The Note, 2/23/09: Fiscal Abilities — Stimulus done, Obama moves to more treacherous terrain

By RICK KLEIN You thought that was hard? Spending money and cutting taxes is all well and good (and all well and partisan, it turns out, too). Now comes everything else — and with it, a turnaround from presidential spender to presidential saver, and from a laser-like focus on one huge item to a scattershot approach that encompasses the whole long list. Plus, that perennial crowd favorite: entitlement reform. The stimulus plan will either work or it won’t (and the spin will argue both sides through 2010 and beyond). President Obama unveils much of the rest of his agenda this week, starting with this his plan to move toward a balanced budget, with a fiscal responsibility summit Monday at the White House. This will get interesting. On one level, pursuing a broader agenda offers an opportunity for the president to recapture some of the bipartisan spirit that wasn’t quite there for the stimulus. Yet it offers just as many opportunities to upset friends and inspire enemies. If Team Obama thought it was tough to cut taxes and raise spending, wait until it tries to cut spending and raise taxes. The AP’s Jim Kuhnhenn and Chuck Babington: “This coming week will mark a turning point from what Obama felt compelled to do, to what he wants to do. It also may test how much spending, change and ambition the American people and their elected officials can stomach in a short time.” “Mr. Obama got barely a month into his term before he began a pivot of his own: from a period in which the fiscal floodgates were opened to accommodate emergency economic measures to one in which the focus is more on budget discipline and long-term restraint,” John Harwood writes in The New York Times. First up: the deficit. “A White House official tells ABC News that the President on Monday will announce that he will try to put the nation on track to cut the deficit in half from that which he inherited by the end of his first term,” per ABC’s Jake Tapper. “Most of the savings will come from ending the war in Iraq, raising taxes on the wealthy, and a more efficient government.”  More from Tapper: “President Obama will announce that he’s appointing respected Interior Department Inspector General Earl Devaney to serve as Chair of the Recovery Act Transparency and Accountability Board. Devaney has built a solid reputation for ferreting out corruption in the beleaguered Interior Department, which was part of the Abramoff scandal.”  Yes, we care — and the president is making us care more: “Eighty-seven percent of Americans are concerned about the deficit, as near unanimity as might be possible on a political issue. That includes 59 percent in this new ABC News/Washington Post poll who are ‘very’ concerned about it — up 10 points in two months as Obama took office and pushed his stimulus plan through Congress,” per ABC Polling Director Gary Langer. “The increase in high-level concerned about the deficit has occurred entirely among Republicans and Republican-leaning independents, who’ve tended to be more critical of the stimulus spending, as well as less inclined generally to support the new Democratic administration. In this group the number who say they’re ‘very concerned’ about the deficit has soared from 47 percent in December to 73 percent now.” Inspiration, anyone? “The balance Obama strikes is to say that things will get worse before they get better, but that they will get better. Now he must convince us that’s true,” Jonathan Alter writes in Newsweek’s cover story. “My take on Obama, based on conversations with him and his team stretching back more than four years and extending into the White House, is that he has a firm grasp of the psychological and substantive challenges of the presidency. Equally important, his 2008 campaign proved that he possesses a superior sense of timing. He knows that now is not the moment to cheerlead, not when the financial players are lying dazed on the field.”  Politico’s Ben Smith: “Last week, America ran up the credit card. This week, the statement arrives. President Barack Obama is set to deliver the worst fiscal news since the Great Depression. . . . It’s easily the trickiest public relations challenge of his young presidency — balancing sober, but optimistic talk about the government’s dismal financial state, on a timeline not of his making.” “Call it Fashion Week for budget wonks,” Linda Feldmann writes in the Christian Science Monitor. “Taken as a whole, the week is shaping up to be equal parts substance and public relations.” What can be done: “Measured against the size of the economy, the projected $533 billion shortfall for 2013 would mean a reduction from a deficit equal to more than 10 percent of the gross domestic product — larger than any deficit since World War II — to 3 percent, which is the level that economists generally consider sustainable. Mr. Obama will project deficits at about that level through 2019, aides said,” Jackie Calmes reports in The New York Times. “Yet Mr. Obama will inflate his challenge by forsaking several gimmicks that President Bush used to make deficits look smaller.” These numbers are as huge as the policy items contained therein: “With the stimulus and Mr. Obama’s proposed housing rescue, the deficit is likely to be well in excess of $1.5 trillion and possibly as wide as $1.9 trillion, according to private forecasts,” Jonathan Weisman writes in The Wall Street Journal. “Mr. Obama will promise that he can shrink that total to $533 billion, or 3% of GDP, by 2013, primarily through savings from withdrawing combat forces from Iraq and allowing George W. Bush’s tax cuts for families earning more than $250,000 to lapse in 2011.”  “Meet Barack the Knife,” Ken Bazinet writes in the New York Daily News. “Determined to slash the deficit from $1.3 trillion to $533 million in four years, President Obama will propose this week cuts across a wide range of the budget, sparing neither the Pentagon nor entitlement programs. Even longstanding Democratic sacred cows like Medicare will not be immune from Obama’s scalpel, sources said.” Fresh fights looming? “After a week off taking a victory lap for passing an economic stimulus, Congress’ Democratic leaders return to Washington on Monday for a second race against the clock to pass another massive spending package,” S.A. Miller writes in the Washington Times. “This time it is a roughly $410 billion omnibus appropriations bill that would fund most of the federal government for the rest of the fiscal year, replacing stopgap funding that expires March 6. . . . The omnibus spending bill already has become a target for Republican attacks on the Democrat-led Congress’ penchant for pork-barrel projects and burgeoning deficits.”  Then there’s entitlements: “Just one week after President Obama signed a stimulus package designed to give a short-term boost to the economy, some of the nation’s top budget analysts plan to deliver a stark warning today at a White House summit that an even more foreboding long-term crisis will unfold unless Obama quickly fixes Social Security, healthcare, the tax code, and more,” Michael Kranish writes in The Boston Globe.  “As sure as the sun rises, the sitting President of the United States promises to save our fiscal future by reforming entitlement spending. And as sure as the sun sets, each attempt at delivering on that pledge ends in failure,” Time’s Michael Scherer reports. “Perhaps the biggest advantage that Obama has as he prepares to tackle entitlement is the financial crisis, which has forced everyone in Washington to focus on the nation’s long term fiscal problems.”  Early concession? “Mr. Obama considered announcing the formation of a Social Security task force at a White House ‘fiscal responsibility summit’ that he will convene on Monday. But several Democrats said that idea had been shelved, partly because of objections from House and Senate leaders,” Jackie Calmes writes in The New York Times.  A tough sell: “Republicans, who are already painting Obama as a profligate spender, are laying plans to attack him on taxes as well. Even some nonpartisan observers question the wisdom of announcing a plan to raise taxes in the midst of a recession,” Lori Montgomery and Ceci Connolly wrote in the Sunday Washington Post.  “But senior White House adviser David Axelrod said in an interview that the proposals reflect the ideas that won the election,” they write. Says Axelrod: “This is consistent with what the president talked about throughout the campaign,” and “restores some balance to the tax code in a way that protects the middle class.” How the president governs — per ABC’s Jake Tapper: “Every day President Barack Obama is handed a special purple folder. The folder contains ten letters, and every day President Obama takes time to read them. Are they from world leaders? From members of the Joint Chiefs of Staff? Members of the intelligence community? No, these letters have been culled from the thousands the White House Correspondence Office receives each day from Americans who have taken the time to sit down and write to their president.”  “Two or three times a day, he writes back,” Tapper reports. Piecing it together: “The appearance before a joint session of the Senate and the House [Tuesday evening] offers an opportunity for Mr. Obama to reprise some themes and initiatives from his campaign that have been overshadowed by the economic emergency that has defined the first month of his presidency,” Jeff Zeleny writes in The New York Times. “The president is not planning to announce significant new policies, officials said, but intends to explain how his agenda can advance despite the deepening recession and monumental budget deficit. The address will be heavily weighted toward domestic priorities and the economy, aides said, and will offer only a brief look at foreign policy.”  Watching for the tone: “First, will he reach out to the Republicans who’ve felt free to scorn him, or match his popularity against theirs and try to slap them back? Second, how specific will he be about his plans for the coming days?” McClatchy’s Steven Thomma writes. “Third, will he continue the dire warnings he’s used so far to prod Congress to follow his lead on rescuing the economy, or will he employ a more upbeat voice and say that help is on the way?”  You didn’t think the spending part was over, did you? “If the fight to end the economic crisis is a war, the stock market’s continuing dive, deepening troubles in the global economy and recent developments at home show that the enemy still has the upper hand — and we’re going to need reinforcements. Maybe massive reinforcements,” The Los Angeles Times’ Jim Puzzanghera reports. “That could be a tough sell in Washington, where the rapidly increasing price tag is leading many Republicans and some conservative Democrats to adopt an old battle cry: Hell no, we won’t go.” As for the politics . . . a new push from the DCCC Monday morning — pressing 12 House Republicans over their opposition to the middle-class tax cuts contained in the stimulus package.  From the release: “During this phase of the campaign, the DCCC is taking the message of middle class tax cuts and economic recovery directly to Republican Members by mounting a major grassroots campaign that includes phone calls, e-mails, and text messages directly to targeted Republicans’ constituents.” As for the opposition — might these governors who don’t want stimulus money be inviting challenges as home, even as they strengthen the principles for their national resumes? “The Republican governors’ divide reflects their party’s erosion to a mostly regional party that is based in the conservative South, after heavy election losses in the Northeast, Midwest and West,” Jackie Calmes and Robert Pear writes in The New York Times. “And with the party leaderless after losing control of both the White House and Congress in the past two election cycles, the split is colored by early maneuvering for conservatives’ support among potential aspirants for the party’s 2012 presidential nomination.”  Guess who can’t run for president: “You know, you’ve got to go beyond just the principles. You’ve got to go and say, ‘What is right for the country right now?’ ” Gov. Arnold Schwarzenegger, R-Calif., told ABC’s George Stephanopoulos on “This Week.” “I think that, if they — they should make an effort to work together and to find what is best for the people, because by derailing everything, it’s not going to help anybody, and it creates instability and insecurity.”  Obama addresses the National Governors Association in the State Dining Room at 10:15 am ET. Then comes the Fiscal Responsibility Summit, with Obama and Vice President Joe Biden speaking to a group of about 130 individuals in the East Room at 1 pm, and delivering closing remarks at 4 pm ET. The press, from the left . . . “Judged by his own standards, President Obama’s $787 billion economic stimulus program is deeply disappointing,” Robert J. Samuelson writes in his Washington post column. “If the economic outlook is as bleak as Obama says, there’s no reason to dilute the upfront power of the stimulus. But that’s what he’s done.” And Paul Krugman makes a case for bank nationalization: “The real question is why the Obama administration keeps coming up with proposals that sound like possible alternatives to nationalization, but turn out to involve huge handouts to bank stockholders.” Just in time: “Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation,” David Enrich and Monica Langley write in The Wall Street Journal. “While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup’s common stock. Bank executives hope the stake will be closer to 25%, these people said. Any such move would give federal officials far greater influence over one of the world’s largest financial institutions.” Also Monday — since there’s room for things not called stimulus. Quite the lineup for a clean energy summit, from 10 am ET to 1 pm ET, with a press conference to close the day, at the Newseum in Washington. Attendees include former President Bill Clinton, former vice President Al Gore, Senate Majority Leader Harry Reid, Energy Secretary Steven Chu, Interior Secretary Ken Salazar, entrepreneur T. Boone Pickens, and Center for American Progress Action Fund President John Podesta. From the release: “The half-day event will bring together a select group of high-level government, business, labor and advocacy group leaders with a focus on developing a plan and key guiding principles to lead the transformation of U.S. energy policy and to reduce the nation’s dependence on foreign oil.”  And a 2010 alert: “Nevada Senator Harry Reid will make a major announcement Monday about Nevada’s clean energy future during his address to the National Clean Energy Project. . . . His vision for Nevada includes a leading role in the clean energy revolution, drawing upon the state’s vast solar, wind and geothermal potential. Reid believes a clean energy future can transform Nevada’s economy and create jobs for thousands of Nevadans, while also reducing dependence on unstable energy sources, protecting our outdoors and strengthening national security.” Speaking of 2010 — did Sen. Jim Bunning, R-Ky., really go there? “During a wide-ranging 30-minute speech on Saturday at the Hardin County Republican Party’s Lincoln Day Dinner, Bunning said he supports conservative judges ‘and that’s going to be in place very shortly because Ruth Bader Ginsburg . . . has cancer,’ ” Joseph Gerth writes in the Louisville Courier-Journal. “Bad cancer. The kind that you don’t get better from,” he told a crowd of about 100 at the old State Theater. “Even though she was operated on, usually, nine months is the longest that anybody would live after [being diagnosed] with pancreatic cancer.”  (Justice Ginsburg is expected on the bench Monday morning for the first time since her cancer surgery.) We are confident that White House Chief of Staff Rahm Emanuel is taking all advice in the constructive spirit in which it was offered. Classic Rahm, courtesy of The New Yorker’s Ryan Lizza: “The stimulus bill was essentially held hostage to the whims of Collins, Snowe, and Specter, but if Al Franken, the apparent winner of the disputed Minnesota Senate race, had been seated in Washington, and if Ted Kennedy, who is battling brain cancer, had been regularly available to vote, the White House would have needed only one Republican to pass the measure.”  “No disrespect to Paul Krugman,” Rahm Emanuel said, “but has he figured out how to seat the Minnesota senator? . . . Write a f——- column on how to seat the son of a bitch. I would be fascinated with that column. O.K.?” Richard Clarke swings back at former Vice President Dick Cheney’s predictions about the likelihood of a terrorist attack: “He calls the charges by Cheney and the others ‘reprehensible,’ all about trying to gain political advantage and having nothing to do with anti-terrorism,” Bloomberg’s Al Hunt writes. “Should there be another attack, he says, their flawed arguments would be ‘post hoc ergo propter hoc’ — or ‘because the attack followed Obama’s policy shifts, therefore the policy shifts are why the attack succeeded.’ This is ‘low risk’ for Cheney, says Clarke, who adds that it’s a ‘safe bet’ that some al-Qaeda-related group is plotting an assault. “If you predict it and you are wrong, no one will ever call you on it.’ ” Burris watch: “Federal authorities questioned U.S. Senator Roland Burris [Saturday] at his lawyer’s office — a long-awaited interview involving his U.S. Senate seat appointment — the Sun-Times-NBC/5 team has learned,” per the Chicago Sun-Times. “Burris is not accused of wrongdoing but was questioned in the case that centers on ousted Gov. Blagojevich and his alleged attempts to sell President Obama’s former seat.”  The Kicker: “Since I’ve become governor I’ve done three cameos when friends ask me and Sly asked me if I would do a cameo. I said of course I would help you do a cameo, there’s no two ways about that.” — Gov. Arnold Schwarzenegger, confirming to ABC’s George Stephanopoulos that he’s planning to appear in a forthcoming Sylvester Stallone movie. “You commie, homo-loving sons of guns.” — Sean Penn, accepting an Oscar for “Milk” with a call for the nation to expand gay marriage. Bookmark the link below to get The Note’s daily morning analysis:
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