Obama’s New Era Of Recklessness By Nolan Finley, Editor Detroit News

Sunday, March 15, 2009

Nolan Finley

Obama opens new era of recklessness

The miraculous marketing machine that carried a junior senator into the White House is now at work trying to convince Americans that writing fat checks from an empty Treasury represents a giant step toward fiscal responsibility.

President Barack Obama has sent Congress a $3.6 trillion federal spending plan that outlines his administration’s priorities.

It starts out $1.75 trillion in the red, the largest deficit by any measure in the nation’s history. But because he’s Barack Obama and everything he does must be chiseled in stone and handed down from the mountaintop, he’s proclaimed this first budget as ringing in a “New Era of Responsibility.”

Call it the Audacity of Hype. The president, casting himself as the somber task master of a frivolous people, is demanding sacrifice of every American. But there’s little sacrifice in his budget.

His entire claim to responsibility rests on raising taxes on the wealthy, an action that is as ideologically driven as anything George W. Bush put on the table and will likely do severe harm to the economy.

Lower and middle-income earners will see tax cuts, even while spending soars, the same sort of financial recklessness that was condemned when Bush was the one going into hock to buy political points.

The Obama budget perpetuates the have-it-now, pay-for-it-later mentality that has brought us to the brink of financial ruin. He isn’t going to let the economic crisis deter him from enacting his hugely expensive social agenda. Nor will he heed warnings that his energy and health initiatives may place additional financial hardships on struggling taxpayers.

In his weekly radio address, the president explained, “like every family going through hard times, our country must make tough choices.” But few families in tight financial straits can choose to borrow to accelerate household spending.

Instead of tightening the national belt, Obama is taking out another mortgage on America’s future. The loans will come largely from China, a nation that hardly shares our world vision.

Rather than exalting personal responsibility, Obama is encouraging dependency. His plan will turn more Americans from contributors to the system to recipients of government handouts.

Cutting the tax deduction for charitable deductions made by the wealthy will take an estimated $9 billion away from nonprofits and send it to Washington, where it will be redistributed as Obama sees fit. The idea of taking care of your own — your own families, your own communities — will become a quaint notion.

Obama will spend less of the budget on defense than any president since Jimmy Carter, a dangerous choice in a world that is increasingly unsettled and where those hostile to America’s interests remain unsubdued.

Overall, the Obama budget will make Americans more dependent on government, explode the federal deficit, risk further crippling of the economy and leave the nation more exposed to its enemies.

If this is what responsibility now looks like, then we have for sure entered a new era.

Obama Administration Considers Health Care Tax On Middle Class

Administration open to taxing health benefits

Proposal problematic for Obama as he denounced similar one in campaign

By Jackie Calmes and Robert Pear

WASHINGTON – The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses. [To be accurate this wil be the second largest tax increase on the middle class in the history of the Country – the first will be the “Cap & Trade” environmental taxes on heating and light bills paid by the middle class, poor and every company that makes, grows or distributes a product in or out of the USA] 

In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. [a number that includes illegal aliens and those 18 to 25 who opt out of purchasing available health insurance from employers or their school – 88% of Americans are currently insured – that number rises to 96% if illegals and the young who “opt out” are subtracted] Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so. [What double talk – Obama, as President is the head of the Democratic Party – The Democratic Congress would not pass a tax on health care without his approval – Obama has a Veto does he not – Even if the Democratic Congress passed such a measure he could Veto it – The Democratic Congress would never pass such a measure without Obama’s approval – if not in public – behind closed doors] 

At a recent Congressional hearing, Senator Ron Wyden, an Oregon Democrat whose own health plan would make benefits taxable, asked Peter R. Orszag, the president’s budget director, about the issue. Mr. Orszag replied that it “most firmly should remain on the table.”

Mr. Orszag, an economist who has served as director of the Congressional Budget Office, has written favorably of taxing some employer-provided health benefits and using the revenue savings for other health-related incentives. So has another Obama adviser, Jason Furman, the deputy director of the White House National Economic Council.

When Senator Max Baucus, Democrat of Montana, advocated taxing benefits at a recent hearing of the Finance Committee, which he leads, Treasury Secretary Timothy F. Geithner assured him that the administration was open to all ideas from Congress. Mr. Geithner did, however, allude to the position that Mr. Obama had taken as a candidate.

Mr. Obama’s own idea for raising revenues for health care — limiting the income tax deductions that the most affluent taxpayers claim — has run into opposition not only from Mr. Baucus but also from his counterpart in the House, Representative Charles B. Rangel, Democrat of New York, who is chairman of the Ways and Means Committee.

Mr. Obama’s proposed limit on deductions would raise an estimated $318 billion over 10 years, or half of his proposed “health care reserve fund.” That is a fraction of the revenues that could be raised from taxing employer-provided health benefits.

In the campaign, Mr. McCain estimated that taxing all health benefits would raise $3.6 trillion over a decade — “a multitrillion-dollar tax hike,” one Obama advertisement said.

The Congressional Budget Office says that including health benefits in taxable income could mean $246 billion in additional revenue for a single year. Stopping short of full taxation, as Mr. Baucus and others suggest, would mean less new revenue.

The latest government figures, for 2007, show that 70 percent of the 253 million people with health insurance received at least some of their coverage through employers. Employment-based insurance covers 60% of the population under 65.

Alan V. Reuther, legislative director of the United Automobile Workers, said: “These proposals would represent a tax increase on working families. They would undermine good health care coverage.”

But at the Service Employees International Union, which was an early supporter of Mr. Obama, Dennis Rivera, the coordinator of the union’s health care campaign, said that while his organization was “predisposed not to agree to the taxing of health benefits,” he would wait to pass judgment. The union, Mr. Rivera said, wants to see how any tax changes fit into the overall effort to revamp the health care system. “We need to see the total picture,” he said.

This story, Administration Is Open to Taxing Health Benefits, originally appeared in the New York Times.

http://www.msnbc.msn.com/id/29703278/

AIG Pays Out Additional Bonuses – Mr Obama What Happened To Your Promise?

AIG paying millions in bonuses despite bailout

Insurer, which has received $170 billion

WASHINGTON – American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company.  AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. [Try these magic words – “were are filing for bankruptcy and the alleged contract under which you believe you are owed a bonus after a 180 Billion Dollar loss is null and void” – that is why “Bankruptcy” was the correct path to take in the first place]

Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.

This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG’s current bonus structure.

Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.

Contractual obligations
In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

Liddy said in his letter that “quite frankly, AIG’s hands are tied” although he said that in light of the company’s current situation he found it “distasteful and difficult” to recommend going forward with the payments. [This is just BS – lets untie those hands in bankruptcy and void all those “bonus contracts”]

Liddy said the company had entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout last fall. [The problems began prior to 2008 – when the first signs of massive mortgage defaults occurred and the first “calls” were made on the ‘wrap around” insurance policies” were made with initial plunge in realestate values. A convenient lie – the housing market collapse led this market collapse – I for one am tired of these excuses for why the bonuses are continuing]

The large bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

A white paper prepared by the company says that AIG is contractually obligated to pay a total of about $165 million of previously awarded “retention pay” to employees in this unit by Sunday, March 15. The document says that another $55 million in retention pay has already been distributed to about 400 AIG Financial Products employees.

The company says in the paper it will work to reduce the amounts paid for 2009 and believes it can trim those payments by at least 30 percent.

Bonus programs at financial companies have come under harsh scrutiny after the government began loaning them billions of dollars to keep the institutions afloat. AIG is the largest recipient of government support in the current financial crisis.

Firm pledges to restructure bonuses [Haven’t we heard this before?]
AIG also pledged to Geithner that it would also restructure $9.6 million in bonuses scheduled to go a group that covers the top 50 executives. Liddy and six other executives have agreed to forgo bonuses.

The group of top executives getting bonuses will receive half of the $9.6 million now, with the average payment around $112,000.

This group will get another 25 percent on July 14 and the final 25 percent on September 15. But these payments will be contingent on the AIG board determining that the company is meeting the goals the government has set for dealing with the company’s financial troubles.

The Obama administration has vowed to put in place reforms in the $700 billion financial rescue program in an effort to deal with growing public anger over how the program was operated during the Bush administration.

That anger has focused in part on payouts of millions of dollars in bonuses by financial firms getting taxpayer support.

In his letter, Liddy told Geithner, “We believe there will be considerably greater flexibility to reduce contractual payments in respect of 2009 and AIG intends to use its best efforts to do so.”

But he also told Geithner that he felt it could be harmful to the company if the government continued to press for reductions in executive compensation.

“We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses, which are now being operated principally on behalf of the American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” Liddy said.

http://www.msnbc.msn.com/id/29697096

Senator Chris Dodd Now Claims That White House And Treasury Department Engineered Payment Of The AIG Bonuses:

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