Sunday Snapshot -- Don't Worry, Be Happy

The CBO predicted Pres. Obama's budget will produce $9.3T in debt over the next ten years, $2.3T worse than the WH budget anticipated. Admin. officials made the Sunday rounds to assure the public they are more optimistic.

WH Council of Economic Advisers chair Christina Romer: "There are actually some questions about the numbers, right? When you actually say, 'Why are the Congressional Budget Office numbers different from ours,' a big part of that is their estimates of long-run growth. When you get out five, 10 years, they're assuming that real GDP is only going to grow about 2.2 or 2.3 percent a year, and that's just lower than private forecasters. It's lower than the Federal Reserve. And we think it's just too pessimistic. So I think a big part of why they're getting such different numbers are just some of these technical issues."

More Romer: "On the bigger issue, though, I think in some sense, the president is addressing this. ... He absolutely said he's going to cut the deficit that we inherited in half, and that is a commitment that is as strong as it ever was. The other thing is taking on health care. One of the biggest things that he's taking on is something I would guess the Congressional Budget Office is our biggest fan, because they have said for the last many years that the thing that is going to bankrupt us, that's going to make that deficit get bigger and bigger, is the fact that health care costs are rising very, very quickly" ("Fox News Sunday," 3/22).

Romer, asked what the tough choices will be if CBO is right: "There is a question whether CBO is right" ("State of the Union," CNN, 3/22).

More after the jump, including the House bonus tax bill and the banking plan.

(KATHERINE LEHR)

WH Council of Economic Advisers' Austan Goolsbee, asked if the CBO's numbers endanger the WH's budget plans: "I would say two things about the CBO report. One, on a technical level, the primary difference between the CBO and, really, most other forecasters is they're much more pessimistic about the long-run strength of the U.S. economy. Seven, eight, 10 years down the road, they believe that the growth rate will be significantly slower than it was, in the long run, in the past. The government is more in line with the private forecasters. But even in the CBO numbers, you see that the president's goals of cutting the deficit in half, while investing in health care, in the clean energy economy and in the education of our kids ... the CBO shows that he is able to do that" ("Face the Nation," CBS, 3/22).

Sen. Kent Conrad (D-ND): "Look, $2.3 trillion over 10 years is a stunning amount of money. In fairness to this administration, they locked down their forecasts three months ago. There's been a lot of bad news since. So we've got a worsening situation. That requires adjustments, and it's going to have to be across a broad front, including agriculture."

VP Biden chief economist Jared Bernstein, in response: "The president is prepared to negotiate on this budget with folks like those at this table, and certainly Senator Conrad has been a longtime budget negotiator at times like these. And the president's been very clear about this, as has our budget director. We don't expect these folks to sign on the dotted line. What we do expect and what we are going to stand very firm on, because this president, this vice president have made this clear, that there are these priorities that brought them to the dance here: energy reform, health care reform, education, all done in the context of a budget that cuts the deficit in half over our first term."

Conrad: "We have got to get back to a more sustainable fiscal circumstance. We cannot have debt pile on top of debt. We cannot run budget deficits in the out-years of over $1 trillion a year. ... I will present a budget that ... acknowledges in the short term, yes, we have got to have added deficits and debt to give lift to this economy, but longer term, we have got to pivot" ("This Week," ABC, 3/22).

Rep. Charles Rangel (D-NY), asked if he's troubled by the CBO numbers: "I am more impressed with the fact that Obama is looking for a better educated and ... a stronger workforce going into a new green economy, that this has to show that America can get off the ground with the deficit and move to where we were under the Clinton administration, drawing a strong surplus. The only way for us to get out of this is to change our way of living in this country, and that's the direction in which the Obama budget is going, and I strongly support it" ("Fox News Sunday," 3/22).

Among the reaction from GOPers:

Sen. Susan Collins (R-ME), asked if she can support Obama's budget: "No. ... It brings our debt levels to an unprecedented level. It would double the public debt in 5 years, triple it in 10 years, the highest percentage of GDP since after World War II, CBO says, by the year 2019, 82 percent of GDP. ... That is not sustainable. It poses a threat to the basic health of our economy" ("This Week," ABC, 3/22).

Sen. Judd Gregg (R-NH): "The practical implications of this is bankruptcy for the United States. There's no other way around it. If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued. ... The president keeps talking about how he doesn't want to pass the problems onto the next generation? What he's guaranteeing here in his budget structure are problems which our children aren't going to be able to survive with" ("State of the Union," CNN, 3/22).

Rep. Mike Pence (R-IN): "The House Republicans are going to come up with a budget alternative that is going to be built on fiscal restraint and getting this economy growing again. ... It's going to be a comprehensive alternative. ... The president's budget, the American people know, spends too much, taxes too much, and it borrows too much" ("This Week," ABC, 3/22).

Sen. Richard Shelby (R-AL), asked if Obama should scale back his budget given the new numbers: "Absolutely. He's going to have to. We're on the fast road to financial destruction, and I see a $20 trillion deficit in the few years to come" ("Fox News Sunday," 3/22).

MINORITY REPORT

Pols were also asked about the admin. using the reconciliation route to pass parts of the budget.

Romer, asked if the admin. will take that route off the table: "I think the truth is, we're getting ahead of ourselves, and sort of what the ins and outs of the legislative strategy are going to be I think is not certainly my -- to use another piece of jargon, my comparative advantage" ("State of the Union," CNN, 3/22).

ABC's Stephanopoulos, to Collins: "It's seriously being debated now in the House putting at least the health care provisions on this fast track that would only require a majority vote. Can you go along with that?"

Collins: "No. It would be a big mistake. ... You don't make major changes in policy using a system that shuts out the Republicans, that limits debate, that prohibits amendments. And I know it's not just Republicans who are concerned about this, the centrist Democrats who are very concerned about this."

Conrad: "I have said for weeks, I don't think it would be wise to use the reconciliation process to write major legislation, reform legislation. That's not what reconciliation was designed for. It was designed for purely deficit reduction. And the problem is, if you try to use it here, not only does it deeply offend the minority, but, more than that, it doesn't work very well."

Bernstein: "We agree with Senator Conrad on this point. But I want to say -- and it's very important for folks to hear that I think that, in an important way, the Obama budget is getting a bad rap in this discussion."

Stephanopoulos: "You said you agree with Senator Conrad, yet the White House has been working with House Democrats on moving this whole notion of going on a fast track on the table."

Bernstein: "I don't think he took it off the table. I think it has to stay on the table. But it's something we would rather avoid."

Conrad: "Well, I'll put it this way: It is not included in the budget that I will present to my colleagues. I have said for weeks, I don't think it is the right way to write substantive legislation. ... What they're talking about is negotiating leverage, sending a signal that it still remains open" ("This Week," ABC, 3/22).

ANGER MANAGEMENT

Meanwhile, the House bonus tax bill continued to be debated.

Bernstein, asked if Obama believes that the House bill and the Senate draft bill undermines the financial system: "I think the president would be concerned that ... the House bill may go too far in terms of some legal issues, constitutional validity, using the tax code to surgically punish a small group. That may be a dangerous way to go. That said, let's see what comes out of the Senate. He has not said he won't sign this bill" ("This Week," ABC, 3/22).

Goolsbee: "The president's also been clear we don't want to govern out of anger. He's going to look at what comes out of the House, what comes out of the Senate, see what ideas we have. At the least there is public pressure and there should be public pressure on those people at AIG who aren't being paid for performance, but are being paid for having lost $170 billion, to give the money back" ("Face the Nation," CBS, 3/22).

Rep. Barney Frank (D-MA), asked if he has support from the WH on this: "I believe so. ... I voted for the bill. I was not a major advocate. I will say that there are a number of routes we ought to take. I have actually been engaged with the executive branch, trying to push them to do what I think is the best way to deal with this, which is to assert our rights, the United States government, as the owner of that company. ... One of the things we ought to be doing is suing as a shareholder" ("Face the Nation," CBS, 3/22).

Rangel: "To use the tax code in what may appear to be a penalty to taxpayers I think is wrong. ... On the other hand, we had to make certain that the American people felt good. We as a government have the responsibility to make certain that people have confidence in government. And the taxpayer did not have confidence in the system. ... We didn't have any problem in reaching the conclusion that this was our only option. ... It had nothing to do with AIG. It had everything to do with the integrity of the tax system" ("Fox News Sunday," 3/22).

Conrad, asked if the Senate will pass a similar excise tax: "The simple answer is, 'I don't know.' ... I've got my doubts whether that's the best way to do this. I think there are certain constitutional questions about the imposition of a tax on a limited group of people."

Collins, in response: "As angry as I am, I agree with my colleague that we need to be careful. And the problem with the Senate bill is it is so wide in its scope that it would apply to tens of thousands of employees all across this country who had nothing to do with getting us in this mess. ... I'm not against getting the money back. In fact, I feel very strongly that we do need to recoup the money. I'm just not certain that either the House-passed bill nor the Senate bill are the best approach."

Collins, on an alternative: "We can have the treasury secretary put more heat on AIG. He never should have allowed this to occur in the first place. We can make sure that there is pressure for people to voluntarily get the money back or else they're going to lose their jobs or there's going to be no further funding for AIG" ("This Week," ABC, 3/22).

Gregg: "It's an abuse of the tax law. You know, the taxing authority of the United States is our most powerful weapon. You know, the reason we separated from England was because the British were using it abusively. And we, as a Congress, in reaction to something that is outrageous, the AIG bonuses, should not adulterate the system of taxation in this country. We shouldn't use it in a penal and personal way. It's really overstepping the appropriate use of taxing authority -- and it leads to a very slippery slope. I mean, where does that stop?" ("State of the Union," CNN, 3/22).

Sen. Charles Grassley (R-IA): "Right now I have to do what I can do. It looks to me like Congress's best leverage is taxes. It's like other things need to be done to make sure that people that are on the dole from the tax payers can't do these sorts of things in the first place. But in the meantime, tax -- and that's what we're going to do" ("Face the Nation," CBS, 3/22).

Pence, on why he voted against the House bonus tax bill: "What we ought to say is to AIG, we ought to say, 'No more bailout money until AIG recovers all of the more than $200 million that's been distributed in executive bonuses.' What the Democrats brought to the floor this week was really a constitutionally questionable bill that was really nothing more than a transparent attempt to divert attention away from the fact that, because of Democrats in Congress and the administration, these bonuses were able to be distributed to begin with" ("This Week," ABC, 3/22).

NYC Mayor Mike Bloomberg (I): "I understand why people are really upset. But the real thing that we've got to focus on is getting the banks liquid, getting them to start making loans again. What I'm worried about, we have 6500 people who work for AIG that live in New York City. Most of them make less than $100,000 a year, they don't get bonuses. They want to keep their jobs, they want to be able to pay their mortgages. So what we've got to do is find some ways to balance all of this, make those who are culpable lose their investments, not get their bonuses, but really focus on how we're going to get companies back going, growing again" ("Meet the Press," NBC, 3/22).

RISKY BUSINESS?

And the Treasury Dept. is scheduled to announce its plan for private investors to partner up with the gov't to by up toxic assets.

Goolsbee: "The announcement itself is going to be tomorrow, and they're going to outline other things as we go through this week. The basic idea is outlining the details of a public-private partnership so that we leverage money from the government with the private sector, so that the government doesn't get in the business of overpaying for assets and things like that."

CBS' Smith: "There's already grumblings from the private sector that if the federal government is going to be so heavily involved, they don't want anything to do with it."

Goolsbee: "Well, I know some people have rumored that. ... Most of the people saying that so far have been people who are on the hook and have received a lot of money from the U.S. government. What we saw this week and what we have seen in our discussions with people is that if you lay out clear rules that are responsible, people want to participate if there's a business reason to participate. And in this circumstance, where we're trying to encourage the private sector to participate, that's going to be treated totally differently than companies like AIG or Fannie Mae, where they are only in business because the government saved them" ("Face the Nation," CBS, 3/22).

Romer, asked how much damage AIG has done to getting private investors to partner up with the gov't: "What the president has said is what's happened at AIG is completely unacceptable. So that's crucial to get on the table. ... I think we're going to have a sensible strategy going forward. The president has very much drawn a distinction. We understand firms that at some level are only in existence today because the government has stepped in and supported them. ... What we're talking about now are private firms that are kind of doing us a favor, right, coming into this market to help us buy these toxic assets off banks' balance sheets. And I think they understand that the president realizes they're in a different category, and I think they are going to have confidence that they're going to be able to come into this program" ("Fox News Sunday," 3/22).

Romer, asked if taxpayers are going to take on more risks here: "I think you need to keep your eye on why we're doing this at all, which is we do know that banks have these so-called toxic assets on their balance sheets. We think they're highly uncertain. They are making banks unwilling to lend, they're making private investors unwilling to come into banks. We need to get those off the banks' balance sheets. That's a market that really hasn't been functioning, really hasn't existed. That's exactly when the government needs to step in. And what is really innovative about this is partnering with private investors, partnering with the FDIC and the Federal Reserve to get all the resources we can to get those things off banks' balance sheets."

Romer, on New York Times' Krugman saying this plan will produce big gains for banks that didn't actually need any help: "I think that's just unfair. And again, keep in mind why we're doing this, it's precisely because banks have these bad things on their books. We need to get them off. We think this is a good way. Another way to say it, part of the reason we're partnering with private investors is to make sure the government doesn't overpay, right, so it isn't just another handout to banks, right? We are trying to actually help the taxpayer by using the expertise of the market to set the price for these toxic or legacy assets" ("State of the Union," CNN, 3/22).

Rangel: "No, I don't approve, but I don't think we have a lot of choices. This is a very complex financials crisis that we find ourselves in. And I'm really surprised that we have to go to people that come from the fiscal families that caused this problem to try to help us to get out of it" ("Fox News Sunday," 3/22).

Shelby, asked if a bonus tax bill could scare off the private investors that the gov't wants to team up with to buy toxic assets: "It's possible" ("Fox News Sunday," 3/22).

YOUR EXCELLENCY

Treas. Sec. Tim Geithner's future also remained a topic of debate.

Romer, asked what the impact would be on the financial markets and the president's recovery plan if Geithner were to step down and the U.S. didn't have a treas. sec. for the next few months: "All of this discussion is really silly. Tim Geithner is an excellent secretary of the treasury. He has been dealt an unbelievably difficult hand to deal with. But he's actually doing a fantastic job. ... He has the complete support of the president. And he's going to keep doing an excellent job" ("Fox News Sunday," 3/22).

Grassley: "I don't think anybody after two months has been tested enough that I would say he should resign. I think he ought to be given some time. But on the other hand, I think the reality of it is that we were told a long time ago that Geithner had to be secretary of Treasury because he was the smartest one to handle the job, he had to be on the job right now. He screwed up twice with AIG, when he was president of the Federal Reserve, once now since he's been secretary of the Treasury. I think it raises questions about whether he's got his eye on the ball or not" ("Face the Nation," CBS, 3/22).

Shelby: "My confidence is waning every day. I said competence brings confidence to anything. I don't see a lot of things positively thus far that Timothy Geithner's been involved in. ... I'm not feeling real good about Treasury's role or the specific role of Tim Geithner at the moment. ... If he keeps going down this road, I think that he won't last long. I think he's probably on shaky grounds now, at least with the Congress and a lot of the American people" ("Fox News Sunday," 3/22).

Bloomberg: "Tim Geithner is exactly the guy that I would want there. He's smart, he is a workaholic, he's been there, he's been part of the financial system for a long time, he understands how things work, how markets work, how people react" ("Meet the Press," NBC, 3/22).

ACTIONS SPEAK LOUDER THAN WORDS

Bloomberg, PA Gov. Ed Rendell (D) and CA Gov. Arnold Schwarzenegger (R), who met with Obama 3/20 at the WH, appeared together on "Meet the Press" to talk about crumbling infrastructure around the U.S. The three are the founders of Building America's Future, a group that cites $1.6T as the amount necessary to deal with infrastructure.

Schwarzenegger, on the case he made to Obama: "In order for the economy to thrive and to live up to 100 percent of its potential, you need to have moved people and goods around very quickly. And so if that falls behind, then the economy falls behind. ... We kind of joined forces and created this partnership here to put the spotlight on this issue. We're very fortunate that this president is listening to that and is interested in rebuilding America, and so we're trying to let him know we want to help and help draft the plan."

Rendell: "Unless we can rebuild our infrastructure, we're not going to be competitive. Unless we can rebuild our infrastructure, our quality of life is going to suffer. Unless we rebuild our infrastructure, things like what happened in Minnesota are going to repeat. ... Our message to the president was, 'Look, you've taken some great first steps.' ... We think the infrastructure bank is terrific. We need to do it in a little bit bigger scale."

Bloomberg, asked if they got a commitment from Obama: "The president started out by saying he got it. We gave him a briefing paper. He had read the briefing paper, and he assembled a team to say, 'OK, these are my people. We're going to work together. Here's who you contact.' We established the dialogue. The president wants to get this done."

Schwarzenegger, asked if Americans would be willing to pay higher taxes for this: "In the latest polls it shows that the people are very interested in rebuilding America and they're willing also to pay for it. Because look, everyone gets stuck in traffic."

NBC's Gregory: "Is an increase in the gas tax a place to start?"

Schwarzenegger: "I think one has to look at it. ... But I think the important thing is that there's a willingness amongst the people to pay for it. It doesn't all have to be done through public money. We are talking here about public-private partnerships. There's many companies that are interested in coming in and financing the high-speed rail or other rail systems, light rail and so on."

Schwarzenegger was also asked about Obama's recent Special Olympics comment.

Schwarzenegger: "I know where his heart is at. I mean, I think that he loves Special Olympics and he would do anything that he can to be helpful to Special Olympics. This was one of those slips that, you know, you always regret afterwards. And I've had mine, believe me. ... People laughed [at Obama's joke]. And I think that it needs more awareness in Special Olympics. I think that the Special Olympics itself does a great job. I think my mother-in-law, who started it in 1968, has done an extraordinary job."

Schwarzenegger, asked if he spoke with Obama about this during their 3/20 meeting at the WH: "Before this ever happened he has already talked about the role he will play and how important Special Olympics is. That's why I said his heart is at the right place. He loves Special Olympics" (NBC, 3/22).

BEAT THE PRESS

And during his appearance on "Fox News Sunday," Rangel was asked about the House Ethics Cmte investigation into his failure to pay taxes.

Fox's Wallace: "Without going into all the details, the question I think a lot of people have is you're the chairman of the House Ways and Means Committee that writes all the tax law. How can you have problems paying your taxes?"

Rangel: "Just because a reporter from the New York Times has a problem with me doesn't mean that the Congress and the country has a problem. And every reporter, including you, would pick up without any facts, without any investigation -- indeed, suggest don't go into the facts -- because one of your colleagues in the press said it. Nobody outside the press has made any accusations, and I have asked the House Republicans and Democrats to review it in order to have it dismissed. So you can tell the story over and over and over again, but it has no merit and it has no facts."

Wallace: "But the House Ethics Committee has been investigating this for six months and still hasn't reached a judgment, still hasn't cleared you. I guess one of the questions I have is, is it that complicated that it should take the House Ethics Committee six months to investigate this?"

Rangel: "Maybe your question should be how long has the Congress been in session during those six months. If you take in consideration the Christmas holidays, you take in consideration the fact that we've had other national holidays, the fact that members have not been in Congress each and every day to look at it -- if I'm satisfied, and there has been no accusations coming from the Congress, I would think that the press ought to be fair enough to wait to see whether or not their colleagues have any substantive charge to make. I mean, that's fairness."

Wallace: "Well, we're always fair and balanced here, Congressman Rangel."

Rangel: "Oh, yeah, I forgot I was on channel five. ... Fox" (3/22).

ROUNDTABLE ROUNDUP

The "This Week" roundtable discussed the House bonus tax bill and the banking plan.

George Will: "The House of Representatives, using the tax code, punitively, retroactively and capriciously targeted a particular group of unpopular Americans. Now, this matters because tomorrow, 172 days after TARP was invented ... evidently the Treasury secretary will come out and invite the private sector investors to become partners with this government. Why anyone in his right mind would be a partner with this
government, I do not know. This matters because $700 billion were allocated for TARP. $300 billion are gone. ... Not a single toxic asset has been purchased. One more thing to bear in mind when the Treasury secretary speaks, the last time he spoke on this the Dow dropped 400 points while he was speaking."

American Prospect's Robert Reich: "Populist rage is usually a pretty good indication that there is something under the rage, that the public may have a legitimate reason to be concerned about. I think that the public, under a tremendous economic stress right now that cannot be exaggerated, is very suspicious of the entire bailout operation. The public is very nervous about what seems to be a counterintuitive proposition, which is that the people on Wall Street whose greed and stupidity got us into this mess somehow should be given huge amounts of
money in order to help us get us out of this mess. And I think that, you know, the administration needs to get ahead of this. This is the same sort of rage that we saw with Tom Daschle" (ABC, 3/22).

The "Fox News Sunday" roundtable discussed the House bonus tax bill, the banking plan, Geithner's future and Obama's overture to Iran

Weekly Standard's Kristol, on Obama's video message to Iran: "It's an embarrassment. There's no statement of solidarity with the people of Iran -- the word 'liberty,' the word'freedom,' the word 'democracy,' the words 'human rights' nowhere in the message. He speaks to the leaders of Iran who have imprisoned Americans in the last couple of months and American journalists. ... But he speaks to the leaders of Iran and promises them respect. ... It's weak, and I think the Iranians took it as a weak statement since they immediately showed contempt for it and said, 'Well, that's nice talk. Now follow up with some actions. Remove the sanctions.'"

NPR's Williams, in response: "I couldn't disagree more. I mean, it seems to me this is the start of a new year there, and this was a new year statement and an attempt to sort of set forth new diplomatic opportunities to say we are going to view you as a government. He didn't use the term regime of President Bush's vintage. ... I think he speaks very clearly, if not, you know, powerfully, to the idea that there are alternatives here for the U.S., but we now choose to try to engage you, to speak to you" (3/22).

The "State of the Union" roundtable discussed the banking plan and Geithner's future.

CNN's Henry, on the banking plan: "A lot of Democrats on the Hill are skeptical. The White House is telling them, in private, what else are we going to do at this point; we can't get more taxpayer money; people are frustrated."

CNN's Yellin, in response: "They say, look, it has to be done because essentially Wall Street is holding the rest of the economy hostage. Until this problem of these bad toxic assets is fixed, none of the rest of us can get home mortgages, et cetera, the way we need to get it. The problem, I think, is that the Obama administration has failed to do what they used to do so beautifully during the campaign, which is communicate clearly" (3/22).

The "Face the Nation" roundtable discussed Geithner's future, the banking plan and the budget.

New York Times' Calmes: "When Tim Geithner got confirmed, after having some tax lapses that came to light, it was said that he was too big to fail, too much experience, too smart. ... You still have a situation where if you get rid of Tim Geithner, who do you bring in? He doesn't even have his Treasury staffed with senior assistants yet, so who would be Treasury secretary?"

Slate's Dickerson: "Not a lot of people have confidence in him. So next week he's going to announce this bank bailout plan, and there will be a lot of questions about, well, there are the merits of the plan itself, but what about him selling it? And is this public-private partnership going to be able to go forward if the man selling it is somebody people don't have confidence in? And that will be debated all next week on a parallel track to the actual merits of the plan" (CBS, 3/22).

The "Meet the Press" roundtable discussed the banking plan, Geithner's future and the House bonus tax bill.

CNBC's Burnett, asked if there is a real conversation going on about replacing Geithner: "Yes, there is. ... I spent a lot of time this weekend talking to Wall Street CEOs and executives. All of them supported Tim Geithner and all of them still say this is a man who understands what he's doing. They respect his intelligence and his knowledge of the complexity. They don't want someone in there who doesn't have those characteristics. That being said, some of them said they are very disappointed not just with some of the charisma challenges that he has had, but with this specifically, which is he asks for them to bring plans. You know, 'Show me some ideas,' and then sort of says, 'Hey, they may not work.' What they miss is the proactivity and the creativity of a Hank Paulson, where he said, 'Here's an idea, take a look at it,' and sort of, 'Let's get this done.'"

NBC's Brokaw, on the House bonus tax bill: "I don't know what happens when it gets to the Senate, but I think it'll play out there a little bit because there's an awful lot of demagoguery that's attached to all this. I can absolutely understand the outrage of the bonuses. ... There was a better way, however, of getting the money back. ... The motivation for people who go to work on Wall Street is they want to make money. And if they can make a lot of money for shareholders and for investors, they deserve to get a piece of the action. Well, what's outrageous about this one is they tanked a company and they still expected to get paid" (3/22).