Research Briefing

As Obama Prepares For His First State Of The Union Address, The Question On Americans’ Minds Is “Why?”

WHY SHOULD AMERICANS THINK STIMULUS II WILL SUCCEED AFTER STIMULUS I FAILED?

Obama Pushing Congress To Pass Stimulus II, Costing Anywhere Between $80 Billion And $174 Billion, That Looks Exactly Like Stimulus I. "Senate Democrats are considering a jobs bill in the range of $80 billion ... a draft summary of proposals under discussion includes small business credits, tens of billions of dollars in infrastructure spending, energy efficiency programs, money to hire police and firefighters and billions to boost lending to small businesses ... Senate Democrats have pledged to take up jobs legislation early this year, after the House passed a $174 billion bill late last year." (Silla Brush, "Senate Democrats Consider $80B Jobs Bill," The Hill, 1/25/10)

Obama Said Last February That $862 Billion Stimulus I Would “Jolt Our Economy Back To Life.” “Obama defended the role of government in the recovery process, saying that ‘with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life.’” (Anne E. Komblut & Michael Fletcher, "Obama Says Economic Crisis Comes First," The Washington Post, 2/10/09)

But Unemployment Currently In Double Digits Despite White House Predictions That It Would Not Rise Above 8 Percent With Stimulus. (U.S. Bureau Of Labor Statistics, www.bls.gov, Accessed 1/26/09; Christina Romer and Jared Bernstein, "The Job Impact Of The American Recovery And Reinvestment Plan," 1/9/09)

WHY IS OBAMA CALLING THE CONTINUATION OF HIS BINGE SPENDING A “SPENDING FREEZE”?

“Obama Plans To Announce A Three-Year Freeze On Discretionary, ‘Non-Security’ Spending In The Lead-Up To Wednesday's State Of The Union Address...” (Glenn Thrush & David Rogers, “Obama To Propose Spending Freeze,” Politico, 1/25/10)

But He Already Raised Non-Defense Discretionary Spending By 19.5 Percent For FY 2010, The Largest One-Year Increase In 34 Years. (Office Of Management And Budget, “Table 8.7--Outlays For Discretionary Programs: 1962-2014,” Accessed 12/11/09)

Maybe That’s Why Candidate Obama Said Spending Freezes Sound Good But Don’t Work. “[W]e do have a disagreement about an across-the-board spending freeze. It sounds good. It's proposed periodically. It doesn't happen.” (Sen. Barack Obama, 2008 Presidential Debate, Hempstead, NY, 10/15/08)

WHY DID OBAMA DITCH HIS POST-PARTISAN POSTURING FOR CHICAGO-STYLE POLITICS?

Candidate Obama Pledged To Get Rid Of “Broken Politics” That “Says It’s Ok To Demonize Your Political Opponents.” “But I also believe the failures of the last seven years stem not just from any single policy, but from a broken politics in Washington. A politics that says it’s ok to demonize your political opponents when we should be coming together to solve problems.” (Sen. Barack Obama, Response To The State Of The Union, 1/28/08)

But Obama’s White House Constantly In “Campaign Mode” “Running A Taxpayer-Funded Rapid-Response Operation.” “Gibbs acts as though he’s playing himself in the movie version of his job. In this imaginary film, he is the smart-alecky press secretary, offering zippy comebacks and cracking jokes to make his questioners look ridiculous. … This is the most visible manifestation of a larger problem the Obama White House has. Many Obama loyalists from the 2008 race still seem … to be having trouble exiting campaign mode. They sometimes appear to be running a taxpayer-funded rapid-response operation.” (Dana Milbank, Op-Ed, “White House’s Gibbs Has Mastered Art Of Speaking With His Hand,” The Washington Post, 01/20/10)

Obama Taking Increasingly “Confrontational Political Tone” In “Departure From His Olive Branches.” “Obama's trip to Massachusetts on Sunday comes as he and his administration have adopted a more confrontational political tone. In a departure from his olive branches to the GOP a year ago, Obama on Thursday welcomed a fight with Republicans on healthcare. ‘Let me tell you something, if Republicans want to campaign against something by standing up for the status quo and for insurance companies over families and businesses, that is a fight I want to have,’ Obama said Thursday.” (Ian Swanson, “President Obama Revives Fiery Rhetoric For Campaign Season,” The Hill, 1/16/10)

WHY DID OBAMA USE ECONOMIC CRISIS TO RUSH THROUGH HIS JOB-KILLING AGENDA?

But "Barack Obama's Big Bang ... Theory Was Simple ... Use A Season Of Economic Anxiety To Enact Sweeping Changes The Public Likely Wouldn't Stomach In Ordinary Times." (Mike Allen And Jim VandeHei, "Obama's Big Bang Could Go Bust," Politico, 8/21/09)

• Obama's Chief-Of-Staff Rahm Emanuel: "Rule One: Never Allow A Crisis To Go To Waste." (Jeff Zeleny, "Obama Weighs Quick Undoing Of Bush Policy, The New York Times, 11/8/08)

So Obama Pushed Government-Run Health Care Experiment That Includes New Regulations Making It More Difficult For Employers To Hire Workers They Need. “[E]mployers who do not offer 'affordable' coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal 'could unintentionally discourage the hiring of lower-income people,' by adding a new 'health surcharge' to the cost of employing them.” (Jeff Zeleny and Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

Obama Supported “Cap-And-Trade” National Energy Tax Could Mean Nearly 1 Million Jobs Lost Per Year. “Overall, a cap-and-trade system that reduces annual GDP by 0.34 percent per year can be expected to reduce U.S. employment by roughly 964,900 jobs per year, reduce household earnings by $37.8 billion, and reduce total U.S. economic output by $136.1 billion.” (Andrew Chamberlain, “Who Pays For Climate Policy?,” Tax Foundation, 3/09)

And Obama’s Proposed Consumer Financial Protection Agency That Would Reduce “The Number Of Net New Jobs Created In The Economy By 4.3 Percent.” “Under plausible yet conservative assumptions the CFPA would… increase the interest rates consumers pay by at least 160 basis points… reduce consumer borrowing by at least 2.1 percent… reduce the net new jobs created in the economy by 4.3 percent.” (David S. Evans and Joshua D. Wright, “The Effect Of The Consumer Financial Protection Agency Act Of 2009 On Consumer Credit,” 10/7/09)

WHY DOES OBAMA WANT TO TAX FIRMS THAT PAID BACK OR NEVER RECEIVED TARP FUNDS, BUT IGNORE FIRMS WHO STILL OWE BILLIONS?

Obama Claims His Bank Tax Is To Recoup TARP Funds. “Mr. Obama also took more jabs at Wall Street, despite continued signs of investor jitters Friday stemming from his proposal to impose levies on big banks. His voice rising, Mr. Obama defended the plan he announced Thursday as a way ‘to repay taxpayers in full for saving [banks’] skins in a time of need …’” (Elizabeth Williamson, “Obama Sharpens His Populist Tone,” The Wall Street Journal, 1/23/10)

But Tax Will Be Passed Onto Consumers Through Lower Interest Payments On Savings Accounts. SUZE ORMAN: “Every time we get involved and we impose fees on the banks and we do certain things, what do you think the banks do? ... They pass those fees ... down to the bottom line so that every single consumer ends up paying for those fees ... Where do they renew those CDs today in order to get income to live? Not at a bank giving that's giving them 1%. And why so little? They're paying zero for that money ...” (MSNBC's “Morning Joe,” 1/12/10)

Nation’s Largest Banks Have Already Repaid TARP. “With the actions by Wells Fargo and Citi, the nation’s four largest banks have returned their aid packages, as have several large regional banks. …J. P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, Capital One Financial Corp., and BB&T Corp. were among the first to repay earlier this year.” (Matthias Rieker, “UPDATE: Wells Fargo and Citi Complete TARP Repayments,” The Wall Street Journal, 12/23/09)

• And Insurance Companies That Did Not Receive TARP Funds Will Be Hit By Savings Tax. "A handful of large insurance companies, most of which turned down government bailout funds, would likely owe money under the proposed Financial Crisis Responsibility tax." (Lavonne Kuykendall, "Insurers Would Owe Under Proposed U.S. Financial Tax," The Wall Street Journal, 1/19/10)

But Fannie Mae And Freddie Mac Still Owe Roughly $110 Billion In TARP Money. “Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.” Wells Fargo, Goldman Sachs and other beneficiaries of the bailout such as Bank of America Corp. and JPMorgan Chase & Co. repaid the money they got from the government. Fannie Mae and Freddie Mac owe about $110 billion, according to Bloomberg data.” (Andrew Frye, Betty Liu and Jamie McGee, “Buffett Says He Can’t See Rationale for Bank Levy” Bloomberg 1/25/10)

• And Automakers Still Owe Taxpayers Over $30 Billion In TARP Cash After Obama Bailed Them Out. “The December report for the Troubled Asset Relief Program, or TARP, showed that the fiscal 2009 net loss included estimated losses of $30.4 billion for AIG and $30.4 billion for automakers, with $27.1 billion in losses from the Home Affordable Modification Program.” (David Lawder, “AIG, Autos Offset Treasury Bank Bailout Profits,” Reuters, 1/11/10)

• But They Won’t Be Subject To The American Savings Tax.  “It’s unclear precisely who would be subject to the fee. A person familiar with the matter said it’s unlikely for now to target auto companies or American International Group Inc., all of which are still struggling. Homeowners who benefited from government-funded housing help also wouldn’t pay the fee.” (Deborah Solomon and Damian Paletta, “Banks Brace For Bailout Fee,” The Wall Street Journal, 1/13/10)

WHY DOES OBAMA TREAT TERRORISTS AS COMMON CRIMINALS INSTEAD OF ENEMIES AT WAR?

Obama Administration’s Poor Reaction To Christmas Day Bomber “Turns Out To Have Resulted Not From A Deliberative Process But As A Knee-Jerk Default To A Crime-And-Punishment Model.”  “[T]he decision to try Mr. Abdulmutallab turns out to have resulted not from a deliberative process but as a knee-jerk default to a crime-and-punishment model… According to sources with knowledge of the discussions, no one questioned the approach or raised the possibility of taking more time to question the suspect. This makes the administration’s approach even more worrisome than it would have been had intelligence personnel been cut out of the process altogether.” (Editorial, “Did The Obama Administration Blow An Opportunity In The Flight 253 Case?” The Washington Post, 1/23/10)

• Obama’s Response To Attempted Christmas Day Terror Attack Was “Myopic, Irresponsible And Potentially Dangerous.”  “[The Obama administration had three options: It could charge him in federal court. It could detain him as an enemy belligerent. Or it could hold him for prolonged questioning and later indict him, ensuring that nothing Mr. Abdulmutallab said during questioning was used against him in court… It is now clear that the administration did not give serious thought to anything but Door No. 1. This was myopic, irresponsible and potentially dangerous.” (Editorial, “Did The Obama Administration Blow An Opportunity In The Flight 253 Case?” The Washington Post, 1/23/10)

Director of National Intelligence Admits Administration Failed To Treat Christmas Day Bomber As High Value Terror Suspect. “Dennis Blair, the Director of National Intelligence, told the Senate Homeland Security and Governmental Affairs Committee that he was not asked whether the suspect should have been treated as a high-value terror suspect upon landing in Detroit and handled first by the High-Value Detainee Interrogation Group, (HIG) which the Obama administration created last year. ‘That unit was created exactly for this purpose, to make a decision on whether...a certain person who’s detained should be treated as...a case for federal prosecution.’ Blair said.” (Jason Ryan and Zach Wolf, “Feds Mislabeled Christmas Bombing Suspect,” ABC News, 1/20/10)

AND AFTER PROMISING THE CHANGE THE CULTURE IN WASHINGTON, WHY DID OBAMA MAKE IT WORSE?

Obama Pledged To "Change The Culture In Washington So That Lobbyists And Special Interests Aren't Driving The Process." (Sen. Barack Obama, Second Presidential Debate, Nashville, TN, 10/7/08)

• But Obama Cut Deal With Unions, Granting Them Exemption From Health Care To "Blunt Their Protests Against" His Government-Run Health Care Bill. "The White House on Thursday cut a deal with its closest labor allies to blunt the impact of a new tax on high-cost insurance policies -- and blunt their protests against the health reform plan. Democrats couldn't eliminate the tax on union members' high-cost insurance policies altogether but did put off the effective date until 2018, but only for labor agreements and state and local government workers." (Carrie Budoff Brown, "White House Scores Key Labor Deal," Politico, 1/14/10)

• And Lobbying Industry On Track To "Shatter Last Year's Record $3.3 Billion Spent To Lobby Congress And The Rest Of The Federal Government." "Washington's influence industry is on track to shatter last year's record $3.3 billion spent to lobby Congress and the rest of the federal government -- and that's with a down economy and about 1,500 fewer registered lobbyists in town, according to data collected by the Center for Responsive Politics." (Victoria McGrane, "Lobbyists On Pace For Record Year," Politico, 12/22/09)

Obama Pledged All Health Care Negotiations Would Be Televised On C-SPAN. "I'm going to have all the negotiations around a big table. We'll have doctors and nurses and hospital administrators. Insurance companies, drug companies -- they'll get a seat at the table ... But what we will do is, we'll have the negotiations televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies." (Sen. Barack Obama, Remarks During Town Hall Meeting, Chester, VA, 8/21/08)

• But Instead Resorted To Secret Meetings When Pushing His Agenda. "Instead, the administration's multibillion-dollar deals with hospitals and pharmaceutical companies have been made in private, and the results were announced after the fact. Both industries promised Obama cost savings in return for an expanded base of insured patients; beyond that, the public is in the dark about details." (Sharon Theimer, "Promises, Promises: Do Obama Deals Break Pledge?" The Associated Press, 7/21/09)

Obama Pledged To “Seek Common Ground” With Republicans, Saying “My Door Is Always Open.” (President Barack Obama, Remarks To A Joint Session Of Congress On Health Care, Washington, DC, 9/9/09)

• But GOP Congressmen Were Rebuffed When They Told Obama They Want To Work With Him To Achieve Reform. "Boehner told reporters that the president has not invited House GOP leaders to the White House for meetings on healthcare reform since the end of April. Earlier this year, GOP leaders sent a letter to the president in May stating that they would li ke to work with the administration to find 'common ground' on healthcare reform. But the administration responded with a tersely worded letter indicating that they had healthcare reform under control." (Molly Hooper, "Boehner: GOP Leaders Haven't Met Obama For Health Talks Since April," The Hill's "Briefing Room" Blog, 9/9/09)

• Rep. Jim Cooper (D-TN) Confirmed House Dems Were Told Not To Work With GOP. "Tom Daschle, Bob Dole and Howard Baker did what Congress is failing to do... And the White House released a statement praising this bipartisan leadership. In the House of Representatives, meanwhile, we are explicitly told not to work with Republicans." (Rep. Jim Cooper, "Reconciliation Rules - Not Bipartisanship - Will Kill Health Care Reform," The Huffington Post, 6/18/09)