Obama's budget would increase financing for education and for civilian research programs by 6 percent and provide cash-strapped states $25 billion, the newspaper reported. The proposal comes as the president seeks to impose a three-year spending freeze on domestic spending not related to national security or entitlement programs. The budget proposes increases for programs at the National Institutes of Health, the National Science Foundation and the Energy Department, according to the newspaper. The fiscal budget looks to cut projects of the Army Corps of Engineers and scrub NASA's plan to return astronauts to the moon.
National security, veterans programs, Medicare, Medicaid, and Social Security would be exempted from the cuts.
Average pay $30,000 over private sector
The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data. Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession's first 18 months — and that's before overtime pay and bonuses are counted. Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector. The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available. When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000. The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules. "There's no way to justify this to the American people. It's ridiculous," says Rep. Jason Chaffetz, R-Utah, a first-term lawmaker who is on the House's federal workforce subcommittee. Jessica Klement, government affairs director for the Federal Managers Association, says the federal workforce is highly paid because the government employs skilled people such as scientists, physicians and lawyers. She says federal employees make 26% less than private workers for comparable jobs. USA TODAY analyzed the Office of Personnel Management's database that tracks salaries of more than 2 million federal workers. Excluded from OPM's data: the White House, Congress, the Postal Service, intelligence agencies and uniformed military personnel. The growth in six-figure salaries has pushed the average federal worker's pay to $71,206, compared with $40,331 in the private sector. Key reasons for the boom in six-figure salaries: •Pay hikes. Then-president Bush recommended — and Congress approved — across-the-board raises of 3% in January 2008 and 3.9% in January 2009. President Obama has recommended 2% pay raises in January 2010, the smallest since 1975. Most federal workers also get longevity pay hikes — called steps — that average 1.5% per year. •New pay system. Congress created a new National Security Personnel System for the Defense Department to reward merit, in addition to the across-the-board increases. The merit raises, which started in January 2008, were larger than expected and rewarded high-ranking employees. In October, Congress voted to end the new pay scale by 2012. •Pay caps eased. Many top civil servants are prohibited from making more than an agency's leader. But if Congress lifts the boss' salary, others get raises, too. When the Federal Aviation Administration chief's salary rose, nearly 1,700 employees' had their salaries lifted above $170,000, too.
The government is losing more than $30 billion on lifelines extended to insurance giant American International Group Inc., according to Treasury data released Wednesday in an audit by the Government Accountability Office. It also is losing more than $30 billion on rescues of struggling automakers Chrysler and General Motors.
Treasury says the losses are offset in part by profits earned from bank bailouts. It says the bank bailouts will net taxpayers $19.5 billion. Over all, the bailouts are projected to cost taxpayers $41.5 billion. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — The Obama administration has extended the $700 billion financial bailout program until October, setting up a struggle between Democrats who favor using some of the leftover money to help generate jobs and Republicans who say it should be used to shrink soaring budget deficits.
The administration insists the bailout fund is still needed to prevent further turmoil in the banking system. In announcing the decision Wednesday, Treasury Secretary Timothy Geithner said extending the program also will help homeowners struggling to avoid losing homes to foreclosures and small businesses having trouble getting loans.
The administration is now projecting the losses to the government from the bailout program will be around $141 billion — $200 billion less than it estimated two months ago.
President Barack Obama said the freed-up money can help reduce the record-high federal budget deficit and "invest in job creation on Main Street rather than Wall Street."
Obama spoke to reporters after a meeting with congressional leaders aimed at providing momentum for a new jobs program he outlined Tuesday. That effort seeks to combat the nation's 10 percent unemployment rate by providing tax breaks to encourage companies to hire new workers, increase bank lending to small businesses and provide a fresh round of infrastructure spending.
The administration has not provided details on the size of the new spending package. But Democratic leaders suggested it could cost between $75 billion and $150 billion.
Democrats initially hoped to pass Obama's proposals this month. But the proposals likely will slip until early January, given opposition from Republicans and the to-do list already facing Congress as it struggles to finish business before Christmas.
Both the administration and Democratic leaders have indicated they want to divert some of the unspent bailout funds to a jobs program. Their goal is to refashion a hugely unpopular program viewed by voters as a taxpayer-funded bailout for big Wall Street firms that then reaped millions of dollars in lavish bonuses.
Republicans vowed to keep trying to close down the rescue program by the end of this month. They said any leftover funds should be devoted exclusively to curbing the country's soaring budget deficits.
"The Obama administration just can't seem to let go of the $700 billion in 'walking around money' taxpayers were forced to put on the line to bailout Wall Street last year," said Rep. Jeb Hensarling, R-Texas.
Republicans also criticized Treasury for using the Troubled Asset Relief Program as a slush fund to support programs that Congress never intended — including bailouts of automakers and failing insurance giant American International Group Inc.
"American taxpayers have had enough of open-ended bailouts that have left them stuck with trillions of dollars in new debt," House Republican Leader John Boehner, R-Ohio, said Wednesday. "TARP should be shut down by the end of the year. It's time to get the government out of the bailout business."
Geithner contended that the bailout program helped avert a worse financial outcome. Financial conditions have improved, and the economy has finally pulled out of a deep tailspin and is starting to grow again.
Repayments from banks who received TARP support will soon total $116 billion, including $45 billion from Bank of America Corp.
The government expects up to $175 billion in repayments from rescued companies by the end of next year, he said.
The TARP was passed during the height of the financial crisis in October 2008 and was scheduled to expire at the end of this year. In his notification to Congress, Geithner said it will be extended until Oct. 3, 2010, "to respond to an immediate and substantial threat to the economy stemming from financial instability."
Geithner said the administration planned only limited use of the TARP over the next year. He expects $550 billion of the $700 billion will be spent. There was $364 billion committed in the 2009 budget year that ended on Sept. 30. Of that, Geithner estimated the government would not recover $42 billion.
The new commitments would be limited to three areas: support to avert mortgage foreclosures, boosting capital for small and community banks that are principal lenders to small businesses, and a potential increase to a joint program with the Federal Reserve designed to bolster consumer and small business lending.
Geithner said of the $141 billion in expected losses, about $25 billion should be incurred in the current budget year. "The vast majority of these potential costs" would come from efforts to prevent mortgage foreclosures.
In a report Wednesday, a TARP watchdog panel said the fund helped ease last fall's financial panic but was less successful in meeting other goals Congress set. These include reducing foreclosures and unfreezing credit for consumers and businesses.
"Congress set goals for the TARP that went well beyond short-term financial stability, and by that measure problems remain," said panel chair Elizabeth Warren.
The report found the program's effects have been uneven. A $75 billion initiative to stem the wave of foreclosures has "failed," and Treasury's actions had granted big banks an "implicit guarantee" that the government would bail them out, Warren said.
The government still is guaranteeing billions of dollars in bank assets, which along with debt guarantees from the Federal Deposit Insurance Corp., amount to ongoing subsidies that may mask the condition of the financial markets, the report said.
Treasury responded that the TARP has "by every measure ... succeeded in achieving its primary goal of economic stabilization."
But the TARP panel, established by Congress to provide independent oversight, noted that bank failures continue and access to credit remains tight. It said the program's progress toward goals necessary for financial stability and economic growth "is less clear."
WASHINGTON, Dec 4 (Reuters) - The U.S. government racked up a gaping shortfall in the first two months of this fiscal year after posting a record budget deficit last year, congressional analysts said on Friday. In October and November, the government spent $292 billion more than it took in, the nonpartisan Congressional Budget Office said. That was even worse than the same period last year, when the government was on its way to posting a record $1.4 trillion deficit for the fiscal year that ended Sept. 30. The federal budget has been battered by the worst economic downturn since the Great Depression of the 1930s, as tax revenues have plunged and spending on safety-net programs like unemployment insurance have skyrocketed. The budget deficit was $176.4 billion in October, according to Treasury Department records, and the CBO estimated the deficit for November will have come in at $115 billion. The CBO gave its figures in billions of dollars and said numbers may not add up to the totals because of rounding. Receipts totaled $132 billion in November, the CBO estimated, down 9 percent from the same month last year. That was partly due to new legislation that gives increased tax write-offs to corporations. Outlays were down $23 billion from a year earlier, the CBO estimated, as the government spent less on federal programs to stem the financial crisis.
WASHINGTON (AP) - The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today's bleak landscape. The administration's annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress. The release of the update—usually scheduled for mid-July—has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town Aug. 7 on its summer recess. The administration is pressing for votes before then on its $1 trillion health care initiative, which lawmakers are arguing over how to finance. The White House budget director, Peter Orszag, said on Sunday that the administration believes the "chances are high" of getting a health care bill by then. But new analyses showing runaway costs are jeopardizing Senate passage. "Instead of a dream, this routine report could be a nightmare," Tony Fratto, a former Treasury Department official and White House spokesman under President George W. Bush, said of the delayed budget update. "There are some things that can't be escaped." The administration earlier this year predicted that unemployment would peak at about 9 percent without a big stimulus package and 8 percent with one. Congress did pass a $787 billion two-year stimulus measure, yet unemployment soared to 9.5 percent in June and appears headed for double digits. Obama's current forecast anticipates 3.2 percent growth next year, then 4 percent or higher growth from 2011 to 2013. Private forecasts are less optimistic, especially for next year. Any downward revision in growth or revenue projections would mean that budget deficits would be far higher than the administration is now suggesting. Setting the stage for bleaker projections, Vice President Joe Biden recently conceded, "We misread how bad the economy was" in January. Obama modified that by suggesting the White House had "incomplete" information. The new budget update comes as the public and members of Congress are becoming increasingly anxious over Obama's economic policies. A Washington Post-ABC News survey released Monday shows approval of Obama's handling of health-care reform slipping below 50 percent for the first time. The poll also found support eroding on how Obama is dealing with other issues that are important to Americans right now—the economy, unemployment and the swelling budget deficit. The Democratic-controlled Congress is reeling from last week's testimony by the head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, that the main health care proposals Congress is considering would not reduce costs—as Obama has insisted—but "significantly expand" the federal financial responsibility for health care. That gave ammunition to Republican critics of the bill. Citing the CBO testimony, House Minority Leader John Boehner, R-Ohio, on Monday accused Democrats of "burying this budget update until after Congress leaves town next month." He called the budget-update postponment "an attempt to hide a record-breaking deficit as Democratic leaders break arms to rush through a government takeover of health care." White House budget office spokesman Tom Gavin disagreed, noting the delay was "really not something out of the norm" and is typical for a president's first year. Gavin noted that President George W. Bush's budget office did not release the mid-session review in his first year until August 22; in President Bill Clinton's first year, it did not come out until Sept. 1. Obama also didn't release his full budget until early May—instead of the first week in February, when he put out just an outline. Late last week, Obama vowed anew that "health insurance reform cannot add to our deficit over the next decade and I mean it." The nation's debt—the total of accumulated annual budget deficits—now stands at $11.6 trillion. In the scheme of things, that's more important than talking about the "deficit," which only looks at a one-year slice of bookkeeping and totally ignores previous indebtedness that is still outstanding. Even so, the administration has projected that the annual deficit for the current budget year will hit $1.84 trillion, four times the size of last year's deficit of $455 billion. Private forecasters suggest that shortfall may actually top $2 trillion. Budget updates in previous administrations have given rise to charges that the White House was manipulating its figures to offer too rosy an outlook. Critics will be watching closely when the White House's Office of Management and Budget releases the new numbers. Still, the update mainly involves plugging in changes in economic indicators, not revising program-by-program details. And indicators such as unemployment and gross domestic product changes have been public knowledge for some time. Standard & Poor's chief economist David Wyss said part of the problem with the administration's earlier numbers is that "they were just stale," essentially put together by budget number-crunchers at the end of last year, before the sharp drop in the economy. Wyss, like many other economists, says he expects the recession to last at least until September or October. "We're looking for basically a zero second half (of 2009). And then sluggish recovery," he said. Even as it prepares to put larger deficit and smaller growth figures into its official forecast, the administration is looking for signs of improvement. "If we were at the brink of catastrophe at the beginning of the year, we have walked some substantial distance back from the abyss," said Lawrence Summers, Obama's chief economic adviser.
White House Delaying Release of Budget Update--Covering Up the Truth
I am so glad that the American people elected a President that promised transparency in the government and is now hiding the fact that his policies have failed American and pushed us further off the cliff. His lack of transparency has become a staple of his Presidency. He keeps information, and blocks attempts of transparency in places like the Federal Reserve.
WASHINGTON (AP) - The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today's bleak landscape.
The administration's annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.
The release of the update - usually scheduled for mid-July - has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess.
WASHINGTON (CNN) -- Congress approved a $3.4 trillion budget for the coming year Wednesday, approving most of President Obama's key spending priorities including increasing in health care, education and alternative energy spending. The spending plan passed without a single Republican vote in either the House or Senate. The Senate voted for the plan 53-43. Four Democrats, including recent party-switcher Sen. Arlen Specter of Pennsylvania, voted against it. Earlier, the House approved the budget 233-193, with 17 Democrats voting against it. The measure passed two days after congressional Democrats reached an agreement reconciling House and Senate versions of the budget package. "Today, for the first time in many, many years, we have a president's budget ... that is a statement of our national values," House Speaker Nancy Pelosi, D-California, said during the final debate on the House floor.
"What is important to us as a nation is reflected in this budget. It's a very happy day for our country." Republicans said the budget reflected reckless taxing and spendi ng priorities that would leave the country in a more fiscally precarious position. "Budgets are supposed to be about tough decisions, and there are no tough decisions in this budget," said House Minority Leader John Boehner of Ohio. "It spends an awful lot of money, it raises a lot of taxes, and it puts all of this debt on the backs of our kids and grandkids. This is not the American way. The American way has been about a more limited government." In one of the most contentious and politically polarizing decisions this year, Democratic budget negotiators decided to fast-track a key part of the budget process.
Major health care reform is likely to pass this year because the special process, known as budget reconciliation, won't allow Republicans to filibuster the legislation, as was widely expected. Democrats, who control 59 seats in the Senate, will be able to pass it with a simple majority vote instead of the 60 needed to overcome a filibuster. Senate Budget Committee Chairman Kent Conrad, D-North Dakota, said he didn't believe that the Senate would need to use reconciliation but noted that it is "there as an insurance policy." Sen. Mike Enzi, R-Wyoming, speaking for most of his GOP Senate colleagues, warned in the budget debate that if a health care "reconciliation winds up in the budget bill, it'll be like a declaration of war."
Under the Democratic plan, the federal government will run an anticipated deficit of $1.2 trillion in the next fiscal year. Their plan promises to cut the deficit by more than half by 2012.
"It is clear that more will be needed to address the long-term fiscal imbalance confronting the nation beyond the five-year budget window," Conrad said. Under the compromise plan, increases in non-defense discretionary spending are limited to 2.9 percent through 2014. Obama's signature tax cuts from the stimulus plan -- $400 for individuals and $800 for couples -- are slated to expire after 2010. The measure also allows former President George W. Bush's tax cuts for couples who make more than $250,000 to expire in 2010.
The budget compromise largely tracks the Obama administration's initial $3.67 billion proposed spending plan, with the notable exception to drop his $250 billion request for potential bailouts of struggling financial institutions. Fiscally conservative House Democrats, known as Blue Dogs, also negotiated with Democratic leaders to cut $10 billion from the president's $540 billion request for non-defense discretionary spending. In an additional nod to her caucus's conservatives, Pelosi and House Majority Whip Steny Hoyer sent a letter to Senate leaders "throwing down the gauntlet" to insist that a pay-as-you-go system be followed, which would require new federal spending to be offset with budget cuts or tax increases, a Democratic aide said.
Obama called for the "PAYGO" legislation in his weekend radio address. The president also gathered his Cabinet members last week and challenged them to cut a total of $100 million in the next 90 days. In the context of the federal budget, $100 million in savings is a tiny amount, critics say. It is the equivalent, according to one example, of having a car dealer offer to shave $1 from the cost of a $36,700 vehicle. "Any amount of savings is obviously welcome," Senate Minority Leader Mitch McConnell, R-Kentucky, said at the time. "But [$100 million is] about the average amount we'll spend every single day just covering the interest on the stimulus package that we passed earlier this year." White House press secretary Robert Gibbs said ordinary Americans would nevertheless appreciate the savings effort. "Only in Washington, D.C., is $100 million not a lot of money. It is where I'm from. It is where I grew up. And I think it is for hundreds of millions of Americans."
