Domestic Policy

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  Recession Will Leave States $300 Billion Short, Congress ToldJanuary 26, 2009 21:37 The slumping economy will leave state and local governments facing shortfalls totaling more than $300 billion by the end of 2010, far worse than a previous estimate, congressional auditors reported Monday.

In November, the Government Accountability Office projected states, cities and counties would face operating deficits of between $100 billion and $200 billion for 2009 and 2010. But worsening economic projections mean they are now likely to see a deficit of $312 billion, the agency told Senate Finance Committee leaders.

"The current results represent a significant deterioration from our November 2008 update," the GAO, the investigative arm of Congress, reported.

The GAO recommended targeting aid to states based on the severity of the recession in each state, and moving it quickly "so that it is delivered as soon as it is needed." It also recommended setting up "triggering mechanisms," so that federal assistance starts and ends according to specific economic indicators.

The figures come as lawmakers are beginning to wrestle with President Barack Obama's proposed $825 billion economic stimulus package, which includes federal aid to states in an effort to head off cuts in public services.

But leading Republicans already have questioned whether the stimulus package will live up to the predictions of Obama's advisers, who say it could create between 3 million and 4 million jobs by 2010. Among the provisions under fire is one that would steer about $200 million toward state programs that provide family planning services for Medicaid recipients.
  Ore. Challenges Endangered Species, Abortion RulesJanuary 18, 2009 09:20 Oregon is joining other states in lawsuits challenging last-minute rule changes by the Bush administration on issues dealing with endangered species and abortion.

Oregon Gov. Ted Kulongoski and Attorney General John Kroger (nyse: KR - news - people ) said Thursday one of what they called the "midnight rules" adopted last month would gut the Endangered Species Act by discounting the advice of federal scientists in adopting species protections.

They said the other rule change would limit women's choices by reinforcing protections for doctors and other health care workers who refuse to participate in abortions or provide contraceptives or other procedures because of religious or moral objections.

"These regulations were designed to put in place controversial policies which the administration could not get passed through the Congress," Kroger said at a joint news conference with Kulongoski.

Oregon is one of eight states joining in a federal lawsuit challenging the endangered species rule change, and one of seven states going to court to try to overturn the other ruling dealing with abortion and contraceptives, Kroger's office said Thursday.
  Holder Denounces Waterboarding, Other Forms Of ‘Torture’January 15, 2009 15:16 Attorney General-designate Eric Holder pledged to fight terrorism and reinvigorate the Justice Department’s “traditional missions” – to protect public safety and safeguard civil rights – at his Senate confirmation hearing Thursday.

Responding to senators’ questions on issues ranging from terrorism to Clinton-era pardons, Mr. Holder said nothing is more important than protecting the American people from terrorism.

“I will use every available tactic to defeat our adversaries, and I will do so within the letter and spirit of the Constitution,” he told the Senate Judiciary Committee.

“Waterboarding is torture,” he said, in response to the No. 1 question at his hearing, first posed by chairman Patrick Leahy of Vermont, but amplified by other senators. Asked whether “painful stress positions, threatening with dogs, forced nudity, and mock executions” also constituted torture, he first said he was “not as familiar with those techniques,” then added: “I believe they do.”

At the same time, Holder laid out sharp distinctions in approach with the Bush administration’s Justice Department, which has been battered by allegations of political interference and partisanship.

“An assessment has to be done and that assessment has already begun,” said Holder.

He credited outgoing US Attorney General Michael Mulcasey and Deputy Attorney General Mark Filip with doing much to “stabilize the department and restore morale.” Mr. Mulcasey took over the department from Alberto Gonzales, who resigned in August 2007 amid allegations of perjury to Congress. “All they lacked was time” to complete the task, Holder told the Justice panel.

At issue is restoring a basic principle, he said: that the Department of Justice represents “not any one president, not any political party, but the people.”

 
  Treasury Must Divulge Details On Bailout, Panel SaysJanuary 09, 2009 04:35 The congressional panel overseeing the administration's financial rescue program plans to release a report today repeating questions it first posed to the Treasury Department in mid-December and harshly criticizing it for failing to provide satisfactory answers.

The report says the department has not articulated a plan for restoring lending to consumers. It asks again why the Treasury has refused to spend any money on foreclosure prevention programs. And it says the department is sowing confusion in the financial markets, undermining the stated purpose of the rescue program, by failing to require companies to report how they are spending federal investments of taxpayer dollars.

"So long as investors and consumers are uncertain about how taxpayer funds are being used, they question both the health and the sound management of all financial institutions," wrote the five-member panel, which is headed by Elizabeth Warren, a law professor at Harvard University.

The roughly 50-page report calls on the Treasury to establish measuring sticks that can be used by the public to assess the program's success. It says banks that get federal money should be required to detail how it is spent.

 
  Obama Readies Push For Recovery PlanJanuary 05, 2009 13:14 President-elect Barack Obama launched his campaign Monday for a massive package of tax cuts and spending proposals aimed at reviving an economy mired in recession.

Obama met with lawmakers from both parties including House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., as well as Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader John Boehner, R-Ohio.

Obama is also planning to deliver a major speech on the economy on Thursday, a senior Democratic official told CNN.

The president-elect will propose roughly $300 billion in tax cuts for individuals and businesses. He has not publicly put a price tag on his overall stimulus plan, though his advisers have said they expect it to fall between $675 billion and $775 billion, 40% of which would be in tax cuts.

According to an Obama spokesman, several tax breaks are under serious consideration.

Middle-class tax cut: Obama would offer a tax cut equal to $500 a year for individuals and $1,000 for couples. The credit would work essentially as a payroll tax credit, meaning the money could be delivered fairly quickly. Companies could simply reduce the tax they withhold from employees' paychecks.

The tax credit is likely to be offered only to those below a certain income level, but the Obama team hasn't specified where the cut-off point would be. The credit also would be refundable, meaning that even tax filers without any tax liability -- typically very low-income workers -- would receive one.

The credit is similar to one Baa proposed during the campaign.

"What's required for the economy right now [is] to put more money into the pockets of ordinary Americans who are more insecure about their jobs, who are continuing to see rising costs in an area like health care, who are struggling to make ends meet," he said Monday.

Business break for losses: Obama is considering a tax break for businesses that book losses in 2008 and 2009.

The stimulus plan may extend what's called the net-operating loss carryback to five years, up from two years currently. The provision lets companies apply their losses to past and future tax bills so that they can get money back on taxes they've already paid or would otherwise have to pay.

Job creation: Obama would establish a new credit for businesses that either create jobs in the United States or avoid layoffs.

Small business write-off: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010, up from $125,000 currently.

While political observers believe the now-added emphasis on business tax cuts as a major part of a stimulus package is one way the Obama team hopes to attract Republican support, that's not how the Obama camp sees it.