Obama pursues charm campaign at Americas summit

U.S.-Cuba Relationship Talk of Summit

PORT OF SPAIN (Reuters) – President Barack Obama on Sunday pursued his diplomatic charm campaign in the Americas in the closing hours of a regional summit that has helped restore the United States' battered image in the hemisphere.

Obama met on Sunday with leaders from Central America, a corner of the continent that has experienced U.S. military interventions and where at least one country voted to return a former left-wing guerrilla to the presidency.

The U.S. leader's contacts during the Fifth Summit of the Americas in Trinidad and Tobago have mended broken diplomatic fences in a region where America-bashing has long been accepted.

"I'm very pleased to have this opportunity to meet with the leaders of Central America. Obviously we have a long history of relations between the United States and Central America," Obama told reporters at Sunday's meeting.

Nicaraguan President Daniel Ortega, a former leftist guerrilla leader and fierce critic of U.S. policies, sat next to Obama.

Honduran President Manuel Zelaya praised Obama's "listen and learn" approach at the summit. "The treatment that we're receiving is totally different in terms of more openness, more dialogue and more respect," he told reporters.

Guatemalan President Alvaro Colom said the Central American leaders held "cordial and frank" talks for about an hour with Obama on migration issues, deportations and drug trafficking.

Although Obama has had to field a chorus of calls to lift the U.S. trade embargo on communist-ruled Cuba, his cooperative diplomatic style appears to have gone down well with his Latin American and Caribbean peers.

He even appeared to have won over die-hard critics of U.S. policy, like Venezuelan President Hugo Chavez, who often pilloried Obama's predecessor, George W. Bush, as the diabolic epitome of "imperialism."

Chavez, a prolific Bush-basher, felt sufficiently reassured by Obama to propose naming a new ambassador to Washington. He expelled the U.S. ambassador in September and Washington responded by kicking out Venezuela's envoy.

A formal closing ceremony later on Sunday was due to set the seal on the two-day summit that introduced Obama to the region. The U.S. president and more than 30 other regional leaders brainstormed on the global economic crisis and energy and security challenges.

OBJECTIONS TO SUMMIT DOCUMENT

It was not clear whether there would be a formal signing ceremony of the lengthy draft summit declaration, because a group of mostly leftist presidents led by Chavez had previously rejected it as deficient.

The group, including Bolivia, Nicaragua and Honduras, said the document failed to address Cuba's exclusion from the summit and did not provide solutions to the global economic crisis that threatens to send millions in the region back to poverty.

"We don't know if everybody is going to sign, but we hope so ... We need consensus and we hope there will be no damper," Dennis McComie, a spokesman for the Trinidadian summit hosts told Reuters. He said Trinidad Prime Minister Patrick Manning was trying to persuade the recalcitrant group to sign.

Despite this, Latin American and Caribbean leaders were hailing the summit as a success.

In contrast to the previous 2005 summit in Argentina that ended in discord, the Port of Spain meeting was humming with good feelings projected by the young new U.S. president, who promised a cooperative partnership of equals with his peers.

"The presence of President Obama has certainly made a powerful contribution to the positive climate and success of the summit," Organization of American States Secretary General Jose Miguel Insulza told reporters.

Insulza did not believe the summit was distracted by a debate over U.S.-Cuban ties that dominated its buildup.

Hopes for a rapprochement between Washington and Havana have risen after both Obama and Cuban President Raul Castro signaled they were ready to talk to try to end the long-standing ideological conflict between their countries.

Obama told the opening session of the summit on Friday he wanted a "new beginning" with Cuba and had made a gesture by easing some aspects of the U.S. embargo earlier in the week.

The U.S. leader also made clear he wanted Cuba to reciprocate by opening up political freedoms for its citizens.

In the past, Havana has rejected placing such conditions on an improvement in ties as meddling in its sovereignty.

Obama tempers optimism with reality on economy

WASHINGTON – Aiming to assert control over the nation's economic debate, President Barack Obama on Tuesday warned Americans eager for good news that "by no means are we out of the woods" and argued his broad domestic agenda is the path to recovery.

In a speech at Georgetown University, Obama aimed to juggle his recent glass-half-full takes on the economy with a determination to not be stamped as naive in the face lingering problems. He summarized actions his administration has taken to steady the limping economy and coupled that with a fresh overview of his domestic goals.

The speech, which key aides had signaled in advance would not contain any major announcements, came as Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations.

"There is no doubt that times are still tough," Obama said. "But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past."

Obama's message came on a day of conflicting economic indicators and Federal Reserve Chairman Ben Bernanke's suggestion that the recession may at last be bottoming out.
It would have been difficult to make that case based on a report the government released earlier Tuesday showing that retail sales plummeted by 1.1 percent in March, a performance much poorer than experts had anticipated. At the same time, wholesale prices dropped sharply, a strong indication that inflation appears to pose little threat to the economy.

In a speech at Morehouse College in Atlanta, Bernanke talked of flickering signs of improvement, citing recent data on home and auto sales, home building and consumer spending.
But the government's broader message — that a full turnaround might be a long time coming — may not be welcome news for a weary U.S. public.

Obama, in fact, said in his speech that a complete recovery depends on building a new foundation for the U.S. economy and making changes in the political landscape. And he said anew that rules governing the financial system must be made compatible with Digital Age technology and innovation, telling Congress that "I expect a bill to arrive on my desk for signature before the year is out."

He also said the economy must be transformed from one less dependent on a risk-obsessed financial sector and more on clean energy, good education and health care costs brought under control.

"We cannot rebuild this economy on the same pile of sand," he said, invoking a Biblical reference to Jesus' Sermon on the Mount. "We must build our house upon a rock. We must lay a new foundation for growth and prosperity a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad."

Obama also said the problem is exacerbated by politicians with an outsized interest in scoring points and an impatient media.

"When a crisis hits," he said, "there is all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died down and the media coverage has moved on to something else, instead of confronting the major challenges that will shape our future in a sustained and focused way."
"This can't be one of those times," Obama said.

Obama put his fledgling presidency on the line when he advocated sweeping new government intervention and spending to right the troubled economic conditions. Shortly after taking office he signed a $787 billion package intended to boost the economy and his administration also has unveiled a slew of other programs aimed to right the troubled home, banking and auto sectors.
"Taken together, these actions are starting to generate signs of economic progress," he said, citing canceled government-sector layoffs, new clean-energy industry hires, a spate of refinancings, and signs of increased credit flows.

But, the president said, "2009 will continue to be a difficult year." He predicted more job losses, foreclosures, and gyrating stock markets.
The president devoted a significant portion of his speech to defending actions he has taken in the face of criticism he has heard mainly from Republicans — but also from some of the more conservative members of own Democratic Party — that he has "been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future."
Not so, Obama said.

"The last thing a government should do in the middle of a recession is to cut back on spending," the president said.

As for the long-term, increasingly dire federal budget deficit picture, he said that investments in new industries and economic foundations is crucial to future success and even to reducing the deficit. "Chronically slow growth will not help our long-term budget situation," he said.

The president also defended the massive and unpopular government programs enacted under the Bush administration and expanded under Obama to bail out banks and other financial institutions. He acknowledged that sending money directly to taxpayers might be more palatable — but said it wouldn't be as effective.

"The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth," Obama said.

Obama to forecast $1.75tn deficit in budget proposal

WASHINGTON: President Barack Obama will forecast a 2009 deficit of $1.75 trillion in a budget proposal on Thursday that sets goals of overhauling the healthcare system and shoring up the US economy.

The huge deficit would represent 12.3 per cent of US gross domestic product — the largest share since World War II.

Two senior administration officials, speaking on condition of anonymity ahead of the release of the 2010 budget at 11 a.m. EST, said Obama's expensive policy goals would be offset by cuts to put the country in better fiscal shape.

Federal spending is skyrocketing as officials try to jolt the faltering economy with public-works spending and tax cuts and bail out the troubled financial industry.

Obama, a Democrat, has pledged to halve the more-than $1 trillion deficit he inherited from former Republican President George W. Bush in four years. The budget lays out spending cuts in agriculture subsidies and other areas to meet that goal.

But spending would increase to meet key objectives. The budget sets aside $250 billion as a "placeholder" if Obama decides to ask Congress for more money to help the troubled US financial system. No such decision has been made yet, officials said.

It also includes a 10-year, $634-billion reserve fund to help pay for the president's proposed healthcare reforms.

Another official said the budget included hundreds of billions of dollars in revenues, starting in 2012 and going over many years, from a greenhouse gas emissions trading system, one of Obama's key proposals to fight global warming.

Officials planned a high profile roll-out of the 134-page budget outline on Thursday. A more detailed version will come out in mid or late April.

The budget, for the fiscal year that begins on October 1, 2009, requires passage by Congress to take effect.

Obama's $1.75 trillion budget deficit forecast for this year reflects shortfalls accumulated under Bush as well as new spending proposals under the $787 economic stimulus package that the Democratic president recently signed.

His stimulus package and other efforts to revitalize the economy have done little to cheer Wall Street. US stocks prices hit 12-year lows this week.

The United States has experienced 14 months of recession triggered by a financial crisis that has spread across the world. Obama says a big increase in government spending is crucial to avoid economic catastrophe.

A big challenge for Obama will be selling the budget to lawmakers, some of whom may resist cuts to such programs as farm subsidies that are popular in Congress.

"There's no doubt that there are going to be things that we do that are going to create some political heartburn," one official said.

"But our fundamental mission is restore the health of the economy, put the budget on a better (footing) moving forward."

The budget reflects the delicate balance Obama must strike between making sure there is enough money to fix the economy while avoiding excessive pressure on long-term finances.

Some experts fear that if the record pace of government borrowing to finance debt continues, it could affect financial markets by raising interest rates for borrowers, which would slow economic growth.

Obama will aim to bring the deficit down by 2013 to $533 billion, or 3 percent of GDP.

Tax increases on wealthier Americans and a troop drawdown from Iraq will curb the shortfall, the budget will say.

The budget projects costs of the Iraq and Afghanistan wars totaling just over $140 billion this year and $130 billion in the 2010 fiscal year. Annual costs will drop after that to $50 billion annually.

Washington spent about $190 billion on the wars in 2008. Obama looks likely to order US combat troops to withdraw from Iraq over about 18 months, according to US officials. At the same time, he is ramping up the US military effort in Afghanistan.

Officials were eager to point out Obama's plans for cuts.

The budget would phase out government payments to crop producers making more than $500,000 — saving $9.8 billion over 10 years — and eliminate subsidies for cotton storage, saving an additional $570 million over the same period.

But the proposals do not lose sight of Obama's political and economic goals.

In a major address to Congress on Tuesday night, Obama signaled he has no intention of delaying his campaign promise of expanding healthcare to the 46 million people who are uninsured in the United States, a goal that may prove tough amid eye-popping deficits.

The United States spends more on healthcare than any other country, but its system is widely considered inefficient and it lags many other nations in key quality measures. Past efforts to make major healthcare changes have died in Congress.

Obama, who is eager to show he is mindful of the need to tackle the burgeoning deficits, held a "Fiscal Responsibility Summit" on Monday bringing together lawmakers and budget experts to discuss the long-term budget challenges.

In an open letter to Obama, experts at the Brookings Institution, the Washington think tank, warned that a soaring national debt would have consequences.

"We will have to borrow money in domestic and international capital markets to finance this debt, and without a serious commitment to long-term fiscal restraint, lenders will eventually question the nation's fiscal credibility," they wrote.

Obama budget moves toward universal health care

WASHINGTON – President Barack Obama is sending Congress a "hard choices" budget that would boost taxes on the wealthy and curtail Medicare payments to insurance companies and hospitals to make way for a $634 billion down payment on universal health care.

Obama's first budget, which will top $3 trillion, predicts the deficit for this year will soar to a whopping $1.75 trillion, according to administration officials who spoke on condition of anonymity before the public unveiling of the budget Thursday. The huge deficit reflects the massive spending being undertaken to battle a severe recession and the worst financial crisis in seven decades.

As part of the effort to end the financial crisis, the administration will propose boosting the deficit by an additional $250 billion this year, enough to support as much as $750 billion in increased spending under the government's financial rescue program. That would more than double the $700 billion bailout effort passed by Congress last October.

Obama, in a morning briefing, spoke of "hard choices that lie ahead." He called his budget "an honest accounting of where we are and where we intend to go."

One administration official called the request for additional bailout resources a "placeholder" in advance of a determination by the Treasury Department of what will actually be needed.

The spending blueprint Obama is sending Congress is a 140-page outline, with the complete details scheduled to come in mid to late April, when the new administration sends up the massive budget books that will flesh out the plan.

However, the submission of the bare budget outline was certain to set off fierce debate in Congress over Obama's spending and tax priorities. The document includes additional requests for the current year and Obama's proposals for the 2010 budget year, which begins Oct. 1.

The budget balances efforts to fulfill Obama's campaign pledges to deliver tax cuts to the middle class, expand health care coverage and combat the economic crisis with an effort to keep an exploding deficit over the next few years from becoming a permanent drag on the economy. However, Republicans assailed the budget for the tax increases and some Democrats worried that Obama was not doing enough to get the deficit under control.

"I would give him good marks as a beginning, but we have to do a lot more to take on this long-term debt buildup," said Senate Budget Committee Chairman Kent Conrad, D-N.D.

Republicans zeroed in on the tax increases to fund half of Obama's health care expansion.

"Everyone agrees that all Americans deserve access to affordable health care, but is increasing taxes during an economic recession, especially on small businesses, the right way to accomplish that goal?" asked House Minority Leader John Boehner, R-Ohio.

The $634 billion down payment on expanding health care coverage would come from a $318 billion increase over 10 years in taxes on the wealthy, defined as couples making more than $250,000 per year and individuals making more than $200,000. The tax increase would occur by reducing the benefit the wealthy get on tax deductions. As one example, taxpayers in the current top tax bracket of 35 percent would see their tax deduction for every $1 given to charity drop from 35 cents to 28 cents.

The other half of the down payment on Obama's drive toward universal health care — $318 billion — would come from curtailing payments to hospitals and insurance companies under Medicare and drug payments under Medicaid.

To meet his pledge of tax cuts for the middle class, the president wants to make permanent the $400 annual tax cut due to start showing up in workers' paychecks in April as part of the $787 billion stimulus package just passed by Congress. Obama's budget also extends the middle class tax cuts passed by the Bush administration in 2001 and 2003. Those cuts were due to expire at the end of 2010. If Congress approves Obama's recommendations, the Bush tax cuts would expire only for couples making more than $250,000 per year.

The cost of the stimulus bill and the increased bailout support would push the deficit for this year to $1.75 trillion, nearly four times last year's record $455 billion and a percentage of the economy — just over 12 percent — not seen since World War II. The deficit is expected to remain around $1 trillion for the next two years before starting to decline to $533 billion in 2013, according to budget projections.

Obama's plan proposes achieving $634 billion in savings on projected health care spending and diverting those resources to expanding coverage for uninsured Americans. The $634 billion represents a little more than half the money that would be needed to extend health insurance to all of the 48 million Americans now uninsured.

Americans now spend a total of $2.4 trillion a year on health care.

Obama also will ask for an additional $75 billion to cover the costs of wars in Iraq and Afghanistan through September, the end of the current budget year. That would be on top of the $40 billion already appropriated by Congress.

The administration will also ask for $130 billion for Iraq and Afghanistan in 2010 and will budget the costs of operations in Iraq and Afghanistan at $50 billion annually over the next several years.

Obama's budget proposal would effectively raise income taxes and curb tax deductions on couples making more than $250,000 a year, beginning in 2011. By not extending former President George W. Bush's tax cuts for such wealthier filers, Obama would allow the marginal rate on household incomes above $250,000 to rise from 35 percent to 39.6 percent.

The plan also contains a contentious proposal to raise hundreds of billions of dollars by auctioning off permits to exceed carbon emissions caps, which Obama wants to impose on users of fossil fuels to address global warming.

Some of the revenues from the pollution permits would be used to extend the "Making Work Pay" tax credit of $400 for individuals and $800 for couples beyond 2010, as provided in the just-passed economic stimulus bill.

About half of what officials characterized as a $634 billion "down payment" toward health care coverage for every American would come from cuts in Medicare. That is sure to incite battles with doctors, hospitals, health insurance companies and drug manufacturers.

Some of the Medicare savings would come from scaling back payments to private insurance plans that serve older Americans, which many analysts believe to be inflated. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage.

To raise the other half, Obama wants to reduce the rate by which wealthier people can cut their taxes through deductions for mortgage interest, charitable contributions, local taxes and other expenses to 28 cents on the dollar, rather than the 35 cents they can claim now. Even more money would be raised if the top rate reverts to 39.6 percent, as Obama wants.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, called Obama's proposal to tax the wealthy to finance health care reform a starting point. But he wants to also examine taxing some of health insurance benefits provided by employers — an idea rejected by Obama in last year's presidential campaign.

Obama's promise to phase out direct payments to farming operations with revenues above $500,000 a year is sure to cause concerns among rural Democrats.

Even after all those difficult choices, cutting about $2 trillion from the budget over 10 years, Obama's budget still would feature huge deficits.

The $1.75 trillion deficit projected for this year would represent 12.3 percent of the gross domestic product, double the previous post-war record of 6 percent in 1983, when Ronald Reagan was president, and the highest level since the deficit totaled 21.5 percent of GDP in 1945, at the end of World War II.

At $533 billion, the deficit in 2013 would be about 3 percent of the size of the economy.

Obama to address Congress, nation on economy

WASHINGTON – Barreling ahead on a mammoth agenda, Barack Obama is ready to offer a detailed sketch of the first year of his presidency, casting the nation's bleeding economy as a tangle of tough, neglected problems.

In a prime-time speech to Congress and millions watching at home, Obama will make his case Tuesday that much more has to be done to turn around the economy — a message he knows he must explain.

White House spokesman Robert Gibbs said Tuesday that Obama will provide more details about his financial stability plan and measures to help the economy while delivering "a sober assessment about where we are and the challenges we face."

"He'll say we're on the right path to meeting these challenges, and there are better days ahead," Gibbs said.

Obama approaches this moment riding a strong, upbeat sentiment among the public. Overall, 68 percent of people approve of his job performance, a new Washington Post-ABC News poll finds. A New York Times/CBS News polls finds that more than three-quarters of those surveyed were optimistic about the next four years with Obama in charge, and similar majorities said they were confident in his ability to make the right decisions about the economy.

Still, the president faces steep challenges. The nation is nearly dizzy keeping up with what's emerged from Washington during Obama's first weeks as president, from a staggering $787 billion stimulus plan to a revamped bailout for the financial sector to a rescue plan for struggling homeowners.

And investors are dour. Wall Street took another pounding Monday, with the Dow Jones industrial average tumbling to its lowest close since 1997.

Although Obama is too new in office to be delivering a State of the Union address, his speech will have all the same trappings. It comes two days before he delivers a budget blueprint to Congress. Unlike that detail-driven document, his address will be broad, spelling out what he wants and how he will do it.

The economy, in its worst tailspin in decades, will dominate. Obama will touch on foreign policy, but that will largely be left for other upcoming speeches. This will not be a rollout of one policy initiative after another.

Obama will make clear that the trillion-dollar-plus deficit is one he "inherited." In other words, he wants to remind people that President George W. Bush and the previous Congress left him a big hole, forcing him to pursue the costly stimulus package.

The president will push for movement on ensuring health coverage for all Americans. He will seek to expand educational opportunities, and diversify the country's energy sources, and contain sacred entitlements like Social Security, and halve the soaring budget deficit in four years.

His rhetorical mission is to show not only how all those pieces connect to the health of the economy, but why they must be pursued simultaneously.

Gunning for so much at once is complicated, both in terms of the issues themselves and the politics. Senior presidential adviser David Axelrod acknowledged Monday there is a risk in taking on too much.

"I think the bigger concern," he said, "is to not be aggressive at a time when a tepid approach could really consign us to a long-term economic catastrophe. We believe the times demand vigor and aggressive action, and so we're having to do a lot of things at once."

Rep. Darrell Issa of California, the top Republican on the House Committee on Oversight and Government Reform, said Obama's speech amounts to a coming-out party.

"You never know what a salesman's going to sell you until he shows up at your door," Issa said of his expectations. "If he gives us a narrow set of priorities that can be executed, and they don't just involve more spending, then I think it will be refreshing. If he gives us a long laundry list, which most presidents do, then although it will set the agenda ... it won't be as meaningful."

In many ways, though, Obama will be speaking directly to the American people. Daily followers of Obama's rhetoric are not likely to be surprised by Obama's words, some of which will be repeats. He is trying to reach millions of people who don't get to hear him every day.

So Obama will say that the crises facing the nation are so large they can only be solved in bipartisan ways. He will be blunt about the country's woes but try to balance that talk with optimism. He will talk about his travels as president so he can focus on the stories of communities outside Washington.

Asked in an MSNBC interview how the president plans to make good on his pledge to cut the deficit in half by the end of his first term, Gibbs said, "The biggest thing we're going to do is cut the amount of money we spend each year in Iraq."

He said Obama also planned to talk about necessary investments and about taxes.

"I think the president believes very clearly that we have to be honest about where we are," Gibbs said. "Tonight, he will tell the country that we've faced greater challenges than we face now and we've always met those challenges."

There is sure to be ceremony as Obama arrives in the well of the House. His speech is tentatively at 45 minutes, accounting for applause time.

Obama poised to sign stimulus into law

AP – President Barack Obama waves as he boards Air Force One at Andrews Air Force Base in Maryland., Tuesday, …

WASHINGTON – President Barack Obama is poised to sign into law the most sweeping economic package in decades, a rescue plan designed to create millions of jobs, spur consumer spending and revive the nation's outlook.

Capping the biggest victory of his month-old administration, Obama will sign the economic legislation Tuesday in Denver.

The setting, the Denver Museum of Nature & Science, is meant to underscore the investments the new law will make in "green" energy-related jobs. It also allows Obama to get away from Washington, where the bill's passage was a mostly partisan affair, and be among people who may benefit from the huge government intervention.

The flailing economy continues to dominate Obama's time.

Tuesday is also when General Motors Corp. and Chrysler LLC, which are living off a combined $13.4 billion in federal bailout loans, are due to hand in plans to Obama's government about how they can remain viable.

And on Wednesday in Arizona, Obama will unveil another part of his economic recovery effort — a plan to help millions of homeowners fend off foreclosure.

But first comes the $787 billion economic stimulus bill, which tries to address the nation's economic free fall on multiple fronts.

It pumps money into infrastructure projects, health care, renewable energy development and conservation, with twin goals of short-term job production and longer-term economic viability.

There's a $400 tax break for most individual workers and $800 for couples, including those who do not earn enough to pay income taxes. It dishes out tens of billions of dollars to states so they can head off deep cuts and layoffs. It provides financial incentives for people to start buying again, from first homes to new cars.

And it provides help to poor people and laid-off workers, with increased unemployment benefits and food stamps, and subsides for health insurance.

What is not expected to do is change the nation's economic fortunes quickly. So part of the White House's goal has been managing expectations.

Presidential spokesman Robert Gibbs said over the long holiday weekend that "things have not yet bottomed out. They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work."

The unemployment rate is now at 7.6 percent, the highest in more than 16 years. Analysts warn the economy will remain feeble through 2009.

Republican lawmakers, meanwhile, largely balked at the economic package. It drew no GOP votes in the House and only three in the Senate, albeit vital ones. Many Republicans said it was short on cutting taxes and the spending measures didn't target the vast sums of money well enough toward short-term job creation, which was the major goal of the bill.

But with the economy shedding jobs, there was widespread consensus in Washington for some sort of stimulus, and fast.

Yet the government's action comes at a cost down the line.

Many private economists are forecasting that the budget deficit for the current year will hit $1.6 trillion, including the stimulus spending. That's about three times last year's shortfall, and such year-to-year deficits contribute toward a mounting national debt.

Moderates seek bipartisan OK of stimulus package

AP – President Barack Obama speaks to the House Democratic Issues Conference Thursday, Feb. 5, 2009 in Williamsburg, …

WASHINGTON – Senate moderates seeking to pare back Barack Obama's economic plan are rekindling their efforts in hopes of building a bipartisan vote that eluded the president in the House.

A group of nearly 20 moderates from both parties — more Democrats than Republicans — huddled off and on all day Thursday in hopes of cutting as much as $100 billion from Obama's plan, which ballooned to $937 billion on the Senate floor, with further add-ons possible during a long day of votes Friday.

Senate Majority Leader Harry Reid, D-Nev., displayed impatience with the moderates, led by Susan Collins, R-Maine, and Ben Nelson, D-Neb., at a midday news conference, but he lent them encouragement as he sent senators home later Thursday.

"It's gotten more encouraging and that's because the leadership has indicated that they have some appreciation for the work that this bipartisan group is doing," said Sen. Mary Landrieu, D-La. "It's still got life. It's still breathing."

A roster of $88 billion worth of cuts was circulating, almost half of which would come from education grants to states, with an additional $13 billion in aid to local school districts for special education and the No Child Left Behind law on the chopping block as well. Some $870 million to fight the flu was among the first items to go, but other items divided the group.

At the same time, the group also was hoping to add perhaps $25 billion in additional infrastructure projects.

"We've added more tax cuts and tax relief. We've trimmed out some of the fat and now we have to add a little muscle," Landrieu said, referring to additional infrastructure spending.

If the group fails to reach an accord — or if it won't fly with Democratic loyalists — the alternative for Reid is to try to ram the measure through with just a few GOP supporters, such as Olympia Snowe of Maine. He expressed confidence he has the 60 votes needed to press it through if need be.

The massive measure is a key early test for Obama, who has made it the centerpiece of his fledgling presidency. Obama embraced the moderates' efforts, saying he would "love to see additional improvements" in the bill.

Speaking to a House Democratic retreat in Williamsburg, Va., Obama pushed Democrats to avoid political gamesmanship and get a stimulus bill to his desk by next week.

Voters who ousted Republicans from power "didn't vote for the status quo," he said. "They sent us here to bring change. We owe it to them to deliver."

The Collins-Nelson group is hoping to bring the measure's cost down to the $800 billion range, though they were working from the $885 billion measure that came to the floor — ignoring the more than $50 billion in add-ons added over the past three days. A recalculated cost for a popular plan to award a $15,000 homebuyer tax credit pushed the overall price tag to $937 billion.

On the Senate floor, Democrats continued to flex the muscle of their expanded 58-41 majority, easily killing efforts by GOP conservatives to replace the bill with versions containing more tax cuts and less spending.

Sen. John McCain, R-Ariz., Obama's vanquished rival for the White House, said that public opinion was shifting in the GOP's favor as he advanced a $421 billion plan, less than half the White House-backed measure. It lost 57-40.

McCain's plan contained a one-year cut in the payroll tax, which would help all wage-earners, as well as reductions in the two lowest income tax brackets that would benefit only those who earn enough to pay income taxes.

Another proposal, by Sen. John Ensign, R-Nev., was designed to reduce mortgage rates to as low as 4 percent for millions of homeowners. It was defeated on a vote of 62-35.

Despite their numbers, many Democrats, including newly elected freshmen such as Mark Begich of Alaska and Mark Udall of Colorado, want to see less long-term spending and more items directly related to job creation.

And while polls show Obama is popular and the public supports recovery legislation, Republicans have maneuvered in the past several days to identify and ridicule relatively small items in the bill.

Obama's engages in diplomacy to retain BlackBerry

WASHINGTON: US President Barack Obama, who is famous for his love of his BlackBerry, has described the negotiations with security officials to keep the smartphone as one of his "toughest" diplomatic challenges till date.

"In just the first few weeks, I've had to engage in some of the toughest diplomacy of my life. And that was just to keep my Blackberry," the tech savvy president said at an exclusive gathering of America's political movers and shakers on Saturday.

Traditionally, American presidents have kept away from using hi-tech communications such as email and mobile phones for a variety of reasons - including security and possible interception from foreign powers.

"I finally agreed to limit the number of people who could email me. It's a very exclusive list," the first African-American president was quoted as saying by the Daily Telegraph newspaper.

"How exclusive?" he continued. "Everyone look at the person sitting on your left. Now look at the person sitting on your right. None of you have my email address," Obama joked as he shared headline billing with Alaska Governor Sarah Palin at the exclusive gathering.

Obama was at a light-hearted evening as part of a nearly century-old tradition of the prestigious Alfalfa Club, where participants try their hand at comedy.

According to reports citing participants, Palin was the object of jovial ribbing, on the heels of the Alaska Governor last year becoming the first woman on a Republican Party presidential ticket.

Obama promises lower mortgage costs, new loans

– Obama discusses economic plans in weekly address

WASHINGTON – President Barack Obama on Saturday promised to lower mortgage costs, offer job-creating loans for small businesses, get credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan.

The White House is deciding how to structure the remaining half of the $700 billion that Congress approved last year to save financial institutions and lenders. An announcement was possible as early as this coming week on an approach that would use a range of tools to unfreeze credit, helping families and businesses.

At the end of a week that saw hundreds of thousands of people lose their jobs, Obama also used his Saturday radio and Internet address to tell that nation that "no one bill, no matter how comprehensive, can cure what ails our economy."

During the final three months of 2008, the economy recorded its worst downhill slide in a quarter-century, stumbling backward at a 3.8 percent pace, the government reported Friday. It could get worse.

Treasury Secretary Timothy Geithner is trying to finish a plan to overhaul the bailout program begun in the Bush administration. Geithner has said the administration is considering using a government-run "bad bank" to buy up financial institutions' bad assets. But some officials now say that option is gone because of potential costs.

Many ideas under consideration could end up costing hundreds of billions beyond the original price tag. Aides would not rule out the possibility that the administration would seek more than the $350 billion already set aside.

Obama said Geithner soon would announce a new strategy "for reviving our financial system that gets credit flowing to businesses and families. We'll help lower mortgage costs and extend loans to small businesses so they can create jobs. We'll ensure that CEOs are not draining funds that should be advancing our recovery."

His administration "will insist on unprecedented transparency, rigorous oversight and clear accountability so taxpayers know how their money is being spent and whether it is achieving results."

Obama's message, largely repackaged from a week of White House statements, was as much for the country as it was for lawmakers: Pass the separate American Recovery and Reinvestment Plan or things are going to get worse.

"Rarely in history has our country faced economic problems as devastating as this crisis," the president said. "Now is the time for those of us in Washington to live up to our responsibilities."

Obama last week won passage of a separate $825 billion economic stimulus plan in the House without a single Republican vote. It now heads to the Senate, where Vice President Joe Biden predicts the measure will fare better among GOP lawmakers.

Republicans pledged to work with Obama. But they cautioned against treating government spending like a "trillion-dollar Christmas list" and renewed their opposition to much in the bill.

"A problem that started on Wall Street is reaching deeper and deeper into Main Street. And the president is counting on members of Congress to come together in a spirit of bipartisanship to act," Senate Minority Leader Mitch McConnell, R-Ky., said in the GOP radio address. "Unfortunately, the plan that Democrats in Congress put forward this week falls far short of the president's vision for a bill that creates jobs and puts us on a path to long-term economic health."

Obama has signaled his willingness to compromise. His chief spokesman said the president hoped to "strengthen" the bill as it headed toward a Senate vote in the week ahead.

Republicans said they hope the administration takes into account their wishes.

"Every day brings more news of layoffs, home foreclosures and shuttered businesses," McConnell said. "And across the country, employers are cutting to the bone even at businesses that most Americans never thought were vulnerable."

Republicans, however, kept putting forward their own plans. McConnell promoted a mortgage program for creditworthy borrowers, offering fixed-rate 4 percent loans designed to increase housing demands and lending.

Obama reverses Bush abortion-funds policy

Getty ImagesWASHINGTON – President Barack Obama on Friday struck down the Bush administration's ban on giving federal money to international groups that perform abortions or provide abortion information — an inflammatory policy that has bounced in and out of law for the past quarter-century.

Obama's move, the latest in an aggressive first week reversing contentious Bush policies, was warmly welcomed by liberal groups and denounced by abortion rights foes.

The ban has been a political football between Democratic and Republican administrations since GOP President Ronald Reagan first adopted it 1984. Democrat Bill Clinton ended the ban in 1993, but Republican George W. Bush re-instituted it in 2001 as one of his first acts in office.

"For too long, international family planning assistance has been used as a political wedge issue, the subject of a back and forth debate that has served only to divide us," Obama said in a statement released by the White House. "I have no desire to continue this stale and fruitless debate."

He said the ban was unnecessarily broad and undermined family planning in developing countries.

"In the coming weeks, my administration will initiate a fresh conversation on family planning, working to find areas of common ground to best meet the needs of women and families at home and around the world," the president said.

Obama issued the presidential memorandum rescinding the Bush policy without coverage by the media, late Friday afternoon. The abortion measure is a highly emotional one for many people, and the quiet signing was in contrast to the televised coverage of Obama's announcement Wednesday on ethics rules and Thursday's signing of orders on closing the Guantanamo Bay prison camp and banning torture in the questioning of terror suspects.

His action came one day after the 36th anniversary of the landmark Supreme Court ruling in Roe v. Wade that legalized abortion.

The Bush policy had banned U.S. taxpayer money, usually in the form of Agency for International Development funds, from going to international family planning groups that either offer abortions or provide information, counseling or referrals about abortion as a family planning method.

Critics have long held that the rule unfairly discriminates against the world's poor by denying U.S. aid to groups that may be involved in abortion but also work on other aspects of reproductive health care and HIV/AIDS, leading to the closure of free and low-cost rural clinics.

Supporters of the ban say that the United States still provides millions of dollars in family planning assistance around the world and that the rule prevents anti-abortion taxpayers from backing something they believe is morally wrong.

The ban has been known as the "Mexico City policy" for the city a U.S. delegation first announced it at a U.N. International Conference on Population.

Both Obama and Secretary of State Hillary Rodham Clinton, who will oversee foreign aid, had promised to do away with the rule during the presidential campaign.

Clinton said Friday evening that for seven years Bush's policy made it more difficult for women around the world to gain access to essential information and health care services. "Rather than limiting women's ability to receive reproductive health services, we should be supporting programs that help women and their partners make decisions to ensure their health and the health of their families," Clinton said.

In a related move, Obama also said he would restore funding to the U.N. Population Fund (UNFPA). Both he and Clinton had pledged to reverse a Bush administration determination that assistance to the organization violated U.S. law known as the Kemp-Kasten amendment.

Obama, in his statement, said he looked forward to working with Congress to fulfill that promise: "By resuming funding to UNFPA, the U.S. will be joining 180 other donor nations working collaboratively to reduce poverty, improve the health of women and children, prevent HIV/AIDS and provide family planning assistance to women in 154 countries."

Thoraya Ahmed Obaid, executive director of the U.N. Population Fund, said: "The president's actions send a strong message about his leadership and his desire to support causes that will promote peace and dignity, equality for women and girls and economic development in the poorest regions of the world."

"We are confident that under the new president's direction, the U.S. will resume its leadership in promoting and protecting women's reproductive health and rights worldwide," Obaid said in a statement issued at U.N. headquarters in New York.

The Bush administration had barred U.S. money from the fund, contending that its work in China supported a Chinese family planning policy of coercive abortion and involuntary sterilization. UNFPA has vehemently denied that it does.

Congress had appropriated $40 million to the UNFPA in the past budget year, but the administration had withheld the money as it had done every year since 2002.

Organizations and lawmakers that had pressed Obama to rescind the Mexico City policy were jubilant.

House Speaker Nancy Pelosi, D-Calif., said the move "will help save lives and empower the poorest women and families to improve their quality of life and their future."

"Today's announcement is a very powerful signal to our neighbors around the world that the United States is once again back in the business of good public policy and ideology no longer blunts our ability to save lives around the globe," said Sen. John Kerry, D-Mass., chairman of the Senate Foreign Relations Committee.

Population Action International, an advocacy group, said that the policy had "severely impacted" women's health and that the step "will help reduce the number of unintended pregnancies, abortions and women dying from high-risk pregnancies because they don't have access to family planning."

Anti-abortion groups and lawmakers condemned Obama's decision.

"I have long supported the Mexico City Policy and believe this administration's decision to be counter to our nation's interests," said Senate Republican leader Mitch McConnell of Kentucky.

"Coming just one day after the 36th anniversary of the tragic Roe v. Wade decision, this presidential directive forces taxpayers to subsidize abortions overseas — something no American should be required by government to do," said House Minority Leader John Boehner, R-Ohio.

Rep. Mike Pence, R-Ind., called it "morally wrong to take the taxpayer dollars of millions of pro-life Americans to promote abortion around the world."

"President Obama not long ago told the American people that he would support policies to reduce abortions, but today he is effectively guaranteeing more abortions by funding groups that promote abortion as a method of population control," said Douglas Johnson, legislative director of the National Right to Life Committee.

Obama's first day in office

BARACK Obama laid down the law on his first day in the Oval Office yesterday.

The new President snatched just a few hours sleep after his euphoric inauguration celebrations — then faced up to a daunting array of problems.

He had promised “swift action”. And in a series of meetings with advisers and generals, he began to tackle America’s crippled economy, the Iraq war, Guantanamo Bay and the Middle East crisis. He also:

SUSPENDED all orders issued to federal departments and agencies by his predecessor George Bush, pending review.

FROZE the pay of presidential staff earning more than £75,000, and BANNED them from accepting gifts from lobbyists.

For your eyes only ... note from Bush to Obama, President No44

The moves were aimed at making his administration more “transparent”. And Obama declared: “Families are tightening their belts — and so should Washington.”

The President began his first working day at a prayer service in Washington’s National Cathedral.

He sat with First Lady Michelle, Vice President Joe Biden and his wife Jill, and Bill and Hillary Clinton.

Hillary was later rubber-stamped as US Secretary of State by the Senate despite Republican questions over potential conflicts of interest created by foreign payments to her husband’s foundation.

Summit

Once in the Oval Office, Obama had a brief moment of solitude in which he read a note left on his desk by Mr Bush.

It was addressed “to No44 from No43” — a reference to the pair being the 43rd and 44th Presidents. But its contents were not revealed.

Getting down to business ... Obama with Rahm Emanuel

Then it was straight into a summit with advisers, including White House Chief of Staff Rahm Emanuel, to discuss plans to revive the US economy with a £600billion injection.

Turning to Iraq, Obama was due to meet Defence Secretary Robert Gates, Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, and General David Petraeus, head of the US Central Command.

Joining the discussion via tele-conference from Iraq were America’s ambassador to the strife-torn nation, Ryan Crocker, and General Ray Odierno, the top ranking US soldier in the battlezone.

Obama was expected to command the team to draw up plans to pull all US combat troops out of Iraq within 16 months.

On the Middle East, Obama called leaders including Jordan’s King Abdullah, Israeli PM Ehud Olmert and Palestinian Authority President Mahmoud Abbas.

The President also ordered a suspension of trials at Guantanamo Bay while a four-month probe is carried out into the whole purpose of the detention camp in Cuba. The move even halted the case of 11 men charged in connection with the 9/11 atrocities.

It was applauded by human rights activists. But guards at the camp — holding 250 terror suspects — were unimpressed.

Though elated at Obama’s inauguration, black officer Patrick Thomas, 43, disagreed with the President’s intention to close it down.

He said: “If you let these detainees go from here they will pop up somewhere else.”

Late yesterday Obama was due to host an “Open White House” for friends and relatives. Meanwhile his staff were rushing to set up offices and computers. Press secretary Robert Gibbs said: “I just have to figure out how to log in.”

AN explosion of Obama-related goodies has appeared on web auction site eBay, including a “My Mama is for Obama” babygrow.

Obama visits with troops, honors King on holiday

AP – President-elect Barack Obama, his wife Michelle Obama, arrive at 'We Are One: Opening Inaugural Celebration …

President-elect Barack Obama, his wife Michelle Obama, arrive at AP – President-elect Barack Obama, his wife Michelle Obama, arrive at 'We Are One: Opening Inaugural Celebration …
WASHINGTON – With history intersecting the transfer of power, large crowds thronged to the capital Monday, on the eve of Barack Obama's elevation to the presidency as America honored slain civil rights leader Martin Luther King Jr.

A day away from becoming the nation's 44th president, Obama made an unscheduled visit to Walter Reed Army Medical Center to visit with troops injured in battle. And President George W. Bush made calls from the White House to thank several world leaders for their work with him over the last eight years.

On the streets, live broadcasts by the television networks attracted swarms of onlookers, and behind the scenes people made final preparations for a slew of parties, balls and other celebrations that will follow Obama's oath-taking and the inaugural parade.

Obama and Vice President-elect Joe Biden, fresh off a rollicking concert at the Lincoln Memorial Sunday, planned to spend their final day before the inauguration with activities keyed to the celebration of King's life, cut short by an assassin's bullet in 1968.

The Obama and Biden families were part of a community renovation project in honor of King on the federal holiday established in his memory. Transition aides declined to name the locations or details of the projects.

The run-up to Obama's inauguration, like his election itself, has been defined by enormous public enthusiasm, carefully choreographed events and a lofty spirit of unity. What awaits, as Obama often reminds the nation, is many months, if not years, of tough work.

The weekend celebrations began Saturday with Obama's whistle-stop tour, from Philadelphia to Washington, along the path Abraham Lincoln took in 1861. Then came that roaring celebrity-filled concert where several hundred thousand people flanked the reflecting pool, hearing actors, singers and then Obama himself rally for national renewal.

Obama is asking the nation to honor King's legacy by making a renewed commitment to service. That has long been the goal of the King holiday, even if many see it as a day off.

The Presidential Inaugural Committee has launched a Web site, USAService.org, to help people find volunteer opportunities close to their homes.

"I am asking you to make a lasting commitment to make better the lives of your fellow Americans — a commitment that must endure beyond one day, or even one presidency," Obama said in a YouTube appeal last week. "At this moment of great challenge and great change, I am asking you to play your part; to roll up your sleeves and join in the work of remaking this nation."

The president-elect has a busy Monday evening, too.

He is to attend three private dinners to honor the public service of former Secretary of State Colin Powell; Biden, a longtime senator from Delaware; and Sen. John McCain, the 2008 Republican presidential nominee. Those dinners will be held at the Hilton Washington, National Building Museum and Union Station.

Michelle Obama, the future first lady, is hosting a children's evening concert.

At the Capitol on Monday morning, groups of tourists wandered around the barricades to take pictures of the viewing stands and the monuments and buildings. A few even stood and watched NFL highlights that were being shown on the big-screen TV at the Capitol.

Three teachers from Baltimore said they decided to come out to the Capitol to scope out their routes in and out for the inauguration ceremony.

"Seems like they've planed it out pretty well," said Gary Campbell, 29, of Baltimore as his group looked at the viewing stand from across the Capitol reflecting pool. Their school, Baltimore Freedom Academy, and the Homeland Security Academy planned to send four busloads of children to the National Mall to watch the inauguration ceremony.

Being from Baltimore the three were decked out in cold-weather gear and said they planned on wearing thermal coats, hats and scarves for the long wait on the Mall Tuesday.

"We knew to come prepared," said Maddy Ahearn, 24.

Runner Kim Person stopped in front of the Capitol to snap a few quick pictures of the reviewing stand during a break in her marathon training. Person doesn't have a ticket to the festivities, so she used the early morning lull to get close to the building.

"That's why I'm looking at it today, because I won't be able to see it tomorrow," said Person, 43, who plans to be near the Washington Monument on Tuesday.

Obama takes train ride from Philadelphia to Washington

WILMINGTON: Barack Obama warned on Saturday of the vast challenges ahead for Americans as he rolled by train toward Washington, where he will be US Vice President-elect Joe Biden greets Michelle Obama as President-elect Obama gets off his train car in Wilmington, Deleware. (Reuters Photo) More Pictures inaugurated in three days as the 44th president of the United States. ( Watch ) Obama waved to crowds along the tracks from the back of a vintage train car at spots during the journey from Philadelphia to Washington. He takes office on Tuesday amid the deepest economic crisis in generations and wars in Iraq and Afghanistan. "Only a handful of times in our history has a generation been confronted with challenges so vast," Obama said as he began the trip in Philadelphia, evoking the patriots who launched the American fight for independence in the city in 1776. "While our problems may be new, what is required to overcome them is not," Obama said. "What is required is the same perseverance and idealism that our founders displayed." Obama, a Democrat, has vowed to spend hundreds of billions of dollars to jolt the country out of a deepening recession. He stressed in Philadelphia and at a later stop in Wilmington, Delaware, where he was joined by Vice President-elect Joe Biden, that it will take time and sacrifice to turn the economy around. "This is more than an ordinary train ride, this is a new beginning," Biden told the crowd in his hometown of Wilmington. The 137-mile (220 km) train journey launches three days of parties, concerts and shows to celebrate Obama's swearing-in at the US Capitol on Tuesday afternoon. He also will stop in Baltimore before arriving in Washington on Saturday night. The trip was designed to mimic the 1861 rail journey to the capital by Abraham Lincoln before he entered the White House. Obama frequently evokes Lincoln, the 16th president who steered America through the Civil War and ended slavery in the United States. Obama will become the first black US president when he is sworn into office on Tuesday. Janice Winston, 56, said she was overjoyed at the prospect. "It's finally hitting me, because I'm starting to cry, that this is really happening," Winston, who is black, said at the station in Philadelphia. "Today is a new day." Obama's train slowed to a crawl at a few spots along the route so he could step out onto the back of his carriage and wave to the crowds that lined the tracks in frigid weather. In Claymont, Delaware, several hundred people gathered to cheer and wave to Obama, holding signs reading "Halleluja, we did it," and "Hail to the chief."

Obama set to press for his share of bailout funds

WASHINGTON – A week shy of taking office, President-elect Barack Obama already is putting his persuasion skills to a high-stakes test with Congress as he seeks access to the second half of the $700 billion financial bailout fund.

Obama planned to be in the Capitol on Tuesday to meet with Senate Democrats. And his transition team prepared to dispatch top aides to meet with Senate Republicans this week in anticipation of a possible vote Thursday on whether to release the money from the embattled Troubled Asset Relief Program.

In the House, the Financial Services Committee scheduled a hearing on the program in advance of legislation offered by committee Chairman Barney Frank, D-Mass., that would place tough new restrictions on recipients of the money and require spending to reduce mortgage foreclosures.

The legislation is scheduled to reach the floor of the House on Wednesday, with a vote set for Thursday.

That flurry of activity comes in the wake of President George W. Bush's decision Monday to act on Obama's behalf and ask Congress for access to the remaining $350 billion of the money Congress authorized to rescue the nation's financial sector. The request reached Congress as lawmakers and Obama also were assembling a spending and tax-cutting stimulus package of $800 billion, or possibly more.

"It is clear that the financial system, although improved from where it was in September, is still fragile," Obama said Monday.

Bush's notification set a 15-day deadline for Congress to disapprove of the request. The Bush administration's handling of the money has met bipartisan criticism in the House and Senate. Lawmakers have complained that the Treasury Department's use of the money has been muddled and misleading, that recipients of the funds have faced little accountability and that the program has done nothing to reduce home foreclosures.

If the Senate rejects a motion to disapprove the funds, it would pave the way for Obama to begin dispensing the money about a week after he assumes office Jan. 20.

Congressional Democrats said they hoped Obama's desire to place greater restrictions on the money and broaden its goals to loosen more credit would build support among otherwise skeptical lawmakers. The House tentatively scheduled a vote for next week. If both chambers refuse to release the money, it would be up to Obama to issue a veto — a dramatic first act by a new president — in hopes that Congress would not override him.

The request by the Bush White House made it clear that the money was to be used by the incoming Obama administration. It directed lawmakers to a letter Monday from top Obama economic adviser Larry Summers that vowed to make significant changes in the way the program is administered.

In the Senate, Majority Leader Harry Reid, D-Nev., said he was encouraged by Obama's efforts to add more conditions and to require greater accountability for the use of the money. Senate Minority Leader Mitch McConnell, R-Ky., voiced skepticism but left open the possibility that he could be persuaded.

"I would be hard-pressed to support additional funding for the TARP without sufficient assurances this money will not be wasted, misspent or simply used for more industry-specific bailouts," McConnell said.

Summers' letter, however, was not as detailed as the legislation proposed in the House by Frank. That bill would set new conditions on the institutions that receive the money, requiring limits on executive pay and an end to owning or leasing private jets. It also would require spending at least $40 billion from the fund on foreclosure mitigation.

Financial services industry lobbyists said they opposed a provision in Frank's bill that would allow the Treasury Department to apply executive pay restrictions to banks that already have received government money.

Scott Talbott, senior vice president at the Financial Services Roundtable, said the group would like to see Congress' concerns addressed without the retroactive provision. The Roundtable represents 100 of the largest banks and insurance companies, including such government fund recipients as Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co.

Some lobbyists hoped Summers' letter would reassure lawmakers and make legislation such as Frank's less likely to pass. Summers' letter doesn't address the question of retroactive limits on executive pay.

At the same time, the Federal Deposit Insurance Corp. issued a directive Monday asking banks and other financial institutions to track how the federal money or guarantees they received helped them boost "prudent lending" and efforts to help at-risk borrowers avoid foreclosures.

Mumbai-type attacks can be replicated: Obama

WASHINGTON: President-elect Barack Obama on Sunday voiced fear that Mumbai-type attacks can be replicated by terrorists in other parts of world,including the US and said his administration will focus on putting more pressure on "our major target" al-Qaida.

Asked about 26/11 terror strikes in an interview to ABC News, Obama said the "danger is always there" to have a Mumbai-type attack in an American city.

"When you see what happened in Mumbai, that potentially points to a new strategy, not simply suicide bombings but you have commandos taking over...," he said.

"I think you have to anticipate that having seen the mayhem that was created in Mumbai, that there are going to be potential copycats or other terrorist organisations that think this is something that they can replicate," Obama said.

At a Congressional hearing on Mumbai attack this week, top US intelligence and police officials had expressed similar fear and said that this makes all the more necessary to ensure that those responsible for such an attack are brought to justice, given that US cities are always on top of the hit list of al-Qaida and other terrorist groups.

"So we're going to have to be vigilant in terms of our intelligence, we're going to have to make sure that we are more effective in terms of anticipating some of these issues, and we've got to continue to put pressure on al-Qaida, which is our major target — that's something that I talked about extensively during the campaign," Obama said.

"That has to be one of our primary areas of focus when it comes to our international security."

Obama provides internal analysis of economic plan

WASHINGTON – Facing growing criticism of his economic recovery plan, President-elect Barack Obama made public Saturday a detailed analysis by his economic advisers that estimates the $775 billion plan of tax cuts and new spending would create 3.5 million jobs over the next two years.

But the president-elect's advisers concede in the 14-page report Obama posted on the Internet that their estimates are "subject to significant margins of error," both because of the assumptions that went into their economic models and because no one knows the final outlines of the package that will emerge from Congress.

"These numbers are a stark reminder that we simply cannot continue on our current path," Obama said Saturday in his weekly radio and YouTube broadcast address.

"If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits — and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world," he said.

Obama, who previously has provided few details of the massive spending and tax cut plan, released the report one day after the unemployment rate jumped to 7.2 percent, the highest in 16 years. The nation lost 524,000 jobs in December, bringing the total job loss for last year to 2.6 million, the largest since World War II.

If Congress fails to enact a big economic stimulus plan, Obama's advisers estimated that another 3 million to 4 million jobs will disappear before the recession ends.

As lawmaker criticisms of parts of his plan grew during the week, Obama agreed Friday to modest changes in his proposed tax cuts. Democratic congressional officials said his aides came under pressure in closed-door talks to jettison or significantly alter a proposed tax credit for creating jobs, and to include relief for upper middle-class families hit by the alternative minimum tax.

The new report is likely to intensify debate over the economic recovery plan even more, as economists outside the Obama team begin delving into the analysis. The report, for example, estimates that the unemployment rate at the end of 2010 would be 1.8 percentage points lower if the plan is enacted.

Top Democrats on Capitol Hill say there is far more agreement than disagreement on the major parts of the recovery plan: aid to cash-strapped state governments, $500-$1,000 tax cuts for most workers and working couples, and a huge spending package blending old fashioned public works projects with aid to the poor and unemployed and a variety of other initiatives.

The new report provides detailed breakdowns of how many jobs each part of the plan would create, even going so far as to provide estimates that more than 40 percent of the new jobs would go to women and that 90 percent of them would be created in the private sector. It also provides estimates of how many new jobs would be created in each different sector of the economy.

"It's not too late to change course — but only if we take immediate and dramatic action," Obama said. "Our first job is to put people back to work and get our economy working again."

Economic crisis, Obama response face new Congress

AP – Senate Minority leader Mitch McConnell, left, listens to House Minority leader John Boehner, right, during …

WASHINGTON – The Democratic-dominated Congress convenes Tuesday to confront perhaps the worst economic crisis since the Great Depression and to grapple with a hugely ambitious agenda set by President-elect Barack Obama.

The opening day of a two-year session is typically more ceremony than substance, and Congress often recesses until the new president takes office or after the State of the Union address at the end of January.

This year, however, with the economy in a worsening recession, Democrats are promising swift action on an as-yet-unveiled $775 billion economy recovery program that is the first order of business for the Obama administration.

"We will hit the ground running ... to address the pain being felt by the American people," House Speaker Nancy Pelosi, D-Calif., promised Monday as she welcomed Obama to her office.

For the first time in 16 years, Democrats control both houses of Congress and welcome one of their own to the White House. That foreshadows a productive session, particularly if Obama can muster Republican support for his initiatives, as he is seeking.

Pelosi had earlier promised to try to get the economic recovery bill ready for Obama's signature by Inauguration Day, an optimistic timeline that has now slipped by several weeks.

With their numbers bolstered by last fall's elections, congressional Democrats are well-positioned to dominate the session.

Democrat Al Franken on Monday became the apparent victor in a hard-fought Minnesota Senate race. That means Democrats' numbers in the chamber could reach 59 — tantalizingly close to the magic 60 votes needed to overcome a GOP filibuster. Incumbent Republican Norm Coleman promises to contest the result.

But first, Senate Democratic leaders need to work out a looming confrontation with Roland Burris, the Illinois Democrat named by scandal-plagued Gov. Rod Blagojevich, who faces charges of having attempted to sell the seat.

Burris, who is black, came to Washington on Monday to claim the seat, though Democratic officials promise he won't be admitted to the Senate carrying the taint of Blagojevich.

In the House, Pelosi finds her own position strengthened by a gain of more than 20 seats. Her status as the top Democrat in Washington, however, has been supplanted by Obama.

For Republicans, the next two years promise to be difficult. They vow to work with Obama but at the same time have installed a more conservative leadership team in the House that's eager to draw distinctions with Democrats.

In addition to the economic recovery plan, early items on the agenda include a measure designed to ensure women have the right to sue their employers for pay discrimination. It passed the House but fell prey to a GOP filibuster in the Senate. Now it looks as though it will easily pass.

Despite the sense of optimism, however, troubling realities threaten the Democratic agenda.

Perhaps most dangerous is the spiraling budget deficit. On Wednesday, lawmakers will get some very sobering news: New budget deficit projections from congressional estimators project a flood of red ink — likely to exceed $1 trillion for the current budget year — that could threaten other initiatives like extending health care to millions of the uninsured.

With that in mind, Obama promises "very concrete, serious plans for midterm and long-term fiscal discipline."