economy. globalization

From the Lori Montgomery and Ceci Connelly in tomorrow's Washington Post: 

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on business and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation's economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that Obama hopes to enact later this year.

A summary of Obama's budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation's costly and inefficient health care system Monday, when he addresses more than 100 lawmakers and budget experts at a White House summit on restoring "fiscal responsibility" to Washington.

A piece by Floyd Norris in the NY Times today reinforces why bringing our fiscal house in order matters - there is a serious question of whether global investors - all with less money in their pocket, and recently burned by their American investments - will continue to lend America the money it needs to finance its extraordinary levels of borrowing: 

JUST when the United States really, really needs the money, overseas investors seem to be less willing to buy long-term American securities.

The government said this week that net purchases of those securities fell to $412.5 billion in 2008, less than half the 2007 level and the lowest annual total since 1999, when the federal government was running a budget surplus.

Money did come in, but it was diverted into the safest investment around, albeit one with almost no expectation of profit, Treasury bills. Overseas investors increased their holdings of those securities by $456 billion, an unprecedented flow. 

There is little doubt now that the coming week will be a very important one for the nascent Obama Presidency.   On Monday he takes to the road, visiting Indiana and Florida, and speaks to the nation.  Also on Monday Treasury Secretary Tim Geithner will offer what now appears to be an outline, or sketch, of the Administration's plan to attack the financial crisis, beginning what will be a very important debate about this part of the emerging recovery plan.  Among the other things we are hoping for is a major initiative to keep people in their homes.  

Also up this week will be the attempt for the Senate and House to reconcile their different stimulus bills into one, and hit the deadline of getting the bill signed by President's day weekend.   Given news reports this morning about the late-night Senate deal, I don't know how easy this is going to be.  

One of the most interesting and important things to watch this week is how the Senate and House come together and "reconcile."   The internal dynamics of these two chambers are very different.   The bills that emerged from each chamber are different.   Will the path forward for future legislation be what we saw with the stimulus - seperate tracks for each chamber - or will the White House and Congressional leadership attempt to prenegotiate the big ones and try to reach a broad outline of a deal that can get through both chambers will little alteration?  How this stimulus bill comes together this week will be a big big test of the ability of the two chambers to reconcile their very different internal politics.

The Republicans.  We learned a lot about them these last few weeks.  Their great test will be whether they can do more than be angry that they are not in power anymore.  The signs so far are not so good. For the good of the nation we need the Republican Party to become a responsibile partner in cleaning up the incredible mess they left us all in.  I think the way The President began to remind the American people of the GOP's role in bringing about the troubles we now face was important - and may be his biggest weapon in bringing them to the table in the many legislative battles ahead (see this Washington Post news story on what could be a fatal political scandal for the new RNC Chairman, Michael Steele).  

Oh, and not to be forgotten, the President signed into law a bill this week that will bring health insurance and good medical care to millions of children who do not have it today.   It was a powerful early signal that the new government can bring people together to tackle our common challenges.  And for those of us optimistic about fixing our broken immigration system this year, that the provision to extend health insurance coverage to all legal immigrant children passed, over initial GOP opposition, is a good sign that reasonable people in both parties can come together and make progress on a broader immigration reform package this year.  

While there are pieces of the package we could do without, the emerging economic recovery plan is a very responsible and serious attempt to address the economic challenges of our time, and it contains many provisions long argued for by NDN.  President Obama and his team should be pleased with where things stand now - on their first major initiative they've shown far-sightedness, political dexterity and resolve.   But the next few days are very important, and will tell us much about our ability to meet the challenges ahead.

Sat 10pm Update - The NYTimes has a good piece running in the Sunday paper looking at the differences between the Senate and House bills.