Secretary of Defense Robert Gates will announce tomorrow a significant shift in the Department's spending priorities, according to Reuters.
The Secretary has repeatedly called for the Department's spending priorities to better match the smaller asymmetric engagements the United States is facing in Iraq and Afghanistan, and will likely face in the future.
The Secretary is expected to curtail spending on large weapons system that don't address a current threat, including the Army's Future Combat system, the Navy’s DDG-1000 destroyer program, and the Air Force's Airborne Laser Program.
"These are not changes to the margins. This is a fundamental shift in direction," said Pentagon press secretary Geoff Morrell.
The Secretary's announcement comes almost a full month before the President plans to release his budget details. The White House's budget outline set aside $533.7 billion for the Defense Department.
“Gates’ hope is that by revealing it all at once and by explaining it in depth and explaining the strategic rationale for all of these decisions, that people will view it as a whole and not get focused on the individual decisions and not let their parochial interests overcome the fact that it is in our national interests to make these adjustments to the whole of the budget,” Morrell explained.
The Secretary will brief members of Congress tomorrow morning before announcing the changes at a press conference.
President Obama next month will host leaders from sixteen nations in a "Major Economies Forum on Energy and Climate."
The forum will meet on April 27-28 to "advance the exploration of concrete initiatives and joint ventures that increase the supply of clean energy while cutting greenhouse gas emissions," the White House said in a statement.
The United Nations is concurrently laying the groundwork to negotiate a successor agreement to the landmark Kyoto protocol, the first major international agreement to target climate change.
George W. Bush's Administration proposed a similar forum, however it was widely seen as a competitor to U.N. action. The Obama Administration, which has already proposed a domestic cap-and-trade system, has made it clear that its forum is designed to complement any U.N. agreement.
The invited nations include: Australia, Brazil, Britain, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa and the United States.
If you charge more on your debit card than you have in your bank account, your bank will likely cover the difference and bill you later.
The bank will probably charge you an "overdraft service" charge for it, but it sounds like a nice thing for the bank to do, right?
Well, yes, but when did you agree to pay for that service?
Most banks don't ask, enrolling customers automatically, and the service charges can really add up. So, if you buy a $4 cup of coffee with your check card and you only have $3 in your account, the bank can hit you with a $34 overdraft fee.
A lot of consumers and consumer advocates out there--including our publisher, Consumers Union--think that's just not right.
The Federal Reserve Board has proposed a rule change to give bank customers the option of opting in or out of overdraft service.
The Fed has also given you a chance to speak your mind on the issue, but that opportunity is about to end. Consumers have until Monday, March 30 to speak up.
The Federal Trade Commission is preparing to put an end to commercials that flaunt disingenuous results while hiding behind disclaimers like "results not typical" or "individual results may vary."
The FTC's guidelines for marketers, designed to empower consumers to independently judge the worthiness of a product, have not been updated since 1980. Since then, marketers have increasingly relied on deceptive advertisements that mask a product's true effect.
"The use of consumer testimonials had become almost a safe harbor for companies as long as they threw in some sort of disclaimer about results not being typical," Richard Cleland, assistant director of the FTC's division of advertising practices told the Chicago Tribune.
Under the new rules, marketers would be able to demonstrate extreme examples only if they also demonstrated more typical results. Advertisers who fail to comply could be subject to legal action.
The proposal would also extend to bloggers and corporate web sites, which worries the Word of Mouth Marketing Association.
"For example, could a blogger be subject to liability for endorsements even if they represent an honest appraisal of the product and the blogger's experience?," WOMMA President John Bell asked. "Bloggers might be afraid to state their opinions or experiences if they believe they go against the grain of mainstream opinion or are not supported by empirical evidence."
The rules, originally proposed two years ago, are currently under final review and are expected to be adopted once finalized.
If all the president's budget proposals were to be enacted and the economy continued to struggle, the nation's deficit would climb well beyond what the White House had previously projected, according to a new analysis from the Congressional Budget Office.
The deficit estimate for 2009 would total $1.8 trillion, or 13.1 percent of GDP, the nonpartisan CBO estimated, with another $1.4 trillion of debt the next year.
President Obama's budget initiatives, if enacted, would add an estimated $4.8 trillion to the nation's deficit between 2010-2019, the CBO report said.
That's a lot more than the numbers put out by the White House. The CBO wrote in its report:
Our estimates of deficits under the President’s budget exceed those anticipated by the Administration by $2.3 trillion over the 2010-2019 period. The differences arise largely because of differing projections of baseline revenues and outlays. CBO’s projection of baseline deficits exceeds the Administration’s estimate (prepared on a comparable basis) by $1.6 trillion.
By comparison, if current laws were maintained, the 2009 deficit would be an estimated $1.7 trillion, and the 2010 deficit would be $1.1 trillion. Even those lower numbers would be the largest deficits as a share of GDP since 1945, the CBO said.
The CBO's estimate of overall economic conditions did not offer particularly cheerful news either.
Despite the steps already taken by the White House and the Treasury, "the economy is likely to continue to deteriorate for some time," the CBO report said.
The recession may technically end by the fall, but:
For the next two years, CBO anticipates that economic output will average about 7 percent below its potential—the output that would be produced if the economy’s resources were fully employed. That shortfall is comparable with the one that occurred during the recession of 1981 and 1982 and will persist for significantly longer—making the current recession the most severe since World War II. In this forecast, the unemployment rate peaks at 9.4 percent in late 2009 and early 2010 and remains above 7.0 percent through the end of 2011. With a large and sustained output gap, inflation is expected to be very low during the next several years.
The Administration is expected tomorrow to unveil a plan to aid small businesses by unfreezing the credit market to reduce the cost of business loans. Congressional Republicans have complained that the Administration's recovery plans primarily helped the financial service and not small business owners.
The Administration will direct $730 million from the economic stimulus package to raise from 85% to 90% the government's guarantee on Small Business Administration loans under $150,000. The government will also eliminate common fees and processing charges that lenders pass on to borrowers, which can add up to 3.75 percent to the cost of a loan.
The Administration aims to unfreeze the credit markets by spending up to $20 billion to buy up loans from primary bank lenders. This in turn should allow the primary lenders to make new loans to other small business owners.
The Small Business Administration usually guarantees loans worth $20 billion each year, however new lending is on track to fall below $10 billion this year, according to Administration officials.
Speaking today on Meet the Press Christina Romer, the Council of Economic Advisors said, "We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them... We’ve talked to a lot of small business owners, and one of the trouble they’re having is just community banks don’t want to lend to them because the secondary market in SBA loans has virtually disappeared. So one of the things we’ll be announcing is a program to get that market cleared and working again."
Minority whip Eric Cantor agreed this morning on Meet the Press that government action can unfreeze the markets. "I think the crux of the issue is the only credit markets that are working, by and large, are the credit markets where the government has stepped in to guarantee the issuance of the debt," he said.
The President is expected to announce the new measures tomorrow from the White House with Treasury Secretary Timothy Geithner.
President Obama will give a speech on earmark reform this morning and later will meet with Democratic members of the Senate and House Budget Committees.
There are several hearings today on Capitol Hill of interest to consumers.
At 10 a.m., the House Energy and Commerce subcommittee on health hosts, "How Do You Fix Our Ailing Food Safety System?"
At 2 p.m., the House Judiciary subcommittee on commercial and administrative law hosts, "Circuit City Unplugged: Why Did Chapter 11 Fail To Save 34,000 Jobs?"
At 2:30 p.m., the House Financial Services subcommittee on financial institutions and consumer credit hosts, "Mortgage Lending Reform: A Comprehensive Review of the American Mortgage System."
There are ways to fight off the nation's next financial crisis, Federal Reserve Chairman Ben Bernanke said today, but before we worry about that governments must get financial systems working again to stabilize the economy.
Speaking at the Council on Foreign Relations, Bernanke said the U.S. government will continue to pour money into financial institutions if necessary.
"Until we stabilize the financial system, a sustainable economic recovery will remain out of reach," he said. "In particular, the continued viability of systemically important financial institutions is vital to this effort. In that regard, the Federal Reserve, other federal regulators, and the Treasury Department have stated that they will take any necessary and appropriate steps to ensure that our banking institutions have the capital and liquidity necessary to function well in even a severe economic downturn."
He went on to say that new regulations could "make crises less frequent and less virulent."
First among his four reform proposals was to deal with companies that are "too big to fail" before they fail. The government already has Citigroup and AIG on life support--costing hundreds of billions of dollars--and Bernanke, without mentioning any company by name, said the Fed's "commitment to avoiding such a failure remains firm."
"Looking to the future, however, it is imperative that policymakers address this issue by better supervising systemically critical firms to prevent excessive risk-taking and by strengthening the resilience of the financial system to minimize the consequences when a large firm must be unwound," Bernanke said.
The second step would be to strengthen the rules under which the financial markets operate, making sure the infrastructure remains strong in times of stress.
Third, Bernanke said, regulations need to be flexible so as not to "overly magnify the ups and downs in the financial system and the economy," such as allowing banks to lend more money in a bad economy than in a good economy.
Lastly, Bernanke proposed a government group that would monitor and address large-scale systemic problems.
Bernanke said his own agency may or may not be able to do the job but should certainly be involved.
"As a practical matter, however, effectively identifying and addressing systemic risks would seem to require the involvement of the Federal Reserve in some capacity, even if not in the lead role," he said.
The stock markets reacted well to Bernanke's comments, particularly about not letting big banks fail. Financial stocks rallied in the morning, climbing around 10 percent after weeks of declines.
For moral and fiscal reasons, Obama said an overhaul of the American health system must begin in 2009.
"Our goal will be to enact comprehensive health care reform by the end of this year," the president said. "That is our commitment. That is our goal."
Acknowledging that health care reform is a perennial loser in Washington, Obama said that it is necessary now because of the toll skyrocketing health care costs are putting on an already struggling economy.
"The same soaring costs that are straining families' budgets are sinking our businesses and eating up our government's budget, too," Obama said.
Polls show that Americans agree with the need for the government to overhaul the health care system. A CNN/Opinion Research poll found that 72 percent favor increasing the federal government's influence over the country's health care system in an attempt to lower costs and provide health care coverage to more Americans. Twenty-seven percent said they opposed.
