Administration strikes cautious economic tone as G.M.'s new C.E.O. makes the Sunday rounds

General Motors' new C.E.O., Fritz Henderson, appeared this morning on NBC's Meet the Press and CNN's State of the Union to say that G.M. would survive as a company, even though bankruptcy loomed as a viable option. Henderson took the reigns at G.M. after the Administration asked former-C.E.O. Rick Wagoner to resign.

Henderson said that G.M. was focused on quickly returning to profitability so that they could repay the taxpayer's money.

"The day we took money from the taxpayer was one of the -- one of the most difficult days of certainly my career and of the history of General Motors," he said. "We need to respect the fact that we need to look after the taxpayer, we need to justify to the consumer and the taxpayer that we’re going to succeed going forward. And one of the -- one of the happiest days of my future career is going to be the day we pay the loans back."

Henderson refused to rule out the possibility of bankruptcy, saying that the company would do whatever was necessary to meet the goals set by the President's Task Force on the Auto Industry.

"Now we’re 55 days, not 60 days away -- and we either accomplish this job outside of bankruptcy in the short term; or alternatively, if it’s necessary, we’ll go into bankruptcy in order to get this job done," he said.

White House Senior Advisor stressed on Fox News Sunday that G.M. still had much work to do. "Whether it comes through some sort of structured bankruptcy or another process," he said, "there is no doubt that for General Motors to survive and prosper, as we all want them to, they’re going to have to do serious restructuring."

Speaking to the broader economy, Treasury Secretary Timothy Geithner stressed on CBS' Face the Nation that even as the economy recovers, it may take some time for the unemployment rate to fall.

"The typical pattern of recoveries," he explained, "is that growth recovers, growth starts to turn positive, people start to spend more, people -- businesses hire more, they invest more, before you see unemployment peak. That’s the crude reality of recoveries."

Geithner also left open the possibility that the government would ask bank executives to resign.

"If, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions, not just to protect the tax payer but to make sure this is the kind of restructuring necessary for them to emerge stronger," he said. "Where that requires a change of management of the board, we’ll do that."

Geithner also emphatically denied reports that the Administration was working to circumvent Congress' restrictions on executive pay.

"Our obligation is to apply the laws that Congress just passed on executive comp," he said. "And we’re going to do that."

The Sunday talk shows also discussed North Korea's failure this morning to launch a missile that could deliver a payload into orbit. Susan Rice, the U.S. Ambassador to the U.N., appeared on ABC's This Week before heading to New York for an emergency meeting of the Security Council.

"Our assessment is that their pursuit of a missile capability is of grave concern and that their aim is to achieve the capability to deliver a weapon as potentially as -- to North America. I think we have to look at exactly what transpired today and make a new assessment of the consequences," she said.

Obama and team flood Sunday talk shows to discuss the economy, Afghanistan

President Obama joined the Secretaries of Defense and the Treasury this morning on the Sunday talk shows to discuss the economy and the commitment of additional troops to the war in Afghanistan.

Speaking on CBS' Face the Nation the President recounted his tough conversation with the leaders of the nation's top banks.

"What I said was, look, first of all, there are a lot of bankers that are doing good work in the community, that are acting responsibly, that haven’t taken huge risks. I understand that. But understand that for the average single mom who is just barely struggling to pay her mortgage or medical bills for her kid, who is paying her taxes, who is playing by the rules, and then finds out that a taxpayer-assisted firm is paying out multimillion-dollar bonuses, that’s not just not acceptable."

The President reaffirmed his commitment to make permanent the two-year middle class tax cuts passed as part of his recent stimulus package. "I’m going to be pushing as hard as I can to get it done in this budget," he said. "If it’s not done in this budget, then I’m going to keep on pushing for it next year and the year afterwards, so that we don’t see a drop-off after the two-year tax cuts."

Over on ABC's This Week, Treasury Secretary Timothy Geithner stressed that the government's response to the crisis would not end soon. "The lesson of financial crises is governments tend to do too little," he said, "They wait too long to escalate."

On NBC's Meet the Press, the Secretary defended his decision to provide nearly $1 trillion public-private loan guarantees as a simple choice between action and prolonged economic turmoil. "We can let -- leave that as it is, hope that banks earn their way out of this over time. That would be a mistake," he said. "That would leave us with a strong -- with a deeper, longer recession."

The President also discussed his decision to commit additional troops to the war in Afghanistan, saying it was a vital step in combatting Al-Qaida.

"What we want to do is to refocus attention on Al Qaida.," he said. "We are going to root out their networks, their bases. We are going to make sure that they cannot attack U.S. citizens, U.S. soil, U.S. interests and our allies’ interests around the world."

Secretary of Defense Robert Gates agreed on Fox News Sunday that Al-Qaida remained a serious threat, saying that Administration was willing to consider alternate proposals if the troop increase proved ineffective. "I think [The President has] been clear -- and frankly, it was my view in our discussions -- that we don’t want to just pursue -- settle on this strategy and then pursue it blindly and open-endedly," he said.

Senator McCain speaking on Meet the Press endorsed the President's approach, saying: "I think this -- the outlines of this proposal are good. The best way to get out of Afghanistan fast is people to think we’re staying."

Sunday talk shows preview coming budget battle

Administration officials and Congressional Republicans squared off this morning over the President's $3.6 trillion budget outline amidst news that the Congressional Budget Office's forecasts are significantly gloomier than the Administration's own projections.

The CBO announced on Friday that federal deficits would rise an additional $4.8 from 2010-2019, $2.3 trillion more than the Administration's estimates. The difference stems in large part from a disagreement over how fast the economy will grow after it escapes from recession.

"When you get out five, 10 years, they’re assuming that real GDP is only going to grow about 2.2 or 2.3 percent a year," said Christina Romer, chair of the Council of Economic Advisers, on Fox News Sunday. "And that’s just lower than private forecasters. It’s lower than the Federal Reserve. And we think it’s just too pessimistic."

Congressional Republicans, including several powerful moderates, said that the deficits were unacceptably large and would need to be scaled back in the final budget.

Senator Susan Collins of Maine said on ABC's This Week that the debts were "not sustainable," and that they posed "a threat to the basic health of our economy." Senator Judd Greg, who declined to serve as President Obama's Commerce Secretary, called the debts "staggering," and said that deficits of "4 percent to 5 percent of GDP" were "not sustainable under any form of government."

"The practical implications of this," Judd continued, "is bankruptcy for the United States. There’s no other way around it. If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued."

Policymakers also demonstrated their support for Treasury Secretary Timothy Geitner, who received widespread criticism after it was revealed that A.I.G. used part of its bailout money to pay for $165 million in employee bonuses.

"If you’re asking me should he resign," said Senator Chuck Grassley on CBS' Face the Nation, "I don’t think anybody after two months has been tested enough that I would say he should resign. I think he ought to be given some time."

Romer characterized calls for the Secretary's resignation as "really silly."

Members of Congress continued to fume over the A.I.G. bonuses, though it seemed far from certain that the President would sign a House-passed bill reclaiming the bonuses through the tax code.

"Retention bonuses are, to a great extent, extortion," Congressman Barney Frank said. "It is people saying... I’ve got the combination to the safe, and if you don’t bribe me, I’m going to leave and you’ll never be able to open the safe."

Vice Presidential advisor Jared Bernstein responded on This Week that the bill might be "dangerous," saying: “The president would be concerned that this bill may have some problems in going too far – the House bill – may go too far in terms of some legal issues, constitutional validity, using the tax code to surgically punish a small group of people."

Over on NBC's Meet the Press, Governors Ed Rendell and Arnold Schwarzenegger joined with New York City Mayor Michael Bloomberg to discuss their new group, Building America's Future, which will call for substantial investments in the nation's infrastructure.

"This country desperately needs to build a high-speed rail passenger system." Governor Rendell said. "We need to improve our rail freight system. But it's not just transportation.  It's the levees that failed in Cedar Rapids and New Orleans.  It's dams, it's water and wastewater systems. It's so much more."

President's economic advisors forecast eventual economic recovery

As the effects of the President's $787 billion stimulus package continue to take hold, the President's economic advisors this morning emphasized that nation was just beginning to walk the long path to economic recovery.

"We haven’t won yet," said Christina Romer, the chair of the the Council of Economic Advisors speaking on NBC's Meet the Press. "We have staged a wonderful battle. So we have put in place just a host of programs: the stimulus package, the financial rescue plan, the housing plan. We think it’s the right medicine and we think it will work."

Larry Summers, director of the National Economic Council, agreed, saying that while recent short-term gains were encouraging, economic recovery was still a long-term prospect. "We’ve got an economy that’s losing 600,000 jobs a month," he said on ABC's This Week. "That’s probably not going to stop imminently. And so, while there is signs that some of the things that the president is doing are starting to have effects, these problems did not get made overnight. They didn’t get made in a year. And they’re not going to get fixed very rapidly, either."

The President's advisors emphasized that the country was on solid economic footing.

"We know that, that temporarily we’re in a mess, right?" said Romer, before adding "the fundamentals are sound." Summer, on CBS' Face The Nation agreed, saying that Treasury bills would retain their status as "the asset of choice for people around the world."

The Administration is continuing to develop plans to address the toxic assets plaguing bank balance sheets, which remain at the heart of financial sector's unease. "I can tell you that that kind of a blueprint is top on our agenda," Romer said "and I expect it to come out very soon."

Summers did reveal that any eventual plan requiring the use of taxpayer funds would wipe out investors. "No taxpayer in these arrangements is going to lose money until the investor who put up the money has lost 100 percent of the money they put up," he said. "So until whoever it is who buys it, whether it’s an insurance company or a hedge fund, until whoever it is who buys it is completely wiped out, the government financing isn’t going to be touched at all."

Meet the Press host David Gregory asked Romer what responsible consumers should do during the crisis.

"That’s an excellent question," Romer responded. "I think we know that consumers have lost a lot of wealth and that normally what you’d say is they should be saving more. I think the truth is consumers have also not done a lot of spending for the last 14 months.

So what I would predict and I think would be a perfectly reasonable thing is you go out and you buy that car that you’ve been thinking about for 14 months and you do some of the spending. And then, over the long haul, I’m hoping we’ll come back to probably a higher savings rate, because we know we were at kind of a historic low before this all happened."

All eyes focused on banks as stimulus cash starts to flow

It is too soon to tell whether the President's $787 billion stimulus package is working, said Administration official this week on the Sunday morning talk shows. "The money is starting to flow," said Peter Orszag, director of the Office of Management and Budget. "Let’s give it some time to work."

This week money from both the stimulus and housing bills entered the broader economy. Members of both parties are looking for signs that the bills are working as they continue to keep a wary eye on the health of the nation's banking sector.

On NBC's Meet The Press, Senator Charles Schumer and Lindsay Graham agreed that an increased government role may be appropriate for banks that dont' pass the Treasury's coming stress tests. "And when the stress tests are administered and you can see that this bank is a zombie bank," Graham said, "I think there’s growing political will that we’re not going to keep throwing good money after bad."

Senator Richard Shelby speaking on ABC's This Week took an even harder line. "I don't want to nationalize," he said. "I think we need to close them... If they’re dead, they ought to be buried."

"I don’t think they’ve made the tough decisions," Senator McCain agreed on Fox News Sunday. "Some of these banks have to fail."

The $410 billion omnibus spending bill with its nearly 8,600 earmarks also drew considerable attention. President Obama has signaled that he will sign the spending bill, which was negotiated largely before he assumed office, even though he strongly criticized earmarks during his campaign.

"...This is like your relief pitcher coming in into the ninth inning and wanting to redo the whole game," Peter Orszag explained. "Next year, we will be the starting pitcher and the game is going to be completely different."