Former US vice-president Dick Cheney says intelligence extracted from tough interrogations of suspected al-Qaeda militants had saved “perhaps hundreds of thousands” of US lives.

“No regrets. I think it was absolutely the right thing to do,” he said on CBS television arguing that techniques decried by critics as torture were essential to break the resistance of captured extremists.

Cheney said, arguing again that al-Qaeda was bent on attacking a US city with a nuclear device:

“I’m convinced, absolutely convinced, that we saved thousands, perhaps hundreds of thousands, of lives,”

But at the annual dinner of the White House Correspondents’ Association late on Saturday, President Barack Obama skewered Cheney’s doomsday view of the world for comic effect.

“Dick Cheney was supposed to be here but he is very busy working on his memoirs, tentatively titled How to Shoot Friends and Interrogate People,”

In one of his first acts as president, Obama reversed predecessor George W Bush’s approval of harsh interrogation methods such as “waterboarding”, or simulated drowning.

Recently released memorandums detail the reasoning used by Bush administration lawyers to justify waterboarding and other techniques such as sleep deprivation, physical slaps and painful “stress positions”.

Cheney reaffirmed his belief that Obama had made the US more vulnerable to attack, and condemned calls by Democratic lawmakers for the Bush legal officials to face prosecution.

“The memos do exist. I have seen them. I had them in my files at one time. Now everything is part of the National Archives. I’m sure the agency (CIA) has copies of those materials,”

“If we’re going to have this debate, it ought to be a complete debate. Those memos ought to be out there for people to look at and journalists like yourself to evaluate in terms of what we were able to accomplish.”

Obama’s national security advisor, General James Jones, dismissed Cheney’s claim that the US was now less safe from attack.

“Oh, I don’t believe that,” the former supreme commander of NATO told ABC, rebutting Cheney’s arguments for the interrogations and for detaining terror suspects without trial in Guantanamo Bay.

“And I think frankly in the Bush administration, there wasn’t complete agreement with the vice-president on that score,”

Obama, he added, was “absolutely committed” to upholding the rule of law while protecting the nation.

While Bush has kept a low profile since leaving office, Cheney has repeatedly gone on the airwaves to defend his own legacy as probably the most powerful US vice-president ever.

“If I don’t speak out, then where do we find ourselves? Then the critics have free run and there isn’t anybody there on the other side to tell the truth,” he said, adding he was prepared to testify in Congress if necessary.

Cheney also heaped scorn on his one-time cabinet rival, former secretary of state Colin Powell, who has been vilified by right-wing radio host Rush Limbaugh after endorsing Obama for the presidency.

“If I had to choose in terms of being a Republican, I’d go with Rush Limbaugh, I think,”

“My take on it was Colin had already left the party. I didn’t know he was still a Republican”.

Cheney said there was still “room for moderates in the Republican Party”, but that the party should stay true to its core principles and not “move dramatically to the left”.

The Democratic Party’s national committee responded:

“It’s sad that because Republican leaders in Congress are so devoid of ideas and direction that Dick Cheney has emerged as the party’s leading voice.”

Technorati Tags: barack obama, Dick Cheney, george w. bush, sleep deprivation, torture techniques, waterboarding

Barack Obama will make his long-awaited address to Muslims in Egypt on June 4, accelerating his bid to mend the US image in the Islamic world from an epicentre of Arab civilisation.

The speech, fulfilling an Obama campaign promise, will focus on how Americans and Muslims abroad can secure the “safety and security” of their children in a more hopeful future, Obama spokesman Robert Gibbs said.

The trip, certain to unfold amid a massive security operation, will come as Obama tries to ignite stalled Middle East peace efforts and will represent his most significant attempt yet to engage the Muslim world.

Arabs and Muslim believers across the world have been alienated by the war in Iraq, abuse of prisoners at Abu Ghraib jail outside Baghdad and the Guantanamo Bay “war on terror” camp which Obama has ordered closed.

Gibbs said that the exact venue for the speech had yet to be decided, but most speculation will centre on Cairo, the capital of Egypt, the most populous nation in the Arab world.

“On June 4, the president will give a speech in Egypt. The speech will be about America’s relations with the Muslim world,”

He added that there were no plans for Obama to make any further stops in the Middle East during the visit, which will precede a trip to France and Germany focusing on World War II commemorations.

The president promised during his 2008 election campaign to make a speech at a major Islamic forum within the first 100 days of his administration which ended last week, but the timetable slipped for logistical reasons.

As Obama tries to kick start Middle East peacemaking, the visit will follow trips to Washington by Israeli Prime Minister Benjamin Netanyahu, Egyptian President Hosni Mubarak and Palestinian leader Mahmud Abbas.

Obama is also trying to coax sworn US foe Iran to the negotiating table in a bid to halt the Islamic state’s nuclear program.

Gibbs defended Obama from claims that by choosing Egypt, where the State Department says there are

“significant restrictions on the political process and freedom of expression” the US president was watering down US support for democracy promotion abroad.

“It is a country that in many ways represents the heart of the Arab world,”

“I think it will be a terrific opportunity for the president to address and discuss our relationship with the Muslim world.”

Obama last month reached out to Muslims from the well of the Turkish parliament.

“You cannot put out fire with flames,”

Obama said, arguing that brute force alone could not thwart extremism as he sent a flurry of coded messages throughout the Middle East.

Obama, who spent part of his childhood in Indonesia and is the son of a Kenyan father of Muslim heritage, drew on his own biography as he sought to forge new trust with the Islamic world.

The president said US ties with Islam could not be simply defined by opposition to terrorism, decades into a US struggle with extremism that was sharpened by the September 11 attacks in 2001.

“The United States has been enriched by Muslim Americans. Many other Americans have Muslims in their family, or have lived in a Muslim-majority country – I know, because I am one of them.”

Within days of taking office in January, Obama launched his effort to engage the Muslim world by granting an interview with the Al-Arabiya television network.

Jon Alterman, the director of the Middle East Program at the Centre for Strategic and International Studies here said:

“Obama has created a combination of curiosity and excitement throughout the Middle East,”

“He embodies change in a region where many people are terribly thirsty for political change.”

The White House also said Friday that Obama will visit the German city of Dresden and the former Nazi death camp at Buchenwald in June 5, before travelling onto D-Day commemorations in France.

Obama’s great-uncle, Charlie Payne, took part in the liberation of part of the Buchenwald camp in 1945 with the US Army but Gibbs said it was unclear whether he would travel with the president.

Payne was a private in the 89th Infantry Division during World War II when he took part in the liberation of Ohrdruf, a forced-labour camp that was part of Buchenwald.

Technorati Tags: barack obama, egypt, Middle East, Muslims

President Barack Obama directed his administration Monday to allow unlimited travel and money transfers by Cuban Americans to family in Cuba, and to take other steps to ease U.S. restrictions on the island.

The formal announcement was being made at the White House Monday afternoon, during presidential spokesman Robert Gibbs’ daily briefing with reporters. The official spoke on condition of anonymity so as not to upstage the president’s announcement.

With the changes, Obama aims to create new space for the Cuban people in their quest for political freedom and a democratic government, in part by making them less dependent on the Castro regime, the official said.  Other steps taken Monday include allowing gift parcels to be send to Cuba, and issuing licenses to increase communications among and to the Cuban people.

About 1.5 million Americans have relatives in Cuba.Obama had promised to take these steps as a presidential candidate. It has been known for over a week that he would announce them in advance of his attended this weekend of a Summit of the Americas in Trinidad and Tobago.

“There are no better ambassadors for freedom than Cuban Americans,”

Obama said in a campaign speech last May in Miami, the heart of the U.S. Cuban-American community.

“It’s time to let Cuban Americans see their mothers and fathers, their sisters and brothers. It’s time to let Cuban American money make their families less dependent upon the Castro regime.”

Sending money to senior government officials and Communist Party members remains prohibited.

Restrictions imposed by the Bush administration had limited Cuban travel by Americans to just two weeks every three years. Visits also were confined to immediate family members.  Other steps taken Monday include expanding the things allowed in gift parcels being sent to Cuba, such as clothes, personal hygiene items, seeds, fishing gear and other personal necessities.

The administration also will begin issuing licenses to allow companies to provide cell and television services to people on the island, and to allow family members to pay for relatives on Cuba to get those services, the official said.

Also in that Miami speech nearly a year ago, Obama promised to depart from what he said had been the path of previous politicians on Cuba policy –

“they come down to Miami, they talk tough, they go back to Washington, and nothing changes in Cuba.”

“Never, in my lifetime, have the people of Cuba known freedom. Never, in the lives of two generations of Cubans, have the people of Cuba known democracy,”

he said then.

“This is the terrible and tragic status quo that we have known for half a century — of elections that are anything but free or fair; of dissidents locked away in dark prison cells for the crime of speaking the truth. I won’t stand for this injustice, you won’t stand for this injustice, and together we will stand up for freedom in Cuba.”

He also promised to engage in direct diplomacy with Cuba, “without preconditions” but with “careful preparation” and “a clear agenda.”

Some lawmakers, backed by business and farm groups seeing new opportunities in Cuba, are advocating wider revisions in the trade and travel bans imposed after Fidel Castro took power in Havana in 1959.

Technorati Tags: barack obama, Cuba, Robert Gibbs

Stephen Colbert, a comedian who plays a slightly goofy conservative Republican, began his Comedy Central TV show The Colbert Report this week brandishing a pitchfork.

“Nation! I am enraged!” he yelled to his audience.

“AIG announced this week that they are giving executives $US165 million in bonuses. Excuse me? That bail-out money is supposed to be used responsibly – in ways we never see, to prop up businesses we don’t understand,”

“Well, the Government says they can’t stop it, but we can, folks! Our founding fathers knew that when the rights of the people get trampled we must become a torch-and-pitchfork-wielding mob, empty of all thought.”

“Let’s go get AIG!” he said, brandishing his pitchfork as his audience cheered wildly.

Colbert’s skit came uncomfortably close to the mark.

Americans – who have spent a year watching jobs disappear by the hundreds of thousands, unemployment rise to a 25-year high of 8.1 per cent, their neighbourhoods decimated by foreclosures and their pension plans slashed by a stockmarket they barely understand – are viscerally angry.

But it is not just outrage at the sheer chutzpah of those at AIG who took bonuses after the company was given $US170 billion of taxpayer funds just to survive.

The AIG bonuses have laid bare the unbridled greed that has driven US-style capitalism in the past decade, confronting even the most staunch defenders of deregulated markets. It has exposed a lack of moral compass in the system and it has rattled Americans’ faith that the best and brightest will rise to the top and be justly rewarded.

Just as disturbing for some Americans, though, are the solutions that President Barack Obama proposes:

- that Government should intervene more strongly, that it should spend billions of taxpayers’ dollars and their children’s tax dollars to rescue companies and banks,

- that it should spend up big on government projects to save the economy.

This isn’t how American capitalism works, either.

It all boiled over this week. Ordinary Americans jammed phone switches at talkback radio stations, flooded blogs and TV stations with emails and deluged their Congressional representatives as the news about AIG and bonuses to executives kept coming.

The company has been forced to enhance security at the Connecticut and London offices of its financial products division, the part of the company at the eye of the storm over bonuses. It was this group of just 350 people whose trade in risky credit default swaps – essentially insurance on the value of mortgage-backed securities – brought the venerable insurance giant undone.

The lawmakers have responded quickly and with a vehemence that is almost as unseemly as Colbert’s mock call to arms. An Iowa Republican senator, Chuck Grassley, went on radio to suggest that the bonus recipients should “follow the Japanese example” and either resign or commit suicide.

Washington has staged its own version of a pillorying. The chief executive of AIG, Edward Liddy, was called before a House of Representatives committee on Wednesday, where he was lectured and harangued about the bonus payments, even though he took over in October at the request of the Government – for a $1 salary – and played no part in writing the bonus schemes. He’d looked into stopping the payments but decided he had no legal avenues.

“Malfeasance” and “a complete violation of trust in the people who invested in your company,” said Representative Stephen Lynch, a Democrat from Massachusetts.

“We have teachers right now across the nation that are receiving pink slips, especially in the state of California. I mean, they’re doing an excellent job, and yet they’re not getting bonuses.”

Liddy was repeatedly asked to name names, which he refused to do, saying he feared for the safety of his staff. Some, he said, had already handed back the bonuses – ostensibly part of a scheme to retain key staff – which range from $US6 million to about US$100,000. Angered at his refusal, Representative Barney Frank said he would subpoena them.

Next week it will be the turn of the Treasury Secretary, Tim Geithner, and Chairman of the Federal Reserve, Ben Bernanke, for a public flogging as congressmen seek to find someone – anyone – to blame for what the White House called “outrageous” payments.

Meanwhile, President Obama was trying to harness the public anger to drive his push for more regulation and more intervention to stabilise the financial market.

“I don’t want to quell anger. I think people are right to be angry. I’m angry. What I want us to do, though, is channel our anger in a constructive way,”

Polls show he still has a big stock of political goodwill. Some 59 per cent of people approve of the way he is handling the economy, while 40 per cent disapprove, according to a CNN poll taken last weekend, before the AIG crisis erupted.

The same poll showed that 86 per cent of people want his policies to work, although a smaller number – 64 per cent – think they are more likely to work than fail.

But President Obama is walking a fine political tightrope.

In this volatile environment, that political capital could quickly evaporate, putting at risk not just his future ability to convince Congress to support further measures to save American banks, but also his own chances of being more than a one-term president.

In the short term, keeping the American public’s trust in his ability to handle the economy is paramount.

During the election campaign he faced Republican attacks that he was a socialist or, worse, a communist. The tom-toms have begun to beat again about Obama’s liberal agenda.

Last week Obama hit back, telling a small business round table he was a “strong believer in the free market“.

“I believe that our role as lawmakers is not to disparage wealth but to expand its reach, not to stifle the market but to strengthen its ability to unleash the creativity and innovation that still makes this nation the envy of the world,”

But in trying to impose remuneration caps, he risks giving the Republicans more ammunition to attack, while at the same time raising expectations too high on Main Street that he can curb the excesses of Wall Street.

Just as outrageous as the bonuses was the culture of Wall Street, based on greed, excess risk-taking and a bubble-and-bust mentality, he said on Wednesday.

“The financial regulatory package that we’re designing, as well as the economic policies that we want to put in place, are going to put an end to that culture,”

Obama is also grappling with another serious problem. His Treasury Secretary, Tim Geithner, who was confirmed despite overlooking $US43,000 in tax, is now a target, thanks in part to his poor performance in selling the Government’s plan for dealing with toxic assets.

Geithner insists he did not know about the AIG bonuses until last Tuesday – just days before the bonuses were paid – but Liddy insists he told the Federal Reserve staff months ago and he assumed they were keeping Treasury and the White House informed.

The who-knew-what-when drama is now consuming the Washington media, even though Geithner was clearly not responsible for the bonuses and commonsense says that he might have had a few more pressing issues on his desk than $US165 million in bonus payments.

Whether it’s fair or not, the newly-minted President has a serious political problem on his hands.

On Intrade, a futures contract is being offered that Geithner will not survive beyond June. On Wednesday, Connie Mack, a junior Republican in Congress, and some traders on Wall Street went so far as to call for Geithner to quit. The Republican leader of the House, Representative John Boehner, said the Treasury Secretary was “on thin ice”.

President Obama, however, expressed “complete confidence” in Geithner and his economic team.

Mr Obama told reporters as he left for California on Wednesday:

“Tim Geithner didn’t draft these contracts with AIG,”

“There has never been a secretary of the Treasury, except maybe Alexander Hamilton during the Revolutionary War, who’s had to deal with the multiplicity of issues that Secretary Geithner is having to deal with – all at the same time.”

“He is making all the right moves in terms of playing a bad hand,”

But Obama knows that the handling of the economy is the yardstick against which he will be measured by the American people in four years, and selling that message of competence is crucial to his survival.

For the Republicans, too, the AIG bonus affair has thrown into sharp focus the party’s internal conflicts.

Several Republicans gleefully reminded their Democratic colleagues this week that they did not support government bail-outs in the first place. The decision to bail out AIG was the policy misstep, not the bonuses themselves.

Others, heeding the public outrage, were more focused on how to prevent such payments in the future.

By Thursday, when a bill to tax the AIG payments at 90 per cent went to a vote, it seems that outrage and free-market capitalism had claimed roughly even numbers.

Eighty-seven Republicans, joined by six Democrats, voted against the bill. Boehner described the bill as a “sham” which would not work.

But 85 Republicans voted alongside 243 Democrats for the measure, which needed a two-thirds majority. The Senate is due to vote on a similar bill next week.

Obama’s success in crafting a new, more morally-centred form of US capitalism will need the support of some of those Republicans down the track.

His huge agenda of regulating the markets more effectively will be just one plank in an agenda that is, perhaps, more weighty than any other in history.

Technorati Tags: AIG, barack obama, Stephen Colbert, Tim Geitnet

If ever the world would have forgiven a man for not being able to walk and chew gum at the same time, it would have been now. No one would blame Barack Obama if he focused exclusively on the economic crisis, pushing the foreign policy in-tray to the back of his desk. After all, there’s only so much even a Messiah can handle.

For all that, the new US President has crammed a slew of foreign policy moves into his first six weeks, any one of which would have made big news in normal times.

Instead, in the age of global economic meltdown, they have had to fight for more than fleeting media attention.

Most visible have been the big declarations, whether announcing the beginning of the end of the Iraq war, avowing that “the United States of America does not torture” or ordering that Guantanamo be closed.

In just the last week, we’ve had the Secretary of State, Hillary Clinton, dispatching officials to Syria as well as inviting Iran to talks on the future of Afghanistan – extending a hand to two states previously consigned to outer darkness.

The start of the month brought the revelation that Obama had written a secret letter to his Russian counterpart, Dmitri Medvedev, hinting at a deal in which Moscow would lean on Iran, urging it to abandon its quest for nuclear weapons, in return for the US scrapping its planned installation of a missile defence system in Russia’s eastern European backyard. A gesture to cap it all: the Obama Administration has moved to ease trade and travel restrictions with Cuba.

The question – 50 days into the administration – is:

is there a common thread of logic running through these moves, one that we might describe, however prematurely, as the Obama doctrine?

The first unifying theme, sounded minutes after he took the presidential oath, is a repudiation of the legacy of his predecessor. Obama is determined to signal to the world that he is the unBush. Some on the left and right alike have suggested that this is more symbolic than real, that in fact the basic lineaments of US policy remain in place.

Obama will keep rather a lot of troops in Iraq until the end of 2011, just as the Bush administration planned; he has intensified US involvement in Afghanistan, sending 17,000 more troops; and Robert Gates, George Bush’s defence secretary, remains in this post under Obama.

Put that to the Obama team and they don’t wholly deny it. The US did not become a different country on January 20, they say; its interests have not changed overnight.

What no one denies is that there is a clear advantage for the US in the rest of the world believing that a profound change has come about. Which is why the declaration by the Vice President, Joe Biden, that the US is pressing the “reset button” has become the current catchphrase of US diplomacy.

A benign assessment of the Obama record so far would see two other early traits.

The first is a readiness to speak the truth. Asked by The New York Times last week whether the US was winning the war in Afghanistan, he replied tersely: “No.”

After the Bush years, when those who followed the evidence were dismissed as dullards imprisoned in the narrow-minded confines of the “reality-based community”, such candour is a relief!

Second, there are some signs of imaginative thinking. Deploying the veteran of the Northern Ireland peace process, George Mitchell, to the Israel-Palestine conflict is one of those ideas that seems obvious – but only because it makes so much sense. The same goes for allocating the Afghan-Pakistan, or “Afpak”, file to the hardball maestro Richard Holbrooke.

But plaudits surely go to Obama’s direct appeal to Medvedev, with its echoes of the former US president John Kennedy’s resolution of the Cuban missile crisis of 1962. Just as JFK agreed to remove US missiles from Turkey if the Soviet Union took theirs away from Cuba, so Obama implicitly made a similar offer to Russia: you get Iran to back down and I’ll remove my interceptor missiles and radar stations from Poland and the Czech Republic. If such an initiative were to work, the knock-on effects would be multiple.

Take one: Israel has long hinted that if its friends were to make the Iranian threat go away, it would respond by moving forward on the peace track. For a long while that was assumed to mean military action against Iran. But if Obama’s Russia gambit were to succeed – and the critics claim Gates started work on these lines a year ago – the goal of an Iranian nuclear freeze, with all its ancillary benefits, would be achieved without a shot being fired.

To be clear, this is not guitar-strumming hippie dovishness, as the escalation in Afghanistan confirms – though one administration official warns against overinterpreting that move. It is a “time-buying exercise”, he says, ensuring things don’t get worse on the ground while the White House undertakes a strategic review of the entire Afpak region, from where, it argues, every major al-Qaeda attack since September 11, 2001, has emanated.

I’m told this was the thrust of Biden’s message to NATO’s North Atlantic Council in Brussels this week: not some kind of “wussy multilateralism”, with lots of cosy meetings and platitudes, but a “results-oriented” desire to get things done – and the belief that that only happens when the world acts in concert.

To be sure, these are only the early signals in the early days. But from a President with his hands full, they are encouraging.

Technorati Tags: Afghanistan, barack obama, george w. bush, President

BARACK OBAMA’S bold experiment in bipartisanship has taken another hit with his second nominee for commerce secretary, the Republican senator Judd Gregg, abruptly withdrawing his nomination citing “irresolvable differences”.

Senator Gregg pointed to the stimulus package and changes to the Census Bureau as the two areas where he could not support Administration policy.

The bones of the stimulus package have been public for weeks. But the Census Bureau issue has been festering behind the scenes after the White House indicated it wanted to move it from the Commerce Department to an independent agency reporting to the White House.

The bureau is crucial; it is not only used for determining funding to programs but also to redistribute congressional districts.

Mr Gregg was the second nominee for the important post of commerce secretary. Bill Richardson, the Democratic Governor of New Mexico, withdrew because of a federal inquiry into donations.

When Senator Gregg came to his decision is unclear and two separate statements were issued – one from the senator and another from the White House spokesman, Robert Gibbs – suggesting tensions.

Mr Gibbs said it was Senator Gregg who had “reached out to the President and offered his name for secretary of commerce”.

Senator Gregg said that he had thought he could bring some ideas and views that would assist the President at this difficult time.

“I especially admire his willingness to reach across the aisle,” he said.

“However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the census there are irresolvable conflicts for me.”

This latest setback in Mr Obama’s bipartisanship experiment is likely to further polarise the vote on the stimulus package.

There have been rumours that up to 20 Republicans, other than the three renegades who have been involved with negotiations, would support the bill in its final form.

Speaking in Peoria, Illinois, where he paid a visit to the Caterpillar factory, the President highlighted the fact that his Transport Secretary, Ray LaHood, who is from Peoria, was a Republican. Mr Obama said he would keep working on a bipartisan approach; Americans were “desperate” for Republicans and Democrats to co-operate.

The fact that Mr Obama was in the Caterpillar factory campaigning in the same way as he did during the election shows that the experiment in bipartisanship is not going smoothly.

Mr Obama has let Republicans paint his stimulus package as irresponsible spending – and their message has started getting traction.

Polls show that while Mr Obama enjoys enormous personal approval, there are serious reservations about his stimulus package.

As a result Mr Obama has reverted to his old campaign strategies, taking his message on the road and directly to the public.

But in some good news for the President, his pick for director of the CIA, the veteran Democratic politician Leon Panetta was confirmed by the Senate late on Thursday.

Technorati Tags: barack obama, Bill Richardson, bipartisanship, Census Bureau, Judd Gregg, Ray LaHood, White House

OBAMA Administration officials have intensified pressure on Congress to pass a huge stimulus package, warning of the consequences of delay.

The White House asked the Treasury Secretary, Timothy Geithner, to focus on winning congressional support for the bill instead of detailing an initiative to aid financial firms, consumer credit markets and struggling homeowners. The announcement of that rescue plan was moved to today.

The Senate was due to hold a procedural vote yesterday on the stimulus package to determine whether a compromise reached at the weekend, which removed about $US100 billion in spending from the bill, would persuade enough Republicans to support it.

Even if senators approve the bill, which carries an $827 billion price tag, they face the daunting task of negotiating a final bill with the House, which passed its own version last week with far more spending proposals and fewer tax cuts. Democratic aides said it could be difficult to get the stimulus to President Barack Obama’s desk by Congress’s self-imposed deadline of Friday.

Mr Obama will fly to Elkhart, Indiana, where unemployment has soared to 15.3 per cent – about twice the national average – before holding a news conference to urge congressional leaders to quickly reconcile the two versions of the bill.

The Administration’s top economic officials said that as negotiations progress, Mr Obama is interested in restoring support for education and for state and local governments – measures stripped out in the Senate version of the plan.

To persuade enough moderate Republicans to vote for it, leaders also added tax credits for home and vehicle purchases.

The administration played down differences between the House and Senate measures, saying it was critical that Congress act swiftly. “The most important thing is to get this done for the sake of an economy that lost 600,000 jobs in one month,” Lawrence Summers, the director of the National Economic Council, said on Sunday.

Many Republicans have called the plan unfocused and wasteful, and complain that they have been locked out of the bill-writing process, despite Mr Obama’s public efforts to reach out to Republicans.

The Republican senator John McCain of Arizona said:

“I know we’re in trouble. I know America needs a stimulus. We need tax cuts. We need to spend money on infrastructure and on other programs that will immediately put people to work. But this is not it.”

Technorati Tags: barack obama, democrat, john mccain, stimulus bill, Timothy Geithner

BARACK OBAMA will hit the road today in an attempt to inject fresh momentum into his stimulus package and his presidency, after moderate Republicans in the Senate struck a deal with the Democratic leadership slicing more than $US100 billion off the $US920 billion package.

Mr Obama will head to Indiana today and Florida tomorrow, areas that have been hit by big job losses, to campaign for the quick reconciliation of the House of Representatives and Senate versions of his rescue plan.

“If we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe. Millions of Americans will lose their jobs, their homes, and their health care. Millions more will have to put their dreams on hold,” he said in his weekly address on Saturday.

The President’s decision to take his pitch for a speedy implementation of the package to Middle America was “a return to the campaign-style approach and aggressiveness that echoes the toughest days of his battle with Hillary Clinton”, The Washington Post said.

Both states were regular stops on the Obama itinerary as he fought his way to the White House.

Senate Democratic leaders have signalled a procedural vote late today local time to clear its path. Assuming 60 senators vote yes in that vote, a final Senate vote on the package will be held at noon tomorrow, media reports said.

The bill then needs to be harmonised with the version passed by the House – and there are some significant differences, including two versions of the Buy American provisions, more spending in the House version, and more tax cuts in the Senate version. It then needs to pass both houses again.

Senator Collins warned:

“If the bill comes back from harmonisation with lots of wasteful spending re-inserted or over $800 billion, it will not have my support.”

The Democrats’ leader in the House, Nancy Pelosi, made clear her displeasure at the cuts. Speaking at a Democratic Party retreat, she said the proposed reductions “do violence to what we are trying to do for the future”, especially on alternative energy and education, two areas Democrats believe were long neglected under George Bush. “The cuts are very damaging.”

But for now, Mr Obama said he was “pleased the process was moving forward”.

The bipartisan deal was cut after two days of talks, in which the White House chief of staff, Rahm Emanuel, played a crucial role.

Spending on upgrading federal buildings to make them more efficient and spending on education has been shaved back.

The goal of the bill is to save or create up to 4 million jobs over the next two years, helping to offset the loss of 3.6 million jobs since December 2007, when the nation began its descent into what economists predict will be the worst recession since the Great Depression.

The President wants to sign the bill before President’s Day next Monday.

Technorati Tags: Arlen Specter, barack obama, hillary clinton, President, revised spending plan, Suan Collins

US PRESIDENT Barack Obama’s Democratic Senate allies unveiled a pared-down plan to pump at least $US780billion into the ailing US economy and vowed to pass it this week.

“We’re doing everything we can to make sure that this severe recession we’re in does not become another Great Depression,” Senate Democratic majority leader Harry Reid said, as all but a handful of Republicans vowed to oppose the deal.

The accord’s price tag would be far smaller than the $US937billion previously under consideration, a reduction aimed at winning over elusive Republican support that was entirely absent when the House of Representatives passed its $US820billion version of the measure.

If the measure clears the Senate, both chambers would reconcile their rival bills, and then vote on the resulting final product – which Mr Obama has said he wants to see on his desk by February 16.

Politicians were to resume debate on the measure in a rare weekend session.

Senator Reid signalled that he believed his 58 Democrats had enough Republican support to secure the 60 votes needed to thwart any parliamentary delaying tactics and said he hoped for a vote “as early as we can next week”.

The new compromise measure emerged under pressure from the White House and ever-grimmer unemployment numbers.

“We trimmed the fat, fried the bacon and milked the sacred cows,” said Democrat Senator Ben Nelson, a leader of the group.

The final cost could rise to about $US800billion because of various amendments still pending, Senate sources said as Republican foes of the original package quickly trained their guns on the new agreement.

Republicans said their calculations put the new bill at roughly $US830billion, plus nearly $US350billion in debt service – meaning the overall price tag was about $US1.2trillion.

“We’re talking about an extraordinarily large amount of money and a crushing debt for our grandchildren,” said Senator McConnell.

“If this legislation is passed, it will be a very bad day for America,” said Republican Senator and failed presidential candidate John McCain.

At the White House, spokesman Robert Gibbs highlighted catastrophic job loss figures and declared:

“We are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs.”

Technorati Tags: barack obama, Economy, Harry Reid, Mitch McConnell, President, stimulus package

Last week Barack Obama chided Wall Street for its “shameful” greed.

This week he did something about executive pay packets, beginning with the banks seeking large amounts of taxpayer assistance.

Under new restrictions, a company seeking government help must cap executive salaries at $US500,000 a year.

“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded,” the President said when announcing the salary caps.

“But what gets people upset – and rightfully so – are executives being rewarded for failure. Especially when those rewards are subsidised by US taxpayers.”

Mr Obama said the bonuses and salary packages that made the headlines during the economic crisis were not only “in bad taste – it’s a bad strategy“.

“We’re going to be demanding some restraint in exchange for federal aid – so that when firms seek new federal dollars we won’t find them up to the same old tricks.”

Stock options will be permitted but they cannot be exercised until the company repays the capital and interest to the Government. But the measures will affect only a small group of companies and are not retrospective. The rules, which will presumably be included in loan agreements, apply only to companies that receive the deep-pocket, tailor-made assistance given to Citigroup, AIG and Bank of America.

Other companies receiving more generalised capital access assistance will be asked to comply with “guidance” measures proposing a similar $US500,000 cap, unless waived specifically by shareholders.

The companies will be expected to disclose their remuneration packages publicly and, if executives are discovered to have misled the markets about the state of the company, they will be subject to repaying any bonuses paid to the top 25 executives.

Mr Obama has been a big believer in the power of the bully pulpit, and he hopes to shame senior executives into restraint.

On Wednesday Wells Fargo – which had received billions to help it buy the struggling Wachovia Bank – cancelled a lavish event planned for the Wynn casino in Las Vegas after an outcry in the media and reprimands from members of congress. It will pay the hotel hefty compensation.

Bank of America has put up for sale three corporate jets and a helicopter owned by the newly acquired Merrill Lynch.

“As part of an ongoing cost reduction effort, we have been scaling back on our use of corporate aircraft including selling three we own and the Merrill Lynch helicopter,” said a spokesman, Scott Silvestri.

The Partnership for New York, a business lobby group warned the salary restrictions could damage the city.

“Without the talent of Wall Street to bring us back into a position of leadership in the global economy, we’re going to be in bad shape,” said a spokeswoman, Kathryn Wilde.

Technorati Tags: barack obama, Economy, politics, President, restraint, wall st