Morning Must Reads
By: Chris Stirewalt
Political Editor
06/03/09 7:56 AM EDT
Washington Post -- President Pivots on Taxing Benefits
As the details of the discussion between President Obama and top congressional Democrats on health care seep out, a few things are coming into view.
Obama wants a state-run component to his health care plan even if it means jamming through a bill on a party-line vote. To pay for it, he is willing to do what he mercilessly attacked John McCain for proposing during the election: taxing private health insurance benefits.
Writer Ceci Connolly got the word that with Obama’s proposed revenue sources, like decreasing the deductions for charitable giving and selling global warming credits, looking shaky in Congress the president is willing to tax health care benefits to get what he has dubbed the top priority for his first year in office.
But while McCain wanted to use the money to provide vouchers for the uninsured and the tax to change consumer behavior, Obama needs the dough to make a down payment on a massive, government-run program that will compete with private insurance companies.
"For the first time in American history, he wants to tax your health benefits," Obama said in September. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too."
Strongly desiring to declare a health-care victory this year, Obama is now taking a more nuanced approach, aides said. "His style of leadership is to say, let's not get bogged down; let's keep moving forward," said one senior adviser who was in yesterday's meeting. "He's not ruling anybody's ideas out."
Wall Street Journal -- Obama Must Address Skeptics in Cairo
The Muslim world President Obama will address on Thursday is young, underemployed and frustrated by promises of reform unmet.
Obama huddles today with King Abdullah of Saudi Arabia as he prepares for his speech in Cairo tomorrow, promised since the fall, that the president claims will help reset relations between the U.S. and the 1.4 billion Muslims in the world.
With new polling showing that Americans are not too keen to open a dialogue with the nations of Islam (40 percent have an unfavorable view, 21 percent have a favorable view), the president may be hard-pressed to offer more than platitudes and his own biography, including a Muslim lineage and a youth partly spent in a Muslim land.
Writers Margaret Coker and Ashraf Khalil explain that without making a policy pivot or denigrating U.S. policy, Obama may have a hard time sealing the deal with his intended audience.
“One key audience for Mr. Obama is Muslim youth. Young adults make up about 30% of the region's population, while in countries like Saudi Arabia and Iran, the percentages are higher. Students from Cairo University and the city's Al Azhar seminary will be among the estimated 3,000 people attending the speech, according to Egypt's state-run press.
Despite growing economies in parts of the region, the aggregate unemployment rate for young adults in the region is almost 25%, compared with a world average of 14%, according to the International Monetary Fund.
Amid such disadvantage, Mr. Obama's personal history still strikes a chord, making him personally popular in Egypt and elsewhere in the Muslim world. But for Cairo residents like 22-year-old business graduate Ereny Abdumalek, the visit doesn't make it any easier for her to achieve her potential. ‘There's a lot of Egyptian youth who can't find a job even though we have university degrees. We can't find housing. Who can fix those problems?’ asks Ms. Abdumalek, who works at her father's open-air market stall.”
Bloomberg -- Treasuries Rise Before Fed Speech and Purchases Today, Tomorrow
International markets were down and U.S. Treasury bonds were going fast as Federal Reserve Chairman Ben Bernanke was preparing his testimony before Congress today. Bernanke is expected to warn of a potentially jobless recovery and to raise the option that the Fed will print more money to buy up more U.S. debt. The $300 billion approved by the Fed to soak up debt will hit the bond market today and Thursday.
Bond buyers were getting in early because the Fed buying up the debt enhances competition, bringing down the interest the government must pay on bonds, helping access to credit for all. But the harm to the value of the dollar and the specter of crippling inflation grows with each dollar printed.
Writers Bo Nielsen and Wes Goodman explain:
“Yields declined for a second day after former Fed Chairman Paul Volker said yesterday that a full U.S. economic recovery is “years” away and before current Chairman Ben S. Bernanke addresses the House Budget Committee today. The central bank is due to purchase securities today and tomorrow as part of its plan to cap borrowing costs.
“The market will follow the biggest buyer,” said Stuart Thomson, an international fixed-income manager in Glasgow at Ignis Asset Management, which oversees about $108 billion. “There’s a 60 percent chance the Fed will add to its Treasury purchases. The economy is still very fragile.”
Philadelphia Inquirer -- Christie wins N.J. GOP gubernatorial primary
In what looks like good news for Republicans, the stronger of the two candidates to try to unseat wildly unpopular New Jersey Gov. Jon Corzine won the GOP primary.
Writer Cynthia Burton explains that Democrats savaged former U.S. Attorney Chris Christie throughout the primary for alleged ethical violations in awarding federal contracts to law firms in hopes of facing his small-town mayor opponent. And the hits will keep coming as mega-rich Corzine launches a campaign that will probably set a new record for dollars spent per vote and national Democrats rush in to prevent a gubernatorial loss there and in Virginia – the only two major races this year.
But if taxes and unemployment keep going up in New Jersey and the national GOP gets on board with Christie, the corruption-fighting former prosecutor could have a chance.
“By calling out Corzine for New Jersey's high taxes, debt level, and unemployment rate, Christie, too, took a shot at what some regard as Corzine's greatest strength - his financial background as former chairman of Goldman Sachs.
The attack served two purposes, analysts say. He was seeding his general-election message, and showing the state's estimated one million registered Republicans that he could fight Corzine in the fall.
For his part, Corzine stayed behind the curtain, acting gubernatorial and letting surrogates attack Christie.
But Democrats chided Christie for being vague on budget and tax matters, having an ethical blind spot, and being aligned with former President George W. Bush - lines of attack likely to play out in the general election.”
Los Angeles Times -- Governor pushes lawmakers for quick action on budget cuts
In a speech to a joint session of the state legislature, Gov. Arnold Schwarzenegger has put a timeline on California’s pending budget collapse – pass massive cuts by June 15 or the state will run out of cash by the end of July.
Writers Michael Rothfeld and Shane Goldmacher explain that coming up $22 billion short after voters rejected a tax increase, California lawmakers are considering shutting down the state park system, closing prisons and deep cuts to a host of welfare programs.
The state can’t borrow any more money and will begin defaulting on loans and missing payroll by the end of next month. Democrats have the power to block Schwarzenegger’s cuts, but perhaps not the stomach to lead the state into receivership.
“Assembly Speaker Karen Bass (D-Los Angeles) said [Democrats] favored a gradual approach, making some cuts by the middle of this month and leaving others for later.
Bass said Democrats "fundamentally disagree" with Schwarzenegger's proposals to abolish programs that provide Californians with welfare, college grants and children's healthcare. They said they would prefer to make cuts within those programs but leave them intact.
The newly installed Assembly Republican leader, Sam Blakeslee of San Luis Obispo, said a piecemeal approach could jeopardize the state's ability to borrow money to stay afloat. He called it unrealistic for Democrats to think that they could close the deficit by dissecting programs instead of eliminating them.”
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Volker must be privy to some very serious data on what is really going on.
