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Kissinger, Albright Urge Bush To Plan Beyond Iraq Buildup January 31, 2007

Posted by notapundit in Politics, US News.
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WASHINGTON (AP)–Former U.S. Secretaries of State Henry Kissinger and Madeleine Albright urged President George W. Bush on Wednesday to go beyond a planned buildup of U.S. forces in Iraq to develop a comprehensive strategy for the area.

They called for wide-ranging talks with Iraq’s neighbors, including Iran and Syria, and increased autonomy for clashing Iraqi groups. The administration has brushed aside the proposal to engage Syria and Iran.

Kissinger, who served under Presidents Nixon and Ford, said the planned buildup of 21,500 U.S. troops appears to be “the best way to get the maneuvering room to the changes in deployment and strategy that will be required by the evolving situation.”

“I think the focus has been on the surge,” he testified. “My focus is the other way around: to explain the surge in terms of the strategy to which we should go.”

The two former officials testified before the Senate Foreign Relations Committee.

Kissinger suggested a strategy that would permit large regional autonomy for the various Iraqi groups and a stronger Iraqi army.

And, he said, “All of this has to be in the context of a willingness to talk to Iran” because of its power, even though he didn’t think Iran “would help us in Iraq as such.”

“What we cannot accept is an Iran that seeks to dominate the region,” Kissinger said.

Albright, who was secretary of state under President Clinton, said she might have backed Bush’s buildup in Iraq if it “had been tied to a clear and achievable mission, and if we were guaranteed our troops would have the best training and equipment.”

“I think we need a surge in diplomacy,” she said. But she also told the committee, “We are viewed in the Middle East as a colonial power and our motives are suspect.”

Like Kissinger, she supported participation by Iran and Syria along with other nations in talks designed to keep Iraq from slipping into chaos. “One gains by communicating with countries with which one disagrees,” Albright said.

She said the U.S. should avoid Iranian President Mahmoud Ahmadinejad, but “there are ways for us to speak to other people” in Iran.

Kissinger said the U.S. should always be ready to negotiate with governments with which it disagrees.

Their views resonated with the committee, several of whose members have been calling for an international or regional conference on Iraq. Committee Chairman Joseph R. Biden Jr., D-Del., said the heart of the administration’s present strategy – building a strong central government – cannot succeed.

“There is not enough trust within the government, no trust of the government by the people, and no capacity of the present government to deliver services and security,” Biden said.

The Iraq Study Group, a private panel headed by former Secretary of State James A. Baker III and former Rep. Lee Hamilton, D-Ind., recommended in December that the administration engage in talks with Iran and Syria.

Clinton Administration Alumni Counter Bush On Economy January 31, 2007

Posted by notapundit in Economic News, Politics, US News, White House.
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WASHINGTON (Dow Jones)–Congressional Democrats brought in three alumni from the Clinton administration to provide counterpoint Wednesday to an economic address President George W. Bush gave in New York.

While Bush said the economy is “strong”, the trio argued at a hearing by the Joint Economic Committee that nation’s growing budget deficits, trade imbalance and income inequality are putting the economy on thin ice.

“We are way off track on almost every front,” former Treasury Secretary Robert Rubin testified before the committee.

Rubin highlighted concerns about annual budget deficits and the foreign borrowing that has financed them.

“The vast flows of capital from abroad that have sustained us are exceedingly unlikely to continue indefinitely,” Rubin said. Rubin would not guess when the flow would begin to diminish, but “I am deeply troubled that at some point the global markets will develop concerns.”

Former Treasury Secretary Lawrence Summers agreed that “the most important step the Congress can take is to adopt a fiscal policy that puts the government’s finances on a sustainable footing.”

Summers says the nation needs to better invest in research and development and in education. It must also shore up the nation’s middle class, in part by assuring that some aren’t foisting their share of the cost of government on others by tax evasion.

But, Rubin, Summers, and former Clinton Administration economic advisor Alan Blinder all advised against one likely response to the nation’s economic challenges – trade protectionism.

Citing the 1960’s musical comedy, “Stop the World, I Want to Get Off,” Blinder said “We cannot stop, and we cannot get off.”

Instead, Blinder said, “Americans need to prepare ourselves for the future of globalization.”

The sole counterpoint at the hearing to the Clinton trio was Ohio University economics professor Richard Vedder, who said the economy is strong and that Democratic plans to reconsider Bush’s tax cuts are unwise. As for concerns over income inequality, Vedder said those are based on largely flawed analyses.

For example, comparing wages from one year to the next is based on constant dollar calculations “that very significantly overstate inflation in the eyes of virtually every mainstream economist; liberal, conservative, vegetarian, Presbyterian, what have you,” Vedder said in his testimony.

Vedder said he agreed with the Democrats on the panel that education is the key for future growth. But where the others argued for more government spending on education programs, Vedder said the government must first learn how to better spend that money.

“Despite spending far more in real terms per student than a generation or two ago, American students do not appear to be learning much more,” Vedder said.

Likewise a tripling of student aid since 1994 has been followed by a decline, not an increase, in the proportion of low-income students in colleges “which are increasingly becoming taxpayer-subsidized country clubs for children of the affluent.”

Summers, who recently served as president of Harvard University, seconded that observation.

“One of the most disturbing statistics I’ve encountered (is that) just 10% of students attending our leading universities come from the lower half of the American income distribution, Summers said.

Joint Economic Committee Chairman Charles Schumer, D-N.Y., said education, and the other issues raised by the panelists, were symptomatic of a broader set of challenges facing middle-income families.

Sen. Schumer said changing technology and greater globalization had brought the nation to an economic crossroad.

“I believe we need to lay out a new vision that both accepts the economic forces at work and acknowledges and deals with the new challenges they present to American families,” Schumer said.

At a similar hearing being held across Capitol Hill by the House Ways and Means Committee, Rep. Jim McCrery, R-La., agreed American families face challenges and that Congress, rather than doing more of the same, should try new approaches to address them.

McCrery singled out as an example Bush’s proposal to replace the blanket tax exemption for employer provided health care with a capped tax deduction.

McCrery said he’d have proposed a tax credit, instead of a deduction, to better focus assistance to those with less income, but still the president’s “proposal should get us thinking about ways the tax code could be modernized to better reflect today’s market realities.”

By John Godfrey, Dow Jones Newswires

US House Approves $463.5 Billion Budget To Fund 13 Cabinet Departments January 31, 2007

Posted by notapundit in Congress, Politics, US News.
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WASHINGTON (AP)–The U.S. House of Representatives passed a $463.5 billion spending bill Wednesday that covers about one-sixth of the federal budget as the new Democrat-controlled House cleared away work undone by the previously Republican-controlled chamber.

Before the 286-140 vote, Republicans made modest objections to Democrats’ spending decisions but protested greatly over how the new majority muscled the measure through the House.

Democrats said the legislation would increase spending on education, veterans, health research and grants to state and local law enforcement agencies. Among the trade-offs were cuts to President Bush’s budget requests for NASA, foreign aid and aid for communities affected by the latest round of military base closings.

The measure heads to the Senate, which is expected to pass it before a Feb. 15 deadline to avoid a partial government shutdown. President Bush has signaled he will sign the budget bill.

The budget is to fund 13 cabinet departments.

Despite GOP complaints about how the bill came together, it generally is a Republican-leaning measure that keeps to the same overall cap that Bush and congressional Republicans insisted on last year – before Democrats won control of Capitol Hill in the November elections.

Spending levels for most agencies and programs are the same as in last year’s budget.

But the chairman of the House Appropriations Committee, Rep. David Obey, D-Wisc., and his Senate counterpart, Robert Byrd, D-W.Va., used a series of maneuvers to find enough money to avoid furloughs and hiring freezes. Obey put the total at $16 billion.

Republicans contended some money came from phantom savings from highway spending. They also said Democrats bowed to Senate demands to preserve some home-state projects such as $45 million for a much-ridiculed indoor rainforest research in central Iowa.

“If ever there was low-hanging fruit… this was it,” said Rep. David Hobson, R-Ohio.

The powerful veterans’ lobby won a $3.6 billion increase from the House for medical care, while low-income college students would receive a $260 boost, to $4,310, in the maximum Pell Grant.

State and local law enforcement agencies would gain more money for grants for new equipment and hiring officers.

Community development block grants, however, were frozen at current levels, as was aid for the Amtrak railroad. Still, advocates for those programs portrayed it as a victory of sorts in comparison to the budget that Bush submitted a year ago.

The amount intended to combat AIDS, malaria and tuberculosis overseas would grow by $1.3 billion, to $4.5 billion. That would be enough to fund the president’s $225 million initiative to fight malaria and increase the U.S. contribution to $724 million for a global fund for those diseases.

Conservative Republicans pressed for a budget freeze to save about $6 billion; others complained about inadequate spending.

Rep. Jerry Moran, R-Kan., pushed in vain for $3.3 billion in additional spending for farm disaster aid. GOP Rep. Dave Weldon of Florida complained that a $545 million cut to NASA would jeopardize the agency’s plans to send man back to the Moon and on to Mars.

The bill has something to please and offend every lawmaker. But the overall feeling was simply relief that the uncertainty of last year’s unresolved budget soon will vanish.

Lawmakers in both parties praised the bill for freeing highway construction funds. Yet the White House said it would slow aid to communities hurt by a 2005 round of military base closings and cut a request for basic scientific research.

Rep. Thelma Drake, R-Va., complained about a $3 billion cut from Bush’s budget to put in place the base closings. Obey said the money would be restored in an upcoming war funding bill.

US Energy Secretary: Oil Market Well Supplied Ahead Of OPEC Cuts January 31, 2007

Posted by notapundit in Economic News, US News.
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WASHINGTON(Dow Jones)–U.S. Energy Secretary Samuel Bodman on Wednesday said he believed global crude markets were well supplied ahead of the upcoming driving season in the U.S. – when refiners tend to build stocks – and ahead of expected additional production cuts due to be implemented by OPEC on Thursday.

The Organization of Petroleum Exporting Countries has said it will begin implementing a 500,000-barrels-a-day production cut – adding to a previously planned 1.2 million barrels a day in cuts – on Thursday. Few market watchers believe the cartel has implemented the full amount of decided cuts, estimating actual reduction in output is between 500,000 to 800,000 barrels a day.

But earlier this week, Saudi Arabia’s oil minister Ali Naimi said his country was to cut, as its contribution to the new reductions, an additional 158,000 barrels of output, with further tightening of OPEC crude spigots later in the month.

Asked if he was concerned that OPEC was planning to implement further cuts ahead of driving season, during a cold-weather snap in the U.S. and subsequent winter-stock draw-down and before a 100,000-barrel-a-day fill of the U.S. Strategic Petroleum Reserve in March, Bodman said he believed Saudi Arabia – OPECs de facto leader and the world’s biggest oil exporter – would keep the market well supplied.

Although the secretary said he hadn’t talked with Saudi Arabia’s Naimi for more than a month, he said: “In general, I have found him to be very supportive and understanding of our position, vis-a-vis, the need to keep markets well supplied, and allowing the market forces to determine price.”

Crude oil futures surged to a new four-week high Wednesday after U.S. government data showed distillate inventories, which include heating oil, fell more than expected amid continued forecasts for cold U.S. weather.

The front-month March light, sweet crude contract on the New York Mercantile Exchange closed up $1.13, or 2%, at $58.10 a barrel.

The secretary also said he believed the U.S. was better prepared for the driving season in terms of ethanol stocks and distribution. Last year, energy economists said a substantial portion of the surge in gasoline prices – which reached record levels during the driving season – was attributable to high ethanol prices. Ethanol replaced methyl tertiary butyl ether, or MTBE, as the industry standard for a gasoline additive, and bottlenecks in the production and distribution chains helped push prices higher.

“I think we are in better shape” than last year, Bodman told reporters following a congressional hearing.

“We’ve now gone through the exercise of replacing MTBE with ethanol, and we now have a large quantity of ethanol,” Bodman said.

By Ian Talley, Dow Jones Newswires

US Senator Biden Defends Comments About Rivals As Presidential Bid Begins January 31, 2007

Posted by notapundit in Congress, Politics, US News.
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NEW YORK (AP)–Sen. Joe Biden spent his first day as an official presidential candidate explaining why he had described Democratic rival Sen. Barack Obama as “clean,” and why he harshly criticized Sen. Hillary Rodham Clinton.

The six-term Delaware lawmaker, who has said for months he would be a candidate in 2008, formally establish his presidential committee Wednesday and launched a campaign Web site. It is the second presidential bid for Biden, who pursued the White House in 1988.

But in a conference call with reporters to discuss his candidacy, Biden was peppered with questions about remarks he made to the New York Observer, a weekly newspaper.

In the article, published Wednesday, Biden took Clinton and candidate John Edwards to task for their proposals to end the Iraq war. He also questioned the credentials of another leading candidate, first-term Illinois Sen. Barack Obama, while calling him “a mainstream African-American who is articulate and bright and clean.”

Biden told reporters that he’d used the word “clean” to describe Obama as “fresh and new,” and that the choice of words was not meant to disparage other black candidates who had run for president in the past, such as civil rights leaders Jesse Jackson and Al Sharpton.

Obama, Biden said, “is probably the most exciting candidate the Democratic or Republican parties have produced since I’ve been around. He’s fresh, new, smart, insightful. Lightning in a jar.”

Biden also said he had called Obama after the controversy surfaced to patch things up.

“He said, ‘Joe, I knew what you meant,”‘ Biden said.

At a Washington news conference earlier in the day, Obama said: “You’d have to ask…Sen. Biden what he was thinking.” But an Obama aide confirmed the two senators had indeed spoken.

“Sen. Obama said that he didn’t take the comment personally,” spokesman Tommy Vietor said.

Biden was also grilled about comments he made regarding proposals offered by Clinton and Edwards to stabilize the situation in Iraq.

A 34-year Senate veteran known for his foreign policy expertise, Biden called Clinton’s proposal – which would cap American troops and threatens to cut funding to Iraqi security forces – “nothing but disaster.” He also criticized Edwards, who has proposed immediately removing 40,000-50,000 U.S. troops from Iraq.

“I don’t think John Edwards knows what the heck he is talking about,” Biden said.

Pressed to explain, Biden reiterated his claim that his rivals’ Iraq plans were a mistake. He also said that while the Democratic field has a number of well-qualified contenders, he was the best qualified to serve as president.

“I believe I’m the best prepared of all the candidates,” he said. “That I can say someone is qualified but can’t take issue with their ideas is a strange phenomenon.”