US “deeply values” special relationship with UK – President Obama

Sunday 27 June 2010

US President Barack Obama has said that the US “deeply values” the special relationship between the US and the UK as he and Prime Minister David Cameron had their first one-on-one meeting.
Afghanistan, economic recovery and the Gulf of Mexico oil spill were on the agenda as they met after arriving in Toronto, Canada, for the G20 Summit.
The two leaders agreed that they had a common approach to securing strong, sustainable growth in the world economy and that a strong political strategy is needed in Afghanistan to complement the military campaign.
Following the meeting, the PM said:

“We are aiming at the same target, which is world growth and stability, but those countries with big deficits like ours have to take action in order to keep that level of confidence in the economy which is absolutely vital for growth.”

President Obama emphasised the importance of the relationship between the US and the UK and said he was impressed with the leadership Mr Cameron has shown since taking office.
He added:

“We already have established a strong working relationship and we are confident that that special relationship is going to get stronger in the months and years to come.”

A Downing Street spokesman added:

“The Prime Minister also raised BP. The leaders agreed that BP should meet its obligations to cap the leak, clean up the damage and meet legitimate compensation claims. They also agreed that it was to both countries’ advantage for BP to remain a strong and stable company. The leaders emphasised their firm commitment to the UK/US relationship and looked forward to the Prime Minister’s July visit to Washington.”

Mr Cameron and President Obama also exchanged bottles of beer following a bet they had made ahead of England’s World Cup clash with the USA earlier this month. They had agreed that whoever backed the losing side would buy a beer for the other.
They both travelled to Toronto to attend the G20 after spending two days in nearby Muskoka at the G8 Summit.
Speeches and transcripts: Meeting with President Obama read below



Sunday 27 June 2010

Meeting with President Obama

A transcript of comments by Prime Minister David Cameron and President Barack Obama following a bilateral meeting at the G20 in Toronto, Canada.

Read the transcript

President Barack Obama
Let me begin by saying that the last conversation I had with David Cameron was before the – well, I guess it wasn’t the last one, but a recent conversation was before the match between the United States and England at the World Cup. And since it ended in a tie, we are exchanging and paying off our debts at the same time. This is Goose Island 312 beer from my home town of Chicago and, David, I understand –
Prime Minister
This is Hobgoblin from the Wychwood Brewery in Whitby, in my constituency.
President Obama
And so I advised him that in America we drink our beer cold, so, yes, put this in the refrigerator before he drinks it, but I think he will find it outstanding. And I’m happy to give that a shot, although I will not drink it warm.
Prime Minister
It’s 5.2%. You can have it cold, it’s all right.
President Obama
Cheers.
Prime Minister
Cheers. Thank you very much.
President Obama
Now, I want to say that all of us in the United States deeply value the special relationship between the United States and the United Kingdom and we have been very impressed with the leadership that David Cameron has shown thus far. He has, I think, taken a series of steps on some very tough issues and clearly is prepared to make difficult decisions on behalf of his vision for his country. We already, I think, have established a strong working relationship, as have our teams, and we are confident that that special relationship is only going to get stronger in the months and years to come.
We had an excellent conversation building off the conversations that we’ve had at the G8 about the world economy and the importance of our two countries focusing both on the issues of growth, but also on the issues of financial consolidation; that we have long term debts that have to be dealt with and we have to address them. There are going to be differentiated responses between the two countries because of our different positions, but we are aiming in the same direction, which is long term sustainable growth that puts people to work.
At the same time, we had extensive discussion about Afghanistan and the alignment between our two countries in recognising we have a serious threat to our safety and security that has to be addressed in this region. That we recognise the enormous sacrifices that both British troops and US troops have been making for some time now, but we are convinced that we have the right strategy to provide the time and the space for the Afghan government to build up capacity over the next several months and years. And this period that we’re in right now is going to be critical, both on the political front and on the military front and there’s going to be extremely close consultation between our two countries so that we can create a situation in which Afghanistan and Pakistan are able to maintain their effective security and those areas are not able to be used as launching pads for attacks against our peoples.
We also discussed Iran and I thanked David for his stalwart support of the United Nations Security Resolution 1929, the toughest sanctions that have been imposed on the Iranian Government through the United Nations Security Council. We now have to make sure that we follow up in terms of implementation and that was a major discussion point.
And the key conclusion that came out of this last day of conversations, and I suspect this will continue through the evening and tomorrow, is that on foreign policy issues the United States and the United Kingdom are not only aligned in theory but aligned in fact. That we see the world in a similar way. We continue to share the same concerns and also see the same strategic possibilities. And so I think this partnership is built on a rock solid foundation and it’s only going to get stronger in years to come.
So, thank you, David – and I think that may have been my phone going off.
Prime Minister
I’m glad it wasn’t mine.
Well, thank you, thank you very much for that and thank you for what you said about the relationship between our two countries, which I believe is incredibly strong and, as you say, I think can get stronger in the years ahead.
We’ve had some very good conversations at the G8 and a very good meeting here today, I think particularly on the issue of Afghanistan, which is the number one foreign policy and security policy priority for my government. Making progress this year and putting everything we have into getting it right this year is vitally important and we’ve had very good conversations on that.
And, as you said, Barack, on all the issues we discussed over the weekend so far: the Middle East peace process, Iran, how we take those forward and the key relationships that we have in the Gulf and elsewhere, we have a very close alignment and I think we can work together and we want to support the work that’s being done.
On the economy, you rightly say we have a big deficit problem which we have to address, but of course we want to do it in a way that encourages growth and that’s why we’re focusing on spending reductions rather than on big tax increases and I think that’s the right approach to take. And as we go into the G20 I think we can explain that we’re aiming at the same target, which is world growth and stability, but it means those countries that have big deficit problems like ours have to take action in order to keep that level of confidence in the economy, which is absolutely vital to growth, to make sure it’s there.
But it’s been great to have this opportunity of a meeting and the discussions we had at the G8 and the G20 and thank you also for the lift between the two. He threatened to send me a bill, but as I said, times are very tight in the UK, so I’m afraid we’ll have to take that as a free lift.
President Obama
He was a model passenger. I want everybody to know he fastened his seat belt as he was supposed to.
Thank you.

PM and President Medvedev hold talks at G8

Saturday 26 June 2010

Prime Minister David Cameron has held his first face-to-face meeting with Russian President Dmitry Medvedev as the two leaders attended the G8 Summit in Canada.
The PM and President Medvedev met on Friday evening to discuss a range of issues including the economy, the Middle East and Iran.
They agreed to stay in touch personally and said there was an opportunity to put their bilateral relationship on “a new footing”.
Speaking alongside President Medvedev after the meeting, the PM said:

“It has been a great pleasure to have this face-to-face meeting. We have spoken on the telephone and it has been good to have this meeting. As you say, I think there is a real opportunity to put the bilateral relationship on to a new footing, to try to make a stronger start and to work through the issues where we have agreement and those where we still have things to work through. But I think there is a lot of common ground on the economic issues we face and the challenges of dealing with deficits, getting our economies growing and more economic cooperation between our two countries.”

A Downing Street spokesman added:
“This was a constructive meeting which represented the first step towards a renewed relationship between UK and Russia. The Prime Minister made clear that there were still points of disagreement between the UK and Russia, and he specifically raised the death of Alexander Litvinenko. But the Prime Minister also stressed that the UK and Russia should work more closely together to build a better relationship focussed around the economy, climate change and academic co-operation.
“The two leaders also discussed a range of global issues, including the world economy ahead of the G20 Summit, the Middle East Peace Process and Iran. The Prime Minister and the President agreed that their Foreign Ministers would work closely together. They looked forward to William Hague’s visit to Moscow


Speeches and transcripts: Meeting with President Medvedev read below



Saturday 26 June 2010

Meeting with President Medvedev

A transcript of comments by Prime Minister David Cameron and President Dmitry Medvedev following their bilateral meeting at the G8 in Canada on 25 June 2010.

Read the transcript

President Medvedev
The Prime Minister and I discussed the current work of the G8 meeting, our plans for the G20 meetings, but what is important is we also talked about issues on our bilateral agenda. We agreed that certain changes must be made in our relations. We agreed for our foreign ministers to stay in touch and consult on all matters of the bilateral agenda, both on the government level. We also agreed that we will stay in touch personally.
We agreed that our bilateral relations require the personal attention of the leaders of the two countries, both in terms of economics and other issues. We are determined to make them more productive and more intense. I hope to establish closer cooperation on a whole range of issues as a result of the Canadian meeting. Now, already we have very close cooperation on certain foreign-policy issues and that helps a lot. And of course, I would like to wish the Prime Minister every success in tackling the very difficult task and the very difficult work to come, and to be very patient as he will have to take part in all sorts of international activities. There will be many of them.
Prime Minister
Thank you. It has been a great pleasure to have this face-to-face meeting. We have spoken on the telephone and it has been good to have this meeting.
As you say, I think there is a real opportunity to put the bilateral relationship on to a new footing, to try to make a stronger start and to work through the issues where we have agreement and those where we still have things to work through. But I think there is a lot of common ground on the economic issues we face and the challenges of dealing with deficits, getting our economies growing and more economic cooperation between our two countries.
We had a very good discussion about the Middle East peace process, about the challenges of Iran, about the challenges of Islamic radicalisation, some of the things that our countries face together. So I think it is very good to have this meeting, to have a stronger bilateral relationship. As we agreed, I said I would follow your Twitter feed now you are doing it, but I think we will also talk on the telephone and our foreign ministers are going to meet to work up a fuller agenda. I think that is very worthwhile, and I know you have given me good advice about being patient at international meetings. But I think it seems we are approaching the G8 and the G20 in a similar way; we have a similar idea of how these meetings could work in the future. So that has been a good discussion and a good meeting.

English PM gives statement on G8 and G20

Monday 28 June 2010

Prime Minister David Cameron has given a statement to the House of Commons on the decisions reached at the G8 and G20 Summits in Canada.
Mr Cameron said both forums had vital roles to play – the G8 for consideration of big foreign policy and security issues and the G20 for discussing major economic issues.

• Read the statement below
• Watch the statement (in Commons Statements section)

The Middle East Peace Process, Iran and North Korea were under discussion at the G8, as well as international aid. Leaders signed up to the Muskoka Initiative – a $5 billion package of aid targeted at improving child and maternal health in poorer nations.
The PM said:

“Today in the UK, the chances of dying in pregnancy and childbirth in one in 8,200. In parts of Africa it is as low as one in seven. This is something we can change – and we must change. And the resources agreed – including a big contribution from the UK – could lead to an additional 1.3 million lives being saved.”

Commitments made at the G20 included an agreement for countries to halve their deficits by 2013 and a set of principles on bank levies. Mr Cameron said the Summit “specifically welcomed” the UK’s plans to cut its deficit set out in the Budget earlier this month.
He also reiterated the need for progress on the Doha Round, which he said could add $170 billion to the world economy.
The PM said:

“In my view, too many people still see this as a zero sum game where one country’s success in exports is another country’s failure. This is nonsense. Everyone can benefit from an increase in trade flows. We will play our part in breaking the log-jam. I want this country to lead the charge in making the case for growing trade flows around the world.”

The Prime Minister also held one-on-one talks with a number of his fellow leaders during the two summits, including US President Barack Obama, Russia President Dmitry Medvedev and Chinese President Hu Jintao.


Monday 28 June 2010

Statement on G8 and G20 Summits

A statement about the G8 and G20 Summits given to the House of Commons by the Prime Minister on 28 June.

Read the statement

[Check against delivery]
With permission, Mr Speaker, I would like to make a statement on the G8 and G20 Summits which took place in Canada.
First I’m sure the whole House will join with me in paying tribute to the seven British servicemen who have lost their lives in the last week.
From 40 Commando Royal Marines; Sergeant Steven Darbyshire.
From 1st battalion the Mercian Regiment; Colour Sergeant Martyn Horton, Private Douglas Halliday, Private Alex Isaac.
From the Yorkshire Regiment; Lance Corporal David Ramsden.
From the 4th Regiment Royal Artillery; Bombardier Stephen Gilbert – who died from injuries he received in an explosion earlier this month.
And the soldier from 101 Regiment Royal Engineers who died yesterday.
As the country marked Armed Forces Day this weekend, people did so with tremendous pride but also great sadness.
We will never forget what these men and so many of their colleagues have given for us.
And our thoughts are with their friends and families.
As I have said Mr Speaker, I am determined that our forces will not stay in Afghanistan a day longer than necessary.
And I led a discussion at the G8, where we made clear that we “fully support the transition strategy adopted” by international partners.
We are not after a perfect Afghanistan – just a stable Afghanistan able to maintain its own security and prevent Al Qaeda from returning.
So the G8 sent a collective signal that we want the Afghan Security Forces to “assume increasing responsibility for security within five years”
The presence of large-scale international forces cannot be an indefinite commitment.
We need to get the job done and bring our troops home.
Mr Speaker, let me report to the House on the main conclusions of the G8 and G20.
I have placed copies of the Communiques in the Library so people can see the details of what was agreed.
The G8 is a good forum for the leading democratic economies to give proper strategic consideration to the big foreign policy and security issues.
It also plays a vital role in helping the richer nations improve the future of the poorest.
In my view these two vital functions of this forum should continue.
Let me take each in turn.
On the big security issues, we discussed the Middle East Peace Process and agreed the importance of putting pressure on both sides to engage in the proximity talks – with the aim of creating the conditions for direct talks.
President Obama specifically said that he would make this his priority in the coming months.
While the changes Israel have proposed are welcome they do not go far enough and the Communique says that the current arrangements in Gaza “are not sustainable and must be changed”.
On Iran, the UN Security Council Resolution 1929 was welcomed – the Communique states that all countries should “implement it fully”. Since the G8 includes Russia, Britain believes this was significant.
Mr Speaker, the UK also made the case for all members of the G8 to have positive engagement with Turkey, which could have a key role to play in resolving both the Iran issue and encouraging progress on Middle East peace.
We also discussed North Korea – deploring and condemning the sinking of the Cheonan – nuclear disarmament and non-proliferation.
On development, while the G8 has played an important role in increasing aid spending by the richest countries in the world some of those countries have not met commitments they set out.
I stressed the importance of transparency and accountability. And the Accountability Report sets out what countries have done in meeting their commitments. While not perfect – it is really good progress in making sure that countries can not make promises without being held to account for them.
Even at a time when our countries face difficult budget decisions it’s important we maintain our commitment to helping the poorest in the world.
The UK is maintaining its commitment to increase spending on aid to 0.7 per cent of gross national income. This gives us the opportunity to exercise leadership.
At the same time in order to take the public with us we also need to make sure that every penny will reach those who need it most – that means transparency and accountability.
Also that the projects we support must be deliverable, practical and measurable, addressing the causes of poverty and not just its symptoms.
The Muskoka Initiative is a case in point.
Today in the UK, the chances of dying in pregnancy and childbirth in 1 in 8,200. In parts of Africa it is as low as 1 in 7.
This is something we can change – and we must change.
And the resources agreed – including a big contribution from the UK – could lead to an additional 1.3 million lives being saved.
As the White Ribbon Alliance points out if you save the mother you save the family; and if you save the family you build a stronger society and a better economy.
Mr Speaker, turning to the G20.
This is now the right forum for all the leading economies of the world to discuss the vital economic issues.
The key goal of the G20 is to continue the recovery of the world economy and secure sustainable growth.
The argument proposed by some that deficit reduction and growth are mutually exclusive is completely wrong.
The whole approach underlined by the IMF for this G20 and the subsequent meeting in Seoul is all about how the world should maximise growth through the right combination of three things: deficit reduction, tackling imbalances particularly through actions by emerging economies; and structural reform in the advanced economies.
There was broad agreement on all three. And this is reflected clearly in the Communique.
On deficit reduction, the G20 agreed that “those countries with serious fiscal challenges need to accelerate the pace of consolidation” and that “there was a risk that failure to implement consolidation would undermine confidence and hamper growth.”
The advanced G20 economies committed to at least halve current deficits by 2013 and stabilise government debt to GDP ratios by 2016.
And while we agreed that the speed and timing of deficit reduction will vary with national circumstances, the verdict of the G20 was unequivocal.
For countries with large deficits the time to act is now.
Britain has one of the largest deficits in the G20.
And the Summit specifically welcomed the plans set out in our Budget last week.
In terms of addressing the fundamental imbalances, China’s recent decision to move towards greater exchange rate flexibility is welcome.
And because in the end growth only comes from rising productivity, we also agreed on the need to pursue structural reform across the whole G20 to increase and sustain our growth prospects.
On financial reform, Mr Speaker, the G20 agreed “a set of principles” on bank levies to ensure the financial sector makes a “fair and substantial contribution towards paying for any burdens associated with government interventions to repair the financial system”.
This is very much in line with the plans for a bank levy which we announced in the Budget.
And on making sure that the banks in all countries can withstand future crises we also agreed that “the amount of capital will be significantly higher and the quality of capital significantly improved”.
And we agreed that new standards on the quality, quantity and transparency of capital and liquidity should be finalised by the Seoul summit in November.
Mr Speaker, Basle took ten years, this looks like it will be completed in one.
But while the drawing up of clear, robust new rules is absolutely essential it is important that they are not implemented too quickly. We do not want to a further monetary squeeze or a reduction in bank lending at this stage of the recovery.
Mr Speaker, the biggest stimulus we could give to the world economy today is the expansion of trade.
While the G20 agreement to extend its pledge that there should be no additional trade barriers put in place is welcome, continued failure to make progress on Doha is deeply disappointing.
This has now been 8 years in negotiation and frankly there can be little confidence that as things stand the round will be completely rapidly.
A completed trade round could add $170 billion to the world economy.
The UK led the working session on this issue at the G20. One potential way of making progress is to try to add to the benefits of the round so all parties can see reasons for going that final mile.
This was supported by President Obama.
And the Director General of the World Trade Organisation, Pascal Lamy, suggested that all trade negotiators should return to the table and consider both what it is they really need from the round and what it is they are prepared to offer to get it moving again.
This will lead to a report at the Seoul meeting in November.
In my view, too many people still see this as a zero sum game where one country’s success in exports is another country’s failure.
This is nonsense. Everyone can benefit from an increase in trade flows.
We will play our part in breaking the log-jam.
I want this country to lead the charge in making the case for growing trade flows around the world.
On Climate change, while the G8 Communique was strongly positive on limiting the rise in global temperatures to less than 2 degrees and seeking an ambitious and binding post-20112 agreement, at the G20 the Communique was more limited.
This is partly because some countries do not see the G20 as the forum for discussing this issue.
In discussions it was also clear that there was widespread disappointment at the way that Copenhagen failed to deliver a legally binding global deal.
We must not give up on this. We will be playing our full part in pushing for a successful outcome at Cancun.
Mr Speaker, this long weekend of Summitry was a good opportunity to build Britain’s bi-lateral relationships.
Among others, I had useful meetings with President Obama, President Hu of China, Prime Minister Singh of India and Prime Minister Erdogan of Turkey.
In building a very strong friendship with our leading European partners I also suffered the exquisite agony of watching England lose 4-1 to Germany in the company of my good friend Chancellor Merkel and the German summit team.
While I can not recommend the experience of watching football in the margins of a G20 summit, I do commend this Statement to the House.

The President's Record on Border Security

Posted by Dan Pfeiffer on June 21, 2010 at 2:51 PM EDT

A video circulating today shows Republican Senate Whip Jon Kyl claiming that the President told him he would not enforce immigration policy on the border unless comprehensive immigration reform is passed.  The President didn’t say that and Senator Kyl knows it.  There are more resources dedicated toward border security today than ever before, but, as the President has made clear, truly securing the border will require a comprehensive solution to our broken immigration system.
Background on President’s Strategic and Integrated Southwest Border Strategy:
Over the past year since the Southwest Border Initiative was launched:

• Doubled the personnel assigned to Border Enforcement Security Task Forces by deploying 110 additional special agents.
• Tripled the number of ICE intelligence analysts along the Southwest border in April 2009 by deploying 28 additional personnel. 
• For the first time, DHS began screening 100% of southbound rail shipments for illegal weapons, drugs, and cash.
• Deployed 13 additional cross-trained canine teams, which identify firearms and currency, to the Southwest Border to augment the five teams already in place.
• Deployed 116 additional Border Patrol Agents to augment CBP officers during inspections operations—particularly outbound inspections.
• Deployed five additional Z-Backscatter Units, which help CBP identify anomalies in passenger vehicles, to the Southwest border to augment the six already there.
• U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) combined have seized $85 million in illicit cash along the Southwest border—a 22 percent increase over the same period during the previous year.
• CBP and ICE together have seized 1,404 firearms and 1.62 million kilograms of drugs along the Southwest border—increases of 22 and 14 percent respectively over the same period during the previous year.
• CBP seized $29.5 million in illicit southbound cash along the Southwest border—a 39 percent increase over the same period during the previous year.

Additionally, the San Diego DHS Maritime Unified Command, comprised of U.S. Coast Guard, CBP, ICE and other law enforcement partners, saw a more than six-fold increase in maritime drug interdictions in the Pacific waters extending from the Southwest border—seizing 57,437 lbs. of drugs in fiscal year 2009 compared to 8,884 lbs. seized in fiscal year 2008. Already in fiscal year 2010, the Coast Guard has seized 11,500 lbs. of drugs across the San Diego sector.
Since 2004:

• The Border Patrol has doubled in size to approx 20,000 Border Patrol agents on board.

And U.S. Customs and Border Protection (CBP) statistics show that illegal immigration into the United States is down with apprehensions between points of entry having dropped 23 percent in FY09. During FY09 the Border Patrol apprehended 556,041 compared with 723,825 during FY08. El Paso Sector saw a 51 percent reduction in apprehensions, the Tucson Sector saw a 24 percent reduction in apprehensions, and the Rio Grande Valley Sector saw a 19 percent reduction in apprehensions. Those statistics reflect a reduction in the number of people attempting to illegally cross our borders.

• And as part of his comprehensive plan to secure the Southwest border, President Obama will request $500 million in supplemental funds for enhanced border protection and law enforcement activities. The President will also deploy up to an additional, requirements-based 1,200 National Guard troops to the border to provide intelligence; surveillance and reconnaissance support; intelligence analysis; immediate support to counternarcotics enforcement; and training capacity until Customs and Border Patrol can recruit and train additional officers and agents to serve on the border. Funds will be utilized to enhance technology at the border, share information and support with State, Local, and Tribal law enforcement, and increase DoJ and DHS presence and law enforcement activities at the border, to include increased agents, investigators, and prosecutors, as part of a multi-layered effort to target illicit networks trafficking in people, drugs, illegal weapons, and money.

Dan Pfeiffer is White House Communications Director

The Affordable Care Act -- Benefits and Weights Being Lifted

Posted by Jesse Lee on June 22, 2010 at 03:41 PM EDT

In March 2007, doctors diagnosed Amy Wilhite’s daughter, Taylor, with Acute Myeloid Leukemia (AML), a fast-growing cancer of the blood and bone marrow. Taylor received three rounds of chemotherapy and a bone marrow transplant. The cancer treatment produced multiple side effects: problems with her heart and hip, short-term memory loss, steroid-induced diabetes, and a compromised immune system. And so as one can imagine, the lifetime limit on the insurance plan that was covering Taylor was a constant worry, and as Amy explained before introducing the President today, there was always the worry pursuing a treatment now might mean they could not afford an even more important treatment later.

Taylor Wilhite takes a photo as her mother Amy Wilhite introduces President Barack Obama for remarks on the 90-day anniversary of the signing of the Affordable Care Act, in the East Room of the White House, June 22, 2010. (Official White House Photo by Pete Souza)

The Wilhites are just one family that will benefit from the fact that the Affordable Care Act, or Health Reform as you probably know it, will prohibit all insurance companies from imposing lifetime benefit limits for plans beginning on or after September 23, 2010.  The Wilhite family can now follow doctor's orders without having to worry about hitting a limit, which Amy described as a weight being lifted.  And that was just one of the benefits that the President spoke about this morning:

On July 1st, uninsured Americans who’ve been locked out of the insurance market because of a preexisting condition will now be able to enroll in a new national insurance pool where they’ll finally be able to purchase quality, affordable health care -- some for the very first time in their lives.  For states that opt to run their own insurance pools using funds from the new law, my administration is urging them to begin enrolling people as soon as possible.
And in a few years, once the new competitive marketplace comes online through insurance exchanges, discrimination against Americans with preexisting conditions will be banned for good.  That’s when individuals and small businesses will finally have the same access to the same types of insurance plans that members of Congress have for themselves.
And today, I’m announcing that the Departments of Health and Human Services, Labor and Treasury are issuing new regulations under the Affordable Care Act that will put an end to some of the worst practices in the insurance industry, and put in place the strongest consumer protections in our history -- finally, what amounts to a true Patient’s Bill of Rights.
This long-overdue step has one overriding focus, and that’s looking out for the American consumer.  It’s not punitive.  As I said when I met with the insurance executives, it’s not meant to punish insurance companies.  They provide a critical service.  They employ large numbers of Americans.   And in fact, once this reform is fully implemented a few years from now, America’s private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers.  We want them to take advantage of that competition.
Now, what Americans expect in return is a greater level of accountability and fairness and security.  We expect to get what we pay for.  And these rights guarantee just that -- basic rules of the road that will make America’s health care system more consumer-driven and more cost-effective, and give Americans the peace of mind that their insurance will be there when they need it -- give Amy that piece of mind that her insurance will be there when she needs it.
So, starting in September, some of the worst abuses will be banned forever.  No more discriminating against children with preexisting conditions.  No more retroactively dropping somebody’s policy when they get sick if they made an unintentional mistake on an application.  No more lifetime limits or restrictive annual limits on coverage.  Those days are over.
And I’m pleased to say that some insurance companies have already stopped these practices.  When news reports indicated that a company was dropping coverage for women diagnosed with breast cancer, my administration called on the industry to end the practice immediately -- don’t wait until September.  And soon after, the entire industry announced that it would comply with the new law early and stop the practice of dropping people’s coverage when they fall ill and need it most.

The President also spoke to health insurance rates, another important factor for families' peace of mind.  Just beforehand he met with health insurers and state insurance commissioners:

But it is important to have these steps in places to protect consumers from unjustifiable rate increases.  In fact, many states are already exercising their review authority.  We’re already seeing a wave of change that’s lifting up consumers and leveling the playing field.  Maine rejected a proposed 18 percent rate hike there.  Pennsylvania is investigating premium increases made by nine of the state’s largest insurers.  New York recently passed a law granting the state the authority to review and approve premium increases before they take effect.  And we’re working with other states and the state insurance commissioners here today to support similar efforts.  Secretary Sebelius has urged them to investigate other rate hikes.  We’ve set up a new Office of Consumer Information and Insurance Oversight to help.  And we’ll provide grants to the states that run the best, most innovative oversight programs to protect their consumers.
And beginning next year, insurance companies will be required to spend at least 80 or 85 percent of health care dollars where they should be spent -- on health care and on efforts to improve its quality.  Not on profits, not on bonuses, not on administrative costs that don’t make people healthier.

President Barack Obama attends a meeting with health insurers and state insurance commissioners in the Roosevelt Room of the White House June 22, 2010. (Official White House Photo by Pete Souza)

Giving Americans Control over Their Health Care

Posted by Stephanie Cutter on June 23, 2010 at 10:37 AM EDT

Monday marked the 90 day anniversary of the signing of the Affordable Care Act, the landmark new law that puts consumers, not health insurance companies, in charge of their own health care.  We have hit the ground running and, in just three months, significant progress has been made.
To begin with, the new Patients’ Bill of Rights will end the worst insurance company abuses and provide the American people with the peace of mind that their insurance will be there when they need it most.  After meeting with representatives of the insurance industry yesterday, President Obama announced this historic regulation that will ban rescission of coverage, discriminating against children with pre-existing conditions, and lifetime limits, as well as place restrictions on annual limits.  For additional details about the Patient’s Bill of Rights, read the fact sheet or watch the webchat with Secretary of Health and Human Services Kathleen Sebelius.




Another important step we’ve taken is to fulfill President Obama’s promise that “if you like your health plan, you can keep it.”  Last week, Secretary Sebelius and Secretary of Labor Hilda Solis announced a new rule that protects the ability of individuals and businesses to keep their current plan.  It outlines conditions under which current plans can be ‘grandfathered’ into the system, minimizing market disruption and putting us all on the path toward the competitive, patient-centered market of the future.  By providing the stability and flexibility that families and businesses need, Americans will be able to make the choices that work best for them.  Learn more about the ‘grandfather’ rule.
You may be aware that increasing the number of primary care doctors and nurses is a key challenge to improving our health care system.  Expanding our health care workforce and supporting our nurses, doctors and other providers are top priorities in reforming our health care system. One of the most obvious and important benefits of a strong health care workforce is increased prevention of disease – which can often mean avoiding the costly treatment of a chronic condition.  During a speech last week at the American Nurses Association conference, President Obama announced investments in a new generation of primary caregivers. These efforts include increased resources for training, new incentives to physicians for providing primary care to patients, and support for caregivers who choose to enter primary care in underserved areas.
Even if you aren’t a senior, you probably know a few – and few things are more important to their health security than Medicare.  That’s why the President and Secretary Sebelius held a tele-town hall to talk directly with America’s seniors, where they addressed misinformation and answered detailed questions about Medicare.  It’s important for seniors to know that their guaranteed Medicare benefits are protected -- regardless of whether they are in Original Medicare or Medicare Advantage -- and seniors who have Medicare Advantage can choose to continue to be enrolled in the plan.
In the coming years, seniors can also expect free preventive care services, including annual wellness visits and cancer screenings, and advanced patient-centered care, which will improve coordination of health care resources and ensure that they have access to support in their community.   Recently, we also announced the good news that seniors will begin receiving a $250 check from Medicare when they reach the ‘donut hole’ – a term used to describe the gap in Medicare Part D prescription coverage.  Until this gap is completely closed in 2020, we will continue to help seniors manage their health care costs.
Finally, everyone likes saving money and we’ve made some big progress in this area.  The new legislation includes some of the strongest anti-health care fraud provisions in history and we will continue to act swiftly and aggressively to prevent fraud and take action against those who break the law.  Reductions in fraud and abuse will help extend the life of the Medicare Trust Fund and provide taxpayers with cost savings. Ongoing activities include implementing tough new rules and sentences for criminals, enhancing screening and enrollment requirements, leveraging new tools and resources to prevent and fight fraud, and enhancing data-sharing among the agencies that are working to eliminate fraud, waste and abuse.
These accomplishments have brought about a number of important new benefits and each day, as we continue implementing the new law, we are working to give Americans greater control over their health care.  The Affordable Care Act is laying the foundation for greater stability and giving American families and businesses the flexibility they need to make the choices that work best for them.
Stephanie Cutter is Assistant to the President for Special Projects

The Secret Life of White House Bees

Posted by Jason Djang on June 23, 2010 at 1:04 PM EDT

When White House carpenter Charlie Brandt told some of First Lady Michelle Obama’s staff about his latest hobby in beekeeping, Chef Sam Kass was quick to ask him if he knew how to make honey that could be used in the White House kitchen. Fortunately, not only did Brandts know how to make the honey, but he also had a spare beehive at home that he was happy to donate to the White House. Now Brandt is the White House’s official beekeeper tending a hive of approximately 70,000 bees near the new Kitchen Garden.
Watch this new "Inside the White House" video on the first ever White House beehive:

President Obama on Afghanistan, General McChrystal & General Petraeus

Posted by Jesse Lee on June 23, 2010 at 03:19 PM EDT

This afternoon the President spoke on new leadership for the mission in Afghanistan, full remarks below:

THE PRESIDENT:  Good afternoon.  Today I accepted General Stanley McChrystal’s resignation as commander of the International Security Assistance Force in Afghanistan.  I did so with considerable regret, but also with certainty that it is the right thing for our mission in Afghanistan, for our military, and for our country.
I'm also pleased to nominate General David Petraeus to take command in Afghanistan, which will allow us to maintain the momentum and leadership that we need to succeed.
I don't make this decision based on any difference in policy with General McChrystal, as we are in full agreement about our strategy.  Nor do I make this decision out of any sense of personal insult.  Stan McChrystal has always shown great courtesy and carried out my orders faithfully.  I've got great admiration for him and for his long record of service in uniform.
Over the last nine years, with America fighting wars in Iraq and Afghanistan, he has earned a reputation as one of our nation’s finest soldiers.  That reputation is founded upon his extraordinary dedication, his deep intelligence, and his love of country.  I relied on his service, particularly in helping to design and lead our new strategy in Afghanistan.  So all Americans should be grateful for General McChrystal’s remarkable career in uniform. 
But war is bigger than any one man or woman, whether a private, a general, or a president.  And as difficult as it is to lose General McChrystal, I believe that it is the right decision for our national security.
The conduct represented in the recently published article does not meet the standard that should be set by a commanding general.  It undermines the civilian control of the military that is at the core of our democratic system.  And it erodes the trust that’s necessary for our team to work together to achieve our objectives in Afghanistan.
My multiple responsibilities as Commander-in-Chief led me to this decision.  First, I have a responsibility to the extraordinary men and women who are fighting this war, and to the democratic institutions that I've been elected to lead.  I've got no greater honor than serving as Commander-in-Chief of our men and women in uniform, and it is my duty to ensure that no diversion complicates the vital mission that they are carrying out. 
That includes adherence to a strict code of conduct.  The strength and greatness of our military is rooted in the fact that this code applies equally to newly enlisted privates and to the general officer who commands them.  That allows us to come together as one.  That is part of the reason why America has the finest fighting force in the history of the world.
It is also true that our democracy depends upon institutions that are stronger than individuals.  That includes strict adherence to the military chain of command, and respect for civilian control over that chain of command.  And that’s why, as Commander-in-Chief, I believe this decision is necessary to hold ourselves accountable to standards that are at the core of our democracy.
Second, I have a responsibility to do what is -- whatever is necessary to succeed in Afghanistan, and in our broader effort to disrupt, dismantle, and defeat al Qaeda.  I believe that this mission demands unity of effort across our alliance and across my national security team.  And I don’t think that we can sustain that unity of effort and achieve our objectives in Afghanistan without making this change.  That, too, has guided my decision.
I’ve just told my national security team that now is the time for all of us to come together.  Doing so is not an option, but an obligation.  I welcome debate among my team, but I won’t tolerate division.  All of us have personal interests; all of us have opinions.  Our politics often fuels conflict, but we have to renew our sense of common purpose and meet our responsibilities to one another, and to our troops who are in harm’s way, and to our country.
We need to remember what this is all about.  Our nation is at war.  We face a very tough fight in Afghanistan.  But Americans don’t flinch in the face of difficult truths or difficult tasks.  We persist and we persevere.  We will not tolerate a safe haven for terrorists who want to destroy Afghan security from within, and launch attacks against innocent men, women, and children in our country and around the world.
So make no mistake:  We have a clear goal.  We are going to break the Taliban’s momentum.  We are going to build Afghan capacity.  We are going to relentlessly apply pressure on al Qaeda and its leadership, strengthening the ability of both Afghanistan and Pakistan to do the same.
That’s the strategy that we agreed to last fall; that is the policy that we are carrying out, in Afghanistan and Pakistan.
In that effort, we are honored to be joined by allies and partners who have stood by us and paid the ultimate price through the loss of their young people at war.  They are with us because the interests and values that we share, and because this mission is fundamental to the ability of free people to live in peace and security in the 21st century.
General Petraeus and I were able to spend some time this morning discussing the way forward.  I’m extraordinarily grateful that he has agreed to serve in this new capacity.  It should be clear to everybody, he does so at great personal sacrifice to himself and to his family.  And he is setting an extraordinary example of service and patriotism by assuming this difficult post.
Let me say to the American people, this is a change in personnel but it is not a change in policy.  General Petraeus fully participated in our review last fall, and he both supported and helped design the strategy that we have in place.  In his current post at Central Command, he has worked closely with our forces in Afghanistan.  He has worked closely with Congress.  He has worked closely with the Afghan and Pakistan governments and with all our partners in the region.  He has my full confidence, and I am urging the Senate to confirm him for this new assignment as swiftly as possible.
Let me conclude by saying that it was a difficult decision to come to the conclusion that I’ve made today.  Indeed, it saddens me to lose the service of a soldier who I’ve come to respect and admire.  But the reasons that led me to this decision are the same principles that have supported the strength of our military and our nation since the founding.
So, once again, I thank General McChrystal for his enormous contributions to the security of this nation and to the success of our mission in Afghanistan.  I look forward to working with General Petraeus and my entire national security team to succeed in our mission.  And I reaffirm that America stands as one in our support for the men and women who defend it.
Thank you very much.

Create an Infographic about the Childhood Obesity Epidemic

Posted by Kori Schulman on June 25, 2010 at 10:00 AM EDT

The Let's Move! initiative and GOOD are working together to help address the challenge of childhood obesity by raising awareness about the problem and how the nation is working to address it.
First Lady Michelle Obama launched her Let's Move! campaign to solve the epidemic of childhood obesity within a generation and, as part of this effort, President Obama established the White House Task Force on Childhood Obesity to develop an interagency action plan to solve the problem of obesity among our Nation's children within a generation. Last month, the Task Force released their action plan to meet this goal.
Now, people around the country can help raise awareness by creating an infographic (or information graphic that visually represents information) on this issue. The idea is to create an infographic that shows the current state of children’s health, and that illustrates some avenue to combat the epidemic, including: getting children a healthy start on life; empowering parents and caregivers; providing healthy food in schools; improving access to healthy, affordable food; and getting children more physically active.
Full project details are available on the GOOD website, including: requirements, ideas for research and inspiration and how to enter. Submissions will be accepted now through July 6th.

Closing Out the G-20 Summit in Toronto

Posted by Jesse Lee on June 28, 2010 at 1:54 PM EDT

If you're looking for more information on the G-20 Summit in Toronto, we've got plenty to keep you busy, including the Declaration that lays out the enormously broad spectrum of issues that were addressed:

• The G-20 Toronto Summit Declaration
• The G-20 Summit in Toronto: U.S. Financial Reform and the G-20 Leaders' Agenda
• The G-20 Summit in Toronto: Acting on Our Global Energy and Climate Change Challenges
• http://www.whitehouse.gov/the-press-office/g-20-summit-toronto-a-global-response-through-multilateral-development-banks-promot
• The G-20 Summit in Toronto: Global Leadership to Combat Corruption
• G-20 Toronto Summit: Progress Since Pittsburgh

President Barack Obama, left, at the G20 Summit opening Plenary Session at the Toronto Convention Center, Toronto, Canada June 27, 2010. (Official White House Photo by Pete Souza)

read the rest

AFL-CIO leader set to press deficit commission to continue with stimulus spending

By Michael O'Brien - 06/29/10 05:22 PM ET

AFL-CIO President Richard Trumka will press President Barack Obama's deficit commission to continue with spending to stimulate the U.S. economy.

The labor leader will tell the bipartisan panel, which the president established earlier this year to generate recommendations on how to reduce long-term deficits and debt, that more spending to create jobs is needed.

"Without a significant reduction in the trade deficit, only economic stimulus in the form of deficit spending can make up for the remaining shortfall of aggregate demand until private sector demand regains its footing," Trumka will tell the commission, according to excerpts of prepared remarks released by the AFL-CIO.

"But instead, we are heading in the opposite direction," he'll say. "We are prematurely withdrawing economic stimulus, allowing the Recovery Act to phase out and standing by passively as state and local governments plan to lay off 900,000 workers."

Republicans have long decried stimulus spending in Congress as contributing to the record deficits that spurred Obama toward establishing the commission. But the administration and many Democrats in Congress have argued that spending to rejuvenate the economy is critical to generating the kind of growth necessary to pay down the deficits.

Still, some centrist Democrats in the House and Senate have balked more and more at spending on unemployment insurance and job creation measures that aren't paid-for with spending cuts elsewhere in the budget.

Trumka will tell the commission, on which former SEIU chief Andy Stern serves, that withdrawing the stimulus would risk a "double-dip" recession.

Dems: Shutting down TARP 'on the table' in Wall Street reform

By Michael O'Brien - 06/29/10 03:15 PM ET

Democrats will put forward a proposal to shut down the 2008 Wall Street bailout bill when they reconvene the conference committee on financial reform legislation this afternoon.

A House Democratic aide said they expect the conference to meet 5 p.m. Tuesday to re-open work on Democrats' Wall Street reform bill.

Part of those talks will include a proposal to shut down the $750 billion Troubled Asset Relief Program (TARP) authorized in 2008 at the height of the financial crisis, and a proposal to use unused TARP authority to pay off the costs of the bill.

"The Democrats are putting on the table a proposal to shut down TARP and any unused TARP authority will be counted toward offsetting the cost of the bill," said the aide. "Taxpayers will never again be on the hook for paying for the costs of any future bank failures."

Democrats restarted the conference to make final changes to win support from Republicans in the Senate like Scott Brown (Mass.), who balked at voting for the final legislation over the inclusion of a $19 billion bank tax. Brown voted for the original bill in the Senate

Dems acknowledge that deadline likely to slip on Wall St. reform

By Sam Youngman and Jordan Fabian - 06/29/10 03:34 PM ET

Democrats acknowledged Tuesday that their deadline for passing Wall Street reform was likely to slip past this week.

White House Press Secretary Robert Gibbs said at his daily press briefing that reform has become a matter of when not if, but he conceded "it will more likely get done the week they get back than this week."

That admission by the administration came as lawmakers prepared to re-open the conference committee later this afternoon to make final changes to the bill in order to ensure adequate Republican support to approve the changes to financial regulations in the Senate.

A spokesman for Senate Majority Leader Harry Reid (D-Nev.) also said Tuesday that it would be difficult to hold a vote on the Wall Street reform legislation this week.

With Sen. Robert Byrd (D-W.Va.) scheduled to lie in repose on the Senate floor almost all day Thursday and with work left to do on the legislation, spokesman Jim Manley told reporters that completing work would be "difficult but it's still possible."

President Barack Obama has said repeatedly he wanted to sign the reforms into law before the Fourth of July recess.

House and Senate conferees reopened their meetings Tuesday after Republicans expressed opposition to a $19 billion fee on financial institutions included in the conference report last week.

The meeting convened after Sen. Scott Brown (R-Mass.) released a letter outlining his objection to the bank fee, saying that he would oppose the bill as is.

Sen. Susan Collins (R-Maine), who like Brown voted for cloture on the original measure, echoed Brown's concerns with the fees but stopped short of saying it would prevent her from voting against the legislation.

Democrats are scrambling to find the votes to pass the measure. They lost one vote with the passing of Byrd. Democrats broke cloture in the Senate in May by a slim 60-40 margin.

Even though Brown withdrew his support, Manley said that Reid will still look to him for support.

"Sen. Brown is someone [Sen. Reid] can do business with and we look forward to getting his vote on these issues on the future," he said.
Originally posted at 3:05 p.m. and updated at 3:34 p.m.

Michelle Obama to address NAACP

By Eric Zimmermann - 06/29/10 01:24 PM ET

First lady Michelle Obama will address the NAACP's yearly meeting next month, the group announced Tuesday.
Mrs. Obama will trek to Kansas City for a July 12 address to the organization's 101st annual convention.
Her speech will focus on childhood obesity, which she has made her signature issue since President Barack Obama took office.
“It is my honor to welcome First Lady Michelle Obama to our annual convention to discuss her views on ways to tackle an epidemic that is plaguing our nation’s young people,” NAACP Chairman Roslyn M. Brock said in a statement. “She is a commanding figure who will ensure that this issue is at the forefront of our nation’s health agenda.”
NAACP President Benjamin Todd Jealous said the NAACP was equally committed to Mrs. Obama's cause.
“We are elated to have First Lady Michele [sic] Obama joining us to celebrate our 101st year,” he said.
“Providing affordable health care coverage and ensuring the well-being of all Americans is a priority for both the NAACP and the Obama Administration. Michele [sic] Obama’s visionary leadership in confronting the problem of child hood [sic] obesity is to be applauded. At our convention, we will unveil health care and advocacy solutions to help solve the critical health problems that are plaguing our communities."

Are War Funding Days Numbered

Visit msnbc.com for breaking news, world news, and news about the economy

Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion

CNBC.com

| 29 Jun 2010 | 10:22 AM ET

For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.

According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion.

Two things are clear: Taxpayers don’t want to foot the bill, and Fannie and Freddie, taken over by the government in 2008 to stanch the financial bloodletting, need a major overhaul.

“Some of us who don’t even own homes are paying to support others and their home ownership, and they ask ‘why?’ said Robert J. Shiller, a Yale University economics professor and co-creator of the S&P/Case-Shiller Home Price Indices.

The indices measure the US residential housing market by tracking changes in the value of residential real estate both nationally and in 20 metropolitan regions.

Shiller added that the mission of Fannie and Freddie should be severely cut back “so that they’re not helping middle-class homeowners, [but] they’re helping poor people get into the housing market.”

A look at what Fannie Mae and Freddie Mac actually do and how much they're costing taxpayers, with CNBC's Steve Liesman.

At the crux of the financial crisis, the government took over Fannie and Freddie to avert possible massive losses for banks, money-market funds and, perhaps, most importantly, foreign institutions that purchased billions of Fannie and Freddie debt because of its implied government guarantee.

The Chinese, for example, had invested heavily, and the US decided it didn’t want them to take a loss on their investment.

One possible scenario for the entities is to turn them into utilities, said Sean Dobson, CEO and chair of Amherst Securities, whose company trades as much as $50 billion in mortgages annually.

“Freddie and Fannie could be used to standardize the mortgage product,” Dobson said, “to completely describe what the risks are and then act as a conduit for the capital markets to take the risk.”

Slideshow: US Cities with Most Underwater Mortgages

America's Double-Dip Real Estate Markets

© 2010 CNBC.com

A Pendulum Swing Toward Austerity

By TYLER COWEN

Published: June 25, 2010

“THE ROAD TO SERFDOM,” the critique of socialism written 65 years ago by the Nobel laureate economist Friedrich von Hayek, was recently No. 1 in nonfiction sales at Amazon.com. 

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David G. Klein

Many people, including the Fox News commentator Glenn Beck, have contended that growth of government power has, indeed, set us on such a road today. But the reality looks different. In many respects, the expansionary phase of big government is coming to an end, and quickly.
In the last few years, we have seen — for better or worse — huge financial bailouts, a $787 billion stimulus plan and legislation for near-universal health insurance coverage. But the policy mood in Washington is now much more modest: no second major stimulus is forthcoming and, in the environmental arena, a cap-and-trade system for greenhouse gas emissions is unlikely to move forward.
The financial regulation bill will most likely pass, but it won’t fundamentally restructure the American economy. For instance, there is no longer talk of breaking up the big financial institutions, and Simon Johnson, the M.I.T. economist, has described the legislation as a failure.
To the extent that the bill limits proprietary trading by American banks — through the so-called Volcker amendment, named for the former Federal Reserve chairman — loopholes may enable banks to keep trading through asset management companies.
The most extreme outcome would be that more financial market trading is pushed out of banks and into hedge funds and other bank competitors. That would matter a lot for bank profits, but American capital markets would perform essentially the same functions as before. The bill we’re getting may be a mere hodgepodge, and that is after the biggest financial crisis since the Great Depression.
If any financial policy idea is taking a major place on the American and global stages, it is fiscal austerity. It is not that fiscal conservatives have won a grand battle of ideas, but rather that governments realize that the bills are coming due. In the United States, we face rising health care costs and pension problems in state governments, with no clear long-run solution for bringing the books into balance.
That makes responsible politicians reluctant to undertake major new commitments. At the very least, they embrace the rhetoric of fiscal conservatism, even when actual progress toward the ideal is slow.
In short, it’s not that ideas of government interventionism and free markets are fighting a titanic intellectual struggle. The reality is more mundane. The ascendancy of one view often creates the conditions for an economic counterreaction.
We’ve seen such cyclical trends before. During the 1980s and 1990s, history seemed to be on the side of freer markets. Communism staged a mass retreat, China and India embraced economic growth and a wide range of governments adopted privatization. The United States cut marginal tax rates and the Clinton administration promoted free trade and welfare reform.
Eventually, things started to go wrong, in part because investors developed too much self-confidence and became complacent about systemic risk. Early cracks in the edifice appeared in the 1990s, during the Mexican and Asian financial crises, but the bigger, broader explosion of 2007 revealed a badly overextended world economy, which led to bailouts. The weak economy brought victory for the Democrats in 2008, which in turn enabled passage of a health care overhaul.
Now the pendulum is swinging back. The economy will now likely make Congress much more Republican, as voters overreact to whatever is not working at the moment.
The unfolding of the financial crisis has also changed the public’s sense of where change is needed, both in the United States and Europe. The tragedies of 2008 were represented by Bear Stearns and Lehman Brothers — both private-sector institutions. In 2010, the financial crisis has spread to sovereign debt, with Greece as the most obvious example.
All of these developments are part of one broader story of overreach and complacency. Yet the 2008 crises were attached more directly to market institutions, while the 2010 crises are more closely linked to governments. Because politicians and voters are more influenced by the latest developments than by news from two or three years earlier, a cautious attitude toward public-sector spending has been further cemented.
While we can expect a larger public sector in America, the cause is mainly the aging of the population, and it will play itself out over the next 30 years with an increase in government transfer payments, mostly through Medicare. Furthermore, even Professor Hayek favored welfare spending and social insurance, so those programs will not alone bring us to serfdom.
DEMOCRACIES, like markets, have some self-correcting mechanisms, and we are now seeing those at work in the United States and many European countries. (Spain and Britain, for example, are pursuing fiscal austerity aggressively.)
The lessons are straightforward. First, to paraphrase the French moralist La Rochefoucauld, things are never as good, or as bad, as they seem. Second, the Obama reforms, like the Reagan revolution, are turning out to be radically incomplete, which should come as no surprise.
Finally, effective political ideas are those that can still do good in half-baked form. We have neglected this insight in designing financial reform, and it remains to be seen if we can apply it successfully to climate change.
And when it comes to the budget? Even if our real fiscal problems lie in the more distant future, it’s important to start worrying about them now, because we cannot count on a grand plan later to save the day.

Tyler Cowen is a professor of economics at George Mason University.

Bet on Private Sector for Recovery Could Prove Risky

 Economic Scene

Associated Press

In his 1932 presidential campaign, Franklin D. Roosevelt vowed to balance the federal budget.

By DAVID LEONHARDT

Published: June 29, 2010

The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome. 

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Graphic

The Squeeze Begins

In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.
On Tuesday, pessimism seemed the better bet. Stocks fell around the world, over worries about economic growth.
Longer term, though, it’s still impossible to know which prediction will turn out to be right. You can find good evidence to support either one.
The private sector in many rich countries has continued to grow at a fairly good clip in recent months. In the United States, wages, total hours worked, industrial production and corporate profits have all risen significantly. And unlike in the 1930s, developing countries are now big enough that their growth can lift other countries’ economies.
On the other hand, the most recent economic numbers have offered some reason for worry, and the coming fiscal tightening in this country won’t be much smaller than the 1930s version. From 1936 to 1938, when the Roosevelt administration believed that the Great Depression was largely over, tax increases and spending declines combined to equal 5 percent of gross domestic product.
Back then, however, European governments were raising their spending in the run-up to World War II. This time, almost the entire world will be withdrawing its stimulus at once. From 2009 to 2011, the tightening in the United States will equal 4.6 percent of G.D.P., according to the International Monetary Fund. In Britain, even before taking into account the recently announced budget cuts, it was set to equal 2.5 percent. Worldwide, it will equal a little more than 2 percent of total output.
Today, no wealthy country is an obvious candidate to be the world’s growth engine, and the simultaneous moves have the potential to unnerve consumers, businesses and investors, says Adam Posen, an American expert on financial crises now working for the Bank of England. “The world may be making a mistake, and it may turn out to make things worse rather than better,” Mr. Posen said.
But he added — after mentioning China, India and the relative health of the financial system, today versus the 1930s — that, “The chances we’re going to come out of this O.K. are still larger than the chances that we aren’t.”
•
The policy mistakes of the 1930s stemmed mostly from ignorance. John Maynard Keynes was still a practicing economist in those days, and his central insight about depressions — that governments need to spend when the private sector isn’t — was not widely understood. In the 1932 presidential campaign, Franklin D. Roosevelt vowed to outdo Herbert Hoover by balancing the budget. Much of Europe was also tightening at the time.
If anything, the initial stages of our own recent crisis were more severe than the Great Depression. Global trade, industrial production and stocks all dropped more in 2008-9 than in 1929-30, as a study by Barry Eichengreen and Kevin H. O’Rourke found.
In 2008, though, policy makers in most countries knew to act aggressively. The Federal Reserve and other central banks flooded the world with cheap money. The United States, China, Japan and, to a lesser extent, Europe, increased spending and cut taxes.
It worked. By early last year, within six months of the collapse of Lehman Brothers, economies were starting to recover.
The recovery has continued this year, and it has the potential to create a virtuous cycle. Higher profits and incomes can lead to more spending — and yet higher profits and incomes. Government stimulus, in that case, would no longer be necessary.
An internal memo from White House economists to other senior aides last week noted that policy makers “necessarily tend to focus on the impediments to recovery.” But, the memo argued, the economy’s strengths, like exports and manufacturing, “more than make up for continued areas of weakness, like housing and commercial real estate.”
That optimistic take, however, is more debatable today than it would have been a month or two ago.
As is often the case after a financial crisis, this recovery is turning out to be a choppy one. Companies kept increasing pay and hours last month, for example, but did little new hiring. On Tuesday, the Conference Board reported that consumer confidence fell sharply this month.
And just as households and businesses are becoming skittish, governments are getting ready to let stimulus programs expire, the equivalent of cutting spending and raising taxes. The Senate has so far refused to pass a bill that would extend unemployment insurance or send aid to ailing state governments. Goldman Sachs economists this week described the Senate’s inaction as “an increasingly important risk to growth.”
The parallels to 1937 are not reassuring. From 1933 to 1937, the United States economy expanded more than 40 percent, even surpassing its 1929 high. But the recovery was still not durable enough to survive Roosevelt’s spending cuts and new Social Security tax. In 1938, the economy shrank 3.4 percent, and unemployment spiked.
Given this history, why would policy makers want to put on another fiscal hair shirt today?
The reasons vary by country. Greece has no choice. It is out of money, and the markets will not lend to it at a reasonable rate. Several other countries are worried — not ludicrously — that financial markets may turn on them, too, if they delay deficit reduction. Spain falls into this category, and even Britain may.
Then there are the countries that still have the cash or borrowing ability to push for more growth, like the United States, Germany and China, which happen to be three of the world’s biggest economies. Yet they are also reluctant.
China, until recently at least, has been worried about its housing market overheating. Germany has long been afraid of stimulus, because of inflation’s role in the Nazis’ political rise. In responding to the recent financial crisis, Europe, led by Germany, was much more timid than the United States, which is one reason the European economy is in worse shape today.
The reasons for the new American austerity are subtler, but not shocking. Our economy remains in rough shape, by any measure. So it’s easy to confuse its condition (bad) with its direction (better) and to lose sight of how much worse it could be. The unyielding criticism from those who opposed stimulus from the get-go — laissez-faire economists, Congressional Republicans, German leaders — plays a role, too. They’re able to shout louder than the data.
Finally, the idea that the world’s rich countries need to cut spending and raise taxes has a lot of truth to it. The United States, Europe and Japan have all made promises they cannot afford. Eventually, something needs to change.
In an ideal world, countries would pair more short-term spending and tax cuts with long-term spending cuts and tax increases. But not a single big country has figured out, politically, how to do that.
Instead, we are left to hope that we have absorbed just enough of the 1930s lesson.

E-mail: leonhardt@nytimes.com