Stock futures are falling a day after congressional leaders failed to agree on a deal to raise the nation’s debt limit.
Lawmakers hoped to reach a compromise on debt Sunday. But those talks stalled. President Barack Obama wants to raise revenues by letting tax cuts for wealthy Americans expire. Republicans have pushed for more spending cuts and have rejected higher taxes.
If an agreement is not reached by Aug. 2, the U.S. could default on its debt. That could have a catastrophic impact on financial markets.
Ahead of the opening bell Monday, Dow Jones industrial average futures are down 85 points, or 0.7 percent, at 12,536. Standard & Poor’s 500 futures are down 10, or 0.8 percent, at 1,331. Nasdaq 100 futures are down 14, or 0.6 percent, at 2,414.
OTTAWA
A shipping company says Somali pirates fired a rocket-propelled grenade at an oil tanker off the coast of Yemen and may have caused a fire during an attempted hijacking.
Central Mare Inc., the Greek company that manages the oil tanker Brillante Virtuoso, said Thursday that firefighting efforts would extinguish the pockets of smoke rising from the ship. The ship is carrying 141,000 metric tons of fuel oil.
The company says a fire that ignited in the crew’s accommodation area does not threaten to ignite the cargo guaranteed high risk personal loans.
Pirates attacked the ship 20 miles (30 kilometers) from the port of Aden on Wednesday, but as a result of the fire the pirates abandoned their efforts to overtake the ship.
WASHINGTON
The Senate’s top Republican is suggesting a short-term increase in the nation’s borrowing limit unless there’s deal soon that includes changes to big entitlement programs.
Economists and Obama administration officials are warning of a calamity if the government defaults on its obligations. The default deadline is Aug. 2.
Vice President Joe Biden is leading bipartisan talks on the debt limit and cuts in federal spending.
Senate GOP leader Mitch McConnell of Kentucky says that if a deal doesn’t include significant entitlement program changes, then legislation raising the borrowing limit for just a few months is likely.
He says lawmakers would return to what he calls “the same discussion” this fall.
McConnell appeared Sunday on CBS’ “Face the Nation.”
President Barack Obama will announce new steps Monday to reduce government waste, arguing that inefficiency, fraud and abuse are especially troubling during tough economic times.
Obama was to sign an executive order creating the Campaign to Cut Government Waste. According to a draft of the order obtained by The Associated Press, Obama will call for a new oversight board to work with federal agencies to cut back on waste and improve their performance. The order also requires cabinet secretaries to hold regular meetings with Vice President Joe Biden to report progress.
Monday’s announcement comes as the White House grapples for ways to both boost sluggish economic growth and quell public anger over the mounting deficit.
“As we work to tackle the budget deficit, we need to step up our game,” Obama said in a video message to be released Monday guaranteed high risk personal loans.
“No amount of waste is acceptable _ not when it’s your money; not at a time when so many families are already cutting back,” he said.
Biden and other administration officials were to discuss plans to cut back on waste
In prepared remarks for Monday’s event, budget director Jacob Lew said wasting taxpayer dollars through inefficiency “is particularly offensive at a time of such fiscal challenges.”
One of the campaign’s first steps will be targeting waste and duplication among federal websites. The administration will halt the creation of new websites, as well as shut down or consolidate one-fourth of the 2,000 government websites in the next few months.
A top European Central Bank official says Greece could get another euro20 billion ($28 billion) in aid from its fellow euro countries and raise three times that through new austerity measures such as selling government property.
Lorenzo Bini Smaghi, a member of the ECB’s executive board, is quoted by the Financial Times as saying Greece needs between euro60 billion and euro70 billion through next year.
That gap could be filled in several ways, Bini Smaghi said, giving a rough sketch of a plan for additional assistance that was split between government and private-sector contributions.
The private sector money would come partly from selling government property as well as rolled-over investments from Greek banks and issuance of short-term government debt.
The government half would be split, two-thirds from the euro area countries, or about euro20 billion, and the rest from the International Monetary Fund.
He said the plan “has to be studied further” and would in any case require concrete commitments from the Greek government to keep working to fix its finances. Greek political parties, however, failed last week to agree to a new plan of austerity measures.
Bini Smaghi again rejected any reduction of the debt through restructuring _ that is, Greece delaying repayment or paying less than the full amount owed. He said that would mean a “major, economic, social and even humanitarian disaster.” He did say Greek banks might renew some of ther holdings, presumably voluntarily.
Earlier in the financial crisis, European officials successfully pressed banks to voluntarily maintain their exposures to troubled countries in Eastern Europe.
Greece already got a rescue package last year worth euro110 billion from the eurozone and the IMF. But its economy continues to deteriorate and the government says it won’t be able to tap financial markets as planned next year.
EU officials are under pressure to secure Greece’s financing for at least a year ahead, with Luxembourg’s Prime Minister Jean-Claude Juncker saying last week that otherwise the IMF’s rules would not permit it to pay out the next installment of its loans to Greece in June.
Bini Smaghi said “if the Greek government agrees to the programme, the IMF will disburse and I am convinced that the euro area countries will disburse their part.”
Citigroup Inc. Chief Economist Willem Buiter said that extending the maturities of Greek debt won’t solve the country’s underlying solvency problem.
“Extension of maturities is of course the final option that would allow them at least to get over the funding gap in 2012,” he said in an interview with Ken Prewitt on Bloomberg radio from Edinburgh. “It doesn’t solve the underlying solvency problem of the Greek sovereign.”
Standard & Poor’s yesterday cut the country’s debt rating two notches to B, citing the likelihood that Greece may need to restructure its debt. Euro-region officials said after an unscheduled May 6 meeting in Luxembourg that Greece needs “a further adjustment program.”
“It’s clear that Greece will have to find money somewhere in a hurry,” said Buiter. Greece “can’t get it in the market, so we either need a new package, an extension of the existing package, or rapid privatization of assets.”
German Chancellor Angela Merkel today refused to commit to more aid for Greece, saying that it is still too early to decide whether the Greek government will need more financial help to overcome the debt crisis.
“The consent has to be unanimous so it’s going to be very, very difficult” to get another bailout, Buiter said. “It’s an investment of reputational capital by politicians. It doesn’t really make a lot of sense as you really are lending to an entity that’s insolvent.”
‘Ponzi Finance’
Buiter said that further lending to Greece would be futile.
“The way to deal with insolvency is not to lend more to the insolvent party, that’s Ponzi finance,” he said. “What you have to do is to face up to the reality of restructuring” which means taking “the necessary steps to restructure the sovereigns and the banks that are exposed to the sovereigns.”
Greece has slashed spending and raised taxes to reduce a budget deficit that reached 15.4 percent of gross domestic product in 2009, requiring a 110 billion-euro ($158 billion) bailout from the European Union and International Monetary Fund. Buiter criticized the Greek policy of raising revenue.
“Last year Greece responded to the tax shortfall by having tax amnesty,” he said. “That’s always a measure of despair which gives you money upfront in return for a complete undermining of your tax enforcement credibility in the future because everybody expects the next tax amnesty five years down the road.”
President Barack Obama says the latest positive jobs report shows the economy is resilient and “can take a hit and still keep on going” despite some strong headwinds, such as rising gasoline prices.
The monthly government jobs report released Friday showed a net increase of 244,000 jobs in April, beating expectations. Obama noted it was the 14th consecutive month of private sector job growth.
Obama says economic progress continues despite high gas prices that are chipping away at people’s paychecks and the Japanese earthquake that has affected some U.S. manufacturing operations.
Obama says there will always be ups and downs coming out of a recession but that the economy is showing its agility.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
President Barack Obama was bringing private words of gratitude Friday to troops involved in the killing of Osama bin Laden and delivering a public reminder that the fight against terrorism isn’t over. His message was reinforced by an al-Qaida threat of retaliation for its leader’s death.
After a stop in Indiana, Obama was visiting Fort Campbell, Ky., home to the Army unit involved in transporting Navy SEALs in and out of bin Laden’s compound in Pakistan.
In addition to his private meeting with raid participants, the president, joined by Vice President Joe Biden, also will address soldiers who have returned recently from Afghanistan, speaking in a public forum likely to highlight the military triumph over bin Laden.
But the president has said there’s no need to “spike the ball” and revel in bin Laden’s death, and White House press secretary Jay Carney said Obama’s comments would reflect that attitude.
“I don’t expect you’ll hear the president spiking the ball and gloating when he speaks to troops returning from Afghanistan,” Carney told reporters traveling with the president on Air Force One. “The point he will make is that while the successful mission against Osama bin Laden was an historic and singular event, it doesn’t by any means mean that we are finished with the war against al-Qaida. The fight goes on.”
That was underscored by a new al-Qaida statement posted on militant websites, which gave al-Qaida’s confirmation of bin Laden’s killing, opening the way for a successor to be named, and said that Americans’ “happiness will turn to sadness.” Its authenticity could not be independently confirmed.
It was the first statement from al-Qaida since bin Laden died in a U.S. commando raid in Pakistan five days ago, and a reminder that despite his death, threats to America remain.
“We are aware of it. We’ve seen the reports,” Carney said. “What it does obviously is acknowledge the obvious, which is that Osama bin Laden was killed on Sunday night by U.S. forces. … We’re quite aware of the potential for (terrorist) activity and are highly vigilant on that matter for that reason.”
At the same time, Obama was seeking to convey a return to the business of governing. Before arriving in Fort Campbell Friday afternoon the president made a stop in Indianapolis where he planned to promote his energy policies. He was greeted upon arrival by Indiana Gov. Mitch Daniels, who is contemplating a presidential run and would be considered a top contender for the Republican nomination to challenge Obama in 2012.
In Indianapolis the president also planned to address monthly jobs numbers released Friday, which showed that the economy added 244,000 jobs in April, beating expectations. At the same time, though, the unemployment rate ticked up to 9 percent.
Without bin Laden’s death to overshadow it, the trip to Indianapolis to showcase a transmission plant that produces systems for hybrid vehicles would have policy and political consequences. Obama has been promoting his energy policies as a long-term answer to rising oil prices and U.S. dependence on foreign oil. The skyrocketing cost of gasoline had caused Obama’s public approval numbers to dip until bin Laden’s death shoved them back up. What’s more, Indiana is a battleground state that Obama won narrowly in 2008 by less than 30,000 votes.
Still, the centerpiece of the day for the president will be the stop at Fort Campbell.
The fort is home to the 101st Airborne Division and many of its combat teams have returned recently from tours of duty in Afghanistan. But its main draw for Obama is the 160th Special Operations Aviation Regiment, the highly specialized Army unit that carried Navy SEALs to bin Laden’s compound in Abbottabad, Pakistan.
The unit, known as Night Stalkers, has fought in nearly every U.S. conflict, from Grenada to Afghanistan, and was memorialized in the book and movie “Black Hawk Down.” Many of its missions are classified and among its primary duties are flying special forces commandos behind enemy lines.
They are equipped with Black Hawk, Chinook and MH-6 Little Bird helicopters. Aviation experts said a helicopter used in the bin Laden raid appeared to be a stealthier, top secret and never-before-seen version of a routinely used special ops helicopter. The helicopter made a hard landing and was destroyed by the military team at the site.
Obama has tried to avoid rejoicing publicly over bin Laden’s death. But even while hewing to his regular schedule of policy sessions and routine ceremonial events, he has maintained a steady stream of events that have kept the success of the remarkable commando operation at the forefront. On Thursday he visited New York to lay a wreath at ground zero and visit fire and police stations that responded to the Sept. 11, 2001, attack that was carried out by bin Laden’s al-Qaida operatives. The president met privately there with victims’ families, but in public Obama never mentioned bin Laden by name. He didn’t have to.
“When we say we will never forget, we mean what we say,” Obama told firefighters.
The stars are aligned for Barack Obama’s re-election in November 2012. He won’t join Jimmy Carter to be the second Democrat in 120 years to lose a second term.
Five things are playing in Obama’s favor.
First, the Republicans — driven by their most conservative members in Congress — will face a primary with many candidates who will advance harsh ideological positions. Michele Bachmann, Newt Gingrich, Donald Trump and others might as well be on the Democratic National Committee payroll. House Budget Committee Chairman Paul Ryan’s reverse Robin Hood plan to cut more than $6 trillion in spending over a decade will provide the outrage, stoked by a sitting president possessed of verbal discipline.
The field of Republican weaklings is already getting smaller. This week, Mississippi Governor Haley Barbour dropped out of the race for the presidency.
Second, the Republican governors’ attacks on unions are turning off the swing voters and Reagan Democrats in Ohio, Florida, Pennsylvania and Wisconsin. Imagine the voter reaction if millions of workers lose their right to collective bargaining, and the impact that cuts in benefits and wages will have on their lives.
Democratic governors, such as Jerry Brown of California, Pat Quinn of Illinois and Andrew Cuomo of New York, are cutting — but not taking away — workers’ bargaining rights. This is a politically useful contrast for Obama. Reagan Democrats, who have won many elections for the Republicans, are a big plus for Obama in the contested states.
No Challenge
Third, no candidates are emerging to challenge Obama in the primaries. A discussion of Obama’s forgotten campaign promises and record would have public support among Democrats. Even so, the liberal base has nowhere to go to send a message about war, free-trade agreements, raising the minimum wage or union membership.
Nor does a third party or independent candidacy pose a threat, given the winner-take-all, two-party system.
Fourth, Obama has neutered much of the big corporate lobby’s zeal to defeat him. He decided from the beginning not to prosecute executives from Wall Street banking, brokerage and rating firms. Multinational companies are pleased with Obama’s position on trade, on not disturbing the many corporate subsidies, handouts and giveaways, such as the corn-ethanol subsidy.
Shelters for Wealthy
By 2014, Obamacare will deliver some 30 million subsidized customers to health-insurance companies. The auto industry is forever grateful for its bailout. Obama hasn’t moved on corporate-tax reform, tax shelters for the wealthy, or the preferential capital-gains tax treatment on the 20 percent service fees of hedge fund managers. Don’t forget last December when Obama agreed to extended tax cuts for the rich while the budget deficit gets larger guaranteed cash advance.
The military-industrial complex about which President Dwight Eisenhower warned in his farewell address 50 years ago, is still uncontrollable, leading departing Defense Secretary Robert Gates to express serious concerns. Obama has even surprised George W. Bush and Dick Cheney and his cohort of neocons, who can scarcely believe how militarily aggressive Obama has been on just about every move that liberals used to call impeachable offenses by former President George W. Bush.
Big Business
Then there’s Jeffrey Immelt, the chairman and chief executive officer of General Electric Co., who can attest to Obama’s outreach to big business. GE Capital was bailed out. The company effectively paid no federal income taxes on $14.2 billion in 2010 profit and received a $3.2 billion benefit. Immelt got a $15.5 million pay raise. And in January, Obama appointed him chairman of the President’s Council on Jobs and Competitiveness while letting him stay as head of a company receiving many government contracts and having regulation problems with the federal authorities. The corporate state doesn’t get much better than that.
Fifth, since the Republicans have little to offer by way of creating jobs, Obama need only show improvement in macroeconomic indicators, as Ronald Reagan did in 1983-1984, and proceed to showcase all the tax breaks he has signed into law for big and small businesses. Poor Americans who continue to bear the brunt of the recession are hardly going to vote Republican. It will be easy for Obama, with his oratorical skills, to paint the Republican-controlled House of Representatives as obstructionist, especially as he develops an economic plan for his second term.
Black Swans
There remain the Black Swans, events that defy prediction as those in Japan and the Middle East have shown. Handling them with firmness and calmness from the White House is what most people expect of a president. Obama will surely not repeat Bush’s mistakes after Hurricane Katrina in 2005.
Obama is averse to conflict with corporate power and disarmingly expedient in compromising with Republicans, leaving the latter to argue largely among themselves. The political duopoly lets the tactical Obama use the Bully Pulpit to his political advantage, even if his principles perish. Obama can look forward to four more years in 2012.
(Ralph Nader is the founder of Public Citizen and author of the book “Only the Super-Rich Can Save Us!” The opinions expressed are his own.)
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