Barack Obama on Budget & Economy Democratic President (2008); IL Senator (2004)

Sub-sections under Budget & Economy:
• Financial Bailout
• Voting Record
• Other issues under Budget & Economy

Freeze annual domestic spending for next five years

This freeze will require painful cuts. Already, we've frozen the salaries of hardworking federal employees for the next two years. I've proposed cuts to things I care deeply about, like community action programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.

OpEd; Stimulus vote turned GOP into "party of No"

But sometimes saying "No" is what's right for this country--an all 178 Republican members said just that to President Obama, Speaker Pelosi, and Leader Reed's pork-laden stimulus package.

In a sense, President Obama had been correct when he identified the stimulus vote as a turning point--he was just wrong about what message it sent to the American people. Far from revealing us as the party of "no," our solidarity in the face of the majority party's bullying tactics revealed us to be an awakening movement of responsible leaders.

Appoint bipartisan fiscal commission and re-establish PAYGO

At this point, we know that the budget surpluses of the '90s occurred in part because of the pay-as-you-go law, which said that, well, you should pay as you go and live within our means, just like families do every day. 24 Republicans voted for that, and I appreciate it. And we were able to pass it in the Senate yesterday.

But the idea of a bipartisan fiscal commission to confront the deficits in the long term died in the Senate the other day. So I'm going to establish such a commission by executive order and I hope that you participate, fully and genuinely, in that effort, because if we're going to actually deal with our deficit and debt.

Some earmarks are defensible, if done in full light of day

Pres. OBAMA: We didn't have earmarks in the Recovery Act. We didn't get a lot of credit for it, but there were no earmarks in that. I was confronted at the beginning of my term with an omnibus package that did have a lot of earmarks from Republicans and Democrats whe we had to make a whole bunch of emergency decisions about the economy. So what I said was let's keep them to a minimum, but I couldn't excise them all. I think all of us are willing to acknowledge that some earmarks are perfectly defensible, good projects; it's just they haven't gone through the regular appropriations process in the full light of day. So one place to start is to make sure that they are at least transparent, that everybody knows what's there before we move forward.

OpEd: Stimulus trillions must be borrowed, printed, or taxed

Servicing the $11.5 trillion debt is a huge annual expenditure in the federal budget. Those who hold our debt, including foreign countries like China and Saudi Arabia, must be paid first. Last year we spent more than $400 billion to service our debt. Is that what the president meant by "change"?

Where is all of this money going to come from? It can come from only three places. Government borrows it, government prints it, or government taxes the people for it. So far the administration has done the first two. We've borrowed massive sums from foreign countries & we've also simply printed money. Economists call this practice "monetizing the debt," and it's not something we hear much about. Higher taxes won't be far behind.

Some wealth of the last economic boom was illusory

As Pres. Obama said of the economic boom that went bust: "I think it's important to understand that some of that wealth was illusory in the first place."

Exactly. But let's also understand the source of the illusion and what to do about it. Of course not everyone is instinctively against this illusion-weaving power, and many even welcome it. They just want to get back to the times when "everything was good" even though it was all just a mirage--a creation of the appearance of wealth by the Fed.

Tragically, the innocent who understand little about the complexity of the monetary system suffer the most, while those who are in the know reap great profit whether the market is going up or down.

Regulate institutions for what they do, not what they are

Regulate institutions for what they do, not what they are

Bottom-up economics instead of trickle-down economics

Obama believes that all will benefit from the system he envisions, that Wall Street & Main Street are intertwined, that you can't have successful securities investing without successful companies to invest in, and you can't have successful companies without motivated engaged workers

Focus on economic justice instead of macroeconomic policy

These words are from Barack Obama's major economic policy speech on Feb. 13, 2008. It had a completely different focus than the macroeconomic issues we are used to hearing discussed in Washington. Rather, he focused his remarks on what, for him, is the most pressing need today in America, the need for economic justice. To a great degree, much of Barack Obama's platform for America is about a singular issue, economic justice.

OpEd: "Hope" translates into economic opportunity

Many of us remember these striking words as the keynote speaker at the 2004 Democratic Nominating Convention. If there is one word associated with Barack Obama, from all of his campaigns, speeches and books, it would have to be hope. From an economic perspective, the word hope easily translates into economic opportunity. Without economic opportunity, there is no hope.

Can’t do anything at home with $12 billion a month on Iraq

Take China “to the mat” about currency manipulation

A: We have legislation that says that if, in fact, they are manipulating their currency--and I think there’s no dispute that they are--that we need to take strong action. It’s in the Banking Committee. I will say that it’s actually a blunt tool. I’d prefer not doing this legislatively. The problem is we’ve had a president that has shown no leadership on it. So when I am in the White House, I will meet directly with the Chinese leadership and indicate we have to restore balance. And, by the way, we have to mobilize our allies, such as the European Union, to have that conversation with us. This is an imbalance that is not good for any economy over time. It’s not sustainable, the trade imbalances that we have.

Supports federal programs to protect rural economy

The worst has passed, but the devastation remains

But the devastation remains. One in 10 Americans still cannot find work. Many businesses have shuttered. Home values have declined. Small towns and rural communities have been hit especially hard. And for those who'd already known poverty, life has become that much harder.

This recession has also compounded the burdens that America's families have been dealing with for decades--the burden of working harder and longer for less; of being unable to save enough to retire or help kids with college.

So I know the anxieties that are out there right now. They're not new. These struggles are the reason I ran for President.

OpEd: Economy recovering, but not feeling it on the street

Recovery Act averted a second Great Depression

Well, that's what the Recovery Act was. Now, I am happy to report this morning that we saw another sign that our economy is moving in the right direction. The latest GDP numbers show that our economy is growing by almost 6%--that's the most since 2003.

Across-the-board tax cuts wouldn't stimulate economy

Pres. OBAMA: This notion that this was a radical package is just not true. A third of them were tax cuts, and they weren't--when you say they were "boutique" tax cuts--95% of working Americans got tax cuts, small businesses got tax cuts, large businesses got help in terms of their depreciation schedules. I mean, it was a pretty conventional list of tax cuts. And the notion that I would somehow resist doing something that cost half as much but would produce twice as many jobs--why would I resist that? I wouldn't. I am not an ideologue. The problem is, I couldn't find credible economists who would back up the claims that you just made.

Increased spending comes from Bush's automatic stabilizers

Pres. OBAMA: I want to just push back a little bit on the underlying premise about us increasing spending by 84%. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies.

Rep. RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84%.

Spending freeze now would be destimulative; later is better

Pres. OBAMA: The reason that I'm not proposing the discretionary freeze take into effect this year is, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. We'll have a longer debate on the budget numbers, all right?

We inherited $8T of debt; and only added $1T more

Pres. OBAMA: When we came into office, the deficit was $1.3 trillion, before I had passed any law. We came in with $8 trillion worth of debt over the next decade--had nothing to do with anything that we had done. It had to do with the fact that in 2000 when there was a budget surplus of $200 billion, you had a Republican administration and a Republican Congress, and we had two tax cuts that weren't paid for. Now, we increased it by a trillion dollars because of the spending that we had to make on the stimulus. The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. That's going to be what our children have to worry about.

We all hated the bank bailout; but it was necessary

But when I ran for President, I promised I wouldn't just do what was popular--I would do what was necessary. And if we had allowed the meltdown of the financial system, unemployment might be double what it is today.

So I supported the last administration's efforts to create the financial rescue program. And when we took that program over, we made it more transparent and more accountable. And as a result, the markets are now stabilized, and we've recovered most of the money we spent on the banks. Most but not all.

To recover the rest, I've proposed a fee on the biggest banks. I am not interested in punishing banks. I'm interested in protecting our economy.

$1T avoided Depression; but I took office with $8T debt

Just stating the facts. Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis. And our efforts to prevent a second depression have added another $1 trillion to our national debt. That, too, is a fact. I'm absolutely convinced that was the right thing to do.

Restore Pay-As-You-Go law

Now, I know that some in my own party will argue that we can't address the deficit or freeze government spending when so many are still hurting. And I agree--which is why [the proposed 3-year spending] freeze won't take effect until next year--when the economy is stronger. That's how budgeting works.

But understand, if we don't take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery--all of which would have an even worse effect on our job growth and family incomes.

Rather than fight the same tired battles that have dominated Washington for decades, it's time to try something new. Let's invest in our people without leaving them a mountain of debt. Let's meet our responsibility to the citizens who sent us here. Let's try common sense. A novel concept.

FactCheck: Obama's estimate of $8T deficit is closer to $3T

Obama: "In 2000, America had a budget surplus of over $200 billion."

FactCheck: Fiscal year 2000 ended with a total budget surplus of $237 billion.

Obama: [By 2009] "a one-year deficit of over $1 trillion."

FactCheck: Deficit when Obama took office: CBO projected the deficit would total $1.2 trillion.

Obama: [By 2009, we had] "projected deficits of $8 trillion over the next decade."

FactCheck: CBO projected only a $3.1 trillion deficit over 10 years.

So the president actually understated matters regarding annual surpluses and deficits for years past, but he may have strained the facts when he spoke of what was being predicted for future years. His figure is based on a "baseline" projection by Obama's own OMB projecting a 10-year deficit of $8.9 trillion.

OpEd: 2008 crisis from deregulated markets running wild

The socialist principles of "equality" and "justice" sound like ideas we should all support, but the socialists' definition of equality is not equality of opportunities but an equality of outcomes. They are not speaking of equal justice under law. Socialists promote a more arbitrary "affirmative justice" government action to combat perceived discrimination or suspected prejudice.

US will emerge from this recession, stronger than before

But while our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.

The answers to our problems don't lie beyond our reach. They exist in our laboratories and our universities; in our fields and our factories; in the imaginations of our entrepreneurs. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

Fundamentals were weak BEFORE crisis; focus on middle class

McCAIN: Americans are hurting right now, and they’re angry. They’re innocent victims of greed and excess on Wall Street and as well as Washington, D.C. But we also have to have a short-term fix, in my view, and long- term fixes [as you outlined about my plan].

Q: Sen. Obama, you proposed $60 billion in tax cuts for middle- income and lower-income people, more tax breaks to create jobs, new spending for public works projects to create jobs.

OBAMA: The fundamentals of the economy were weak even before this latest crisis. Sen. McCain and I agree that we’ve got to help homeowners. I disagree with Sen. McCain in how to do it, because the way Sen. McCain has designed his plan, it could be a giveaway to banks if we’re buying full price for mortgages that now are worth a lot less.

Not enough to help those at the top: it doesn’t trickle down

OBAMA: It’s not enough just to help those at the top. Prosperity is not just going to trickle down. We’ve got to help the middle class. Part of the problem is that for many of you, wages and incomes have flat-lined. For many of you, it is getting harder and harder to save, harder and harder to retire. Sen. McCain is right that we’ve got to stabilize housing prices. But underlying that is loss of jobs and loss of income. That’s something that the next treasury secretary is going to have to work on.

McCAIN: We obviously have to stop this spending spree that’s going on in Washington. Do you know that we’ve laid a $10 trillion debt on young Americans, $500 billion of it we owe to China? We’ve got to have a package of reforms and it has got to lead to reform prosperity and peace in the world. And I think that this problem has become so severe, that we’re going to have to do something about home values.

We’re in the worst financial crisis since Great Depression

A: We are going through the worst financial crisis since the Great Depression. As we engage in this important rescue effort, we’ve got to make sure that we’ve got oversight over this whole process. $700 billion, potentially, is a lot of money. We’ve got to make sure that taxpayers have the possibility of getting that money back--and gains--if & when the market returns. We’ve got to make sure none of that money is going to pad CEO bank accounts or t promote golden parachutes. We’ve got to make sure we’re helping homeowners, because the root problem has to do with the foreclosures taking place all across the country. This is a final verdict on 8 years of failed economic policies--a theory that says w can shred regulations & consumer protections and give more to the most, and somehow prosperity will trickle down. It hasn’t worked. The fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake.

The lax regulation that Bush favored got us in this disaster

A: We haven’t seen the language yet, & there’s constructive work being done. I am optimistic about the capacity of us to come together with a plan. But how did we get into this situation in the first place? Two years ago, I warned that because of the subprime lending mess, because of lax regulation, that we were potentially going to have a problem & tried to stop some of the abuses in mortgages that were taking place at the time. Last year, I wrote to the secretary of the Treasury to make sure that he understood the magnitude of this problem and to call on him to bring all the stakeholders together to try to deal with it. We’ve have to intervene to solve this problem short-term. But we’re also going to have to look at how is it that we’ve shredded some many regulations, we did not set up a 21st century regulatory framework to deal with these problems. And that, in part, has to do with an economic philosophy that says regulation is always bad.

Pay attention to Main Street, not just Wall Street

McCAIN: We’ve got fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington, DC, and in the Wall Street. There’s no doubt that we have a long way to go, and obviously stricter interpretation and consolidation of the various regulatory agencies that weren’t doing their job that has brought on this crisis. But I have a fundamental belief in the goodness and strength of the American worker. And the American worker is the most productive, the most innovative.

Decide financial rescue plan on future slower tax revenues

A: There are a range of things that are probably going to have to be delayed. We don’t yet know what our tax revenues are going to be. The economy is slowing down. So it’s hard to anticipate right now what the budget’s going to look like next year. But there’s no doubt that we’re not going to be able to do everything that needs to be done.

Spending freeze is like a hatchet where you need a scalpel

McCAIN: How about a spending freeze on everything but Defense, Veterans Affairs and entitlement programs? We ought to seriously consider, with the exceptions of caring for our veterans, national defense and several other vital issues.

OBAMA: The problem with a spending freeze is you’re using a hatchet where you need a scalpel. There are some programs that are very important that are currently underfunded. I want to increase early childhood education. We’re currently spending $10 billion a month in Iraq when they have a $79 billion surplus. It seems to me that if we’re going to be strong at home as well as strong abroad, that we’ve got to look at bringing that war to a close.

Regulate institutions for what they do, not what they are

Free market needs proper government oversight

Obama's overall economic philosophy: He understands the power of the free market to create jobs and encourage creativity, but he also understands that, left to its own devices, without proper government oversight, it has a way of bouncing wildly between booms and busts. Individual participants in a market economy can do little to influence the overall stability of the system, but government can, and must, act to assure our financial markets remain strong and stable.

Prosecute mortgager fraud; require full mortgage disclosure

• Protect homeownership and crack down on mortgage fraud: Obama will make sure homebuyers have honest and complete information about their mortgage options.
• Ensure more accountability in the subprime mortgage industry: Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal fraud penalties for mortgage professionals, and requires industry insiders to report suspicious activity.
• Mandate accurate loan disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric for home mortgages.
• Close bankruptcy loophole for mortgage companies: Obama will eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payment.

Latinos & blacks are hardest hit by housing & gas crises

More accountability in subprime mortgages

• Ensure More Accountability in the Subprime Mortgage Industry:Obama introduced comprehensive legislation over a year ago to protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for law enforcement, and creates new criminal penalties for mortgage fraud.
• Create a Universal Mortgage Credit:Obama will create a 10% universal mortgage credit to provide tax relief to homeowners who do not itemize. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.
• Mandate Accurate Loan Disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

Help the homeowners actually living in their homes

Capping credit card interest rates at 30% is not enough

Release people in bankruptcy due to health care problems

Accountability and oversight over the financial markets

Modify some of the fraudulent & predatory lending practices

Bush & GOP dug budget hole; need years to dig out

A: Over the last seven years, what we’ve seen is an economy that’s out of balance because of the policies of George Bush and the Republicans in Congress. Not only do we have fiscal problems, but we’ve got growing inequality. People are working harder for less and they’re seeing costs go up. So what I want to do is get the long-term fundamentals right. That means that we are investing in education & infrastructure, structuring fair trade deals, and also ending the war in Iraq. That is money that can be applied at home for critical issues.

Q: So a priority to balance the federal budget, or not?

A: We are not going to be able to dig ourselves out of that hole in 1 or 2 years. But if we can get on a path of sustained growth, end the war in Iraq, end some of the special interest loopholes and earmarks that have been clogging up the system, then I think we can return to a path of a balanced budget.

Regulate financial instruments to protect home mortgages

DODD: Yes, but we also need more liquidity in the market. It has seized up. You can’t get a mortgage in America today.

OBAMA: We do need more liquidity, but we’re going to have to not only help home owners who are going to be losing their homes as a consequence of this; we’re going to have to make sure that we’ve got the kinds of tough regulation when it comes to financial instruments to make sure that people who have saved and are trying to get their own home for the first time are not hoodwinked out of it. And, unfortunately, the reason that we haven’t had tougher regulation in part goes back to the issue of lobbying. This is where special interests have been driving the agenda. We have not had the kinds of consumer protections that are in place. That’s why, when we have this debate about lobbying, we have to remind ourselves it has very real consequences.

Government regulation needed for when markets fail

Voted against limiting credit to 30%, because 30% too high

Obama did vote against--and Clinton voted for--an amendment that would have placed a 30% cap on the interest rate that could be charged on any extension of credit. The amendment failed by a vote of 74 to 24 in 2005. When the amendment came up for a vote, Obama was standing next to Sen. Paul Sarbanes, D-MD, the senior Democrat on the banking committee and the leader of those opposing the landmark bill, which would make it harder for Americans to get rid of debt.

As for whether the 30% cap was too high, that’s certainly a matter of opinion. Sen. Mark Dayton of Minnesota, sponsor of the amendment, said on the Senate floor that such a cap “is still consumer abuse” but is much better than rates of more than 300%, which he said were being charged by some loan operations in the country.

I opposed both the 2001 and 2005 bankruptcy bills

Voted NO on paying down federal debt by rating programs' effectiveness.

Proponents recommend voting YES because:

My amendment says we are going to take about $18 billion as a strong signal from the Congress that we want to support effective programs and we want the taxpayer dollars spent in a responsible way. My amendment doesn't take all of the $88 billion for the programs found by PART, realizing there may be points in time when another program is not meeting its goals and needs more money. So that flexibility is allowed in this particular amendment. It doesn't target any specific program. Almost worse than being rated ineffective, we have programs out there that have made absolutely no effort at all to measure their results. I believe these are the worst offenders. In the following years, I hope Congress will look at those programs to create accountability.

Opponents recommend voting NO because:

The effect of this amendment will simply be to cut domestic discretionary spending $18 billion. Understand the programs that have been identified in the PART program are results not proven. Here are programs affected: Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, child abuse prevention, and treatment. If there is a problem in those programs, they ought to be fixed. We ought not to be cutting Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, and the rest. I urge a "no" vote.

Voted NO on $40B in reduced federal overall spending.

Get minorities into home ownership & global marketplace.

The CBC is focused on economic empowerment issues including:
• New Markets and Small and Minority Business Development. The CBC will seek to increase opportunities for minority and small and disadvantaged businesses by expanding contracting opportunities in the public and private sectors, increasing access to capital, creating tax incentives for capital improvements, removing outdated and restrictive regulatory barriers, and streamlining and enhancing procurement tools to encourage minority and small business utilization.
• Trade and Global Economic Empowerment. The CBC will work to ensure that the benefits of the dynamic global marketplace extend to minority businesses, and Africa and developing countries. To this end, the CBC will propose and support trade and investment initiatives designed to bridge the global digital divide, create jobs, improve infrastructure, promote sustainable development, and raise living and work standards for people of color around the globe. Moreover, the CBC will work to ensure that America’s international trade agenda and priorities also meet these goals.
• Increasing Affordable Housing Opportunities. The CBC’s goal is to increase the nation’s homeownership rates. Home ownership is one of the best wealth creation vehicles for minority families. We will work with lending institutions and community organizations to ensure that minorities are afforded every opportunity to realize the dream of owning a home.

Require full disclosure about subprime mortgages.

Sen. DODD: Today we are facing a crisis in the mortgage markets on a scale that has not been seen since the Great Depression: over 2 million homeowners face foreclosure at a loss of over $160 billion in hard-earned home equity; over one out of every 5 subprime loans is currently delinquent. These high default rates have frozen the subprime and jumbo mortgage markets and infected the capital markets to the point where central banks around the world have had to inject liquidity into the system to avoid the crisis from spreading to other segments of the market.

One of the fundamental causes of this serious crisis is abusive and predatory subprime mortgage lending. The Homeownership Preservation and Protection Act of 2007 is designed to protect American homeowners from these practices, and prevent this disaster from happening again. The legislation will:

• realign the interests of the mortgage industry with borrowers to insure the availability of mortgage capital on fair terms both for the creation and sustainability of homeownership;
• establish new lending standards to ensure that loans are affordable and fair, and
• provide for adequate remedies to make sure the standards are met; and create a transparent set of rules for the mortgage industry so that capital can safely return to the market without bad lending practices driving out the good.

In the coming months, the housing crisis is going to get worse. We will need to continue to press lenders and servicers to provide real relief for homeowners threatened with foreclosure.

Reform mortgage rules to prevent foreclosure & bankruptcy.

• Foreclosure Prevention Act of 2008 - refinance mortgages originally financed through a qualified subprime loan.
• Makes FY2008 appropriations for emergency needs of states and local governments to redevelop abandoned and foreclosed homes; and the Neighborhood Reinvestment Corporation for foreclosure mitigation activities.
• Helping Families Save Their Homes in Bankruptcy Act of 2008 - Authorizes a bankruptcy plan for individuals with regular income to provide for payment of such claim for a period of up to 30 years. Creates a principal residence homestead exemption for debtors over 55 years of age.
• Mortgage Disclosure Improvement Act of 2008 - Amends the Truth in Lending Act to set forth additional disclosure requirements governing any extensions of credit (not only mortgages) secured by the dwelling of a consumer.