Tales from the Trail

Washington Extra – A late start

obama_gmIt must be more than a little frustrating to win the Nobel Peace Prize for your best intentions — ridding the world of nuclear weapons – and then struggle to even get the START Treaty ratified this year. Not surprising, then, that President Barack Obama told his deputy to work “day and night” to get this thing through.

But whatever the temptation to throw a little egg on the president’s face, many security analysts still find it amazing to see Republicans blocking a treaty that the U.S. military so strongly backs. Welcome to bipartisan Washington, again, I guess.

Despite the uneven start to the week, Wednesday was not a bad day for Obama by any means.

The president was able to celebrate GM’s successful blockbuster initial public offering, by implication a victory for his controversial bailout of the automobile industry. The offering cut the government’s stake in the company to 26 percent from 61 percent and raised more than $20 billion, with investors betting on a positive future for the automaker which so nearly went out of business. Obama said taxpayers would end up recovering more from General Motors than his administration spent on the bailout, adding that a million jobs were saved and many more were now being created.

Obama and Vice President Joe Biden will travel to auto town Kokomo, Indiana next week to celebrate. The rescues of the banking and auto industries certainly didn’t make great politics in the midterm elections, but with much of the money coming back to the public purse, “bailout” might not be such a poisonous word in the 2012 campaign.

from Summit Notebook:

Lady Gaga may not be the only one singing a new tune in November

USA/
The 2010 Reuters Washington Summit included 4 days of on-the-record interviews with policymakers, congressmen and Obama Administration officials here in the DC bureau. The interviews covered a wide range of topics…from the impact of the mid-term elections to the importance of the Lady Gaga vote.

With less than six weeks to go before the mid-term elections the focus was on what a potential shift in power to a Republican-controlled Congress could mean for policy priorities in the coming year. We heard from Senators’ McCain, Dodd, Gregg and Bingaman. On the House side we spoke with the man responsible for getting Democrats elected…Rep. Chris Van Hollen, Chairman of the Democratic Congressional Campaign Committee. He called this election season a “tough and challenging environment,’ but predicted Democrats would retain control of the House.

From the Obama Administration, White House Press Secretary Robert Gibbs opened his comments by admitting that early on the administration did not have a “real understanding of the depth of what we were in.” News of Larry Summers’ departure as White House advisor came on the eve of our interview with a man who has worked with Summers, Austan Goolsbee, Chairman of the White House Council of Economic Advisors. Goolsbee said he expected that Mr. Summers’ replacement wouldn’t be part of “a dramatic change in direction.” On the economy, Goolsbee noted that he does not see a double dip on the horizon and that “pulling back on current spending programs could spook the markets.”

from Summit Notebook:

With end of TARP, investigations into fraud take center stage

SUMMIT-WASHINGTON/BAROFSKYWhile the much maligned $700 billion Troubled Asset Relief Program (TARP) has officially ended, not everything has wrapped up -- auditors are just starting to hit their stride investigating scores of cases of possible malfeasance.

Neil Barofsky, special inspector general for the program, nicknamed SIGTARP, said his office has more than 120 criminal investigations underway. They are looking into whether the money loaned to financial institutions and automakers was used properly or not, if there was fraud in applications for TARP financial backing and other wrongdoing.

"Our focus on investigations is growing and that's an area where we are definitely in a ramp-up phase," Barofsky told the Reuters Washington Summit. "The crimes that have been committed were committed in 2008, 2009 and 2010. The most common statute of limitation for fraud is five years and there's a reason for that, it takes a while for these type of sophisticated while collar investigations ... to hit, for fraud to be discovered and it takes a while to investigate them."

from DealZone:

‘New GM’ Gets a Visit from a Shareholder

obamalordstown1 GM's Lordstown, Ohio assembly plant has become a symbol of both GM's hard times and its best hopes for a turnaround after a $50 billion federal investment. A recent bump in sales because of the government's "Cash for Clunkers" program has allowed GM to call back more than 1,000 workers from layoff.   So it was a natural backdrop for a return visit by President Obama, who held a roundtable with workers and then gave a stump speech from the factory floor for his economic policies and health care reform.   But this is not your father's GM anymore and nothing about it as clear-cut as it seems -- even if you are the leader of the free world and head of the government that holds a controlling stake in the automaker.     At one point, Obama -- veering from his prepared remarks -- suggested that health-care reform would allow the UAW-represented workers in the audience to negotiate better wages.

“Think about it. If you are a member of the union right now, you’re spending all your time negotiating about health care. You need to be spending some time negotiating about wages, but you can’t do it," he said.

 

In fact, the UAW locked itself into a contract limiting wages and changes to health care, without the ability to negotiate with a threat of strike, until 2015. These stands were agreed to by the union at the prodding of the Obama administration, which demanded that union autoworkers accept lower wages -- as a condition to the bailout that saved Lordstown -- to match non-union workers at Toyota plants in Kentucky and Honda plants in Ohio.

The First Draft: Obama courts autoworkers, Biden visits Iraq

President Barack Obama courts autoworkers in Ohio and union leaders in Pennsylvania on Tuesday.

Obama meets workers at a General Motors plant in Lordstown, Ohio, and later addresses a convention of the AFL-CIO labor federation in Pittsburgh.
USA-POLITICS/OBAMA
Vice President Joe Biden is in Iraq for visits with U.S. troops and Iraqi leaders.

Back in Washington, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, briefs lawmakers on the war in Afghanistan.

The First Draft: A bumpy Mideast landing

OBAMA/SAUDI ARABIAWithin minutes of President Barack Obama’s arrival in Saudi Arabia today, a recording by al Qaeda leader Osama bin Laden was played on Al Jazeera television. U.S. television networks showed Air Force One landing in Riyadh and the first images of Obama greeting Saudi King Abdullah, the audio recording from bin Laden took aim. The militant leader accused the Obama administration of “planting seeds for hatred and revenge.”

It was a rough beginning to what could be a challenging visit to the Middle East and Europe by Obama. He spends tonight at the Saudi monarch’s farm, then flies to Cairo tomorrow for a much-previewed address to the Muslim world. He then travels to Germany and finally to France to commemorate D-Day, returning to Washington on Saturday.

There’s a full cast of characters testifying today on Capitol Hill. Federal Reserve Board Chairman Ben Bernanke appears before the House Budget Committee on challenges facing the economy. Energy Secretary Stephen Chu talks to a panel of the House Appropriations Committee. And executives from GM and Chrysler testify before the Senate Commerce Committee on protecting auto dealers and consumers after the closure of hundreds of car dealerships at both companies.

Cheney wanted GM in bankruptcy sooner

GUANTANAMO-CHENEY/With General Motors expected to file for bankruptcy next week, former Vice President Dick Cheney said on Wednesday that he wanted the company to take that step months ago when George W. Bush was still president.

“Some of us at the time wanted GM to go bankrupt, go to Chapter 11,” Cheney said in an interview with CNBC’s “The Kudlow Report”. But Cheney apparently was in the minority with that view at the time.

“The decision was made that, in the final analysis, since our administration was almost over and a brand-new team was about to take over that the president wanted, in effect, not to take a step that wasn’t necessarily going to be followed by his successor, but rather to set up a situation which the new guys could address that issue and make a decision about what the long-term policy was going to be,” he said.

Obama wants YOU … to buy a car

AUTOS-OBAMA/President Barack Obama is now America’s car salesman.

Obama made his sales pitch on Monday as he laid out White House plans for restructuring the struggling auto giants General Motors and Chrysler. Buy a car, he said, and you might qualify for a tax deduction.

“The IRS is launching a campaign to alert consumers of a new tax benefit for auto purchases made between February 16th and the end of this year — if you buy a car anytime this year, you may be able to deduct the cost of any sales and excise taxes. And this provision could save families hundreds of dollars and lead to as many as 100,000 new car sales,” Obama said.

White House press secretary Robert Gibbs followed up on this theme a bit at his daily briefing saying Obama “absolutely” would prefer for Americans to buy U.S.-made cars.

First Draft: sputtering autos

President Barack Obama gives his verdict on auto industry restructuring plans at 11 a.m.

Apparently GM and Chrysler, both seeking government money, did not pass with flying colors. White House forced GM chief Rick Wagoner out and wants Chrysler to work out a partnership with Italy’s Fiat — could that spawn a PT Cruiser Panda? OBAMA/

Lots of chatter on the ousting of Wagoner. Two main questions being raised — why was the White House tougher on automakers than bankers on this front and is it the proper role of government to depose the head of a private company?

First Draft: bad, add, mad

Mortgages gone bad, auto industry seeking an add, and a chimpanzee gone mad starting off the day.

President Barack Obama out in Arizona to outline a housing bailout plan to offer help on distressed mortgages at 12:15 p.m. Washington time. The plan commits up to $275 billion to support housing, including through government subsidies to mortgage lenders to encourage lower payments for borrowers.

FINANCIAL/TIMES-FORECLOSURES

More negative economic data. New U.S. housing starts and permits dropped to record lows in January. Housing starts fell 16.8 percent to an annual rate of 466,000 units and new building permits fell 4.8 percent to 521,000 units.