Obama Administration

The Obama Administration is the Executive Department portion of the U.S. government under liberal, Democrat President Barack Hussein Obama; it began on January 20, 2009 for a term of four years.

Although the exact direction of the Administration is unknown, it is known from public policy statements and initial actions that it will take a more leftist position than the Bush Administration on issues such as taxing the rich and abortion.

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Obama has filled few top positions--none in the Treasury besides the Secretary himself, who is stretched thin. For example he was to busy to notice the huge bonuses awarded to A.I.G. traders.

Economics

The gravest crisis it faces is the Recession of 2008, with the economy spiraling downward. Moving fast, the House on Jan. 28 passed an economic stimulus package‎ of $819 billion in new spending and tax increases, despite unanimous Republican opposition. A revised bill passed the Senate with three Republican votes. A compromise bill known as the "American Recovery and Reinvestment Act of 2009" is now law, providing for $789 billion in tax cuts and new spending. Democrats claim it will prevent 3-4 million jobs from disappearing, but economists are unsure how to measure the impact it will have. The stock market declined rapidly after Obama took office, and in March 2009, the Wall Street Journal declared "President Obama's policies have become part of the economy's problem".

While Detroit spread gloom on Feb. 17 as GM starkly warned of impending bankruptcy unless it gets more aid, Obama promised $275 billion to help people refinance their home mortgages. Thus far Obama's response to economic crisis closely parallels that of Herbert Hoover in 1930-31 in dealing with the Great Depression. It is too early to say if his plan will be as unsuccessful as Hoover's but the mortgage plan was dismissed by CNBC announcer Rick Santelli who called it "collectivist." The Wall Street Journal says the plan will cost up to $275 billion and will help up to nine million homeowners. Thus, the cost is about $30,000 per homeowner helped.

2010 Budget

On Feb. 26 Obama proposed to Congress a $3.6 trillion budget containing a sharp shift toward expanded government activism, tax increases on high income families and businesses that are still profitable, with tax increases targeted at businessmen he says profited from "an era of profound irresponsibility." The Obama budget is "breathtaking in scope" and will consume a record 27.7 percent of the GDP. Under the plan, no income tax rate decreases, and rates on upper-income people increase. The plan will likely lead to a decrease in charitable giving.

The Tax Foundation says that 44% of all tax filers will have no tax liability and most of those will get a check from the government especially from the Earned Income Tax Credit (EITC) and credits for college tuition and child care. The Wall Street Journal noted about Obama's plan that, "Once upon a time we called this 'welfare'".

The Budget assumes federal deficit of $1.75 trillion for 2009, or 12.3% of GDP--the highest deficit in percentage terms since World War II. By 2013, the hypothetical deficit will drop to $533 billion but then will begin to climb again. The budget includes an additional $250 billion for more rescues of the financial markets by purchasing toxic assets on the banking sector's books.

The budget reorders national priorities to provide national health care, shift the energy economy away from oil and gas, and raise the federal spending on schools. To fund it all, families earning more than $250,000 and a variety of businesses will pay steep new taxes. Observers expect a fierce political battle over the budget, with conservatives calling it "class warfare" and detrimental to long-term growth.

The Congressional Budget Office (CBO) estimates the Obama plans will raise the national debt far more than Obama says. The CBO says the Obama plan will cause total deficits over the next ten years of $9.3 trillion, compared to Obama's estimate of "only" 7 trillion. That is in addition to the current national debt of $11 trillion and rising. The annual GDP by contrast is about $15 trillion and falling. Senator Jedd Gregg says that Obama's budget will double the national debt in five years and triple it in ten.

More pain will come out of Obama's proposed carbon cap and trade system, which will raise energy prices for families and businesses. It will cost an extra $645 billion between 2012 and 2019, which will result in higher prices. Rep. John Boehner said, "Let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple."

The chairman of the Senate Budget Committee is conservative Democrat Kent Conrad of North Dakota, a deficit hawk who said he is "very uncomfortable with the build-up of debt" and urged Obama to make good on his promise to overhaul federal retirement and health-care programs. Conrad called for "more discipline on the spending side."

Optimism or pessimism?

The Obama Administration is basing its domestic policies on the assumption of a rapid economic recovery, that will generate the tax revenue needed to fund permanent new spending program in areas such as health care and greening the economy. It assumes that the rich will recover enough of their investments to pay new taxes--right now tax collections are falling sharply as investments turn sour. Administration forecasts are more optimistic than private sector forecasts, which see a 25% chance of a Second Great Depression. Congress is unlikely to approve very heavy new spending programs unless the economy improves, since a large number of conservative Democrats have been recently elected who may vote with Republicans to keep down spending and deficits.

Obama flunking, say economists

Although public opinion of Obama remains positive, experts have turned from positive expectations in December 2008 to a negative assessment in March 2009. The Wall Street Journal survey of 49 professional economists gives poor grades to Obama and his key people. On a scale of 100 = best, Obama was scored 59 in March 2009, Treasury Secretary Geithner 51, and Fed Chairman Bernanke 71.

The main criticism of the Obama team was the delay in rescuing banks. "They overpromised and underdelivered," said Stephen Stanley of RBS Greenwich Capital. "Secretary Geithner scheduled a big speech and came out with just a vague blueprint. The uncertainty is hanging over everyone's head." Geithner unveiled the Obama plan Feb. 10, but he offered few details, and the Dow Jones Industrial Average is down almost 20% since the announcement, as multiple issues have troubled investors' confidence. A second criticism was that the stimulus package was not big enough, although some argued it was unnecessary.

The economists are increasingly pessimistic about the economy, predicting it will shed another 2.8 million jobs over the next 12 months as the unemployment rate climbs to 9.3% by December, up from the 8.1% rate recorded in February. Economists see a one-in-six chance that the U.S. will fall into a depression, defined as a decline in per-person GDP or consumption by 10% or more. They give equally poor marks to the efforts of other countries to end the recession.

The economists, however, were broadly supportive of the Federal Reserve. Over 85% agreed that its proliferating lending programs are well-designed, well-executed and helping the economy.

Bailout crisis worsens

After spending over a trillion dollars in cash and guarantees, the bailout of the financial system by March 2009 seems to have failed to help economic recovery. Obama started to decline in the polls, as independents and Republicans became increasingly critical. A firestorm of outrage swept the nation in March when it was learned that AIG insurance company, now 80% government owned, was paying $165 million in bonuses to the traders that had caused $60 billion in losses. Geithner was appointed to the Treasury largely on the basis of his work at the New York Fed, where his most important action was to design the bailout of AIG. Under Geithner's leadership it received $170 billion from the government.

Geithner plans to sell toxic assets to Wall Street

With major banks on the verge of failure, Treasury Secretary Timothy Geithner unveiled yet another massive bailout program in mid-February. Trillions would be spent to move toxic assets out of the banks, but few details were provided. The widespread reaction was very negative, and Geithner lost more of his credibility as a problem solver. Geithner finally came back with a plan on March 23 that will not need additional funding or approval by Congress. The Treasury will use $100 billion from the Troubled Asset Relief Program (TARP), as well as new capital from private investors, in order to generate $500 billion in purchasing power to buy toxic loans and assets. The program could potentially expand to $1 trillion over time.

US job losses January 1-March 31, 2009

Health Care

Obama is moving quickly to nationalize health care. He will attempt to pay for it with "$634 billion in new taxes on wealthy Americans". He claimed that "The cost of health care now causes a bankruptcy in America every thirty seconds", an argument conservatives dispute because people who are very sick lose their jobs and income which in turn causes the bankruptcy.

Cabinet

Obama proceeded rapidly with cabinet choices. Obama has drawn heavily on Clinton Administration leaders to fill his Cabinet, along with Bush appointees Gates, Jones and Geithner. His national security team (Biden, Clinton, Gates, Jones) all supported the Iraq war, although Obama made opposition to the war central to his campaign. So far no leaders of the left-wing of the Democratic party have been appointed to any major position, which has stunned antiwar and left elements.

A growing failure of leadership emerged in the Treasury department in March, as it proved difficult to assemble a leadership team. Dozens of senior Treasury jobs are empty; apart from the Secretary, the first 3 names were sent to the Senate for confirmation on March 8 and two other top nominees withdrew their names. Secretary Geithner is overwhelmed with multiple major responsibilities without any senior officials in place. He does have about 50 informal aides. The result was poorly thought out proposals that won no support, and lengthy delays in responding to the increasingly serious financial crisis. Analysts debated whether the display of incompetence was due more to Geithner or the White House.

Cabinet Scandals

Scandal has already tainted the cabinet. Bill Richardson was nominated for Secretary of Commerce but had to withdraw when he became a party to a criminal investigation. The nominee for Secretary of the Treasury, Timothy Geithner, was confirmed after a humiliating televised session in which he admitted not paying $34,000 in federal income taxes. Tom Daschle withdrew his nomination as secretary of Health and Human Services because he had avoided $140,000 in federal taxes over a period of years, and paid them only after he had been named to the cabinet.

Scandal also ruined the career of Nancy Killefer, nominated by President Obama to be the federal government's first chief performance officer. She too had evaded paying her taxes.

It was not a scandal but an embarrassment for Obama on Feb. 12, when New Hampshire Republican Senator Judd Gregg, who had agreed to join the cabinet as Secretary of Commerce, dropped out. Gregg cited irreconcilable differences, and observers pointed out that Obama's staff planned to take the 2010 Census out of the Commerce Department's jurisdiction, weakening the secretary and politicizing the census.

Senate scandals

Even more damaging to liberal Democrats were scandals involving the Senate seats of Clinton and Obama himself. In New York Gov. David Paterson came to office in 2008 after a sex scandal forced the resignation of his predecessor. Paterson damaged himself and his Democratic party by dangling an appointment to Caroline Kennedy, who was unable to make up her mind. He finally rejected her and turned to the most conservative Democrat in the entire Northeast, Rep. Kirsten Gillibrand. She is a Blue Dog Democrat known for her defense of gun rights and opposition to the Obama stimulus package.

It was much worse in Illinois, after Gov. Rod Blagojevich (a Democrat) sought to sell the Obama seat. Obama refused to bargain, so Blagojevich tried to auction it off, and was caught in FBI wiretaps. He was arrested and will face criminal trial in federal court, and was promptly impeached by the state legislature, with all the conservatives and Republicans there unanimous in calling for his ouster. Before he was forced out, Blagojevich named a light-weight replacement, Roland Burris. Democrats in Washington at first promised they would keep Burris out because of his tainting by the governor's maneuvers; they relented and were forced to seat Burris.

Burris admitted in February that he lied under oath to the Illinois legislature about his contacts with Blagojevich. Calls have been made for a perjury investigation that may lead to Burris's expulsion from the Senate..

Important Officials
Vice President	Joseph Biden	Confirmed
Chief of Staff	Rahm Emanuel	Confirmed
Secretary of State	Hillary Clinton	Confirmed
Secretary of the Treasury	Timothy Geithner	Confirmed
Secretary of Energy	Steven Chu	Confirmed
Secretary of Defense	Robert Gates	Confirmed
Attorney General	Eric Holder	Confirmed
Secretary of the Interior	Ken Salazar	Confirmed
Secretary of Commerce	Gary Locke	announced
Secretary of Health and Human Services	Kathleen Sebelius	announced
Secretary of Veterans Affairs	Eric Shinseki	Confirmed
Secretary of Homeland Security	Janet Napolitano	Confirmed
Budget Director	Peter Orszag	Confirmed
Council of Economic Advisers	Christina Romer	Confirmed
National Economic Council	Lawrence H. Summers	Confirmed
National Security Advisor	James Jones	Confirmed
CIA Director	Leon Panetta	Confirmed

Presidential Actions

Presidential Actions (Executive Orders, Presidential Memoranda and Proclamations) are listed on the White House website, on the Presidential Actions page.

• Executive Orders are listed here.
• Presidential Memoranda are listed here.
• Proclamations are listed here.

See Also

• Essay: Blow The Nomination
• Lobbyists ties to the Obama administration
• Obama doublespeak

External Links

• Obama Unveils His National Security Team, Fox News, December 1, 2008