The press is in a tizzy over the AIG mess, but the real story involves the new Geithner plan to deal with toxic assets. Of course, Paul Krugman hated it, but economist Brad DeLong explains why the plan makes sense.
Category: Economy (Page 3 of 14)
News about the Obama administrations plans for cuts in weapons systems is starting to leak out.
Two defense officials who were not authorized to speak publicly said Gates will announce up to a half-dozen major weapons cancellations later this month. Candidates include a new Navy destroyer, the Air Force’s F-22 fighter jet, and Army ground-combat vehicles, the officials said.
More cuts are planned for later this year after a review that could lead to reductions in programs such as aircraft carriers and nuclear arms, the officials said.
As a former CIA director with strong Republican credentials, Gates is prepared to use his credibility to help Obama overcome the expected outcry from conservatives. And after a lifetime in the national security arena, working in eight administrations, the 65-year-old Gates is also ready to counter the defense companies and throngs of retired generals and other lobbyists who are gearing up to protect their pet projects.
“He has earned a great deal of credibility over the past two years, both inside and outside the Pentagon, and now he is prepared to use it to lead the department in a new direction and bring about the changes he believes are necessary to protect the nation’s security,” said Geoff Morrell, the Pentagon press secretary.
Gates is not the first secretary to try to change military priorities. His predecessor, Donald H. Rumsfeld, sought to retool the military but succeeded in cancelling only one major project, an Army artillery system.
Former vice president Dick Cheney’s efforts as defense chief under the first President Bush, meanwhile, are cited as a case study in the resistance of the military, defense industry, and Capitol Hill. Cheney canceled the Marine Corps’ troubled V-22 Osprey aircraft not once, but four times, only to see Congress reverse the decision.
The article highlights the difficulties Gates and Obama will face as they try to cancel these unnecessary and ridiculously expensive programs. This time we’re in the middle of a financial crisis, and Republicans have been howling about spending, so now Obama will be able to turn the tables on them.
Here’s more information on the F-22.
Gates’ first showdown looms with a $350 million–a–pop fighter jet. He has to decide by March 1 whether to add more F-22 Raptor fighters to the 183 purchased by the Bush Administration. For years, the Air Force has wanted to double the fleet, while Gates has made clear that he thinks 183 is sufficient. A month ago, some Air Force officials were saying privately that maybe 60 more F-22s would suffice. The Pentagon’s acquisition boss, John Young, recently detailed why more F-22s might be a poor investment. The F-22s that exist are ready to fly only 62% of the time and haven’t met most of their performance goals. “The airplane is proving very expensive to operate, not seeing the mission-capable rates we expected, and it’s complex to maintain,” Young said. Besides, he added, the Air Force plans on spending $8 billion to upgrade most of the F-22s it already has.
We can’t afford to spend more money here.
I’ve been stunned by what I’ve been seeing on CNBC. After most of the clowns on this networks completely missed the financial crisis, we have them lecturing the Obama administration about its efforts to dig us out of this mess and address long-term problems like health care and energy.
Rick Santelli has received the most press with his idiotic rant, but Jim Cramer has pushed the envelope on irresponsible rhetoric, calling Obama “Lenin” and saying he wants to destroy capitalism. This over-the-top rhetoric is absurd, particularly when you watch the video below. Cramer has been so spectacularly wrong about the banks that he looks like a complete fool now.
Jon Stewart reminds us that CNBC just sucks.
While conservatives are having heart attacks over the prospect of the government helping sick people, Barack Obama is cleaning up the mess left over by President Bush and the Republicans.
The contracting process in Washington is a disgrace, wasting billions of dollars every year. The war-profiteering in Iraq was particularly bad, and the process for building weapons systems is completely out of control.
With that backdrop, Obama announced that the old ways of doing business in Washington are over.
President Barack Obama on Wednesday ordered an overhaul of the way the U.S. government awards contracts for private sector work, reversing a Bush administration policy that in some cases led to federal investigations of procurement practices and no-bid contracts.
Obama joined Republican Sen. John McCain, his presidential campaign rival, and other congressional figures to announce an executive memorandum that commits his administration to a new set of marching orders for awarding contracts. Obama said “the days of giving government contractors a blank check are over” and said changes could save up to $40 billion a year.
One area in particular that is targeted is no-bid contracts, which the administration is seeking to change so that there will be more competition for government-paid work.
“Even if these were the best of times, budget reform would be overdue in Washington,” Obama said.
Obama’s presidential memo changes government contracting procedures. It directs Peter Orszag, director of the White House Office of Management and Budget, to work with Cabinet and agency officials to draft new contracting rules by the end of September. Those new rules, White House aides say, will make it more difficult for contractors to bilk taxpayers and make some half-trillion dollars in federal contracts each year more accessible to independent contractors.
“We will stop outsourcing services that should be performed by the government and open up the contracting process to small businesses,” he said. “We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people. And we will strengthen oversight to maximize transparency and accountability.”
The new administration argued that its Republican predecessor’s contract spending had doubled to more than $500 billion over the last eight years.
Having McCain join Obama on this is huge. He and Obama don’t get along on many issues, and McCain recently scolded Obama over his unwillingness to take on earmarks. But McCain has been a tireless advocate of cleaning up the mess in government contracting. Hopefully this signals true bi-partisan cooperation. It is much easier to afford necessary government programs when we don’t waste money.
Expectations were justifiably pretty low for Treasury Secretary Timothy Geithner based on his prior performances, but I’ve been impressed with his testimony today as he explains the Obama administration’s budget in front of the House Ways and Means Committee. He has complete command of the issues, and he has been able to explain the strategy behind the plan.
The Obama administration needs effective surrogates to sell the President’s economic plan, and Geithner’s testimony today suggests he will be more effective than he was in the past.
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