American Morning

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March 25th, 2009
11:00 AM ET

Bring on the budget!

We survived the TARP debate. Then the stimulus fight. Bring on the budget!

The political wrangling over the president's $3.6 trillion budget is set to explode this week on the Hill. The president is pitching the budget as an investment initiative, not a bunch of typical big government spending. He says investments in energy, healthcare, and education will seed a recovery and grow a more efficient economy. All the while, he promises, with an eye firmly on fiscal responsibility. He pledges to cut the budget deficit in half by 2013.

It'll be tough. His growth assumptions are slightly more optimistic than some economists. I asked noted economist (and AM regular) Jeff Sachs this morning about the president's statement in his press conference, that his budget's assumptions are "consistent with what blue-chip forecasters are saying."

"That's just wrong," Sachs said. Sachs and many others worry that a recovery when it comes will be weak. A UCLA Anderson School of Management survey released this morning is more pessimistic than the White House assumptions on unemployment (UCLA forecasts unemployment will hit 10.5% in the middle of 2010 and will still be above 9% in 2011, even as a recovery takes hold.)

The president's team says others are not counting the full effects of the boom from the stimulus and other efforts under way.

Bottom line - get ready for another big spending fight. This time, against the backdrop of all that has already been done to shore up the economy, and in an environment where the public is furious at many of the measures that the Washington policymakers have said are critical to restoring the economy to health.

Of course, the stimulus, the budget, the "Road to Rescue" as we call it at CNN, do little unless the banking sector is healed. It's a message the administration has struggled to communicate through the noise of the AIG bonus debacle. Let me be clear, healing the banks whether we like it or not, is the first step for healing the rest of the economy.

Which brings me to something Treasury Secretary Timothy Geithner said before the Council of Foreign Relations this morning. He was asked by CFR's Roger Altman, how difficult will it be to get more support from Congress for additional funding for the bank bailout, if needed.

"It's going to be extraordinarily difficult," Geithner said. "Politics of this here, everywhere are very, very hard. That's why crises are so hard to manage in some sense because it is so hard to make people understand that recovery requires a financial system that is working and that will require government taking risks, providing the support in some sense. But we're just going to have to work on it to make that case."

Filed under: Economy • Minding Your Business
soundoff (4 Responses)
  1. dancingrhonda


    April 10, 2009 at 11:02 am |
  2. Felix B.

    We talk so much about how to spend our countries bailout money.No one has even come close as to say,what about new refineries?.They just said a while back that the reason for gas prices going up is because we do not have enough refineries.Then let us build more of them.Since we(the tax payer)are footing the bill,then we should have a say so on how to spend our money.

    Than you.

    March 26, 2009 at 8:24 am |
  3. flyday

    The Policies of President Obama are the only ones to rescue us from the derelict of duties for the last 28 years. The people who are holding up the process of recovery are the same people who sat on their hands for all these years. They have implement policies that do not work and do not have the public interest at the heart of them. The President has to given the opportunity to implement policies that will turn that tidal wave around. The notion that we should listen to Conservadems and GOP reps at this point is irresponsible. They fear the President will be successful and highlight the fact that the last 28 years have lead us to this economic disaster. The main reason being they implement their plans in the first place to protect their friends and relatives who benefited the most from their plan while the rest of us drown under them.
    This is suppose to be the home of the brave so, Brave new plans to change the mistakes of the past are required. It is those without any vision of the future that will put these plans in the crapper. I bet the Conservadems and GOP reps do not even see the earlier signs that The Obama team is starting to make a real difference. November 2008 stamped the Obama plan with the highest level of approval that exist. The people were not left in the dark like they have been for the last 28 years where they were last on that list of concerns. The Obama team present all their plans and even policies upfront then the people accepted them not the other way around. It's bad enough that we, the people, can not put certain representatives up for ethics violations for permitting the deregulation of a system that was working just fine before they started messing with it.

    March 26, 2009 at 7:39 am |
  4. junior

    hi cnn america morning i am from jamaica ( the caribbean) an would like you to know that i love your show as it is very informative to the piont where i will be able to do my exam in international business this sundays.

    continue to work hard bringing the world the most informative and interesting news that we can see and/or hear

    March 25, 2009 at 5:47 pm |