FROM Peter Morici
War on poverty or war against the poor? The White House budget request is called A New Foundation for American Greatness , in tune with the best-known slogan of the Trump campaign. Massive cuts in safety-net programs, from Medicaid to food stamps, are supposed to get people off the dole and into the workforce. Where are the jobs? Massive tax cuts for the wealthy are expected to trickle down and be offset by growth in the economy. It's a formula that hasn't worked before, and the Budget Director admits that $2 trillion in revenue has been double counted.
Cutting, squeezing, trimming -- and spending President Trump wants to cut government — except for Social Security and Medicare. At the same time, he wants to put people to work. So, a new infrastructure program might appeal to the Democrats, but Republicans say the money's not there without cutting those sacred entitlements. As Trump begins work on a so-called "skinny" budget, he finds himself bound by vague campaign promises that may turn out to be contradictory. Don't forget major cuts for wealthy taxpayers. We look at early efforts at assembling a financial puzzle — even when the pieces don't fit.
A Fast Start to the President's "Fourth Quarter" Last night, the President told Congress the State of the Union is "strong." He provided a list of positive changes over the past five years: 11 million new jobs, lower prices for gasoline, increased economic growth, decreased deficits — with the stock market up and health coverage for ten million uninsured people. President Obama told Congress what every Democrat wanted to hear, but that's not the way Republicans describe the state of the union and — just last November -- they won control of Capitol Hill. The President isn't conceding. Last night, he threatened to veto four potential GOP challenges to his policies and actions. He also made the case for "middle class economics." Did he set the stage for bipartisanship — or next year's presidential campaign?
Poverty and Politics in an Election Year Fifty years after Lyndon Johnson's War on Poverty, President Obama says "the defining challenge of our generation” is income inequality. Both parties claim they want action, but even extending benefits to the 1.3 million long-term unemployed may be more than the Senate and Congress can manage. If there's no action on Capitol Hill, that number will rise by 72,000 people a week. Last week, six Republican Senators agreed to allow a bill to come to the floor. Now they're outraged at Democratic Majority Leader Harry Reid. Have Democrats mismanaged an issue that could help them in November's elections? Will Republicans take the blame anyway? We hear the latest about voter sentiment and a clash of opinions on other proposals, including a raise in the minimum wage.
Who Can We Trust with our Money? News coverage of AIG bonuses, Bernie Madoff, CNBC's Jim Cramer and Treasury secretaries with ties to Wall Street has been relentless. Public confidence in banks, insurance companies, money managers and financial reporters has sunk to an all-time low. Searching for safe, reliable investments -- not dependent on government -- Americans bought 600 tons of gold last year, a 42% increase over the year before. The rest are stuck with a troubling question: who can you trust with the money you have left as the financial bloodbath continues? Is it time for consumers to go it alone?
Barack Obama and Housing Foreclosures In Phoenix, Arizona today, President Obama says it's worth $75 billion to rescue nine million homeowners already in default or “underwater” with loans worth more than their houses. He said his plan would not reward “the unscrupulous or irresponsible” -- speculators, dishonest lenders or buyers who knew they were assuming obligations they couldn't afford. We hear how homeowners can qualify for assistance and get some informed reaction.
Obama to the Rescue for Homeowners In Phoenix, Arizona today, President Obama says it’s worth $75 billion to rescue nine million homeowners already in default or “underwater” with loans worth more than their houses. He said his plan would not reward “the unscrupulous or irresponsible” -- speculators, dishonest lenders or buyers who knew they were assuming obligations they couldn’t afford. We hear how homeowners can qualify for assistance and get some informed reaction.
A Political Salesman Lays It on the Line President-elect Obama said today that America's economic crisis is " no accident of history ." He decried "an era of irresponsibility" from Wall Street to Washington. But he said the seeds of the problem provide hope for overcoming what he called a "devastating loss of trust and confidence…"
A Political Salesman Lays It on the Line President-elect Barack Obama said today that only the federal government is big enough to prevent economic recession from lasting for years to come. Calling the America's economic crisis "no accident of history," he decried "an era of irresponsibility" from Wall Street to Washington and warned that "a bad situation could become dramatically worse" if Congress fails to act soon. But sounding more like a president than a president-elect he observed that the seeds of the problem provide hope for overcoming what he called a "devastating loss of trust and confidence…" We hear more about how bad things are, what Obama proposes and the prospects for improvement if he gets what he wants. Were years of "prosperity" really a sham? What's in store for America's standard of living?
As Truck and SUV Sales Plunge, Detroit Goes for Small Urban cowboys in pickups and SUV's are a thing of the past. More and more customers don't even talk about power any more. Ford, Chrysler and General Motors were not ready for four-dollar gasoline, and June was another disaster for an industry that helped make America great, with sales of new cars and trucks that plunged to a ten-year low. GM dropped 18%; Ford 28% and Chrysler 36%. Toyota took a 21% hit, but Honda rose by 1.1 and Kia , owned by Hyundai of South Korea, went up by 7.6. We talk with a Chrysler/Jeep dealer who says the Big Three are their own worst enemy. Can they re-tool in time? Can they figure out how to make money on small cars with high mileage before they're swamped by foreign companies who saw the light a long time ago?
Citibank and the US Economy Citigroup said today it lost $10 billion in the last three months, the first time it has reported a loss since it was redesigned 10 years ago as a global "financial supermarket." Economist Peter Morici, a business professor at the University of Maryland, discusses the impact on the US economy.
The Sub-Prime Mortgage Meltdown Continues When housing prices were going up, lenders were approving low interest loans to borrowers with questionable credit. The interest rates were "adjustable"--scheduled to go up, but before higher rates kicked in, homeowners could sell at a profit or re-finance their loans to get better deals. Banks and investment companies packaged the sub-prime loans and issued hundreds of billions of dollars worth of bonds. Now, the head of Merrill-Lynch is among those losing their jobs as Wall Street pays the price for over-investing in sub-prime mortgages. America's biggest home lender is helping borrowers to restructure their loans to avoid foreclosure, but home prices are still going down. The sub-prime debacle may cost $400 billion, twice as much as the savings and loan crisis of the early 90's, and two million people may lose their homes. Will there be a recession? Should the government step in or let borrowers and investors live with the consequences of risky decisions?
Fixing the American Auto Industry Sales at Ford Motor Company dropped 18% last month, and Toyota outsold Ford by 35,000 vehicles—many of which were Made in America. Meantime, workers at General Motors are voting on a contract some say will save the company—and maybe Ford and Chrysler , as well, although skeptics say the union didn't give up enough. These are bad times for the industry that once dominated the world's strongest economy. Can it become competitive once again? We hear more about that GM contract, mileage standards, global warming—and clean diesel.
White House budget proposal slashes and burns President Trump's first budget request is considered dead on arrival in Congress — a familiar development in Capitol Hill. We hear what it reveals about the priorities of the new administration. What's likely to die… and what might survive?