Federal President's Weekly Address

President Obama Hails Unprecedented G-20 Action to Address Global Economic Downturn

THE WHITE HOUSE
Office of the Press Secretary
_________________________________________________________________
EMBARGOED UNTIL 6:00 AM ET Saturday, April 4, 2009

WEEKLY ADDRESS: President Obama Hails Unprecedented G-20 Action to Address Global Economic Downturn

WASHINGTON – In his weekly address, President Barack Obama praised the agreement of the G-20 nations to act together as a turning point in this global economic slump. With the American economy inextricably linked to the global economy, global coordination is needed to restore lending, spur job growth, reform financial regulation and ultimately fix our economy. The President also discussed his meetings with Chinese President Hu, Russian President Medvedev, and America’s NATO allies.

The audio and video will be available at 6:00am Saturday, April 4, 2009 at www.whitehouse.gov.

Prepared Remarks of President Barack Obama Weekly Address
Saturday, April 4, 2009

In this new century, we live in a world that has grown smaller and more interconnected than at any time in history. Threats to our nation’s security and economy can no longer be kept at bay by oceans or by borders drawn on maps. The terrorists who struck our country on 9/11 plotted in Hamburg, trained in Kandahar and Karachi, and threaten countries across the globe. Cars in Boston and Beijing are melting ice caps in the Arctic that disrupt weather patterns everywhere. The theft of nuclear material from the former Soviet Union could lead to the extermination of any city on earth. And reckless speculation by bankers in New York and London has fueled a global recession that is inflicting pain on workers and families around the world and across America.

The challenges of our time threaten the peace and prosperity of every single nation, and no one nation can meet them alone. That is why it is sometimes necessary for a President to travel abroad in order to protect and strengthen our nation here at home. That is what I have done this week.

I began my trip by attending a summit of the G20 – the countries that represent the world’s largest economies – because we know that the success of America’s economy is inextricably linked to that of the global economy. If people in other countries cannot spend, that means they cannot buy the goods we produce here in America, which means more lost jobs and more families hurting. Just yesterday, we learned that we lost hundreds of thousands more jobs last month, adding to the millions we’ve lost since this recession began. And if we continue to let banks and other financial institutions around the world act recklessly and irresponsibly, that affects institutions here at home as credit dries up, and people can’t get loans to buy a home or car, to run a small business or pay for college.

Ultimately, the only way out of a recession that is global in scope is with a response that is global in coordination. That is why I’m pleased that after two days of careful negotiation, the G20 nations have agreed on a series of unprecedented steps that I believe will be a turning point in our pursuit of a global economic recovery. All of us are now moving aggressively to get our banks lending again. All of us are working to spur growth and create jobs. And all of us have agreed on the most sweeping reform of our financial regulatory framework in a generation – reform that will help end the risky speculation and market abuses that have cost so many people so much.

I also met this past week with the leaders of China and Russia, working to forge constructive relationships to address issues of common concern, while being frank with each other about where we disagree. President Hu and I agreed that the link between China’s economy and ours is of great mutual benefit, and we established a new Strategic and Economic Dialogue between the U.S. and China. President Medvedev and I discussed our shared commitment to a world without nuclear weapons, and we signed a declaration putting America and Russia on the path to a new treaty to further reduce our nuclear arsenals. Tomorrow, I will lay out additional steps we must take to secure the world’s loose nuclear materials and stop the spread of these deadly weapons.

Finally, I met yesterday with our NATO allies and asked them for additional civilian support and assistance for our efforts in Afghanistan. That is where al Qaeda trains, plots, and threatens to launch their next attack. And that attack could occur in any nation, which means that every nation has a stake in ensuring that our mission in Afghanistan succeeds.
As we have worked this week to find common ground and strengthen our alliances, we have not solved all of our problems. And we have not agreed on every point or every issue in every meeting. But we have made real and unprecedented progress – and will continue to do so in the weeks and months ahead.

Because in the end, we recognize that no corner of the globe can wall itself off from the threats of the twenty-first century, or from the needs and concerns of fellow nations. The only way forward is through shared and persistent efforts to combat fear and want wherever they exist. That is the challenge of our time. And if we move forward with courage and resolve, I am confident that we will meet this challenge.

Thank you.

An Electrifying Irony (false promises and hopes in the transportation market)

An Electrifying Irony (false promises and hopes in the transportation market). By Kenneth P. Green
Master Resource, April 3, 2009

To those who have a memory that transcends more than a few weeks, recent events in the auto sector must induce a great feeling of irony.

Back in August of 2008, then-candidate Obama called for 1 million plug-in hybrid vehicles to be on the road by 2015.

To that end, then-candidate Obama called for:

• $4 billion in tax credits to American automakers to retool plants for the production of plug-in hybrid cars capable of 150 miles to the gallon;
• A $7,000 tax credit for consumers who bought early model plug-in vehicles

Then-candidate Obama also vowed that half of all cars purchased by the federal government would be plug-in hybrids or all-electric by 2012.


As both candidate and president, Obama has repeatedly raised plug-in hybrids as a vital technology for greening Detroit.

Fast forward to a recent item in the Wall Street Journal that reports: ”In a five-page analysis of GM’s viability, the [Obama car] team critiqued GM’s marquee next-generation project, the electric-powered Chevy Volt, as ‘too expensive to be commercially successful in the short-term.’” Thomas Edison told Henry Ford as much in 1896.

Ah, the irony is palpable. And it’s not as if we hadn’t told them so. We did. In Stop the Green Carjacking, an article I wrote for The American last year, I observed:

The National Renewable Energy Laboratory (NREL) estimates that plug-in hybrid vehicles cost $3,000 to $7,000 more than regular hybrids, even though the performance differences between the two models are slight, and the really fuel-efficient hybrids cost $12,000 to $18,000 more than the conventional brand.

And for the Volt, I observed:

Consider the Chevy Volt. When it was first announced, the price estimate from General Motors (GM) was $30,000. That soon jumped to $35,000. Now GM’s president says that the actual price could be closer to $40,000, and that GM will still lose money on the sale.

I wonder if Mr. Obama will give taxpayers back that $4 billion in tax credits he was giving the automakers for his plug-in hybrid dreams?

North Korea in International Limelight over its Space Development Programme

North Korea in International Limelight over its Space Development Programme. By Rajaram Panda and Pranamita Baruah
Institute for Defence Studies and Analyses, April 2, 2009

North East Asia’s fragile peace is being threatened by North Korea’s planned launch between 4 and 8 April over Japanese territory of a communication satellite. The US and its allies suspect the planned satellite launch to be a long-range ballistic missile test. The prevailing uneasy peace is accentuated by the fact that both a ballistic missile and a satellite launcher operate on very similar technology. According to Dennis Blair, Director of US National Intelligence, the technology for a space launch “is indistinguishable from an intercontinental ballistic missile.” If the “three stage space-launch vehicle works,” it could technically reach the US mainland. Consequently, the reactions from the US and its allies have been strong.

There has remained a lurking suspicion that North Korea and Iran have joined together to build missiles. That Iran has made rapid strides in missile technology is an established fact. But whether the collaboration between the two countries includes warheads or other nuclear work remains shrouded in mystery. But given the behaviour of the two countries over the years, it is difficult to disbelieve that both Iran and North Korea are not cooperating in such activity.

North Korea already possesses the Taepo Dong-2 with ICBM potential (striking range of 5500 kilometres or greater). It may be recalled that Pyongyang’s August 1998 test firing of a Taepo Dong-2 into the Sea of Japan had panicked American friends and allies in East Asia. It is a different matter that the test failed 40 seconds into its launch. However, it propelled North Korean engineers to make substantial modifications in the missile’s design. The advanced version of Taepo Dong-2 is supposed to have a minimum striking range of 6,700 kilometres (4100 miles), capable of striking the US west coast.

Despite its precarious economic problems, Pyongyang has never felt shy of demonstrating its defence capabilities by upgrading its missile development systems continuously. It has built a ballistic missile arsenal capable of hitting not only Japan and South Korea but also the west coast of the US. In total, North Korea deploys around 750 ballistic missiles, including between 600-800 SCUDs, 150-200 No Dongs, 10-20 Taepo Dong-1, and a few Taepo Dong-2s.

Pyongyang has not halted its nuclear programme despite the denuclearisation deal that it struck at the Six Party talks in February 2007. It is suspected that Pyongyang is aiming to produce nuclear payloads for its ballistic missiles. It is also feared that Pyongyang’s missile development programme is projected towards developing a nuclear warhead sophisticated enough for delivery aboard a space-bound rocket. In the event of Pyongyang achieving that capability, it would be in a position to detonate a nuclear warhead in space. The electromagnetic pulse (EMP) emanating from such a detonation would have frightening repercussions, especially for unhardened satellites. A space launch would advance Pyongyang’s missile programme, enabling it to produce more accurate and powerful ballistic missiles capable of terrorizing not only Seoul and Tokyo but also Los Angeles and San Francisco.

With a view to deterring and intercepting missiles from the North, South Korea has announced its own plans to complete a missile defence system by 2012. Japan too has affirmed its commitment to acquire a multi-layered system after the US withdrew from the Anti-Ballistic Missile Treaty (ABM) in 2002 and North Korea left the NPT regime in 2003. If North Korea does not retract from its ballistic missiles test programme, the US, Japan and South Korea are likely like to keep their missile defence options open.

There already exist the necessary mechanisms through international legal instruments to deter North Korea from upgrading its missile development capability. United Nations Security Council resolution 1718 (2006) prohibits Pyongyang from conducting any ballistic missile activity. North Korea is a signatory to the 1967 Outer Space Treaty, which prohibits the deployment of nuclear weapons or other weapons of mass destruction in orbit, in the moon or elsewhere in space. However, it has asserted its right to engage in a peaceful space programme. The state-run Korean Central New Agency said “preparations for launching experimental communications satellite Kwangmyongsong-2 by means of delivery rocket Unha-2 are now making brisk headway” at a launch site in Hwadae Country in the northeast. The statement called the upcoming launch “a giant stride forward” for the country’s space programme.

North Korea finds fault with the US and Japan, claiming that these two countries have already launched their own satellites and therefore have no moral right to prevent it from doing the same. It further warns Washington and Tokyo that if they deny Pyongyang the right to use space for peaceful purposes, it would not only be discriminatory but also not in keeping with ‘spirit of mutual respect and equality’ of the 2005 disarmament pact. Pyongyang further warns that any sanctions that the UN, US and its allies might impose on it would “deprive the Six-Party talks of any ground to exist or their meaning.” Meanwhile, North Korea has asserted that it would regard any attempt to shoot down its rocket as an unprovoked Act of War and retaliate with prompt strikes on the US mainland, Japan and South Korea.

The international community is aghast at Pyongyang’s obduracy. Japan has decided to call for an emergency meeting of the UNSC if the launch takes place. In the event of the North’s missile firing, Japan will urge the UNSC to take immediate action regardless of how other UN members would react, as it would be directly exposed to an immediate missile threat. Japan has warned that it will shoot down a missile or any debris if it threatens to hit Japanese territory.

Japan debated between two possible options in response to a missile launch by North Korea: to ask the cabinet to take an instant decision after a missile launch or to give military approval in advance to shoot it down, and finally decided to exercise the second option by issuing an advanced order to the Self Defence Forces on March 27 to use the Patriot missile defence system to destroy any missile or debris that shows signs of falling toward Japan. Japan, however, does not want to strike a North Korean rocket unless it appears to pose a direct threat, in the event of a mishap that could send an errant missile or debris flying toward the country.

Japanese Prime Minister Taro Aso has already obtained the support of British Prime Minister Gordon Brown. Both Japan and Britain have agreed to take the issue to the UNSC to discuss possible punitive action if Pyongyang goes ahead with the launch. As a pre-emptive measure, Japan has deployed three Aegis destroyers, two of which are fitted with anti-missile missiles, around Japan and Patriot guided-missile units at select locations in Japan. The US Seventh Fleet has been deployed around Japan. US cruisers and destroyers based at Yokosuka also reportedly have the capability to launch guided missiles against ballistic missiles. Five Aegis destroyers of the US Navy modified for ballistic missile defence have already left Yokosuka and other Japanese ports on March 30. They are expected to detect and track the North Korean rocket passing over northeastern Japan if the launch goes according to plan.

South Korea is worried over the heightened tensions on the Peninsula and President Lee Dang-hee has appealed for restraint. Seoul has also alleged that Pyongyang’s long-range rocket launch clearly violates UNSC resolution 1718. It has described Pyongyang’s planned rocket launch as a ‘serious challenge and provocation’ to regional security. North Korea, however, has ramped up its anti-Lee rhetoric, warning that the Koreas are headed for a military clash.

Russia too has joined the chorus of nations expressing concern over the upcoming launch. Russian Deputy Foreign Minister Alexei Borodavkin said that the launch would lead to increased tensions in the region and urged Pyongyang to refrain from it. As regards China, a traditional ally and a major donor for impoverished North Korea and UNSC permanent member, it has not publicly urged Pyongyang to halt the launch. However, both China and Russia have notified the Obama administration that North Korea has a legitimate right to launch a satellite. The perceived tacit support from China and Russia might embolden North Korea not to rethink its planned space satellite launch.

It appears that the uneasy peace in the North East Asian region stemming from Pyongyang’s intransigence is likely to continue for some more time to come. If North Korea is to be trusted about its intentions for the communication satellite launch programme, it would serve the interests of the country. If, however, Pyongyang has other covert intentions, it will have to face the reactions from its neighbours and the US.

Dr. Rajaram Panda is Senior Fellow, and Pranamita Baruah is Research Assistant, at the Institute for Defence Studies and Analyses, New Delhi.

Obama administration to avoid Congressional limits on executive pay

Administration Seeks an Out On Bailout Rules for Firms. By Amit R. Paley and David Cho
Officials Worry Constraints Set by Congress Deter Participation
Washington Post, Saturday, April 4, 2009; A01

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.

This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.

Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration's decisions and might seek to undo them. "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.

A Treasury spokesman defended the approach. "These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery," spokesman Andrew Williams said.

In one program, designed to restart small-business lending, President Obama's officials are planning to set up a middleman called a special-purpose vehicle -- a term made notorious during the Enron scandal -- or another type of entity to evade the congressional mandates, sources familiar with the matter said.

In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman.

At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.

Obama's team is also planning to exempt financial firms that participate in a program designed to find private investors to buy the distressed assets on the books of banks. But Treasury officials are still examining the legal basis for doing so. Congress has exempted the Treasury from applying the restrictions in a fourth program, which aids lenders who modify mortgages for struggling homeowners.

Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.

The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama's team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.

Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.

"They are basically trying to launder the money to avoid complying with the plain language of the law," said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. "They are trying to create a loophole to ignore Congress, and I think the courts will think that it's ridiculous."

The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury's actions are legal.

Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.

Obama himself has called for these limits. "We've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street," he said earlier this year.

But officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around.

In private meetings with officials in both the Bush and Obama administrations, firms' leaders have pushed back against pay limits.

A major test of whether the Treasury would apply the congressional restrictions was a $1 trillion program developed last fall to revive consumer lending. The initiative, known as the Term Asset-Backed Securities Loan Facility, or TALF, will be seeded with up to $100 billion from the financial rescue package, with the rest coming from the Fed.

The program set up a special entity providing low-cost loans to hedge funds and other private investors so they can buy securities that finance consumer debt from banks and other lenders. This would free these companies to make more loans.

When the Bush administration announced the program in November, officials directed the Fed to apply the pay limits to the lenders because they stood to benefit the most from the program. "There was a public hunger for executive-compensation restrictions, and we knew we couldn't be tone-deaf to the politics there," a former Bush administration official said.

In February, Obama administration officials at the White House and the Treasury began reviewing that decision. Treasury officials consulted with Department of Justice attorneys, who said they could legally avoid the pay restrictions, according to a government official. The requirements were removed just before the initiative was launched.

The concerns persisted as the administration crafted other initiatives. Some private investors said, for instance, that they would not help the government buy toxic assets from banks if the congressional restrictions were applied to them. And every major provider of small-business loans has said that it will not participate in the government's program if it has to surrender ownership stakes to the government or submit to executive-pay limits.

Belgium & Spain offer NATO trainers for Afghanistan

Barack Obama fails to win Nato troops he wants for Afghanistan. By Michael Evans and David Charter in Strasbourg
The Times, April 4, 2009

Barack Obama made an impassioned plea to America’s allies to send more troops to Afghanistan, warning that failure to do so would leave Europe vulnerable to more terrorist atrocities.

But though he continued to dazzle Europeans on his debut international tour, the Continent’s leaders turned their backs on the US President.

Gordon Brown was the only one to offer substantial help. He offered to send several hundred extra British soldiers to provide security during the August election, but even that fell short of the thousands of combat troops that the US was hoping to prise from the Prime Minister.

Just two other allies made firm offers of troops. Belgium offered to send 35 military trainers and Spain offered 12. Mr Obama’s host, Nicolas Sarkozy, refused his request.

The derisory response threatened to tarnish Mr Obama’s European tour, which yesterday included a spellbinding performance in Strasbourg in which he offered the world a vision of a future free of nuclear weapons.

Mr Obama – who has pledged 21,000 more troops to combat the growing insurgency and is under pressure from generals to supply up to 10,000 more – used the eve of Nato’s 60th anniversary summit to declare bluntly that it was time for allies to do their share. “Europe should not simply expect the United States to shoulder that burden alone,” he said. “This is a joint problem it requires a joint effort.”

He said that failing to support the US surge would leave Europe open to a fresh terrorist offensive. “It is probably more likely that al-Qaeda would be able to launch a serious terrorist attack on Europe than on the United States because of proximity,” he said.

The presidential charm offensive failed to move fellow Nato countries. President Sarkozy told Mr Obama that France would not be sending reinforcements to bolster its existing force northeast of Kabul.

Germany, Italy, Poland, Canada and Denmark said that they were considering their positions. After a meeting with Angela Merkel, the German Chancellor, Mr Obama tried to apply further moral pressure. “I am sure that Germany, as one of the most important leaders in Europe, will be stepping up to the plate and helping us to get the job done.”

Jaap de Hoop Scheffer, the Nato Secretary-General, warned that new laws proposed by President Karzai in Afghanistan sanctioning child marriage and marital rape had made it harder to raise more soldiers.

“We are there to defend universal values and when I see, at the moment, a law threatening to come into effect which fundamentally violates women’s rights and human rights, that worries me,” he said.

“I have a problem to explain to a critical public audience in Europe, be it the UK or elsewhere, why I’m sending the guys to the Hindu Kush.”

The temporary British deployment falls short of the 2,000 soldiers that the Army had planned to deploy long-term to Afghanistan and appeared to catch defence chiefs by surprise.

Mr Brown announced the commitment as he flew into Strasbourg for the two-day summit, but hopes that it would spur other allies to follow suit were soon dashed. British officials said that the extra troops, expected to number between 500 and 700 – increasing Britain’s military strength there to about 9,000 – would be dispatched to southern Afghanistan for a four-month period leading up to and beyond the election, due to take place on August 20.

The plan is to withdraw them once the election is over. Mr Brown said that the extra troops were only supposed to provide a “temporary uplift”.

Military contingency plans remain on the table to send up to 2,000 more troops long-term, taking the total to 10,000, but that will depend on the political will to approve the deployment.
Although the Prime Minister discussed Afghanistan with President Obama when they held bilateral talks before the G20 summit in London, it is understood that no formal offer of extra troops was made.