August 12, 2008

Budget deficit soars to $102.8 billion in July

Deficit is nearly triple the $36.4 billion deficit recorded a year ago

WASHINGTON - The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.

The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007.

The deficit outstripped the $97 billion gap that Wall Street economists had been expecting for July.

The Treasury said outlays were pushed up by $15 billion because of payments the Federal Deposit Insurance Corp. made to depositors at failed banks. The Treasury report did not identify the banks but federal regulators seized the assets of California-based IndyMac Bank, the largest regulated thrift to fail in U.S. history.

The FDIC is expected to be successful in recovering much of its outlays for failed banks, in part by selling the assets of seized institutions. The FDIC has also raised the possibility that it will increase insurance premiums on healthy banks to cover the cost of what are expected to be rising bank failures as the current credit crisis unfolds.

Besides the payouts by the FDIC, government outlays were increased by the final bulk mailings of government stimulus payments in July. The July deficit also looked worse than the July 2007 deficit because last year's figure was artificially deflated by timing issues that shifted about $19 billion in normal outlays into the prior month.

So far this year, the budget deficit totals $371.4 billion, more than double last year's deficit through the same time period of $157.4 billion.

The Bush administration recently revised its forecast for this year's deficit, lowering it from an estimate of $410 billion, down to $389 billion. However, the Congressional Budget Office is more pessimistic, projecting the deficit for this year will total $400 billion when the current budget year wraps up on Sept. 30.

For the 2009 budget year, which begins Oct. 1, the administration is now projecting a deficit of $482 billion, which would be the highest in dollar terms in history, surpassing the old mark of $413 billion set in 2004.

Through July, government revenues total $2.094 trillion, down 1 percent from the same period a year ago. Revenues have been weaker this year, reflecting the sharp slowdown in the overall economy.

Government spending so far this budget year totals $2.466 trillion, 8.5 percent higher than a year ago. That's in part due to the $168 billion stimulus package Congress passed at the beginning of the year in an effort to keep the country out of a deep recession and because of increased spending for the wars in Iraq and Afghanistan.

August 11, 2008

Franken: America a 'chump' on Iraq rebuilding

Minnesota Senate candidate seeks to get back more U.S. Iraqi funds

Last week, Franken's opponent, Republican Sen. Norm Coleman, said the U.S. should take back $1.1 billion committed to Iraqi reconstruction after a government report found that Iraq has a cumulative budget surplus of up to $50 billion for 2008, thanks mostly to oil and gas revenues.

The Coleman campaign issued a statement Monday applauding Franken for joining in seeking to have the Iraqis pay for more of their own reconstruction. But it said Franken's proposal includes money that has already been returned, plus more that will be returned in the coming weeks, and that it would put U.S. troops at risk by taking money away from a program that provides funds to field commanders for emergency responses.
Minnesota Senate candidate seeks to get back more U.S. Iraqi funds

ST. PAUL, Minn. - Senate candidate Al Franken called on the U.S. to rescind $7.1 billion that's committed but not yet obligated to Iraqi reconstruction, and spend it instead on highway infrastructure improvements in the United States.

Franken, the Democratic candidate in Minnesota's Senate race, said at a State Capitol news conference Monday that there's no reason for U.S. dollars to keep flowing if Iraq can pay for its own reconstruction.

"There's a line between being responsible for rebuilding a country you helped destroy, and being a chump, and I think we crossed that line," Franken said.

Franken's call for taking back more money set off a new round of tussling between the campaigns over Iraq, which has been a central issue in the race. Franken returned to one of his most persistent criticisms of Coleman — that as chairman of the Senate Permanent Subcommittee on Investigations from 2003 to the end of 2006, Coleman failed to provide any oversight of U.S. funds being diverted to Iraqi reconstruction.

"Senator Coleman at any time could have done these hearings on reconstruction and he did none," Franken said, arguing that to have done so might have run Coleman afoul of the Bush White House and Republican congressional leaders.

Coleman campaign manager Cullen Sheehan said Franken was being deceptive in how he characterized the work of the subcommittee on investigations. Sheehan said its small staff and budget would make it the wrong entity to undertake a comprehensive investigation of the Iraqi reconstruction.

Sheehan pointed out that the panel's ranking Democratic member could have instigated an investigation of the reconstruction but did not. That senator, Carl Levin of Michigan, also hasn't initiated such an investigation since becoming chairman, Sheehan said.

Coleman has supported investigations of U.S. spending and policies in Iraq by other entities including the Special Investigator General for Iraq Reconstruction, a nonpartisan group established by Congress to conduct oversight in Iraq.

"It's a matter of dollars and resources and not duplicating effort," Sheehan said.

August 9, 2008

Iraq demands timeline for U.S. withdrawal

But U.S. officials insist there is no agreement on specific dates

BAGHDAD - Iraq's foreign minister insisted Sunday that any security deal with the United States must contain a "very clear timeline" for the departure of U.S. troops.

Foreign Minister Hoshyar Zebari told reporters that American and Iraqi negotiators were "very close" to reaching a long-term security agreement that will set the rules for U.S. troops in Iraq after the U.N. mandate expires at the end of the year.

Zebari said the Iraqis were insisting that the agreement include a "very clear timeline" for the withdrawal of U.S.-led forces, but he refused to talk about specific dates.

"We have said that this is a condition-driven process," he added, suggesting that the departure schedule could be modified if the security situation changed.

No deal without timeline
But Zebari made clear that the Iraqis would not accept a deal that lacks a timeline for the end of the U.S. military presence.

"No, no definitely there has to be a very clear timeline," Zebari replied when asked if the Iraqis would accept an agreement that did not mention dates.

Differences over a withdrawal timetable has become one of the most contentious issues remaining in the talks, which began early this year. U.S. and Iraqi negotiators missed a July 31 target date for completing the deal, which must be approved by Iraq's parliament.

President Bush has steadfastly refused to accept any timetable for bringing U.S. troops home. Last month, however, Bush and Prime Minister Nouri al-Maliki agreed to set a "general time horizon" for a U.S. departure.

Last week, two senior Iraqi officials told The Associated Press that American negotiators had agreement to a formula which would remove U.S. forces from Iraqi cities by June 30, 2009 with all combat troops out of the country by October 2010.

The last American support troops would leave about three years later, the Iraqis said.

No agreement on specific dates
But U.S. officials insist there is no agreement on specific dates. Both the American and Iraqi officials spoke on condition of anonymity because the talks are ongoing. Iraq's Shiite-led government believes a withdrawal schedule is essential to win parliamentary approval.

American officials have been less optimistic because of major differences on key issues including who can authorize U.S. military operations and immunity for U.S. troops from prosecution under Iraqi law.

The White House said discussions continued on a bilateral agreement and said any timeframe discussed was due to major improvements in security over the past year.

"We are only now able to discuss conditions-based time horizons because security has improved so much. This would not have been possible 18 months ago," White House spokesman Gordon Johndroe said Sunday. "We all look forward to the day when Iraqi security forces take the lead on more combat missions, allowing U.S. troops to serve in an overwatch role, and more importantly return home."

Iraq's position in the U.S. talks hardened after a series of Iraqi military successes against Shiite and Sunni extremists in Basra, Baghdad, Mosul and other major cities.

Violence in Iraq has declined sharply over the past year following a U.S. troop buildup, a Sunni revolt against al-Qaida in Iraq and a Shiite militia cease-fire.

Concerns about militants
But attacks continue, raising concern that the militants are trying to regroup.

The suicide bomber struck Sunday afternoon as U.S. and Iraqi troops were responding to a roadside bombing that wounded an Iraqi in Tarmiyah, 30 miles north of Baghdad, the U.S. military said.

Four Iraqi civilians were killed along with the American soldier, military spokesman Lt. Col. Steve Stover said. Two American soldiers and an Iraqi interpreter were among 24 people wounded.

No group claimed responsibility for the blast but suicide bombings are the signature attack of al-Qaida in Iraq.

"This was a heinous attack by al-Qaida in Iraq against an Iraqi family, followed by a cowardly attack against innocent civilians, their security forces and U.S. soldiers," Stover said.

Elsewhere, a suicide car bomber attacked the Kurdish security department in Khanaqin, 90 miles northeast of Baghdad. At least two people were killed and 25 wounded, including the commander of local Kurdish forces, Lt. Col. Majid Ahmed, police said.

Ethnic tensions growing in northern Iraq
Ethnic tensions have been rising in northern Iraq amid disputes between Kurds, Turkomen and mostly Sunni Arabs over Kurdish demands to annex the oil-rich city of Kirkuk into their self-ruled region.

Sawarah Ghalib, 25, who was wounded in the blast, said he believed military operations under way south of the city in Diyala province had pushed insurgents into the Khanaqin area.

"I did not expect that a terrorist attack to take place in our secure town," Ghalib said from his bed in the Khanaqin hospital. "Al-Qaida is to blame for this attack. Operations in Diyala have pushed them here."

In Baghdad, six people were killed in a series of bombings on the first day of the Iraqi work week.

The deadliest blast occurred about 8:15 a.m. in a crowded area where people wait for buses in the capital's mainly Shiite southeastern district of Kamaliya. Four people were killed, including a woman and her brother, and 11 others wounded, according to police.

A car bomb later exploded as an Iraqi army patrol transporting money to a state-run bank passed by in Baghdad's central Khillani square, killing two people including an Iraqi soldier and wounding nine other people, a police officer said.

Another Iraqi soldier was killed and five were wounded by a car bomb in Salman Pak, about 25 kilometers south of Baghdad, police said.