Obama’s Egypt Struggles Grow; Hawks win Spending Fight; White House Punts on Fannie/Freddie; Pakistan Ignores U.S. Demands

Mubarak Fake Out Fools White House

"The mystique of America's superpower status has been shattered."

-- Steve Clemons, director of the American Strategy Program of the liberal New America Foundation, who has attended two meetings with the National Security Council on Egypt, talking to the Wall Street Journal.

The Obama administration had a very bad day on the Egypt crisis and the trouble may be just beginning.

Part of the problem is that the administration was apparently relying on press reports that President Hosni Mubarak was stepping down.

The press reports, in turn, were based on the statements of high-ranking Egyptian officials, including the leader of the nation’s parliament, but not from Mubarak’s inner circle. And the statements from the officials were, in turn, based on a misunderstanding, perhaps intentionally sewn, of what Mubarak and the leaders of the nation’s army told them.

In his testimony before the House intelligence committee, CIA Director Leon Panetta spoke of the “strong likelihood” that Mubarak would step down. That remark acted to confirm the rapidly growing worldwide belief that Mubarak was on his way out.

The CIA quickly walked back the comment, saying that Panetta was only talking about media reports, not any fresh intelligence.


More than two hours after Panetta’s comments, Obama, who was on a trip to Michigan in support of a stimulus spending proposal, talked about Egypt in guarded terms but in an optimistic tone, talking about “witnessing history unfold because the people of Egypt are calling for change.”

But history did not unfold. Mubarak said he still would not step down before September but did cede new responsibilities to new Vice President Omar Suleiman, the former head of the nation’s brutal intelligence service.

Mubarak’s announcement came with a specific rebuke of “foreign pressure” that seemed aimed directly at the Obama administration’s efforts to speed his departure, suggesting that the reason President Obama and his team got it wrong was that they have lost contact with the government in Cairo.

The notion of intelligence failure was further reinforced Thursday when Obama’s Director of National Intelligence James Clapper expounded at great length about the “largely secular” Muslim Brotherhood of Egypt. Clapper, also testifying before the House Intelligence Committee, talked about the peaceful aims of the group "not under the guise of an extremist agenda."

This was apparently news to FBI Director Robert Mueller, who was testifying at the same hearing, who declined to publicly discuss the threats from the group, but said, "Obviously, elements of the Muslim Brotherhood here and overseas have supported terrorism."

Today’s papers are full of stories with insider quotes about “disarray,” “disbelief” and “division” at the White House and new strains on the relationships with other allies in the region.

Saudi Arabia and Jordan are unhappy that Obama publicly pressured Mubarak after his promise to not seek reelection. Saudi King Abdullah reportedly gave Obama quite a talking to about mistreating a longtime ally. Israel is preparing for disaster, namely a Middle East without an Egyptian bulwark, waning U.S. influence and a nuclear Iran.

Who knows what today will bring in Egypt? The army has swung behind the Mubarak plan for a long succession process and Suleiman as a kind of acting president. The protestors are enraged and preparing to march, but have been told to disperse. Will the army move in? Will the police redeploy?

After all the disarray and disbelief had worn off, Obama put out a statement calling for “restraint by all parties,” and saying, “violence must be forsaken.” But as Thursday’s events show, the president has diminishing influence over the situation.

The worst fears about Egypt have been that a violent confrontation between a state alienated from Western influence and citizens burning with hate could plunge the entire region into chaos. The alternate anxiety has been that Islamist groups like the Muslim Brotherhood could exploit a democratic awakening and Western naiveté to seize control of the largest Arab nation.

The administration managed to simultaneously reinforce both worries on Thursday.

To this point, Obama has gotten passing marks politically on his handling of the crisis. Only 38 percent of respondents in the FOX News poll released Thursday but taken at the beginning of the week expressed dissatisfaction with Obama’s handling of the situation. If the president isn’t able to reassert some influence over the situation, that number will climb quickly.

Conservative House GOPers Win Spending Fight

“Our intent is to make deep but manageable cuts in nearly every area of government, leaving no stone unturned and allowing no agency or program to be held sacred.”

-- House Appropriations Committee Chairman Hal Rogers, R-Ky., in a statement announcing deeper spending cuts.

One day after rolling out a partial plan to reduce spending for the remaining seven months of the fiscal year by $32 billion, House Appropriations Committee Chairman Hal Rogers, R-Ky., came back with a pledge to more than double that amount.

Rogers’ proposal comes in $100 billion less than president Obama’s plan for the next seven months and $74 billion less than would be spent if the current stopgap spending levels approved in the lame-duck session of the last Congress were simply extended.

Rogers’ plan also tops Budget Committee Chairman Paul Ryan’s initial proposal by $42 billion.

What happened was that Rogers found out that Speaker John Boehner was indeed serious about letting the more conservative members of the House have full access to the spending measure when it got to the floor of the House.

The young turks of the GOP caucus blew off Rogers and Ryan. After having to explain why they were coming up short of their campaign pledge to trim $100 billion from spending this year, new members hit back hard and demanded that the budget hit the magic number.

Rogers was facing the possibility that his spending bill would be ambushed by his own party and be defeated on the House floor after an ugly fight over amendments. By hitting the $100 billion mark, Rogers can hope to get the team back together and push the legislation through the Republican-dominated House in fast fashion.

This is a big win for the freshman but also a validation of Boehner’s laissez-faire approach to the speakership. Rather than trying to clamp down on the freshmen, he let them work it out themselves with the old bulls. Let the members say what they like, but in the end, it’s all about who has the votes.

Rogers is still working up exactly where all of this money is going to come from, which may yet delay the process. But it looks likely that the plan will move ahead and will have nearly unified Republican support.

Over in the Senate, Democrats are already suggesting that there will need to be a temporary extension of current spending levels past their current March 4 expiration. That means they’re ready to fight with the House over the cuts, setting up an ugly intra-chamber fight over the budget.

Administration Punts on Fannie/Freddie Plan

“Goldilocks fashion”

-- Associated Press description of how an Obama administration proposal for dealing with shattered mortgage agencies Fannie Mae and Freddie Mac.

The Obama administration heralded today’s release of the president’s long-awaited plan for unwinding government support for Fannie Mae and Freddie Mac, the publicly backed mortgage firms at the heart of the panic of 2008.

But we are told today that the plan is really a menu of three plans – one for no government involvement in the mortgage business, one for emergency intervention into the mortgage markets and one for a permanent government presence in home lending.

The administration has been under increasing pressure from both Republicans in Congress and investors to answer how the government will untangle itself from the multi-trillion obligations to Fannie and Freddie. The agencies, which formerly operated as quasi-private entities, have already gobbled up $130 billion from taxpayers to cover bad loans they made while inflating the housing bubble.

But rather than making a proposal, the administration is punting and offering three options for Congress to consider as they look at ways to undo what has become one of the longest-lasting aftereffects of the Panic of 2008.

Despite the hype, today’s proposal will not do much to advance the issue. Rather than taking the initiative, the administration seems to want Congress to offer up its own strategy first.

The AP, which got an advance look at the non-plan, said the administration’s plan was to “provoke a discussion” on the subject. But we already have that. Lawmakers, lenders and investors were actually hoping for a solution.

Pakistan Rebuffs Obama Call For Diplomat’s Release

“A clear murder.”

-- Pakistani police describing the deaths of two young men shot by American diplomat in Lahore

Diplomatic tensions between the U.S. and Pakistan are reaching the breaking point after a Pakistani court has ordered a security consultant for the State Department to be held without bond for two weeks while murder charges are prepared against him.

The Obama administration has demanded the release of Raymond Davis, who was in the country on a diplomatic visa, but the Pakistani central government has been either unable or willing to comply.

Davis is held in the state of Punjab, which has fallen increasingly under the sway of Islamists, the same folks who daily threaten to topple the government of President Ali Asif Zardari. The killings of the two men, which Davis said were in self defense, has outraged the nation and excited existing resentment of the ever-increasing U.S. military/security presence in Pakistan.

The country is radicalizing – a new law provides the death penalty for anyone caught preaching the Christian gospel. The country is also expanding its military – a recent assessment said the country now has 100 nuclear warheads built to fight a war with hated rival India.

There have been multiple reports that the Obama administration has threatened to revoke a March state visit invitation for Zardari, which was already promising to be an unpleasant spectacle for the White House. Zardari seems to have been marginalized by claims of serious corruption and being a U.S. pawn. The U.S. may also revoke the diplomatic status of Pakistan’s legation in Washington in retaliation.

But social snubs and diplomatic counter measures seem of little concern at this moment. If Pakistan -- a roiling nation of 170 million Muslims next door to 100,000 American troops in Afghanistan – has unraveled to the point that the central government cannot or will not respond to U.S. demands, we have much bigger problems.