Obama Jumps Back in for Government Unions

“I don't think it does anybody any good when public employees are denigrated or vilified, or their rights are infringed upon."

-- President Obama speaking to the members of the National Governors’ Association

President Obama and his administration have jumped back into the fray on the Wisconsin budget stalemate on the side of protesting workers and fugitive Democratic lawmakers.

In his remarks to the nation’s governors gathered at the White House, Obama volunteered his concerns that public employees were being “denigrated or vilified” and cautioned against infringing upon their rights.

That follows weekend remarks by Labor Secretary Hilda Solis, who the Washington Examiner reports fired up the crowd at the winter meeting of the Democratic National Committee by shouting that the “fight is on” for "our brothers and sisters in public employee unions."

What Obama and Solis are talking about is an effort by Wisconsin Gov. Scott Walker and the Republican majorities in the state’s legislature to increase public workers’ contributions to their own benefits, reduce the power of unions to negotiate future benefit increases and eliminate mandatory union membership for state workers.

Two weeks ago, Obama granted a White House interview to the Milwaukee NBC affiliate in which the president denounced the legislation as an assault on unions. Spurred by Obama’s support and with the assistance of the president’s campaign organization, union activists began an around-the-clock protest at the Wisconsin state capitol.

But, as the protests wore on and became increasingly ugly, schools remained closed and Democratic members of the state Senate remained in hiding (now for 12 days) in order to prevent a vote on the legislation, the Obama White House backed away from the issue.

Obama ignored a massive public worker demonstration against a similar bill in Ohio last week that coincided with the president’s visit to the state to discuss his proposal for green energy stimulus spending. And Senior White House Adviser Valerie Jarrett cautioned against letting a “Wisconsin issue” become a “Washington issue.”

But the battle is now reaching its decisive phase as Walker has set today as the deadline for Senate Democrats to show themselves or see more than 1,000 state workers fired. There is also a sense among Democrats that they are winning the battle over their collective bargaining powers. That’s reflected in Wisconsin surveys that while voters are fed up with the runaway Democrats, they are generally opposed to Walker’s plan.

And, as has been oft discussed, this is a huge political issue for 2012. Wisconsin and Ohio are swing states and public worker unions are the most important Democratic constituency, providing the largest bloc of the party’s financial support, reliable votes and ground troops for getting out other voters. A loss here for Democrats and unions would be a damaging blow to Obama’s reelection hopes. Obama needs a union win and needs to show his union patrons that he is with them in the struggle.

And, as we heard from attendees at the National Governors Association meeting, the prospect of reining in the lavish benefits of public workers is very appealing to the leaders of cash-strapped states. If Walker wins, the movement will spread more quickly.

The Obama administration has worsened the plight of those governors with new obligations under Medicaid and, ironically, through the generous bailouts he has obtained for their states.

State governments were the largest single recipients of cash from Obama’s February, 2009 stimulus package. States received an estimated $160 billion out of the $787 billion package. Then, in August of 2010 the president pushed through another $26 billion in state aid aimed at preventing government worker layoffs.

With no more stimulus spending coming through a Republican House, states are facing a combined shortfall for the next fiscal year of more than $120 billion. Part of the problem is that the Obama stimulus money prevented gradual belt tightening. Even fiscally conservative governors could find little interest in their legislatures for belt tightening as the federal largesse flowed.

Now, states are facing a fiscal crisis thanks to a boom and bust in federal freebies exacerbated by low tax receipts and new Medicaid costs. Republicans are using the moment to push against the government workers who benefit most directly from the policies of the Obama Democrats.

Decision Day for Fugitive Wisconsin Democrats

"Failure to return to work and cast their votes will lead to more painful and aggressive spending cuts in the very near future. This is the Senate Democrats' 24-hour notice."

-- Gov. Scott Walker, R-Wisc., in a written ultimatum issued Monday

After spending 11 days in hiding, Wisconsin Senate Democrats will face their toughest test yet today as Republican Gov. Scott Walker readies layoffs for more than 1,000 state workers.

Walker says the state will miss out on the chance to refinance more than $500 million of its debt if the Senate cannot act on his budget bill today. To make up for the higher interest rates, Walker says he will start laying off the government workers Senate Democrats fled the state in order to protect.

Walker’s short-term plan seeks to close a $137 million budget deficit with higher contributions from government workers for their benefits like retirement (teachers currently get a $56.94 match for every dollar they contribute) and health insurance (Republicans are seeking 12.6 percent contributions up from the current norm of five percent or less).

The state has to balance its budget before the end of the current fiscal year on June 30, and Walker says he will keep cutting payrolls until he closes the gap.

But today, Walker also will lay out his two-year budget plan in an afternoon speech to the legislature (or whatever part of it is not still hiding in Illinois). Walker will propose his plan for covering a projected shortfall of more than $3 billion, which is expected to again fall heavily on the state’s public employees.

Democrats have lost much of their ability to make their case for continuing lavish benefits for union workers because of the fugitive senators. Hiding seldom helps improve one’s political profile. Coming back to bash Walker’s budget will be another incentive.

But state Senate Majority Leader Scott Fitzgerald may have found the best way of all to get the lawmakers out of Illinois and back to work.

Fitzgerald announced Monday that the Senate would no longer be using direct deposit to pay the lawmakers but instead would be holding their checks at the statehouse.

Fitzgerald also decreed that his office would start reviewing and approving the timesheets for Democratic staffers who have been unsupervised while their bosses nibble AFSCME fruit baskets in Illinois motels.

If, as some suspect, the aides have been providing logistical support (and clean britches) to the runaway lawmakers, Fitzgerald’s move will complicate the Democrats’ situation.

Book of Bloat Bolsters GOP Calls for Cuts

"It makes us all look like jackasses. Go study that. It will show why we're $14 trillion in debt."

-- Sen. Tom Coburn, R-Okla., to FOX News on a report due out today from the Government Accountability Office

The effort of Senate Democrats to resist Republican calls for cuts today will take a serious hit as the nonpartisan Government Accountability Office prepares to lay out findings of more than $100 billion in federal waste.

The study looked at duplicated efforts, unaccounted outlays and general wooly headedness in federal spending and, according to an advance copy obtained by FOX News colleague Trish Turner, found a bonanza of waste.

The central problem seems to be uncoordinated efforts by agencies with overlapping mandates.

Consider economic development. There are 72 federal programs working on entrepreneurship and small business incubation, 19 devoted to expanding tourism and 26 dedicated to expanding telecommunications efforts.

Sen. Tom Coburn, R-Okla., the Senate’s most ardent foe of such waste, will be pounding home the message today as his Democratic colleagues ready their response to a Republican plan to cut about $2 billion a week from federal spending for the remaining seven months of the federal fiscal year for a total of $61 billion.

The question in the Senate is whether Democrats will accept outright a Republican proposal for two weeks of the cuts in order to keep the government running past the expiration of the previous Democratic plan passed during the lame-duck session in December.

White House Frets Over Obamacare Uncertainty

"Clarification is appropriate … to dispel the confusion of the public and many plaintiff states regarding their rights and obligations going forward."

-- Filing from the Justice Department in regard to the ruling of U.S. District Judge Roger Vinson against President Obama’s national health care law

Justice department lawyers have begun their push against a pair of federal court decisions against President Obama’s national health care law.

In the case brought by Virginia, the administration laid out its argument to the appellate court that the law’s provision which requires every American to purchase private insurance or be enrolled in an approved government program is legal.

The essence is that since everyone has to use health care, the government is only regulating existing commerce, not mandating new commerce.

But the more revealing filing on Tuesday was in the case brought by 26 states and the nation’s leading small-business group. In that case, U.S. District Judge Roger Vinson ruled that the president’s mandatory insurance program was not only unconstitutional but that it was so central to the law overall that the whole shebang had to be thrown.

Now, cash-strapped governors already facing increased costs under the president’s plan are using Vinson’s ruling to try to wriggle free of implementation.

As governors clamor for waivers to federal requirements, Vinson’s decision poses a practical threat to the president’s law. If the machinery doesn’t start going into place now, it won’t be ready for final imposition in 2014.

This may be the first step toward the government joining the plaintiffs in seeking a speedier remedy at the Supreme Court. The more uncertainty that surrounds the law, the more willingness governors will have to flout it and the less fear Senate Democrats will have about changing key provisions.

Treasury Report Downplays Inflation Concerns Ahead of Bernanke’s Testimony

$1.2 trillion

-- The amount of U.S. debt owned by China in a revised Treasury report – up $200 billion from the prior estimate

Federal Reserve Chairman Ben Bernanke got a boost ahead of what is expected to be a brutal session in the Senate today as his former Fed colleague, Treasury Secretary Tim Geithner, put out a set of revised estimates on foreign holdings of U.S. debt.

Normally, administrations are eager to downplay the importance of foreign governments (especially communist, rising superpowers in the Pacific) in buying U.S. debt. But Bernanke has raised alarms about the value of the dollar and the desirability of U.S. debt because of his program to gobble up U.S. debt by printing money.

The concern is that the U.S. will have to pay more to borrow money because there is so much of it and investors see the central bank cheapening the dollar to pay for it. The reason fiscally unsound nations pay more for borrowing is that lenders know that inflation will rob them of some of their expected return.

So, after heralding the lowish rate of Chinese holdings of U.S. debt of less than $900 billion and total foreign central bank holdings of less than $3.2 trillion, the Treasury’s new estimate that the Chinese government owns $1.2 trillion in government debt will help Bernanke’s case in the Senate today.

The ever-embattled central banker is on the Hill to present his regular report on the state of the currency. And, lawmakers can be expected to pummel him over inflation concerns. The value of the dollar is down and the cost of necessities like gas and food is up, which means Americans are losing buying power. The belief among conservative economists is that Bernanke’s decision to keep printing money to buy debt is worsening the situation.

Those on the right generally believe that the stirrings of recovery may be stifled by inflation. Most on the right believe that the Fed must keep up its stimulus efforts or the deep recession that followed the Panic of 2008 will return.

Bernanke today will be able to say that foreign lenders are still taking U.S. debt and that the latest Fed print and lend effort (a $600 billion cash dump that continues through June) isn’t causing concerns around the globe. If the government of China doesn’t worry about a weak dollar, why should Congress?

Economists to varying degrees blame Bernanke’s bank for the steady rise in commodity prices here and around the globe. If a dollar is worth less and oil prices are measured in dollars per barrel that means it takes more dollars to buy oil.

There is little expectation that Bernanke will deviate from his long-standing line that there is no fear of inflation, despite rising prices, and that when inflation does occur, he will be able to stop it. As Geithner said last week, it isn’t “rocket science.”

But with gas prices up an average of 30 cents a gallon from last month and consumer spending faltering, senators are not likely to be feeling so blithe.

And Now, A Word From Charles

“Ever since the unsuccessful Iranian revolution of 2009, this administration is showing an incredible reluctance to express itself in terms of the principles and in terms of our strategic interests. Late on Iran, late on Egypt, and now late again on Libya.”

-- Charles Krauthammer on “Special Report with Bret Baier