Obama's call of college for all: Could it be done?

In his address to a joint session of Congress on Tuesday, President Barack Obama called for every American to pursue some form of education beyond high school.

It's an ambitious goal — some might say impossible. Currently, only two of every five American adults have a two- or four-year college degree. Millions of Americans struggle even to complete high school, with one in four dropping out. And even a high school degree is no guarantee a student is ready for college.

Particularly alarming are the college rates for low-income and minority students. One recent study reported more than 90 percent of low-income teens said they planned to go to college — but only half actually enroll.

Those who do enroll are substantially less likely than others to finish their degree. If they borrowed money for college and don't graduate, they may be worse off than if they hadn't even started college.

The Associated Press asked six experts — from the worlds of policy, philanthropy, and some who work directly with struggling students — to answer the same two questions.

Is the president's goal realistic? And what would it take to attain it? Here are their responses.

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Kati Haycock, president of the Education Trust, an advocacy group for children, particularly poor and minority children:

Absolutely! Just as those GIs stepped up to the challenges of college, today's young people will, too. But we have work to do.

First, we must get serious about high schools. Instead of preparing some for college and others for the jailhouse, we need to help high schools prepare every student for college.

Second, we have to dramatically improve results for low-income and minority students, now more than half of our youth. Increasing their success is the only way to ensure our national success.

Finally, colleges need to accept some responsibility for improving graduation rates. (See collegeresults.org for information on any college.) That includes holding costs down, and focusing not just on getting students in the door, but out with degrees. Yes, students need to work harder. But what colleges do matters a lot.

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Richard Vedder, Ohio University professor and member of the Commission on the Future of Higher Education assembled by former Education Secretary Margaret Spellings:

Not everyone can or should go to college. Given the dubious quality of our secondary schools as well as limited cognitive skills and motivation, many students are incapable of college-level work. Fulfillment of President Obama's goal would lead to many students failing, resources being squandered and the quality of postsecondary education being diluted.

I think it is sheer fantasy to believe we will lead the world in the percent of young adults with college degrees by 2020. More generally, the president's approach is the equivalent of dropping dollars out of airplanes over student homes and college campuses. That will not change colleges' behavior to make them less arrogant and elite, and more affordable, efficient and accountable.

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Nicole Hurd, executive director of the National College Advising Corps, which places recent college graduates in low-income schools to work as college guidance counselors:

All students are capable of continuing their education beyond high school. And while there are no easy answers, one way to open the door wider is to demonstrate to our young people that college is possible.

No one can do this better than recent college graduates. There is something powerful about a 23-year-old telling a high school student that "I went to college and if I can do it, you can, too." Or "My family was worried about the cost of college, but the aid is out there. Let's sit down and fill out your FAFSA (Free Application for Federal Student Aid)." Or "If you want to go to college and get a good job, you need to take hard classes and do your best."

Many of the barriers to higher education, whether financial, social, or cultural, can be overcome through this kind of mentoring and advising. In calling high-school students to college, President Obama is calling college students to service. Just imagine if 500 recent graduates served in our public high schools. Such a group could mentor 150,000 low-income and first-generation students — and could help thousands enroll in college who might not otherwise have found their way. While this kind of service isn't the only solution, it could go a long way.

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Eduardo J. Marti, president of Queensborough Community College in New York City:

President Obama's call for higher education for all Americans is doable.

The United States began building higher education capacity in 1947, when the Truman Commission established the concept of universal access to higher education and created open admissions community colleges. The 1965 Higher Education Act established financial aid. These two actions resulted in a post-secondary education system that guarantees access to all. No other country has this infrastructure.

All Americans, young or old, can use community colleges to upgrade their skills or obtain a degree. This existing system can be used to retrain displaced workers for better jobs and it can be used to prepare the leaders of tomorrow. We must make America competitive again.

We must also hold our community colleges accountable by developing strenuous metrics of excellence. The national Achieving the Dream Project is studying innovative approaches in 82 colleges and we can use those results to measure our success. The shattered dreams and wasted fiscal resources that result from low graduation rates must be stopped.

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Gaston Caperton, former governor of West Virginia and president of the College Board, which works to connect students to college and runs the SAT and AP exam programs:

Not only is the president's goal realistic, achieving it is also vital to the future economic and social well-being of our society. Among the most important steps to attain it are:

_An earlier start to schooling, especially for youngsters from low-income families. Greater access to and participation in preschool programs, such as Head Start, would help put many, many more young people on the path to college.

_Access to more rigorous courses in middle and high school, taught by teachers with strong training and access to sustained professional development.

_Better strategies for making college affordable, such as early college savings plans for all students, including plans that are subsidized by the government for low-income families.

_Adult education programs that make it easier to return to college, through online courses or community colleges.

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Jamie P. Merisotis, president of the Indianapolis-based Lumina Foundation, which works to expand access to higher education:

President Obama's goal is challenging, but it's certainly realistic. At Lumina Foundation, our own goal is to increase Americans' attainment of high-quality degrees from its current 39 percent rate to 60 percent by 2025.

We know that our goal is ambitious. Fortunately, there are steps that can be taken — by educators, policy makers and the public — to help realize BOTH goals.

First, we must ensure that students truly prepare themselves for college success: academically, financially and socially. Second, higher education institutions must direct their full energies toward the success (not just the enrollment) of students — especially low-income and minority students. Finally, we must encourage efforts that improve efficiency and productivity on the nation's campuses, so more students are properly saved

Obama's budget: huge ambitions, huge obstacles

WASHINGTON – Breathtaking in its scope and ambition, President Barack Obama's agenda for the economy, health care and energy now goes to a Congress unaccustomed to resolving knotty issues and buffeted by powerful interests that oppose parts of his plan.

Perhaps the only things as high as Obama's goals are the hurdles they must clear.

While tackling the economic crisis, he is asking Congress to enact contentious measures that have been debated, but not decided, in calmer times: cut subsidies for big farms; combat global warming with a pollution tax on industries; raise taxes on the wealthy; make big changes to health care, including lower reimbursements for Medicare and Medicaid treatments and prescription drugs.

Standing alone, any one of these proposals would trigger a brawl in Congress and fierce debates outside Washington. Obama wants the proposals done largely in concert, as an interrelated plan to undo major elements of Ronald Reagan's conservative movement.

Obama outlined the approach in a budget proposal Thursday, a sprawling road map that will require several hard-fought pieces of legislation.

He launched his campaign for the package Saturday with a fiery, populist radio and Internet address that depicted his critics as champions of "the interests of powerful lobbyists" and "the wealthiest few."

"I realize that passing this budget won't be easy," the president said, because it "represents a threat to the status quo in Washington."

"They're gearing up for a fight," he said. "So am I."

If his rhetoric was tough, the challenges he faces are downright daunting. The economy contracted by a stunning 6.2 percent in the final three months of 2008, its worst showing in a quarter-century. Obama says the crisis calls for gutsy actions, and many groups feel he has delivered.

"We're struck with how bold and courageous a budget it is," said James Horney of the liberal Center on Budget and Policy Priorities, which supports the president. "There are a whole lot of things that are going to be extremely difficult because there are very powerful vested interests out there that will fight them."

Obama is not simply proposing a budget that assumes a jaw-dropping deficit of $1.75 trillion this year, a quadruple increase from the year before. He's trying to redirect strong currents in American society.

The wealthiest 5 percent would pay a whopping $1 trillion in higher taxes over the next decade, while most others would get tax cuts. Industries would buy and trade permits to emit heat-trapping gases. Higher-income older people would pay more for Medicare benefits. Drug companies would receive smaller profits from the government. Banks would play a much smaller role in student loans.

Obama's climb is steep. Even with solid Democratic majorities in the House and Senate, he secured a $787 billion stimulus package only after accepting compromises that irked liberals but won the support of three Republican senators.

Not a single House Republican backed it. Judging from House GOP leaders' immediate condemnation of his budget blueprint, Obama can expect more of the same.

More troubling for him, however, are the divisions quickly emerging among Democratic, liberal and centrist constituencies that either backed the stimulus or stayed on the sidelines.

Democratic Rep. Collin Peterson of Minnesota, the House Agriculture Committee chairman, criticized Obama's plan to cut direct payments to farms with sales exceeding $500,000 a year. "Now is not the time" to reopen a recently passed farm bill, he said.

Sen. Arlen Specter of Pennsylvania, one of the stimulus bill's three Republican backers, said it is hard to see how Obama can meet his new deficit-reduction targets. He called Obama's chief energy proposal "entirely speculative" and urged the president "to forgo the tax increases" in the plan.

The U.S. Chamber of Commerce, which also backed the stimulus bill, said Obama's budget blueprint "appears to move in exactly the wrong direction. More taxes, heavy-handed regulations, and command-and-control government will not hasten recovery... You don't build a house by blowing up its foundation."

That sounded like a jab at Obama, who said Thursday: "There are times when you can afford to redecorate your house, and there are times when you have to focus on rebuilding its foundation."

Some Washington veterans say that if anyone can overcome the hurdles, it is Obama.

"He has such enormous popularity right now," said Scott Lilly, who spent 31 years as a congressional aide before joining the liberal-leaning Center for American Progress.

Obama's political gifts are extraordinary, Lilly said. No one expects the president to get everything he's asking for, he said, "but I think he could get a big share of it."

Pushing his tax and health proposals through the Senate Finance Committee "is going to be one hell of a fight," Lilly said. The committee chairman, Sen. Max Baucus of Montana, sometimes parts ways with Democratic leaders on important issues such as tax cuts and Medicare.

Stiff resistance awaits Obama at almost every turn.

"Class warfare" is how Republicans label his plan to raise taxes, starting in 2011, on households making more than $250,000 a year.

Some liberal-leaning foundations are unhappy about his proposed reduction in the tax deductibility of gifts to charity from wealthy people.

On health care, Obama wants to cut payments for Medicare and Medicaid, the government programs for the elderly, disabled and poor. Taking hits would be insurance companies, home health services, hospitals and drug manufacturers, all of which are powerful lobbies in Washington.

On energy, Obama wants to reduce greenhouse gases and raise money for clean-fuel technologies, such as solar and wind power, by auctioning off carbon pollution permits. The proposal, known as cap and trade, will lead to a bruising fight in Congress, which may be divided more by region than party.

William Kovacs, who oversees regulatory affairs for the U.S. Chamber of Commerce, says Obama is pushing too fast for such a dramatic policy change.

"Any support that there was for cap and trade from the business community," he said, was based on the assumption of "a long-term transition."

Some government veterans, however, think doubters are underestimating Americans' hunger for change. For example, every individual and institution is hurt by the ever-rising cost of health care, and many are ready to shake up the system to make it less expensive, said Bruce Reed, who oversaw domestic policy in Bill Clinton's White House.

"The country wants it, the economy needs it, businesses large and small know that they can't afford not to have it," said Reed, who now heads the Democratic Leadership Council, a center-left group. "I don't think a do-nothing caucus will get anywhere on health care."

Reed added, however: "Health care has always been the Middle East of domestic policy."

On energy, he said, "Congress ought to be able to pass a cap and trade bill. The rest of the industrialized world is doing emissions trading. A broad swath of American industry wants this question to be answered."

The president's agenda is vast and ambitious, Reed said, but the times call for it. After all, he said, "Obama didn't have the luxury of saying, 'I'll handle the economic crisis and then get back to you on the rest of America's future.'"

Most Iraqis Welcome Obama's Pullout Plan

It should come as no surprise that Iraqi Prime Minister Nouri al-Maliki has been quick to endorse emerging plans to hasten the departure of U.S. forces from his country. Maliki, after all, had opposed the Bush Administration's decision to increase U.S. troop levels in the surge of 2007, and he had forced a reluctant Washington to accept a hard deadline for withdrawal in the Status of Forces Agreement adopted late last year. The growing abilities of the Iraqi security forces and the strengthening of his political position after last month's provincial elections have added to Maliki's confidence in managing without the Americans. "We welcome such a decision and support it," said Tahseen al-Shekhli, a spokesman for the Iraqi government, of Obama's intention to end the U.S. combat mission in Iraq by August 2010. "We consider this as a good-faith sign from the American Administration toward Iraq and Iraqis."

Word of the new White House drawdown plan, which Obama officially announced on Friday morning in a speech at Camp Lejeune in North Carolina, was greeted with shrugs of contentment by most Iraqi political figures, largely because the Obama plan appears to be in step with what Iraqis had expected as a result of the Status of Forces Agreement signed by the Maliki government and the Bush Administration last December. That agreement requires most U.S. combat troops to be off the streets of Iraq by this summer and all U.S. troops to have left the country by 2011. (See pictures of Basra's return to normality.)

The most powerful political factions in Iraq would prefer to see U.S. forces leave sooner rather than later. Maliki's Shi'ite-dominated government and security forces have faced down their biggest foe, the Mahdi Army militia of Shi'ite cleric Muqtada al-Sadr. And Sadr's movement, which remains a political force in Iraq, was the first of the Shi'ite groups to agitate for a U.S. withdrawal. Only two camps in Iraq remain uneasy about seeing U.S. troops move offstage over the next 18 months - the minority Sunnis, who remain fearful of a revival of sectarian violence against them, and the commanders of the Iraqi security forces, who are anxious that U.S. logistical support and equipment may dry up as the U.S. draws down.

"It's really necessary for the American troops to remain now," said Yousef Aboud Ahmed, a Sunni volunteer fighter with a militia supported by U.S. forces in the Baghdad neighborhood of Adhamiya. "If we had a nonsectarian government in power, then yes, it would be a good idea for the American forces to go. They should go one day. But not in this situation."

For some U.S. soldiers in Iraq, however, the prospect of leaving sooner rather than later within the established withdrawal timeline is welcome. "Good," said Army Captain Matt van Stavern, whose unit is serving in Mosul, where U.S. and Iraqi security forces continue to battle insurgents who've remained active in the city for the past year despite an overall drop in violence across the country. "My boys are ready to go home. And the Iraqi people will be ready."

Obama health plan opens tough negotiation

WASHINGTON – President Barack Obama's prescription for the nation's ailing health care system comes with Medicare cuts and tax hikes — usually poison pills that doom any overhaul effort in Congress.

But the budget Obama proposed Thursday is not a finished blueprint for overhauling health care. Rather it's the opening bid in a tough negotiation. Anybody who's been in a bargaining session knows you never end up with your opening bid.

Obama is asking Congress: If you're going to cover an estimated 48 million uninsured Americans in the world's costliest medical system, how do you pay for it?

Obama's plan would set aside $634 billion over 10 years in a major effort to cover all Americans — a goal that could cost more than $1 trillion. Half the money would come from tax increases on upper-income earners; the other half from cuts to Medicare and Medicaid. Private insurance plans serving Medicare seniors would take the biggest hit, but hospitals, drug companies and home health agencies also face cuts.

Republicans and fiscally conservative Democrats are sure to disagree with Obama's specifics, but they may quietly applaud his determination to pay for health care reform, instead of adding to the deficit.

"This is a serious effort to get the process moving," said Mark McClellan, a doctor and health economist who ran Medicare for former President George W. Bush. "The specific financing proposals are going to have a very tough time."

Obama's approach is a conscious departure from the path former President Bill Clinton took in the 1990s. Clinton's 1,300-page health care bill tried to answer every question and ultimately went nowhere. Obama is asking Congress to fill in the blanks.

"He's outlining these cuts as examples of places where savings can be accrued," said Christine Ferguson, a health policy professor at George Washington University. "You put those on the table, and if people want to have this discussion, they have to propose alternatives."

Whether that dialogue succeeds depends not just on Obama, but on Congress and interest groups representing insurers and doctors, hospitals and drug companies, consumers and small business.

Clinton's top priority was to get everybody covered quickly. Obama has framed the problem differently, focusing on how to slow rising costs, so that everybody can eventually be covered.

"What the president is doing is bold, but it's not overreaching," said economist Robert Reischauer, president of the Urban Institute research center. "The administration is coming to grips with the reality that this will cost a lot of money, and it's committed to paying for it."

The tricky part is in the details.

For example, more than half of Obama's spending cuts would come from Medicare managed care plans. The private plans cost the government 14 percent more on average than care for seniors in traditional Medicare. That translates into lower out-of-pocket costs for seniors, who in a bad economy have been flocking to the plans, increasing enrollment to about 10 million.

"People are flooding into the program," said Dan Mendelson, president of Avalere Health, an information company serving government and the health care industry. "I don't think cuts of this magnitude ultimately are going to be palatable to Congress."

Obama would replace the current payments with a competitive bidding system estimated to save $177 billion over 10 years. That sent insurance company shares skidding Thursday on Wall Street. But some market analysts said there may be a silver lining: While competitive bidding could decrease profit margins, it might generate higher revenues for insurers if seniors keep signing up.

America's Health Insurance Plans, the insurance industry trade group, wasn't ready to leave the bargaining table.

While warning that Obama's cuts would "jeopardize the health security" of seniors, the group's president, Karen Ignagni, said insurers "are committed to doing our share" to expand coverage.

Obama vows to lead US from dire 'day of reckoning'

WASHINGTON – Standing before the nation on a "day of reckoning," President Barack Obama summoned politicians and public alike Tuesday night to forge a path out of the worst economic disaster in a quarter-century by embracing shared sacrifice and costly new endeavors to improve health care, schools and the environment.

"The time to take charge of our future is here," Obama declared in his first address to a joint session of Congress, watched by millions of worried Americans on television and the Internet.

Adding words of reassurance, he said, "Tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before."

Obama had to wade his way into a chamber packed with lawmakers eager to welcome the nation's first black president into a Capitol built by slaves. The House gallery included a special section hosted by first lady Michelle Obama, where guests served as living symbols of the president's goals. Cramming the floor was virtually the entire leadership of the federal government, including Supreme Court justices, led by Ruth Bader Ginsberg, back on the bench only this week after cancer surgery, and all but one Cabinet member, held away in case disaster struck. Obama's 52-minute speech was interrupted 61 times by applause.

To deal with the current economic crisis, deepening each day, the president said more money would be needed to rescue troubled banks beyond the $700 billion already committed last year. He said he knows that bailout billions for banks are unpopular — "I promise you, I get it," he said — but he also insisted it was the only way to get credit moving again to households and businesses, the lifeblood of the American economy.

Along with aid for banks, he also called on Congress to move quickly on legislation to overhaul regulations on the nation's financial markets.

"I ask this Congress to join me in doing whatever proves necessary," Obama said. "Because we cannot consign our nation to an open-ended recession."

With U.S. automakers struggling for survival, Obama also said he would allow neither their demise nor "their own bad practices" to be rewarded. "I believe the nation that invented the automobile cannot walk away from it," he said.

Thinking longer-term, Obama said in a speech lacking many specifics that both political parties must give up favored programs while uniting behind his campaign promises to help the millions without health insurance, build better schools and move the nation to more-efficient fuel use. He skipped the traditional litany of new programs common in such speeches but spoke on broad generalities about goals and themes that formed the backbone of his presidential campaign.

Just five weeks after his inauguration, Obama addressed an ebullient Democratic congressional majority and an embattled but reinvigorated GOP minority as well as anxious viewers at home. Despite the nation's economic worries and the failure so far of his effort to draw support for his plans from more than a handful of Republican lawmakers, Obama enjoys strong approval ratings across the nation.

Bobby Jindal, Louisiana's young, charismatic governor who is considered a potential 2012 presidential candidate, was chosen to deliver the televised GOP response. He exhorted fellow Republicans to be Obama's "strongest partners" when they agree with him. But he signaled that won't happen much, calling the $787 billion stimulus package "irresponsible."

"The way to lead is not to raise taxes and put more money and power in hands of Washington politicians," Jindal said. "Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need?"

Still, mindful of the public's optimism about Obama's leadership, Jindal, as well as other Republicans, took care to focus criticism primarily on Congress' Democratic leaders, not on the president.

Pre-speech, Wall Street was in a better mood than it had been in for days: Stocks were up after Federal Reserve Chairman Ben Bernanke said the recession might end this year.

But Obama spoke as bad economic news continued to pile up, felt all too keenly in U.S. homes and businesses. Some 3.6 million jobs have disappeared in the recession that ranks as the biggest job destroyer in the post-World War II period. Americans have lost trillions of dollars in retirement, college and savings accounts, with the stock market falling nearly half from its peak of 16 months ago.

New polls — some with Obama's public support rising and others with it dropping — show that the political climate can be as precarious as the economic one. So Obama reached for both candor and can-do, blending the kind of grim honesty that has become his trademark since taking office with a greater emphasis on optimism.

"The weight of this crisis will not determine the destiny of this nation," he said.

The central argument of his speech was that his still-unfolding economic revival plan has room for — even demands — a broader agenda. This is the big chore of his young presidency, and Obama's hope was that he can begin to persuade the country that the longer-term items on his presidential agenda are as important to the nation's economic well-being as unchoking credit and turning around unemployment numbers.

"The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care, the schools that aren't preparing our children and the mountain of debt they stand to inherit," Obama said.

He urged lawmakers to reduce emissions of greenhouse gases that cause climate change by creating a cap-and-trade system of limits and pollution allowances. And he said the budget he is sending to Congress on Thursday will call for $15 billion a year in federal spending to spur development of environmentally friendly but so far cost-ineffective energy sources such as wind and solar, biofuels, clean coal and more fuel-efficient vehicles.

He said his budget request also will create new incentives for teacher performance and support for innovative education programs. He asked every American to commit to completing a year or more of higher education or career training.

In contrast to many State of the Union addresses by George W. Bush, Obama did not emphasize foreign policy. He touched on his intention to chart new strategies in Iraq and Afghanistan and to forge a new image for the U.S. around the world even as he keeps up the fight against terrorism.

With the economy dominant, Obama said the mess was one he inherited. "We have lived through an era where too often, short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter or the next election," he said.

Nonetheless, he aimed to show he is tackling the situation with both urgency and strict oversight for how the staggering sums are being spent. The massive stimulus plan, an overhaul of the financial sector bailout, and a $275 billion rescue for struggling homeowners are already in place, and more is likely on the way, Obama said.

Even as Washington pours money into the economic recovery, Obama said the budget deficit, at $1.3 trillion and ballooning, must be brought under control.

He promised he would slash it by half by the end of his term in 2013, mostly by ending U.S. combat in Iraq and eliminating some of Bush's tax cuts for the wealthy. He said his budget officials have identified a total of $2 trillion in savings over the next 10 years, also including ending education programs "that don't work" and payments to large agribusinesses "that don't need them," eliminating wasteful no-bid contracts in Iraq and spending on weapons systems no longer needed in the post-Cold War era, and rooting out waste in Medicare.

"Everyone in this chamber, Democrats and Republicans, will have to sacrifice some worthy priorities for which there are no dollars," he said. "And that includes me."

He touted his decision to end the practice of leaving Iraq and Afghanistan war spending out of the main budget. "For seven years, we have been a nation at war. No longer will we hide its price," Obama said.

Analysis: Obama address renews audacity to hope

WASHINGTON – President Barack Obama gave America the audacity to hope again.

After describing the U.S. economy in nearly apocalyptic terms for weeks, pushing his $787 billion stimulus plan through Congress, the president used his address to Congress on Tuesday night to tap the deep well of American optimism — the never-say-die spirit that every president tries to capture in words. And great presidents embody.

"We will rebuild. We will recover, and the United States of America will emerge stronger than before," Obama said, echoing Franklin Delano Roosevelt and Ronald Reagan.

"The answers to our problems don't lie beyond our reach," Obama said. "What is required now is for this country is to pull together, confront boldly the challenges we face, and take responsibility for our future once more."

The themes of responsibility, accountability and, above all, national community rang throughout an address carefully balanced by the gravity of its times. Job losses. Home foreclosures. Credit crisis. Rising health care costs. Declining trust in government. Obama touched all those bases.

"The impact of this recession is real, and it is everywhere," he said.

It seemed that the president might be sticking to the dour talking points of the stimulus debate, when he warned that failure to pass the legislation would lead to a catastrophe "as deep and dire as any since the Great Depression," one that "we may be unable to reverse."

Fearing (and hearing) the worst, Americans supported Obama's package and lawmakers passed it. But his rhetoric carried a risk.

None other than former President Bill Clinton, husband of Obama's former rival and now the secretary of state, Hillary Rodham Clinton, complained that the president's words were too much of a downer. The president from Hope, Ark., told the author of "The Audacity of Hope" to get back on message.

"I just want the American people to know that he's confident that we are going to get out of this and he feels good about the long run," Clinton told ABC's "Good Morning America" last Friday.

Obama didn't need Clinton's advice. While his advisers privately criticized Clinton for second-guessing their strategy, Obama said a president must be both a realist and a cheerleader. "I'm constantly trying to thread the needle between sounding alarmist but also letting the American people know the circumstances that we're in," Obama told ABC News on Feb. 10.

Indeed, advisers said at the time that Obama had already written much of his address, and they predicted that it would mark a rhetorical pivot — from selling fear to raising hopes.

And that he did.

"You should also know," Obama told millions of viewers Tuesday night, "that the money you've deposited in banks across the country is safe; your insurance is secure; you can rely on the continued operation of our financial system."

He sounded like Roosevelt who, after closing banks briefly in the first days of his presidency, stoked the embers of American optimism. "Confidence and courage are the essentials of success in carrying out our plan," Roosevelt said. "Let us unite in banishing fear. We have provided the machinery to restore our financial system. It is up to you to support and make it work. It is your problem no less than it is mine. Together we cannot fail."

Like Roosevelt, Obama asked Americans to unite against pessimism. "We are a nation that has seen promise amid peril, and claimed opportunity from ordeal," Obama said. "Now we must be that nation again."

Like Roosevelt, Obama said his government had already provided the machinery to create jobs, improve access to health care, free up credit and help struggling homeowners.

And, like Roosevelt, he challenged Americans to help fix the nation's woes. Obama even challenged his fellow citizens to recognize their role in creating the problem. "People bought homes they knew they couldn't afford," Obama said, "from banks and lenders who pushed those bad loans anyway."

He was blunt but bullish on America.

"None of this will come without cost, nor will it be easy," he said after spelling out his agenda. "But this is America. We don't do what's easy. We do what is necessary to move this country forward."

In short, he reminded people that America has always seen itself as a "shining city upon a hill," as one of its earliest leaders, John Winthrop, put it — a metaphor that Ronald Reagan reintroduced effectively in the 1980s.

When he addressed Congress, Reagan liked to pepper the audience with average people who did extraordinary things and epitomized the American spirit. Obama borrowed that device, inviting Ty'Sheoma Bethea to join first lady Michelle Obama in the crowd.

Bethea is an eighth-grade student who wrote Congress for help in repairing her dilapidated school, telling lawmakers that she and her fellow students will rise above their conditions because, "We are not quitters."

And that was Obama's bottom-line message to a shaken nation. We are not quitters.

Obama pledges $15B for Medicaid, answers critics

WASHINGTON – President Barack Obama promised quick help for strapped Medicaid programs Monday amid a gathering of advisers and adversaries to discuss keeping entitlement programs from exploding the federal deficit.

Obama's summit at the White House, which was coming at close of a three-day meeting of the nation's governors, was the first such forum of his young presidency designed specifically to get at problems threatening the long-term fiscal health of the nation. It came as Obama gets ready to disclose ambitious plans to slash the federal deficit in half within four years.

Even before it began, some of its 130 invited White House conference participants cautioned against overinflated expectations.

"It can either be a nice press event. Or it can be a substantive event," said Republican Sen. Judd Gregg, whom Obama appointed as commerce secretary before the New Hampshire lawmaker balked. "History tells us it will be the first. We've had these meetings before. There's always a lot of people willing to point out the problem."

Yet, he said, there is seldom anyone willing to make the difficult decisions to solve those problems.

As the nation's economy continues its downward spiral, Obama's advisers are keeping their focus on the broader fiscal troubles that have sent millions to unemployment rolls. Taken in context, the summit is but one part of the White House's larger approach to the coming weeks focused on Obama's priorities for a first term, including a State of the Union-style address on Tuesday.

That speech is not likely to include plans to deal with long-crumbling entitlement programs.

Obama's first order of business on the domestic front Monday was his East Room talk to the governors about the stimulus program — and an unmistakable warning to critics of the $787 billion plan.

Obama revealed that his administration will release $15 billion Wednesday to help governors meet Medicaid payments to poor Americans. And he took the opportunity, as well, to address concerns about the stimulus plan raised by a handful of Republican governors who have called the plan overly large and wasteful .

At issue is a proposed expansion of state unemployment benefits for part-time workers and others who where previously ineligible to receive the funding. Some GOP governors — several with an eye on the 2012 presidential contest including Mark Sanford of South Carolina and Bobby Jindal of Louisiana — say they may not accept that funding because it will require a tax increase on employers once the stimulus money runs out.

Obama addressed that critique directly, and warned against allowing political considerations to cloud a discussion of the stimulus program.

"I think there are some very legitimate concerns on the part of some about the sustainability of expanding unemployment insurance. What hasn't been noted is that that is $7 billion of a $787 billion program. And it's not even the majority of the expansion of unemployment insurance," Obama said.

He added, "If we agree on 90 percent of this stuff, and we're spending all our time on television arguing about 1, 2, 3 percent of the spending in this thing, and somehow it's being characterized in broad brush as wasteful spending, that starts sounding more like politics. And that's what right now we don't have time to do."

On the larger question of burgeoning deficits, Senate Republican Leader Mitch McConnell of Kentucky said that a solution exists in legislation written by Gregg and his Democratic counterpart on the Budget Committee, Sen. Kent Conrad of North Dakota.

Their measure would create a bipartisan commission to deal with Social Security, Medicare and Medicaid. The entitlement programs face eventual bankruptcy, although experts differ on how urgently each is threatened.

Many House Democrats, however, remain opposed to a commission, including Speaker Nancy Pelosi. Obama has indicated he's open to the idea — and many others — as a way to move toward a viable solution.

McConnell said any movement would be a step toward getting a handle on the unfunded liabilities.

Obama plans to cut the federal deficit in half by the end of his first term, mostly by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government. The goal is to halve the federal deficit to $533 billion by the time his first term ends in 2013.

He inherited a deficit of about $1.3 trillion from his predecessor, President George W. Bush.

Obama announces 18-month troop withdrawal schedule

AMP LEJEUNE, N.C. – President Barack Obama says he'll withdraw America's combat brigades from Iraq over the next 18 months.

He made the announcement in a speech to military troops and officers at Camp LeJeune (leh-JUHN) N.C. He said his administration will "proceed cautiously" on the withdrawal and that U.S. commanders will bring it about in close consultation with the Iraqi government.

During his campaign for the presidency, Obama had advocated pulling troops out within 16 months of taking office. The timeline he announced Friday, involving roughly 100,000 troops, was two months longer. It still hastens the U.S. exit, nevertheless.

Obama also said that between 35,000 and 50,000 troops will initially remain there to help train Iraqi forces and undertake counter-terrorism missions.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) — A substantial number of the roughly 100,000 U.S. combat troops to be pulled out of Iraq by Aug. 31, 2010, will remain in the war zone through at least the end of this year to ensure national elections there go smoothly, senior Obama administration officials say.

That pacing suggests that although Obama's promised withdrawal will start soon, it will be backloaded, with larger numbers of troops returning later in the 18-month time frame.

Obama was to announce his strategy Friday at the sprawling Camp Lejeune in North Carolina, where thousands of Marines are soon heading to another war front, Afghanistan.

The administration now considers Aug. 31, 2010, the end date for Iraq war operations.

That timetable is slower than Obama had promised voters, but still hastens the U.S. exit.

Even with the drawdown, a sizable U.S. force of 35,000 to 50,000 U.S. troops will stay in Iraq under a new mission of training, civilian protection and counterterrorism.

The potential size of that remaining force doesn't please leaders of Obama's own Democratic Party, who had envisioned a fuller withdrawal. Obama personally briefed House and Senate members of both parties about his intentions behind closed doors Thursday.

Republican Sen. John McCain, who lost the presidential election to Obama, offered his support for the plan Friday.

"I think the plan is significantly different than the plan Obama had during the campaign," said McCain, referring to Obama's campaign pledge to pull combat troops out of Iraq within 16 months of taking office if possible.

Defense Secretary Robert Gates and Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, told lawmakers in the briefing that ground commanders in Iraq believe the plan poses only a moderate risk to security, McCain said.

War critics are ready to hear Obama's public words. They see his much-anticipated announcement as the beginning of the end of a long, costly conflict.

The last of the U.S. troops are to be out of Iraq no later than Dec. 31, 2011. That's the deadline set under an agreement the two countries sealed during George W. Bush's presidency. Obama has no plans to extend that date or pursue any permanent troop presence in Iraq.

Administration officials spoke about Obama's Iraq decision under condition of anonymity to discuss details of the strategy ahead of the announcement.

The Iraq war helped fuel Obama's presidential bid. Most Americans think the war was a mistake. More than 4,250 U.S. military members have died in the war.

From the Jan. 20 start of his presidency to his deadline for ending the combat mission, Obama has settled on a 19-month withdrawal. He had promised the faster pace of 16 months during his campaign but also said he would confer with military commanders on a responsible exit.

Officials said Thursday that the timetable Obama ultimately selected was the recommendation of all the key principals — including Gates and Mullen. The timeline was settled on as the one that would best manage security risks without jeopardizing the gains of recent months.

With 142,000 U.S. troops in Iraq, Obama plans to withdraw most of them; the total comes to roughly 92,000 to 107,000, based on administration projections.

Officials said Obama would not set a more specific schedule, such as how many troops will exit per month because he wants to give his commanders in Iraq flexibility. "They'll either speed it up or slow it down, depending on what they need," said one official.

Yet the officials made clear Obama wants to keep a strong security presence in Iraq through a series of elections in 2009, capped by national elections tentatively set for December. That important, final election date could slip into 2010, which is perhaps why Obama's timetable for withdrawing combat troops has slipped by a few months, too.

One official said Gen. Ray Odierno, the top American commander in Baghdad, wants a "substantial force on the ground in Iraq to ensure that the elections come off."

Another official said Odierno wanted flexibility around the elections. "The president found that very compelling," the official said.

Obama has maintained that getting out of Iraq is in the security interest of the United States. He planned to emphasize in his comments on Friday, however, that the U.S. has no plans to withdraw from its interests in the region and will intensify its diplomatic efforts.

The senior administration officials sought to describe Obama's decision-making process as one that was not driven by his political promise to end the war. They said he consulted extensively with his military team while interagency government teams reviewed the options.

Obama made the final decision on Thursday, officials said.

The U.S. forces that will remain in Iraq starting Sept. 1, 2010, will have three missions: training and advising Iraqi security forces; providing protection and support for U.S. and other civilians working on missions in the country; and targeted counterterrorism.

McCain, R-Ariz., said his understanding is that the troops left behind would still go on combat patrols alongside Iraqis as part of the advisory role.

"They'll still be in harm's way," he said. "There's no doubt about it."

Obama had said all along he would keep a residual force in Iraq.

"When they talk about 50,000, that's a little higher number than I had anticipated," Senate Majority Leader Harry Reid said before the briefing at the White House. Among others there was House Speaker Nancy Pelosi, who has also expressed concern about the troop levels.

Violence is down significantly in Baghdad and most of Iraq, although many areas remain unstable. U.S. military deaths in Iraq plunged by two-thirds in 2008 from the previous year, a reflection of the improving security after a troop buildup in 2007.

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Obama offers 3rd pick, Gary Locke, for Commerce

WASHINGTON – President Barack Obama introduced former Washington Gov. Gary Locke as his nominee for commerce secretary Wednesday, trying a third time to fill a key Cabinet post for a country in recession.

"I'm sure it's not lost on anyone that we've tried this a couple of times. But I'm a big believer in keeping at something until you get it right. And Gary is the right man for this job," Obama said, standing with the fellow Democrat in the Indian Treaty Room at the Eisenhower Executive Office Building near the White House.

The president's two top earlier choices for the post dropped out — one a Democrat facing questions about a donor and the other a Republican who had a change of heart about working for a president from the opposite party — well before the Senate had a chance to confirm them.

Obama praised Locke as a man who shares his vision for turning around the moribund economy, and as someone who is committed to doing what it takes to keep the American dream alive.

"Gary will be a trusted voice in my Cabinet, a tireless advocate for our economic competitiveness and an influential ambassador for American industry who will help us do everything we can, especially now, to promote our industry around the world," Obama said.

"I'm grateful he's agreed to leave one Washington for another," the president added.

In turn, Locke said he was committed to making the sprawling agency an "active and integral partner" in advancing Obama's economic agenda, as the agency nurtures innovation, expands global markets, protects ocean fisheries and fosters growth.

"The Department of Commerce can and will help create the jobs and the economic vitality our nation needs," Locke said.

If confirmed by the Senate, Locke would assume control of a large agency with a broad portfolio that includes overseeing many aspects of international trade, oceans policy and the 2010 census.

Prompting outcry from Republicans, the administration recently took steps to assert greater control over the national head count. It has deep political implications because it is used to redraw congressional districts and distribute federal money.

"Who oversees the census won't change," White House press secretary Robert Gibbs said, adding that the director of it always reports to the commerce secretary. "I think members of Congress and the White House both have an interest in a fair and accurate census count."

Locke, 59, was the nation's first Chinese-American governor, serving two terms in Washington from 1997 to 2005. He currently works for the Seattle-based law firm Davis Wright Tremaine on issues involving China, energy and governmental relations.

Obama initially tapped New Mexico Gov. Bill Richardson, a Democrat, for the Cabinet post, calling him "uniquely suited for this role" and "a leader who shares my values." But Richardson withdrew in January, before Obama took office, after the disclosure that a grand jury is investigating allegations of wrongdoing in the awarding of contracts in his state.

A month later, Obama announced that Republican Sen. Judd Gregg of New Hampshire had accepted the job. The president said Gregg was "the right person" to lead the agency and someone would be "a trusted voice" in the Cabinet. But a week after that, Gregg stepped down, citing "irresolvable conflicts" with the policies of the Democratic president."

Even after Obama made Locke's selection official, his Cabinet still won't be complete.

He still does not have a health and human services secretary; former Senate Democratic leader Tom Daschle withdrew his nomination for that post amid a tax controversy. Among those under consideration to replace him is Kansas Gov. Kathleen Sebelius.

Locke still must get through Senate confirmation hearings to assume the post, and there are a number of issues over which he may face questions.

He was briefly linked to the scandal over foreign contributions to President Bill Clinton's 1996 campaign. Locke denied any wrongdoing, and he subsequently returned some checks tied to people implicated in the matter.

In December 1997, Locke's political committee was fined a maximum $2,500 by state regulators after it admitted breaking campaign finance laws during two out-of-state fundraisers in 1996.

And in March 1998, state investigators cleared Locke of wrongdoing following complaints that he unlawfully took $10,000 in campaign contributions from members of a Buddhist church.

Obama seeks $634B over 10 years for health care

WASHINGTON – President Barack Obama's first budget will seek $634 billion over 10 years as a down payment on health care reform, a senior administration official said Wednesday. The official said Obama's proposal is meant to start a dialogue with Congress over how to provide coverage for an estimated 48 million uninsured while also slowing health care costs, which amount to $2.4 trillion a year and keep rising even as the economy is shrinking.

The senior official spoke on condition of anonymity because the budget won't be released until Thursday.

Obama's request comes on top of recent health care expansions approved by Congress and also described by his administration as down payments toward overhauling the health care system. Those include $32 billion to expand coverage for the children of low-income workers and $19 billion to speed the adoption of computerized health records.

Aside from health care, the budget will extend Obama's signature $400 tax cut for workers, originally enacted as part of the economic stimulus plan.

The budget also calls for an increase in the top income tax rate, from 35 percent to 39.6 percent for couples with incomes above $250,000 a year, said another administration official.

The biggest tax adjustment, however, would come from updating the alternative minimum tax for inflation. That would add $150 billion to the deficit by 2013. The AMT was originally designed to make sure the wealthy paid at least some taxes, but it threatens to ensnare some 24 million middle- to upper-income taxpayers next year.

Obama has called on Congress to send him a health care reform bill this year, but even before the budget arrives on Capitol Hill, senior members of both parties say they are concerned about the cost.

Almost no one believes that Americans are getting good value for their health care dollars. Some experts say 30 percent or more of what the nation spends may be going for tests and treatments of little or no lasting benefit.

But bringing the uninsured into such a costly system won't be easy. Experts say the cost could easily exceed $1 trillion over 10 years, a figure that the Obama administration does not dispute.

Against that backdrop, "it's very hard for me to understand why the answer is to put more money into the system," Senate Budget Chairman Kent Conrad, D-N.D., said at a hearing Wednesday.

Sen. Charles Grassley of Iowa, the senior Republican on the Finance Committee, warned that Obama is walking "a razor's edge between a broken health care system and fiscal catastrophe."

But administration officials say overhauling the health care system to slow increases in costs and get everybody covered is essential to solving the nation's long-term budget problems. They argue that it may take a big investment up front to reap significant dividends over the long term.

The $634 billion Obama wants to set aside for health care would be almost evenly divided between spending reductions and tax increases.

Obama's plan would trim $316 billion over 10 years from Medicare. Some of the savings would come from scaling back payments to private insurance plans that serve older Americans, which many analysts believe to be inflated. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage.

The health care proposal would also limit tax deductions for upper-income individuals and families, raising about $318 billion over 10 years.

Obama to address Congress, nation on economy

WASHINGTON – Barreling ahead on a mammoth agenda, Barack Obama is ready to offer a detailed sketch of the first year of his presidency, casting the nation's bleeding economy as a tangle of tough, neglected problems.

In a prime-time speech to Congress and millions watching at home, Obama will make his case Tuesday that much more has to be done to turn around the economy — a message he knows he must explain.

White House spokesman Robert Gibbs said Tuesday that Obama will provide more details about his financial stability plan and measures to help the economy while delivering "a sober assessment about where we are and the challenges we face."

"He'll say we're on the right path to meeting these challenges, and there are better days ahead," Gibbs said.

Obama approaches this moment riding a strong, upbeat sentiment among the public. Overall, 68 percent of people approve of his job performance, a new Washington Post-ABC News poll finds. A New York Times/CBS News polls finds that more than three-quarters of those surveyed were optimistic about the next four years with Obama in charge, and similar majorities said they were confident in his ability to make the right decisions about the economy.

Still, the president faces steep challenges. The nation is nearly dizzy keeping up with what's emerged from Washington during Obama's first weeks as president, from a staggering $787 billion stimulus plan to a revamped bailout for the financial sector to a rescue plan for struggling homeowners.

And investors are dour. Wall Street took another pounding Monday, with the Dow Jones industrial average tumbling to its lowest close since 1997.

Although Obama is too new in office to be delivering a State of the Union address, his speech will have all the same trappings. It comes two days before he delivers a budget blueprint to Congress. Unlike that detail-driven document, his address will be broad, spelling out what he wants and how he will do it.

The economy, in its worst tailspin in decades, will dominate. Obama will touch on foreign policy, but that will largely be left for other upcoming speeches. This will not be a rollout of one policy initiative after another.

Obama will make clear that the trillion-dollar-plus deficit is one he "inherited." In other words, he wants to remind people that President George W. Bush and the previous Congress left him a big hole, forcing him to pursue the costly stimulus package.

The president will push for movement on ensuring health coverage for all Americans. He will seek to expand educational opportunities, and diversify the country's energy sources, and contain sacred entitlements like Social Security, and halve the soaring budget deficit in four years.

His rhetorical mission is to show not only how all those pieces connect to the health of the economy, but why they must be pursued simultaneously.

Gunning for so much at once is complicated, both in terms of the issues themselves and the politics. Senior presidential adviser David Axelrod acknowledged Monday there is a risk in taking on too much.

"I think the bigger concern," he said, "is to not be aggressive at a time when a tepid approach could really consign us to a long-term economic catastrophe. We believe the times demand vigor and aggressive action, and so we're having to do a lot of things at once."

Rep. Darrell Issa of California, the top Republican on the House Committee on Oversight and Government Reform, said Obama's speech amounts to a coming-out party.

"You never know what a salesman's going to sell you until he shows up at your door," Issa said of his expectations. "If he gives us a narrow set of priorities that can be executed, and they don't just involve more spending, then I think it will be refreshing. If he gives us a long laundry list, which most presidents do, then although it will set the agenda ... it won't be as meaningful."

In many ways, though, Obama will be speaking directly to the American people. Daily followers of Obama's rhetoric are not likely to be surprised by Obama's words, some of which will be repeats. He is trying to reach millions of people who don't get to hear him every day.

So Obama will say that the crises facing the nation are so large they can only be solved in bipartisan ways. He will be blunt about the country's woes but try to balance that talk with optimism. He will talk about his travels as president so he can focus on the stories of communities outside Washington.

Asked in an MSNBC interview how the president plans to make good on his pledge to cut the deficit in half by the end of his first term, Gibbs said, "The biggest thing we're going to do is cut the amount of money we spend each year in Iraq."

He said Obama also planned to talk about necessary investments and about taxes.

"I think the president believes very clearly that we have to be honest about where we are," Gibbs said. "Tonight, he will tell the country that we've faced greater challenges than we face now and we've always met those challenges."

There is sure to be ceremony as Obama arrives in the well of the House. His speech is tentatively at 45 minutes, accounting for applause time.

Obama pledges to slash deficit — after increase

WASHINGTON — Despite all the White House hoopla Monday about "fiscal responsibility," Washington is showing little inclination to practice what it's preaching.

The $787 billion stimulus package that President Barack Obama signed Feb. 17 adds an estimated $185 billion to the already-record federal deficit for fiscal 2009, pushing it up to about $1.4 trillion . That's a whopping 10 percent of the gross domestic product, the highest level since the end of World War II.

The measure's full of projects that Democrats, who are in charge of the legislative and executive branches for the first time since 1994, have sought for years, and it's questionable whether many of those provide the economy much of a short-term boost.

Even more such projects are included in the next round of legislation, a $410 billion spending plan for the rest of fiscal 2009 that the House of Representatives is to consider Wednesday.

That package would spend about 8 percent more than the same programs got last year, the second biggest annual increase since 1978 for discretionary spending, programs that the government isn't required to fund, unlike Social Security and Medicare .

The White House message Monday at the fiscal meeting, which included experts from the political, academic and economic worlds, was one of hope.

"As we take the steps that we must to get through the crisis we're in now, we will not lose sight of the long term," Vice President Joe Biden said.

Obama pledged to cut the deficit in half by the end of his first term, but he's counting on the stimulus to get the economy growing again soon, and some experts call that a risky bet.

"This really doesn't do much to juice the economy in the short term," said Brian Bethune , the chief U.S. financial economist at IHS Global Insight, an economic consulting firm in Lexington, Mass.

The nonpartisan Congressional Budget Office agreed. It found that only 23 percent of the stimulus would be spent by Oct. 1 , growing to 74 percent by the end of fiscal 2010 a year later.

The most immediate stimulus will come as tax relief, notably the $400 annual reduction in payroll taxes for most taxpayers, as well as extra unemployment benefits and help for states with Medicaid expenses, the health-care program for poor people and those with disabilities.

Obama also called Monday for pay-as-you-go spending, to avoid having new programs swell the deficits, but the legislation that the House will consider Wednesday eschews that approach.

Most government programs will run out of money March 6 unless Congress acts.

House Speaker Nancy Pelosi , D- Calif. , on Monday defended the coming spending spree, which includes an estimated 9,000 earmarks, or local projects, said to cost about $5 billion . She called the bill "the unfinished business of last year, when the president refused to address the priorities and needs of the American people."

Democrats have been awash recently in unfinished fiscal business. Last year, for instance, President George W. Bush wanted to end or cut back several law-enforcement grant programs as well as spend less on the environment, health, labor and education than Democrats wanted.

The stimulus included $2.7 billion for seven major justice grants, including the Byrne Grants, which state and local governments use for crime-fighting strategies.

Democrats also got a long list of other projects into the bill whose stimulative effects have been questioned, including $50 million for the National Endowment for the Arts , $165 million for "critical deferred maintenance" at wildlife refuges and fish hatcheries, $200 million for the Department of Homeland Security to relocate its headquarters and $300 million so that the government can buy more fuel-efficient vehicles.

Some experts maintain that all the spending is easily justified.

"You're adding $787 billion to the economy that wouldn't otherwise be there," said Stan Collender , a veteran Washington budget analyst.

Critics counter that too much of the stimulus is unfocused. Independent analysts had two other concerns.

First, they said, the stimulus, as well as the fiscal 2009 budget legislation, may not provide the psychological boost the economy needs. The bills are too difficult for the public to grasp, because they have so many ways of stimulating the economy and the aid isn't clearly visible. Then too, the stimulus' costliest tax break, the $400 annual rebate, Bethune said, "is pretty minimal," since it will add only about $13 a week to most paychecks.

The next biggest tax break, a $70 billion patch in the alternative minimum tax, is "a phantom," he said, since it simply wipes off the books an increase that people will never see. Economists agree: That one's not stimulative. Congress passes it every year; Democrats just loaded it into the stimulus bill to get it out of the way.

The other problem involves the view that Washington isn't being fiscally responsible long term by focusing so much on the near term. The CBO warns that while the stimulus should boost the gross domestic product by 1.4 percent to 3.8 percent this year and 1.1 percent to 3.3 percent next year, long-term uncertainties loom.

The CBO projects that the GDP in 2015 and beyond will be as much as 0.2 percent smaller than it would have been without the stimulus package, dragged down by financing all the debt that's being piled up. In addition, noted the Committee for a Responsible Federal Budget, a bipartisan fiscal research group, the bill will "have a permanent impact on the deficit through higher interest payments on additional public debt."

As Kenneth Thomas , a lecturer in finance at the Wharton School of the University of Pennsylvania , put it, "There's going to be collateral damage. But now the goal is just to put out the fire."

Obama wants to overhaul health care; can he do it?

WASHINGTON – Now for the hard part. Even if the national credit card is maxed out and partisanship remains the rule for Washington's political tribes, President Barack Obama and Congress are plunging ahead with a health care overhaul.

This week, Obama will start the dialogue on how to increase coverage, restrain costs and improve quality.

Whether a bill can get through Congress and to Obama this year is uncertain. For half a century, the track record on health care has been one of missed opportunities, spectacular failures and hard-won incremental gains.

Obama plans to stress the need for major changes in his address to Congress on Tuesday, administration officials say. He quickly will follow up with a budget that includes a commitment to expand coverage for the uninsured. A White House summit on health care is being planned in coming weeks.

"They don't intend to blink. They intend to plow ahead," said health economist Len Nichols of the nonpartisan New America Foundation. "Health reform is seen as essential to balancing the federal budget and economic recovery in the long run."

People in the U.S. spend $2.4 trillion a year on health care, or about $7,900 per person. That's more than twice as much per capita as in other advanced countries. But few would claim those dollars are buying good value. The costs are a staggering burden for taxpayers, employers and families, and the recession is leaving more people without insurance.

Yet even a self-described optimist such as Sen. Mike Enzi, R-Wyo., says he has doubts about prospects for overhauling health care. "It needs to be done up front and quickly," said Enzi, the senior Republican on the Senate Health, Education, Labor and Pensions Committee. "I'm not so sure that we haven't already lost that, with so many other things coming in and weighing us down."

In the 1990s, President Bill Clinton took the better part of a year to deliver a 1,300-page health care bill to Congress and later waved his veto pen at lawmakers who might have given him half a loaf. He got nothing. Obama has shown a tendency to be more pragmatic.

Administration and congressional officials say Obama will lay out a vision and see if Congress can make the details work. The Senate has gotten an early start and is shaping up as the proving ground for legislation.

"The Obama administration has said they are going to give the Senate a very wide berth," said Sen. Ron Wyden, D-Ore., who for years has tried to get Democrats and Republicans working together. "There are areas in which there is going to be spirited debate. But there are four or five major areas where there's a lot of common ground."

Polls show most people support coverage for all and believe government should help guarantee it. But what looks like consensus starts to break down once thorny details such as costs and the government's influence on the doctor-patient relationship come into the picture.

Administration officials say Obama has made a down payment by expanding coverage for children of low-income working families and by providing subsidies to help people who lose their jobs keep health benefits.

As he moves forward, Obama will follow the plan laid out in his campaign.

It calls for government, employers, families and individuals to keep sharing financial responsibility for health care. The approach would overhaul the health insurance market, particularly for self-employed people and small businesses. It would set up a national insurance purchasing "exchange" through which people would be guaranteed access to private health insurance or the choice of a new public plan.

Obama sees coverage for all as a goal to be reached in steps. His plan would not require every individual to purchase insurance. The estimated cost is about $90 billion a year, to start with.

The plan might sound simple in a brief summary, but it's not. Potential dealbreakers lurk at every turn.

Many liberals can't get excited about doing battle for just a promise — not an immediate guarantee — of coverage for all.

Conservatives and insurance companies fear that a public plan offered to workers and their families could become the gateway for Canada-style government health care for all.

Employers, hospitals, doctors, and drug companies worry that the government's already pervasive influence in health care will become stifling.

The initial work has fallen to the Senate, where Democratic Sens. Max Baucus of Montana and Edward Kennedy of Massachusetts want to present a bill by the summer.

Baucus is chairman of the Senate Finance Committee, which oversees Medicare and taxes. Kennedy, who is under treatment for brain cancer, leads the Senate health committee. He has pursued the goal of coverage for all his entire career and doesn't want this opportunity to slip away.

Baucus has already outlined a plan that differs in some key details from Obama's. For example, it contemplates taxing some health insurance benefits to raise money for expanded coverage. That's an idea Obama has rejected but one that certain Republicans favor.

It takes 60 votes to get a bill through the Senate, and Democrats don't have them.

In the House, the effort seems to be moving more slowly. Senior aides from leadership offices and committees are talking. Rep. Henry Waxman, D-Calif., chairman of the House Energy and Commerce Committee, is expected to take a leading role.

Some experts believe the issue is too complicated to try to accomplish in one year and one bill.

Watching and waiting are people such as Robyn Perry, 56, of Lake Worth, Fla., who recently lost a job with health benefits. She has struggled to find coverage now that she is self-employed. Private plans are either too expensive or won't take her because she had a ministroke several years ago. A plan sponsored by local government accepted her, but won't cover her outside her county.

"Something has to be done," said Perry. "I work. I make decent money. But I still can't get coverage. I would really like to find a normal health insurance plan that would cover me wherever I get sick, not just in Palm Beach county."

Obama tells Treasury to begin cutting taxes

resident Barack Obama ordered the U.S. Treasury on Saturday to implement tax cuts for 95 percent of Americans, fulfilling a campaign pledge he hopes will help jolt the economy out of recession.

The tax cuts are part of a $787 billion economic recovery plan passed by the Democratic-controlled Congress over Republican opposition. The aim is to put more money in the pockets of Americans and stimulate the economy by increasing consumer spending.

"I'm pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1st, a typical family will begin taking home at least $65 more every month," Obama said in his weekly radio address.

"Never before in our history has a tax cut taken effect faster or gone to so many hard-working Americans," he said.

With tens of thousands of Americans losing their jobs in the midst of a global economic meltdown, Obama has said fixing the U.S. economy is his top priority. He has acknowledged that his success or failure in that will define his presidency.

Obama campaigned for the White House last year on a pledge to roll back his predecessor George W. Bush's tax cuts on the wealthy few and implement a cut for 95 percent of Americans.

His announcement came a day after one of his top economic advisers, former Federal Reserve Chairman Paul Volcker, said the global economy may be deteriorating even faster than during the Great Depression of the 1930s.

Since being sworn into office on January 20, Obama has sought to reassure Americans that his government is tackling the economic crisis boldly and swiftly -- holding near-daily events to announce measures to stem mortgage foreclosures, prop up failing banks, rescue the ailing auto industry and drive his stimulus package through Congress.

The measures have received a mixed early reaction from gloomy financial markets uncertain whether they will succeed in arresting the downward economic spiral.

The package includes $282 billion in tax cuts -- the Republicans pushed unsuccessfully for more -- and $120 billion for public works projects including highway and rail projects.

'HAZARDOUS ROAD AHEAD'

"But as important as it was that I was able to sign this plan into law, it is only a first step on the road to economic recovery," Obama said in his address.

"None of this will be easy. The road ahead will be long and full of hazards. But I'm confident that we, as a people, have the strength and wisdom to carry out this strategy and overcome this crisis," he said.

His announcement on the tax cuts capped a week that saw him sign the stimulus package into law and announce new measures to help families facing foreclosure and those struggling to make mortgage payments.

He will step up the pace next week when he holds a summit at the White House on Monday to look at how to rein in the country's ballooning deficit and bring government spending under control as the economy starts to recover.

Lawmakers, academics and business leaders have been invited to share their ideas on how to cut the $1 trillion deficit that Obama inherited along with two costly wars in Iraq and Afghanistan.

Obama will follow the summit with a major speech on Tuesday to a joint session of Congress in which he will lay out his domestic and foreign policy agenda. Inevitably, the economic crisis will loom large.

After a short breather on Wednesday to host a concert honoring Stevie Wonder, Obama on Thursday will unveil his proposed budget for the 2010 fiscal year, which will reflect the big increases in public spending as part of the economic recovery plan.

Official: Obama plans to slash deficit in half

WASHINGTON – President Barack Obama has committed hundreds of billions of dollars to help revive the economy and is working on a plan to cut the federal deficit in half by the end of his first term.

Obama will touch on his efforts to restore fiscal discipline at a White House fiscal policy summit on Monday and in an address to Congress on Tuesday. On Thursday he plans to send at least a summary of his first budget request to Capitol Hill. The bottom line, said an administration official Saturday, is to halve the federal deficit to $533 billion by the time his first term ends in 2013. He inherited a deficit of about $1.3 trillion from former President George W. Bush.

The official, speaking on condition of anonymity because the president has not yet released his budget for the fiscal year 2010, which begins Oct. 1, said the deficit will be shrunk by scaling back Iraq war spending, ending the temporary tax breaks enacted by the Bush administration for those making $250,000 or more a year, and streamlining government.

"We can't generate sustained growth without getting our deficits under control," Obama said in his weekly radio and Internet address that seemed to preview his intentions. He said his budget will be "sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't, and restoring fiscal discipline."

Republicans were not convinced. They said Obama's plan would hurt small businesses, including many filing taxes as individuals and possibly facing higher taxes under his plan.

"I don't think raising taxes is a great idea," Senate Republican leader Mitch McConnell of Kentucky told CNN's "State of the Union" on Sunday. "And when our good friends on the other side of the aisle say raising the taxes on the wealthy, what they're really talking about is small business."

Obama's budget also is expected to take steps toward his campaign promises of establishing universal health care and lessening the country's reliance on foreign oil.

Obama has pledged to make deficit reduction a priority both as a candidate and a president. But he also has said economic recovery must come first.

Last week, he signed into law the $787 billion stimulus measure that is meant to create jobs but certainly will add to the nation's skyrocketing national debt. He also is implementing the $700 billion financial sector rescue passed on Bush's watch; about $75 billion of which is being used toward Obama's plan to help homeowners facing foreclosure.

Obama warns mayors not to waste stimulus money

WASHINGTON – Invoking his own name-and-shame policy, President Barack Obama warned the nation's mayors on Friday that he will "call them out" if they waste the money from his massive economic stimulus plan.

"The American people are watching," Obama told a gathering of mayors at the White House. "They need this plan to work. They expect to see the money that they've earned — they've worked so hard to earn — spent in its intended purposes without waste, without inefficiency, without fraud."

In the days since the White House and Congress came to terms on the $787 billion economic package, the political focus has shifted to how it will work. Obama has staked his reputation not just on the promise of 3.5 million jobs saved or created, but also on a pledge to let the public see where the money goes.

His budget chief this week released a 25,000-word document that details exactly how Cabinet and executive agencies, states and local organizations must report spending. It is a system meant to streamline reports so they can be displayed on the administration's new Web site, Recovery.gov.

Using his presidential pulpit, Obama demanded accountability, from his friends in local government as well as his own agencies. He said the new legislation gives him tools to "watch the taxpayers' money with more rigor and transparency than ever," and that he will use them.

"If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it, and put a stop to it," he said. "I want everyone here to be on notice that if a local government does the same, I will call them out on it, and use the full power of my office and our administration to stop it."

The economic plan will inject a sudden boost of cash into transportation, education, energy and health care. Beyond new spending, it aims to aid people through a package of tax cuts, extended unemployment benefits and short-term health insurance help. The cost will be added to a growing budget deficit.

Obama said government leaders have asked for the "unprecedented trust of the American people."

"With that comes unprecedented obligations to spend that money wisely, free from politics and free from personal agendas," he said.

The president did not specify how, exactly, he would call out one of his own agencies or a local government about wasteful projects.

Obama cautious in meeting with Canada's Harper

OTTAWA – President Barack Obama stepped cautiously in his first foreign trip Thursday, refraining from asking Canada to rethink its plans to withdraw troops from Afghanistan and saying changes to the North American Free Trade Agreement can wait.

In a news conference with Canadian Prime Minister Stephen Harper, Obama acknowledged that he has said NAFTA does too little to protect U.S. workers and the environment. Canada, the United State's largest trading partner, is leery of changes to the deal.

Robust trade helps both nations, Obama said. Noting that NAFTA has side agreements on labor and the environment, he added: "If those side agreements mean anything, then they might as well be incorporated into the main body of the agreements so that they can be effectively enforced." He said he hopes there eventually will be a way to do so "that is not disruptive to the extraordinarily important trade relationships" between the two nations.

Both leaders said that as economies around the world face challenges, it's important for the U.S. and others to resist calls for protectionism.

In Afghanistan, Canada plans to pull its 2,500 combat troops from the volatile south in 2011, following the loss of more than 100 troops killed in the country since 2001. Obama is headed the other direction, dispatching 17,000 more U.S. troops to the war zone.

Obama said Thursday he did not press Harper to reconsider. He said he praised Canada for its sacrifices and for making Afghanistan its largest recipient of foreign aid.

Turning to U.S.-Canada border security and the fight against terrorism, Harper said any threat to the United States is a threat to his country, too.

The prime minister said Canada has made "significant investments" in security and in border protection since the Sept. 11, 2001, terrorist attacks against the United States.

But he said there's a "real challenge" in increasing border security in a way that doesn't limit commerce and social interaction.

Obama said he believes the ties between Canada and the United States will grow even stronger over the next four years. The men took questions from two Canadian reporters and two U.S. reporters in a room adorned with numerous flags of the two nations.

Obama later made a surprise visit to a downtown market in Ottawa, leaving fellow customers stunned.

Obama throws $75 billion lifeline to homeowners

President Barack Obama threw a $75 billion lifeline to millions of Americans on the brink of foreclosure Wednesday, declaring an urgent need for drastic action — not only to save their homes but to keep the housing crisis "from wreaking even greater havoc" on the broader national economy.

The lending plan, a full $25 billion bigger than the administration had been suggesting, aims to prevent as many as 9 million homeowners from being evicted and to stabilize housing markets that are at the center of the ever-worsening U.S. recession.

Government support pledged to mortgage giants Fannie Mae and Freddie Mac is being doubled as well, to $400 billion, as part of an effort to encourage them to refinance loans that are "under water" — those in which homes' market values have sunk below the amount the owners still owe.

"All of us are paying a price for this home mortgage crisis, and all of us will pay an even steeper price if we allow this crisis to continue to deepen," Obama said.

The new president, focusing closely on the economy, in his first month in office, rolled out the housing program one day after he was in Denver to sign his $787 billion emergency stimulus plan to revive the rest of the economy. And his administration is just now going over fresh requests for multiple billions in bailout cash from ailing automakers.

Wall Street has shown little confidence in the new steps, declining sharply on Tuesday before leveling off after Wednesday's announcement. The Dow Jones industrials rose 3 points for the day.

Success of the foreclosure rescue is far from certain.

The administration is loosening refinancing restrictions for many borrowers and providing incentives for lenders in hopes that the two sides will work together to modify loans. But no one is required to participate. The biggest players in the mortgage industry temporarily had halted foreclosures in advance of Obama's plan.

Complicating matters, investors in complex mortgage-linked securities, who make money based on interest payments, could still balk, especially those who hold second mortgages or home equity loans. Their approval would be needed to prevent many foreclosures.

"The obstacles have not gone away," said Bert Ely, a banking industry consultant in Alexandria, Va.

Another cautionary note came from John Courson, chief executive of the Mortgage Bankers Association.

"It seems to offer little help to borrowers whose loan exceeds their property value by more than 5 percent," he said, noting that that requirement would limit the plan's success in some of the hardest-hit areas in California, Florida, Nevada and Arizona and parts of the East Coast.

Indeed, Obama himself said, "This plan will not save every home."

The goal is to lower many endangered homeowners' payments to no more than 31 percent of their income. But that depends on a high degree of cooperation by lenders who have been increasingly wary of new lending as the crisis has deepened.

Still, the Obama administration, after talking with mortgage investors, appears confident that it is providing the right mix of incentives and penalties to make sure mortgage companies take part. Obama said he backs legislation in Congress to allow bankruptcy judges to modify the terms of primary home loans — an idea ardently opposed by the lending industry.

"Taken together, the provisions of this plan will help us end this crisis and preserve, for millions of families, their stake in the American Dream," Obama said. Yet, he also added: "We must also acknowledge the limits of this plan."

He called on lenders, borrowers and the government "to step back and take responsibility" and said: "All of us must learn to live within our means again."

There's broad economic anxiety across the nation, an Associated Press-Gfk poll indicated.

Nearly three in four people say they know someone who has lost a job in the past six months as a result of the tough economic conditions, according to the poll, released Wednesday. And more than half say they worry about being able to pay their bills and about seeing their retirement investments decline. So far, Obama's job approval rating still is high, at 67 percent, and he is scoring strong marks for his handling of the economy.

The president unveiled his housing plan at a Phoenix-area high school in a state with one of the country's biggest foreclosure rates.

Nationally, Moody's Economy.com says that of the nearly 52 million U.S. homeowners with mortgages, about 13.8 million, or nearly 27 percent, owe more than their homes are worth after many months of declining prices.

How soon will the new plan show results?

"You'll start to see the effects quite quickly," Treasury Secretary Timothy Geithner told reporters in Phoenix, noting that rules governing the changes will be published March 4.

In theory, homeowners facing foreclosure or borrowers owing more on their homes than their mortgages are worth would have more opportunities to refinance their loans so that they have lower monthly payments. Lenders would voluntarily participate in the government programs.

The $75 billion Homeowner Stability Initiative would provide incentives to mortgage lenders to cut monthly payments in an effort to persuade them to help up to 4 million borrowers on the verge of foreclosure. The goal: cut monthly mortgage payments to sustainable levels, using money from the $700 billion financial industry bailout passed by Congress last fall.

Another part would specifically help people with dwellings whose market value has sunk below the principal still owed on the mortgages. Such mortgages have traditionally been almost impossible to refinance. But the White House said its program will help 4 million to 5 million families do just that — if their mortgages are owned or guaranteed by Fannie Mae or Freddie Mac.

To boost confidence, the Treasury Department said it would double its support to the two mortgage giants that the government essentially took over last fall.

It said it would absorb up to $200 billion in losses at each company by using money Congress set aside last year and will continue purchasing mortgage-backed securities from them. Fannie Mae and Freddie Mac are projected to need a combined government subsidy of about $66 billion, well short of the new promise of up to $400 billion.

Obama emphasized that his plan focuses on helping families who have "played by the rules" stay in their homes.

But, he said, it will do nothing to help "the unscrupulous or irresponsible." He cited so-called speculators who took out risky loans on multiple properties to make money by selling them during the housing boom, lenders who took advantage of naive buyers by glossing over the fine print, and people who willingly bought homes that were way beyond their means.

"This plan will not save every home," Obama said.