President Barack Obama is turning to his vast political network in a high-stakes effort to win the day with his $3.6 trillion budget proposal. It'll mark the first time since the November election that Obama asks his supporters to use election-style tactics. What's at stake is a federal budget carrying the bulk of Obama's campaign promises and, politically, the enthusiasm that energizes his online community. Obama has turned to his list of names, numbering nearly 14 million, to try to overwhelm Capitol Hill with phone calls and other direct contact with lawmakers. It marks a test of how well his grass-roots network might be used as a tool in running the country. At the same time, he's been on the stump in California and on television with the same style and fervor that earned him the presidency.
Capitol Hill aides say the latest deficit figures produced by Congressional economists show the federal budget deficit will exceed $1.8 trillion this year. The flood of red ink gets only slightly better in 2010 with a deficit of almost $1.4 trillion under the Congressional Budget Office's latest figures. Democrats in Congress are readying President Barack Obama's budget for preliminary votes next week. Obama's figures are in line with CBO's for the current year but slightly lower for 2010. The weakening economy is responsible for the worsening deficit picture, but Democrats insist it won't crimp Obama's agenda.
Former U.S. Securities and Exchange Commission Chairman Harvey Pitt says he believes it could be up to two years before the economy bottoms out before rebounding. Pitt spoke during a symposium at the University of Dayton School of Law. He predicts Americans are going to experience a lot more economic pain. Pitt says consumers have cut back on spending, which is causing companies to lay off workers, which in turn gives people less money to spend. He says steps must be taken to break the cycle. Pitt estimates it will be 18 to 24 months before the economy hits bottom. Pitt was chairman of the SEC from 2001 to 2003.
U.S. Representative Chet Edwards says $621 million in federal stimulus money will pay for the first phase of a new military hospital at Food Hood. A statement from the Waco Democrat says the first phase of the new hospital is expected to break ground in September 2010 and take about three years to complete. The Darnall Army Medical Center, which opened in 1965 and was expanded in 1984, is inadequate to serve the 55,000 active duty soldiers and 176,451 eligible beneficiaries at Fort Hood. The Austin American-Statesman reports the second phase of the hospital will cost $350 million, but there are no federal funds designated for it. Edwards said construction is set to begin in 2016.
A state audit shows that millions of state tax dollars tagged for increased border security were spent on law enforcement equipment and positions away from the border. The Office of Emergency Management spent most of more than $79 million between September 2005 and November 2008 to combat crime in border regions. But the report from the State Auditor's Office cites several examples of squad cars, helicopters and new positions that landed elsewhere in Texas. The Department of Public Safety, Parks and Wildlife Department and the Governor's Division of Emergency Management received about $142 million in state and federal funds between fiscal 2006 and 2009. The agencies had spent just over half of it. The audit notes that 105 new DPS patrol cars were distributed statewide and 106 used vehicles were sent to the border instead. A new $7.4 million twin-engine helicopter was stationed in Austin, and a used single-engine chopper was sent to Laredo instead. Five new officers in the DPS aircraft division were assigned to stations outside the state's 45-county designated border zone.
Schlumberger is expanding operations in Louisiana to work a new natural gas find. That $48 million project means 400 jobs around Shreveport. In January, Schlumberger announced it would eliminate up to 1,000 jobs in North America, or about five per cent of its work force, and was looking at cuts elsewhere globally. The company, whose principal offices are in Houston, Paris and The Hague, employs 19,000 in North America and 84,000 worldwide.
The Postal Service says it will offer early retirement to 150,000 workers, cut management staff and close six district offices. The agency has been battered by shrinking mail volume and rising costs. It lost $2.8 billion last year and is headed toward larger losses this year despite a planned rate increase in May. Officials said the post office will eliminate some 1,400 management and supervisor posts across the country. It's offering 150,000 workers early retirement.
Hudson & Marshall are auctioning 61 foreclosed Houston-area homes tomorrow, with values ranging from $8,000 to $600,000. The auction is set for 1 p.m. at the Houston Marriot Westchase. The "as-is" homes can be viewed online prior to auction. This is a reserve auction, which means sellers have the right to accept, reject or counter any bid.
The Federal Deposit Insurance Corporation says it has completed the sale of one of the largest casualties of the housing bust. Indymac Federal Bank has been sold to OneWest Bank, a California-based federal savings bank formed by an investor group that includes billionaire George Soros and Dell founder Michael Dell. They agreed last December to purchase the failed California lender for $13.9 billion. OneWest will assume all deposits of Indymac's 33 branches, which are reopening as branches of Onewest, with deposits continuing to be insured by the FDIC. Under terms of the sale, the new investors will shoulder the first 20 per cent of the bank's loan losses, with the FDIC agreeing to take on the majority of any losses thereafter. In return, OneWest will continue a closely watched home-loan modification program launched by FDIC Chairman Sheila Bair last August.
Federal regulators now say the nation's banks lost $32.1 billion in the final quarter of last year, even worse than the $26.2 billion originally reported last month. The FDIC says "significant" revisions it received from banks also lowered the industry's net income for all of last year to $10.2 billion from $16.1 billion. Rising losses on loans and eroding values of assets bit into the revenue of U.S. banks and thrifts in late 2008, causing them to post the first quarterly deficit in 18 years.
The Federal Reserve says commercial banks borrowed more from the Fed's emergency lending program over the past week, while investment firms drew less. The Fed says commercial banks averaged $65.68 billion in daily borrowing over the week that ended Wednesday. That was up from $63.49 billion in average daily borrowing logged over the week that ended March 11th. Investment firms drew $19.68 billion over the past week from the Fed program. That was down from an average of $19.73 billion the previous week. The identities of financial institutions that borrow from the Fed program are not released. They now pay just 0.50 percent in interest for the emergency loans.
The mortgage meltdown exposed the weakness of self-regulation in financial markets. Now the salmonella outbreak is doing the same for the food industry. A House of Representatives subcommittee released new documents that showed how private inspectors contracted by Peanut Corporation of America failed to find long-standing sanitary problems at company facilities. Peanut Corporation is at the center of a nationwide outbreak that has sickened nearly 700 people and is blamed for at least nine deaths. Lawmakers said the food industry's private inspection system failed to catch filthy conditions because the firm itself hired the inspectors. Last summer, Peanut Corporation's private inspector, a company called AIB, awarded the peanut processor a certificate in 2008 for "superior" quality at its Plainview plant. This year, salmonella was discovered there.
The first Eubank Conference: Modeling Real World Markets is set for Monday and Tuesday at Duncan Hall's McMurtry Auditorium on Main at Rice University. The free conference, named for Rice trustee emeritus J. Thomas Eubank, will address investment strategies that do not depend on the efficient market hypothesis. That's the concept that stock markets assimilate new information quickly enough that the current trading price of a security tends to be an accurate reflection of its real value. But some economists blame money managers' adherence to the theory, taught in business schools, for many of the nation's troubles.
Many of the country's bird populations continue to decline, and energy production of all types is speeding that trend along. In a first-of-its-kind report, the government says wind, ethanol and mountaintop coal mining are among the contributing factors. Also on the list are suburban sprawl, global warming and the spread of exotic species. Many of the bird groups that have seen the fastest declines over the last 40 years inhabit areas with the greatest potential for energy development. Operations aimed at harnessing wind energy along coastlines can be a physical hazard to birds, while the conversion of grasslands into corn fields for biofuels destroys habitat for prairie species. Forest clearing for mining provides another example. Environmentalists and scientists say the report should give the Obama administration some pause as it seeks to expand renewable energy production.
Nearly 400 head of cattle are spending the weekend in Miami modeling for vendors from as far as Texas and Argentina. The second annual Miami International Agriculture and Cattle Show aims to strengthen South Florida as a hub for beef exchange between the U.S. and Latin America. That's the point: bring the cows to Miami and ship them to the Spanish-speaking countries south of Florida. The event has grown for its second run. American ranchers and their cows came only from Florida last year. This time about 100 breeders will commute from 12 states, including Texas and Washington. Buyers and breeders from 12 countries will also help Miami by spending money on hotels, restaurants and entertainment. Organizers are taking advice and cues from agriculture and livestock shows in Houston, home of the biggest, and the 113-year-old show in Fort Worth, which is the oldest. The 24-day Fort Worth event lures buyers from countries including China and Russia to generate $100 million for the city.
The number of rigs actively exploring for oil and natural gas in the United States dropped by 41 this week to 1,085. Weak energy demand continues to hamper oilfield activity. Houston-based Baker Hughes reports today 857 rigs nationwide were exploring for natural gas and 215 for oil. A total of 13 were listed as miscellaneous. A year ago, the rig count stood at 1,784. The U.S. count is down more than 45 per cent since the end of August. Oil prices peaked near $150 a barrel in July before plunging. Light, sweet crude for April delivery is around $51 on the New York Mercantile Exchange. Texas lost 26 rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.