Economy & Budget

The Congressional Budget Office (CBO) is projecting that the federal government's deficit will reach a record $1.2 trillion in 2009, given that government spending and tax laws do not change.

The $1.2 trillion figure does not include the $775 billion economic stimulus package proposed by President-elect Barack Obama and congressional Democrats are pushing.

The CBO made its projection today in a report on the country's economic and budget outlook from 2009 to 2019. It also predicted that

President-elect Barack Obama this morning praised President Bush's decision to grant $13.4 billion in immediate loans to General Motors and Chrysler from the Treasury's $700 billion bailout fund.

Obama called on the automakers to take the opportunity to begin restructuring their companies. See his full statement below:

Today's actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers. With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together -- including labor, dealers, creditors and suppliers -- to make the hard choices necessary to achieve long-term viability. The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it.

Sen. Hillary Rodham Clinton (D-N.Y.) today called on the White House to use remaining money from the Treasury's $700 billion bailout fund to help keep the Big Three in business, after the Bush administration indicated this morning that it would consider doing so.

"I call on the current administration to use any tool at its disposal to keep our automakers afloat including using the authority given to the Treasury Secretary to stabilize our markets and troubled companies," Clinton said this morning in a release from her Senate office. Read more...

Former New York Gov. Eliot Spitzer (D) is putting himself back in the public sphere by becoming a financial columnist.

Spitzer, who resigned his post this year after being linked to a high-priced prostitution ring, had his first column for Slate published Wednesday. In the column, he argues against the use of bailouts to rebuild giant companies. The column doesn't mention his sordid past. Before he became governor, Spitzer earned a reputation as watchdog of the financial sector as New York's attorney general.

At an economic meeting with 49 governors and governors-elect in Philadelphia today, President-elect Barack Barack Obama heard input from governors on what the federal government should do to save the economy from crisis, seeking their help in crafting the stimulus plan that will likely be his first major action as president.

"As President, I will not simply ask our nation Read more...

The National Bureau of Economic Research today said that the U.S. economy's current recession began in December 2007.

The private, nonpartisan organization found that December 2007 marked a peak of economic expansion that began in November 2001. Many economic indicators

President-elect Barack Obama today announced the formation of the President's Economic Recovery Advisory Board, a panel of experts from outside government that will advise Obama and Vice President-elect Joe Biden in their efforts to steer the economy out of its crisis.

The board will be comprised of experts from business, labor, academia, and other areas, Obama said, naming former Federal Reserve Chairman Paul Volcker to chair the new panel. Austan Goolsbee, an economic adviser to Obama, will serve as the panel's chief economist, staff director, and liaison to the administration, Obama said.

See below Obama's full remarks, from a news conference in Chicago this morning:

Good morning.

It has become increasingly clear in recent months that we are facing an economic crisis of historic proportions. At this defining moment for our nation, the old ways of thinking and acting just won

Filmmaker Michael Moore told CNN's Larry King last night that if the federal government gives the proposed $25 billion to U.S. automakers, it should "hold the reins" on those companies with orders to produce mass transit infrastructure and hybrid cars.

"If we're going to give them $25 billion, we should be able to own the company. If you gave me $25 billion to make my next movie, I think you own that movie, Larry," said Moore, who directed the 1989 documentary "Roger & Me," in which he confronted General Motors (GM) CEO Roger Smith about GM workers in Flint, Mich. who lost their jobs.

Here's how Moore made his case (transcript from CNN): Read more...

Senate Banking Committee Chairman Chris Dodd (D-Conn.) today welcomed Federal Reserve Chairmen Ben Bernanke's decision to cut the federal funds rate (the rate at which banks loan money to each other) from 1.5 percent to 1 percent.

The move "facilitates the unlocking of our credit markets so that businesses can continue to operate and American families are able to afford homes, cars and to send their children to college," Dodd said, praising Bernanke's "foresight in rejecting calls by other Federal Reserve Governors to raise interest rates several months ago."

But lowering interest rates alone won't solve the nation's economic crisis, Dodd said, pressing for more action from the Bush administration and calling for Congress's $700 billion bailout fund to be used for job-creating purposes. Read more...

George Soros, the powerful financier spoofed on "Saturday Night Live" as owner of the Democratic Party, said that he doesn't affect government policy and that he hasn't spoken with Barack Obama recently.

Soros made the remarks when asked by CNN's John Roberts this week whether his enormous wealth gives him too much influence over the political process.

"First of all, I have had absolutely no contact with Senator Obama ever since he started running for president," Soros said.

When Roberts noted that he has funded liberal organizations such as MoveOn.org and the Center for American Progress, Soros said that he funds groups that "bring out the vote."

"And, of course, they do have a certain bias," he said. "There's no question about it. But I exercise no influence on the government policy. I don't need any favors from government. So, I do want the government to function better. But I'm not looking for any kind of personal favor. I don't need it."

Soros, founder of his own investment firm, said his political efforts this year haven't been as extensive as his 2004 voter turnout project "because I felt that in 2004, the greatest benefit that I could bring to humanity was to prevent [Bush's] re-election," Soros said.

He said that the next president will have face an "extremely difficult task" and will have to do "something unusual."

"He has to take some steps, something out of the box, to -- to justify the hopes that are attached to him," Soros said. "And I think it has to be probably in the area of energy. Global warming, and energy independence because that's where very large investment needs to be made."

Soros didn't take offense at "SNL"'s depiction of him as an omnipotent investor who will be the beneficiary of the $700 billion government bailout plan. He said there was no foundation to it. (Video of the skit, which has been pulled from NBC's websites and others, can be seen here.)"Well, I was amused," Soros said when asked about the skit.