Greek austerity budget passes second vote amid protests

Athens, Greece (CNN) -- Greece's Parliament has approved a key law needed to implement a five-year austerity package that was approved by lawmakers a day earlier.

Lawmakers voted 155-136 in favor of the measure, with five voting "present" in the 300-seat house.

The package had been demanded by international lenders -- and its passage should clear the way for an emergency loan to Athens.

But Greece has seen weeks of sometimes violent public protests against the austerity plan, which follows a series of cuts agreed to last year.

European Commission head Jose Barroso and European Union President Herman van Rompuy said they strongly welcomed Thursday's vote.

"This was the second, decisive step Greece needed to take in order to return to a sustainable path," they said in a joint statement from Brussels. "In very difficult circumstances, it was another act of national responsibility."

They said the conditions "are now in place" for a decision on the release of a fifth round of emergency funds to Greece, part of a multi-billion euro deal agreed last year, and for "rapid progress" on a second proposed bailout.

Following the vote, the Greek civil servants' union ADEDY called another rally outside Parliament for Thursday evening.

Before Wednesday's vote, small numbers of demonstrators hurled stones at police, chanted, waved Greek flags and set small fires to protest the austerity measures, which include new taxes and job cuts.

At least 19 police officers were injured Wednesday, police said.

European and international lenders agreed last year to give Greece a $156 billion bailout package as its deficit soared, but were threatening to hold up an installment of $17 billion due soon.

Greece has debt payments coming due in mid-July and needs the $17 billion in emergency funds to be able to pay them -- but lenders, including the International Monetary Fund and the EU, had demanded that it approve the austerity measures in order to get the loan.

A default by Greece would send shock waves through the European banking sector and potentially dent global economic confidence.

German Chancellor Angela Merkel called Wednesday's passage of the austerity measures "really good news," German government spokesman Steffen Seibert said on Twitter.

Eurogroup chairman Jean-Claude Juncker also welcomed the news, saying: "I'm very happy and relieved that the Greek Parliament followed the government and voted in favour of a new program of structural reforms and budgetary adjustment."

Unions oppose the austerity package, but its backers say it is essential to the stability of the Greek economy, the euro, and the global financial system.

Protesters lament that the cuts are being carried out on the backs of those who can afford it least.

CNN's Elinda Labropoulou, Diana Magnay, Frederik Pleitgen and Eve Parish contributed to this report.

CNN

Greek austerity squeaks through, but budget woes remain (The Christian Science Monitor)

Paris – Greek lawmakers under terrific urging from European Union officials today voted 155 to 148 to accept a package of austerity necessary to avert a government default and avoid a feared chain reaction of market turmoil around Europe and the world.

Markets were optimistic before today’s vote that Greek politicians would ignore a howling public that polls as high as 80 percent opposed to the $40 billion in government spending cuts and tax hikes that are the price of the international bailout that's staving off default. Other struggling “peripheral” euro-zone members, including Ireland, Portugal, Spain and Italy, are anxious not to suffer the negative market consequences of a Greek default.

The current Greek crisis, the second in slightly more than a year, is seen by some as a possible harbinger of European disunity, a turning point for greater isolation between the 17 eurozone members. Others see it as a necessary spur towards deeper integration.

Prime Minister George Papandreou framed today’s vote in historic terms and together with new finance minister Evangelos Venizelos, a heavyweight in the ruling Pasok party, pushed through the package and also avoided defections that could have brought the government down.

IN PICTURES: Greece protests

News reports have a Pasok party headquarters in Crete being burned down, and in Athens the outcome of the vote has brought enough tear gas on the street to put 30 people in the hospital. The nation is in the second day of general strikes called by the trade unions. In the past weeks, atmosphere for the mostly peaceful protests in Syntagma Square, epicenter of political anger, has turned violent.

Tomorrow brings another vote in Parliament to enable the austerity legislation. That vote is being treated as pro forma, though some of the specific details – for instance, a huge cut in utility spending – remain sensitive.

Show Greece the moneyToday’s vote, if ratified tomorrow, allows the release of a of $16.5 billion slice from the $142 billion bailout agreed in May 2010, after the Papandreou government admitted its books had been cooked to hide a $350 billion deficit. [Editor's note: This story was edited after posting to correct the size of the bailout package.]

Lacking a growth package and any structural adjustments, many Greek citizens say that agreeing to an austerity package merely sentences them to an unrelenting long-term debt problem that they can’t see a way out of.

“I’m not sure what will happen now. What I see is a lot of political and social polarization in Greece,” says Takis Pappas, an expert on Greek politics at the University of Strasbourg, “and this is what worries me at the moment. Greece doesn’t have room to maneuver. Will the opposition try to take down the government or be silent. The opposition [New Democrats] will likely play hardball.”

'Kicking the can'The fresh $16.5 billion, however, will only sustain the Greek payroll through the summer, causing some analysts to say today’s vote merely “kicks the can down the road.”

Yet analysts at Morgan Stanley, speaking anonymously, say that the new money and time bought by a€?kicking the cana€

Philippe Waechter, chief economist at Natixis Asset Management in Paris, says the vote may be salutary but still doesn’t offer a long term answer.

“Thanks to this vote we can avoid the problematic situation that would arise from Greece's straight default,” Mr. Waechter argues, “but this vote, on a very, very drastic austerity plan, only allows for Greece to benefit from the Troika's [EU, IMF, European Central Bank] next financing tranche. What is preoccupying is that a considerable effort is made to just meet a short-term deadline. What will happen tomorrow if Greece is again in the same situation, which will surely occur if nothing is done to tackle long-term problems?”

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California lawmakers pass budget deal

California Gov. Jerry Brown had veteod an earlier budget plan, forcing lawmakers to craft a new bill.California lawmakers pass main portions of budget dealThe state's $26 billion deficit would be cut to $5 billion under the proposalThe plan calls for massive cuts to human services, education and courtsDemocrats and the governor drafted the budget deal over Republican objections

(CNN) -- California lawmakers passed a budget bill Tuesday night that will reduce the state's monetary shortfall from $26 billion to $5 billion, officials said.

Both houses of the state's legislature passed the main portions of the budget after hours of committee meetings.

The Senate was still grappling with the education section of the deal late Tuesday, but the measure was expected to pass early Wednesday and go on to Gov. Jerry Brown for his signature.

"Democrats in the California State Legislature made tough choices and delivered an honest, balanced and on-time budget," Brown said in a statement. "(It) contains painful cuts and brings government closer to the people through an historic realignment. Putting our state on a sound and sustainable fiscal footing still requires much work, but we have now taken a huge step forward."

The deal, brokered by the governor and Democratic leaders over Republican objections, calls for massive cuts: $5 billion to health and human services, $1 billion to the corrections department, $650 million to the University of California system, another $650 million to the California State University system and hundreds of millions to the court system, officials said.

Brown warned it contains "tough decisions," but said "we have a very good plan for the budget."

The proposal also assumes $4 billion in additional revenue from a rebounding economy. That estimate is based on the state seeing that amount of additional revenue in the fiscal year ending this month, Brown said.

But if the recession-stressed economy falters and those revenues don't materialize over the next year, additional cuts will be enforced -- including eliminating a week from the school year and cutting the state funding for local school busing programs, according to Alicia Trost, press secretary for Senate President Pro Tem Darrell Steinberg.

Democrats were confident that the budget would be approved Tuesday, since the party controls both the Assembly and the Senate, and under a voter-approved measure last year, legislators can now pass a budget with a simple majority -- no longer needing a two-thirds majority, Trost said.

The proposal called for $85.9 billion in spending, down from $91.4 billion, Trost said.

Republicans criticized the budget measure. They had sought a spending cap, public pension changes and regulatory reform.

The proposal is a shift for Brown, who has said for months that the state's $26 billion budget gap should be addressed with a mix of spending cuts and extensions on taxes that are scheduled to expire Friday. He also was determined to fulfill his pledge to put the extension of personal income and sales taxes before the voters.

But Brown could not convince four Republicans to join him so he could get the tax extension on the ballot this fall. A budget containing a tax hike needs the support of two-thirds of lawmakers.

Still, Brown and fellow Democrats plan to put a tax measure on the ballot in November 2012 through a voter initiative -- bypassing the requirement for Republican consent -- and those funds would address the remaining deficit, Trost said.

In their criticism, Republicans accused the Democrats of being compromised by special interests such as public employee unions.

"While Democrats may still use legally questionable maneuvers to raise taxes, the simple truth is because of Republicans' resolve, temporary tax increases will expire this Friday and the average California family will save nearly $1,000 per year," said Assembly Republican Leader Connie Conway.

"Californians deserve a government that understands that money belongs to the people, not the government," she said. She added that Republicans' "steadfast opposition to higher taxes has helped remind Sacramento tax-and-spend liberals of the need to live within our means."

The latest proposal was put together less than two weeks after Brown vetoed a budget approved by the legislature, saying it was chock full of gimmicks and contained legally questionable maneuvers.

Lawmakers had raced to pass a spending plan by June 15 to meet a voter-imposed deadline that required the legislature to pass a balanced budget or forfeit their pay.

However, state controller John Chiang determined that the budget was actually unbalanced. So lawmakers, who earn $95,291 a year and $142 per diem for each day they are in session, have gone without pay since mid-month.

CNN's Kim Hutcherson contributed to this report

CNN

Greece prepares to slash budget after confidence vote

Athens, Greece (CNN) -- Greece is set to press ahead with new taxes, public-sector job cuts and the sale of everything from airports to gaming licenses after Greek Prime Minister George Papandreou narrowly survived a confidence vote early Wednesday.

Papandreou is planning to cut 150,000 government jobs, slash the salaries of those who keep their posts, and slap new taxes on property, yachts and swimming pools.

He's trying to win confidence from international lenders in order to get a second bailout package to keep the government from defaulting on debts.

But the austerity package is very unpopular. Weeks of protests forced Papandreou to shuffle his cabinet last week, leading to the confidence vote, which he won 155-143.

European markets were slightly down Wednesday morning, though it was not clear if that was in response to the Greek vote.

International lenders have demanded Greece cut spending, lay off public workers, increase taxes and raise 50 billion euros ($71 billion) through selling off state-owned enterprises in exchange for another bailout deal for the cash-strapped nation.

Analysts warn that a Greek default could cripple the euro, the European Union's common currency, and send shock waves throughout the world economy.

"If Greece were to default, I think the idea that you could contain that would be fanciful," former British finance minister Alistair Darling told CNN Wednesday.

"It's a bit like saying, 'Let's let Lehman's go bust again and wait and see what happens," he said, referring to the investment bank that collapsed in 2008, adding fuel to the global recession.

An acute crisis in Greece would lead to a chain effect that "probably wouldn't stop in Europe," he warned. "It would have a feedback to American banks and so on."

Greek lawmakers are slated to vote on the privatization plan and further tax increases, pension cuts and layoffs on June 30, and European Commission President Jose Manuel Barroso warned Greece risks being abandoned by both Europe and the International Monetary Fund if it fails to act.

"There is no alternative to this program. Let's face it," Barroso told CNN on Tuesday. "And that's why it has to be clear. We need Greece to deliver, and if Greece wants this program of support, Europe is ready to support it."

Greek Finance Minister Evangelos Venizelos said Tuesday he was encouraged by support he received from main opposition leader Antonis Samaras on the austerity plan, which Venizelos said he would take to Eurogroup ministers July 3.

Harsh reforms designed to help reduce Greece's enormous budget deficit have so far led to tax hikes and public-sector job losses alongside already record-high unemployment. Papandreou faces opposition from within his own ruling socialists over the austerity measures.

Airports, highways and state-owned companies as well as banks, real estate and gaming licenses will all go on the auction block.

On June 9, the Cabinet approved a tough five-year plan for 2011-15 and introduced a bill in Parliament to put austerity measures into effect. The government proposes reducing the public-sector workforce by 150,000; workers will also face changes in working hours, practices and wages, and the plan also sets out changes to social benefits, including pensions and unemployment aid.

Protests against those plans turned violent June 15 as demonstrators threw gasoline bombs at the Finance Ministry and police fired tear gas at protesters, police said. But Papandreou did not change course, telling lawmakers over the weekend, "The government must stop spending more than it takes in."

According to the Finance Ministry, these measures will help achieve 28.3 billion euros ($40.5 billion) in cuts from 2012 to 2015 and shrink Greece's public deficit to less than 3% of gross domestic product, in accordance with the EU target.

CNN's Diana Magnay and Richard Allen Greene and journalist Elinda Labropoulou contributed to this report.

CNN

Supporters of New York Public Library fight budget cuts

Saturday's human chain at the 42nd Street branch was part of a nationwide campaign against funding cuts for public libraries.Librarians join public in massive "hug" around 42nd Street branchLibraries that serve Manhattan, Bronx, Staten Island face $40 million in proposed cutsFree public access to internet among benefits cited by library advocatesCuts in funding and staffing widespread nationally, according to a survey

New York (CNN) -- A group of supporters encircled the New York Public Library's 42nd Street branch in Manhattan arm-in-arm Saturday to show their love.

Mayor Michael Bloomberg's proposed budget cuts $40 million from the branches in Manhattan, the Bronx and Staten Island. Queens and Brooklyn library branches have their own separate budget and are facing their own reductions.

Hug the Library was part of the savenyclibraries.org campaign organized by the advocacy group Urban Librarians Unite in response to nationwide cuts to public libraries.

"We chose the Schwarzman building for its iconic status, but we feel that the most important library in America is the one that is in every community," said ULU representative Christian Zabriskie in a statement.

The continuous human chain also symbolized a human shield to protect the library from the most significant decrease of weekly access, books on the shelf and staff in its 100-year history.

"We have three weeks to save the library. This is a clarion call to librarians all over the country to embolden people to speak up to their council members and mayors to save our libraries," said City Councilman Jimmy Van Bramer of Queens.

Libraries across the country have been facing budget cuts. In a Library Journal 2010 budget survey, 72% of responding libraries reported budget cuts and 43% reported staff cuts.

"When the economy declines, people come to the library for help with finding jobs. We've helped tens of thousands reposition themselves to find jobs ever since the economy tanked," said NYPL President Paul LeClerc. "One of the most important things that libraries do across America is to let people be online for free."

According to a Bill & Melinda Gates Foundation study, two-thirds (67%) of U.S. public libraries are the only provider of free public access to computers and the Internet in their community.

A library advocacy flier quoted Pedro Munoz, a junior high school dropout and recovering addict, as saying the library "has saved my life. Without it I would still be out there on the street." According to the flier, he is learning to read and write in free adult literacy classes at the Tompkins Square Library in Manhattan.

"The public values the free books, music, DVDs and e-books that libraries provide. The institution of the library exists as a cultural storehouse, a common space and a center of learning, self-improvement and entertainment in the community," ULU Communications Director Lauren Comito said in a statement.

New York's City Council and Mayor Michael Bloomberg will negotiate a budget in a few weeks.

CNN

Budget officer forecasts bigger deficits (Reuters)

OTTAWA (Reuters) – Canada's economy and fiscal health will fare worse than expected in coming years, the country's budget officer said on Wednesday in a downbeat report days ahead of the government's budget.

The Parliamentary Budget Officer (PBO) issued a report providing the office's own economic growth forecasts for the first time, rather than using the consensus private sector forecasts published by the government.

It predicted the government would not be able to eliminate the federal deficit by 2014-15 as it has planned due to higher projected operating expenses.

Mediocre growth, unemployment remaining above 7 percent until 2016 and a persistently strong Canadian dollar mean the Bank of Canada will be reluctant to raise interest rates too quickly, it said.

"Reflecting the sluggish recovery, PBO projects that the output gap will close gradually, restraining the pace of interest rate hikes by the Bank of Canada," said the report.

The PBO's fiscal outlook excludes new measures announced by the government in its March budget, which was never adopted because of the general election. The Conservatives, who won a majority on May 2, will present another budget on Monday, which they say will be largely the same as the previous document, with some minor tweaks.

The PBO sees a budget deficit in 2011-12 of C$26.1 billion, slightly below Ottawa's latest projection of C$27.8 billion.

While the Conservatives predict a return to balance in roughly 2014-15, the PBO sees a shortfall of C$13.3 billion that year and C$7.3 billion the year after.

"PBO's estimate of the structural deficit does not mean that the government's budget will not return to balance or that its fiscal structure is not sustainable," the report said.

"Rather, it suggests that policy actions to increase revenues and/or reduce spending would be required to ensure that the budget is balanced once the economy returns to its potential."

Gross domestic product will grow 2.9 percent this year, the PBO estimated, in line with government forecasts. Growth in 2012 and 2013 will be below government forecasts at 2.2 percent and 2.3 percent, respectively.

PBO projects budgetary deficits totaling $128.2 billion from 2010-11 to 2015-16, compared with the C$93.6 billion projected by the government.

Finance Minister Jim Flaherty responded to the PBO report by suggesting Budget Officer Kevin Page should read the March budget proposal to see how Ottawa plans to return to surplus.

"It's all set out how we would do it. It's in the budget that we filed March 22," Flaherty said.

The cost of measures announced in the March budget -- and excluded from PBO's calculations -- totaled C$7.6 billion over six years, the government said at the time. It also said it had found savings of C$6.2 billion over five years.

In addition, it promised to squeeze out an additional C$11 billion in savings between now and 2016 but did not include those savings in its projections.

Ottawa has said the budget will restate commitments made in the original plan and add a couple of campaign promises.

On Tuesday, Flaherty said the spending plan will use the same economic growth forecasts as the original budget, which assumed 3.1 percent expansion this year and 2.8 percent in 2012.

(Reporting by Louise Egan; editing by Rob Wilson)

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Japan's parliament passes tsunami recovery budget

TOKYO (AP) — Japan's parliament passed a $48 billion tsunami recovery budget Monday, but it will cover only a fraction of the cost of what was the most expensive disaster ever.

Mounting frustrations over the government's response and a still unfolding nuclear crisis, meanwhile, are threatening to topple the country's increasingly unpopular prime minister as more budgetary battles lie ahead.

The supplementary budget bill for the fiscal 2011 year that started in April was unanimously approved by parliament's upper house budget committee Monday morning and was made into law at the chamber's plenary session later in the day. The more powerful lower house had approved the plan Saturday.

The budget will cover the building of new houses for the more than 100,000 people who remain without proper shelter, the massive undertaking of clearing debris and rubble, reconstruction of fishing grounds, and support for disaster-hit businesses and their employers.

"I'm anxious to get the budget plan approved as quickly as possible so that we can reimburse funds for the projects immediately," Finance Minister Yoshihiko Noda said at the budget committee meeting.

Further outlays are expected to follow in the months ahead, he said.

The March 11 magnitude-9.0 earthquake and ensuing tsunami, which wiped out large swaths of Japan's northeastern coastline, are believed to have caused an estimated $300 billion in damage, making it the most expensive disaster ever.

More than 26,000 people are dead or missing.

Though the new budget passed relatively smoothly, Prime Minister Naoto Kan's government is coming under growing pressure for its handling of the crisis and can expect greater opposition from rival parties in future budget negotiations.

"We support this budget plan just because of the urgent need to fund reconstruction projects," said Mikishi Daimon, an opposition lawmaker from the Communist Party.

Opposition leaders have called on Kan ? who was already unpopular before the disaster ? to step down for his handling of the aftermath, particularly his response to the subsequent crisis at the Fukushima Dai-ichi nuclear power plant.

Polls show the public is also not satisfied with his efforts.

A poll released Monday by the Asahi, a major newspaper, found 55 percent of respondents have "few expectations" for Kan's Cabinet to handle the disaster response properly. Only 27 percent said they were "hopeful," according to the nationwide telephone survey conducted April 23 and 24 among 1,842 randomly selected households. A poll of that size would normally have a margin of error of plus- or minus-3 percentage points.

The budget does not include any government support for the massive compensation liability of the nuclear plant's operator, Tokyo Electric Power Co.

Chief Cabinet Secretary Yukio Edano made clear Monday that TEPCO bears unlimited liability because the tsunami and quake were "not impossible to foresee" and not an exception under the nuclear accident compensation law.

TEPCO spokesman Takashi Kurita said the operator was preparing to install an air purifier inside the Unit 1 reactor building to reduce radioactivity by 95 percent over the next few days ? a step to allow workers into the area for the first time since the crisis began so they can resume their primary goal of restoring cooling systems.

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Budget Panel: Obama Deficit Plan Saves Less Than Advertised

AP

President Obama speaks during a town hall meeting at Facebook headquarters in Palo Alto, Calif., April 20.

A leading panel of budget experts estimated Thursday that President Obama's latest spending plan does not save as much money as the White House initially claimed and is about $1.5 trillion more expensive than the Republican plan. 

Since he delivered a major fiscal policy address last week, Obama and other officials have touted that the White House plan would cut $4 trillion over 12 years. Using that figure, they've claimed it's very similar to a House Republican plan which supposedly would cut $4.4 trillion over 10 years. 

But given that most budget outlines use a 10-year window, as required by law, the Committee for a Responsible Federal Budget tried to offer an apples-to-apples comparison -- and determined Obama's proposal would actually cut deficits by $2.5 trillion over the next decade. It credited the president for "moving the ball forward," but said that based on Congressional Budget Office assumptions, the plan doesn't do enough to tackle the debt crisis. 

"It appears unlikely that the policies proposed in the president's framework would be sufficient to reduce debt to a manageable level," they wrote. 

In response, the White House claimed that using the 10-year window, the president's budget plan would cut $2.9 trillion, not $2.5 trillion. And officials continued to stand by the claim that it cuts $4 trillion over 12 years. A White House aide suggested the president's plan would save more than the committee claims in part because of a "failsafe" provision that would trigger additional spending cuts if debt reduction goals are not met. 

"Even with the Committee for a Responsible Federal Budget's shifting of the goalposts and failure to factor the failsafe in their analysis, they still confirm that the president's plan would reduce the deficit substantially and prevent a large increase in the debt," White House spokeswoman Amy Brundage told Fox Business Network. 

The Committee for a Responsible Federal Budget also dialed back Republican claims about their spending plan. Though Rep. Paul Ryan, R-Wis., the plan's author, claimed it would cut $4.4 trillion over a decade, the committee said it would cut more like $4 trillion in that period. 

That still leaves $1.5 trillion separating the two plans, in an apples-to-apples comparison, raising questions about administration claims that Republicans and Democrats agree on how much to cut. 

The new estimates also showed the GOP plan would bring the debt down to about 69 percent of GDP by 2021. By contrast, Obama's plan would bring the debt to 77 percent of GDP, the report said. 

The committee is composed of former officials from the CBO, the White House Office of Management and Budget and other key offices.

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'Gang of Six' Senators Under Pressure to Strike Budget Deal After Credit Rating Warning

AP

Shown here are Sens. Tom Coburn, left, and Kent Conrad.

With partisan squabbling increasing ahead of a vote to raise the nation's borrowing limit, aides to a bipartisan "gang of six" lawmakers in the Senate are working through a holiday recess on a deal to slash the country's skyrocketing debt and deficit. 

Staffers for the group tell Fox News that their goal is to produce an agreement by May 2 to present to Congress when lawmakers return from their Easter break. 

And with Monday's blunt warning from the credit rating agency Standard & Poor's about U.S. debt, and the financial markets' subsequent drop, the pressure is growing more intense. 

"This is one more warning sign that the financial markets are paying close attention to see if we are serious about addressing our budget deficits and long-term debt," said Sen. Mark Warner, D-Va., a former governor and lead organizer of the so-called "gang of six," in a statement released by his office. 

S&P, which downgraded its outlook on the U.S. from "stable" to "negative" for the first time since World War II, based its pessimism on doubts that Congress could overcome partisan gridlock to tackle the problem. 

Fox News has learned that aides to the senators are working overtime to have a plan ready when lawmakers return to the Capitol, which will be less than two weeks from when the Obama administration estimates the government will have exhausted its $14.3 trillion debt limit. 

The plan is expected to mirror one put forward by the president's own deficit commission, of which all six lawmakers were a part. The commission plan would cut the debt by roughly $4 trillion over 10 years, touching every area of the budget, including entitlements, taxes, and defense spending. 

"They're working like mad. There's definitely a lot of pressure, but who knows if they'll get to a place that everyone can support. I think there's a growing feeling that they just have to," said one senior staffer close to the talks who requested anonymity, because of the sensitivity of the negotiations. 

With Republicans promising to hold up Obama's request for a debt limit increase without major spending reductions and the White House warning of a "global economic calamity" if the ceiling isn't raised, the pressure on the negotiators is intense. 

"The talks have almost collapsed a few times," according to another source familiar with the negotiations who also asked to remain anonymous in order not to jeopardize the deal. The source said the group is "in a much better place now." 

"All the members are optimistic about getting a deal. It's been rough going at times, but they've stuck with it. It's too big a problem not to try to solve," said the staffer. 

Gang members include Democratic Sens. Dick Durbin of Illinois, number two in his party's leadership, Warner, and Budget Committee Chairman Kent Conrad of North Dakota. On the Republican side are Sens. Tom Coburn, dubbed "Dr. No" for his fiscal hawk status, Saxby Chambliss of Georgia and Mike Crapo of Idaho. 

While the other five are well-known figures in the Senate, Crapo has toiled outside the spotlight since he first came to Congress in 1998. In a chamber of headline-seekers, Crapo rarely attends news conferences and is not often seen in gaggles with reporters. But he is, perhaps, one of the most well-liked among his colleagues. 

No one in the gang of six is up for re-election, a factor that no doubt aids in their potential success, though the similarities between the Republicans and Democrats pretty much stops there.

But given the severity of the U.S debt picture, the group appears to have checked partisan hats at the door, imbued with a sense of urgency. And it faces many obstacles, not the least of which is a looming presidential election year, during which little substantive legislation is likely to be achieved. 

It certainly helps that the group, according to firsthand accounts, gets along well behind closed doors. Many meetings take place in Warner's fourth floor Russell Senate Office Building, mostly outside the path of reporters and cameras. The meetings typically switch off between members-only and staff. There usually is some kind of anteroom set up, according to a source, and the members and staff move back and forth conferring between the two. 

One essential ingredient to the group's recipe for success? "They always have a big spread of food," said a source. 

At one morning meeting, one budget expert baked homemade scones for the group. Sometimes, for the evening meetings, lawmakers meet over a glass of wine, according to the source. A little "gentle teasing" goes on between the members (Coburn and Durbin are especially known for this), but the members take the substance "quite seriously," said the source, adding, "There isn't really a single person pushing the talks along, it's a real group effort. You know, they frankly didn't know each other particularly well before this started, and they've grown pretty close over the last five months." 

The good humor will serve the group well when and if they can produce a package. At least 20 senators, Republican and Democrat, are waiting for the finished product, anxious to support some kind of deficit and debt reform package ahead of any debt ceiling increase. 

But there are many others who have cast a gloomy eye on the bipartisan work of the group. With Social Security reform on the table, according to Warner, the group is poised to run headlong into the powerful Senate Majority Leader, Harry Reid of Nevada, who told reporters recently, "Social Security has not contributed one penny to the deficit. Leave Social Security alone." 

Then there's Mitch McConnell of Kentucky, Reid's GOP counterpart, and House Speaker John Boehner, R-Ohio, who have said, emphatically, that tax increases are off the table, a position long a part of GOP orthodoxy. But Chambliss, along with Coburn and Crapo, has said that times have changed and that, most definitely, tax hikes will be in the final product, likely in the form of eliminated tax deductions in favor of personal and corporate tax rate reductions. 

"I'm taking arrows from some on the far right," Chambliss told the Rotary Club of Atlanta in a recent appearance with Warner, adding, "Are some people going to pay more in taxes? You bet." 

That will, no doubt, mobilize the influential anti-tax advocacy group Americans for Tax Reform, run by Grover Norquist, who doggedly holds lawmakers to their no-tax-increase pledge. 

Already, Coburn has been at loggerheads with Norquist merely for voicing support for a compromise on revenue measures, and the senator's spokesman now labels Norquist the "chief cleric of sharia tax law." And the arrows have continued in GOP circles, with one conservative blogger, Erick Erickson of Redstate.com, recently asking in a recent post, "Is Saxby Chambliss Becoming a Democrat?" 

Still, even in the face of so much bipartisan opposition, gang members are increasingly signaling that a deal is near. 

"I think there's a good chance that we'll be able to come up with a bipartisan agreement that people can swallow," Coburn predicted on "Fox News Sunday." 

"Nobody is going to like what we come up with," Coburn added, "The left isn't going to like it, and the right isn't going to like it. And that's one thing that would be an indicator that is probably the best compromise we're going to be able to get. So, I think there's a good likelihood that we can get there. It's not a sure thing." 

And Warner warned, "If we fail to take this seriously, and if our deficit and debt discussions turn into just another game of political brinksmanship, this could result in the most predictable economic crisis in our history."

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High Gas Prices a Boon for Alaska Budget

AP

Shown here are oil and gas pipelines running into Alyeska's trans-Alaska oil pipeline pump station in Deadhorse, Alaska.

While most Americans are cursing the high price of gas, residents in one state have reason to celebrate. 

Alaska gets 90 percent of its state revenue from oil production taxes. When the price of oil goes up, so does the amount paid to the state. Bryan Butcher, Alaska's Revenue Commissioner, said he's anticipating a tax windfall of $3.4 billion this year, adding to a healthy reserve fund. 

"We're looking at a surplus of approximately $15 billion in reserve that the governor and Legislature could tap if need be," he said.  

That's a far cry from what's happening in other states around the country. Most governors are being forced to slash spending to fill huge budget deficits. In Alaska, in addition to the reserve fund, the state has a Permanent Fund currently worth $40 billion. Established by the Legislature when oil started flowing down the Trans Alaska Pipeline, the Permanent Fund pays out dividends to Alaskans annually. Last year each man, woman and child received $1,300. 

Oil revenue also allows Alaska to build roads, educate kids and provide health care without collecting a state sales tax or income tax. 

"Any time (the price of oil) gets up high, my first thought is what's being paid out in rural Alaska, and my second thought is we'll be able to fund state government this year," Butcher said. 

Despite sitting on top of so much oil, Alaskans still pay among the highest gas prices in the nation. The statewide average is currently $4.17 which is 24 cents higher than the national average. That's the part Alaska residents don't like. 

"Everything is rising," Anchorage resident Rebecca Williams said. "You've got your groceries and all your other bills, and we're not getting any raises." 

Other state residents admit they're still way ahead with the dividend checks and miniscule tax burden. Alaska's Department of Natural Resources Commissioner Dan Sullivan said the prices are high because the local gas market is small and remote. 

"We have one refinery in the state," he said "And the economies of scale are such that large-scale production of gasoline does not happen here, so a lot of it has to come back." 

Officials still know they are in an enviable budget position. Lawmakers are in Juneau figuring what to do with all the oil revenue. They're considering massive projects such as a natural gas pipeline and hydroelectric dam. 

Most of the surplus, however, will go into a rainy day fund. Alaskans know every boom is followed by a bust. They remember oil plummeting to $9 per barrel in the late '80s and a decade later. The most recent swing took place in 2008. Alaska crude oil reached a record price of $147 per barrel. Within three months, the price had plunged to $30 a barrel.

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Ratings Service Warns Politics Could Delay Budget Deal, Downgrades Outlook

Reuters

In this Feb. 14 photo, The National Debt Clock hangs from a building near Times Square in New York.

As the White House and lawmakers call for renewed cooperation to tackle the deficit, a leading rating agency isn't buying it. 

Standard & Poor's Ratings Service warned Monday that politics may be getting in the way of a budget compromise, and -- in an announcement which sent stocks tumbling -- said it was lowering the outlook for U.S. sovereign debt to "Negative" from "Stable" due to the risk posed by the growing deficit. 

Putting Washington on notice, S&P warned that it might be compelled to lower the country's rating if Congress can't reach a budget deal that brings the deficit under control. 

The announcement puts added pressure on lawmakers and the White House as they pitch dueling budget plans. Republicans called it a "wake-up call" to get spending under control. But the Obama administration disputed S&P's finding and said negotiators are, to the contrary, ready to bridge their differences. 

White House spokesman Jay Carney said the political process will outperform the agency's expectations, downplaying the significance of the announcement. 

"We see momentum going that way," a senior Treasury official told Fox Business Network, referring to the possibility of an agreement before the next election. "A lot is going on behind the scenes. ... I'm not saying it won't be messy." 

The official pointed to negotiations underway among a bipartisan group of senators, who are trying to produce a plan when Congress returns from recess. 

"Both political parties now agree that it is time to begin bringing down deficits as a share of GDP," Mary Miller, assistant secretary for financial markets at the Treasury Department, said in a written statement. "We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation." 

The agency reaffirmed the investment-grade credit ratings on the United States' long-term and short-term debt. S&P says the U.S. has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation. 

But the country's ballooning deficit could offset those positives over the next two years. The agency noted that the deficit grew to 11 percent of gross domestic income in 2009. That is much higher than the average of 2 percent to 5 percent in the previous six years. 

The statement from S&P reflected what it called the "significant risk" that deadlock in Washington could last through the 2012 elections, leaving the government without a medium-term deficit strategy for another several years. 

"Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years," S&P's credit analyst Nikola G. Swann said in a statement. "The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012." 

Swann said a compromise that tackles the deficit could lead the ratings service to reverse its outlook. 

"Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating," Swann added. 

Miller, though, said the economy is "strengthening as it emerges from the recent recession." And she pointed to the deficit-reduction plan outlined last week by President Obama in arguing that the country is ready to reverse course. 

"As the president said last week, addressing the current fiscal situation is well within our capacity as a country. He has initiated a bipartisan process that will allow us to make progress on a balanced approach to restoring fiscal responsibility," she said. 

The president outlined a plan he said would reduce the deficit by $4 trillion over 12 years. Republicans, though, said the plan relied too heavily on tax hikes and did not do enough to address entitlement spending. Republicans are pushing their own long-term budget proposal, which would overhaul Medicare and Medicaid, and are pushing for spending reforms as a condition for their support on raising the $14.3 trillion debt limit. 

The federal government is expected to hit that ceiling by next month, and the S&P announcement quickly became a political football in that debate Monday. 

Sen. Mark Kirk, R-Ill., said the debate over the debt limit offers lawmakers the chance "to save the dollar and our economy." He said S&P offered a "stark warning" for the country if lawmakers "miss this chance or if Congress sends the president a blank check."

Rep. Paul Ryan, R-Wis., author of the Republicans' budget proposal, said the failure to reach an agreement threatens the country's "economic security" and continued to hammer the president for his deficit speech last week. 

"A campaign speech is no substitute for a serious, credible budget. The president and his party's leaders must put an end to empty promises and work with us to avert this looming economic crisis," Ryan said. 

But Rep. Peter Welch, D-Vt., issued a statement arguing that the announcement reinforces the need to approve the debt ceiling increase no matter what -- since failing to increase the debt limit could cause the country to default. 

"The markets have doubts about America's ability to get its fiscal house in order. And they are right," Welch said, adding that Republicans would unleash "the financial hounds of hell" if they play politics with the debt ceiling. 

The Associated Press contributed to this report.

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Obama Keeps 'Czars' Despite Budget Deal That Eliminated Them

President Barack Obama is interviewed by The Associated Press, Friday, April 15, 2011, in Chicago.(AP)

President Obama may have never met a "czar" he didn't like and he's not about to bid farewell to any of them now, despite a budget deal he struck with Republican leaders last week that eliminated four of these positions.

The budget compromise that Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid reached in the final moments before the government shut down last Friday included language effectively eliminating the czar positions overseeing health care, climate change, the auto industry and urban affairs

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Tea Party Rally Calls for Budget Cuts

April 15: Former Minnesota Gov. Tim Pawlenty speaks to a crowd at a Tea Party rally at the Statehouse, in Concord, N.H. (AP)

It’s never too early for presidential politics in New Hampshire. And in this first-primary-in-the-nation state, it almost seemed as if the campaign kicked off Friday.

Four prospective Republican candidates appeared together at a Tax Day-Tea Party rally, calling for lower taxes and major cuts in federal spending. Several hundred attended the event, held on the front lawn of the historic statehouse in the crisp New England sun, and sponsored by the group, Americans For Prosperity.

Former Minnesota Gov. Tim Pawlenty, former U.S. Sen. for Pennsylvania, Rick Santorum, ex-Louisiana Gov. Buddy Roemer, and businessman Herman Cain, one-time head of Godfather’s Pizza, all attended and spoke.

The potential political rivals sounded a common theme: the federal government budget needs to be deeply trimmed, and taxes cut, to restore the nation's economic vitality.

"Valley Forge wasn't easy. Settling the West wasn't easy. Winning World War II wasn't easy," declared Pawlenty. "Thank you for being part of the Tea Party and let's take back this nation."

He asked the crowd "have you had enough of big government and big unions and big bail out businesses scratching each others back asking you to get your wallet out to pay for their recklessness and stupidity?," to which the attendees shouted "yes!"

"It takes a real re-awakening, it takes a Tea Party in generations, to re-establish those burning founding principles that made America that shining city on the hill," proclaimed Santorum, "What's at stake right now is a group of people who want you to believe that you need them, that you need to be taken care of, that you need to be provided for....the battle for freedom, fundamentally in America, is right here."

"We have a tax code that is 4,000 pages long and you can't read it," Roemer told the crowd. "We have a debt for the rest of our lives...We spend $300 billion a month and borrow $120 billion from our competitors. The game is rigged...the American Revolution was about a Tea Party, taxation without representation. I think it's time for a second revolution."

In a rousing address reminiscent of a preacher, Herman Cain said "stupid people are ruining this country

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Obama Draws Contrasts With Republican Budget Plan

April 15: President Barack Obama returns to the White House in Washington after a trip to Chicago. (AP)

WASHINGTON –  Launching a week devoted to selling his deficit-reduction plan, President Obama on Saturday drew sharp contrasts with a Republican budget that he says offers a vision that "is wrong for America."

In his weekly radio and Internet address, Obama charged Republicans with seeking to dismantle venerable safety net programs and choosing tax cuts for the wealthy at the expense of students paying for college or older adults on Medicare, the federal health care program.

"To restore fiscal responsibility, we all need to share in the sacrifice - but we don't have to sacrifice the America we believe in," Obama said.

The criticism echoed his speech Wednesday in which he unveiled a $4 trillion deficit-reduction plan over 12 years, a goal he says he can achieve with a blend of spending cuts, changes in major government health care programs and tax increases.

Obama's message represents his clearest attempt to place ideological distance with Republicans after months spent negotiating a compromise six-month spending bill that trimmed more than $38 billion from the government. Obama signed that legislation Friday.

Obama plans to continue his plan's pitch throughout the week, holding town halls in Northern Virginia Tuesday and in Palo Alto, California, and Reno, Nevada, later in the week during a Western tour that includes at least two Democratic Party fundraisers.

While trying to cast the debate in his own terms, the president's attention to fiscal discipline signals a watershed in national politics. After two years devoted to priming an anemic economy with new spending and passing an overhaul of health care, Congress and the White House are beginning a debate about how to tame long-term deficits and a crushing debt of more than $14 trillion.

In the Republicans' weekly address, Sen. Tom Coburn called that turning point "a monumental shift for Washington."

Still, Obama predicted in an interview with The Associated Press on Friday that fundamental questions about how to change giant benefit programs like Medicare or how to change the tax system might have to wait until after the 2012 presidential elections.

He conceded, however, that he would have to offer spending cuts to win votes in the Republican-controlled House for an increase in the debt limit. The debt will hit its ceiling of $14.3 trillion by mid-May, and administration officials say the cap must be raised by no later than early July.

And while Obama, in the interview, predicted a "smart compromise," his address Saturday left little room for common ground with the House Republican budget. That plan, approved by the House Friday, would reduce deficits by $4 trillion over the next 10 years. It would extend Bush-era tax cuts at all income levels, repeal Obama's health care law and overhaul of Medicare by providing future retirees a voucher-style federal payment to purchase coverage from private plans.

"It's a vision that says that in order to reduce the deficit, we have to end Medicare as we know it and make cuts to Medicaid that would leave millions of seniors, poor children and Americans with disabilities without the care they need," Obama said.

Obama has adopted a sharper, partisan tone since announced his re-election bid more than a week ago.

Coburn said Obama's sharp critique of the House Republican budget amounted to "campaign-style political attacks."

"Instead of describing the threat and bringing both sides together, the president attacked those who have a different vision of the government," he said.

Coburn is one of a bipartisan group of six senators working to find a compromise on long-term deficit reduction. The group has not tipped its hand as its members continue to seek common ground. They have not set a timeline for achieving a compromise.

Coburn, however, praised the House Republican Medicare proposal, suggesting that the so-called Gang of Six may still have a long way to go before reaching a compromise.

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Obama signs 2011 budget deal into law

Obama caught on open micSTORY HIGHLIGHTSPresident Obama signs the spending deal covering the rest of the current fiscal yearThe deal includes spending reductions totalling $38.5 billionThe measure passed both houses of Congress on ThursdayPolitical leaders are now turning their attention to the debt ceiling and the fiscal year 2012 budget Washington (CNN) -- President Barack Obama signed the budget agreement covering federal spending for the remainder of the current fiscal year on Friday, bringing an end to any remaining fears of a government shutdown.

The bipartisan deal, which won approval Thursday from both the House and Senate, cuts $38.5 billion in spending while funding the government through September 30.

In a White House statement, Obama expressed his objection to two sections of the agreement, which prohibit the use of funds to transfer Guantanamo detainees into the United States and to move detainees into the custody of foreign countries unless specific conditions are met.

"Despite my continued strong objection to these provisions, I have signed this act because of the importance of avoiding a lapse in appropriations for the federal government, including our military activities, for the remainder of fiscal year 2011," the president said.

"Nevertheless, my administration will work with the Congress to seek repeal of these restrictions, will seek to mitigate their effects, and will oppose any attempt to extend or expand them in the future."

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Obama Pitches Budget Deal, Tells Senators to Run With Details

Reuters

While deficit commission co-chairman Alan Simpson suggests prayer is the answer to finding long-term debt reduction, President Obama is counting on a small group of senators to turn his 2012 budget proposal submitted two months ago into a long-term plan to reduce the government's tab.

That's no easy task. The president's budget submission in February allows for a $1.2 trillion deficit in 2012 alone, and $9.4 trillion additional debt over 10 years, according to an analysis by the Congressional Budget Office. 

But after continued reports of record-breaking debt numbers and a proposal from House Budget Committee Chairman Paul Ryan to reduce debt by $6.2 billion over 10 years, the president this week outlined his own offering -- a plan that called for $4 trillion in savings over 12 years, in part by increasing current tax rates for families earning $250,000 or more. 

"It is a balanced plan that asks for shared sacrifice in order to provide shared opportunity for all Americans," Obama said Thursday after a meeting with his deficit commission co-chairmen. 

The proposal doesn't come with any new budget revisions being sent to Congress, a decision that was not an afterthought, according to the Office of Management and Budget.

"The 2012 budget already exists," an OMB spokeswoman told Fox News on Thursday. "The framework outlined yesterday builds on the president's 2012 budget to provide a comprehensive, balanced approach to deficit reduction. The president's goal was to lay out his vision, not to write specific legislation or present every detail and say take it or leave it. This charts a path forward."

That decision didn't please the Senate Budget Committee ranking Republican Jeff Sessions, R-Ala.

"The president has obviously recognized that the budget he submitted was inadequate," Sessions told FoxNews.com. But instead of offering a revised budget, which is required by the Congressional Budget Act, Obama is taking the stage to try to discredit Ryan, he said. 

"They have no intention of actually following through the speech with concrete proposals that Congress can evaluate," he said. "The idea he's proposing can't be evaluated because it's just talk."

Without a revised budget, getting from Obama plan 1.0 to Obama plan 2.0 appears to be a task left at the doorstep of the Gang of Six -- three Republicans and three Democrats who served on the failed deficit panel but are committed to looking for a middle ground on debt reduction.  

Jack Lew, the president's budget chief, called it a "significant challenge" to get "from here to where we need to go," but said the most popular commentary in Washington is to say it's impossible to reach an agreement.

"When Congress gets back ...  the vice president will meet with leaders and lay out the issues that they need to work through, with a pretty tight deadline, with the goal of having progress by Memorial Day" and a vote in June, he said.

"The important thing is that we have action," said Erskine Bowles, a deficit commission co-chairman who met with Obama and his co-chairman Simpson on Thursday. 

Calling the Gang of Six "very brave, bold senators," Bowles said it will likely be up to it to come up with legislative language for a vote.

"I don't think anybody has a crystal ball, but I do think we have a framework set up," he said. "Every single plan is talking about $4 trillion of deficit reduction. That's the key and now what we have to do is take the best ideas out of all plans and get to real action."

"I think they will put out their plan, and then if anybody else wants to put in a plan we suggest that they do so, and that would be a wonderful thing, and then we'll just mess around the plans and see where's the best results," Simpson added. 

But their confidence belies the trouble the Gang of Six is having reaching an agreement.

Sen. Kent Conrad, D-N.D., a member of the Gang of Six, told Fox News that everything is on the table -- entitlements, domestic spending and revenue in the form of tax reforms. 

But Conrad, who as Budget Committee chairman is responsible for submitting a Democratic budget in the Senate, said he's been holding off so as to give every chance for the group to come together. 

"I think that's what's required at the end of the day," he said. "Look, neither party can do this on its own. This is a circumstance in which one party controls the House, one controls the Senate. Of course the president has his own views, so if we don't come together, nothing is going to happen."

But Sessions said he's perplexed by the decision to leave it to six senators unknown to most of America. 

"The Gang of Six, I'm not sure how they were selected or how they're expected to perform, and we have no confidence they will reach any agreement," he said, adding that maybe it could come up with some ideas, but the group is limited in latitude. "They're not able to do much more than sit around a room and give and take a little bit."

Ryan, R-Wis., whose legislation is expected to get a House vote before Congress leaves this week for a two-week spring break, said he's more encouraged that his bill will pass now that the president has failed to lead with a revised budget and offered what he described as a slanted speech to the nation. 

"When the commander-in-chief sort of brings himself down to the level of the partisan mosh pit that we've been in, that we are in, it makes it more difficult to bring that kind of leadership," he said.

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House passes budget despite GOP defections

House passes 2011 budget dealSTORY HIGHLIGHTSThe House has approved a deal covering the rest of the FY2011 budgetA report on when the new budget cuts will take effect is causing "concern" on Capitol HillDemocrats and Republicans remain at sharp odds over the fiscal year 2012 budgetThe two parties also have to reach an agreement over raising the debt ceiling Washington (CNN) -- The struggle to control America's skyrocketing debt took center stage in the House of Representatives on Thursday as members approved a fiscal year 2011 budget deal reached last week by President Barack Obama, Senate Majority Leader Harry Reid, D-Nevada, and House Speaker John Boehner, R-Ohio.

The measure, which also is expected to be taken up by the Senate Thursday, passed the Republican-controlled chamber in a 260-167 vote. The bill would not have passed without support from members of both parties.

Fifty-nine Republicans voted no on the measure -- raising questions about Boehner's ability to keep his conservative Tea Party-infused caucus unified in the face of politically perilous tax and spending negotiations with the Democrats.

The vote also reflected growing liberal angst and anger over the impending spending reductions. Only 81 Democrats backed the measure; House Minority Leader Nancy Pelosi, D-California, voted no.

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Health Care Law Support Dips on Budget Woes, Poll Finds

Associated Press

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Amid a budget debate that will affect the health care of virtually every family, a new poll finds support for President Obama's overhaul at its lowest level since passage last year.

The Associated Press-GfK poll showed that support for Obama's expansion of health insurance coverage has slipped to 35 percent, while opposition stands at 45 percent and another 17 percent are neutral. That nearly ties the previous low in September 2009, when after a summer of heated town hall meetings dominated by critics, only 34 percent supported Obama's approach.

The worry this time appears to be federal budget deficits driven by unmanageable health care costs. Among seniors, whose views are critical in any debate over health care, support for the law dipped below 30 percent for the first time in AP-GfK polling.

Obama delivered a major speech Wednesday laying out his path for reducing deficits. While administration officials have acknowledged the need for more savings from Medicare and Medicaid, congressional Republicans have offered a bold alternative to tackle health care costs.

House Budget Chairman Paul Ryan, R-Wis., is proposing to convert Medicare into a "premium support" program. Instead of traditional Medicare, people now 54 and younger would get a fixed payment, or voucher, from the government to buy private health insurance when they retire. Medicaid, which serves low-income people, would be turned over to the states as a block grant program. Taken together, the programs serve about 100 million Americans.

In a ringing defense of Obama's policies, Medicare chief Donald Berwick pleaded Tuesday for more time on the health care law, and branded a leading Republican plan "unfair and harmful" and "a form of withholding care."

Berwick, who oversees Medicare and Medicaid as well as the rollout of the new health care law, told Associated Press reporters and editors Tuesday that the Republican approach would set back efforts to improve quality and squeeze waste.

It would be like "giving people a sum of money and saying, 'Good luck, God bless you,"' Berwick said during an hour-long interview. "That's not about improving care. That's about shifting burdens."

Ryan says his plan will save Medicare from bankruptcy, and market competition will bring down costs without compromising quality.

A pediatrician, Berwick is well-known in the medical community as an advocate for better quality. But in Washington, he has become one of the most controversial administration figures. His statements as an academic praising the British health care system brought him under suspicion from Republicans, who accused him of favoring rationing. Despite his denials, Berwick's confirmation has been blocked in the Senate, and he may have to leave the job by the end of this year.

The political uncertainty didn't stop him from a full defense of the new health care law. He lamented that the administration has not been able to convince the public that the complex legislation will improve quality and reduce costs over time.

They are in a "psychological trap, where nothing looks good," he said. "The public's smart. They're going to wait for the results before they actually change their minds."

If anything, Berwick said, he wished "the tempo of the law were faster," so that Americans could experience the benefits of coverage for virtually all residents and payment changes to reward doctors and hospitals for quality care, not the volume of tests and procedures.

"We are not going to take your care away. We are going to make it better," Berwick said. "The public will notice as we make health care better, but that takes time."

On Tuesday, the Obama administration began a national program to improve safety in hospitals, which are rife with infections and opportunities for medical mistakes.

The new Partnership for Patients will help hospitals adopt proven strategies to reduce those problems dramatically, with the goal of preventing nearly 2 million patient injuries and saving more than 60,000 lives over the next three years. If it works, it could save Medicare $10 billion over that period.

The poll showed the administration's message isn't getting through, particularly with seniors.

Fifty-nine percent of seniors oppose the new health care law, while only 29 percent support it. Disapproval of Obama's handling of health care among seniors has ticked upward to 62 percent, while Republicans are more trusted than Democrats to handle the issue, by a 51 percent to 36 percent margin.

By contrast, among adults of all ages, Obama's approval rating on health care stands at 52 percent, and 53 percent say they trust Democrats to do a better job.

The Associated Press-GfK Poll was conducted March 24-28 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide, and has a margin of sampling error of plus or minus 4.2 percentage points.

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Likely 2012 Candidates Pile on Obama Over Budget Speech

FoxNews.com

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Though Republican candidates have been slow to formally enter the 2012 presidential race, the reaction to President Obama's budget speech Wednesday should leave no doubt the race for the White House is under way. 

Several likely, but undeclared, GOP candidates were swift to condemn the president's plan. Obama vowed to cut $4 trillion from the deficit over 12 years, through a combination of spending cuts and tax hikes on high-income Americans. 

"Today's speech was nothing more than window dressing," former Minnesota Gov. Tim Pawlenty said in a statement. 

Former Massachusetts Gov. Mitt Romney, who just launched an exploratory committee and is positioning himself as the business-savvy alternative to Obama, went directly after the president's plan to raise taxes. 

"President Obama's proposals are too little, too late. Instead of supporting spending cuts that lead to real deficit reduction and true reform of Medicare, Medicaid, and Social Security, the president dug deep into his liberal playbook for 'solutions' highlighted by higher taxes," Romney said. 

Other potential candidates took to Twitter to express their outrage, mostly on taxes. 

"President Obama doesn't get it: The fear of higher taxes tomorrow hurts job creation today," Mississippi Gov. Haley Barbour tweeted. 

"Unbelievable -- President Obama blaming deficit on tax cuts! We do NOT have a revenue problem; we have a spending problem," wrote Gary Johnson, the former New Mexico governor who is expected to soon throw his hat in the ring. 

Even the California Republican Party weighed in, accusing the president of trying to "tax our way out of deficit." 

Obama made reference to the 2012 candidates in his address at George Washington University, noting that they were championing the GOP budget proposal outlined by Rep. Paul Ryan, R-Wis. 

He challenged that proposal as unfair to seniors and the poor, and said he wanted to take a more balanced approach by rolling back the Bush tax cuts on those making above $250,000. He acknowledged the political difficulty in doing so. 

"Without even looking at a poll, my finely honed political instincts tell me that almost nobody believes they should be paying higher taxes," Obama said.

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Medicare at the center of budget debate

By Pablo Martinez Monsivais, AP

President Obama outlines his fiscal policy during an address Wednesday at George Washington University in Washington.

EnlargeCloseBy Pablo Martinez Monsivais, AP

President Obama outlines his fiscal policy during an address Wednesday at George Washington University in Washington.

But not on Medicare.

The government

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