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President Barack Obama’s first budget request would provide as much as $750 billion in new aid to the financial industry, as well as overhaul the U.S. health-care system and launch a program to cut carbon-dioxide emissions.

The spending blueprint, being sent to Congress today, anticipates the government will run a deficit totaling $1.75 trillion in the year ending Sept. 30, equivalent to about 12 percent of the nation’s gross domestic product. Obama has promised to cut the shortfall — the biggest since World War II - - in half by the end of his first term.

A senior administration official, in a briefing yesterday with reporters, declined to say how large the White House forecasts the fiscal year 2010 deficit will be or provide the total budget figure.

Obama is scheduled to make remarks about his fiscal plan at 9:30 a.m. Washington time, and the full document is set for release at 11 a.m.

The administration proposes to finance the budget in part by limiting tax deductions for couples earning more than $250,000 a year, raising taxes on hedge-fund managers, cutting defense spending and paring subsidies to insurance companies participating in the government’s Medicare health-care system.

More details will come in the 134-page overview the administration plans to release later outlining budget priorities for the 2010 fiscal year, which begins Oct. 1. The administration official, noting Obama has only been in office for little more than a month, said the White House doesn’t plan to release a full, detailed budget until April.

Aid Figure in Flux

The official, speaking on condition of anonymity, said the White House hasn’t decided whether the $750 billion in additional aid to the financial industry will be needed. He said it will be put in the budget as a “placeholder.”

The official said the aid would appear in the budget as about $250 billion because the rules require policy makers to record the plan’s net cost to taxpayers. The government anticipates it would eventually recoup some, though not all, of the money expended to help financial companies.

The funds would come on top of the $700 billion rescue package approved last October by Congress.

The official said the White House is asking for a “down payment” of about $635 billion to begin overhauling the nation’s health-care system, which Obama has said is critical to expanding health-insurance coverage and getting the government’s fiscal house in order quick payday loan.

The fund would be financed in part by the limits on tax deductions for those earning more than $250,000 a year and by requiring insurance companies participating in the Medicare Advantage program to enter into competitive bidding.

‘Carried Interest’ Loophole

The budget proposes raising taxes on hedge-fund managers by eliminating the so-called carried interest tax loophole that allows investment managers to pay 15 percent tax rates on their compensation rather than the usual income tax rates. The spending plan would also raise taxes on corporate income earned overseas and crack down on business transactions that are solely designed to reduce companies’ tax bills.

The budget would eliminate the Advance Earned Income Tax Credit, a tax break for low-income earners that government officials have said is poorly administrated.

The spending plan assumes the government would begin taking in at least $75 billion in 2012 from a cap-and-trade system that requires companies to buy credits if they exceed greenhouse-gas limits. That money would be used to invest in clean-energy technology and also help offset higher energy costs for lower-and middle-income Americans, according to officials who spoke on condition of anonymity.

War Costs

On defense, the administration will request an additional $75 billion this year for Iraq and Afghanistan war costs, bringing the total annual spending on the conflicts to more than $140 billion. The budget assumes those costs will decline to about $130 billion in 2010 and $50 billion in subsequent years.

The administration official said Obama plans to pursue deficit reduction by cutting spending on defense, an area with “significant” opportunities for savings. Agriculture subsidies also are targeted for reductions, with the administration pushing to phase out payments to farmers earning more than $500,000 annually.

While the federal government has taken over Fannie Mae and Freddie Mac, the Obama administration opted to exclude most of the costs of running the mortgage financiers in its budget plan. The blueprint includes the money the Treasury Department has injected into the companies so far, the official said.

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Eclipse Aviation Corp.’s senior note holders filed a motion today to convert Eclipse’s bankruptcy proceedings to Chapter 7.

Albuquerque, N.M.-based Eclipse, which makes the 6-seat Eclipse 500 very light jet, filed for Chapter 11 protection with the U need a personal loan with bad credit.S. Bankruptcy Court in Delaware last November. Chap. 11 is a process that allows a business to gain temporary relief from paying debts in order to reorganize. The debtor remains in control of the business during the bankruptcy, and the business continues to function.

In January, the court approved a proposal by EclipseJet Aviation International Inc. to buy Eclipse for $28 million in cash, $160 million in newly issued notes, and an offer of 15 percent equity in the newly formed company to senior secured note holders.

Last week, however, Eclipse furloughed its remaining 800 employees in Albuquerque and 24 at Albany International Airport because negotiations over the company’s sale were taking longer than expected.

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German business confidence may hold steady in February as executives weigh the government’s stimulus program and interest-rate cuts from the European Central Bank, a survey of economists shows.

The Ifo institute will say its business climate index stayed at 83, according to the median of 37 forecasts in a Bloomberg News survey. Ifo will release the report, based on a survey of 7,000 executives, at 10 a.m. in Munich today.

German lawmakers last week agreed to more than double the government’s fiscal stimulus to about 80 billion euros ($105 billion) to stem the country’s worst recession since World War II. The ECB has also signaled it will cut interest rates to a record low next month as the global economic slump prompts companies to reduce production and lay off workers. The International Monetary Fund expects the German economy, Europe’s largest, to contract 2.5 percent this year.

“There is still hope that all the stimulus programs will help revive the economy in the second half of the year,” said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. “The economy is at rock bottom at the moment and it can’t really get any worse.”

Ifo’s gauge of current conditions may decline to 84.9 from 86.8, the survey of economists shows. The measure of expectations is expected to rise for a second month, to 81.1 from 79.4.

Investor Confidence

German investor confidence jumped the most in more than 15 years this month on hopes for an economic recovery later this year.

Chancellor Angela Merkel’s stimulus program, which includes tax cuts and infrastructure investment, amounts to about 1.6 percent of gross domestic product, making it the biggest spending boost in Europe.

The ECB, which has lowered its benchmark lending rate by 2 guaranteed unsecured personal loans.25 percentage points since early October to 2 percent, is poised to deliver another reduction in March.

Some policy makers’ reluctance to cut rates as aggressively as the Federal Reserve and Bank of England may be melting as data suggest Europe’s recession could deepen.

“Official interest rates have been lowered; in many countries they are near zero,” ECB council member Mario Draghi said in a speech in Milan on Feb. 21. “Worrying about getting too close to the lower limit for nominal interest rates cannot be a reason for inaction.”

Manufacturing and service industries unexpectedly contracted at a record pace this month, a survey of purchasing managers showed on Feb. 20. The report “challenges our forecast of a stabilization in first-quarter economic data,” Royal Bank of Scotland economists wrote in a research note.

Companies Retrench

German car makers Volkswagen AG, Bayerische Motorenwerke AG and Daimler AG are among companies that have scaled back production and employment as the global slump saps demand.

Plant and machinery makers will reduce output by 7 percent this year and cut as many as 25,000 jobs, the VDMA industry association said Feb. 10.

Deutsche Lufthansa AG, Europe’s second-largest airline, said Feb. 1 that January passenger numbers fell 9.3 percent from a year earlier.

Ifo’s index unexpectedly rose in January for the first time in eight months. Michael Holstein, an economist at DZ Bank AG in Frankfurt, said a second consecutive gain “would be a sign of hope that the worst could be behind us.”

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President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.

“Next week sets the table for the year,” and the president’s four-year term, Kenneth Baer, spokesman for the White House budget office, said yesterday, referring to the budget plan that will be released on Feb. 26.

To increase revenue, Obama will propose taxing the investment income of hedge-fund and private-equity partners at ordinary tax rates, which are now as high as 35 percent and may rise to 39.6 percent under the administration’s plan, the New York Times reported today. They are currently taxed at the capital-gains rate of as much as 15 percent.

Obama promised during the campaign that he would slash federal programs that weren’t working. “The president has said he can’t kick the can down the road anymore,” Baer said.

The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term payday loan in advance.

Iraq War

Most of the savings will be realized from winding down the war in Iraq as well as increased revenue from Americans making more than $250,000 a year, said the official. The Times said Obama will propose letting President George W. Bush’s tax cuts for the wealthy lapse in 2010.

Earlier today, Obama talked about the importance of reining in the ballooning federal deficit in his weekly address. He will hold a so-called fiscal-responsibility summit at the White House on Feb. 23, with about 130 people invited to attend, including about 50 members of the House and Senate from both parties, according to Baer.

Obama said the Treasury Department will begin ordering employers today to cut taxes taken from workers’ paychecks as part of his effort to pull the economy out of a recession.

The president said a “typical” family will start getting at least an extra $65 a month by April 1 as a result of the $787 billion stimulus package he signed into law this week. He said the measure is only a “first step.”

The president has also pledged $275 billion to help struggling homeowners avoid foreclosure and plans to announce measures to stabilize banks. Companies from General Motors Corp. to Alcoa Inc. are slashing jobs and cutting production as the recession threatens to become the worst slump in the postwar era.

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HOUSTON – A new batch of lousy economic news dragged oil prices down nearly eight per cent today, as signs from across the globe pointed to a prolonged and painful recession.

Light, sweet crude for March delivery fell $2.87 to US$34.64 a barrel on the New York Mercantile Exchange after settling at $37.51 on Friday. Nymex was closed for the Presidents Day holiday on Monday.

Energy analysts at Raymond James & Associates said broader market concerns continue to weigh heavily on crude prices, even as U.S. President Barack Obama prepared to sign into law the $787 billion stimulus package today.

"The market doesn't seem to think that this plan is going to solve the economic problems in the short term," Raymond James said in a note to clients today.

Stocks took a nosedive in early trading today, as Wall Street reacted to unsettling news from the automotive and retail fronts, as well as slumping markets from Asia to Europe.

General Motors Corp. and Chrysler LLC were racing to finish restructuring plans to present to the federal government, but it appeared both may miss today's deadline. The plans are supposed to outline how the automakers intend to again become viable and repay billions of dollars of government loans.

Wal-Mart Stores Inc. said today its fourth-quarter profit fell 7.4 per cent. While results adjusted to account for a labour settlement beat Wall Street forecasts, the world's largest retailer said it might fall short of expectations for the first quarter of this year.

And new data from the U.S. Federal Reserve Bank of New York showed weakening manufacturing in the state. The Empire State Manufacturing Survey hit a new low of negative 34.7. Economists polled by Thomson Reuters were projecting a reading of negative 22.2.

The report is the earliest of several monthly regional snapshots that investors look to for insights on manufacturing 24 hour payday loan.

Poor economic data from Japan, the world's second-biggest economy, further discouraged investors. It said Monday its economy shrank 3.3 per cent in the fourth quarter from the previous quarter, the worst performance since 1974.

"The economic and inventory data paint a bleak picture for oil demand," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "Since the beginning of the year, the outlook has worsened."

Oil prices are even more volatile than usual because the March contract expires Friday. That means anyone in possession of a contract must find a place to store the oil in a few weeks.

That has become more difficult ever week, with U.S. crude storage hitting 82-week highs.

OPEC's output cuts have helped keep prices from falling further. Leaders of the Organization of Petroleum Exporting Countries have said they may go beyond the 4.2 million barrels a day of cuts already announced when they meet next month.

Hussain al-Shahristani, Iraq's oil minister, said today that current crude prices don't provide "sufficient incentives" for investors to put money into new projects. That, he warned, could set the stage for a "big shortage" in world supply once the global economy recovers.

In other Nymex trading, gasoline futures tumbled six per cent, or 7.53 cents to $1.131 a gallon. Heating oil fell 10 cents to $1.1992 a gallon, while natural gas for March delivery slipped 23 cents to $4.222 per 1,000 cubic feet.

In London, the March Brent contract fell $2.29 to $40.99 on the ICE Futures exchange.

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The investment fund backing the Canada Pension Plan suffered an $18.3 billion loss in 2008, pulling down its average annual return to about 5 per cent over the past decade.

Falling stock prices erased 14 per cent of fund reserves last year, or nearly four years worth of excess contributions from workers and companies.

"Times are difficult," said David Denison, who leads the 460 professionals charged with building up a reserve fund that will be needed to keep the annual payroll deductions required to pay CPP retirement and disability pensions steady.

Despite the low 5 per cent average return after two stock market crashes in a decade "the CPP as constituted remains strong and sustainable," said the chief executive officer.

The fund’s 10-year investment return was less than the interest paid on 10-year Government of Canada bonds at the time the CPP Investment Board was created in 1999. Higher returns will be needed if the fund is to serve its intended purpose.

Denison said he does foresee an improvement for the $117.4 billion fund, starting within a few months. He expects to snap up stocks, real estate and infrastructure businesses at prices that would lead to much higher returns over the coming decade.

"We are seeing assets come on the market that we haven’t seen trade in many years," he said in an interview.

There are investment opportunities in infrastructure "we did not think would be on the market for another 20 or 30 years."

The investment fund lost more than $300 million in the year ended March 31, 2008 and $17.5 million in the final nine months of 2008.

Denison provided the loss figure for the calendar year to make it easier for outsiders to compare returns with other pension plans no teletrack payday loans.

One news report claims the Caisse de d?p?t et placement du Qu?bec, which manages money for the parallel Quebec Pension Plan reserve fund and other pension plans, lost a staggering 26 per cent in 2008.

Official figures are to be released later.

One mistake the CPP fund managers avoided was investing heavily in mortgage-backed securities, real estate and corporate bonds in the past couple of years, Denison said.

The CPP board will not disclose how the fund has done relative to outside benchmarks relevant to its mix of investments until its annual report in May.

But pension consultants at Mercer have estimated a Canadian pension fund with a balance of bonds and stocks would also have lost about 14 per cent last year.

Executive bonuses are tied to how well the fund has done relative to benchmarks over a four-year period. So bonuses could be paid if the fund merely loses less than the relevant benchmarks.

CPP contributions are expected to exceed the cost of pensions for the next 11 years, and allow the partial reserve fund to grow for many more years.

The fund is designed to spare workers and employers from having to pay more than 9.9 per cent of pay to fund CPP benefits.

Jean-Claude M?nard, chief actuary for the CPP, has assumed investment returns will beat inflation rates between 3.4 and 4.4 percentage points a year over the next 40 years.

He could not be reached for comment yesterday.

But it will take strong gains in the next few year to make up for the 2008 results – a 14 per cent loss instead of his assumption of a 6.3 per cent gain.

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G7 finance ministers headed to Rome to discuss the global economic crisis on Friday with a warning from Germany that the world could be plunged back into the dark days of the 1930s if governments resorted to protectionism.

The G7 industrialized economic powers, all in recession, are under pressure to prove they can work together to stop the rot rather than engaging in a battle of “beggar-thy-neighbor,” and Berlin made it clear the latter was an increasingly real risk.

“We will have to do everything to ensure history does not repeat itself,” German Finance Minister Peer Steinbrueck told parliament a few hours ahead of the Rome meeting.

“Right now, I think Germany has a huge interest in ensuring, at international meetings, that the world does not make the same mistakes it made in the 1930s.”

He cited the “buy American” clause in an economic stimulus package the U.S. Congress is due to vote on just as the finance ministers of the G7 powers — the United States, Japan, Germany, Britain, France, Italy and Canada — meet over dinner in Rome.

Fresh data from Europe served a reminder of the scale of the economic downturn and Dominique Strauss-Kahn, managing director of the International Monetary Fund, said the worst had probably still to come.

In the last three months of 2008, economic output in the 16-country euro currency zone shrank more than any quarter on record and the picture was much the same in the 27-country European Union — with GDP down 1.5 percent in both cases versus the preceding three months.

Italian Prime Minister Silvio Berlusconi said the Rome G7 would focus on improved regulation of the financial sector, where the current trouble began when a credit boom ended no credit check payday loan.

“The problem is that the effect on the real economy, for the most part, is still to come,” the IMF’s Strauss-Kahn said.

All of the G7 economies contracted in the last quarter of 2008 and even rising stars such as China are slowing hard if not in quite the dire state of the more mature economies where the trouble began.

Like Berlusconi, French Economy Minister Christine Lagarde put the focus ahead of the Rome meeting on the need for better regulation of banks and the financial sector.

In an interview in London’s Financial Times, she said this was the ultimate priority but that it risked being neglected as governments focus on reflating their economies with massive public spending programs and industry bailouts.

“The sense of priority has varied a bit and my fear is that we lose sight of what is in my view the key priority for restoring confidence, which is this platform of sound and safe regulations,” she said.

The ministers and central bankers were set to meet first for a working dinner and then reconvene on Saturday for a gathering that is billed more as a staging-post session ahead of a summit on April 2 of the G20 countries, a forum that includes the big emerging economies as well as the G7 ones.

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Chrysler LLC and General Motors Corp. could announce plant closures when they submit viability plans to the U.S. Treasury next week, an auto industry analyst said today.

Chrysler, GM and Ford — which isn’t receiving federal loans but still is burdened with the economic downturn — could each close two assembly plants and have enough capacity to meet demand, said Haig Stoddard, an industry analyst for IHS Global Insight. Among the plants at risk for closure between now and 2012: the St. Louis North Plant, where the Dodge Ram is made, Stoddard said Monday.

The Detroit Free Press and Wall Street Journal reported this weekend that plant shutdowns are expected to be part of the restructuring. Both media outlets quoted Stoddard and mentioned the Chrysler’s Fenton plant, where more than 1,000 people work.

Chrysler spokeswoman Shawn Morgan declined to comment Monday.
In 2008, Chrysler produced nearly 1.9 million vehicles, according to Automotive News. Production is expected to drop about 31 percent to 1.3 million vehicles this year, and Stoddard said 10 assembly plants could meet that amount. Chrysler has 12 assembly plants in operation.

Meanwhile, the Wall Street Journal cited anonymous sources that said Chrysler would close at least one assembly plant.

Since Chrysler cut one shift of the Fenton pickup assembly in September, analysts have considered the plant at risk of closure payday loan company. Last month, Stoddard told the Post-Dispatch it was possible that Chrysler would close some plants this year and the Fenton plant would be a probable choice.

One production shift in manufacturing is considered inefficient and unprofitable.

"Typically you want at least 80 percent capacity in most assembly plants to keep them profitable," Stoddard said.

The St. Louis North plant is operating at 43 percent of its capacity, he added.

Chrysler could meet demand by consolidating Dodge Ram production to plants in Warren, Mich., and Saltillo, Mexico, that also make the pickup, analysts have said.

The Fenton plant isn’t the only vulnerable Missouri plant. Stoddard said Ford might close the F-150 pickup assembly plant in Claycomo, a suburb of Kansas City.

Chrysler and the other automakers, both foreign and domestic, have been battered by the recession and credit freeze. In December the federal government agreed to lend $4 billion to Chrysler and $13.4 billion to GM.

A week from Tuesday, the two companies must outline to the U.S. Treasury how they will become viable.

atablac@post-dispatch.com | 314-340-8140

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U.S. Senators reached a tentative deal on a $780 billion economic stimulus package late Friday, according to media reports.

The deal is much smaller than the $940 billion package that was being considered this week and comes after a long day of hard negotiations Friday. Those negotiations came after a long week that included working late into Thursday night.

After trying all day Thursday to reach a deal, Senate Majority Leader Harry Reid, D-Nev., sent senators home around 9 p.m. that night, saying it was clear the Senate was not going to reach agreement on the package then.

Less than three hours earlier, he had told senators that he wanted to finish work on the package that night.

“If necessary, we’re going to work through the night,” Reid said. “I can’t imagine what would happen to financial markets tomorrow if there are reports this bill might go down. … It’s not a pleasant picture.”

But Senate Minority Leader Mitch McConnell, R-Ky., said “the question is not doing nothing vs. doing something.”

“The question is the appropriateness of an almost trillion-dollar spending bill to address the problem," he said.

As the Senate took up numerous amendments to what was a $940 billion package, a group of about 20 moderate senators from both parties tried to work out a compromise that would cut around $100 billion in spending from the bill.

Those talks will continue Friday, as will Senate action on additional amendments.

Melody Barnes, who directs the White House’s Domestic Policy Counsel, said Thursday afternoon that the president is “interested and open to a conversation” about alternative proposals.

Earlier that day, however, President Barack Obama indicated he was growing impatient with the Senate.

“The time for talk is over,” Obama said. “The time for action is now, because we know that if we do not act, a bad situation will become dramatically worse. Crisis could turn into catastrophe for families and businesses across the country.”

“Doing something wrong quickly does not make it right,” countered Sen cash advance america. John Ensign, R-Nev.

Ensign and other Republicans said Congress should focus on restoring the health of the housing market, not spend billions of dollars on new government programs that have little immediate impact on the economy.

“Make a distinction between what grows the economy and what doesn’t,” said Senate Minority Leader Mitch McConnell, R-Ky. “Anything that doesn’t ought to be cut out.”

He said the bill includes “hundreds of billions of dollars” in nonstimulus spending and interest payments.

The Senate rejected a $420 billion Republican alternative, sponsored by Sen. John McCain of Arizona, Thursday afternoon on a 57-40 vote.

This bill included money for infrastructure spending, assistance for the housing market, a reduction in the corporate tax rate, a payroll tax holiday and an extension of unemployment benefits.

"We all know that we have to stimulate this economy and create jobs,” said McCain, the Republican nominee for president in 2008. “The question is how you do it — profligacy, or I believe a mature and responsible approach."

Sen. Robert Casey, D-Pa., said state and local taxes “would go through the roof” in a few months if Congress doesn’t pass the economic stimulus package. The legislation includes aid to states and localities to help them avoid cuts in Medicaid coverage and school funding.

On Thursday, the Senate approved by voice vote an amendment that would limit executive compensation and spending on entertainment, office renovations and transportation at companies that receive federal investments from the Troubled Asset Relief Program.

On Wednesday, the Senate adopted an amendment that would offer homebuyers a tax credit of up to $15,000, as long as they live in the house for three years. The amendment added $19 billion to the cost of the legislation.

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The news of what was going to happen with Wells Fargo & Co. in Las Vegas didn’t stay in Vegas.

So a planned casino junket for employees has been canceled under a storm of criticism.

The bank at first defended the trip Tuesday after the Associated Press reported it had booked 12 nights at two of the city’s most-expensive hotels.

Then criticism rained down from Washington about taking $25 billion from the Troubled Asset Relief Program while spending lavishly on a casino junket.

The annual employee conference is nothing new at Wells Fargo (NYSE: WFC). The bank has previously sent workers on all-expense-paid trips to Puerto Rico and the Bahamas cash advance. The latter included a private Jimmy Buffett concert for more than 1,000 of the company’s top employees and guests.

Spending by banks that accept taxpayer bailouts are coming under increasing scrutiny, from sports naming rights to employee-reward programs such as the Wells Fargo trip.

Morgan Stanley on Monday canceled an employee appreciation trip to Monte Carlo. Bank of America Corp. (NYSE: BAC) has canceled all employee incentive trips.

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