TUESDAY, JUNE 15, 2010


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Economy & Business Obama’s call for stimulus, jobs spending a tough sell


White House slow to allay concerns in Congress over deficit


by Lori Montgomery


Congressional Democrats were stewing Monday over Presi- dent Obama’s urgent appeal for more spending on the economy, saying they share his goals but need more help from the White House to fend off rising concern among rank-and-file lawmakers about budget deficits. House Speaker Nancy Pelosi


(D-Calif.), who last month strug- gled to sell a jobs package to skeptical House Democrats, re- acted with stony silence to Oba- ma’s request, delivered Saturday in a letter to congressional lead- ers; her office declined Monday to issue an official response. Sen- ate Majority Leader Harry M. Reid (D-Nev.) was working to ral-


ly senators behind a key piece of Obama’s agenda, but a top aide acknowledged that the going was slow and the outcome uncertain. “We agree with the White


House on the need to create jobs and get our economy on track, as we have been working to do since this crisis hit,” Reid spokesman Jim Manley said. “Unfortunately, we are dealing with a Republican Party that would rather say no than address the needs of their constituents.”


Republicans aren’t the only


ones saying no to more spending. Late last week, several Demo- crats said they were unwilling to support the jobs package before the Senate, which includes sever- al administration priorities. Among them: provisions to re- vive emergency benefits for un- employed workers, which ex- pired June 2, as well as $24 bil- lion in state aid that Obama has called critical to averting “mas- sive layoffs” of public-sector workers.


But the package also would in- crease budget deficits by nearly $80 billion over the next decade. Sen. Ben Nelson (D-Neb.) said that’s too much at a time when the total national debt is $13 tril- lion and rising. “The more we borrow on these important areas,” he said last week, “the more I think we will retard the recovery period dramatically be- cause of more deficit and debt.” According to Democratic aides


and key lawmakers, the White House has done little to allay such concerns. The administra- tion has sent mixed messages on spending, they said, touting the president’s plans to freeze agen- cy budgets and veto appropria- tions bills while urging lawmak- ers to spend more on job crea- tion. And the White House has been largely absent from the con- gressional debate, aides said, of- fering little input on the radically slimmed-down jobs bill that ulti- mately passed the House. In the letter Saturday, Obama


made an unequivocal case for spending more now — partic- ularly on measures to support small business and state govern- ments — to ensure that the re- covery doesn’t “slide backwards.” And administration officials de- fended their lobbying campaign, noting that White House Council of Economic Advisers Chairman Christina Romer met with two key groups of House Democrats in recent weeks to make the case for delaying major deficit-reduc- tion until growth is firmly rees- tablished.


Despite Romer’s efforts, Sen-


ate leaders this week were con- sidering scaling back the jobs bill to win over moderates such as Nelson and Sen. Olympia J. Snowe (R-Maine) in time for a critical vote later this week. Meanwhile, House Democrats were talking about slashing an- other Obama priority — money to preserve public teaching jobs — from $23 billion to $10 billion and covering the cost with un-


expended funds from last year’s stimulus package. If approved, that plan would continue a pattern of dialing back White House proposals. In its February budget request, the administration sought $266 bil- lion in “temporary recovery measures” on top of last year’s $862 billion stimulus package. So far, Congress has approved only about $40 billion in addi- tional jobless benefits, according to congressional estimates, as well as a $15 billion measure called the HIRE Act, which creat- ed a temporary tax credit for businesses that hire the unem- ployed.


“If the White House wants this


stuff,” said a House Democratic aide, who requested anonymity to speak candidly about intra- party affairs, “they actually have to fight for it.” The administration has of- fered other, more popular ideas for combating a 9.7 percent un- employment rate, including a


Lawmakers cite five questionable decisions BP made oil spill from A1


One potential area of disagree- ment loomed: whether the es- crow account would be limited or whether it could be replenished, as the administration is demand- ing. BP is also seeking assurance that money be used only for rea- sonable or “legitimate” claims through an impartial administra- tor. Investment analysts expect


that BP might suspend or reduce its dividend to fund an escrow ac- count that some lawmakers have demanded be as large as $20 bil- lion. “Suspending the dividend would significantly reduce the political heat on BP and enhance its financial flexibility,” said Fadel Gheit, an oil analyst at Oppenhei- mer. “BP can raise $20 billion in escrow account within days.” Meanwhile, rival oil compa- nies, worried about new regula- tions or limits on deepwater dril- ling off U.S. coasts, began openly criticizing BP. “What we do know is that when you properly design wells for the range of risk anticipated; follow established procedures; build in layers of redundancy; properly inspect and maintain equipment; train personnel; con- duct tests and drills; and focus on safe operations and risk manage- ment, tragic incidents like the one in the Gulf of Mexico today should not occur,” Kenneth P. Co- hen, Exxon Mobil’s vice president of public and government affairs, said in a blog. But Exxon Mobil’s criticism paled next to the 14-page letter that Rep. Henry A. Waxman (D- Calif.), chairman of the House En- ergy and Commerce Committee, and Rep. Bart Stupak (D-Mich.), chairman of the panel’s subcom- mittee on oversight and investi- gations, sent to BP chief exec- utive Tony Hayward, who will tes- tify before the committee Thursday. After reviewing docu- ments and interviews the com- mittee obtained, the two law- makers said that “BP appears to have made multiple decisions for economic reasons that increased the danger of a catastrophic well failure.” The money that BP allegedly


saved seems trivial in light of the blowout that killed 11 Deepwater Horizon rig workers and led to the oil spill that has polluted large swaths of the gulf. But given the daily costs of $1 million to $2 million to run a drilling rig, they appear to have been a big factor in the decision-making. “I know the planning has been


lagging behind the operations, and I have to turn that around,” Gregory Walz, a drilling engi- neering team leader, said in an e- mail to his superior, the well team leader John Guide. One decision that looks ques- tionable was the one to use only six devices for centering the drill pipe in the well hole instead of 21, as initially planned and recom- mended by Halliburton, the serv- ice company hired to put cement between the pipe and wall of the hole. Halliburton warned that with- out the full complement of cen- tralizers, the danger of cracks in the cement surrounding the pipe increased. The American Petro- leum Institute’s recommended practices say that if the pipe, or casing, is not centered, “it is diffi- cult, if not impossible,” for the ce- ment to displace the drilling mud on the narrow side of the open- ing. That could create channels for gas to travel up the well. But the equipment needed to center the well in all 21 places was not on the rig. A BP rig work- er located some pieces in Hous- ton and made arrangements to fly them to the rig, but more sen-


fund to promote small-business lending that the House is likely to approve this week. Unlike the state aid package, that measure has a designated funding source and will not increase deficits. With Republicans hammering Democrats over the tide of red ink, paying for jobs bills may be the only way to pass them in ad- vance of this fall’s midterm elec- tions, Senate Budget Committee Chairman Kent Conrad (D-N.D.) said Monday. “The problem is what’s neces-


sary in the short term and what’s necessary in the long term are di- rectly contradictory,” said Con- rad, a deficit hawk who pushed hard to create a special commis- sion to address the nation’s soar- ing debt. “In the short term, how- ever, I believe we need more stimulus, unpaid for, because we continue to have weakness . . . But politically, unless things are paid for, it’s going to be hard to get them through.” montgomeryl@washpost.com


A11


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Get news from Obama’s speech on your iPhone For updates on tonight’s presidential address, plus the latest developments from the Gulf, download The Post’s iPhone App.


Available at the App Store. Learn more at washingtonpost.com/mobile


JIM YOUNG/REUTERS President Obama tours a Coast Guard oil clean-up staging area in Theodore, Ala. He vowed to hold BP accountable for the spill.


ior officials decided against doing so. In an e-mail April 16, BP’s well team leader Guide said that “it will take 10 hours to install them. . . . I do not like this,” according to the lawmakers’ letter. That sentiment reflected a pat- tern of time- and money-saving measures, Waxman and Stupak wrote. They said their investiga- tion is “raising serious questions” about decisions made in the days and hours before the explosion on the drilling rig that sank. Ac- cording to the committee’s in- vestigation, other decisions also “posed a tradeoff between cost and safety,” including: KBP saved $7 million to


$10million by using a more risky option for the well casing, or steel tubing. The safer method, known as the liner-tieback option, would have provided more barriers to prevent the flow of natural gas up the space between the steel tubes and the well wall. KBP decided against a nine- to


12-hour procedure known as a “cement bond log” that would have tested the integrity of the ce- ment. Although the company had a team from Schlumberger, a leading oil services firm, onboard the rig, BP sent the team home, saying its services were not need- ed.


KBP did not fully circulate dril- ling mud, which would have tak- en as long as 12 hours. That would have helped detect any


pockets of gas, which later shot up the well and exploded on the deck of the drilling rig. KBP did not secure the connec- tions, or casing hangers, between pipes of different diameters. The letter says that many of those decisions contradict the ad- vice in other BP internal docu- ments, which warned against the dangers of using certain types of pipe. And it reveals that even be- fore the accident, BP engineers were struggling with unusual dif- ficulties. On April 14, BP drilling engineer Brian Morel e-mailed a colleague, Richard Miller, saying: “This has been [a] nightmare well which has everyone all over the place.”


Since then, the nightmare has spilled out across the gulf. BP has said it will bring in additional vessels to boost its ability to han- dle as much as 53,000 barrels a day, though it warned that the site was so crowded with vessels


that safety is a concern. Obama, struggling to appear in command in the face of the con- tinuing spill, made a swing though Mississippi, Alabama and Florida on Monday. The trip was aimed largely at audiences in those three states rather than at the national viewing public. The president softened his tone mea- surably from the week before, when he said he was figuring out “whose ass to kick.” On Monday, he acknowledged that there are problems complicating the quick payment of damage claims to those affected by the spill — a relatively muted complaint and one that other senior officials had already made publicly. “There are still problems” with the claims process, Obama said after a briefing in Gulfport, Miss., with several governors, Coast Guard officials and others in- volved in the response. Flanked by Mississippi Gov. Haley Bar-


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bour (R) and Coast Guard Admi- ral Thad W. Allen, the incident commander, Obama said the dis- cussion included how best to co- ordinate skimmers and other boats already on the gulf to pre- vent the slick from coming ashore. “We also talked about claims so


that people in Mississippi and throughout the region are ad- equately compensated for the damages done,” Obama said. The White House on Monday announced Obama’s choices for the bipartisan commission tasked with issuing a report with- in six months about the spill and how to prevent and mitigate fu- ture oil spills. The appointees would be Na- tional Resources Defense Council President Frances Beinecke; Don- ald Boesch, president of the Uni- versity of Maryland Center for Environmental Science; Terry D. Garcia, executive vice president for the National Geographic Soci- ety overseeing programs in scien- tific field research, conservation and exploration; Cherry A. Mur- ray, dean of the Harvard School of Engineering and Applied Sci- ences; and Fran Ulmer, chancel- lor of the University of Alaska at Anchorage. The five will work with the co- chairmen, former senator Bob Graham (D-Fla.) and former En- vironmental Protection Agency administrator William K. Reilly. mufsons@washpost.com kornbluta@washpost.com


Staff writers Scott Wilson and Joel Achenbach contributed to this report.


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