In a two-page letter sent Wednesday to congressional leaders, Treasury Secretary Timothy Geithner said he wants to create a central electronic-based system that would track the buying and selling of derivatives. He also wants to ensure that financial firms selling the instruments have enough capital on hand in case they default and subject them to stringent standards of conduct and new reporting requirements.

The legislative proposal is the administration’s first major step in overhauling the nation’s financial regulatory system.

“All (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation,” Geithner wrote in his letter.

“Key elements of that robust regulatory regime must include conservative capital requirements, business conduct standards, reporting requirements and conservative requirements relating to initial margins on counterparty credit exposures,” he adds.

New rules would deter financial firms from taking undue risk, prevent fraud and ensure they are marketed appropriately, according to the letter.

Current law largely excludes regulation of the instruments, which are referred to as “over-the-counter” derivatives because they are traded privately rather than through commodity exchanges now regulated by the Commodity Futures Trading Commission.

It was unclear how the rules would affect hedge funds, which are large, mostly unregulated entities that use complex trading tactics to earn big returns for high-dollar investors. Many hedge funds use derivatives contracts to offset risk on other transactions.

The proposal is strikingly similar to legislation proposed by a small group of major Wall Street banks. Critics of that proposal say the regime would give the same banks that contributed to the financial meltdown exclusive control over a larger part of the derivatives market.

The plan was received warmly by House Democrats who share oversight of the issue.

Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, and Rep. Colin Peterson, D-Minn., chairman of the Agriculture Committee, said in a joint statement that they agree there should be “strong, comprehensive and consistent regulation” of the derivatives market and promised to work toward that end.

The value of over-the-counter derivatives hinges on an underlying figure or commodity — ranging from currency rate “swaps” to oil futures and inflation bets. The derivative reduces the risk of loss from the underlying asset. The global business world holds a staggering $600 trillion of these contracts.

One of the most infamous examples of the derivatives were credit-default swaps sold by American International Group Inc. AIG sold the swaps to investors as a kind of insurance to protect against defaults on mortgage-backed securities. But the company had to accept a hefty federal bailout after it became unable to support the contracts.

Under Treasury’s new plan, companies like AIG would have to prove they have enough reserve capital to support the sale of derivatives.

Geithner said in congressional testimony in March that his plan would force the system to be more transparent.

“Let me be clear: The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end,” he said.

Under the plan, the CFTC would establish an “audit trail” for the derivatives and have “clear unimpeded authority to police fraud, market manipulation and other market abuses” involving the derivatives. The Securities and Exchange Commission would be given comparable authority, including tools to prevent insider trading.

The new system should enable the regulators to “detect and deter all such market abuses,” Geithner stated in his letter.

Investors are betting that exchanges like CME Group Inc., the parent company of the Chicago Board of Trade and the Chicago Mercantile Exchange, would benefit under the new regulation.

Shares of CME soared more than 6 percent Wednesday even as most other stocks fell.

Associated Press business writers Daniel Wagner and Tim Paradis contributed to this report.

WASHINGTON – After weeks of discussing ways to provide health care to the uninsured, Congress is beginning the difficult task of finding a way to pay for it.

Lawmakers are considering a broad range of ideas – including a new federal tax on soda – but a key Senate committee focused Tuesday on a proposal to tax health insurance that millions of Americans receive through their employers.

“I don’t think you can avoid taking that on,” Gail Wilensky, senior fellow at the health education foundation Project HOPE, told the Senate Finance Committee, which is helping to craft an overhaul of the health care system.

Nearly 164 million people, or 62 percent of the nation’s non-elderly population, receive health insurance through work, according to a joint congressional committee on taxation. Money spent on insurance provided by employers is excluded from an employee’s taxable income. If the exemption was lifted entirely, it could have raised about $226 billion in 2008, the joint committee reports.

During the campaign last year, President Obama opposed taxing employer-based health care benefits, and White House press secretary Robert Gibbs reiterated that opposition Tuesday.

Even so, Senate Democrats are taking a closer look at the idea of at least limiting the tax break. Senate Finance Chairman Max Baucus, D-Mont., said the exemption helps the well-off more than the poor, who are less likely to receive health care through work.

Baucus said the idea of repealing the break entirely is “just not going to happen,” but said Congress could cap the amount of benefit made available tax-free. He also said lawmakers may set an income limit so the exemption would not apply to high-paid employees.

Wyoming Sen. Mike Enzi, the top-ranking Republican on the Senate’s Committee on Health, Education, Labor and Pensions, also supports the idea of repealing the exemption.

Gerald Shea of the AFL-CIO said limiting the tax break is “a step in the wrong direction” because it could punish employees who negotiated for better health care coverage rather than higher wages. Also, some employees pay more for health care insurance because of factors outside of their control, including the size of their company, he said.

Of the nine national awards in the Restaurant and Chefs category, the Big Apple made off with eight:

• Outstanding Restaurateur Award: Drew Nieporent, Myriad Restaurant Group, New York

• Outstanding Chef Award: Dan Barber, Blue Hill, New York

• Outstanding Restaurant Award: Jean Georges, Jean-Georges Vongerichten, chef/owner, New York

• Rising Star Chef of the Year Award: Nate Appleman, A16, San Francisco

• Best New Restaurant: Momofuku Ko, David Chang, chef/owner, New York

• Outstanding Pastry Chef Award: Gina DePalma, Babbo, New York

• Outstanding Wine Service Award: Le Bernardin, Aldo Sohm, wine director, New York

• Outstanding Wine and Spirits Professional Award: Dale DeGroff, Dale DeGroff Co. Inc., New York

• Outstanding Service Award: Daniel, Daniel Boulud and Joel Smilow, owners, New York

Best Chefs in America:

• Pacific: Douglas Keane, Cyrus, Healdsburg, Calif.

• Mid-Atlantic: Jose Garces, Amada, Philadelphia

• Midwest: Tim McKee, La Belle Vie, Minneapolis

• Great Lakes: Michael Symon, Lola, Cleveland

• Northeast: Rob Evans, Hugo’s, Portland, Maine

• Northwest: Maria Hines, Tilth, Seattle

• Southeast: Mike Lata, Fig, Charleston, S.C.

• Southwest: Paul Bartolotta, Bartolotta Ristorante di Mare at Wynn Las Vegas

• South: John Currence, City Grocery, Oxford, Miss.

Banks with less than $500 million in assets will have six months to apply for the funds, Geithner said in remarks to the annual meeting of the Independent Community Bankers of America. They also will be able to apply for larger amounts than banks were allowed to request during the current round of investments.

The administration first indicated that the repaid funds would be used for further injections earlier this month when regulators announced the results of the “stress tests” conducted on the nation’s 19 largest banks. Those tests found that 10 of the banks, including Bank of America Corp. and Citigroup Inc., needed to raise additional capital to survive a worsening recession.

Geithner also said the administration will propose an overhaul of the financial regulatory system in the “next couple” of weeks. The reforms will simplify and streamline the existing oversight structure, which he said is “too complex.”

Due largely to the government’s efforts, “the financial system is starting to heal” and “a substantial part of the adjustment process is now behind us,” he said.

Still, the administration wants to move on an overhaul of the nation’s financial rule book “while memory of the crisis is still acute,” Geithner said.

The fine exceeded a euro899 million monopoly abuse penalty for Microsoft Corp. last year. Intel called the decision “wrong” and said it would appeal.

Intel, based in Santa Clara, California, has about 80 percent of the world’s personal computer microprocessor market — and faces just one real rival, Advanced Micro Devices Inc.

The European Commission says Intel broke EU competition law by exploiting its dominant position with a deliberate strategy to keep AMD out of the market that limited customer choice.

It said Intel gave rebates to computer manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 computer processing units, or CPUs, from Intel and paid them to stop or delay the launch of computers based on chips from AMD, which is headquartered in Sunnyvale, California.

Intel president and CEO Paul Otellini said the company would appeal to the EU courts because “the decision is wrong” and “there has been absolutely zero harm to consumers.” The company promised to comply with the EU order but criticized it as extremely ambiguous.

AMD’s Europe president Giuliano Meroni said the EU order “will shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Regulators said the company also paid Germany’s biggest electronics retailer, Media Saturn Holding — which owns the MediaMarkt superstores — from 2002 to 2007 to only stock Intel-based computers.

This meant workers at AMD’s biggest European plant in Dresden, Germany, could not buy AMD-based personal computers at their city’s main PC store.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” said EU Competition Commissioner Neelie Kroes. “Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”

Kroes joked that Intel would now have to change its latest global ad campaign — “sponsors of tomorrow” — to proclaiming “the sponsor of the European taxpayer.”

“I can give my vision of tomorrow for Intel here and now: Abide by the law,” she added.

EU regulators said they calculated Intel’s fine on the value of its European chip sales over the five years and three months that it broke the law. Europeans buy some 30 percent of the euro22 billion ($30 billion) in computer chips sold every year.

They could have gone even higher as EU antitrust rules allow them to levy a fine of up to 10 percent of a company’s annual global turnover for each year of bad behavior. Intel’s worldwide turnover was euro27.9 billion ($38.8 billion) in 2007.

European consumers group BEUC welcomed the fine and said Intel should be held to account to consumers through civil suits in European courts. So far these are rare but the EU is urging victims of antitrust action to seek damages.

“Intel should be liable to compensate the victims of its illegal practices,” said Monique Goyens, head of the group. “Consumers have been paying too much for their computers and they should be compensated.”

The manufacturer rebates started in 2002, the EU said, with most ending in 2005 — apart from a 2007 deal for one unidentified company to only source notebook computer chips from Intel.

Regulators said rebates that give discounts for large orders are illegal when a monopoly company makes them conditional on buying less of a rival’s products or not buying them at all.

Manufacturers depend on Intel to supply most of the chips they need and faced higher costs if they lost most or all of a rebate by choosing AMD chips for even a small order.

Hewlett-Packard buys a fifth of Intel chips with Dell taking 18 percent, according to market research from Hoovers.

The discounts were so steep that only a rival that sold chips for less than they cost to make would have any chance of grabbing customers, the EU executive said.

It said AMD offered 1 million free chips to one manufacturer — which could not accept because that would lose it a rebate on many millions of other chips. It only took 160,000 free chips in the end, regulators said.

Intel’s payments to manufacturers ordered the company to delay the European launch of AMD’s first business desktop by six months. They were also paid to only sell the AMD line to small and medium companies and to only offer them directly to customers instead of to retailers.

Other manufacturers were paid to postpone the launch of AMD-based notebooks by several months, from September 2003 to January 2004 and from September 2006 to the end of 2006 — missing the key Christmas market.

The European Commission said Intel tried to conceal the conditions attached to these payments and details only emerged from e-mails that regulators seized in surprise raids on the companies.

Regulators refused to rule out returning to other parts of their probe where they had investigated Intel’s behavior in the server market and allegations of below-cost pricing designed to hurt AMD. Intel strongly denies these charges.

The EU charges also cover a time when AMD managed to take market share from Intel by launching higher performance microprocessors for servers in 2003, previously an Intel stronghold.

Intel fought back successfully by rolling out Core chips. More recently, it has grabbed more market share with Atom chips for netbooks.

EU regulators are not the only ones chasing Intel — South Korea fined the company $21 million last year.

And the U.S. may be stepping up action. The Federal Trade Commission upgraded a probe into Intel last year — and as the Obama administration is set to take a more aggressive approach against monopoly abuse by reversing a strict interpretation of antitrust law that saw regulators shun such cases.

When Barbara Sotelo’s husband died in an accident two years ago, her life began to spiral downward.

Faced with raising three children on her paycheck from the state Department of Corrections, Sotelo scraped by for most of a year. Then her adjustable-rate mortgage payment jumped to $1,500.

“That made me use my credit cards so I could keep up,” said the 38-year-old single mother.

Leaning on credit cards for school clothes and sometimes food soon led to higher card balances and payments, and the mortgage burden led to late card payments that sparked higher interest rates.

Credit fees and penalties quickly spun out of control. Sotelo has paid more than $1,000 in card fees in the past year, and all of her interest rates have jumped above 20 percent.

Now she is struggling to keep her home, and credit card companies won’t lower rates or forgive fees that stack on top of existing balances, which total about $8,000, she said.

It’s a difficult life that puts knots in her stomach with every ring of the telephone.

“You go through anxiety, and you’re afraid to answer the phone,” Sotelo said. “My phone is always ringing. Sometimes at 7 o’clock on Saturday, they start calling.”

A bill passed by the U.S. House of Representatives and one pending in the Senate would shelter consumers from some credit card practices that hurt people like Sotelo.

The House’s Credit Cardholders’ Bill of Rights (HR 627) would prevent punitive interest rate increases unless an account was more than 30 days late and require credit card companies to give 45 days’ notice for interest rate increases. It would limit late and over-limit fees and allow consumers to set “hard” limits so purchases would not go through if they push cards over the limit.

U.S. Reps. Gabrielle Giffords and Raúl Grijalva, Democrats from Tucson, co-sponsored the bill.

A companion bill in the Senate would ban punitive interest rate hikes unless payments were 60 days behind, let consumers regain low interest rates after six months of paying on time and require anyone 21 or younger to prove ability to repay before a card could be issued.

The legislation is likely to change before a compromise version is sent to President Obama, and credit provider lobbyists are sure to fight to dilute the bill.

Obama has signaled he would sign such legislation if it passed.

Card debt increasing

About 46 percent of American families had credit card balances in 2007, with an average of $3,000 outstanding – a 25 percent balance increase in three years, according to a Federal Reserve survey report in February.

From 2000 to 2003, the average balance increased just 9 percent, the report said.

Nonhousing debt payments accounted for an average 14 percent of disposable income among survey respondents in 2007 – virtually unchanged from 2004.

But the number of families with debt payments totaling 40 percent or more of their income rose 2.5 percent from 2004 to 2007, which hints at an increase in families with burdensome debt, the report said.

When Sotelo needed advice, she turned to the nonprofit Primavera Foundation, which offers free financial counseling and education. Primavera can help people avert disaster, but that’s usually not the case, said counselor Lisa Peregrina.

“A lot of people don’t learn about credit until they’re in a credit card crisis,” Peregrina said.

Primavera sees walk-in clients and gets referrals, often from banks trying to help people qualify for home or other loans. The number of clients seeking help has risen dramatically in recent months, Peregrina said.

“And the numbers keep going up,” she said.

Consumer Credit Counseling Services, a nonprofit funded largely by credit card issuers, offers free counseling. And for $25 a month, it will manage your debt for you. The company has also seen a sharp increase in clients, said counselor Maria Grijalva.

High interest rates hurt

Interest rates are a common route to higher credit card bills, according to Grijalva and Peregrina.

Many card companies offer low or no interest for new accounts, then slip a policy into the fine print that says interest rates rise if payments are late. Sotelo has been hit by this numerous times, and Peregrina sees it all too often.

“The rate may be zero percent, but if you miss one payment, it might go up suddenly to 29 percent,” Peregrina said.

The House bill would prohibit such rate changes unless a payment were more than 30 days late. The Senate version would extend that to 60 days.

Over-limit fees that often top $30 also snare consumers. Again, credit card companies’ fine print often lets them change limits at will and allows the card holder to freely charge beyond limits.

Card companies are increasingly lowering credit limits, even for customers who always pay on time, and a lack of hard limits means many consumers unwittingly exceed limits and get stung by fees.

Both bills would force credit card companies to notify you at least 45 days before contract changes, such as lowered credit limits.

Avoiding disaster

A key reason people get trapped is a lack of information, even a little bit of which can steer you clear of fees and skyrocketing interest rates, Grijalva said.

“A majority of people don’t even know what their interest rates are,” she said.

Above all, Grijalva urged consumers to read the fine print in credit applications and terms.

“You always have to read the fine print, and it’s always, always in the very fine print where the most important information is,” she said.

Both Grijalva and Peregrina suggest calling credit card companies to negotiate lower interest – even if you have a high rate because of late payments.

“You do have a right to call that credit card company and ask them to negotiate,” Peregrina said.

She also suggests self-imposed balance limits. Keeping your outstanding balance at half or less of your available balance helps your credit score and lowers the chance you will charge over the card limit, she said.

Always review statements, limit yourself to one or two cards for emergencies only and keep those cards at home to avoid temptation, Grijalva said.

“Don’t keep it in your wallet,” she said.

Vigilance and education are your best weapons – whether you are already in trouble with debt or have always been able to pay on time, the counselors said.

And be patient, Peregrina said.

“It took some time to get this debt up. It’s going to take some time to pay it down.”

———

WHERE TO GET HELP

• Primavera Foundation, 623-5111

• Chicanos por la Causa, 253-0838

• Consumer Credit Counseling Services, 795-1121

• Catholic Community Services of Southern Arizona, 623-0344

• Family Housing Foundation, 318-0993

• TMM Family Services, 322-9557

• Tucson Urban League, 791-9522

• Old Pueblo Community Services, 445-7085

———

AVOIDING CREDIT WOES

• Have one or two credit cards, and use them only for emergencies.

• Don’t carry credit cards with you; leave them at home so they won’t tempt you.

• Review statements carefully. Interest rates and card limits can change unexpectedly, even for people who pay on time.

• Ask questions of your credit card companies.

• Know what actions can trigger higher interest rates such as late payments or over-limit charges.

• Don’t just blame your credit card company when problems arise; you are at fault, too.

• Negotiate with card companies to get lower interest rates. Sometimes they listen.

• Start negotiating with creditors before you have trouble.

Sources: Primavera Foundation, Consumer Credit Counseling

———

DID YOU KNOW?

• 46 percent of American families had credit card balances in 2007, with an average $3,000 outstanding balance, a 25 percent balance increase in three years, according to a Federal Reserve survey released in February. During the previous three years, the average outstanding balance increased 9 percent.

• Nonhousing-related debt payments accounted for an average of 14 percent of disposable income among respondents to a 2007 Federal Reserve survey, virtually unchanged from 2004.

But the number of families with debt payments totaling 40 percent or more of their income rose 2.5 percent from 2004-07, which hints at an increase in families with burdensome debt, the survey said.

The Commerce Department said Tuesday the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast.

The March deficit was 5.5 percent higher than February’s revised $26.1 billion trade gap, which had been the smallest since November 1999. Through the first three months of this year, the trade deficit was running at an annual rate of $359.7 billion, far below last year’s $681.1 billion. Economists expect the deficit will remain at low levels this year as a recession in the U.S. crimps demand for foreign goods.

Other reports out Tuesday showed home prices in most of the U.S. fell in the first quarter, which created buying opportunities in some states, while job openings have hit an eight-year low and companies remain reluctant to hire.

The global downturn also has cut into sales of U.S. exports. That will limit the amount of improvement seen in the deficit, which is the difference between what America imports and what it sells abroad. The slump in exports has been a blow to U.S. manufacturing giants such as Boeing Co. and Caterpillar Inc. who derive a large part of their sales from foreign markets.

For March, exports of goods and services fell 2.4 percent to $123.6 billion, the lowest level since August 2006. Sales of farm products dropped $2.4 billion, while exports of capital goods slid $1.7 billion, led by big declines in sales of civilian aircraft, telecommunications equipment, semiconductors, and domestic autos and auto parts.

Imports declined 1 percent to $151.2 billion, the lowest level since September 2004. Imports of capital goods dropped $516 million, led by declines in industrial machinery. The overall import level fell even though imports of oil rose 6.2 percent to $17.2 billion, the highest level since January.

The politically sensitive deficit with China rose 10 percent to $15.6 billion in March, the largest gap since January. China for more than a decade has been the country with the largest trade surplus with the U.S. The gap has triggered repeated calls in Congress for a crackdown on what critics see as unfair trade practices in China that also have resulted in the loss of millions of American manufacturing jobs.

China reported Tuesday that its global export sales fell 22.6 percent in April from the same month last year, fresh evidence that pain in the country’s trade sector persists due to slumping global demand.

The Obama administration earlier this year said it will continue to hold high-level talks with China started by the Bush administration, although the frequency of the meetings was cut in half to once a year. The first meeting is scheduled for this summer in Washington.

With the U.S. recession expected to last until the second half of this year and the downturn in many other nations expected to drag into 2010, economists don’t expect a significant rebound in trade anytime soon.

Meanwhile, home prices in the U.S. also continue to fall, although that has prompted sales gains in a handful of states. The National Association of Realtors said that median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago. Nationwide, sales of foreclosures and other distressed properties made up about half of the market.

Home sales fell in all but six states — Nevada, California, Arizona, Florida, Virginia and Minnesota — where buyers have been able to snap up foreclosures at a deep discount. Still, the median sales price nationwide was $169,900, down 13.8 percent from a year ago. The median price is the midpoint, which means half of the homes sold for more and half for less.

The housing slump and latest hit to export sales have added to the wave of job layoffs in the U.S. There were 2.7 million jobs available nationwide in March, down from 3 million in February and 4 million a year ago, according to the Labor Department. That’s also the lowest number in the eight years the department has tracked job openings.

Other recent reports indicate that while layoffs may be slowing compared with the waves announced earlier this year, hiring hasn’t picked up much since the department gathered the job openings data in March.

The department on Friday reported 539,000 net job losses in April. While still elevated, it was the lowest level in six months and below the 700,000 monthly average during the first quarter of this year.

Many economists believe the unemployment rate, which hit 8.9 percent in April, will climb to around 10 percent even if the recession ends and a recovery begins sometime this fall.

Without new hiring, the unemployment rate will continue to rise. That’s because many people who were discouraged and stopped looking for work at the depths of a recession customarily return to the labor market once a recovery begins. If jobs aren’t available, those new job seekers are added to the total of unemployed workers.

President Barack Obama speaks about health care reform on Monday in the State Dining Room of the White House in Washington.

WASHINGTON – President Barack Obama on Monday portrayed the health care industry’s promise to cut $2 trillion in costs over 10 years as “a watershed event” in the long search for a solution to the millions of uninsured.

Whether that is true won’t be readily known as debate begins in Congress over sweeping health care legislation. What is known now is that the move puts the industry groups involved firmly inside the process of expanding coverage, with the hope they can steer the final product toward something that doesn’t restrict their profitability.

“I will not rest until the dream of health care reform is achieved in the United States of America,” Obama declared in the White House’s State Dining Room as he announced the voluntary offer made to the White House Monday by a consortium of hospitals, insurance companies, drug makers and doctors.

They told Obama they would slow rate increases by 1.5 percentage points a year by improving coordination, focusing on efficiency and embracing better technology and regulatory reform.

Government economists say the shaved costs would create breathing room to help provide health insurance to an estimated 50 million Americans who now do not have it.

It’s a substantial change from the time in the early 1990s when President Bill Clinton took on health care reform, only to see industry leaders fight back hard, ultimately killing the White House proposal before it could gain any traction.

Still, even Obama acknowledged that the step announced Monday would be meaningful into the future only if it is not a singular event, but part of a larger and successful effort toward universal health care coverage for Americans. He said the country “can, will and must” accomplish this goal by the end of the year.

“There’s so much more to do,” he said.

“We can’t continue down the same dangerous road we’ve been traveling for so many years,” Obama said. “Reform is not a luxury that can be postponed, but a necessity that cannot wait.”

He indirectly criticized some of the groups at his side for killing the effort last time.

“All too often, efforts at reform have fallen victim to special interest lobbying aimed at keeping things the way they are, to political point-scoring that sees health care not as a moral issue or an economic issue, but as a wedge issue, and to a failure on all sides to come together on behalf of the American people,” the president said.

The industry letter said “these and other reforms will make our health care system stronger and more sustainable.”

Although the offer from the industry groups doesn’t resolve thorny details of a new health care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing.

The industry groups are trying to get on the administration bandwagon for expanded coverage now in the hope they can steer Congress away from legislation that would restrict their profitability in future years.

Insurers, for example, want to avoid the creation of a government health plan that would directly compete with them to enroll middle-class workers and their families. Drug makers worry that in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned the government could dictate what they get paid to care for any patient, not only the elderly and the poor.

It’s unclear whether the proposed savings will prove decisive in pushing a health care overhaul through Congress. There’s no detail on how the savings pledge would be enforced. And, critically, the promised savings in private health care costs would accrue to society as a whole, not just the federal government. That’s a crucial distinction because specific federal savings are needed to help pay for the cost of expanding coverage.

Costs have emerged as the most serious obstacle to Obama’s plan. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that.

By Philip Elliott, Ricardo Alonso-Zaldivar

Assistant Attorney General Christine Varney said the Justice Department is abandoning legal guidelines established by the Bush administration in September 2008. Critics complained that the earlier instructions made it difficult to pursue antitrust cases against big firms.

Varney laid out the new policy in a speech to the Center for American Progress, a left-leaning think tank.

She said some of the economy’s problems were due to the lack of enforcement in the previous 10 years — a clear jab at the Bush administration, which, she said, raised too many hurdles to antitrust investigations.

“There was a high cost to standing aside. We must change course and take a new tack,” said Varney.

The new rules mark a return to the antitrust policies of the Clinton administration, which brought a major action against Microsoft. These days, similar questions are being asked about the market dominance of Google.

The Justice Department is reviewing a proposed legal settlement with authors and publishers that would expand Google’s digital library of books, after some librarians and consumer activists complained that the proposed settlement will give Google a digital monopoly on millions of books.

Asked about Google, Varney insisted her remarks weren’t aimed at any particular company or industry, but wanted all companies to get the message.

“Look, when you become successful and you have market power, however you define it, you need to pay attention to the rules,” she said.

Bruce McDonald, a lawyer and former antitrust official in the Bush Justice Department, said Varney’s comments don’t give any clear indication whether the government will challenge conduct by Google.

“We now know what direction Ms. Varney wants to take the antitrust enforcement, but exactly how far she will go will only be known when it’s played out in particular cases,” he said.

Ed Black, president of the Computer and Communications Industry Association, said Varney’s remarks showed firms should “do some self-correcting before they get corrected” by the government.

“It’s clear we have a new sheriff in town and I think there is so much that has been left ignored and not dealt with,” said Black.

The Justice Department is following up on a campaign pledge by President Barack Obama, who said the Bush administration had “what may be the weakest record of antitrust enforcement of any administration in the last half-century.”

Varney said the Obama administration would try to follow the historic lessons of The Great Depression in pursuing antitrust cases even in a troubled economy.

Ineffective government regulation, she argued, is contributing to the current economic problems.

“As antitrust enforcers, we cannot sit on the sidelines any longer,” she said, adding that new legislation may be needed to better police the marketplace.

Her division has also launched a program designed to sniff out fraud or anticompetitive collusion surrounding the government’s $787 billion economic stimulus package.

———

ON THE WEB

White House Council of Economic Advisers’ Report: tinyurl.com/pevwsu

The deficit for the current budget year will rise by $89 billion to above $1.8 trillion — about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall St. bailout, the cost of President Barack Obama’s economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.

The developments come as the White House completes the official release of its $3.6 trillion budget for 2010, adding detail to some of its tax proposals and ideas for producing health care savings. The White House budget is a recommendation to Congress that represents Obama’s fiscal and policy vision for the next decade.

Annual deficits would never dip below $500 billion and would total $7.1 trillion over 2010-2019. Even those dismal figures rely on economic projections that are significantly more optimistic — just a 1.2 percent decline in gross domestic product this year and a 3.2 percent growth rate for 2010 — than those forecast by private sector economists and the Congressional Budget Office.

For the most part, Obama’s updated budget tracks the 134-page outline he submitted to lawmakers in February. His budget remains a bold but contentious document that proposes higher taxes for the wealthy, a hotly contested effort to combat global warming and the first steps toward guaranteed health care for all.

Obama’s Democratic allies controlling Congress have already made it clear that they will reject key elements of his plan. Already apparently dead is a plan to raise $267 billion over the next decade to pay for his health care initiative by curbing the ability of wealthier people to reduce their tax bills through deductions for mortgage interest, charitable contributions and state and local taxes.

And the congressional budget plan approved last month would not extend Obama’s signature $400 tax credit for most workers — $800 for couples — after it expires at the end of next year.

Obama’s remarkably controversial “cap-and-trade” proposal to curb heat-trapping greenhouse gas emissions is also reeling from opposition from Capitol Hill Democrats from coal-producing regions and states with concentrations of heavy industry. Under cap-and-trade, the government would auction permits to emit heat-trapping gases, with the costs being passed on to consumers via higher gasoline and electric bills.

Among the new proposals is a plan — already on its way through Congress — that would increase the Federal Deposit Insurance Corporation’s borrowing authority from $30 billion to $100 billion in order to grant a two-year reprieve from higher deposit insurance premiums while the industry is struggling.

Also new are several tax “loophole” closures and increased IRS tax compliance efforts to raise $58 billion over the next decade to help finance Obama’s health care measure. The money makes up for revenue losses stemming from lower-than-hoped estimates of his proposal to limit wealthier people’s ability to maximize their itemized deductions.

The updated budget also would repeal an unintended tax windfall taken by paper companies that use a byproduct in the paper-making process as fuel to power their mills. The tax credits were never intended for paper companies, but now they could be worth more than $3 billion a year, according to a congressional estimate.

The budget would make permanent the expanded $2,500 tax credit for college expenses that was provided for two years in the just-passed economic stimulus bill. It also would renew most of the Bush tax cuts enacted in 2001 and 2003, and would permanently update the alternative minimum tax so that it would hit fewer middle- to upper-income taxpayers.