Senate says no to 6,000 border troops
Plan blocked by Democrats
Sen. John McCain, seen at a May 17 Senate hearing, disagreed Thursday with objections to boosting a program that jails illegal immigrants briefly rather than immediately releasing them across the border.
By Stephen Dinan
Senate Democrats managed Thursday to block deployment of 6,000 National Guard troops to the U.S.-Mexico border, but the proposal still garnered a majority of senators, showing widespread support for a border-security-first strategy and underscoring why President Obama is having difficulty trying to win an immigration-legalization bill.

The vote flustered Democrats, who seemed uncertain how to handle the proposal and were reluctant to defy Mr. Obama, who just this week proposed that a much smaller 1,200-troop force be deployed.

In the end, 12 Democrats joined 39 Republicans in voting for the deployment - though that still fell nine votes shy of the 60-vote supermajority needed for passage.

The border-security debate was the key fight as the Senate debated the $59 billion emergency war-spending bill to fund Mr. Obama's Afghanistan troop surge.

Late Thursday, the spending bill passed 67-28, sending it on to be reconciled with a House version.

But that was not before senators defeated a Democratic effort to force Mr. Obama to produce a timetable for withdrawal and Republican efforts to force cuts elsewhere in the budget to pay for the added spending.

"First and foremost, this bill provides the resources needed to support and protect our troops serving in harms way," said Sen. Daniel K. Inouye, chairman of the Senate Appropriations Committee.

With Democrats holding a giant advantage in the Senate, Republicans were never likely to garner the 60 votes needed to pass the National Guard amendment. But that made the symbolism of the vote all the more significant - a fact that was underscored by Sen. Charles E. Schumer's pleas on the Senate floor to his colleagues not to defect and vote with Republicans.

"The president's plan is smart and focused," the New York Democrat said on the floor.

He told his colleagues to reject three Republican amendments that would have deployed 6,000 guard troops, siphoned more money to federal and local law enforcement on the border and boosted a program that jails illegal immigrants for a short time rather than immediately releasing them across the border, where they often just try again to cross.


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Spain Loses AAA Rating at Fitch Amid Deficit Crisis (Update4)
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Esteban Duarte and Emma Ross-Thomas

May 28 (Bloomberg) -- Spain lost its AAA credit grade at Fitch Ratings amid a fiscal crisis that prompted the European Union to forge an almost $1 trillion bailout package for the region’s weakest economies.

The ratings company cut the grade one step to AA+ and assigned it a “stable” outlook, according to a statement from London today. Spain has held the top rating at Fitch since 2003. Standard & Poor’s lowered Spain’s ratings to AA on April 28.

“The process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term,” Brian Coulton, Fitch’s head of Europe, Middle East and Africa sovereign ratings in London, said in the statement.

Spain is struggling to cut the euro region’s third-largest budget deficit as the economy, still reeling from the collapse of a debt-fueled construction boom, is expected to contract for a second full year. Prime Minister Jose Luis Rodriguez Zapatero, who has angered traditional allies by cutting public wages and freezing pensions, has failed to convince investors he can put the finances back in order as borrowing costs continue to surge.

U.S. stocks extended losses after Fitch’s announcement, with the Standard & Poor’s 500 Index sliding 1.2 percent to close at 1,089.41. The euro weakened 0.7 percent to $1.2271 at 4:08 p.m. in New York.

‘Still a High Rating’

“I would like to emphasize that it’s still a high rating,” Soledad Nunez, the director of Spain’s Treasury, said in a telephone interview. “The agency recognizes that public finances are strong and the government’s commitment to fiscal reform.”

The Treasury, which faces a 16.2 billion-euro bond redemption in July, has completed about 40 percent of its funding program for this year, Nunez said.

The extra yield investors demand to hold Spanish 10-year bonds rather than German equivalents rose to 153 basis points today from 152 basis points yesterday. The spread compares with an average of 23 basis points over the last decade and is just 10 basis points below the level before the EU created a financial backstop for the weakest euro members.

That facility, providing as much as 750 billion euros ($925 billion), was created on May 10 and coincided with the European Central Bank’s announcement that it would start buying government bonds.

Deeper Cuts

In return, Spain agreed to deeper spending cuts that would slash the deficit to 6 percent of gross domestic product in 2011 from 11.2 percent last year. Parliament approved those measures yesterday by a single vote, signaling Zapatero may struggle to achieve support for the 2011 budget.

“The Spanish government had been in denial from 2008 to early 2010 about the magnitude of the crisis so now you have consequences,” said Raphael Gallardo, who helps manage 500 billion euros ($615 billion) as chief economist at Axa Investment Managers in Paris. “Now with the acceleration of austerity measures, like the shocking cut to civil servant wages, they finally got real and measured the severity of the crisis.”

The austerity program, which won applause from the International Monetary Fund, will undermine the recovery, Finance Minister Elena Salgado said on May 20 as she cut her forecast for Spanish growth next year to 1.3 percent from 1.8 percent. The government predicts a 0.3 percent contraction this year.

Fitch’s move follows Standard & Poor’s decision to cut its rating on Spain twice since the start of 2009. Moody’s Investors Service retains an Aaa rating. Spain’s debt burden as a proportion of GDP was 53 percent last year, lower than Germany, France and the euro-region average.