600,000 Jobs Is A Small Price To Pay To Keep David Broder From Crying

Paul Krugman:

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad.

Considering that you need 60 votes in the Senate to pass this bill and any future bill that raises the federal deficit (which a stimulus bill will inevitably do), it was always going to be like this. I'm not certain that if Obama didn't pre-compromise the bill, that the moderates and Republicans wouldn't have pushed it to exactly where it is now. I'm sympathetic to the notion to an extent, but considering 36 Republicans wanted the entire bill to be straight tax cuts, I think the moderates would have went there anyway. Where Obama broke down was not whipping the public up to support his plan from the get-go. The fact that the rhetorical war got away from him made it easier for the moderates to run wild. Even then, the awful media coverage was unlikely to improve, though at least Obama's point of view would have been represented.

I mean, you have Republicans who are calling a $780 billion dollar bill a $1 trillion dollar bill because they are calculating in the debt service on the borrowed money. Funny, I don't remember them doing that for appropriations on Iraq, for example. They were always going to oppose in the most extreme way possible, and considering how some of our "sensible centrists" on the Democratic side think, I just don't agree that there was going to be a good strategy here.

Senator Claire McCaskill:

"Proud we cut over 100 billion out of recov bill.Many Ds don't like it, but needed to be done.The silly stuff Rs keep talking about is OUT."

That silly stuff includes big reductions (relative to the House Bill) in food stamps, school construction, head start, and COBRA subsidies for people who have lost their jobs.

How Senator McCaskill is spending her day:

"Going to Museum of Am History today.Haven't been since it re-opened.Want to check it out.Also grocery store and later a movie date with Joe."

Hopefully she enjoys the museum. Amusingly, she also voted for the Coburn amendment which forbids the use of any of the stimulus money for, among other things, musems.

With moderate friends like these....

The state spending has to go back in, the AMT fix has to go back out. That gives it just the slightest chance to succeed.

...I do agree with this comment, for future reference:

My advice to Obama is to never pre-compromise with Republicans unless he negotiates with specific Republicans whose votes he secures at the same time. I have no problem with putting in compromises worked out with Spector and the women from Maine in return for their support, but you can't just put in stuff Republicans might go for.

I don't think Obama gets a lot out of the "moral authority" of saying he tried to compromise the bill at first. Republicans don't really care. They should be able to get changes in legislation, but only in exchange for support, not for a theory of what they might support.

Michael Steele's Idea Of Responsible Spending

That nice Michael Steele, the new RNC chair, delivered his own YouTube address today (they're real original thinkers over there) and he slashed and burned the Democrats over their wasteful spending:

For the last two weeks, theyve been trying to force a massive spending bill through Congress under the guise of economic relief.

All of us Republicans and Democrats agree the government must act to kick-start the American economy. American families are doing their best to balance their own budgets and pay their mortgages.

The fastest way to help those families is by letting them keep more of the money they earn. Individual empowerment: thats how you stimulate the economy.

Democrats in Congress want a one-trillion dollar spending bill. Youve heard about the pork-barrel programs they want to fund 45 million dollars for ATV trails and removal of fish passage barriers is one that caught my eye. Exactly what is a fish passage barrier and why does it cost 45 million dollars to stimulate the economy with it?

It really is terrible how the Democrats are using the stimulus to waste the people's money with projects that create jobs. Certainly the RNC under Michael Steele would not use money in a wasteful fashion to benefit a few... sorry, what's that?

Michael S. Steele, the newly elected chairman of the Republican National Committee, arranged for his 2006 Senate campaign to pay a defunct company run by his sister for services that were never performed, his finance chairman from that campaign has told federal prosecutors.

Federal agents in recent days contacted Steele's sister, a spokesman for Steele said yesterday.

The recent allegations outlined four specific transactions. In addition to the payment to Steele's sister, (Alan) Fabian said that the candidate used money from his state campaign improperly; that Steele paid $75,000 from the state campaign to a law firm for work that was never performed; and that he or an aide transferred more than $500,000 in campaign cash from one bank to another without authorization.

The bank transfer was made against the explicit wishes of other Maryland Republicans, who had hoped to use it to support the campaigns of state legislators, said aides to Steele and former governor Robert L. Ehrlich Jr.

See, Republicans are the fine stewards of the people's money. Democrats just waste your hard-earned tax dollars by building roads and schools and trains. Republicans use it wisely by paying off friends and relatives.

...This is funny, some hack at The Corner thinks the leak of Steele's payments are politically motivated, even though the US Attorney in the case was appointed by George Bush.

Well, considering that U.S. Attorney Rod J. Rosenstein was appointed by George Bush, my guess is that he will indeed lose his job pretty soon. Just like all the rest of Bush's USAs. As for an investigation, that seems like it would be a petty and vindictive partisan attack on a Bush appointee who's going to be out of office soon anyway, but I guess it's OK with me if conservatives insist.

The OTHER Big Plan

Since the recovery package has dominated the news this week, little attention has been paid to a major announcement expected on Monday.

After weeks of internal debate, the Obama administration has settled on a plan to inject billions of dollars in fresh capital into banks and entice investors to purchase their most troubled assets.

The new financial industry rescue plan, to be outlined in broad terms on Monday in a speech by the Treasury secretary, Timothy F. Geithner, will not require banks to increase their lending. That is despite criticism that institutions that already received money from the Troubled Asset Relief Program, or TARP, either hoarded it or used the funds to acquire other banks.

The incentives to investors could be in the form of commitments to absorb some of the losses from any assets they purchase, should their values continue to decline. The goal is to relieve the banks of their worst assets so that private investors might then provide more capital.

Officials hope that that part of the plan is not labeled a “bad bank” administered by the government, although they expect that some might call it that.

No matter what it is called, the government would assume some of the risk of declining assets at the heart of the economic crisis. But by relying on a combination of private investors and government guarantees, the administration hopes to reduce its exposure to losses and avoid the problem of having to place a value on assets that the institutions have been unable to sell.

They don't want to call it a bad bank because that idea has been torched by all sides of the economic spectrum, including this amazing takedown by Yves Smith which will forever be the takedown by which all other takedowns will be measured. But I don't see a lot different from the above proposal and what Smith criticizes here. They seem to just be propping up insolvent banks.

In case you had any doubts, propping up dud asset values is a form of forbearance. Japan had a different way of going about it, but the philosophy was similar, and the last 15 year illustrates how well that worked.

What we have from Team Obama is a bigger abortion of a "throw money at bad bank assets" plan that I feared in my worst nightmare. And (when we get to the Post preview), they have the temerity to invoke triage to make what they are doing sound surgical and limited.

Those who remember the origin know that triage means focusing on the middle third of the wounded on the battlefield : abandoning the goners to die, leaving those wounded but stable to fend for themselves for the moment (they were in good enough shape to wait to be transported or hold on to be treated later). The middle third, those in immediate danger but who might nevertheless be salvaged, get top priority.

The concept of "triage" recognizes that resources are limited, tough decision need to be made, and some are beyond any hope. But in Team Obama Newspeak, triage means everyone can be saved because resources are presumed to be unlimited [...]

The problem is not a lack of price discovery, as the discussion above pretends, it's a lack of investor willingness or ability to take losses. And readers have said if a particular piece of paper doesn't fetch a bid, that's because its real value is not materially above zero. But per above, that's the sort of dreck that Team Obama would buy.

And what, pray tell, is the point of the guarantee? The loss exposure on a guarantee (versus a purchase) at the same nominal price is the same, although the initial cash outlay is considerably different. Ah, but if the paper is guaranteed, then your friendly bank welfare recipient can bring the junk to the Fed and get nice cash back.

So we the taxpayers are going to eat a ton of bank losses that should instead be borne first by stockholders and bondholders This program should be labeled the Pimco bailout plan, since the giant bond fund holds a lot of bank debt. That shows what a fiction Obama's populism is. It's mere posturing and empty phrases. Look at where the dough goes, and it is going first and foremost to the big money end of town.

This really makes a mockery of those "punitive" executive compensation limits, which banks are balking at anyway.

They don't want to take large ownership stakes of the banks in exchange for saving them, even though they are pumping in more money than the banks are materially worth, whether you look at it through stock or assets. It may be a smaller bailout, they may not have to ask Congress for any money, but without actually fixing the problem, it makes it nearly certain that they'll need a larger bailout down the road. In fact, they admit that in the NYT piece.

But lawmakers said they expected the administration to seek more money for the rescue program later this year.

So more taxpayer risk, more shareholder reward. I'm no economist, but that's insane.

I don't know that this will create moral hazard on the part of bankers, who will have no compunction against ringing up bad bets in the expectation that they'll be bailed out again; I'm not certain moral hazard exists in the conscious sense. I just think that these executives are greedy and self-important and feel entitled to stay rich and powerful, and will do whatever they can to keep that money and power.

The point is that another world is possible. We can do something different. We can nationalize the banks temporarily, instead of wildly overpaying for toxic assets. We can admit that most of the banks are insolvent, and we can let them remain in public hands until they can restore their balance sheets. We can actually look at what is coming in and what is going out of the banks and price the assets accordingly. We could even let the Fed lend directly to individuals and eliminate the need for these banks entirely. Whatever we do, we can use this standard:

Find out How Deep the Hole Is
Perform Triage: Bury the dead, help the injured, let those only mildly wounded fend for themselves
Make sure the damage to the financial sector doesn't spread any further beyond the financial sector

And in the future, we can re-imagine the revenue stream, paying for everything society needs by reducing inequality and ending corporate greed.

See also here and here. I fear this won't be part of the Treasury Secretary's proposal because it's beyond the limits of the establishment imagination. We're all going to have to learn the hard way.

The Lowdown

OK, with a day to sit back and figure things out, here's what's going on.

The Senate is going to pass their version of the bill by noon on Tuesday at the latest, depending on how much Republicans want to obstruct. There will be a cloture vote on Monday at 5:30ET. Here's a list of what the Axis of Nelson-Collins cut out of the bill to make room for more tax cuts.

$40 billion State Fiscal Stabilization
$16 billion School Construction
$1.25 billion project based rental
$2.25 Neighborhood Stabilization (Eliminate)
$1.2 billion in Retrofiting Project 8 Housing
$7.5 billion of State Incentive Grants
$3.5 billion Higher Ed Construction (Eliminated)
$ 100 million FSA modernization
$50 million CSERES Research
$65 million Watershed Rehab
$30 million SD Salaries
$100 million Distance Learning
$98 million School Nutrition
$50 million aquaculture
$2 billion broadband
$1 billion Head Start/Early Start
$5.8 billion Health Prevention Activity.
$2 billion HIT Grants
$1 billion Energy Loan Guarantees
$4.5 billion GSA
$3.5 billion Federal Bldgs Greening

The $40 billion for state aid is astounding. You're not going to see an economic recovery if the states are having to cut budgets at the same time the feds expand them. They'll cancel each other out.

What you don't see in there are the three big tax cuts that the Senate put in this bill that has crowded out this spending, not for reasons of effectiveness, but purely because squishy moderates couldn't live with a $900 billion dollar bill. They are:

1) $70 billion dollars for a patch so that the Alternative Minimum Tax (AMT) doesn't affect high-middle-income earners making under $1 million dollars a year. This is passed annually because Congress is too cowardly to rewrite the tax code. But it doesn't belong in a stimulus bill, as no less than House Minority Whip JON KYL just said in a floor speech. People making $400,000 a year aren't likely to spend money they get to keep as a result of fixing the AMT.

2) At least $35 billion dollars for a $15,000 home buyer's tax credit, which will only go to people who have enough money to buy a house. This is a craven attempt to reinflate the housing bubble before prices have settled, and because there's so much inventory on the market it will not spur hardly any new home construction.

3) Around $11 billion for a tax credit for car buyers, which will only go to people who have enough money to buy a new car. This is not tied to greening the US fleet and will be implemented before fuel economy standards have changed over, so it doesn't even reward fuel efficiency or reducing greenhouse gas emissions.

These are tax breaks for suburbanites, which in all likelihood won't get spent at anywhere near the rates that they would in the hands of the poor or middle class. And they won't create jobs, either.

Arlen Specter, one of the moderate squishes, said this is the best they can do. The above tax cuts are most certainly not. In particular, the House is piqued about the AMT patch in the bill.

House moderates oppose including the AMT provision in the stimulus package, arguing that the issue should be addressed in the regular budget process so that its cost can be offset by spending cuts or tax increases. But until yesterday, House leaders appeared willing to accept the provision, which was added at the urging of Sen. Charles E. Grassley (Iowa), the senior Republican on the Senate Finance Committee.

With AMT in and some of House Democrats' top spending priorities out, the package could become much more difficult for many House members to swallow, Democratic aides said. House Majority Leader Steny H. Hoyer (D-Md.) said House Democrats will push hard to restore the Senate's deletions. That means, lawmakers said, that the overall cost would grow to around $900 billion to accommodate the AMT fix.

This is the next step. The bill will go to a House-Senate conference. According to Kagro X in a must-read post, the Senate wants the House to swallow this bill whole, claiming that they cannot pass the bill if anything is deleted.

Assuming passage on Tuesday, the House will then have the option to accept the Senate package as is, to make still more amendments and send it back to the Senate, or to agree to the Senate's request for a formal conference to resolve their differences. It is the Senate's announced intention (also included in the unanimous consent agreements from last night) to insist on its version of the bill in conference. If the House acts immediately either to pass the bill or to go to conference, they would have an opportunity to do so Tuesday afternoon. The self-imposed deadline for clearing the bill for the White House falls prior to the scheduled adjournment for the President's Day recess at the end of next week. That doesn't leave a lot of time, and increases the pressure on the House and the likelihood that they'll be forced either to accept the Senate bill, or make only minor changes.

You're going to see a lot of House-Senate wrangling. The Senate could adjourn prematurely and stick the House with the bill. They'll create a sense of urgency through an artificial deadline. And they'll try to ram this flawed bill down the House's throat.

The question is whether or not the Senate moderates would be willing to sink the economy if the House makes changes to the bill in conference that are more than cosmetic. Obviously the rump faction of the Senate isn't going to alter their stance, you can't compromise with crazy. But the Snowe-Collins-Specter-Nelson faction kind of knows that something has to be done. The President is talking up job creation and will be hitting the road this week to increase the pressure. If you want more jobs, you have to eliminate the AMT patch, which can be reconciled through a regular process with offsets, and add back the spending to the states, school construction, and more, which will probably add a million more jobs. Otherwise, you're going to see cops, firefighters, nurses and teachers out on the street (John Kerry is explaining this very well on the Senate floor).

Will the House force the moderates in the Senate to eat a shit sandwich? Will the moderates do it, or will they vote against the bill and sink the economy? There can be no amendments to a conference report, but the bill will need a 3/5 vote. Again, Kagro X:

Just as the bill was subject to a budget point of order in the Senate, so will the conference report be. So the Senate will need 60 votes, filibuster or no, to pass any conference report. That, too, will increase pressure on the House to defer to the Senate position. Senate conferees will no doubt insist that nothing but their Perfect and All-Wise version of the bill could ever muster the necessary 60 votes, and House conferees will have to measure any changes they propose against the likelihood that the Senate's claims are true.

This is a big game of chicken, but if the President and House Democrats can generate enough grassroots support, they may have the cover to swap state spending in and the AMT patch or some of these other suburbanite amendments out.

The other thing, as I've said before, is that the Senate can help themselves by immediately confirming Judd Gregg for Commerce Secretary. Gregg is now recusing himself from all recovery package votes, which is the same as a no vote under the circumstances. Confirming him would reduce the number of Senators to 98, which would mean only 59 votes would be needed for passage. It reduces the moderates needed to eat the shit sandwich by one. If Bonnie Newman then came to the Senate to be seated, she could be blocked unless Al Franken is seated in a compromise action, which would get us 59 Democratic Senators and again keep the number of moderate squishes needed to one. I have no idea why Harry Reid isn't doing this. If he's afraid of Republican bleating he could schedule the Gregg vote immediately before the final vote on recovery and shock doctrine them.

That's basically what's going on. I think the pressure points are Harry Reid and Nancy Pelosi. Tell Reid to allow a real conference instead of forcing the House to make changes, and tell Pelosi that we'll have her back if she strips the AMT patch and adds back aid to the states.

Domenici On Notice

I think we all thought that the US Attorney scandal would melt away with the end of the Bush regime. But a federal grand jury is looking into Pete Domenici's role in the firing of David Iglesias in New Mexico.

The federal grand jury is investigating whether Domenici and other political figures attempted to improperly press Iglesias to bring a criminal prosecution against New Mexico Democrats just prior to the 2006 congressional midterm elections, according to legal sources close to the investigation and private attorneys representing officials who prosecutors want to question. Investigators appear to be scrutinizing Iglesias' firing in the context of whether he was fired in retaliation because Domenici and others believed that he would not manipulate the timing of prosecutions to help Republicans [...]

The grand jury investigation is currently being led by Nora Dannehy, the acting U.S. attorney in Connecticut. Then-Attorney General Michael Mukasey named Dannehy to "determine whether any prosecutable offense was committed" in the course of the firings following September's report by the Inspector General and OPR on the firings.

The report found that Iglesias was fired largely as a result of complaints made to the White House by Domenici and Bell. But the report also concluded that the probe was severely "hindered" by the refusal by Domenici, Bell, and several senior Bush administration officials to cooperate with the investigation.

If they cannot get cooperation out of the grand jury, I assume this could be an obstruction of justice indictment, but if the grand jury finds that Domenici and others did pressure Iglesias to prosecute Democrats before the midterms, that would also be obstruction of justice in THAT case. So two possible tracks here. No word on whether Heather Wilson, the former Congresswoman who also reportedly called Iglesias during that time, is involved in the case, but Emptywheel wants to know if someone else is involved.

It'll be interesting to see whether Domenici cooperates. That's because--according to an often-ignored story from the Albuquerque Journal--Domenici had to call Bush directly to get Iglesias fired.

"In the spring of 2006, Domenici told Gonzales he wanted Iglesias out.

Gonzales refused. He told Domenici he would fire Iglesias only on orders from the president.

At some point after the election last Nov. 6, Domenici called Bush's senior political adviser, Karl Rove, and told him he wanted Iglesias out and asked Rove to take his request directly to the president.

Domenici and Bush subsequently had a telephone conversation about the issue.

The conversation between Bush and Domenici occurred sometime after the election but before the firings of Iglesias and six other U.S. attorneys were announced on Dec. 7.

Iglesias' name first showed up on a Nov. 15 list of federal prosecutors who would be asked to resign. It was not on a similar list prepared in October.

The Journal confirmed the sequence of events through a variety of sources familiar with the firing of Iglesias, including sources close to Domenici. The senator's office declined comment."

Would the former President be criminally liable in this case? I guess it depends on how far the prosecutor is willing to take the case. From the beginning of the US Attorney scandal, it was clear that the conduct with respect to David Iglesias was egregious. We could really see some arrests in this one.

UPDATE: There's also talk of Karl Rove cooperating with the US Attorney investigation, which I'm finding hard to believe. But maybe by "cooperating" Rove means "lying on the stand and then trying to wiggle out of it," the way he "cooperated" in the CIA leak investigation.

Presidents Nelson, Collins Upbeat After Saving Bipartisanship

Washington (BP) - Presidents Susan Collins, the historic first female President, and Ben Nelson, the historic first Nebraskan President (OK, Ford, but he was only born there), were reported in good spirits after working long into the night to save bipartisanship on the $780 billion dollar stimulus package. Just three weeks after their inauguration, they were able to avert the bipartisanship crisis and come together to restore the faith of everyone working as on-air or print talent in the media industry in the vicinity of Georgetown, Bethesda, MD and Arlongton, VA.

Sen. Ben Nelson, a Democrat from Nebraska and one of the chief negotiators of the plan, said senators had trimmed the plan to $827 billion in tax cuts and spending on infrastructure, housing and other programs that would create or save jobs.

"We trimmed the fat, fried the bacon and milked the sacred cows," Nelson said as debate began.

According to several senators, the revised version of the plan axed money for school construction and nearly $90 million for fighting pandemic flu, among other things.

Remaining in the plan are tax incentives for small businesses, a one-year fix of the unpopular alternative-minimum tax and tax-relief for low- and middle-income families, said Sen. Susan Collins of Maine, who was the most prominent Republican negotiator in the bipartisan talks.

"Our country faces a grave economic crisis and the American people want us to work together," she said. "They don't want to see us dividing along partisan lines on the most serious crisis facing our country."

Making the recovery bill safe for tax cuts and free of wasteful spending like $40 billion in aid to states which will now have to lay off hundreds of thousands of workers was "a very liberating process," Presidents Nelson and Collins said before repairing to separate corners of the White House with their families. "It feels good to have that sense of accomplishment that comes with kicking firefighters and teachers out onto the street and seeing others slip into poverty," Nelson and Collins said in unison. "They said it couldn't be done!" The Presidents offered a list of wasteful nonsense that was excised:

In addition to the large cut in state aid, the Senate agreement would cut nearly $20 billion proposed for school construction; $8 billion to refurbish federal buildings and make them more energy efficient; $1 billion for the early childhood program Head Start; and $2 billion from a plan to expand broadband data networks in rural and underserved areas.

Collins and Nelson's chief of staff, former Illinois Congressman Rahm Emanuel, was singled out for praise:

Obama endorsed the moderates' effort and brought its leaders -- Sens. Ben Nelson (D-Neb.), Susan Collins (R-Maine) and Arlen Specter (R-Pa.) -- to the White House to discuss their proposed cuts. White House Chief of Staff Rahm Emanuel attended the final meetings in Reid's office last night to work out lingering differences. Before Emanuel arrived, Collins said, Democrats were advocating $63 billion in cuts. "Then Rahm got involved, and a much better proposal came forward," she said.

Once the expected Senate passage is completed, the bill will move to a conference committee with the House of Representatives, whose leader, Speaker Nancy Pelosi, called the new package "very damaging" and said she was very much opposed to the cuts. House Majority Whip Jim Clyburn was quoted as saying, "I don't think much of what the Senate is doing." In response, Presidents Collins and Nelson retorted, "Who died and elected them President?"

In other news, state Senator Barack Obama (D-IL) and his team won the Illinois Legislature pick-up basketball game last night by the score of 65-53.

Election 2009!

No, not here, you can put your Sarah Palin dolls back. Actually, I'm talking about Israel, which holds elections next week amid uncertainty following the war in Gaza. There's been lots of mudslinging and no substance in the campaigns, but the Gaza assault obviously looms as the biggest issue. When Foreign Minister Tzipi Livni and Defense Minister Ehud Barak launched the attacks it was cynically seen as a bid to raise their hopes for the election for their respective parties, Kadima and Labor. Predictably, the war only strengthened Hamas inside Palestine, with Fatah completely discredited by its people for tacit collusion with the Israelis. In addition, the war appears to have strengthened far-right extremist Avigdor Lieberman - no relation to Joe - of the Yisrael Beitenu (Israel Our Home) Party, kind of the Israeli Pat Buchanan, who is running on loyalty oaths:

Lieberman is campaigning on the slogan "Without loyalty, there is no citizenship," promising a new bill requiring all Palestinians with Israeli passports to swear loyalty to the Jewish state or lose their citizenship. He advocates carving out part of the Galilee that is home to Arab Israeli villages and handing it over to Palestinian control.

His critics among the Israeli left and in the country's 20% Arab minority are widespread. "Here we have a racist immigrant who is fighting against the residents of the land, the natives," said Ahmad Tibi, an Arab Israeli MP. Yossi Sarid, a former leftwing MP, said: "What's the difference between his party and all the fascist parties in Europe? It's the same message, the same technique, taking advantage of the same fears."

But among a growing number of Israelis his policies resonate. Polls today suggested he might win as many as 19 seats in the 120-seat Knesset, putting him ahead even of the Labour party.

Paradoxically, this appears to be helping Livni and the Kadima Party, as the batshit right Lieberman is taking votes from the merely far right Benjamin Netanyahu and the Likud Party. This could mean that Kadima would be able to pick the governing coalition and not Likud, which would increase the prospects of peace exponentially, although with Fatah basically discredited and far-right populist sentiment on the rise, those prospects look bleak.

All of which re-emphasizes the point that the Gaza war was truly dumb, and distressing to anyone who wishes for peace. After 1,300 dead and thousands of buildings destroyed, extremists are taking over both sides of the divide. Hamas is so radicalized that they are confiscating UN relief supplies, and Israel is taking seriously the candidate calling for loyalty oaths, which is ironic as all get out. Time is running out for a peace deal, and that's probably true no matter who is elected. George Mitchell and Barack Obama (who offered $20 million in Gaza relief this week) have their work cut out for them.

Friday Random Ten

We'll have to look at what this all means tomorrow. The latest report was that 42% of the Senate bill is tax cuts, which is dreadful, but we're not to the conference report yet, and if some of the crappier, non-stimulative tax cuts are still in there, maybe the House takes them out. I'm going to try and take it all in for once.

In the meantime, music:

Black Hole Sun - Soundgarden
My Valuable Hunting Knife - Guided By Voices
Thank You, Lord, For Sending Me The F Train - Mike Doughty
Back To Boston - The Rosebuds
Fake Tales Of San Francisco - Arctic Monkeys
Closer You Are - Guided By Voices
Spirit Walker - Ween
Die Gedanken Sind Frei - Brazilian Girls
McFearless - Kings Of Leon
Bulls On Parade - Rage Against The Machine

IL-05: Way Outside The Box

As we await the carnage that the Axis of Nelson-Collins brought to the recovery bill, my thoughts turn to what could happen if some real progressives were in positions of power in Washington. We have an opportunity in Rahm Emanuel's old seat, IL-05, where I lived for a while a decade ago (and I believe my Congressman was one Rod Blagojevich).

Earlier this week I was able to attend an event with Thomas Geoghegan, a labor lawyer who has dedicated his life to helping working people, running for Congress as a first-time politician. He has a completely different conception of what's needed right now, a three-point plan that you'll almost never hear from anyone in the political arena. He describes it in this video:



1) Increase Social Security benefits so we have a livable public pension system comparable to the rest of the developed world. Businesses have all but eliminated their pensions, and Social Security is not enough to survive.

2) Single-payer national health care now. It is crucial we take over the non-wage labor costs from the private sector so they can increase their global competitiveness and stay in business. Insurance company overhead is a waste of money and single payer is the way to fund health care and hold down costs.

3) Reduce the interest rates on what the financial sector can take out of the economy, and in exchange for bailing out the banks (and taking them over temporarily), cancel consumer debt just like we're canceling the debt from toxic securities.

Geoghegan's overall goal is to increase the economic security of working people while making US businesses more competitive globally. The key point he said is that "people have no sense that they get anything back on their taxes" and that we'll never win the long-standing tax battle if we don't offer something tangible. In European nations the tax base is higher, but people are happy to pay it because they see a return. His smaller point was that the banks have become the real economy instead of the industrial sector, and this has taken all the creative energy of the economy away from entrepreneurship and into the financial sector.

This is a radical departure from how most politicians talk about the economy. Instead of placating an interest group or tailoring a message to the people who can fund a campaign, Geoghegan is really talking about the return of the social contract, where work is rewarded and government is on the side of the people. We're so unused to hearing these ideas, so ready to dismiss them as unworkable, that these avenues get permanently closed off. It's time to shift the debate.

If you believe in the progressive movement and in real, lasting change, you can get behind Tom Geoghegan's campaign. More here, here and here.

Yay Deal.

Feel the bipartisan centrism-ness.

Senate Democrats were near a deal Friday to win passage of their economic recovery plan, as White House Chief of Staff Rahm Emanuel came to the Capitol to meet with moderate Republicans and Majority Leader Harry Reid (D-Nev.) called a Democratic caucus for the evening.

After days of watching from the sidelines, Emanuel’s sudden arrival was telling, and two Democratic sources said the outlines of an agreement are now in place. “We have a deal,” said one official.

The final price tag we're hearing is $780 billion, about $150 billion less than where the Senate bill currently stands, but only about $30 billion less than the House version. The big question is what was cut. MSNBC and The New York Times have stories, but there's nothing very specific.

Keep in mind that this is not the end. In fact, there should be MORE pressure from the bottom up right now. There's going to be a conference committee where House and Senate negotiators will reconcile the final package. Keep in mind that a conference bill cannot be filibustered.

President Obama has a Monday night press conference and appearances across the country next week to put on a full-court press to get this passed. He needs to be in the room with the conference committee as well. It may be early, but the Presidency is in many ways on the line if this package is ineffective.

How About Confirming Gregg Tonight?

With all the sausage-making going on, and with the margins of victory so thin, I'm shocked that Senate Democrats haven't come up with the idea of immediately confirming Judd Gregg. Clearly they need every vote they can get, even putting out the call to Ted Kennedy to return to the Senate if possible:

After five days of debate, Majority Leader Harry Reid expressed optimism about the prospects for passage, and White House chief of staff Rahm Emanuel traveled to the Capitol in mid-afternoon to join the negotiations.

At the same time, officials strongly suggested that Sen. Edward M. Kennedy's vote would be needed to assure passage. The Massachusetts Democrat, battling a brain tumor, has been in Florida in recent days and has not been in the Capitol since suffering a seizure on Inauguration Day more than two weeks ago. The senator's office did not comment.

Judd Gregg right now is recusing himself from all these votes while awaiting confirmation as Commerce Secretary. The Senate could confirm him tonight - I'd be shocked if they didn't have the votes, Republicans would have to vote against one of their own colleagues - reducing the number of Senators to 98 (the seat in Minnesota is still not filled). That would mean that only 59 votes would be required to break a filibuster, in which case you would only need Olympia Snowe or George Voinovich. If Bonnie Newman attempts to be seated, mount a filibuster to block her unless and until Al Franken is seated. Either way, you reduce the number of votes required for passage by one. They should have done this the day Gregg was nominated.

When you're talking about job loss like this, you really ought to pull out all the stops.

Hey Jerry Brown: It's Time To Investigate The Yacht Party

Two months ago I wrote about how Mike Villines' threats on the budget were illegal under Section 86 of the California Penal Code:

86. Every Member of either house of the Legislature, or any member of the legislative body of a city, county, city and county, school district, or other special district, who asks, receives, or agrees to receive, any bribe, upon any understanding that his or her official vote, opinion, judgment, or action shall be influenced thereby, or shall give, in any particular manner, or upon any particular side of any question or matter upon which he or she may be required to act in his or her official capacity, or gives, or offers or promises to give, any official vote in consideration that another Member of the Legislature, or another member of the legislative body of a city, county, city and county, school district, or other special district shall give this vote either upon the same or another question, is punishable by imprisonment in the state prison for two, three, or four years and, in cases in which no bribe has been actually received, by a restitution fine of not less than two thousand dollars ($2,000) or not more than ten thousand dollars ($10,000) or, in cases in which a bribe was actually received, by a restitution fine of at least the actual amount of the bribe received or two thousand dollars ($2,000), whichever is greater, or any larger amount of not more than double the amount of any bribe received or ten thousand dollars ($10,000), whichever is greater.

It appears that the California Labor Federation includes some readers. Yesterday, they sent a letter to the Attorney General calling for an investigation into illegal vote-trading.

The charge by leaders of the California Labor Federation, State Building and Construction Trades Council, Sierra Club California and the Planning and Conservation League stems from reports that Republican legislative leadership are withholding their votes on a state budget as they attempt to extract votes on policy matters unrelated to the budget.

“Republicans are holding the state budget hostage in a shameful attempt to gut vital workplace and environmental standards that have absolutely nothing to do with the budget,” said California Labor Federation Executive Secretary-Treasurer Art Pulaski. “These actions aren’t just unconscionable, they may be criminal.”

According to a release from the California Labor Federation and the Sierra club there are several examples of actions that may be in violation of California Penal Code.

“Specifically, (Republican leaders) have demanded that legislators vote for proposals to weaken labor and environmental standards as a condition for any ‘aye’ vote from Republican caucus members on the overall budget,” the letter states.

According to the release, “This conduct appears to violate Penal Code Section 86, which prohibits any legislator from offering to give his or her vote in exchange for another legislator’s vote on the same or a different matter.”

Some would call this the criminalization of politics, but in this state, politics is too often a criminal enterprise, and it's high time somebody was taught a lesson. Like the Yacht Party.

AG Brown should do this. There's already a Facebook group set up; I urge you to join it. End the Blagojevich-ization of the California legislature.

Summers Eve

I am definitely worried that Lawrence Summers is acting as a kind of mole inside the Obama White House, defining economic policy in the most neoliberal of ways. I think he is mostly responsible for the mix of tax cuts, particularly corporate tax cuts, in the initial pre-compromised stimulus bill. And he's certainly responsible for the terrible "bad bank" idea, which I haven't gotten around to writing about recently, but which would basically hand over maybe trillions in taxpayer money to the very bankers who got us into this mess. Obama is cautious and certainly listens to varying points of view, but my fear is that Summers was winning the arguments, at least until the past couple days, when the President could no longer abide the right-wing attacks and came out in a forcefully partisan manner.

The question is who will be the counterweight to Summers in the White House? Chris Hayes thinks it could be the Vice President.

Summers has already come to dominate the White House economic policy shop. One person close to Obama's economic team told me that on economic policy, "it's looking like it's Larry's show." This leaves a disconcerting vacuum in the White House for a labor-liberal voice equal in stature and clout. Enter, perhaps, Joe Biden.

In December he named Bernstein, formerly of the labor-friendly, stoutly progressive Economic Policy Institute, to be his chief economic adviser, a position with no recent precedent. Bernstein then co-wrote the first economic report released by the transition team, which attempted to quantify the benefits of the president's proposed stimulus. He is one of the people present for the daily economic briefings to the president.

In the weeks before inauguration, Biden reached out to labor leaders, including the AFL-CIO's John Sweeney, confirming that he would be a strong advocate for them in the White House. And he has publicly supported "Buy American" provisions in the stimulus package that would require participating firms to purchase their materials from domestic companies--a measure that Summers pointedly refused to endorse during a recent briefing with reporters.

Biden is "really pushing hard" on "a more progressive populist approach to economic policy," says Mike Lux, the transition's liaison to the progressive movement. "I'm just delighted that there's somebody with his clout that's doing this, otherwise our side would be in a lot worse shape."

Indeed, Biden's appearance yesterday at a Maryland train station was a signal of his growing progressive populism on domestic issues, as is his task force on the middle class. I didn't think Biden would end up being the champion of any of this, but I hope he can keep Summers from dominating.

Big Bipartisan On Campus

A couple years ago at what was then Yearly Kos, I was quoted in the Washington Post saying that Joe Lieberman was more harmful to progressive policies than, say, Ben Nelson, because Nelson didn't undermine Democrats in the media or borrow Republican talking points.

Let me say that I was wrong, and that Nelson is trying his best to become the new Village darling with a package of cuts to the recovery bill that would negate all of the positive benefits it could possibly offer.

Total Reductions: $80 billion

Eliminations:

Head Start, Education for the Disadvantaged, School improvement, Child Nutrition, Firefighters, Transportation Security Administration, Coast Guard, Prisons, COPS Hiring, Violence Against Women, NASA, NSF, Western Area Power Administration, CDC, Food Stamps

*****************************

Reductions:

Public Transit $3.4 billion, School Construction $60 billion

*****************************

Increases:

Defense operations and procurement, STAG Grants, Brownfields, Additional transportation funding

The Axis of Centrism, in addition to all that, wants to cut aid to the states.

By Thursday evening, aides said the group had drafted a list of nearly $90 billion in cuts, including $40 billion in aid for states, more than $14 billion for various education programs, $4.1 billion to make federal buildings energy efficient and $1.5 billion for broadband Internet service in rural areas. But they remained short of a deal.

I'm sorry, but anyone who proposes cutting funding to state and local governments at this point is a complete moron. The fastest stimulus is government purchasing. The jobs most in need of saving are at the state level. With slashed aid to states, millions of teachers, firefighters, and cops will be out of work. And cutting food stamps is just as dumb, considering that poor people are most likely to spend just on their own basic necessities, increasing demand. The money they don't have to spend on food will go elsewhere in the economy.

Good to see as well that funding for the military, which we spend more on that every other country on Earth combined, is getting increases in the plan. That seems fair and balanced.

Harry Reid is trying to hold the line on this nonsense, but I'm sure Nelson and his axis will go lovingly into the arms of their media cohorts and decry all the "wasteful spending" on poor people that just has to go. Sen. Jeff Merkley, who can't get on the teevee because of all that patchouli oil and tie-dye, makes the obvious point: there's nothing wasteful about creating a job. That would be a unique perspective!

One project they're attacking hit close to home. They're calling funding to restore forest health and prevent wildfires in National Forests wasteful. Coming from Southern Oregon, I can tell you firsthand they are dead wrong.

I grew up in Southern Oregon. My father was a sawmill worker and a logger and his job put food on the table. Right now Douglas County, where I was born, has an unemployment rate of 12.8 percent. That's the highest it's been in decades and well above the current national average. Douglas County is home to many of Oregon's timber workers and they need the stability of a good paying job. The money that would be allocated to counties like Douglas to restore forest health and prevent forest fires would put these folks back to work.

Let me explain. Due to federal mismanagement, there are millions of acres of choked and overgrown second-growth forests. These forests are a complete menace. They are diseased and are very little use for strong ecosystems. Moreover, they are a huge fire hazard. Thinning these neglected forests is essential for restoring forest health and generating thousands of rural jobs.

Let me emphasize this: this provision will create thousands of rural jobs. This is a win-win for our rural economies and our ecosystems.

Preventing wildfires is something that desperately needs to be done in any economic condition and now has the added benefit of providing jobs in areas that need them most. How Republicans can call job creation for hardworking millworkers like my dad "wasteful spending" is a mystery to me.

If Nelson and his centrists are choking on the price tag of the bill, they can get rid of the tax cuts they all inserted that will do nothing for anyone.

Sen. Olympia Snowe (ME), one of the four Republicans considered genuinely open to cooperation with Democrats on a workable economic recovery bill, just released a statement saying she was approached by Majority Leader Harry Reid (D-NV) to come up with a list of trims from the $275 billion-plus tax section of the stimulus.

Pruning the tax section of the stimulus is an idea that could hold promise for liberals, many of whom are concerned about the hits that education and transit would take in the centrist senators' package of cuts. The portion Snowe is looking at contains plenty of cuts, for both businesses and individuals -- some of them added in the hopes of winning GOP support -- but also a number of tax credits that could take money out of government coffers in the short term while increasing economic growth in the long term.

If it suits you to make a bunch of phone calls, if there's anything to go to the mats over, it's this: defeating the Nelson-Collins amendment and preserving at least the good parts of the bill. Not to mention making David Broder cry. At least the bulk of the Republicans are honest neo-Hooverists; I respect them more. Ben Nelson and his "very serious" friends deserve to go down.

...by the way, Krugman is absolutely right about this:

Which raises the obvious question: shouldn’t Obama have made a much bigger plan, say $1.3 trillion, his opening gambit? If he had, he could have conceded to the centrists by cutting it to $1.2 trillion, and still have had a plan with a good chance of really controlling this slump. Instead he made preemptive concessions, only to find the centrists demanding another pound of flesh as proof of their centrist power.

Obama negotiated with himself, and this is the result. We can only speculate on what might have been if he didn't pre-compromise the bill.

...Ben Nelson, by the way: for state aid before he was against it.

AP: Wankers Of The Year

It's only February: but this qualifies:

On buttons, posters and Web sites, the image was everywhere during last year's presidential campaign: a pensive Barack Obama looking upward, as if to the future, splashed in a Warholesque red, white and blue and underlined with the caption HOPE.

Designed by Shepard Fairey, a Los-Angeles based street artist, the image has led to sales of hundreds of thousands of posters and stickers, and has become so much in demand that copies signed by Fairey have been purchased for thousands of dollars on eBay.

The image, Fairey has acknowledged, is based on an Associated Press photograph, taken in April 2006 by Mannie Garcia on assignment for the AP at the National Press Club in Washington.

The AP says it owns the copyright, and wants credit and compensation. Fairey disagrees.

This is just a failing media company trying to capitalize off of someone else's art. When you are an artist who cannot get a public figure to come in for a sitting, you can appropriate images under the concept of fair use. The AP does not have a copyright on Barack Obama's image, and that's what Fairey used.

Wankers.

Labor Finally Goes To The Mattresses For Solis

After waiting and waiting, labor groups are finally demanding that Hilda Solis be confirmed as the Secretary of Labor. Andy Stern of the SEIU made a short video:



Their action page has a petition.

And this is just the beginning:

"Enough is enough, the gloves are coming off on Friday," said one official with the AFL-CIO, outraged over the delays. "Labor, women's groups, Hispanic groups are opening fire. We worked with Republicans in good faith. Hilda Solis has answered all their questions but they continue to oppose her for partisan ideological reasons."

With Solis's nomination stalled again on Thursday after revelations that her husband had just settled $6,400 in tax leins against his business, unions are no longer willing to hold their breath for the sake of fewer dramatics.

"Our full efforts are being mobilized to fight back," the union official said. "Earned media and field campaign to generate calls, letters, and emails coming tomorrow. Depending on how things move paid media will be added on top of these efforts."

Good to see. Progressive groups like MoveOn should get Hilda's back, too.

UPDATE: Our old friend Hans von Spakovsky, vote suppressor extraordinaire, is writing anti-Solis screeds in places like The Weekly Standard.

UPDATE II: MoveOn jumps in with a letter to the editor tool.

An Army Of Krugmans

Paul Krugman delivered some upside the head slaps on Morning Joe today. Pat Buchanan actually tried to argue in favor of the WARREN HARDING TAX CUTS that led to expansion - never mind the Republican Great Depression afterwards. Joe Scarborough tried the fool's game of disowning Bush, saying he was a big spender and not a classic conservative - never mind the fact that Reagan and both Bushes increased the deficit more than every other President combined. Krugman was having none of it. It's worth watching from about the 4:30 mark on. Here's one sample bite.

KRUGMAN: Look at what just happened, we had a proposal I think it was McCain’s proposal for an economic recover package, his version of it which was all tax cuts, a complete, let’s do exactly what Bush did, have another round of Bush-style policies. After eight years which that didn’t work and we got 36 out of 41 Republican senators voting for that which is completely crazy. So how much bipartisan outreach can you have when 36 out of 41 republican senators take their marching orders from Rush Limbaugh?

Unfortunately, there aren't 150 Paul Krugmans to deploy to every news outlet in America. There are, however, 150 liberal Democrats in Congress, maybe even more! I know there's a substantial faction of Democrats who are moles, essentially, and committed more to having Beltway chatterers smile at them in the hallways than anything else. But there really are enough actual Democrats to defend the concept of a stimulus. Here is someone who is decidedly NOT a Democrat, Steven Pearlstein, saying what shouldn't need to be said, but definitely is, because Democrats have been cowtowed by Republican B.S. for so many years.

Let's review some of the more silly arguments about the stimulus bill, starting with the notion that "only" 75 percent of the money can be spent in the next two years, and the rest is therefore "wasted."

As any economist will tell you, the economy tends to be forward-looking and emotional. So if businesses and households can see immediate benefits from a program while knowing that a bit more stimulus is on the way, they are likely to feel more confident that the recovery will be sustained. That confidence, in turn, will make them more likely to take the risk of buying big-ticket items now and investing in stocks or future ventures.

Moreover, much of the money that can't be spent right away is for capital improvements such as building and maintaining schools, roads, bridges and sewer systems, or replacing equipment -- stuff we'd have to do eventually. So another way to think of this kind of spending is that we've simply moved it up to a time, to a point when doing it has important economic benefits and when the price will be less.

Equally specious is the oft-heard complaint that even some of the immediate spending is not stimulative.

"This is not a stimulus plan, it's a spending plan," Nebraska's freshman senator, Mike Johanns (R), said Wednesday in a maiden floor speech full of budget-balancing orthodoxy that would have made Herbert Hoover proud. The stimulus bill, he declared, "won't create the promised jobs. It won't activate our economy."

Johanns was too busy yesterday to explain this radical departure from standard theory and practice. Where does the senator think the $800 billion will go? Down a rabbit hole? Even if the entire sum were to be stolen by federal employees and spent entirely on fast cars, fancy homes, gambling junkets and fancy clothes, it would still be an $800 billion increase in the demand for goods and services -- a pretty good working definition for economic stimulus. The only question is whether spending it on other things would create more long-term value, which it almost certainly would.

All spending is stimulus. It's four words that have been absent from the debate. Democratic lawmakers have been banned from the teevee, I know, but when they do manage to get on, they could do worse than uttering those four words. All spending is stimulus. And if you want to talk about speed, the fastest stimulus is government purchases, either local, state or federal. This is exactly what the axis of centrism and the far right are trying to remove from the bill.

I think Obama's speech to House Democrats last night was intended for a very particular audience. They are being outworked and they need to pull their weight.

(Just to be clear, the bill has too many tax cuts, and if the Axis of Centrism can't swallow the price tag, they can get rid of the $70 billion AMT patch and the $35 billion home-buying credit and the auto-buying credit, cuts which won't help anyone who can't afford a home or a car and will just give away free money to people who would have bought those items anyway. There's your $100 billion in cuts.)

Happy Holidays!

Welcome to furlough day, that time of year twice a month where state workers take a (government-imposed) break, stopping to smell the roses, think about the good times, and just be.

Scores of state offices will be closed today as more than 200,000 workers take their first unpaid day off in response to California's deepening fiscal crisis.

That means Californians won't be able to take a driver's license test or conduct business at some state office buildings [...]

Among the closed offices will be all Department of Motor Vehicles outlets, Fish and Game, Food and Agriculture, Social Services and the Commission on Teacher Credentialing.

The Department of Mental Health will be closed, but mental hospitals will remain open. Workers Compensation offices will be closed.

State parks, which generate revenue from entrance fees, will remain open, as will state courts, the secretary of state's offices, California Highway Patrol offices and campuses of the University of California, Cal State and California Community Colleges. Public safety employees are exempt from the Friday furloughs and can schedule their days off differently.

I particularly enjoy that the Governor's Office of Emergency Services is closed. Good thing no emergencies happen on a Friday! I'd ask Arnold's press secretary about that one, but he's probably not working today.

The other offices that are closed are the Employment Development Department and the Unemployment Insurance Appeals Board. The salaries of those employees are largely paid by the US Department of Labor, and so, while very little or no money will be saved, the jobless will find it harder to collect, which is probably the point.

Over the objections of the federal government, workers handling jobless assistance claims and appeals have been ordered by Gov. Arnold Schwarzenegger to go on furlough -- even though nearly all their salaries are paid by the U.S. Labor Department, and their days off will save the state very little or no money.

In a letter late last month, the department warned that furloughs could worsen the state's current "below standard performance" in meeting criteria for the timely handling of unemployment claims and appeals.

Failure to comply with the department's demands could violate Social Security laws, said the letter's author, Richard C. Trigg, regional administrator in San Francisco of the Labor Department's Employment and Training Administration.

The governor's office said it was unmoved by the federal concerns.

Now that's the spirit of the furlough holiday season!

Somebody should ask Arnold if he's closing the unemployment office so people can't get their benefits. Maybe on Monday. Because, you know, he's a state employee, so he must be off today.

...I would actually be OK with a 4 day, 10 hour work week that would save on energy and transportation costs and increase employee satisfaction as well as recruitment for state jobs. And if employees staggered their time off, government offices could stay open full-time. But this furlough is nuts.

Is It Fearmongering If It's True?

The President lit into Republicans last night at a House Democratic retreat with a fiery, almost campaign-like speech.

Obama, speaking to about 200 House Democrats at their annual retreat at the Kingsmill Resort and Spa, dismissed Republican attacks against the massive spending in the stimulus.

"What do you think a stimulus is?" Obama asked incredulously. "It’s spending — that's the whole point! Seriously.”

Stabbing hard at Republicans who once aligned themselves with his predecessor, Obama made it clear that the problems he seeks to address with his recovery plan weren’t ones of his making.

“When you start hearing arguments, on the cable chatter, just understand a couple of things,” he said. “No. 1, when they say, ‘Well, why are we spending $800 billion [when] we’ve got this huge deficit?’ – first of all, I found this deficit when I showed up, No. 1.

“I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office.”

Obama went on to contrast the kind words of House and Senate Republican leaders with their increasingly strident opposition to the stimulus package.

“We were complimented by Republicans saying, ‘This is a balanced package . . . we’re pleasantly surprised,’” he said. “Suddenly, what was a ‘balanced package’ is suddenly out of balance.”

In some circles this has been derided as fearmongering, this idea that the consequences of doing nothing are grave and serious. Um, here are the consequences of doing nothing, George Bush's final gift to a dying nation:

Employers slashed another 598,000 jobs off of U.S. payrolls in January, taking the unemployment rate up to 7.6%, according to the latest government reading on the nation's battered labor market.

The latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008.

The loss since November is the biggest 3-month drop since immediately after the end of World War II, when the defense industry was shutting down for conversion to civilian production.

This isn't a game and it isn't a false threat. We need a massive boost to the economy and the spender of last resort is government.

...Krugman:

It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.

Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again [...]

The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

Passing Thought

So, if you nominate a Commerce Secretary whose views differ so far from yours that you feel the need to take away core functions of the department for fear of what he would do in charge of them...

...was it really such a good idea to nominate him?

And by the way, to those Republicans shrieking that "OMG they took the Census away from Judd Gregg," I've been waiting to say this, but, you lost the election. If you wanted to run the Census, maybe you should have beat Barack Obama.

Senate's Reverse-Midas Touch Turns Economic Recovery To Dung

When the initial Obama recovery plan came to the Congress, it had about a 40%-60% ratio between spending and tax cuts. That got reduced to around 33%-67% in the House bill. Based on the amendments that have passed and the inclusion of the AMT patch in the Senate, if the axis of Nelson-Collins are successful in scooping out $100 billion in spending that percentage could be closer to 50%-50%. This is especially true because the ridiculous home-buyer credit, passed last night, is now twice as costly as once imagined.

The measure, which had been championed by GOP Senator Johnny Isakson, would give $15,000 (or 10 percent of the purchase price, whichever is lower) to every person who buys a home in 2009.

As late as this afternoon, the overall price tag allotted for this measure was around $18.5 billion.

But the ultimate real world cost of this measure has been disputed, with some critics predicting that it would cost much more, given the expected levels of housing sales this year.

Turns out the critics may have been right. The nonpartisan Joint Committee on Taxation has just sent a letter to Chuck Schumer, who’s on the Finance Committee, responding to Schumer’s request that the Committee score an estimate of the measure’s cost.

The total price estimated by the Committee? $35.5 billion — double the original cost, says the letter, which was sent our way by Schumer’s staff.

So now we have a $35 billion dollar bailout for the mortgage industry in this bill, and the offsets are coming from state and local government relief, so county hospital workers and cops and firefighters can be thrown out of work?

This is lunacy. Robert Reich has an on-point explanation of how this debate SHOULD have gone, if we lived in a marginally sane country.

Regardless of your ideological stripe, you've got to see that when consumers and businesses stop spending and investing, there's only entity left to step into the breach. It's government. Major increases in government spending are necessary, and the spending must be on a very large scale. In the last several weeks the President has put forward the outlines of a stimulus plan, and has left it to the House and Senate to fill in the details. A tiny portion of the details that made it into the House version should be stripped away because they seem like old-fashioned pork. But most spending in the bill is absolutely appropriate. My worry is there's not nearly enough of spending to fill the shortfall in overall demand.

Yet at this very moment, Senate Republicans are seeking to strip the President's stimulus package of many of its spending provisions and substitute tax cuts. Part of this is pure pander: They know tax cuts are more popular with the public than government spending, even though spending is a far more effective way to stimulate the economy (more on this in a moment). Another part is pure partisan politics: Republicans are emboldened by Obama's willingness to court Republicans (taking three Republicans into his cabinet, bringing Republican leaders into the White House for consultations, putting all those business tax cuts into the stimulus bill in order to gain Republican favor) without getting anything at all back from the GOP. House Republicans snubbed the bill entirely. So, Senate Republicans say to themselves, what's to lose?

Plenty. Millions more jobs and a full-fledged Depression, for example.

We're adding in tax cuts that people will either give to bankers to pay down debt or keep in savings accounts in case they're the next to get fired. Maybe they'll buy some cheap crap from China. And we're taking out spending that can give people jobs and circulate multiple times through the economy to increase demand. This is so stupid.

Here's the deal. Obama pre-compromised with 40% tax cuts. That's too high, and I'd prefer having only the targeted, progressive tax cuts (like the child tax credit, tuition tax credit, and reduction in withholding) in there, but let's take the midpoint between Obama's initial offer and the House bill. That's 37.5% tax cuts. That ratio should be FIXED. If you add tax cuts in, you have to take tax cuts out so the ratio stays the same. If you want to give $35.5 billion to home buyers, you can eliminate those worthless business tax cuts in the exchange. Obama should announce that the ratio must be preserved or he cannot accept the bill. Veto threats work. These people cave.

...Maybe he'll do that this Monday. Greg Sargent reports that Obama will hold a nationally televised news conference. Maybe he can explain what a stimulus is and why it's needed, as well.

Iraqi Election Update

The newspapers are reporting a big win for Prime Minister Maliki in the provincial elections, and predictably are leaving out the nuance that such a victory entails. First of all they are claiming that this win for Maliki is a "loss for Iran," as if Iran doesn't have major ties to the Dawa Party and Maliki himself.

Second, while everyone is focusing on the Shiite Maliki/Sadr split - and really, Maliki had all the guns, so his victory was sealed when the US military helped him raid Basra - it's the marginalization of the Sunnis in Baghdad that could spark outrage and unrest, much like the apparent electoral fraud in Anbar:

The conventional wisdom has been that the provincial elections would redress the sectarian imbalance in the Baghdad Council -- which had only one Sunni, a Communist, out of 57 seats because of their boycott of the 2005 elections. Sunnis (many of whom continue to believe themselves a majority) expected to capture a significant share of the Baghdad council this time. Most U.S. analyses shared that expectation, which was the basis for hopes that the provincial elections would lock in the incorporation of Sunnis into the political process.

But a dramatic increase in Sunni representation (commensurate with their aspirations) was always unlikely for one big reason: the clearly visible refusal to take serious measures to allow refugees or internally displaced persons to vote. IDPs were technically enfranchised, but the rule that they vote in their place of origin and the inefficiency of the bureaucracy ensured that few actually would. In September, Brian Katulis and I warned that failure to deal effectively with the IDP problem would "essentially ratify the country's new sectarian map" created by the bloody sectarian cleansing of 2006-07. According to IOM's authoritative surveys, about 64% of Iraqi displaced come from Baghdad -- and it is in Baghdad where the effects of their disenfranchisement are most being felt. With less than 10% (or even 20%) of the seats in the Baghdad council, Sunnis may well feel that this warning has come true. How will they react?

The unexpectedly strong showing of Maliki may reflect a popular yearning for a strong central government. But add on the unexpectedly strong showing of the Islamic Party in Anbar, and it is difficult to not wonder whether there is more to the strong showing of the incumbent parties than their popularity. Months of "shaping operations" and state-funded patronage may have had something to do with it as well. But either way, the provincial elections seem likely to shift attention to exactly the question we worried about last fall: how will frustrated challengers react to their failure to obtain the share of state power that they had expected? Ahmed Abu Risha, head of the Iraqi Awakening Conference and a key American ally in Sunni Iraq, has already proposed one answer: "We will form the government of Anbar anyway...An honest dictatorship is better than a democracy won through fraud." That beats the "Darfur" and "graveyards" and "streets running with blood" of which others speak, I suppose... but none are quite what the cheerleaders for this process seem to have had in mind.

The Sunni Awakening was predicated on hopes that they would get a share of power somewhere down the line. If they are shut out of the political process, who's to say they won't turn to other means?

...It looks like some thumbs were placed on the scales in Anbar, giving the election to a third party and not the Awakening coalition or the Iraqi Islamic Party. Lynch:

I never expected the provincial elections to solve all of Iraq's problems, and they didn't. The elections have created new problems that need to be recognized and dealt with -- especially Sunni frustration in Baghdad, intra-Sunni strife in Anbar, perceptions of electoral fraud in support of incumbents, IDP and refugee disenfranchisement, and the impact of the election of a strongly anti-Kurdish front up north. But that doesn't mean that disaster is lurking around every corner -- with luck, these new problems can be dealt with constructively.

Lest my coverage appear too negative, let me say that I'm very pleased to see the collapse of ISCI across much of the country and hopefully the end of its designs on creating a Shia super-region. And I'm happy with the strengthening of forces calling for a stronger central state -- since I've been arguing for years that the consolidation of a Weberian Iraqi state is the key to establishing the conditions for successfully extracting the U.S. military. With luck, the coalition-building phase can allow points of entry for some of the potentially frustrated challengers.

I'm sincerely hoping that all the parties involved can work out their conflicts peacefully and that the results are accepted as broadly legitimate -- both of which require frank, honest looks at what really happened and why. And then with the elections out of the way, the U.S. should move on to the business of starting its troop withdrawals and setting a new course.

UPDATE: This Anthony Zinni story is completely weird. He was offered the Ambassador job in Iraq and then never heard anything until he found out he was replaced by Christopher Hill (who ran the North Korea diplomacy)? How could they do that? Zinni is a valuable asset for Democrats on national security. Is the Obama team going to disrespect every Democratic general one by one?

Next Up He Should Hijack The Private Jet To Davos And Take It To Malawi

This is actually a cool move by Bill Gates:

In what is probably the coolest conference-talk attention grab I've ever heard of, Bill Gates apparently just released a swarm of mosquitoes into the crowd at TED, the geniuses-only mind meld. Holy shit.

"Not only poor people should experience this," the Tweetosphere has Gates saying as he released the swarm into the audience. Malaria is a cause that Bill and Melinda have been hitting hard with their philanthropy, and this is certainly a way to drive that point home.

Take away their box lunch too. Turn TED into an episode of 30 Days!

The amount of money in that room could pay for mosquito netting for the entire continent of Africa. They should have it in their faces more.

The Afghanistan Muddle

I was on a phone call today set up by VoteVets to talk about Afghanistan with Maj. Gen. Paul Eaton, Lawrence Korb and a couple other foreign policy Democrats. And they were talking about various theories and strategies behind what to do in Afghanistan, though clearly with a lean toward escalation. Near the end of the call, I asked, "How exactly are we going to convey these new troops and supplies to bases in Afghanistan?" Sounds like a simple question, but it's not. The Taliban has been going after supply lines out of Pakistan for months, recently destroying a key bridge that has been used by the military on one of the main supply routes. The other main base and point of conveyance into Afghanistan has been from Kyrgyzstan, and they're vowing to close the US base.

MOSCOW — In Moscow to seek financial support, the president of Kyrgyzstan, Kurmanbek Bakiyev, on Tuesday announced that a decision to close a U.S. air base in his country — a decision that will seriously hamper U.S. efforts in Afghanistan.

Mr. Bakiyev arrived in Moscow under pressure to ease economic troubles in Kyrgyzstan, which is heavily in debt to Russia and dependent on remittances from migrant workers. President Dmitri A. Medvedev said Russia would extend a $2 billion loan and $150 million in aid to Kyrgyzstan, which Mr. Bakiyev hailed as “serious and important support.”

At a press conference, Mr. Bakiyev said the U.S. had not paid Kyrgyzstan enough in return for the use of the base – and expressed anger over a 2006 case in which an American serviceman shot and killed a Kyrgyz truck driver on the base. The American left the country, against official protest.

“How can we speak of independence and sovereignty if we cannot enforce the law on the territory of our own country?” he said, at a press conference. “All this has given rise to a negative attitude to the base in Manas. And that is why the government has made such a decision.”

There is a belief that Russia put the Kyrgyz leader up to this. But the underlying machinations don't really matter. This is a key supply and refueling point.

I didn't really get a satisfactory answer from the distinguished panel assembled other than "this is tough." And it seems to me that, if you can't even explain how these escalation troops are going to GET to Afghanistan, you haven't gone very far to explaining what their mission is and why.

The Joint Chiefs report urging a rollback of US goals in the region is very important and even a little encouraging. No longer are we looking for a model democracy to spring up in a country that has never known one. We are simply trying to deny safe haven to forces that would plot terror attacks against the United States. And given this massive scaling back of desires in the region, it seems to me that a major troop commitment, especially when the supply lines are breaking down, doesn't connect at all with those new goals. There are counterinsurgency efforts that could be undertaken with Afghan and Pakistan forces in the lead. The diplomatic effort can be targeted at those countries rooting out homegrown terror cells, as they are now doing. Afghan's government can take shape based on the desires of its own people. But that doesn't require a massive commitment of manpower and treasure without end:

According to military officials during last week’s meeting with Defense Secretary Gates and the Joint Chiefs of Staff in the Pentagon’s “tank,” the president specifically asked, “What is the end game?” in the U.S. military’s strategy for Afghanistan. When asked what the answer was, one military official told NBC News, “Frankly, we don’t have one.” But they’re working on it.

This push to escalate doesn't make a lot of sense when you take a step back.

Best To Ruth Bader Ginsburg

The Supreme Court Justice went pretty quickly from routine checkup to pancreatic cancer surgery.

The 75-year-old Justice Ginsburg, the only woman now serving on the court, was treated for colon cancer a decade ago. After a pioneering career as a legal advocate for women's rights, a law professor and a federal appellate judge, she was elevated to the high court by President Bill Clinton in 1993, and has been a reliable member of the court's liberal wing.

The court said Justice Ginsburg had no symptoms prior to her annual checkup in late January at the National Institutes of Health in Bethesda, Md., where a CAT scan detected a tumor one centimeter across in the center of her pancreas. Last week, Justice Ginsburg and her husband, tax lawyer and law professor Martin Ginsburg, visited specialists in New York, people familiar with the matter said.

She had surgery Thursday at Memorial Sloan-Kettering Cancer Center in New York, the court said. It also said that her attending surgeon, Murray Brennan, expected the justice to remain hospitalized for seven to 10 days.

Best wishes to her for a speedy recovery. Speculating about the Court is ghoulish at this time and I won't do so. Ginsburg has been a pretty stalwart protector of Constitutional rights and I hope she's back on the bench soon.

Harkin (Hearts) Dean

When I saw the boomlet for Howard Dean as HHS Secretary, I didn't think it was plausible. I certainly didn't think a high-profile Senator would come out and back him.

Iowa Senator Tom Harkin, who endorsed Dean's presidential campaign in 2004 and is rumored to be in the HHS running himself, applauded the idea of the former DNC header taking over the cabinet post vacated by Tom Daschle.

"I think that would be a very good move," Harkin told the Huffington Post. "He brings all the background and experience. He's very strong on prevention and wellness, which I'm very strong on. I think he'd make an outstanding secretary of HHS."

Asked if he had spoken to White House on the matter, Harkin demurred: "I'm not going to get into that," he said after a pause.

The thousands on Facebook, I expected, but not this. Color me surprised, and good for Tom Harkin.

By the way, here's a short list of Vermont's health care picture after Dean's leadership. As a small state Vermont has different issues than the rest of the country, but this is an indication of what Dean has done and can do.

Under Governor Dean's leadership, Vermont developed one of the best health care systems in the country.

• 96% of Vermont children have health insurance and 99% are eligible for coverage under Governor Dean's Dr. Dynasaur program.

• More than a third of Medicare recipients in Vermont receive state help in paying for prescription drugs.

• Vermont was ranked the "Healthiest State" in the U.S. in 2001, 2002 and 2003 by the Morgan Quinto Press.

• In 1997, Governor Dean signed a law requiring insurance companies in Vermont to provide the same coverage for mental illness and substance-abuse treatment that they provide for physical conditions.

• As a result of early intervention programs established by Governor Dean, 89% of pregnant Vermont women enter prenatal care in their first trimester and 91% of families with newborns receive a voluntary home visit.

• Vermont has the lowest teenage pregnancy rate in the country – teen pregnancies decreased 49% during Governor Dean's tenure.

• Child abuse dropped 45% under Governor Dean. Vermont was the first state to institute a statewide protocol for abuse investigations.

• Vermont ranks second in the nation in child immunizations -- 81% of children are fully immunized by age 2 and 97% are immunized before kindergarten.

Now Husband's Tax Issues Are Fair Game

Hilda Solis's confirmation in the Senate HELP Committee was abruptly cancelled today after a report surfaced about her husband paying $6,400 to remove a tax lien on his business.

The report, by USA Today, came just before the Senate's Health Education Labor and Pensions Committee was slated to meet to consider Solis's nomination, which had been delayed by questions over her role on the board of the pro-labor organization American Rights at Work. A source said that committee members did not learn about the tax issue until today.

"Today's executive session was postponed to allow members additional time to review the documentation submitted in support of Representative Solis's nomination to serve in the important position of Labor Secretary," read a joint statement issued by Sen. Edward M. Kennedy (D-Mass.), the panel's chairman, and Mike Enzi (Wyoming), the committee's ranking Republican. "There are no holds on her nomination and members on both sides of the aisle remain committed to giving her nomination the fair and thorough consideration that she deserves. We will continue to work together to move this nomination forward as soon as possible."

No new date has been set for the hearing. The disclosure about Solis's husband comes after tax problems caused trouble for three of Obama's top appointees, leading two of them -- HHS-nominee Tom Daschle and Nancy Killefer, who was to be chief performance officer -- to withdraw.

Senate Republicans have been slow-walking this nomination for weeks, and this revelation gave them another reason to do so. To be clear, we're talking about her husband's business. Given that she's in Congress and is in Washington most of the time, I doubt very highly that she has anything to do with it. In addition, by paying the taxes, Solis and her entire family are adhering to Obama's ethical standards, not subverting them.

So this is the latest in a months-long obstructionism. The LA Times reported today that some GOP members were trying to put a gag order on Solis:

Underscoring the bitter debate over a proposal to make it easier for workers to form unions, Republican senators are suggesting that President Obama's pick for Labor secretary must recuse herself from lobbying for the bill's passage.

In a written exchange with Solis, Republican senators indicated they are wary of her ties to a tax-exempt group dedicated to helping workers unionize [...]

Solis' Cabinet nomination is in the crossfire. She was a co-sponsor of the bill in 2007 and has served for the last four years on the board of American Rights at Work. Solis receives no salary as a board member or treasurer [...]

In their questionnaire, the senators noted that American Rights at Work has lobbied for passage of the bill. They asked Solis whether she would seek a waiver from the Obama administration or avoid any role in passing the legislation.

Solis replied that she does not need a waiver and has no intention of stepping back. She said she was only a member of Congress exercising her powers.

"I am not a registered lobbyist, nor do I in any way meet the statutory requirements for registration as a lobbyist," she wrote.

The American Rights at Work thing is a complete red herring. She was a representative figure for those who supported Employee Free Choice in Congress. She is not a lobbyist. She supported a bill. And so denying her free-speech rights seems ridiculous to the extreme.

I don't know if a family member's tax issue is enough to sink this nomination (like the last Labor Secretary's spouse, one Mitch McConnell, has no ethical issues to speak of), but I for one think Solis should be confirmed. And as for the Employee Free Choice Act, the battle for a fair workplace goes on. Thousands of people are marching in the streets of Los Angeles today in support of free choice.