As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Saturday, February 14, 2009

Sen. Correa Really Doesn't Want To Vote For The Budget

It's clear that he doesn't. He probably thinks it will cost him his re-election in 2010. That may or may not be, but certainly it's his point of view. There is no other reason why the vote was rescheduled. And it's certainly why Dem leaders are offering him incentives:

In what some might call an amazing coincidence, a measure to give Orange County an extra slice of the state budget pie was included in Saturday's deficit-closing proposals, the fate of which rested heavily on the vote of an Orange County state senator.

The senator, Lou Correa of La Habra, was the only Democratic member of the upper house reported to be "noncommittal" on whether to support a $40 billion package of tax hikes, spending cuts and loans designed to close the gap in California's budget.

Correa's vote is vital because Senate Republican leader Dave Cogdill of Modesto said that for any Republicans to cast votes for the package - and three are needed to give it the 27-vote two-thirds majority it needs - all Democrats will have to vote aye. "I just don't think it gets out if he (Correa) doesn't go up on it," Cogdill said earlier this week.

Capitol sources, who asked not to be named while commenting on private negotiations, said language had been inserted in the massive 33-bill package that would give Orange County $35 million in additional property tax revenues in the coming fiscal year; $35 million in the 2010-11 fiscal year, and up to $50 million annually after that.

Further delays mean he's further away from saying yes to the whole thing. And of course, this is another perverse outcome of the Yacht Party's stranglehold on the budget process - Correa's marginal seat shouldn't really hold the key to whether or not this passes.

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The Unbearable Lightness Of Glenn

Practically all I know about Glenn Beck is that he once famously said "It took me about a year to start hating the 9-11 victims' families."

Beck: You know, it took me about a year to start hating the 9/11 victims' families. It took me about a year. Um, and I had such compassion for them and I really, you know, I wanted to help them, and I was behind -- let's give them money, let's get them started, and all of this stuff. And I really didn't -- all the 3,000 victims' families, I don't hate all of them, I hate about, probably about ten of them. But when I see 9/11 victim family, you know, on television, or whatever, I'm just like, 'Oh, shut up.' I'm so sick of them. Because they're always complaining. And we did our best for them. And again, it's only about ten.

So to see him tear up over the death of 9-11 widow Beverly Eckert, who died in that terrible Buffalo plane crash, is an act of hypocrisy by which all future hypocrisy can be judged. These guys wrap themselves in 9-11 so easily that they don't even know when they're contradicting themselves.

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This Would Be A Legacy

A bill was introduced last week in Congress that would end the travel ban to Cuba and restrict the ability to reimpose the ban in the future. This type of legislation has been offered in the past but went nowhere. However, the new President has been supportive of lifting the ban (and possibly the embargo), and Cuba's new President has returned the love:

The Obama administration has taken note of remarks both by Cuban President Raul Castro and by his brother, former President Fidel Castro, expressing, in part, positive sentiments about Barack Obama and the significance of his presidency, according to a senior State Department official. Both Castros, using somewhat different language, have said they view Obama as intelligent and sincere in wanting to change U.S. foreign policy and see his presidency as historic.

The Castros' remarks have come since the U.S. election and have continued occasionally in interviews, comments to the media, and, in the case of Fidel Castro, his frequent articles in the Cuban press. "I think the statements are important. They've registered," said the State Department official.

U.S. policy toward Cuba, including the various restrictions that flow from a 47-year-old economic embargo, will be reviewed by Obama administration agencies. During the campaign, Obama said that he intended to remove restrictions on travel and remittances to Cuba by Cuban-Americans and that he favored well-prepared "direct diplomacy" with the island's communist government.

Cuba is moving forward, albeit gradually, with some economic reforms, and there are signs that the Cuban people are pushing for additional political and social reform from the bottom up. There's nobody better positioned to capitalize on this than President Obama. Robert Farley notes:

Nothing says EPIC FAIL more than the 47-year policy of disengagement and embargo that the United States has pursued toward Cuba -- even strong Castro foes would be well advised to seek an alternative approach. As Doherty notes, Obama doesn't appear to be afraid of the Cuban-American vote in Florida. The community is becoming more politically diverse, and in any case is losing its demographic grip over the state's electoral votes. Cuba has real "legacy" potential for Obama; 10 presidents have failed to dislodge either Castro or his opponents in the United States.

Absolutely. And while the economic benefit during this downturn would be small, certainly there would be increased regional stability in South Florida to come with a more vibrant system of trade and rapport with Cuba. I think it would be an excellent thing to focus on diplomatically in the first term.

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Let's Play "Bring Down The Government Of The Nuclear-Armed State"

Another Predator drone attack killed at least 20 in Pakistan, according to early reports. While the US government continues to claim that these strikes are successful, at the very least they anger local populations and provide fuel for extremist organizations like the Taliban, which are already established in much of Pakistan and willing to weaken an already struggling young democratic government.

Given the circumstances, why in God's name would Dianne Feinstein make a statement like this that could increase anger among the disaffected in the country?

A senior U.S. lawmaker said Thursday that unmanned CIA Predator aircraft operating in Pakistan are flown from an air base in that country, a revelation likely to embarrass the Pakistani government and complicate its counter-terrorism collaboration with the United States.

The disclosure by Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Intelligence Committee, marked the first time a U.S. official had publicly commented on where the Predator aircraft patrolling Pakistan take off and land.

At a hearing, Feinstein expressed surprise over Pakistani opposition to the campaign of Predator-launched CIA missile strikes against Islamic extremist targets along Pakistan's northwestern border.

"As I understand it, these are flown out of a Pakistani base," she said.

The basing of the pilotless aircraft in Pakistan suggests a much deeper relationship with the United States on counter-terrorism matters than has been publicly acknowledged. Such an arrangement would be at odds with protests lodged by officials in Islamabad, the capital, and could inflame anti-American sentiment in the country.

The Pakistani government, a nuclear-armed state, is literally fighting for their lives against Taliban forces. They have 120,000 soldiers in the fight. There are extremists and terrorists all over Pakistan - the government is finally acknowledging that the Mumbai attacks were launched from their soil. What can bring down the government in Pakistan quickly is losing the faith and support of the people, who are not disposed to the United States even under President Obama. It's extremely delicate and for Feinstein to make a statement like this, which will be seized on by the Taliban and used to whip up anger against Zardari and his government, is absolutely irresponsible.

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Friday, February 13, 2009


Up close it looked pretty ugly, but now that the stimulus has passed it doesn't look so bad, even if it's a bit small.

The signage will happen on Monday. Measured against recent first 100 days, this is pretty darn good for the first 25.

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Friday Random Ten

I'll be in Palm Springs this weekend for this. There's a remodeling coming down the pike and it's a good way to get some ideas. So posting will be light, although I'm going to try and load up some stuff to fill out the next couple days. And that music you've been asking for?

Hyper-Ballad - Bjork
Stem/Long Stem/Transmission - DJ Shadow
(Rock) Superstar - Cypress Hill
Dirtywhirl - TV On The Radio
Rapture - Blondie
Maybe I'm Amazed - Paul McCartney (Wow, really? I think I downloaded this when I was editing my sister's wedding video, because this was her song. That's my story and I'm sticking to it.)
Kick Out The Jams - Rage Against The Machine
Run Thru - My Morning Jacket
Troubles - The Beta Band
Hiperboreal - Dandy del Sur

OK, McCartney aside, I think my street cred is intact.

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Specter The Scapegoat

This is quite telling.

Sen. Arlen Specter (R-PA), who broke with his party to support President Obama's stimulus package last week, said before the final vote Friday that more of his colleagues would have joined were they not afraid of the political consequences.

"When I came back to the cloak room after coming to the agreement a week ago today," said Specter, "one of my colleagues said, 'Arlen, I'm proud of you.' My Republican colleague said, 'Arlen, I'm proud of you.' I said, 'Are you going to vote with me?' And he said, 'No, I might have a primary.' And I said, 'Well, you know very well I'm going to have a primary.'"

Politicians generally have no courage, and Republicans are clearly frightened of their base. But they're also making a political calculation. If the economy rebounds they will get no credit regardless of who voted for the bill. If the economy suffers they can demagogue the stimulus package and run on it in 2010. There's no political reason for them to own this, and every political reason to let their holdouts muck up the bill and reduce its effectiveness. In a crisis sometimes people think about the good of the country and not politics, but we don't have leaders like that on the right side of the aisle.

But it's good to hear this cloak room chatter because it buttresses no less than Michael Steele's argument:

STEELE: Yeah, no, Glenn. I’m not gonna, look, I’m not going to soft pedal this with you. I’m not going to try to blow smoke either. The reality of it is, you are absolutely right. You have absolutely no reason, none, to trust our word or our actions at this point. So, yeah, it’s going to be an uphill climb.

Thank you Sen. Specter for proving your RNC Chair right.

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Foreclosures Finally Getting A Look

Post-stimulus, we still have an insolvent banking industry and a housing market in free fall. Prices continue to drop at an alarming rate, and there doesn't seem to be a bottom. And 2008 was a record year for foreclosures, which depress prices, lower property values and suck money out of the system.

Clearly we need a solution. And this is what the White House is looking at doing.

The Obama administration is considering a proposal to help distressed homeowners by subsidizing lenders who cut the interest rate on mortgages, according to sources familiar with the discussions.

The sources cautioned that the administration is still weighing several options for addressing the country's growing foreclosure problem. The Treasury Department has set aside $50 billion for a homeowner relief program, which officials said was likely to be announced within the next week. The sources spoke on condition of anonymity because the plans are not final.

The initiative would include both carrots and sticks for lenders, said lawmakers briefed by the administration. For example, it would probably endorse legislation to allow bankruptcy judges to change the terms of mortgage loans, a measure opposed by the industry. But the program would also include legal protections for lenders that modify loans but fear being sued by investors. Government subsidies could be among the inducements for lenders, the lawmakers said.

Under one proposal being actively discussed, the government would share the cost to lenders of reducing interest rates for cash-strapped borrowers, the sources said. For example, consider a homeowner with a $200,000 mortgage and a 9 percent interest rate who now pays about $1,700 a month, including taxes and insurance. Lowering the interest rate to 5 percent would reduce the payments to about $1,160. The government and industry would each chip in to cover the difference, about $540.

If this is just talking about existing homeowners and not slashing rates for new homes below what the market will bear, which will reinflate the housing bubble for no reason, I think there's some merit to it. It looks like the lenders are ready to get into this as well. But it should be combined with other measures.

First of all, there should be an absolute moratorium on foreclosures for 60-90 days. Fannie and Freddie are suspending sales, which is good, and some big banks are temporarily halting them as well. This time is needed for implementation of this loan modification idea, which is essentially the brainchild of Sheila Bair at the FDIC. There's going to be some moral hazard in bailing out people who made bad decisions in getting a home, but it's a pittance compared to all the corporate welfare money promised, and considering that predatory lending put homeowners into mortgage products they didn't even want, I think we can live with a little excess at the margins. Reuters has more.

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Bye Norm

The Minnesota Supreme Court just ruled that absentee ballots had to have been legally cast to be counted in the Senate election, meaning that at least 13 of the 19 categories of rejected ballots will not be part of any review. Which means that the universe of ballots that Coleman would need to win overwhelmingly just got a lot smaller. Considering that Coleman put an admitted forgerer on the stand to prove thatthese types of ballots should be counted, it's not a surprising ruling. Brad Friedman has more.

Oh well, Norm. But of course, he did his job. He ran interference long enough for the stimulus package to finish without the input of an extra Democratic Senator like Al Franken, increasing Republican leverage over the bill. That's all this lawsuit was intended to do.

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Budget Follies: By the Skin Of Its Teeth

A day after Calitics called the roll of the Yacht Party on the budget deal to be voted upon tomorrow in the State Senate, Shane Goldmacher does the same and comes up with just three Republicans who haven't signaled a no vote:

The field of potential Republican votes for the budget compromise in the Senate -- widely viewed as the most challenging caucus to corral support -- has narrowed so significantly that only three members have yet to throw cold water on the tentative deal.

That happens to be the bare minimum of Republican votes needed to pass the $40 billion-plus budget plan.

Those three are Senate Republican leader Dave Cogdill, Sen. Dave Cox of Fair Oaks and Sen. Roy Ashburn of Bakersfield.

Neither Ashburn, Cox OR Cogdill said they would actually vote for the budget, by the way. You can read all of the statements at the link. It should be noted that normally, the Senate would need only two Republican votes to pass, but since Mark Ridley-Thomas' seat is vacant (he was elected to the LA County Board of Supervisors in November) until the March special election, it takes three.

That basically means that full caucus unity is needed from the Democrats, and these three votes would have to come through, for the budget to pass. And we know that Lou Correa is wavering.

And the outside pressure is on. Opportunists like Steve Poizner are slamming the deal, and advocacy groups on both sides are urging a no vote.

GOP conservatives were incensed at the notion of a colleague supporting tax hikes, while labor and environmental groups were mad at what they consider Democratic concessions.

"If we're going to win elections in 2010, we have to say that we're the other party – that we're going to stop tax increases," said Jon Fleischman, a conservative blogger and a vice chairman in the state Republican Party.

Jeanine Meyer Rodriguez, spokeswoman for the state council of Service Employees International Union, representing 750,000 workers statewide, was upset by spending restraints and billions in budget cuts in the proposal.

"We're making it clear to all the legislators that if they vote for this, they're not representing our members," she said.

This morning's Republican press release painted the budget as a necessary evil, so the skids are being greased for passage. Still, with nobody owning the bill and lots of variables, it's entirely possible that it goes down tomorrow. Given some of the details, I'm not convinced that's a bad thing. But clearly, tomorrow should be... interesting.

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The Coming SUPERTRAIN Domination

High speed rail got a big boost in the final stimulus bill.

And while many initiatives were scaled back as Congress and the White House sought to cut the overall cost, there were some surprise increases, including a quadrupling of money for high-speed rail projects to $8 billion.

The White House pushed for the added money in the final rapid-fire negotiations, seeing it as a tangible way to create jobs and benefit different parts of the country. It also added a futuristic element to legislation that has been criticized as lacking forward vision.

That could be just the author trying to wrap its head around it. In fact, high speed rail will dramatically reduce greenhouse gas emissions, create thousands of jobs and offer a tangible benefit to the American public, finally bringing our transit infrastructure in line with Europe and Asia. While the California HSR blog is perturbed that this boost appeared to come from funding for existing mass transit and intercity rail systems, which is distressing, hopefully the normal budget process can fill in the gaps on public transit. You would never see high speed rail get this kind of money from a regular appropriation. This will restart some projects that needed to be chilled because of a lack of private investment.

Nevertheless, the wingnut brigade is going apeshit over an off-handed comment attributed to Harry Reid:

The madness continues on the right-wing’s crusade against a mythical high-speed rail to Las Vegas project that Harry Reid is alleged to have snuck into the stimulus bill. “Tell me how spending $8 billion,” asked House Minority Leader John Boehner (R-OH) on the floor, “in this bill to have a high-speed rail line between Los Angeles and Las Vegas is going to help the construction worker in my district.”

For one thing, if we stuck by the standard that members of congress should only agree to fund infrastructure projects located in their own districts, then obviously we’d have no infrastructure at all. This is a debate that I thought we settled in the days of Henry Clay. But beyond that there is no such provision in the bill.

There are millions of people who would gladly use that Vegas line - I've been in that traffic - and it's a reasonable project, but it is not currently on the list of federally designated HSR corridors.

Hilariously, one of the big areas for HSR in that map is Ohio, despite the fact that Ohio's John Boehner is a ringleader in slamming the made-up LA-to-Vegas line. High speed rail can be an economic engine for the Midwest, spurring growth and productivity, but these Republicans don't even know a good thing when it hits them in the face.

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The New Landscape

In 1994 when Betsy McCaughey wrote her piece in The New Republic full of lies abut the Clinton health care reform bill, the DC establishment accepted it uncritically because, well, she was in The New Republic, and nobody liked these Clinton outsiders anyway, and there was virtually no countervailing opinion independent of the White House that offered any refutation of her claims. The Village was the one and true arbiter of her story, and their acceptance of it colored the entire health care debate from that point forward.

Fast forward to 2009, and another fallacious McCaughey claim based on a clear misreading of legislative language makes the rounds of conservative media. Her claim that health information technology and comparative effectiveness research would cause rationing and give big gubmint a veto over your medical care is ridiculous. Only this time, a mainstream reporter actually chronicled how that conservative media puke funnel reinforces itself and creates opinion where there are only lies. And then a cable news show thoroughly debunks the lie in a long segment. And a series of blog posts reveal that McCaughey is on the board of directors of a medical device company and therefore has a conflict of interest over stopping comparative effectiveness studies, or that she received stock options from that company days before writing her flase op-ed in Bloomberg, or that the think tank she works at is funded by drug companies. As Ezra Klein says, this is a very new age:

Will Olbermann's segment on McCaughey end her relevance? Probably not. But it -- along with the blog posts, and inevitable columns -- will be part of what any CNN producer sees if he wants to run a segment on McCaughey the next morning. It will be part of what an NPR editor reads when she's researching a show. None of this progressive infrastructure existed in 1994. She published her smear job in an influential journal of putatively liberal opinion that was being edited by a self-professed conservative and it quickly become the conventional wisdom. This time, such arguments will not go unchallenged. That doesn't mean they will disappear. McCaughey's arguments are already taking root in the fertile swamp of talk radio. But it will be much harder for such bits of disingenuous nonsense to cement themselves in the center. And by the same token, it will be much easier for liberals to make, and disseminate, their own arguments.

I don't know if that's entirely true - there's nothing the Village likes more than to be willingly blind, and they'll probably opt for a "teach the controversy" approach - but that's better than the 1994 landscape.

Sometimes I definitely feel like I'm spitting into the wind out in the lonely blogosphere, and yet letting smears go unchallenged and letting progressive ideas get sandbagged is no longer an option. There is a progressive infrastructure now that can at least get a piece of the spotlight through relentless effort. It ought to actually be funded (greetings, liberal angels!), but even today it does have an impact.

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Just Nationalize Already

Some truthsaying from the New York Times:

Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.

It's really time to stop calling this a doomsday prediction. The banks have been allowed to hide from reality for too long, and there are very real costs to cleaning up their mess later rather than immediately. Costs that could register in the trillions. Noriel Roubini and Matthew Richardson offer the prescription.

As free-market economists teaching at a business school in the heart of the world's financial capital, we feel downright blasphemous proposing an all-out government takeover of the banking system. But the U.S. financial system has reached such a dangerous tipping point that little choice remains. And while Treasury Secretary Timothy Geithner's recent plan to save it has many of the right elements, it's basically too late [...]

Two important parts of Geithner's plan are 1) "stress testing" banks by poring over their books to separate viable institutions from bankrupt ones and 2) establishing an investment fund with private and public money to purchase bad assets. These are necessary steps toward a healthy financial sector.

But unfortunately, the plan won't solve our financial woes, because it assumes that the system is solvent. If implemented fairly for current taxpayers (i.e., no more freebies in the form of underpriced equity, preferred shares, loan guarantees or insurance on assets), it will just confirm how bad things really are.

Nationalization is the only option that would permit us to solve the problem of toxic assets in an orderly fashion and allow lending finally to resume. Of course, the economy would still stink, but the death spiral we are in would stop.

I think everyone sees Geithner's "stress test" as helpful in determining which banks are solvent and which aren't. But right after those tests are completed, the insolvent institutions have to be nationalized with the equity-holders wiped out. The assets can be sold off to private capitalists, with depositors and debt-holders getting the proceeds. And then we start over.

The eventual outcome would be a healthy financial system with many new banks capitalized by good assets. Insolvent, too-big-to-fail banks would be broken up into smaller pieces less likely to threaten the whole financial system. Regulatory reforms also would be instituted to reduce the chances of costly future crises.

Nationalizing banks is not without precedent. In 1992, the Swedish government took over its insolvent banks, cleaned them up and reprivatized them. Obviously, the Swedish banking system was much smaller than the U.S. system. Moreover, some of the current U.S. financial institutions are much larger and more complex, making analysis difficult. And today's global capital markets make gaming the system easier than in 1992. But we believe that, if applied correctly, the Swedish solution will work here.

Arianna Huffington has more.

The one thing holding the policymakers back is an over-reliance on elites who wouldn't want to see the system fail. Already they're being threatened into overpaying for bad assets, or chaos will ensue, as if it hasn't already. This is from an economist at Deutsche Bank:

One main stumbling block to the purchasing of troubled assets has been pricing, specifically how does the government price a diverse set of assets in a way that does not put the taxpayer on the hook. However, this should not be the standard by which we judge the efficacy of the plan, because a more prolonged deterioration in the
economy will result in a higher terminal unemployment rate and a greater deterioration of the tax base. As such, the decline in tax revenues will crimp many of the essential services provided by the government. Ultimately, the taxpayer will pay one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line to pay for the massive debt issuance required to fund current and prospective fiscal spending initiatives.

We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to taxpayers.

We shouldn't negotiate with terrorists.

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Strategy THEN Decision, What A Concept

I am encouraged by the fact that President Obama is reluctant to put the cart before the horse in Afghanistan. Right now there is an ongoing strategy review that will likely determine the new policy. But commanders on the ground want an infusion of troops immediately. They may end up getting a brigade or two before the strategy is complete, but there's no way we should continue with the theory that troops are a universal good absent giving them something tangible to do. There's a school of thought that we are papering over a lack of troops in Afghanistan with airstrikes that rile civilian populations, but in Iraq airstrikes went way up after the surge and were used as cover for ground movements. So there is no value in troops without the strategy, and I'm glad the President is thinking hard about that.

Meanwhile, maybe the best near-term option would be to secure our own weapons:

Tens of thousands of assault rifles and other firearms in Afghanistan are at risk of being stolen because U.S. officials have lost track of them, according to a congressionally ordered audit that warns that some weapons may already be in Taliban hands.

The audit by the Government Accountability Office found that inventory controls were lacking for more than a third of the 242,000 light weapons donated to Afghan forces by the United States -- a stockpile that includes thousands of AK-47 assault rifles as well as mortars, machine guns and rocket-propelled grenade launchers.

There were no reliable records showing what ultimately happened to an additional 135,000 weapons donated by other NATO countries, the report said. Many of the weapons, supplied between 2004 and 2008, were left in the care of Afghan-run military depots with a history of desertion, theft and sub-par security systems that sometimes consist of a wooden door and a padlock, the report said.

Ah, the Pentagon. Such a model of efficiency. By the way, losing bunches of weapons is a nasty habit for St. Petraeus.

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Not One Single Vote, Again

So the House passed the conference report of the American Recovery and Reinvestment Act.

No Republican votes again.

(Seven Dems voted no - Bright, DeFazio, Griffith, Minnick, Peterson, Shuler and Taylor. Dan Lipinski copped out and voted "Present." I'm assuming Peter DeFazio's was a protest vote against what he considered to be insufficient public transit spending in the bill.)

It's not their bill, so they really shouldn't be voting for it. But it's hilarious that Republicans think they're winning. They think that Judd Gregg is a modern-day folk hero for realizing 9 days late that he's a conservative and Obama's a Democrat. They think they're gaining credibility with the American people by peddling lies on the floor of the House (did he really just hold up a toy mouse?) and claiming that spending isn't stimulus. The actually think it's in their interest to sink the global economy.

Andrew Sullivan is succinct:

This much is now clear. Their clear and open intent is to do all they can, however they can, to sabotage the new administration (and the economy to boot). They want failure. Even now. Even after the last eight years. Even in a recession as steeply dangerous as this one. There are legitimate debates to be had; and then there is the cynicism and surrealism of total political war. We now should have even less doubt about what kind of people they are. And the mountain of partisan vitriol Obama will have to climb every day of the next four or eight years.

More here. I'm not surprised by it. They are bereft of ideas, and in a political climate that rewards day-to-day pugilistic nonsense over anything substantive, of course the GOP would measure themselves by news cycle wins and losses. It is beyond perverse, but considering the posturing for the future, the ability to nitpick the economy over and over through united opposition, it's completely expected.

Which is what progressives looking at Obama's efforts at bipartisanship have been saying from the beginning.

• What Obama did: Trusted Judd Gregg when he indicated that, “despite past disagreements about policies, he would support, embrace and move forward with the president’s agenda.”

• What Obama got in return: A “change of heart” from Gregg, who said that he “couldn’t be Judd Gregg” at Commerce.

• What Obama did: Reached out to have dinner with right-wing pundits Bill Kristol, Charles Krauthammer, and David Brooks.

• What Obama got in return: A ripping from his right-wing friends, who called it the worst in “galactic history.”

• What Obama did: Tried to work with the House GOP by preemptively including tax cuts, stripping stimulative spending proposals, and attending their conference meeting.

• What Obama got in return: Zero votes (and a bunch of false myths about his plan)

• What Obama did: Tried to reach out to John McCain to work together on “solving our financial crisis.”

• What Obama got in return: Nothing. McCain voted against the legislation, and even went so far as to call it “generational theft” and hypocritically complained that it contained “corporate giveaways.”

There's no bargaining with the rump faction, and I think the White House is coming around to recognizing that. And perhaps there's some value in making the breaking of the extended olive branch very public and visible. And it's good to hear that future message won't be calibrated to the biorhythms of the Village:

Mr. Emanuel owned up to one mistake: message. What he called the outside game slipped away from the White House last week, when the president and others stressed bipartisanship rather than job creation as they moved toward passing the measure. White House officials allowed an insatiable desire in Washington for bipartisanship to cloud the economic message a point coming clear in a study being conducted on what went wrong and what went right with the package, he said.

This is kind of serious stuff. The global economic meltdown is now the biggest threat to the United States, so says the National Intelligence Director. We can't afford these neo-Hooverists, or the dynamic that empowers the Axis of Centrism. Best of luck to the Obama team to figure out a path forward.

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CA-38: She's Her Own Predatory Lender

Grace Napolitano is a fairly unassuming back-bencher Congresswoman from the Los Angeles area, who generally votes well on most issues. Being in a heavily Democratic district, she hasn't faced much competition from Republicans in election cycles during her decade in Congress, so she's had to find somewhere for campaign contributions to go. Like her pocket:

During a decade in Congress, California Representative Grace Napolitano has pocketed more than $200,000 of political contributions by charging as much as 18 percent interest on money she loaned to her own campaign.

The suburban Los Angeles Democrat made the $150,000 loan in 1998, when she was first elected to the U.S. House of Representatives. Through Dec. 31, her campaign committee has used donations to pay Napolitano $221,780 of interest while reducing the principal by just $64,727, a review of her Federal Election Commission filings shows.

As recently as June 2008, Napolitano held a fundraiser asking supporters and political action committees for money to pay down the 1998 debt. Napolitano, her spokesman and her campaign’s lawyers didn’t respond to requests for comment [...]

For Napolitano, a 72-year-old grandmother of 14, the campaign IOU has been a profitable asset, far outperforming stocks since the loan started accruing interest in May 1998. Over the same period, an investment in the Standard & Poor’s 500 stocks, with reinvested dividends, would have lost more than 7 percent, according to Bloomberg data.

A case could be made that if you're silly enough to contribute to Grace Napolitano in a D+20 district, you deserve to be fleeced. But of course, the great majority of her contributors are corporate clients that are funneling personal contributions to her through interest payments on her initial loan. It's really shocking, particularly considering that she represents a district with a 16% poverty rate.

Napolitano is a solid vote but we can expect much better than this from our public officials. Politics should never be an avenue for self-aggrandizement.

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More Stimulus Pre-Post-Mortem

Pro Publica has come up with a full list of the spending provisions of the stimulus bill, and a taxing matter has the rundown of the tax provisions.

The tax provisions, by their very existence, aren't great, but are certainly an improvement over the Senate bill. The home-buyer credit is scaled back to $8,000 and only for first-time buyers; and the car-buyer credit, while not limited to green or American-made vehicles, is down to a credit for state and local sales taxes on purchases in 2009. That's the good. Here's some of the bad:

But Max Baucus got through the conference agreement the much-lobbied-for cancellation of debt income provision. See this earlier ataxingmatter posting on the reasons forgiving the tax on debt forgiveness does not make sense as a stimulus. In brief, the only companies that will buy back their debt will be those with liquid assets and no need to borrow more, so they are not the companies the government should be underwriting through tax breaks during a recession that is making huge demands on government funding [...]

Another provision that makes no sense whatsoever--the exclusion of even more capital gain income for owners of stock. Section 1202 current excludes half the gain from small business stock held from issuance for more than 5 years. The temporary (2009-2011) "stimulus" provision will exclude 75% of that gain. That's an investor break that is poorly targeted to stimulate the economy (most owners of that stock will be among the more affluent) and it is one that will be very difficult not to make permanent when the economic shock is over, as has generally been the case with investor tax breaks.

And the Senate's AMT patch is still in there, making up about $70 billion (almost one-tenth) of the entire stimulus package. That's oxymoronic. The AMT patch is not a stimulus. It means less taxes and more money generally for the upper middle class. It is not well targeted to those in the lowest income distributions who will spent their tax savings in ways that serve as a stimulus to the economy.

Even financial institutions--one of the primary causes of our current economic meltdown due to their greedy speculation--got targeted tax breaks in the "stimulus" package. First, they will be permitted to deduct interest on debt used to purchase tax-exempt municipal bonds (i.e., they will get an interest deduction on money they borrowed to buy an investment that gives them a kind of income that is excluded). This tax break is limited (for now, anyway) to bonds issued in 2009-2010 and to the extent those investments are less than 2% of the average adjusted bases of all assets of the financial institutions. Second, another provision that excepts certain issuers from the interest disallowance provision is broadened by increasing the dollar threshold. The two provisions are expected to cost $3.2 billion over 10 years.

For this they nickel-and-dimed the refundable middle-class tax credit from $500/$1000 to $400/$800.

As for the spending, I'm sure the right will make a stink about increasing Inspector General budgets, although that's specifically to watch stimulus spending and will probably save taxpayers in the long run if they can stop waste, fraud and abuse. There are some great programs in here for the poor and the recently unemployed, as well as robust state and local government relief (albeit not as big as the house bill) which will come as a boost to those facing budget cuts, although how much of a boost is unclear. The major spending outside of that is in energy, education and health care. There's $13 billion for science and technology research. And there's $100 billion for transportation and infrastructure. In a surprise, the extension of the 1933 Buy America Act to cover the stimulus spending survived conference and will be reflected in the purchases, which I think is good. So is the keeping of comparative effectiveness research in the bill, which could drastically reduce health care costs on devices and treatments that don't work well.

Overall, the spending itself is fine, the tax provisions troubling but not deeply harmful. But the size is probably not sufficient. I can't find the link now, but Mark Zandi at Moody's is claiming that the bill will only create or save 2.5 million jobs and that we'll still be at double-digit unemployment in 2010. And Paul Krugman lays out the case that the package is insufficiently bold (although I think he's more concerned about the bank plan):

These aren’t normal times, so normal political standards don’t apply: Mr. Obama’s victory feels more than a bit like defeat. The stimulus bill looks helpful but inadequate, especially when combined with a disappointing plan for rescuing the banks. And the politics of the stimulus fight have made nonsense of Mr. Obama’s postpartisan dreams [...]

The ugliness of the political debate matters because it raises doubts about the Obama administration’s ability to come back for more if, as seems likely, the stimulus bill proves inadequate.

For while Mr. Obama got more or less what he asked for, he almost certainly didn’t ask for enough. We’re probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.

Officially, the administration insists that the plan is adequate to the economy’s need. But few economists agree. And it’s widely believed that political considerations led to a plan that was weaker and contains more tax cuts than it should have — that Mr. Obama compromised in advance in the hope of gaining broad bipartisan support. We’ve just seen how well that worked.

Republicans are looking to run on the stimulus for the next five years, and will constantly be grousing about how it didn't work from the moment it's enacted. To the extent that it doesn't work, it will partially be a cause of the Axis of Centrism watering down the bill to blunt its effectiveness. House Democrats are pissed off by this dynamic and want the Senate to "make them filibuster." My question about that has always been "Then what?" Republicans are perfectly happy to ignore public opinion, and also I don't even think Senate rules allow for what House Democrats are wishing for. However, I do agree that pressure from the left must be significant and sustained if we are ever going to break the dynamic of catering legislation to two or three wayward centrists who don't have the same interests at heart. Politicians need to be pressured and pushed into doing just about anything.

... by the way, the final CBO scoring of the bill shows that 75% will get out in the first two years, exactly as Obama requested. And if they didn't cut down the fastest stimulus of them all, state fiscal stabilization funding, it would be even higher.

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The crash of a Continental commuter plane in Buffalo, killing all aboard, is terrible. That a 9/11 widow was aboard the flight is just a cruel irony.

Condolences to the families of the victims.

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Thursday, February 12, 2009

The Inevitable Lincoln/Darwin/D-Day Post

Lots of hubbub today over birthdays. As fate would have it, 164 years after Charles Darwin and Abraham Lincoln were born on the same day, I came into being. If you simply MUST make me pair all three together, well, fine, I will, but I take no pleasure in it.

We do a disservice to these great men by following the accident of history and drawing too many parallels, but certainly neither was afraid of the occasional truth in a world all too burdened with falsehood. Darwin had the courage to follow facts instead of dogma and set a path for evolutionary biology that is as wondrous as it is grounded in science. As he said in the final line of On The Origin Of Species:

There is grandeur in this view of life, with its several powers, having been originally breathed into a few forms or into one; and that, whilst this planet has gone cycling on according to the fixed law of gravity, from so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved.

As for Lincoln, I've often praised him for his political foresight, his acknowledgment of the realities of a house divided, and his work to save the union. Here's President Barack Obama today.

Obama pointed out that the men building the Capitol wondered whether each workday would be their last, fearing that the metal they were using in the construction would be requisitioned for use in the war. "When President Lincoln was finally told of all the metal being used here, his response was short and clear: 'That is as it should be,' " he said. "The American people needed to be reminded, he believed, that even in a time of war, the work would go on; that even when the nation itself was in doubt, its future was being secured; and that on that distant day, when the guns fell silent, a national Capitol would stand, with a statue of freedom at its peak, as a symbol of unity in a land still mending its divisions."

Which is nice and all, but I prefer Cooper Union, cutting through the rhetoric of his opposition and speaking the truth of how they seek only to have everyone be placed "avowedly with them," and how "They will continue to accuse us of doing, until we cease saying." It is truth that binds these two.

And truth that imperils them. The Gallup poll showing that only 39% of Americans believe in evolution is very dangerous, not just for our future as a competitive nation educationally and economically, but dangerous to the idea of rationality, which those who believe in must protect with an eternal vigilance. It is ignorance - ignorance of history, ignorance of facts, ignorance of reality, whether by design or by accident - that has brought us to the crisis where we now find ourselves, both domestically and abroad. There will always be those who counter thought with the need to believe - and hey, if anyone wants to pick up a quick 6 trillion dollars, talk to the Islamic creationist in that article who's offering that sum for anyone who shows him a fossil proving evolution - and there must always be those who lighten those dark corners with reason before it envelops. In many ways, that's a core purpose of the progressive blogosphere - aha, I knew I could find the connection somewhere!!!

I say all that to say this - the Library of Congress has released several never-before-scanned photos of Lincoln onto their Flickr page, including this slick one showing Lincoln with the Johnny Cash look:

In solidarity, I am not wearing my hair the same way today. But I appreciate Abe and Charles' contributions ... especially because otherwise, the next most-famous celeb on this birthdate is Lorne Greene.

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Burton Watch Offers Revealing Critiques Of The Man Who Would Be CDP Chair

It's been distressing to see the race for CDP chair turn from an election into a coronation, with John Burton lining up institutional support, muscling out the grassroots and forcing his competition to the sidelines. Coming off an historic Presidential election, with the demographics squarely on the side of Democrats and a new generation of activists who have boundless ideas to bring a different organizing philosophy to California, the right chairman of the Party could really leverage the energy and activity into something special, to lay the groundwork for a re-imagining of the political structure. Sadly, the best can be said of Burton is that he's an old workhorse, but there are troubling signs that he is unaware of the changes in modern campaiging, unconcerned with reforming the broken institutions both inside and outside the party, and unable to use the new energy and excitement to any decent ends. It appears that the frenetic organizing outside the party structure may be the only hope for progressives in the near term.

But it could be even worse than that. The new site Burton Watch offers a substantive critique of the former State Senator, with information that every delegate and voting member of the Party ought to know before turning over the reins to this guy. The initial post surveys how Democrats could lose California under this version of leadership:

Because the public instinctively knows that when power and money compete with the public interest, we all suffer. If you’ve ever registered voters or walked precincts for a candidate, you’ve undoubtedly been greeted with this response: “I’m not going to vote because it doesn’t matter. All politicians are the same.” And as the cynicism grows, voter turnout declines and the Decline To State registration escalates -- now approximately 20% of all Californians are registered DTS. So how do we combat the innate distrust that drives a large segment of our population to disengage from political parties and even voting? Well, Obama showed us a part of the solution [...]

When previously disenfranchised voters, minorities, and the young are all flocking to the Democratic Party because we represent a new way, a vision of hope and change, why on earth would we want to take a giant step backwards to the bad old days? And yet that’s exactly what Democrats in California are poised to do this April. The California Democratic Party, instead of rising to meet the challenges of a new millennium with openness and inclusion, is set to reach back to one of the oldest and most entrenched political machines in California history for its leadership.

Enter John Burton, California’s much older version of Rod Blagojevich. There are so many reasons why John Burton is unfit for the role of Party Chair in California, that I’ll be doing a series of posts, each one dedicated to a disqualifying aspect of his background. All of the material I’ll be using has been obtained through basic use of the google, and the state’s Republicans could easily find and use it against California Democrats. And trust me, they will.

At the end of this series, I think you’ll agree that John Burton is the wrong person to lead the California Democratic Party in 2009.

The next installment recounts perhaps the most infamous episode in Burton's past - the very public sexual harassment lawsuit brought by a former staffer, with excerpts from the complaint filed by Kathleen Driscoll in San Francisco Superior Court:

During DRISCOLL’S employment, BURTON engaged in hostile, demeaning and sexually abusive conduct such that DRISCOLL’S working conditions were significantly altered. His conduct over the past year easily rises to the level of severe or pervasive conduct for a hostile work environment sexual harassment claim both in California and under federal law. The harassing acts started in approximately September 2006. They consisted of numerous events, which took place throughout DRISCOLL’S employment, including but not limited to:
Asking DRISCOLL over the phone, “What are you wearing?” on approximately 10 occasions;

On one occasion, DRISCOLL sent a temporary employee to deliver paperwork to BURTON. BURTON ordered DRISCOLL to never send someone on her behalf again by berating her, “When you drop stuff off, stop in will ya? I mean I’m not getting laid under the fuckin’ table.”

Singling DRISCOLL out for exorbitant demands and attention, included but not limited to excessive demands for immediate and frequent meetings to go over routine matters, including on weekends after the work week was over in contrast to her co-workers;

There's more at the link, and it's pretty graphic. It goes without saying that women make up an extremely large bloc of the Democratic base.

I don't know what more Burton Watch will trot out, but here are some facts: Californians have little connection to their state government other than knowing that they don't like it. They hear things like how politicians are living high off campaign donations and it's both alienating and corrosive. The rules are already rigged in favor of a conservative wipeout of government and the last thing Democrats need as they seek to make structural changes is the spectre of an old-school pol with a lot of skeletons hanging over their collective heads. John Burton has the potential to take the state backwards and it's a chance that delegates should think long and hard about.

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Crooks And Liars About Sums It Up

The Joe The Plumber Victory Tour continued today on Capitol Hill, where he did a "live hearing" on failed Internet channel Pajamas TV and said this:

The money that they’re talking about spending is just absolutely incredible. You can’t get your mind around it. We used to think a million dollars was just the most incredible thing. Then it went to billions and now we’re talking trillions. And trillions is such a large number we just can’t wrap our mind around it, at least I can’t.

I know, inflation blows my mind too. Let me try and help out. US GDP every year is $13 trillion dollars. This is a two-year bill for $789 billion. So it's less than 1/26th of total GDP. See, Mr. the Plumber, one dude in ACORN doesn't get the whole "trillion," it's spread out over 300 million people, which I know is just the most incredible thing.

When they're not zonked out about all the crazy, crazy numbers, they're straight-up lying:

Is there really $30 million in the new stimulus package devoted to saving the salt marsh mouse in Nancy Pelosi’s district?

That’s what some conservatives are now charging, and the claim seems to be gaining some traction with elected GOP officials and conservative media outlets, who are using it to argue that the bill is stuffed with Dem pork.

But there isn’t any such money in the bill. And Pelosi’s office is saying that the claim is a “total fabrication.”

Not that you needed to hear this, but there is no salt marsh mouse in San Francisco.

Meanwhile the Repbulicans' big idea is to get Politico to write a story about "attack ads" when they're spending $35,000 on spots in 29 districts. Not exactly saturation coverage. Speaking of fiscal responsibility and sticking to conviction:

BLITZER: Doesn’t South Carolina need some help?

GRAHAM: Yes. But there’s only one taxpayer. This is not money we found under a tree in Washington. The money we’re sending back to the states came out of the same wallet that the money going to the states came from. So, yes, South Carolina needs help. I’m all for infrastructure spending. But it’s got to be shovel ready. […]

I’m not for $75 billion slush fund for states that can be spent on anything they want to spend it on including budget problems because we’ve got our own budget problems and you’re rewarding states who have done very little to trim up their own budget.

However, when Blitzer asked him whether South Carolina should “take the money, Graham replied: “I think that, yes, from my point of view, I — you don’t want to be crazy here. I mean, if there’s going to be money on the table that will help my state, but I’ve got a job to do up here, and that is to try to help people and not damn the next generation.”

If Democrats were vindictive, the formula would be pretty simple: if you don't vote for the recovery, your district doesn't get any of it. Some Republicans get this, and I'm sure if the Democrats played hardball a lot more would, too.

U.S. Rep. Anh "Joseph" Cao, R-New Orleans, said Wednesday he is likely to vote for the economic stimulus bill when it comes to a vote, probably today or Friday, even if he is the only Republican member of the House to do so.

"I'm voting along what my conscience dictates and the needs of the 2nd Congressional District dictate, even if I were to be the only member of the GOP to vote for the stimulus package," he said.

"Even though it is going to be a humongous bill, even though we will be in debt for years, I believe that more likely than not, I will vote for it because the 2nd Congressional District needs a stimulus package."

A liberal is a conservative who has angry constituents.

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Stress Test Then Nationalization?

I'm a little late to this party, but here's President Obama on nationalization.

There are two countries who have gone through some big financial crises over the last decade or two. One was Japan, which never really acknowledged the scale and magnitude of the problems in their banking system and that resulted in what’s called “The Lost Decade.” They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn’t see any growth whatsoever.

Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country.

Obviously, Sweden has a different set of cultures in terms of how the government relates to markets and America’s different. And we want to retain a strong sense of that private capital fulfilling the core — core investment needs of this country.

And so, what we’ve tried to do is to apply some of the tough love that’s going to be necessary, but do it in a way that’s also recognizing we’ve got big private capital markets and ultimately that’s going to be the key to getting credit flowing again.

I appreciate that he's thought through the scenario and is aware of the Swedish solution. I think the "cultural differences" is a cop-out. First of all, for the last 70 years the FDIC has been able and willing to take over banks all the time, and nobosy has really raised their voices in alarm. In fact, they appreciate it. In addition, there's a market-based case for nationalization - banks that are insolvent and have failed shouldn't get propped up but should be subject to the vicissitudes of the market. We don't want consumers to be wiped out in the process, and that's why we have a system of temporarily taking over the banks and selling them back to investors once they get on their feet. If we have to call it "preprivatization" to remove the stigma, fine, but "cultural differences" should never get in the way of sound policy.

The "Sweden had like five banks" isn't really a legitimate claim, either. Nobody's talking about the thousands of community banks and lending concerns; there is a problem with half-a-dozen very large banks and financial companies. The scale in terms of numbers is not so different.

Now, if Obama wanted to make a technical point, he could make this one:

My bottom line: Visit the Nordic countries and you’ll be impressed that their civilian public agencies are much more effective than ours. Arguments which observe that things their institutions can do, our institutions might well screw up are valid. At the same time, there are things that require effective public agencies to do that need to be done. In fields like educating poor children, we’re simply not doing them, and a price is paid. But it’s a price that most middle class Americans don’t see or pay personally. If it turns out that we can’t manage a financial panic adequately, we’ll all be paying the price. I don’t think assuming failure in advance and therefore adopting unlikely-to-work policies makes sense. Abraham Lincoln and FDR both asked the government to do things it didn’t have the ability to do; that meant they had to build the institutions.

Exactly. Cultural or technocratic barriers aren't an option when the clearly preferable policy is a temporary nationalization. We don't have the luxury of messing this part up. If the banks aren't lending properly because they are hording capital, all of the economic multiplier effects of the stimulus are lost. Banks will suck up money from consumers and it will fall into this black hole. We will not have solved the core economic problems. And if the Fed is planning this massive community lending for cars, students, credit cards, small business and nonresidential mortgages, um, why do you need the banks at all? Not to mention that such lending just re-inflates the securitization bubble by guaranteeing the secondary market, which isn't wise.

The case for nationalization is pretty clear. Robert Kuttner and Simon Johnson say it well, but Martin Wolf is perhaps saying it best:

All along two contrasting views have been held on what ails the financial system. The first is that this is essentially a panic. The second is that this is a problem of insolvency.

Under the first view, the prices of a defined set of “toxic assets” have been driven below their long-run value and in some cases have become impossible to sell. The solution, many suggest, is for governments to make a market, buy assets or insure banks against losses. This was the rationale for the original Tarp and the “super-SIV (special investment vehicle)” proposed by Henry (Hank) Paulson, the previous Treasury secretary, in 2007.

Under the second view, a sizeable proportion of financial institutions are insolvent: their assets are, under plausible assumptions, worth less than their liabilities. The International Monetary Fund argues that potential losses on US-originated credit assets alone are now $2,200bn (€1,700bn, £1,500bn), up from $1,400bn just last October. This is almost identical to the latest estimates from Goldman Sachs. In recent comments to the Financial Times, Nouriel Roubini of RGE Monitor and the Stern School of New York University estimates peak losses on US-generated assets at $3,600bn. Fortunately for the US, half of these losses will fall abroad. But, the rest of the world will strike back: as the world economy implodes, huge losses abroad – on sovereign, housing and corporate debt – will surely fall on US institutions, with dire effects.

Personally, I have little doubt that the second view is correct and, as the world economy deteriorates, will become ever more so. But this is not the heart of the matter. That is whether, in the presence of such uncertainty, it can be right to base policy on hoping for the best. The answer is clear: rational policymakers must assume the worst. If this proved pessimistic, they would end up with an over-capitalised financial system. If the optimistic choice turned out to be wrong, they would have zombie banks and a discredited government. This choice is surely a “no brainer”.

The "stress test" portion of the plan holds out some hope. If there is a legitimate independent audit of the books, and the top banks are all seen to be insolvent, the case for nationalization becomes much more clear. That's privileged information and it makes sense to go through a process to find it out. But in the interim, handing over a bunch of money that isn't going to do much of anything is ridiculous.

Obama and his team may think there is no political possibility of nationalization without the data. But there's probably no possibility WITH the data - Republicans won't go for it. Sometimes you just have to rip the band-aid off.

The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once. It is an important, but secondary, question whether the right answer is to create new “good banks”, leaving old bad banks to perish, as my colleague, Willem Buiter, recommends, or new “bad banks”, leaving cleansed old banks to survive. I also am inclined to the former, because the culture of the old banks seems so toxic.

By asking the wrong question, Mr Obama is taking a huge gamble. He should have resolved to cleanse these Augean banking stables. He needs to rethink, if it is not already too late.


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Shorter Judd Gregg, per MSNBC: "They took away my Census!"

"...I have found that on issues such as the stimulus package and the Census, there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately, we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy."

Actually, YOU didn't focus on those concerns, Judd.

Good to know that the Obama Administration has a different set of views from Judd Gregg. It always seemed like a poor fit. Gregg is not just a Northeastern Republican, he's quite wingnutty. And Paul Hodes can beat him in New Hampshire in 2010. In fact, I wouldn't be surprised if he didn't run at all - clearly he wanted out of the Senate.

And I think at this point we need to seriously consider selling off the Commerce Department for parts.

...and as I predicted - Gregg's not running for re-election.

... great statement by Robert Gibbs:

"Senator Gregg reached out to the President and offered his name for Secretary of Commerce. He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the President's agenda. Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama's key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways. We regret that he has had a change of heart".

Their story is Gregg reached out. As I said, there could never be any mysery from Gregg's perspective about Obama's intentions.

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DiFi Tries To Hand Corporations A Giveaway In The Stimulus

The final numbers on the stimulus package are trickling out. Some of the baseline investments are here:

* Investments in Infrastructure and Science - $120 billion
* Investments in Health - $14.2 billion
* Investments in Education and Training - $105.9 billion
* Investments in Energy, including over $30 billion in infrastructure - $37.5 billion
* Helping Americans Hit Hardest by the Economic Crisis - $24.3 billion
* Law Enforcement, Oversight, Other Programs - $7.8 billion

It's unquestionable that the conference report is worse than the House bill but better than the Senate. It costs less than the Senate bill while providing more stimulus. Some bad spending like the clean coal "FutureGen" project is out, along with some of the worst corporate tax breaks. Mass transit spending is up, the child tax credit was partially restored to House levels (now kicking in after $3,000 in income), and the state fiscal stabilization fund gets around $54 million (but that includes funding for school construction). You can find the full summary here.

There are some very solid elements to the bill. White House economists estimate that the package will create or save 396,000 jobs in California and 3.5 million nationwide. This is a down payment on a new generation of investment in America.

However, like with most Congressional sausage-making, there may be some rough patches. The worst is the allegation that Dianne Feinstein is trying to include filtering into the stimulus as part of the program to expand broadband capacity across the country.

The Open Internet Coalition - which includes groups like Public Knowledge, Free Press and the Computer and Communications Industry Association (CCIA) - is applauding the more than $2 billion expected to be in the stimulus bill for broadband build-out in rural or underserved areas. They say not only will building out high-speed Internet instantly create jobs, but giving people in those areas more access to the Internet will spur small-business creation and other growth [...]

These groups are also over-the-moon about the fact that the Senate bill has a non-discrimination, interconnection requirement that essentially says any provider receiving stimulus funding has to make sure they provide equal access to everyone over their network (part of the so-called "net neutrality" debate). The House version requires the FCC to define "open access," which essentially calls for carriers to share their networks with competitors.

But they're worried Hollywood is still trying to insert a content filtering provision via Sen. Diane Feinstein, D-Calif., at the last minute. Feinstein has been trying to add language specifying that Internet service provider (ISPs) may engage in "reasonable network management" ... "such as" efforts to combat illegal activity like "child pornography and copyright infringement." In essence, some argue, ISPs would be able to monitor any content coming to and from your computer, just in case there was some copyrighted material violating fair use, or kiddie porn in there.

But groups like the Motion Picture Association of America stress the "network management" angle of the bill ("filtering" is a nasty word around these parts). After all, it's hard to argue against stopping kiddie porn from being sent over one's pipes. I've left a message with Feinstein's press office to see what the status of her amendment is. It doesn't appear to be in there, but I'll let you know if she plans on trying to stick it in at some point.

"Of course we see huge privacy invasions from this sort of thing," said Cathy Sloan of CCIA.

Now, some caveats. There was a hyperventilating story in the UK Register claiming that this would kill net neutrality. As stated earlier, there are open access provisions in the stimulus, and it doesn't appear that this amendment even made it into the final version. This looks to me to be more of a privacy and anti-competition issue.

In another part of that story, Henry Waxman was implicated. His office has assured multiple constituents, including yours truly, that he has had nothing to do with any filtering amendment.

That's not to say that we shouldn't be concerned. DiFi is allegedly trying to pay back a corporate constituent with a highly invasive amendment that would certainly violate the spirit if not the letter of privacy laws. And of course this kind of monitoring is a slippery slope, as are most IP issues. At the root I agree with John Cole:

As baseball season is getting close, I would like to propose a trade. We give the Republicans Dianne Feinstein and a PTBNL and they give us Olympia Snowe. This is a solid trade for us. With Judd Gregg at commerce, we would almost complete the New England rout, and Feinstein, as a newly minted Republican, will go down to certain defeat in California. Additionally, there is nothing in this agreement that says the PTBNL can’t be Nelson or Lieberman.

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No Economists On The Teevee

Turns out that the traditional media doesn't put a premium on informing the public. Over the last month, which has been dominated by debate about the stimulus package, the experts most likely to be able to actually perform the debate in a credible and intelligent manner, economists, haven't been on the scene.

In the hour following President Obama's February 9 press conference -- during which he gave a brief address about the economic recovery legislation currently moving through Congress -- cable news programs featured guests and panelists to discuss Obama's remarks. But CNN, Fox News, and MSNBC did not bring on a single economist to discuss the plan. The absence of economists in the post-press conference discussion was consistent with the observation made by founder John Amato in a February 4 article on The Huffington Post: "I'm sure you've heard about the hundreds of economists that are either for or against President Obama's stimulus plan. My question to the media is: Where are they?" Indeed, a Media Matters for America review of the Sunday talk shows and 12 cable news programs from January 25 through February 8 found that during 139 1/2 hours of programming on Sunday mornings and weekday afternoons and evenings, of 460 total guest appearances in discussions about the economic recovery legislation and debate in Congress, only 25 were made by economists -- a mere 5 percent.

Economists actually differed wildly on the stimulus, and had their own biases that they brought to the debate. But surely that would be a debate grounded more in facts than what we currently see on the teevee. Of course, economists aren't adept at determining whether Obama flipped the bird to Hillary Clinton when he was scratching his nose, or how Obama's body language signifies his belief in civil rights, so they are kind of useless on cable. John Amato and Digby have more.

When you have a debate about the economy without the economists, you end up having a debate featuring this guy.

U.S. Rep. Steve Austria said he supports a scaled-down federal economic-stimulus proposal, but the Beavercreek Republican told The Dispatch editorial board that the huge influx of money into the economy could have a negative effect.

"When (President Franklin) Roosevelt did this, he put our country into a Great Depression," Austria said. "He tried to borrow and spend, he tried to use the Keynesian approach, and our country ended up in a Great Depression. That's just history."

That is just history, with the added invention of a time machine so that Roosevelt could return to the 1920s and be President when the stock market crashed. Now, this was such a stupid statement that Austria had to walk it back, but there are hundreds more little white lies that come up from the know-nothings, which the media turns into a debate worthy of broadcast entertainment. But it lacks one thing - precise information.

In fact, for most of the New Deal era, the economy grew quickly -- an annual rate of about 13 percent from 1933 to 1937 and more than 10 percent from 1938 to 1941, Commerce Department data show.

Many liberal economists say that shows the virtue of boosting spending. Dean Baker, co-director of the Center for Economic and Policy Research, said that "when Roosevelt came in, he started spending money, and from 1933 to 1937 the economy grew at a double-digit annual rate. It was soaring, and the unemployment rate fell at 4 percentage points a year."

But in 1937, the economy started tumbling backward again. Drawing an analogy to today's fiscally conservative Democrats in Congress, Baker said Roosevelt "listened to the Blue Dogs of his day and cut spending, and the unemployment rate rose again."

Here's a handy chart:

I got that from Rachel Maddow's show, the oasis in the cable desert.

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Stupid Americans, Believing In Constitutional Principles

The standard line from the Village is that we cannot have investigations of Bush Administration officials for crimes like torture or illegal wiretapping because that would take the country through a painful cycle and tear the very fabric of the nation apart and this would be just too mortal a blow to a nation that needs to bind up its wounds. If you actually ask those people these brave Villagers are trying to protect, however, they'd say "Yeah, we're cool with it."

Even as Americans struggle with two wars and an economy in tatters, a USA TODAY/Gallup Poll finds majorities in favor of investigating some of the thorniest unfinished business from the Bush administration: Whether its tactics in the "war on terror" broke the law.

Close to two-thirds of those surveyed said there should be investigations into allegations that the Bush team used torture to interrogate terrorism suspects and its program of wiretapping U.S. citizens without getting warrants. Almost four in 10 favor criminal investigations and about a quarter want investigations without criminal charges. One-third said they want nothing to be done.

Even more people want action on alleged attempts by the Bush team to use the Justice Department for political purposes. Four in 10 favored a criminal probe, three in 10 an independent panel, and 25% neither.

Apparently the delicate sensibilities of "the people," as distilled by those in Washington, are not quite so delicate.

The real problem, of course, is the education system. We teach children the preamble to the Constitution and the Declaration of Independence, tell them to remember that all men are created equal and that no man is above the law, and then they actually start to BELIEVE THAT? Somebody change out the textbooks.

If you're part of this nation composed of 2/3 dirty hippies, you might want to take action at Patrick Leahy's new site Bush Truth Commission. A truth and reconciliation commission is really the very least we can do to get the full extent of the crimes out into the light of day. If the President believes the Villager pressure that this will rip the nation asunder and be just a terrible distraction, there's no reason the Congress has to follow. You can watch Sen. Leahy's remarks at Georgetown University in favor of a Truth Commission here.

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Country First

The lack of representation for the nearly 600,000 residents of Washington, DC is an enduring scandal and shame, a very real betrayal of the principles that led to the American Revolution. Yesterday, the Congress moved closer to erasing this blot when a Senate Committee approved the compromise plan that would give a voting member to DC and an extra voting member to Utah until the next apportionment after the 2010 Census. The vote had only one dissenter - John McCain.

McCain was the only one of them who voted nay, and he gave two reasons. The first was that the proposed compromise that would give D.C. voting rights while giving Utah a fourth seat in Congress was unfair to other fast-growing states. The second was that McCain didn’t want to pass a bill that constitutional scholars are still tussling over “and then have the Supreme Court decide whether or not it’s constitutional.”

This is a problem. What would happen if — a totally random example here — a senator introduced a campaign finance law that, according to many constitutional scholars and the president of the United States, violated the First Amendment? What if the Supreme Court had to decide whether or not the law was constitutional? That would be crazy.

Dave Weigel is a libertarian and I don't necessarily agree with him about McCain-Feingold, but the core idea that Congress can't make a law because the Supreme Court might overturn it would essentially end all lawmaking entirely, wouldn't it?

Because of this technical and entirely bullshitty reason, John McCain told the residents of DC, people he's walked among for 26 years, to go stuff it. What a man of the people.

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Eric Garcetti Stomps On Budget Deal, Lights It On Fire

Before last night's blogger conference call with LA City Council President Eric Garcetti, my opinions of the budget deal from Sacramento weren't very well-formed. I think I have become so inured to craptastic solutions from Sacramento that this one looked no worse than others. Of course, I don't have a responsibility to constituents and a need to implement the outlines of the plan, so Garcetti's very forceful words against the package kind of snapped me out of my slumber. Here's a paraphrase.

"I think it's a reflection of a broken system. It's like shooting a little morphine into a sick patient. I think depending on federal dollars to balance the budget is irresponsible, and will blunt the impact of the stimulus. It means that the county and school districts will see a lot of projects rolled back. The health care cuts are going to be devastating. You're going to see a lot more homeless people this year, a lot more people who need critical care and can't get it. So there is no joy in this resolution other than that it is a resolution."

Very strong stuff. And he's not wrong. It's not the reliance on federal stimulus dollars to balance the budget, which is necessary and will save jobs throughout the system, that gets me, but the continued reliance on borrowing and the raid of voter-approved funds for mental health and early childhood programs, which is illegal and will require the unlikelihood of passing new initiatives. We all new there were going to be extremely painful cuts, including an elimination of all local public transit agencies at a time when transit activity is up, and cuts to education below levels of Prop. 98's mandate (which will also require a vote by the people to override the passed law). But some of the ideas are just completely bizarre - they can't cut prison medical care, it's in a receivership and not their hands, unless they figure that releasing 55,000 inmates will alleviate them of the burden of providing Constitutional rights for those who remain.

There are long-overdue revenue increases but they are both temporary and either flat or regressive. For 30 years the affluent in society have avoided their share of the tax burden, and now the least of society will have to pay for it for a few years. And of course, it's sweetened with an enormous corporate tax cut.

Careful listeners could glean that the “framework” includes a new limit on state spending and no permanent tax increases. In response to a question as to what taxes would be increased, Steinberg answered that the reporters who had written about the issue in the Los Angeles Times and the Sacramento Bee were “good reporters.” These stories suggest that the deal would include a 1 cent increase in the state’s sales tax rate, a 12 cent per gallon increase in the gasoline tax, a doubling of the Vehicle License Fee rate - although the new rate would remain lower than the pre-late 1990s tax rate - and a 0.25 percentage point personal income tax surcharge. The duration of the tax increase would depend on whether voters approve the proposed limit on spending. If voters approve the limit, the new taxes would stay in effect five years. If voters turn down the cap, the new taxes would sunset in approximately two years.

There isn't any margin for error if, say, one of the five measures that will now be on the ballot fail, or if nobody wants to buy our debt or buy the state lottery, which is losing revenue. It's another seat of our pants craptastic budget which makes no long-term solutions and essentially keeps intact a broken structure. Garcetti is right that the problem is systemic, and so that's the goal for progressives in the state for this point forward - systemic change.

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Hunger Strike For CEO Parnell

I thought that the banksters' hearing would be the best in the House yesterday, but actually the hearing with the Georgia peanut plant owner was much more interesting - and enlightening.

As salmonella illness began spreading across the country last fall, the owner of a Georgia peanut plant that was causing the outbreak railed against the cost and delays that the contamination was causing his businesses, according to internal company documents obtained by Congress.

Stewart Parnell, president of Peanut Corporation of America, also pressed federal regulators to allow him to continue using peanuts from the tainted plant and shipped contaminated products to customers with a homemade certificate that falsely attested to their purity, according to e-mails and memos made public yesterday at a hearing of the House Energy and Commerce Committee.

Parnell, whose Virginia-based company is at the center of a massive food-contamination scandal and a federal criminal investigation, was compelled by subpoena to appear before lawmakers but refused to answer questions [...]

Federal regulators at the hearing called Parnell's actions "unconscionable"; several lawmakers called them criminal.

"This is a company that cared more about the financial bottom line than it did about the safety of its customers," said Rep. Henry A. Waxman (D-Calif.), the committee chairman.

Rep. Greg Walden (R-Ore.) held up a large jar wrapped in yellow police tape stamped "Caution" and filled with some of the 1,900 peanut products that have been recalled as a result of the contamination. "I'm going to ask Mr. Parnell if he'd like to open this and sample some of the products that he thought it was okay for others to eat," Walden said.

Parnell, who showed no emotion, did not respond to Walden's invitation. Instead, he repeated the only line he spoke at the hearing: "Mr. Chairman and members of the committee, on advice of my counsel, I respectfully decline to answer your questions based on the protections afforded me under the U.S. Constitution."
(emphasis mine)

Parnell was actually on an advisory board on PEANUT QUALITY under Bush's Department of Agriculture.

If nothing else, the change in Administration portends a return to federal agencies and watchdogs actually performing their core functions again. President Obama has already called for a full review of the FDA and said that the government is too slow in tracking tainted food. I believe the President values competence and will do his best to remedy this.

One thing, though... this hearing took place in Henry Waxman's House Energy and Commerce Committee. Clearly it's more of a job for the Oversight Committee, though obviously the commerce of food makes it germane. These are the types of hearings Waxman held all the time at Oversight. Does he have to hold two gavels now? Is Ed Towns alive?

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