Saturday, February 7, 2009

Political & Economic Reality vs. Rightwing Propaganda, Part II


Both Paul Krugman (Nobel Prize Laureate in Economics in 2008) and Bob Herbert are 100% correct. The heartless, braindead Republican Party is a national menace and disgrace and really don't care if the country goes belly up or not so long as the rich and arrogant continue to thrive at our collective expense. President Obama, the Democratic Party, and the rest of us will have to fight these rightwing demagogic bullies tooth and nail for the entire duration of the President's stay in the White House, and if we don't--mark my words--this country will be destroyed...


February 6, 2009
On the Edge
New York Times

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.

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.

It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.

Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.

Meanwhile, our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall.

It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.”

Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap.

We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken.

As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.

And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?

Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive.

So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next.

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

Copyright 2009 The New York Times Company

Playing With Fire
New York Times
February 6, 2009

It was good to see the president, ordinarily so cool, so accommodating, exhibiting some real fire the other night. It seems to have done some good.

With the economy in deep, deep trouble, and Americans suffering by the tens of millions, the Republicans spent much of the week doing their same-old, bad-faith Neanderthal two-step: trying their best to derail the economic stimulus package working its difficult way through Congress.

“This bill is stinking up the place,” said Lindsey Graham, a Republican senator from South Carolina who not only opposed the legislation but wanted to make sure that no one would mistake him for a class act.

One of the goals of the package, of course, is to begin cleaning up the holy mess that resulted from the long, dark night of G.O.P. control in Washington. President Obama went out of his way to get a substantial number of Republicans to make a genuine effort to move the economic revitalization process along, but was rebuffed, and in some cases contemptuously.

On Thursday night, he struck back, attacking Republican intransigence and its failed policies of the past. On Friday morning, with the government reporting that nearly 600,000 more jobs had been lost in January, the president went public again, stressing how irresponsible it would be to do nothing in the face of the growing crisis.

Neither the job losses nor the president’s prodding was enough to prompt much of a response from the Republicans. But by Friday evening, it appeared that a small number of G.O.P. senators, enough to assure Senate passage of a revised (and watered-down) stimulus package by a very slim margin, had come aboard.

But only a small number. Even as the report of an agreement was being circulated, Senator Bob Corker, a Tennessee Republican, was bad-mouthing the package on CNN. “This bill is a disaster,” he said.

It’s been clear for years that the G.O.P. is a party without a heart. But its pointless obstructionism, its overall lack of any serious response to what is a clear national economic emergency, seems to indicate it’s also a party without a brain.

Republicans in Washington have behaved like a milling crowd standing in the way of firefighters trying to respond to a devastating blaze. The best that can be said for the party is that a few senators seem to have been able part the crowd enough to let the rescuers begin to inch forward.

President Obama addressed Republican inflexibility on Thursday night when he said at a gathering in Williamsburg, Va., “Don’t come to the table with the same tired arguments and worn ideas that helped to create this crisis.” He added that without swift action on the stimulus bill, “an economy that is already in crisis will be faced with catastrophe.”

The report of January’s enormous job losses came roughly a dozen hours later. It was the latest in a long and hideous pattern of employment woes, much of it resulting from the G.O.P.’s obsession with destructive supply-side economic voodoo.

On the front page of The Times on Friday was an article that said the number of women on the nation’s payrolls is poised to pass that of men for the first time in American history. This is not because women have been doing so well, but because men have been doing so poorly.

As I was reading the article, I thought of all the guys who used to listen to Rush Limbaugh while driving to or from work but are now tuning in from their living rooms because the benefits of the G.O.P.’s right-wing, tax-cutting ideology never trickled down to them and they are now jobless.

“Since the start of the recession,” as Heidi Shierholz, an economist with the Economic Policy Institute, points out, “the U.S. economy has shed more jobs than the total population of Chicago.”

The Republicans still don’t get it. Most act as if they don’t understand that in this radical economic downturn the demand for goods and services has fallen off a cliff, and that government spending is needed — and needed quickly — to replace a large portion of that lost demand.

The goal is twofold: to alleviate some of the enormous suffering (something that is easily understood if you have a heart), and to revive the battered economy (equally easy to understand by anyone with a brain).

Senator John McCain echoed many of his Republican colleagues on Friday when he indignantly asserted, “This is not a stimulus bill; it is a spending bill.”

It was an objection that had been addressed by an incredulous President Obama on Thursday night. “What do you think a stimulus is?” the president asked, his voice rising. Spending, he said — to laughter from his audience — “is the whole point.”

Friday, February 6, 2009

Political & Economic Reality vs. Rightwing Propaganda


The stark reality vs. the criminal propaganda of the venomous and destructive Republican right is this: President Obama and the majority Democratic Party is simply going to have to get tough and go toe to toe with the Republicans because "bipartisanship" is merely a rancid myth/lie at this point in American political history. It's a genuine all out ideological war whether the Democrats want to face it or not and they and the President had better be fully prepared to go all the way in their principled opposition to the reactionary bullshit of the shameless demagogues running the Republican Party. The survival of this country hangs in the balance and as the President openly acknowledges any delays in passing this crucial legislation is totally "inexcusable" (see Obama's remarks in the article following the first one below about SPIRALING UNEMPLOYMENT...


February 7, 2009
Economy Shed 598,000 Jobs in January
New York Times

WASHINGTON - The United States lost almost 600,000 jobs last month, and the unemployment rate rose to 7.6 percent, its highest level in more than 16 years, the Labor Department said Friday.

It was the biggest monthly job loss since the economy tipped into a recession more than a year ago, and it was even worse than most forecasters had been predicting.

In addition, the government revised the estimates for previous months to include another 400,000 job losses. For December, the government revised the job loss to 577,000, versus an initial reading of 524,000. Over all, it said, the nation has lost 3.6 million jobs since it slipped into a recession in December 2007.

"Businesses are panicked and fighting for survival and slashing their payrolls," said Mark Zandi, chief economist at Moody's "I think we're trapped in a very adverse, self-reinforcing cycle. The downturn is intensifying, and likely to intensify further unless policy makers respond aggressively."

Despite the jobless number, Wall Street was higher; all three major exchanges were up about 2 percent at noon.

President Obama, in comments Friday morning, said the jobs report reinforced the need for Washington to act quickly, and he urged Congress to pass the economic stimulus package.

"All of us in Washington must remember that we're here to work for the American people," Mr. Obama said. "And if we drag our feet and fail to act, this crisis will turn into a catastrophe."

As in previous months, employers in January slashed their payrolls in almost every industry except health care. Manufacturers eliminated 207,000 jobs, more than in any year since 1982. The construction industry eliminated 111,000 jobs. And retailers, who were wrapping up their worst holiday shopping season in years, eliminated 45,000 jobs.

One modest exception was in workers' wages, which have thus far not reflected the sharp plunge in employment. Hourly earnings edged up to $18.46, up 5 cents, and average weekly earnings climbed to $614.72, up $1.67.

But over all, the new data reinforced the impression of an economy that has become increasingly trapped in a vicious circle of slumping consumer demand, falling business investment, rising unemployment and mounting losses in the banking system.

Although the United States officially slipped into a recession in December 2007, the decline was erratic and temporarily disguised by the impact of the emergency tax-rebate last spring.

Since September, analysts say, economic activity has plunged on almost every front. The monthly pace of job losses shot up to about 500,000 a month for the last three months of 2008, and the new report offered no hint that a bottom was in sight. Last week, the number of Americans filing first-time jobless claims reached a 26-year high, with 626,000 filling out applications.

"This is a horror show we're watching," said Lawrence Mishel, president of the Economic Policy Institute, an economic research organization in Washington. "By every measure available - loss of employment and hours, rise of unemployment, shrinkage of the employment to population rate - this recession is steeper than any recession of the last 40 years, including the harsh recession of the early 1980s."

Most forecasters had predicted that the economy would lose about 540,000 in January. Instead, the Labor Department estimated that 598,000 jobs disappeared.

To be sure, monthly payroll numbers are subject to big revisions in the months that follow. But most other indicators of the job market had been trending worse as well.

Major retailers, rocked by one of the worst holiday shopping seasons in memory, have been shutting stores and laying off of armies of workers in recent weeks. On Thursday, retailers reported that sales fell 1.6 percent in January, the fourth consecutive month of steep declines.

And in a sign that the country's slowdown continues to reach beyond its borders, Canada, America's largest trading partner, reported Friday that its unemployment rate jumped to 7.2 percent in January, from 6.7 percent in December.

In Washington, Friday's gloomy job report put more pressure on Congress to pass an economic stimulus bill. The House passed a bill last week that would provide more than $800 billion in spending and tax cuts. In the Senate, still bogged down by objections from Republicans, lawmakers were hoping to be able to muster enough votes to pass a measure on Friday

"If anything can persuade Congressional Republicans to stop their hyperpartisan sniping at the recovery package, these disastrous employment numbers should be it," said Representative Barney Frank, the Massachusetts Democrat who leads the House Financial Services Committee.

For comparison, the unemployment rate was 4.9 percent in January 2008. But some analysts contend that the current rate of 7.6 percent understates the labor market's problems because the percentage of adults participating in the labor force has slumped, and those people are not listed as "unemployed."

Peter Morici, an economist at the University of Maryland, estimated that if the labor force participation rate today were as high as it was when President Bush took office, the unemployment rate would be 9.4 percent.

Ian Shepherdson, chief North American economist for High Frequency Economics in Valhalla, N.Y., said the government had become the only source of energy left to break the cycle of slumping demand for goods and falling production.

"The public sector needs to act," Mr. Shepherdson wrote in a note to clients. "It needs to prevent an endless spiral of attempts to increase saving, leading to reduced spending, leading to reduced incomes, leading to further attempts to raise savings, and so on."

"We remain firmly of the view that the package now in Congress is the bare minimum required to slow the shrinkage of the economy over the next year," he said.

Many economists expect that the economy will continue to contract until July at the very least, but at a slowing pace in the second quarter.

The Federal Reserve continues to pump money into the financial system at a furious pace. Since September, the central bank has more than doubled its reserves, from $900 billion to more than $2 trillion, by literally creating new money.

The Fed has used some of that money to help bail out financial institutions, from Citigroup and Bank of America to the American International Group.

It has been pumping hundreds of billions of dollars into lending programs, stepping in for banks and other financial institutions to buy up a widening array of corporate debt. Later this month, the Fed will begin a $200 billion program, in conjunction with the Treasury, to finance consumer debt ranging from car loans and credit card debt to student loans.

But analysts say that the big problem is not a shortage of money, but a shortage of demand for products by businesses and consumers. As a result, banks are overloaded with excess reserves, made available by the Fed, which they are often simply parking at the Fed.

Jack Healy contributed reporting from New York.

Copyright 2009 The New York Times Company

February 7, 2009
Senators Close to Reaching Accord on Stimulus Bill
New York Times

WASHINGTON - Spurred by a dismal unemployment report for January, senators were close to reaching an accord on Friday evening on an economic stimulus program of some $800 billion sought by President Obama to pull the country out of the worst recession in years.

Democrats appeared to have succeeded, after a long day of private negotiations and intense public debate, to have won the support of enough Republicans to move the package toward a final vote. Assuming there is a final vote, passage would be assured.

Exact outlines of the accord were not immediately available, but the senators reportedly agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.

Once the Senate votes on the package, differences between the Senate legislation and a considerably different version passed recently by the House would have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.

Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were said to be among the senators being wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president's chief of staff, who is a former Congressman from Illinois.

Senator Harry Reid of Nevada, the Democratic majority leader, and Mr. Emanuel reportedly met with Ms. Collins and Mr. Specter Friday evening to smooth out any remaining wrinkles. Soon afterward, Mr. Reid conferred with his fellow Democrats to gain their approval.

The Senate negotiations and day-long public debate were given new urgency by the announcement on Friday morning that 598,000 jobs were lost in January. Democratic lawmakers said it was time to stop quibbling about the exact parameters of the legislation, which mixes safety net spending, tax cuts and a huge infusion of dollars into federal programs.

"While we dither, Rome burns," Senator Dianne Feinstein, Democrat of California, said, noting that the number of unemployed in her state was greater than the total population of other states.

At the White House, Mr. Obama urged Congress to act expeditiously.

"It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work," said the president, who has grown increasingly impatient with Republican resistance to the legislation.

But Republicans argued that the urgency of the moment should not make them forget their party's principles. "We want to stimulate the economy, not mortgage the future of our children and grandchildren by the kind of fiscally profligate spending embodied in this legislation," said Senator John McCain of Arizona, the defeated presidential candidate who was emerging as a chief Republican opponent of the proposal.

The accord emerged after hours of talks between Democratic leaders and a bipartisan group of lawmakers seeking some reductions in the price tag of the plan. The bipartisan group led by Senators Collins and Ben Nelson, a conservative Democrat from Nebraska, was trying to reduce the spending to about $800 billion, in line with Mr. Obama's initial request.

A memorandum circulating Friday afternoon listed proposed cuts that would bring a net reduction of about $80 billion from a measure that had grown to more than $900 billion. The document showed that money would be eliminated from education programs such as Head Start, criminal justice initiatives that included money for additional police, and some future spending on food stamp programs. The proposal would add spending on Pentagon programs, environmental cleanup and some transportation programs.

"This is a critical day for this new Congress and our country," Senator Reid said. "Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery."

"Lets not get dug in," said Senator Joseph I. Lieberman, independent of Connecticut. "This is not a perfect bill, but it clearly is a very good bill. Most important, of all, it is a proposal that will pump money into American economy, into the pockets of working Americans and to businesses throughout this country."

By mid-day, after the president called further delays "inexcusable," the tone of the Senate debate was growing decidedly sharper, with no immediate end in sight, although the Democratic majority leader, Senator Harry Reid of Nevada, remained optimistic about a vote by Friday evening.

President Obama seized on Friday's economic news - the Labor Department's report that the unemployment rate shot up in January - to step up the pressure on the lawmakers. "Last month, another 600,000 Americans lost their jobs," Mr. Obama said. "That is the single worst month of job loss in 35 years. The Department of Labor also adjusted their job loss numbers for 2008 upwards, and now report that we have lost 3.6 million jobs since this recession began.

"I am sure that at the other end of Pennsylvania Avenue, members of the Senate are reading these same numbers this morning. I hope they share my sense of urgency and draw the same, unmistakable conclusion: The situation could not be more serious. These numbers demand action. It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work. It is time for Congress to act."

Senator Joseph I. Lieberman, independent of Connecticut, said he was worried that the Senate was becoming like a gathering of firefighters arguing about "how to get to the fire while the house keeps burning."

"This is a critical day for this new Congress and our country," Mr. Reid said earlier on the Senate floor. "Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery.

"If we succeed, there will be plenty of credit to go around. But if we fail, our entire country will suffer the consequences."

Still, Mr. Reid's Republican counterpart, Senator Mitch McConnell of Kentucky, said his party colleagues would not sign on to "an aimless spending spree that masks as a stimulus."

President Obama, after signaling for the last several weeks that he wanted to work with Republicans on the bill and accommodate their requests, suggested in sometimes-sharp language on Thursday night that his patience with the other party is wearing thin, and that the Democratic Party's ideological approach should take precedence.

"Don't come to the table with the same tired arguments and worn ideas that helped to create this crisis," Mr. Obama told a gathering of House Democrats in Williamsburg, Va., referring to Republican demands for more tax cuts.

"We are not going to get relief by turning back to the very same policies that for the last eight years doubled the national debt and threw our economy into a tailspin," Mr. Obama said. "We can't embrace the losing formula that says only tax cuts will work for every problem we face, that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees."

Stepping up his pressure on both parties on Capitol Hill to act swiftly to finish work on the bill in the next 10 days, the president said that the American people had not voted for "the false theories of the past" when they elected him in November, and that it was time to set aside "phony arguments and petty politics."

The Democrats will need the support of at least two Republicans and probably more to win passage of the Senate's stimulus bill, which for procedural reasons will require 60 votes. The Democrats now hold 58 seats, but only 57 have been voting this week. Senator Edward M. Kennedy of Massachusetts has been absent because of illness.

David Stout contributed reporting.

Thursday, February 5, 2009

Support President Obama's Economic Stimulus Bill!


President Obama's economic stimulus bill is not only vitally necessary for the national economy but even more importantly is actually a very progressive and far reaching piece of legislation that proposes and provides crucial funds for education, health care, housing, and employment. Needless to say it's absolutely necessary that this bill (and much more legislation along the same lines besides) is actively supported by the American people and PASSES in the Senate where it is currently being considered for final passage before it is sent on to President Obama for his signature after Congress passed the bill last week (with ZERO support from every last one of the 177 Republican congressional representatives in the House)...The following email letter from provides even more important detail about what the bill is actually about...


President Obama's economic stimulus plan is in trouble. Conservative talking points are dominating the media's coverage and there's lots of misinformation around. Here are a few things you may not have heard about it:

1) This is a very, very good bill. As The Nation writes, "If enacted, the economic recovery plan will be one of the biggest and boldest pieces of progressive legislation in the past forty years."1

Here are some facts about what the bill really does:

Creates or saves 3 million to 4 million jobs in the next two years.2

Averts "literally hundreds of thousands of teacher layoffs"—and doubles funding for the Department of Education.3

Creates 500,000 green jobs and doubles our clean energy production.4

Immediately helps unemployed folks get affordable health insurance.5

Some folks are arguing that it should be bigger, and they're probably right, but this is the best down payment on economic recovery we have seen, and it needs to be passed.

2) The stuff that's being singled out for criticism amounts to a tiny fraction of the bill—like anti-smoking programs that make up less than one-ten-thousandth of the spending.6 They would have you believe this is the centerpiece of the bill. It is not. This kind of nit-picking is pure politics.

3) If it doesn't pass, we're in deep trouble. Even John McCain's economic adviser estimates that without the stimulus, unemployment would top 11% by 2010, the highest level since the Great Depression.7

We all urgently need to get these facts out before the public. Can you write a letter to the editor of your local paper about how the stimulus will affect real people? Our tool makes writing a letter really easy. Click here to get started:

Last week alone, 100,000 people lost their jobs in this country.8 So we need to make sure the Senate takes action quickly. Nearly 200 economists from across the political spectrum wrote to Congress, agreeing:

"We do not have the luxury of a lengthy debate over the best course of action. This legislation may not be enough to solve all the economy's problems, but it is urgently needed and an important step in the right direction."9

But with so much rhetoric and demagoguery surrounding the bill, it won't pass unless we can get the real facts out to a wide audience. And letters to the editor by local MoveOn members are one of the best ways to set the record straight.

Our tool makes it super easy. We'll provide you with talking points to use, some tips on writing your letter, and an easy way to send it in to any newspaper in your area.
You can start writing your letter to the editor by clicking here:

Thanks for all you do.

–Noah, Laura, Patrick S., Anna and the rest of the team


1. "The Right is Winning Today," The Nation, February 3, 2009

2. "Senate OKs tax break for new-car buyers," Boston Globe, February 4, 2009

3. "Stimulus Plan Would Provide Flood of Aid to Education," New York Times, January 27, 2009

4. "American Recovery and Reinvestment Act," Speaker Nancy Pelosi, January 28, 2009

5. "Relief Seen for Jobless and State in Health Care Plan," New York Times, January 27, 2009.

6. "What GOP Leaders deem wasteful in Senate stimulus bill," CNN, February 3, 2009

7. "The Economic Impact of the American Recovery and Reinvestment Act,", January 21, 2009

8. "Job cuts exceed 100,000 for the week," CNN, February 2, 2009

9. "Letter to Congress: Economist Across the Spectrum Endorse Stimulus Package", Center for American Progress Action Fund, January 27, 2009

Want to support our work? We're entirely funded by our 5 million members—no corporate contributions, no big checks from CEOs. And our tiny staff ensures that small contributions go a long way.

Sunday, February 1, 2009

President Obama, The Economy, and Fighting the Republican Right

February 1, 2009

Stimulus Plan: Reinvention or Recovery?

New York Times

WASHINGTON — As President Obama and Congress barrel toward the latest emergency program to resuscitate the American economy, one question is looming over their search for a cure: Can the government fashion a fast and efficient economic stimulus while also seizing the moment to remake America?

For now, Mr. Obama and his aides are insisting they can accomplish both goals, following their mantra of using the urgency of the economic crisis to accomplish larger — and long-delayed — reforms that never garnered sufficient votes in ordinary times.

In fact, at various times in American history, moments like this one have been used for big programs, from integrating the armed forces to creating Social Security and, later, Medicare. So it is little wonder that everyone with a big, stalled, transformative project — green energy programs, broadband networks that reach into rural America, health insurance for the newly unemployed or uninsured — is citing the precedent of Franklin D. Roosevelt, and declaring that a new New Deal is overdue.

But the question that the Senate will begin debating Monday is whether grand ambitions are getting in the way of pulling the country out of a nose dive. And so for every comparison of this moment to Roosevelt’s first hundred days, there are warnings that much of his social experimentation did not have a big impact on America’s economic recovery, which took years.

“When you are filling a hole this big and adding to America’s debt on such a large scale, you need to make sure every dollar is aimed for the economic boost you need,” said Martin S. Feldstein, a Harvard economist who warned more than a year ago that the United States economy was about to be hit between the eyes.

Mr. Feldstein has provided the economic arguments behind Republican objections that Mr. Obama is starting a long-term expansion of government, after decades in which the United States has relied on market solutions and encouraged nations around the world to do the same.

The economic arguments mask, for some, a primal fear that this is 1933 all over again, the beginning of a 21st century liberal resurgence.

The comparisons to 1933 are sure to resound even louder in the next week. Much as Roosevelt imposed a “bank holiday” in his first days in office to stop the run on American financial institutions, Mr. Obama promised in his weekly address to the nation on Saturday that Treasury Secretary Timothy F. Geithner would soon announce “a new strategy for reviving our financial system that gets credit flowing to businesses and families.”

That is bound to revive the question of whether anything short of nationalizing some of America’s biggest banks, even briefly, can get the job done.

Taken together, the economic stimulus plan and the banking bailout have quickly melded into a bitter political and ideological clash, barely two weeks into the Obama presidency.

Some of what is going on might best be called a classic case of pent-up demand — demand by Democrats for the kinds of programs that they could never get passed during the Bush years.

After years of battling with a White House that questioned the science behind global warming, Democratic lawmakers see a chance to begin programs aimed at environmental protection, using economic justifications for efforts like developing low-emission cars. And with a Democrat in the White House, they also see an opening to push for increased spending on education.

The efforts are fueled by a liberal base that supported Mr. Obama’s promise that he would tackle the biggest issues. That same base is concerned that the long slog ahead will force a delay or an abandonment of those ambitions.

As a result, there is $54 billion in the House bill for new forms of “American energy,” a phrase with an air of nationalism, along with a series of “Buy America” requirements of dubious legality under trade treaties; $141 billion for education; $24 billion for lowering health care costs; and $6 billion for broadband service, the digital equivalent of Lyndon B. Johnson electrifying the Hill Country in Texas.

(Some critics of that effort say it is pitifully small, too small to fulfill Mr. Obama’s campaign promise that all Americans should enjoy “the highest form of broadband access.”)

To those who argue that many of the programs will take years to get rolling, their advocates have replied, “So what?”

“It’s not as if we can just fix what’s wrong and go back to normal,” said James K. Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs in Austin. “Can you overdo? Maybe, but it’s easier to pull back later than to make up for the fact that you did too little.”

But the result is that a piece of “emergency” legislation that would spend heavily to stanch the killing of jobs is now transforming into a series of long-term commitments that are sure to add enormously to the national debt, and keep adding to it long after the Panic of 2008 and the recession — or worse — that it set off are consigned to history.

Republicans see a chance to do something they could do only quietly, and rarely, until President George W. Bush flew out of the city 11 days ago: protest huge deficit spending. Now, they are freer to complain — as Senator Mitch McConnell of Kentucky did on Saturday in the Republican response to Mr. Obama’s address, when he argued that “permanent spending would be expanded by about $240 billion” in the House, which would “lock in bigger and bigger deficits every year.”

(Mr. McConnell was less vocal in his opposition when President Bush declared that the combination of 9/11, a downturn and the expansion of the military budget required deficit spending.)

The Republicans have been joined by a small band of Democratic fiscal conservatives whose message does not seem to match the party’s mood.

“Because we’re doing this outside the budget process, it means no one has to talk about what the long-term effects of any of this might be,” said Alice M. Rivlin, an economist at the Brookings Institution and a former member of the Federal Reserve, who supports a major stimulus package. She testified recently in Congress about the need to separate short-term economic stimulus from a broader agenda — which embraces everything from fixing America’s schools to improving health care for children.

“We seem to be counting on the Chinese to keep investing to pay for this,” Ms. Rivlin said, referring to the huge amount of United States government debt held by China, “and we’re assuming that the rest of the world isn’t going to lose confidence once we use this moment to spend on a whole range of programs. And I’m just not sure that’s the right assumption.”

Ms. Rivlin raises what may turn out to be the most urgent question of all in a few months.

When Roosevelt took America down new roads, he financed it at home. Mr. Obama does not have that luxury: He must persuade not only Congress and the public but also world financial markets, which must decide whether — and at what interest rate — they are willing to finance his plan.

That is the three-dimensional chess game the administration must play as it tries to mount the biggest economic rescue plan in more than seven decades.

Copyright 2009 The New York Times Company


1 Obama Is a Two-Faced Liar. Aw-RIGHT!

2 Obama's Economic Recovery Plan Is Almost As Pure As
Ivory Soap

Obama Is a Two-Faced Liar. Aw-RIGHT!

by Greg Palast
January 29, 2009

Republicans are right. President Barack Obama treated
them like dirt, didn't give a damn what they thought
about his stimulus package, loaded it with a bunch of
programs that will last for years and will never leave
the budget, is giving away money disguised as "tax
refunds," and is sneaking in huge changes in policy,
from schools to health care, using the pretext of an
economic emergency.

Way to go, Mr. O! Mr. Down-and-Dirty Chicago pol.
Street-fightin' man. Covering over his break-your-face
power play with a "we're all post-partisan friends" BS.

And it's about time.

Frankly, I was worried about this guy. Obama's
appointing Clinton-droids to the Cabinet, bloated
incompetents like Larry Summers as "Economics Czar,"
made me fear for my country, that we'd gotten another
Democrat who wished he were a Republican.

Then came Obama's money bomb. The House bill included
$125 billion for schools (TRIPLING federal spending on
education), expanding insurance coverage to the
unemployed, making the most progressive change in the
tax code in four decades by creating a $500 credit
against social security payroll deductions, and so on.

It's as if Obama dug up Ronald Reagan's carcass and put
a stake through The Gipper's anti-government heart. Aw-

About the only concession Obama threw to the right-wing
trogs was to remove the subsidy for condoms, leaving
hooker-happy GOP Senators, like David Vitter, to pay
for their own protection. S'OK with me.

And here's the proof that Bam is The Man: Not one
single Republican congressman voted for the bill. And
that means that Obama didn't compromise, the way
Clinton and Carter would have, to win the love of these
condom-less jerks.

And we didn't need'm. Nyah! Nyah! Nyah!

Now I understand Obama's weird moves: dinner with those
creepy conservative columnists, earnest meetings at the
White House with the Republican leaders, a dramatic
begging foray into Senate offices. Just as the
Republicans say, it was all a fraud. Obama was pure
Chicago, Boss Daley in a slim skin, putting his arms
around his enemies, pretending to listen and care and
compromise, then slowly, quietly, slipping in the
knife. All while the media praises Obama's "post-
partisanship." Heh heh heh.

Love it. Now we know why Obama picked that vindictive
little viper Rahm Emanuel as staff chief: everyone
visiting the Oval office will be greeted by the Windy
City hit man who would hack up your grandma if you mess
with the Godfather-in-Chief.

I don't know about you, but THIS is the change I've
been waiting for.

Will it last? We'll see if Obama caves in to more tax
cuts to investment bankers. We'll see if he stops the
sub-prime scum-bags from foreclosing on frightened
families. We'll see if he stands up to the whining,
gormless generals who don't know how to get our troops
out of Iraq. (In SHIPS, you doofusses!)

Look, don't get your hopes up. But it may turn out the
new President's ... a Democrat!


Greg Palast's investigative reports for BBC and Rolling
Stone can be seen at Palast is the
author of New York Times bestsellers The Best Democracy
Money Can Buy and Armed Madhouse.


Obama's Economic Recovery Plan Is Almost As Pure As
Ivory Soap

By Bernie Horn
January 27th, 2009>

There's been a lot of bitching and moaning in the
progressive blogosphere about the huge business tax
cuts that are supposed to be contained in President
Obama's economic recovery plan.

In fairness to all, the negotiations took place behind
closed doors, leaving us little solid information on
which to base opinions. And over the years, we've had
good reason to be wary of backroom deals in Congress.

But there's good news. The American Recovery and
Reinvestment Act is a remarkably "clean" bill. Only
between 1½ and 3 percent is being wasted on tax cuts
for business. Put another way, the bill is about 98
percent pure-money dedicated to good, progressive

The Congressional Budget Office (CBO) analysis,
released Monday, says the business tax cuts will cause
"a net revenue loss of $13 billion over the 2009-2019
period." See the discussion on pages 11-12 of this

The figure of $13 billion is confirmed and explained by
the House Ways and Means Committee on pages 2-3 in this
document. There are only three business tax provisions
that have a significant price tag. First, the extension
of bonus depreciation enacted last year, allowing
businesses to depreciate capital costs faster than the
ordinary schedule, will cost $5 billion. Second, the 5-
year carryback provision, allowing businesses to deduct
net losses from the last five years instead of the last
two, will cost $15 billion. Third, the repeal of a Bush
Treasury Department ruling that unjustly benefits the
purchasers of certain companies will increase revenues
by $7 billion. So $20 billion in business tax cuts are
offset by a $7 billion tax increase, leaving a total of
$13 billion in benefits.

As you probably know, the Senate Finance Committee
intends to make larger business tax cuts than the House
bill has. The analysis of the Finance Committee's
markup, evaluated by the Congressional Joint Committee
on Taxation, is on page 3 of this document. The Senate
version includes both the bonus depreciation and 5-year
carryback provisions, but the Joint Committee estimates
these will cost a total of $22.5 billion instead of the
House's $20 billion. The Senate does not include the $7
billion tax increase and adds a bit more than $2
billion more in tax breaks for a total of $24.9 billion
in business tax benefits.

The CBO tells us that the whole bill costs $816
billion. So if the Senate version is adopted, only 3
percent of the spending is for business tax breaks.
(That percentage is about the same with or without the
recent Alternative Minimum Tax provision.) If the House
version is adopted, it's only 1½ percent. Either way,
this is a bill that is between 97 and 98.5 percent
targeted toward good causes.

In our nation's capital, no major bill ever passes
without a "sweetener" for the special interests you may
oppose. By Capitol Hill standards, this is an
exceptionally modest sweetener. And don't think it's
necessarily being done to gain Republican votes-key
Democrats want these too.

The bottom line: This is the biggest and boldest
progressive legislation in 40 years. By all means,
register your complaints against the business tax cuts.
But don't let that dampen your enthusiasm for the
overall measure. If you live in a state with a
Republican or less-than-liberal Democratic Senator,
call them today and urge them to support this bill.
You'll be sorry if you don't help out, because this is
history in the making.

The writer is a Senior Fellow at Campaign for America's
Future and author of the recent book, Framing the
Future: How Progressive Values Can Win Elections and
Influence People.


Portside aims to provide material of interest
to people on the left that will help them to
interpret the world and to change it.