So whenever you hear a Republican politician or tea partier say that the stimulus failed point them to this article where conservative think tank AEI admitted that the stimulus boosted the economy by 4%.

The real economy also responded to the massive stimulus but remained heavily dependent on it. In the United States, growth during the second half of 2009 probably averaged about 3 percent. Absent temporary fiscal stimulus and inventory rebuilding, which taken together added about 4 percentage points to U.S. growth, the economy would have contracted at about a 1 percent annual rate during the second half of 2009.

President Obama plans to announce the details of how he plans to spur job growth through infrastructure, home energy efficiency, and tax breaks for small businesses.  “Having finally moved into positive territory when it comes to economic growth, our biggest challenge now is making sure that job growth matches up with economic growth,” Obama told reporters at the White House after his job summit last week.  Today the President will give details to the American people about how he plans to do just that.  We can expect the President’s initiatives to help increase growth within small businesses in an effort to create a need for such businesses to hire new staff, to increase spend to modernize roads, railways, bridges and tunnels, airports and seaports and install a rebates program for consumers who retrofit their homes to become more energy efficient, according to a White House official.

WASHINGTON — Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain.

The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real-estate market a bigger boost while preventing real-estate investors from benefiting. 

See remainder of story here

Some may have missed the good news that came out regarding the good the the Obama administration has accomplished during its seven months in office.  Remember when the economy was on the brink of desaster in January?  Well we are seeing a few changes as a result of policies implemented by this administration.

• There has been a significant jump in home sales by 7.2 percent.  This is the largest monthly increase in ten years.  Analysts opine that the President’s tax breaks for first time home buyers contributed significantly.
• A slowing of job loss as indicated this month from 9.5 percent to 9.4 percent
• Federal Chairman Ben Bernanke’s forcast that the economy is on the verge of recovery
• The rise in the stock market by 150 points at close of business last Friday
• The success of the cash-for-clunkers program resulting in the sale of more cars during the short period that the program was in place than some dealers have seen in the last ten years of being in business.  More than 450,000 energy efficient cars were sold in the past few weeks.

President Obama will announce today that he will reappoint Federal Chairman Ben Bernanke to the Federal Reserve.

Yesterday President Obama responded to today’s GOP scheduled tax day “tea party” initially brought on by CNBC analyst Rick Santelli during an ill advised rant last month.  The GOP has now taken the spectacle and ran with it.  Unfortunately, the Grand Old Party do not have a cohesive focus or message for their stunt.   The president, however, has decided to address all the criticisms lodged against his economic policies coming from certain factions of the GOP.  If you want to be informed regarding teh president’s policies and teh logic and reasoning behind them, read below.  If you want to know why it does not make sense to send checks directly to taxpayers as opposed to giving it to the banks read below.  If you want to know why it does not make sense to nationalize the banks read below.  If you want to know why it is critical to our economic recovery that the government increases its spending please read below.

President Barack Obama’s remarks at Georgetown University, as provided by the White House                          

A House Upon A Rock

It has now been twelve weeks since my administration began. And I think even our critics would agree that at the very least, we’ve been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.

I know that some have accused us of taking on too much at once. Others believe we haven’t done enough. And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.

So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we’ve done, why we’ve done it, and what we have left to do. I want to update you on the progress we’ve made, and be honest about the pitfalls that may lie ahead.

And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.

To understand how we get there, we first need to understand how we got here.

Recessions are not uncommon. Markets and economies naturally ebb and flow, as we have seen many times in our history. But this recession is different. This recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.

As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled “Buyer Beware.”

No one really knew what the actual value of these securities were, but since the housing market was booming and prices were rising, banks and investors kept buying and selling them, always passing off the risk to someone else for a greater profit without having to take any of the responsibility. Banks took on more debt than they could handle. The government-chartered companies Fannie Mae and Freddie Mac, whose traditional mandate was to help support traditional mortgages, decided to get in on the action by buying and holding billions of dollars of these securities. AIG, the biggest insurer in the world, decided to make profits by selling billions of dollars of complicated financial instruments that supposedly insured these securities. Everybody was making record profits – except the wealth created was real only on paper. And as the bubble grew, there was almost no accountability or oversight from anyone in Washington.

Then the housing bubble burst. Home prices fell. People began defaulting on their subprime mortgages. The value of all those loans and securities plummeted. Banks and investors couldn’t find anyone to buy them. Greed gave way to fear. Investors pulled their money out of the market. Large financial institutions that didn’t have enough money on hand to pay off all their obligations collapsed. Other banks held on tight to the money they did have and simply stopped lending

This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to a college education. It’s how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn’t get car loans, a bad situation at the auto companies became even worse. When people couldn’t get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can’t afford to buy our goods, it slows our economy even further.

This is the situation we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we’ve had no choice but to attack all fronts of our economic crisis at once.

The first step was to fight a severe shortage of demand in the economy. The Federal Reserve did this by dramatically lowering interest rates last year in order to boost investment. And my administration and Congress boosted demand by passing the largest recovery plan in our nation’s history. It’s a plan that is already in the process of saving or creating 3.5 million jobs over the next two years. It is putting money directly in people’s pockets with a tax cut for 95% of working families that is now showing up in paychecks across America. And to cushion the blow of this recession, we also provided extended unemployment benefits and continued health care coverage to Americans who have lost their jobs through no fault of their own.

Now, some have argued that this recovery plan is a case of irresponsible government spending; that it is somehow to blame for our long-term deficit projections, and that the federal government should be cutting instead of increasing spending right now. So let me tackle this argument head on.

To begin with, economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending. You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse. That’s why the government has to step in and temporarily boost spending in order to stimulate demand. And that’s exactly what we’re doing right now.

Second of all, I absolutely agree that our long-term deficit is a major problem that we have to fix. But the fact is that this recovery plan represents only a tiny fraction of that long-term deficit. As I will discuss in a moment, the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs – not to stand idly by as the economy goes into free fall.

So the recovery plan has been the first step in confronting this economic crisis. The second step has been to heal our financial system so that credit is once again flowing to the businesses and families who rely on it.

The heart of this financial crisis is that too many banks and other financial institutions simply stopped lending money. In a climate of fear, banks were unable to replace their losses by raising new capital on their own, and they were unwilling to lend the money they did have because they were afraid that no one would pay it back. It is for this reason that the last administration used the Troubled Asset Relief Program, or TARP, to provide these banks with temporary financial assistance in order to get them lending again.

Now, I don’t agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – “where’s our bailout?,” they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth. Read the rest of this entry »

Americans have grown more optimistic about the economy and the direction of the country in the 11 weeks since President Obama was inaugurated, suggesting that he is enjoying some success in his critical task of rebuilding the nation’s confidence, according to the latest New York Times/CBS News poll.

These sometimes turbulent weeks — marked by new initiatives by Mr. Obama, attacks by Republicans and more than a few missteps by the White House — do not appear to have hurt the president. Americans said they approved of Mr. Obama’s handling of the economy, foreign policy, Iraq and Afghanistan; fully two-thirds said they approved of his overall job performance. 

By contrast, just 31 percent of respondents said they had a favorable view of the Republican Party, the lowest in the 25 years the question has been asked in New York Times/CBS News polls.

It is not unusual for new presidents to enjoy a period of public support. Still, the durability of Mr. Obama’s support contrasts with that of some of his predecessors at the same point in their terms. It is also striking at a time when anxiety has gripped households across the country and Mr. Obama has alternately sought to rally Americans’ spirits and warn against economic collapse as he seeks Congressional support for his programs.   See full article here

President Obama explained today how his administration will bring us out of this economic down turn and how he will pay for it through eliminating government waste and tax loopholes for the wealthy.  The President plans to reduce the deficit by fifty percent at the end of his first term.  See full comments below.

REMARKS BY THE PRESIDENT
ON THE FISCAL YEAR 2010 BUDGET
Dwight D. Eisenhower Executive Office Building, Room 350
February 26, 2009

9:55 A.M. EST

THE PRESIDENT:  Before I begin, I have some good news to report.  Starting today, the recently unemployed will benefit from a COBRA subsidy that will make health care affordable.  At a time when health care is too often too expensive for the unemployed, this critical step will help 7 million Americans who’ve lost their jobs keep their health care.  That’s 7 million Americans who will have one less thing to worry about when they go to sleep at night.  Equally important, it prevents a further downward spiral in our economy by ensuring that these families don’t fall further behind because of mounting health care bills.  And it is a direct result of the American Recovery and Reinvestment Act that I signed into law the other week — a recovery plan that has only just begun to yield benefits for the American people. 

But while we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline over the long run that we can produce sustained growth and shared prosperity.  And that is precisely the purpose of the budget I’m submitting to Congress today.

In keeping with my commitment to make our government more open and transparent, this budget is an honest accounting of where we are and where we intend to go.  For too long, our budget has not told the whole truth about how precious tax dollars are spent.  Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan.  And that kind of dishonest accounting is not how you run your family budgets at home; it’s not how your government should run its budgets, either.  We need to be honest with ourselves about what costs are being racked up — because that’s how we’ll come to grips with the hard choices that lie ahead.  And there are some hard choices that lie ahead.

Just as a family has to make hard choices about where to spend and where to save, so do we, as a government.  You know, there are times where you can afford to redecorate your house and there are times where you need to focus on rebuilding its foundation.  Today, we have to focus on foundations.  Having inherited a trillion-dollar deficit that will take a long time for us to close, we need to focus on what we need to move the economy forward, not on what’s nice to have.  That’s why, on Monday, I held a fiscal summit to come up with a plan to put us on a more sustainable path.  And that is why, as we develop a full budget that will come out this spring, we’re going to go through our books page by page, line by line, to eliminate waste and inefficiency.  This is a process that will take some time, but in the last 30 days alone, we have already identified $2 trillion in deficit reductions that will help us cut our deficit in half by the end of my first term.

For example, Agriculture Secretary Vilsack is saving nearly $20 million with reforms to modernize programs and streamline bureaucracy.  Interior Secretary Salazar will save nearly $200 million by stopping wasteful payments to clean up abandoned coal mines that just happen to have already been cleaned up.  Education Secretary Duncan is set to save tens of millions dollars more by cutting an ineffective mentoring program for students, a program whose mission is being carried out by 100 other programs in 13 other agencies. Read the rest of this entry »

New York’s Senator Chuck Schumer has a message for GOP governors humming and hawing over whether that want to accept the funds from the Reinvestment and Recovery Act (stimulus).  Schumer, in a letter to Peter Orzag of the Office of Management and Budget, requests that that the governors of the states not be given the option to splice and dice the package because it would then diminish the stimulative effect of the package and its implementation.  Lousiana’s governor Jindal has indicated that he will accept some of the funds but will reject monies allocated for the unemployment trust fund (UTF).  Interesting position by Jindal considering that he accepted and advocated for the same federal funds allocated to the UTF for Katrina relief.  Not to mention that Lousiana has one of the highest rates of unemployment in the country.  See Schumer’s letter to the Office of Management and Budget below.

Dear Director Orszag:

In recent days, a small minority of governors, mostly Republicans, have publicly weighed the possibility of foregoing certain emergency provisions provided under the American Economic Recovery and Reinvestment Act signed last week by President Obama. I believe this prospect not only would undercut the stimulative effect of the recovery package, but also is inconsistent with a key provision included in the law passed by Congress. To protect the integrity of the recovery program, I urge the administration to issue implementation guidance clarifying that while any Governor may exercise his or her discretion to accept or reject the federal funds provided in the stimulus, no Governor should have the authority to arbitrarily adopt a select subset of the overall package.

As you know, Section 1607(a) of the economic recovery legislation provides that the Governor of each state must certify a request for stimulus funds before any money can flow. No language in this provision, however, permits the governor to selectively adopt some components of the bill while rejecting others. To allow such picking and choosing would, in effect, empower the governors with a line-item veto authority that President Obama himself did not possess at the time he signed the legislation. It would also undermine the overall success of the bill, as the components most singled out for criticism by these governors are among the most productive measures in terms of stimulating the economy.

For instance, at least two governors have proposed rejecting a program to expand unemployment insurance for laid-off workers. Economists consistently rank unemployment insurance among the most efficient and cost-effective fiscal stimulus measures; by one frequently cited estimate, it provides an economic return of as high as $1.73 for every dollar invested. Thus, by denying this provision for their residents, these governors are not just depriving some of the neediest Americans of relief in a dire economy; they are undermining the overall stimulative impact of the package.

No one would dispute that these governors should be given the choice as to whether to accept the funds or not. But it should not be multiple choice. The composition of the package was rightly dictated by economic considerations; we should not let the implementation of the package be dictated by political considerations.

Sincerely,

Charles E. Schumer

United States Senator

President Obama signed the stimulus bill yesterday as well as gave a breakdown of how the money will be spent. 

• $288 billion in tax relief
• $144 billion in state and local fiscal relief
• $111 billion in infrastructure and science
• $81 billion goe to protecting the vulnerable
• $59 billion healthcare
• $53 billion education and training
• $43 billion energy
• $8 billion listed as other

The President said that 3.5 million jobs will be created or saved by the package.  For more specific information about the bill and track how it is being spent go to www.recovery.gov

Today the President will unveil his plan to stabilize the housing market in Phoenix, Arizona, one of the hardest hit areas in the nation for foreclosures.

The second stimulus package has been approved by the House and the Senate and both bodies will be voting on it in the next few days hoping for the President to sign it by Monday.  The package consists of $507 billion in spending programs and $282 billion in tax relief and is designed to save or creat 3.5 million jobs.  Much of the education funding was put back into the package.  Stimulus checks to individuals were cut back from $500 per individual, $1000 per family to $400 per individual and $800 per family.  The package will also include a one time payment of $250 to social security and disability recipients.  The bill will extend unemployment benefits by 20 weeks and boost such benefits by $25. Further, the bill expands the subsidy that helps the unemployed continue to buy health insurance from their employer. A one time tax credit for  buyers purchasing a home in 2009 was included but was reduced to $8000 tax credit for first-time buyers only instead of the initial $15,000 for all home buyers.  In addition, tax breaks for new car buyers to write off interest for their loans. Not sure if that tax credit will be retroactive to include January and and the first part of February of 2009. There are significant amounts for infrastructure, healthcare, education, and energy. The total amount of the package is $789 billion.  Hopefully the full details of the new package will be released in the coming days.  Read the full text of the FINAL bill here .

February 10, 2009   8pm EST

President Barack Obama 

Good evening. Before I take your questions tonight, I’d like to speak briefly about the state of our economy and why I believe we need to put this recovery plan in motion as soon as possible.

I took a trip to Elkhart, Indiana today. Elkhart is a place that has lost jobs faster than anywhere else in America. In one year, the unemployment rate went from 4.7% to 15.3%. Companies that have sustained this community for years are shedding jobs at an alarming speed, and the people who’ve lost them have no idea what to do or who to turn to. They can’t pay their bills and they’ve stopped spending money. And because they’ve stopped spending money, more businesses have been forced to lay off more workers. Local TV stations have started running public service announcements that tell people where to find food banks, even as the food banks don’t have enough to meet the demand.

As we speak, similar scenes are playing out in cities and towns across the country. Last Monday, more than 1,000 men and women stood in line for 35 firefighter jobs in Miami. Last month, our economy lost 598,000 jobs, which is nearly the equivalent of losing every single job in the state of Maine. And if there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don’t know where their next paycheck is coming from.

That is why the single most important part of this Economic Recovery and Reinvestment Plan is the fact that it will save or create up to 4 million jobs. Because that is what America needs most right now.

It is absolutely true that we cannot depend on government alone to create jobs or economic growth. That is and must be the role of the private sector. But at this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life. It is only government that can break the vicious cycle where lost jobs lead to people spending less money which leads to even more layoffs. And breaking that cycle is exactly what the plan that’s moving through Congress is designed to do.

When passed, this plan will ensure that Americans who have lost their jobs through no fault of their own can receive greater unemployment benefits and continue their health care coverage. We will also provide a $2,500 tax credit to folks who are struggling to pay the cost of their college tuition, and $1000 worth of badly-needed tax relief to working and middle-class families. These steps will put more money in the pockets of those Americans who are most likely to spend it, and that will help break the cycle and get our economy moving.

But as we learned very clearly and conclusively over the last eight years, tax cuts alone cannot solve all our economic problems – especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it has only helped lead us to the crisis we face right now.

That is why we have come together around a plan that combines hundreds of billions in tax cuts for the middle-class with direct investments in areas like health care, energy, education, and infrastructure – investments that will save jobs, create new jobs and new businesses, and help our economy grow again – now and in the future.

More than 90% of the jobs created by this plan will be in the private sector. These will not be make-work jobs, but jobs doing the work that America desperately needs done. Jobs rebuilding our crumbling roads and bridges, and repairing our dangerously deficient dams and levees so that we don’t face another Katrina. They will be jobs building the wind turbines and solar panels and fuel-efficient cars that will lower our dependence on foreign oil, and modernizing a costly health care system that will save us billions of dollars and countless lives. They’ll be jobs creating 21st century classrooms, libraries, and labs for millions of children across America. And they’ll be the jobs of firefighters, teachers, and police officers that would otherwise be eliminated if we do not provide states with some relief.

After many weeks of debate and discussion, the plan that ultimately emerges from Congress must be big enough and bold enough to meet the size of the economic challenge we face right now. It is a plan that is already supported by businesses representing almost every industry in America; by both the Chamber of Commerce and the AFL-CIO. It contains input, ideas, and compromises from both Democrats and Republicans. It also contains an unprecedented level of transparency and accountability, so that every American will be able to go online and see where and how we’re spending every dime. What it does not contain, however, is a single pet project, and it has been stripped of the projects members of both parties found most objectionable.

Despite all of this, the plan is not perfect. No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans. My administration inherited a deficit of over $1 trillion, but because we also inherited the most profound economic emergency since the Great Depression, doing too little or nothing at all will result in an even greater deficit of jobs, incomes; and confidence. That is a deficit that could turn a crisis into a catastrophe. And I refuse to let that happen. As long as I hold this office, I will do whatever it takes to put this country back to work.

I want to thank the members of Congress who’ve worked so hard to move this plan forward, but I also want to urge all members of Congress to act without delay in the coming week to resolve their differences and pass this plan.

We find ourselves in a rare moment where the citizens of our country and all countries are watching and waiting for us to lead. It is a responsibility that this generation did not ask for, but one that we must accept for the sake of our future and our children’s. The strongest democracies flourish from frequent and lively debate, but they endure when people of every background and belief find a way to set aside smaller differences in service of a greater purpose. That is the test facing the United States of America in this winter of our hardship, and it is our duty as leaders and citizens to stay true to that purpose in the weeks and months ahead. After a day of speaking with and listening to the fundamentally decent men and women who call this nation home, I have full faith and confidence that we can. And with that, I’ll take your questions.

And let me go to Jennifer Loven at [The Associated Press]. There you go.

Question: Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse.

Can you talk about what you know or what you’re hearing that would lead you to say that our recession might be permanent when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?

Obama: No, no, no, no. I think that what I’ve said is what other economists have said across the political spectrum, which is that, if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of.

We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough and, as a consequence, they suffered what was called the lost decade, where essentially, for the entire ’90s, they did not see any significant economic growth.

So what I’m trying to underscore is what the people in Elkhart already understand, that this is not your ordinary, run-of-the-mill recession. We are going through the worst economic crisis since the Great Depression.

We’ve lost now 3.6 million jobs, but what’s perhaps even more disturbing is that almost half of that job loss has taken place over the last three months, which means that the problems are accelerating instead of getting better.

Now, what I said in Elkhart today is what I repeat this evening, which is, I’m absolutely confident that we can solve this problem, but it’s going to require us to take some significant, important steps.

Step number one: We have to pass an economic recovery and reinvestment plan. And we’ve made progress. There was a vote this evening that moved the process forward in the Senate. We already have a House bill that’s passed. I’m hoping, over the next several days, that the House and the Senate can reconcile their differences and get that bill on my desk.

There have been criticisms from a bunch of different directions about this bill, so let me just address a few of them.

Some of the criticisms really are with the basic idea that government should intervene at all in this moment of crisis. Now, you have some people, very sincere, who philosophically just think the government has no business interfering in the marketplace. And, in fact, there are several who’ve suggested that FDR was wrong to interfere back in the New Deal. They’re fighting battles that I thought were resolved a pretty long time ago.

Most economists almost unanimously recognize that, even if philosophically you’re — you’re wary of government intervening in the economy, when you have the kind of problem we have right now — what started on Wall Street, goes to Main Street, suddenly businesses can’t get credit, they start paring back their investment, they start laying off workers, workers start pulling back in terms of spending — that, when you have that situation, that government is an important element of introducing some additional demand into the economy.

We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you’ve got this gaping hole in the economy.

That’s why the figure that we initially came up with of approximately $800 billion was put forward. That wasn’t just some random number that I plucked out of — out of a hat. That was Republican and Democratic, conservative and liberal economists that I spoke to who indicated that, given the magnitude of the crisis and the fact that it’s happening worldwide, it’s important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs.

That still means that you’re going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.

Now, the recovery and reinvestment package is not the only thing we have to do. It’s one leg of the stool. We are still going to have to make sure that we are attracting private capital, get the credit markets flowing again, because that’s the lifeblood of the economy.

And so tomorrow my treasury secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again.

And that means having some transparency and oversight in the system. It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity, in terms of how the program was going to move forward.

It means that we condition taxpayer dollars that are being provided to banks on them showing some restraint when it comes to executive compensation, not using the money to charter corporate jets when they’re not necessary.

It means that we focus on housing and how are we going to help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.

So there are going to be a whole range of approaches that we have to take for dealing with the economy. My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief.

And I’m happy to get good ideas from across the political spectrum, from Democrats and Republicans. What I won’t do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested, and they have failed. And that’s what part of the election in November was all about.

OK. Karen Boeing (ph) of Reuters? Read the rest of this entry »

Caterpillar, Sprint, Home Depot, IBM, United Airlines, Texas Instruments, General Motors, Pfizer, cut over 43,000 jobs yesterday.  Yet the GOP is playing politics with respect to the latest stimulus package.  The GOP has not presented any better ideas besides the Bush tax cuts that helped put us in this situation in the first place.  This is an American problem and we need to address it as Americans.  The economy is in a downward spiral and something needs to be done and done quickly.  The Obama administration appears to be very open to GOOD ideas as long as they are not the same ideas that were implemented throughout the last eight years.  This past election was a referendum on the GOP agenda….not wanted.  The GOP not voting for Obama’s redevelopment and reinvestment in America plan is an attempt to make the Democrats take the fall for any backlash that may come from it yet they have not offered up anything better.

According to the Associated Press President-elect Barack Obama is coming to Washington to put money in the pockets of taxpayers and business by proposing a significant tax cut in a second stimulus package that he hopes to  get passed by February.   See full story below.

WASHINGTON (AP) — President-elect Barack Obama’s proposed stimulus package would provide businesses with billions of dollars in refunds on taxes they paid several years ago.

The refunds are popular among business groups and could increase pressure on Republicans to support Obama’s massive stimulus package, even though most of them are wary of government spending increases that could send its total cost to $800 billion or more.

“This gives companies an infusion of cash just when they need it,” Dorothy Coleman of the National Association of Manufacturers said of the proposed refunds.

Obama’s proposal to stimulate the economy includes tax cuts of up to $300 billion, including more than $100 billion for businesses.

The refund provision would enable some companies posting losses last year to get refunds for taxes paid as far back as five years earlier. The businesses could refile their old tax returns, using the losses suffered last year to offset profits made when times were good.

Under current law, businesses can use losses to offset profits the two previous years.

Obama’s team has yet to provide estimates on what the refunds could total. When Congress considered the same idea last year, carrying back losses to offset profits in the previous five years would have provided businesses an estimated $25.5 billion in refunds.

With business losses mounting in 2008 because of the recession, the price tag on Obama’s plan would probably be much higher, said Bruce Wein, who heads the U.S. tax practice for the law firm DLA Piper.

“I think it’s creative, I think it’s bold,” Wein said. “It’s going to get a lot of backing from Republicans for the obvious reasons.”

Obama’s tax package also targets individuals, providing a $500 tax cut for most workers and $1,000 for couples, at a cost of about $140 billion to $150 billion over two years. The individual tax cuts may be awarded through withholding less from worker paychecks, effectively making them about $10 larger each week.

Another provision brought to the negotiations by the Obama team would award companies that hire new workers a one-year tax credit at a total cost of $40 billion to $50 billion over two years. Businesses also would get additional incentives to invest in new equipment.

Obama takes office in two weeks. Meeting with congressional leaders Monday at the Capitol, he described the nation’s economic condition as “precarious” and said he’d like Congress to have a stimulus package ready for signing into law by early February.

The ability to write off losses and apply them to tax bills retroactively was “at the top of the list from businesses’ viewpoint,” said Bruce Josten, the executive vice president for government affairs at the U.S. Chamber of Commerce.

Josten said the Obama transition team has held more than a dozen meetings with chamber officials to discuss a number of issues, with several of the meetings devoted to the economic recovery plan. The tax relief package detailed in press reports on Monday “fits the criteria that we’ve outlined,” he said.

“It doesn’t help autos, who haven’t paid taxes previously. It probably doesn’t help steel, probably doesn’t help airlines,” he said. “But the rest of the business community, I think it’s safe to say that was at the top of their list.”

Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee, said tax cuts could help boost the economy “if it’s done right.”

“It’s tricky to make sure the relief is big enough to make a dent in our huge economy and done in a way that stimulates growth,” Grassley said in a statement. “Business tax incentives should be strong enough to spur investment and create jobs.”

House Republican leader John Boehner of Ohio said he is concerned the package could include “wasteful spending.” But he is pleased Obama and congressional Democrats “agree with Republicans that tax relief for middle-class families and small businesses has to be a major part of this economic package.”

Today, Sen. Barack Obama offered a real life solution to Americans in response to the sky-rocketing gas prices.  Yesterday, Exxon Mobil posted record profits.  The oil company actually made history when it reported the highest profits earned by a corporation……EVER!!!!   $12 BILLION to be exact!!!  That is obscene considering the state of our economy and the prices consumers are paying at the pump.  Therefore, instead of waiting twenty years to receive a benefit  from off-shore drilling which Obama now supports in a limited way, Sen. Obama also proposes giving the American people a $1,000 emergency energy rebate check, and we pay for it………..with a windfall profit tax to be applied to the oil companies.  Impressive.  The fact that he has a real people solution, and a way to pay for it will go a long way towards putting gas money back in the pockets of consumers.  To be clear, it is in the spirit of compromise that Obama supports a limited amount of off-shore drilling. if the republicans will also comprimise and approve his oil company windfall profit tax proposal that will give Americans real, immediate, relief.   No gimmick, but a practical, plausible, immediate solution that offers real-time relief from the high price of gas and has the added benefit of being fiscally responsible.  Judgment and Leadership.  

Expect your refund checks in the mail.  Many believe that this may be too little too late.  However, I wonder if the government expects many of us to spend the refund check long before we receive it in the mail. Therefore, the effect of the Stimulus Package will be felt immediately or at least much sooner than the media is predicting.  The bill is now expected to go the Senate for it’s approval tomorrow.  The Senate has hinted that it may have issues with the current version of the bill.