Stimulus Package?

The Obama administration is preparing a plan to address the country's anemic job situation, but has ruled out another major stimulus package.

With the elections coming up in November, even a modest proposal could be hard to push through. The Republicans have not signaled that they are willing to cooperate. However, many analysts believe that a new stimulus package is necessary to ward off a double dip recession.

As I have argued previously on this blog, the economy is not really in any condition for corporations or small businesses to lead a recovery. The old system that got us into this mess is still very weighted down in debt. We saw what happened to the entire nations of Iceland and Greece, and to massive corporations like Lehman Brothers. Banks have huge loans from these types of debtors along with vast number of smaller bad loans, for example, all those distressed homeowners.  The financial markets will take a long time to unload this bad debt and that will mean that businesses will have difficulty getting loans. What has driven the economy up to this point since the start of the economic meltdown in 2007 is the federal stimulus package.

As the old stimulus plan winds down, we may see things like unemployment begin to rise quickly again. To avoid this the government will need to act again either now or after the elections. In the end, though, we will need something more than just economic stimulus if we want to reform the system. The last thing we need is to return to the old ways of doing things -- the bubble economy.

The current tax regime is not sufficient to fund the government, and yet government services are far from excessive. Thus, there is only one alternative even though no one wants to raise a voice on this issue. Revenues have to increase, and that means the tax system has to be restructured. We need to look at alternatives like an annual land value tax and a value added tax (VAT) that hold the promise of even replacing income taxes for the vast majority of Americans.

We should also look into creating an economy and society that is no longer tilted in favor of big business interests. One area that looks promising is a basic citizen’s income that could replace our means-based welfare system. A universal basic income would probably meet less resistance from conservatives compared to welfare since it is not means tested. Such a system would provide citizens with a safety net against corporate whims and economic bubbles. The consumer economy would be stronger and more stable, and, in the end, there would be less need for stimulus packages or other government intervention.

For now, though, we have to hope that a new Obama stimulus package is in the works if only behind the scenes.

Obama-Sarkozy clash at G20?

There's some news going around the blogosphere about a possible feud between U.S. President Barack Obama and French President Nicholas Sarkozy.

Obama wrote a letter to former French president Jacques Chirac in response to an earlier letter sent to him by Chirac in mid-March.

Chirac and Obama will meet at the G20 summit and the U.S. president has released an editorial to international newspapers suggesting the need to stimulate the economy. France is known to be less than enthusiastic about a stimulus plan, and more concerned about regulating the financial markets.

Video: Obama vs Sarkozy: plans for G20 France 24

Obama writes letter to Chirac - blogosphere goes crazy Christian Science Monitor

Foreign Policy: why is Obama writing to Jacques Chirac? Examiner.com

Does Barack Obama know who the President of France is? Telegraph.co.uk

Jobless claims rise as Senate haggles over stimulus

Jobless claims reached a 26-year high according to a new report on the labor market.

Initial weekly jobless claims increased by 35,000 to 626,000 the highest level since October 1982, the Labor Department said today. Total unemployment benefit collectors jumped to a record 4.788 million a week earlier. A media forecast by Bloomberg News had predicted jobless claims would fall to 580,000 from 588,000. The overall unemployment rate in January was 7.5 percent, the highest in 16 years.

Yesterday, President Barack Obama said the nation faced an economic "catastrophe" if an economic stimulus plan was not passed quickly. "A failure to act, and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future," Obama said.

Reuters

US Initial Unemployment Claims Jump to 26-Year High
Bloomberg - 1 hour ago
By Courtney Schlisserman and Timothy R. Homan Feb. 5 (Bloomberg) -- The number of Americans filing first- time claims for jobless benefits unexpectedly jumped last week to a 26-year high, signaling a deepening deterioration in the labor market.
New Jobless Claims Surge to 626000 Washington Post
INSTANT VIEW: Jobless claims jump to 26-yr high Reuters

Obama to hit airwaves for economic stimulus

The Obama administration is planning a media blitz as senators debate over changes to his economic stimulus package.

Obama will saturate U.S. television with ads urging Congress to approve the $885 billion plan.

Democrats want more funding for transportation infrastructure especially mass transit. Republicans are asking for a large range of cuts in "wasteful" spending.

The tug-of-war goes on as reports continue to flow out demonstrating the depth of the economic troubles both in the U.S. and abroad.

However, Obama's "Buy American" clause drew concern abroad including amongst the country's allies. "Beggar thy neighbour policies will never give a good result," IMF chief Dominique Strauss-Kahn said in a speech in Tokyo.

Many economic analysts note that the depths of the Great Depression are widely believed to have been caused partly by a worldwide trade war sparked by U.S. protectionist legislation.

Sydney Morning Herald

Obama plans media blitz on stimulus plan
USA Today - 1 hour ago
By Ron Edmonds, AP WASHINGTON (AP) - President Obama planned Tuesday to blanket US television with the message that Congress must approve hundreds of billions of dollars to fight off economic collapse.
Video: Obama to Nominate Gregg for Cabinet


AssociatedPress

Obama Picks Another Republican U.S. News & World Report

Barack Obama's first bill, setback

President Barack Obama signed into law his first bill a day after a disappointing House vote on his economic stimulus plan.

The stimulus plan passed but in an inauspicious portent for bipartisanship, Obama failed to attract Republican support.

Republicans may be playing politics here as they know there is a good chance that the economy will still be in recession by election time in 2010. By rejecting the stimulus plan, they can use the economy as a weapon against Democrats in trying to win back Congress.

On a positive note for the Obama administration today, the president signed an equal pay law for women. The Lilly Ledbetter Act focuses on gender equity for pay in the workplace.

The Miami Herald

Barack and Michelle Obama lead celebration of new equal pay law
Christian Science Monitor - 35 minutes ago
By Dave Cook | 01.29.09 Since her highly photographed appearances at various inaugural balls, the first lady has spent much of her time out of public view helping her two daughters adjust to their new surroundings.
Video: Obama Signs First Bill CBS


Obama Signs First Piece of Legislation Washington Post

House Republicans ask for more tax cuts

House Republicans are offering a counter-proposal to President Barack Obama's economic stimulus plan, but it looks likely that it will pass with a Democratic vote today. The Republicans are still looking for more tax cuts rather than new government spending.

However, tax cuts now might encourage recession-wary Americans to save rather than spend given the regular flow of gloomy economic news. Apparently that's what happened with the last stimulus plan, and even banking companies have squirreled away money from the big financial bailout instead of making it available for new lending.

The Miami Herald

House Republicans Push Counter-Proposal on Stimulus
FOXNews - 1 hour ago
An economic stimulus bill pushed by Republicans in the House would shift focus entirely from spending to tax relief. Far from rolling over, House Republican leaders are trying to win concessions from President Obama over the massive economic stimulus ...
Video: House Expected to Vote Wed. on Stimulus Package AssociatedPress



South Florida Republicans resist Obama's stimulus plan The Miami Herald




ITV.comGloom Deepens Among Executives, Economists at Davos
Bloomberg - 2 hours ago
28 (Bloomberg) -- Gloom is deepening among business leaders and economists, casting a pall over this year’s World Economic Forum in Davos, Switzerland. ...
Video: Davos'09: global crisis in mind RussiaToday


Gloom enshrouds Davos crisis summit AFP
DAVOS: Doom and gloom at World Economic ForumBild.de

Bipartisanship difficult on economic issues

Progressives and conservatives can often get together in times of crisis especially when it involves issues of national security.

On economic issues though -- things like taxes, deficits and spending -- it has always been much harder to get them to agree with each other. Indeed, often consensus is difficult on economic matters even among members of the same party.

So it may be that the Obama administration will have to ramrod the president's economic stimulus plan through the House of Representatives with mostly Democratic votes. There may still be some time to get more Republican support before the Senate votes on the package.

If only for political reasons, members of both party know that something needs to be done quickly as thousands of jobs are lost everyday. Moving forward alone though can be risky for the Democrats. If the stimulus plan is seen as failing, then the Republicans can use that failure as political ammunition come election time.

BBC News

Obama seeks Republican support for stimulus plans
Reuters - 42 minutes ago
By Thomas Ferraro and Caren Bohan WASHINGTON, Jan 27 (Reuters) - Democratic President Barack Obama struggled on Tuesday to placate Republicans in Congress who insist his $825 billion plan for reviving the troubled US economy should include bigger tax ...
Video: Obama, GOP Leaders Meet on Stimulus AssociatedPress


Obama Visits Capitol to Press Republicans on Stimulus Plan New York Times

Will Republicans back Obama stimulus plan?

House Republican leader John Boehner said today that there is little GOP support for President Barack Obama's economic stimulus plan.

Boehner said the current package has too much wasteful and "slow-moving" spending that will not be effective in creating jobs.

"I think a lot of Republicans will vote no, because they see this as a lot of wasteful Washington spending, padding the bureaucracy and doing nothing to help create jobs and preserve jobs," Boehner said on NBC Sunday.

Obama's economic team though continued to warn that delayed action could have serious consequences including double digit unemployment.

Democratic Sen. Chuck Schumer of New York was optimistic that Republicans would eventually support the Obama package. "I think you're going to find a large number of Republicans voting for this package. There has been a lot of input," Schumer said on "Fox News Sunday."

Washington Post

Will Obama's economic plan stimulate bipartisan support?
CNN - 2 hours ago
WASHINGTON (CNN) -- President Barack Obama, who arguably won a large chunk of political capital in the 2008 election, is now looking to cash in as he urges Congress to pass a massive economic stimulus package.
Video: Boehner: Little GOP Support for Stimulus Package AssociatedPress


Biden, Summers Sound Economic Warnings, Push Stimulus Bloomberg

Obama gives more details on stimulus plan

President Barack Obama gave more details on his economic stimulus plan that will cost at least $820 billion.

Obama plans to cut taxes by a minimum of $275 billion and spend at least $545 billion on new projects and to help states with their budget problems.

Some specific programs include doubling green energy capacity in three years and expansion of the Child Tax Credit.

Republicans have expressed some concern about the amount of deficit spending saying that they do not want to pass on too much debt to future generations.

Of course, many of us remember such warnings about "future generations" before, but now find out that we do not have to wait for our great grandchildren to come along. The debt has caught up with the borrowing generation!

And new debt might have more immediate effects as compared to the previous decades of borrowing. As an illustration, think of a fresh new company that comes along with a clean slate. Early on, the company can obtain financing rather easily without any immediate repercussion.

However, if the company accumulates more and more red ink, each new loan has more immediate effect. The tolerance level and confidence of creditors and investors diminishes and pretty soon the company will not be able to attract new capital.

Sify

Obama Fleshes Out Further Details of Stimulus Plan
Washington Post - 2 hours ago
By Paul Kane, Michael D. Shear and Anne E. Kornblut President Obama ramped up his personal lobbying campaign for an economic recovery package that would cost at least $820 billion, holding his first bipartisan gathering of congressional leaders at the ...
Video: Obama Asks Lawmakers to Back Stimulus BillAssociatedPress


Obama, Republicans seek common ground on economy Los Angeles Times

Speaking in hard-hit Ohio, President-elect Barack Obama said quick action was needed to fix the economy in the near and long term.

Obama said his economic stimulus plan would create good-paying jobs -- about 90 percent in the "private sector." He said that his "first job" is "to put people back to work."

Public sector jobs are actually a very quick and efficient way to put people back to work right away. With private sector contracts there is a long bidding process a lot of the money tends to go toward executive salaries and perks like corporate jet travel. Franklin D. Roosevelt and Lyndon Johnson popularly used public works programs to employ the jobless.

CBS News

Obama: 'Dramatic action' needed now to fix economy
The Associated Press - 1 hour ago
BEDFORD HEIGHTS, Ohio (AP) - President-elect Barack Obama made a pitch for his massive economic stimulus plan at a Midwestern factory that makes wind turbine parts, saying Friday his plan would make smart investments in the country's future and create ...
Video: Obama: 'Dramatic Action' Needed to Fix Economy AssociatedPress


Obama says his 'first job' is to 'put people back to work' USA Today

Obama: 90 percent of stimulus jobs from private sector

In his weekly address, President-elect Barack Obama sought to deflect criticism that his economic stimulus plan would over-inflate the public sector.

Obama said that 90 percent of the jobs created or saved by his economic package would come from the private sector.

“The jobs we create will be in businesses large and small across a wide range of industries,” Mr. Obama said. “And they’ll be the kind of jobs that don’t just put people to work in the short term, but position our economy to lead the world in the long-term.”

The Obama plan aims at creating 3.7 million new jobs -- a figure that has grown from the one million jobs promised during the campaign.


Obama Says Stimulus Will Redound to Private Sector
Washington Post - 1 hour ago
By Michael A. Fletcher President-elect Barack Obama, seeking to quiet concerns that his economic stimulus package would lead to an unsustainable expansion of the public workforce, said today that 90 percent of the 3 to 4 million jobs created or saved ...
Video: Obama Pieces Together Economic Plan AssociatedPress


Obama team boosts jobs estimate to 3.7 million USA Today

Barack Obama wants new economic direction

President-elect Barack Obama rallied support for his new economic stimulus plan suggesting that the costly program and its associated debt is necessary to stave off even deeper woes for the economy.

"It is time to set a new course for this economy, and that change must begin now," he said at an address on the economy at George Mason University, near Washington.

Obama's plan that is projected to cost between $800 billion and $1 trillion comes on more bad employment news showing the 2008 was the worse year for job losses since 1945.

"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs," Obama said. "More families will lose their savings. More dreams will be deferred and denied."

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible."

Reuters

Congress, Obama focus on economy

Report
Jan 06, 2009

FOXNews

Obama calls for new economic course
USA Today - 1 hour ago
By Charles Dharapak, AP By Douglas Stanglin, USA TODAY WASHINGTON - President-elect Barack Obama sought to rally support for a new economic stimulus package by acknowledging that his plan will be expensive and painful, but warning that inaction could ...
Lawmakers and Financial Experts Question Obama's Tax Cuts Washington Post
Obama to Warn of Costs of Inaction on the Economy New York Times


Boston GlobeUS December Job Cuts Quadruple From Year Ago, Challenger Says
Bloomberg - Jan 7, 2009
For all of 2008, employers announced 1.22 million job cuts, the most in five years. The economy is caught in a self-perpetuating cycle of rising job losses ...
Some bad omens for key jobs report CNN
National business news briefs: Lots of job cuts Kansas City Star
Financial service hit hard by Dec. job cutsBoston Globe

Obama tax cut is offering to Republicans

President-elect Barack Obama's $300 billion tax cut looks like an effort to get House Republicans to buy his new economic stimulus plan.

The tax cuts will be part of an overal package estimated to cost $800 billion that will include government infrastructure projects to create new jobs.

Obama might also be preparing Republicans for an eventual proposal to hike taxes for the rich. Even California Gov. Arnold Schwarzenegger, a Republican and self-proclaimed 'fiscal conservative' is proposing steep tax hikes because of the state's economic and fiscal woes. Without some new revenues, the federal government will be awash in red ink, and may have trouble actually raising some of the funds required.

BBC News

Obama Pitches Stimulus Package to House Republicans
Washington Post - 1 hour ago
By Paul Kane, Lori Montgomery and Shailagh Murray President-elect Barack Obama arrived on Capitol Hill yesterday and immediately set to work reassuring skeptical Republicans about his massive economic stimulus package -- part of a campaign that earned ...
Video: Obama: Economy 'bad and Getting Worse' AssociatedPress


Obama Pushes for Stimulus on Capitol Hill New York Times

Obama ups job creation to 3 million after more bad news

President-elect Barack Obama said Saturday that he would increase his goal of new jobs to 3 million after more bad economic news was released.

Democratic officials told CNN that forecasts predict up to 4 million jobs will be lost over the next year and that the unemployment rate should rise to more than 9 percent.

Another sign of the ailing economy came from California where Gov. Arnold Schwarzenegger declared a fiscal emergency with the state's revenues falling more drastically than anyone expected.

The big question again though is where all the money will come from. Will Obama raise taxes or increase the deficit?

CTV.ca

Obama ups jobs goal to 3 million on bad economic news
CNN - 58 minutes ago
WASHINGTON (CNN) -- President-elect Barack Obama has decided to increase his goal for creating new jobs after receiving economic forecasts that suggest the economy is in worse shape than had been predicted, two Democratic officials told CNN.
Obama Expands Economic Recovery Plan to Create 3 Million Jobs Bloomberg
Obama Expands Economic Goals as Outlook Dims Washington Post

Barack Obama unveils economic team

Barack Obama named his economic team today in a press conference in Chicago including Timothy Geithner as his Treasury Secretary nominee and Lawrence Summers as the director of the National Economic Council.

"I've sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold, new ideas, and most of all who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street," Obama said.

The news came as Goldman Sachs Inc. predicted that the economy will shrink in the fourth quarter and the first quarter of next year in the deepest recession since 1982.

Play
Chicagoans React To Obama's Economic Announcements
CBS 2 Chicago via Yahoo! News - 23 minutes ago

Play
Obama Announces Economic Team
CNBC via Yahoo! News - Nov 24 10:45 AM

Geithner, Summers have eye for stimulus, restraint
Forbes - 28 minutes ago
By JIM KUHNHENN , 11.24.08, 07:01 PM EST In the president-elect's new economic team, these are not mutually exclusive views of the world.
Obama names his economic team CNNMoney.com
Economic odd couple to lead US crisis rescue Reuters

Mon Nov 24, 6:23 PM ET

Barack Obama readies $500 billion rescue plan

Advisers and aides of President-elect Barack Obama say that he is preparing a $500 billion stimulus package that includes new federal spending and tax cuts over the next two years. This is a significant increase over the $175 billion plan offered during the presidential campaign.

No details of the plan are available so it can not be said how much of this will contribute to the federal budget deficit. Obama has promised to roll back Bush tax cuts for the rich, but when that will happen and whether it will be enough to cover the bill are unknown.

Today we also hear that the Bush administration will bail out Citigroup, the latest in a line of financial institutions to be saved from the brink of insolvency.

Obviously, this nation has not seen this type of corporate chaos since the Great Depression, when the government spent more than a decade bailing out banks and corporations. Possibly the big difference here will be in the method in which these bailouts are payed for.

During the Great Depression, the government raised taxes very sharply and especially on the rich to help pay for the bailouts. This time around, so far, the corporate dole-outs are being paid for 100% by growing the national debt.

New York Daily News

Obama Eyes $500 Billion in Stimulus; Paulson Weighs Ramping Up Aid ...
Wall Street Journal - 1 hour ago
By JONATHAN WEISMAN, DEBORAH SOLOMON, and JON HILSENRATH Aides to President-elect Barack Obama and President George W. Bush are rushing to craft measures to shore up financial markets and prevent a policy vacuum from further harming the economy during ...
Ahead of the Bell: Slow impact seen in stimulus CNNMoney.com
House leaders clash over economic stimulus MarketWatch
The Associated Press - New York Times - Reuters - Forbes

Obama economic team

Obama urges fast response on economy

President-elect pushed for Congress to pass a quick economic stimulus plan and said if they failed he would make such a package his first priority in office.

Obama also specifically asked for a "down payment" on his rescue plan in the form of an extension of unemployment benefits. He made the appeal on his YouTube address, a planned weekly communication with the public.

Voice of America

Obama Urges Congress to Make `Down Payment' on Economic Rescue
Bloomberg - 2 hours ago
By Vincent Del Giudice Nov. 15 (Bloomberg) -- President-elect Barack Obama urged Congress to extend unemployment benefits as part of a ``down payment'' on a US economic rescue plan as world leaders meet in Washington today to fight the global recession ...

Obama urges Congress to quickly pass rescue plan Reuters

Barack Obama's Plan to tackle the Housing Crisis

Barack Obama’s Plan to Stimulate the Economy and Protect American Families

• Provide an immediate $250 tax cut for workers and their families.
• Provide an immediate, temporary $250 bonus to seniors in their Social Security checks.
• Provide an additional $250 tax cut to workers and an additional $250 to seniors if the economy continues to worsen
• Provide relief to homeowners hit by the housing crisis.
• Provide aid to states hardest-hit by the housing crisis to avoid a slash in services.
• Extend and expand Unemployment Insurance.

Click here to read Barack's economic stimulus plan.

WaPo: Barack's economic solution gets highest grade

The Washington Post's Ruth Marcus graded the economic stimulus plans of the three Democratic candidates:

Barack Obama: A-minus. I criticized his previous tax plan, but Obama is at the head of the class with an intelligently designed, $120 billion stimulus plan. He would speed a $250 tax credit to most workers, followed by another $250, triggered automatically, if the economy continues on its sour path. Obama would direct a similar rebate to low- and middle-income seniors, who are also apt to spend and could get checks quickly. One demerit: Obama omits any increase in food stamp benefits, which Moody's estimates would have the greatest bang for the buck, $1.73 for every dollar spent.

John Edwards: B-minus. Edwards gets points for handing in his paper early -- in December, he issued a $25 billion stimulus proposal (plus $75 billion more if needed), including important help to states to avoid cutting Medicaid rolls. But like Hillary Clinton (see below), he would spend too much money on programs -- investing in "green collar" jobs, for instance -- with too long a lag time to make them an effective stimulus. Edwards's grade goes down because he also hasn't explained how the $75 billion would be spent.

Hillary Clinton: C-plus. Clinton, too, raised the issue early, then turned in a faulty first draft with a $70 billion stimulus plan that didn't provide much immediate stimulation. It included a $25 billion increase in the program to help low-income Americans with heating costs -- an excessive amount (the current program is under $3 billion) that probably wouldn't kick in until next winter. Even worse was her housing plan, including a five-year freeze on subprime mortgage rates that could produce higher interest rates and reduce liquidity.

Obama Campaign Stops in South Carolina

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