ECONOMY
Bush's Stimulus Misses The Target

This past weekend, as most Americans celebrated the legacy of Dr. Martin Luther King, Jr., markets all across the world were experiencing precipitous declines. The fears of a recession "roiled markets from Mumbai to Frankfurt on Monday, puncturing the hopes of many investors that Europe and Asia would be able to sidestep an American downturn." Witnessing the global markets free fall, Federal Reserve Chairman Ben Bernanke took a sudden and surprising action yesterday morning, announcing the single deepest cut in the Fed's main interest-rate target in more than two decades. "The unexpected decision came after a rare, hastily called policy meeting by videoconference on Monday evening, and it reduced the Fed's benchmark overnight lending rate by three-quarters of a percentage point, to 3.5 percent." U.S. News reports that, in private, Bernanke is expressing fear that the United States is falling into a recession that "will be much worse than he has admitted to publicly." Last Friday, President Bush announced a $145 billion economic stimulus package meant to reassure the "health of the broader economy." The dramatic downturn in global markets over the weekend, however, sent an umistakable message that investors lacked confidence in the President's "grasp of the depth of the problem." Center for American Progress Senior Fellow Christian Weller writes that Bush's proposal "is not targeted enough to get the biggest bang for the buck from the sizeable spending increase he proposed, and it does not include an answer to the threat of sharply lower house prices."

THE ECONOMY'S WEAK UNDERPINNINGS: Meeting with House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) yesterday, Bush said that the current economy is "inherently strong" and simply needs a "boost." Ed Lazear, Bush's Chairman of the Council of Economic Advisers, added, "The structure of the American economy is sound."  In fact, such happy talk overlooks the fundamental weaknesses of the U.S. economy -- a weak labor market, large budget deficits, massive trade deficits, low productivity growth, and a nationwide decline on house prices. The Philadelphia Fed reported yesterday that the economies shrunk in 23 states -- including Ohio, Missouri, and Arizona -- last month and was stagnant in seven others. For years, the Bush administration has been ignoring these structural deficiencies and masking them with record amounts of debt.

HOW WE GOT HERE: Since the beginning of the current business cycle in early 2001, family incomes in the United States have not risen, yet the costs for important consumer items such as housing, health care, transportation, energy, and food all climbed at often breathtaking speeds. To afford these necessities, families buried themselves in deeper and deeper debt relative to their income -- "at a rate more than four times faster than that in the 1990s." Partly due to the Bush administration's laissez-faire, deregulatory approach to the markets, lenders preyed off low-interest rates and offered risky loans, financing them by borrowing heavily overseas. As a result, a vicious cycle of debt has resulted from the meltdown in the housing market, and the burgeoning crisis has enveloped foreign investors and markets.

HOW WE GET OUT: Bush's plan to get America out of its economic doldrums is to offer tax rebates and business tax cuts, a package that fully or partially excludes an estimated 65 million taxpayers who would be the most likely to spend the money to help our ailing economy. Business lobbies are already trying to add targeted tax cuts to the stimulus package. But tax rebates alone are not good enough. What is needed instead is some display of economic competence from the Bush administration and conservatives in Congress. The Center for American Progress Action Fund has crafted a proposed stimulus package with a number of components targeted on spurring demand, including measures such as expanding unemployment insurance, increasing food stamp benefits, and dealing with rising energy costs. But above all, the plan notes, no stimulus plan is complete without solving the housing crisis: "Nothing policymakers could do in 2008 would be more important to the economic prospects of American families and the national economy than actions to stem the decline of home values." As part of this effort, "Congress should create a refinancing vehicle for creditworthy homeowners who cannot refinance because they owe more than the house is worth." House Financial Services COmmittee Chairman Barney Frank (D-MA) has indicated his desire to "expand availability of federally insured mortgages for subprime borrowers as part of the economic-stimulus plan being negotiated with the White House." Moreover, beyond a temporary stimulus, a long-term plan is needed. The Center for American Progress has put forward a plan for the next administration to transform America's economy through clearn energy, innovation, and opportunity.

Under the Radar

ENVIRONMENT -- U.S. ENVIRONMENTAL PERFORMANCE RANKS AT BOTTOM OF G8 COUNTRIES: A new international ranking by Yale and Columbia Universities puts the U.S. environmental performance at "the bottom of the Group of 8 industrialized nations and 39th among the 149 countries on the list." The ranking evaluates sanitation, greenhouse gas emissions, air pollution, and other measures. Daniel Esty, the director of the Yale Center for Environmental Law and Policy and the study's lead author, noted that Switzerland's top ranking was based on the fact that it is "the most greenhouse gas efficient economy in the developed world." The United States, which scored an 81 out of a possible 100, has "a bottom-tier performance in greenhouse gas emissions," Esty said. Recently, President Bush sent out invitations to 17 other countries to attend a "major emitters" meeting in Hawaii at the end of January, where the White House will propose voluntary targets for emissions cuts. In December, the European Union -- which encompasses nearly all the best performers in the new environmental study -- threatened to boycott the talks if the United States remained recalcitrant about specific emissions cuts at the Bali conference.

ADMINISTRATION -- BUSH ADMINISTRATION MADE 935 FALSE PRE-WAR STATEMENTS ON IRAQ: In the years since the U.S.-led invasion of Iraq, numerous bipartisan government investigations have concluded that the Bush administration's claims that Iraq possessed weapons of mass destruction and had links to al Qaeda were false. The Center for Public Integrity (CPI), in conjunction with the Fund for Independence in Journalism, has now launched a database documenting hundreds of inaccurate statements top Bush administration made during the run-up to the war. The database is "an exhaustive examination of the record show[ing] that the statements were part of an orchestrated campaign that effectively galvanized public opinion and, in the process, led the nation to war under decidedly false pretenses." According to CPI, "on at least 532 separate occasions" in the two years preceding the March 2003 invasion, President Bush and his top officials "stated unequivocally that Iraq had weapons of mass destruction (or was trying to produce or obtain them), links to Al Qaeda, or both." The CPI database has documented "at least 935 false statements" from these administration officials over the same time period.

IRAQ -- NEW LAW ON EX-BAATHISTS COULD BRING ANOTHER PURGE: On Jan. 12, 2007, the Iraqi Parliament passed the Justice and Accountability Law, a nominal re-Baathification law said to "allow thousands of former Baathists who were not involved in past crimes against Iraqis to fill posts in the Shiite-dominated government." The bill has been touted by the Bush administration as "a step forward for national reconciliation [and] for healing the wounds of the past." But as the Washington Post reports, "more than a dozen Iraqi lawmakers, U.S. officials and former Baathists [in Iraq] and in exile expressed concern in interviews that the law could set off a new purge of ex-Baathists, the opposite of U.S. hopes for the legislation." "This is a bomb on the road of reconciliation," said one ex-Baathist living in exile in Amman, Jordan. Unlike legislation "encouraged" by U.S. officials, the legislation that passed "would restrict division members from working in a host of government agencies," which means at least 7,000 ex-Baathists already working in those ministries could be purged "from their current positions." The legislation was spearheaded by the most anti-Baathist groups and opposed by former Baathists. The session of parliament in which it was narrowly passed was attended by only 150 members of the 275-seat parliament, meaning the vote count "could have been as low as 72."

Think Fast

"Many of the poorest people in the United States are still struggling to recover from the effects of a recession that ended six years ago, making them very vulnerable as the country stands on the brink of a new downturn." In 2006, "12.3 percent of Americans were living in poverty, compared with 11.7 percent in 2001, the year of the last recession." 

The House has postponed votes on "criminal contempt citations against White House chief of staff Joshua Bolten and former White House counsel Harriet Miers" in order to foster "bipartisan unity" while working on an economic stimulus package. 

Planned Parenthood "expects to raise at least $10 million over the next 10 months to recruit patients, as well as their friends and families, to lobby legislators and vote for candidates who support Planned Parenthood's agenda." The campaign "will be the group's most ambitious and expensive effort ever."

"House Democrats have scheduled a vote Wednesday to override President Bush's December veto of the $35 billion expansion of the State Children's Health Insurance Program."

The Writers Guild of America "will begin informal talks with studios" tomorrow "after agreeing to drop proposals to unionize reality and animation shows that had contributed to a negotiations impasse." The talks "will be aimed at a resumption of full negotiations, both sides said in statements."

And finally: Rep. Mike Simpson's (R-ID) hair is "threatening to cascade past his shoulders in waves," and colleagues are unhappy. Last week, a colleague "whisked past Simpson" in the Speaker's Lobby and said, "Call Joe Q," referring to the House barber. Simpson said that he also recently grew a beard after a trip to the Middle East, but he shaved it off after his wife "told him he looked like a terrorist."

Good News

"The Whole Foods Market chain said Tuesday that it would stop offering plastic grocery bags, giving customers instead a choice between recycled paper or reusable bags."

State Watch

NEW YORK: Gov. Eliot Spitzer (D) proposes an ambitious plan to close a $4.4 billion budget deficit.

MISSOURI:  Scandal-clad Gov. Matt Blunt (R) will not seek re-election.

VIRGINIA: Del. Frank D. Hargrove, Sr. (R) says global warming doesn't matter because "Virginia is a small dot on the map."

Blog Watch

THINK PROGRESS: No questions on global warming asked at CNN's coal-industry sponsored presidential debates.

MATTHEW YGLESIAS: Newsweek's Fareed Zakaria claims that "the war has largely ended."

BLUE GRASSROOTS: Kentuckian says Senate Minority Leader Mitch McConnell (R-KY) had her fired for asking him a question about Iraq.

FEMINISTING: Bloggers for choice commemorate the 35th anniversary of Roe v. Wade.

Daily Grill

'[Torture is] antithetical to what this country stands for."
-- Attorney General Mike Mukasey, 10/17/07

VERSUS

Q: So, is waterboarding torture?
MUKASEY: I haven't yet figured out precisely when and precisely how. I understand that the time is coming.
-- Mukasey, 1/20/08