ECONOMY
A New New Deal

When President-elect Barack Obama officially introduces his economic team today, he is also expected to lay out his vision for a "massive fiscal stimulus program." While estimates of its size vary -- from $300 billion to over $700 billion -- the expected stimulus package is now almost certain to eclipse the $175 billion package that Obama proposed during the election. The need for a stimulus increases with each passing day. Last week, new unemployment claims reached a 16-year high and are expected to increase again this week, while the total number of individuals seeking jobless benefits is now at a 25-year high. More worrisome for the nation's overall economic outlook is the very real threat of deflation. While the current crisis looks to be the greatest economic crisis since the Great Depression, economist Dean Baker explained recently this crisis needn't be as bad as the Great Depression. Baker wrote bluntly, "There is a simple way to get out of that sort of prolonged downturn: spend money." Despite such a simple prescription for our economic ills, conservatives who enthusiastically embraced President Bush's record deficit spending to fund the war in Iraq and tax cuts for the rich, are now recklessly opposing a stimulus package that would include necessary and significant spending to jump-start the economy and fund tax-cuts for the middle class.

NEW DEAL MYTH-BUSTING: In the past, rewriting the history of the Great Depression remained the favored pasttime of activists on the radical right: Grover Norquist, Jonah Goldberg, and the Heritage Foundation. In their erroneous view, FDR's New Deal was not only ineffective, but was responsible for "prolonging" the Great Depression. Increasingly, however, this view is breaking into the mainstream. Yesterday, for example, conservative columnist George Will said on ABC's This Week, "Before we go into a new New Deal, can we just acknowledge that the first New Deal didn't work?" But as Brad DeLong, Paul Krugman, and others explain, the New Deal did in fact work for Americans. Where the New Deal had shortcomings, they were the result of the initiative not being bold enough in the short-term. DeLong explained recently that after the New Deal policies went into effect, "[p]rivate investment recovered in a healthy fashion," but as the economic outlook began to brighten, Roosevelt chose to "adopt more 'orthodox' economic policies and try to move the budget toward balance." Roosevelt's attempt to return to "conservative budget principles" by cutting spending and raising taxes precipitated "an economic relapse that drove the unemployment rate back into double digits." "What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs," Krugman wrote.

THE RETURN OF DEPRESSION ECONOMICS: Those on the right arguing against a sufficiently large economic stimulus and in favor of "belt tightening" at the federal level have been aptly labeled neo-Hooverists. Like President Hoover before them, such neo-Hooverists fail to grasp that admirable policy goals can become harmful in moments of economic crisis. As Krugman wrote recently, the U.S. economy is "well into the realm of what I call depression economics...a state of affairs like that of the 1930s in which the usual tools of economic policy -- above all, the Federal Reserve's ability to pump up the economy by cutting interest rates -- have lost all traction. When depression economics prevails, the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly." Indeed, while conservatives argue for reduced spending and balanced budgets, New York University Economics Professor Nouriel Roubini testified before Congress's Joint Economic Committee that failure to enact a fiscal stimulus could actually result in wider deficits as the economy contracts. In his estimate, this would send the U.S. into a "very severe recession."

LARGE ENOUGH TO MATTER: Any fiscal stimulus should be bold. As Krugman wrote recently, "My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent." Vice President for Economic Policy at the Center for American Progress, Michael Ettlinger, explained why such a significant stimulus is needed: "The idea of a stimulus package is that it quickly puts money out into the economy to increase consumption, to increase spending, so that businesses can have confidence that if they make investments, if they hire people, there are consumers for their products which warrant those kinds of expenditures on their part." In order to have any effect at all, Ettlinger argued that such a package must be "large by historical standards": at least $300 billion in 2009. While it is unclear just how large Obama's stimulus plan will ultimately be, it appears that Obama's economic team is on the right track. Close advisers to Obama including Gov. Jon Corzine (D-NJ) and former Treasury Secretary Larry Summers both raised the possibility of a $700 billion dollar two-year stimulus plan last week. Failing to pass a plan "big enough to deal with the huge problem we face" risks repeating past errors. Indeed, "only those who learn from history can hope to avoid repeating it.

Under the Radar

ADMINISTRATION -- WOODWARD: BUSH 'DOESN'T LIKE HOMEWORK' SUCH AS 'READING,' 'GETTING BRIEFED,' OR 'HAVING A DEBATE': On the Chris Matthews Show yesterday, Matthews argued that one of the major differences between President Bush and President-elect Barack Obama is the fact that Obama is intellectually curious. Matthews played a 2004 clip of Washington Post reporter Bob Woodward saying on CBS's 60 Minutes that Bush "is not an intellectual" or what "would be called a deep thinker." After the clip, Matthews asked Woodward to explain why Bush "shows little intellectual curiosity," Woodward said it was essentially because Bush "doesn't like homework," adding, "And homework means reading or getting briefed or having a debate." Woodward, who has written four books on the Bush White House, has reported multiple instances in which Bush has put his distaste for homework on display. In 2004, Woodward told PBS's Frontline that Bush describes himself as "a gut player" who doesn't "play by the book." In his most recent book, Woodward reported that Bush actually bragged about not attending meetings where key decisions about the surge were made, telling Woodward, "I'm not in these meetings, you'll be happy to hear, because I got other things to do." Woodward has said that in his opinion, Bush has "often displayed impatience and a lack of interest in open debate."

ADMINISTRATION -- OBAMA TO APPOINT MELODY BARNES AS HEAD OF DOMESTIC POLICY COUNCIL: Later today, President-elect Barack Obama will announce that our friend and former colleague Melody Barnes will be named as Director of the White House Domestic Policy Council. The Council "coordinates the domestic policy-making process in the White House and offers policy advice to the President." In her new role, Melody will be working with allies such as incoming Health and Human Services Secretary Tom Daschle to bring about comprehensive health care reform. Her policy portfolio will include issues such as education, immigration, criminal justice, and other domestic issues. Melody was a former Executive Vice President for Policy at the Center for American Progress, and previously served as Senior Domestic Policy Advisor for the campaign and as co-chair of the Agency Review Working Group for the transition. We wish her the best of luck.

CONGRESS -- BOEHNER DISMISSES EMPLOYEE INTIMIDATION, CLAIMS UNIONIZATION ELECTIONS ALREADY ARE 'ALMOST...AUTOMATIC: Yesterday on Fox News Sunday, host Chris Wallace echoed right-wing talking points to ask Rep. Steny Hoyer (D-MD) a loaded question about the Employee Free Choice Act (EFCA). "Why is a secret ballot okay and desirable for Congress, but you want to take it away for workers?" asked Wallace. House Minority Leader John Boehner (R-OH) dismissed Hoyer's explanation that EFCA is needed to help workers who face employer intimidation form unions, claiming that "there's almost an automatic election" if enough employees support unionization. "It may get delayed but it's pretty hard to stop an election," he said. Boehner is simply wrong when he says elections are automatic. "Many employers hire expensive lawyers and anti-union consultants to delay any union election, sometimes for years," the California Labor Federation explains. Ninety-two percent of employers whose workers try to organize force workers to attend anti-union meetings, and 25 percent of employers actually fire at least one worker for supporting the union, even though it is against the law.

ECONOMY -- CHAMBLISS SKIPS VOTE ON UNEMPLOYMENT BENEFITS WHILE GIVING SPEECH ON UNEMPLOYMENT: On Thursday, Georgia's Department of Labor announced that the state's unemployment levels rose to 7 percent, the highest in 16 years. That same day, Sen. Saxby Chambliss (R-GA) -- who is locked in a tough run-off election campaign with Democrat Jim Martin -- gave a campaign speech saying it's "imperative" that the government re-instills confidence in the financial markets "so that we can see...people having the ability to borrow money to operate and expand their businesses." Yet Chambliss chose campaigning over governing, skipping that day's Senate vote to extend unemployment benefits by 13 weeks in states with an unemployment rate of at least 6 percent. Chambliss was one of just four senators to miss the vote. Despite his absence, he later sent out a press release praising "the passage of the law and [saying he] hopes it will help laid-off workers get by while seeking a new job." (In other Chambliss news, the Atlanta Journal-Constitution reported yesterday that the senator has used the Republican Majority Fund PAC to fund lavish golfing vacations with celebrities and lobbyists.)

Think Fast

President-elect Barack Obama will announce his economic team later today in a press conference with Vice President-elect Joe Biden in Chicago. "Obama's transition team is working with lawmakers on Capitol Hill so that on Obama's first day in office, Jan. 20, 2009, an economic stimulus package has passed both houses of Congress and is awaiting his signature."

Hailing President-elect Barack Obama's cabinet selections, ABC's George Stephanopoulos added, "We have not seen this kind of combination of star power, brain power, and political muscle this early in a cabinet in our lifetimes." NBC's Andrea Mitchell added that Obama's "all-star cabinet" is comprised of the "smartest people he can find."

Sen. Chuck Schumer (D-NY) expressed the need for "a pretty big package" to stimulate the economy. "In my view, it has to be between $500 and $700 billion, and that's because our economy is in serious, serious trouble." Due to the state of the economy, President-elect BarackObama is reportedly "leaning toward letting a Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner."

In an interview with a Japanese television network, President Bush said he believes the Iraq war was a success and is "very pleased" with what is happening there. "People have been able to take their troops out of Iraq because Iraq is becoming successful," he added.

Three bomb attacks in Baghdad killed at least 20 people today, including a suicide bombing near an entrance to the U.S.-protected Green Zone. The attacks come as Iraqi lawmakers prepare for a vote this week on a security pact with the U.S. and are seen by some as "a calculated show of insurgent defiance" towards the agreement.

"Marine Corps leaders are devising a plan" to send additional combat troops to Afghanistan "to wage aggressive warfare against the Taliban that they expect could take years." The plan, which has to be approved by Defense Secretary Robert Gates and Centcom Commander Gen. David Petraeus, calls for more than 15,000 troops.

Yesterday, the U.S. government "agreed to inject an additional $20 billion into Citigroup Inc. and back up to $306 billion worth of the giant bank's assets in a bid to help stabilize the firm." In return, Citigroup will give the Treasury preferred shares, "adhere to executive pay limits and implement a government program designed to help make home loans more affordable for struggling borrowers."

"Private health insurance plans, which serve nearly a fourth of all Medicare beneficiaries, have increased the cost and complexity of the program without any evidence of improving care," according to new studies. One study found that "growth in private plans had driven up costs because the government pays them 13 percent more on average than what it would spend for the same beneficiaries in traditional Medicare."

A new study by the Children's Health Fund finds that children of displaced families from Hurricanes Katrina and Rita "have serious health and mental ailments." For example, "41% of children younger than 4 were diagnosed with iron-deficiency anemia" and "55% of elementary-school-aged children had a behavior or learning problem."

"A new network of monitors that is to track lead emissions from factories has been scaled back" after the White House intervened "at the last minute" to weaken last month's Environmental Protection Agency's (EPA) ruling limiting toxic metal particles in the air. The White House changed an EPA plan to require lead monitors next to any factory emitting at least half a ton of lead a year, raising the threshold to a ton of lead or more.

And finally: Last night, Stephen Colbert debuted "A Colbert Christmas: The Greatest Gift of All!." In the new special, Colbert "not only tries to outsmart a bear, but he also takes on Yuletide songwriting, eggnog spices and his talented guests, including John Legend, Feist, Toby Keith, Willie Nelson and Elvis Costello." Keith, for example, sings a song about the so-called "War on Christmas." Watch a preview here.

Good News

"After being scared off in the post-9/11 years by tightened visa restrictions and America's soured image, foreign students are flocking back to the United States in record numbers."

State Watch

IOWA: State Senate Majority Leader pledges to introduce bill to increase minimum wage and index it with inflation.

VIRGINIA: State appears to be "abandoning its hard-line approach as state officials consider proposals to help foreign-born residents assimilate."

ALASKA: "The falling price of North Slope crude oil will be a drag on the state budget, officials said."

Blog Watch

THINK PROGRESS: Top scientist says President Bush's "burrowing" of political appointees will "leave wreckage behind."

YGLESIAS: What to do with war criminals.

HUFFINGTON POST: Candace Gingrich tells her brother Newt: "Stop being a hater."

KEVIN DRUM: Questions about the Citigroup bailout.

Daily Grill

"We did not torture."
-- Dana Perino, 11/18/08

VERSUS

"It is not a complicated procedure. It is torture."
-- Sen. John McCain (R-AZ) 10/26/07, commenting on the Bush administration's admitted use of waterboarding