ECONOMY
Obama's Stimulus Plan

Today, President-elect Obama is moving forward with what he has billed as his top priority: an economic stimulus package called the "American Recovery and Reinvestment Plan." He is scheduled to meet with House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV), and possibly the Republican leaders in both chambers. In his weekend radio address, Obama said that his goal is to put together a plan that "not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term." The package will focus on providing assistance to low- and middle-income Americans, strengthening the nation's infrastructure, and investing in states that are struggling with falling revenues, with the goal of creating or preserving at least 3 million jobs over the next two years. Underscoring the urgency of addressing the nation's faltering economy, Pelosi has said that her goal is to pass a bill that is ready to be signed by Obama once he takes office on Jan. 20. However, House Majority Leader Steny Hoyer (D-MD) has cast doubt on such an expedited timeline, and many conservatives are already indicating that they plan to block this progress. Obama spokesman Robert Gibbs conceded that the stimulus package is "unlikely" to be ready by the inauguration.

MIDDLE-CLASS ASSISTANCE: Over the weekend, Obama officials announced that they would like Congress to direct 40 percent of the stimulus bill toward tax breaks aimed at businesses and middle-class workers. Most workers would receive a $500 payroll credit, and some businesses would "receive incentives to create jobs and make equipment purchases more affordable." While these cuts may be able to give the economy a kick-start right away, they are also meant to assuage skeptical conservatives. Congressional Democratic leaders are also considering unemployment benefits and health coverage to assist jobless workers, as economists predict that the U.S. unemployment rate could reach 10 percent by the end of 2009. Obama's goal of creating 3 million jobs will be spurred by the creation of "green" jobs that would not only begin addressing the country's energy needs by shifting to clean energy but also contribute to private sector job creation. A Center for American Progress report by Dr. Robert Pollin and University of Massachusetts Political Economy Research Institute economists estimates that by investing $100 billion over two years, the United States could create 2 million jobs, "with a significant proportion in the struggling construction and manufacturing sectors."

INFRASTRUCTURE INVESTMENT: Another important part of Obama's job creation plan is infrastructure investment. When a water main broke in suburban Maryland last month -- trapping a dozen commuters in their cars as four feet of freezing cold water surged around them -- the public received a startling reminder of the current state of the country's crumbling infrastructure. The American Society of Civil Engineers estimates that $1.6 trillion is needed over the next five years to repair and restore the nation's infrastructure." As NPR has pointed out, "Every $1 billion the federal government commits to roads, bridges and other infrastructure helps to support some 35,000 jobs." This program should repair existing roads and bridges, not pay to build new highways that would foster sprawl and increase oil consumption. "The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn't needed," wrote New York Times columnist Paul Krugman in October. "Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let's get those projects rolling." Indeed, a November Washington Post-ABC News poll found that almost 70 percent of those surveyed said "they support new federal spending of as much as $700 billion on construction projects and other programs to try to stimulate the economy," even if it means increasing the size of the deficit.

DIRECT AID TO STATES: As CAP has noted, a stimulus package also needs to "help states cope with falling revenues that otherwise force them to lay off workers, cut spending on critical safety-net programs, and shortchange areas of long-term importance such as education, infrastructure investment, and health care." Several governors have already appealed to the federal government for assistance. "I firmly believe that if it took only two weeks for the federal government to find $700 billion to bail out Wall Street and bank executives," New York Gov. David Paterson (D) told Congress, "then we ought to be able to find a fraction of that amount to help preserve essential services at the state level." Health care, in particular, is one of the top costs plaguing the states. Currently, at least 27 states are facing budget gaps and some have already slashed safety-net programs. Medicaid consumes an average 17 percent of state budgets. Media reports indicate that Obama and congressional leaders are pushing for direct aid to states, which may "come in the form of payments that could help meet the growing costs of Medicaid spending."

CONSERVATIVE OBSTRUCTION: Despite the urgency after eight years of the Bush administration's do-nothing attitude, Senate Minority Leader Mitch McConnell (R-KY) has said that he and his fellow conservatives are in no rush to provide this important economic relief and plan to put the brakes to attempts to quickly pass a package. "I believe the taxpayers deserve to know a lot more about where it will be spent before we consider passing it," he said in a statement last week. According to the Washington Post, McConnell has also "called for a weeklong cooling off period between when the bill is drafted and when it is voted on, allowing time to dissect it for signs of 'fraud and waste.'" Conservatives have the power to filibuster the legislation if they oppose it. (McConnell, however, had no problem quickly passing President Bush's Wall Street bailout, even though that package had almost no oversight safeguards. In fact, he "led the battle" to pass the bill.) The real risk, according to many economists, is in doing too little. Krugman, for example, has said that he would like to see a "bigger" stimulus package -- as high as a trillion dollars. New York University Economics Professor Nouriel Roubini has explained that failure to enact a fiscal stimulus could actually result in wider deficits, which would send the country into a "very severe recession."

Under the Radar

ETHICS -- DESPITE EIGHT SEPARATE PROBES OF MADOFF, SEC NEVER SAW SCANDAL: The Wall Street Journal reported today that although the Securities and Exchange Commission (SEC) and other regulators examined Bernard Madoff's investment firm, they "never came close to uncovering the alleged $50 billion Ponzi scheme" that began in the 1970s. Despite the SEC's failure to uncover the massive fraud, SEC Chairman Christopher Cox insisted in a December interview that he and his agency deserve no blame whatsoever. "When Cox was asked whether he should be blamed for a culture of lax enforcement that allowed multiple warnings about the fraud to go undetected, he said: 'Absolutely not,'" reported the Washington Post. Cox called the Madoff case "inexplicable" and dismissed it as "a big asterisk" for the SEC. However, a former SEC official slammed Cox for missing the obvious warning signs. "I can't comprehend how a well-run investigation would have missed a fraud of this magnitude," said Lynn Turner, a former SEC chief accountant. Today, the House Financial Services Committee will hold a hearing to "question the SEC's internal watchdog...as lawmakers try to learn why the regulatory agency failed to detect" the $50 billion fraud. 

ECONOMY -- CHENEY: FINANCIAL CRISIS 'DEVELOPED' ONLY 'OVER THE LAST SIX MONTHS': On CBS' Face The Nation yesterday, host Bob Schieffer asked Vice President Cheney whether Americans were "better off now than we were years ago." "I think we've done some very good things in the course of the last eight years," replied Cheney. After listing off policies that he claimed were accomplishments, such as No Child Left Behind, Cheney acknowledged that the Bush administration was leaving incoming Obama administration officials "with their hands full." But he was unwilling to admit any real culpability for the challenges that President-elect Obama will face, saying only that they are a "new set of problems." Cheney even claimed that the turmoil in the financial sector "developed" only "over the last six months." Cheney is following in the footsteps of right-wingers like Rush Limbaugh, who also claim that the country's economic problems only began recently under Democrats. But the financial sector's problems developed over many years and were pushed forward by the economic policies of the Bush administration. As the Center for American Progress's Tim Westrich has noted, the "root cause of the financial mess is the hands-off approach towards mortgage and finance markets by the Bush administration, and its lack of action when a disaster was imminent." Instead of taking responsibility for the challenges that President-elect Obama will inherit, Cheney simply claimed that "each administration has its challenges."

ENVIRONMENT -- BUSH ADMINISTRATION TRYING TO MAKE IT EASIER TO TURN FORESTS INTO HOUSING DEVELOPMENTS: In yet another potential last-minute rule change, "the Bush administration appears poised to push through a change in U.S. Forest Service agreements that would make it far easier for mountain forests to be converted to housing subdivisions." Though President-elect Obama has opposed the move, Mark E. Rey, the former timber lobbyist who heads the Forest Service, has signaled that he intends to finalize the plan before Obama's inauguration. As a presidential candidate, Obama vocally criticized Rey's plan while campaigning in Montana, calling it "outrageous." Rey is pushing a technical change that it will have "large implications." After Rey first proposed the rule last summer, Sen. Jon Tester (D-MT) requested a Government Accountability Office (GAO) report that eventually found "considerable internal disagreement" within the Forest Service about the proposed change. The GAO concluded that under the rule change, 900 miles of logging roads could be paved in Montana and that amending the long-held easements "could have a nationwide impact." Rey told the Washington Post on Wednesday that he plans to push his plan forward "in the next week or so" after he holds courtesy meetings with lawmakers. Tester says no meetings have been arranged yet with his office.

Think Fast

The EU is pushing for a cease-fire and "sustainable truce" between Hamas and Israel. One proposal circulating in "Paris and at the United Nations on Sunday was to send European Union troops as part of an international force to the Gaza border to help prevent smuggling of munitions across the frontier, diplomats said." In the meantime, the European Commission promised $4.2 million in humanitarian aid to Gaza.

"Senior Israeli officials said that the fighting could go on for days, if not weeks, and that calls for a cease-fire were premature." "Israeli Defense Minister Ehud Barak insisted that, while Hamas had 'sustained a very heavy blow from us,' Gaza operation was not finished. ‘We have yet to achieve our objective.'"

The RNC will select its new chairman this month and the six-way contest is aggravating "intraparty tensions." As one RNC consultant explained to Politico, "Some people are p-ssed off at [Americans for Tax Reform President] Grover [Norquist]. Some people are p-ssed off at the Conservative Steering Committee. Some people are p-ssed off at [current RNC chair] Mike Duncan. Some people are p-ssed off at social conservatives. ... Everyone is basically p-ssed."

According to a report by the Pew Research Center for the People and the Press, "the Internet overtook print newspapers as a news source this year." The popularity of newspapers did not decline, but rather, the number of people naming the Internet as their primary news source nearly doubled.

Obama and congressional Democrats are "planning swift action to overturn a Supreme Court decision that made it much harder for people to challenge discrimination in employment, education, housing and other fields." Since the May 2007 decision, courts "have gone far beyond the facts of that case and cited it as a reason for rejecting lawsuits claiming discrimination based on race, sex, age and disability."

In Baghdad today, the United States opened its new embassy building in "a step meant to symbolize its transition from occupying power to an ally of a sovereign Iraqi government." The building, which is the largest U.S. embassy building in the world, cost $592 million to construct and will be staffed by 1,200 employees, including diplomats, servicemen and staff from 14 federal agencies.

A female suicide bomber in Baghdad killed at least 40 people Sunday near one of Iraq's most sacred Shi'ite shrines. The attack occurred just ahead of the Islamic holy day of Ashura and was the deadliest in Iraq since December 11.

And finally: Fox News's Gretchen Carlson is returning to her beauty pageant roots, working as a special "consultant" to the Miss America pageant this year. The former Miss America winner has been "given the task of posing questions about hot-button social issues -- sex education, same sex couples and adoption." Watch the video here.

Good News

"An increasing number of offices, hotels and others are giving drivers of hybrids free or reduced-cost parking or reserved spots closer to entrances, similar to those for the disabled or for pregnant women," following the lead of at least a dozen cities.

State Watch

ILLINOIS: Lt. Gov. Pat Quinn (D) is seeking ways to "fumigate" state government of ethical improprieties.

LABOR: A new business group called Save Our Secret Ballot is fighting the Employee Free Choice Act through state ballot initiatives.

ECONOMY: Governors request a $1 trillion dollar federal stimulus to help offset crippling state budget cuts.

Blog Watch

THINK PROGRESS: Senate Majority Leader Harry Reid (D-NV): "I really do believe President Bush is the worst president we've ever had."

WONK ROOM: Former senator Rick Santorum on Employee Free Choice Act: "Vito Corleone's famous line again comes to mind."

MEDIA MATTERS: Is NBC going to help Ann Coulter sell her offensive book again?

GLENN GREENWALD: The Weekly Standard's Michael Goldfarb embraces terrorist ethics.

Daily Grill

"I don't believe we violated anybody's civil liberties."
-- Vice President Cheney, 1/3/09

VERSUS

"Despite pledges by President George W. Bush and American intelligence officials to the contrary, hundreds of US citizens overseas have been eavesdropped on as they called friends and family back home."
-- ABC News, 10/9/08