Financial Reform Becomes Law

After a long legislative fight, the financial reform bill finally passed the Senate. It's extremely lacking in some key areas, and definitely doesn't do nearly enough to break up the power of the megabanks. With that said, unlike how I felt after the passage of health care reform, I feel pretty confident that this is a major improvement over the status quo, and I'm very happy it passed.

A major way the reforms can have an intimidate impact is if the right person is nominated to head the newly formed Consumer Protection Agency. Labor and advocacy groups are pushing Elizabeth Warren, and it's such a no brainer you can bet it won't happen. Tim Geithner seems to be opposed to her nomination, which should tell you everything you need to know about why she'd be a good choice.

The PCCC is gathering signatures in support of her nomination, so sign on to show your support.

As for the point of financial reform ("so that we never have a crisis like this again") I'm far far less optimistic. The big banks are just as powerful as they were before, and the masters of the universe whose ideas caused the crisis are still highly thought of (or you know, in the Administration), while the economists who have been right remain marginalized and largely ignored by those calling the shots.

The Elizabeth Warren thing is huge. If Obama fucks that up, it's a pretty big black eye not only because she would be amazing, but because it shows the worst elements of his Administration really are calling all the shots. Warren's nomination would at least be a glimmer of hope that the Larry Summers and Tim Geithner Experience might finally be coming to an end, Jared Bernstein could be let out of his cage and the chance of better economic policy might be in sight.

This is a fork in the road for the Administration's economic policy, hopefully they make the right call.

Obama Embraces Deficit Hysteria with Open Arms

When the Democrats get slaughtered in the fall because the economy hasn't turned around, people will start looking for places to put the blame.

One of these quotes is Barack Obama, one of these quotes is from John Boehner:

"It’s time for government to tighten their belts and show the American people that we ‘get’ it"

"At a time when so many families are tightening their belts, he’s going to make sure that the government continues to tighten its own"

Krugman:

We’ll never know how differently the politics would have played if Obama, instead of systematically echoing and giving credibility to all the arguments of the people who want to destroy him, had actually stood up for a different economic philosophy. But we do know how his actual strategy has worked, and it hasn’t been a success.

Talking like a Republican while advocating conservative ideas isn't 11 dimensional chess, it makes it look like an idiot who doesn't stand for anything. And when the economy is this bad and voters can't tell who stands for what, it's the people in power who get booted.

But it's not just Republican talking points that this Administration has embraced, it's their failed policies as well: (via Digby)

Obama picks adviser to cut deficit

“Jack’s challenge over the next few years is to use his extraordinary skill and experience to cut down that deficit and put our nation back on a fiscally responsible path. And I have the utmost faith in his ability to achieve this goal as a central member of our economic team,’’ Obama said.

Senate Budget Committee chairman Kent Conrad, Democrat of North Dakota, called Lew “a superb choice’’ and a person of “the highest integrity.’’

“He knows how to make the tough choices. And he knows how to reach across the aisle to find bipartisan solutions,’’ Conrad said.

So Obama adopts Republican rhetoric and conservative ideas... which becomes a self fulfilling prophecy it leads to Repblican gains in the 2010 elections, giving Obama more Republicans to appease and beg for their affection.

I bet he and John Boehner will have some great discussions about the government "tightening it's belt" after Obama's deficit fetishism has made him speaker of the house.

Not Fucking Helping

There's a general school of thought in progressive circles that while more stimulus is desperately needed, Obama is doing as much as possible to help the unemployment situation. I tend not to agree with that position for a variety of reasons, partially because they keep saying shit like this:

Here's Treasury Secretary Tim Geithner on The Kudlow Report last night:

Sec. GEITHNER: We have a pro-growth agenda. Part of the agenda is growing exports. They're central to our future. What the president today is to say, that is important to the United States, we're going to be committed to making sure we're that we're expanding opportunities for American business everywhere. Now, this president understands deeply that governments don't create jobs, businesses create jobs. And our job as government is try to make sure we're creating the conditions that allow businesses to prosper so they can hire people back, get this economy going again.

This echoes President Obama, as quoted in a piece by TAP's Tim Fernholz:

"Now, government can't create jobs, but it can help create the conditions for small businesses to grow and thrive and hire more workers," President Barack Obama said yesterday as he urged Congress to take up new jobs legislation at an event honoring Small Business Owners of the Year. "Government can't guarantee a company's success, but it can knock down the barriers that prevent small-business owners from getting loans or investing in the future."

As Adam Bink and atrios point out, to say that the Government can't create jobs is 1) not true, 2) a conservative talking point 3) not true 4) the last thing you want to say if you claim you're also pushing for THE GOVERNMENT TO CREATE MORE JOBS.

Taking this into acount, we there are two options:

A: The Administration wants to create more jobs, but is extremely incompetent when advocating for further job creation measures.

B: The Administration doesn't think our current unemployment rate is a problem.

I hope option B isn't true, but option A isn't very encouraging either.

Right and Wrong

Paul Krugman illustrates the problem:

A quick note on David Brooks’s column today. I have no idea what he’s talking about when he says,

The Demand Siders don’t have a good explanation for the past two years

Funny, I thought we had a perfectly good explanation: severe downturn in demand from the financial crisis, and a stimulus which we warned from the beginning wasn’t nearly big enough. And as I’ve been trying to point out, events have strongly confirmed a demand-side view of the world.

But there’s something else in David’s column, which I see a lot: the argument that because a lot of important people believe something, it must make sense:

Moreover, the Demand Siders write as if everybody who disagrees with them is immoral or a moron. But, in fact, many prize-festooned economists do not support another stimulus. Most European leaders and central bankers think it’s time to begin reducing debt, not increasing it — as do many economists at the international economic institutions. Are you sure your theorists are right and theirs are wrong?

Yes, I am. It’s called looking at the evidence. I’ve looked hard at the arguments the Pain Caucus is making, the evidence that supposedly supports their case — and there’s no there there.

And you just have to wonder how it’s possible to have lived through the last ten years and still imagine that because a lot of Serious People believe something, you should believe it too. Iraq? Housing bubble? Inflation? (It’s worth remembering that Trichet actually raised rates in June 2008, because he believed that inflation — not the financial crisis — was the big threat facing Europe.)

There are two types of economists right now: There are those that do actual research, examine the past and come to scientific conclusions, and there are those blinded by an ideology that believes everyone but the rich in this country have it too easy. This isn't a straight ideology split (McCain's former economist Mark Zandi has supported more stimulus), but it is most certainly a split between those that have been right, and those that have been wrong.

The economists who have been wrong about just about everything for the past 30 years think that we should focus on reducing the deficit, while the economists who have been largely right are arguing that we needed and continue to need more stimulus.

David Brooks is a moron who thinks the biggest problem our country faces right now is that the poor have it too good. Paul Krugman is a Nobel prize winning economist who has been spot on in predicting the economy over the last 3 years. The idea that the administration has shut out Paul Krugman (and similar minded economists) yet is bending over backwards to please David Brooks is fucking appalling.

The Unemployment Crisis

Really bad news: (via Ezra Klein)

A brutal unemployment report this month. Payrolls dropped by 125,000. In another one of those unwanted lessons in how we calculate unemployment data, the unemployment rate dropped from 9.7 percent to 9.5 percent -- but not because people got hired. Instead, 652,000 people gave up and stopped looking for work. And that number might be higher than it looks, as the natural monthly growth in the labor force is about 100,000 -- so to see a 652,000-person drop might mean something like 752,000 current workers left as 100,000 new workers entered.

The Douche caucus doesn't take this stuff seriously cause they're assholes, and Ben Bernanke doesn't believe lowering unemployment is his job, and the rest of Obama's econ team is too busy repeating Republican talking points about deficit reduction to spend any political capital on something that might help the situation.

Obama could have chosen Stiglitz, Krugman or Baker but instead he hired Summers, Bernanke, the very people whose ideology is responsible for the economic crisis we have today.

As atrios often says, he doesn't "hope" for bad news, but he hopes for something that will get the Administration's attention on the severity of this crisis. Maybe these numbers will do it, maybe they wont. All I know is that if they'd tackled this problem with half the crisis rhetoric/bullshit committee making energy that they've put into fighting the non existent problem of running a deficit during a rescission, we'd be in a far, far better place.

The Idiocy of the "Deficit Hawks"

Ezra Nails It:

Unemployment may be at 9.7%, but the Senate is moving on

Or, at the least, they care about the deficit more. By a vote of 52 to 45, the Senate rejected a jobs package that would've extended unemployment insurance, offered some tax breaks to individuals and businesses, kept doctors in the Medicare program and more. "$77 billion or more of this is not paid for," said Sen. Ben Nelson, "and that translates into deficit spending and adding to the debt, and the American people are right: We've got to stop doing that."

No, sir, they're wrong, and we don't. It's hard to say this loudly enough, but it really doesn't make sense to offset stimulus spending, at least in the short term. The point of the money is to get the economy moving faster, to give people cash to spend. This isn't like health-care reform, where you're purchasing something and you should pay for it. When you're trying to expand the economy, you need to use debt to put more money into it than would otherwise be there. If you're just moving a dollar from one purpose to another, you may be using that dollar better, but you're not expanding the total amount of demand in the economy by very much. You're just moving it around. It would be like bailing water from a boat, but throwing it into another part of the boat.

There'll come a time when we need to start reducing the deficit. If we can get the economy back into gear, that time might even be soon. But for now, increasing the size of the deficit isn't some nasty side effect of stimulus spending. It is, quite literally, the point of the enterprise.

But Nelson isn't the only one throwing up some odd rationalizations for his vote. Other politicians, as Arthur Delaney explains, have decided that unemployment insurance is just "too much of an allure" for people. It keeps them from going back to work. In theory, you could imagine unemployment benefits so lavish such that that would happen. But in America, benefits are 36 percent of the worker's average previous wage. Imagine living on one-third of your income. That sound "alluring" to you?

Unemployment is at 9.7 percent right now. It's extraordinarily high. And it's extraordinarily high because not enough jobs are being created to absorb all the workers who got laid off during the recession. Killing their unemployment benefits wouldn't magically make more jobs appear. It would just make those people poorer, and because they'd be poorer, they'd have less to spend, and because unemployment is geographically concentrated, that would mean the economy in areas with lots of unemployed workers would tank further and thus it would take longer for it to create jobs.

The big debate now is whether or not we should be spending money to create jobs, or if we should be focus on cutting the deficit. Krugman gets into a bit of the details:

What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up. Arguing with German deficit hawks feels more than a bit like arguing with U.S. Iraq hawks back in 2002: They know what they want to do, and every time you refute one argument, they just come up with another.

Here’s roughly how the typical conversation goes (this is based both on my own experience and that of other American economists):

German hawk: “We must cut deficits immediately, because we have to deal with the fiscal burden of an aging population.”

Ugly American: “But that doesn’t make sense. Even if you manage to save 80 billion euros — which you won’t, because the budget cuts will hurt your economy and reduce revenues — the interest payments on that much debt would be less than a tenth of a percent of your G.D.P. So the austerity you’re pursuing will threaten economic recovery while doing next to nothing to improve your long-run budget position.”

German hawk: “I won’t try to argue the arithmetic. You have to take into account the market reaction.”

Ugly American: “But how do you know how the market will react? And anyway, why should the market be moved by policies that have almost no impact on the long-run fiscal position?”

German hawk: “You just don’t understand our situation.”

The key point is that while the advocates of austerity pose as hardheaded realists, doing what has to be done, they can’t and won’t justify their stance with actual numbers — because the numbers do not, in fact, support their position. Nor can they claim that markets are demanding austerity. On the contrary, the German government remains able to borrow at rock-bottom interest rates.

So the real motivations for their obsession with austerity lie somewhere else.

In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.

It's also worth pointing out that the people behind cutting the deficit are the exact same people who have been wrong about the economy for the past 30 years, where as those arguing for job creation are the same people who have been largely right in predicting this economic crisis.

As of now it's looking like all the important people are listening to the same geniuses whose ideas destroyed the economy.

If people keep listening to them, it's not hard to figure out what happens.

Defending of the Rich and Powerful

It's unfortunately becoming fairly common that when something genuinely good is happening in congress, the White House is fighting against it:

The White House, Federal Reserve and Wall Street lobbyists are kicking up their opposition to an amendment to audit the Fed as a Senate vote approaches, Sen. Bernie Sanders (I-Vt.), the lead sponsor of the measure, said on Monday.

Banking Committee Chairman Chris Dodd (D-Conn.), who is shepherding the bill through the Senate, told Sanders Monday afternoon that "there's a shot we'll be up tomorrow," Sanders told HuffPost.

In the spring of 2009, Sanders brought a similar amendment to the Senate floor and won 59 votes. Eight senators who voted against it then are now cosponsors of his current measure.

"I think momentum is with us. But I've gotta tell you, that on this amendment, you're taking on all of Wall Street, you're taking on the Fed, obviously, and unfortunately you seem to be taking on the White House, as well. And that's a tough group to beat," said Sanders.

If you're wondering why we need an audit of the Federal Reserve, it's as if they can't stop giving us more reasons:

Earlier on Monday, HuffPost reported that former Fed Chairman Alan Greenspan wanted dissent kept secret so that people outside the Fed wouldn't involve themselves in their debates.

"We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting. "I'm a little concerned about other people getting into the debate when they know far less than we do."

Sanders said that Greenspan's comments are all the more reason for an audit. "I think it just adds a lot of weight to what we are trying to do," Sanders said. "It just points to the fact that if there was more transparency then it in fact would have allowed the debate to take place about the subprime mortgage [sic] unfolding crisis at that point. It may have prevented the horrendous recession that we're in now and the near collapse of the financial institutions."

The funny part about the White House opposing this bill is that it actually fits perfectly with their bipartisan fetish. Except when it's a group of democrats and republicans coming together to propose something threatens the power of the Federal Reserve and our banking industry... then the need for bipartisanship suddenly vanishes.

It's also good to have another issue where Obama is seen siding with the the banking industry, a stance that's sure to be a winner at the polls. The "Obama is in Wall Street's pocket" theme hasn't really caught on yet with the media, but with Tim Geithner and Larry Summers running your banking policies, it's only a matter of time.

"Welcoming their Hatred"

Obama's speech in New York was billed as going into the heart of the beast and giving it to them straight. Not sure if those people were mislead, or if I just missed something but...

With Goldman Sachs's top leaders in attendance, President Barack Obama urged financial executives to work with him in passing the financial reform bill currently pending in the Senate.

"Ultimately, there is no dividing line between Main Street and Wall Street. We rise or we fall together as one nation. So I urge you to join me -- to join those who are seeking to pass these commonsense reforms," according to Obama's prepared remarks for a speech in New York City. "And I urge you to do so not only because it is in the interests of your industry, but because it is in the interests of our country."

Uh, what?

I understand good economy equals job growth, but it's fucking absurd to say that Wall Street and Main Street fall and rise together.

Sorry Barack, but there's simply no magical middle ground on this one. You're either with us or against us.

These people won't meet us half way, because there's no reason for them to. The system's working amazingly for them, so why would they change it?

What you need is people willing to fight and take these interests on directly. Since I mocked people who compared Obama to FDR in the primaries it isn't really fair to make this comparison, but look FDR's language towards the financial elites of his time:

"We had to struggle with the old enemies of peace -- business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering," Franklin Delano Roosevelt said in a 1936 speech. "They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today.

"They are unanimous in their hate for me -- and I welcome their hatred."

Holy fuck, I think 1930s David Broder's head just exploded.

Populism gets a bad name because all the very serious people have decided that it's an overly simplified view of economics and the world. There's no denying that there are plenty of complex issues out there, but you don't need to understand the complexities of a credit default swap to figure out that working people in this country have been getting screwed for quite some time now. You don't need to know the ins and outs of derivatives regulation to figure out that when Mitch McConnell skips town to attend a retreat with banking lobbyists, he's probably not doing it for your benefit.

Obama may feel some duty to rise above that type of populism, but I'm sure there are plenty of Republicans smarter than Mitch McConnell that won't mind tapping into that anger. It will be hypocritical and the opposite of the policies they actually support, but when our political media has the attention span of a 3 year old, you can bet they'll get away with it.

The Republicans may not seize the opportunity, but I sure wish Obama would stop leaving the door so fucking wide open.

Real Banking Reform

If this makes it into the Financial Regulations Bill, it would truly be a Big Fucking Deal:

In a conference call with reporters, Sens. Sherrod Brown (D-OH) and Ted Kaufman (D-DE) introduced a bill, The Safe Banking Act of 2010, which would mandate hard leverage and size caps on financial institutions and force the breakup of many of the largest mega-banks. The duo planned to introduce their legislation as an amendment to the financial reform bill expected next week.

The bill would place a cap on any financial institution, limiting their total assets to 3% of GDP (that would lower to 2% for banks, as opposed to 3% for non-bank institutions). Currently, the 6 largest banks have holdings that equal 63% of GDP. The Safe Banking Act would also impose a 10% cap on any bank holding company’s share of insured deposits. Bank holding companies and “selected nonbank financial institutions” would have a leverage limit of 6%, meaning that they would not be able to lend out more than around sixteen dollars for every dollar of capital in house.

In his opening statement, Brown said “If we’re going to prevent big banks from putting our entire economy at risk, we need to place sensible size limits on our nation’s behemoth banks. We need to ensure that if banks gamble, they have the resources to cover their losses.” Sen. Kaufman, who has been a hero on this issue for his strong stands against too big to fail, added that “this is exactly what we need,” because financial institutions don’t need this kind of size to compete internationally, and they just put the nation’s financial system needlessly at risk. He explained that we cannot leave the question of size and leverage caps to the regulators, because they already have the authority under existing statutes to institute these size and leverage caps, and they haven’t done it.

Unfortunately because it's so awesome, I have no doubt that it will be one of the first parts of the bill that people try to vote down/gut.

If Obama lends his support to this, anything is possible. As we saw in the health care debate, when he was willing to lobby for things, he largely got what he wanted.

He'll give a speech on reform later today, so maybe we'll get a few more clues then.

Goldman Sachs to Feel it?

Shit just got real: (via Zero Hedge)

Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

Kenneth Lench, Chief of the SEC's Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."

I'm still not clear on what this means in terms of potential punishment, but any attempt to investigate Goldman has to be a good thing.

Larry Summers Shares Your Priorities

It's good to know that with 9.7% unemployment, Larry Summers is focused on what's really important:

Summers' legendary self-regard worsened last August, when the president reappointed Federal Reserve Board Chairman Ben Bernanke to a second term. Many Fed-watchers -- Summers chief among them -- thought that Obama might turn to his economic adviser instead of retaining the Republican academic whom President George W. Bush appointed and who presided over the Great Recession.

So peeved was Summers that he buttonholed Chief of Staff Rahm Emanuel for some personal perks he wanted to add to his position in the West Wing. First, according to informed sources, Summers asked to play golf with the president, which he did four weeks later on September 27. The economic adviser also huffed that he desired Cabinet status, an upgrade that Emanuel granted. Summers got walk-in privileges to Cabinet and other high-level meetings, for example, and he strode among the Cabinet officers who witnessed Obama's State of the Union address. In addition, the former Harvard University president sought a personal car and driver, which happens to be a privilege that the head of the nation's central bank enjoys. The chief of staff initially said yes, only to discover that that perk simply does not exist in the White House.

So Larry Summers is a self-absorbed dick, but we put up with him because he's so "brilliant" that his actions and ideology are a good deal responsible for the financial crisis.

I don't get it.

Sen. Dodd Decides to Rejoin the Real World

After months of pointless negotiations with Republican Bob Corker, Chris Dodd has apparently decided to write his own bill and give up on his bipartisan quest for bullshit financial reform:

“On Monday, I will present to my colleagues a substitute to the original financial reform package, unveiled last November.”

“Over the last few months, Banking Committee members have worked together to try and produce a consensus package. Together we have made significant progress and resolved a many of the items, but a few outstanding issues remain.”

“It has always been my goal to produce a consensus package. And we have reached a point where bringing the bill to the full committee is the best course of action to achieve that end. I plan to hold a full committee markup the week of March 22nd.”

“I have been fortunate to have a strong partner in Senator Corker, and my new proposal will reflect his input and the good work done by many of our colleagues as well.”

Glad that he's breaking off the negotiations, although I hope he doesn't actually mean that his proposal will include Corker's input. As atrios points out, this is where Democrats don't seem to understand the basics of negotiation. You add a few of his shitty ideas in exchange for something. You don't win any points by adding Republican ideas for the sake of doing it. Preemptively making your bills shitty in order to please people who will never actually support your legislation has become the hallmark of Democratic governance, and one look at their legislative record so far should tell you how successful that's been.

So props to Chris Dodd for figuring this out 9 months faster than Max Baucus and Barack Obama did, and hopefully this bill will be in much better shape as a result.

Real Financial Reform In Serious Danger

Following the model set by the Health Care negotiations, the most important part of the financial reform bill could be gutted in the Senate:

Consumer advocates are reacting harshly to a compromise Consumer Financial Protection Agency being proposed by Banking Committee Chairman Chris Dodd (D-Conn.).

HuffPost and other media outlets have obtained a copy of a memo outlining the proposal that Dodd sent to committee members this weekend. Read the memo here.

Under Dodd's plan, "[t]he agency proposal would be dropped." Consumer groups and labor unions had been pushing for independence as key to the agency's success. Bank regulators, they argued, should not have authority to veto consumer protection rules, because they have the interests of the banking sector as their central priority, rather than concern for abusive practices.

Consumer groups also wanted a presidentially-appointed head of the agency and an independent funding stream. Dodd's proposal includes both of those. But without independence, the agency loses its ability to write or enforce strong rules.

It's good to know that Senator Dodd's love of the banking industry is so deep that he'll continue to be in their pocket even when he doesn't have to worry about reelection. Elizabeth Warren has it right about idea about how to deal with Dodd and the rest of the Senate:

"My first choice is a strong consumer agency," the Harvard Law professor and federal bailout watchdog said in an interview with the Huffington Post. "My second choice is no agency at all and plenty of blood and teeth left on the floor."

Without an independent consumer agency, it isn't real financial reform, and this is a fight we need to pick. From the early signs of it, the White House might be getting the message:

WASHINGTON (AP) -- The Obama administration waded into negotiations over Wall Street regulations Wednesday, calling for limits on the size of financial institutions and insisting that consumer protections remain a central objective of legislative attempts to rein in the industry.

The plan reiterated a proposal that the administration staked out in January. The measure is known as the Volcker Rule, after former Federal Reserve Chairman Paul Volcker, a vigorous proponent of limiting proprietary trading by commercial banks. Volcker has been advising the Obama administration.

This is a massive departure from the previous actions the Administration has taken on Banking policy, which is great news. The other encouraging news is people such as Paul Krugman have already begun saying that no bill is better than Dodd's gutted bill. If those threats start to be taken seriously, then it could get the momentum for a bill going back in the right direction.

"Tough Shit"

A lot of this stuff isn't about policy. The sheer contempt that many Republicans have for those less fortunate than them is really stunning: (Via atrios)

Jim Bunning, a Republican from Kentucky, is single-handedly blocking Senate action needed to prevent an estimated 1.2 million American workers from prematurely losing their unemployment benefits next month.

As Democratic senators asked again and again for unanimous consent for a vote on a 30-day extension Thursday night, Bunning refused to go along.

And when Sen. Jeff Merkley (D-Ore.) begged him to drop his objection, Politico reports, Bunning replied: "Tough shit."

. . .

The stakes are enormous: provisions of last year's stimulus bill that allow extra weeks of unemployment benefits and COBRA health coverage are set to expire on Feb. 22. State workforce agencies have already sent out letters informing recipients that they'll be ineligible for extra "tiers" of benefits starting next month. The National Employment Law Project estimates that 1.2 million people will prematurely lose benefits in March.

What a monster. If you've got a few extra minutes in lunch hour, let him know how you feel:

202-224-4343

Like atrios said, be polite, and don't use any language that the esteemed Senator from Kentucky wouldn't be comfortable with.

The Stimulus in Action

It wasn't big enough, (we'll find that out the hard way when it starts to run out this fall) but the stimulus succeeded in creating jobs and saving our economy.

New York Times:

Imagine if, one year ago, Congress had passed a stimulus bill that really worked.

Let’s say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let’s also imagine it was large enough to have had a huge impact on jobs — employing something like two million people who would otherwise be unemployed right now.

If that had happened, what would the economy look like today?

Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren’t hypothetical. They are descriptions of the actual bill.

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

So while the Republicans will naturally continue to criticize something in invalidates their theory of government, it sure won't stop them from touting the projects that created jobs in their districts.

I'm a big believer in the power of images and graphics to convey things that words cannot. With that in mind, I better see this graph in the news an average of 6000 times a week between now and November:



Update: Holy crap this ad is brilliant:



WHERE THE HELL WERE THESE PEOPLE DURING THE HEALTH CARE DEBATE?

WHAT THE FUCK IS GOING ON HERE?

Not Fucking Helpful

Sweet Jesus this is stupid:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

It's great that while unemployment hovers around 10% the administration is trying to "trumpet the influence that corporate leaders have on his economic policies". Paul Krugman's reaction does a pretty good job of summing up my feelings:

Oh. My. God.

First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.

And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability.

. . .

The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state. There’s good reason to feel outraged at the growing appearance that we’re running a system of lemon socialism, in which losses are public but gains are private. And at the very least, you would think that Obama would understand the importance of acknowledging public anger over what’s happening.

As Krugman says at the end, I'm not sure which is worse: Actually believing what he's saying or thinking that saying it will be helpful politically.

Talking like this is as much political suicide as it is bad economic policy. From the beginning I had close to zero faith in Summers and Geithner, but I thought Obama's political team would be smart enough to not let their sucking shape the administration's overall message. Well, the economy will be front and center and the face of the Obama administration becomes those two fuck ups.

It's gonna be an ugly, ugly November.

Just a Reminder...

Crazy/super controversial ideas like taxing the rich to fund BIG GOVERNMENT are actually well liked, and can be passed by popular referendum:

It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures.

The latest results indicate both Measure 66 and 67 passed in 11 of Oregon's 36 counties.

"Tonight, I want to thank Oregonians for voting to protect critical public services during this difficult economic period," Gov. Ted Kulongoski said in a statement. "Even with this result, we still have some challenges before us. It is going to be a slow growth recovery from this recession for Oregon and the entire nation."

Measure 66 raises the income tax paid by households earning at or above $250,000 a year or individual filers who make $125,000 or more. Measure 67 raises the state's $10 minimum corporate income tax.

Together they generate an estimated $727 million, which has already been budgeted by the 2009 Legislature for public schools and other state services.

The tax measures were strongly supported by the state's teachers and other public employee unions. They argued that schools and public services would face damaging cuts.

A coalition of Oregon businesses, including the state's grocers, mounted a campaign to defeat the taxes, arguing that they would cost jobs at a time when the economy is already struggling.

House Speaker Dave Hunt said he and other supporters "have been hopeful from the beginning that Oregonians would be committed to strong schools, access to services and a healthy business climate."

You wouldn't know it from the way many Democrats piss their pants at the thought of populism, but these ideas are... wait for it... *popular*!

There's No Freeze on Stupid Ideas

Apparently our economic situation is now serious enough that it requires a political gimmick that was laughed out of the room when the McCain campaign gave it a try:

President Obama plans to announce a three-year freeze on discretionary, “non-security” spending in the lead-up Wednesday's State of the Union address, Hill Democratic sources familiar with the plan tell POLITICO.

The move, intended to blunt the populist backlash against Obama's $787 billion stimulus and an era of trillion-dollar deficits -- and to quell Democratic anxiety over last Tuesday's Massachusetts Senate election -- is projected to save $250 billion, the Democrats said.

The freeze would not apply to defense spending or spending on intelligence, homeland security or veterans.

The proposal is in line with a plan floated by Sen. Evan Bayh (D-Ind.), a fiscal hawk, who told Bloomberg's Al Hunt last week that there was a “fighting chance” Obama would propose a freeze in most discretionary spending by the federal government as part of his address.

It's an idea so blindingly stupid that you don't even know where to start. Krugman:

It’s bad economics, depressing demand when the economy is still suffering from mass unemployment. Jonathan Zasloff writes that Obama seems to have decided to fire Tim Geithner and replace him with “the rotting corpse of Andrew Mellon” (Mellon was Herbert Hoover’s Treasury Secretary, who according to Hoover told him to “liquidate the workers, liquidate the farmers, purge the rottenness”.)

It’s bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.

I happened to be watching Rachel Maddow's show when she absolutely demolished Jared Bernstein (who happens to be the only economist I really like in the administration) when he tried to defend this insanity:


You gotta feel for Bernstein a bit because you know this wasn't his idea (again, he's a smart economist), and he was sent out there to defend something that cannot defended in any logical way. When looking at the impact, as usual atrios said it best:

I guess the best defense of the "spending freeze" is that it's a cheap political gimmick with little actual impact.

Yep. Engaging in cheap political gimmicks while the economy burns. Voters will love that, just ask John "suspend my campaign until the economy clears up" McCain.

Message Received?

After watching the news coverage following Scott Brown's win in Massachusetts two nights ago, you would have thought Obama would be forced to resign in shame by week's end.

And while most sane people could see that the loss was a result of demoralized base/crappy candidate/10% unemployment combo, it was hardly the overwhelming rejection of big government/black people/health care that everyone made it seem.

I was joking with a coworker yesterday that a "wake up call" wouldn't be a bad idea if I wasn't so sure that the Democrats would get the wrong message of why people were angry.

Well, if this is true, I couldn't be happier to be wrong:

WASHINGTON—President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country's biggest banks, marking the administration's latest assault on Wall Street in what could mark a return, at least in spirit, to some of the curbs on finance put in place during the Great Depression, according to congressional sources and administration officials.

The past decade saw widespread consolidation among large financial institutions to create huge banking titans. If Congress approves the proposal, the White House plan could permanently impose government constraints on the size and nature of banking.

Mr. Obama's proposal is expected to include new scale restrictions on the size of the country's largest financial institutions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal competitive forces. It couldn't be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.

Mr. Obama is also expected to endorse, for the first time publicly, measures pushed by former Federal Reserve Chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place "firewalls" between different divisions of financial companies to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits.

. . .

The rules could also keep banks out of the business of running hedge funds, investing in real estate or private equity, all businesses that have become important, profitable parts of these banks. The collapse of two highly leveraged hedge funds began the process that led to the collapse of Bear Stearns.

Holy crap. That is BY FAR the best banking policy endorsed by the administration since it took office. Still waiting for more details, but if these pictures of Paul Volcker and Larry Summers are any indication, then we may be on the right track.

Reasons I care about Losing Byron Dorgan

Gramm-Leach-Bliley Act
Vote Counts:
YEAs 90
NAYs 8
Present 1
Not Voting 1


NAYs ---8
Boxer (D-CA)
Bryan (D-NV)
Dorgan (D-ND)
Feingold (D-WI)
Harkin (D-IA)
Mikulski (D-MD)
Shelby (R-AL)
Wellstone (D-MN)