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WASHINGTON (CNN) — The House of Representatives handily passed a bill Wednesday night that would provide up to $14 billion in bridge loans to automakers, but Republican opposition cast doubt about the bill’s fate in the Senate later this week.
The U.S. House approved an auto bailout package Wednesday, but it could hit a roadblock in the Senate.
The stopgap measure, approved by a vote of 237 to 170, is designed to let the new Congress and incoming administration of President-elect Barack Obama craft a long-term solution. It would also give the companies time to negotiate with creditors and the United Auto Workers union on additional concessions needed to stem their ongoing losses.
Thirty-two GOP representatives voted with 205 Democrats in support of the bill while 20 Democrats and 150 Republicans opposed the bill.
In Michigan, the home of the three major U.S. automakers — Chrysler, Ford and General Motors — eight Republicans joined the six Democrats in the state’s delegation in voting for the measure. A ninth Michigan Republican, Timothy Walberg, did not vote.
Seven other Republicans that voted for the bill are from nearby Midwestern states that are also home to auto plants. However, outside of the auto belt, the bailout had little Republican support.
Even Democrats couldn’t come to complete agreement on the bill, with House and Senate Democrats going their separate ways on one of the criteria the “car czar” must consider in determining an auto company’s long-term viability plan.
House Democrats used language requiring that autos meet stricter “applicable” fuel efficiency and emissions standards — which would cover consideration of state standards such as those adopted in California and New York — while the Senate version of the bill calls for vehicles to meet “federal” standards, which are not as high as some state benchmarks.
A Senate Democratic leadership aide told CNN that Senate Republican leader Mitch McConnell told Senate Majority Leader Harry Reid Wednesday morning that the bill would never pass the Senate with the House language.
House Speaker Nancy Pelosi wanted the higher efficiency standard so that liberal Democrats who are not inclined to help the auto manufacturers would feel they had assurances that these companies would adopt and make more fuel-efficient cars, according to House Democratic aides.
However, even if language about the fuel efficiency standards is resolved, Senate Republicans still aren’t likely to flock behind the bill.
“I don’t think the votes are there on our side of the aisle,” reported Sen. George Voinovich of Ohio, one of few vocal Republican backers of the bill.
“It’s not gonna pass right now,” echoed Sen. Richard Shelby, R-Alabama, a fierce critic of the bill.
Voinovich and Shelby spoke after Senate Republicans huddled behind closed doors in the Capitol on Wednesday to weigh the merits of the bailout. Vice President Dick Cheney and White House Chief of Staff Josh Bolten attended the meeting — called “spirited” by one senator — to sell the bill the White House negotiated with congressional Democrats.
Several senators said they were concerned the so-called “car czar,” created by the legislation, would not have enough power to force the troubled automakers to restructure to become profitable.
“I have concerns about the power of the czar,” said Sen. Norm Coleman, R-Minnesota, a moderate who Democrats have hoped would vote for the bill, “that he actually has some real power. And I think that’s a concern a lot of my colleagues have right now.”
“The car czar needs the authority to create a de facto structured bankruptcy. Not consulting. Not calling meetings. He needs the capacity of a master of bankruptcy to force things to happen,” said Sen. Robert Bennett, R-Utah.
Some senators oppose any assistance to the automakers, saying they should file for bankruptcy, but White House spokeswoman Dana Perino pointed out that many lawmakers from both sides of the aisle believe that allowing “a disorderly bankruptcy could be fatal to U.S. automakers and have devastating impacts on jobs, families and our economy.”
“As a result, they also agree we should find a way to foster the companies’ restructuring so that they can become viable and profitable,” she said. “We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs.”
Other senators said they were concerned that the carmakers might never pay taxpayers back for the loans, meant to keep General Motors and Chrysler afloat until they can finalize a long-term viability plan — by March 31, according to the legislation.
GM has said it needs $4 billion by the end of the month to continue operations, and believes it’ll need an additional $6 billion in the first three months of 2009. Chrysler has said it needs $4 billion by the end of the first quarter.
Ford, which has more cash on hand than its U.S. rivals, is not expected to tap into this bailout in the coming months.
Obama MTP Interview: Obama Big Three automakers ‘strategic mistakes’
Project Would Be the Largest Since the Interstate System
On the heels of more grim unemployment news, President-elect Barack Obama yesterday offered the first glimpse of what would be the largest public works program since President Dwight D. Eisenhower created the federal interstate system in the 1950s.
Obama said the massive government spending program he proposes to lift the country out of economic recession will include a renewed effort to make public buildings energy-efficient, rebuild the nation’s highways, renovate aging schools and install computers in classrooms, extend high-speed Internet to underserved areas and modernize hospitals by giving them access to electronic medical records.
“We need to act with the urgency this moment demands to save or create at least 2 1/2 million jobs so that the nearly 2 million Americans who’ve lost them know that they have a future,” Obama said in his weekly address, broadcast on the radio and the Internet.
Obama offered few details and no cost estimate for the investment in public infrastructure. But it is intended to be part of a broader effort to stimulate economic activity that will also include tax cuts for middle-class Americans and direct aid to state governments to forestall layoffs as programs shrink.
House Speaker Nancy Pelosi (D-Calif.) has called for spending between $400 billion and $500 billion on the overall package. Some Senate Democrats and other economists have suggested spending even more — potentially $1 trillion — in the hope of jolting the economy into shape more quickly.
Nice background today! I wonder if that’s a view of Chicago out the window.
President-elect Barack Obama lays out key parts of Economic Recovery Plan >> Transcript here
With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.
The decline, the largest since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.
“We have recorded the largest decline in consumer confidence in our history,” said Richard T. Curtin, director of the Reuters/University of Michigan Survey of Consumers, which started its polling in the 1950s. “It is being driven down by a host of factors: falling home and stock prices, fewer work hours, smaller bonuses, less overtime and disappearing jobs.”
The employment report increased the likelihood that Congress, with the support of President-elect Barack Obama, will enact a stimulus package by late January that could exceed $500 billion over two years. More than half that money would probably be channeled into public infrastructure spending. Many economists consider such investments an effective way to counteract, through federally financed employment, the layoffs and hiring freezes spreading through the private sector.
“Basically $100 billion of public investment in such things as roads, bridges and levees would generate two million jobs,” Robert N. Pollin, an economist at the University of Massachusetts, said. “That would offset the two million jobs that we are now on track to lose by early next year.”
GM CEO makes case at bailout hearing
Chrysler CEO lays out plan
Auto workers union fate tied to GM
Car execs grilled by Congress on transport to hearing
GM Volt technology allows a car to drive for 40 miles before switching over to gas/petrol – but we already have electric cars like the Tesla that can go 240 miles without recharging – plenty enough for everyday driving – at about 2 cents/mile to run.
It seems that the auto makers are stalling ~
US Auto makers roll out fuel efficient cars
Dec. 3 (Bloomberg) — President-elect Barack Obama said Bill Richardson will be an “economic diplomat” for the U.S. as commerce secretary and a key member of a team that lays the groundwork for renewed growth.
Warning that a recovery from the recession that began last year “won’t happen overnight,” Obama said Richardson has a unique combination of national and international experience to be an “unyielding advocate” for American companies and workers at home and abroad.
“Bill has seen from just about every angle what makes our economy work and what keeps it from working better,” Obama said at a news conference today in Chicago at which he formally announced the New Mexico governor as his choice to lead the Commerce Department.
Richardson, 61, is one of the highest-profile Latinos to hold elective office in the U.S. Before winning his race for governor of New Mexico in 2002 and gaining a second term in 2006, he served in two Cabinet positions in President Bill Clinton’s administration and eight terms in the U.S. House.
He ended his own bid for the Democratic presidential nomination in January and later endorsed Obama, calling him a “once-in-a-lifetime leader” who can unite the country. That move was a rebuke to Hillary Clinton, who Obama has picked for secretary of state, and her husband publicly lashed out at Richardson at the time.
Richardson downplayed any suggestions that hard feelings lingered from the campaign.
“There are some who speak of a team of rivals,” he said. “But I’ve never seen it that way. Past competitors, yes.”
Richardson said that he would use his position to promote trade. “Boosting commerce between states and nations is not just a path to solvency and growth; it’s the only path,” he said.
He vowed to make the Commerce Department an integral part of Obama’s financial recovery plan. The “catchphrases of your economic plan” Richardson told Obama, are “investment, public/private partnerships, green jobs, technology, broadband, climate change and research.”
“That is the Department of Commerce,” he said.
Richardson would head a Cabinet agency with responsibilities that include compiling economic data, monitoring the weather and adjudicating trade complaints.
Companies such as General Electric Co., the world’s biggest maker of power-generation equipment, said they will be looking to Richardson for help reducing hurdles and tariffs to selling their goods overseas.
Richardson is “very smart on things like free-trade agreements,” said Peter O’Toole, a GE spokesman and former speechwriter for Richardson. “Hopefully we can work with Governor and future Secretary Richardson on making sure that free and fair trade is a two-way street.” …
liberal/progressive/terrorist! This is the first Thanksgiving in eight years where you represent the political majority. Because you know who voted with you? Oh, just fifty-three percent of the United States of America. HELL YEAH! Who’s a member of the fringe lunatic this holiday season? Not you!
But what happens if your right-wing relatives still want to debate the outcome of the election? Defang your conservative loved ones with these ten helpful facts!:
|President-elect Obama won by 8 million votes.
President Bush is probably drinking again.
Many media conservatives are furious with President Bush.
Experts say that Al Qaeda’s recent video shows that the terrorists are afraid of President-elect Obama.
President-elect Obama is cocky enough to think he can pull this “economic miracle” shit off.
The “socialist” takeover of America’s banks happened on Bush’s watch.
The “Democratic” Senate has been working with a one vote majority, and that vote is Joe Lieberman. If they get to the “Magic 60,” that sixtieth vote is still Joe Lieberman.
The majority of rich Americans voted to have their wealth spread.
President Obama will probably only get to replace liberal judges on the Supreme Court.
Cheer up, the GOP still owns the “racist belt!”:
During a press conference earlier today, CNN’s Ed Henry challenged President-elect Barack Obama on his naming of some recent appointees who have had experience serving in the government. “What do you say to your supporters looking for change?” Henry wondered. Obama noted that there is a “conventional wisdom floating around Washington that ‘well, there’s a recycling of people who were in the Clinton administration.’”
Addressing the media criticism directly, Obama explained:
- It would be surprising if I selected a Treasury secretary who had had no connection with the last Democratic administration because that would mean the person had no experience in Washington whatsoever. And I suspect you would be troubled and the American people would be troubled if I selected a Treasury secretary or a chairman of the National Economic Council…who had no experience whatsoever.
Obama said his personnel selections will “combine experience with fresh thinking.” But he underscored that the buck stops with him:
- But understand where the vision for change comes from first and foremost. It comes from me. That’s my job — is to provide a vision in terms of where we are going and to make sure that my team is implementing it.
Obama concluded, “What I don’t want to do is to somehow suggest that because you served in the last Democratic administration that you’re somehow barred from serving again — because we need people are going to be able to hit the ground running.”
Source: Think Progress
President-elect Barack Obama will appoint former Federal Reserve Chairman Paul Volcker on Wednesday to be the chairman of a new White House advisory board tasked with helping to lift the nation from recession and stabilize financial markets, Democratic officials say.
University of Chicago economist Austan Goolsbee, one of Mr. Obama’s longest-serving policy advisers, will serve as the board’s staff director, along with his duties as a member of the White House Council of Economic Advisers. Members of the panel will be drawn from a cross-section of citizens outside the government, chosen for their independence and nonpartisanship.
Wednesday’s event was more of a surprise, but with it, Mr. Obama has found a place for the former Fed chairman who is largely credited with halting inflation in the early 1980s. Since the financial crisis erupted in September, Mr. Obama has leaned heavily on the 81-year-old Mr. Volcker for advice.
Advisers familiar with the team selection said Mr. Volcker’s advanced age always made it unlikely he would get the Treasury job, but Mr. Obama wanted him in the White House with Mr. Summers, who, like Mr. Volcker, moved into the center of the Obama policy orbit in recent months.
Read it all…
CHICAGO (Reuters) – President-elect Barack Obama takes another step toward tackling the ailing U.S. economy on Wednesday as part of an aggressive effort to demonstrate that his administration will face the global financial crisis head-on.
In his third news conference this week, Obama will make an “economic announcement” at 10:45 a.m. EST, his transition office said, following a similar event on Tuesday, when he presented his picks to head the White House budget office.
The Wall Street Journal reported Obama would name Former Federal Reserve Chairman Paul Volcker to chair a new economic advisory panel designed to stabilize financial markets and steer the country out of a recession.
Quoting Democratic officials, the newspaper reported on its Web site that University of Chicago economist and Obama policy adviser Austan Goolsbee would serve as the panel’s staff director.
It said the board would not supplant the Treasury Department, but give Obama an official forum for getting expert advice outside bureaucratic channels.
Obama, who succeeds President George W. Bush on January 20, seems already to be taking the reins as financial market players increasingly tune out the current president and focus instead on the country’s next leader.
In addition to naming his top economic advisers, Obama has come closer to forming his national security team, with reports saying that Republican Robert Gates will stay on as defense secretary and retired Marine Gen. James Jones will take over as national security adviser.
Those appointments, along with New York Sen. Hillary Clinton as secretary of state, are likely to be made early next week, after the November 27 Thanksgiving holiday.
For now Obama has put his focus squarely on the economy, pledging a costly stimulus package that he urged the next Congress to pass quickly.
On Tuesday, he vowed to cut billions of dollars in wasteful government spending.
But questions remain about both goals. Obama declined to put a figure on the stimulus package — other Democrats have estimated it could cost hundreds of billions of dollars — and he did not identify specific government programs to be cut.
Analysts said Obama’s daily economic pronouncements showed the next president stepping into a leadership chasm.
“Confidence in Bush as an effective president has eroded so substantially that he is no longer taken seriously,” said Paul Beck, a professor of political science at Ohio State University.
“There is, of course, much more confidence in Obama or he would not have been elected as president. And, he is the president-in-waiting, so the only alternative the country has to Bush as a leader, especially in a period when the markets have failed and government must play an enlarged role in them.”
Obama has not shied away from telling struggling industries like banks and automakers to take responsibility for their ailing position in the economy.
In an interview with ABC television network, Obama said bank executives should forego their bonuses this year.
CHICAGO (Reuters) – President-elect Barack Obama announced his top budget officials on Tuesday and promised significant spending cuts to partially offset a costly stimulus package that aims to revive the U.S. economy.
As the top two officials at the Office of Management and Budget, Peter Orszag and Rob Nabors will closely examine federal spending to cut out wasteful programs, Obama said.
“If we are going to make the investments we need, we also have to be willing to shed the spending that we don’t need,” Obama said at his second press conference in as many days.
One obvious example: Crop subsidies to farmers who make more than $2.5 million per year, Obama said.
Though he does not take office until January 20, Obama’s team of economic advisers are already working out the details of a two-year package to save or create 2.5 million jobs that could cost several hundred million dollars.
Obama himself meanwhile has dropped his former low-profile approach and spoken directly to the American people with two news conferences this week. A third Obama press appearance is scheduled for 10:45 a.m. EST Wednesday.
Bush administration officials continue to extend massive life support efforts to the ailing U.S. financial system.
The Federal Reserve on Tuesday announced a $600 billion program to buy mortgage-related debt and securities, and a $200 billion program to increase the availability of consumer debt, such as credit cards and auto loans.
Treasury Secretary Henry Paulson urged patience and said any effort will take time to work.
Orszag now heads the Congressional Budget Office and Nabors currently serves as staff director of the House Appropriations Committee. Both previously held White House positions under President Bill Clinton.
Their announcement follows on Monday’s unveiling of New York Federal Reserve Bank President Timothy Geithner as Obama’s Treasury secretary and Lawrence Summers, a former Treasury secretary under Clinton, as director of his National Economic Council.
Obama’s aides are in contact with Bush administration officials, who said they would work closely with Geithner and other incoming officials on any new rescue plans.
The scope of the economic crisis has widened since Obama’s November 4 victory over Republican John McCain, with auto companies warning that they are short on cash, unemployment numbers rising and the government bailing out yet another gigantic financial institution, Citigroup Inc.
New figures released on Tuesday showed that the U.S. economy shrank more severely during the third quarter than previously estimated as consumers cut spending at the steepest rate in 28 years. Corporate profits and business investment fell as well.
Obama has kept a low profile until this week’s news conferences, which are intended to show the priority he places on addressing the worst economic crisis since the Great Depression.
He said on Monday he has not yet decided whether to roll back President George W. Bush’s 2001 tax cuts for the wealthy, which would provide the government with much-needed revenue, or simply allow them to expire at the end of 2010 as scheduled, a move that would avoid what would likely be a bruising fight in Congress.
The United States government unveiled $800 billion worth of new loans and debt purchases on Tuesday, hoping another massive infusion of cash would smooth troubled credit markets and make borrowing easier for homebuyers, small businesses and students.
The Federal Reserve said it would buy up to $600 billion in mortgage-backed assets from government-sponsored mortgage giants Fannie Mae and Freddie Mac. It would buy up to $100 billion in debt directly from the companies and up to $500 billion in mortgage-backed securities.
“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Federal Reserve said in a statement.
Separately, the Fed and Treasury Department announced a $200 billion program to ease commercial lending on debt like student loans, car loans or business loans. The Fed would lend up to $200 billion to holders of asset-backed securities supported by car loans, credit card loans, student loans, and business loans guaranteed by the Small Business Administration.
The program would be seeded with $20 billion in “credit protection” from the Treasury Department, which is drawing the money from the original $700 billion bailout.
“It gives institutions liquidity and it’s clearly direct lending that will help consumers,” Treasury Secretary Henry M. Paulson Jr. said Tuesday at a news conference.The announcements came one day after President-elect Barack Obama unveiled his economic team and tried to assure Americans that he was seeking to fill any leadership vacuum, and said his economic advisers would begin working “today.” The advisers include Timothy F. Geithner, his choice for Treasury secretary.
WASHINGTON – The government introduced a pair of new programs Tuesday that will provide $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.
The new programs from the Federal Reserve and Treasury Department are the latest effort to provides billions in government support to get the U.S. financial system back to more normal operations and keep the country from sliding into a deep and prolonged recession.
The Fed program for consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans such as credit cards, auto and student loans. The goal is to provide greater demand for these securities as a way of lowering interest rates consumers are paying and to make these loans more available.
Treasury Secretary Henry Paulson had signaled that the government was working on this new program. It will be supported by $20 billion of credit protection provided by the $700 billion government rescue fund.
The Fed also said Tuesday it will buy up to $600 billion in mortgage-backed assets in a separate attempt to deal with the financial crisis.
The Fed said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.
The severe financial crisis rocking global markets began more than a year ago with rising defaults on subprime mortgages, loans provided to borrowers with weak credit histories.
The billions of dollars of losses financial institutions have suffered on their mortgage loans have caused banks to stop making new loans of various types. The huge loan losses have also caused multiple failures and takeovers, resulting in the biggest upheavals in the financial system since the Great Depression.
Citing an “economic crisis of historic proportions” President-elect Barack Obama announced the key members of his economic team at a news conference in Chicago.
Update | 12:34 p.m. The Q & A was over pretty quickly, and Mr. Obama and his newly introduced economic team filed offstage.
Here’s a quick thumbnail that Mr. Obama gave in introducing each of them:
Mr. Geithner: “offers not just extensive experience shaping economic policy and managing financial markets – but an unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency. Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today’s markets – and a clear vision of the steps we must take to revive them.”
“Growing up partly in Africa and having lived and worked throughout Asia; having served as Under Secretary of the Treasury for International Affairs – one of many roles in the international arena; and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.”
Mr. Summers: “Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. He also championed a range of measures – from tax credits to enhanced lending programs to consumer financial protections – that greatly benefited middle income families.”
“As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class. This idea is the core of my own economic philosophy and will be the foundation for all of my economic policies.”
Ms. Romer: “Christina is both a leading macroeconomist and a leading economic historian, perhaps best known for her work on America’s recovery from the Great Depression and the robust economic expansion that followed. Since 2003, she has been co-director of the National Bureau of Economic Research Monetary Economics program. She is also a member of the Bureau’s Business Cycle Dating Committee – the body charged with officially determining when a recession has started and ended – experience which will serve her well as she advises me on our current economic challenges.”
“Christina has also done groundbreaking research on many of the topics our Administration will confront – from tax policy to fighting recessions. And her clear-eyed, independent analyses have received praise from both conservative and liberal thinkers alike. I look forward to her wise counsel in the White House.”
Ms. Barnes: She has a “brilliant legal mind” and is “one of the most respected policy experts in America, will be serving as director of my Domestic Policy Council.” She will be “working hand-in-hand with my economic policy team to chart a course to economic recovery. An integral part of that course will be health care reform – and she will work closely with my Secretary of Health and Human Services on that issue.”
“As executive vice president for policy at the Center for American Progress, Melody directed a network of policy experts dedicated to finding solutions for struggling middle class families. She also served as chief counsel to the great Senator Ted Kennedy on the Senate Judiciary Committee, working on issues ranging from crime to immigration to bankruptcy, and fighting tirelessly to protect civil rights, women’s rights and religious freedom.”
Related: What Economic Blogs Are Saying
Auto Industry | 12:32 p.m. Question: What should be done about the auto industry?
Mr. Obama gets tough on Detroit and says he was “surprised” that the auto execs went to Washington last week without being better prepared.
“We can’t allow the auto industry to simply vanish,” he says, but “we can’t just write a blank check.” Nor, he said, can taxpayers be expected “to pony up more money to an auto industry that has been resistant to change.”
Then this: “I was surprised they didn’t have a better-thought-out proposal when they arrived in Congress.” He says Congress “did the right thing to say you guys need to come up with a better plan and come back.”
But any additional money for the industry, he says, should assure a long-term sustainable auto industry and is not just “kicking the can down the road.”
Economic Approach | 12:27 p.m. Question: How will your approach to the economy differ from the “ad hoc” approach of the last year?
Mr. Obama says he wants to make sure that moving forward he is “clearly articulating” his end goals, what he is trying to achieve and that there is “clarity and transparency” to his plan. Markets have been confused about the overall direction of the economy, he says, and he wants to provide clarity.
Stimulus Package? | 12:25 p.m. Ah, now we’ve got sound. But he still declines to discuss the size of the stimulus package. He says there is a consensus “across the spectrum” that we need an economic stimulus package and that it’s big enough to give a “jolt” to the economy. He is vague about how to pay for it beyond “reforms” in Washington.
On to Questions | 12:19 p.m. In the question-and-answer period, the questions, alas, are inaudible. But Mr. Obama declines to put a price tag on his stimulus package. Apparently he was asked about the Bush tax cuts because Mr. Obama says he isn’t sure exactly how those tax cuts will be repealed.
No Shortcuts | 12:15 p.m. “We need a recovery plan for both Wall Street and Main Street – a plan that stabilizes our financial system and gets credit flowing again, while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs – jobs rebuilding our crumbling roads and bridges, modernizing our schools, and creating the clean energy infrastructure of the twenty-first century,” he says. “Because at this moment, we must both restore confidence in our markets – and restore the confidence of middle class families, who find themselves working harder, earning less, and falling further and further behind.”
He adds: “Again, this won’t be easy. There are no shortcuts or quick fixes to this crisis, which has been many years in the making – and the economy is likely to get worse before it gets better. Full recovery won’t happen immediately. And to make the investments we need, we’ll have to scour our federal budget, line-by-line, and make meaningful cuts and sacrifices as well – something I’ll be discussing further tomorrow.”
‘Crisis of Historic Proportions’ | 12:09 p.m. “We are facing an economic crisis of historic proportions,” Mr. Obama says, and we need the best minds to bring sound judgment and fresh thinking. He said his team are people who share his fundamental belief that we can’t have a thriving wall street without a thriving Main Street.
The News Conference Begins | 12:03 p.m. The market continues to cilmb as Mr. Obama opens his news conference. The Dow is up 306 points so far.
In addition to Mr. Geithner, Mr. Summers and Ms. Romer, Mr. Obama announces Melody C. Barnes will be director of the Domestic Policy Council, which will Ms. Barnes previously served as executive vice president for policy at the Center for American Progress and as chief counsel to Senator Edward M. Kennedy on the Senate Judiciary Committee from December 1995 until March 2003, according to the transition team. Mr. Obama said that an integral part of Ms. Barnes’s job will be working closely with the Secretary of Health and Human Services on health care reform.
The Economic Team | 11:53 a.m. President-elect Barack Obama is about to hold a news conference in Chicago and announce the members of his economic team, including Timothy F. Geithner, president of the New York Federal Reserve, as his Treasury secretary.
Mr. Obama also plans to name Larry Summers, who was Treasury secretary during the Clinton administration, as the head of his National Economic Council and Christina Romer, a well-regarded economist at the University of California at Berkeley, to lead the Council of Economic Advisers.
And he is expected to make the case for an expanded economic stimulus package to create or preserve 2.5 million jobs during the next two years.
Something for the prediction lovers out there!
He’s someone who says things are going to be looking up!
Timothy Geithner is a seasoned crisis manager with a temperament to match that of Barack Obama
STOCKMARKETS soared on Friday November 21st when investors learned that Barack Obama would nominate Timothy Geithner as his Treasury Secretary. That might seem odd. The president of the Federal Reserve Bank of New York was already a favourite for the post. And he brings no magical solution to the financial crisis: he has been battling it for over a year, with no end in sight.
The 494-point (6.5%) jump in the Dow Jones Industrial Average is more a statement about investors’ anxiety over the unsettled state of economic policymaking. News of the Treasury nominee holds out the prospect of a more coherent and forceful approach to the crisis. The current treasury secretary, Hank Paulson, is reworking the $700 billion bail-out plan on the fly, policymakers are struggling over a new approach to foreclosures, the status of the mortgage agencies, Fannie Mae and Freddie Mac, is in limbo, and Congress has just sent the carmakers, teetering close to insolvency, home empty handed. The two months before Mr Obama is sworn in seem like an eternity.
Investors were also relieved that their darkest fears of a Sarah Palin-like shock announcement did not come to pass and that Mr Obama, as in his other important appointments, has chosen ability over connections. Mr Geithner does not know Mr Obama well and has no notable ties to the Democratic Party. But for this cabinet post more than any other, an overtly political appointment would have been corrosive to investor confidence.
Assuming he is nominated Mr Geithner brings two crucial qualities. First, he represents continuity. From the first days of the crisis last year, he has worked hand in glove with Ben Bernanke, the Fed chairman, and Mr Paulson. He can continue to do so while awaiting confirmation. If Citigroup, for example, needs federal help, Mr Geithner will be involved. An unknown when he joined the New York Fed in 2003, he is now a familiar face to the most senior executives on Wall Street and to central bankers and finance ministers overseas.
Second, he represents competence. He has spent more time on financial crises, from Mexico and Thailand to Brazil and Argentina, than probably any other policymaker in office today. Mr Geithner understands better than almost anyone that in crises you throw out the forecast and focus on avoiding low probability events with catastrophic consequences. Such judgments are excruciating: do too little, and you undermine confidence and generate a bigger crisis that needs even bigger policy action. Do too much, and you look panicked and invite blowback from Wall Street, Congress and the press. At times during the crisis Mr Geithner would counsel Mr Bernanke on the importance of the right “ratio of drama to effectiveness”.
Mr Geithner looks a lot younger than his 47 years. He skateboards and snowboards and exudes a sort of hipster-wonkiness, using “way” as a synonym for “very” as in “way consequential” and occasionally underlining his point with the word “fuck”.
In temperament he seems similar to Mr Obama: he is suspicious of ideology, questions received wisdom
In normal times, risk aversion damps economic cycles; in a crisis, it accentuates them, leading to withdrawn credit, evaporating liquidity, margin calls, falling asset prices, and more risk aversion. “The brake becomes the accelerator,” as he puts it. Indeed, although he worked alongside Mr Paulson on the crisis, he has at times advocated a more aggressive approach. For example, news reports say that he was not comfortable with Mr Paulson’s decision to take public money off the table in the ultimately unsuccessful effort to save Lehman Brothers. He has not always got it right: he was the most important architect of the original bail-out of American International Group, an insurer, which in time has proved flawed, requiring significant amendment.
Mr Geithner looks a lot younger than his 47 years (though not as young as he did before the crisis began). He skateboards and snowboards and exudes a sort of hipster-wonkiness, using “way” as a synonym for “very” as in “way consequential” and occasionally underlining his point with the word “fuck”. In temperament he seems similar to Mr Obama: he is suspicious of ideology, questions received wisdom, likes a competition of ideas and is keenly aware of how uncertain the world is.
Mr Geithner learned about crisis management as an aide to Lawrence Summers who rose to Treasury Secretary under Bill Clinton. Mr Summers was the other candidate for the job under Mr Obama, and his appointment would probably also have been greeted enthusiastically. He will reportedly join the administration in a White House advisory role.
Mr Geithner leaves a big hole; the New York Fed president is by tradition the financial system’s go-to crisis manager, and that job has never been more important in the modern era than it is now. A probable candidate to succeed him is a Fed governor, Kevin Warsh. Though young (he is just 38) he has been a central player in the crisis thanks to his extensive contacts in the financial world and closeness to Mr Bernanke, who puts great store in Mr Warsh’s feel for politics and markets (see our recent blog post). That appointment will be made by the board of the New York Fed.
Mr Geithner faces a huge job. He will have critical decisions to make on whether to enlarge or alter the $700 billion Troubled Asset Relief Programme, what sort of firms will qualify for its money, whether and how to bail out the carmakers, what to do with the flailing mortgage agencies, Fannie Mae and Freddie Mac, and how to deal with countless other chapters in the continuing crisis. Unlike Mr Summers he is not an economist and brings no expertise to many of the big economic-policy questions that the Obama administration will confront such as health care, fiscal policy and taxes, even though he will be the primary spokesman on the administration’s economic policies.
He is a quick learner: within a year of joining the New York Fed he could debate the intricacies of monetary policy with academic experts. But he will join an administration rapidly filling up with heavyweights on economic policy, not least of them Mr Summers. Indeed, one of the big questions of the new team that Mr Obama is expected to unveil on Monday is just how Mr Summers, a brilliant but intimidating and sometimes abrasive figure, will fit in.
Mr Obama is assembling a formidable economic team. With the economy perhaps on the precipice of its worst recession since the Depression, he will need it.
Today on “Fox News Sunday,” Obama adviser David Axelrod talked to Chris Wallace about the economy and the upcoming appointments that the President-elect plans to make.
Real Clear Politics
Nov. 20 (Bloomberg) — I sat in the window of a cafe this month in Annapolis, Maryland, a sailing town near Washington, counting parked cars. “Honda, Honda, Nissan, Toyota, Honda, Lexus (made by Toyota), Mazda, and a battered 1970s Cadillac.”
No wonder the U.S. carmakers are in meltdown and begging to be plugged in to the Treasury’s life-support machines.
Don’t be misled, though — the something that is rotten in the auto industry has nothing to do with the credit crunch, and everything to do with years of mismanagement, shoddy products and bad choices.
Consider the credit-rating histories of General Motors Corp. and Ford Motor Co. For both companies, the rot started all the way back in August 2001, when Standard & Poor’s put the A grades they had enjoyed for a decade on review for downgrade. In October of that year, they each suffered a two-level cut to BBB+ that left them just three moves away from junk status.
So seven years ago, the car companies were already on the slide, after years of their Japanese rivals stealing market share with improved production methods and better reliability. That was well before the words “credit crunch” had become as ubiquitous as “would you like large fries with that?” or “the new Bond film isn’t as good as the previous one.”
Pirates of Detroit
In other words, give us what we want or suffer the consequences. That sure sounds like blackmail to my ears, except even Somali oil-tanker pirates have so far stopped short of trying to pilfer $25 billion from their victims.
So, what to do? Nobody, least of all President-elect Barack Obama, wants to see the 250,000 people who work directly for the big three U.S. automakers tossed on the scrapheap, or the other 4 million workers whose job security is at risk somewhere along the supply chain from the drawing boards of Detroit to the car showrooms of America.
There seems to be a groundswell of support building for the concept of retraining and retooling auto workers away from churning out four-wheeled gas guzzlers to put them instead at the vanguard of the fight against climate change.
“Wouldn’t the benefits be greater if the U.S. government spent $25 billion to $75 billion — the current dollars proposed to bail out the auto industry — to train engineers, support infrastructure and work in the much-neglected alternative energy space?” wrote Tom Sowanick, who helps manage $20 billion as chief investment officer of Clearbrook Financial LLC in Princeton, New Jersey.
I Spy iCar
New York Times columnist Thomas Friedman suggested earlier this month that Apple Inc. CEO Steve Jobs should be persuaded to sign up for “national service” and run a car company for a year, long enough to invent the iCar.
I think Friedman is on to something. Sure, the iCar would be available in any color as long as it’s white (with a black model to be introduced as soon as all the early adopters have a pearlescent model in the driveway), and the windshield would be scratched to opacity within weeks. It would probably run on fresh air, though, and the packaging would be to die for.
First off, the U.S. government would need to absorb all those legacy pension and health-care costs that the automakers have used as an excuse for years to dodge getting their collective act together. Splitting the welfare issue from the business travails would deliver some much-needed clarity to the true financial position of the carmakers.
Then, turn the entire industry over to people who might make a difference. Give GM to Jobs, let Microsoft Corp. founder Bill Gates run Ford and allow billionaire Warren Buffett to try his hand at Chrysler. In five years, I bet that car counting in Annapolis would deliver a very different result.
(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)
No v. 21 (Bloomberg) — President-Elect Barack Obama’s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry’s financial crisis, according to a person familiar with the matter.
A representative of Obama’s team has already contacted at least one bankruptcy-law firm to say that Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack, according to this person.
U.S. lawmakers yesterday delayed until December a vote on whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a $25 billion bailout. GM today said it would idle production at four plants an extra week and return some corporate jets to conserve cash. Automakers could use a judge-supervised bankruptcy to reduce debt and reject expensive contracts.
“It creates the environment to deal with GM’s problems but limits government financial commitment,” said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.
Bankruptcy is just one option being examined. Obama told CBS News’s “60 Minutes” on Nov. 16 that government aid to automakers might come in the form of a “bridge loan,” advanced if the industry could draw up plan to make itself “sustainable.” The president-elect earlier urged Congress to approve as much as $50 billion to save automakers, using the model of Chrysler’s bailout in 1979.
Tarullo referred questions on a prepack to the transition team press office. Team spokeswoman Stephanie Cutter said, “We have not put out anything specific for the auto industry except that something needs to be done immediately.”
GM, the largest U.S. automaker, said it might run out of cash as early as the end of the year and that the risk was even greater by mid-2009. GM Chief Executive Officer Rick Wagoner said this week GM would have to liquidate if it filed for bankruptcy.
The automaker probably has weeks rather than months left before it runs out of money unless it gets federal aid, Jerome York, an adviser to billionaire Kirk Kerkorian and a former GM board member, told Bloomberg Television yesterday.
In a prepackaged bankruptcy, an automaker would go into court with financing in hand after reaching agreement with lenders, workers and suppliers on what each would give up and on the business plan to be followed. The process might take six to 12 months, compared with two to five years if the automakers followed an ordinary Chapter 11 proceeding and worked out agreements under a judge’s supervision, Bane said.
Automakers would have to depend on government financing to restructure in bankruptcy court and probably couldn’t attract private loans until they were ready to emerge from the process, Bane said.
Officials of the three automakers told members of Congress this week that they had studied a pre-arranged bankruptcy, championed by Republican lawmakers such as Senator Bob Corker of Tennessee, before dismissing the idea as unworkable.
Confounding the conventional wisdom that he is a lame duck president with no agenda as his days in office dwindle, President George W. Bush is redoubling his efforts to mutilate the country before his term expires, aides confirmed today.
“President Bush has spent the first seven years and ten months of his presidency doing everything in his power to leave the United States in smoldering ruins,” said White House spokesperson Dana Perino. “He certainly is not going to let the final days of his tenure go to waste.”
While Ms. Perino said that President Bush is proud to have led the U.S. into a “pointless and totally avoidable catastrophe in Iraq” and “the most terrifying financial cataclysm since the Great Depression,” he is “in no way prepared to rest on his laurels.”
Mr. Bush is “delighted,” Ms. Perino said, that the stock market has lost one trillion dollars of its value in the last three days, but “that’s just the tip of the iceberg in terms of the damage he hopes to wreak in his remaining time in office.”
Among the targets for destruction that the President is currently eyeing, Ms. Perino indicated that the demise of the Big Three automakers was at the top of his list.
“If the President could preside over the disappearance of the Big Three and the millions of jobs they represent, that would be the ultimate feather in his cap,” she said.
For his part, Mr. Bush took few questions from reporters today, saying that he had to return to the Oval Office to order random airstrikes over Belgium.
2/4 Barack and Michelle Obama on 60 Minutes
3/4 Barack and Michelle Obama on 60 Minutes
4/4 Barack and Michelle Obama on 60 Minutes
In the wake of McCain’s defeat, Sean Hannity appears to be going through his own personal five stages of death: Anger, Denial, Anger, Denial, and Denial. [23/6] We’ll be checking in on him from time to time to see how he’s holding up.
The stage he’s in today: Anger. Well, actually, more like “pissy.” Well, “pissy and completely divorced from reality.” Here are a couple highlights from last night’s chat with Mike Huckabee, after the jump…
An “Obama recession?” No, Sean, you can’t do that. You can’t just put the name of someone you hate in front of a problem and use that as proof that they’re to blame. If we could we’d stop telling people we have herpes and start telling people we have “McCain herpes.” How do we know McCain caused our herpes? His name’s right in front of the word herpes ain’t it? The defense rests.
This is a common step in the grieving process. In the griever’s mind, the cause of his grief becomes elevated to an all-powerful being, responsible for all of his pain and heartbreak. Hannity’s friend, the GOP, is dead, and he blames Barack Obama. So in Sean’s mind, if there is something wrong in the world, Obama must be to blame. Whether it be the recession or the fact that he looks like an effeminate Fred Flintstone. It’s all Obama’s fault.
He should get through this step in about eight years.
As for the “New York Obama Times” comment, that’s just baby Sean throwing a quick tantrum. But we gotta admit, it is kind of catchy.
Update: Yesterday Sean Hannity was raking over his favorite subject – that of Bill Ayers – as a follow up to the Ayers/GMA interview. During the show Hannity was visibly shaken and could hardly get the words out of his mouth – it was clearly too much for him – to think after all his ranting and raving – Obama still won. On top of having to consider the possibility that he was sidelined – ignored – marginalized – not taken that seriously. It must be bad ~ in his head right now ~ so for Hannity – don’t do it buddy – here’s a how you can cope ~ take a few slow deep breaths ~ and chant Ohm-Baaa-maa at least 5 times a day ~ this will help you to calm down and adjust to the new reality!
With just weeks to go before taking office, the economy is hurting and oil and gasoline prices are dropping, all presenting challenges for President-elect Obama’s green energy proposals. Stacey Delo reports. (Part 1 in a series.) (Nov. 12)
For more political videos, check out www.wsj.com/video.
Barack Obama spent much of his presidential campaign decrying the influence of Washington lobbyists. In the 10 days since he was elected, he already has had an impact: He has touched off a mini-boom on K Street.
Top lobbying firms are gearing up to handle increased demand from corporate clients who fear that the Obama administration will expand its regulatory reach and target them for tax increases. Some firms, such as Patton Boggs, Akin Gump Strauss Hauer & Feld, and Alston & Bird, are also preparing for new business resulting from the ongoing effort to stabilize the economy.
And who is cashing in on this boom? Democrats who supported Obama, such as Jaime R. Harrison.
Harrison helped mobilize voter turnout for Obama in South Carolina, and for the past two years he directed floor operations for House Majority Whip James E. Clyburn (D-S.C.) — credentials that made him a sought-after addition to firms looking for an edge in a new administration.
“I built a lot of strong relationships with members, as well as their staff, and some of my very best friends worked on the campaign,” Harrison said. He will start with the Podesta Group next week.
For some Republicans, this is bad news. Lockheed Martin, Boeing and Comcast have recently replaced Republicans in top corporate lobbying posts with Democrats. But most Republicans, especially prominent ones, profess little concern about Obama’s desire to shake up the culture in Washington, or seem chastened by strict new rules aimed at weakening their influence.
This week, Obama transition chief John D. Podesta told reporters that the president-elect would impose “the strictest and most far-reaching ethics rules of any transition in history,” including a series of rules defining how the group that is planning the new administration will interact with the lobbying industry.
Political scientist Norman J. Ornstein said that while the rules “may exclude some good people with deep experience in their fields . . . it will also exclude those who see government service as a springboard to financial success, or who are more intent on pleasing future potential employers or clients than making tough choices in the public interest.”
But almost from the start of his campaign, Obama made clear that he would not be slamming the door on interactions with lobbyists. In a December 2007 speech in Iowa, he said he was “running to tell the lobbyists in Washington that their days of setting the agenda are over. They have not funded my campaign. They won’t work in my White House.” But the candidate quickly backed away from that second part. A few days later in Waterloo, Iowa, he changed the phrasing to say that lobbyists “are not going to dominate my White House.”
One bright line Obama will continue to draw is his prohibition on campaign contributions from lobbyists, now extended to cover the nonprofit accounts he has set up to pay transition costs and fund inauguration festivities. That is in keeping with the ban on donations Obama enforced during the campaign.
Read it all…
Stiff Republican Resistance Could Force Democrats to Wait for Obama and Their Party’s Enlarged Majority to Take Office
WASHINGTON — Congressional Democrats are scaling back plans for an economic-stimulus package as partisan deadlock clouds chances for passage of either that measure or a proposed bailout of Detroit’s auto makers until the party’s enlarged majority convenes in January.
Democratic leaders want to move legislation that would give a jobs-producing jolt to the economy. They also support proposals to toss a $25 billion financial lifeline to Detroit. But it isn’t clear either of those steps can pass before January, when President-elect Barack Obama and a new, more heavily Democratic Congress take office.
The biggest problem is in the Senate, where Democrats have only a 51-49 edge until year’s end. The Bush administration is balking at the Democratic agenda, and Republicans in the House and Senate are growing more vocal about their concerns, especially concerning the auto package.
“The financial situation facing the Big Three [auto makers] is not a national problem, but their problem,” said Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee.
In the House, Minority Leader John Boehner, the Ohio Republican, assailed the proposed aid to Detroit as “neither fair to taxpayers nor sound fiscal policy.”
Senate Banking Committee Chairman Christopher Dodd said Thursday that he knew of no Republicans who would support the $25 billion proposal by Democrats, and said he is disinclined to move a bill without bipartisan support.
“I’d want to be careful about bringing up a proposition that might fail,” given that a rescue plan would be more likely to pass under an Obama administration, the Connecticut Democrat told reporters on Capitol Hill. “There’s some political considerations that need to be made over the next few days.”
Senate Majority Leader Harry Reid of Nevada still plans to move forward next week. “Senator Reid still believes it is important to address this crisis plaguing our auto industry,” said Reid spokesman Jim Manley, adding that bipartisan cooperation will be needed. “We cannot do it without the support of Senate Republicans, who I hope will join us to pass a bill that saves the jobs and protects the livelihoods of millions of hard-working Americans.”
Mr. Dodd, meanwhile, wants to add foreclosure relief to an economic-stimulus package. He expressed frustration Thursday with efforts to help distressed homeowners by the private sector and the Bush administration, which was supposed to make foreclosure relief a top priority in the $700 billion rescue packaged enacted earlier this fall to stabilize financial markets.
“We want to see more progress,” Mr. Dodd said, adding he is prepared to legislate — “now, if possible” — to address the problem.
November 12, 2008: The Day in 100 Seconds
President-elect Barack Obama is hearing from private sector economists, and some members of his economic advisory team that Congress should consider — and he should sign into law in January — a far broader stimulus package than anyone has publicly discussed to date.
Instead of $300 billion dollars, which has been the upper limit, they are now talking about $500 billion, which is 3 to 4 percent of GDP.
These advisers are looking at analysis that says next year unemployment could top eight percent, private sector spending could drop six percent of GDP, and the Federal Reserve is basically out of room to do anything more with monetary policy.
So they argue the nation’s economy will need that injection of capital.
How? They’re talking about implementing it through infrastructure — roads and bridges. Tax cuts. Investments in so-called green-jobs and alternative energy development. Unemployment extensions. And other aid to state and local governments.
But the big question is: how do you get the stimulus without making it permanent spending that increases the deficit over the long term?
President-elect Barack Obama has made no final decisions on a stimulus package, but this is what they’re contemplating right now.
Source: ABC News
Mr Obama’s spokesman, Robert Gibbs, said yesterday that the plight of automakers was one of a number of issues discussed in a two-hour meeting with Mr Bush to discuss the transfer of power at a time of war and financial crisis. Other issues included housing, mortgage foreclosures, and, more generally, “the need to get the economy back on track”.
The parlous state of the American car industry was highlighted last Friday when General Motors – the biggest US car manufacturer – reported a $2.5 billion net loss for the third quarter, bringing its total losses to nearly $57 billion since the beginning of 2005.
Ford Motor Company’s $129 million quarterly loss, meanwhile, brought to nearly $24.5 billion the deficit it has run up since plunging into the red in 2006. The privately-held Chrysler LLC is also thought to be fast running out of cash – one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to General Motors.
The New York Times, citing unnamed people familiar with the discussion, said that Mr Obama went into his post-election meeting with Mr Bush primed to urge him to support emergency aid for the car industry.
The Bush Administration is reluctant to give carmakers access to the bailout fund, even though the Democrats say it could legally do so.
Linking the issue with the Colombia free trade deal could delay any move until after Mr Obama’s inauguration on January 20. US union leaders oppose the agreement because of numerous murders of trade unionists in Colombia at the hands of right-wing paramilitary squads closely linked to the Colombian armed forces.
WASHINGTON (CNN) – President-elect Barack Obama could reverse some of President Bush’s most controversial executive orders, including restrictions on embryonic stem cell research, shortly after taking office in January.
Two other executive orders from Bush — one dealing with a so-called “gag” order on international aid organizations regarding abortion, the other with oil and gas drilling on federal lands — also are receiving increased scrutiny.
Obama’s transition team is reviewing hundreds of Bush’s executive orders, according to John Podesta, Obama’s transition co-chair.
New presidents often use executive orders to put their stamp on Washington quickly. Unlike laws, which require months to complete and the consent of Congress, presidents can use their executive authority to order federal agencies to implement current policies.
“Much of what a president does, he really has to do with the Congress — for example, budgeting, legislation on policy — but executive actions are ones where the president can act alone,” said Martha Kumar of the White House Transition Project, a nonpartisan group established to help new presidential administrations.
(CNN) – Sarah Palin told local reporters in Alaska that unhappiness with the Bush administration’s Iraq war policy and spending record were responsible for the GOP ticket’s defeat this year.
“I think the Republican ticket represented too much of the status quo, too much of what had gone on in these last eight years, that Americans were kind of shaking their heads like going, wait a minute, how did we run up a $10 trillion debt in a Republican administration?” Palin told the Anchorage Daily News and Alaska’s KTUU Channel 2.
“How have there been blunders with war strategy under a Republican administration? If we’re talking change, we want to get far away from what it was that the present administration represented and that is to a great degree what the Republican Party at the time had been representing. So people desiring change I think went as far from the administration that is presently seated as they could. It’s amazing that we did as well as we did.”
Palin returned to Alaska last week amid growing speculation about her political future. The Alaska governor is slated to attend the Republican Governors Association’s meeting in Miami this week.
On the day that President-elect Barack Obama visited the White House, a new national poll illustrates the daunting challenges he faces when it becomes his home next year.
Only 16 percent of those questioned in a new CNN/Opinion Research Corporation survey released Monday say things are going well in the country today. That’s an all-time low. Eighty-three percent say things are going badly, which is an all-time high.
“The challenge Obama faces has never been greater. No president has ever come to office during a time when the public’s mood has been this low. In the 34 years that this question has been asked, the number who say things are going well has never fallen below 20 percent,” said Keating Holland, CNN’s polling director.
The 83 percent saying things are going badly is “more than in 1992, when the first President Bush was ousted because of ‘the economy, stupid.’ That’s more than in 1980, when President Carter got fired after the malaise crisis. That’s more than in 1975, after Watergate and the Nixon pardon,” said Bill Schneider, CNN senior political analyst.
So far, Obama seems to be meeting the public’s high expectations. Two-thirds of all Americans have a positive view of what he has done since he was elected president, and three-quarters think he will do a good job as president.
The all-time low on the public’s mood may have something to do with the poll’s finding that President Bush is the most unpopular president since approval ratings were first sought more than six decades ago. Seventy-six percent of those questioned in the poll disapprove of how he is handling his job.
That’s an all-time high in CNN polling and in Gallup polling dating back to World War II.
“No other president’s disapproval rating has gone higher than 70 percent. Bush has managed to do that three times so far this year,” Holland said. “That means that Bush is now more unpopular than Richard Nixon was when he resigned from office during Watergate with a 66 percent disapproval rating.”
Before Bush, the record holder for presidential disapproval was Harry Truman, with a 67 percent disapproval rating in January of 1952, his last full year in office.
In September, 1932, Franklin Delano Roosevelt, the Democratic nominee for President, was asked by a reporter for his view of the job that he was seeking. “The Presidency is not merely an administrative office,” Roosevelt said. “That’s the least of it. It is more than an engineering job, efficient or inefficient. It is preëminently a place of moral leadership. All our great Presidents were leaders of thought at times when certain historic ideas in the life of the nation had to be clarified.” He went down the list of what we would now call transformative Presidents: Washington, Jefferson, Jackson, Lincoln, Theodore Roosevelt, Wilson. (He also included Grover Cleveland, who hasn’t aged as well.) Then Roosevelt asked, “Isn’t that what the office is, a superb opportunity for reapplying—applying in new conditions—the simple rules of human conduct we always go back to? I stress the modern application, because we are always moving on; the technical and economic environment changes, and never so quickly as now. Without leadership alert and sensitive to change, we are bogged up or lose our way, as we have lost it in the past decade.”
When the reporter pressed Roosevelt to offer a vision of his own historical opportunity, he gave two answers. First, he said, America needed “someone whose interests are not special but general, someone who can understand and treat the country as a whole. For as much as anything it needs to be reaffirmed at this juncture that the United States is one organic entity, that no interest, no class, no section, is either separate or supreme above the interests of all.” But Roosevelt didn’t limit himself to the benign self-portrait of a unifying President. “Moral leadership” had a philosophical component: he was, he said, “a liberal.” The election of 1932 arrived at one of those recurring moments when “the general problems of civilization change in such a way that new difficulties of adjustment are presented to government.” As opposed to a conservative or a radical, Roosevelt concluded, a liberal “recognizes the need of new machinery” but also “works to control the processes of change, to the end that the break with the old pattern may not be too violent.”
That November, Roosevelt defeated President Herbert Hoover in a landslide. His election ended an age of conservative Republican rule, created a Democratic coalition that endured for the next four decades, and fundamentally changed the American idea of the relationship between citizen and state. On March 4, 1933, Roosevelt was inaugurated under a bleak sky, at the darkest hour of the Great Depression, with banks across the country failing, hundreds of thousands of homes and farms foreclosed, and a quarter of Americans out of work.
In defining his idea of the Presidency, Roosevelt had left himself considerable room for maneuvering. His campaign slogan of a “new deal” promised change, but to different observers this meant wildly different things, from a planned economy to a balanced budget. “Roosevelt arrived in Washington with no firm commitments, apart from his promise to ‘try something,’ ” the Times editorialist Adam Cohen writes in his forthcoming book, “Nothing to Fear: FDR’s Inner Circle and the Hundred Days That Created Modern America.” “At a time when Americans were drawn to ideologies of all sorts, he was not wedded to any overarching theory.”
Barack Obama’s decisive defeat of John McCain is the most important victory of a Democratic candidate since 1932. It brings to a close another conservative era, one that rose amid the ashes of the New Deal coalition in the late sixties, consolidated its power with the election of Ronald Reagan, in 1980, and immolated itself during the Presidency of George W. Bush. Obama will enter the White House at a moment of economic crisis worse than anything the nation has seen since the Great Depression; the old assumptions of free-market fundamentalism have, like a charlatan’s incantations, failed to work, and the need for some “new machinery” is painfully obvious. But what philosophy of government will characterize it?
The answer was given three days before the election by a soldier and memoirist of the Reagan revolution, Peggy Noonan, who wrote in the Wall Street Journal, “Something new is happening in America. It is the imminent arrival of a new liberal moment.” The Journal’s editorial page anticipated with dread “one of the most profound political and ideological shifts in U.S. history. Liberals would dominate the entire government in a way they haven’t since 1965, or 1933. In other words, the election would mark the restoration of the activist government that fell out of public favor in the 1970s.” The Journal’s nightmare scenario of America under President Obama and a Democratic Congress included health care for all, a green revolution, expanded voting rights, due process for terror suspects, more powerful unions, financial regulation, and a shift of the tax burden upward. (If the editorial had had more space, full employment and the conquest of disease might have made the list.)
Continue reading here..
President-elect holds a briefing laying out his transition plan and plans to resolve the financial crisis.
Obama to act swiftly on economy
Presser will kick off in Chicago at 2:30 pm ET. Read more details here.
Aides say he plans to stay home through the weekend with a blackout on news announcements so he and his staff can get some rest.
John McCain’s chaotic operation may well rank among recent history’s least successful efforts.
The GOP presidential campaign of 2008 will certainly be one that historians discuss for years to come. But not in the way that some Republicans had hoped for when they selected an experienced maverick, loved by the media, to face off against an inexperienced African-American who had trouble vanquishing his opponent in the primaries.
To be fair, the odds were stacked against any Republican. The economy has suffered while the incumbent president was phenomenally unpopular. Democrats were well organized and well financed. They found, in Barack Obama, an exceedingly charismatic and dynamic candidate.
But nothing is inevitable in American politics. A strong campaign, combined with the issue of race and fears about Obama’s inexperience, could have produced a different outcome.
History is filled with examples of campaigns marked by bad decisions and poor performances that undermined their chances of victory. In 1964, Republican Barry Goldwater made statements that allowed President Lyndon Johnson to depict him as a candidate too far out of the American mainstream. Eight years later, Richard Nixon returned the favor to Democratic Sen. George McGovern, who had put together a campaign that appealed to the New Left and other activists inspired by 1960s activism but failed to bring in traditional Democratic constituencies such as organized labor. In 1988, Democrat Michael Dukakis was the proverbial deer in the headlights when Republican Vice President George H.W. Bush and his team redefined the technocratic Massachusetts Democrat into an extreme card-carrying ACLU liberal who let out murderers on weekend furloughs. Bush then stumbled in 1992 with his tin ear about the economic recession. In 1996, Republican Robert Dole ran a lethargic campaign that emphasized nostalgia and suspicion while President Bill Clinton ran around the country boasting about peace and prosperity. During the last election, Sen. John Kerry didn’t adequately defend himself against “Swift-Boat” attacks.
But Team McCain ran a campaign that ranks on the bottom of this list. This was an aimless and chaotic operation made worse by poor choices at key moments. Their first mistake was picking Gov. Sarah Palin. Though in the first week following her selection, Palin energized the conservative base of the GOP, she became a serious drag on the ticket. This turned into one of the worst picks since McGovern selected Thomas Eagleton, a Missouri senator who withdrew after revealing that he had gone through electroshock therapy and suffered from “nervous exhaustion.” By picking Palin, McCain simultaneously eliminated his own best argument against Senator Obama—the limited experience of his opponent—while compounding his own most negative image, that of someone who was erratic and out of control. The pick also fueled the feeling that grew throughout September and October that the Republican candidate was willing to take any step necessary to win the campaign. The Palin pick made every decision that followed seem purely political.
The second mistake was going dark. McCain missed the biggest lesson of the Reagan Revolution: conservatives usually do best when they appeal to America’s optimism and develop a positive campaign around a vision for the country. President George W. Bush understood this in 2000, stressing compassionate conservatism, and in 2004 he couched his candidacy in an optimistic argument about how the Bush Doctrine could strengthen America against terrorism and restore the kind of security that seemed lost after 9/11.
McCain and Palin rejected this approach, instead putting together a campaign that was almost entirely negative and focused on attacking their opponents. They sounded much more like Goldwater in 1964 than Reagan in 1980, opening themselves up to Obama’s charge that they were willing to divide the nation for the purpose of winning the election. They called Obama a socialist, an extremist and even linked him to a terrorist. The campaign got so out of control that a man at one Palin rally yelled “Kill him!”. McCain had to restore order at a town meeting when one woman explained how scared she was of having an “Arab” in office. Still, the McCain campaign continued to run advertisements connecting Obama to 1960s radical Bill Ayers.
The third mistake was the “no-state” strategy. In contrast to Obama’s “50-state” strategy whereby Democrats hoped to win support in red states, the Republican ticket moved from one state to the next without any clear rationale. Just as the Republicans lacked a broader vision, they also lacked a clear electoral strategy. From the start, they were playing catch-up and allowing Democrats to drive their decisions. The goal seemed to be courting support only when polls were narrowing rather than deciding in which states to focus their efforts. While Democrats systematically laid out their organizational and financial efforts, Republicans scrambled from one place to the other.
The fourth mistake was the way McCain handled the crisis on Wall Street. McCain’s decision to temporarily stop the campaign and possibly call off the debate at the start of the Wall Street crisis in September looked terrible. McCain often looked a lot like President Bush in 1992: uncertain about what to do about the economy and at many moments not seeming to care. In contrast, Obama’s decisions and performance seemed presidential.
McCain’s final mistake was to leave his most politically powerful argument until it was too late. While there were many problems with Joe the Plumber, the argument could have been used much more effectively against Senator Obama: that the Democratic ticket was too left of center, especially on the issue of taxes. Toward the end of the campaign, McCain picked up some steam in states like Ohio and Pennsylvania. But the argument came much too late and at a point when many Americans had become so cynical, and turned off, by the Republican campaign that McCain could not restore his strength.
Now, the McCain-Palin campaign will be added to the list of devastated losers. The odds against the Republican ticket were formidable as any political scientist will tell you. But McCain could have put up a more effective fight. Perhaps the best outcome for Republicans would be if they took the campaign to heart, learned from their mistakes, and figured out for the next time around how to put together a campaign that looks more like 1980 than 1964. At the same time the next GOP candidate needs to look toward the future, realizing that at least when it comes to the economy, the conservative era has finally come to an end.
Julian E. Zelizer is a professor of history and public affairs at Princeton University’s Woodrow Wilson School. He is the co-editor of “Rightward Bound: Making America Conservative in the 1970s” and is completing a book on the history of national-secu rity politics since World War II, to be published by Basic Books.
While Americans eagerly vote for the next president, here’s a sobering reminder: As of Tuesday, George W. Bush still has 77 days left in the White House — and he’s not wasting a minute.
President Bush’s aides have been scrambling to change rules and regulations on the environment, civil liberties and abortion rights, among others — few for the good. Most presidents put on a last-minute policy stamp, but in Mr. Bush’s case it is more like a wrecking ball. We fear it could take months, or years, for the next president to identify and then undo all of the damage.
Here is a look — by no means comprehensive — at some of Mr. Bush’s recent parting gifts and those we fear are yet to come.
CIVIL LIBERTIES We don’t know all of the ways that the administration has violated Americans’ rights in the name of fighting terrorism. Last month, Attorney General Michael Mukasey rushed out new guidelines for the F.B.I. that permit agents to use chillingly intrusive techniques to collect information on Americans even where there is no evidence of wrongdoing.
Agents will be allowed to use informants to infiltrate lawful groups, engage in prolonged physical surveillance and lie about their identity while questioning a subject’s neighbors, relatives, co-workers and friends. The changes also give the F.B.I. — which has a long history of spying on civil rights groups and others — expanded latitude to use these techniques on people identified by racial, ethnic and religious background.
The administration showed further disdain for Americans’ privacy rights and for Congress’s power by making clear that it will ignore a provision in the legislation that established the Department of Homeland Security. The law requires the department’s privacy officer to account annually for any activity that could affect Americans’ privacy — and clearly stipulates that the report cannot be edited by any other officials at the department or the White House.
The Justice Department’s Office of Legal Counsel has now released a memo asserting that the law “does not prohibit” officials from homeland security or the White House from reviewing the report. The memo then argues that since the law allows the officials to review the report, it would be unconstitutional to stop them from changing it. George Orwell couldn’t have done better.
THE ENVIRONMENT The administration has been especially busy weakening regulations that promote clean air and clean water and protect endangered species.
Mr. Bush, or more to the point, Vice President Dick Cheney, came to office determined to dismantle Bill Clinton’s environmental legacy, undo decades of environmental law and keep their friends in industry happy. They have had less success than we feared, but only because of the determined opposition of environmental groups, courageous members of Congress and protests from citizens. But the White House keeps trying.
Mr. Bush’s secretary of the interior, Dirk Kempthorne, has recently carved out significant exceptions to regulations requiring expert scientific review of any federal project that might harm endangered or threatened species (one consequence will be to relieve the agency of the need to assess the impact of global warming on at-risk species). The department also is rushing to remove the gray wolf from the endangered species list — again. The wolves were re-listed after a federal judge ruled the government had not lived up to its own recovery plan.
In coming weeks, we expect the Environmental Protection Agency to issue a final rule that would weaken a program created by the Clean Air Act, which requires utilities to install modern pollution controls when they upgrade their plants to produce more power. The agency is also expected to issue a final rule that would make it easier for coal-fired power plants to locate near national parks in defiance of longstanding Congressional mandates to protect air quality in areas of special natural or recreational value.
Interior also is awaiting E.P.A.’s concurrence on a proposal that would make it easier for mining companies to dump toxic mine wastes in valleys and streams.
And while no rules changes are at issue, the interior department also has been rushing to open up millions of acres of pristine federal land to oil and gas exploration. We fear that, in coming weeks, Mr. Kempthorne will open up even more acreage to the commercial development of oil shale, a hugely expensive and environmentally risky process that even the oil companies seem in no hurry to begin. He should not.
Soon after the election, Michael Leavitt, the secretary of health and human services, is expected to issue new regulations aimed at further limiting women’s access to abortion, contraceptives and information about their reproductive health care options.
Existing law allows doctors and nurses to refuse to participate in an abortion. These changes would extend the so-called right to refuse to a wide range of health care workers and activities including abortion referrals, unbiased counseling and provision of birth control pills or emergency contraception, even for rape victims.
The administration has taken other disturbing steps in recent weeks. In late September, the I.R.S. restored tax breaks for banks that take big losses on bad loans inherited through acquisitions. Now we learn that JPMorgan Chase and others are planning to use their bailout funds for mergers and acquisitions, transactions that will be greatly enhanced by the new tax subsidy.
One last-minute change Mr. Bush won’t be making: He apparently has decided not to shut down the prison in Guantánamo Bay, Cuba — the most shameful symbol of his administration’s disdain for the rule of law.
Mr. Bush has said it should be closed, and his secretary of state, Condoleezza Rice, and his secretary of defense, Robert Gates, pushed for it. Proposals were prepared, including a plan for sending the real bad guys to other countries for trial. But Mr. Cheney objected, and the president has refused even to review the memos. He will hand this mess off to his successor.
We suppose there is some good news in all of this. While Mr. Bush leaves office on Jan. 20, 2009, he has only until Nov. 20 to issue “economically significant” rule changes and until Dec. 20 to issue other changes. Anything after that is merely a draft and can be easily withdrawn by the next president.
Unfortunately, the White House is well aware of those deadlines.