Obama's stimulus package wasn't enough but was much better than nothing

By Michael J.W. Stickings

As CNN is reporting, Republicans are crapping all over the American Recovery and Reinvestment Act on the fifth anniversary of its passage. That's the stimulus package that President Obama was able to get out of Congress, and specifically out of obstructionist, trickle-down Republicans, early in his first term. Apparently making shit up about Benghazi and the IRS and otherwise smearing the president at every turn isn't enough. Now they're on to blaming him for... saving the economy from utter disaster.

The economy needed much more of a stimulus back then, but of course Obama wasn't about to get a bigger package from Republicans wedded to their extremist anti-government ideology and intent on trying to make him fail even at the expense of harming the country, and from Democrats who lacked either the courage or the simple common sense to embrace even this limited government intervention in the economy. But what he got was still absolutely necessary, and it was not just better than nothing but enough, it would appear in retrospect, to stabilize the economy and put the country on the road to recovery, as bumpy as it's been given how little his opponents have bothered to help.

Indeed, as Steve Benen reminds us today, "the global economic crisis had reached terrifying levels, and U.S. policymakers had to choose a direction for the nation’s future." Democrats, on the whole, demanded action and got behind stimulus, while Republicans "called for a five-year federal spending freeze." Just imagine what would have happened had Republicans gotten their way. Imagine what the unemployment level would be today, imagine how weak the economy would still be, imagine how so many more Americans would be suffering, unable to pay their bills and put food on the table, if even on a table at all.

Just take a look at the charts in Steve's post. What do you see? Significant GDP growth and private-sector job growth that is connected directly to Obama's stimulus package:

The evident details are hard to miss – the economy crashed, then Democrats approved the stimulus, and then the economy started growing, job creation picked up, and the stock market soared. I've long been curious: for Republicans, how is this possible? Was it magic? Was it a coincidence? How do they explain why every relevant economic metric showed sharp improvements immediately after the Recovery Act kicked in?

None of this would have happened with Republicans in power. Things would have gotten far worse:

Indeed, perhaps the most striking thing about GOP economic arguments is that they weren't just wrong about the efficacy of Clinton's policies, and then wrong again during the Bush/Cheney era, and then wrong once again about whether the Recovery Act would help turn the economy around, congressional Republicans also seemed to go to great lengths to impose policies – debt crises, spending cuts, sequestration, a government shutdown – that seemed almost designed to make the economy worse.

 

It's why Ben Bernanke – a Fed chairman who, up until extremely recently, was considered a fairly conservative Republican – repeatedly told Capitol Hill that the single biggest obstacle to a healthier economy has been the fiscal policies demanded by GOP lawmakers.

 

It's why Republicans are bad for America. Period.

Fed might as well have single mandate

By Frank Moraes

Matt Yglesias is very insightful about the Federal Reserve. Last year, he asked an incredibly important question, "If the unemployment and inflation rates were reversed, would the Fed do something about it?" The point is that the Federal Reserve has a dual mandate to keep both inflation and unemployment low. Yet all the Fed seems to care about is inflation. At the time he said that, inflation was 2% and unemployment was 8%. If it were the other ways around, the Fed would be working hard to cool the economy down. But they are perfectly happy with the way things were (and are).

There is some talk among conservatives that the Fed should have a single mandate: keep inflation low. The idea is that the Fed shouldn't worry about employment at all. Note that this is an idea that is designed to help the rich. Inflation hurts people who have a lot of money. Unemployment hurts people who have to work for a living. By saying that the Fed should only worry about inflation, the conservatives are telling us everything we need to know about them: they are policy hacks for the rich.

But today, Minnesota Senator Amy Klobuchar asked the Federal Reserve Chairman Ben Bernanke how the Fed would act differently if it did have the single mandate. Yglesias rightly noted that after much bobbing and weaving, the Fed chair said that he wouldn't do anything differently. And that's important, if not surprising. We have long known that the Fed didn't seem to think that 8% unemployment was anything to worry about. After all, none of the members of the Fed even know anyone who is out of a job.

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Politics and treason: Republicans urge Bernanke to let economy tank, American people suffer

By Michael J.W. Stickings

As you may have heard, Congressional Republicans have sent a letter to Fed Chairman Ben Bernanke arguing that "further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy," that is, urging him to do nothing about the economy at this perilous time. As Matthew Yglesias puts it, they are basically urging him to keep unemployment high.

Here's how David Frum, a conservative (if also a renegade Republican) explains the letter:

I'm not shocked by much any more, but I am shocked by this: the leaders of one of the great parties in Congress calling on the Federal Reserve to tighten money in the throes of the most prolonged downturn since the Great Depression...

As is, we're looking at a continued economic slump, more unemployment, and more deleveraging via continuing catastrophic consumer default on mortgages, car loans, credit cards, and student aid. And now the GOP leadership is urging that the Federal Reserve make the catastrophe worse? To what end?

We know that Republicans these days usually put ideology (their extremist right-wing ideology) ahead of what's best for the American people. (Just think back to their hostage-taking of the country during the debt ceiling crisis.)

But this isn't so much about ideology, it seems, as it is about brute partisanship, about doing whatever it takes to get Republicans elected. If the economy continues its apparent downward trajectory, or at the very least if confidence remains low and uncertainty remains high, voters, they hope, will blame Obama and vote Republican next year.

Indeed, as Andrew Sullivan observes, looking at some deeply troubling poll numbers for the president (with independents in overwhelming numbers saying they'll vote against Obama), "the GOP's total intransigence seems to be paying off politically." What they're hoping is that even more intransigence, and getting the Fed to play along (as if the country's central bank should be a partisan extension of the Republican Party), will pay off even more at the polls. 

As Steve Benen writes:

Frum doesn't come right out and say it explicitly, but reading this, it appears Frum believes Republican leaders are — or at least may be — trying to hurt the economy on purpose, as part of a political strategy to undermine President Obama during a crisis.

In other words, Frum seems to be suggesting that the top GOP officials in Congress, including the entire party leadership, may be involved in some kind of sabotage campaign. That's no small charge.

No, but it appears to be an accurate one:

A few months ago, Kevin Drum wondered whether this will ever be "a serious talking point," adding, "No serious person in a position of real influence really wants to accuse an entire party of cynically trying to tank the economy, after all."

Given recent events — the debt-ceiling scandal, the GOP-driven downgrade, the Republican rejection of any efforts to boost the economy, the letter to Bernanke, the repeated threats of government shutdowns — it appears all kinds of serious people are at least entertaining the possibility.

We should do more than just entertain it. The evidence points to a concerted effort on the part of Republicans -- and not just any Republicans, the top Republicans on Capitol Hill, and perhaps also most of the Republicans seeking their party's presidential nomination -- to benefit politically from a weakened and (if they have their way) weakening economy, cruelly and callously to score political points at the expense not just of President Obama but of the American people, millions upon millions of whom are struggling to make it through this difficult time, if they are even in a position to struggle at all.

Personally, I call that treason. Do you have a better word for it?

Bernanke nomination in doubt

By Creature

I know someone's toying with my emotions here, but dumping Ben Bernanke would be good thing. As I've said in the past, I do give him credit for his creativity in stopping a financial collapse, but he also should have seen that collapse coming. Throw in his hostile testimony toward Social Security and Medicare last month and that should be enough for Democrats to say no to his second term. Not to mention, doing so would show some of that much needed Democratic spine we've all been waiting for.

Person? Of the year?

By Carl

Ben Bernanke?

A bald man with a gray beard and tired eyes is sitting in his oversize Washington office, talking about the economy. He doesn't have a commanding presence. He isn't a mesmerizing speaker. He has none of the look-at-me swagger or listen-to-me charisma so common among men with oversize Washington offices. His arguments aren't partisan or ideological; they're methodical, grounded in data and the latest academic literature. When he doesn't know something, he doesn't bluster or bluff. He's professorial, which makes sense, because he spent most of his career as a professor.

He is not, in other words, a typical Beltway power broker. He's shy. He doesn't do the D.C. dinner-party circuit; he prefers to eat at home with his wife, who still makes him do the dishes and take out the trash. Then they do crosswords or read. Because Ben Bernanke is a nerd.

He just happens to be the most powerful nerd on the planet.

Now, look, I'm a nerd, so I suppose I should have some support for this news.

And it cannot be doubted that Bernanke has been front and center of the news this entire year. Or rather, his policies and oversight have. Too, I have nothing against a guy who hasn't married a DC pundit and whirls around the DC cocktail party circuit like a banshee. In fact, I rather like that about Bernanke.

But seriously... person of the year? This presumes that Bernanke's policies will have far-reaching effects throughout the economy for a period of time extending beyond this year, and that's up for grabs, as far as I'm concerned.

Indeed, from what I've seen, Bernanke has both been a factor creating the problems we've encountered and acted as a bandaid now that those chickens have roosted.

If maintaining the status quo is the most newsworthy thing a person can do in this "Year of No," then perhaps the real person of the year should be Joe Lieberman, whose insistence on being a slave to the corporatocracy while millions of Americans sicken and die under his thumb will have a far greater impact on American and by extension world culture than the few dribs and drabs and wrist-slaps of the Fed chairman.

A better choice: how about rewarding the courage of Olympia Snowe for getting on board the healthcare reform bandwagon and insisting that, come what may of the bill, it should be subject to serious debate and discussion in the halls of the Senate? I get the title is for the person who has made the most news this year, but it seems to me that means bucking the partisan trends of political thought to actually get something done. Without her, there is no healthcare discussion much less the pitiful reform we're seeing take shape.

(Cross-posted to Simply Left Behind.)

Dump Bernanke

By Creature

Like many on the Internets I was ambivalent towards Bernanke getting another whirl as Fed chief. Being in charge and ignoring the mess Wall Street was making leading up to the crash should have been enough to disqualify him. On the other hand, the actions taken to prevent a collapse have been bold and necessary (however, one sided). In the end, if it wasn't Bernanke, another Wall Street tool would be put in his place. At least Bernanke was a tool with experience having dealt with the mess.

All that being said, after his performance yesterday in front of the Senate Banking Committee (bastard wants to gut Social Security and Medicare while leaving his rich buddies alone), I am fully on board the dump Bernanke express. Now I can only hope the Senate gets on board too. Dumping Bernanke would send a strong signal that the Senate is on the side of the people and not the bankers (and as I typed that I realized how futile that hope is).

Money, it's a gas: Ben Bernanke and the bottomless bailout

By Michael J.W. Stickings

Well, you knew this was coming. As the Times puts it, "the banks need more taxpayer money," "a lot more money."

Isn't this partly why so many of us were against the bailout, at least in principle, from the start? It wasn't just that it's a bailout of Wall Street instead of Main Street, which is to say, a bailout of the stinking rich, of those who are at the very core of the financial meltdown and who are very much to blame for it, it was that it was never clear, in terms of dollar figures, what it would amount to. The price tag was just a guess tossed out there by the Treasury, so high that it boggled the mind, initially preventing judgement, but so vague in terms of specifics that it, once the mind settled, it was nothing if not concerning.

In other words, the Treasury didn't know how money was needed for the bailout, and so it was, and is, in effect, a bottomless bailout. It was never going to be just $700 billion.

And now the banks, with Fed Chairmain Bernanke at the head, is back at the trough, asking for more.

Will there be no end to it?

I said at the time, back in October, that, whatever my opposition to it in principle, it seemed to me that something had to be done, and soon, if only for the sake of public confidence and market stability -- and that the bailout was at least something.

Still, confidence and stability aside, the bailout is essentially nothing more than a massive transfer payment to Wall Street, a blank cheque for Treasury Secretary Paulson and the Wall Street oligarchs.

"More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets," said Bernanke.

There will be an end to it, eventually, but the wedge has already been driven in. And if the banks get their way, as I suspect they will, more and more taxpayer money, how much nobody knows, will flow in their direction.

Waking up in a crazy house

By Capt. Fogg

As an indication of the insanity level now rising past the levies and flood gates and embankments of humanity, Lady Lynn Forester de Rothschild, wife of Lord Evelyn de Rothschild and more tightly connected to the ultra rich and well connected than can be achieved with epoxy, thinks Barack Obama is an elitist and so will support millionaire McCain. Either words mean nothing any more or the disease of belief has destroyed any remnants of cognitive function in America. It's impossible to have a sense of irony and not be in pain this morning. I'm sure someone in a clapped out 40-year-old trailer in Belle Glade, Florida agrees with her opinion and will join her in supporting John McCain's all-jive express.

I've been awaiting a terrorist attack since the McCain campaign began, the benefits of a hysterical population being pivotal to his pretended image of a tough, militaristic defender. The embassy bombing in Yemen can't, of course, be blamed on McCain, but George W. Bush's attacks and incursions into Pakistan certainly are sufficient provocation and McCain is the heir apparent to the the puppethood of Bush. It's obvious that fear of Islamic evil is being promoted. Is it too much to wonder if actual attacks are being provoked?

Well do you feel more entitled this morning? We all now own 79% of AIG along with Fanny Mae and Freddy Mac and it only cost us -- well, don't ask, it's only borrowed money anyway and debt doesn't matter. Eventually China will bail us out in turn since our continued indebtedness is to their advantage. Maybe they will be satisfied with a 79% share.

I hear from Raw Story that George had a prepared speech about the health of the economy ready to deliver to reporters about his meeting with key economic advisers like Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and others. He decided to slink home without comment. I wonder why.

Meanwhile, back at the McCain campaign, John says, according to Crooks and Liars, that he can offset the $315 billion price tag for 45 new nuclear power plants by cutting earmarks. Maybe that's why he took on Palin the Earmark Queen, because the only way to do that is not to do that and say you did. Besides, what's another 300-billion-pound monkey on our backs? We can all just go out and marry millionaires like he did.

Anyway, the Dow has now erased yesterday's "rebound" plus another 80 points, and I think I'll go back to bed.

(Cross-posted from Human Voices.)

That's easy for HIM to say!

By Carl

On the face of things, this sounds like a good idea:

Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech in Orlando, Florida today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Approximately ten percent of mortgages in the country are in technical default, meaning that the amount owed to the lender exceeds the market value of the house. Figure another twenty percent beyond that are at or just around a default, meaning that if housing prices drop any further, they too would risk being in technical default. This doesn't take into account actual defaults, where families simply toss the keys on the table and walk away, unable to make anymore payments.

So would banks agree to this?

Probably not, except in limited circumstances. I can visualize a scenario where banks decided to reduce some mortgages on borrowers who they deemed to be good re-risks: in other words, likely to come back and borrow more, which would make up some of the reduction in loans receivable for the bank's balance sheets.

Widespread mortgage reductions simply ain't happening and we have only to look as far as the new Visa IPO to see how silly this talk is.

If you don't know about this, a consortium of banks owns the Visa credit card as a private joint venture amongst them. These banks are attempting to spin off the Visa division as a stand-alone public company.

Odd time to spin off a credit card company, don't you think? Consumer defaults on credit cards are at all-time highs, lending risk is skyrocketing, and people are maxed out on their credit cards. How could Visa possibly mine new territory now in order to make the IPO work?

Many reasons have been put forth for this, but underlying all these excuses seems to me a very simple piece of logic: the banks are seeing what Bernanke is seeing and taking self-serving action to support their own stock prices: they are off-loading bad debts not by expensing them and taking a hit to the bottom line, but by moving them into the new Visa entity, then spinning that off to basically drop dead and drop their debt off on the suckers who buy the stock.

This will give the banks the funds necessary to try to salvage their mortgage banking business, roughly $10 billion across the IPO.

Naturally, this makes the shareholders of the banks happy and they would not be pleased to see that money "squandered" on some bunch of suckers who borrowed more than they should have.

I guess it's easy to be bloodless when your blood runs cold anyway.

(Cross-posted to Simply Left Behind.)