February 27, 2008

White House Threatens Veto Of Mortgage Reform Measure

The White House yesterday threatened to veto a Senate Democratic housing stimulus package, saying it would cost too much and rewrite bankruptcy rules that would undermine current mortgages.

In a Statement of Administration Policy [PDF], the Bush administration listed many items that it objected to in Senate Majority Leader Harry Reid's bill of direct aid and consumer-friendly initiatives designed to help homeowners who cannot afford to pay their mortgages because they took predatory loans. It said many of the provisions are "unnecessary, costly, and counterproductive."

The White House opposed a provision sponsored by Senate Majority Whip Richard Durbin, D-Ill., that would allow a judge to change the terms of a primary mortgage that has entered into foreclosure. Durbin reworked his provision to pick up support, such as credit union lobbying groups that received a carve-out for members that made interest-only loans for those with good credit histories.

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Posted to: Bush Administration, Congress, Economy, Senate
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February 13, 2008

Bush, Congress Enjoy Feel-Good Moment

A historically unpopular president and an even more unpopular Congress came together today to remind Americans that they might not be so worthless after all.

Lawmakers squeezed around President Bush in the White House this afternoon as he signed into law a $168 billion economic stimulus package that will mean up to $1,200 in tax rebates for working couples plus $300 per child.

"A lot of folks in America probably are saying it's impossible for those of us in Washington to find common ground and reach compromise on important issues. I don't feel that way, and I know the leaders don't feel that way," Bush said, opening the signing ceremony. "As a result, we have come together on a single mission, and that is to put the people's interest first."

Lawmakers who have been highly critical of Bush's economic policies and of the stimulus bill itself, which was forged through intense negotiations and compromise, beamed in the background.

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Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
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February 12, 2008

Mortgage Crisis Spreads, White House Responds

Treasury Secretary Henry Paulson and HUD Secretary Alphonso Jackson announced a new mortgage rescue plan that would help all kinds of borrowers, not just those who took out subprime loans.

Dubbed Project Lifeline, the program would enlist the six major mortgage lenders in a "targeted outreach to homeowners 90 days or more delinquent" that would "pause" the foreclosure process. Though the Bush administration continues to insist that the economy hasn't fallen into recession, today's announcement was an acknowledgement that better-off Americans are also suffering as a result of the lending crash.

"Project Lifeline has the potential to offer new solutions to responsible and able homeowners who want to keep their homes," Paulson said at a joint press conference with Jackson. Describing the effort to help struggling homeowners as "evolving," Paulson added, "As our economy works through this difficult period, we will look at additional opportunities to try to prevent additional foreclosures."

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February 06, 2008

The Economy: Not So Super

The excitement surrounding yesterday's unprecedented Super Tuesday nominating contests obscured the latest and perhaps most damning news to come out on the troubled economy: Activity in the crucial service sector slowed for the first time in nearly five years last month.

The report from the Institute of Supply Management shows a significant decline in non-manufacturing activity (previously the "firmest pillar of economic expansion") in January. Those numbers, coupled with last week's news that jobs were declining, are heightening concerns that the economy is not only headed for a recession, but is already in one.

"Recession is here," the headline on CNNMoney.com read yesterday. The report quotes several economists who said the ISM report was the tipping point for them.

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Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, Hillary Rodham Clinton, House, John McCain, Mitt Romney, Republicans, Senate, WH 2008
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February 04, 2008

Bush To Send Congress Largest Budget In History

President Bush is expected to send the nation's first-ever $3 trillion budget request to Congress today for the 2009 fiscal year. Bush's proposal will project about $400 billion in budget deficits over the next two years, bolstered in part by the current economic slump and the stimulus package. But AP reports that, once again, the largest spending increases in the FY09 budget are in national security.

Despite the huge projected deficits, Bush's budget includes sizable cuts in domestic spending, particularly for government health care programs, state and local anti-terrorism grants and social service programs, according to the Washington Post. The plan is already drawing ire from Democratic lawmakers, who charge that Bush is directing cuts at programs that benefit the poor and middle-class families while protecting his tax cuts for the wealthy.

Meanwhile, the projected deficits do not even take into account funding for the wars in Iraq and Afghanistan. CongressDaily (subscription) reports this morning that Bush "is expected today to ask Congress for $70 billion to cover" the cost of the wars "for the first few months of FY09 -- a request that, if approved, could ultimately push the total amount of supplemental spending for military and civilian needs over the $1 trillion mark over the life of this administration."

The war-funding request coupled with the $3 trillion budget means the spending battles that ensnared Congress and the White House last year are likely to continue well into 2008.

AP has a breakdown of some elements in Bush's budget, and the New York Times and Wall Street Journal (subscription) have more on the administration's proposed spending increases for military operations.

Posted at 9:13 AM
Posted to: Bush Administration, Congress, Economy, President Bush
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February 01, 2008

Everyone Except Exxon Mobil Frowning Today

Having lost one of his main talking points on the economy -- that the U.S. was enjoying an unprecedented, 52-month run in job growth -- President Bush sought to assure Americans today that the U.S. economy would get through the current "rough patch."

"During this downcycle, we want to help individual Americans," Bush said, speaking from Hallmark Cards, Inc. in Kansas City. "There is concern whether consumers will lose confidence in our economy. One way to address that issue is to have a temporary, robust tax rebate," he continued, referring to the checks that are going out to millions of households this summer.

Today's Labor Department report on January job growth was not the one everyone was expecting. Non-farm payrolls dropped 17,000 jobs, the first time the U.S. has lost jobs since 2003.

Capping a week of other negative indicators on the economy, "the disappointing report could tilt economists' reading of the U.S. labor market towards the belief that it is weakening significantly," the Financial Times reports.

But not everyone is shaking their head with worry today. Exxon Mobil reported $40.6 billion in net income, a historical best for the energy giant. The record profits are a result of the sharp spike in oil prices worldwide. (Rival Chevron also beat analysts' estimates.)

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Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
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January 31, 2008

Deficits Could Force Domestic Spending Freeze

UPDATED.

President Bush is seeking a freeze on nearly all domestic spending along with a plan to squeeze savings out of entitlement programs in his 2009 budget, AP reports.

Federal deficits are approaching the $400 billion mark this year, in part because of ongoing spending in the Iraq and Afghanistan wars, and in part because of a pending economic stimulus package, which is expected to cost around $150 billion and double this year's deficit.

When Bush presents his budget on Monday, he will call for $178 billion in savings from Medicare and $17 billion for Medicaid. Much of the Medicare savings would come from freezing reimbursement rates to health care providers for three years, according to AP.

The overall slowdown of the economy and an onslaught of negative economic indicators mean lower revenues this year, and the White House is expected to deliver a worse revenue prediction than a recent forecast from the nonpartisan Congressional Budget Office.

Bush's budget is not likely to be well received in Congress, this being an election year. As the ripple effects of the housing bust continue to be felt in households, the new deficit estimates put Republicans running for re-election at a real disadvantage.

Meanwhile, Senate Democrats appear ready to slash the price tag on their economic stimulus proposals. A stimulus package is expected on Bush's desk by Feb. 15.

Posted at 4:05 PM
Posted to: Bush Administration, Congress, Economy, Iraq, Middle East, President Bush, Taxes
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Senate Panel Sends Stimulus Bill To Floor

The Senate Finance Committee voted 14-7 Wednesday to send a roughly $157 billion economic stimulus package to the floor, adding tax breaks for alternative energies and homebuilders and disqualifying upper-income taxpayers -- including members of Congress -- from getting rebate checks. Initially the proposal had no upper-income caps at the behest of Finance Committee ranking member Charles Grassley, R-Iowa, and other Republicans who considered such limits an unfair redistribution of wealth.

Under pressure from Democrats, Finance Committee Chairman Max Baucus, D-Mont., agreed to phase out eligibility for rebates beginning at $150,000 of adjusted gross income per single filer and $300,000 for couples filing jointly. Those limits are twice those in the House version, which costs $117 billion over 10 years.

Unlike the House bill, Baucus' proposal also provides rebate checks to about 20 million low-income retirees dependent on Social Security benefits. "They have worked hard all their lives. They have paid taxes for a lifetime," Baucus said. "The House-passed bill would not give a stimulus check to seniors who were scraping by on Social Security income alone and had no tax liability." Baucus also agreed to a proposal by Sens. Blanche Lincoln, D-Ark., and Olympia Snowe, R-Maine, making about 250,000 veterans on disability benefits eligible for rebates.

The measure faces an uncertain future as Senate Majority Leader Harry Reid as early as today plans to queue the House version. Supporters of the Baucus measure would need to get 60 votes to substitute it for the House version.

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January 30, 2008

Fed Watch: There Will Be Cuts

UPDATED.

A Wall Street rally following a 50-basis-points rate cut from the Fed today was not long for this world, as yet another negative economic report sent the Dow back down 37.47 points to close at 12,442.83. The S&P 500 and Nasdaq also pulled back from afternoon bumps.

Earlier in the afternoon, the Fed slashed interest rates to 3 percent, as was widely anticipated. The confirmation sent the Dow Jones industrial average and the S&P 500 ticking back up. But bad news from the bond sector sent those indexes sinking back down.

The brief rally may just have been a sigh of relief that the Fed had delivered as projected. New data released today show economic growth is grinding down, heightening fears of a recession this year.

"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets," the Federal Open Market Committee said in a statement. "The committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully."

Chairman Ben Bernanke joined in the near-unanimous decision. Voting against the cut was Richard Fisher, president of the Federal Reserve Bank of Dallas. The Board left the door open to future reductions.

"It's great that they did it now. I wish they had done it earlier," said CNBC's Jim Cramer, who has been screaming -- sometimes literally -- about the Fed's slowness to act on the housing bust and credit crunch.

Continue reading "Fed Watch: There Will Be Cuts"

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Posted to: Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Senate
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January 29, 2008

House Passes Stimulus Package

The House approved a $146 billion economic stimulus package today on an overwhelming 385-35 vote. The package now heads to the Senate, where tinkering with the bill is being criticized by lawmakers who reached a deal with President Bush.

"I would hope that the timely aspect of this is recognized by my colleagues in the Senate," House Speaker Nancy Pelosi said. "We have to have a stimulus. There's just no question. Once you understand that, then you have a responsibility to work back to that and find common ground. I would hope that what the Senate does is respectful of the focus that we have on middle-class and lower-income people."

The House measure would send rebate checks worth $600 to individuals and $1,200 for families, plus $300 per child, while providing tax breaks to businesses. Most of the revenue loss associated with the bill takes place in FY08.

See CongressDaily (subscription) and The Gate's previous coverage of the House-negotiated bill for more details.

-Peter Cohn, CongressDaily

Posted at 3:37 PM
Posted to: Bush Administration, Congress, Economy, House, President Bush, Senate
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U.S. Home Foreclosures Up 75 Percent In 2007

In another troubling sign of crisis in the U.S. housing market, the number of home foreclosures rose a staggering 75 percent to a total of more than 2.2 million filings in 2007, according to new data from RealtyTrac. The online seller of foreclosure properties reports that filings were up 97 percent in December compared to December 2006.

In an interview with MarketWatch, RealtyTrac's Rick Sharga concluded that the "primary driver" of the surge in foreclosures was "the high delinquency rates of these adjustable-rate subprime mortgages," and he warned that "we have one more massive wave of these loans that will adjust or reset... in late May or early June." Listen to the interview here and view RealtyTrac's findings here.

CNNMoney.com's Les Christie predicts that the "rapid rise" in foreclosure risk "could last for years."

According to Forbes' breakdown of the data, many of the hardest-hit counties are in key electoral battleground states, including some that have already held presidential nominating contests (Nevada, Michigan) and some that will weigh in next week on Super Tuesday (California, Arizona, Colorado). With overall economic concerns already a top priority for voters, the housing crisis could shape up to be one of the key issues in this year's presidential election.

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Posted at 10:48 AM
Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, Hillary Rodham Clinton, President Bush, WH 2008
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Baucus Stimulus Bill Has Key Add-Ons

Senate Finance Committee Chairman Max Baucus, D-Mont., unveiled a roughly $156 billion economic stimulus package yesterday, adding low-income seniors and laid-off workers to those who would benefit from a previously agreed-upon House proposal. Business incentives would also be expanded to let companies write off losses going back five years, offsetting earlier gains and earning them refunds on previous tax bills.

"Rebates for seniors and payroll taxpayers, extended unemployment insurance, and tax relief for struggling businesses will put more cash into the American economy right away," Baucus said in a statement.

In the most significant departure from the House proposal, the Finance bill would extend jobless benefits through the end of 2008, making 13 additional weeks of unemployment insurance available. For states where unemployment rates are 6 percent or higher, an additional 13 weeks would be available.

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Posted to: Bush Administration, Congress, Economy, House, President Bush, Senate
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January 28, 2008

Liveblogging President Bush's Final State Of The Union Address

End note. SOTU affairs are always a laundry list, and few expect them to deliver poetry. This year's address (full text) did lack the rhetorical punch of previous years, particularly Bush's first SOTU address following 9/11, which received very high marks.

If there is one character trait that describes this president, it is determination-bordering-on-
stubbornness. He has largely ignored polls and the punditry, and he only changed tacks in Iraq when the calls for a change in course permeated his own administration. Plenty of Americans didn't tune in to this speech tonight, on the assumption Bush is a lame duck. That is probably not the case, at least as far as the legislature is concerned.

With his veto threat and the executive order coming Tuesday, Bush is asserting himself in a dramatic way. The rate of federal spending under Bush's watch is triple that of the Clinton administration. That Bush is positioning himself to put a foot down on pork-barrel spending was pretty unexpected in his final year in office. We'll be watching to see how it pans out.

As for Bush's various claims in tonight's speech, NPR's reporters have been posting fact checks all evening. See their corrections on the tax cuts, FISA, Iraq and entitlement reform. Good night.

10:27. A somewhat unexpected criticism of the president here: "In spite of the attempts to convince us that we are divided as a people, a new American majority has come together. We are tired of leaders who rather than asking what we can do for our country, ask nothing of us at all.

"We are Americans sharing a belief in something greater than ourselves, a nation coming together to meet challenges and find solutions; to share sacrifices and share prosperity; and focus, once again, not only on the individual good but on the common good."

It should come as little surprise that Sebelius has endorsed Barack Obama. This speech reflects Democrats' palpable eagerness to move the country well away from the Bush era.

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Posted at 10:47 PM
Posted to: Barack Obama, Bush Administration, Campaigns, Climate Change, Congress, Democrats, Economy, Hillary Rodham Clinton, House, Iraq, Middle East, Military, President Bush, Senate, Taxes, Terrorism, Trade, Veterans, WH 2008
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Poll: Bush's Rating On The Economy Tanks Before SOTU

As President Bush prepares to deliver the final State of the Union address of his presidency, a new NBC News/Wall Street Journal poll [PDF] shows that not only does his job approval rating continue to hover in the low 30s, but the public's approval of his performance on the economy, which will be a main focus of his speech, has also fallen to an all-time low of just 29 percent (in a half-sample of respondents).

Bush's advisers have indicated that he will not be focusing on his legacy in the speech, and perhaps with good reason. About seven in 10 respondents told NBC/WSJ pollsters they expected Bush to be remembered as a worse president than his most recent predecessors.

See today's Poll Track for more on the survey. Meanwhile, today's Ad Spotlight has details on a national buy from liberal advocacy group Americans United for Change that is designed to keep the heat on Bush as he enters his final term in office. And check back with The Gate this evening; we'll be liveblogging Bush's final SOTU address.

Posted at 1:45 PM
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January 24, 2008

House Leaders: Stimulus Not Perfect But Will Do The Trick

UPDATED.

In a rare display of bipartisan camaraderie, House Speaker Nancy Pelosi and Minority Leader John Boehner urged colleagues to get their $145 billion compromise stimulus package to the White House ASAP.

"We will bring it to the floor at the earliest date so those rebate checks can be in the mail," Pelosi said during a joint press conference with her Republican counterpart and Treasury Secretary Henry Paulson, who represented the Bush administration during the late-night negotiations yesterday.

The legislation includes tax rebates from $300 to $1,200, with low-wage earners at one end and middle-income joint filers on the other. Recipients will also receive a $300-per-child bonus on top of what they get in rebates.

Those figures are lower than the expected $800-$1,600 range, but in exchange for lowering the disbursements, congressional Republicans agreed to extend the rebates to workers who don't earn enough to pay income taxes. Individuals who earned at least $3,000 in 2007 will get a check for $300, while mid-level earners would receive at least $600. Individuals earning more than $87,000 and families earning more than $187,000 won't get a check. Individuals who fall in the $75,000-$87,000 range and households in the $150,000-$187,000 would receive reduced checks.

"This is an initiative to strengthen the middle class and those who aspire to be in the middle class," Pelosi said, adding that the rebates were going to those who will "spend it right away to inject demand into the economy to help create jobs and to help turn around the economy."

Calling the deal "a big win for the American people," Boehner seconded Pelosi's assessment of the package. "It will stimulate our economy in the most direct and effective way possible, by putting money in the hands of middle-income families and giving businesses incentives to create and keep new jobs in the economy," he said

Both sides were forced to make concessions in order to reach speedy agreement on the package. Pelosi and her caucus gave up on an expansion of food stamps and unemployment benefits, and also consented to as much as $50 billion in tax breaks for businesses. In return, Republicans agreed to extend the rebates to the 35 million-plus workers who don't earn enough to owe income taxes and would have been ineligible for the rebates under President Bush's original plan.

"The Speaker gave some, we gave some. This was not easy, as most of you know, for the two of us and our respective caucuses... to have to come together and work in a bipartisan way and reach a compromise that I think is in the interest of the American people," Boehner said.

"I can't say that I'm totally pleased with the package, but I can say it will help the economy. And if it does not, there will be more legislation to come," Pelosi vowed.

Continue reading "House Leaders: Stimulus Not Perfect But Will Do The Trick"

Posted at 3:40 PM
Posted to: Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Senate, Taxes
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January 23, 2008

Econ Watch: Throwing $$$ At The Problem

Yesterday, President Bush and the leaders of his political opposition, Harry Reid and Nancy Pelosi, strongly signaled that they were on board with the outlines of the White House's economic stimulus proposals. That may be by necessity, since all parties are under intense pressure to jolt consumers and businesses into spending again.

Though Republicans and Democrats in Congress are still quibbling over who will get the tax rebates -- everyone, or just those who pay income tax -- the global market chaos of this week is spurring them to make a deal, fast. "There are no issues of disagreement right now," House Minority Leader John Boehner told reporters yesterday. Though Bush's plan doesn't include rebates for low- and moderate-income workers who pay more in payroll tax than income tax, there are signs that Republicans can be persuaded to include those groups.

"It must be broad-based. To be effective, the package must reach a large number of citizens," Treasury Secretary Henry Paulson told the U.S. Chamber of Commerce in a speech yesterday. The Washington Post interpreted Paulson's selection of the word "citizens," rather than "taxpayers," as a sign that the White House is also willing to expand coverage of its tax rebates.

The Democrats' case -- that low-income people who aren't eligible for those $800-$1,600 checks not only need them the most, but are more likely to spend them immediately -- is a compelling one. But before we go there, maybe lawmakers should explain why mailing out checks to millions of Americans is a good idea in the first place.

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Posted at 4:56 PM
Posted to: Ben Bernanke, Bush Administration, Campaigns, Congress, Economy, Federal Reserve, President Bush, Taxes, WH 2008
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CBO Predicts Growing Deficit But No Recession Next Year

The Congressional Budget Office is forecasting that, after three years of declining budget deficits, the FY08 shortfall will rise to $219 billion, up from $163 billion last year. The estimates do not factor in the costs of wars in Iraq and Afghanistan, extensions of expiring tax cuts and the economic stimulus package.

Senate Budget Committee Chairman Kent Conrad, D-N.D., estimated that about 80 percent of the $140 billion to $150 billion impact of the stimulus will be felt in this fiscal year, along with $30 billion more in war costs, for an FY08 deficit actually exceeding $350 billion. The new forecasts "show an explosion in federal deficits and debt if we continue to follow the president's deficit-financed tax and spending policies," he said in a statement.

The report noted that if President Bush's 2001 and 2003 tax cuts were extended, if Congress continued to prevent the alternative minimum tax from hitting more taxpayers and if discretionary spending continued to grow beyond inflation, it would add $5.7 trillion to the deficit over the next 10 years when debt service is factored in. At the end of five years, instead of being in balance, the budget actually would have a deficit of $402 billion, CBO said.

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January 22, 2008

Econ Watch: The 'Uh-Oh' Heard 'Round The World

UPDATED.

President Bush sought to assure investors and consumers that a relief package was on the way, though he made no promises about when.

"I believe we can find common ground to get something done," he said, flanked by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. They were joined by Bush's economic team at the White House for a briefing on Bush's recent trip to the Middle East as well as a discussion of the $150 billion stimulus package the president proposed on Friday.

"The economy is inherently strong, but it needs to get a boost. We need to make sure this uncertainty doesn't translate into more economic woes for our workers and businesspeople," Bush said.

Bush was discussing the nation's economy with opposition leaders in Congress on a day of dizzying volatility in the U.S. and global markets. This morning, the Federal Reserve Board made its first emergency rate cut since shortly after the 9/11 attacks, voting to slash its benchmark interest rate by 75 basis points to 3.5 percent. The move was meant to provide immediate relief for debtors in an economy seized by a two-fer liquidity and credit drought.

The surprise announcement came one week before the Fed's regularly scheduled meeting, at which it was expected to further nick at rates by 50 basis points. The move did nothing, initially, to mitigate fears that the U.S. economic slowdown is having a tsunami effect on global markets. The Dow plummeted more than 460 points soon after the opening bell.

But the emergency cut was also a signal that the Fed stands at the ready to react aggressively to the economy's downturn. By noon the sell-off had slowed, and the Dow mostly recovered to close down 128 points, or 1.1 percent.

Continue reading "Econ Watch: The 'Uh-Oh' Heard 'Round The World"

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Posted to: Asia, Ben Bernanke, Bush Administration, Congress, Economy, Europe, Federal Reserve, President Bush
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January 18, 2008

Bush Pushes Tax Cuts As Cure For Economy's Ills

As expected, President Bush publicly called on Congress today to prioritize an economic stimulus package that will include immediate tax rebates for Americans. The new sense of urgency comes one day after Federal Reserve Chairman Ben Bernanke recommended the government take immediate measures to perk up economic growth.

"I've concluded that additional action is needed," Bush said in a brief statement at the White House. "Congress and the administration need to work to enact an economic growth package as soon as possible."

The president indicated that the White House and congressional leaders from both parties were largely in agreement on the outline of the package. The legislation is expected to include $145 billion in immediate tax relief, mostly in the form of rebates.

"The package must be big enough to make a difference in an economy as large and as diverse as ours," Bush said, recommending that the stimulus be equivalent to 1 percent of GDP. "This package must be temporary and take effect right away, so we can get help to our economy when it needs it most."

The president's previous assessments of the economy have been mostly upbeat, despite the carnage resulting from the housing and credit meltdowns. In December, Bush announced a program designed to aid struggling homeowners and put the brakes on foreclosures. Big banks and brokerages including Merrill Lynch and Citibank reported record losses stemming from the subprime crash in the last quarter. Those negative reports, plus sluggishness in productivity and job growth, plus continued softness in the dollar, plus record-high gas prices, have sent Wall Street into a tailspin.

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Posted at 12:19 PM
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January 17, 2008

Dow Plummets; Bernanke Calls For Stimulus ASAP

UPDATED.

Blue chips sank more than 300 points today, the biggest single-day drop of the year so far. The slide suggests that a federal economic stimulus fix currently in the works may be arriving too late for investors' tastes.

Federal Reserve Chairman Ben Bernanke told lawmakers this morning that if they were serious about putting the brakes on the U.S. economic slowdown, any congressional stimulus package would have to be implemented sooner rather than later.

"To be useful, a fiscal stimulus package should be implemented quickly and structured so its effects on aggregate spending will be felt in the next months or so," Bernanke said in his opening remarks before the House Budget Committee. "There could be destabilization if the package comes at a time growth is improving. Measures that rely on long lead times will not provide stimulus when it is most needed."

President Bush had been expected to announce his own stimulus package ahead of his State of the Union address on Jan. 28, but the White House said today that he would be discussing the proposals on deck in a speech tomorrow. Investors are clearly impatient for some sort of cash injection into the economy, and a round of negative economic reports today only underscored the urgency with which Wall Street wants help halting the nation's growth slowdown.

Notably, Bush appears to be heeding the advice dispensed by Bernanke, and moving more quickly on a stimulus package than originally planned. At the noon press briefing, while Bernanke was still testifying, spokesman Tony Fratto said there was no time frame for when the president planned to address the economy and indicated the White House was still hanging on to hope it would be able to use the package to make tax cuts permanent.

Bush met with congressional leaders from both parties following Bernanke's testimony, and press secretary Dana Perino announced that the president's main concerns now were that the package be temporary, effective and pass as quickly as possible. According to House Minority Leader John Boehner, the package could top out at $150 billion.

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Posted to: Ben Bernanke, Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Taxes
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January 16, 2008

Lawmakers Eye Medicaid Boost For States

Lawmakers writing an economic stimulus package plan to include a temporary increase in federal Medicaid matching rates for states worth several billion dollars, according to aides familiar with the negotiations.

The provision would boost state funds for Medicaid almost immediately and help governors ride out the economic downturn. The administration has signed off on similar language in the past, although it is unclear whether the White House would continue to support a new round of Medicaid increases despite state support for them. The Medicaid provision is being modeled on language in the last economic stimulus package, in which states got a 1.5 percent increase in the matching rate for six quarters. Lawmakers also want to require that states use the extra money only for Medicaid.

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Economy's Woes Hit Americans In Their Tummies

Rising food prices may be one of the most underreported economic stories. New data show that this trend is impacting the larger economy.

Consumer prices rose 4.1 percent last year, according to the Labor Department. In a new report, the Federal Reserve found no growth in factories, mines and utilities last month. Inflation is the highest it's been in 17 years, and the Fed is expected to announce a half-point rate cut to ease the pain when it meets later this month.

AP reports: "Energy costs rose by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999."

Obviously, this is hitting Americans who live paycheck to paycheck the hardest, which is why we've seen the economy skyrocket among voters' lists of concerns going into the 2008 elections. But the rise in food prices is perceived as a mixed blessing by analysts.

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Posted at 11:25 AM
Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, John McCain, President Bush, Republicans, WH 2008
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PAYGO Divides Dems Crafting Stimulus Plan

House Democratic mantras requiring adherence to budgetary offsets and a "timely, targeted and temporary" response to a possible recession are bumping up against each other, as PAYGO budget rules are again stirring up divisions within the ranks.

"PAYGO could be a problem," said House Financial Services Committee Chairman Barney Frank, D-Mass., who met yesterday with the House Democratic leadership and other committee chairmen involved in the stimulus talks.

As much as $120 billion in spending and tax proposals are under consideration. Spending components could be designated as an "emergency" and not require offsets. And under House rules, new tax or mandatory spending initiatives only have to be paid for over a five-year period.

Frank said that fact might assuage some of his party's budget hawks.

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Posted at 9:42 AM
Posted to: Bush Administration, Congress, Economy, House, President Bush
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January 15, 2008

SCOTUS Ruling Bad News For Enron Plaintiffs

The Supreme Court today drew a line around securities law, ruling that third-party defendants could not be sued for facilitating or failing to disclose fraud.

The 5-3 ruling in Stoneridge Investment Partners v. Scientific-Atlanta [PDF] was authored by Justice Anthony Kennedy. (Justice Stephen Breyer recused himself from this case.) This Supreme Court is not a fan of class-action lawsuits, and today's ruling reflected the justices' desire to cap those suits to a manageable minimum.

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Posted at 2:20 PM
Posted to: Constitution, Economy, Supreme Court
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Thanks, Citigroup: A Weepy Day On Wall Street

In case anyone has any lingering doubts, the U.S. economy is teetering dangerously close to recession. The latest evidence: Citigroup actually managed to surprise with its 4Q 2007 results today, in an environment that already expects the worst.

Now, for the really dire news: Rich people are pinching pennies.

Middle class stagnation is by now the natural state of things in the American economy. That those consumers are exercising caution is to be expected, particularly as gas prices skyrocket. But when the wealthy start trimming back on their Louis Vuitton and Tiffany purchases, you know something is afoot.

According to a report in this morning's New York Times, high-end retailers Nordstrom, Saks Fifth Avenue and Tiffany experienced a marked slowdown in sales last month.

The rate of spending by American Express' customers, "a generally affluent group of consumers," fell from 13 percent growth to 10 percent growth, "the first slowdown since the 2001 recession," according to the Times report.

That's right, folks. Even Marty Scorsese is holding back.

Continue reading "Thanks, Citigroup: A Weepy Day On Wall Street"

Posted at 12:16 PM
Posted to: Bush Administration, Campaigns, Democrats, Economy, President Bush, WH 2008
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January 14, 2008

Democrats Seeking Broad Backing For Stimulus Package

As part of an effort to seek bipartisan agreement on an economic stimulus package, House Speaker Nancy Pelosi met today with Federal Reserve Chairman Ben Bernanke, and other Democrats laid out their ideas for an aid proposal.

"We hope to work in a bipartisan way for an initiative that is timely, targeted and temporary," Pelosi said before this afternoon's closed-door meeting. Quick action on a stimulus package has become the top issue for the White House and Democratic congressional leaders, although neither side has offered details. House Democratic leaders are expected to meet Tuesday, when that chamber returns to Washington after the long holiday recess, to discuss the legislative possibilities.

Pelosi and Senate Majority Leader Harry Reid have requested meetings with President Bush after he returns Wednesday from a visit to the Middle East. The Senate returns to work next week.

Continue reading "Democrats Seeking Broad Backing For Stimulus Package"

Posted at 4:20 PM
Posted to: Bush Administration, Campaigns, Congress, Economy, House, President Bush, Senate, WH 2008
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January 11, 2008

Making Sense Of The Mess On Wall Street