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.

Continue reading "White House Threatens Veto Of Mortgage Reform Measure"

Posted at 9:12 AM
Posted to: Bush Administration, Congress, Economy, Senate
Share via

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.

Continue reading "Bush, Congress Enjoy Feel-Good Moment"

Posted at 3:05 PM
Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
Share via

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."

Continue reading "Mortgage Crisis Spreads, White House Responds"

Posted at 12:38 PM
Posted to: Bush Administration, Economy, President Bush
Share via

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.

Continue reading "The Economy: Not So Super"

Posted at 12:20 PM
Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, Hillary Rodham Clinton, House, John McCain, Mitt Romney, Republicans, Senate, WH 2008
Share via

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
Share via

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.)

Continue reading "Everyone Except Exxon Mobil Frowning Today"

Posted at 12:57 PM
Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
Share via

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
Share via

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.

Continue reading "Senate Panel Sends Stimulus Bill To Floor"

Posted at 8:53 AM
Posted to: Congress, Economy, Senate
Share via

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"

Posted at 5:04 PM
Posted to: Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Senate
Share via

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
Share via

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.

Continue reading "U.S. Home Foreclosures Up 75 Percent In 2007"

Posted at 10:48 AM
Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, Hillary Rodham Clinton, President Bush, WH 2008
Share via

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.

Continue reading "Baucus Stimulus Bill Has Key Add-Ons"

Posted at 9:26 AM
Posted to: Bush Administration, Congress, Economy, House, President Bush, Senate
Share via

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.

Continue reading "Liveblogging President Bush's Final State Of The Union Address"

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
Share via

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
Posted to: Bush Administration, Economy, President Bush
Share via

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
Share via

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.

Continue reading "Econ Watch: Throwing $$$ At The Problem"

Posted at 4:56 PM
Posted to: Ben Bernanke, Bush Administration, Campaigns, Congress, Economy, Federal Reserve, President Bush, Taxes, WH 2008
Share via

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.

Continue reading "CBO Predicts Growing Deficit But No Recession Next Year"

Posted at 3:10 PM
Posted to: Bush Administration, Congress, Economy
Share via

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"

Posted at 5:02 PM
Posted to: Asia, Ben Bernanke, Bush Administration, Congress, Economy, Europe, Federal Reserve, President Bush
Share via

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.

Continue reading "Bush Pushes Tax Cuts As Cure For Economy's Ills"

Posted at 12:19 PM
Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
Share via

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.

Continue reading "Dow Plummets; Bernanke Calls For Stimulus ASAP"

Posted at 4:46 PM
Posted to: Ben Bernanke, Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Taxes
Share via

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.

Continue reading "Lawmakers Eye Medicaid Boost For States"

Posted at 5:11 PM
Posted to: Bush Administration, Congress, Economy, Health
Share via

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.

Continue reading "Economy's Woes Hit Americans In Their Tummies"

Posted at 11:25 AM
Posted to: Bush Administration, Campaigns, Congress, Democrats, Economy, John McCain, President Bush, Republicans, WH 2008
Share via

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.

Continue reading "PAYGO Divides Dems Crafting Stimulus Plan"

Posted at 9:42 AM
Posted to: Bush Administration, Congress, Economy, House, President Bush
Share via

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.

Continue reading "SCOTUS Ruling Bad News For Enron Plaintiffs"

Posted at 2:20 PM
Posted to: Constitution, Economy, Supreme Court
Share via

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
Share via

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
Share via

January 11, 2008

Making Sense Of The Mess On Wall Street

Americans who consider President Bush to be a lame-duck leader are wrong. One, there's that veto pen of his. And two, federal intervention will almost certainly be needed in order to circumvent a looming recession.

Under enormous pressure from economists and Wall Street, the White House is expected to roll out an economic stimulus package, as it did following 9/11. With financial anxiety roiling both Democrats and Republicans, expect the economy to take center stage when Bush delivers his final State of the Union address on Jan. 28.

Publicly, Bush is stressing what's right about the economy (GDP growth, job creation) while acknowledging in very broad strokes that his administration is closely monitoring turmoil on Wall Street. There's been some clamor for him to tackle the issues at hand head-on, as complaints from those he once joked were "his base" grow.

Continue reading "Making Sense Of The Mess On Wall Street"

Posted at 4:18 PM
Posted to: Bush Administration, Economy, President Bush, Taxes
Share via

January 08, 2008

Feds Plan Anti-Fraud Push As Medicare Spending Rises

The U.S. Department of Health and Human Services is cracking down on medical equipment suppliers it says bilk taxpayers out of hundreds of millions of dollars.

Medicare officials estimate suppliers have fraudulently billed the government upwards of $300 million in Los Angeles County alone, the Los Angeles Times reports. The problem is most acute in urban areas in Southern California and South Florida where large numbers of elderly Medicare recipients are concentrated, the government says.

The new rules require equipment suppliers to be accredited by the government and to set prices through a bidding process. The Times reports that some medical equipment suppliers are threatening to opt out of Medicare because they believe the rules are too harsh.

Continue reading "Feds Plan Anti-Fraud Push As Medicare Spending Rises"

Posted at 1:10 PM
Posted to: Bush Administration, Economy, Health
Share via

January 07, 2008

Bush Renews Veto Vow On New Taxes

UPDATED.

Telling the Union League Club of Chicago that his New Year's resolution is "to make sure Congress keeps the taxes low," President Bush warned lawmakers he would squash any new legislation that raises taxes.

"I will be talking to Congress about how this administration will use its authority to keep taxes low," Bush said.

Continue reading "Bush Renews Veto Vow On New Taxes"

Posted at 6:28 PM
Posted to: Bush Administration, Congress, Economy, President Bush, Taxes
Share via

January 04, 2008

WH '08: A Brusque, But Not Brisk, Farewell To Iowa

We haven't matched the rest of the media's outsized coverage of the Iowa caucuses because of the very nature of the caucuses themselves. But we have to admit that what we saw last night was pretty astonishing, in part because a poll predicting the results actually turned out to be right.

Of course, that could just be a coincidence, but the Des Moines Register appears to have corrected for some of the factors that plagued surveys past. (Though it's still not without its problems, Mark Blumenthal points out.) The David-vs.-Goliath victory of Mike Huckabee (results) flew in the face of conventional wisdom, proving that a virtual unknown with hardly any money to campaign with and virtually no organization could sell himself to voters.

Huck's defeat of Mitt Romney does not, however, mean that the conventional wisdom won't prevail.

If you know anything about how the caucuses work, you know that they are unrepresentative of party voters nationwide and are undemocratic, particularly on the Democratic side (irony, irony), to boot. So of course all the attention now goes to New Hampshire (but not Wyoming, which holds its GOP caucus tomorrow), for the first primary vote of the season. New Hampshire's results will almost certainly be different from Iowa's, so a lot of comparing and contrasting will ensue.

We purposely did not devote a lot of blog space to the caucuses for good reason. But yesterday's surprising results dispelled some long-standing prognostication about the 2008 presidential election. Since dispensing with conventional wisdom can be fun (OK, we're nerds), let's take out the trash after the jump.

Continue reading "WH '08: A Brusque, But Not Brisk, Farewell To Iowa"

Posted at 5:51 PM
Posted to: Barack Obama, Bush Administration, Campaigns, Democrats, Economy, Hillary Rodham Clinton, Iraq, John Edwards, John McCain, Joseph Biden, Middle East, Mike Huckabee, Mitt Romney, President Bush, Republicans, WH 2008
Share via

Get Ready For Recession

Lower-than-expected job growth in December is roiling markets today, all but ensuring the Fed will further slash the interest rate in an effort to stave off total economic slowdown.

A mere 18,000 jobs were added in December, a far cry from the 70,000 that were projected. According to the Labor Department's monthly report, the unemployment rate also jumped to 5 percent, up from November's 4.7 percent.

A recession isn't assured, of course, but investors and the Fed are bracing themselves for the likelihood. Consumers are also expected to prepare for lean times ahead by cutting back on spending -- which of course is a contributor to recessions.

Continue reading "Get Ready For Recession"

Posted at 11:35 AM
Posted to: Economy
Share via

January 02, 2008

Oil Crosses $100 Barrier

It's tipped back down, but concerns about the violence in Nigeria appear to be driving prices up, TheStreet.com reports. The Dow is down about 100 points at the moment on crude concerns as well as soft manufacturing data. Nervous investors are also flocking to the safety of precious metals: The price of gold rocketed more than $20.

Posted at 12:43 PM
Posted to: Economy
Share via

December 21, 2007

WTO Issues Decision On Internet Gambling Case

The World Trade Organization issued a decision [PDF] today regarding Antigua and Barbuda's request to impose $3.4 billion in retaliatory measures against the United States for allegedly violating its WTO commitments. The WTO said Antigua can use annual trade sanctions against the U.S. retroactive to April 2006 for the amount of $21 million until the U.S. reaches compliance with the WTO. The WTO also ruled that Antigua's sanctions may target U.S. intellectual property.

"Considering that Antigua and Barbuda were asking for over $3 billion in compensation, and they were only awarded a token $21 million, this decision is a partial victory for the U.S.," said Rep. Bob Goodlatte, R-Va. "However, I remain concerned about how these countries could extract these sanctions from unrelated U.S. companies, like those in the intellectual property and banking industries."

"I will continue to closely monitor this situation and work with other U.S. policymakers and businesses to mitigate the decision's impact on U.S. industries," continued Goodlatte, who sponsored legislation banning online gambling last year.

Greg Frazier, executive vice president of worldwide government policy for the Motion Picture Association of America, warned of possible repercussions from the ruling. "We have made clear from the outset of the case that if Antigua were to suspend its intellectual property rights obligations in retaliation, we believe such a move -- which would be virtually unprecedented in WTO disputes -- would put Antigua at odds with some of its other international obligations as well as raise questions about its eligibility for certain U.S. trade preference programs," he said.

"Also, as a practical matter we have serious questions about how such a decision could be effectively managed to avoid damage beyond the amount of compensation in the WTO decision," Frazier added.

Continue reading "WTO Issues Decision On Internet Gambling Case"

Posted at 4:53 PM
Posted to: Congress, Economy, House, Trade
Share via

December 19, 2007

Global Health Survey Finds Regional Differences

Health care has been a prominent issue on the campaign trail in the U.S. this year, with presidential candidates, particularly on the Democratic side, vowing to expand access to health care coverage for the over 40 million Americans without insurance. According to a new study, these concerns about the quality and availability of health care are also shared worldwide, albeit in different ways.

The global survey [PDF] from the Kaiser Family Foundation and the Pew Global Attitudes Project shows that while health care ranks high among citizens' political priorities around the world, attitudes toward the issue vary widely according to where people live, their economic status and their experiences with particular diseases.

Overall, the survey of over 45,000 people in 46 countries finds that health is a "local phenomenon." Not surprisingly, respondents in areas hardest hit by disease and malnutrition, particularly sub-Saharan Africa, were more likely to rank health as the top problem for their countries. In other regions, including Latin America, Asia and Europe, crime, terrorism, drugs and pollution were perceived as greater threats than the spread of infectious diseases.

Continue reading "Global Health Survey Finds Regional Differences"

Posted at 12:30 PM
Posted to: Africa, Campaigns, Economy, HIV/AIDS, Health, U.N., WH 2008
Share via

December 18, 2007

Fed Proposes New Rules For Lenders To Ease Mortgage Crisis

After months of urging from lawmakers, market-watchers and consumer advocates concerned about the impact of risky subprime loans on the slumping housing market, the Federal Reserve unanimously agreed to propose tighter restrictions on lenders this morning.

The proposal includes "a ban on low-documentation loans and limits on penalties for borrowers who prepay their debts," Bloomberg News reports. According to MarketWatch, the proposed rules would not apply to current borrowers but would instead aim to avoid future lending crises "like the one that has crippled the subprime mortgage industry."

"Our goal is to promote responsible mortgage lending, for the benefit of individual consumers and the economy," Federal Reserve Chairman Ben Bernanke said in a statement. "We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated."

CNNMoney.com and the Wall Street Journal (subscription) have more on the proposal, and the Fed's Web site has highlights. In related news today, the Economist named the subprime mortgage crisis the "biggest mess" in the business world this year.

Posted at 1:52 PM
Posted to: Ben Bernanke, Economy, Federal Reserve
Share via

Study: Trouble Ahead For Aging Public Employees

According to a new study billed as the first of its kind, states are about $731 billion short of what they need to cover pensions, health care and other long-term obligations for retiring public workers.

The Pew Charitable Trusts report [PDF] covers all 50 states, and examines what states already have in the bank vs. what they will eventually need. Pew estimates that, all told, states will be on the hook for $2.73 trillion over the next three decades. Researchers describe that figure as conservative.

Some states are squirreling away more efficiently than others. Only Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin were ready to fully fund nonpensions benefits for the next 30 years by FY 2006, the report found. None of the five largest states had saved money for nonpensions benefits.

Several states are taking measures to correct the problem, including raising the retirement age and setting up trusts to pay for retiree health care. Bloomberg and Reuters have more on the study.

Posted at 12:15 PM
Posted to: Economy
Share via

December 17, 2007

World Leaders Watch: The Economy, Stupid

To no one's surprise, Russian President Vladimir Putin said today that he accepts his top aide's offer of the prime minister's slot should Dmitry Medvedev win the presidency in March. Medvedev is Putin's longtime aide and handpicked successor for the presidency -- an office Putin is barred by law from seeking again.

"If the citizens of Russia show trust in Dmitry Medvedev and elect him the new president, I would be ready to continue our joint work as prime minister without changing the distribution of authority between the positions," Putin said in an address to his United Russia party.

Putin sought to allay concerns that the coming election would amount to just moving the deck chairs, but few Russians are under the illusion that Putin's power would really be capped by the traditional bounds of the much-weaker prime minister's post. Nonetheless, Medvedev, who was formally nominated by United Russia today, is assured a decisive victory in the March 2 vote. Why hasn't Putin's authoritarian power-grabbing dented his popularity? The economy.

Russians can forgive Putin his flaws because their economy is rocketing -- even if Putin isn't exactly responsible for that trend. Here in the United States, the perception that the economy is flagging is threatening to upend next year's elections -- and President Bush's legacy. For the second time this month, Bush devoted a public address to the economy in an attempt to persuade the public that things weren't as dire as they seemed.

"My attitude was if you're paying taxes you ought to get tax relief," Bush told the Rotary Club in Fredericksburg, Va., recalling concerns about the economy after the 9/11 attacks. "If you think about where we were, coming out of 2001, and where we are today, you can't help but say the plan worked.

Continue reading "World Leaders Watch: The Economy, Stupid"

Posted at 2:15 PM
Posted to: Bush Administration, Campaigns, Congress, Economy, Media, President Bush, Russia, Vladimir Putin
Share via

December 14, 2007

Jim Cramer & Ron Paul: The Interview Of The Century So Far

It's nearly the weekend, but we urge you all to run home and TiVo the following: Rep. Ron Paul sits down with Jim Cramer on "Mad Money" tonight(!!!).

No shouting or renting of garments, according to an early transcript. Paul and Cramer both HATE the Fed in a big way, and that's topic No. 1 in the interview.

"I always feel like I'm out there by myself criticizing this institution that everybody thinks is like a holy temple, when the reality is these are just men and women like you and me except for they're making policy with no checks and balances," Cramer tells the GOP presidential candidate. "I wish you the best of luck, sir, with your campaign. You are changing things with what you're saying."

Do we have another convert to the Ron Paul Revolution? Will Cramer be Ron Paul's very own Oprah? The magic begins at 6 p.m. EST and re-airs at 11 on CNBC.

-JANE ROH

Posted at 5:12 PM
Posted to: Campaigns, Economy, Republicans, Ron Paul, WH 2008
Share via

December 13, 2007

Liveblogging The Final Dem Debate Of 2007!

4:10. All over, no more debates until next year, hurray!

Up until a couple of months ago, there seemed to be a critical mass of Democratic support building behind Clinton, in part because of her metamorphosis into a suddenly "human" and likable politician and the assumption that the Clinton machine could best take on the Republican nominee next year. The political press carried on that change vs. experience debate all summer and into the early fall.

But now the nomination fight has been upended, and polls [PDF] show (subscription) that Obama and Edwards are viable in general election matchups, too. That eliminates for some voters their primary thesis for supporting Clinton, and it's why she's been struggling to stay afloat this month.

Most of us can look forward to relaxing with family in a week or so, but for the presidential contenders and Iowans it's closing arguments time. One thought to keep in mind: Part of the shifting around in this field and in the GOP as well is that the Iraq war has largely dropped out of the debate. Iraq no longer dominates the front page because of the decrease in violence and because of the campaigns. That changes in March at the latest, when Gen. David Petraeus is due back in Washington to report on the ground situation. We know the military part of the surge is working, but we are not much farther than we were in September on political reconciliation. The "what's next?" question is still hanging out there, unanswered. The GOP front-runners have more or less indicated loyalty to the Bush administration's policies, so answers will have to come from the Democratic field.

Early reactions: boring, boring, nice, snark.

Continue reading "Liveblogging The Final Dem Debate Of 2007!"

Posted at 4:10 PM
Posted to: Barack Obama, Bill Richardson, Campaigns, Christopher Dodd, Democrats, Economy, Education, Health, Hillary Rodham Clinton, Iraq, John Edwards, Joseph Biden, Middle East, Republicans, Taxes, Trade, WH 2008
Share via

December 12, 2007

Trouble Ahead For Generation Y-Save

A new Government Accountability Office report [PDF] has found that just 36 percent of all workers participate in a 401(k) or similar retirement plan. For lower-income workers, participation in such plans was practically nil, meaning those workers risk falling off a cliff once they retire.

The returns on 401(k) plans may not be enough to sustain retirements, the report also found. The typical balance of such accounts was $22,800, the Los Angeles Times reports. Stretched to cover the retirement years, that is barely enough for many Americans to live on.

The report doesn't factor in Social Security benefits, however, so the overall outlook is not so dire. Still, the low participation and return levels could add momentum to an already existing push for automatic or mandatory enrollment in defined contribution retirement plans.

MarketWatch and Reuters have more on the GAO report. Though the prevailing wisdom is that Americans spend too much and don't save enough, some economists argue that Americans are actually saving more than they need to live comfortably after retirement. The New York Times reported on that school of thought in January.

Posted at 12:47 PM
Posted to: Congress, Economy
Share via

Econ Watch: Like Lancing A Boil...

Investors were relieved this morning after the Federal Reserve announced it would be working with four other central banks to correct the global liquidity crisis.

The Dow tanked yesterday after the Fed's cautious decision to cut the benchmark funds rate by a quarter-point, instead of the more dramatic half-point some investors had been hoping for. The deal announced today includes the Bank of England, Bank of Canada, European Central Bank and the Swiss National Bank.

The banks will auction short-term funds in order to reinfuse markets with much-needed cash. As of 10:06 a.m., the Dow had rebounded 195 points.

The Financial Times and MarketWatch have more details.

Posted at 10:21 AM
Posted to: Economy
Share via

December 11, 2007

Fed Disappoints With 1/4-Point Rate Cut

UPDATED.

The Federal Reserve nicked the benchmark federal funds rate for the third quarter in a row, but not by the half-point many investors were hoping for. The quarter-point cut brings the rate down to 4.25 percent.

The Dow Jones Industrial Average plummeted after the announcement, ending the day down more than 225 [UPDATED 5:17] 294 points. The decision indicates that the credit crunch is having a rippling effect throughout the broader economy, in the Fed's view. The interest rate was also cut a quarter-point to ease bank borrowing.

"Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks," the Federal Open Market Committee said in a statement. Citing higher prices on energy and other goods, the committee added, "Some inflation risks remain, and" the committee "will continue to monitor inflation developments carefully."

Continue reading "Fed Disappoints With 1/4-Point Rate Cut"

Posted at 4:23 PM
Posted to: Economy
Share via

December 06, 2007

Bush Lays Help For Homeowners At Senate's Feet

UPDATED.

President Bush told worried homeowners today that help would be on the way -- once the Senate stopped sleeping on the housing foreclosure threat.

"The federal government is taking several regulatory actions to make the mortgage industry more transparent, reliable and fair," Bush said, as he announced a plan to stop the housing market implosion struck by his administration and the mortgage lending and services industries. "The U.S. Congress has the potential to help even more. It's been three months since I made proposals... and Congress hasn't sent me a single bill to help homeowners."

"If members are serious about helping" struggling homeowners, Bush continued, they will pass legislation as soon as possible.

The House has passed two housing fixes, both of which have stalled in the Senate. Democratic Rep. Barney Frank, chairman of the House Financial Services Committee, seemed to rail against the leadership in his own party when he recently complained that "the increasing inability of the United States Senate to function is becoming a threat to governance."

In a second press conference shortly after the president spoke, HUD Secretary Alphonso Jackson echoed calls for Senate action.

"We've done our part. We need a bill now, as do hundreds of thousands of Americans," Jackson said. "Combining our administration's action and passage of this bill could help 800,000 families in fiscal year 2008."

Continue reading "Bush Lays Help For Homeowners At Senate's Feet"

Posted at 3:20 PM
Posted to: Bush Administration, Congress, Economy, House, President Bush, Senate
Share via

December 05, 2007

Details On Mortgage Rescue Plan Tomorrow

It looks like President Bush will also participate in tomorrow's joint press conference at the Treasury Department. Secretary Henry Paulson and HUD Secretary Alphonso Jackson are scheduled to speak at 1:45. A source told the Wall Street Journal (subscription) that the plan will apply to "certain loans originated between Jan. 1, 2005, and July 31, 2007, that will reset between Jan. 1, 2008, and July 31, 2010." Those borrowers, presumably, will be allowed to pay back their loans at their current interest rates. We'll report on the confirmed details of the plan after tomorrow's presser.

In related news, Sen. Hillary Rodham Clinton called for a 90-day freeze on foreclosures and a voluntary five-year freeze on interest rates to help borrowers hang on to their homes. In an interview on CNBC, she said she would also consider legislation that would force the mortgage industry to work with borrowers at risk of foreclosure.

Posted at 4:31 PM
Posted to: Bush Administration, Congress, Economy, President Bush, Senate
Share via

December 03, 2007

Paulson: Details On Mortgage Fix 'Soon'

In a speech at the Office of Thrift Supervision National Housing Forum today, Treasury Secretary Henry Paulson confirmed that he was close to finalizing a deal with lenders to put the brakes on home foreclosures across the country.

"We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners," Paulson said.

The secretary also called on Congress to act before heading back home for the holidays in two weeks.

Continue reading "Paulson: Details On Mortgage Fix 'Soon'"

Posted at 12:26 PM
Posted to: Bush Administration, Economy
Share via

November 30, 2007

Reasons To Freak Out About The Economy

Ignore those FOX News chyrons -- today's Wall Street rally has nothing to do with how healthy the economy is, and everything to do with how unhealthy it is.

"The combination of higher gas prices, the weak housing market, tighter credit conditions and declines in stock prices seem likely to create some headwinds for the consumer in the months ahead," Federal Reserve Chairman Ben Bernanke said yesterday. Stocks are up today because investors are relieved that there will probably be another rate cut when the Fed next meets on Dec. 11. No one is overjoyed at why that cut is needed.

The Bush administration still wears an upbeat face on the economy, trumpeting October as the 50th consecutive month of job growth and noting that GDP has grown an average of 2.8 percent every year since 2001. But behind the scenes, Treasury Secretary Henry Paulson and HUD Secretary Alphonso Jackson are negotiating a deal to freeze interest rates on certain subprime loans in order to help struggling borrowers fend off delinquency and foreclosure. Reports of the pending deal are also driving the surge on Wall Street, as the housing market crisis is one of the main forces pushing us close to a recession.

Former Treasury Secretary Lawrence Summers is one of the more prominent economists to predict the U.S. is now more likely than not headed for recession. In an op-ed published by the Financial Times on Sunday, he wrote of the housing freefall, "We do not have comparable experiences on which to base predictions about what this will mean for the overall economy, but it is hard to believe declines of anything like this magnitude will not lead to a dramatic slowing in the consumer spending that has driven the economy in recent years."

Continue reading "Reasons To Freak Out About The Economy"

Posted at 12:30 PM
Posted to: Bush Administration, Economy
Share via

November 27, 2007

The Writers Strike: Good For Candidates, Bad For Voters

When the Writers Guild of America launched its nationwide strike four weeks ago, The Gate sort of joked that the extended hiatus for late-night talk shows and political satires would spell doom for Washington. But now that it's been nearly a month since the last new "Daily Show" episode, we're starting to get nervous... seriously.

With the Jan. 3 Iowa caucuses and Jan. 8 New Hampshire primaries rapidly approaching, the presidential campaigns have shifted into high gear. And with at least eight debates scheduled between now and Christmas, the media's coverage of the campaigns has reached a fever pitch. Meanwhile, the candidates and those responsible for covering them in the press are going about their business free from the scrutinizing eyes of Jon Stewart, Stephen Colbert and "Saturday Night Live." That's not just bad for comedy -- it's bad for democracy.

Continue reading "The Writers Strike: Good For Candidates, Bad For Voters"

Posted at 4:50 PM
Posted to: Campaigns, Economy, Media, WH 2008
Share via

November 09, 2007

Few Defections As Dems Pass AMT Fix

The House today passed 216-193 an $81 billion tax extenders package, including a one-year patch to protect 21 million taxpayers from the alternative minimum tax.

Eight Democrats voted against the bill, including several who had voiced opposition to offsets used to pay for the package. Democrats voting no were Reps. Tim Mahoney (Fla.), Jim Cooper (Tenn.), John Barrow (Ga.), Melissa Bean (Ill.), Nick Lampson (Texas), Jim Matheson (Utah), Harry Mitchell (Ariz.), and Gene Taylor (Miss.). No Republicans voted for the bill.

The largely united Democratic vote belied more widespread concern in the Caucus about the offsets, though leaders managed to persuade them to support the bill despite misgivings. To offset the AMT patch, House tax writers included a $26 billion provision to tax the profits of private equity, hedge fund and other investment partnerships at 35 percent instead of the 15 percent capital gains rate as under current law. The bill would also delay implementation of tax cuts for multinationals and yank tax benefits that hedge fund managers enjoy by deferring compensation on offshore income.

Continue reading "Few Defections As Dems Pass AMT Fix"

Posted at 5:44 PM
Posted to: Congress, Economy, House, Senate, Taxes
Share via

November 08, 2007

Bernanke Predicts Growth Slowdown Heading Into '08

In testimony before Congress' Joint Economic Committee today, Federal Reserve Chairman Ben Bernanke had some good news and some bad news for American investors amid growing concerns on both Wall Street and Main Street.

The bad news: The current turmoil that began in the housing sector and trickled down into securities and other financial markets will likely slow economic growth in the coming year, while higher oil prices and the weak dollar could boost inflation and "impose further restraint on economic activity."

The good news: Overall, the economy "remained resilient in recent months," and "the recent developments may well lead to a healthier financial system in the medium to long term."

Continue reading "Bernanke Predicts Growth Slowdown Heading Into '08"

Posted at 11:46 AM
Posted to: Ben Bernanke, Economy, Federal Reserve
Share via

November 07, 2007

More Angst On Wall Street

Is there no safe haven for American investors?

Morgan Stanley and Goldman Sachs could be the next big securities firms to take huge writedowns as a result of the subprime lending crisis. As feared by investors following Merrill Lynch's and Citibank's tumbles last month, the entire sector may sustain as much as $50 billion in losses this quarter, a Deutsche Bank analyst predicted.

Dragging the Dow down even further -- 250-plus as of this post -- are the news that the dollar has hit an all-time low and GM's report of a whopping $39 billion loss last quarter. Oil prices flirting with $100 a barrel may just be the cherry on top.

Continue reading "More Angst On Wall Street"

Posted at 5:28 PM
Posted to: Economy
Share via

November 02, 2007

Bias & The Media: Everything You Suspect Is True

Looking back on the past year, the most surprising development of Campaign '08 so far has to be the crash and burn of Sen. John McCain. Less than a full presidential election cycle ago, the Arizona Republican's popularity so transcended party lines that John Kerry sought him out as a running mate.

Today, the one-time front-runner is nearly broke, has a skeletal campaign staff and is trailing badly in the polls. When the campaigns started to get under way earlier this year, every other headline about McCain had to do with his dogged support for President Bush's Iraq war policy despite overwhelmingly pessimistic coverage of the "surge" strategy. The formerly adoring political press, which McCain used to refer to as "my base," seemed to be punishing the lawmaker they once hailed as a maverick.

Looks like that hunch was right.

Continue reading "Bias & The Media: Everything You Suspect Is True"

Posted at 1:47 PM
Posted to: Campaigns, Economy, John McCain, Media, Republicans, WH 2008
Share via

October 30, 2007

Halloween Memo: Beware Of Lead

The Consumer Product Safety Commission is in hot water again on Capitol Hill following the latest round of product recalls, this time focused on toys and accessories associated with Halloween.

The agency recently recalled what Agence France-Presse described as "a record number of products for lead violations, including buckets to collect 'treats' and costume teeth for children for the fun festival."

The recalls coincided with a scathing report [PDF] from liberal advocacy group Campaign For America's Future that calls for a drastic overhaul of the systems used to vet products imported from China, the origin of most of the contaminated items that have been recalled in recent months.

Sen. Sherrod Brown, D-Ohio, today called for CPSC Chairwoman Nancy Nord's resignation, citing her failure to offer a "plan that would adequately equip the CPSC to do its job" in the wake of multiple product safety scares.

Posted at 4:37 PM
Posted to: China, Economy
Share via

Bush Vows 'Three Veto Bill Pileup'

President Bush is seeking to get out ahead of negative headlines this week by accusing the Democratic Congress of holding U.S. troops and poor children "hostage" as part of a "cynical" political strategy.

"They haven't seen a bill they could not solve without shoving a tax increase into it," Bush said derisively. He called the brief press conference outside the White House following a meeting with the top Republican House leaders: John Boehner, Roy Blunt and Adam Putnam.

The president's press conference ushered in the annual appropriations tug-of-war between the White House and Congress, an autumn rite by no means unique to this administration. Tensions are superheated this year, though, because the bills concern an increasingly unpopular war with the prospect of yet another unpopular war and renewal of health care funding for poor children.

Bush also plans to veto a $23.2 billion water resources bill that he says is excessive. The bill is overwhelmingly popular in both chambers, however, and it is all but guaranteed an override if Bush follows through on his threat by the end of this week.

Continue reading "Bush Vows 'Three Veto Bill Pileup'"

Posted at 9:49 AM
Posted to: Bush Administration, Congress, Economy, House, Iran, Iraq, Middle East, President Bush
Share via

October 24, 2007

Today In Bad Economic News, Pt. II

Well, bad for the Republican presidential front-runners, anyway.

The New Yorker's James Surowiecki writes a damning indictment of supply-side economics theory in this week's issue. "The supply-side argument that, in the United States, tax-rate cuts pay for themselves -- that, after cutting taxes, the government actually ends up with more revenue -- has little or no support within the mainstream economic profession, and no hard empirical data to back it up," he contends.

President Bush, of course, is the supply-sider in chief. Bush has been able to point to the growth of the economy during his term, and the post-9/11 rebound in particular, as proof that his controversial tax cuts are sound -- ignoring the "simple fact," as Surowiecki puts it, that "the American economy grows over time."

Continue reading "Today In Bad Economic News, Pt. II"

Posted at 5:05 PM
Posted to: Bush Administration, Campaigns, Economy, John McCain, President Bush, Republicans, WH 2008
Share via

Today In Bad Economic News...

A significant writedown and a bracingly grim housing forecast has driven the Dow down more than 150 points, slightly up from this morning's nosedive of 200.

AP: "Merrill said it wrote down $7.9 billion in fixed-income instruments called collateralized debt obligations and from defaulting subprime mortgages -- more than the $5 billion writedown the investment bank estimated earlier this month. The result was a net loss for the quarter of $2.3 billion." Merrill Lynch & Co. is the nation's largest investment firm, and its worse-than-expected third-quarter losses bode ill for the rest of the sector as it grapples with an apparently worsening housing implosion.

Lending arms are clamming up to stanch the bleeding of the subprime lending crisis, effectively putting the brakes on the housing market. MarketWatch reports that "sales of existing homes and condos fell 8% in September to the lowest level in at least eight years as inventories of single-family rose to a 20-year high." In other words, there is quite a bit more property out there than there are buyers. Those who are managing to sell are doing so at reduced prices.

While there is some concern that home sales are being "artificially depressed" -- as one analyst put it -- by panic at the credit crunch, the one-two punch of investor losses and credit cutoff for many Americans means a longer-term negative trend.

Continue reading "Today In Bad Economic News..."

Posted at 2:21 PM
Posted to: Bush Administration, Economy, Education
Share via

October 22, 2007

GM Back On Top... For Now

New quarterly earnings reports show that GM remains the world's No. 1 automaker, following a scare earlier this year when Japanese automaker Toyota briefly overtook the American stalwart in sales.

According to its third-quarter filings, Toyota sold 2.34 million vehicles, slightly fewer than the 2.38 million units moved by GM in the same period. GM also beat out its Japanese rival in sales for the year by about 10,000 vehicles.

GM has reason to celebrate after a bruising year that included a strike by the United Auto Workers, but long-term concerns remain. As the American market as a whole grapples with rising manufacturing and labor costs, analysts believe that Japanese automakers will eventually overtake GM if conditions in the U.S. don't improve.

Continue reading "GM Back On Top... For Now"

Posted at 11:28 AM
Posted to: Asia, Economy, Japan
Share via

October 10, 2007

UAW Calls Strike On Another Big Three Automaker

Once again, the United Auto Workers instructed tens of thousands of its members to take to the streets in protest against one of the Big Three U.S. automakers. This time, it was the failed negotiations between union leaders and Chrysler over a new labor agreement that sparked the walkout of some 40,000 workers nationwide.

The Detroit Free Press notes "it’s the second strike against a Detroit automaker in the past two-and-half weeks by the UAW," which picketed General Motors for two days before hammering out a tentative agreement, "and the first strike against Chrysler in recent history." Job security and health care remain the two main sticking points in the ongoing negotiations.

According to the Detroit News, at least four Chrysler plans are excluded from the strike, so not all of the union's 49,000 Chrysler members are picketing today.

The Detroit News has workers' reactions to the strike and the Free Press has background on the negotiations. MarketWatch and the Wall Street Journal (subscription) are also covering this story in detail.

Posted at 11:52 AM
Posted to: Economy, Labor
Share via

The Republicans Yuk It Up In Michigan

This is how low the bar is set for the 2008 Republican front-runners' debate performances: Don't screw up, and make us laugh at least once.

That's according to most of the news coverage, anyway. Of Fred Thompson's long-awaited debut in yesterday's GOP primary debate in Michigan, the general assessment is no, he didn't screw up, and yes, that one thing he said at the end was kind of funny.

"I've enjoyed watching these fellas," the former Tennessee senator said as things were winding down. "I've got to admit, it was getting a little boring without me."

Good line, were it not for the fact that the debate wasn't terribly exciting with him either. He didn't scuffle with any of his eight rivals there, so there were no fireworks. Nor, as Rich Lowry also observed, were any of the "Law & Order" star's lines very funny. Does it matter? Thompson's catching a lot of flak for a rocky campaign launch -- before CNBC aired the debate, Radar magazine went up with a YouTube-laden "blooper reel" feature -- but his ready-made support in the polls guarantees him top-contender status. That support, remember, was there even before he officially entered the race. Unless he goofs up horribly on the national stage, it isn't going away because of one disappointing debate performance.

Thompson's viability is rooted less in who he is than who he is not. So voters might be better served by also paying attention to how Rudy Giuliani and Mitt Romney fared, even though this was their umpteenth televised debate.

Continue reading "The Republicans Yuk It Up In Michigan"

Posted at 9:15 AM
Posted to: Campaigns, Democrats, Economy, Fred Thompson, Hillary Rodham Clinton, Iran, John McCain, Middle East, Mike Huckabee, Mitt Romney, Republicans, Rudy Giuliani, Taxes, WH 2008
Share via

October 03, 2007

Nazareth's Departure Will Leave SEC Without Democratic Voice

Annette Nazareth, the last Democrat standing on the Securities and Exchange Commission, is planning to leave her post in the coming months, the agency announced yesterday. Her move leaves the possibility of a three-person, all-Republican SEC if officials fail to fill two empty seats quickly. The other Democratic commissioner, Roel Campos, exited two weeks ago.

USA Today explains this morning that a one-sided commission is "not without precedent," and it's not uncommon for more than one seat to remain unfilled at any given time. "But what distinguishes the current SEC from previous incarnations is the gulf that has developed between positions championed by Republicans Paul Atkins and Kathleen Casey, and those supported by Nazareth and Campos."

For example, the Wall Street Journal (subscription) notes that, most recently, commissioners have differed on whether to give "shareholders the ability to nominate their own candidates for corporate boards and place their names on company-issued proxy ballots."

Only three of the five SEC chairs are allowed to be filled by members of the same party; the Senate and President Bush will be required to fill Nazareth's and Campos' seats with Democratic commissioners.

MarketWatch and the Washington Post have more on this story.

Posted at 7:47 AM
Posted to: Economy
Share via

September 27, 2007

Juan Williams: Bill O'Reilly Not A Racist

UPDATED.

We meant to go up with something on the Bill O'Reilly controversy du jour on Tuesday, but more pressing news did not permit. The Lede beat us to it: "Mr. Reilly [sic] is guilty of being sheltered, old-fashioned and possibly exhibiting a casual racism." Maybe. We decided to put the question to his sparring partner in the now-infamous interview, NPR's Juan Williams.

Williams, a prominent political journalist who is also black, is the liberal counterpoint on "FOX News Sunday." We reached him by phone on Tuesday, and asked if he thought O'Reilly was a racist. His answer was, "No."

Continue reading "Juan Williams: Bill O'Reilly Not A Racist"

Posted at 9:00 AM
Posted to: Don Imus, Economy, FOX News, Media, Race
Share via

September 26, 2007

Tentative GM-UAW Deal Ends Two-Day Strike

General Motors and the United Auto Workers reached a tentative deal early this morning to end a massive national strike that brought the Detroit-based automaker to a halt for two days. Plants will be up and running again today as thousands of unionized employees head back to work.

The four-year contract agreement still needs to be ratified by UAW members and its details are sketchy, but the Wall Street Journal (subscription) reports that the deal includes "a historic restructuring of GM's obligations for UAW retiree health care." According to a GM press release, the agreement establishes "an independent retiree health care trust" for the approximately 74,000 unionized GM workers.

"This agreement helps us close the fundamental competitive gaps that exist in our business," GM Chairman and CEO Rick Wagoner said in the release.

"'We're proud of this tentative agreement," UAW President Ron Gettelfinger also said in a statement, "and we look forward to getting into the field and discussing it with our membership."

The Detroit News and Detroit Free Press have full coverage of the labor negotiations and the tentative agreement.

Posted at 7:50 AM
Posted to: Economy
Share via

September 24, 2007

UAW Calls Strike As Deal Hits Impasse

UPDATED.

As promised, about 73,000 unionized workers walked off the job at several General Motors plants nationwide this morning when the automaker and the United Auto Workers failed to settle contract disagreements by an 11 a.m. deadline set earlier by union leaders. "The work stoppage represented the first significant contract-related GM labor strike since 1984, when the UAW struck 25 facilities for 13 days," the Wall Street Journal (subscription) reports.

It wasn't immediately clear exactly why GM and UAW officials could not come to an agreement in time to avoid the walkout.

"The company walked right up to the deadline like they really didn't care," UAW President Ron Gettelfinger said at a press conference this afternoon, placing the blame squarely at the feet of GM negotiators. "We will be going back to the bargaining table today.... We expect that the company would move rather expeditiously on the open issues," he continued.

In a statement released prior to the walkout, GM announced: "The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company. We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors."

Continue reading "UAW Calls Strike As Deal Hits Impasse"

Posted at 3:55 PM
Posted to: Economy
Share via

September 21, 2007

Cribs & Lunch Pails Spark New 'Made In China' Concerns

The latest round of recalled goods again centers around children's products made in China. This time, the Consumer Product Safety Commission is recalling about 1 million Simplicity baby cribs because of design flaws that can lead to the entrapment or suffocation of infants. At least three children have died and seven have been trapped by the drop side of Simplicity cribs, which are manufactured in China.

The Chicago Tribune, which will publish its investigation into the April 2005 death of 9-month-old Liam Johns this weekend, attributes the recall to its reporting on the matter. "More than two years after the child died, following the paper's inquiries, the CPSC sent an investigator earlier this week to finally retrieve the crib and examine its flaws," the Tribune reports today. "Three days later, the agency announced the massive recall."

The CPSC Web site has details on the specific models being recalled.

And in an unrelated story today, public health officials in California are recalling 300,000 canvas lunch boxes, also made in China, which the state has given away for free over the past three years to promote healthy eating habits. At least some of the lunch boxes are believed to contain harmful levels of lead, the California Department of Public Health said Thursday.

The two latest recalls come after a spate of recent scares over the safety of Chinese-made food products and toys have increased public scrutiny of imports from China.

Posted at 3:27 PM
Posted to: China, Economy
Share via

Do Not Call... Ever

It's dinner time. The phone rings. You get up from the table to answer it, but the person on the other end can't even pronounce your name right. No, it can't be. It's... a telemarketer!

For many Americans, this nightmare ended four years ago, when the Federal Trade Commission began allowing citizens to enter their phone numbers in a national Do Not Call registry. But what many people might not know is that the list is not permanent. Numbers placed on the registry will be dropped from the list after the first five years, meaning the first lucky citizens to make their phones off-limits to telemarketers when the service was launched in June 2003 will have to re-register to keep from fielding annoying calls once again.

Continue reading "Do Not Call... Ever"

Posted at 2:31 PM
Posted to: Congress, Economy
Share via

September 20, 2007

Jena Puts Race Back In The Headlines... For Now

CNN anchors Kyra Phillips and Tony Harris have been waxing poetic about the state of race relations today from Jena, La., where thousands, possibly tens of thousands, have gathered to protest criminal charges brought against seven black teens who jumped a white classmate last year.

This latest national Rodney King moment reminds us of the early days of the Duke lacrosse rape case, which inspired intense soul-searching about the state of race relations in this country that quickly came to a halt once it became clear the accusations were a whole lot of bunk. The New York Times, a primary driver of the race narrative in that story, never revisited the issue in its subsequent reporting (though the ombudsman did) after the charges were dropped and DA Mike Nifong was stripped of all credibility.

The Jena case may have its own dodgy prosecutor. The LaSalle Parish District Attorney, Reed Walters, initiated the national outcry over this case when he charged the seven high school students -- including three minors -- with attempted murder and conspiracy to commit second-degree murder. Given the facts, his effort to lock the teens up until they reach middle age seems both patently foolish and grossly punitive. Walters eventually scaled back the charges to aggravated battery, but the damage was done.

Enter Al Sharpton and Jesse Jackson.

Continue reading "Jena Puts Race Back In The Headlines... For Now"

Posted at 6:30 PM
Posted to: Economy, Media, Race
Share via

Bush Riffs On Iran, MoveOn And 'Missing' Rumsfeld

Proving yet again that his lame-duck status is the media's gain, President Bush treated the White House press corps to a freewheeling Q&A session this morning, in which the explainer in chief talked about the threat of war with Iran, that MoveOn ad, the GOP's record on race relations -- and even his feelings.

Before taking questions, though, the president scolded Democrats for failing to promptly renew a federal health insurance program for low-income children. "Unfortunately, instead of working with the administration to enact this funding increase to children's health care, Democrats have passed a bill they know will be vetoed."

Congressional negotiators are working to reconcile the House and Senate bills under threat of veto from Bush for provisions that raise the income ceiling for eligibility.

"One of the [Democratic] leaders said a veto would be a victory," Bush said, visibly irked. He was referring to Rep. Rahm Emanuel, who said this week that a White House veto of final SCHIP legislation might be read as opposition to insuring poor children, which would be a "political victory" for Democrats.

Bush said that he has backed SCHIP since his days as governor of Texas, but that he opposed offering federally funded health care to children from families earning $80,000. The income ceiling is actually not that high in either the Senate or House bills, though some states are permitted to issue waivers to families earning around that much. Democrats want to roll back a policy introduced by the White House last summer that prohibits SCHIP coverage for households earning two and a half times the poverty level, or $51,625 for a family of four. They contend that private insurance is prohibitively expensive for some middle-income households.

The president also said he opposed all new taxes, including the cigarette tax hike that would help fund SCHIP. "There's no need to raise taxes. I believe this is a step toward federalization of health care," Bush said. "Their proposal is beyond the scope of the program."

Continue reading "Bush Riffs On Iran, MoveOn And 'Missing' Rumsfeld"

Posted at 11:23 AM
Posted to: Bush Administration, Campaigns, Congress, David Petraeus, Donald Rumsfeld, Economy, Iran, Iraq, Middle East, Military, President Bush, Republicans, Taxes, WH 2008
Share via

September 18, 2007

Bye-Bye, TimesSelect

We did it!

OK, maybe not. Nonetheless, there will be much cheering come midnight tonight when the New York Times finally scraps its unpopular experiment with paid content, TimesSelect. Readers and columnists alike balked when the company announced two years ago that non-subscribers would be charged $49.95 a year for access to the online columns of Tom Friedman, David Brooks and Maureen Dowd et al. As widely predicted, online readers used to consuming the Times for free did not jump at the chance to cough up bucks for the opinion columns.

According to New York Times Co., the decision to make its columnists available to all was a response to the changing online content environment. The Web site receives more indirect readers than readers who go directly to NYTimes.com, and the company saw "opportunities for more page views and increased advertising revenue."

Soon before TimesSelect went up, Slate's Timothy Noah conducted an online survey of how much readers would pay for the Times' columnists. Let's just say some were more popular than others.

PaidContent.org has a writeup of the Times Co.'s decision. There is much rejoicing in the blogosphere. Henry Blodget thinks the decision is financially savvy, but Recovering Journalist has mixed feelings.

Posted at 10:57 AM
Posted to: Economy, Media, New York Times Co.
Share via

August 30, 2007

Bernanke Reassures Investors

Federal Reserve Chairman Ben Bernanke promised that the Fed is keeping a close eye on financial markets and that it "is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets."

His statements were made in a letter written to Sen. Charles Schumer, D-N.Y., released Wednesday. Bernanke has come under criticism for refusing to cut the federal interest rate or to loosen regulations on mortgage funding companies Fannie Mae and Freddie Mac during a recent financial shake-up that sent stock markets worldwide tumbling.

Continue reading "Bernanke Reassures Investors"

Posted at 12:52 PM
Posted to: Charles Schumer, Congress, Economy, Senate
Share via

August 23, 2007

Et Tu, SpongeBob?

First it was Thomas. Then came Elmo & Dora. Now the furor over tainted toys made in China has reached yet another beloved children's character -- SpongeBob SquarePants.

The U.S. Consumer Product Safety Commission has issued a new recall of more than 300,000 items manufactured in China, including a quarter of a million address books and journals featuring the blue-eyed, yellow-visaged Nickelodeon character, because of concerns about excessive levels of lead. China, meanwhile, appears to be growing weary of all the product safety accusations coming from the United States and is now claiming U.S. soybeans are tainted with pesticides and poisonous weeds, AP reports.

Reuters has more on the latest toy recall. And Slate has a report on why protecting American children from lead poisoning will require more than just avoiding the "Made in China" label.

Posted at 2:05 PM
Posted to: China, Economy
Share via

August 21, 2007

Market Crisis: In Bernanke We Trust?

To state the obvious, it's no fun being a new homeowner or investor these days. Today's news that foreclosures are up 93 percent from a year ago says it all. So where do we go from here?

Expect the issue to be harped on -- and distorted -- on the campaign trail. As CNBC's Bob Pisani observes, more than half of the foreclosures are in states that are packed with votes (California, Florida, Michigan, Ohio) and/or are emerging battlegrounds (Nevada, which leads the country with one foreclosure for every 199 households).

Democratic candidates including Christopher Dodd and John Edwards play right into critics' hands when they suggest the federal government throw money at the problem. The few recent polls on the subprime lending meltdown indicate Americans hold lenders and borrowers responsible for the default crisis.

Continue reading "Market Crisis: In Bernanke We Trust?"

Posted at 12:11 PM
Posted to: Campaigns, Christopher Dodd, Congress, Democrats, Economy, John Edwards, WH 2008
Share via

August 17, 2007

Fed Aims To Ease Credit Crunch

In a surprise announcement, the Federal Reserve said today it was trimming the discount rate half a point to 5.75 percent, in an effort to rein in the recent credit crunch that has sent world markets reeling.

The move sent stocks rallying both on Wall Street and in Europe, where the volatile conditions have prompted officials to call for an international probe of credit-rating agencies and their impact on the global market.

The Wall Street Journal reports that "the Fed's decision to lower the discount rate and ease the terms of discount borrowing but not to cut the fed-funds target of 5.25% suggests that for now it believes the problems in the markets are mostly related to the availability of cash, not the price of cash." So far, economists are giving the Fed's decision mixed reviews.

The Journal has a copy of the Fed's announcement and a primer on the "discount window." Bloomberg News, Financial Times and New York Times are all following this story.

Posted at 12:44 PM
Posted to: Economy
Share via

Shaky Market Prompts Calls For International Probe

Yet another day of extreme volatility in worldwide markets sent investors reeling again yesterday. In the U.S. alone, the Dow Jones plummeted 340 points only to rally in its final hour and finish essentially even with where it started; another roller-coaster ride is expected today. U.K. markets finished the day at their lowest level in nearly a year, and Asian markets are anticipating their biggest weekly fall in a decade.

This week, though, European countries are asking the international economic community to do something about it -- specifically, to figure out "whether conflicts of interest between credit-rating agencies and the banks they oversee contributed to the market slide that continued Thursday around the world," the Washington Post reports.

Leaders want an explanation for what they believe was an inadequate warning about problems with the U. S. subprime mortgage business, which triggered the recent jitters. And some American investors are looking toward the Federal Reserve to quiet the markets -- in the form of a cut in interest rates -- even before its scheduled Sept. 18 meeting.

AP and the New York Times have more information on the next steps for the world market.

Posted at 8:03 AM
Posted to: Economy
Share via

August 14, 2007

The China Conundrum

The Chinaphobia train grew a little more powerful today, but there are various ways to view our emerging supercompetitor to the East.

One is the What, Us Worry? approach. The repetition of product recalls and bans this year exposed a large, ugly gash in the exports machine China's become. Sure, they can turn out commodities faster and cheaper, but where's the quality control? For nations including the U.S. and Germany, which lead China in exports but not for long, this is potentially good news. Those fearing China's economic reach will soon envelop the world have good reason to suspect the communist giant can't logistically handle the task after all.

The other, darker vision of what's ahead: China, as both manufacturer and investor, is simply too wealthy and ambitious to ignore. The relationships China has developed with countries like Iran and Russia have given rise to an alternative axis of world powers that has successfully stymied the agendas of the U.S. and EU. China is rising, and no amount of crowing about its lax human rights record and alarming income gap will change that.

Continue reading "The China Conundrum"

Posted at 6:35 PM
Posted to: Africa, Asia, Bush Administration, Campaigns, China, Democrats, Economy, Sudan, WH 2008
Share via

August 10, 2007

Hang On To Your Piggybanks...

...things aren't looking so hot on Wall Street. MarketWatch, the Washington Post, Forbes and the New York Times are following the queasy developments.

Posted at 12:30 PM
Posted to: Economy
Share via

July 27, 2007

Global Markets Tumble; GDP Gathers Steam

UPDATED.

Global investors got jittery after yesterday's stock market drop-off in the United States. Asian markets had some of their worst days of the year, with falling indices in Japan, South Korea, Taiwan and Hong Kong.

The Dow Jones Industrial Average fell more than 400 points Thursday amid a slew of fresh concerns about the housing market, credit quality and energy prices. Thursday's tumble rivaled the biggest loss of the year in February, just a week after it hit a record high -- over 14,000 -- for the first time.

Meanwhile, the Commerce Department reports today that U.S. economic growth picked up in the second quarter, lifting the gross domestic product 3.4 percent from April through June -- a sharp rise from the disappointing 0.6 percent increase in the first quarter.

Bloomberg News and the New York Times report on the reasons behind the better-than-expected GDP gains. And CNNMoney.com and the Wall Street Journal have more on the stocks plunge.

Posted at 10:39 AM
Posted to: Economy
Share via