January 15, 2008
by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, and Ali Frick
ECONOMY

In Need Of A Jump-Start

Congress returns this week to focus on a plan to "jump-start the economy and try to shorten the slowdown that many economists say has already begun to take hold." House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) have openly expressed their desire to work with President Bush to pass an economic package aimed at buttressing consumer confidence and avoiding a recession. "We want to work with the president in a bipartisan way to develop a fiscal stimulus package" that is "timely, targeted, and temporary," Pelosi said in a statement yesterday after meeting with Federal Reserve Chairman Ben Bernanke. The Fed Chairman, who has signaled his plans to cut interest rates by a half percentage point at the end of the month, reportedly told Pelosi that some stimulus is needed, a shift from last week when he said his thoughts on a fiscal stimulus were "inchoate." Both the administration and Congress appear to agree on the need for immediate action. Treasury Secretary Henry Paulson said any stimulus package should be put into effect swiftly, and House Financial Services Committee Chairman Barney Frank (D-MA) added that any stimulus package has to "get money into the economy quickly."

CURRENT STATE OF ECONOMY: With plummeting home sales, oil near $100 a barrel, and slowing employment, the current economic environment is perilous for a growing number of Americans. "We begin the new year with America's economy in the worst shape and the middle class at its most uncertain since the days immediately following 9/11," said Sen. Charles Schumer (D-NY). A Labor Department report last month showed the nation's unemployment rate jumped to five percent, a two-year high. "Sales at U.S. retailers stalled in December, capping the weakest holiday shopping season in five years." Additionally, economists at Goldman Sachs, Merrill Lynch, and Morgan Stanley have said the United States is probably slipping into a recession. "With signs of economic stress abounding, Bush's approval for handling the economy was 33 percent," compared with 36 percent in November. A new Washington Post/ABC News poll reports that "concern about the economy has jumped to the front of voters' minds as optimism about the nation's direction has dipped to its lowest point in more than a decade."

STIMULUS PLANS: Congressional leaders are insisting that conservatives not inject their desire to extend the Bush tax cuts for the wealthiest Americans "into negotiations of a short-term rescue package intended to dampen the impact of a recession." But some Republicans are insisting on keeping long-term tax cuts on the table. "[I]t isn't too soon to talk about making permanent the Bush tax cuts. ... I think that has to be part of the discussion," said Rep. Dave Camp (R-MI). The President is reportedly "weighing a tax rebate targeted at low- and middle- income Americans, according to a government official. Bush probably will announce the plan in his Jan. 28 State of the Union speech. Meanwhile, Democratic leaders in Congress are designing their own package, which may include public works spending, aid for the poor and a tax rebate." Leading Democratic presidential candidates John Edwards, Hillary Clinton, and Barack Obama have unveiled stimulus plans of their own. By contrast, Republican candidates Mitt Romney, John McCain, and Rudy Giuliani "are much more skeptical about short-term government rescues." The Center for American Progress has recommended that any stimulus plan adhere to four principles: 1) stem the decline of home values, 2) ensure the stimulus contains immediate impact, 3) target the benefit to those recipients most likely to spend it, and 4) strengthen the economy in short-term ways that inure to America's long-term economic benefit.

SPOTLIGHT ON MICHIGAN: Today, voters in Michigan head to the polls in the state's primary with economic concerns looming at the forefront of their minds. Michigan "has lost about 275,000 industrial jobs since 2000, and has the nation's highest unemployment rate, 7.4 percent." Detroit has been hit by "more foreclosure filings than any other city in the one hundred largest US metropolitan areas." The Big Three U.S. automakers have shed both white- and blue-collar jobs, and cutbacks from auto suppliers have spread through other sectors of the Michigan economy. But as they campaign in Michigan, most Republican candidates "are sticking to their existing proposals for lower taxes and less regulation," unwilling to propose a larger role for government intervention to help revive the sagging economy. New York Times columnist Paul Krugman writes that "recent statements by the candidates and their surrogates about the economy are quite revealing." For instance, Sen. John McCain (R-AZ) acknowledges, "The issue of economics is not something I've understood as well as I should."

UNDER THE RADAR

CONGRESS --  BUSH'S POCKET VETO OF DEFENSE BILL TO BE ADDRESSED AS CONGRESS RETURNS: As the House of Representatives opens its 2008 session today, it will return to work on "a major Pentagon policy measure" lingering from 2007 "that was rejected in a surprise move by President Bush late last year." On Dec. 28, after Congress had departed for the holiday break, Bush announced he would veto the $696 billion defense authorization bill because of "concerns over language that" he said "could endanger Iraqi assets held in U.S. banks" from legal claims by victims of Saddam Hussein's government. Bush's veto also denied upgrades to military health care, cancelled a 3.5 percent pay raise for service members, and caused some "bonus programs" for the Air Force to expire. Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) condemned Bush's veto, saying that the White House "should have raised its objections earlier." Despite their objections, "senior legislative aides said Monday that Democrats were not inclined to mount a major fight over the veto" and "the most likely approach would be to vote to send the Pentagon measure back to the Armed Services Committee, where the disputed provision could be quickly corrected." "Lawyers for American victims of Saddam Hussein's crimes," however, are pushing for Congress to not give in to Bush's veto.

IRAQ -- CONSERVATIVES LAUD 'SUCCESS' OF FAULTY DE-BAATHIFICATION LAW: This morning, Secretary of State Condoleezza Rice "split off from President Bush's Mideast tour" to make a surprise visit to Baghdad, where she said that national reconciliation has moved along "quite remarkably." She praised the de-Baathification law passed last weekend, saying it was "clearly a step forward for national reconciliation [and] for healing the wounds of the past." Conservatives have seized on the law to claim political victory in Iraq. Yesterday, Sen. John McCain (R-AZ) said the law showed that "now we're succeeding politically." The National Review echoed these sentiments: "Yesterday we were losing in Iraq, today we are winning." William Kristol, writing in The New York Times, accused Democrats of refusing to "admit real success" in Iraq. Yet as the Times reported yesterday, "the legislation is at once confusing and controversial, a document riddled with loopholes and caveats to the point that some Sunni and Shiite officials say it could actually exclude more former Baathists than it lets back in, particularly in the crucial security ministries." University of Michigan Professor Juan Cole pointed out that the law was spearheaded by Sadrists, who tend to be hard-line anti-Baathists. "Somehow...[this] suggests to me that the law is not actually, as written, likely to be good for sectarian reconciliation," he said.

AFGHANISTAN -- PENTAGON TO DEPLOY MORE TROOPS FOR 'FORGOTTEN WAR': Defense Secretary Robert Gates approved a plan yesterday to send 3,200 additional Marines to Afghanistan. President Bush is expected to finalize the deployment order, which will supplement the current U.S.-led international force of 54,000 troops. For months, Gates has pressured NATO allies to contribute additional troops to the effort. The troop increase comes more than six years after the initial U.S.-led invasion. Troop levels are at the highest they have been in the conflict, yet the situation has continued to "dramatically deteriorate." A plan put forth by the Center for American Progress in September also called for "a massive renewed commitment" in aid and troop levels to stabilize the country and counter the insurgency, and proposed an "increase [of] troop levels by approximately 20,000 by redeploying troops from Iraq to Afghanistan." American Progress scholars Spencer Boyer and Caroline Wadhams also urge U.S. leaders to "demonstrate to the world that Afghanistan is a priority" and to cede some U.S. control over forces in Afghanistan in order to gain more allied involvement.


THINK FAST

Today's Republican presidential primary in Michigan is "this election year's first clear referendum" on the economy, state voters' top concern. Conditions have left Michigan "in a virtual single-state recession" with an unemployment rate of seven percent, the highest in the nation.

"Sen. Chris Dodd (D-CT) returns full time to the Senate this month with high expectations from his colleagues -- and particularly his leadership -- that he will play a key role in their plans to make the economy a dominant issue this year." An aide added that "Dodd will not lose focus on the FISA issue."

With "just 32 percent of Americans" now approving of the way he is handling his job, "President Bush starts the last year of his presidency with the worst approval rating of his career." Sixty-six percent of Americans disapprove of Bush's job performance.

President Bush yesterday "launched a rare round of intensive personal diplomacy with Saudi King Abdullah aimed at winning support for a variety of American objectives such as rebuilding Iraq, pressuring Iran, fighting al-Qaeda and backing the U.S.-brokered peace talks between Israel and the Palestinians."

The House Intelligence Committee has postponed testimony from former CIA official Jose Rodriguez Jr., who destroyed videotapes showing harsh interrogation tactics, "after being told that he would not answer questions without a grant of legal immunity for his testimony." Senior CIA lawyer John A. Rizzo is still scheduled to appear tomorrow. 

Federal authorities expect to "deport more than 200,000 immigrants this year who are convicted criminals serving time in prisons and jails across the country," said Julie Myers of the Immigration and Customs Enforcement agency, which is spearheading the effort.

"Patients are waiting longer for care in the nation's emergency rooms, a potentially deadly result of the shrinking number of emergency departments and rising demand for emergency services, according to a new study by researchers at Harvard Medical School." Between 1997 and 2004, median waiting times increased by 36 percent.

Iraqi defense minister Abdul Qadir said Monday that Iraq "would not be able to take full responsibility for its internal security until 2012, nor be able on its own to defend Iraq's borders from external threat until at least 2018.' The predictions were "even less optimistic than those he made last year."

And finally: Love can transcend politics. Meghan McCain, Sen. John McCain's (R-AZ) "bloggy" daughter, recently went on a date with "an ardent Ron Paul supporter." "The date became all about him trying to convince her about Paul," noted one of Meghan's friends. "Finally she said,'You know my dad's running for president. You're not going to change my mind!'"


INTERNSHIPS

The research team that brings you The Progress Report and ThinkProgress.org needs spring interns! Click here for more information.

GOOD NEWS

"Yale University Monday became the latest high-priced, highly selective private college to reduce tuition for families across a broad range of incomes."

STATE WATCH

MISSOURI: Gov. Matt Blunt (R) proposes a plan that would make mortgage fraud a state felony.

MARYLAND: Baltimore finds that the subprime mortgage crisis hurts women in particular.

CALIFORNIA: State's independent budget analyst says Gov. Arnold Schwarzenegger's (R) call for across-the-board spending cuts is "misguided."

BLOG WATCH

THINK PROGRESS: White House Press Secretary Dana Perino falsely claims President Bush has never expressed "anything but support" for the intelligence community's findings on Iran.

EDITOR & PUBLISHER: New York Times news article contradicts claim on Iraq in column by Bill Kristol on the same day.

GLENN GREENWALD: Conservative claims of "judicial activism" are usually made with little understanding of the legal issues involved.

DAILY GRILL

"I've not heard the President express anything but support for the intelligence community."
-- White House Press Secretary Dana Perino, 1/14/08

VERSUS

"He told the Israelis that he can't control what the intelligence community says, but that [the National Intelligence Estimates] conclusions don't reflect his own views" about Iran's nuclear weapons program.
-- Senior administration official, 1/08