Obama Rolls Out the TARP
Time reports Congress will support Obama on releasing another $350B: “So what did Obama say to charm his former colleagues into blocking the resolution? He promised to write down, in a detailed manner, how his administration will dole out the funds once he is sworn in next Tuesday. ‘The conditions have to do with tracking the money, how the money can and can’t be used, accountability for the money, what dividends cannot be spent with it, the executive pay issues,’ said Senator Carl Levin … ‘In other words there’s a whole host of misuses of the first half which have to be avoided the second time around.’ The letter, which may come from Obama’s economic adviser Larry Summers, is expected to come before Thursday’s vote…”
AP picks up lingering Dem concerns: “Sen. Evan Bayh, D-Ind., who supported the bailout last fall and is up for re-election in two years, described himself as ‘open-minded but skeptical … I don’t get the sense of impending crisis today that I did at the time of original enactment. I need to be persuaded about need.” … several Democrats emerged from Tuesday’s meeting seeming to agree with where Obama was heading. ‘I feel much more comfortable,’ said Sen. Patty Murray of Washington … Even so, she said she hasn’t yet decided on how to vote now amid outcry from her constituents.”
OurFuture.org interviews co-chair of the House Progressive Caucus Rep. Raul Grijalva on TARP accountability: “Is what the President-Elect said enough? I don’t think so. We have to do more.”
MSNBC’s Rachel Maddow interviews Rep. Barney Frank: “…because George Bush screwed it up, Barack Obama doesn’t get to use it… . Why that should be an argument … I do not understand. … But we’re not simply leaving it to trust…”
Do Bernanke, Summers, Etc. Know What They Are Doing?
W. Post on Bernanke’s game plan: “Fed leaders offered a more detailed vision than have aides to Obama. Lawmakers on both sides of the aisle have voiced consternation and even anger that they have not been given more specifics on how the money would be used. Among other steps, Federal Reserve Chairman Ben S. Bernanke and vice chairman Donald L. Kohn suggested taking troubled assets off the books of banks — a strategy that Fed officials backed before it was abandoned months ago — and also using some of the money to help homeowners at risk of foreclosure.”
LA Times hears befuddlement: “Bernanke’s call for the new administration to buy or guarantee troubled assets left many listeners baffled. The Fed chairman worked closely with Paulson selling Congress on the troubled asset program by offering elaborate explanations for how the purchase of toxic securities would help the financial system, but then stood by silently when the Treasury secretary dropped that plan of attack. ‘The idea of [Bernanke] coming back to the notion of removing troubled assets now is mystifying’ said Laurence H. Meyer, a former Fed governor. ‘It’s one of the most confusing things I’ve ever seen.’”
W. Post’s Steve Pearlstein defends calls for more TARP funds: “The reason there is still a credit crunch isn’t primarily because bankers are too greedy or even that they are too cautious, although they may be both. The better explanation is that banks can no longer can sell their loans into the secondary market, where loans have long been packaged into bonds and sold to investors. This giant ‘shadow banking system’ has been effectively shut down for the past year after investors lost confidence in the quality of the loans within the packages. The Federal Reserve is hoping to jump-start those secondary markets by buying those packages of consumer and small-business loans directly, as has already been done with some success for home mortgages and commercial paper. That effort, however, may well require additional funds from the Treasury, which is one reason the Obama team has asked Congress to release the second round of bailout money.”
W. Post’s Harold Meyerson demands more accountability: “a bill that Barney Frank is promoting in the House, which would direct banks that choose to take bailout funds to start lending to creditworthy borrowers and designate no less than $40 billion for mortgage relief, is necessary if Congress is to authorize the Treasury to spend another $350 billion on TARP. Over in the Senate, the Democrats seem inclined to think that the need for such legislation is obviated by President-elect Obama’s promise to administer the TARP in the ways that Frank’s bill would mandate. If Obama’s appointees inspired sufficient trust that they would be willing to take on the banks, such legislation would be unnecessary. Unfortunately, they don’t.”
The Nation’s Robert Scheer demands deliberation: “Why rush to throw another $350 billion of taxpayer money at the Wall Street bandits and their political cronies who created the biggest financial mess since the Great Depression? We don’t have time, President-elect Barack Obama’s key economic adviser, Lawrence Summers, insisted in a letter to Congress on Monday, promising that the new infusion would not be squandered as was the first installment. But given that Summers is personally as responsible for this meltdown as anyone, why should we trust him on this?”
Dean Baker cautions on how homeowner help is structured:: “In many cases, banks may be paid tens of thousands of dollars to leave a homeowner in a home in which they have no equity. At a time when Congress is debating extending the State Children’s Health Insurance Program at a cost of $3,000 per kid, it is not clear how many kids’ health care they or the public would be willing to sacrifice to pay a bank to leave someone in a home in which they have no equity.”
SCHIP Vote in House Today
W. Post reports SCHIP expansion expected to pass, but more work is left to do: “Some supporters of the expansion, while urging quick action, said it nevertheless falls short of Obama’s campaign pledge to guarantee health care for every American child. ‘This is certainly not the promise to cover every child that the president-elect ran on,’ said Susan Gates, general counsel at the Children’s Defense Fund, who said the legislation would still leave as many as 5 million children with no insurance and millions more with intermittent or partial coverage.”
D-Day: “I look forward to passage of the SCHIP expansion, incremental though the progress may be.”
W. Post on provision to cover children of legal immigrants: The one remaining sticking point concerns the fate of recently arrived legal immigrant children and pregnant women. They are currently required to wait five years before applying for coverage. The House bill would give states the option of allowing legal immigrants into the program. The Senate version, released Monday afternoon by Finance Committee Chairman Max Baucus (D-Mont.), would maintain the status quo, although Baucus said he looks forward to an opportunity to support addition of the immigrant provision as the bill moves forward.
TNR’s Jonathan Cohn: “immigrant children are far more likely than native-born children to go without health insurance, not because their parents are less likely to be workng but because their parents are more likely to work in low-wage jobs that lack employer benefits. As a result, these children are less likely to get preventative services and more likely to use emergency rooms. … They end up less healthy and, frequently, their families end up weighed down with huge medical bills. Meanwhile, the costs of subsdiziing what the families can’t pay inevitably ripple through the rest of the health care system.”
Latina Lista: “Do we not fly in children from all parts of the world who are suffering major illnesses and provide them opportunities to live healthy lives? What is the difference if the children are legally here and the health opportunities are used to prevent them from suffering worse diseases that could be costly and life threatening?”
Meanwhile, LA Times reports: “states are slashing health services to their poorest residents amid the economic downturn.”
Energy Dept. Nominee Steven Chu Testifies
USA Today reports on friction between Chu and Bayh: “On global warming, Chu said the United States should lead the way in cutting greenhouse gases. Chu … said he hopes that China — the world’s largest source of the main greenhouse gas — will follow … ‘The United States should take the first step and hopefully the Chinese will immediately, very closely follow,’ Chu said. That drew a gentle rebuke from Sen. Evan Bayh, D-Ind. ‘That approach will not be enacted by the U.S. Congress.’”
Climate Progress slaps Bayh: “The most worrisome thing I heard was when Evan Bayh (D-IN) said that he wasn’t going to be able support a climate bill before China bought in to emissions restraints in a serious and verifiable manner. That is the “China Excuse” for inaction, and it inevitably leads to The U.S.-China Suicide Pact on Climate, where they won’t act unless we do and we won’t act unless they do. Obama must break that cycle — and I expect he will.”
TNR’s Brad Plumer analyzes Chu’s remarks on coal: “Chu explained to the committee that if the world continued to build and operate coal-burning plants at its current rate, then, yes, the effects on climate would be horrific—a nightmare, you might say. But, he added, two-thirds of the world’s coal reserves are concentrated in the United States, Russia, China, and India, and even if we stopped burning coal, he argued that it’s doubtful the other three countries will abandon it. So, he argued, it’s “imperative to use coal as cleanly as possible,” and said that he was optimistic as a scientist that it was possible to develop the technology to safely sequester carbon emissions … No word on whether carbon sequestration could be more cost-effective than other clean-energy sources, which is really the key question here … [asked] how much of a priority he’d make carbon sequestration research … Chu said that efficiency should be the Energy Department’s top priority…”
What Was That About Obama Not Getting Along With Dems?
The Hill reports Obama and Senate Dems had a nice chat about econ recovery: “President-elect Obama used his star power on Tuesday to quiet Democratic critics who had initially balked at his plan to revive the economy. Obama’s promise, delivered at a private lunch on Capitol Hill, to scale back contentious tax cuts in a proposed stimulus package, appeared to win over Senate Democrats. Once the doors of the closed-door lunch reopened, his former colleagues were back to swooning over their president-elect, who swept through the chamber with all the trappings of a sitting president. ‘What I believe from what I heard is that they’re tailoring down the numbers,’ said Sen. Dianne Feinstein (D-Calif.). ‘There was absolutely no dissension in the caucus,’ said Majority Leader Harry Reid (D-Nev.).”
Wall Street Journal reports on the House Dem plans: “State and local governments would benefit from more than $160 billion in federal aid under a plan pushed by House Democratic leaders … some $80 billion would be steered toward a new “education stabilization fund,” which would be used to help states avoid cutbacks in teachers and classroom programs. An additional $87 billion would be set aside for Medicaid, the federal-state program that helps low-income families and is facing budget constraints. A further $3 billion would be spent on certain Medicaid regulatory initiatives … Beyond aid to states, the spending package will include investments in renewable energy, such as wind and solar power, and highway and bridge construction. It will be paired with $300 billion in tax cuts for businesses and individuals.”
Washington Monthly’s Phillip Longman pushes more for rail: “America’s dilapidated rail lines ought to be a prime candidate for some of that spending. All over the country there are opportunities … in which relatively modest amounts of capital could unclog massive traffic bottlenecks, revving up the economy while saving energy and lives. Many of these projects have already begun … or are sitting on planners’ shelves and could be up and running quickly … If high-traffic rail lines were also electrified and powered in part by renewable energy sources, that investment would reduce the nation’s greenhouse gas emission by 38 percent and oil consumption by 22 percent. By moderating the growing cost of logistics, it would also leave the nation’s economy 13 percent larger by 2030 than it would otherwise be. Yet despite this astounding potential, virtually no one in Washington is talking about investing any of that $1 trillion in freight rail capacity.”
Stateline finds transportation officials worried that money now means no money later.
Wonk Room: Progressive Infrastructure Investment Creates Six Times As Many Jobs As Conservative Proposals»
Economist’s View’s Mark Thoma debunks CATO’s charge that public investment amounts to “make work.”
The Hill finds House conservatives keeping busy: “House conservatives are scheduled to release their plan to stimulate the economy on Wednesday, but GOP leaders in the lower chamber are taking a more deliberative route. Members of the conservative Republican Study Committee (RSC) are hopeful that their ideas will be folded into the yet-to-be-released GOP leadership economic stimulus package. … [The House GOP] 13-member economic stimulus working group, which will be holding an open hearing on Thursday with marquee panelists, including former Massachusetts Gov. Mitt Romney (R) and former eBay chief Meg Whitman…”