Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

Huff Post

William Alden & Shahien Nasiripour

First Posted: 11-20-10 09:01 AM   |   Updated: 11-20-10 01:55 PM

NEW YORK — For at least the fourth time since June, Federal Reserve Chairman Ben Bernanke publicly urged Congress to combat the lackluster recovery by increasing government spending, a recommendation that has gone unheeded by lawmakers.

In a speech at a conference of central bankers in Frankfurt, Bernanke once again said the Fed cannot save the economy on its own. The Fed’s recent move to add to its ballooning balance sheet by committing to buy up to $600 billion of government debt faces “limits” to its effectiveness, Bernanke said. The rest of the government, the chairman added, could aid the Fed’s efforts by hammering out a plan for stimulative spending. The right kind of spending, he noted, could help reduce the budget deficit over the long-term by first boosting economic growth.

“[I]n general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve,” Bernanke said Friday, according to his written remarks.

The fiscal policy recommendation came directly after Bernanke acknowledged it isn’t his job to make such policy proposals. “The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs,” the chairman noted.

The official parameters of his job, though, have not stopped Bernanke from engaging in backseat driving. At least four times since June — on June 9, July 21, July 22 and now Friday — he has urged lawmakers to increase spending to jumpstart the lagging economy.

But policy makers have proved to be unable to agree upon such a plan — or even propose one that’s viable. The rest of the nation has suffered as a result, as near-10 percent unemployment continues to hobble the economy. Democrats recently lost control of the House of Representatives, and a substantial part of their majority in the Senate. Voters said the dismal economy was their top concern.

To combat an ineffectual Washington establishment, the Fed has taken matters into its own hands. By buying up to $600 billion of government debt, the central bank hopes to increase the flow of money through the economy. Critics of the program, which is intended to lower interest rates and encourage corporate spending, have said the cheap money will not convince businesses to create jobs.

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As stimulus funds near end, new pain will begin

by Ronald J. Hansen – Nov. 21, 2010 12:00 AM
The Arizona Republic

If people didn’t like the federal stimulus, they may hate when it’s gone.

As the year winds down, the $862 billion plan to rescue the economy from the depths of the recession enters a new phase in which tax cuts and credits expire and countless hard-to-replace construction projects will end. Thousands of workers in some states could lose their jobs.

The political power shift brought about by the midterm elections has likely settled any lingering doubts that the stimulus will largely run out, as scheduled, in the coming months. A smaller package of federal aid that passed in August, primarily for teachers, also will rapidly disappear. With the new Republican majority in the House next year, there will be little support for similar additional measures.

Worries about the national debt and a negative view of the stimulus augur a new period when more businesses must survive on their own and governments must tighten their belts. The austerity will be widely felt.

Nearly every worker in the nation will see slightly slimmer paychecks as $400 individual tax cuts are slated to end this year.

Tax credits, such as those offering incentives for energy-efficiency improvements for homeowners, also are set to lapse at year’s end. The earned-income tax credit, which rewards the working poor, will no longer include funding for those with a third child.

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Risk Of Double-Dip Recession?

Economists See Increased Chance Of Double-Dip Recession

Huffington Post |  Ryan McCarthy First Posted: 08-16-10 01:19 PM   |   Updated: 08-16-10 01:51 PM

Buried amidst the increasingly gloomy economic news of the last few weeks — which includes stubbornly high unemployment, rising foreclosures and a grim outlook from the Fed, among other factors — is a growing sense of doom among some prominent economists.

More than a few top economic thinkers have significantly upped the chances of a return to a recession. Today, the noted bear Nouriel Roubini, the president of RGE Monitor and a professor at New York University, delivered a grim prognostication via Twitter: “Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%.”

Roubini is not alone in his concern. Last week, David Rosenberg, the Gluskin Sheff economist (formerly of Merrill Lynch), whose words have become must-read barometers of bear-ishness, said that the chances of a double-dip recession in the U.S. are now “higher than 50-50.”

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Exxon Valdez: How That Disaster Destroyed The Economy 20 Years Later

Exxon Valdez: How That Disaster Destroyed The Economy 20 Years Later

Huff Post- Jason Linkins

First Posted: 06- 8-10 05:55 PM   |   Updated: 06- 8-10 09:36 PM

Hopefully, by now, you’ve already read the oil spill apocalypse pieces penned by our own Ryan Grim — who documented “BP’s Long History Of Destroying The World” — and Sam Stein, who got the following diagnosis from a top lawyer in Exxon Valdez litigation: “[I]f you were affected in Louisiana, to use a legal term, you are just f–ked”.

Well, here’s something else depressing that you can add to your oil spill woes. The Exxon Valdez disaster, which occurred on March 24, 1989, played a major role in the collapse of the economy some 19 years later. See, as Stein documented, after lengthy litigation, Exxon managed to get the amount of punitive compensatory damages reduced from the hoped-for $5 billion to a paltry $500 million. But, back when Exxon had reason to imagine it might actually have to part with the $5 billion, the oil giant needed to find a way to cover its hindquarters. Exxon found a savior in the form of J.P. Morgan & Co., who extended the beleaguered company a line of credit in the amount of $4.8 billion.

Of course, that put J.P. Morgan on the hook for any potential judgment against Exxon. So the bank went looking for a way to mitigate that risk. Its solution made history, which you can read about in a June 2009 piece from the New Yorker‘s John Lancaster, entitled “Outsmarted.” Here’s the relevant portion:

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Insane Republicans Insane Budget Plan

It only makes sense that a party currently being wagged by fringe crazy people like Glenn Beck, Rush Limbaugh and Michele Bachmann would release its alternative budget on April Fools’ Day.

Not only does the Republican plan freeze discretionary spending for five years in the midst of a recession which, by most accounts and proved by history, will countermand any sort of economic recovery, but it also cuts taxes by 10 percent for the same Wall Street executives whose actions largely got us into this economic mess in the first place. In other words: Congratulations, Republicans, you just released a budget that rewards wealthy corporate executives while blocking any attempt to dig us out of the economic catastrophe they created.

Smart!

The only bit of Republican legislation that’d be more ridiculous would be if Michele Bachmann were to introduce a constitutional amendment thwarting a fake plot to eliminate the dollar as the form of currency in the United States.

Oh wait. She’s already done that. And 33 Republican congressmembers so far have co-sponsored the amendment. 30-plus Republicans have irrevocably tethered their wagons to the Bachmann crazy train. Excellent. Next on the agenda: a bill creating the Office of Robot Insurance, protecting us from robot attackers who use old people’s medicine for fuel. Speaking of which, the Republican plan also phases out Medicare.

The marquee item, however, in the Republican plan is their inexplicably regressive tax cut for the super rich. Wealthy Americans in the top three tax brackets would see their tax burden cut to a flat 25 percent from previous rates of 35, 33 and 28. According to the Center for American Progress, CEOs from any of the top 800 corporations would receive a tax break of around $1.5 million a year. Meanwhile, if you earn $15,000 a year, your tax break will be around $0 a year.

But get this. Under the Republican plan, Americans are given the option of paying the old tax rates instead of the new, expensive and regressive Republican rates. So, for example, if your household income is $100,000, you could pay the same tax rate as someone earning $15,000. Or you could be a swell egg and go back to your old rate. Aside from the utter lack of fairness in the notion of a $100,000 household paying the same rate as a $15,000 household, who in their right mind would voluntarily pay higher taxes?

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Dead Banks And Wall Street Bailouts??

This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts

By James Galbraith, Washington Monthly. Posted March 23, 2009.

Why the economic crisis, and its solution, are bigger than anyone has so far admitted.

Barack Obama’s presidency began in hope and goodwill, but its test will be its success or failure on the economics. Did the president and his team correctly diagnose the problem? Did they act with sufficient imagination and force? And did they prevail against the political obstacles — and not only that, but also against the procedures and the habits of thought to which official Washington is addicted?

The president has an economic program. But there is, so far, no clear statement of the thinking behind that program, and there may not be one, until the first report of the new Council of Economic Advisers appears next year. We therefore resort to what we know about the economists: the chair of the National Economic Council, Lawrence Summers; the CEA chair, Christina Romer; the budget director, Peter Orszag; and their titular head, Treasury Secretary Timothy Geithner. This is plainly a capable, close-knit group, acting with energy and commitment. Deficiencies of their program cannot, therefore, be blamed on incompetence. Rather, if deficiencies exist, they probably result from their shared background and creed — in short, from the limitations of their ideas.

The deepest belief of the modern economist is that the economy is a self-stabilizing system. This means that, even if nothing is done, normal rates of employment and production will someday return. Practically all modern economists believe this, often without thinking much about it. (Federal Reserve Chairman Ben Bernanke said it reflexively in a major speech in London in January: “The global economy will recover.” He did not say how he knew.) The difference between conservatives and liberals is over whether policy can usefully speed things up. Conservatives say no, liberals say yes, and on this point Obama’s economists lean left. Hence the priority they gave, in their first days, to the stimulus package.

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Tent Cities Across America

Cities Deal With Surge In Shantytowns

HuffPo/New York Times |  JESSE McKINLEY   |   03/25/09

New York Times:

FRESNO, Calif. — As the operations manager of a outreach center for the homeless here, Paul Stack is used to seeing people down on their luck. What he had never seen before was people living in tents and lean-tos on the railroad lot across from the center.

“They just popped up about 18 months ago,” Mr. Stack said. “One day it was empty. The next day, there were people living there.”

Read the whole story: New York Times

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Cheney’s Excuse For Economic Crisis: ‘Stuff Happens’

Download | Play Download | Play

Cheney has a ready excuse for the economic debacle: ‘Stuff happens’

Crooks and Liars- By David Neiwert Sunday Mar 15, 2009 5:00pm

Interviewed by John King on CNN’s State of the Union this weekend, former vice president Henry F. Potter Dick Cheney wasn’t really able to tell us why Republicans like himself should have any credibility whatsoever when it comes criticizing the Obama economic plan, considering how well theirs worked out.

Here’s how theirs worked out:

Here’s how Cheney explained it:

Well, there are all kinds of arguments to be made on that point. But there’s something that is more important than the specific numbers you’re talking about, and that had to be priority for our administration.

Eight months after we arrived, we had 9/11. We had 3,000 Americans killed one morning by al Qaeda terrorists here in the United States. We immediately had to go into the wartime mode. We ended up with two wars in Afghanistan and Iraq. Some of that is still very active. We had major problems with respect to things like Katrina, for example. All of these things required us to spend money that we had not originally planned to spend, or weren’t originally part of the budget.

Stuff happens. And the administration has to be able to respond to that, and we did.

… We always said — I always said that wartime scenario is cause for an exception in terms of spending. It was appropriate in World War II, certainly, and I think it’s appropriate now.

So his excuse for the sour economy was 9/11 — which happened six years before the economy started heading south — and the Iraq invasion — which turned out not to have been quite as necessary as advertised.

MORE HERE

Dick Cheney – CNN State of Union – John King part 1

Dick Cheney – CNN State of Union – John King part 2

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McConnell Bumbles When Asked For GOP Alternative To Obama’s Budget (Video And Transcript)

McConnell Bumbles When Asked For GOP Alternative To Obama’s Budget: We’re ‘Getting Down In The Weeds’

Think Progress- By Amanda Terkel at 12:00 pm

Since President Obama unveiled his budget last month, Republicans have been relentlessly attacking his comprehensive proposals. Last week, Rep. Eric Cantor (R-VA) said that Obama “should be focusing on the ‘economic crisis,’ as opposed to holding four-hour meetings on health care.” Today on ABC’s This Week, Senate Minority Leader Mitch McConnell (R-KY) kept up the drumbeat, saying, “It taxes too much, it spends too much, it borrows too much.”

However, host George Stephanopoulos repeatedly pressed McConnell for a comprehensive Republican alternative budget. Each time, McConnell simply attacked Obama’s plan. He said that he and his colleagues would be offering amendments to “reframe” what the Democrats have proposed, but don’t plan on offering a comprehensive plan:

McCONNELL: [W]e are going to offer a number of amendments to the Democratic proposal. […]

STEPHANOPOULOS: But shouldn’t you have a comprehensive approach that lays out the trade-offs? If you just have rifle-shot amendments, you don’t have to make all the trade-offs that you have to make in an overall budget.

McCONNELL: Well, we’re just sort of getting down in the weeds here about procedure. Through the amendment process, we would absolutely reformulate the Democratic plan. Whether you have a comprehensive approach or whether you offer an amendment is something a parliamentarian can debate.

Watch it:

As the New York Times has pointed out, by not offering a full counterproposal, Republicans have made a decision “that will spare them from outlining potentially painful decisions required to bring federal books more in line with their call to hold down spending, cut taxes and reduce the deficit.” What they are instead offering is “a steady stream of complaints.”

In many ways, their strategy is a repeat of what they did during the economic recovery debate. Republicans largely opposed Obama’s plan for political reasons, picking out small provisions as excuses to oppose the entire bill. The Progress Report has more here on why, despite McConnell’s complaints, it is possible walk and chew gum at the same time.

Transcript HERE

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Katrina Vanden Heuvel To Karl Rove: ‘It’s Laughable For You To Talk About Fiscal Responsibility’ (VIDEO)

Vanden Huevel rips Rove: ‘It’s laughable for you to talk about fiscal responsibility.’

Think Progress- By Satyam Khanna at 2:17 pm

Today on ABC’s This Week, Karl Rove slammed the cost of President Obama’s new budget. The Nation’s Katrina Vanden Heuvel quickly fired back at Rove’s newly-discovered sense of fiscal responsibility, observing that Rove and President Bush “helped plunge this nation into trillion dollars of debt”:

VANDEN HEUEVEL: But, Mr. Rove –

ROVE: Call me Karl.

VANDEN HEUVEL: It’s laughable for you to talk about fiscal responsibility from someone who helped plunge this nation into trillion dollars of debt, through tax cuts for the very rich and a war we never should have fought. And also starving the beast. Starving government has been a Republican role in terms of government. And, therefore, when George asks why government hasn’t functioned, people have not seen the role of government improving the conditions of their lives for decades.

Watch it:

Pollster Stan Greenberg also chided Rove. “It’s a remarkable lecture considering the performance,” he said.

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The Wingnut Revolution Is Upon Us

After nearly three decades of Reaganomics in which the wealthiest two percent of Americans have grown exponentially wealthier while middle class wages have remained stagnant, a growing faction of super rich Americans is seriously pissed off — and their Wingnut Revolution is upon us.

Sure, the interests and influence of the wealthiest two percent make them more responsible than most for the free market policies that created this current economic crisis. But if there’s one thing we’ve learned about those responsible for this recession, it’s that the concept of accountability is about as foreign as their live-in au pairs. Instead, they’re blaming this on Barney Frank and a legion of “losers” (read that: working class minorities) even though Ben Bernanke himself has debunked this myth.

But accountability (a “reckoning” as President Obama called it) is underway in the form of the president’s housing proposal, his healthcare plan and, naturally, the recovery act. At the end of the day, ninety-five percent of Americans will benefit from what amounts to the largest tax cut in American history, along with increased access to affordable healthcare and millions of new jobs.

Though, alas, the super rich will have to pay slightly more in taxes.

Yeah, that’s a shame.

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