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Posts Tagged ‘Economic Recession’

Economists Agree Time Is of the Essence for Stimulus

Washington Post Staff Writers
Sunday, February 8, 2009; Page A01

With Congress moving closer to adopting a $820 billion stimulus package and the Obama administration poised to unveil a new bank bailout plan, economists say that the federal government is taking its biggest role in the economy in a generation.

States that once aspired to blaze trails independent from Washington are turning to it for money, banks and businesses that once decried regulation now are seeking federal capital, grants or tax cuts and individuals are looking for tax relief.

“This is a seismic shift in the role of government in our society,” said Allen Sinai, chief global economist for Decision Economics. “Those who believe the government can be an effective, positive instrument for good will have another chance to try it,” said Sinai, a political independent.

While economists remain divided on the role of government generally, an overwhelming number from both parties are saying that a government stimulus package — even a flawed one — is urgently needed to help prevent a steeper slide in the economy.

Many economists say the precise size and shape of the package developing in Congress matter less than the timing, and that any delay is damaging.

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Republicans Clearly Are Willing to Let This Country Collapse if They Think it Will Win Them Elections

By Doug Kreeger, AlterNet. Posted February 4, 2009.

It is abundantly clear that the Republican leaders are going to do everything to prevent Obama and the Dems from doing anything constructive.

Last week, we witnessed how the Republicans will help serve this country in the worst crisis since the Great Depression.

By standing together in opposition to the stimulus package, they showed the world that they haven’t at all joined the momentum of the new administration, rather they are still playing politics and are focused on the 2010 elections. Their objections to the stimulus have nothing to do with trying to solve this crisis.

I was always struck during the Bush Error (otherwise known as Era), that the axis of evil title was slapped onto any entity not aligned with their inane response to any issue they faced. Whether it was Iraq or Hurricane Katrina, time and time again we were expected to take their word through blind faith and or outright deceit.

Now the remaining cronies have sunk to an unthinkable new low. It is abundantly clear that the Republican leaders are going to do everything to prevent anything constructive from happening. They will be sure our damaged nation does not get fixed on Barack Obama’s watch, the public be damned.

Last week, Obama’s plans were debated in Congress. His goal of creating 2 million to 3 million jobs in the next two years through a massive rebuilding program of our crumbling infrastructure, was countered by the Republicans’ revised stimulus plan. Their plan was not detailed beyond more tax cuts.

Here’s the catch: The Republicans said their plan would create 6 million jobs. Really. Remember “Mission Accomplished”? Just saying something doesn’t make it true.

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White House, Congress hammer out auto bailout

The White House Tuesday demanded that Detroit automakers prove their “long-term viability” in return for a 15-billion-dollar rescue bailout but said a deal with Congress was in sight.

President George W. Bush’s administration is making “good progress” in its talks with congressional leaders over legislation to shore up General Motors, Ford and Chrysler, White House spokeswoman Dana Perino told reporters.

“We are still working through a number of issues, some of them just small and technical, and other ones a little bit more meaty in scope, but, all in all, making sure we’re headed in the right direction,” she said.

But Perino stressed: “Our insistence that long-term viability be reflected in the legislation is something that we have held very strong feelings about, and that has not changed.

“There will not be long-term financing if they cannot prove long-term viability.”

Short-term loans of 15 billion dollars are meant to sustain the car giants through March, allowing president-elect Barack Obama time to address their crisis after he takes office on January 20.

GM and Chrysler are first in line after warning they are fast running out of cash. Ford, though equally hampered by slumping sales, says it faces no immediate liquidity crisis but wants a nine-billion-dollar line of credit.

While the Democratic-led Congress was ready to extend a larger amount of aid, the Bush administration has balked at giving any more than 15 billion and insists — like Obama — that the automakers must retool for the long haul.

White House and congressional negotiators held talks late into Monday and the emerging total proposed is less than half of the 34 billion dollars the auto giants say they would need to stave off a “catastrophic collapse.”

Senate Majority Leader Harry Reid said late Tuesday morning: “I’m confident that those matters can be resolved within the next hour or so.”

But Perino said that “while we’re working fast, we want to get it right.”

“So I wouldn’t read into anything if we don’t get it all finalized today.”

The proposed legislation calls for a presidential appointee, or “car czar,” to oversee the overhaul of the Big Three US automakers, which have been losing ground for years to their Japanese rivals.

In return for the loans, the government would get an equity stake and the automakers would have to improve their fleets’ fuel-efficiency and also examine using their excess capacity to build bus and rail cars for public transit.

The bill also requires the automakers to sell their private jets and places strict limits on executive compensation, similar to a recent bailout for financial firms buffeted by the global credit crunch and toxic mortgage loans.

House of Representatives Speaker Nancy Pelosi said Monday Congress expects stakeholders in the industry — including bosses, union members, shareholders, car dealers and suppliers — to make sacrifices for the bailout.

“We call this the barbershop,” Pelosi said. “Everybody’s getting a haircut here, in terms of the conditions of the bill,” she said, adding: “The management itself has to take a big haircut on all of this.”

Obama has called a collapse of the auto industry “unacceptable,” and said Sunday he wanted a supervisory process that would hold the companies’ “feet to the fire.”

GM, which had warned it could run out of cash as early as January, urged swift passage of the bill and vowed it will “abide by the conditions proposed in the bill and will continue our restructuring with great urgency.”

Chrysler made similar noises while Ford, the second-biggest US automaker after GM, said: “Our industry is highly interdependent and a failure of one of our competitors could affect us all.”

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