Zandar's Thought Of The Day

Democrats taking over national politics + Economy tanking at breathtaking speed = Wingnut bloggers out of work.

Nobody could have predicted, etcetera, etcetera.

In Which Zandar Answers Your Burning Questions

Via e-mail, Zandardad asks:

So far I am very unhappy with some of the specifics of the stimulus plan; and I think the Democrats in the Senate really need to open up the process to get at least some Republicans on board. What do you think?

Well, the answer is yes, especially in the Senate. Republicans will filibuster, and I honestly don't think Obama's going to get every single Democrat in the Senate on board either. Mathematically he has to get some Republicans on board. That's just fact.

Pops points out David Broder's Friday column as an example of this reality. For once, he has a couple of salient points.

Last week the $819 billion tax and spending bill passed the House with all but 11 Democrats supporting it and not a single Republican voting yes. The first important roll call of the Obama presidency looked as bitterly partisan as any of the Bush years.

It was not for lack of effort on the part of the new president. Obama went to the Capitol to visit Republican as well as Democratic lawmakers, and he encouraged the Democratic draftsmen to scrap a couple of egregiously irrelevant spending programs they had penciled into the bill.

On the other hand, Broder takes those points and uses them to blame Nancy and Harry. Obama indeed reached out in a good faith effort. For his troubles, the House GOP flipped him off in a completely partisan show of disrespect.

My problem is Broder's assumption that the Republicans should be ultimately controlling this legislation. Getting some Republicans on board is one thing. Surrendering the legislation to the GOP is another. Why should Obama and the Democrats bow and scrape to the GOP? The Republicans lost the election. The people rejected them having control of the country in an unequivocal and total fashion.

Let's recall who got us into this mess in the first place: The Republicans and their $3 trillion war, years of lack of executive branch oversight, and flat out greed.

The Republicans had their chance. They had their say. And still, Obama offered them an olive branch time and time again. Their ultimate answer was a total, unanimous rejection of the bill by every single Republican in the House.

Now they are complaining about not being involved in the process of legislation they wholly struck down, in the most petulant, whiny fashion possible. Broder, being the Village Idiot In Chief, is doing their whining for them.

Pop, the GOP wants the stimulus to fail. Period. Don't fall for this bipartisanship crap. You can recognize a user and an enabler when you see one.

Turning Into A Distinct Pattern

For a political party and a President that promised "Change you can believe in" there sure has been an awful lot of news stories about politically corrupt Democrats here in the last month. Granted, most of the stuff they've done is just plain stupid (and nothing in comparison to the rank illegality of Bush/Cheney mind you) but there's a pattern here, and after ten days of the Obama administration I'm already sick and tired of it.

The ongoing "pay-to-play" investigation into Bill Richardson and Blago's impeachment are the most serious. But there's still plenty of ethical questions involving Hillary Clinton's relationship to international donors to her husband's foundation, the increasingly bizarre Caroline Kennedy/David Paterson/Kirsten Gillibrand imbroglio, and the fact that Treasury Secretary Tim Geithner can't do his own taxes correctly.

And now another major problem rears its ugly head: HHS nominee Tom Daschle has his own tax problems.

After being defeated in his 2004 re-election campaign to the Senate, Daschle in 2005 became a consultant and chairman of the executive advisory board at InterMedia Advisors.

Based in New York City, InterMedia Advisors is a private equity firm founded in part by longtime Daschle friend and Democratic fundraiser Leo Hindery, the former president of the YES network (the New York Yankees' and New Jersey Devils' cable television channel).

That same year he began his professional relationship with InterMedia, Daschle began using the services of Hindery's car and driver.

The Cadillac and driver were never part of Daschle's official compensation package at InterMedia, but Mr. Daschle -- who as Senate majority leader enjoyed the use of a car and driver at taxpayer expense -- didn't declare their services on his income taxes, as tax laws require.

During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007.

(Daschle reimbursed the IRS $31,462 in taxes and interest for tax year 2005; $35,546 for 2006; and $34,935 for 2007, a Daschle spokesperson said, adding that Daschle had asked his accountant to look into the tax implications of the car and driver five months before Obama won the presidency.)

The Daschle spokesperson told ABC News that the senator, facing questions from the committee, has said "he deeply regretted his mistake. When he realized it was a mistake he corrected it rapidly."

Now we see why Geithner was confirmed. Daschle had the same problem.

Is it too much to ask for the Obama guys to find people who aren't doing stupid crap like this and putting them in critical positions? Our economy is all but done, our health care system is on life support, and we've got Obama putting in tax cheats to run his damn programs?

Is it truly that hard to find decent Democrats that don't have records that make them look like Bush-era nepotists and cronies? Is it truly that hard to find decent Democrats that don't have records that make them look like Bush-era nepotists and cronies? Honestly? We've had eight years of this shit and I'm altogether sick and tired of the same excuses, the same backslapping, the same bullshit from the last eight years.

No, I don't want the Republicans back in power. Yes, I do want competent and decent Democrats in the Cabinet because I know they exist, and Obama has managed to find a lot of them to his credit. But aren't we in enough trouble here as it is, Mr. President? Don't we need a clean slate here at a time where crap like this has gotten this country to the brink of economic disaster?

Maybe I'm holding Obama to a higher standard. But frankly after Bush/Cheney nearly destroyed this country, we all should be holding our entire government to a higher standard. Period.

OK, rant over. Resume Obama administration.

StupidiNews, Weekend Edition

• Iraqi provincial elections are underway at this hour.
• Protests continue to rock Europe as the global recession deepens.
• Bolivia's lithium deposits may be the key to the electric car movement...or the largest political headache.
• US stocks muddle through their worst January in history.
• A sweeping legal ruling involving World of Warcraft could completely redefine digital copyright law.

Epic Alternative Stimulus Package Fail

Over at his new digs at The Plum Line, Greg Sargent details the analysis of the GOP's vaunted "alternative stimulus package" full of tax cuts. Only one problem: in their usual style of total incompetence and shoddy workmanship, it turns out the GOP's tax cutting stimulus would in fact raise taxes on over twenty million Americans due to failure to account for the Alternative Minimum Tax (AMT) in their version of the bill.

This is a bit in the weeds. But here goes. According to Dems on the House Ways and Means Committee who have crunched the numbers, the GOP plan, which would reduce income taxes, would as a result shove millions over on to the Alternative Income Tax rate, which would be higher for them. Dem Ways and Means spokesperson Matthew Beck emails me this statement making the case:

In 2008, 4.2 million Americans had to pay the Alternative Minimum Tax (AMT). The Republican proposal would lower marginal tax rates for individuals, but would not reduce AMT rates. Current law requires you to pay the greater of the two rates, so many of those receiving this lower marginal rate would now be held liable for the AMT.

There is no question that Congress needs to — and will — act to prevent the number of taxpayers hit by the AMT from growing to an estimated 26 million this year. However, we confirmed with the non-partisan Joint Committee on Taxation that 26 million people would still be forced to pay the AMT this year under the GOP bill. Essentially, their tax bill would give with one hand and take away with the other, leaving 26 million families without the tax cut they promised in their bill.

Make of this argument what you will, but the fact is that this is going to be an official attack line coming from the DCCC, which is right now drawing up press releases to push this line in the districts of at least a dozen House members across the country who backed the GOP alternative. The hits accuse each member of voting “to raise taxes on 22 million hard working Americans.”

That's right...by lowering tax rates for Americans but NOT the AMT rate, the GOP bill would actually drop the tax rate under the trigger point where the AMT would kick in...and 22 million Americans (families making $70k-$150k or individuals making $46,500-$75,000) would actually end up paying MORE taxes under the AMT as a result. It's a silly oversight...but it's one that would be very costly to millions of Americans.

But what did you expect from the GOP? Actual competence?

EPIC. FAIL.

More Swinging And Missing

This is starting to get ridiculous. It was one thing when Obama was complaining about Wall Street bonuses, but now Sen. Claire McCaskill of Missouri wants to cap the pay of any Wall Street executive whose company is taking bailout cash. While that's a nice thought, when you turn around and hand the same company several trillion dollars, capping executive pay in comparison looks...well...how shall I put this?

Immensely stupid. Seriously. This is not helping, guys. The problem is not that Wall Street types are making lots of money. You want to make a difference, Claire? Pass a bill that says Congress gets to fire all top management for running the company badly enough to require trillions of dollars of our tax money to save them.

Jesus, but the Democrats look like morons. C'mon guys, you can do better. Obama hasn't made many mistakes so far, but even I can see the GOP play on this one. "Why are we capping CEO pay when liberals are handing the company trillions in the first place? What kind of quid pro quo shop is Obama running here?"

And for once, the GOP would be right. The problem is not excessive Wall Street pay. The problem is the bailout.

Shouting At The Wind

What Digby said.

As we watch this legislative sausage slowly crumble, I would hope that President Obama will take his economic agenda to the American people. (And it's not going to be enough for him to ask people who've had house parties in the past to get together and talk about the president's plan.) He's needs to speak to the country directly.

I can't find any news about an impending State of the Union address (aside from this Ambinder note from last November which speculated about doing one in early February) but I think he should schedule one or something like it. The country needs to be instructed about the logic and necessity of this stimulus plan because they clearly don't fully understand it. And because of that, the Republicans are making headway with their rhetoric of "fiscal responsibility," conflating stimulus with bailouts and the rest of their destructive obstructionism.

Get on the TV. Make the case for the stimulus. Because the rest of Congress is on TV daily making the case against it.

In Which Zandar Answers Your Burning Questions

Tim over at Balloon Juice asks:

I get why Obama would tap Republican Sen. Judd Gregg (NH) for Commerce. Democrats get a 60 vote majority in the Senate, Obama gets bipartisan cred and a vetted Commmerce nominee who seems like a reasonable guy. That’s fine, but why does Gregg want the job?

It does seem like a rather nifty coup. New Hampshire Governor John Lynch, a Democrat, would then appoint a Democrat to Judd Gregg's seat, giving the Dems 60 votes in the Senate (once Al Franken is seated). So why would Gregg basically cut the GOP's throat in the Senate like that?

Whatever the pluses (e.g., he escapes a radicalized caucus that hates and abuses moderates like him), Gregg can look forward to the kind of hate that only Jim Jeffords and a sick twelve year old kid can possibly understand.

Before Judd Gregg makes up his mind, I suggest that he sit down with Graeme Frost and talk about living as a magnet for hysterical rightwing hate.

I've said before that since the GOP insists on doubling down on its massive losses, GOP moderates will simply leave the party. Gregg's been given the perfect opportunity to do so. Why shoudn't he take it? As a moderate Republican Senator, they right wingers will already hate him.

It's the wrong question, however. The one you should be asking is "If Judd Gregg voted against the EFCA, Ledbetter, and SCHIP on multiple occasions and as recently as the last couple weeks in the case of SCHIP and Ledbetter, why is he even in the running for the position?"

Honestly, what the hell business does Gregg have being Commerce Secretary if he doesn't believe in something as simple as equal pay for women? (Which is now law of the land, by the way).

No Mister Bond Market, I Expect You To Die

Much has been made of the stock market tanking in the last 4 months, but much more attention needs to be paid to the bond market.

A disappointing 5-year Treasury note auction was a less obvious, but potentially more insidious, contributor to the market's malaise. The record $30 billion auction priced with a yield of 1.82% well above expectations and up from 1.54% at last month's five-year auction, Bloomberg reports.

Prices of Treasuries with maturities of two-years and longer fell sharply in reaction to the lackluster demand for the 5-year auction, which "may signal investors will have trouble absorbing the as-much-as $2.5 trillion in debt the U.S. is likely to issue this year to pay for a $1 trillion budget deficit and programs to spur the economy," Bloomberg says.

That sentence is notable for its understatement. If the government has to pay higher yields on debt sales, the various bailouts and stimulus packages will turn out to be even more expensive than currently contemplated. And don't be fooled into the "what's bad for bonds is good for stocks" mindset; a big reason the Fed stands ready to buy longer-term Treasuries is to help keep rates down, and their failure to be more specific about those plans yesterday also contributed to weakness in fixed-income today.

Foreign investors are beginning to ignore US Treasuries, especially long-term notes. This has the potential to bring down the economy much faster than a stock market crash would. America runs on China buying our debt...and China is no longer happy with that arrangement.

Then there's the scenario where the U.S. government is forced to pay extremely high interest rates - or is simply unable to sell Treasuries - because foreign buyers go on strike. We're a long way from that "sum of all fears" outcome, but comments from Chinese Premier Wen Jiabao at Davos critical of U.S. economic policy suggest it's getting closer - especially in the wake of Tim Geithner's "manipulation" comment.

I don't think we're very far from that "sum of all fears" moment. In fact, I think there's a very good chance that we'll see foreign buyers go on a strike of sorts sometime before the end of the year.

When that happens, the real economic pain will begin in this country. Foreign investors just aren't going to be able to afford US treasury debt any longer. That will imperil our ability to pay that money back, causing a self-fulfilling prophecy that leaves us all officially broke. What happens when the US government goes belly up? The printing presses go full tilt as a last resort, and the dollar disintegrates in value.

How fast and how brutal that process is will decide if America is just crippled as a world leader or a mortally wounded third world economy.

Swing And A Miss

I like Obama. I think he's a vast improvement over Bush and McCain. I do not however think he's going to be able to fix the economy. I think we're going to crater over the next two years, and be mired in a long, multi-year recovery. Granted, that recovery might be generational under McCain instead of a decade, but it's still going to be bad.

It's going to define my generation and the next for the rest of our lives. Those of us old enough to remember the boom times of the Clinton years will have some nice stories to tell our kids.

Having said that, Obama's complaint about $18 billion in Wall Street bonuses being "outrageous" rings pretty damn hollow when economists are predicting Obama will have to lay out a staggering $4 trillion to rescue the banks.

Sorry Barack. That's a Bush-league mistake right there. That statement is going to come back and kick his ass, and deservedly so.

[UPDATE] What dday said.

There's minor value in angry missives about bonuses, but there's major value in, uh, four trillion dollars. Especially when the more elegant solution is to take over the insolvent banks and stiff the shareholders. But such things are forbidden hippie-talk.

Your Number's Up

How bad the economy do in the fourth quarter? We'll find out this morning at 8:30 AM EST. The quarterly GDP numbers are expected to show a yearly decline around 5.5%, I'm taking the high end of that at 6%. If it's significantly higher, it could be a really horrible day on Wall Street. Likewise, if the number comes in less than 5%, it could be a banner day.

I'll update the numbers as they come in.

[UPDATE] The rosiest prediction was 4%, but GDP only fell 3.8%. That's significantly better than Wall Street expected. Dow futures rocketed upwards, but quickly fell back flat as the significance of a 3.8% drop kicked in. It was bad last quarter.

It'll get worse this one. Next week's unemployment figures will most likely be brutal.

StupidiNews!

• Iraqis have erected a monument to the shoes tossed at Bush's head.
• Tensions between North and South Korea are the worst in years.
• Michelle Obama is developing her own policy advocacy role.
• Japan's manufacturing output fell by a record 9.6% in December.
• North Carolina is the latest state to consider taxing digital downloads.

The Executive Privilege Trap

Republicans are pretty confident they've got Obama right where they want him on the issue of Karl Rove's subpoena. They are betting in a face-off between the current Congress and the Bush administration, Obama will have no choice but to side with Bush on executive privilege in order to protect his own administration from the inevitable GOP backlash down the line.

The issue is likely to come to a head soon. The Justice Department is due to state its position on executive privilege to the U.S. Court of Appeals in a few weeks in response to the House's attempt to enforce its previous subpoenas for Miers and Bolten, who were subpoenaed to turn over documents relating the U.S. attorneys firings. Both refused to comply, or even show up—relying on the Bush Justice Department's sweeping position on "absolute immunity" from testifying before Congress.

Few legal observers expect the Obama Justice Department to endorse that position, but it remains an open question how the new administration will define the scope of presidential privilege. Bush's attempt to assert privilege even after he leaves office throws a new wrinkle into the dispute.

The GOP is confident that Obama will leave so many loopholes in his own administration's view of executive privilege that it will be a de facto win for Rove...and for Bush.

How will Obama respond?

Bla-gone-jevich

Blago is Bla-gone, a unanimous vote in the Illinois Senate to impeach.

Bye, Rod.

Your Zero And One Seventy-Seven Republican Party

As the Dow gives back all of yesterday's gains and then some, John Cole and the guys at Balloon Juice point out that the Republican party is now 100% committed to the failure of the American economy in order to make political gains in 2010.

Let's stop and consider this plan. They have decided that the best way for the GOP to regain their political power is to hope that millions of Americans lose their jobs, their homes, and their livelihoods just so they can blame it on Obama.

Think about that. This means in fact the Republicans are basically convinced that the economy is going to fail so badly that they believe that the risk involved in this bald-faced partisan attempt to sink the President's measure and any hope of rehabilitating the economy is less than the risk of voting for the President's measure.

As tristero puts it over at Hullabaloo:

The rejection of bipartisanship by the Republicans should be perceived in terms of their long term strategy. They know that the depression has just begun. The worse is yet to come. How bad will it be? Far worse than anyone so far has imagined, and we've all imagined it as pretty bad. It will exceed our most extreme fantasies. (In fact, my father, who turns 100 next month (!) said this is shaping up as much worse than the thirties; I think he may be right.) The GOP knows that no feasible stimulus plan, no matter how large or well-crafted, can avert catastrophe. They intend to refuse to go along with anything Obama proposes, wait until disaster hits,and then - counting on the country's short memory span as well as the complicity of the media - blame Obama, Democrats, and liberalism for destroying the economy.

In other words, the GOP is as pessimistic about the economy as I am, if not more so. They are now married to the idea that there will be a Second Great Depression, and that they are washing their hands of the economy and the American worker just so 18 months from now they can say "See, Obama destroyed this country. When the GOP was in charge, this country was wonderful!"

And I fear that tristero is absolutely right. It's one thing for me to predict the gloom and doom of another economic depression. It's quite another thing entirely to see an American political party absolutely counting on one happening in the next two to four years. So tristero continues:

Obama also knows that economic disaster cannot be avoided and that it will be far worse than anything anyone alive - other than centenarians like my Dad - has ever seen; that's why his inaugural address was so grim. He also knows that no stimulus plan will work. And he knows he will be blamed for it when the misery adds up. Therefore, he is trying like hell to get the GOP to sign up, at least partially, for his proposal so he can spread the blame, This is after all, a time-honored political tactic, used by Bush, for example, to claim bipartisan authorization for the invasion of Iraq.

Since the GOP won't ever play - they're not stupid about their self-interest, after all - what is to be done? First, like Duncan, I think the Obama administration must propose the most responsible stimulus package they can, focused entirely on serious efforts to prop up the economy rather than appeasing the Republicans' special interests. Furthermore, they must propose legislation that protects as much as possible the middle class and the poor from the economic tsunami the Bush administration unleashed on this country and that has only begun to be felt. It may not work in staving off an economic collapse, but the crash will be so bad that any amelioration of its effects will be useful.

Naturally, Obama needs to take the high road and continue to call for "bipartisanship." But, as the GOP continuously refuses to go along, the Democratic party, and progressives, must attack on two fronts. First, they must accuse the GOP of lack of patriotism, of refusing to support the president in a time of extreme crisis. Second, they must never, not for a single news cycle, let the country forget that a Republican president, and a Republican legislature is to blame for the dreadful shape of the US economy.

And really, that goes a long way towards explaining why Obama is so keen on bi-partisanship, and why the GOP is so keen on making sure Obama owns the economy over the next four years.

Eventually, somebody's going to have to level with the American people. Whoever does it first, and does it best, will be in charge once the smoke clears. Obama and the Democrats must keep that in mind.

[UPDATE] BooMan reminds us that this vote was meaningless for the GOP as it wasn't the final House vote on the plan. Where tristero opines the GOP is playing no for the long haul and playing long term, BooMan thinks the GOP is playing short ball games strictly in the short term because they have zero long term strategic moves left and are pretty much done for. The bill has to go to the Senate next week where it will be voted on, and then it must be reconciled with the House version, requiring a second House vote on the reconciled bill in February. BooMan is convinced a couple dozen GOP members will go with the Democrats on the reconciled bill, effectively ending the GOP's influence in the House during the Obama era after roughly three weeks, after which John Boehner becomes the biggest joke in Washington.

This theory too has a lot of things going for it. The House vote on the final, reconciled bill will tell us a lot. I just think that vote is going to be zero Republicans.

After all, this is the same House GOP group where all but three of them voted against the Ledbetter Fair Play Act. Maybe they're just insane and enjoy losing.