Yet More Stimulus And Response

Harry Reid says the Dems now have the votes to pass the stimulus bill.

Senators working to craft a massive U.S. economic stimulus package said on Thursday they had agreed it should be close to the $800 billion wanted by President Barack Obama, and Senate leader Harry Reid said he believed he had the votes to pass it.

Moderate Democratic and Republican senators, seeking to bolster support for a compromise, agreed to cut the package from some $900 billion after pressure from Republicans who said it was too high and included non-essential projects.

Reid told reporters he expected a full Senate vote on the measure later in the day and that it would pass. "We hope to have the vote today," he said. "Do we have the votes? We believe we do. We believe we can find two Republicans of good will."

The Republicans are now in full crisis mode as they look for the "traitors to humanity" who will resist the inevitable filibuster. One of them is Maine's Susan Collins, but the Dems will need at least one more Republican to get this done. The House will pass whatever the Senate passes, and Obama could be signing this into law next week.

Or it could all come apart.

[UPDATE] Turns out Harry Reid doesn't have the votes after all, and has called it quits for the night. Who knows at this point.

WOLVEREEEEEEEEEEENS!

Yeah, the GOP is delusional. Once again they believe they are the brave insurgents protecting America from the evil Democratic Socialism onslaught.

No, really.

Frustrated by a lack of bipartisan outreach from House Democratic leaders, Rep. Pete Sessions (R-TX), chairman of the National Republican Congressional Committee, said House Republicans -- who voted unanimously last week against the economic plan pushed by President Obama and House Speaker Nancy Pelosi -- will pitch a "positive, loyal opposition" to the proposal. The group, he added, should also "understand insurgency" in implementing efforts to offer alternatives.

"Insurgency, we understand perhaps a little bit more because of the Taliban," Sessions said during a meeting yesterday with Hotline editors. "And that is that they went about systematically understanding how to disrupt and change a person's entire processes. And these Taliban -- I'm not trying to say the Republican Party is the Taliban. No, that's not what we're saying. I'm saying an example of how you go about [sic] is to change a person from their messaging to their operations to their frontline message. And we need to understand that insurgency may be required when the other side, the House leadership, does not follow the same commands, which we entered the game with."

That agreement, as Sessions described it, involved a promise from Pelosi to preside over an "open, honest, ethical Congress." Obama, Sessions added, has pledged to diminish the political rhetoric in Washington and work in a bipartisan fashion.

"If they do not give us those options or opportunities then we will then become insurgency of a nature to where we do those things that are necessary to making sure the American public knows what we think the correct answer is," Sessions said during the 60-minute interview. "So we either work together, or we're going to find a way to get our message out."

Yeah, insurgents. And they wonder why they lost.

WOLVEREEEEEEEEEENS!

Making The Case

Good. Obama plans to hold a prime-time news conference on Monday night to state his case for the stimulus bill. This is the kind of thing Obama needs to do more of.

Well, kind of. I'm personally leery of the Village Idiots doing the GOP's work for them by spending the entire news conference saying "Mr. President, how do you justify spending X dollars on Y?" and "Do you believe you have lost control of the debate?" and basically defining the argument strictly by GOP talking points when the real question needs to be "Mr. President, how are you going to save America's economy?"

But that of course would entail Villagers doing actual work.

Block Buster

Republicans continue to block any nomination vote on Obama's Labor Secretary, Hilda Solis. Today's Senate committee vote was delayed again when Republicans insisted they needed far more time to discuss Solis' work as treasurer of a pro-labor group. Now, they want more time to discuss her husband's tax lien issues, and Republicans are now screaming that Solis should immediately withdraw.

The Employee Free Choice Act scares these people so much that any Labor Secretary who would actually enforce it will not be tolerated by the GOP in any way.

[UPDATE]Labor committee senior Republican Mike Enzi of Wyoming explains there's no chance whatsoever that Solis's nomination will be acted upon anytime soon.

Some Good News

As I mentioned yesterday, putting conservative Republican Judd Gregg in charge of the Census as Commerce Secretary, phenom-a-bad idea.

However, Team Obama fixed this problem damn fast, as Steve Benen tells us that Obama hasn't left the Census to the GOP.

Fortunately, he didn't. CQ's Jonathan Allen has the story.

The director of the Census Bureau will report directly to the White House and not the secretary of Commerce, according to a senior White House official.

The decision came after black and Hispanic leaders raised questions about Commerce Secretary nominee Judd Gregg's commitment to funding the census.

Gregg, New Hampshire's senior senator, voted in committee and on the floor for a 1995 Republican budget that envisioned the elimination of the Commerce Department. Of even more concern to black and Hispanic leaders, Gregg battled President Clinton over a request for "emergency" funding for the 2000 census.

The prospect of Gregg overseeing the census drew intense criticism this week from the Congressional Black Caucus and the National Association of Latino Elected Officials, among others. Taking the census out of Gregg's hands should go a long way in assuaging concerns.

It's also evidence that the White House will take notice when a decision draws fire from Obama's base.

For now. How about that bank thing, Barry?

Applied Lying For Dummies

Wall Street is thrilled this morning that Obama plans to let insolvent banks lie about being insolvent.

Stocks extended gains on Thursday as shares of financial services companies sharply cut losses on talk that Washington's rescue plan for banks may include suspension of a key accounting rule, traders said.

"The market suspects there maybe a suspension of mark-to-market accounting as part of the plan coming out of Washington to shore up the financial system," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "It would be very impactful."

Among bank stocks, shares of Bank of America (NYSE:BAC - News) cut more than half of their losses following the accounting talk. Earlier the stock had hit its lowest since 1984.

So the most effective part of Obama's Bad Bank Bonanza as far as Wall Street is concerned is not the free money injections, and not the loan guarantees for more free money, and not the part where the government gives them yet more free money to buy assets that are literally worthless, but the part where banks get to lie about what their craptastic worthless assets are actually worth.

And people ask me why I'm so convinced that we're screwed.

It works like this. Let's say you have a car as an asset. You buy the car 10 years ago, it goes down in value, you count what the Kelly Blue Book says your used car is worth should you try to sell the car.

Banks on the other hand have the car and they keep screaming at the top of their lungs that the car is worth exactly what they paid for it ten years ago. Replace "car" with "Securitized Mortgage Bundled Thingy" and you have the problem. "Mark-to-Market" accounting means the banks have to value the crap at the crappy 2 cents on the dollar that it's actually worth rather than the 100 cents on the dollar paid for the damn security bond in the first place.

Now, Obama wants to let them lie again. Bank stocks are actually up about 10% across the board this morning on the news. Let's keep in mind that up until about last year when the bailouts started, banks were happily free to lie about this. The number one complaint out of Wall Street was that mark-to-market accounting practices, I.E. THE TRUTH, was killing them. They've been lying about it and have been able to lie about it for years and years under Bush. When the bailouts started, suddenly the truth was woo much to handle.

That's because the truth is our financial sector is insolvent. Completely. They lost trillions of dollars betting on this stuff. Period. Game over.

The only real solution is to nationalize. Won't happen. Lying is much, much easier. Obama has no problem with this. Geithner and Summers have no problem with this.

But you will have a problem with it when our economy folds. Remember, our brainiacs in Washington are counting on applied lying for dummies and throwing money at banks to fix the problem.

If that isn't a Bushian solution, I don't know what is. Of course it will fail. Of course our economy will fail along with it.

It's depressing. As Atrios mused yesterday, "I wonder if this is how empires fall."

If It's Thursday...

...it must be time for another 26-year high in new jobless claims and for December factory orders to be down 3.9% or so. Tomorrow's unemployment figures are expected to be around 525,000 lost jobs...I'll take 600,000 on it.

No end in sight, folks.

Bad Bank Blues

More details are leaking about the Obama administration's Bad Bank Bonanza plan, and they aren't encouraging.

The Obama administration has decided on a new package of aid measures for the financial services industry, including a bad bank component, and is expected to announce them next Monday, according to a source familiar with the planning.

The plan will be "smaller" than originally expected, said the industry source, and centered around government guarantees and insurance of troubled assets, what's called a "ring fence" concept.

What's a ring fence concept?

The ring fence concept has already been used with Citigroup and Bank of America.

Oh, well that's giving me warm fuzzies. Do what we've done for BoA and Citigroup for every bank in America. Surely if we throw trillions at the problem it will naturally form a dam out of all those dollar bills and stanch the flow of red ink. Hooray, our fiduciary genius is manifest! Cookies and juice boxes for everyone!

Bonus stupidity:

Under the emerging plan, the government will buy toxic assets below the banks "carrying value," which is basically market value, but not at fire sale levels, the source said.

Negotiators hope that concept would placate both taxpayer and Congressional concerns about the government over-paying for the assets. But, the source noted, it could "trigger an accounting problem for the banks," presumably because the institutions will have to report a loss on the transactions.

The Obama administration is now working on ideas to address that, which might entail, a temporary suspension of certain accounting rules.

Buy crap from bank, allow banks to lie about taking loss on crap, people will flock to buy bank stock based on huge lie that everyone's aware of!

PS, now do you see why Tim Geithner has to go?

The Turning Point, Maybe

I've been saying for a while now that Obama's needed to take his case to the people for the dire need of the stimulus bill to try to save our economy from a depression. This morning he did so with a WaPo opinion piece.

By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression. Millions of jobs that Americans relied on just a year ago are gone; millions more of the nest eggs families worked so hard to build have vanished. People everywhere are worried about what tomorrow will bring.

What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis.

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

That's why I feel such a sense of urgency about the recovery plan before Congress. With it, we will create or save more than 3 million jobs over the next two years, provide immediate tax relief to 95 percent of American workers, ignite spending by businesses and consumers alike, and take steps to strengthen our country for years to come.

This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education. And it's a strategy that will be implemented with unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail.

Every day, our economy gets sicker -- and the time for a remedy that puts Americans back to work, jump-starts our economy and invests in lasting growth is now.

From a human standpoint, he's right. It's a clear, logical argument. Obama need to take this and take it to the people, take it his Youtube address, take it to the TVs and the radio and the internet. He's starting now. He needs to ramp this effort up quickly.

From a partisan standpoint, the notion that the longer the bill is delayed by the Republicans the more jobs are lost by the Republicans needs to be the friggin' centerpiece of the argument. That's what we need to see Democrats out there saying. Bipartisan playtime is over. The GOP is trying to sink the country to get back in power. It's time to call them on it and smash them down for it.

Tomorrow morning we'll see the monthly job numbers for January. They are going to be hideous. Another half a million jobs lost at least, and maybe far more. The unemployment rate will near 8%. The U6 numbers will top 14%, nearing the rate of one in 7 Americans lacking a full time job.

Republicans have successfully framed the argument as "tax cuts good, wasteful pork spending baaaaaaaaaaaaaad". The argument needs to be "saving the economy good, tens of millions of Americans unemployed and thousands of businesses closed, really friggin bad." Those January job numbers will be all over the news, and Obama needs to use them to reframe the argument.

That framing is up to Obama. I'm glad to see him moving on this issue. The time to act on the economy, not react to the Republicans, is now.

StupidiNews!

• Unsealed evidence against Barry Bonds could put the home run slugger in a world of hurt.
• The efforts for Howard Dean to replace Tom Daschle at HHS are growing bigger.
• The Bank of England has cut interest rates again to a new all-time record low.
• Obama has reversed Bush's decision to drill for oil in national parks.
• Congress passes a four month delay for the digital TV transition to June 12.

The Light Or The Shadow

Me, six days ago on the GOP:

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.

Josh Marshall, today:

Of course, at some level, why would Republicans be trying to drive the country off a cliff? Well, not pretty to say, but they see it in their political interests. Yes, the DeMints and Coburns just don't believe in government at all or have genuinely held if crankish economic views. But a successful Stimulus Bill would be devastating politically for the Republican party. And they know it. If the GOP successfully bottles this up or kills it with a death of a thousand cuts, Democrats will have a good argument amongst themselves that Republicans were responsible for creating the carnage that followed. But the satisfaction will have to be amongst themselves since as a political matter it will be irrelevant. The public will be entirely within its rights to blame Democrats for any failure of government action that happened while Democrats held the White House and sizable majorities in both houses of Congress.

More and more people are coming to a similar conclusion. As Josh says, the GOP cannot allow the stimulus bill to work. If he's successful, Obama saving the economy FDR style will end the GOP as we know it. The GOP is now fully committed to the failure of the stimulus and our economy. It is a harsh and disturbing reality, but I cannot see any other explanation.

Only by making the case directly to the American people can Obama get a stimulus that has any chance of working. Once again, the Democrats are allowing the Republicans to frame the dimensions of the argument. The Village is completely on board with the PR effort. Obama is getting rolled, and the result will be a multi-year depression. The only chance he has to stop it is to make it painfully clear that without it, we're back in 1931.

Think about it. The two outcomes facing the GOP right now at this moment are a stimulus bill that works and enshrines Obama as one of the greatest Presidents ever...or it fails, we spiral into a full-blown depression, and he goes down as one of the worst.

As a Republican on the Hill, which option would YOU choose, the light or the shadow? The fact that every single Republican in the House voted against the bill should clue you in.

And It Keeps Getting Better

The leading replacement for Daschle for HHS secretary? As Digby points out, it's our old friend Blue Dog Jim Cooper.

I wrote the other night about that Blue Dog ass Jim Cooper and how he stuck the shiv into Obama and the stimulus. And I noted this important piece by Mike Lux about Cooper's important role in the tanking of the Clinton health care plan in 1994.

Well, guess what? He's being discussed as the replacement for Daschle at HHS, which is only slightly less ludicrous than the silly idea of Newt Gingrich in the job.

Jim Cooper is an enemy of universal health care. He will, howver, work to ensure that the insurance industry and the Big Pharma gets more of your tax dollars.

Hell, why not. We're going down in flames anyway. Cooper is the quintessential Blue Dog jagoff, having personally led the effort to screw over progressives since the Clinton era. Digby continues:

Read on. And keep in mind that this person simply does not believe in universal health care and he is perfectly comfortable undermining his own president without a second thought. He's already done it to Obama on the stimulus and he will do it again with his very, very clever GOP-style ability to manipulate the press. They need to keep him away from health care.

The country cannot afford another giveaway to Big Insurance and Pharma and desperately needs a complete overhaul of the system in order to get costs into line and get people covered. This recession is going to end up making more than 50 million people without health insurance, very possibly more than that. Many more are terribly underinsured. Obama cannot put some slimy Blue Dog opportunist in charge of it.

The only comfort is the economy is going to tank so badly that Cooper won't be able to get any money to do any damage.

Randy Quaid And The Obama Bank Bailout

From today's WaPo:

The basic problem confronting the government is that banks hold large quantities of assets that they value on their books for much more than investors are willing to pay. Banks cannot sell these assets without recording massive losses. But holding the assets is tying up vast amounts of money, choking the financial system.

Since the early days of the financial crisis, officials have struggled to unwind that knot. If the government buys the assets at prices that banks consider fair, the Treasury would take a huge loss when it ultimately sells the assets for much less. If, instead, the government insists on paying market prices, the banks may not survive their losses.

Instead of taking a single approach, the Obama administration plans to divide assets and other loans into three categories, each with its own solution, according to sources familiar with the discussions, speaking on condition of anonymity because the details are not finalized.

The government would buy and hold on to those assets whose falling prices are putting banks under the most pressure. Officials want to limit these purchases because of the vast expense.

The centerpiece of the plan would be a guarantee to limit losses on a second group of troubled assets that can be kept by the banks because they have more stable prices.

And it would allow banks to retain and profit from their healthiest assets.

Beyond these initiatives, the government also is likely to inject more capital into troubled institutions.

Yes. That's the entire plan:

1) Put the taxpayer on the hook for trillions in disintegrating, flaming crap,

2) limit losses on trillions of crap that will disintegrate down the road (leading to said taxpayer being on said hook for said crap),

3) let the banks keep actual assets, and

4) throw more money at the banks.

You remember Randy Quaid's character in Major League? The guy in the outfield screaming "Vile Thing! You walk everything!!" at Charlie Sheen?

Yeah, it's like that. We're screwed. Completely. This is going to fail so badly, Obama will have no choice but to nationalize the country's banks.

The Vanquished Winners

Over at LGM, Scott Lemieux argues that the Dems should tell the GOP to screw off and turn the vote for the stimulus bill into a short-term budget reconciliation bill that can't be filibustered.

In theory, this is of course correct; a filibuster should be both politically damaging and futile for the Republicans, and the Democrats shouldn't just assume that they need 60 votes but should compel an actual filibuster before just passing the best stimulus they can under reconciliation rules if necessary. The Democrats should realize that the GOP has very little actual leverage here. Whether they do, of course, is another question, and I'm much less optimistic about the answer than Kevin. (Admittedly, it's hard to tell the difference between concessions being offered to appease Republicans and concessions being offered to appease Blue Dogs.)

And therein lies the problem: it's the Blue Dogs in the Senate preventing the reconciliation path altogether. The bill doesn't even have 50 votes at this point.

The GOP may not have much leverage, but the Democrats have even less spinal integrity. Meanwhile, the odds of passage for the stimulus plan seem to fall daily, and for his bipartisan efforts, Obama will get 100% of the blame and none of the credit on the .001% chance the economy improves before November 2010.

Crash And Burn

All indications are that regional banks are not long for this Earth, as they don't qualify as "too big to fail" like Citigroup or Bank of America. The march off the cliff is being led by Regions Bank, Huntington Bank and Fifth Third Bank. Options traders are putting mid-February contracts on Fifth Third at 20 cents a share, folks. Right now, you could buy the 12th largest bank in the US for less than a billion.

Either mass nationalization or mass failure is imminent for a number of regional banks, within a matter of months, maybe weeks. Obama's econ team is going to have to decide who lives or who dies, because the entire sector is insolvent. Obama is going to have a draw a line in the sand before Easter...maybe before St. Patrick's Day...possibly before President's Day.

The promise of future bailout billions are the only thing keeping the entire financial industry afloat right now. That's it. Eventually Obama has to come up with the money or shut the banks down.

Pretty soon he'll have no choice. Eight million people work in the financial sector. The number working two years from now will be a fraction of that.