Progressive Breakfast: Bailing Out The Bailout

Progressive Breakfast is the morning roundup of what progressive movement members need to know to start the day.

ALERT: The Conservative Attack Strategy On Economic Recovery

Marc Ambinder: [1] "A trillion dollars worth of government spending over the course of a few years is a ripe target for conservatives. Think back to the (Bill-Clinton/Joe Biden!) crime bill of 1994, when Republicans rallied their base against the legislation by ridiculing a tiny part of it -- proposals to expand midnight basketball leagues as a way of keeping kids off the streets and out of gangs. Watch for Republicans to settle on a handful of objectionable items and create the impression that the entire enterprise is suspect. Doing so will give Republicans cover to vote against more wildly popular projects."

Bailing Out The Bailout

WSJ peeks at Obama team deliberations on how to reform the financial bailout: [2] "Among the plans being discussed are injecting more capital into banks, creating a market for illiquid assets clogging the books of financial institutions and helping borrowers who are having trouble making their mortgage payments ... One key distinction will be in the approach to helping homeowners facing foreclosure. Mr. Paulson and the White House have resisted calls to embark on a government rescue of homeowners."

Salon.com's Mike Madden looks at where the first $350B [3] of the bailout has gone: "A lot of it is, apparently, just sitting in the bank ... The feds were essentially taking out the trash -- buying shares in various banks that had gotten themselves into trouble by issuing crappy mortgages using complicated formulas, assuming the cost of many of the mortgage-backed securities that were weighing down the balance sheets ... The feds were pumping money into these banks so they would feel free to make more loans -- better, simpler, sounder loans. ... But the banks did not start making new loans. They seemed to sit on their federal windfalls. And the Bush administration kept handing out more."

More Main Street, Less Wall Street

CAF's David Sirota joined Rachel Maddow on MSNBC [4] to discuss what Obama can do instead: "...he can use as much money that hasn't been spent already for a real Main Street economic stimulus ... what money that continues to be invested in banks, he can put more strings on ... for instance, the money that is invested in banks needs to be lended off of, the capital needs to be lended off of at a greater rate."

Visit msnbc.com for Breaking News [5], World News [6], and News about the Economy [7]

Streetsblog worries states will over-emphasize highways [8], calls for channeling aid to cities instead of states: "it's the cities that build the bike paths, it's the cities that build the transit systems, it's the cities that run the bus lines, it's the cities that run the rail stations."

Not that states don't need aid. Stateline: "Home-delivered meals, transportation and job training are among the services increasingly requested by low-income seniors [9] as they struggle to cope with shrunken pensions, job shortages and rising food costs. But a national survey of state services this month shows that despite an 85 percent spike in demand, revenue shortfalls are forcing states to lay off social services staff [9] and slash administrative costs to forestall program cuts expected next year."

W. Post looks at the broadband component of Main Street recovery: [10] "Within the well-funded world of telecom lobbying, even fierce opponents are in rare agreement that Obama's plans to expand networks would boost the economy with jobs digging trenches for fiber lines and designing complex networks. But the interest groups differ on how that ambition should be executed...

"....the Telecommunications Industry Association ... asked for tax breaks to build broadband infrastructure and $25 billion in grants to companies that build networks in hard-to-reach areas ... [Free Press] insists the service should be affordable and seeks subsidies for low-income families with school-age children so they can buy laptop computers and deduct the cost of home Internet access. 'The worst-case scenario would be to write a billion-dollar check in tax breaks and funnel money directly to prop up a stock price,' said Ben Scott, policy director at Free Press."

On Fox News, Sirota stresses the importance of increased taxation on the wealthy [11] to help states. Seeing The Forest looks at the impact of anti-tax plans in California: [12] "California Republicans finally, finally submitted what they claim is a plan to attack the budget deficits, detailing specifics of the cuts they are demanding. The plan they submitted only cuts the deficit in half, thereby admitting (but not admitting) the urgent need to raise taxes to cover the other half of the deficit. The Republican plan guts public schools, community colleges, Medi-Cal, transit, mental health and many other programs. And yet it still leaves half of the deficit in place."

Annals of Stupid Poll Questions

ABC/W. Post poll shows 65% support for "new federal spending of up to 700 billion dollars [13] on construction projects and other programs to try to stimulate the economy." But ABC's pollster notes [14], "support weakens considerably -- to about an even split -- if it'll add to the federal budget deficit."

That's an uninformative question, since the whole idea is to increase the deficit in the short-run with investments that will pay off in the long-run.

Salazar Reaction

Grist's Kate Sheppard goes deeper into expected Interior pick Ken Salazar's enviro record [15], finds mixed record: "staunchest opponent of the Bush administration's plans to rush forward with oil-shale development in Western states ... [supported] compromise plan [that[ merged tax incentives and funding for renewables with some offshore drilling ... called for more efficient use of water and more research into the effects of climate change on water supply ... voted against an amendment to the Water Resources Development Act reauthorization bill that would have required the U.S. Army Corps of Engineers to consider the long- and short-term effects of climate change..."

Sheppard concludes: [15] "Other environmental organizations and interest groups have yet to weigh in. Overall, the jury's still out [15] on what to expect from Salazar."

Daniel's News & Views [16] (via Ambinder [17]) rounds up what enviro criticism there is against Salazar.

Vilsack Reactions

La Vida Locavore's Jill Richardson reacts negatively: [18] "The general reaction I'm hearing is not a very happy one, but also 'he's not the worst pick.' ... Iowans who I've spoken to tell me about their disappointment in Vilsack's vote (as a state senator) to take away local control on hog factory farms in Iowa. During his time as governor 'Vilsack oversaw the largest proliferation of hog confinements in the states history.' These new hog CAFOs put tens of thousands of independent family hog farmers out of business in the state. The end result of this was a "decimation of rural Iowa" and serious degradation of the state's drinking water. Iowans also remember the rides on Monsanto's corporate jet that Vilsack ... enjoyed during his time in office. He repayed Monsanto by ... promising to do everything he could to get a seed bill to pass. This bill took away county power to regulate GMOs within county borders."

MyDD's Natasha Chart gives a mixed review: [19] "organic consumer activists ... oppose Vilsack on the grounds that he's good buddies with the Monsanto corporation ... Their long campaign to end seed-saving as practiced for millenia is about as greedy, shortsighted and wrongheaded a course of action as I can imagine. Their thuggish enforcement policies and ridiculous disregard for public welfare are legend ... But there's a stance I consider very important for which Vilsack is to be rightly commended ... [he] supports the right of animal growers to fair access to the courts, open markets with a level playing field for small farmers, and the enforcement of fair and transparent business practices in the livestock industry."

Beyond Green is optimistic: [20]"this may all be about climate change (a subject which Vilsack is passionate about) ... When the time comes for the agriculture sector to submit to limits on carbon emissions (and despite his ill-considered support for both flavors of ethanol), Tom Vilsack has the credibility and the commitment to deliver on them."

NYT notes on ethanol: [21] "Both Mr. Obama and Mr. Vilsack are regarded as staunch advocates of ethanol and other bio-fuels as a way to reduce the nation’s reliance on foreign oil ... [But, he] was the co-chairman of a task force last year on climate change for the Council on Foreign Relations, which recommended phasing out subsidies for mature biofuels, including corn-based ethanol, as well as reducing tariffs on imported biofuels like Brazilian sugar ethanol."

Annals of Made-Up Problems

USA Today headline: [22] "Obama faces a crush of demands from interest groups."

USA Today article: [22] "The government can do more than one big thing at a time, says Richard Kirsch, national campaign manager for Health Care for America Now, a coalition of unions and progressive groups.'There's no reason that Congress can only do health care, only do climate change.'"

While the Auto Industry Waits, Distress Spreads

Bloomberg: [23] "Chrysler LLC’s credit arm said it may temporarily halt the loans used by dealers to buy vehicles as the retailers pull money from an account that helps finance their borrowing. Losing access to the lending would be a blow to Chrysler dealers struggling with a 28 percent plunge in 2008 U.S. sales. Lender Chrysler Financial wants to tap the $700 billion bank-bailout fund to boost cash, as does Chrysler, the third-biggest U.S. automaker."

USA Today: [24] "As the Bush administration prepares to throw a life ring to Detroit automakers, industry parts suppliers fear they will be left to drown ... With all automakers — domestic and foreign — slashing production to match falling sales, however, suppliers' 2009 revenue will shrink regardless. Their health, too, is vital to the industry, with as many as 300 suppliers contributing parts to a single vehicle. But the impact on the supplier base is already being felt..."

W. Post's Harold Meyerson notes the historic economic importance of the UAW to our economy: [25] "In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards -- in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build."

Climate Progress sees some hope: [26] "Chrysler to electrify entire product line! ... Wow. If this is really true, if Chrysler will spell this out in the spring for the government as part of a full bailout plan, then the company certainly should be given a chance to put this strategy into place."

WSJ vs. WSJ on Madoff & SEC

WSJ columnist Holman W. Jenkins Jr.: [27] "Where was the SEC? Such is the plaint lofted in the wake of the Bernie Madoff scandal. Huh? When has the Securities and Exchange Commission ever found a fraud except by reading about it in the newspapers? Anyway, who said the agency was supposed to prevent investors from losing money or relieve them of having to perform due diligence?"

WSJ news reporters: [28] "The Securities and Exchange Commission will examine the relationship between a former official at the agency and a niece of financier Bernard L. Madoff, after the SEC's chief admitted 'apparent multiple failures' to oversee the firm at the center of an alleged $50 billion Ponzi scheme. [28] In an extraordinary admission that the SEC was aware of numerous red flags raised about Bernard L. Madoff Investment Securities LLC, but failed to take them seriously enough, SEC Chairman Christopher Cox ordered a review of the agency's oversight of the New York securities-trading and investment-management firm. The review will include whether relationships between SEC officials and Mr. Madoff or his family members had any impact on the agency's oversight."

W. Post's Steven Pearlstein advises: [29] "Accounting firms and rating agencies are too easily compromised by the fact that they are chosen and paid by the management of the companies whose books they are auditing and securities they are rating. There are simply too many built-in conflicts of interest. The solution is equally obvious: turn these firms into something akin to a regulated public utility."

Unidentified Insurance Lobbyists To Pose As Grassroots Health Care Activists

NYT: [30] "When supporters of President-elect Barack Obama hold house parties to discuss ways of fixing the health care system over the next two weeks, they may find some unexpected guests. The health insurance industry is encouraging its employees and satisfied customers to attend ... Those who attend are not required to disclose their employers or affiliations."

Dem Announces Opposition To Stronger Unions

Marc Ambinder: [31] "That's.... 57 votes in favor of cloture now. In-cycle [up for re-election] Sen. Blanche Lincoln of Arkansas formally opposes the Employee Free Choice Act. She says it's 'not necessary' right now. "

Meanwhile, Crooks and Liars reports: "Lou Dobbs lets right-wing front group smear SEIU so he can link Obama to Blagojevich [32] ... Dobbs willingly used the Center for Union Facts -- which is another word for "smear" -- to make these farcical claims. CNN should be ashamed of itself ... It's bad enough that Dobbs doesn't even know what Employee Free Choice Act is, but to then use a wingnut front group to attack it means either a couple of things ... He is lying to his audience or he is completely ignorant of the entire story."