The Curtain Falls on Act One

Tonight the curtain falls on Act One of the Obama Presidency with the passage of the $787 billion American Recovery and Reinvestment Act, otherwise known as the fiscal stimulus. I am not quite sure if what we have just witnessed is a comedy of errors or tragedy in the making though I remain hopeful that this was just a modest exposition, an introduction to the ever-changing cast of heroes and villains in our continuing national drama. The President now has a record, a legislative accomplishment even if it is more modest than most of us would have preferred.

This bill, passed with the support of just three Republican Senators despite a full-court press by the President to secure broad bipartisan support, does begin the task of rebuilding the nation by investing in the nation. The bill invests large sums for education, health care, energy, transportation and technology that will create jobs not just in the near-term but over the long haul. And the bill also extends the social safety net that has been badly frayed by the Republican class war on the middle class and on the poor. That the President failed to adequately frame and tout the merits of this bill to the American people is, I hope, a lesson that his team has learned. This bill, as Terence Samuels of the American Prospect observed, should have been called the jobs, jobs, jobs bill.

Still as the New York Times notes "it is beyond the scope of any one bill to counter the worsening recession." The awful truth is that the economy will continue to shed jobs and 2009 will be marked by a painful contraction of the global economy. The problem is a systemic one and it cannot be cured by fiscal stimulus or even shock therapy. A fundamental reworking of our economic priorities is in order. We need to rethink globalization and unregulated free markets. We have to tackle the world that securitization built, a financial system run amok.

But before we can do any of this we must tackle the banking crisis that has been building across the globe. Just today in the UK, the Lloyds Banking Group, formed recently by the merger of Lloyds TSB and HBOS, announced an £11 billion in losses causing the stock to plunge 23%. And the British taxpayers already own nearly 43% of Lloyds. It is probable that they are about to own even more of it. Banks so far have been injected with capital, mostly loans, in numerous countries but outright nationalizations have occurred in just Iceland, Estonia, Venezuela and Austria. They are coming in Britain, Spain, Ireland, Russia, Germany and the Netherlands.

The US banking system is clearly in trouble. For more than a month now, economists from Paul Krugman to Nouriel Roubini to Joseph Stiglitz have been calling on the Obama Administration to act and act decisively. Losses are now above the one trillion dollar mark and headed for two trillion and beyond. It is to be expected that rising unemployment will trigger deeper losses on credit cards, mortgages and home-equity loans as more consumers fall behind on their bills further eroding the bank's position. Combined with these problems is the growing ripple effect from the fast sinking commercial real-estate sector that will force banks will to bolster their loan-loss provisions, eroding profits further.

The balance sheets of the nation's banks cannot sustain this sort of bleed. The banks are in a death spiral and if this is allowed to continue, it will bring down what's left of the economy down with them. This is now the second act in this drama. We must save the banks. The banks are effectively insolvent. They are headed for bankruptcy. If you can't call it nationalization for "cultural reasons", then call it a receivership as Mr. Roubini has suggested.

If we don't solve this in Act Two, then Act Three will see a full tragedy unfold. It's time to act.

Tags: American Recovery and Reinvestment Act, Fiscal Stimulus, President Obama (all tags)

Comments

33 Comments

Heh

"That the President failed to adequately frame and tout the merits of this bill to the American people is, I hope, a lesson that his team has learned"

wrong, 59% support the bill by latest gallup. What eh failed to get was more repug votes, what he succeeded to do was to show GOP as the party of NO (gallup poll from last week shows 60% (!!) disapprove of the way gop handled the stimulus, 67% approve of the way obama handled it) and a party who models them selves after taliban!!

Big party and legislative victory imo.

http://www.gallup.com/poll/114577/Stimul us-Support-Edges-Higher.aspx

P.S. this is one of MANY legislative things he has done so far, including Lilly ledbetter, SCHIP, EO's on civil liberty, gitmo and EPA stuff. but nice reach back to your primary mentality. Move on.

by Bury 2009-02-13 10:29PM | 0 recs
dont spin here

Try this on:

http://www.rasmussenreports.com/public_c ontent/politics/obama_administration/feb ruary_2009/49_trust_themselves_more_on_t he_economy_than_obama">49%
Trust Themselves More On the Economy Than Obama

Forty-nine percent (49%) of U.S. voters trust their own judgment more than President Obama's when it comes to the economic issues affecting the nation.
Thirty-nine percent (39%) trust the president more in a new Rasmussen Reports national telephone survey. Twelve percent (12%) are not sure whose judgment is better.

by Jerome Armstrong 2009-02-14 05:31AM | 0 recs
Re: dont spin here

That's a pretty weird question.  Without some kind of baseline to compare those numbers to, I don't know that it means anything.

by Steve M 2009-02-14 05:37AM | 0 recs
Exactly! Really Jerome

Why focus on such a weird question from Rasmussen, rather than all the other polls showing a solid majority of Americans favoring Obama's program?

by Davidsfr 2009-02-14 06:17AM | 0 recs
Re: dont spin here

by Jerome Armstrong 2009-02-14 08:03AM | 0 recs
Re: dont spin here

Its fwiw. Taken on its on, it means Obama doesn't have the sort of deified status that many here think he does.

by Jerome Armstrong 2009-02-14 08:04AM | 0 recs
Re: dont spin here

49% is also the number of Americans of below average intelligence.

Makes you think.

by lojasmo 2009-02-14 07:20AM | 0 recs
Re: dont spin here

are you out of your mind?   For you to tell ANYONE not to spin is the HEIGHT of hypocrisy Jerome... or should we go back and examine your Primary front page posts... especially the ones where you Cherry picking a single poll with a bad Obama number while ignoring the 3-4 with good numbers.

While I agree with Charles post over all... what the poster you rudely responded too said was correct.   The polls show that a majority of Americans favor the Bill.

Now instead of your rude response, you should have said that those numbers were only obtained AFTER Obama started selling the bill and campaigning.  So Charles thesis is correct... Obama did a poor job of selling the bill by trying for Bipartisan support.  He took a gamble, it failed, and THANK GOD, Obama adapted.  Had he campaigned for it fromt he start and called it the Jobs bill I think Public support would have been better.

Furthermore, many many people feel they are better than the sitting president on many issues.  That's ANY sitting President and any issue.  Its similar to the number of Americans who think they have a better shot into heaven than Mother Theresa or the Pope.

Seriously man, what is your problem of late.  I used to love reading you but over the last two yours you have turned into a NASTY person on here.    I'm not sure if you have some personal demons causing the attitude change or what, but seriously, your change in demeanor worries people.  Perhaps, in all seriousness, its time to see a shrink or look in on your demons... because, and I say this as someone who had been on myDD for 5 years, the attitude change is really affecting your writing.

by yitbos96bb 2009-02-14 07:49AM | 0 recs
Re: dont spin here

And please take my post not as an attack on you but as someone who honestly cares.   I've seen behavior changes like this before with people, and its NEVER ended well, unless they got help.

by yitbos96bb 2009-02-14 07:52AM | 0 recs
Re: dont spin here

Wow, go get some help, later troll.

by Jerome Armstrong 2009-02-14 07:56AM | 0 recs
Jerome

I trust my own judgement more than the President's on economic issues affectnig the nation, but I'm not the President and since I'm not, I trust President Obama's more than any Republican.

by DTOzone 2009-02-14 08:30AM | 0 recs
Good job

I remmeber your "Golden standards" polls in the GE. you are a joke and so is Rasmussen who consistently leans to gop (including bush approval numbers).

how about take a non partial poll like Gallup or CBS or PEW? nah common sense is too much to ask.

by Bury 2009-02-14 01:02PM | 0 recs
Thank you

Are we reading MyDD or listening to the right-wing hacks on TV? Or are we to the point where they are one and the same?

by Davidsfr 2009-02-14 06:24AM | 0 recs
Re: Heh

That's not 100% right...

The poll numbers supporting the Bill were not good.  I saw ones less than 50 in support and barely above 50.    The numbers you cite did not happen until AFTER Obama started campaigning for a bill.

The white house forgot that one of their biggest strengths is Barack Obama.   For someone who proclaims to be a Reagan admirer, he forgot that Reagan campaigned for a lot of his horrific programs.    Obama needs to do the same, especially on health care reform.

by yitbos96bb 2009-02-14 07:55AM | 0 recs
Re: Heh

Considering the incredible amount of media opposition and the size of the bill, the numbers were fantastic.  Only rasmussen showed less than 50%, and that's only 'cos of huge numbers of undecideds...  

Getting 50% on an $850 bill is pretty damn good, especilaly when opponents on the TV are on 24/7 with lies and smears about it!

by LordMike 2009-02-14 08:33AM | 0 recs
Re: Heh

this is one of MANY legislative things he has done so far, including Lilly ledbetter, SCHIP, EO's on civil liberty, gitmo and EPA stuff. but nice reach back to your primary mentality. Move on.

You are confusing ownership. Obama owns the fiscal stimulus. It is largely his bill. Gitmo isn't even a legislative victory. That was an executive order. The others are all holdovers from the previous Congress, brought back this term. Bush vetoed them, Obama signed them. That's great but to ascribe them as solely Obama victories is disingenuous. They are Democratic victories.

To deny that this process was handled poorly at times is to put one's head in the sands. Mistakes were made. Let's learn from them and not repeat them. Obama's bipartisanship approach won him 3 Senators. Without their support, the bill would not have passed. You can make your judgments was to whether the cost was worth the benefit.

In my own view, this is act one, hence the title, act two awaits and there will be further acts. To clean up the mess left by the GOP and their Democratic enablers is going to be a generational effort.

And you chose to focus on the part of the post that was set in the past when the most important part of the post was about what happens next. What is done is done. It is now that matters.

by Charles Lemos 2009-02-14 01:28PM | 0 recs
Also

He got what he wanted as well, huge victory in this difficult climate IMO(having to rely on GOP senators and right leaning media hacks).

http://www.politico.com/news/stories/020 9/18860.html

Here's a list of items frequently touted by Obama and how they fared in the recent negotiations:

Hybrid Vehicles for Federal Fleet
House: $600 Million
Senate: $300 Million
Final: $300 Million

Computerizing Medical Records
House: $20 Billion
Senate: $19 Billion
Final: $19 Billion

Rural and underserved Broadband
House: $6 Billion
Senate: $7 Billion
Final: $7.2 Billion

School Construction Modernization
House: $21 Billion
Senate: Zero
Conference: Folded into $44.5 Billion in aid primarily to prevent teacher layoffs

High performance green federal buildings
House: $6 Billion
Senate: $2.5 Billion (some may have been reallocated)
Final: $4.5 Billion

Head Start/Early Start Expansion
House $2.1 billion
Senate: $1 billion
Final: $2.1 billion

Neighborhood Stabilization: buying up foreclosed homes in distressed areas
House:$4.2 billion
Senate: Zero
Final: $2 billion

Education technology
House: $1 billion
Senate: $1 billion
Final: $650 Million

by Bury 2009-02-13 10:34PM | 0 recs
Re: Tragic beginning

Time to reassess and redouble ourefforts. We share a large part of the blame for Obama's failed first 3 weeks. We shirked. We cowered. We even caved, in the hope that Obama would actually 'have this'.

Let us commit to redouble the shrill, and perhaps we can salvage something from what remains of the failed Obama Presidency.

Post Partisanship My Ass!

by QTG 2009-02-14 01:55AM | 0 recs
Re: Tragic beginning

Yes, I would peg whatever failure of the spin about the stimulus at the alter of idiotic framing of it as bipartisan. Not surprisingly, few buy this gambit, and it only serves to undermine credibility.

http://www.rasmussenreports.com/public_c ontent/politics/obama_administration/feb ruary_2009/60_say_stimulus_plan_is_what_ democrats_want_not_bipartisan">60%
Say Stimulus Plan Is What Democrats Want, Not Partisan

Sixty percent (60%) of U.S. voters say the economic stimulus plan that is emerging
from Congress is mostly what Democrats want rather than a truly bipartisan product.
Twenty-five percent (25%) think the plan now pegged at $789 billion is a bipartisan
effort, according to a new Rasmussen Reports national telephone survey.

by Jerome Armstrong 2009-02-14 05:33AM | 0 recs
Re: Tragic beginning

And according to Gallup, 59% support the bill and 67% support the way obama operated. according to CBS 81% think Obama was bipartisan and reach out while only 41% think GOP reach out.

http://www.gallup.com/Home.aspx

But i understand you have to cherry pick GOP polls to cast a bad light on Obama, big surprise!

by Bury 2009-02-14 01:06PM | 0 recs
Yeah boy that was some failure

Biggest spending bill and biggest middle class tax cut in history passed in the first month of a presidency.

Horrors!

by Davidsfr 2009-02-14 06:22AM | 0 recs
This is snark right?

So hard to tell nowadays.

by DTOzone 2009-02-14 08:33AM | 0 recs
Re: The Curtain Falls on Act One

Let us pray that Act II is not Social Security "reform".

I say go right on to national healthcare.  When you are moving $ trillions to help banks, spending $100's billions to fix healthcare looks like chump change.

With the political capital of the rich ebbing as fast as Bush's post-Katrina, you can make them pay for healthcare with higher marginal rates.

by Bob H 2009-02-14 02:23AM | 0 recs
Re: The Curtain Falls on Act One

What I learned from exposition:

-Protagonist: President bent on keeping his word to reach out to his rivals in a spirit of cooperation, in spite of his own political cache and their diminishing political capital.

-Antagonists: Rep party that cannot turn from its overly confrontational demeanor spitting in his face.  One that would rather stonewall and complain about initiatives than work to improve them as they see fit.

-Ragtag Bunch of Troops: Congressional Dems.

-Uneasy Alliance: "RINO" senators from Blue States that want to get reelected.

-Failed Appointees: A couple knuckleheads who can't manage to pay their taxes or make up their minds. (Probably won't make action figures of them.)

At the end of Act 1 Obama and Dems emerge victorious following betrayal and fierce battle.  Reps reveal themselves as opportunistic enemies of progress who care only about their own political future.

Other notes:
-Rush is STILL the de facto leader of the Republicans (something I've known for the last 13 years).  It isn't good for them that this has become public.
-The MSM is increasingly irrelevant.

by midwestdem1 2009-02-14 04:02AM | 0 recs
Re: Obama presidency over

As Kuttner and Hudson pointed out on Democracy Now! on Friday this plan is vastly underfunded, and as a result its safe to conclude it won't work.

Many other economists---Nouri Roubini, Dean Baker, et al. have pointed out the same thing.

Obama's tiny measure isn't even going to take care of the Americans who lost their jobs in the last year, let alone the half million or more who are going to be losing theirs before even one dollar is sent out.

When a critical mass of Americans finally realizes this puny plan didn't work, where they gonna go?  

The only other option they know: the Republicans.

by neaguy 2009-02-14 04:09AM | 0 recs
Re: Obama presidency over

Please. What are the Republicans going to offer them? Over at Kos it shows that Republican bloggers thought we should spend 30 billion on a stimulus and liberal bloggers thought we should spend an average of 620 billion. People know that Republicans do not have solutions in an economic crisis.

Historically, when FDR passed the New Deal the Depression had been underway for a couple years. Everybody knew we were in deep shit, there are still a lot of people out there who are in total denial about how bad this is going to get. Obama's plan will save 3 million jobs so it'll work, but it won't stop our huge slide.

We may have to go back for more, but I hope we stimulate the economy with a health care and green energy bill instead.

by Lolis 2009-02-14 05:30AM | 0 recs
What a lot of crap!

Please, if you are so defeatist, why not join the wingnuts in a mass migration out of the country.

Obama is doing just fine thank you, and this package will have positive results. Combined with further efforts to come we will prevail over the extreme right and people like you.

by Davidsfr 2009-02-14 06:20AM | 0 recs
Re: The Curtain Falls on Act One

You need to have some perspective and chill.  This commentary sounds like the same BS we heard during the campaign about Obama not being able to compete with McCain.

Obama and his Democratic allies just passed one of the largest spending bills and largest tax cuts in U.S. history - less than a month into this new presidency.  

This economy will recover (it likely would have anyway, but the stimulus bill will hopefully speed the recovery).  

When the economy does begin to recover, Obama and the Democrats will rightfully be able to take credit for doing the right thing.  This will give them a basis for expanding Democratic majorities in Congress and state houses.

This bill could very well be the beginning of a decades long Democratic hegemony - for the benefit of this country and its people.  

Ps - let's not forget that SCHIP also got passed - again in under a month.    

by ruskin 2009-02-14 06:35AM | 0 recs
Re: The Curtain Falls on Act One

What tax cut are you talking about?  I have not seen own at all.

When people stop focusing on the country and focus on another 80 years of democrat rule it really is not good for the free people of this country.

by Classical Liberal 2009-02-14 07:26AM | 0 recs
Re: How about that Lieberman thing?

 Obama kissed up to Lieberman, and what did it get him? Did Lieberman work to get his Republican pals to vote for the Package? Did he vote for the package? Was any of that important? Did Obama's gesture to Lieberman early on pay off? Is Obama completely incompetent at politics?

by QTG 2009-02-14 07:22AM | 0 recs
Re: How about that Lieberman thing?

Actually, yes... it seems that Lieberman's help was crucial to get this thing passed!

http://www.huffingtonpost.com/2009/02/13 /specter-republicans-suppo_n_166875.html

by LordMike 2009-02-14 08:36AM | 0 recs
Re: How about that Lieberman thing?

THAT CAN'T BE TRUE. We were almost unanimous in insisting that Obama and the Senate leadership should have , no that's too weak... MUST punish Lieberman. We were sure of it. We we SURE OF IT.

WAAAAAAAAAAAAAAHHHHH!!!!!!

by QTG 2009-02-14 11:30AM | 0 recs
This Post

is NOT really about the fiscal stimulus. It is about the need to act to clean up the financial system which is imploding.

Think about it. Every lost job puts further pressure on the banks because consumers have such debt loads that they will start to default in record numbers. The TARP is an unmitigated failure because it failed to stem the bleed. To continue it is to throw good money after bad. It is a sunk cost. Time to clean it out. Wipe out the shareholders, put toxic assets in receivership, close banks which under capitalized and prop up those that can survive via nationalize. Leave healthy banks private. Then break up the financial sector beginning with Citibank. Separate investment banks from commercial banks and spin off all ancillary financial istitutions. And above REGULATE.

The comedy of errors to which I referred did not refer to Obama solely but to Washington in general especially the chattering class and the Senate and most all the GOP. The House Democrats for the most part showed true leadership. I regret that I did not make this clearer.

by Charles Lemos 2009-02-14 11:46AM | 0 recs

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