The Democratic Congressional Campaign Committee announced that 40 Democrats in the U.S. House of Representatives will be in the “Frontline Program,” which seeks to protect incumbents in potentially vulnerable districts. Once again, Leonard Boswell of Iowa’s third district will be a Frontline Democrat. Here’s what the designation means:

The Frontline Program is a partnership between the DCCC and Members which lays the ground work for the 2010 cycle by supporting and expanding their fundraising and outreach operations. Frontline Members must sign a memorandum of understanding, strengthened this cycle to reflect the challenging political environment, that requires Members to meet aggressive fundraising goals, accelerate volunteer and recruitment efforts, and increase their online networking.

The DCCC’s Frontline Program is a proven success. Frontline Members and the DCCC did its work effectively and early in the 2008 cycle.  As a result, the DCCC’s independent expenditure campaign made a significant investment in only 10 of 34 Frontline districts – approximately 15 percent of the IE’s budget.

I’ve put the DCCC’s press release after the jump. Most of the others named to the Frontline list appear to be in more vulnerable districts than Boswell. Republicans targeted Boswell during his first five re-election campaigns but did not make a serious challenge in IA-03 in 2008. Boswell defeated Kim Schmett by 56 percent to 42 percent in November.

Here’s an interesting fact from the DCCC’s statement, which underscores how the Republican Party has become increasingly uncompetitive in large parts of the country:

There are 83 Democrats in districts that President [George] Bush won in 2004, while there are only six (6) Republicans in seats that Senator [John] Kerry won.

Presumably a significant number of those 83 districts swung to Barack Obama in the 2008 election, as Iowa’s third district did. But the final presidential election results by Congressional district have not been calculated everywhere in the country.

I would be very surprised if the DCCC had to spend resources defending Boswell in the next election. Many House Democrats are in a more precarious position. Unfortunately, the irony is that re-electing Boswell in 2010 could make IA-03 a very tough hold for Democrats in 2012.

The DCCC is staying on offense as well, launching robocalls this week in the districts of 12 potentially vulnerable House Republicans. A few weeks ago the DCCC ran radio ads in 28 Republican-held House districts, including Iowa’s fourth district. Tom Latham is not being targeted in the current robocall effort, however. It’s just as well, since IA-04 does not appear to be among the top Democratic pickup opportunities for the next cycle.

Chris Bowers wrote a good post on where Representative Bruce Braley’s new Populist Caucus fits in among House Democrats. The whole piece is worth reading, but here’s an excerpt:

Clearly, there is a strong tendency toward the Progressive caucus among the Populists, even though they were organized by a New Democrat. Further, Progressive punch puts the median lifetime score on “crucial votes” for this group at 55.5 of 256 (between [Joe] Courtney at 54 and [Dave] Loebsack at 57) in the Democratic caucus, placing it decidedly in the left-wing of the party.

[…]

Notably, the Populists are also heavy on the class of 2006, as 14 of the 20 members listed by the Huffington Post were first elected to Congress that year (and Massa came within an inch of being a 15th that year). Only Boswell, DeFazio, Filner Sanchez and Schakowsky were first elected to Congress before 2006. As such, while it displayed the same fractured tendencies of all ideological caucuses across the three bailout votes, the Populist Caucus appears to be primarily a caucus of progressive sophomore Representatives. This is particularly interesting since the class of 2006 was supposed to be a conservative dominated class ushered in by then -DCCC chair Rahm Emanuel. Now, the progressive members of that class appear to have organized a new caucus for themselves.

I didn’t realize until I read this page on Braley’s website that Tom Harkin chaired a House Populist Caucus during the 1980s:

In February of 1983, a group of 14 Midwest Democratic members of Congress founded the first known “Populist Caucus” with the goal to “fight for such economic goals as fairer taxes, lower interest rates and cheaper energy.”

The original Populist Caucus was chaired by then-Rep. Tom Harkin (D-IA).  The other members in the caucus were Berkley Bedell (D-IA); Lane Evans (D-IL); Tom Daschle (D-SD); Al Gore (D-TN); Timothy Penny (D-MN); Jim Weaver (D-OR); Byron Dorgan (D-ND); Harold Volkmer (D-MO); James Oberstar (D-MN); Bob Wise (D-WV); Frank McCloskey (D-IN); Bill Richardson (D-NM); Gerry Sikorski (D-MN); and Mike Synar (D-OK).

The first Populist Caucus dissolved by the mid-1990’s.

Several members of that original Populist Caucus had been elected to the U.S. Senate or had left the House for other reasons by the early 1990s.

Side note: Bill Richardson once identified himself as a populist? Wow.

The new Populist Caucus platform is on Braley’s website:

  1. Fighting for working families and the middle class by creating and retaining good-paying jobs in America, providing fair wages, proper benefits, a level playing field at the negotiating table, and ensuring American workers have secure, solvent retirement plans.

  2. Cutting taxes for the middle class and establishing an equitable tax structure.

  3. Providing affordable, accessible, quality health care for all Americans.

  4. Ensuring quality primary education for all American children, and affordable college education for all who want it.

  5. Defending American competiveness by fighting for fair trade principles.

  6. Protecting consumers, so that Americans can have faith in the safety and effectiveness of the products they purchase

I will be interested to see how the Populist Caucus weighs in on the coming debates over health care, workers’ rights and tax policy.

A full list of the 23 founding Populist Caucus members is after the jump.  

Remember how urgent it was for Congress to approve the Wall Street bailout last fall to free up credit? Not surprisingly, things didn’t work out that way:

A new report out of the Treasury Department Tuesday confirmed what many lawmakers, housing advocates, small businesses and individual consumers have known all along: That despite hundreds of billions of dollars flowing from Washington to the finance industry, bank lending among recipients of the Troubled Asset Relief Program fell in the last three months of 2008.

Among the 20 largest TARP recipients, median mortgage and business lending both fell by 1 percent over that span, Treasury found, while median credit card lending rose 2 percent, “reflecting greater reliance on existing credit lines by consumers.”

The findings were based on a survey of the 20 banks receiving the most federal help under the TARP, and marks the first in what will be a series of monthly reports analyzing the lending trends among bailed-out banks.

It would be nice to know what the banks are doing with the bailout money, but they don’t want to tell anyone.

How disappointing that Barack Obama’s Treasury Secretary Timothy Geithner wants to continue the misguided effort begun by George Bush’s Treasury Secretary, Henry Paulson.

Here are some more links on why Geithner’s plan “fails on almost every level.” Excerpt:

Robert Kuttner offers a strong analysis of Geithner’s strategy to salvage the banking industry in The American Prospect, noting that Geithner is explicitly avoiding the simplest and cheapest solution in favor of propping up the current Wall Street regime. The current plan is designed to support a financial architecture that has proven completely ineffective in maintaining the nation’s basic economic functions.

Someone who works for a non-profit organization told me last week that he has filled out a detailed six-page application for a $1,000 federal grant, while Geithner wants to get $350 billion on the basis of a vague two-page proposal.

Josh Marshall notes that “a lot of key political appointments at the Treasury haven’t been made yet, let alone been confirmed.” He takes a stab at explaining why:

one of the big issues is that it’s actually hard to find people with the requisite knowledge of banks and the capital markets who aren’t also compromised — either in policy or business terms — by the housing bubble and the rest of the financial collapse. And that raises again as a question: why have none of the people who were financial orthodoxy dissidents and saw what was coming been brought in to the administration. I know I’m hardly the first one to bring this up. And we know that the big appointees — Summers and Geithner — were part of the mix. But there aren’t even any of them further down into the appointment structure. They’re all still on the outside.

Disturbing.

Although GOP leaders are boasting that zero House Republicans voted for the stimulus bill, I have a sneaking suspicion that once this so-called “wasteful spending” starts working its way through the economy, Republican members of Congress will find a way to take credit for it.

We saw last fall that Steve “10 worst” King used his first television commercial to take credit for progress toward widening Iowa Highway 20. The TIME-21 plan approved by the state legislature last spring–not King’s work in Congress–made that project possible. Nevertheless, King continued to mislead voters about his role in moving the Highway 20 project forward.

At least two House Republicans are already playing this game with respect to the stimulus. David Waldman/Kagro X predicts,

Standard operating procedure, of course. Oppose the bill viciously, vote against it, then show up at every ribbon cutting in the district paid for by federal funds, and cry “Politicization!” if they’re not invited.

Paul Rosenberg’s take on this story is also worth a read.

Democrats need to be on the lookout for this kind of weaselry over the next couple of years. Help from Iowans living in the fourth and fifth Congressional districts would be most appreciated.

If you see Steve King or Tom Latham taking credit for stimulus spending they voted against, either in an official press release or in a local newspaper, radio or television news story, please post a diary about it at Bleeding Heartland, or e-mail me with the details (desmoinesdem AT yahoo.com).

UPDATE: More Republicans are touting wonderful provisions in the stimulus bill they voted against.

As President Barack Obama signed the stimulus bill in Denver,

The White House today released state-specific details on the local impact of the American Recovery and Reinvestment Act.  The American Recovery and Reinvestment Act is a nationwide effort to create jobs, jumpstart growth and transform our economy to compete in the 21st century. The compromise package of $789 billion will create or save 3.5 million jobs over the next two years. Jobs created will be in a range of industries from clean energy to health care, with over 90% in the private sector.

Below are links to tables and fact sheets outlining the impact of the American Recovery and Reinvestment Act.  The estimates are derived from an analysis of the overall employment impact of the American Recovery and Reinvestment Act conducted by Christina Romer, Chair of the Council of Economic Advisers, and Jared Bernstein, Chief Economist for the Vice President, and detailed estimates of the working age population, employment, and industrial composition of each state.

Note: all of the links below are to pdf files.

Overview on American Recovery and Reinvestment Act

American Recovery and Reinvestment Act on Working Families

Employment Numbers by State

Employment Numbers by Congressional district

Education Fact Sheet

Energy Fact Sheet

Health Care Fact Sheet

Infrastructure Fact Sheet

I have not had time to read these documents yet. Please use this comment thread to write about what you like and don’t like about the stimulus.

Note: while House Republican leaders proudly proclaim that no one in their caucus voted for the stimulus, I heard on the news this morning that 22 of the 24 Republican governors support the bill.

That’s the difference between someone whose main task is to build an electoral comeback on Democratic failure and someone who has to govern in this difficult economy.

President Barack Obama will have a very large bill to sign on Monday. Yesterday the U.S. House of Representatives passed the $787 billion economic stimulus bill by 246 to 183. As expected, no Republicans voted for the bill. Iowa’s three Democrats in the House voted for it. Looking at the roll call, I was surprised to see that only seven House Democrats voted against this bill (one voted “present” and one did not vote). I did not expect that much support from the 50-odd Blue Dog Democrats. Good for them!

In the Senate, supporters of the stimulus managed exactly 60 votes after Senator Sherrod Brown flew back from Ohio, where he was attending his mother’s wake. All Democrats, two independents, and three Republicans (Olympia Snowe, Susan Collins and Arlen Specter) voted for it. According to Specter, at least a few other Senate Republicans supported the bill but were afraid to vote for it (fearing a challenge from the right in the next GOP primary). I’m no fan of Specter, but I give him credit for casting a tough vote today. As brownsox explains, conservative Republicans in Pennsylvania are eager to take Specter out in the 2010 primary, having apparently forgotten how badly right-wing Senator Rick Santorum got beaten in 2006.

Daily Kos diarist thereisnospoon, a self-described “hack” who conducts focus groups for a living, is giddy about the potential to make Republicans pay in 2010 for voting against “the biggest middle-class tax cut in history.”

On the whole, this bill is more good than bad, but I agree 100 percent with Tom Harkin’s comments to the New York Times:

Even before the last touches were put to the bill, some angry Democrats said that Mr. Obama and Congressional leaders had been too quick to give up on Democratic priorities. “I am not happy with it,” said Senator Tom Harkin, Democrat of Iowa. “You are not looking at a happy camper. I mean they took a lot of stuff out of education. They took it out of health, school construction and they put it more into tax issues.”

Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery.”

The $70 billion spent on fixing the alternative minimum tax will produce little “stimulus bang for the buck” compared to most forms of spending. The upper middle class and upper class earners who will benefit are likely to save rather than spend the money they get back.

As exciting as it is to see increased funding for high-speed rail, I fear that the bulk of the much larger sum appropriated for roads will go toward new highway construction rather than maintaining our existing infrastructure.

But I’ve buried the lede: what will the stimulus bill do for Iowa?

Iowa Politics linked to two White House documents about the impact in terms of spending and jobs created. This pdf file estimates the number of jobs created in each state and in each Congressional district within that state. It estimates 37,000 jobs created in Iowa: 6,600 in the first district, 7,000 in each of the second and third districts, 6,700 in the fourth district and 6,200 in the fifth district.

Prediction: Tom Latham and Steve King will take credit for infrastructure projects in their districts during the next election campaign, even though both voted against the stimulus bill.

This pdf file shows how much money Iowa will receive under different line items in the stimulus bill. Even more helpful, it also shows the figures for the original House and Senate bills, so you can get a sense of which cuts were made. The bill that first passed the House would have directed $2.27 billion to Iowa. The first Senate version reduced that number to $1.8 billion. The final bill that came out of conference directs about $1.9 billion to Iowa.

If you delve into the details of this document you’ll understand why Harkin isn’t thrilled with the bill he voted for. They took out school construction funds and extra money for the Low Income Home Energy Assistance Program (LIHEAP), for crying out loud.

“Bizarro Stimulus” indeed.

Iowa Independent reports that Harkin and Chuck Grassley “agree that the newly conceived formula used to distribute the $87 billion Medicaid portion of the bill shortchanges Iowa.”

After the jump I’ve posted statements from Representatives Dave Loebsack and Bruce Braley on the stimulus bill. Both talk about the jobs that will be created in Iowa. Loebsack emphasizes the tax cuts that 95 percent of American families will receive as a result of this bill. However, he also expresses his concern about what he views as inadequate funding for modernizing schools in the final bill.

Braley’s statement highlights an amendment he wrote providing low-interest loans for biofuels producers.

I would have been happy to post a statement from Leonard Boswell too, but his office has repeatedly refused my requests to be added to its distribution list for press releases. Hillary Clinton may have a prestigious job in Barack Obama’s cabinet and Joe Lieberman may be welcome in the Democratic Senate caucus, but Boswell’s press secretary seems ready to hold a grudge forever against the blogger who supported Ed Fallon.  

Representative Steve King bragged about his 11th-grade research project in the Thursday edition of the Des Moines Register:

As a junior at Denison High School, I wrote a term paper on President Franklin D. Roosevelt and the New Deal. I began working on the paper with the intention of confirming what I had been taught in school – that FDR’s government recovery programs brought America out of the Great Depression.

I started my research believing in the success of Roosevelt’s economic-recovery programs. To support this claim, I spent hours at the Carnegie Library in Denison reading past editions of the local, biweekly newspaper.

My reading began with the 1929 stock-market crash, and I examined every issue through the attack on Pearl Harbor in December 1941. Those stacks of old papers turned upside down everything I had been taught in history and government class about the New Deal. As I searched for information proving the New Deal stabilized the American economy, I instead found the exact opposite: high unemployment, a struggling stock market and continued hard times.

Later statistical findings confirm my 11th-grade research. Throughout the 1930s, the unemployment rate never dipped below 14 percent. FDR’s tinkering with the free market frustrated investors, and the 1929 high point for the Dow Jones industrial average was not reached again until 1954.

Roosevelt possessed tremendous leadership skills and inspired many Americans, including my hard-hit family. Charisma aside, historians often inflate the true economic record of the New Deal. Roosevelt tried one big government program after another, with poor results. Many of Roosevelt’s programs and initiatives led the government to compete directly with the private sector for capital and workers, with Washington making the rules.

Massive government spending did not lift the United States out of recession. Instead, FDR’s big-government programs prolonged the Great Depression. The best we can say about the New Deal is that it may have blunted the depths of the Depression, but the trade-off was it delayed economic recovery until World War II and our post-war industrial advantage brought America out of the Depression.

Ah yes, the “poor results” of big-government programs introduced by FDR. Programs like Social Security, which dramatically reduced poverty among the elderly, and the Fair Labor Standards Act, which “set maximum hours and minimum wages for most categories of workers.”

But never mind the safety net for seniors and regulations that improved the quality of life for workers. What about King’s central claim, that the New Deal prolonged the Great Depression? This is now a key right-wing talking point against government spending in Barack Obama’s stimulus package.

It is wrong to say that no economic recovery occurred during the New Deal. On the contrary,

The economy had hit rock bottom in March 1933 and then started to expand. As historian Broadus Mitchell notes, “Most indexes worsened until the summer of 1932, which may be called the low point of the depression economically and psychologically.”[18] Economic indicators show the economy reached nadir in the first days of March, then began a steady, sharp upward recovery. Thus the Federal Reserve Index of Industrial Production hit its lowest point of 52.8 in July 1930 (with 1935-39 = 100) and was practically unchanged at 54.3 in March 1933; however by July 1933, it reached 85.5, a dramatic rebound of 57% in four months. Recovery was steady and strong until 1937. Except for unemployment, the economy by 1937 surpassed the levels of the late 1920s. The Recession of 1937 was a temporary downturn. Private sector employment, especially in manufacturing, recovered to the level of the 1920s but failed to advance further until the war.

Unemployment continued to be high by today’s standards throughout the 1930s, but King ignores the sharp reduction in unemployment following the introduction of New Deal policies.

The bottom line is this: the unemployment rate dropped by 9 percent during the pre-World War II FDR era, and the absolute number of unemployed people dropped by 36.7 percent (from 12.8 million unemployed in 1932 to 8.1 million unemployed in 1940).

World War II significantly reduced the number of unemployed Americans, but again, it is false to claim that the New Deal programs accomplished little on the employment front.

By way of comparison, under King’s hero Ronald Reagan, the unemployment rate only dropped by 2.1 percent, and the absolute number of unemployed people dropped by 19.0 percent (from 8.2 million in 1981 to 6.7 million in 1988).

The U.S. population was a lot bigger during Reagan’s presidency than it was in FDR’s day. If Reagan’s policies were so much better for putting people to work, why did we not see a larger decrease in the total number of unemployed Americans during the 1980s? Why did we see such marginal improvement in the unemployment rate during Reagan’s presidency?

If we look at employment figures under every president since FDR, King’s nemesis Bill Clinton comes out ahead. During his presidency, the unemployment rate declined by 2.9 percent, and the total number of unemployed dropped by 36.3 percent (from 8.9 million in 1993 to 5.6 million in 2000).

Note: Chase Martyn had a go at King at Iowa Independent, but he was too kind in my opinion. The facts do not support King’s assertion that the New Deal delayed economic recovery and failed to address high unemployment.

Someone please talk King into running for governor in 2010 so we can get a less odious Republican representing Iowa’s fifth district.

Senator Judd Gregg of New Hampshire withdrew his name from consideration for Commerce Secretary in Barack Obama’s cabinet today. Politico posted the statement from Gregg’s office. Excerpt:

I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

Obviously the President requires a team that is fully supportive of all his initiatives. […]

As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate.

One wonders why Gregg only noticed today that his views on economic stimulus and the census would impede his effectiveness as a cabinet member. (The U.S. Census Bureau is part of the Commerce Department.)

Despite the last paragraph of Gregg’s statement, you have to wonder whether something popped up in the vetting process here.

Whatever his reasons, I welcome the news and hope that the third time will be the charm for President Obama as he tries to fill this position.

This thread is for any comments or speculation about why Gregg dropped out and who should replace him at Commerce. I don’t want the job to go to another conservative or another Republican.

It didn’t take long for representatives and senators to reach a compromise on a $790 billion stimulus bill. Chris Bowers posted a good summary of the bill at Open Left. Senate Majority Leader Harry Reid’s selling point is that the bill that came out of conference creates more jobs than the original Senate bill while spending less money than the original House bill.

I don’t believe the bill is large enough to do the job it’s supposed to do, especially since it still contains costly measures that won’t stimulate the economy much (such as fixing the alternative minimum tax, which hits high-income Americans).

I hope President Barack Obama will take a tougher line in future negotiations with Congress. He did too much pre-compromising with Republicans, to the detriment of the final bill. His original suggestion of an $800 billion price tag for the stimulus, seen by some as a “floor” that would increase when Congress got to work, became a “ceiling” above which any bill was viewed as too expensive.

He also included too many non-stimulative tax cuts in his original proposal to Congress. Predictably, Republicans demanded (and got) even more concessions, even though none of them voted for the bill in the House and only three voted for it in the Senate.

Bowers noticed one Q and A from Obama’s prime-time press conference the other night, which hints that the president learned a lesson about negotiating from this experience.

Bowers believes that “The deal isn’t perfect, but it is still probably the best piece of legislation to pass Congress in, oh, 15 or 16 years.”

David Sirota is also mostly pleased:

I’m not happy that the stimulus bill was made less stimulative by reactionary Republicans and embarrassingly incoherent Democrats. I’m also not happy that direct spending on infrastructure/social programs comprises a miniscule 4.6% of all the government funds spent to deal with this economic crisis. However, considering how far progressives have pushed the debate, I’d say the deal on the economic stimulus package is a huge victory.

Remember, only months ago, the incoming administration and the Congress were talking about passing a stimulus bill at around $350 billion. Remember, too, that Obama started out pushing a stimulus package chock full of odious tax cuts. Now, we’ve got a bill that’s $790 billion (including a sizable downpayment for major progressive priorities) and stripped of the worst tax cuts.

Your opinion of the stimulus may depend on which issues you care about most. Open Left user WI Dem noticed that the compromise bill included more funding for high-speed rail but less for urban public transit, which “has a far greater effect on CO2 [emissions] and on people’s daily lives.”

Via the twitter feed of Daily Iowan opinion writers, I found this piece by Climate Progress on “what’s green” in the stimulus compromise.

The Republican Party is already planning to run ads against 30 Democrats who will vote for the stimulus. It makes sense for the GOP to bet against the stimulus, because they won’t get credit if it succeeds, and their best hope for a comeback in the next election cycle is for Democrats to fail. The main risk for them is that if the stimulus package succeeds, the upcoming advertising campaign people could make more people remember that Republicans tried to stand in its way.

Speaking of Republican propaganda, contrary to what your wingnut friends may tell you, the stimulus bill does not earmark $30 million to save “Nancy Pelosi’s mouse.” It does include some funding for federal wetlands restoration, however.

UPDATE: TPM’s Elana Schor provides surprising proof that no politician is wrong 100 percent of the time. Apparently Senator Tom Coburn of Oklahoma got a $2 billion “clean coal” earmark out of the stimulus bill.

Greg Sargent explains how “Pelosi’s mouse” went from fabrication to talking point for right-wing television pundits.

Representative Bruce Braley (IA-01) announced plans to form a Populist Caucus in December. According to the Huffington Post, Braley plans to roll out the new caucus this week. (Hat tip David Sirota.)

Huffington Post lists most of the 21 founding members, who come from all over the country. There are moderates like Leonard Boswell (IA-03) and Phil Hare (IL-17), progressives like Keith Ellison (MN-05) and Jan Schakowsky (IL-09), and netroots heroes like Eric Massa (NY-29) and Pete DeFazio (OR-04). According to Huffington Post, Braley would be open to having Republicans join the caucus, although only Democrats have signed up so far.

Braley’s letter inviting colleagues to join the caucus listed these key points of the Populist Caucus agenda:

1. Fighting for working families and the middle class through the establishment of an equitable tax structure, fair wages, proper benefits, a level playing field at the negotiating table, and secure, solvent retirement plans.

2. Providing affordable, accessible, quality health care to all Americans.

3. Ensuring accessible, quality primary education for all American children, and affordable college education for all who want it.

4. Protecting consumers, so that Americans can once again have faith in the safety and effectiveness of the products they purchase.

5. Defending American competitiveness by fighting for fair trade principles.

6. Creating and retaining good-paying jobs in America.

Huffington Post also had this encouraging news:

The Populist Caucus will make its first major play by advocating for the inclusion of a “Buy American” provision in the stimulus package.

Bring it on. The “Buy American” provision is important if we want the stimulus to create jobs in the U.S. rather than taxpayer-funded outsourcing.

Though only starting his second term in Congress, Braley is rising fast. He landed a seat on the House Energy and Commerce Committee after aggressively advocating for Henry Waxman to replace John Dingell as its chairman. He is also one of three vice-chairs of the Democratic Congressional Campaign Committee.

When Barack Obama nominated Timothy Geithner for Treasury Secretary and appointed Larry Summers to be the chief presidential economics adviser, I became very worried. Summers had a hand in some of Bill Clinton’s deregulation policies that have contributed to our current economic problems, and Geithner was a key architect of the Wall Street bailout last fall.

Here and at other blogs, some commenters urged me to “give Obama a chance–he hasn’t even been inaugurated yet.”

Geithner confirmed my worst fears today when he rolled out the new-and-improved bailout plan (using the second $350 billion tranche from the Troubled Assets Relief Program). Economist James Galbraith came up with the name Bad Assets Relief Fund (BARF) to describe Geithner’s plan.

Other bloggers have already explained why Geithner’s proposal is an unimaginably pricey gift to Wall Street bankers at the expense of the public interest. This diary by MyDD user bobswern hits all the main points, drawing on a front-page story in the New York Times and other sources.

Writing about how Geithner prevailed over presidential advisers like David Axelrod, who wanted to attach more strings to the taxpayer money Wall Street bankers would receive, David Sirota observed,

Interestingly, the divide inside the administration seems to hearken back to a divide discussed very early on in the formation of the administration – the one whereby progressives were put in strictly political positions, and zombie conservatives were put in the policymaking positions. In this case, more progressive politicos like Axelrod was overruled by corporate cronies like Geithner.

The good news is that at least there seems to be something of a debate inside the administration, however tepid. The bad news is what I and others predicted: namely, that progressives seem to have been ghettoized into the political/salesmanship jobs, the conservative zombies shaping policy aren’t interested in having any debate with them. Worse, we’re now learning that those zombies are as rigidly ideological as their initial policies seemed to suggest.

I stand by my prediction that Geithner will turn out to be one of Barack Obama’s worst appointments. I can’t fathom why Obama wants to “own” the very worst aspects of the Bush administration’s failed Wall Street bailout, while also depriving the government of cash needed for other domestic priorities.

The stock market fell sharply today, perhaps because investors have no confidence in Geithner’s scheme and perhaps because the compromise stimulus bill that passed the U.S. Senate came straight out of bizarro world (do click that link, you’ll enjoy it).

I hope Obama will recognize his mistake and let Geithner and Summers go within a year or so, but they’re already poised to do plenty of damage to his administration.

Speaking of bad appointments, isn’t it amazing that Obama didn’t even make Senator Judd Gregg of New Hampshire promise to vote for the stimulus bill in exchange for being named Commerce Secretary? Why would you put someone in a cabinet position with influence over economic policy if that person doesn’t even support the president’s stimulus plan?

Apparently Obama’s also considering making a lobbyist for the Chamber of Commerce the main presidential adviser on judicial appointments. I’ve long anticipated that judges appointed by Obama would be corporate-friendly, pro-choice moderates in the Stephen Breyer mode, but I never imagined that a Chamber of Commerce lobbyist would be in a position to recommend only judges who would favor business interests.

If Tennessee Governor Phil Bredesen becomes Secretary of Health and Human Services, the Obama-Biden magnet is coming off my car.

The Senate is on track to pass the deeply flawed compromise stimulus bill Tuesday after a motion to invoke cloture passed by a 61-36 vote today. (To overcome a filibuster in the Senate, 60 votes are needed for a cloture motion.)

All Senate Democrats, including Tom Harkin, voted yes, joined by Republicans Olympia Snowe, Susan Collins and Arlen Specter. Two Senate Republicans did not vote on the cloture motion, and all the rest, including Chuck Grassley, voted no.

Last week Grassley said he would vote for the stimulus bill if it included a provision on low-cost mortgages. Looking here I couldn’t find any sign that the amendment Grassley supported made it into the Senate version, so I assume it did not. I will call the senator’s office tomorrow to double-check.

According to Kagro X, a great side-by-side comparison of the House and Senate stimulus bills is here, but I couldn’t make that work on my browser.

The stimulus was the main topic of Barack Obama’s first prime-time news conference as president tonight. Click that link for some highlights.

Yesterday, I wrote about the compromise made on the Stimulus bill by Centrists in the US Senate that helped win the vote from 3 Republicans needed for the bill to pass.

John Nichols summed up the cuts that were made…

The bottom line is that, under the Senate plan:

* States will get less aid.

* Schools will get less help.

* Job creation programs will be less well funded.

* Preparations to combat potential public health disasters — which could put the final nail in the economy’s coffin — will not be made.

In every sense, the Senate plan moves in the wrong direction.

At a time when smart economists are saying that a bigger, bolder stimulus plan is needed, Senate Democrats and a few moderate Republicans have agreed to a smaller, weaker initiative.

Paul Krugman wrote this morning that the cuts made as part of the compromise will be cutting approximately 600,000 jobs.

Now the centrists have shaved off $86 billion in spending – much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast – because it prevents spending cuts rather than having to start up new projects – and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

The cuts made by the Senate include $40 billion in State Fiscal Stabilization, $16 billion for School Construction, $7.5 billion of State Incentive Grants, and $5.8 billion for Health Prevention Activity.

The most troubling cut is the $40 billion in state fiscal stabilization.  Iowa is looking at a very tight budget and we are hardly in the worst shape out there compared to other states.

This report by the Center of Budget and Policy Priorities was written BEFORE the cuts were made by the Senate and says the money is the Stimulus will help, but is not enough.  Now that a chunk of that money has been cut.

The state fiscal situation is dire.  Revenues are declining, and demand and need for services such as Medicaid is rising, as people lose income and jobs.  State deficits are projected to equal $350 billion over the next 30 months.  Because nearly all states are required to balance their budgets, states have begun to cut expenditures and raise taxes – both of which create a drag on the economy and threaten to counteract part of the intended federal economic stimulus.

The Senate economic recovery package recognizes this fact and includes substantial assistance for states.  The amount of funding that would go to states to help them maintain current activities is approximately $160 billion to $165 billion – or roughly 45 percent of projected state deficits.  Most of this money is in the form of increased Medicaid funding plus most of a “Fiscal Stabilization Fund.”  This funding would likely be sufficient to deter many states from making the most severe spending cuts and to moderate state tax and fee increases.  But states would still have very large gaps to close on their own.

On Meet the Press this morning, Rep. Barney Frank (D-MA), the chair of the House Financial Services Committee, said that these cuts will essentially lay off police officers and firefighters because States will have to cut their State budgets.

Give Sen. Grassley a call at 202-224-3744 and tell him to support more money for States and for schools in the Stimulus bill.

UPDATE from desmoinesdem: This graph shows that many more jobs are being lost in this recession compared to other recent recessions.

A funny post by Paul Rosenberg at Open Left pointed me to this post by Greg Sargent:

The Republican National Committee, under new chairman  Michael Steele, has quietly killed an ambitious plan to create the Center for Republican Renewal, a big in-house RNC think tank intended to develop new policies and ideas in order to take the party in a new direction, a Republican official who was directly informed of the decision by RNC staff tells me.

The Center’s goal was to help the GOP reclaim the mantle of the “party of ideas,” as RNC officials glowingly announced in December, and the decision to scrap it has some Republicans, including allies of former RNC chair Mike Duncan, its creator, wondering how precisely the RNC intends to generate the new ideas necessary to change course and renew itself.

Rosenberg mocks Steele’s apparent decision to give up on making the GOP the “party of ideas,” but I think Steele is smart not to waste money on this project. As I’ve written before, I share Matthew Yglesias’s view that the time for Republicans to implement effective new ideas was when they were in power.

Whether the Republicans come back in 2010 or 2012 has little to do with their ability to generate new ideas and everything to do with how Democrats govern.

If Democrats fail to deliver on big promises, the pendulum will swing back. If Democratic leaders succeed, no think-tank generated “new Republican ideas” will prevent a political realignment in our favor.

If only we could explain this concept to the Democrats in the U.S. Senate who are eager to strip from the stimulus bill the government spending that would help the economy by creating jobs (school reconstruction) or increasing consumer spending (more money for food stamps). Those same so-called “centrist” Democrats favor leaving in tax cuts that provide much less “bang for the buck” (tax credits for business, fixing the alternative minimum tax).

In the name of bipartisanship and compromise, Democrats in the Senate may approve a stimulus bill that won’t work. That will do more to revive the Republican Party than the think tank Michael Steele axed. Even if a handful of Senate Republicans vote for the stimulus, Barack Obama and Congressional Democrats will pay the price if the economy continues to decline.

President Obama deserves much of the blame for the sad turn the stimulus debate has taken. His negotiating strategy was deeply flawed, as debcoop and Theda Skocpol have explained. He should have started the debate on the stimulus with a much higher dollar number and a clear statement that he would not accede to failed Republican ideology.

I’ve noticed on these stimulus threads that some commenters think Obama would be acting too much like George W. Bush if he applied his political capital toward crafting a strong Democratic (rather than bipartisan) stimulus bill, and shaming a few Republicans into going along. I disagree. The most important thing for Obama is to pass a bill that will help the economy. Voters won’t give him points on style if the economy is still lousy in 2010 and 2012.

Bush’s mistake was not being partisan, but using his political capital to push through policies that failed miserably. If he had rammed bills through Congress that boosted our economy, improved the environment, kept our national debt from exploding and didn’t get us bogged down in an expensive war, he might have laid the groundwork for Republican realignment while his approval ratings were still very high.

I learned at Iowa Independent that Senator Chuck Grassley told reporters on Wednesday that he would vote for the economic stimulus “regardless of what else is in the bill” if the Senate approved an amendment providing for 30-year fixed-rate mortgages at 4 percent interest.

He remained critical of the spending in the bill:

“People at the grassroots see it as a lot of spending and not very much stimulus,” Grassley said. “Somebody thinks they’re fooling the people of this country with this package, but they aren’t.”

Senator Tom Harkin’s office put out a statement on Tuesday listing some of the proposed spending that would benefit Iowans:

February 3, 2009

HARKIN: $1.5 BILLION INCLUDED FOR IOWA IN SENATE STIMULUS PACKAGE

Washington,  D.C. – U.S. Senator Tom Harkin (D-IA) today announced that there are more than $1.5 billion in critical investments for  Iowa included in the Senate version of The American Recovery and Reinvestment Act. These investments will create and save jobs; help with budget shortfalls to prevent deep cuts in basic services such as health, education, and law enforcement; cut taxes for working families and invest in the long-term health of our economy.

“The economy is now shedding an average of 17,000 jobs a day, and new foreclosures average 9,000 a day.  We are facing what could be the deepest, longest recession since the Great Depression.  We must act quickly and boldly,”  said Harkin.  “This bill will create jobs now while also laying the foundation for a stronger economy that works for all Americans in the future.”

The American Recovery and Reinvestment Act provides $888 billion in investments and tax cuts.  Of this total, $694 billion will enter the economy by the end of Fiscal year 2010, meaning that 78 percent of the monies allocated will reach the American people by September 30, 2010, providing an immediate boost to the overall economy and creating an estimated four million jobs nationwide.

Below are the approximate investments Iowa could see if the Senate bill is passed and signed into law by the president.  These amounts only include major accounts that are allocated by formula, and do not include the considerable funds that will be allocated competitively by the executive branch.

Nutrition Programs

·         $2.3 million for School Lunch Programs

·         $109 million for the Supplemental Nutrition Assistance Program

·         $776,000 for the Emergency Food Assistance Program

Homeland Security Programs

·         $639,000 for the Emergency Food and Shelter Program

Clean Water Programs

·         $24 million for the Drinking Water Fund

·         $54 million for the Clean Water Fund

Transportation Funding

·         $389 million for  Iowa ‘s Highway fund

·         $46 million for Transit Funding

Housing Programs

·         $7.6 million for public housing capital

·         $14.8 million for HOME funding

·         $16.8 million for homelessness prevention

Law Enforcement / Crime funding

·         $14 million for Byrne/JAG funding

·         $978,000 for crime victim programs

·         $1 million to protect children against internet crimes

·         $3.2 million to assist women who are victims of violence

Energy Programs

·         $6.6 million for  Iowa ‘s energy program

·         $48.6 million for weatherization programs

Labor, Health and Human Service and Education Programs

·         $18.1 million for Child Care and Development Block Grants

·         $5.2 million for Head Start

·         $625.6 million for the state stabilization fund

·         $65.4 million for Title 1 programs

·         $140.1 million for Special Education Part B Grants

·         $46.1 million for Higher Education Facilities

·         $1.6 million for Adult Employment and Training

·         $78.7 million for School modernization

·         $5 million for education technology

·         $2.2 million for Community Service Block Grants

·         $441,000 for Senior Meals

·         $3.9 million for Employment Service Grants

·         $5 million for Dislocated Worker Grants

·         $5.4 million for vocational rehabilitation programs

·         $7.2 million for immunization programs

 

Some of these programs yield more “bang for the buck” than others, and there’s an argument to be made that the stimulus bill has too much of a grab-bag quality. Yesterday Daily Kos user TocqueDeville lamented the fact that Democrats put together a spending bill instead of “a big, unifying vision for the future – a Rebuilding America Act.” I agree with much of the critique and would have liked to see some different spending priorities.

That said, even an imperfect spending bill will do more to stimulate the economy than the tax cuts favored by Republicans.

I don’t know the specifics of the amendment Grassley supports, but in general making low-rate mortgages more accessible would be good. It was stupid as well as unethical for Federal Reserve Chairman Alan Greenspan and other wise men of Wall Street to encourage so many Americans to buy adjustable-rate mortgages.

I was surprised to see Grassley say that the low-rate mortgage provision would be enough to win his vote for the stimulus. Senator Judd Gregg got a post in Barack Obama’s cabinet and still won’t vote for the bill.

If Grassley ends up voting yes on the stimulus, the wingnuts will go ballistic, but what can they do other than add a line to Grassley’s entry on the Iowa Defense Alliance “Wall of Shame”?

In other stimulus-related news, Obama published an op-ed in the Washington Post making the case for this package. Excerpt:

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.

It’s a start, but I agree with early Obama supporter Theda Skocpol. Obama mishandled this effort by making bipartisanship (instead of saving the economy) his measure of success. He can undo some of the damage by going directly to the people to make the case for the stimulus. But unfortunately, the Republicans still have the upper hand if they vote against the bill and blame the president for not giving them enough input.

Paul Rosenberg has an outstanding post up at Open Left on a report by Mark Zandi, the chief economist and co-founder of Moody’s Economy.com. Zandi analyzed different types of tax cuts and government spending in terms of “fiscal stimulus bang for the buck.”

Click here to view the chart showing his conclusions. Various types of government spending all delivered much more stimulus to the economy than even the most effective tax cuts.

Temporary increases in food stamps carried the most “bang for the buck,” $1.73 for every federal dollar spent. That’s because food stamp money goes into the hands of people who will spend it right away. Not far behind was extending unemployment benefits (which also helps people likely to spend money quickly) and government spending on infrastructure (which creates jobs).

Zandi found that even the government spending that delivered the least bang for the buck, general aid to state governments, still generated $1.38 for every federal dollar spent.

On the other hand, most tax cuts generated far below $1 for the economy for every dollar they cost the federal government. That’s particularly true for the tax cuts Republicans tend to favor, which mainly benefit high-income Americans or businesses. These generate between 25 and 50 cents for the economy for every dollar they cost the federal government.

By far the best tax cut for stimulating the  economy, according to Zandi, was a payroll tax holiday, which generates $1.28 for every dollar it costs. However, a payroll tax holiday still ranked significantly below various types of spending in terms of “bang for the buck.”

Rosenberg created a second chart combining Zandi’s figures with job creation numbers from the Center for Economic Policy and Research. It shows that millions more jobs would be created by $850 billion in spending compared to $850 billion in tax cuts.

Not only does government spending create more jobs and stimulate more consumer spending, it can also accomplish tasks that benefit the community as a whole. For instance, everyone who uses a bridge benefits from maintenance that prevents that bridge from collapsing. Thousands of travelers could take advantage of improved passenger rail service, which would also reduce greenhouse-gas emissions compared to driving or flying. For those reasons, I agree with the Iowa legislators who have advocated more rail funding in the stimulus bill.

Yesterday the Iowa Environmental Council provided another excellent example of how stimulus spending could produce both jobs and cleaner water in many Iowa communities:

IOWA ENVIRONMENTAL COUNCIL

For Immediate Release

February 2, 2009

More money needed in stimulus for clean water infrastructure

The Iowa Environmental Council is encouraging U.S. lawmakers to increase clean water infrastructure funding in the economic stimulus plan, now under consideration in Congress. The House version of the stimulus package currently includes $8 billion and the Senate bill $4 billion for clean water infrastructure. The EPA estimated the cost of meeting our clean water infrastructure needs at $580 billion during the last assessment in 2004, according to a GAO report.

In Iowa alone, the Department of Natural Resources estimates water infrastructure needs to be over $618 million over the next two to three years.

According to Susan Heathcote, water program director for the Iowa Environmental Council, 87 of these projects, with a total cost of $306 million, could be underway in three to four months if the necessary funding were made available.

Sixty-six communities in Iowa do not have a public sewer system and 21 communities need help to upgrade their drinking water systems says Heathcote.

“These needs combined with the fact that we could have shovels in the ground as soon as funding becomes available make them perfect candidates for funding under the nation’s economic stimulus package,” said Heathcote.

In letters to Iowa Representative Boswell and Senators Harkin and Grassley, Heathcote outlined Iowa projects that could proceed immediately with available funding:

·         25 communities with sewage treatment plant projects, with estimated needed loan amounts of $165 million.

·         41 small unsewered communities, with estimated total cost of $72 million.

·         21 communities with need for upgrades to their drinking water systems, with an estimated total cost of $69 million.

Heathcote says, in addition to the new water projects outlined above, Iowa communities also need help to address ongoing efforts to separate outdated combined sewer systems and to repair or replace aging sanitary sewer system pipes. Until this work is completed, Iowa communities must continue to deal with the public health threat from frequent failure of sanitary sewer systems that result in discharges of untreated sewage into Iowa rivers.

“While we are addressing our ailing economy, why not make a real investment in clean water?” said Heathcote.

### End ###

Maybe Senator Chuck Grassley, who derides the stimulus spending as “porkulus,” needs to hear from Iowans living in communities with substandard sewage systems and drinking water that could be a lot cleaner. You can reach his office by calling (202) 224-3121.

President Barack Obama and Democratic leaders in Congress need to do a better job explaining to the public that the spending in the stimulus bill would directly boost the economy much more than tax cuts.  

The Des Moines Register reported on Tuesday that David Yepsen will be the new director of the Paul Simon Public Policy Institute at Southern Illinois University at Carbondale:

Carolyn Washburn, the Register’s editor and vice president, said the newspaper would miss the veteran political writer, who has been with the Register since 1973, and the newspaper’s senior political columnist since 2000.

“As a political journalist in Iowa, David has really done it all, for decades,” Washburn said.

Yepsen has been a familiar face to Iowans. He became the Register’s senior political writer in 1983 and a full-time columnist in 2000. The Jefferson native and University of Iowa graduate also has been a host on Iowa Public Television’s “Iowa Press” since 1975, and a frequent commentator on national news programs.

The Southern Illinois campus newspaper confirmed the story.

Yepsen interviewed for his new job in December, around the time the Register imposed yet another round of layoffs in the newsroom. (Political cartoonist Brian Duffy was among those fired at that time. I’ve seen several of his cartoons in the Des Moines area weekly Cityview since then.)

Best of luck to Yepsen in his new position, and kudos to him for taking on a new challenge after so many years at the Register.

Any guesses on who will become the Register’s chief political columnist? The obvious play would be to promote Tom Beaumont from the newsroom, since he covers a lot of the political stories already. Or, they could move columnist Marc Hansen, who is a great writer, over to the op-ed page.

Given the Register’s difficult financial position, I doubt they will bring in a senior columnist from outside, but they could hire someone currently working at a different Gannett newspaper.

UPDATE: Marc Ambinder shares  his reflections on Yepsen and predicts that O.Kay Henderson of Radio Iowa will be “Yepsen’s heir” as the most influential Iowa journalist during the next presidential campaign.

John Deeth (“not a Yepsen fan”) discusses the end of an era from his perspective. I agree with him about so-called objective American journalism.

SECOND UPDATE: Yepsen will start his new job on April 1, according to the SIU Saluki Times:

Asked why he sought the institute position, Yepsen said, “Paul Simon’s legacy prompted me to apply. I am really interested in spending the rest of my life in public service, teaching and working with students and working in the public policy arena.

“I am a great admirer of his and I have been to the institute and the campus several times,” he added. “I like the University and the people here. Also, I grew up in a small town in Iowa that was not far different from much of Southern Illinois. When this position came open, I thought this could be a really good fit for me.”

He said the institute presents a “nice combination of academic work and public policy work,” noting it reminds him of the Harvard Kennedy School “in terms of bringing students, academicians and practitioners together to solve problems.”

That article also quotes former Senator Paul Simon’s book about his 1988 presidential campaign:

“Every four years, the chief political reporter for the Des Moines Register becomes the most important reporter in the nation. It is a position that could cause vanity and abuse. To his credit, David Yepsen handled this position with sensitivity and balance. And he worked hard.”

Didn’t see this one coming. I learned via Iowa Politics that the Democratic Congressional Campaign Committee is running radio ads in 28 Congressional districts held by Republicans, including Iowa’s fourth district:

The ads focus on the Republicans out of step priorities by putting bank bail outs and building schools in Iraq before the needs of the Americans in the struggling economy. The Putting Families First ads begin airing on Tuesday morning during drive time and will run for a week.

In addition to the strategic radio ads in 28 Republican districts, the DCCC will also begin a grassroots initiative which includes targeted e-mails to 3 million voters and nearly 100,000 person-to-person telephone calls.

House Republicans just don’t get it.  They celebrate being the party of no and status quo, while more than 2.6 million Americans have lost their jobs, the stock market has plummeted wiping out nearly $7 trillion stock market wealth and endangering thousands of investors’ nest eggs, and one in 10 homeowners was delinquent on mortgage payments or in foreclosure this fall.

“These are serious times, hard working families are worried about keeping their jobs, health care and homes – they want action, not House Republicans cheering about doing nothing,” said Brian Wolff, Executive Director of the DCCC. “Republicans’ champagne wishes and caviar dreams simply don’t connect with middle class families struggling to make ends meet and furious that their tax dollars are going to bail out banks, build schools in Iraq, or send American jobs overseas.  The Putting Families First campaign is only the first step, we will continue to go district by district to hold Republicans who continue to vote in lockstep with party leaders and against the folks in their districts accountable.”

There are several versions of the ad (click here for transcripts). This transcript of an ad running in a Michigan representative’s district is apparently comparable to what the DCCC is running in Tom Latham’s district:

Did you know Congressman Thad McCotter opposed over $526 million to modernize crumbling Michigan schools, but supported building new schools in Iraq?  Times are tough, tell Thad McCotter to put American jobs first.

If you’ve heard any of these radio ads, please post a comment or send me an e-mail (desmoinesdem AT yahoo.com) to let me know what issue it covered.

There is a lot of overlap between the 28 districts where DCCC ads are running and this list of the 20 most vulnerable House Republicans going into 2010, which Crisitunity compiled at Swing State Project last month. However, there are a handful of Republicans on Crisitunity’s list who are not (yet) being targeted by the DCCC’s ad campaign.

Conversely, the ads are running in some districts where the incumbents may not seem vulnerable at first glance. Latham did not make Crisitunity’s list after he won re-election by more than 20 points in November, despite the fact that Barack Obama carried IA-04. However, the DCCC clearly has not ruled out making a serious play for this district in 2010.

Remember, Iowa’s Bruce Braley is now the DCCC’s vice chair responsible for “offensive efforts including recruitment, money, and training.”

Taking out Latham in 2010 would make it highly likely for Iowa Democrats to hold three out of the four Congressional districts we will have after the next census. Even if we don’t beat him in 2010, running a strong campaign against Latham could bring down his favorables and improve our chances of holding IA-03 if that district includes Story County in 2012.

UPDATE: Brownsox demolishes Fred Hiatt’s criticism of this ad campaign.

Have you just started shopping regularly at Walmart? This may be a sign that you haven't been doing so well financially. At least that's what some credit card companies think, because reportedly your credit card score can be lowered if you shop at the retail giant:

The Senate confirmed Eric Holder as attorney general today by a vote of 75-21. Both Tom Harkin and Chuck Grassley voted yes, as expected. I always thought Holder would be confirmed, but I am pleasantly surprised that he was approved by a larger majority than Treasury Secretary Timothy Geithner. I believe Holder will turn out to be one of President Barack Obama’s better cabinet appointments.

For reasons I cannot fathom, Obama appears ready to appoint Senator Judd Gregg of New Hampshire, a conservative Republican, as Secretary of Commerce. Chris Bowers concisely explains why this is an awful choice:

So, for some reason, in the wake of total Republican intransigence on the stimulus bill, the Obama administration will respond by putting a Republican in charge of one the federal departments overseeing the economy. Judd Gregg himself has said he will oppose the stimulus package. That is certainly an, um, interesting way for the Obama administration to incentivize Republican opposition. Oppose President Obama, and he will reward you by giving you a cabinet position.

It is worth noting what sort of ideas Judd Gregg has for the economy: a commission of center-right insiders operating in secret and circumventing Congress in order to destroy Social Security and Medicare.

Senate Republicans continue to hold up Hilda Solis’s confirmation as Labor Secretary, and Obama responds by appointing Gregg to the cabinet?

Democrats won’t even get a Senate seat out of the deal, because the Democratic governor of New Hampshire has promised to appoint a Republican to serve out Gregg’s term. The only upside is that the appointee may be easier to beat in 2010 than longtime incumbent Gregg would have been. But that’s not worth handing over control of the Commerce Department to a conservative, in my opinion.

All I can say is, Gregg better not screw around with the Census Bureau and the National Oceanic and Atmospheric Administration.

In a dispatch from bizarro world, Politico’s David Rogers still isn’t convinced that Obama is serious about bipartisanship, even though Gregg will become the third Republican in his cabinet and will be replaced by a Republican in the Senate:

Obama, while talking a good game about bipartisanship, is draining the Senate of the very talent he needs to achieve this goal.

If only Obama were merely “talking a good game about bipartisanship.”

Speaking of Senate Republicans, Kagro X put up a good post on prospects for a filibuster of the economic stimulus bill, and Chris Bowers posted a “whip count” here, concluding that

Overall, it seems highly likely that the stimulus will pass without Republicans forcing major changes. However, given the narrow margins, this is not a guarantee.

The Senate will likely vote on the bill on Wednesday. Grassley has already spoken out against what he calls the “stimulus/porkulus bill.”

It’s easy to complain about “wasteful government spending” in the stimulus bill when you’re in the Congressional minority. Voting against the stimulus may even be a smart political play for Congressional Republicans.

However, Republican governors who have to balance state budgets in this shrinking economy view the prospect of massive federal government spending differently:

Most Republican governors have broken with their GOP colleagues in Congress and are pushing for passage of President Barack Obama’s economic aid plan that would send billions to states for education, public works and health care.

Their state treasuries drained by the financial crisis, governors would welcome the money from Capitol Hill, where GOP lawmakers are more skeptical of Obama’s spending priorities.

The 2008 GOP vice presidential nominee, Alaska Gov. Sarah Palin, planned to meet in Washington this weekend with Senate Republican leader Mitch McConnell of Kentucky and other senators to press for her state’s share of the package.

Florida Gov. Charlie Crist worked the phones last week with members of his state’s congressional delegation, including House Republicans. Vermont Gov. Jim Douglas, the Republican vice chairman of the National Governors Association, planned to be in Washington on Monday to urge the Senate to approve the plan. […]

This past week the bipartisan National Governors Association called on Congress to quickly pass the plan.

“States are facing fiscal conditions not seen since the Great Depression _ anticipated budget shortfalls are expected in excess of $200 billion,” the NGA statement said. “Governors … support several key elements of the bill critical to states-increased federal support for Medicaid and K-12 and higher education; investment in the nation’s infrastructure; and tax provisions to spur investment.”

Will the GOP base become disenchanted with Alaska Governor Sarah Palin because of her public support for the stimulus? I suspect Markos is right:

It complicates matters for the anti-stimulus ideologues who see starbursts in the presence of Palin.

Then again, Palin had no trouble lying about her support for the Bridge to Nowhere. Nothing will stop her from trying to rewrite history three years from now.

Speaking of Palin, I learned from Jeff Angelo that she’s created SarahPAC. Something tells me that a lot of Iowa Republican candidates in will receive generous contributions from this political action committee during the next two election cycles.

Senator Tom Harkin was right to warn in a conference call with reporters today that the economic stimulus bill may be too small.

He is also right to be concerned about the tax-cut provisions. Tax cuts that put more money into the hands of people in high income brackets (such as fixing the alternative minimum tax) will not necessarily boost consumer spending.

He is right about this too:

Harkin said the bill must be seen as more than an immediate jump-start for the ailing economy, and therefore lawmakers should not be timid about its potential.

“This is not just a stimulus bill to put someone to work right now,” Harkin said. “That’s important and we will do that. But we are also going to do things that lay the groundwork for a solid recovery in the future.”

Harkin wants the bill to put more money into renewable fuels and less money into so-called “clean coal”:

“We’re putting money into clean coal technology,” he said. “There’s no such thing.”

You said it, senator.

Speaking of how there’s no such thing as clean coal, if you click here you’ll find another clever ad from the Reality Coalition.

Speaking of senators who are right about things, Here’s John Kerry on the stimulus:

Reacting to Wednesday night’s vote in the House – where not a single GOP member supported the stimulus package – Kerry told Politico that “if Republicans aren’t prepared to vote for it, I don’t think we should be giving up things, where I think the money can be spent more effectively.”

“If they’re not going to vote for it, let’s go with a plan that we think is going to work.”

The Massachusetts Democrat and 2004 presidential candidate suggested tossing some of the tax provisions in the stimulus that the GOP requested. “Those aren’t job creators immediately, and even in the longer term they’re not necessarily. We’ve seen that policy for the last eight years,” he said.

What was that thing Americans voted for in November? Oh yeah, change.

The House of Representatives passed an $819 billion economic stimulus bill today by a vote of 244-188. Here is the roll call. Iowa Democrats Bruce Braley (IA-01), Dave Loebsack (IA-02) and Leonard Boswell (IA-03) all voted with the majority. Republicans unanimously opposed the bill, including Tom Latham (IA-04) and Steve King (IA-05), and 11 “Blue Dog” Democrats also voted no.

All the news reports have emphasized that not a single Republican voted for this package, even though President Barack Obama tried hard (too hard if you ask me) to bring them on board.

It reminds me of 1993, when Congressional Republicans unanimously opposed President Bill Clinton’s first budget. The GOP seems to be banking on running against Democrats’ management of the economy in the midterm elections. For that reason, I think it’s foolish for Democrats to try to cater to Republicans. Passing a stimulus bill that truly helps the economy should be paramount.

I’ll update this post later with more details about what made it into the House bill and what got left behind. I’m pleased to note that an amendment significantly increasing mass transit funding passed. A Siegel tells you which Democrats deserve particular credit for this achievement. By the way, mass transit is not just for large cities.

UPDATE: Congressman Loebsack’s office sent out a release with a long list of provisions in the stimulus bill. I’ve posted it after the jump, so click “there’s more” if you want all the details.

The top point of the release is that Loebsack successfully pushed for school modernization funds to be included in the stimulus package.

At the very end of the press release, you’ll see that the stimulus bill “Prevents [Illinois] Governor [Rod] Blagojevich from directing the use of funds provided in the package.” I understand why people would worry about him administering any funds earmarked for Illinois, but I am with Adam B: this provision is tantamount to “bribing the jury” of Illinois senators who are considering impeachment charges against Blagojevich.

Just as I’d feared, President Barack Obama is moving toward the Republican position in an effort to pass a “bipartisan” economic stimulus bill.

At the request of the president, the overall price tag will be in the $800 billion range, even though many economists believe we need at least $1 trillion to kick-start the economy.

Also, House Democrats were under pressure to reduce planned spending on mass transit and other infrastructure projects to make room for tax cuts to appease Republicans–even though the tax cut provisions are unlikely to create the jobs we need.

Yesterday Obama personally urged Democrats to remove contraception funding for poor women from the stimulus bill in order to appease Republican critics.

Trouble is, the top two House Republicans have already told their caucus to vote against the stimulus bill when it comes to the floor.

Today Obama met privately with Republican Congressional leaders to discuss the stimulus further. As you’d expect, Republicans keep finding things to complain about, like a few billion dollars for “neighborhood stabilization activities.”

How many more times will the president cave to GOP demands before he realizes that Republicans have already decided to vote against the bill?

He doesn’t need Republican votes to pass this bill.

No matter how many concessions he makes, he won’t get a significant number of Republican votes in favor of the bill.

All he’ll get is a watered-down stimulus bill and a talking point that he tried to work with the other side. Republicans will get the political credit for opposing the stimulus if it turns out to be ineffective.

Obama should stop worrying about bipartisanship and work toward getting Congress to pass the best bill for fixing the economy.

I’m with New York Times columnist Bob Herbert:

When the G.O.P. talks, nobody should listen. Republicans have argued, with the collaboration of much of the media, that they could radically cut taxes while simultaneously balancing the federal budget, when, in fact, big income-tax cuts inevitably lead to big budget deficits. We listened to the G.O.P. and what do we have now? A trillion-dollar-plus deficit and an economy in shambles.

This is the party that preached fiscal discipline and then cut taxes in time of war. This is the party that still wants to put the torch to Social Security and Medicare. This is a party that, given a choice between Abraham Lincoln and Ronald Reagan, would choose Ronald Reagan in a heartbeat.

Why is anyone still listening?

Instead of wasting time meeting with Republicans who are not negotiating with him in good faith, Obama could try to get his Treasury Secretary Timothy Geithner on board with the administration’s alleged “no lobbyist” policy.

UPDATE: Forgot to mention that last week Obama agreed to delay bankruptcy reform in a fruitless effort to bring over Republicans on the stimulus bill:

Many Democrats, including Obama, have long-supported the strategy of empowering bankruptcy judges to alter the terms of primary mortgages to prevent foreclosures. But White House officials have said they don’t want the bankruptcy provision in the stimulus bill for fear of alienating Republicans, most of whom oppose the change.

Obama should worry more about the substance of legislation and less about whether he can claim a victory for bipartisanship.

SECOND UPDATE: TomP sees the glass half full, arguing that Obama is not compromising further on “core values.”

THIRD UPDATE: As usual, Natasha Chart says it very well:

Some Democrats have fallen prey to the delusion that politics is a gentlemen’s parlor game in which they’re being judged on style, as opposed to a set of deadly serious struggles in which they’re being judged on their results.

It’s a stupid belief that will lead its holders to no good end in the future, just as it has not in the past.

Though likely, long before they suffer any consequence for their foolishness, some young family with crappy jobs, a child or children that they can barely feed already, and no insurance is going to find themselves in a jam this year that these bozos could prevent by funding family planning for low-income households.

Details about Governor Chet Culver’s proposed 2010 budget will come on Wednesday morning, but today the governor’s office announced plans to impose 6.5 percent spending reductions on 205 state programs in next year’s budget. According to the Des Moines Register,

“We’re not going to tax our way out of a tight budget,” [Culver] said. […]

Culver will continue to ask lawmakers not to raise taxes. His budget will propose no tax increases, according to a copy of the governor’s remarks provided before a speech at the Iowa Business Council’s annual meeting.

Culver would like to protect certain areas from the full effect of the 6.5 percent cut: public safety, workforce development, human services, disaster relief, the teacher quality program, and early childhood education.

He will recommend that $200 million from the state’s cash reserves be used during the next budget year.

Via e-mail I received this joint statement from Senate Majority Leader Mike Gronstal, Senate President Jack Kibbie, House Speaker Pat Murphy, and House Majority Leader Kevin McCarthy:

“In these tough economic times, we appreciate Governor Culver and Lt. Governor Judge taking another step to ensure a balanced state budget by releasing this proposal.

“Because of the deepening national recession, this year will be very tough for many Iowans.  While Iowans had little to do with the mismanagement, greed, and financial carelessness that is causing the worst national economic situation since the Great Depression, we will be sharing in the pain.

“In the coming weeks and months, we are committed to:

·        Listening to our constituents

·        Working with the Governor, Lt. Governor and Republican legislators, and

·        Passing a fiscally responsible state budget that attempts to protect the progress we’re making on creating good-paying jobs, improving student achievement and teacher quality, and ensuring affordable health care.”

As you can see, the Democratic statehouse leaders did not unconditionally endorse the governor’s proposal or the principle of relying solely on spending cuts and tapping reserve funds to balance the budget. Some statehouse leaders have advocated raising the gas tax to help pay for road works.

As I have written before, I think it would be a big mistake to rule out any tax increases for next year.

As a political sound bite, it’s appealing for a governor to say, “I balanced the budget without raising a single tax.” But seriously, does Culver believe that Iowa has no obsolete tax loopholes that cost the state far more than they benefit the economy? The Iowa Policy Project has identified “wasteful, secret subsidies to big companies through the tax code.” (pdf file) How about asking those companies to share in the sacrifices that need to be made in the coming year?

Borrowing money to pay for certain infrastructure projects is reasonable, but a modest gas tax increase could reduce Iowa’s debt burden in future years without much pain. There may be other tax increases that make sense, if the funds raised could be linked to specific spending priorities that create jobs.

Politically, it’s risky for any governor to raise taxes, but Culver should balance those considerations against the risk that large spending cuts could prolong the recession:

Almost every single economist agrees, the last thing we want to do in a recession is slash government spending. We want, in fact, to increase that spending so that it is a counter-cyclical force to a deteriorating economy. So the question, then, is how to most safely generate the revenue to maintain or increase that spending. By  “most safely” I mean how to raise the revenue in a way that will minimize any negative economic impact. And the answer comes from Joseph Stiglitz:

 

“[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.”

So, first and foremost, you don’t want dramatic spending cuts (beyond the usual rooting out of waste/fraud) and you don’t want to raise taxes on middle- and lower-income citizens who both need the money for necessities, and are the demographics that will most quickly spend money in a stimulative way. That leaves taxes on the super-rich, and Stiglitz – unlike anti-tax ideologues – has actual data to make his case.

For more information, see Budget Cuts or Tax Increases at the State Level:

Which is Preferable During an Economic Downturn?

I’m sure the Iowa Business Council will applaud Culver’s promise this evening to balance the budget with no tax hikes of any kind.

But economic considerations as well as basic fairness dictate that taxes should be on the table when the legislature drafts the 2010 budget. We should not let the fear of Republican-funded attack ads scare us away from sensible steps to increase revenues.

Tom Vilsack appears to be on track for unanimous confirmation by the Senate as Secretary of Agriculture in Barack Obama’s cabinet. At his confirmation hearing yesterday, Republicans didn’t ask hostile questions, and Vilsack didn’t have to explain away any embarrassing behavior like Treasury Secretary-nominee Timothy Geithner’s failure to fully meet his tax obligations over a period of years.

Despite the lack of drama, Vilsack made a number of noteworthy comments during the hearing. Here are some highlights.

Vilsack told senators on Wednesday that

The Obama administration wants to accelerate the development of new versions of biofuels made form crop residue and non-food crops such as switchgrass. The plants’ fibrous material, or cellulose, can be converted into alcohols or even new versions of gasoline or diesel.

“Moving toward next-generation biofuels, cellulosic ethanol, is going to be really important in order to respond” to concerns about the impact on food prices of using grain for fuel, he said.

Vilsack addressed a range of other issues, pledging, for example, to promote fruit and vegetable consumption and promising to ensure that any new international trade agreement is a “net plus for all of agriculture.”

It makes a lot of sense to produce ethanol from perennial plants that are less energy-intensive to grow and need fewer herbicides, pesticides and fertilizer than corn.

Vilsack’s opening statement also

promised swift implementation of the Conservation Stewardship Program (CSP) which, alone among farm bill conservation programs, has languished under the Bush Administration since passage of the 2008 Farm Bill last May.

A little later during the hearing, Vilsack described the Conservation Stewardship Program as important for the environment and cited its potential to boost farm income and create jobs.

By the way, Vilsack’s disclosure documents show that he collects payments from the US Department of Agriculture on some Iowa farmland he and his wife own:

The former Iowa governor and his wife, Christie, have been receiving payments since 2000 for an acreage in Davis County that is enrolled in the land-idling Conservation Reserve Program, according to USDA data compiled by the Environmental Working Group.

In a Jan. 8 letter to USDA ethics officials, Vilsack said he would seek a waiver to continue receiving CRP payments while he is secretary. Otherwise, experts said, he would have to break his contract and reimburse the USDA for all previous payments he has received, which would total nearly $60,000.

Craig Cox, Midwest vice president of the Environmental Working Group, a research and advocacy organization, welcomed having an agriculture secretary who receives conservation payments.

At a time “when simultaneously protecting our soil, water, wildlife habitat and climate is an urgent priority, it is encouraging that our new secretary of agriculture is personally participating in a conservation program that does just that,” he said.

I’m with Cox; it’s good for the secretary of agriculture to have first-hand knowledge of the conservation reserve program’s value.

Earlier this week the Register published an article on the opening statement Vilsack prepared for his confirmation hearing:

Tom Vilsack is promising to use the U.S. Department of Agriculture to “aggressively address” global warming and energy independence.

In an opening statement prepared for his Senate confirmation hearing on Wednesday, President-elect Barack Obama’s nominee for agriculture secretary also said he would use the department to “create real and meaningful opportunities” for farmers and to guarantee that rural communities grow and prosper. […]

Vilsack, a former mayor of Mount Pleasant, also said rural communities continue to lose population and “find it increasingly difficult to keep pace with the ever-changing national and global economy.”

He pledged to try to resolve the long-standing civil rights claims against the department.

“If I’m confirmed, the message will be clear: discrimination in any form will not be tolerated,” Vilsack said.

After reading that Register article, La Vida Locavore’s Jill Richardson commented,

I want to see our subsidy structure change to reward farmers for sustainability instead of yield. I want the government to ease the financial risk on any farmer transitioning to organic because it appears to me that being an organic farmer isn’t so bad on your bank account, but transitioning alone might break several farmers financially. I want to outlaw CAFOs altogether. But will Vilsack do this? Let me just say this: I am so confident he won’t that I promise now to entirely shave my head if he DOES do each of these 3 things.

I think we can all agree that Jill is not going to look like Sinead O’Connor anytime soon. I totally agree with her first two suggestions. As for CAFOs, it’s not realistic to expect them to be banned, but I believe they would be greatly reduced in number and size (over time) if government policy made them pay for the harm they cause.

On a more encouraging note, I read this at the U.S. Food Policy blog:

Some highlights included Vilsack’s encouragement of locally grown fruits and vegetables and pronouncement that they should be grown not just in rural areas, but everywhere. He announced that he met with Health and Human Services nominee Tom Daschle last week in order to demonstrate the importance of working together for nutrition. “It’s going to be important for us to promote fresh fruits and vegetables as part of our children’s diets. . .that means supporting those who supply those products” and making it easier for consumers to buy locally grown products, Vilsack said.

Maybe Vilsack and Daschle will take some of Angie Tagtow’s excellent advice on how their agencies can work together to improve human health. I would also encourage them to read this recent piece by Steph Larsen: “For healthy food and soil, we need affordable health care for farmers.”

I am curious about what Vilsack means by “supporting those who supply” locally-grown fresh fruits and vegetables. One problem with our current agricultural policy is that commodity farmers lose all federal subsidies if they put more than two acres into growing fruits or vegetables. Apparently that was the price needed to get California’s Congressional delegation to vote for various farm bills over the years. Even though almost no subsidies go directly to California farmers, this penalty limits the competition California growers might otherwise face from Midwestern farmers.

So, very little of the produce consumed by Iowans is grown in Iowa, and our grocery stores are full of produce trucked in from thousands of miles away. Most of the crops Iowa farmers grow are inedible for humans without processing.

A few years back the Leopold Center for Sustainable Agriculture at Iowa State University published a report on “Food, Fuel and Freeways.” It showed how far food travels to Iowans and how much Iowans could reduce greenhouse-gas emissions if we increased the proportion of locally-grown food in our diets to even 10 percent of what we eat.

Getting back to the Vilsack hearing, members of the Senate Agriculture, Nutrition and Forestry Committee made some notable comments yesterday. who questioned Vilsack made some notable comments on Wednesday. Iowa’s own Tom Harkin, who chairs the committee, gave Vilsack a warm welcome:

“I just couldn’t be more proud to see you sitting there. I don’t think President-elect [Barack] Obama could have picked a better person for this position,” Harkin said.

Harkin also discussed federal child nutrition programs:

Agriculture Chairman Tom Harkin , D-Iowa, said reauthorization of a law (PL 108-265) governing school lunches and other child nutrition programs “is really the only thing that we have to do this year.” […]

During the hearing, Harkin said he will propose that the Department of Agriculture use Institute of Medicine guidelines to set standards for junk food sold in schools. Current USDA school food standards exempt most snack foods, because they aren’t a part of subsidized lunches.

During the last renewal of the child nutrition act, then-Gov. Vilsack wrote a letter to lawmakers and the Bush administration expressing concern about childhood obesity and the problem of vending machine snacks that compete with school meals.

At the time, Vilsack backed limits on the kinds of snacks and beverages students can buy outside the lunch line. Nutrition advocates want junk food kicked out of schools, but many schools use the cash from sales to cover the rising costs of meal services.

(Side note: the state of Iowa is now considering banning the sale of junk food in public schools.)

Meanwhile, Iowa’s Republican Senator Chuck Grassley urged Vilsack to act quickly on several other fronts, including rule-making that would protect smaller volume livestock producers. Also, Grassley and Democratic Senator Byron Dorgan of North Dakota wrote an open letter to Vilsack asking him to close a loophole affecting commodity program payment limits. Ferd Hoefner, Policy Director of the National Sustainable Agriculture Coalition, explains that “This particular loophole is the single most important one allowing mega farming operations to collect payments in multiples of what otherwise appears to be the statutory dollar limit.”

According to Hoefner,

Another former chairman, Pat Leahy (D-VT), weighed in with a comment that the Department is not keeping up with the rapid growth of organic and then with a question asking whether it wasn’t time for the Department to get on with the business of actually actively promoting organic.  Vilsack said we need to “celebrate and support” organic and USDA should view it as one very legitimate option in a menu of options for improving farm incomes.  Then, in response to an extended monologue from Senator Pat Roberts (R-KS) deriding organic as marginal, Vilsack held his ground, but diffused the implied antagonism, saying the Department needs to support the full diversity of American agriculture.

The Ethicurean blog published an excerpt of Roberts’ insult to “small family farmers”:

That small family farmer is about 5’2″ … and he’s a retired airline pilot and sits on his porch on a glider reading Gentleman’s Quarterly – he used to read the Wall Street Journal but that got pretty drab – and his wife works as stock broker downtown. And he has 40 acres, and he has a pond and he has an orchard and he grows organic apples. Sometimes there is a little more protein in those apples than people bargain for, and he’s very happy to have that.

How disappointing that an imbecile like this could easily get re-elected in Kansas. Roberts’ caricature does not resemble any of the sustainable farmers I know. They work just as hard as Roberts’ idealized “production agriculture farmer” but don’t receive any federal subsidies, despite growing high-quality food and being good stewards of the land.

If you haven’t already done so, please go to the Food Democracy Now site and sign their new petition recommending 12 good candidates for undersecretary positions at the USDA. These will be important appointments, since Vilsack won’t single-handedly be setting the USDA’s policy direction.

The Center for Rural Affairs has also launched a petition worth signing, which urges Vilsack to implement a number of programs that would benefit farmers and rural economies.

My apologies for not getting this in closer to the actual new year, but you could say that “a day late and a dollar short” has been the theme of the new year so far for me. Or five days short, as the case may be.

In any case, before we start the new political year for real, I thought it might be fun to share our predictions for the new year. Here are nine predictions of mine for two thousand and nine.

1. The state budget is in far worse shape then we think. Expect the fight over the budget to get ugly, quick.

The Iowa state fiscal year runs from July 1 2008 to June 30 2009–right in the heart of the economic meltdown. Given that the estimates for this period are just starting to come in, it's reasonable to assume that the stories we're currently hearing about the “budget crisis” represent only the tip of a much larger iceberg. Likewise, the 1.5% across-the-board cut currently proposed by Gov. Culver isn't going to be nearly enough to solve the crisis. It's going to get ugly and fast.

2. Unemployment will hit 10% by the end of 2009, and recovery will not come until early 2010.

Call me a pessimist, but I think things are going to get much worse before they get better. When you combine the potential failure of the Big 3 (a still unresolved issue, by the way), plus a global manufacturing slowdown, with the fact that up to 25% of retail stores may declare bankrupcy in the next year–you have the recipie for unmitigated economic disaster.  

To complicate matters, I do not expect President Obama's recovery measures to be passed before May of this year. (There are already signs that a long battle is ahead for this bill.) That means that many of the infrastructure projects given funds through the program will miss out on the summer construction window–meaning they likely won't start until Summer 2010. Many other measures, like tax cuts or social programs won't go into effect until 2010 as well…moving the light at the end of the tunnel further and further away.

3. The Big 3 will not survive in their current form. Get ready for the Big 2.

Regardless of whether the auto bailout was the correct move at the time, by the time the big ball drops in 2010–there will no longer be a Big 3 as we know them now. My best guess is that one of the Big 3 automakers (most likely Chrysler) will implode into disorganized bankrupcy. No buyer will be found, and the brand will simply cease to exist. This will spark a crisis that will either lead to the organized bankrupcy/restructuring of the other companies, or government assistance with severe Bob Corker style conditions. 

The good news is that out of the multitude of laid-off engineers and designers, we could see new  and innovative technologies, designs, and companies form. By 2020 we could all be driving solar hybrids designed and built by ex-Big 3 designers who started their own companies.

6. The Supreme Court will rule in favor of same-sex marriage in the case of Varnum v. Brien.

Beware the ides of March rings true in Iowa in 2009. Expect a ruling on the case of Varnum v. Brien to come down with a rulings for several other cases on March 13, the conclusion of the Court's March session. When that happens expect a whirlwind of craziness to descend on the state: national media, a rush of spring weddings, celebrity attention, half-cocked legal challenges, right-wing rants, Fred Phelps-ian protests, legislative blustering, Steve Deace's head exploding, and who knows what else.

I don't think the moon turning to blood, the dead walking the streets, or any other Pat Robertson-style pronouncements will come true…but expect a wild ride.

5. The Republican candidate for Governor will be a serious contender who already holds a major elected office.

The current fight over the RPI chair has a definite and familiar theme: change. Old hacks are out, new hacks are in. While there is a faction of the GOP that clings to BVP like life preserver, the majority of the party is, I think, waiting for someone new to come along.

That someone is either State Auditor David Vaudt, Sec. of Agriculture Bill Northey, or 4th District Congressman Tom Latham.

Vaudt looks to emerge as one of the main faces of opposition to Culver on budget issues, a position he could use to slingshot him to the governorship. Northey is the darling of the Republican Party and, with agricultural issues on the back-burner this year and little to do, may find the Governor's race an attractive prospect. Latham, by all measures a low-importance member of the minority party might decide that its now or never for him. And he has nothing to lose: if he wins, he's the Governor; if he loses, he can run again as the elder-statesman in the dogfight that will be the new 3rd district.

On Saturday I asked whether the proposed coal-fired power plant near Waterloo was dead now that Dynegy has pulled out of a joint venture with LS Power and Associates.

I am pleased to bring you the answer to the question:

LS POWER AFFILIATE WILL FOREGO FURTHER DEVELOPMENT OF ELK RUN ENERGY STATION

01/06/2009

WATERLOO, IOWA (January 6, 2009) – LS Power affiliate, Elk Run Energy Associates, LLC, announced today that it will forego further development of the Elk Run Energy Station in Waterloo, Iowa.

Given the slowing load growth in the region due to the current downturn in the U.S. economy, and the fact that LS Power has more advanced projects under development in the region that could serve the same need, the Company will redirect its development efforts to other projects.

“Elk Run Energy has been a proud member of the Greater Cedar Valley community, and appreciates the unwavering support of so many individuals and organizations throughout the development process,” said Mark Milburn, Assistant Vice President of LS Power.

LS Power continues to develop a portfolio of coal, natural gas, wind and solar generation facilities and transmission projects with ongoing development activities in Arkansas, Arizona, Georgia, Michigan, Nevada, New Jersey, Texas, Virginia and other locations.

Did you catch that bit about “slowing load growth” in the region? That means that future electricity usage is projected to be lower than previously thought, because of the current recession. People are tightening their belts, and conserving energy is a good way to save money. We could do even more on this front with aggressive state or federal policies on energy efficiency.

Thanks again to all the environmental and community advocates who helped doom the Elk Run project. One coal-fired power plant down, one to go.

Will Alliant and its subsidiary IPL keep trying to build a new coal plant near Marshalltown? I don’t know, but it’s worth noting that Dynegy’s stock went up 19 percent the day they withdrew from the joint venture on developing new coal plants. Alliant’s stock price could use a shot in the arm right now.

The Houston Chronicle reported on January 2:

Stingy credit markets and high regulatory hurdles have spurred Houston-based Dynegy to step back from new coal-fired power plant projects by ending a joint venture with LS Power Associates.

Dynegy will keep the right to expand its 27 existing coal, natural gas and oil-fired plants in 13 states, and it retains stakes in a pair of Texas and Arkansas coal projects.

But Dynegy will pay New York-based LS Power $19 million as part of the split and let it take full ownership of new projects under consideration in Arkansas, Georgia, Iowa, Michigan and Nevada.

Shares of Dynegy closed up 38 cents, or 19 percent, to $2.38 on Friday.

Dynegy Chairman and CEO Bruce Williamson said the power plant development landscape has changed since the company entered into the joint venture with LS in the fall of 2006. Funding new projects is much more difficult given the worldwide credit crunch and the possibility of new climate change legislation under the Obama administration.

“In light of these market circumstances, Dynegy has elected to focus development activities and investments around our own portfolio where we control the option to develop and can manage the costs being incurred more closely,” Williamson said in a statement.

Here is the Waterloo-Cedar Falls Courier’s take on the story:

The future of a proposed coal-fired power plant near Waterloo became a little cloudier Friday when Texas-based Dynegy Inc. announced that it and New Jersey-based LS Power Associates were dissolving their joint venture to develop that plant and others in several states.

The move transfers to LS Power full ownership and developmental rights associated with various “greenfield” projects in several states, including the 750-megawatt Elk Run Energy Station proposed for construction northeast of Waterloo.

[…]

Separation from Dynegy puts the Elk Run plans in doubt, said Don Shatzer, a member of Community Energy Solutions, which opposes the Elk Run Energy project.

“LS Power has no experience developing/operating coal plants and so is unlikely to proceed (without) a new partner,” Shatzer said in an e-mail note.

Bruce Nilles, director of the Sierra Club’s National Coal Campaign, shares Shatzer’s opinion, according to The Houston Chronicle.

This sounds quite promising, although neither the Houston Chronicle nor the Waterloo-Cedar Falls Courier were able to get a comment from LS Power on whether it will continue to pursue this project.

Incidentally, the Waterloo plant is not needed to meet Iowa’s energy demand; most of the electricity the plant would have generated would have gone out of state.

Many thanks to all those who have worked hard to prevent this plant from being built, notably the Waterloo-based grassroots organization Community Energy Solutions, the Sierra Club Iowa chapter, Plains Justice of Cedar Rapids, and the Iowa Environmental Council (with which I am involved).

Well-organized activists helped prevented LS Power from annexing some farmland for the coal-fired plant.

In March 2008, the Iowa Department of Natural Resources denied a construction permit for the project. Apparently the county zoning for that land was not in order, so the DNR concluded that LS Power “hadn’t met our requirement to have the full ability to put the power plant on that property.”

These small victories were not themselves enough to kill the project. However, the setbacks delayed the process until “external credit and regulatory factors that make development much more uncertain” prompted Dynegy to walk away.

Lesson for environmental activists: it is worth exercising every legal option to put up obstacles to a bad project.

Lesson for Alliant, which wants to build a new coal-fired power plant near Marshalltown: Dynegy’s stock shot up 19 percent in one day after they pulled out of the joint venture with LS Power. The market favors abandoning new coal projects. Dropping your plans to build a power plant near Marshalltown would not only be good for public health and the environment, it could boost your stock price.

Not a whole lot is happening yet, but things will pick up quickly once the legislature is back in session, beginning January 12.

As always, post a comment or send me an e-mail (desmoinesdem AT yahoo.com) if you know of an event I’ve left out.

Saturday, January 3:

The Iowa Citizen Action Network is organizing a “Roadmap to Economic Recovery” town hall meeting from 10:30 am to noon at the Bidwell Riverside Center, 1203 Hartford in Des Moines. For more details about the event, read this post at Century of the Common Iowan.

Monday, January 5:

At 10 am the Des Moines Register’s editorial board will interview top Iowa Republicans in the legislature: Senate Minority Leader Paul McKinley, House Minority Leader Kraig Paulsen, and House Minority Whip Linda Upmeyer. People will be able to watch the interviews live at the Register’s website.

Tuesday, January 6:

At 9:30 am the Register’s editorial board will interview top Iowa Democrats in the legislature: Senate Majority Leader Mike Gronstal, House Speaker Pat Murphy, and House Majority Leader Kevin McCarthy. People will be able to watch the interviews live at the Register’s website.

Thursday, January 8:

From the Iowa Environmental Council e-mail bulletin, via Angela Clark of enrgPATH:

Sustainable Business After Hours meet monthly at Mars Café, the second Thursday of every month. Jan 8 is the next one at 5:30 p.m. This is for anyone in business that is interested in hearing about how others are incorporating sustainability into their business. We feature a non-profit group each month from the Sustainability spectrum as well. Hope to see you there!

Practical Farmers of Iowa is giving you a chance to see the documentary “King Corn” and meet the film-makers:

The movie King Corn is coming to Des Moines, along with co-star Curt Ellis and director Aaron Woolf, for a Practical Farmers of Iowa fundraiser on January 8. The screening will be at the Fleur Cinema, and movie time is 7:00. After the movie, join Curt Ellis and Aaron Woolf for dessert, drinks, and discussion.

King Corn’s Curt Ellis: “We are supporting Practical Farmers of Iowa through this fundraiser because they provide a vision for what all Iowa agriculture might look like a generation from now: family-driven farms growing healthy and sustainable food in thriving local communities.”

King Corn tracks two college kids’ quest to understand the food system.  “As city kids from the coasts, we had no idea that the food we were eating–meat, milk, or soda–had its roots on a corn farm.  When we found out just how much of our diet was coming from that one crop, we decided to see the Corn Kingdom for ourselves,” said Curt. “We moved to Iowa , grew an acre of corn, and followed the fate of our crop as food. Along the way, we found out some wonderful things about agriculture, and some disconcerting things about our food.”

Tickets are $20 in advance, $25 at the door, and $10 for students. To purchase tickets, call Suzi at (515)232-5661 or fill out and send in the ticket order form.

Sponsors for this fundraiser are Des Moines Area Community College , Drake University Environmental Science and Policy Program, Environmental Nutrition Solutions, Iowa Farmers Union, Sage, Slow Food Des Moines, and the Wallace House Foundation.

Practical Farmers of Iowa includes a diverse group of farmers and nonfarmers. Corn, soybeans, beef cattle, and hay are the top enterprises for PFI farmers, although many have a variety of other operations, including fruits and vegetables. PFI’s programming stresses farmer-to-farmer networking through research and demonstration, field days, conferences, and more. For more information, call (515)232-5661 or visit www.practicalfarmers.org.

Friday, January 9:

The Iowa Commission on the Status of Women is having a lunch and learn to discuss its legislative agenda for the coming session:

12 noon – 1 p.m.

State Capitol, Room 116

Free and open to the public * Bring your lunch and join us!

2009 Policy Agenda

1.      Enhance protections for equal pay.

2.      Provide sustainable funding for domestic violence and sexual assault centers across the state.

3.      Extend gender balance requirement on boards and commissions to political subdivisions of the state.

4.      Support policy and research to assist low-income women entering skill shortage areas.

The annual conference of Practical Farmers of Iowa opens in Marshalltown:

The 2009 PFI conference, “Biological Harvest: The Sustainable Farmer’s Hidden Opportunity,” will take place at Marshalltown Community College January 9 and 10. Keynote speaker Joel Huesby, fourth-generation farmer who farms in Washington State, speaks with great optimism about the future of agriculture and the tremendous opportunities for “farming with the sun.” Friday evening of the conference King Corn co-star Curt Ellis and director Aaron Woolf will show a sneak preview of their new film, tentatively titled “Big River,” that looks at the environmental impacts of high-intensity corn production. Dave Baker from the Beginning Farmer Center is available for private consultations. Holistic veterinarian Will Winter will host a one-on-one coffee shop Saturday. Other highlights include: business meeting, member posters, Iowa-grown meals, silent auction, and many opportunities to network with fellow farmers and agriculture advocates. The conference offers a diverse line-up of workshops. For more information or to register, visit www.practicalfarmers.org or contact Suzi Berhnard, (515)232-5661, suzi@practicalfarmers.org.

Saturday, January 10:

From the Iowa Environmental Council e-mail bulletin:

A meeting of anyone interested in habitat and water quality issues in the Walnut Creek Watershed will occur on Saturday, January 10, in the morning. The exact time and place will be announced later. Walnut Creek is a tributary of the Raccoon River, and it has significant rural and urban watershed areas. The tentative meeting schedule includes an introductory slide presentation and overview, interest- and issue-based working groups, and discussion of outreach to communities and potential funding sources. If you want a detailed announcement of the meeting, please send an email to Lee Searles at searleslr@msn.com or contact him at 515-979-6457.

Last year at this time I was scrambling to make as many phone calls and knock on as many doors as I could before the Iowa caucuses on January 3.

This week I had a little more time to reflect on the year that just ended.

After the jump I’ve linked to Bleeding Heartland highlights in 2008. Most of the links relate to Iowa politics, but some also covered issues or strategy of national importance.

I only linked to a few posts about the presidential race. I’ll do a review of Bleeding Heartland’s 2008 presidential election coverage later this month.

You can use the search engine on the left side of the screen to look for past Bleeding Heartland diaries about any person or issue.

Many a bad bill has passed the U.S. House of Representatives with the votes of Republicans and Democratic “Blue Dogs.” These representatives call themselves “moderates” or “centrists,” and you often find them voting with corporate interests, against the majority of the House Democratic caucus, when the chips are down.

This Washington Post article about the upcoming debate over an economic stimulus bill cites Representative Baron Hill of Indiana as “incoming co-chairman of the Blue Dog Coalition, a caucus of 51 fiscally conservative House Democrats.”

Hill wants the economic stimulus money to go toward road and bridge construction, whereas others would like to see more of the money spent on “green jobs” and infrastructure projects that are more environmentally friendly than building new roads. Progressives would like to spend the transportation money on fixing our existing roads and bridges while expanding public transit and rail.

Friends of the Earth has launched a campaign to “keep the economic stimulus clean”:

Transportation in the U.S. is responsible for 30 percent of our global warming pollution and 70 percent of our oil consumption. We cannot solve the energy and climate challenge without making our transportation system far cleaner and more efficient.

President-elect Obama and the congressional leadership are moving quickly to pass an economic stimulus package that creates green jobs with a new, clean energy infrastructure. Public transportation, smart growth and green transportation alternatives are a crucial part of this effort.

Unfortunately, the road-building lobby is attempting to hijack this bill and divert billions of dollars to the construction of new, unnecessary roads, highways and bridges that would deepen our nation’s dependence on oil and increase greenhouse gas emissions.

Click here for more details about the economic and environmental consequences of letting new road construction dominate the stimulus bill.

Getting back to the title of this diary, Matt Stoller read that Washington Post piece about debates over the stimulus and was intrigued to learn that Hill claims 51 members for the Blue Dog Coalition:

Last session, there were 49 Blue Dogs, and during the election season the caucus continually bragged about how they would add a substantial number of new members in 2009.  Still, their PAC didn’t give to very many Democratic candidates, two Blue Dogs lost reelection, and a bunch of their candidate prospects lost.  If it’s true that the Blue Dogs have only increased their number by 2, and I’m not sure it is, then they really are far weaker in the House than they were from 2006-2008.  There are 257 Democrats in the next Congress and 178 Republicans.  While the Blue Dogs are still a swing bloc, they only have 11 votes to give.  That’s not very many, considering that this number assumes all Republicans always vote with the Blue Dogs.  If Republicans split off from their caucus on certain votes, even small numbers of Republicans, then Blue Dog priorities are far less likely to matter overall.

Leonard Boswell (IA-03) is the only Iowa Democrat in the Blue Dog group. Once the new House convenes, it will be interesting to see how the Blue Dogs compare in number to the Progressive Caucus, which had 71 members in the last Congress, including Dave Loebsack (IA-02). My hunch is that the Progressive Caucus will add a lot more new members than the Blue Dogs.

After the new year I’ll try to find out how many members Bruce Braley (IA-01) was able to recruit to the Populist Caucus he is forming.

Whether or not Blue Dog power declines in the House, it may be on the rise in the Senate. Senator Evan Bayh of Indiana is setting up a Blue Dog caucus in the upper chamber. Although Senate Majority leader Harry Reid’s spokesman claims Reid is “upbeat” about Bayh’s plans, it’s likely that the Senate Blue Dogs will collude with Republicans to obstruct Barack Obama’s agenda.

Matthew Yglesias advanced a very plausible hypothesis about Bayh’s move:

With Republicans out of power, the GOP can’t really block progressive change in exchange for large sums of special interest money. That creates an important market niche for Democrats willing to do the work. It was a good racket for the House Blue Dogs in 2007-2008 and there’s no reason it couldn’t work for Senate analogues over the next couple of years.

Let’s hope the memory of the 1994 Republican landslide will induce conservative Democrats not to block most of Obama’s agenda. The Democrats who ran Congress in 1993 and 1994 wanted to show Bill Clinton who was boss, but the effect was to make Democrats look incompetent, depressing Democratic base turnout in 1994 and turning swing voters toward the Republicans.

On the other hand, I would not underestimate the Blue Dogs’ willingness to do what big money wants, whether or not it’s good for the Democratic Party.

Share any relevant thoughts in the comments.

UPDATE: Kagro X notes that the Progressive Caucus seems to be a more cohesive voting bloc than the Blue Dogs, which is surprising.

Meanwhile, Chris Bowers argues persuasively than the Blue Dogs have achieved little on their alleged signature issue of “fiscal responsibility”:

If the Blue Dogs only exist in order to promote “fiscal responsibility,” isn’t it pretty clear that, rather than getting their way, they have actually failed across the board over the last eight years? From the Bush tax cuts, to soaring deficits, to making exceptions for war, to making exceptions for bailouts, to making exceptions to stimulus packages, the Blue Dogs have completely and utterly failed at their stated primary policy area and done so at every available opportunity.

The only actual successes of the Blue Dogs appear to be the [Foreign Intelligence Surveillance Act] re-write and blank check funding for Iraq. It is notable that 38 of the 47 Blue Dogs voted in favor of both these measures, which jointly render a member a “Bush Dog” in Open Left’s terminology. Given that 70 House members voted in favor of both those measures, the Democratic defectors on those issues were clearly spearheaded by the Blue Dogs.

Mainly, I am impressed that Blue Dogs keep earning press that describes them as fiscally responsible and wildly powerful, when the record shows otherwise. When offered opportunities to actually clamp down on spending over the last two years, the Blue Dogs have balked at every turn, favoring blank check funding for Iraq, blank check funding for the bailout, and massive funding for the economic stimulus. That a group of House members can do all of this and still be described as both “fiscally responsible” and “powerful” is pretty impressive. Maybe what we progressives really need is to hire the Blue Dogs’ PR people.

Merry Christmas to Bleeding Heartland readers who are celebrating the holiday today.

And if you’re Jewish like me, remember that Jesus was an important Jewish theologian and reformer.

Here are some holiday links for you.

On the real meaning of Christmas:

A Christmas prayer from pastordan.

Carnacki shares a true story and treasured family memory.

John Lennon sings “Happy Christmas (War Is Over).”

greywolfe359 reflects on Light in the Darkness.

noweasels offers Christmas wishes and memories of small-town Christmas pageants.

Some less-happy Christmas stories:

Millions of children grow up in poverty, and even if they are relatively comfortable as adults, they never forget those feelings of economic insecurity. Last year chuckles1 shared his memories of “The year we stole a Christmas tree.” (The piece is still relevant, even though the presidential campaign angle is obsolete.)

Expatyank lives in Britain, where unemployment and other economic problems are causing the retail sector to implode during what should be the busiest shopping week of the year.

For history buffs:

Daily Kos’ resident historian Unitary Moonbat talks about how Christmas has been celebrated throughout the centuries.

Remember, the Puritans felt Christmas “incited moral degeneracy and so they declared war on the Christmas holiday by passing laws against it in Scotland and England, later in Massachusetts […]”

Other useful Christmas links:

Asinus Asinum Fricat is a chef and native of France. He shares some memories of Christmas in Provence, including recipes for traditional desserts.

The same diarist is a veteran restaurant owner and operator, and offers a Christmas proposal for entrepreneurs out there. It’s about how to set up and run a low-cost restaurant that “will thrive in this severe economic downturn.”

A conservative blogger offers some Christmas cooking and sewing ideas (the muffins look truly decadent).

Daily Kos commenters had lots of good suggestions to add to my list of no-clutter holiday gift ideas.

Eddie C posted a fun photo diary on Christmas in New York City.

Christmas humor:

JeffLieber wrote a funny piece from the perspective of Joseph: I’ve just discovered my wife has been unfaithful.

Asinus Asinum Fricat offers a selection of Christmas jokes (some are Australian and “saucy”). Be sure to read the comments, where many people posted additional Christmas humor. I added a Jewish Christmas joke.

Christmas music:

What do you prefer? Old-fashioned cheesy, like Bing Crosby and Tony Bennett? Childhood favorites like the Charlie Brown Christmas album? Hip adult options like Diana Krall’s jazzy Christmas music?

Deoliver47 shares a bunch of Christmas music videos.

We mostly listen to Chanukah music, but I do enjoy Oy to the World: A Klezmer Christmas.

Share holiday cheer or other thoughts in the comments.

P.S.: It’s the second white Christmas in a row in Iowa, which is nice.

From Daily Kos user rok for dean:

In 1950, the average pay of an S&P 500 CEO was less than 30 times that of an average U.S. worker; by 1980, prior to the “Reagan Revolution,” the average pay of the S&P 500 CEO was approximately 50 times higher than that of an average U.S worker.  But by 2007, the average pay of an S&P 500 CEO had soared to more than 350 times as much as that of an average U.S. worker.

This is both immoral and unsustainable in a democracy.  By way of comparison, in Europe, an average CEO only makes 22 times as much as an average worker, and in Japan, only 17 times as much.

If America wants to be competitive again, we need to reduce CEO pay to a level comparable to CEO pay in Europe and Japan.  I know exactly how to accomplish this feat.  The [United Auto Workers] should agree to immediately lower U.S. union worker pay to a level equal to the level paid by their non-union, non-American competitors.  In return, auto CEO’s must agree to permanently lower their compensation to only 20 times that of an average union worker.

Sounds fair to me. How many Republicans who’ve been beating the war drums about excessively generous pay to union workers would agree to those terms?

It’s true that union workers get paid more than non-union workers (though strong unions are associated with higher average wages even for non-union workers in the same area). But in a country where two-thirds of our gross domestic product depends on consumer spending, higher wages are not a bad thing.

In any event, unions are not primarily to blame for the auto industry’s current problems. Toyota is about to post its first operating loss in 70 years despite having an entirely non-union workforce. The tough economy has diminished demand for new cars.

American automakers also have to bear the burden of our broken employer-based health insurance system, but that’s a topic for another diary.

The same Republicans who claim they’d never raise taxes on Americans are only too happy to slash the wages of middle-class auto workers. As rok for dean says, let’s call their bluff and see if they would be willing to tie executive pay to a reasonable multiple of the average worker’s salary in the company.

Side note: my dad was a Republican, but it really bothered him when corporate executives would receive exorbitant salaries and bonuses even as they were driving their companies into the ground. Rewarding good performance is one thing, but paying incompetent managers obscenely high salaries is another.  

By now you have surely read about Bernard Madoff and his $50 billion Ponzi scheme. For background, here’s a collection of New York Times articles on the scandal.

The Securities Exchange Commission is conducting an internal investigation to find out why Madoff’s criminal enterprise went undetected for so long. It’s already obvious that this was a massive regulatory failure.

The SEC was warned about Madoff:

The SEC had the authority to investigate Madoff’s investment business, which managed billions of dollars for wealthy investors and philanthropies. Financial analysts raised concerns about Madoff’s practices repeatedly over the past decade, including a 1999 letter to the SEC that accused Madoff of running a Ponzi scheme. But the agency did not conduct even a routine examination of the investment business until last week.

No one knows yet how many people were involved in helping Madoff conceal his fraud. And while Madoff’s operation was particularly massive, no one knows how many other fraudulent investment firms are out there, because the SEC lacks the resources to enforce compliance with financial securities laws.

Those who had invested with Madoff have lost the entire value of their accounts, and they are not the only victims of his crimes. In fact, Madoff may have indirectly harmed more victims than any other white-collar criminal in history. His clients included many non-profit organizations and charitable foundations, some of which have already ceased operations. Numerous Jewish non-profits have been hit hard, but the fallout will extend far beyond the Jewish community. The Picower Foundation alone gave out tens of millions of dollars in grants every year. Within months, the education, human rights and arts non-profits that relied on those funds are likely to be in financial crisis.

The JEHT Foundation was much smaller than the Picower Foundation but “was a leading supporter of civil rights causes, including groups working to expand voting rights in the South.” Its outgoing president noted when announcing plans to shut down operations that

The issues the Foundation addressed received very limited philanthropic support and the loss of the foundation’s funding and leadership will cause significant pain and disruption of the work for many dedicated people and organizations. The Foundation’s programs have met with significant success in recent years – promoting change in these critical areas in partnership with government and the non-profit sector. Hopefully others will look closely at this work and consider supporting it going forward.

We can hope that others will step in to support the worthy causes whose funders were defrauded by Madoff, but that is extremely unlikely. Just about every grant-making foundation has suffered a significant decline in assets this year because of the stock market’s slide. Individuals of great wealth have also seen their net worth shrink. Non-profit organizations were already bracing for a difficult fundraising year in 2009. The Madoff scandal makes it even more likely that many non-profits will not survive this downturn.

Consider them casualties of “small government” at the SEC, and remember what happened to them the next time conservatives whine about big, bad regulators.  

I opposed the massive Wall Street bailout rushed through Congress this fall, but if the government can provide hundreds of billions of dollars to financial firms with no oversight, it’s only fair that $13.4 billion of the Troubled Asset Relief Program be used to prevent General Motors and Chrysler from collapsing:

“These are not ordinary circumstances,” Bush said at the White House today. “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.”

The cost of letting automakers fail would lead to a 1 percent reduction in the growth of the U.S. economy and mean about 1.1 million workers would lose their jobs, including those in the auto supply business and among dealers, the White House said in a fact sheet.

‘Necessary Step’

President-elect Barack Obama endorsed the plan, calling it in a statement a “necessary step” to avoid a major blow to the economy.

“I do want to emphasize to the Big Three automakers and their executives that the American people’s patience is running out,” Obama said later at a news conference. “They’re going to have to make some hard choices.”

The United Auto Workers are “disappointed” that Bush added “unfair conditions singling out workers,” the union’s president, Ronald Gettelfinger, said in a statement.

“We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed,” Gettelfinger said.

This diary by TomP has a lot more detail and reaction to the bailout deal.

It would be grossly unfair for only the workers to be asked to sacrifice to make these companies profitable. Some Republicans, notably Senator Bob Corker of Tennessee are explicitly trying to drive wages in union shops down to the level paid to non-union employees of Japanese automakers in the southern states.

But it’s no coincidence that the standard of living in states with more union workers is higher than the standard of living in the deep south.

I don’t know enough about the details to know whether this bailout can save GM and Chrysler, but failing to act was not an option with so many jobs on the line.

By the way, all three U.S. automakers have made a lot of mistakes over the years, but kudos to management of Ford Motors for locking in a large credit line while credit was easy to obtain. In case you were wondering, that’s why Ford is not currently on the brink of collapse, begging for a government bailout. Nevertheless, I’m sure Ford will have to do a lot of restructuring to adapt to this tough economy, just like GM and Chrysler. I can’t imagine 2009 will be much better for new car sales than 2008 was.

Chrysler has already idled all of its plants for a month. Ford is extending the holiday break at most of its plants until January 12, and GM plans massive production cuts next year.

Those actions may be necessary to save the automakers, but they will have disastrous ripple effects in all the communities where the idled factories are located.

Some of these problems could have been avoided if Congress had fixed our broken health-care system years ago. This report is more than two years old:

The competitive disadvantage of U.S. automakers resulting from the absence of a national strategy on health care financing is becoming increasingly clear. GM faces legacy costs (health care plus pensions for retired workers) of $1,500 per car. Together, the Big Three automakers support roughly 800,000 retirees, compared to less than 1,000 for foreign-owned competitors in the United States.

Clearly the failure to address America’s health care finance problems has become a major competitive disadvantage for our economy as a whole and has placed U.S. workers in a diminished bargaining position for wages and job security in relation to the rest of the industrialized world. Targeting retiree health costs offers an opportunity to provide strong incentives for industry action on fuel savings investment and reduces the competitive disadvantage.

Share any relevant thoughts in the comments.

UPDATE: Why I am not surprised to learn that banks like Goldman Sachs and Morgan Stanley are giving out large bonuses to some executives after receiving billions in bailout money from the federal government?

Note also that George Bush attached all kinds of conditions to the loans for automakers, while major financial institutions just got free money with no oversight.

Ouch:

Gov. Chet Culver announced an across-the-board budget cut today and said education and Medicaid won’t escape unscathed.

Culver announced a 1.5 percent across-the board reduction in an attempt to deal with the state’s declining revenues.

The governor said staff reductions and employee furloughs are likely, which will be determined by each department. “It’s going to be painful,” he said.

The cuts announced today amount to $91.4 million and will have an effect on services, Culver acknowledged. In addition, Culver ordered a transfer of $10 million of unused money into the general budget. Most of that transfer money will come from an underground storage tank account, which is used to investigate and clean up any past petroleum contamination from underground storage tanks.

A week ago, Culver announced $40 million in cuts, largely through a hiring freeze and limiting out-of-state travel. In addition, Culver said he will ask the Legislature to withdraw plans for a $37 million new office building.

Combined with cuts announced Dec. 9, the total is $178.4 million in reduced expenses in the current budget year that ends June 30.

Clearly spending cuts in the current year are unavoidable because of the decline in projected revenues.

When state legislators draft next year’s budget, though, I hope they will not rely only on spending cuts to make up for projected lower revenues. David Sirota explains why:

Almost every single economist agrees, the last thing we want to do in a recession is slash government spending. We want, in fact, to increase that spending so that it is a counter-cyclical force to a deteriorating economy. So the question, then, is how to most safely generate the revenue to maintain or increase that spending. By  “most safely” I mean how to raise the revenue in a way that will minimize any negative economic impact. And the answer comes from Joseph Stiglitz:

 

“[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.”

So, first and foremost, you don’t want dramatic spending cuts (beyond the usual rooting out of waste/fraud) and you don’t want to raise taxes on middle- and lower-income citizens who both need the money for necessities, and are the demographics that will most quickly spend money in a stimulative way. That leaves taxes on the super-rich, and Stiglitz – unlike anti-tax ideologues – has actual data to make his case.

For more information, see Budget Cuts or Tax Increases at the State Level:

Which is Preferable During an Economic Downturn?

Will Democrats dare to raise taxes, knowing that Republican candidates and interest groups will hammer them for it in 2010?

I have no idea, but if drastic spending cuts send the economy further into recession, 2010 isn’t going to be a picnic for Democrats anyway. I doubt they’ll rally the troops with “At least we didn’t raise your taxes” as a campaign message.

When analyzing the new Iowa House Democratic committee assignments, Chase Martyn noticed,

Almost all vulnerable Democratic incumbents have been kept off the Ways and Means committee.  In a year of budget shortfalls, Ways and Means will likely have to send some tax-increasing bills to the floor.

Post any thoughts about the budget/spending/taxes debate in this thread.

UPDATE: The press release from Culver’s office is after the jump.

SECOND UPDATE: If you think Iowa’s budget outlook is grim, read this short piece about the situation in California.

THIRD UPDATE: Nancy Sebring, the superintendent of the Des Moines Public Schools, announced plans to cut $3.3 million from the current-year budget (about 1 percent) in light of the state budget cuts. Presumably most if not all school districts in Iowa will need to take similar action. I wouldn’t be surprised if fiscal constraints force more of our small school districts to merge.

Three days after he announced plans to cut $40 million from the current-year budget and delay a planned expenditure of $37 billion, Governor Chet Culver said on Friday that he will announce a further $60 million in spending cuts next week. The total state budget for the current fiscal year is $6.1 billion.

Iowa’s Revenue Estimating Conference met the same day and “lowered this fiscal year’s revenue estimate by $99.5 million and next year’s estimate by $132.6 million.”

Iowa House Republican leader Kraig Paulsen slammed Democrats in a statement:

Democrats have put this state in a precarious position […] At a time when the national economy was on it’s way down, Democrats increased state spending by over $2,000 per family, over the span of two years they’ve hired more than 2600 new state employees, and loaded up budgets with pork projects for their preferred constituents. The only thing they have left to show for it is a gaping hole in the budget.

Give me a break. The Republican Party long ago stopped being the party of fiscal responsibility. John McCain himself admitted this:

We lost the election in 2006 because we lost our way. […] Spending lurched completely out of control.

Anyway, the New York Times reported last month,

At least 37 states and the District of Columbia have faced or are facing budget gaps totaling $66 billion in the 2009 fiscal year. Most states, which rely on sales, income and property taxes, are seeing a significant drop in such revenues or increases that are below the inflation rate, compared to the same period last year.

Click here to view a graphic showing which states have budget problems. If you look at that map, you can see that many states’ projected budget shortfalls are larger per capita than Iowa’s. This is a tough economy, and not only for states run by Democrats.

Meanwhile, House Speaker Pat Murphy promised,

We will take action in January to keep the 2009 budget balanced. There will be difficult decisions to make, but we will not balance the state budget on the backs of middle class families in these difficult times.

House Majority Leader Kevin McCarthy commented,

We have over $620 million in the state’s rainy day funds and we have a Governor and state legislature that are committed to fiscal discipline.

Yet, we need to be prepared for real cuts in budgets for both 2009 and 2010.  There will be real cuts and there will be real pain, but I do believe that Iowa is in a better position to weather this budget storm than almost any other state.  

Jason Hancock’s piece about the various budget projections for Iowa is worth a read. The most pessimistic scenario is quite grim.

Very tough choices will have to be made during the legislative session. I wouldn’t expect the return of much, if any, of the state money that was “swept” from other programs last summer to pay for flood relief.

Strong words from President-elect Barack Obama at yesterday’s press conference introducing Tom Daschle as Secretary of Health and Human Services:

Some may ask how, at this moment of economic challenge, we can afford to invest in reforming our health care system. Well, I ask a different question — I ask how we can afford not to….If we want to overcome our economic challenges, we must also finally address our health care challenge.

Obama also promised to address health care “this year,” implying that he will spend political capital to get a plan through Congress in 2009.

Daschle linked health care reform to economic recovery:

Addressing our health care challenges will not only mean healthier and longer lives for millions it will also make American companies more competitive, address the cause of half of all of our personal bankruptcies and foreclosures and help pull our economy out of its current tailspin.

Obama also named Jeanne Lambrew as Daschle’s deputy. Ezra Klein is very pleased with that pick:

Lambrew is an incredibly talented and knowledgeable health wonk, and her involvement should cheer liberals. Unlike during the campaign, when Obama’s health care team seemed heavy on relatively cautious academics, Lambrew has long White House and executive branch experience, and comes to health care as a crusade as much as a topic of study. As Jon Cohn says, the importance of her presence “goes beyond the fact that she happens to know a heck of a lot about health care. She, too, has a strong commitment to what you might call the ‘social justice’ side of the debate.”

For more from Lambrew, check out her congressional testimony from late October, where she argued that “the short-run economic crisis has health policy causes and effects-and arguably the most serious long-run economic challenge is our broken health care system.” That was almost exactly the message Obama delivered today. And it’s the message that will be heard in the White House, and translated into a political strategy by Tom Daschle.

In this article for The American Prospect, Klein compares Obama’s team of “health care heavyweights” to Bill Clinton’s disastrous strategy for pushing health care reform in 1993 and 1994.

The major battle will be making sure there is some public insurance plan Americans can opt into, so that private insurers will need to cover health care in order to compete for customers.

The Principal Financial Group lowered the boom on 300 workers in central Iowa yesterday:

Principal Financial Group laid off 550 employees Tuesday, including 300 in its Des Moines headquarters, the company said.

Principal, one of the area’s largest employers, has approximately 16,400 employees worldwide and 8,000 in the Des Moines area. […]

The Des Moines-based insurance and financial services company said the cuts are due to continued deterioration of U.S. and global markets.

Principal reported a net income of $90.1 million for the third quarter, a 61 percent decrease from $232.3 million in the same period a year ago. Principal also told a state development agency last month that it is no longer interested in receiving tax incentives in exchange for creating 900 jobs in Iowa.

The last day for most affected employees will be Dec. 31, and all affected employees will receive severance and career assistance, the company said.

It’s great that people will receive severance pay and career assistance, but they will be entering a very tough job market. Other local employers, including Wells Fargo Home Mortgage, have already laid off workers this fall. Finding a job with pay and benefits comparable to what Principal offered won’t be easy.

This isn’t just an issue for central Iowa. As nyceve writes in her latest diary, rising unemployment is expected to greatly increase the number of Americans lacking coverage for basic health care. Add that to the list of problems with our costly and inefficient employer-based health insurance system.