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Friday, February 13, 2009

Slumdogs Unite!


SOMEDAY historians may look back at Tom Daschle’s flameout as a minor one-car (and chauffeur) accident. But that will depend on whether or not it’s followed by a multi-vehicle pileup that still could come. Even as President Obama refreshingly took responsibility for having “screwed up,” it’s not clear that he fully understands the huge forces that hit his young administration last week.

Barry Blitt

Fred R. Conrad/The New York Times

Frank Rich

The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus. It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger.

Like nearly everyone else in Washington, Obama was blindsided by the savagery and speed of Daschle’s demise. Conventional wisdom had him surviving the storm. Such is the city’s culture that not a single Republican or Democratic senator called for his withdrawal until the morning of his exit. Membership in the exclusive Senate club, after all, has its privileges. Among Daschle’s more vocal defenders was Bob Dole, who had recruited him to Alston & Bird, the law and lobbying firm where Dole has served as “special counsel” when not otherwise cashing in on his own Senate years by serving as a pitchman for Pepsi and Viagra.

In New York, editorial pages on both ends of the political spectrum, The Wall Street Journal and The Times, called for Daschle to step down. But not The Washington Post. In a frank expression of the capital’s isolation from the country, it thought Daschle could still soldier on even though “ordinary Americans who pay their taxes may well wonder why Mr. Obama can’t find cabinet secretaries who do the same.”

As Jon Stewart might say, oh those pesky ordinary Americans!

In reality, Daschle’s tax shortfall, an apparently honest mistake, was only a red flag for the larger syndrome that much of Washington still doesn’t get. It was the source, not the amount, of his unreported income that did him in. The car and driver advertised his post-Senate immersion in the greedy bipartisan culture of entitlement and crony capitalism that both helped create our economic meltdown (on Wall Street) and failed to police it (in Washington). Daschle might well have been the best choice to lead health-care reform. But his honorable public record was instantly vaporized by tales of his cozy, lucrative relationships with the very companies he’d have to adjudicate as health czar.

Few articulate this ethical morass better than Obama, who has repeatedly vowed to “close the revolving door” between business and government and end our “two sets of standards, one for powerful people and one for ordinary folks.” But his tough new restrictions on lobbyists (already compromised by inexplicable exceptions) and porous plan for salary caps on bailed-out bankers are only a down payment on this promise, even if they are strictly enforced.

The new president who vowed to change Washington’s culture will have to fight much harder to keep from being co-opted by it instead. There are simply too many major players in the Obama team who are either alumni of the financial bubble’s insiders’ club or of the somnambulant governmental establishment that presided over the catastrophe.

This includes Timothy Geithner, the Treasury secretary. Washington hands repeatedly observe how “lucky” Geithner was to be the first cabinet nominee with an I.R.S. problem, not the second, and therefore get confirmed by Congress while the getting was good. Whether or not this is “lucky” for him, it is hardly lucky for Obama. Geithner should have left ahead of Daschle.

Now more than ever, the president must inspire confidence and stave off panic. As Friday’s new unemployment figures showed, the economy kept plummeting while Congress postured. Though Obama is a genius at building public support, he is not Jesus and he can’t do it all alone. On Monday, it’s Geithner who will unveil the thorniest piece of the economic recovery plan to date — phase two of a bank rescue. The public face of this inevitably controversial package is now best known as the guy who escaped the tax reckoning that brought Daschle down.

Even before the revelation of his tax delinquency, the new Treasury secretary was a dubious choice to make this pitch. Geithner was present at the creation of the first, ineffectual and opaque bank bailout — TARP, today the most radioactive acronym in American politics. Now the double standard that allowed him to wriggle out of his tax mess is a metaphor for the double standard of the policy he must sell: Most “ordinary Americans” still don’t understand why banks got billions while nothing was done (and still isn’t being done) to bail out those who lost their homes, jobs and retirement savings.

As with Daschle, the political problems caused by Geithner’s tax infraction are secondary to the larger questions raised by his past interaction with the corporations now under his purview. To his credit, Geithner, like Obama, has devoted his career to public service, not buckraking. But he still has not satisfactorily explained why, as president of the New York Fed, he failed in his oversight of the teetering Wall Street institutions. Nor has he told us why, in his first major move in his new job, he secured a waiver from Obama to hire a Goldman Sachs lobbyist as his chief of staff. Nor, in his confirmation hearings, did he prove any more credible than the Bush Treasury secretary, the Goldman Sachs alumnus Hank Paulson, in explaining why Lehman Brothers was allowed to fail while A.I.G. and Citigroup were spared.

Citigroup had one highly visible asset that Lehman did not: Robert Rubin, the former Clinton Treasury secretary who sat passively (though lucratively) in its executive suite as Citi gorged on reckless risk. Geithner, as a Rubin protégé from the Clinton years, might have recused himself from rescuing Citi, which so far has devoured $45 billion in bailout money.

Key players in the Obama economic team beyond Geithner are also tied to Rubin or Citigroup or both, from Larry Summers, the administration’s top economic adviser, to Gary Gensler, the newly named nominee to run the Commodity Futures Trading Commission and a Treasury undersecretary in the Clinton administration. Back then, Summers and Gensler joined hands with Phil Gramm to ward off regulation of the derivative markets that have since brought the banking system to ruin. We must take it on faith that they have subsequently had judgment transplants.

Obama’s brilliant appointees, we keep being told, are irreplaceable. But as de Gaulle said, “The cemeteries of the world are full of indispensable men.” You have to wonder if this team is really a meritocracy or merely a stacked deck. Not only did Rubin himself serve on the Obama economic transition team, but two of the transition’s headhunters were Michael Froman, Rubin’s chief of staff at Treasury and later a Citigroup executive, and James S. Rubin, an investor who is Robert Rubin’s son.

A welcome outlier to this club is Paul Volcker, the former Federal Reserve chairman chosen to direct Obama’s Economic Recovery Advisory Board. But Bloomberg reported last week that Summers is already freezing Volcker out of many of his deliberations on economic policy. This sounds like the arrogant Summers who was fired as president of Harvard, not the chastened new Summers advertised at the time of his appointment. A team of rivals is not his thing.

Americans have had enough of such arrogance, whether in the public or private sectors, whether Democrat or Republican. Voters turned on Sarah Palin not just because of her manifest unfitness for office but because her claims of being a regular hockey mom were contradicted by her Evita shopping sprees. John McCain’s sanctification of Joe the Plumber (himself a tax delinquent) never could be squared with his inability to remember how many houses he owned. A graphic act of entitlement also stripped naked that faux populist John Edwards.

The public’s revulsion isn’t mindless class hatred. As Obama said on Wednesday of his fellow citizens: “We don’t disparage wealth. We don’t begrudge anybody for achieving success.” But we do know that the system has been fixed for too long. The gaping income inequality of the past decade — the top 1 percent of America’s earners received more than 20 percent of the total national income — has not been seen since the run-up to the Great Depression.

This is why “Slumdog Millionaire,” which pits a hard-working young man in Mumbai against a corrupt nexus of money and privilege, has become America’s movie of the year. As Robert Reich, the former Clinton labor secretary, wrote after Daschle’s fall, Americans “resent people who appear to be living high off a system dominated by insiders with the right connections.”

The neo-Hoover Republicans in Congress, who think government can put Americans back to work with corporate tax cuts but without any “spending,” are tone deaf to this rage. Obama is not. It’s a good thing he’s getting out of Washington this week to barnstorm the country about the crisis at hand. Once back home, he’s got to make certain that the insiders in his own White House know who’s the boss.

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Who Keeps Screwing Us Over?

Cenk Uygur

I shouldn't be surprised by now. But I still was when I read the article this morning in the Washington Post explaining that the cap on executive pay has been removed from the stimulus bill. I knew what Congress was doing yesterday by bringing the Wall Street executives in and scolding them in public was a dog and pony show. But I had not realized how profoundly full of shit these politicians are.

They make a big display of yelling at the CEOs and then the very next day they quietly remove any cap on their compensation. These people are not on our side. This is why so many Americans are so damn frustrated. Everyone in power appears to be bought and paid for. There is a circle of people in DC and NY that keep passing the money around to one another and then come and collect it from us.

I want to know -- no, I demand to know -- who killed this provision? Who argued for taking this cap on executive pay out of the stimulus bill? Do we have a free and strong press in this country? Or are they in on it, too? If not, then find out who did this to us.

The constant non-sensical argument is that if we cap their pay, they won't want to participate in this system. Ooh, don't scare us now. So, we won't get the most incompetent and corrupt losers in America to participate in their own rescue? I'm shivering thinking about the possibility of losing out on the help of these geniuses.

We're wasting our time here. Just nationalize the damn banks already. Almost all of the top economists are now in agreement that we should take this step. The people who put the money in are the people who own the company -- that's how capitalism works. I'm a die-hard capitalist. I don't want the federal government owning banks for an extended period of time. But what's worse is to continue letting these bankers rob us of our money day in and day out while we sit around like fools.

We buy it, we own it. Kick the clowns out. Run it for a limited amount of time while we stabilize the credit markets. And then sell them off in the free market. Instead of begging the bankers to loosen up credit, we take the banks and do it ourselves.

At the very least, it is unconscionable to get rid of these pay caps. On what grounds do these people think they deserve millions of dollars for bankrupting their companies? How is that capitalism? That's not capitalism, that's cronyism. They pay the politicians, the politicians pay them. They have perverted the whole system.

No way. No way. No way. We have to stop this. If we don't, I guarantee you that we will look back and realize that the bankers actually did the most amount of damage and ripped off the system for millions more after the TARP program started and we let them walk away with all the money after the companies were bankrupt.

As Joseph Stiglitz says, they are bleeding the banks right now. It's a zero sum game, every dollar they take out is a dollar we have to put in. Why are we paying them for their incompetence?

My favorite joke is when people say if we don't continue to pay these clowns millions of dollars they will take their talent elsewhere. I literally laughed out loud after writing that. Please, have at it hoss. Take your talent wherever the fuck you would like.

Is it possible that the Obama administration is behind this move? Absolutely. First, Tim Geithner is a complete Wall Street guy. He believes in protecting the Wall Street bubble. That's why they were ecstatic when he was selected. And Obama himself is a guy who is instinct is almost always to be conciliatory. If Wall Street says this is necessary, he's going to want to reach out and appease them to get things moving. But not this time. This is a conciliatory move we cannot abide.

I voted for Obama, but I did not loan out my intellect to him. I can still make up my own mind on whether he is right or wrong. And if he is participating in this, he is 100% wrong.

One last thing, the banks say that part of the stimulus cap on pay might be retroactive and that's not fair because that's changing the rules (I love how they're complaining about fairness now). They say that the banks might pull out of these deals if we change this rule on them now.

First, great, pull out. Where are you going to get the money elsewhere? Nowhere. It's the world's worst bluff. And even if they do, they run out of money. We are forced to nationalize them and we arrive at a better result anyway. Please make our day and don't take the money.

Second, on the retroactive issue. As one of our listeners pointed out, if a bank makes an error and deposits some money into your account that isn't yours and you spend it, you know what happens to you? You get arrested! We have covered numerous stories like this on the show. The bank accidentally puts in an extra $100,000 in someone's account. They spend it and they go to jail.

Here we have accidentally put too much into the bankers' accounts. I know it's too much because they took $18 billion of it home in bonuses instead of spending it on the problem at hand. If they spend it after we notify them of the error, they get arrested. They have to give the money back. It's what they do to their customers all the time.

Now, that's my solution. But that's not even in the bill. We should get that $18 billion back. But instead all we're asking for is that they not pay their executives more than $400,000 a year for being the worst businessmen in the country. Here's what I know as a fact -- that is not too much to ask for.

And if our politicians claim that is too much to ask for, then they are either the most pathetic weaklings around or they are in on the heist. Either way, if they don't put this back in the bill, they gotta go. Democrat or Republican, I don't care. If they don't understand the urgency of this, then they are not for us.

Every day we wait is another day they "bleed the banks." If there isn't a popular uprising to stop these guys from stealing our money, then we deserve what we get. The old saying goes, a fool and his money are soon parted. Are you going to be that fool?

Original here

Dick Cheney Remembers

In his first interview since leaving public office, former Vice President Dick Cheney told Politico last week that he's ready to start writing his memoirs. Slate has obtained the following excerpts from an early draft.

Dick Cheney. Click image to expand.I'll never forget the anguish in his voice. "You have no choice, son," he said. "You've simply got to take that military deferment." I felt punched in the gut. "No!" I shouted. "No, damn you! No! That's the fifth time you've done this to me!"

Without telling anyone, Nixon and I had worked up a little routine. I asked, "Who is the Vietnamese foreign minister?" Immediately, he chimed in, "No, Woo is on first!" The whole room cracked up. Kissinger had to take a pill.

Let me get this straight," I said. "I choose your running mate?" George gave a wide grin. "You got it, Chief," he said. "Freddie Thompson, Newt, Lugar—heck, even Old Man McCain. You name him, and I'll go with him. Will you do it?"

I felt a shiver rise up my spine. "I'm very busy these days," I said. "But I'll consider it."

Throughout the president's colonoscopy, I stayed cool as a cucumber.

"We want to see the minutes of your energy-policy meetings," she barked, her snotty, liberal leftist nose high in the air. "We want to know the lobbyists you've met with." I just stared through her. "Listen, missy," I replied. "You're not fooling me. You're trying to find out what we're doing, so you can tell everybody, and that's not going to happen!"

It was heartbreaking. He looked at me with those sad, defeated eyes and rasped, "Mr. Vice President, I let you down." Well, what could I say? I put my hand on his shoulder and said, "No, please, never think that way." But, inside, I was angry with him. I wanted to shout, "Christ, Harry, what in hell were you doing, poking your big face right into my line of fire?"

I knew from her glassy-eyed grin that Lynne was well into her fourth tequila and valium. "Guesh what," she said. "Your pretty little daughter has gone and got himself a girlfriend."

The hippies were out there, protesting a war that we were waging to defend their right to protest wars. Sadly, they couldn't see the reality: During wartime, there's just no place for that kind of protest.

I warned Scooter about talking to Robert Novak. "Remember," I said. "No matter what he says, no matter how he acts, he's CNN. We're Fox."

Sorry, folks, but it's not torture to have a little water poured on you. You want torture? Try a two-hour piano recital from Condoleezza Rice.

They said, "Dick, for the sake of the country, we need you in a safe, secret location, out of the public eye." I knew they were right, but, still, I longed to be away from those salt deposits and back above ground.

"Let me be their target," I said. "Put me out front. Let me be your poster boy. Let me be your bait. I'm not afraid of being a target."

But McCain's people wouldn't buy it.

Paulson looked dazed, confused, like a deer in headlights. "It's all turning to shit," he whispered. "Everything is collapsing! We're going down!"

I slapped him hard across the face, leaving a red blotch on his cheek. "Get a grip," I barked. "I'll call Rove. He'll fix this."

Mark my words: There will be another terrorist attack. Thousands will die. Millions will suffer. When it happens, America will see at last that we were right. History will vindicate us, and we'll receive the respect we rightfully deserve. Not that I would ever want that, of course.

The other day, as Lynne and I watched a storm approaching over the horizon, we pondered the incredible journey that has been our lives. Until that moment, I never realized how much Dubai looks like old Wyoming.

I love America. There! I said it! Sue me. I don't care. Because the one thing I've learned is that all the missiles, all the armies, and all the bombs in this big crazy world cannot defeat love. So there you have it, liberals: This "war criminal" pleads guilty as charged—guilty of believing in the power of love.

Original here

GOP Rep. Cantor Attacked For Profanity-Laced Web Video

UPDATE: Rep. Eric Cantor's spokesperson has apologized:

"I would like to apologize for a joke that was in no way an official response from Congressman Cantor, but instead an inappropriate email. I apologize to AFSCME for my inappropriate email containing an old video. Let me be clear, we know people are hurting in these trying times and House Republicans completely agree that we must pass an economic recovery bill that preserves, protects and create jobs for Americans facing these economic challenges," said Brad Dayspring.

* * * * *

As first reported by The Plum Line, Virginia Republican Eric Cantor is in hot water after his office responded to critics by sending out a profane web video.

The union AFSCME (American Federation of State, County and Municipal Employees), along with Americans United for Change, started running ads targeting Cantor for encouraging Republican opposition to the economic recovery plan. The House whip's office reacted by sending out an ad of their own (but not created by them), depicting AFSCME workers as curse-spewing bullies.

"On your way to work tomorrow, instead of sitting around with your finger up your ass, look around," the voiceover says. "There's a union out there called AFSCME and they're busting their balls doing a lot of shit work you take for granted. For example, we pick up your fucking garbage."

"We don't take shit from nobody," the voiceover finishes. "You got that, asshole? AFSCME -- the fucking union that works for you."

WATCH (Warning: Language NSFW):

AFSCME President Gerald McEntee isn't amused. "Eric Cantor may think the greatest economic crisis in seventy years is a joke, but we don't," he said in a statement. "He should talk to the people in Virginia who are losing their jobs, health care and homes."

Brad Woodhouse, President of Americans United for Change, responded more forcefully:

"Does Eric Cantor believe that peddling profanity-laced filth around the Internet is consistent with the values of the people of Virginia or the country? This is childish, inappropriate and disgusting behavior from someone who is supposed to be a leader in Congress and a role model to others. Eric Cantor's response to one of the most serious crises facing America in our lifetimes is to spread this filth, denigrate government employees and treat the current economic crisis like a joke. This video has been floating around on YouTube for years - but Eric Cantor's use of it in this context shows how completely and utterly out of touch he is with the current economic crisis and the lives of his constituents. Eric Cantor should be ashamed and he should apologize."

And AFL-CIO President John Sweeney added: "During these tough economic times the last thing hard working Americans need is to be ridiculed by a member of the Republican leadership. Rep. Cantor should apologize for insulting America's workers with this profane video."

ThinkProgress points out that Cantor himself is an anti-obscenity crusader who has said "the use of obscenity" in television "should not and cannot be tolerated."

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Broadband stimulus passes, but many questions linger

By Julian Sanchez

Broadband stimulus passes, but many questions linger

By a narrowly partisan vote, the Senate on Tuesday approved a massive $838 billion economic stimulus package, including $7 billion in funds to promote broadband deployment. But with a slew of differences between the House and Senate versions of the legislation remaining to be resolved in a conference committee this week, enormous uncertainty remains about the specifics of the plan—a situation that has many policy experts and advocates combing the details in search of the devil.

The most obvious open question concerns the total size of the broadband subsidy. Earlier drafts of the Senate bill appropriated $9 billion for broadband, of which $2 billion were cut over the weekend as part of a compromise designed to win over enough Republicans and centrist Democrats to overcome a filibuster threat. The House bill allocates $6 billion for the same purpose.

At the tech advocacy group Public Knowledge, however, there's at least as much concern about the rules attached to broadband funding as about the total dollar amount. The nonprofit sounded an alert Tuesday about an amendment introduced by Sen. Dianne Feinstein (D-CA) (though not brought to the floor for consideration), creating a "network management" exception to the "open access" conditions imposed on any government-funded broadband networks. Though the conditions themselves are somewhat vague—the Federal Communications Commission and National Telecommunications and Information Administration would hash out the specifics—network neutrality advocates expect that they would be used to bar various forms of discriminatory routing by ISPs.

Feinstein's amendment, however, would construe the statute to permit "reasonable network management practices such as deterring unlawful activity, including child pornography and copyright infringement." Neutrality proponents fear this would create a loophole that permits ISPs to use deep packet inspection to automatically block copyrighted content—but automatic filters are notoriously hard pressed to distinguish between simple copyright infringement and legally protected fair use. They also pose significant concerns about subscriber privacy.

There are also broader structural questions about the wisdom of including broadband spending in the stimulus package at all, as well as more specific concerns about the focus on subsidizing broadband deployment in rural areas. Economists and policy experts voiced a welter of such concerns at a panel hosted by the conservative American Enterprise Institute on Tuesday afternoon.

The wisdom of stimulating broadband

Robert Crandall, an economist with the centrist Brookings Institution, argued that there was "little reason to provide a specific targeted subsidy for broadband," rather than providing a more general cash infusion and allowing the market to determine which projects were deserving of support. Crandall worries that grants or loans designed to accelerate broadband deployment could end up investing in technologies that may well be superseded a few years hence. Perhaps ironically, Crandall's own research has been the basis for ambitious claims about the job-creating potential of a broadband stimulus—claims Crandall himself now says are a "gross overstatement."

Even if a targeted broadband subsidy were a good idea, Michael Katz, formerly chief economist at the FCC, wants to know: "What's the rush?" Notwithstanding stimulus advocates' emphasis on "shovel-ready" projects, much of the money allocated for broadband—especially funds that come in the form of loans and grants subject to an application and approval process—would likely not be spent for at least a year or two. Under the circumstances, though he agrees that it's "important to send to the market signals that we're doing something," Katz worries that cramming broadband into a rushed stimulus bill will lead to poorly crafted legislation. Taking a bit more time with broadband, he argues, would ensure that the government is not "paying people to do what they'd be doing anyway or even crowding out private investment."

Moreover, as one attendee noted during the question-and-answer period, if the goal of a national broadband strategy is to improve the United States' rates of broadband penetration, laying costly fiber in sparsely populated areas makes far less sense than promoting adoption in denser urban areas where there's preexisting infrastructure.

Katz also questions the emphasis in both versions of the stimulus on rural broadband deployment. The House version of the package puts half of the broadband funds under the control of the Department of Agriculture, and an amendment proposed by Sen. Patrick Leahy (D-VT) would create a similar split in the Senate version, which currently puts all the money in the hands of the NTIA. But Katz argues that it's "environmentally hostile" to subsidize the choice to live in those "underserved" rural areas—and perhaps unequitable as well, given that rural residents enjoy far lower housing costs than denizens of highly wired urban areas. (He even offered his own tongue-in-cheek proposal to require rural residents to buy their own broadband service unless it would cost more than the difference between the cost of rural living and that of keeping a flat in Manhattan.)

Moreover, as one attendee noted during the question-and-answer period, if the goal of a national broadband strategy is to improve the United States' rates of broadband penetration, laying costly fiber in sparsely populated areas makes far less sense than promoting adoption in denser urban areas where there's preexisting infrastructure.

Robert Shapiro, formerly a principal economic advisor to Bill Clinton, was more sanguine about the general idea of a temporary broadband stimulus—but took pains to stress that he didn't wish to defend the specifics of the legislation currently under consideration, "because I don't think it's very well designed." Shapiro said his own research had shown that in general, there was no evidence for a systematic market failure in broadband, and argued that the so-called "digital divide" was better cast as a "digital lag" of about five years between those at the top and bottom rungs of the economic ladder. "This is not something one would do in the absence of a crisis," he said, and warned that "there is a real danger of this becoming a permanent program because it is in the economic interest of certain companies."

Apropos of which, Shapiro claimed to have been told that the speed requirements for broadband networks funded under the stimulus package—hailed by proponents of government broadband subsidy—would originally have applied only to FiOS networks, until panicked telecoms complained.

Gigi Sohn of Public Knowledge stressed that the broadband spending should not be seen purely as a short-term form of economic stimulus, but as a means of guaranteeing broad-based democratic participation. To that end, Sohn argued that targeted grants and loans should be preferred to tax credits for broadband providers, which play a significant role in both versions of the bill, since these must be individually approved and monitored—and because tax credits provide little benefit to companies not currently turning a profit. Echoing the other panelists, she worried that without the checks that come with such grants, money would simply flow to incumbent firms to underwrite deployment they'd undertake anyway. If tax credit language proposed by Sen. Jay Rockefeller (D-WV) is incorporated in the final bill, some analysts project that Verizon alone could capture as much as $1 billion of the total broadband stimulus.

As several panelists noted, however, the varied goals of broadband subsidy in the context of a stimulus package often conflict. Short term jobs for workers in the ailing construction sector are created by rural deployment, though that's not the most effective way to get the largest number of people online. Similarly, if the goal is to spend funds in a way that creates a near-term economic boost, then the logical recipients of those funds are incumbent telecoms, who are in the best position to quickly add capacity, rather than newer startups—which would have its own distortionary effects on the broadband market in the longer terms. (Sohn countered by questioning "the obsession with shovel ready," asking: "Don't we want to stimulate this economy over a little longer time horizon than just the next six months or year?"

The perhaps surprising consensus across the political spectrum—among those broadly supportive of the theory behind broadband stimulus and those who remain skeptical—was that the stimulus bill in its current form is at best profoundly imperfect, packed with provisions that do more to advance the interests of specific companies (incumbent providers and rural telcos, primarily) rather than sound broadband policy. And if that's what it looks like now, wait until we see what they do with it in committee.

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Has Obama Made a Good Choice for Drug Czar?

The Seattle Post-Intelligencer is reporting that Seattle Police Chief Gil Kerlikowske will likely be Obama’s nominee for director of the Office of National Drug Control Policy, commonly referred to as the drug czar. It appears that we may soon be faced with the most promising drug czar ever to occupy the position.

To be clear, Kerlikowske is not a friend of drug policy reform to any extent I’m aware of. What matters here is that I see no evidence that he is a vicious drug warrior of the sort commonly associated with the drug czar post. Given that ONDCP is mandated to oppose reform efforts and has typically embraced that role, a less confrontational and reefer madness-driven drug czar is really the best case scenario from a drug policy reform perspective.

Under Kerlikowske, Seattle has been a model for sensible marijuana policy, including the famous Seattle Hempfest at which the Seattle Police Department performs a public safety role while declining to make marijuana arrests. Following the passage of a 2004 lowest priority initiative, the city’s already-low rate of marijuana prosecutions fell even further, suggesting that Kerlikowske was responsive to the will of voters.

In that sense, he offers a dramatic departure from ONDCP’s shameful history of undermining state medical marijuana laws and inserting itself into state politics for the purpose of thwarting reform efforts. In an office typically run by military officials and political hacks, Kerlikowske would bring expertise in community policing and public relations.

As drug czar, I have no doubt that Gil Kerlikowske would oppose drug legalization and serve as our primary opponent on many issues. Nevertheless, at first glance, my gut instinct is that after several drug czars from hell, a guy from Seattle doesn’t sound so bad.

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USA was 3 hrs away from Economic, Political Collapse in September 2008

According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks.

Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

Kanjorski's bombshell begins to detonate at roughly 2:10 into the video.

Partial transcript below the fold.

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things.

On Thursday, at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn't be further panic and there. And that's what actually happened.

If they had not done that their estimation was that by two o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.

Hat tip nicta.

On the day the electronic run on the money markets happened, September 18th, the Dow Jones Industrial Average closed at 11,019.69. This was roughly two weeks before the huge market collapse during the first week of October 2008. As an aside, I wonder how many members of Congress got cashed out their stocks that day?

In a blog post at The Motley Fool, TMFSinchiruna describes this clip as "The One Jaw Dropping Video that Every Fool Must See".

He first gives some background to what is known about that fateful day on Capitol Hill.

Fools who read my blogs regularly know I have been fascinated by what may have been included within the dire warnings issued to members of Congress by Paulson and Bernanke behind closed doors on Thursday, September 18, 2008. As the debates lingered on over the week that followed, several members voiced their sense of shock over the severity of the warnings, while refusing to divulge the details to a public that deserves to know.

Representative Sherman later revealed that members were warned that Martial Law would result if the $700 bailout plan was not passed, and Iguadland10 posted another video ascribing that particular warning to Paulson.

The New York Times quoted Senator Dodd as jumping in when Charles Schumer described the meeting as 'somber': “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.” Also from NYT: Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.

He notes the only thing that has changed since the money market run in September is "that more money has been thrown at the problem, but the problems have continued to mount in the meantime. I hope financial disaster can be averted, but judging by what I've witnessed so far that hope is muted at best."


The final word goes to Rep. Kanjorski though:

Ya know, we're not any geniuses in economics or finances... We're representatives of people. We ought to take our time, but let the people know this is a very difficult struggle.

Somebody threw us into the middle of the Atlantic Ocean without a life raft and we're trying to determine what's the closest shore and whether there's any chance in the world to swim that far. We. Don't. Know.

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Economic stimulus bill passes Senate hurdle

WASHINGTON - An $838 billion economic stimulus bill backed by the White House survived a crucial test vote in the Senate Monday despite strong Republican opposition, and Democratic leaders vowed to deliver legislation for President Barack Obama's signature within a few days.

Monday's vote was 61-36, one more than the 60 needed to advance the measure toward Senate passage on Tuesday. That in turn, will set the stage for possibly contentious negotiations with the House on a final compromise on legislation the president says is needed desperately to tackle the worst economic crisis in more than a generation.

The Senate vote occurred as the Obama administration moved ahead on another major component of its economic recovery plan. Officials said Treasury Secretary Timothy Geithner would outline rules on Tuesday for $350 billion in bailout funds designed to help the financial industry as well as homeowners facing foreclosure.

Hours after the Senate stimulus vote, Obama pressed the House and Senate to come together and urgently give final passage to the bill.

With the nation falling deeper into recession, Obama used the first prime-time news conference of his presidency to warn that a failure to act “could turn a crisis into a catastrophe.”

He defended his plan against Republican criticism that it is loaded with pork-barrel spending and will not create jobs.

“The plan is not perfect,” the president said, addressing the nation. “No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans.”

Obama said 90 percent of the jobs created by the plan would be in the private sector, rebuilding crumbling roads, bridges and other aging infrastructure.

Republicans break ranks
Monday's Senate vote was close but scarcely in doubt once the White House and Democratic leaders agreed to trim about $100 billion on Friday.

As a result, Republican Sens. Susan Collins and Olympia Snowe, both of Maine, and Arlen Specter of Pennsylvania broke ranks to cast their votes to advance the bill.

Democratic Sen. Edward M. Kennedy, battling a brain tumor, made his first appearance in the Capitol since suffering a seizure on Inauguration Day, and he joined all other Democrats in support of the measure.

"There is no reason we can't do this by the end of the week," said Majority Leader Harry Reid. He said he was prepared to hold the Senate in session into the Presidents Day weekend if necessary and cautioned Republicans not to try and delay final progress.

He said passage would mark "the first step on the long road to recovery."

Moments before the vote, the Congressional Budget Office issued a new estimate that put the cost at $838 billion, an increase from the $827 billion figure from last week.

"This bill has the votes to pass. We know that," conceded Sen. John Thune, a Republican who has spoken daily in the Senate against the legislation.

Even so, in the hours before Monday's vote, he and other Republican opponents attacked it as too costly, and unlikely to have the desired effect on the economy. "This is a spending bill, not a stimulus bill," said Sen. Lamar Alexander, a Republican.

All 36 votes in opposition were cast by Republicans.

Working out the differences
The two remaining versions of the legislation are relatively close in size — $838 billion in the Senate and $819 billion in the House, and are similar in many respects.

Senators: Stimulus plan will create jobs
Feb. 9: TODAY’s Matt Lauer talks to Sens. Susan Collins (R-Maine) and Ben Nelson (D-Neb.) about building bipartisan support to pass a robust, but fiscally responsible stimulus plan.

Today show

Both include Obama's call for a tax cut for lower-income wage earners, as well as billions for unemployment benefits, food stamps, health care and other programs to help victims of the worst recession in decades. In a bow to the administration, they also include billions for development of new information technology for the health industry, and billions more to lay the groundwork for a new environmentally friendly industry that would help reduce the nation's dependence on foreign oil.

At the same time, the differences are considerable.

The measure nearing approval in the Senate calls for more tax cuts and less spending than the House bill, largely because it includes a $70 billion provision to protect middle-class taxpayers from falling victim to the alternative minimum tax, which was intended to make sure the very wealthy do not avoid paying taxes.

Both houses provide for tax breaks for home buyers, but the Senate's provision is far more generous. The Senate bill also gives a tax break to purchasers of new cars.

Both houses provide $87 billion in additional funds for the Medicaid program, which provides health care to the low income. But the House and Senate differ on the formula to be used in distributing the money, a dispute that pits states against one another rather than Republicans against Democrats.

There are dozens of differences on spending.

The Senate proposed $450 million for NASA for exploration, for example, $50 million less than the House. It also eliminated the House's call for money to combat a potential flu pandemic.

On the other hand, the Senate bill calls for several billion more in spending for research at the National Institutes of Health, the result of an amendment backed last week by Specter.

Copyright 2009 The Associated Press.

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Court weighs contempt motion in Calif. prison case

SAN FRANCISCO (AP) -- A federal appeals court on Thursday began considering whether Gov. Arnold Schwarzenegger can be held in contempt for refusing to release money to improve inmate health care, testing the limits of federal intrusion into states' control of their prisons.

In a hearing before the 9th U.S. Circuit Court of Appeals, Deputy Attorney General Daniel Powell argued that a judge's demand for a $250 million down payment violates state sovereignty and federal law. A court-appointed receiver wants that money to go toward his $8 billion plan to build seven new medical and mental health facilities for the state's 33 adult prisons.

Powell told the three-judge panel that the plan goes far beyond what's needed to remedy the prison health care system. The state cited proposed amenities such as therapy rooms, basketball courts and bingo boards. Powell added that the state already has taken steps to improve care that has been ruled unconstitutional.

The demand for billions to improve inmate medical care comes during a time of "extreme fiscal crisis," the state argued. California is struggling to bridge a $42 billion budget gap, furloughing employees two days each month, cutting billions from education and social services and considering a variety of tax increases.

"It couldn't be a worse day for us to argue," said James Brosnahan, the attorney representing the receiver overseeing the health care reform efforts, J. Clark Kelso. "I wanted to get here before it got worse. It's just awful."

Nevertheless, Brosnahan said, the state cannot suddenly object to paying for facilities the Schwarzenegger administration has long agreed are sorely needed to keep inmates from dying unnecessarily.

U.S. District Judge Thelton Henderson of San Francisco had been preparing to hold the Republican governor in contempt until the appeals court stepped in.

The three judges gave no indication when they will rule on whether Henderson can proceed with a contempt hearing. But they seemed to side with Henderson and Kelso on Thursday.

"We're seeing a challenge to a lot of things that seem to have been agreed to beforehand," said Judge William C. Canby Jr. He and Judge Mary Schroeder noted that the state had repeatedly consented to the receiver's plans before reversing course last summer.

Canby also objected when Powell, the state's attorney, argued that the federal Prison Litigation Reform Act, which took effect in 1996, prohibits judges from ordering states to build prisons. "That doesn't prohibit anything," Canby responded.

The third judge, Michael Hawkins, said he's sympathetic to the state's dilemma but suggested it could have made its arguments to Henderson and awaited his decision before appealing.

Powell said the state had to act to prevent a drain on its treasury. The state doesn't have the $8 billion needed for the prison improvements because state legislators did not approve Schwarzenegger's request to borrow the money. Brosnahan countered that the $250 million down payment already has been set aside by lawmakers, while the final cost to the state has yet to be decided.

Kelso last week offered to scale back his plan for housing 10,000 physically and mentally ill inmates.

Kelso said his $8 billion plan is the best and quickest way to improve care so poor that inmates regularly die from suicides or neglect. But he said the courts and state could opt for a $2.5 billion plan to build three medical facilities - an option that would not help mentally ill inmates.

Though legislators and the administration have balked, the state still could borrow the money to spread out the cost over many years, Kelso said in a phone interview.

The state also may need less space for mentally and physically ill inmates because a different panel of federal judges on Monday said they plan to order the state to lower its prison population by around one-third over the next several years.

© 2009 The Associated Press.

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GOP Sounds Alarm Over Obama Decision to Move Census to White House

Utah's congressional delegation is calling President Obama's decision to move the U.S. census into the White House a purely partisan move and potentially dangerous to congressional redistricting around the country.

Rep. Jason Chaffetz, R-Utah, told FOX News on Monday that he finds it hard to believe the Obama administration felt the need to place re-evaluation of the inner workings of the census so high on his to-do list, just three weeks into his presidency.

"This is nothing more than a political land grab," Chaffetz said.

Rep. Rob Bishop, R-Utah, told the Salt Lake Tribune that the move "shouldn't happen." He and Chaffetz are trying to rally Republicans "before its too late."

"It takes something that is supposedly apolitical like the census, and gives it to a guy who is infamously political," Bishop said of Chief of Staff Rahm Emanuel, who would be tasked with overseeing the census at the White House.

The U.S. census -- a counting of the U.S. population -- is conducted every 10 years by the Commerce Department. Its results determine the decennial redrawing of congressional districts

As a matter of impact, the census has tremendous political significance. Political parties are always eager to have a hand in redrawing districts so that they can maximize their own party's clout while minimizing the opposition, often through gerrymandering.

The census also determines the composition of the Electoral College, which chooses the president. If one party were to control the census, it could arguably try to perpetuate its hold on political power.

The results of the census are also enormously important in another way -- the allocation of federal funds. Theoretically, a political party could disproportionately steer federal funding to areas dominated by its own members through a skewing of census numbers.

At this point the White House doesn't seem willing to say what Emanuel's role will be in overseeing the census, and White House officials say census managers will work closely with top-level White House staffers, but will technically remain part of the Commerce Department.

But critics say the White House chief of staff can't be expected to handle the census in a neutral manner. Emanuel ran the Democratic Congressional Campaign Committee in the 2006 election, and he was instrumental in getting Democrats elected into the majority.

"The last thing the census needs is for any hard-bitten partisan (either a Karl Rove or a Rahm Emanuel) to manipulate these critical numbers. Many federal funding formulas depend on them, as well as the whole fabric of federal and state representation. Partisans have a natural impulse to tilt the playing field in their favor, and this has to be resisted," Larry Sabato, the director of the Center for Politics at the University of Virginia, told FOX News in an e-mail.

Critics note that the method of counting can skew the census. Democrats have long advocated using mathematical estimates, a practice known as "sampling," to count urban residents and immigrants. Republicans say the Constitution requires a physical head count, which entails going door-to-door.

In 2000, Utah, which has three congressmen, was extremely close to landing a fourth House seat based on U.S. Census numbers, but the nation's most conservative state fell short by a few hundred votes because the Census Bureau wouldn't count Mormon missionaries from Utah serving temporarily overseas.

The GOP took the case to the U.S. Supreme Court, but was ultimately unsuccessful. Utah leaders had hoped the 2010 census would rectify the problem, but now worry that they will lose again if the census is managed by partisans.

When Obama nominated New Mexico Gov. Bill Richardson to be commerce secretary -- he was later forced to withdraw -- he indicated that Richardson would be in charge of the census.

The decision to move the census into the White House was announced just days after Obama named New Hampshire Sen. Judd Gregg, a Republican, to be his commerce secretary. Gregg has long opposed "sampling" by the census and has voted against funding increases for the bureau.

Sabato said moving the census "in-house" will likely set up a situation where neither the Commerce Department nor the White House will know exactly what is going on in the Census Bureau. He said the process is "too critical to politics for both parties not to pay close attention."

"I've always remembered what Joseph Stalin said: 'Those who cast the votes decide nothing. Those who count the votes decide everything.' The same principle applies to the census. Since one or the other party will always be in power at the time of the census, it is vital that the out-of-power party at least be able to observe the process to make sure it isn't being stacked in favor of the party in power. This will be difficult for the GOP since I suspect Democrats will control both houses of Congress for the entire Obama first term," Sabato said.

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