Next Wallace spoke with Gov. Tim Kaine (D-VA), the new Chairman of the DNC. Kaine defended Treasury Secretary Geithner and walked through four elements of Obama’s plan to solve the financial crisis, and said the financial rescue will be more difficult than an economic stimulus plan because it must be globally coordinated.

George Stephanopoulos hosted a roundtable of Sen. Claire McCaskill (D-MO), Sen. Evan Bayh (D-IN), Sen. Richard Shelby (R-AL), and President Tom Donohue of the U.S. Chamber of Commerce on ABC’s This Week. McCaskill said to be patient and let the stimulus package realize effects and that there is a psychological lag to the state of the economy. Shelby declared TARP a failure and said we must not have a TARP II. Donohue disagreed, noting that TARP’s main objective was injecting liquidity, which he said succeeded. Bayh argued that a company too big to fail must operate under a different set of rules and also that the budget bill is too large.

Host David Gregory met with Sen. Lindsey Graham (R-SC) and Sen. Chuck Schumer (D-NY) on NBC’s Meet the Press. Graham began lauding the Fed’s TALF plan to get credit flowing again. Schumer walks through three main points of Obama’s economic recovery plan – stimulus, foreclosure abatement, and financial reform – and blamed the severity of this mess on consumer confidence and eight years of spending more than we earned.

Schumer described two types of nationalization – good nationalization and bad nationalization – and said Republicans are touting the policies of Herbert Hoover and want to return to the “Reagan days.”  Despite having 37 earmarks, Graham wants the spending bill to be vetoed because of earmarks.

White House Budget Director Peter Orszag was first on the lineup for host Bob Schieffer on CBS’s Face the Nation. Orszag described the GOP alternative to the budget as one of tax cuts for the wealthy and corporations, a Medicare program that covers 80% of healthcare cost, and a social security plan that invests in the stock market. He said the Obama administration is like a “relief pitcher stepping into the ninth inning” with the 2009 budget and that they will start fresh with the 2010 budget.

Rep. John Boehner (R-OH) was Schieffer’s other guest. He said the government needs to lead by example by freezing spending.

SEN. MCCAIN ON FNS: Sen. John McCain (R-AZ) was first on FOX News Sunday. Host Chris Wallace began the interview on the economy.  McCain didn’t want to commit to saying the 21% decline in the markets is Obama’s fault – the so-called “Obama Bear” – and that he’ll leave that up to the experts.”  Still, he declared that we are committing massive generational theft through the trillions of dollars Obama is spending.

McCain followed up by arguing that we should have let more banks fail and GM should enter bankruptcy, renegotiate union contracts, and come out leaner and stronger.  On Obama’s housing proposal, McCain described it as similar to the one he campaigned on and will work hard to help it pass.

On the possibility of additional stimulus, McCain hopes we can give more tax cuts and give small businesses incentives, noting the lack of help to what he called a major driver of jobs in America. McCain also decried Obama’s “fundamental policy decisions” supporting protectionism and welfare.

Wallace next brought up the Rush saga, which McCain called a distraction.  Instead of arguing about who is the leader of the party, we should be discussing things like job losses and the economic crisis.

Wallace mentioned that this morning Iran announced they launched a new long-range missile. McCain said its not surprising and called it a “great threat” to Israel and that we’re going to face a serious international crisis.  Also, although the current administration wants to take a different tone diplomatically than the previous administration, McCain said he hopes Obama remembers the lessons learned over the last eight years, including Russia’s aggression against Georgia.

GOV. KAINE ON FNS: Gov. Tim Kaine (D-VA), Chairman of the DNC, was Wallace’s next guest.  Kaine first pointed out that the market had already slid from 14,000 to the 8,000’s prior to Obama inauguration and that the President is working hard to put steps in place to get the economy growing again.

Wallace hit a similar tone as the last two weeks, asking why Treasury Secretary Geithner still has no clear plan to solve the financial crisis. Kaine said that four important elements of this plan are already in place:

1.    A capital cushion for some of the banks
2.    Home foreclosure plan
3.    Get securitization occurring again
4.    Using private investment to start purchasing bad assets

Kaine also noted that unlike the economic crisis to which we can pass a stimulus bill, the financial crisis is worldwide and must be coordinated with other countries

Wallace next brings up executive appointments. He alleges that Obama has 800 senate confirmable jobs to appoint but that only 44 have been nominated, with 28 being confirmed, and, significantly, other than Secretary Geithner not one has been nominated in Treasury, leaving the Treasury understaffed. Kaine said that history shows it takes time to get these appointments through, and that 50 appointments have been made that are not senate confirmable.

Kaine disagreed that Obama should focus entire on the economic crisis and forestall cap and trade plans and tax increases, describing our energy issues, exorbitant healthcare costs, and economic crisis interrelated. He pointed to the role healthcare costs played in GM’s high cost structure as an example.

The Virgnia governor called Obama’s decision to decrease tax deductions on the wealthy one of the “painful decisions” necessary to cut the deficit and that while earmark reform should be enacted, Obama’s budget still has a 25% decrease in earmarks from the 2005 year high.

Finally, Kaine defended the DNC’s decision to put up a billboard in Rush’s hometown of Palm Springs, claiming he would not have approved this decision except Rush said he roots for the President to fail.

SEN. MCCASKILL (D-MO), SEN. BAYH (D-IN), SEN. SHELBY( R-AL), PRES. DONOHUE ON TW: Host George Stephanopoulos hosts a roundtable on ABC’s This Week that includes Sen. Claire McCaskill (D-MO), Sen. Evan Bayh (D-IN), Sen. Richard Shelby (R-AL), and President Tom Donohue of the U.S. Chamber of Commerce.

The show began with Sen. McCaskill saying its too early for a second stimulus package and that since job losses are a lagging indicator its not always the best data point to use when deciding whether more stimulus is needed.  She also pointed to another “lag” – the psychological one. It takes time before people realizing things are getting better, something she thinks will happen near year-end.

Shelby argued that we need to straighten out the banking system and get banks lending again, as long as we don’t have TARP II which he said failed, and that we should close some of the big banks.

Donohue disagreed, noting that TARP had a very important value – injecting liquidity – and that its not practical to close a big bank as they are integrated throughout the global economy. Instead, we should buy those assets away from the banks and put them in an institution that would have both public and private money.

Bayh said that if any organization gets so large that its too big to fail, they need to operate under a different set of rules since some risk is transferred to the taxpayers.  An opponent of Obama’s spending bill, Bayh said it has a substantive problem and perceptual problem:  substantively, it has too much deficit spending – if we just continued last year’s level of spending, Bayh claims taxpayers would save $250 billion over the next 10 years – and perceptually, Bayh points out that while Americans are tightening their belt, it looks like the government is immune from the problems most people face.

Shelby actually supports the spending bill, saying its time to get it behind us and move on.

Steph asks McCaskill why, as an unequivocal opponent of earmarks, she supports the spending bill.  She replied that she’s done everything she can to reject the process of funding through earmarks and that she dropped another bill to reform the process further, but that she can’t sit on the sidelines on every budget.

Bayh walked through a distinction between TARP, the stimulus bill, and the spending bill.  TARP was intended to inject liquidity and the government should receive most of the money back. The stimulus bill was supposed to be focused “like a laser” on stabilizing the economy. The spending bill, however, is just general government spending and is increasing at many times the rate of inflation.  He thinks Congress should show that they are willing to sacrifice for the good of the American people.

Steph next asked Shelby if he can defend the earmark process as he has more earmarks than 40 other Senators. Shelby replied that he could, though he accused Obama and Bush of being the biggest earmarkers.

Donohue declared that if we talked as much about jobs as we talk about earmarks, we’d be better off. He later pointed out that 45% of the spending in the health care business is from the government and that solutions are more challenging because of the increased complexity and cost related to the industry. Still, he supports the President’s efforts, in part because of the need to have information technology play a larger role.

Donohue called Obama’s proposal to lower deductions on the wealthy “dead on arrival.”

Finally, McCaskill said she’s not sure she has the votes to pass the Employee Free Choice Act Employee Job Loss Act, but that its unfair that a secret ballot is necessary to start a union but not to dissolve a union.

SEN. GRAHAM (R-SC) & SEN. SCHUMER (D-NY) ON MTP: On NBC’s Meet the Press, host David Gregory held a discussion between Sen. Lindsey Graham (R-SC) and Sen. Chuck Schumer (D-NY).

Graham begins by saying the goal is to get credit flowing again and that the TALF plan – which uses federal money to finance the securitization of car loans, consumer credit, and potentially CLOs and CDOs, and other asset-backed securities – should help. He notes that some consumers in South Carolina want to buy a car but are having difficulty getting a car loan and that their biggest fear is that they may get laid off in the next six months. Apparently, he expects opening the spigot of consumer credit via the TALF to help, but he fails to explain why a rational lender shouldn’t be wary of lending money to someone likely to be laid off in only six months.

Schumer points out the three legs of Obama’s economic recovery stool:

1.    Major stimulus
2.    Housing / foreclosure plan
3.    Financial reform

He claims that the key to the President’s plan to stem foreclosures is focusing not on the borrower but the servicer who puts together the refinancing, and since two-thirds of servicers have received TARP, they agreed to set up the President’s plan to refinance mortgages.

Schumer blamed this mess in part on consumer confidence but also said the day of reckoning has come for those who have consumed more than they earned over the last eight years, though he conveniently avoided the topic of how the government can consistently spend more than they bring in and not face the same day of reckoning.

On the budget, Graham called it a “radical, reckless exercise that’s scaring the hell out of everybody who is watching this country’s financial situation,” noting that it triples national debt in ten years, assumes 3.2% GDP growth in 2010 when its clear we won’t achieve that level of growth and a 8.2% unemployment rate.

Schumer then compared those Republicans who want to cut government spending and return to the “Reagan days” and to Herbert Hoover who allegedly said the government should do nothing when we were in a recession. (Ed: the stock market returned 11.3% during the “Reagan days,” while the stock market loses 20% during the first month and a half of the “Obama days.” Both Presidents inherited a disastrous economy. History will judge which “days” will turn out better, but I’d bet the house that “Reagan days” will outperform “Obama days.” A new trade on Intrade, perhaps?

He next says that the goal is not to do the financial rescue quickly as Bush and Paulson did, but do it right, and that the evaluations of the banks are underway and will be finished in a couple weeks.

On bank nationalization, Schumer says there’s good nationalization and bad nationalization. Bad nationalization is the government taking over and running a bank, but good nationalization is effectively receivership, when the government clears out management, wipes out existing stockholders, takes the bad assets off the books and recapitalizes the bank with private dollars and a new private management to run it.

In addition, Schumer said he likes stricter limits on executive compensation and “clawbacks,” where the government can recapture previous years’ compensation.

Graham next said he hopes Obama vetoes the spending bill because of its earmarks and that we need earmark reform, though Graham himself has 37 earmarks and defended their use. Schumer argued that we have more accountability and transparency in the earmark process, noting that all earmarks are online with a Senator’s name attached to it. Further, he said that next year, every request will be put online (not just those accept for the bill), these requests will be available much earlier, and no more than one percent of the bill will be dedicated to earmarks.

Finally, Graham said we should stop talking about Rush at the White House and work with Republicans to solve housing and banking.

DIRECTOR ORSZAG ON FTN: Host of CBS’s Face the Nation Bob Schieffer first interviewed Whie House Budget Director Peter Orszag. Orszag began by saying that despite Democrats becoming increasingly wary of Obama’s budget proposal, once people look at the proposal in more detail, they’ll come around to it.

Orszag said to give the stimulus bill some time to act before talking about a second stimulus package and that this mess has been eight years in the making and that it’s going to take some time to work our way out of it.

He then decried what he called the Republicans’ alternative to the budget, which he says includes:
-    $3 trillion in tax cuts for the wealthy and corporations
-    a Medicare program that covers 80% of the cost of healthcare
-    Social security plan in which your social security fund would be invested in the stock market

Orszag followed up saying that the budget bill was supposed to be done last September but that the Obama administration is like a “relief pitcher stepping into the ninth inning,” insofar as the 2009 budget is concerned. He’s looking forward to starting fresh with the 2010 budget which will be “a lot different.”

Instead of a spending freeze which Republicans are calling for, Orszag says we should invest more in education, clean energy, and healthcare.

REP. BOEHNER ON FTN: Boehner was Schieffer’s next guest, and he began by saying we should freeze spending to lead by example and “show the American people that the government can go on a diet as well,” and that he had a stimulus plan that costs half as much yet creates twice as many jobs. He also said his alternative housing plan that provides a $15,000 tax credit for anyone who buys a home would also be a more effective solution.

Boehner next said that the Rush controversy was created by the White House to divert people’s attention from the spending “binge” they’ve been on.

Furthermore, he doesn’t think the government should inject more money in GM until it shows a viable plan for the long-term, otherwise its just “throwing good money after bad.”

Wallace next interviewed Sen. Jon Kyl (R-AZ) and Rep. Paul Ryan (R-WI) to discuss the budget. Ryan said the GOP will propose a full alternative budget in April and that the tax hikes proposed for 2011 still hinders job creation in 2009 in anticipation of this higher cost. Kyl defended his $118 million of earmarks, argued that the GOP should no longer be slapped on the hand for their atrocious spending record while in power, and that Obama’s budget adds more government debt than the cumulative sum of debt incurred from 1789 until the end of the Bush presidency.

On NBC’s Meet the Press, host David Gregory discussed with Secretary of Defense Robert Gates the US policy in Iraq, Afghanistan, Pakistan, and his relationship with Obama. Gates described the mission in Iraq as very different and “principally a training, assistance, and advisory role.” He discussed a few hot spots in Iraq, called Russia a “real challenge” that they don’t understand, and said it would be a “challenge” to stay for Obama’s entire first term.

On CBS’s Face the Nation, host Bob Schieffer interviewing White House Chief of Staff Rahm Emanuel. Emanuel disapproved of the 9,000 earmarks in the budget bill but said Obama will sign it. He called the budget “honest” about the cost of the war and asked if Republicans will continue to subsidize a broken health care system, the oil industry, and the banking industry instead of helping kids go to college.

Emanuel also called the accusation that energy costs will rise under a cap and trade system a “scare tactic” and said 95% of Americans will receive a tax cut. Finally, he said General Motors failed because it produced gas guzzlers and had an outdated health care cost structure.

OMB Director Peter Orszag gave an embarrassing display on ABC’s This Week, failing to explain a key assumption of the budget’s deficit reduction plan, something he is responsible for as director of the Office of Management and Budget. Go below the jump to read more about his embarrassing and opaque remarks.

Rep. Eric Cantor (R-VA) wrapped up FTN by saying we can’t afford trillions of dollars or more debt, small business people want job growth not wealth transfers, he disagrees with Rush Limbaugh that Obama should fail, and that we need to return to a party of inclusion and work together to produce real solutions.

JT CHIEFS CHAIRMAN MULLEN ON FNS. FOX News Sunday host Chris Wallace spoke first with Admiral Mike Mullen, Chairman of the Joint Chiefs.

Adm. Mullen began by confirming that there will be considerable near-term costs as we draw down in Iraq – it costs funds to bring our troops home – plus additional costs for the escalation in Afghanistan.

However, Adm. Mullen admitted he didn’t know where Obama got last week’s estimate that winding down the war in Iraq will save $183 billion, saying the figure didn’t come from him and that he had never seen that number before. Look for Republicans to use this valuable ammunition to bolster their charge that Obama’s deficit reduction plans are filled with bogus numbers at worst, and rosy projections at best.

Adm. Mullen emphasized that plans in Afghanistan are dependent upon a strategic review currently underway. Still, the 17,000 additional troops to be deployed in Afghanistan will be used principally for security. He emphasized the continued desire to bring pressure against Al Qaeda safe havens, particularly in the Pakistan-Afghanistan border. He noted their plans to bring pressure on both sides – from the Pakistani army on one end and Allied forces on the other.

Adm. Mullen emphasized that he is keeping a “very close eye” on North Korea and that he is following their alleged satellite launch carefully.

Despite North Korea’s advances on missile technology, Adm. Mullen said that US anti-missile defense policy will be going under White House review. I wish Wallace would have pressed Mullen more on this – capitulation to the wishes of enemies of democracy like Iran and Russia should only come at substantial gain elsewhere, and I’m curious to know what the US stands to gain by dropping missile defense other than the ire of our allies in Eastern Europe.

Finally, Adm. Mullen says that Obama consistently listens to him and the Pentagon brass, is focused on the threat of terrorist extremists, and that though they may not call it a war on terror, his guidance is to pursue in every possible way the many elements of terrorism that threaten us until they are no longer a threat.

SEN. KYL AND REP. RYAN ON FNS. Wallace next met with Sen. Jon Kyl (R-AZ) and Rep. Paul Ryan (R-WI) to discuss the budget.

Wallace brought up the WSJ editorial that says Obama is “attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back.” Both Ryan and Kyl unsurprisingly opposed Obama’s radical budget, calling it radical in the same way that FDR’s, LBJ’s, and Reagan’s budgets were radical.

Ryan emphasized that the GOP has policy alternatives and will be proposing a full alternative budget in April. Although taxes aren’t scheduled to raise until 2011, Ryan argued that small businesses will still hold back hiring and spending in anticipation of higher taxes.

When asked what is wrong with increasing taxes on the top 2% since income inequality has grown, Kyl first rebuts that taxes will go up on everyone via higher energy costs from Obama’s cap and trade policy and these taxes are regressive since poorer individuals spend a higher percentage of their budget on energy costs such as gasoline and power.

On Healthcare, Kyl points out that throwing more money around does not solve the problem: Americans spend 2.5x more on healthcare than the rest of the world and still we have over 40 million uninsured.

Wallace then brought up a list of Kyl’s earmarks – totaling $118 million – and asked him how he can lecture Democrats on spending. Kyl responded that he can defend each one of them and that the GOP hasn’t been in charge for over 2 years and should no longer be slapped on the hand for their spending record. He emphasized that Obama’s budget adds more government debt than the cumulative sum of debt incurred from 1789 until the end of the Bush presidency.

Finally, Kyl and Ryan pleaded for the American people to reach out to their Congresspeople because they aren’t sure 41 Republicans alone in the Senate can stop the budget, especially to southern Democrats.

SEC DEF GATES ON MTP. Host David Gregory of Meet the Press discussed with Secretary of Defense Robert Gates the War in Iraq, Afghanistan, and how Obama works with his military advisors.

Gates first emphasized that American troops will have a “very different mission” in Iraq, one that is “principally a training, assistance, and advisory role. US forces will be consolidated into a limited number of bases, though there will be a “limited” counterterrorism mandate.

Something Gregory missed is that this “new” strategy sounds similar to the failed pre-surge strategy in Iraq – keeping US forces out of neighborhoods and away from the Iraqis. Gen. Petraeus’s surge strategy that has been a resounding success relied on American forces building working relationships with locals, something simply not possible when the forces are physically removed from Iraqi citizens.

Gregory next showed a clip of Pelosi denouncing Obama’s plans to keep 50,000 troops in Iraq, saying 15,000 or 20,000 should be sufficient. However, Gates said that if commanders on the ground had their wishes, the combat mission would not have ended until the end of 2010. Though he denied that Obama’s 50,000 figure was a “concession” between the liberals who wanted complete withdrawal and the military commanders on the ground, its tough to see this any other way. Gates simply said that since American forces must be out of Iraq by the end of 2011 (unless our accord with the Iraqi government is re-negotiated), 50,000 is just a way station on the way to zero – hardly a rational justification for the proposed troop level.

Though refusing to comment on whether Obama has an overly optimistic view on Iraq, Gates admitted that Obama retained the authority to change the plan for troop withdrawal based on the situation on the ground, but that nobody believes it will be necessary, putting the odds at “fairly remote.”

Next, Gates addressed three potential hot spots in Iraq that Gregory brought up:

- Basra: disagrees that it’s a hot spot, calling it a real success story for Prime Minister Maliki’s offensive last year

- Mosul’s large al-Qaeda presence is clearly an issue

- Arab-Kurd tensions remain a problem

When asked about General Odierno’s comments that he wants around 35,000 troops on the ground in Iraq through 2015, Gates admitted he agrees but that an entirely new agreement must be negotiated to keep that force level past 2011.

Gates commented on Fmr Secretary of State Henry Kissinger’s article in the Washington Post that said a strategy to create a stable central government in Afghanistan “cannot succeed.” Gates said that this exact question is being reviewed in the administration right now, a discussion including Afghans, Europeans, and others.

On Iran, Gates denied that Iraq serves as a distraction from Iran and points out that $35 or $40 oil makes US sanctions far more costly than they would be under $140 oil. He then said that a strategic relationship between the US and Iran is up to the Iranians, that he’s “been in this search for the elusive Iranian moderate for 30 years. [He’s] still looking.”

On Mexico, Gates applauded President Calderon’s efforts in taking the fight to the drug cartels through bypassing the often corrupt police force and using the military. Furthermore, he suggests that the US is in a better position to help the Mexicans than in the past, providing training, resources, reconnaissance and surveillance, and intelligence.

Gates next called Russia a “real challenge” and pointed out that in the Bush administration both the Secretary of State and Defense had PhDs in Russian history and they still “didn’t have a clue” what was going on. Gates said he believes Russia is trying to come back from the “ultimate humiliation” of the collapse of both the Soviet Union and the Russian empire.

To close, Gates said it would be a “challenge” to stay for Obama’s entire first term but that he doesn’t have a certain date in mind for when he’d leave.

EMANUEL ON FTN. On CBS’s Face the Nation, host Bob Schieffer interviewed White House Chief of Staff Rahm Emanuel.

Rahm began his appearance by defending the 9,000 earmarks that cost $8 billion in the budget by pointing out that two major bills were passed without earmarks – the stimulus package and the children’s healthcare bill, and that the earmarks we do have in this bill are more transparant and there’s more transparency.

Still, he says Obama wants serious reductions in the number of earmarks and doesn’t like the current level in the budget bill.

On the size and growth of government under Obama and the budget proposal, Rahm had three points:

• Obama inherited a $1.7 trillion deficit and $4 trillion of new debt

• The budget is honest – about the cost of the war and the alternative minimum tax

• Will Republicans continue to subsidize health care while lack of coverage increases? Will they continue to subsidize the oil industry? Will they subsidize the banking industry rather than help kids go to college?

Next, Emanuel challenges the Republicans to propose, not just criticize, and asks if we will continue the path of the last 7 years that got us to a culture of rising deficits and more consumer spending. This budget, he said, fundamentally changes the culture and says we’ll become a society that invests and saves.

Emanuel called the accusation that energy costs will go up under a cap and trade system a “scare tactic” and repeated a common adminstration talking point (OMB Director Orszag repeats the same line on TW): instead of addressing the validity of higher costs under cap and trade, Emanuel changes the subject and says 95% of Americans will receive a tax cut.

Emanuel then described Rush Limbaugh as an intellectual force in the party and complimented him for his bold vision and honesty, though he clearly disagrees with Rush that its good for America should Obama fail.

General Moters failed for producing gas guzzlers and an outdated health care cost structure, Emanuel declared, and GM has a panel of experts (lined up by the government) to help them restructure. Conveniently for Rahm, Schieffer failed to bring up the role of unions in their “outdated health care cost structure.”

On the Iraq withdrawal policy, Emanuel said the 50,000 remaining troops will focus on training, protecting our diplomats and civilians in Iraq, and some counterinsurgency.

Following up on Schieffer’s monologue on Mexico last week, Rahm said Obama and President Calderon of Mexico are committed to securing the border – stopping the guns from the US going heading south and the drugs from Mexico going north.

OMB DIRECTOR ORSZAG ON TW. On ABC’s This Week, host George Stephanopoulos first talks with OMB Director Peter Orszag. Orszag begins by describing two trillion dollar gaps – the trillion dollar gap between how much the economy is producing and how much it could produce, and the trillion dollar deficits. The stimulus package is intended to lower the first gap and the budget intends to lower the second.

Steph points out the White House’s rosy projections that the economy will fall only by 1.2% in 2009 compared to the average private forecast of 2.0%, though Orszag points out that his forecast was the same as the CBO’s (though their views on the stimulus were quite different).

Steph then notes that most of the deficit reduction in the budget comes from assuming that the war in Iraq would continue at the same level for several years. Orszag responded, “Well, let’s, let’s be clear about this. We’re going to spend about $140 billion on the war this year. The president is committed to getting, to winding down the war. That’s going to save money. It’s pretty clear.”

One thing is very clear – and it’s not Orszag’s response. Steph challenged one of the key assumptions of Obama’s deficit reduction plans and Orszag’s response was opaque at best. Orszag runs the Office of Management and Budget and he couldn’t explain a fundamental assumption of his budget. The answer is fairly easy to explain – give the amount the Bush administration planned on spending in 2009, the amount Obama plans to spend, and the difference is the net savings. He failed to give the first and the last figure. I don’t care if you’re Republican or Democrat, responsibility requires organizational leadership to understand the most fundamental of assumptions.

Next, Orszag responds to Newt Gingrich’s charge that cap and trade raises energy costs by, as expected, touting that 95% of Americans receive tax cuts in the new budget.

Orszag’s response is too ludicrous to pass up, so I’ll quote: “I just reject the theory that the only thing that drives economic performance is the marginal tax rate on wealthy Americans and the only way of being pro-market is to funnel billions and billions of dollars of subsidies to corporations.” The only thing??? I reject it too, Mr. Orszag, just as I reject every other straw man you choose to throw up. Find me one Republican official who believes either point and I’ll send you $250.

Steph presses Orszag on the cost of cap and trade and he finally admits that cap and trade will increase prices for most Americans, though he claims most Americans will get other benefits in the budget that will offset.

Steph really starts hammering Orszag to give him straight answers – after waffling around, Orszag says that if they don’t get a revenue stream from cutting the deductions of charitable contributions by the wealthy, they’ll have to get the revenue from other sources to pay for Obama’s health care plan. He refuses to say with certainty as to whether the administration will follow through with their health care plans if its funded by the deficit, but his choice of words indicated that health care reform is top priority and deficit reduction second.

To close the interview, Orszag said he’s open to having a health care focused commission, but refused to say with certainty.

REP. CANTOR ON TW. Republican Whip Eric Cantor (R-VA) is Steph’s next guest.

He began by saying we cannot afford to throw trillions of dollars on the backs of Americans and that our priority should be protecting and creating new jobs. He says that small business people are hurting and want policies that stimulate job growth, not wealth transfers.

Cantor said nobody, Republican or Democrat, wants the President to fail.

He next responds to Gov. Huntsman (R-Utah) who said that the GOP needs to change their position on the environment and gay rights to reach a younger audience. Cantor said that we must return to a party of inclusion and that we need to work together to produce real solutions.

Finally, Cantor said he disagrees with Rush Limbaugh that the President should fail, but that instead we need to put forward solutions to the problems people are facing today.

This Week (ABC): Host George Stephanopoulos talks to OMB Director Peter Orszag and Republican Whip Eric Cantor, likely about Obama’s proposed budget. Karl Rove also joins Steph’s roundtable.

Meet the Press (NBC): Moderator David Gregory interviews Secretary of Defense Robert Gates for his first TV interview as a member of Obama’s administration.

Face the Nation (CBS): Host Bob Schieffer will speak with White House Chief of Staff Rahm Emanuel.

News of the week likely to be discussed:

• Barack Obama’s speech to Congress
• The budget
• Obama’s policy to withdraw from Iraq
• The US taking a substantial ownership stake in Citigroup
• The North Korean Missile Crisis

Two topics I hope the moderators bring up:

• The wisdom of proposing tax hikes during the worst month for the market since 1933
• Chuck Schumer’s proposal to force states to accept stimulus funds against their wishes

FOX News Sunday host Chris Wallace began the Sunday Shows with an interview of Republican Govs. Mark Sanford (SC) and Tim Pawlenty (MN) and Democratic Govs. Ed Rendell (PA) and Jennifer Granholm (PA). Sanford defended his opposition to receiving bailout funds saying the government doesn’t create jobs and the strings attached to the funds earmarked for unemployment cost are unacceptable. The other governors plan to accept the money, Rendell and Granholm both enthusiastically.

Gov. Rendell admitted we may not be able to afford the long-term cost of the stimulus plan, but said he doesn’t mind because his people are suffering. Sanford quickly reminded Rendell that it was similar short-term thinking that caused this mess.

On NBC’s Meet the Press, Louisiana Governor Bobby Jindal and host David Gregory discussed Jindal’s refusal to accept portions of the stimulus money his state is eligible to receive, such as $100 million for unemployment cost, citing the long-term impact of the strings attached to be higher business taxes. Gregory and Jindal moved to a debate over a supply-side, tax-cut-focused plan versus a demand-side plan that emphasizes spending. Jindal points out that job growth and productivity comes from private industry and not government.

Florida Governor Charlie Crist was next on MTP, emphasizing his disagreement with Jindal on the stimulus plan and lauded it as a way to help Florida. Crist was much cooler on Obama’s plan to stem foreclosures, calling it a “good start” but refuses to support the proposal until he gets more details.

CBS’s Face the Nation began with host Bob Schieffer interviewing Housing Secretary Shaun Donovan who described the three parts of the plan to halt foreclosures – lowered mortgage rates via a backstop to Fannie Mae and Freddie Mac, refinancing underwater mortgages, and loan modifications. He said the plan is based on the notion that these mortgage issues need to be worked out prior to bankruptcy.

Schieffer next interviewed Govs. John Corzine (D-NJ), Ted Strickland (D-OH), and Mitch Daniels (R-IN). Daniels refused to take a position on the stimulus plan, saying its not his role to criticize either side. Corzine remarked that the stimulus will make a “big difference” in the economy, and Strickland said he’s happy to receive the stimulus funds. On the auto bailout, Strickland said that even Honda has lobbied for government assistance for their competitors.

California Governor Arnold Schwarzenegger concluded the Sunday Shows with his appearance eon ABC’s This Week. The Governor and host George Stephanopoulos discussed Schwarzenegger’s attempts to be nonpartisan with a push for open primaries, his bipartisan support of the Obama stimulus plan, and his philosophy that it “doesn’t really matter if you’re a Republican or Democrat.”

One item noticeably absent from the discussion was bank nationalization, something clearly on the minds of economists and market participants alike.

GOV. PAWLENTY (R-MN), GOV. SANFORD (R-SC), GOV. GRANHOLM (D-MI), AND GOV. RENDELL (D-PA) ON FNS

FOX News Sunday host Chris Wallace interviewed two Republican governors – Mark Sanford (R-SC) and Tim Pawlenty (R-MN) – and two Democratic governors – Ed Rendell (D-PA) and Jennifer Granholm (D-PA).

Wallace launched into the program by asking Sanford why he doesn’t want the stimulus money when his state has the third highest unemployment rate in the country. Sanford replied that the government doesn’t create jobs and that he opposes the strings attached with the money destined to help ease states’ cost of unemployment.

Granholm, whose state of Michigan has the highest unemployment rate, disagrees, saying the discussion isn’t about philosophical theory but real people who from no fault of their own are laid off.

Though Pawlenty claims to dislike the bill, he’s happy to accept his state’s portion of the stimulus bill, noting that Minnesota is a net subsidizer – for every dollar his state contributes to the Federal Government, they get 72 cents back. He also doesn’t mind the strings attached to the funds for unemployment cost, claiming that Minnesota has already enacted most of the enhancements the government requires to accept the funds.

Rendell has the most to gain from the stimulus bill – $16 billion – the most of any state. Rendell has “no doubt” that the infrastructure dollars create jobs over the short-run, but he admitted uncertainty about the long-term feasibility of the stimulus package. It may not fix the economy over the long-run and the government may not be able to cope with the future higher unemployment cost, but, he declared, “I don’t care. My people are suffering.”

Sanford quickly reminded Rendell that this is the same king of short-term thinking that got us into this mess.

Wallace returned to substantive issues by asking how quickly the governors can put the money to use and how they will safeguard against waste. Rendell, Granham, and Pawlenty all affirmed they can immediately spend, and Rendell and Granham both accepted personal responsibility for ensuring the money is used wisely.

Sanford argued that the money is already being wasted, whether its money for the park service or the upgrade of digital television, and Pawlenty mentioned Hillary Clinton’s recent trip to China and her gratitude for the Chinese purchasing our debt. He then said that the day that the Chinese and sovereign wealth funds stop buying our debt, we’ll have the equivalent of the mortgage crisis in the federal government.

On Obama’s efforts to stem foreclosures, Sanford remarked that it’s a horrible idea. 95% of people are struggling but paying their mortgages and “playing by the rules.” He mentioned three negative effects:

1. The fact that somebody down the street can get help for their mortgage may encourage others to stop paying.
2. The danger of judges rewriting contracts
3. Giving money to Fannie Mae and Freddie Mac who are part of the cause of the problem

Rendell responded that we are giving money to banks who were also part of the problem, but that its necessary to avoid a systemic collapse. Pawlenty suggested the government should simply make lower interest rates available rather than the “scary” notion of the government forcibly rewriting contracts.

The bailout of the auto industry was the next topic, which Granholm rigorously defended as expected, placing the blame of the ailing industry at the feet of consumer confidence and arguing that since every other country is supporting their auto industry, we should too. She then called Sanford an “outlayer” [sic] for his opposition to the bailout, to which Sanford responded by saying he’s more in touch with main street and claiming that there have been no operational changes necessary for the survival of the Big 3.

Granholm took difference, pointing to “enormous” reform efforts, and when Pawlenty said the unions had not cut enough, Granholm claimed unions agreed to a 50% cut in starting wages and said we should enact universal health care, placing the burden of health care on the taxpayers instead of corporations as other countries do.

The group then commented on Obama’s fiscal responsibility summit tomorrow, with Pawlenty saying the market will dislike his plan to raise taxes, Rendell pointing out that the economy grew after Clinton raised taxes, and that getting troops out of Iraq will help cut the deficit. Finally, Sanford noted that the operational deficit is just a fraction of the entitlement deficits.

JINDAL ON MTP

On NBC, Meet the Press host David Gregory spent the morning with Republican Governors Bobby Jindal (Louisiana) and Charlie Crist (Florida) discussing the stimulus bill. Jindal promises to review each new dollar coming to Louisiana from the stimulus package, make sure he understands the conditions and the strings, and determine if its good for Louisiana.

Jindal pledges to reject anything he considers bad for the state, such as almost $100 million in unemployment benefits. This is temporary money requiring permanent changes that would raise taxes on Louisiana businesses, Jindal argued.

Louisiana Senator Mary Landrieau criticized Jindal in Saturday’s New Orleans Times-Picayune, saying he should work to obtain as much funding from Washington as possible, but Jindal responded that the permanent increases in business taxes outweight the short-term benefit from the additional funds. Still, the governor plans to accept funds destined for other purposes, such as roads.

Although framed differently, the discussion moved to supply-side vs. demand-side economics. Round one focused on whether tax cuts are the appropriate strategy since the median income failed to increase following the Bush tax cuts. Jindal pointed out that tax cuts during the administrations of JFK, Reagan, and Bush all created jobs, and that the current spending is debt our children will have to pay, and instead of printing more money, our efforts should be to help the private sector grow.

Round two dealt with the government’s role in creating demand when the private sector doesn’t grow. Gov. Jindal said that we can’t print enough money to move the economy and that tax cuts should be combined with stimulus money in a targeted, effective and bipartisan way. The Louisiana governor emphasized that we escape this mess through private sector growth and supports policies that speed this process (something RedState contributor Francis Cianfrocca has been harping on for some time; see here, here, here, and here).

On the future of the GOP, Jindal says the party was “fired with cause” for defending spending and corruption that should never have been tolerated. Instead, GOP leaders should offer conservative solutions, working with the President when possible, but standing on principle when there is disagreement and proposing alternative solutions.

Jindal concluded by saying he plans to run for re-election as governor in 2011 and would likely serve the full term.

GOV. CRIST ON MTP

Crist disagrees with Jindal on the stimulus plan, supporting Obama and the bill before passage and lauding it as a way to help the state get through the tough economy. He has “looked into the eyes” of people in the unemployment offices who need help (though no word on whether he got a sense of their soul), and the stimulus provides these people with assistance.

Crist denied being an “Obama Republican,” a clear reference to the Reagan Democrats of the 80’s, and said that he’s a Florida Republican willing to take ideas from anybody regardless of party.

On Obama’s plan to stem foreclosures, Crist said it may be a “good start” but that he doesn’t support it until he reviews the details, admitting that it may not halt the slide of housing prices.

When asked who the leader of the party is, Crist said “the people” and that he wasn’t sure if we had had one national leader, but then followed up to say that Obama is the national leader. Crist said the key to power for the GOP is to do what’s right for the people, take a compassionate approach, ensure fiscal discipline, and use common sense.

HOUSING SECRETARY DONOVAN ON FTN

On CBS’s Face the Nation, host Bob Schieffer first interviewed Housing Secretary Shaun Donovan who said the foreclosure plan is designed to make sure the folks who took advantage of others – lenders, speculators, and flippers – are not eligible, and that only owner occupants are.

Donovan described the three parts of the plan:

1. Mortgage rates: the largest part of plan with up to $200 billion serving as a backstop to Fannie Mae and Freddie Mac to help lower interest rates
2. Refinance underwater mortgages: Allow folks who play by the rules and make every payment but are underwater b/c of lower housing values to refinance. The loan must be between 80% and 105% Loan-to-Value (LTV)
3. Loan Modification – $75 billion – directed at people struggling the most

Donovan argued that job losses drive foreclosures and that people are losing homes out of no fault of their own. This argument has been the consistent response among the proponents of the bill on the Sunday Shows (particularly Govs. Granholm and Schwarzenegger) when asked if this plan is unfair to those who pay their mortgages on time. Their response consistently points out that speculators will not benefit but fails to address the moral hazard of rewarding those homeowners who purchased a larger home than they could afford (see: Chicago Tea Party).

Next, Donovan claimed that this plan stops three or four million of the estimated six million foreclosures that would occur without the plan. Furthermore, he emphasized that mortgage issues need to be worked out prior to bankruptcy and that loan modification is one of the best ways to accomplish this.

GOV. CORZINE, GOV. STRICKLAND, GOV. DANIELS ON FTN

Next on FTN were Govs. John Corzine (D-NJ), Ted Strickland (D-OH), and Mitch Daniels (R-IN). Corzine strongly supported the stimulus package, saying it’ll make a “big difference” in the economy. Strickland also emphasized the importance of the bill, saying Ohio needs these resources and is happy Congress and the President is providing them. Daniels too will take the money even though Indiana has a balanced budget and plans to invest it in the “future of the state.”

Strickland supports the auto bailout and says the collapse of one auto company would have a “huge impact,” not only on the Big 3 but on all companies. He mentioned that Honda has lobbied for help for their competitors.

Daniels concluded the discussion by refusing to take a position on the stimulus plan, saying it’s not his role to criticize either side.

Schieffer ended the show by highlighting a dangerous situation developing in Mexico – a surging drug cartel. Nearly 1,000 people died last year in the drug war, and cartels profited $25 billion. Schieffer notes that in some areas the cartels have “all but replaced” the Mexican government.

SCHWARZENEGGER ON TW

George Stephanopoulos interviewed Gov. Arnold Schwarzenegger (R-CA) on ABC’s This Week.

Steph first noted the criticism Schwarzenegger receives from both sides of the aisle. The governor retorted that when you’re in the center, you get attacked from the left and the right and that what is good for the people is not always good for politics.

However, reneging on a promise not to raise taxes is ALWAYS bad politics and California Republicans are hammering Schwarzenegger for reversing his campaign pledge to kill the car tax. The governor defended the tax hikes by pointing to Ronald Reagan’s tax increases when he served as Governor of California.

He next offered to take South Carolina’s share of the stimulus if Gov. Sanford rejects it, calling the stimulus bill “a terrific package.”

Steph asked Schwarzenegger what you say to a homeowner who did everything right and didn’t buy too much house, and the governor continued the talking point that job losses are the driver of foreclosure: “People just need a little bit of help.”

Next, Steph reminded Schwarzenegger that since he says that he came to the US out of hatred of socialism, how he feels about the US facing nationalization of the bank industry. The Governor said he likes the current system of the US taking over only failed banks and dislikes the European method where the government may own part of the bank.

When reminded that the TARP gives the US Government substantial ownership of banks, Schwarzenegger tried to recover by emphasizing the importance of stability and that “no one here is right or wrong.”

The governor continued his diatribe on no one being right or wrong: “It doesn’t really matter if you’re a Republican or Democrat.” What does matter to the California governor are roads, high speed rail, and other infrastructure, and for the GOP to return to power, he says its simple – listen to the people – and if the nation wants universal health care, the party should abandon its principles and give them universal health care. The governor also supports open primaries in California despite opposition from both parties.

Any fans of Governor Schwarzenegger should look for him in Sylvester Stallone’s new film The Expendables. Although rumored otherwise, the film is not about Schwarzenegger’s view of Conservative principles but an action film starring Jason Statham and Jet Li.

FOX News Sunday Host Chris Wallace launched this week’s round of talk shows, speaking with Obama Senior Advisor David Axelrod who claimed the stimulus package will improve the unemployment situation, or slow its ascent, but also admitted that aspects of the stimulus may not have an immediate effect.

Next up for Wallace was Google CEO Eric Schmidt and Moody’s Economist.com Chief Economist Mark Zandi. Both were thankful for the Savior’s Obama’s quick action, though Zandi lamented the relatively small size of the stimulus package. Zandi thinks Obama over-estimates its impact, creating 2 or 2.5 million jobs rather than the 3.5 million the administration claims. Finally, Zandi thinks lower mortgage payments through interest rate reductions won’t be enough to bolster the housing market descent and that principal reductions are necessary.

Round Two for Axelrod took place on NBC’s Meet the Press where he repeated many of the same talking points from FNS. Gregory hammered him on the Buy America provisions and Axelrod just repeated, “The language is consistent with our treaties.” Axelrod also affirmed Obama’s desire to maintain a private banking sector.

On CBS’s Face the Nation, White House Press Secretary Robert Gibbs said the President shares the country’s outrage over executive compensation on Wall Street, but when asked whether Obama plans to enforce Congress’s tougher restrictions, Gibbs just replied: Obama is going to sign the bill into law.

Rep. Barney Frank and Sen. Richard Shelby followed Mr. Gibbs on FTN, with Frank offering a meek defense of Geithner’s vague financial rescue plan and Shelby claiming Geithner wasted four hours of the Senate’s time.

Finally, ABC’s This Week consisted of a roundtable of Sens. Charles Schumer and Lindsey Graham and Reps. Peter King and Maxine Waters. The group discussed the stimulus package, with Schumer lauding the bill, Graham and King deriding its partisan taste and lack of tax cuts, and Waters praising the three Republicans who broke ranks to support the stimulus package. Next the group discussed the possibility of bank nationalization, with both Democrats sounding more wary of the idea than the Republicans.

AXELROD ON FNS. FOX News Sunday host Chris Wallace spoke first with Obama strategist and Senior Advisor David Axelrod. Axelrod said to expect the rise of unemployment to be retarded from the stimulus plan.

Still, there remains uncertainty as to what will be retarded more – the unemployment rate or Obama’s bipartisan expectations. Despite garnering just three Republican votes, Axelrod notes a positive effect of just having bipartisan dialogue, something he claims hasn’t happened in DC for the last eight years.

Axelrod expressed the importance of a thriving auto industry and said that all parties involved must agree to significant concessions. When asked about the breakdown of labor union talks, he responded that he wants to speak to the auto industry executives before making a statement.

Despite divulging none of the specific plans on a financial rescue as Obama promised, Axelrod said Geithner is doing a “spectacular job.” Wallace hammers Axelrod on why Geithner still does not have a specific plan after three months in office, but Axelrod takes difference, saying there is a plan in the public-private fund to purchase toxic assets, and promises that “we’ll get this right.”

ERIC SCHMIDT AND MARK ZANDI. Wallace next discussed the effectiveness of the stimulus plan and the banking rescue efforts with Google CEO Eric Schmidt and Moody’s Economy.com Chief Economist Mark Zandi.

Zandi argued that the plan, while useful, is not big enough. He thinks Obama over-estimates the impact of the stimulus package on jobs, estimating 2 or 2.5 million jobs rather than Obama’s estimate of 3.5 million. He also says that the infrastructure spending will take longer than the White House assumes.

Schmidt says that action is needed now and is thankful we passed the stimulus bill because the business community wants something immediate. On the other hand, he favors deliberation over Geithner’s financial market rescue, saying the numbers are so large that he’d rather get the regulation right. Schmidt didn’t elaborate on how the $787 billion of the stimulus package – the largest economic package in US history – is too small to deserve the same level of deliberation as the financial rescue plan.

Zandi said Geithner’s lack of details is disheartening, but the markets will be fine if the White House provides information in the coming weeks.

Finally, Obama plans to announce a $50 billion foreclosure plan in the middle of this week. Zandi said that its not enough to reduce mortgage payments by reducing the interest rate or lengthening the term of the loan, but should focus on writing down the principal of the loan.

AXELROD ON MTP. Round Two for David Axelrod came from David Gregory on Meet the Press. Axelrod repeated his talking points from FOX News Sunday on the next stage of the auto bailout and the stimulus plan.

When asked about the Republican opposition, Axelrod said that Republicans continue to hold to the failed policies of the last eight years that focused on tax cuts. He affirmed his statement on FNS, stating that “Bipartisanship isn’t measured just by votes, but by dialogue.”

Gregory hammered Axelrod on the Buy America provision, particularly on the point that India and China will not be permitted to bid on certain projects. When pressed, Axelrod continued to repeat the same phrase: “The language is consistent with our treaties.”

Gregory asked about bank nationalization, and Axelrod emphasized that while the administration is keeping its options open, their desire is to have a strong private-sector banking system.

Finally, Axelrod said that “to his knowledge,” a disagreement over the politicization of the census was not at the heart of Sen. Gregg’s withdrawal from his Commerce Secretary nomination. Axelrod said that Obama’s third nomination for Commerce Secretary should be coming shortly, though he refused to say if the announcement would come this week, and the administration is still reviewing candidates for the top post at Health and Human Services, a job from which Tom Daschle withdrew his name due to his failure to pay taxes.

Axelrod finished the interview by thanking President Bush, saying he “could not have been more generous in the transition,” though wishing VP Cheney were more accommodating.

ROBERT GIBBS ON FTN. Bob Schieffer, host of CBS’ Face the Nation, spoke first to White House Press Secretary Robert Gibbs.

On why the stimulus bill will be signed in Denver, Gibbs said that its part of an effort to show people across America what is inside the bill and help them focus on the long-term investments in this bill that will help economic growth. He said that the aid given to states and the tax cuts will hit the economy very quickly, while the rest may take longer.

Schieffer asked what sign the administration uses to determine when the economic situation is improving, and Gibbs’ first and only response is jobs. Gibbs notes that we’ve lost 3.5 million jobs during this recession, and he claims this stimulus package will add or save 3.5 million jobs to the economy. He continued Axelrod’s mantra that bipartisanship is more than votes, it’s dialogue, and the administration will continue to reach out to Republicans. Gibbs also repeated Axelrod’s statement on Sen. Judd Gregg’s withdrawal from his nomination for Commerce Secretary, describing the Senator as “independent” and that it may be tough for him to serve in this or any cabinet.

Gibbs said that the President agrees with Congress on the outrage over executive compensation, but when Schieffer asked if Obama will enforce the compensation provisions, Gibbs only responded that he is going to “sign the bill into law.”

REP. FRANK & SEN. SHELBY ON FTN. Schieffer’s next guests were Rep. Barney Frank (D-Mass.) and Sen. Richard Shelby (R-A.L.).

Rep. Frank outlined the importance of making sure the public knows TARP part 2 and the stimulus package are being handled differently than by the Bush administration. On Geithner’s bank rescue plans, Frank said there were two things he didn’t give specifics on – how to deal with toxic assets and foreclosures – and the second will be rolled out this week. Frank insists Geithner was not as opaque as some are charging, and that we should not read into the market decline on Tuesday as an indication of the quality of Geithner’s plan.

Sen. Shelby said Geithner has gotten off to a bad start and wasted four hours of Senate time. He further noted that many banks are like the “walking dead” and they need to be closed now. Shelby concludes by noting his concern over the role of the Fed.

SEN. SCHUMER, SEN. GRAHAM, REP. KING, AND REP. WATERS ON TW. On ABC’s This Week, host George Stephanopoulos held a panel with Sen. Charles Schumer (D-N.Y.), Sen. Lindsey Graham (R-S.C.), Rep. Peter King (R-N.Y.), and Rep. Maxine Waters (D-Cal).

On the fiscal stimulus plan, Schumer says the bill will do three things:

- Keep or create 3.5 million jobs

- Put money in the hands of the middle class

- Build infrastructure

Graham points out that only $3 billion of tax cuts go to small business while 75% of Americans work for small business. King notes that just 18% of the bill is comprised of new tax cuts. Though some, including Sen. Graham, claim 27%, King notes that 9% is from a fix of the Alternative Minimum Tax which would have taken place anyway without the stimulus plan. In addition, he points to a CBO Report that says the stimulus may help in the short term but will hurt the economy more in the long-run than if Obama were to do nothing.

Schumer thinks differently, describing the danger of a deflationary spiral and how the stimulus package helps avoid it.

King expressed outrage that not one Republican in the House could contribute to the bill. Waters and Schumer disagreed, pointing out that the two biggest amendments were Republican amendments ($70 billion for Sen. Grassley’s AMT fix and $30 billion for Sen. Isakson’s tax credit for home purchases, though Isakson’s plan was later gutted).

Sen. Graham came down hard: “If this is going to be bipartisanship, the country’s screwed. There is nothing about this process that has been bipartisan.”

The South Carolina Senator then disagreed with his Governor, who announced he is considering refusing federal bailout money. Graham said that South Carolina should take the money because South Carolina will still have to pay it back. The eight billion dollars that South Carolina is eligible to receive would flow to other states, and South Carolina taxpayers would still foot the bill to pay this money off.

Steph threw out the idea of bank nationalization, and interestingly the Republican Graham seemed more open to nationalization than Waters or Schumer. Waters said that the word nationalization “scares the hell out of people.”

Schumer gave a moderate defense of Geithner’s financial rescue, saying:

- It’s big and bold

- He doesn’t go for the mistake of Paulson – a one-size-fits-all approach that every bank needs bad assets taken which transformed to every bank needs capital injections

- Instead, each bank is inspected and inspectors determine what solution is needed

- TALF: the Fed is using its own capital to bolster lending by going right to the consumer via credit cards, small business loans, etc. This approach seems to work for the commercial paper market and interbank lending, and this approach can be used on a broad basis.

Unfortunately for Schumer, the TALF is not a new concept and was around long before Geithner’s revelations on Tuesday.