Diary

MI Morning Update 2-7-09

633 Days
until Election Day

February 7,
2009

QUOTE OF THE DAY:

Reagan described the Soviet system as “an evil empire” and predicted the Soviet Union would end up on “the ash heap of history”.
President Ronald Reagan

MORNING UPDATE:

RNC TRANSITION….we finished another day of meetings at the RNC with the Transition Team. I was assigned e-campaign and technology as my area of responsibility. Chairman Steele made it clear he wants us to not only catch up with what the Democrats and the Obama campaign did this time around, but anticipate and be ready for what’s next. We have scheduled a Technology Summit for next week Friday at the RNC where we will invite folks from all over the country for a brainstorming session on how to proceed. Details to follow.

RONALD REAGAN’S 98th BIRTHDAY AND PREMIER…last night we celebrated Ronald Reagan’s 98 birthday with the premier showing of “Ronald Reagan: Rendezvous with Destiny” at the Kennedy Center in D.C. Newt and Callista Gingrich hosted the event which included Senators Fred Thompson and George Allen, George Will, David Keene, Ollie North and many others from the Reagan administration as well as movement conservatives. It was a great tribute to Reagan and a great chance to see old friends from across the country.

Connect to the Michigan Republican Party through Twitter and recieve all the latest updates as they come in at: http://twitter.com/migop

MRP STATE CONVENTION…Just a quick note to let you know that the Michigan Republican’s website has been updated with State Convention information.   For your reference in directing potential delegates to the site, the address is: http://www.migop.org/event.asp.

CPAC 2009 Timeless Principles, New Challenges…Register today for the largest gathering of conservative grassroots activists in the country! The American Conservative Union Foundation is pleased to invite you to participate in the nation’s largest annual gathering of conservatives. The 36th Annual Conservative Political Action Conference (CPAC) will be held on February 26-28, 2009. http://www.cpac.org/.

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THE REST OF THE STORY:

No further commentary today

TODAY’S TOP STORIES

The following
stories and more are available at my
Articles of Interest online.

CBO: Obama stimulus harmful over long haul

Stephen Dinan

President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.


Senate Reaches $780 Billion Compromise Package

By GREG HITT and JONATHAN WEISMAN

WASHINGTON — Senate Democratic leaders struck a deal late Friday with three moderate Republicans on a leaner economic-recovery package, clearing a path to Senate passage of one of the most ambitious fiscal stimulus plans in decades.

The deal came after five days of partisan gridlock, and followed news earlier Friday that employers had slashed nearly 600,000 jobs in January. Senators valued the compromise plan at $780 billion — well less than the $930 billion plan the Senate debated most of the day.

No final vote on the package was expected before Monday.

Not counted in that estimate are several popular tax breaks — including measures to encourage auto and home sales — that were approved this week on the Senate floor and are expected to be incorporated into the legislation. Those could push the final cost of the Senate plan closer to $820 billion.



The Fierce Urgency of Pork

By Charles Krauthammer

"A failure to act, and act now, will turn crisis into a catastrophe."

— President Obama, Feb. 4.

Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill.

And so much for the promise to banish the money changers and influence peddlers from the temple. An ostentatious executive order banning lobbyists was immediately followed by the nomination of at least a dozen current or former lobbyists to high position. Followed by a Treasury secretary who allegedly couldn’t understand the payroll tax provisions in his 1040. Followed by Tom Daschle, who had to fall on his sword according to the new Washington rule that no Cabinet can have more than one tax delinquent.

The Daschle affair was more serious because his offense involved more than taxes. As Michael Kinsley once observed, in Washington the real scandal isn’t what’s illegal, but what’s legal. Not paying taxes is one thing. But what made this case intolerable was the perfectly legal dealings that amassed Daschle $5.2 million in just two years.



Stimulate the economy, not government

By Miitt Romney

(CNN) — These are extraordinary times, and like a lot of Republicans I believe that a well-crafted stimulus plan is needed to put people back to work. But the Obama spending bill would stimulate the government, not the economy.

We’re on an economic tightrope. The package that passed the House is a huge increase in the amount of government borrowing. And we’ve borrowed so much already that if we add too much more debt, or spend foolishly, we could invite an even bigger crisis.

We could precipitate a worldwide crisis of confidence in America, leading to a run on the dollar or hyperinflation that wipes out family savings and devastates the middle class.



From Awful to Merely Bad: Reviewing the Bank Rescue Options

By R. GLENN HUBBARD, HAL SCOTT AND LUIGI ZINGALES

When Henry Paulson, President Bush’s Treasury secretary, first introduced the Troubled Asset Relief Program (TARP) in Congress last September, we cautioned against using government funds to buy mortgages and mortgage-related securities from banks. After the Emergency Economic Stabilization Act was signed into law in early October, the Treasury decided not to buy these assets. Instead, it used the first $350 billion of TARP funds to inject capital first into nine systemically important troubled banks, and later into insurer AIG (as part of a refinancing) and auto makers General Motors and Chrysler.

This approach seems to have achieved (albeit at a high cost for taxpayers) its principal objective of avoiding a massive collapse of the financial system. But it has not yet resulted in an increase in bank lending or the attraction of new private equity to the banking system, both of which are important to reviving the economy. There now appears to be active consideration of using TARP funds to buy "bad assets" from the banks. Major problems with so doing remain.

The central issue is how to price the assets. When the subprime crisis hit in the summer of 2007, the Treasury’s first response was to encourage the private sector to create a fund — the so-called Super SIV (structured investment vehicle) — to buy mortgage-related assets. This proposal foundered due to the difficulty of setting a price for these assets, which come in complex and incomparable varieties. If Treasury pays close to par, it is paying far too much. If it pays current prices, no one will sell because of the adverse impact on their capital. If it pulls a price out of a hat, it will be acting arbitrarily.



Jobs Down, Stocks Up?

By Lawrence Kudlow

How do you explain it when jobs plunge and stocks surge? That’s what happened Friday as the January employment report revealed a disastrous 598,000 drop in payrolls. Actually, the job loss was 664,000 if you count downward revisions to the prior two months. Meanwhile, the unemployment rate moved up from 7.2 to 7.6 percent. So there’s no sugar coating it: It was a terrible report.

However, stocks traded strong on Friday, with the Dow Jones finishing up over 200 points. Broad stock indexes are up 15 to 20 percent from their November lows. How can this be? Well, the stock market is telling us that the economy’s future is a lot brighter than its past. The stock market looks ahead; the employment report looks behind.

Mustard seeds planted a while back are now pointing to economic recovery. The huge energy tax cut is one such mustard seed. The related inflation collapse is another. By the way, in today’s jobs report, wages rose again, and now stand nearly 4 percent higher than a year ago. With zero inflation, that’s a real increase in worker purchasing power for the 92.4 percent, or 135 million workers, still employed.



Congress risks criticism over luxury retreat trips

By LAURIE KELLMAN

WASHINGTON (AP) – Members of Congress were quick to shame corporate executives for over-the-top extravagance during the economic crisis, flying private jets and taking luxury junkets. But some lawmakers are strolling fancy resorts spending tens of thousands of taxpayer dollars and mingling with lobbyists.

"We’re very mindful" of perceptions, House Democratic Caucus Chairman John Larson told reporters Thursday camped outside of the sprawling Kingsmill Resort & Spa in Williamsburg, Va., where House Democrats spent about $100,000 on their three-day annual retreat. "It’s serious and it’s from morning till night. We’ve been dwelling, rightfully, on the economy," said Larson, D-Conn.

Republicans and Democrats in the House have passed new rules governing such trips even as lawmaker say the events are useful for negotiating public policy. But with a nation tightening its belt and already fatigued by stories of corporate excess, perceptions matter these days in Washington. Congress risks shattering its glass house throwing stones.



High stakes for Obama at weekend security conference

By Helene Cooper

WASHINGTON: The Obama administration is facing its first big international test this weekend as Vice President Joseph Biden Jr. heads to a conference in Europe in the face of a confrontational stance from an old cold war adversary.

Administration officials have concluded that Russia pressed Kyrgyzstan, a former Soviet republic, to close the American base in that country, which they interpret as a shot across the bow. The base is crucial to the American-led fight in Afghanistan that Obama has identified as his central national security objective. Obama plans to deploy as many as 30,000 additional troops to Afghanistan over the next two years; shaky overland supply routes through Pakistan would make it difficult for the United States to adjust to the loss of the base, in Manas, Kyrgyzstan.

It was Biden who warned publicly in October that Obama’s mettle could be tested early in his administration by some kind of an international crisis. Now, a speech that Biden is scheduled to deliver Saturday before leaders and defense officials from Europe and Asia will be watched closely to determine what tack America’s fledgling leadership will take regarding Russia.



Iran: US must rethink policies for reconciliation

By GEORGE JAHN and DAVID RISING
Associated Press Writers

MUNICH (AP) – Iran sternly dismissed decades of U.S. policies targeting Tehran and declared Friday that the new American administration had to admit past wrongs before it could hope for reconciliation.

The comments by Iranian parliamentary speaker Ali Larijani at an international security conference in Munich appeared to be the most detailed outline yet of Tehran’s expectations from President Barack Obama’s administration.

"The old carrot and stick policy must be discarded," he said, alluding to Western threats and offers of rewards to coax Iran to give up nuclear activities the West views as threatening. "This is a golden opportunity for the United States."

Obama has said the U.S. is ready for direct talks with Iran in efforts to overcome concerns that its nuclear program could be used to develop atomic weapons. Tehran denies that and insists its aims are peaceful. The former U.S. administration refused one-on-one negotiations with Tehran on the issue unless it made significant nuclear concessions beforehand.


Russia rattles sabres in Obama’s direction

By Quentin Peel

Russia may face a grim economic downturn but one would scarcely think so to judge by the sound of sabre-rattling emerging from the Kremlin. Unless, of course, it is intended as a domestic distraction from the gathering gloom.

The double-act of Dmitry Medvedev and Vladimir Putin has come up with a series of security initiatives that seem designed to provoke, or at least irritate, the new administration in Washington. Without even waiting to hear how President Barack Obama intends to conduct his relations with Moscow – something that Joe Biden, his vice-president, may well address on Saturday at the annual Munich Security Conference – the Russian leaders have thrown down the gauntlet.

First, they leaked details of naval and air bases to be established on the shores of the Black Sea in the breakaway Georgian province of Abkhazia, whose independence is recognised by Moscow alone. Then they signed an air defence treaty with the former Soviet republic of Belarus, apparently paving the way for an anti-missile defence system to counter one planned by the previous US administration across the border in Poland. Moscow appears to have persuaded the Central Asian republic of Kyrgyzstan to oust the US from its air base at Manas, outside Bishkek, in exchange for $2bn (€1.6bn, £1.4bn) in loans, and $150m in financial aid.