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Obama Responds to Senate Energy, Tax Cut Concerns

Politico reports Obama moves toward Senate Dems during Sunday talks:

The Obama team told about 35 Senate Democrats gathered at Sunday’s meeting that it would grow the size of an energy-tax incentive package and modify proposed tax credits for individuals and for businesses that hire new employees, according to meeting attendees


"It’s very clear they’ve listened, they’ve heard and that they’re moving to respond," said Sen. Kent Conrad ... "It was very, very healthy. They’re not defensive, not arguing back, they’re listening, they’re attempting to hear and they’re responding."


Sens. Barbara Boxer (D-Calif.) and Maria Cantwell (D-Wash.) both said that Obama’s team signaled that their new proposal would double the funds dedicated to energy tax credits, to at least $20 billion.

“They’re moving in our direction,” Boxer said, adding that the Obama team assured Democrats that the money given to state governments would reach cities and counties suffering from budget shortfalls.

The Hill reports: "Democratic senators have set a goal of Feb. 13 to pass an $800 billion economic stimulus package proposed by President-elect Obama. Senate Democrats said they made significant progress during a rare two-hour Sunday meeting with Lawrence Summers, a senior Obama aide who will head the National Economic Council."

Speaker Pelosi pledges: No Earmarks.

McClatchy assesses McConnell's weak hand: "[Senate Min. Leader McConnell,] who has used filibusters to block legislation he deems unfavorable, may have to fight to keep moderate Republican Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania from joining Democrats on such key votes as the proposed $1 trillion economic stimulus package, environmental protection measures, broadening health care coverage and stem cell research."

Progressive Breakfast
Big Enough? Strong Enough?

NYT's Krugman: "So how can Mr. Obama do more? By including a lot more public investment in his plan — which will be possible if he takes a longer view."

HuffPost's Robert Kuttner offers ideas for "a trillion dollars of stimulus that can take effect instantly, and another trillion that can take effect over the course of eighteen months ... the idea that the government can't spend adequate sums efficiently or quickly is nonsense."

Financial Times' Clive Crook: "So far as the structure goes, a mix of temporary tax cuts and high-impact spending (albeit with a strong bias towards the latter) is wise ... the real problems with the Obama plan lie – not in its basic structure ... but in its scale... $800bn over two years now looks too small ... A stimulus of $500bn to $750bn in 2009 should be the aim."

The Guardian's Michael Tomasky sees "canny poker playing" on Obama's part: "...I guess [Obama] wants about the same thing Krugman and other liberal economists want, if he can get it. Something closer to a trillion, with more spending and less in tax cuts. But he knows he's far better off if he just lets Congress do that. Let John Kerry bash him for proposing a $3,000 tax credit to businesses for each job they create. That credit is a poker chip. If Kerry can get it off the table, more power to him. But it's much better for Obama to let Kerry do it than for him to do it. That lets Kerry be seen as the liberal - which is no skin off Kerry's nose, since he represents Massachusetts and has a seat for life - and lets Obama be seen as more centrist."

You Said You Wanted Ideas

McClatchy rounds up ideas for green stimulus:

Studies show mass transit would add more jobs than building new highways, and that there are $30 billion in transit projects around the country that would be ready to start in four to 18 months, [Anna Aurilio of Environment America] said. Her group also calls for a "fix it first" plan that would spend highway dollars on repairs rather than adding roads.


Sen. Carl Levin, D-Mich., said the stimulus plan should include $1 billion in grants to spur the production of batteries for electric vehicles in the United States.

Most of the technology for lithium ion batteries was invented in the United States, but Pacific Rim countries now are producing nearly all these batteries "as a result of years of financial support from their governments," Levin said.

Earth2Tech on renewable energy refundable tax credits:: "Now that President-elect Barack Obama has presented his economic stimulus plan — and set a goal of doubling clean energy output within three years — it’s time to delve into what wind and solar industry insiders say will be the most crucial incentive for boosting production: refundable tax credits ... Refundable tax credits ... can drop a company’s tax liability to less than zero. That means a startup can count on a check from the government to help them get going when clean power projects come online. In boom years, the Lehman Brothers of the world have typically provided that early investment. But many of today’s remaining investment banks have acquired troubled rivals."

Grist's Kate Sheppard reports on enviro concerns and House plans: "The initial Obama plan didn't include details on how much would go toward infrastructure and didn't specifically mention mass-transit funding, though it called for doubling the production of renewable energy and retrofitting the majority of federal buildings. Some enviros and transit advocates are concerned that the stimulus plan could put massive amounts of money into traditional infrastructure without taking into account the long-term environmental impacts ... House Transportation and Infrastructure Committee Chair James Oberstar (D-Minn.) -- who will likely have plenty of say in what the House package will look like -- is floating a stimulus proposal that would provide $85 billion for infrastructure investments, with more than half going to energy and environmental projects. "

The well-reasoned conservative response to green stimulus? WSJ's Paul Gigot on Meet The Press: "It's spend whatever you can to get us out of this, and worry about the deficits later. That's [Obama's] policy ... if you're borrowing it for aircraft carriers like Reagan did to win the Cold War, you get a big payoff down the road. If you're doing it for tax cuts that really stimulate and drive private investment, and in two or three years' time bring the economy back, great. But if it goes to pork, if it goes to green jobs that may sound good in the short term but may not have a market response or a market for them, then it's a waste."

Salon's Angela Blackwell on big, smart and fair stimulus: "We can also use the recovery package to encourage new grocery stores to come back to the low-income communities of color they abandoned decades ago. New fresh-food stores could dramatically increase healthy eating, reduce the out-of-control rates of obesity and diabetes in these communities and provide a vibrant, long-term source of retail jobs for local residents. The stimulus shouldn't be only about building structures, either. It should be about building up people and communities -- our human capital. By ensuring that 1 or 2 percent of the cost of every project is set aside for job training, we can create a pipeline to get low-income young men and woman and youth of color trained and ready to be part of the massive workforce we will need to get all these projects built. Community colleges are a perfect venue to train people for a new generation of blue-, white- and green-collar jobs"

D-Day: Shovel-Ready Isn't Enough

In These Times' Art Levine: "without tough enforcement of contracting laws — and a fair right to organize — those ambitious jobs plans may never come to pass."

EconoSpeak's Sandwichman promotes shorter work hours: "Not only do shorter work hours present a strategy for creating good jobs, they are better for the environment. David Rosnick and Mark Weisbrot of the Center for Economic and Policy Research looked at the potential environmental effects of other countries adopted U.S. style long working hours in a report titled 'Are Shorter Work Hours Good for the Environment: A comparison of U.S. and European Energy Consumption.' They found that the levels of carbon emissions could increase substantially if workers in other countries worked as much as U.S. workers do. Conversely, if the U.S. adopted working times closer to the European average, energy consumption could be reduced significantly."

Calculated Risk: "How about a demolition program ... if any state and local governments have old idle buildings waiting for future plans, why not demolish them today? This would provide jobs for local workers, and prepare the land for future development and remove an eyesore."

How To Talk About the Economic Recovery Plan's Bernie Horn explains:

1. Don’t call it a “stimulus plan,” call it an “economic recovery” or “recovery and reinvestment” plan—that’s what Americans understand.

2. Stress the need for jobs and reinvestment—that’s what Americans want.

3. Make sure you identify it as Obama’s plan—that’s who Americans trust.

Conservative Tack: Distort Views Of Obama Econ Advisors

Red State hypes hack-ish AP story which looks to pit Obama's own economic advisors -- particularly Peter Orszag and Christina Romer -- against the American Recovery and Reinvestment Plan by oversimplifying their past statements.

FiveThirtyEight shreds former Bush administration economist Greg Mankiw's attempt to pretend a 1994 Romer paper shows she only supports tax cuts for stimulus: "The paper Mankiw refers to, written by Berkeley Economists Christina and David Romer, is the sort of thing that will make your head spin. But the gist of it is that (i) It is very important to differentiate the motivation for different types of tax cuts or tax increases, and (ii) a certain type of tax cut or tax increase may have a much larger effect on growth than is generally acknowledged. The type of tax cut that Romer and Romer think falls into this category is what they call an "exogenous" tax cut -- one designed not to counter business cycles, but rather a "spontaneous" tax cut under relatively healthy economic circumstances. This is very much not the type of tax cut that we are contemplating right now." (A follow-up FiveThirtyEight response to Mankiw is here.)

NYT's Adam Cohen puts the nail in the coffin of the conservative attempt to trash the New Deal.

Bush Legacy Smolders

W. Post offers the grim conclusion of the Bush economic policy:

The number of jobs in the nation increased by about 2 percent during Bush's tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administration. And Americans' incomes grew more slowly than in any presidency since the 1960s, other than that of Bush's father.

Bush and his aides are quick to point out that they oversaw 52 straight months of job growth in the middle of this decade, and that the economy expanded at a steady clip from 2003 to 2007. But economists, including some former advisers to Bush, say it increasingly looks as if the nation's economic expansion was driven to a large degree by the interrelated booms in the housing market, consumer spending and financial markets. Those booms, which the Bush administration encouraged with the idea of an "ownership society," have proved unsustainable.

Kansas City Star pins blame on Bush bankruptcy law: "There’s no shortage of blame for the mortgage crisis that drove the economy into the ditch. But here’s a fresh culprit: the 2005 bankruptcy reform act, which was strongly pushed by the credit card industry. So say three researchers at the Federal Reserve Bank of New York, who argue that the legislation shifted risk from credit card lenders to mortgage lenders, helping trigger the surge in home foreclosures."

SCHIP vote expected this week

W. Post's E.J. Dionne: "this week, the House of Representatives is ... scheduled to take up an extension of the State Children's Health Insurance Program (SCHIP), as the Kennedy-Hatch initiative is called, so that 10 million kids can get insurance. Getting more children covered before Congress starts wrangling over the larger health-care bill is good politics and the right thing to do. Congress needs to act anyway, because the program expires March 31. It might as well act fast, and act generously."

Estate Tax Lives, Aristocracy Cries

WSJ (via The Agonist): "President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010 ... Senate Finance Committee Chairman Max Baucus said in a recent interview that he will move 'in the next few weeks' on legislation to deal with urgent tax matters not related to any economic stimulus. Estate-tax preservation will be front and center, an aide to the Montana Democrat said. [Repeal] movement veterans are already conceding defeat is likely."

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