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To: cirrus who wrote (157740)	1/9/2009 10:12:15 AM
From: stockman_scott	Respond to of 362297

U.S. Payrolls Post Biggest Annual Drop Since 1945 (Update2) By Shobhana Chandra Jan. 9 (Bloomberg) -- The U.S. lost more jobs in 2008 than any year since 1945 as employers fired another 524,000 people in December, indicating a free-fall in the economy just days before President-elect Barack Obama takes office. “Consumers are now going to get more and more scared at the prospect of losing their job,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Obama’s proposed fiscal stimulus “needs to be big, needs to be bold, needs to be swift. If they can do something quickly we can limit the hemorrhage by mid-year.” The Labor Department reported that the nation lost 2.589 million jobs in 2008, with the unemployment rate climbing more than economists forecast, to a 15-year high of 7.2 percent in December. Today’s figures will intensify pressure on U.S. lawmakers to speed Obama’s recovery program, which may exceed $775 billion, through Congress in an effort to save or create 3 million jobs. They also underscore the urgency of the Federal Reserve’s $200 billion initiative to restart consumer financing markets that’s scheduled to begin next month. The outlook for jobs this year is no brighter as retailers from Wal-Mart Stores Inc. to Macy’s Inc. slash profit forecasts and manufacturers including Alcoa Inc. cut output and staff. Stocks, Treasuries Stock-index futures rose and Treasuries fell amid relief among some investors that the drop in payrolls wasn’t even bigger. Futures on the Standard & Poor’s 500 Stock Index rose 0.4 percent to 910.70 at 9:10 a.m. in New York, and yields on benchmark 10-year notes were at 2.47 percent, from 2.44 percent late yesterday. The dollar gained 1 percent to $1.3568 per euro. Payrolls were forecast to drop 525,000 after a previously reported 533,000 decline in November, according to the median estimate of 73 economists surveyed by Bloomberg News. Revisions subtracted 154,000 from payroll figures previously reported for November and October. The jobless rate was projected to jump to 7 percent from a previously reported 6.7 percent in November. Obama is pressing for a stimulus plan including tax cuts and spending on everything from roads and schools to the energy network. Yesterday he called for “dramatic action as soon as possible” to help pull the world’s largest economy out of a slump that’s in its second year. “If nothing is done, this recession could linger for years,” he said in Fairfax, Virginia. Benchmark Revisions With today’s report, Labor revised figures from its household survey, which includes the unemployment rate, going back five years. Benchmark revisions to the payroll figures will be announced in February. Last month’s decline was the 12th consecutive drop in payrolls. The economy created 1.1 million jobs in 2007. Today’s report showed factory payrolls shrank 149,000, the biggest drop since August 2001, after decreasing 104,000 in November. Economists had forecast a drop of 100,000. The decrease included a loss of 21,400 jobs in auto and parts industries. Manufacturing, which makes up 12 percent of the economy, shrank in December at the fastest pace in 28 years, Institute for Supply Management figures showed. Payrolls at builders dropped by 101,000 after decreasing 85,000. Financial firms reduced payrolls by 14,000, after a 28,000 loss the prior month. Services Jobs Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 273,000 workers after a decline of 402,000. Retail payrolls dropped by 66,600 after a 100,000 decrease. Government payrolls increased by 7,000 after falling 3,000 the prior month. Fed staff last month cut projections for gross domestic product and the job market, stating the unemployment rate was “likely to rise significantly into 2010,” according to minutes of policy makers’ December meeting. Analysts said the economy may be in danger of a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once it’s begun. “This was the most rapid deterioration in the labor market over a six-month period since 1975,” said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. “Policy makers will go full throttle” until “the labor market starts to turn,” he said. Wal-Mart, the world’s biggest retail chain, yesterday said fourth-quarter profit will miss its earlier forecasts after sales rose less than analysts anticipated. Macy’s said December revenue slipped 4 percent and announced it would close 11 stores. Retail Sales Sales at stores open at least a year dropped 2.2 percent in the last two month months of 2008, the biggest holiday-season decline since the International Council of Shopping Centers started keeping records in 1970, the group said yesterday. “These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Klaus Kleinfeld, chief executive officer of Alcoa, said in a Jan. 6 statement announcing 13,500 job cuts worldwide. The world’s largest aluminum producer said it will trim an additional 1,700 contractor positions and froze hiring and salaries in some areas. Some companies have taken other steps to lower costs. Caterpillar Inc., the world’s largest maker of construction equipment, will put 814 workers on an “indefinite” layoff, shipper FedEx Corp. cut the pay of Chief Executive Officer Fred Smith and other employees, and auto-parts supplier Visteon Corp. said it will trim the workweek and some salaries. The average work week shrank to a record-low 33.3 hours from 33.5 hours, today’s figures showed. Average weekly hours worked by production workers dropped to 39.9 hours from 40.3 hours, while overtime decreased to 3 hours from 3.3 hours. That brought the average weekly earnings down by $2 to $611.39. Workers’ average hourly wages rose 5 cents, or 0.3 percent, to $18.36 from the prior month. Hourly earnings were 3.7 percent higher than December 2007. Economists surveyed by Bloomberg had forecast a 0.2 percent increase from November and a 3.6 percent gain for the 12-month period. To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net Last Updated: January 9, 2009 09:20 EST

To: cirrus who wrote (157740)	1/9/2009 10:44:33 AM
From: stockman_scott	Read Replies (1) \| Respond to of 362297

Not Doing Enough tnr.com Why I worry that Obama doesn't realize just how bad things are. By John B. Judis/ The New Republic/ Published: Friday, January 09, 2009 Does Barack Obama understand the seriousness of the economic crisis? Yesterday, he laid out his economic agenda, and it was filled with all sorts of important exhortations and proscriptions. He appropriately condemned the "anything goes" policies of the last administration. He declared that government is now the solution to our woes, not the problem. Still, I worry that the president elect is underestimating the problem he and the country faces. We may not simply be facing a steep recession like that of the early 1980s, from which we can extricate ourselves in a year or two, but something resembling the Great Depression of the 1930s. For starters, the current crisis is global, which means that one part of the world can't lift the other out of its misery; everyone will go down together, which is what happened in the 1930s. Secondly, the downturn has combined an unusual decline in the real economy--employment in durable-goods manufacturing fell by 21.9 percent from 2000 to 2008--with a financial crash precipitated by the bursting of the housing bubble. The bubble resulted from an attempt to sustain growth and employment in the face of an underlying decline, which, too, is what happened in the late 1920s. Over the past six decades, policymakers have used some tactics from the Great Depression to quell recessions--such as spending on roads and bridges to create jobs, transferring payments to raise consumer demand, and infusing money into the credit system. But these stopgap measures, which are at the heart of Obama's recovery program, may prove inadequate. There's much to like in Obama's plan. But there are two important ways he may have to go further. Most economists agree that what finally pulled the U.S. out of the Great Depression was military spending for World War II. Some liberals argue that if the Roosevelt administration had not abandoned a Keynesian stimulus strategy in 1937-38, the U.S. might have gotten out of the depression without a war. But in 1936, unemployment was still at 16.9 percent; by 1942, after two years of war spending, it was 4.7 percent, strongly indicating that it was war spending that did it. I am not suggesting that the United States start a world war in order to solve the world's economic problem. But I am suggesting a strategy that could be called the fiscal equivalent of war. It would consist not merely of updating or repairing the nation's infrastructure, but in undertaking massive new investments that would expand the scope of American industry, and address other urgent problems in the process: global warming, over-reliance on petroleum, and the need to revive America's domestic manufacturing capabilities--not just to provide jobs, but also to provide tradeable goods that can reduce the country's current account deficit. One area that is ripe for such investment--and that is not, from what I have seen, a declared priority of the Obama administration--is high-speed rail. Amtrak's Acela trains--the closest thing we have to one--average less than 100 mph between Washington D.C. and Boston, whereas trains in Western Europe and Japan go more than twice as fast. Many of them also run on electricity. They would be the most energy-efficient and quickest means of getting between places like Boston and New York, or Los Angeles and San Francisco. But they would require a massive investment. For instance, installing high-speed rail in the Northeast corridor could cost about $32 billion, while California's high-speed rail system would require up to $40 billion. A system that would address the other areas of the country could easily raise the cost to the hundreds of billions. The House transportation and infrastructure committee has currently proposed $5 billion in stimulus funds for intercity rail--not even a down payment on what it would cost to convert the U.S. to high-speed rail. Investing in high-speed rails would be very expensive, but unlike tax cuts--the benefits of which can be siphoned off in the purchase of imported goods--the money spent would go directly to reviving American industry and improving the country's trade balance. That doesn't just mean jobs creating dedicated tracks or new rail stations: Though the U.S. abandoned train manufacturing decades ago to the French, Germans, Canadians, and Japanese, this kind of production could be undertaken by our ailing auto companies or aircraft companies--if the federal and state governments were to place orders. And building trains that would run on electricity would be a paradigmatic example of the "green jobs" that Obama often touts. Though a massive investment in high-speed rail brings its own set of complications, it's worth keeping these kind of examples in mind when one hears from the Obama people that they can't find sufficient infrastructure projects to fund. The question I would pose is this: Are we not at some point going to have to go beyond repairing roads and bridges in our conception of public spending and public works, and contemplate the kind of ambitious industrial expenditures that the country made on war production in 1941? The second arena that needs radical action from Obama is international. One reason that the depression of the 1930s endured and deepened was because the international monetary system, which had been based on gold, broke down; and one reason that the world economy enjoyed reasonable prosperity between 1945 and 1971 was because the International Monetary Fund--created as part of the Bretton Woods system in 1944--ensured a measure of international monetary stability. Countries controlled their capital inflow and outflow, and the IMF oversaw--if imperfectly--surpluses and deficits, and devaluations and revaluations. Currency exchange was regulated by nations, not by private companies or speculators. And the only country that ran a large surplus after World War II--the United States--took it upon itself to spend much of it helping the other countries to revive their industries. Since 1971, the breakdown of Bretton Woods has given way to a perverse anti-system that combines floating rates, fuelled by speculation, and behind-the-scenes currency manipulation by counties like China and Japan that don't want their exports priced out of foreign markets. The result, as Martin Wolf and others have argued, has been decades of financial crises, which began on the fringes of the system but have now engulfed the center. This system, which features huge surpluses in China and Japan, and huge deficits in the United States, has not proven viable, and is breaking down right now. If China is "losing [its] taste for debt from the U.S.," as a recent New York Times story reported, the U.S. will have trouble financing its deficit expenditures. Interest rates will go up, investment will go down, income will sink, and more Americans will be out of jobs; on the other side of the Pacific, China will be able to sell less goods to the U.S., its investment will fall, its workers will be jobless, and so on. It's not a pretty picture. What's needed, it appears, is a new international system that will prevent the kind of global imbalances that are plaguing the current system. Like Bretton Woods worked initially in practice, it will place the onus of regulating these imbalances on countries running surpluses, not deficits. It would also permit countries to develop economic strategies without fearing that speculators would create a run on their currency. Larry Summers and Tim Geithner are well-suited to work out the details of such broad reform, but Obama has yet to make this a priority within his economic policy. The U.S. also needs to begin working on its own strategy to reduce its current account deficits. That may require not only very large government subsidies to manufacturing industries, but also some currency manipulation of our own to get the price of our goods competitive with those produced in Asia. Obama is certainly right to abandon the "anything goes" mentality of the Bush administration and to promote an $800 billion stimulus program. But to reverse to current economic collapse, the new administration may have to go even farther than this in the direction of a fiscal equivalent of war and a new Bretton Woods. *John B. Judis is a senior editor of The New Republic and a visiting scholar at the Carnegie Endowment for International Peace.

To: cirrus who wrote (157740)	1/9/2009 4:50:58 PM
From: stockman_scott	Respond to of 362297

Obama Uses Campaign Tactics to Sell Stimulus Plan (Update1) By Hans Nichols and Lorraine Woellert Jan. 9 (Bloomberg) -- President-elect Barack Obama’s top political aides are adapting their campaign tactics to selling policy, using data from polls and focus groups to shape the debate over a stimulus plan that may cost at least $775 billion. David Axelrod, Obama’s chief political adviser, along with campaign media adviser Jim Margolis, are encouraging lawmakers to use the word “recovery” instead of recession and “investment” instead of “infrastructure.” Those recommendations came from focus-group research indicating that such framing would make the package more appealing to voters. The Obama camp is trying to build support for the stimulus proposals, which have encountered resistance from lawmakers of both parties over size and cost. Republicans have employed similar tactics in past policy debates, notably when they labeled the estate tax as the “death” tax in arguing for its repeal. “Not unlike news organizations, we poll public attitudes about where the economy is,” Robert Gibbs, Obama’s choice for White House press secretary, said in an interview yesterday. “We’re not polling to see what should be in an economic-recovery plan.” Axelrod and Margolis briefed Senate Democratic leaders on Jan. 7 and their House counterparts at lunch yesterday on the details of the research, participants in the meetings said. Reinforcing the message, Obama said yesterday the U.S. risks sinking deeper into an economic crisis without an infusion of government spending and a cut in tax rates. He urged Congress to act quickly on a stimulus package. ‘Potential and Promise’ In a speech at George Mason University in Fairfax, Virginia, Obama drew a portrait of a nation where family income is falling, the unemployment rate is rising and a “generation of potential and promise” may be lost without federal action. “I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” he said. Obama officials are using polling data to determine how to frame the economic proposals for voters and what language should be used, Gibbs said. They want to know “how America reacts” to the president-elect’s stimulus proposals and the public’s “attitudes toward the economy,” he said. Axelrod and Margolis encouraged the senators to change the way they were discussing the stimulus plan and adopt language that the aides tested in focus groups, said a Democratic official briefed on the meeting. Wrong Signal The two Obama advisers said the old way of talking about the plan sends the wrong signal, the Democratic official said, adding that the substance of the package was also discussed. The Democratic senators, including Dick Durbin of Illinois and Tom Carper of Delaware, were given data showing that about half the poll’s respondents favored making huge investments that would expand government during a recession even if such measures result in a $1 trillion deficit. Obama’s language on the stimulus has won praise from Republican political advisers, who said he understands he can dictate the direction of the debate by controlling the terms used to describe it. “The language he is using is brilliant because it’s future- focused,” said Frank Luntz, a Republican pollster. “He’s using the best language of the progressives and the best language of the conservatives,” he said. “This is linguistic fusion.” Obama’s economic stimulus proposals encountered opposition yesterday in the Senate, where some members of his party criticized elements of the plan as ineffective. ‘Largely a Bust’ Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said he doubted a $140 billion tax proposal to give $500 to individuals and $1,000 to families by withholding less from their paychecks would do much to boost the economy. Conrad said the idea was similar to rebate checks sent last year by the Treasury Department, which he said were “largely a bust” in terms of fixing the economy. “I’m very skeptical that’s going to make a difference,” he told reporters in Washington. “For the average family, it’s going to add $20 a week -- I mean, how much lift is that going to give?” Senate Agriculture Committee Chairman Tom Harkin said he was “a little concerned” by the approach favored by Larry Summers, Obama’s nominee to be director of the White House National Economic Council. Summers met with Senate Democrats yesterday to discuss the stimulus plan. ‘Trickle Down’ “To me it still looks like more of this trickle down,” Harkin said. “What I’m hearing from Mr. Summers and others is that they’ve got perhaps a different view, a different approach.” Axelrod dismissed any notion that Democrats were divided or weren’t committed to acting swiftly. “What I sense is a real spirit of cooperation,” he said yesterday in an interview after briefing House leaders. “There’s an enormous appetite in this country for action,” he said. He declined to provide specifics about his polling and focus-group data. House Speaker Nancy Pelosi, a California Democrat, said she was satisfied with the conclusions of Axelrod’s polls, which she called “very, very positive.” ‘Like the Brand’ “People don’t know the details but they like the brand,” she said. It isn’t unusual for White House aides to commission polls to determine where the public stands on an issue, though the law prohibits them from using federal money for polling that might be construed as election-related, said Dick Morris, who conducted polling for former President Bill Clinton. “We polled everything, every policy initiative, everything you can think of,” Morris said. “It’s become pretty standard.” By contrast, he said, President George W. Bush “didn’t really poll policy; he polled the presentation.” Jan Van Lohuizen, who conducted surveys for Bush, said that once the White House settled on a policy, the pollsters were tasked with discovering how to package it. ‘How Do We Sell It’ He cited Bush’s proposal to overhaul Social Security, saying polling was conducted to determine “how do we sell it and what are the words and what’s the language.” “But we never did: Is privatization the right solution?” he said. “That’s where the boundary was.” Bush ultimately dropped the proposal in the face of resistance from Congress. Obama, who takes office Jan. 20, has said his economic package won’t be influenced by political calculations. He has instructed his advisers “to make sure that we are proceeding on projects and investments based on national priorities and not based on politics,” he told a news conference on Nov. 26. Congressional Republicans dismissed the Democrats’ plans to use poll-tested language to help pass a stimulus package. “President-elect Obama’s real problem is that congressional Democrats don’t believe that tax relief is critical to revitalizing the economy and is overwhelmingly supported by the American people,” said Brad Dayspring, spokesman for Representative Eric Cantor of Virginia, the second-ranking House Republican. To contact the reporters on this story: Hans Nichols in Washington at hnichols2@bloomberg.net; Lorraine Woellert in Washington at lwoellert@bloomberg.net Last Updated: January 9, 2009 10:36 EST

To: cirrus who wrote (157740)	1/10/2009 2:34:17 AM
From: stockman_scott	Read Replies (1) \| Respond to of 362297

Leon Panetta: Speaking Truth to Power _______________________________________________________________ By Richard Reeves Syndicated Columnist JANUARY 9, 2009 LOS ANGELES — In January of 1970, President Richard Nixon tried a half-dozen times to get assistants to fire the young California Republican who headed the small Office of Civil Rights in the Department of Health, Education and Welfare. It seemed the young man had told reporters that the Nixon administration was committed to civil rights and the rule of law, and that was why he was part of it. The president's assistants, H.R. Haldeman and John Ehrlichman, tried to ignore the order because they worried about the reaction of civil rights organizations and the press. Finally, on Feb. 17, 1970, Nixon told his press secretary, Ron Ziegler, to announce that the director had resigned, which was news to the director. In September of 1994, I was interviewing President Bill Clinton, thinking we might ramble on for hours as we had in the past. The Clinton White House was like that. After 25 minutes — I had asked for a half-hour — his new chief of staff came in with a big smile, a few words of greeting, and I was out of there. Suddenly, the White House did not feel like a fraternity house or an Internet startup anymore. In last Thursday's Los Angeles Times, under the headline, "Obama Takes the State's Best Bet," the paper's veteran Sacramento columnist, George Skelton, wrote: "Thanks a bunch, Mr. President-elect. You've just taken away California's best hope for government and political reform — reform necessary to save this state." The hero of all three of those little stories, the young Republican fighting for civil rights, the Democratic chief of staff and the co-chairman of California Forward, is the same man: Leon Panetta. In between, the same guy served eight terms in Congress, became chairman of the House Budget Committee and served as director of the Office of Management and Budget. He also sat in on the morning national intelligence briefing during his 2 1/2 years as White House chief of staff. "Washington's gain is California's loss," said Tracy Westen, director of the Center for Governmental Studies, a California think tank, when he heard that Obama intended to name Panetta director of the Central Intelligence Agency. You would think Washington might appreciate its gain. But, in fact, the intelligence establishment is already out to get Panetta. He is not one of them. The CIA and some very good friends believe they work for themselves, not for the country. They prefer directors like George "Slam Dunk" Tenet, who came up through the ranks. The attack they will make is that appointing someone like Panetta would "politicize" the collection and interpretation of intelligence. I'm not sure what that means, since one of the problems of the last eight years has been the agency's — or its directors' — inclination to tell politicians whatever they wanted to hear. The first and most important person to attack the Panetta nomination was a longtime California colleague, Sen. Dianne Feinstein, the chairman of the Senate Intelligence Committee. The story is that she was miffed that the Obama folks had not let her know in advance about the Panetta appointment. I'm sure she was — and had a right to be — annoyed by that, but I don't think that was the principal reason she jumped in and suggested that her old friend was some kind of hack who had no intelligence experience. The big reason, I think, is that members of Congress who serve on intelligence committees almost inevitably become co-opted by the "intelligence community." I've watched it happen to other senators — Bill Bradley and Jay Rockefeller come to mind — after they have had a secret or two whispered to them. They all adopt a small nod that apparently means, "If you knew what I know. ..." I don't know what they know, and I don't know whether it is worth knowing. I do know that Leon Panetta is as good as it gets. I do not know whether he can get control over the nasty internal politics of the CIA, but I do know he will tell the truth to the president, and that CIA analysts and spies work not for nameless bosses but for the people of the United States. If that is politicization, I am all for it. _______________ *Richard Reeves is a visiting professor at the Annenberg School for Communication at the University of Southern California and the former Regents Professor of Political Science at UCLA. He has also taught political writing at the Columbia University Graduate School of Journalism. His weekly column has been distributed by Universal Press Syndicate since 1979 and appears in such newspapers as the Los Angeles Times, The Denver Post and Dallas Morning News. He is a former chief political correspondent of The New York Times and has written extensively for numerous magazines including The New Yorker and The New York Times Magazine.