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WATCH: Highlights From Obama Jobs Speech

by on September 9, 2011

Huffington Post…

President Barack Obama outlined a new plan from his administration to boost job creation to a joint session of Congress on Thursday night. HuffPost’s Sam Stein relays details on the proposal: Titled the American Jobs Act, the proposal includes more than $250 billion in tax incentives for small businesses and employers, according to administration estimates. The rest of the money would be devoted to infrastructure spending, state aid, unemployment insurance, and neighborhood rehabilitation. The president will pay for the proposal by asking the congressional super committee tasked with finding $1.5 trillion in deficit reduction to offset the cost of the package in their proposal. Senior administration officials said that the White House plans to introduce the president’s proposal next week as a single piece of legislation. The same administration officials did not rule out the idea that the White House would petition the congressional super committee to simply include the jobs bill in the set of recommendations that they reveal later this fall. In his speech to a joint session of Congress, however, the President repeatedly made the case that quicker action is needed. Below, reaction to the president’s speech from some members of Congress via the Associated Press. Click here for full text of Obama’s remarks. “The proposals the president outlined tonight merit consideration. We hope he gives serious consideration to our ideas as well. It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation.” – House Speaker John Boehner, R-Ohio. ___ “President Barack Obama laid out a set of bipartisan ideas to create jobs whose size and scope reflects the urgent need to put Americans back to work. Most of the ideas in this bill have been supported by both Democrats and Republicans. These are common-sense solutions for getting our economy moving again and spurring hiring in the private sector. – Senate Majority Leader Harry Reid, D-Nev. ___ “The president is politically paralyzed and philosophically incapable of doing what needs to be done. The president should take immediate action.” GOP presidential candidate Michele Bachmann, a Minnesota congresswoman. ___ “The president’s plan is a solid foundation for Congress to build on. It strategically combines tax incentives for small businesses with targeted investments in American workers, the education of our children and improving our nation’s crumbling infrastructure. That said, I would have liked to have seen a greater emphasis on domestic energy production and a special focus on water and flood protection for the nation.” – Sen. Mary Landrieu, D-La. ___ “Where we agree – like the need to pass the long pending, job creating trade agreements – we should act and act now. All we need is for the president to send Congress the agreements with Colombia, Panama and South Korea so the American people can begin to take advantage of the up to 250,000 jobs they will create. However, I was disappointed that the president did not discuss the one area that can truly spark sustained private-sector job creation in this country – comprehensive tax reform.” _Rep. Dave Camp, R-Mich., a member of the supercommittee on debt reduction. ___ “Now is the time to invest in the future of our country by creating opportunities and helping out of work Americans find jobs. Many of the president’s ideas have the potential to create jobs and spark the economy.” – Sen. Jay Rockefeller, D-W.Va. ___ “Ultimately I think the problem is there are some things in there that are good, but by and large, it’s a proposal based on things that just won’t work, haven’t worked in the past and they won’t work in the future.” – Sen. Marco Rubio, R-Fla. ___ “President Obama offered a clear path to help small businesses succeed and hire, provide tax relief for our workers, rebuild America, and provide aid to those who have lost their jobs through no fault of their own. It will put Americans back to work and it will be paid for.” – House Minority Leader Nancy Pelosi, D-Calif. ___ “The president’s plan makes a mockery of the recent debt limit deal. That agreement cut $7 billion in appropriations next year but the president now wants to borrow hundreds of billions more to finance a second stimulus package.” – Sen. Jeff Sessions, R-Ala. ___ The president took an important and necessary step tonight: He started a serious national conversation about how to solve our jobs crisis. He showed working people that he is willing to go to the mat to create new jobs on a substantial scale. Tonight’s speech should energize the nation to come together, work hard and get serious about jobs. – AFL-CIO President Richard Trumka.

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WATCH: Highlights From Obama Jobs Speech

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U.S. stocks slighlty rise by midday, while all eyes remain on Bernanke’s Speech

by on April 27, 2011

menafn.com…

U.S. stocks slighlty rise by midday, while all eyes remain on Bernanke’s Speech

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U.S. stocks slighlty rise by midday, while all eyes remain on Bernanke’s Speech

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Did Obama Plan His Budget Speech Months In Advance?

April 19, 2011

WASHINGTON — President Barack Obama’s much discussed speech last week on how to remedy the country’s fiscal future was part of a far broader, more strategically detailed political strategy than has been previously reported. Several high-ranking administration officials have confirmed that the White House laid out plans for the address as far back as the last calendar year, with the president’s economic team and other senior staff members “meeting regularly since February to put the policy together and work on the speech.” In presenting a fiscal roadmap, the administration aimed to demonstrate Obama’s fundamental seriousness towards what is widely perceived to be a looming deficit crisis. But the speech also illuminated both the lack of communication between the White House and Capitol Hill and a growing conviction among insiders that the president must move the deficit debate off center stage in order to tackle other domestic priorities. The address, delivered at George Washington University last Wednesday, outlined an expansive approach towards leveling the federal government’s balance sheet. Obama expressed a need for simplifying the tax code and raising the rates on the highest earners. He called for a “debt fail-safe” trigger, mandating Congress to pass across-the-board spending reductions if the nation’s debt does not decline. He advocated stronger cuts in the Pentagon’s budget and less waste in Medicare. His remarks, in all, were positively received by Democrats and derided as partisan waste by Republicans. Yet build-up to the speech illustrated more than reactions to it. Capitol Hill officials, including the White House’s top allies, say they were left completely in the dark. No one, it appears, knew Obama would deliver an address until his top aide, David Plouffe, announced plans on the Sunday shows. Key aides were briefed on its content only days (if not hours) before the president took the stage. “Members and staffs had no idea what they were going to say until about four hours before the speech—three days after the speech was announced,” said a senior Senate Democratic aide. “It was pretty ham-handed in its roll out and members weren’t pleased.” The abundance of secrecy left the impression that White House officials came up with the idea for Obama’s speech at the eleventh hour in an effort to divert attention away from the debate raging in Congress. “They were scrambling to change the subject from the budget debacle and this was what they latched on to,” said the aide. Having failed to effectively brief members of Congress on the details of his plan, few lawmakers could therefore amplify the president’s message. Administration officials, for their part, steadfastly refute the idea that they simply “winged” it. According to one Obama aide, the president and his team decided in December that he would have to “lay out a comprehensive plan” for deficit reduction “after the FY2011 funding debate had completed.” Another White House official described the planning as even more specific, asserting, “Its been on the schedule for the Wednesday after the [continuing resolution avoiding a government shut down] was resolved for months now.” Because a vote on the continuing resolution was delayed on several occasions, the date of the speech remained, consistently, in flux. According to these individuals, the President’s staff had been considering university locations near or in Washington, D.C. for venue well before the speech was announced, with an eye toward delivering subsequent deficit-focused addresses outside the nation’s capital the following week. Michelle Sherrard, a spokesman for George Washington University, did not have a specific date for when the administration first contacted the university. She noted only that “The White House and GW regularly communicate about the possibility of hosting upcoming events on campus.” One administration aide defended congressional outreach, adding, “Throughout this process the President’s team has been in touch with leaders on the Hill, including both the Gang of Six [Senators meeting on their own deficit proposal] and Congressman [Paul] Ryan, and other stakeholders like the deficit commission chairs.” “In touch,” however, remains an inherently subjective phrase. As late as the Tuesday night before the speech was delivered, one extremely close White House ally professed to not having a clue about what would be said. “I don’t think they have briefed anyone and I am not sure the speech is done!” In fact, the speech wasn’t done. According to an administration aide, “the president worked until late in the night Tuesday, and put final touches on the speech on Wednesday morning.” Why did it take so long to finalize the details on a speech planned months in advance? For one, various areas of policy disagreement within the White House remained unresolved. In particular, officials familiar with the discussions say, Obama’s economic advisers warned against calling for a final balance of three dollars in spending reductions for every dollar generated in additional tax revenue, arguing the ratio was too explicit. Medicare reform sparked another element of disagreement. In his speech, the president proposed strengthening the Independent Payment Advisory Board, a group tasked with finding excessive and unnecessary spending within the system. Several aides wanted him to further outline specific ways to empower Medicare to negotiate over drug prices and medical procedures. In the end, Obama kept the speech broad, leaving Democrats officials on the Hill largely pleased. Several members of Congress also expressed agitation with the timing. Obama’s speech came after Rep. Paul Ryan (R-Wisc.) unveiled his own budget plan , giving his own remarks the veneer of a presidential response rather than executive leadership. Moreover, by calling for additional talks on deficit reform, the president miffed lawmakers either working on or invested in the Gang of Six talks currently ongoing. “The fact that the president has come out with his vision should be a positive reinforcement, another indication that this is important work that needs to be done,” Press Secretary Jay Carney said on Monday in response to complaints Obama stepped into Gang of Six territory. “And the fact that the President built his vision by borrowing in many ways from the recommendations of the bipartisan commission on which a number of members of that Senate group sat… gives a good sign, a good indication, of the fact that there is a building consensus around the way to approach this problem. So he thinks it’s very complementary to the process.” But many Democrats don’t want “complementary.” The Gang of Six already gives progressives angina, with the Democratic members of the group — including Sens. Dick Durbin (D-Ill.) and Mark Warner (D-Va.) — openly supporting elements of Social Security reform and even extending the Bush tax cuts. Should the president end up complementing or even embracing their approach, the worry goes, no progressive counterpoint to Ryan’s proposal will emerge. Instead, the distance between the Gang of Six and the Republican alternative will become the “compromise.” The White House has been noticeably tight-lipped about its thoughts on Gang of Six conversations, perhaps because scarce information exists as to what, exactly, the lawmakers are discussing. But signs of mounting concern permeate both on and off the Hill. When Vice President Joe Biden hosts a deficit reduction meeting with members of Congress at the Blair House on May 5, no Democratic lawmakers from the Gang of Six will be present. Instead, Senate Majority Leader Harry Reid (D-Nev.) is sending Finance Committee Chairman Max Baucus (D-Mont.) and Appropriations Committee Chairman Dan Inouye (D-Hawaii). Gang of Six member and Budget Committee Chair Kent Conrad (D-N.D.), one Democratic Senate aide relayed, was more than “irked” by his absence from the talks. Other Democrats voiced relief over the Gang of Six absence, speculating that both Reid and Sen. Chuck Schumer (D-N.Y.) were growing wary about the bipartisan group’s role. Gang of Six criticism is more intense off the Hill, with several of the nation’s most powerful union groups laying down crisp lines in the sand over elements they consider non-negotiable, such as ending tax cuts for the richest Americans. “Any plan to reduce the deficit that does not include ending the Bush tax cuts — a clear contributor to the deficit — is not a serious plan,” said Michelle Nawar, Director for Legislation at the Service Employees. “Every middle class family should be offended if Congress calls on them to bear the burden for reducing a deficit they did not cause while continuing to handout more tax giveaways to millionaires and corporations. We’ll see what the Gang of Six proposes, but how could any Democrat support a plan that cuts needed services for seniors and children while continuing these expensive tax giveaways?” Nawar’s question presumably extends to Obama, who has punted once on letting the Bush tax rates for the wealthy expire (they will now lapse at the end of 2012). A far more immediate and pressing concern, however, is whether the administration’s attempt to jump ahead of the deficit debate will yield the type of political fruits the White House envisions. The president’s advisers — chiefly, former Senior Communications Aide David Axelrod –- have long seen benefits to deficit hawk-ery in private polling. But the payoff this time around has been limited: An ABC News/Washington Post poll released on Tuesday showed that 57 percent of Americans disapproved of the way Obama is handling the economy. “I think they were concerned about how to give the president credibility on this issue and how to win over some independents,” one top party strategist said of Obama’s speech on Wednesday. “The irony is it won’t give him any. He could have offered $10 billion more in cuts for the CR and it would never be good enough for the GOP.” Jen Bendery contributed to this report.

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A QUICK FIX: Bank Regulator’s Easy Solution May Hurt Homeowners

February 17, 2011

The federal bank regulator overseeing the nation’s largest lenders is pushing for a quick and modest settlement to the months-long federal and state probes into abusive mortgage practices, frustrating other federal agencies and state regulators and raising questions over President Barack Obama’s delay in naming a pro-consumer chief to head the agency. The Office of the Comptroller of the Currency, which oversees lenders like JPMorgan Chase and Bank of America, plays a key role in the ongoing investigations launched last September into improper foreclosure practices. The federal review involves the OCC and other bank regulators, as well as the Departments of Justice, Housing and Urban Development and the newly formed Bureau of Consumer Financial Protection. The 50-state probe involves state attorneys general and state bank regulators. But the OCC, known for its light-touch approach, is trying to come to a quick settlement with the banks it supervises, according to officials from multiple agencies involved in the investigations. The agency is negotiating an agreement that would cost the industry less than $5 billion in fines and mortgage modifications for troubled homeowners, including principal reductions, the officials said. Other agencies are pushing for something bigger. On Wednesday, Rep. Patrick McHenry, a North Carolina Republican, said during a House hearing on housing issues that he had heard the potential settlement would be in the “tens of billions range.” In 2008, state attorneys general reached an $8.4 billion agreement with just one company — Countrywide Financial — to settle predatory lending accusations. The money was used to aid distressed homeowners. The OCC is also trying to persuade mortgage companies that collect payments from borrowers, known as servicers, into adopting new standards in how they deal with homeowners. The agency has wide influence over the way banks service mortgages: It supervises firms that control nearly two-thirds of all home mortgages in the U.S., or more than 33 million loans totaling about $5.8 trillion. But officials said the OCC’s proposals give the institutions wide discretion, potentially undercutting their intent. The OCC is said to be rushing to settle in hopes of forcing the hand of other regulators on the federal and state level, weakening their efforts to extract a more meaningful resolution. The probes have cast a pall over the industry as bank executives have been forced to answer questions about the investigations posed by investors and analysts. The industry wants to put the whole matter behind it and move on. Officials at the Treasury Department and Federal Deposit Insurance Corporation have grown frustrated with the OCC’s efforts, people familiar with the matter said. State regulators conducting their own probe said they aren’t a part of the OCC’s seemingly lonely action. “Any statements or actions by the OCC at this point are on the agency’s own behalf and not in conjunction with the 50-state attorneys general,” Iowa Attorney General Tom Miller said in a statement. “Regardless of any federal action, we intend to fully pursue all state claims and remedies.” Spokesmen for the OCC didn’t respond to a request for comment e-mailed after regular business hours. State and federal officials are trying to reach a global settlement that will deter future abuses in the way mortgage servicers modify delinquent home loans and foreclose on homeowners, as well as levy penalties as a measure of restitution and force lenders to restructure distressed mortgages. The OCC’s efforts subvert the possibility of a unified settlement, officials said. In December, Federal Reserve Governor Daniel K. Tarullo said the federal review had found “significant weaknesses in risk-management, quality control, audit, and compliance practices as underlying factors contributing to the problems associated with mortgage servicing and foreclosure documentation.” “We have also found shortcomings in staff training, coordination among loan modification and foreclosure staff, and management and oversight of third-party service providers, including legal services,” he said. In the wake of the worst housing crisis in generations, consumer advocates, housing analysts and bank regulators have heavily criticized the industry’s performance. In addressing the recent controversies of improper foreclosures during a speech last November, Fed governor Sarah Bloom Raskin said procedural flaws like robo-signing and other efforts that cut corners are “part of a deeper, systemic problem.” She added that she was “gravely concerned.” “The complex challenges faced by the loan servicing industry right now are emblematic of the problems that emerge in any industry when incentives are fundamentally misaligned, and when the race for short-term profit overwhelms sustainable, long-term goals and practices,” Raskin said. “I believe that serious and sustained reform is needed to address the larger problems in mortgage servicing.” Tarullo said the “problems are sufficiently widespread that they suggest structural problems in the mortgage servicing industry.” “The servicing industry overall has not been up to the challenge of handling the large volumes of distressed mortgages,” he said in December. “It is clear that the industry will need to make substantial investments to improve its functioning in these areas and supervisors must ensure that these improvements occur.” But as of last week, nothing had changed, Raskin said in another speech. “These problems existed before November and as far as I can tell they remain unaddressed,” Raskin said. “How do I know this? Late last year, the federal banking agencies began a targeted review of loan servicing practices at large financial institutions that had significant market concentrations in mortgage servicing. The preliminary results from this review indicate that widespread weaknesses exist in the servicing industry.” “These deficiencies pose significant risk to mortgage servicing and foreclosure processes, impair the functioning of mortgage markets, and diminish overall accountability to homeowners,” she added. “I’m sure this has been said, but I’ll say it again because I have seen little to no evidence of improvement in the operational performance of servicers since the onset of the crisis in 2007.” Bank regulators will address the issue on Thursday during a Senate hearing. On Wednesday, Federal Housing Administration Commissioner David Stevens said that a settlement would come in the next month. Options include penalties against the nation’s largest banks, more mortgage modifications for borrowers, and the reduction of homeowners’ mortgage principal, he said. Stevens also touched on how regulators aren’t on the same page. “There’s two ways we can go about coming to a conclusion here,” Stevens said. “We can come up with one set of solutions, assuming the general findings are the same, or we can go individually. That process is being worked through right now.” The FHA chief added that the agencies would have to work together “to make this less disruptive in the market,” an acknowledgement that a massive principal write-down scheme would likely impair the nation’s largest financial institutions. The OCC’s actions in trying to derail a more substantial settlement raises questions over the Obama administration’s delay in nominating the agency’s next leader. Its last chief, John C. Dugan, stepped down in August after his five-year term ended, and joined Covington & Burling LLP, where he leads the firm’s financial institutions group. Dugan “advises clients on a range of legal matters affected by significantly increased regulatory requirements resulting from the financial crisis,” according to the firm’s Web site. One of his colleagues is Edward Yingling, who last year stepped down as president and chief executive officer of the American Bankers Association, the industry’s largest trade group. Consumer advocates pushed for the White House to nominate an outsider who was less connected to the OCC’s prior failures. The agency came under withering criticism for its lax oversight of the industry in a report published by the bipartisan, Congressionally-appointed Financial Crisis Inquiry Commission. Treasury Secretary Timothy Geithner picked Dugan’s former chief of staff at the OCC, John Walsh, as Dugan’s interim replacement. Obama has not yet named his successor. The nomination requires Senate approval. But Democrats lost six seats in the Senate in last fall’s election. The administration now faces an uphill battle to get a tough regulator in the role. ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Bernanke Discusses Unemployment, Defends QE2 in Speech Today

February 9, 2011

Bernanke Discusses Unemployment, Defends QE2 in Speech Today

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Stephen M. Wing: Winning the Future Means Closing the Skills Gap

February 6, 2011

In his State of the Union address, President Obama outlined a plan for the United States to win the future through better education, smarter innovation and broader investment. He would have done well to invoke another favorite phrase–”the fierce urgency of now”, itself borrowed from Dr. Martin Luther King, Jr.–to bolster his case. That urgency was imprinted in black and white, quite literally, the next morning. As the day-after analysis of the speech occupied front pages of newspapers across the country, readers needed only flip to page 2 for a reality check. “National science test scores disappoint,” announced one headline. “Less than half of students proficient in science”, proclaimed another. The newest report from the National Assessment of Educational Progress, known as “the nation’s report card”, was but the latest in a litany of sobering findings suggesting today’s generation of young Americans is fully unprepared for the challenges of tomorrow. How, indeed, will we seize our future and out-compete the rest of the world in scientific and technological advances when just one-third of American 8th graders and barely one in five high school seniors are deemed “proficient” in science? How will we out-innovate our global peers in creative pursuits when today’s American 15-year-olds rank 17th internationally in reading comprehension and 31st in math? And–worse still–when a quarter of our students won’t finish high school on time, if at all? These are questions that vex many of the forward-thinking business executives we work with at Corporate Voices for Working Families, the leading national business membership organization shaping conversations and collaborations on policy issues involving working families. Employers are certainly not alone in the collective hand-wringing, but they possess a unique perspective on the skills and knowledge young people need to succeed in the labor market today and the workforce of tomorrow. Our work at Corporate Voices reflects this perspective, and the recognition that employers can and must be active partners in preparing the talent pool of skilled employees. One important way to do so is to invest in their continuing education and training through ” learn and earn ” initiatives–programs offering lower-skilled workers in particular the opportunity to pursue higher education and post-secondary credentials while earning a living at the same time. The need is critical: Of the 47 million jobs projected to be created in the U.S. by 2018, some 30 million will require at least some post-secondary education. Those jobs will simply be out of reach for too many young Americans unless they are able to negotiate the demands of school and work. In a new publication, ” From an ‘Ill-Prepared’ to a Well-Prepared Workforce: The Shared Imperatives for Employers and Community Colleges to Collaborate ,” we explore innovative partnerships between the business sector and community colleges. We highlight the most successful practices in these ‘learn and earn’ programs, and recommend a set of public and private policies to support their growth and replication. Such business-college partnerships are one tiny but promising strategy in support of the ambitious domestic agenda President Obama imagined once again last week. To win the future in a vastly different global landscape of tomorrow, we’ve got to start today–and investing in the best-educated workforce we’re capable of producing is a fine place to start.

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Startup America: Will Obama’s New Initiative Live Up To Its Name?

February 1, 2011

WASHINGTON — “This is our generation’s Sputnik moment ,” declared President Obama in his State of the Union Address last week. As a result, we need to fund “a level of research and development we haven’t seen since the height of the space race,” with particularly strong investments in biomedicine, information technology, and clean-energy technology. Reinvigorated, Obama’s two-year old innovation agenda took one small step forward on Monday, as administration officials, business executives and entrepreneurs gathered at the White House to unveil the administration’s Startup America Partnership , which aims to boost innovation and entrepreneurship in the U.S. by encouraging private investment in startups. To kick off the initiative, the administration hosted an event featuring a panel that included AOL co-founder Steve Case and Carl Schramm, the President and CEO of the Kauffman Foundation, both of whom oversee the project. Case, the initiative’s chair, is the second prominent business figure recruited by Obama in two weeks. Last week, the president named GE chief executive Jeff Immelt as head of a presidential advisory council on competitiveness. At Monday’s event, Case told the audience that even though the initiative is backed by the White House, it is a private sector endeavor that will largely run independently of the government’s efforts to spur small business development. “The last couple of years there was not as much of a focus on the entrepreneur,” Mr. Case told the New York Times . “I applaud that the president and his teams have really pivoted and made it a real commitment for the next couple of years.” Schramm, one of the initiative’s founding board members, joked in his speech on Monday that he hardly had any more Kauffman Foundation statistics to cite, as nearly every one of the preceding panelists had used at least one. In designing Startup America, it’s clear the administration took cues from a slew of widely-publicized Kauffman studies released over the past few years which find that young, high-growth firms or so-called “gazelle” firms comprise less than one percent of all companies, yet generate roughly 10 percent of new jobs in any given year . Similar Kauffman research shows that net job growth in the U.S. over the past three decades is entirely driven by startups. Yet in the beginning of 2010, American entrepreneurs formed new businesses at the second slowest pace in over 18 years . And a year later, the number of self-employed Americans has fallen for three straight months and is down 336,000 from a year ago, according to the Small Business and Entrepreneurship Council . To open the floodgates of entrepreneurship and unleash waves of new jobs, the administration aims to provide small business assistance to those entrepreneurs capable of scaling their businesses. “This isn’t to say that one or two-man plumbing shops aren’t important to America’s economic well-being,” Fortune’s Dan Primack points out , “but simply to acknowledge the greater value of a company that may someday be able to hire hundreds or thousands of workers.” “It’s about investing in people who can change the world,” Gene Sperling, director of the National Economic Council, told the audience on Monday, quoting Steve Case. Sperlin, Case and the eight other panelists announced some of the initiative’s 27 public and private commitments aimed at doing just that. On the private side, Intel has committed $200 million to expand startup investment, IBM will invest $150 million in business mentoring programs and Facebook will launch a series of mentoring events across the country. Also participating is the startup accelerator and seed investor TechStars , which will expand its network of business “incubators” to include entrepreneurship boot camps across 20 U.S. cities, aiming to create 25,000 jobs nationwide by 2015. On the public side, the SBA pledged $2 billion in small business loan assistance over the next five years, while the administration put forth a handful of policy suggestions, including a proposal to expedite the lengthy patent application process by charging applicants a “fast-track examination” fee. The White House said the Obama Administration will also ask Congress to permanently eliminate capital gains taxes on qualified small business investments. Congress passed the tax elimination as a temporary provision under the small business bill in September, but the new proposal would make the tax break permanent. However, to qualify for the tax break small businesses must have a net value under $50 million at the time of the investment, and be incorporated for at least five years. As Dan Primack notes, those qualifications effectively exclude the types of scalable, high-growth startups the initiative is designed to foster. Primack is also unimpressed with the corporate investments announced under the partnership. He points out that Intel’s $200 million investment basically maintains their status quo: “Yawn. Reminds me of Intel’s announcement last February that it and 24 VC firms would invest $3.5 billion in U.S. startups over two years. Isn’t that what Intel and VC firms do already? In fact, isn’t Intel typically the most active U.S. venture capitalist, via its Intel Capital arm? It would be as if the New York Yankees announced plans to, you know, play baseball games.” Several attendees at Monday’s White House event shared similar sentiments that the new initiative was merely a PR stunt, pointing to rumors that, prior to the partnership with Startup America, Intel already had plans to invest $200 million, and TechStars was well overdue for an expansion. In addition, some of the public programs proposed under the initiative were underway well before anyone had even heard of Startup America. Brendan Buck, a spokesman for House Speaker said in a statement that “it seems like the only thing being offered by the White House this morning is another catch phrase.” Buck added, “Not until the administration is prepared to break down Washington barriers to job creation — onerous mandates, costly regulations, and economic uncertainty resulting from massive budget deficits — will we renewed confidence from American small business owners.” As some dismissed what they perceived as a thinly veiled press stunt, others showed signs of approval for Obama’s new initiative. During the White House’s announcement on Monday, the U.S. Chamber of Commerce e-mailed a press release announcing a $1 million expansion of its entrepreneurship education plans. In the release, the Chamber said the money will “bolster the private sector component of the White House’s new ‘Startup America’ initiative.”

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Robert Kuttner: Where’s the Protest at Home?

January 30, 2011

On Saturday, I crossed paths with a few hundred protesters marching from Cambridge to Boston to call for the resignation of Egyptian President Mubarak. By appearance, they were a mixture of Arab-Americans, locals, and people from assorted other backgrounds. The loud, peaceful march was almost startling, because you hardly see street protests in America these days, even in liberal Massachusetts. The Boston Globe quoted one Egyptian-American woman saying that middle class anger in Egypt has swelled with unemployment and inflation. “You can’t live a fairly decent life without being rich,” she said. In 2011, you might say the same about downwardly mobile America. But where are the protests in our country? Where is the leadership connecting the dots… between the financial meltdown, the record profits and bonuses on Wall Street, the continuing collapse of home equity, the joblessness, and the assault on public services in the name of budgetary prudence? For the moment, the small amount of citizen protest seems to belong to the Tea Parties. However, the Republican responses to President Obama’s State of the Union address showed a total vacuum of plausible remedies. Obama’s own address was a blend of this president at his best — invoking the aspirations that we share as Americans, some very nimble packaging of progressive themes in unassailable patriotic language — but combined with a fair amount of needless pandering to the right. As strategist Drew Westen parsed the speech at a recent conference of progressive Democratic legislators, some passages seized the political high ground and then defined it in a progressive way. We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It’s how we make a living. Our free-enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS. ….. Our infrastructure used to be the best — but our lead has slipped. South Korean homes now have greater Internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.” We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system. The jobs created by these projects didn’t just come from laying down tracks or pavement. They came from businesses that opened near a town’s new train station or the new off-ramp. Pitch perfect. What logically follows from the president’s invoking of the history of American prosperity is a call for more public investment in 21st century infrastructure. This is not in-your-face partisanship, but the astute marketing of a progressive message and ideology that contrasts radically with the conservative one. But then the president said this: Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same. So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than $400 billion over the next decade and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president. This freeze will require painful cuts. Already, we have frozen the salaries of hard-working federal employees for the next two years. I’ve proposed cuts to things I care deeply about, like community action programs. My friend Westen was incredulous. Why would a Democrat give aid and comfort to a right wing ideology that is also wrongheaded economics? Why sacrifice Medicaid and programs for kids for the sins of the bankers? Why add fuel to the right’s attack on public employees? People watching the speech rightly wondered: How do you freeze domestic spending — and also dramatically increase outlay on 21st Century infrastructure? How do you win public support for more desperately needed public investment when you brag that you will reduce domestic spending to its lowest share of the economy since the Eisenhower years? In the 2008 election, people with incomes of under $50,000 supported Obama and the Democrats by wide margins. But the kind of mixed messaging in the president’s State of the Union address reinforces political anomalies such as the 2010 mid-term election, where white working class voters supported Republican House and Senate candidates by a staggering margin of 30 points. The administration’s mixed signals on aid to Wall Street are so potent that in the 2010 election, a majority of voters who blamed the collapse on Wall Street nonetheless voted for a Republican candidate for Congress. On January 17, the New York Times published a letter to the editor from a woman named Susan Kross, of upstate New York, praising governors for “reining in labor unions.” The shocker was her concluding paragraph. She wrote, “I was reared on a family farm where pennies were always pinched, every day was a workday, and there was no such thing as a pension or vacations, let alone paid ones.” Such is the state of ideological muddle and confused self-interest that a hard working rural, middle-class American could disdain pensions and paid vacations as unnecessary luxuries too good for working people. This woman’s family farm, if it has truly been in her family for generations, probably survived thanks to the New Deal. She gets her crops to market thanks to government-subsidized highways, and uses modern farming methods thanks to USDA. Her parents and grandparents, who benefited from Social Security, most likely did not share her contempt for pensions and paid vacations. This moment cries out for a combination of clear leadership and mass protest. The protesters shaking the foundations of despotic regimes in the Middle East are a blend of people who want radical Islam in temporary coalition with those who want western-style tolerance, democracy, and a semblance of honest and competent government. They are united only by their disgust with the corrupt status quo. But you have to admire them for acting on their frustrations. This wave of citizen protest is a reminder that insurgent moments can break out and spread with little warning. But you never know whether a genuine revolution from below leads to a Jefferson, a Mandela, a Havel, a Roosevelt — or a Hitler, Mussolini, or in current circumstances radical Islamists who reject everything secular, tolerant, and democratic about the Enlightenment. The United States may possess more than half of the world’s arms, but it is powerless to control this kind of popular uprising. As protest spreads and regimes that America propped up are toppled, we don’t know whether the successor governments will be pluralist Muslim democracies like Turkey and Indonesia, radical fundamentalist states like Iran, or military dictatorships. But half a century of American investment in strongmen like Mubarak to contain popular unrest is collapsing along with his regime, and US influence in the Middle East is very likely to decline. President Obama took office with more good will in the Middle East than any recent president, just as he kindled a new generation of hope at home. It remains to be seen whether his administration can credibly identify the United States with the aspirations of hundreds of millions of ordinary Arabs, and thereby nudge a turbulent region in the direction of tolerant democracy rather than fundamentalist rage. It also remains to be seen whether Obama can finally be the ally of drastic reform at home. If not, the domestic rage about the economy will continue to belong to the far right. It’s great to see Americans demonstrating in solidarity with ordinary Egyptians. But the next time I cross paths with a robust protest march, I’d like to see citizens protesting the wreckage of American prosperity by Wall Street and the too feeble response by our government. Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril .

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Ian Fletcher: Cluelessness Trifecta as Tea Party Flubs Response to Obama State of the Union

January 28, 2011

I have already written about the economic cluelessness of Obama’s State of the Union Address and the cluelessness of the official Republican response. Neither party seems to grasp that free trade killed the Great American Job Machine, and both are grasping at straws, repeating mantras from 30 years ago, or promoting policies (a NAFTA with South Korea?!) that will make things even worse. But I was holding out a tiny glimmer of hope for the Tea Party. Whatever one may think of them on other issues, they are a populist insurgency, so if a challenge to the Demopublican Tweedledum-Tweedledee consensus on trade was to emerge somewhere, it just might be here. And polls now report that a solid 61% majority of Tea Party supporters are now against free trade agreements. Unfortunately, the Washington leadership of this loosely-organized movement is notoriously not the same as its rank and file, and the response to the State of the Union by Tea Party supporter Rep. Bachmann merely repeated the same mistakes as the official Republican response: a) no grasp of the Keynesian idea of deficit spending to get out of recession, and b) no idea why jobs are being lost. She said, Two years ago, when Barack Obama became our president, unemployment was 7.8 percent and our national debt stood at what seemed like a staggering $10.6 trillion dollars. We wondered whether the president would cut spending, reduce the deficit and implement real job-creating policies. Unfortunately, the president’s strategy for recovery was to spend a trillion dollars on a failed stimulus program, fueled by borrowed money. The White House promised us that all the spending would keep unemployment under 8 percent. Well not only did that plan fail to deliver, but within three months the national jobless rate spiked to 9.4 percent. It hasn’t been lower for 20 straight months. While the government grew, we lost more than 2 million jobs…In October of 2001, our national unemployment rate was at 5.3 percent. In 2008 it was at 6.6 percent. But just eight months after President Obama promised lower unemployment, that rate spiked to a staggering 10.1 percent. Today, unemployment is at 9.4 percent with about 400,000 new claims every week. Narrowly true, most of it, but why, Michelle? Why is the jobs engine broken? No mention of that in your speech. Just some bits from the old Reaganite deregulation agenda — as if deregulation hadn’t caused a big part of our current mess, and as if we could ever win a race to lower regulatory standards with Guandong. The Tea Party claims to believe in returning to the Founders’ vision of America. Well, here’s something they should consider: the founders were explicitly against free trade. Article I, Section 8 of the Constitution is what they need to be pondering right about now.

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Obama Calls For Corporate Tax Cuts, But Paying For Them Is The Hard Part

January 26, 2011

President Barack Obama called on Congress to lower corporate tax rates in his State of the Union address Tuesday night, suggesting that such tax cuts could be paid for by closing certain tax loopholes but offering few concrete details. If and when lawmakers move forward on corporate tax relief, the key battle lines are likely to be drawn over those fuzzy pay-fors. “I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes,” Obama said in his address. “A parade of lobbyists has rigged the tax code to benefit particular companies and industries.” Officially, the top corporate tax rate in the United States is 35 percent, one of the highest in the world. But the federal tax code is filled with so many loopholes and credits that few companies actually pay that rate. General Electric, for example, only paid an average of 3.6 percent over the last 3 years , according to the most recent annual company report. G.E. is not the only company that succeeds in paying dramatically less than the top corporate tax rate. But it is — as HuffPost’s Shahien Nasiripour laid out what he heard — and didn’t hear — on corporate taxes in Obama’s Tuesday night speech: What he said: We need a competitive corporate tax system with low rates and fewer tax preferences that raises the same amount of money as the current corporate tax system. What he didn’t say: How we’d get there and-except for a passing reference to ending oil subsidies-which business tax breaks he’d repeal. What role business must play in helping reduce the deficit. On the corporate tax code’s current word count, Gleckman was likewise blunt. “Most of those words are in there because somebody’s lobbyist wanted them in there,” Gleckman told The Associated Press. “Everybody likes their special interest tax break.”

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Robert L. Borosage: A Strong State of the Union Address for a Union in a Different State

January 26, 2011

No surprise that President Obama knows how to deliver a speech. His State of the Union speech will add to his reviving poll numbers. He set up what should be a centerpiece of Washington’s debate over the next months: invest and grow vs. the Republican “cut and grow,” or in the Republican Study Group version, “gut and grow.” This is an argument that will mobilize progressives and that the president can win if he wages it. Americans are more concerned about jobs and growth than they are about deficits and cutting spending. And the president did a good job of describing how investments in research and development, infrastructure and education are vital to our growth. But what was striking was not how new, but how dated and conventional the speech seemed. This was a speech that sounded as if it were anchored in 1992 or before. But the world has changed, and the illusions of conventional wisdom have been shattered since then. Obama movingly described the plight of working Americans who found their jobs, indeed their dreams, shipped out from under them. But Americans aren’t losing jobs and income and security, as the president then suggested, because of “revolutions in technology” and China and India “educating their children” and “investing in new research.” As Germany’s success as a high wage export nation proves, Americans have lost wages, benefits and job security, and are scarred by Gilded Age inequality because of failed public policies: a Wall Street trade policy explicitly designed to facilitate the export of jobs rather than products; a corporate war on labor plus executive pay policies that keep workers from capturing a fair share of productivity gains; and inadequate investment in areas vital to our growth, and of course, successive top end tax cuts. The flawed diagnosis leads to an inadequate prescription. Investment in education, R&D and infrastructure is essential, as the president said. A move to new energy and capturing a lead in the green industrial revolution are vital. But the Chinese are using their mercantilist toolkit to make themselves the global manufacturer of solar panels and windmills. Without a serious industrial policy and a reformed trade policy that challenges Chinese mercantilism, US technology and companies will build green jobs abroad. The president, eager to brandish his fiscal probity, chose not to make an explicit argument for putting off budget cuts until the economy comes back. Instead he agreed the time had come for getting our books in order. He noted that we couldn’t afford to make the top end tax cuts permanent — a populist gesture that was popularly received according to reports from dial testing of independents. But his emphasis was on spending cuts — extending his three year freeze on federal DOMESTIC discretionary spending to five years, to the lowest levels as a percentage of GDP since Eisenhower. (thereby virtually insuring that his investment agenda will suffer the fate of his recovery plan — too small and cribbed to do the job). The source of current deficits — two unfunded wars, massive defense spending and “homeland security spending” increases, successive tax cuts, skewed to the wealthy and recession — were not mentioned. Obama wisely argued that the main source of future deficits comes from soaring health care costs — as opposed to entitlements, making the case for continuing with his health care reforms. But instead of going after next step common sense reform that would actually save big time money — lifting the ridiculous ban on Medicare from negotiating bulk savings on prescription drugs for example, he turned, in a gesture to Republicans, to ending “frivolous lawsuits,” a political posture that doesn’t do anything on the cost of health care. The president chose to put Social Security on the table, arguing for the need to “strengthen Social Security” in the context of deficit reduction -”to put ourselves on solid ground ” — where it simply doesn’t belong. It hasn’t added to the deficit, and reforms won’t help reduce the deficit in the short term. The AARP, which had been silent in the run up to the speech, was sufficiently alarmed to put out a statement decrying the error. Washington still seems oblivious to the straits we are in. Republicans are clueless, arguing for the same policies that drove us into the worst downturn since the Great Depression. They assume the economy is growing so they can slash and burn government spending while pursing top end tax cuts (and blame Obama for excessive spending and regulation if jobs don’t revive). Obama assumes the economy is growing so he doesn’t need to push an immediate jobs program, or a new global strategy or take on the unsustainable concentration of wealth or the big banks. The president set up a debate on investment which progressives will be happy to join. But the limits of this debate are too narrow, the reforms too limited. This isn’t 1995 when Bill Clinton could count on a rising economy and a dot com bubble to fuel his revival. What is reviving in America is the old economy that was unsustainable — Gilded Age inequality, debilitating trade deficits, concentrated and highly leveraged banks, and a declining middle class. Progressives will have to challenge the confines of this debate and offer a far bolder strategy to revive the American dream that politicians of both parties invoke.

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Joseph J. Thorndike: Will Business Kill Tax Reform?

January 26, 2011

Corporations like to complain about their taxes. In testimony, statements, and speeches, executives rehearse the same old litany of woe. Rates are too high! We pay too much! We can’t compete with foreign companies! There’s a kernel of truth in these complaints. U.S. corporate tax rates are among the highest in the world. And some U.S. companies are paying a lot of taxes. Corporate tax reform, as President Obama declared in his State of the Union speech, is certainly long overdue. But what sort of reform? Some corporations are paying too much, but others aren’t paying enough. We talk about the “business community” like it really exists, but when it comes to tax reform, it’s riven by fault lines. Business support for tax reform depends on papering over these divisions in the hopes of procuring a pain-free package of goodies from Congress. Level playing field? My colleague at Tax Analysts, Marty Sullivan, has underscored the disparities plaguing the corporate income tax. “The essence of an efficient and competitive tax system is a level playing field,” he told the House Ways and Means Committee last week. “Government should not attempt to outguess the market and pick winners and losers. Unfortunately, there is a wide disparity in the tax treatment of businesses under current law.” Wide disparities, indeed. In recent years, General Electric paid taxes at an effective rate of just 3.6 percent, while Home Depot paid 35.4 percent. Merck paid 12.5 percent, while Disney paid 36.5 percent. Pfizer paid 17.1 percent while CVS paid 38.8 percent. Why do some companies pay so little while others pay so much? Low rates are common, according to Sullivan, in industries where operations and technology can be readily moved offshore to low-tax jurisdictions. By contrast, companies that find their markets here in the United States aren’t so lucky. It’s hard to ship your customers overseas along with your factories. Tax disparities within the business sector mean that policy reforms helping one company will end up hurting another. And that makes genuine reform a long shot, since business support for reform is likely to evaporate once talk moves from the general to the specific. Hands off my loophole! Multinational companies are doing pretty well under the current tax system, thank you very much. And while they’re happy to see statutory rates fall, they aren’t so wild about additional reforms that might be used to pay for lower rates. Closing loopholes always seems like a good idea until it’s your loophole that’s getting closed. Among multinational corporations with low effective rates (thanks to provisions allowing them to shift profits to overseas subsidiaries), any effort to shore up the tax base is likely to run headlong into a buzz saw of opposition. In his speech, Obama attributed tax law disparities to the “parade of lobbyists” who have advanced the interests of their clients even as they undermined the tax system as a whole. And he’s certainly right. But many of the benefits showered on multinational corporations have been deliberate, designed to encourage the competitiveness of U.S. corporations and protect U.S. jobs. That’s not crazy, but it’s not right, either. As Marty Sullivan told Congress: Yes, U.S. multinationals create jobs. But so do purely domestic corporations. So do small businesses. And so also do foreign-headquartered companies that invest in the United States. Multinational companies have their own needs and desires, often quite distinct from those of real, live American workers. The tax system doesn’t need to penalize multinationals, but it shouldn’t favor them either. Tax favors aren’t just unfair, they’re also unwise. As the Center on Budget and Policy Priorities has observed, tax disparities distort decision-making , encouraging companies to make investments based on tax consequences, not business fundamentals. Leveling the playing field among corporate taxpayers would help eliminate such distortions, boosting efficiency across the economy. Goodies for everyone But if you’re hoping for that sort of tax reform, get ready for disappointment. Tax reform is currently all the rage, as evidenced by Obama’s endorsement. But the popularity of the idea – especially within the “business community” — is premised on the unspoken condition that reform means rate cuts without loophole closing. That sort of “reform” neatly avoids creating winners and losers by simply making everyone a winner. At least over the short term. Over the long-term, however, that sort of reform would be a disaster. It costs about $8 billion for each percentage-point reduction in the corporate tax rate, according to a report from Bloomberg. Unless offset by base broadening, that sort of giveaway is simply unaffordable in our current fiscal climate. Indeed, corporate tax reform should really be used to raise money, not lose it. Sadly, though, revenue-losing tax reform is still a distinct possibility, despite its patent absurdity. As New York University law professor Daniel Shaviro has observed , “You don’t need to rely on broader intellectual consensus if you are simply handing out goodies, rather than mixing them with sour medicine.” Business leaders, like Proctor & Gamble CEO Robert McDonald, have been urging precisely that sort of pain-free tax reform. Obama has made clear that corporate tax reform shouldn’t lose money. And maybe he’ll stick to his guns, demanding a broader tax base in exchange for lower rates. But as last December’s tax deal made clear, there’s plenty of congressional interest in further tax reduction, especially among Republicans. Let’s hope Obama will stand up to them. And stand up for real reform.

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SOTU PREVIEW: What Obama Will Focus On In Tuesday’s Address

January 23, 2011

WASHINGTON — Under pressure to energize the economy, President Barack Obama said Saturday he will use his State of the Union address to outline an agenda to create jobs now and boost American competitiveness over the long term. Heading quickly into re-election mode, Obama is expected to use Tuesday’s prime-time speech to promote spending on innovation while also promising to reduce the national debt and cooperate with emboldened Republicans. “I’m focused on making sure the economy is working for everybody, for the entire American family,” Obama said Saturday in an uncommon preview of his speech, offered up in an online video to his supporters late Saturday afternoon. The president announced that the economy would be the main topic of his speech, a nod to how important that issue is to the country’s standing and his own as well. At the halfway point of his term, Obama said the economy is on firmer footing than it was two years ago: it is growing again, albeit slowly, while the stock market is rising, and corporate profits are climbing. But with the unemployment rate stubbornly stuck above 9 percent, Obama will signal a shift Tuesday from short-term stabilization policies toward ones focused on job creation and longer-term growth. Obama offered no details on specific proposals he will call for in his address, though he has offered hints in recent weeks. Perhaps the clearest came in an overlooked speech in North Carolina last month, one that will likely serve as a template of what the nation is about to hear. Obama said then that making the U.S. more competitive means investing in a more educated work force, committing more to research and technology, and improving everything from highways and airports to high-speed Internet. In his weekly radio and Internet address Saturday, Obama also highlighted free trade as a way to increase U.S. exports and put Americans to work. “That’s how we’ll create jobs today,” Obama said. “That’s how we’ll make America more competitive tomorrow. And that’s how we’ll win the future.” Obama’s challenge will be to find the money and political will to spend it, at a time when he’s pledged to reduce spending and tackle the mountainous debt. In his preview to supporters Saturday, Obama said he would emphasize fiscal restraint Tuesday, but didn’t go into detail, saying only that any spending cuts should be done in a “responsible way.” The president is under growing pressure to tackle the debt from the public and lawmakers, particularly some newly elected Republicans who ran on pledges to cut spending. Obama, too, has made spending cuts a priority, setting up a bipartisan fiscal commission which recommended tax hikes and cuts to entitlement programs – both efforts that would likely be a hard sell with the American people. Obama will speak Tuesday to a Congress changed both by Republican wins in the November election and the attempted assassination of one of its own. Democratic Rep. Gabrielle Giffords was shot in the head two weeks ago during an event in her district in Tucson, Ariz. Since then, the president has appealed for more civility in politics, and in a nod to that ideal, some Democrats and Republicans will break with tradition and sit alongside each other in the House chamber Tuesday night. Obama hinted Saturday that he would build on that theme during the State of the Union, tying the country’s economic success to bipartisan cooperation. “We’re up to it, as long as we come together as a people_Republicans, Democrats, Independents_as long as we focus on what binds us together as a people, as long as we’re willing to find common ground even as we’re having some very vigorous debates,” Obama said. The White House sees competitiveness as a framework Republicans could support. GOP lawmakers traditionally have backed the types of trade deals and research-and-development efforts that Obama is promoting. Senate Minority Leader Mitch McConnell, R-Ky., appeared to give the president an opening when he said last week in a speech that “my advice to my colleagues is if the president is willing to do what we would do anyway, then we should say yes.” Yet for all the talk of bipartisanship, Obama will deliver Tuesday’s address at a time when his White House is shifting into re-election mode. Obama plans to file papers to formally run for re-election around March, and several aides are moving to Chicago to run the 2012 campaign. Saturday’s video preview to supporters signaled a return to the campaign-style outreach Obama’s team mastered in 2008, and underscored his need to rally his base around his agenda. The White House is keenly aware that Obama’s re-election prospects likely hinge on the state of the economy. More than half of those questioned in a new Associated Press-GfK poll disapproved of how he’s handled the economy, and just 35 percent said it’s improved on his watch. Three-quarters of those surveyed did say it’s unrealistic to expect noticeable improvements after two years. They said it will take longer. Obama’s preview Saturday focused exclusively on his domestic agenda, with no mention of foreign policy. Obama is, however, expected to frame his call for competitiveness in global terms, calling for a new Sputnik moment – a reference to the Soviet Union’s 1957 launch of the first satellite, ahead of the U.S. He intends to say the U.S. is again facing challenges from abroad, this time from fast-growing economies in China, India and throughout Southeast Asia. In his travels to Asia and during Chinese President Hu Jintao’s recent trip to Washington, Obama has said he’s been struck by the rapid rise of that region and the laser-like focus on competing in the global economy. “They are thinking each and every day about how to educate their work force, rebuild their infrastructure, enter into new markets,” Obama said in November, after wrapping up a 10-day Asia trip. “We should feel confident about our ability to compete, but we are going to have to step up our game.”

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Obama To Push For New Spending In State Of The Union

January 22, 2011

President Barack Obama will call for new government spending on infrastructure, education and research in his State of the Union address Tuesday, sharpening his response to Republicans in Congress who are demanding deep budget cuts, people familiar with the speech said.

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Richard (RJ) Eskow: If Obama Moves Right He Loses Everybody — and Everybody Loses

January 19, 2011

The latest Democracy Corps/Campaign For America’s Future poll on jobs and the economy has a clear message for the president and his party: Stand up for jobs, and protect Social Security and Medicare. The results couldn’t be clearer. Yet it’s still rumored that the president’s State of the Union will emphasize deficit reduction over job creation, and the White House has refused to assure worried Democrats that the president won’t also propose cuts to Social Security. How many polls will it take to convince the White House that this is political suicide? How many expert analyses will it take to persuade them that its premature to make deficits the priority when the country desperately needs jobs and economic growth? The latest poll is based on interviews with 1,480 people who voted in 2008, and was conducted January 9 – 12. It strongly reinforces the findings of earlier polls: Voters overwhelmingly want their government to emphasize job creation and economic growth over deficit reduction, and they are opposed to cutting Social Security or Medicare. The bottom line? The president’s in danger of moving in a direction that will lose everybody he needs. Literally every demographic group he and his party needs will be alienated by a right-leaning set of policies. Voters Today Here’s how the picture looks today, by demographic group: Young voters will be considerably less eager to support Barack Obama in 2012, except in the unlikely event that his opponent is Sarah Palin. While he wins 64 percent to 29 percent of the youth vote in a match-up against Palin (which tellingly isn’t even as great as his poll showing against McCain), he only wins 54 percent of the youth vote against Mitt Romney, who hasn’t even begun to campaign. Support for Congressional Democrats among young voters is plunging, as the 63-18 percent difference drops to 50-39 percent in a hypothetical 2012 match-up. And these numbers don’t capture the lost intensity of support, either. After the 2008 election, the Obama team boasted that it had built an independent, youth-based team around its Internet lists that it could mobilize to win future elections. But the number of young voters plunged by more than half in 2010. 51 percent of voters aged 18-29 showed up in 2008, and that number plummeted to 20.4 percent last November. That’s even fewer than voted in 2006. The party’s lead in union households, another Democratic stronghold, has dropped from 37 points to 18 points. The president and the party still have some very strong relationships: suburban voters, unmarried women, and African Americans are still very solid. And the president’s negatives have dropped sharply since the election. But two core constituencies, the young and union members, are crumbling. The picture’s even bleaker among key groups of swing voters. Congressional Democrats are trailing by 23 points among white non-college voters, and Obama’s losing them to Sarah Palin by 22 points (and to Romney by 21). Obama’s losing white seniors to Palin by 8 points, to Romney by 25 points, and other Democrats are losing them by 16 points. Congressional Democrats are losing rural non-South white voters by 31 points, and Obama trails both Palin and Romney (losing to Romney by 26 points). So the question becomes, what should the president and Congressional Democrats do — and what shouldn’t they do — to improve their electoral chances? The Way Out The answer, as it turns out, is: The right thing. The rumored priorities for the State of the Union are exactly the opposite of voters’ priorities. When asked to name the two biggest problems right now, the overwhelming answer was “jobs and the economy.” Unemployment and outsourcing ranked first and second, with a total of 74 percent of respondents placing them in the top two. “Deficits” were included by only 18 percent; 18 percent said “wages have not kept up with the cost of living,” and 17 percent said “the economy is not growing.” The total blend of answers paints the picture of a country devastated by job loss and economic setbacks. In a similarly-structured question, 46 percent said Congress’ top priority should be “economic recovery and jobs,” 34 percent said “protecting Social Security and Medicare,” and only 15 percent said “reducing the size of the budget deficit.” Another 14 percent included “investing in new infrastructure and new industries” as one of their two top priorities. Should Social Security benefits be cut? White seniors said no, by 48 percent to 36 percent, and the “don’t cut” voters felt much more strongly about their position. White non-college voters said “don’t cut” by 55 percent to 35 percent. Voters in districts that turned Republican in 2010 opposed cuts by 57 percent to 34 percent. Even suburban voters were opposed, 60 percent-34 percent. The voters were strongly in favor (57 percent) of “a plan to invest in new industries and rebuild the country over the next five years.” By contrast, only 52 percent approved of “a plan to invest in new industries and rebuild the country over the next five years,” with less intensity of support than expressed by those who wanted investment. Other ideas sound good to voters until they’re told what’s involved: They liked the idea of adopting the recommendations of a “bipartisan deficit commission,” supporting it 56 percent to 19 percent. But when they were told what the recommendations were, they opposed them by 54 percent to 34 percent. 55 percent were opposed to raising the retirement age and 57 percent were opposed to reducing benefits for people now entering the workforce. Would this be a “move to the middle”? 52 percent of independents and 55 percent of Republicans oppose raising the retirement age. People under 50 oppose it by a 22-point margin, women oppose it by a 19-point margin, suburbanites oppose it by a 14-point margin, and people in districts the GOP picked up last year opposed it by 14 points. For other benefit cuts the opposition was even greater. The margins were 25 for under-50′s, 27 points for women, 26 points for suburban voters, and 23 points in GOP pick-up districts. So why are we still talking about this? Warning Signs These poll results show that a rightward move at the State of the Union would be disastrous, yet the signs are ominous. Robert Gibbs has indicated several times that deficit reduction will be a major theme of the speech. Now Christina Romer, a former administration economics official, is pushing the deficit line. In a New York Times op-ed called ” What Obama Should Say About the Deficit, ” Dr. Romer writes today that “My hope is that the centerpiece of the speech will be a comprehensive plan for dealing with the long-run budget deficit.” Romer continues: “The recommendations of the bipartisan National Commission on Fiscal Responsibility and Reform that the president created are a very good place to start.” That’s wrong on two counts: The bipartisan Commission never issued recommendations — it couldn’t reach the required majority — and the recommendations of its’ two co-chairs are harmful, anti-growth, and (as the polling has showed) extremely unpopular. This is the same Christina Romer who wrote another op-ed only ten weeks ago, also in the Times , called ” Now Isn’t the Time to Cut the Deficit .” Is this reversal the sign of some internal administration shift? Now Dr. Romer says that “the need for such a bold plan is urgent — both politically and economically. Voters made it clear last November that they were fed up with red ink.” (No, they didn’t, as this and many other polls have shown. This was a protest vote, more than anything else.) Why are deficits “urgent” economically? Dr. Romer explains: “At some point — likely well before 2035 — investors would revolt and the United States would be unable to borrow.” Jobless Americans might be stunned to learned that a possible investor revolt sometime within the next quarter-century, based on hypothetical scenarios, is more “urgent” than they are. Many economists would be equally surprised to learn that Dr. Romer doesn’t consider economic growth an effective way to cut the deficit. Many of the president’s advisors will argue that there’s a new political calculus and that he no longer has the horsepower to get spending measures through Congress. They’ll also point out that voters say they want cooperation and civility. Okay. But why can’t you explain what you believe will work? And since when did articulating an economic policy or defending Social Security become “uncooperative”? The Moment Before If the president moves to the right in this way, it would be a deeply cynical strategy — one that sacrifices his party and everything it’s represented for 75 years in order to win on celebrity likability and post-partisan “branding.” Worse, from his point of view, we now know it probably wouldn’t work. The numbers aren’t there. He would be proposing the wrong policies, at the wrong time, for the wrong reasons. And if the president’s advisors think that a deal on Social Security or deficits would give him the same boost that the tax deal did, they’d be sadly mistaken. The tax deal, whatever its flaws, put money in everybody’s pockets. Social Security cuts and austerity economics would take money out of those pockets. Sure, Republicans would cut a deal. Then they’d use it against him in 2012. Large segments of his base would turn away from him, or just stay home. Swing voters would register their disapproval of the deal by turning on him, as the public face of the “grand compromise.” We’re in a strange historical moment. The president’s about to give a speech that will define the future of his presidency — and our own personal futures — yet nobody knows what he will say. That’s odd and disturbing. For those who want to see the administration defend Social Security and strive to rebuild the economy, Washington seems to be moving in slow-motion. It’s like the scene in a science-fiction movie right before a world-changing event. You know the scene I mean, the one where the sky grows dark and the wind rises and everything becomes silent. You don’t know exactly what’s coming. But you know that afterwards nothing will ever be the same. Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Strengthen Social Security campaign. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.” Website: Eskow and Associates

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Michael Port: Why Entrepreneurs Should Ditch The Elevator Pitch

December 15, 2010

A primary reason that many professional service providers fail to build thriving businesses is that they struggle to articulate in a clear and compelling way exactly what solutions and benefits they offer. They don’t know how to talk about what they do without sounding confusing or bland or like everyone else — and without using an elevator speech. You know, that 30-second commercial that’s supposed to wow someone with what you do in the time it takes an elevator to go from the first to the fifth floor. No one wants to listen to your elevator speech. I’ve been polling audiences of thousands for years on this issue. During each speech I ask, “How many of you love, love, love listening to someone else’s elevator speech?” No hands go up. I then ask, “How many of you love, love, love giving your elevator speech?” Same thing. No hands. So what gives? If we don’t like listening to or giving the speech, why is it still being taught? Because, of course, we need to be able to talk about what we do — I get the concept. However, in this case, the elevator speech has been inappropriately appropriated by the service professional. Not only does it not work well, it makes us look foolish, or, worse yet, obnoxious. The elevator speech does not help sell professional services. The elevator pitch is designed for the entrepreneur to pitch an idea to a venture capitalist or angel investor in the hopes of receiving funding, not for the service professional to try to build a relationship of trust with a potential client. Venture capitalists often judge the quality of an idea on the basis of the quality of its elevator pitch. Makes perfect sense, in that situation. But this is not how a relationship develops between a client and a service professional. You’re trying to earn the status of a trusted adviser, not trying to raise money to create some new product like metal-detecting sandals. Totally different context. Totally different dynamic. So, how do you talk about what you do? By using this crazy concept that I call a conversation. You know when two people actually care about what the other has to say? Shocker, I know. Creative — but not scripted! — conversations will spark curiosity and interest about you and your services, products, and programs. If you know, and I mean really know, who you help, what challenges they face, how you help them, and the results and benefits they get from your services — you can talk about what you do any which way ’till Sunday; 30 seconds, three minutes, three hours, it doesn’t matter. Or, you could go with an overblown, high-falutin, hyperbole-laden elevator speech that’s supposed to make you look like a rock star in 30 seconds. Unfortunately, I doubt the excessively exuberant elevator pitch is going to compel the listener to whip out his credit card right then and there. Developing Your ‘ Book Yourself Solid ‘ Dialogue Let’s put it all together with a simple five-part exercise that will help you talk about what you do. Part I: Summarize your target market in one sentence. Part II: Identify and summarize the three biggest and most critical problems that your target market faces (what they want to get away from). Part III: Identify and summarize your target markets’ three most tangible desires (what they want to get to) Part IV: Identify the number one most relevant result you help your clients achieve. Part V: List the benefits your clients’ experience as an outcome of the result you provide. You now have an outline that will help you clearly articulate what you do without sounding confusing or bland. In fact, you’ll sound like a superstar because you can use this outline or framework to have a meaningful conversation with another human being. Reminder: this is not a speech. Don’t stay married to the format. Be sure to improvise. Using the structure can be helpful but you may not need to go through every element of this framework in every conversation. The person you’re engaged with might end up doing all the talking and even supply your side of the dialogue accurately. Then you can just sit back and relax. The point is, if you’re prepared with these five elements, you have the required ingredients for talking about what you do so you can cook up a sweet and tasty business, booked solid with high-paying, high-value clients. Called “an uncommonly honest author” by the Boston Globe and a “marketing guru” by The Wall Street Journal , Michael Port can be seen regularly on MSNBC and is a New York Times Bestselling author of four books including Book Yourself Solid , Beyond Booked Solid , The Contrarian Effect and The Think Big Manifesto . Get free chapters from Book Yourself Solid at www.BookYourselfSolid.com

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GM Wants ‘Some Relaxation’ Of Government’s Pay Restrictions

December 10, 2010

WASHINGTON (By John Crawley) – General Motors Co Chief Executive Dan Akerson said on Friday that the automaker is seeking “some relaxation” in the restrictions on executive pay imposed by the U.S. government. “We have to be competitive and retain talent,” Akerson said in response to a question at the Economic Club of Washington, D.C. “We’re starting to lose them now.” Akerson said he would meet with the U.S. Treasury’s special paymaster on Friday to discuss the issue of executive compensation. Akerson guided GM through its blockbuster initial public offering in November that reduced the U.S. Treasury’s stake to about 33 percent from 61 percent. The IPO for the top U.S. automaker came just over a year after it was put through a restructuring in bankruptcy funded by the Obama administration. Akerson, who in September became GM’s fourth CEO in under two years, said the automaker was determined to never repeat the missteps that led to its 2009 bailout. “We are humbled by our near-death experience,” he said. In his speech, one of his highest profile public appearances since the IPO, Akerson repeated several key points that GM and its bankers made to investors during the run-up to the record $23.1 billion share offering. Akerson said investors “saw a new company” with a competitive cost structure, leaner inventories, stronger brands and new success in avoiding the damaging discounting that it relied on to drive sales earlier this decade. “All of which is resulting in improved earnings and cash flow,” Akerson said just blocks from the executive office building where Obama administration officials orchestrated the company’s wrenching overhaul. Akerson said GM was positioned to break even if industry-wide auto sales were to retreat and was “better positioned” than other automakers to take advantage of the “huge growth potential” of China, India and Brazil. (Reporting by John Crawley; writing by Kevin Krolicki, editing by Gerald E. McCormick, Dave Zimmerman) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Greenback to Take A Hit on Friday As Investors Digest Latest Fed Speech

November 19, 2010

Greenback to Take A Hit on Friday As Investors Digest Latest Fed Speech

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Volcker: Fed’s $900 Billion Plan Won’t Do Much To Boost Economy

November 5, 2010

SEOUL, South Korea (AP, By Kelly Olsen) — Former Federal Reserve Chairman Paul Volcker says the U.S. central bank’s plan to buy hundreds of billions of dollars in government bonds probably won’t do much to boost the economic recovery. The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds. Volcker told a business audience in Seoul that the Fed’s bond plan is obviously an attempt to spur the U.S. economy but “is not the kind of action that’s likely to change the general picture that I’ve described as slow and labored recovery over a period of time.” The Fed’s move has caused worries in South Korea and other emerging markets in Asia. Those governments fear that lower interest rates in the U.S. will further push investors to seek higher returns overseas and that this tide of money will drive up their currencies and destabilize their markets. Volcker served as Fed chief from 1979 until 1987 under presidents Jimmy Carter and Ronald Reagan and is currently chairman of President Barack Obama’s Economic Recovery Advisory Board. He also warned that the U.S. won’t find its way out of the economic doldrums through over-stimulation. “The thought that you can create a prosperous economy by inflating is an illusion, in my judgment,” he told reporters after his speech. “And we should never forget that. I thought we’d learned that lesson and I hope we continue to learn that lesson.” The Fed faces a dilemma in balancing the aim of boosting the economy now while avoiding fears of a future jump in inflation due to the monetary stimulus, said Volcker, who as central bank chairman hiked interest rates aggressively to tame inflation. “The influence of this kind of action on longer term interest rates, in particular, is ambiguous because the immediate impact of buying bonds ought to be to drive bond prices up and interest rates down,” he said. “But if people get concerned about longer run inflationary impacts, the effects go in the other direction.” In theory, the Fed’s action is expected to lower interest rates because bond prices and interest rates — also known as yields — move in opposite directions. The yield is the fixed amount of annual interest paid to the owner of the bond expressed as a percentage of the bond price, so the extra demand created by the Fed’s purchases should push bond prices up and lower the yield. But when investors fear inflation will be higher in the future they demand that bonds pay a higher interest rate to protect their investment from the value-eroding effects of inflation.

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Ben Bernanke: Regulators Looking Into Foreclosure Mess

October 25, 2010

WASHINGTON — Federal banking regulators are examining whether mortgage companies cut corners on their own procedures when they moved to foreclose on people’s homes, Federal Reserve Chairman Ben Bernanke said Monday. Preliminary results of the in-depth review into the practices of the nation’s largest mortgage companies are expected to be released next month, Bernanke said in remarks to a housing-finance conference in Arlington, Va. “We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Bernanke said. “We take violation of proper procedures very seriously,” he added. The central bank’s decision adds weight to federal and state investigations into whether banks used flawed documents to foreclosure on homeowners. Attorneys general in all 50 states plus the District of Columbia are jointly investigating whether paperwork and legal procedures were handled properly. At the federal level, the Treasury Department’s Office of the Comptroller of the Currency last month asked seven big banks to examine their foreclosure practices. The OCC and the Federal Deposit Insurance Corp. are also working with the Fed on its examination. In addition to probing the banks handling of foreclosure documents, Fed staffers and other federal agencies are evaluating the potential effects of the foreclosure debacle on the real-estate market and on financial institutions, Bernanke said. The Federal Reserve oversees bank holding companies – typically Wall Street’s biggest banks – including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo. The inquiries come as Bank of America and Ally Financial Inc.’s GMAC Mortgage have resumed processing foreclosures, after halting them temporarily to review documents. Both lender face allegations that employees signed but didn’t read foreclosure documents that may have contained errors. Other companies, including PNC Financial Services Inc. and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public. The federal agencies have a range of options at their disposal. They include issuing a “cease and desist” order requiring a company to stop engaging in a specific practice. They can impose fines on the companies. Agencies also can take less drastic actions, such as crafting a plan with the company to fix any problems. Bernanke didn’t provide details in his speech. According to people familiar with the examination, the banking agencies are looking into whether companies had controls in place when foreclosure documents were signed, what procedures were in place to proper handle documents, and whether employees involved in the foreclosure process were adequately trained. Dubious mortgage practices and lax lending standards were blamed for contributing to a housing bubble that eventually burst and thrust the economy from 2007-2009 into the worst recession since the 1930s. Many Americans took out home loans that they didn’t understand and bought homes that they couldn’t afford. As a result, foreclosures have soared to record highs. It’s one of the negative forces restraining the economy’s ability to get back on sounder footing. Now more than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further, Bernanke said. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” Bernanke warned.

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Droga5: POPTECH 2010: How Not To Save The World

October 22, 2010

PopTech kicked off Thursday with with a recount of the disastrous campaign in the 1970s to bring clean water to Bangladesh. It’s an ominous story about how millions of tube wells were dug into shallow layers of ground that had naturally occurring arsenic, which contaminated the water. What resulted was what the World Health Organization later dubbed “the largest mass poisoning of a population in history.” Ned Breslin, from Water For People , echoed this theme through his speech in which he spoke about the kind of quick fix solutions that are thrown at the water crisis in developing nations. Quick fixes like hand pumps for wells that fail and eventually lead to broken water access points. In providing this infrastructure, what we are doing is scaling failure. There are many lessons that you can extrapolate from these stories, but what hit me the hardest was that sometimes our best intentions to do good can actually cause catastrophic harm exacerbating the original problem. It’s sobering to put these insights into context when you consider the growing mandate among global brands to do more good in this world. It’s become fashionable in business to embrace a cause and have a go at fixing it. In thinking about the role these companies want to play in this capacity, two questions immediately come to mind: Are businesses suited for the task? And what are the boundaries for the problems that companies should be allowed to tackle? I think the answer lies between what Kathryn Schulz , author of the bestselling book, Being Wrong: Adventures in the Margin of Error, and what Kevin Dunbar , a psychologist who studies the impact of failure on our brains both had to say. Dunbar talked about risk aversion and how a lack of diversity of thought held research scientists back from explaining unexpected findings. From Schulz we learned about error blindness and that believing that we are right can be dangerous in how we approach problem solving. Arriving at solutions that have real impact, but more importantly, don’t spawn new problems requires a profound commitment to getting it right. For corporations, this means a number of things. First, it requires that they step outside of their systems, networks and even category to embrace the approaches of some the remarkable leaders that are pioneering solutions today. It means that in order to make significant impact, brands have to force themselves to prioritize solutions that have longevity. Lastly, any endeavor that a corporation endeavors has to seek out wide perspective embracing even skeptics to challenge their thinking. In doing so, I believe that any brand that wants to do good in this world will have laid the foundation for arriving at a solution that wont go awry. Harry Roman, Strategist at Droga5

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Currency Traders Witness Mix Price Action Ahead of the Slew of U.S. Economic Releases, And Ben Bernanke’s Speech

October 15, 2010

Currency Traders Witness Mix Price Action Ahead of the Slew of U.S. Economic Releases, And Ben Bernanke’s Speech

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Peter Shankman: Five Ways to Not Screw up Your Networking Attempts

October 4, 2010

I was at a conference this weekend in Las Vegas — It’s bad enough to fight with the recycled air, the perfumed-at-50-degrees conference rooms, and the endless fried foods that pass for “healthy,” but you add in 200 people who have absolutely no clue how to network, and it’s enough to make you pull an Ocean’s Eleven and sneak out of the hotel in an ambulance. Here are the top five ways to not screw up your next networking opportunity. 1) Networking doesn’t begin when you get to the conference, it begins the second you leave your house. Anyone is a potential hiring manager, client, or customer. True story: I was behind a real jackass at a ticket counter for an international flight last year. At one point, he actually had the nerve to say “Well, I work for company XYZ (A big global company), and I can make sure that we never give you any business again if you don’t fix my problem,” or something just as arrogant. At that point, the person behind me walked up to him, and said quietly “What’s your name?” The arrogant slob said “Why do you care, pal?” To which the first gentleman said “Because I’m senior executive vice president at [said big global company,] and I won’t have anyone sullying our good name with their petty bullshit.” I’m pretty sure the arrogant guy doesn’t work for the company anymore. In today’s world, you’ve simply got to be on your best behavior. I can promise you, if you’re a screaming jerk at check-in, or on the rental car bus, or virtually anywhere, and I happen to be there, I’ll be the guy with the FlipCam, posting your idiot rant onto YouTube. Why? Because I can. You don’t want to be the guy in the video. Besides — I know a lot of people — What if I know your boss? Or what if you find me one day as the guy doing the hiring? 2) Turns out, “It doesn’t always have to be about you!” is actually a good comment. As we sit down at the conference lunch, I don’t need to know what you do, how well you do it, how many awards you’ve received for doing it, and how you’re pretty sure you can do it for me if I’d simply pay you to, all before I’ve had sip one of my watered down iced tea. Here’s a thought — Try making it about someone else for a change — Instead of sitting down and launching into your pre-rehearsed litany of how great you are, what about shutting up and listening once in a while? Put the business-card-Uzi away, and don’t rapid fire them to anyone within range. You know how it seems how some people are only listening to find a break in the conversation so they can talk? Don’t be that person. Ask questions! It’s the ultimate way to learn, and allows you the opportunity to actually contribute something of value to the conversation, as opposed to the spiel of your latest victory. Remember: Value gets remembered, verbal diarrhea simply gets recalled — and not in a good way. 3) Going up to the speaker at the end of her speech ensures only one thing: You’ll be one of a hundred people going up to the speaker at the end of her speech. So rather than giving yourself the opportunity to not get noticed in the slightest, why not buck the crowd? Find the speaker twenty minutes before they go on stage, and introduce yourself. On your business card, write “I’m the one who met you before your speech. You’ll be remembered. 4) Do something different : My business card is a poker chip. You can’t scan it in, you don’t want to throw it out. You keep it on your desk and play with it. I’ve seen other business cards that were actual credit cards, bottle openers — Anything but a boring piece of cardboard. Try and be original. If you’re creative enough to give me something I’ll remember, chances are I’ll want to do some business with you. 5) Finally — Be wary of making the leap from “Met you at the conference” to “Friending you on Facebook so you can see photos of me in my speedo.” Until Facebook becomes the norm and networking is ubiquitous with it, (probably 24 months) there are still people wary of it. And until you learn what to post online and what not to post, remember that not everyone is going to assume that a FB connection request is either a) acceptable or b) worth their time. We’ll get there, but we’re not there yet. We’ll eventually learn what’s acceptable and what’s not — because in the end, we’ll only have one network — It’ll have everyone in our lives, both business and professional, and we’ll have to be smart enough to know that what we post can be seen by everyone, forever. Until we are, asking a potential business contact who doesn’t know you that well to till your crops on Farmville is just asking for trouble. (And massive ridicule.) 6) Bonus rule : It’s no one’s fault but your own if your personal or professional brand isn’t seen as you want it. It’s not Facebook’s fault, it’s not Twitter’s fault, it’s not LinkedIn’s fault — It’s your fault. Make sure to keep up appearances as you want them to be. Otherwise, you’ve got no one to blame but yourself. Peter Shankman sold his social media company HARO (http://helpareporter.com) to Vocus, Inc. in June of this year. He spends the majority of his time tweeting as @petershankman, and doesn’t take his Blackberry with him if he’s going to be drinking. He blogs at http://shankman.com

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Obama: Reforms, Economy Are ‘Moving In The Right Direction’

September 20, 2010

In a town hall discussion broadcast live on CNBC Monday, President Barack Obama said the country’s economy is “moving in the right direction” — even if it doesn’t feel that way. Responding to questions from, in addition to the host John Harwood, a student, a Wall Streeter, a small business-owner and a self-described member of the middle class, the president acknowledged that “times are tough for everybody,” but pointed to his record so far as president and asked the audience to trust in his agenda. “We went through the worst recession since the Great Depression,” he said. “Those programs that we put in place worked. So now you’ve got a financial system that is stable. …The challenge is that the hole was so deep.” The tough questions came near the beginning. The chief financial officer for a veterans service organization, who called herself a “middle-class American,” said she was “exhausted of defending you” and “deeply disappointed with where we are right now.” “The life you describe, one of responsibility, looking after your family, contributing to your community, that’s what we want to reward,” Obama said in response. “I understand your frustration.” He proceeded to list his administration’s reforms on student loans, credit cards and “a whole host of things that we’ve put in place that do make your life better.” The president deflected criticism from Wall Street as well. He pushed back against the assertion that he has vilified business, saying the angry response to his reforms has been irrational. His citing of historical examples, such as the creation of Medicare, recalled that passage from a 1933 Time article he read in a speech in April — “Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment…” — which refers to the creation of the Federal Deposit Insurance Corporation. When SkyBridge Capital manager Anthony Scaramucci told Obama, in a question, that Wall Street feels like a “pinata,” the president said, to applause, “There’s a big chunk of the country that thinks that I have been too soft on Wall Street.” WATCH Obama respond to accusations that he’s been too tough on Wall Street: “Me saying you should be taxed more like your secretary, when you’re pulling home a billion dollars or a hundred million dollars a year, I don’t think is me being extremist or anti-business.” Throughout the speech, Obama insisted he was allied with businesses of all sizes. In response to a question from a small business owner who does monogram glass work, Obama pointed to the “eight tax cuts for small businesses so far” that his administration has passed, calling them “pro-business agendas.” He admitted, further, that his own political approach to this legislation hasn’t always been ideal, saying that he will be “setting a better tone so that everybody feels like we can start cooperating again, instead of going at loggerheads all the time.” The president’s argument, ultimately, was that reforms need to continue. Regarding housing, Obama countered the argument that allowing the market to fall naturally would help it more than continuing to prop it up. “We were very successful in keeping the housing market alive at a time when it had completely shut down,” he said. “My job as president is to think about those families that are losing their homes, not as some abstract numbers. I mean, these are real people.” He also touched on the possibility of a payroll tax holiday (“This is something that we’ve examined”) and on China’s capital restrictions. “What we’ve said to them is you need to let your currency rise,” he said about China. “We are going to continue to insist that, on this issue and on all trade issues between us and China, it’s a two-way street.”

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Bank Of America CEO Says Bank’s Growth Will Come From Abroad

September 14, 2010

Speaking at at an industry conference today, Bank of America CEO Brian Moynihan said his bank, the country’s largest by assets, will continue selling unessential assets and will focus on global expansion. At today’s installment of the Barclays Capital 2010 Global Financial Services Conference, Moynihan’s message of, in his words, “hard work and good execution,” was expected in light of the Wall Street Journal’s interview with the CEO this morning. “We’re just hard at work transforming our company from the excess of the economic crisis. There’s no new news here,” Moynihan said in his remarks, which were broadcast on the web. As the WSJ points out, though, Moniyan’s conservative position is itself news: Under the previous CEO, Kenneth Lewis, the bank spent more than $120 billion on acquisitions, including the purchase of the now-infamous mortgage lender Countrywide Financial. Moynihan’s plan, he said, is to hunker down and strengthen the core business. “We reviewed our franchise, selling off parts that didn’t fit with the core customer basis, in order to focus on what we have: the best franchise in financial services,” he said today. And in what was perhaps the greatest understatement of his speech, he continued, “We are a very different company than we were three years ago. Our franchise is complete. We don’t need to acquire anything.” Be that as it may, Moynihan has global ambitions for the company, especially in its investment banking division. Bank of America emerged from the financial crisis with a strengthened investment banking arm, thanks to its hurried purchase of Merrill Lynch in September 2008. The WSJ reported today that the Merrill-BofA combination hasn’t produced stunning results. But Moynihan, who said his investment bank is already second in the world in terms of fees collected, hopes to get even stronger. His bank collects 75 percent of its fees from U.S. customers and 25 percent abroad, he said. The key to growth, he added, is to increase the bank’s global presence. “If we get to 50-50, I’m confident we’ll move to number one investment banking in the world.” The New York Times reported today that Bank of America hired four new bankers in Europe. Indeed, Moynihan said that over the last year and a half, his company has hired about 800 people outside the U.S. “Even as a large company, we have lots of room to grow this company,” he said.

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Home Prices Set To Fall Further: Richard Fairbank, Capital One CEO

September 13, 2010

Speaking at the Barclays Capital 2010 Global Financial Services Conference, Capital One CEO Richard Fairbank was pessimistic about the housing market and about consumer demand — but optimistic about his bank’s prospects. Fairbank, in remarks that were broadcast on the web, was asked by an audience member whether there will be a double-dip in the housing market. He chose his words carefully. “I think we feel very cautious about the housing market,” Fairbank said. “I think that even despite some of the recent months where home prices have gone up, I think it’s a very plausible case for home prices to go back down again.” His dim view of the U.S. housing market, he said, is based on the current “logjam” of defaulted mortgages and foreclosures being dealt with at Capital One, which added a retail banking arm to its lending and credit card businesses in 2005. “Unsold inventory is really at just about an all-time high.” Although he claimed not to be predicting a “double-dip recession,” Fairbank was not at all optimistic about the housing market. “We are managing to a view that home prices are more likely to be headed down rather than up,” he said. Nervousness on the part of consumers, he said, isn’t helping. Because more people are saving money rather than spending it, their credit is relatively strong, but the economy is suffering from the lack of demand. “We’ve got to be careful what we wish for here,” he said. “Credit is improving certainly faster than the economy is.” The thrust of the speech and Q&A session was a brief on Capital One’s own position, which Fairbank and head of investor relations Jeff Norris said was largely conservative. The bank, they said, will be resilient “even in the face of a weak economy.”

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Home Prices Set To Fall Further: Richard Fairbank, Capital One CEO

September 13, 2010

Speaking at the Barclays Capital 2010 Global Financial Services Conference, Capital One CEO Richard Fairbank was pessimistic about the housing market and about consumer demand — but optimistic about his bank’s prospects. Fairbank, in remarks that were broadcast on the web, was asked by an audience member whether there will be a double-dip in the housing market. He chose his words carefully. “I think we feel very cautious about the housing market,” Fairbank said. “I think that even despite some of the recent months where home prices have gone up, I think it’s a very plausible case for home prices to go back down again.” His dim view of the U.S. housing market, he said, is based on the current “logjam” of defaulted mortgages and foreclosures being dealt with at Capital One, which added a retail banking arm to its lending and credit card businesses in 2005. “Unsold inventory is really at just about an all-time high.” Although he claimed not to be predicting a “double-dip recession,” Fairbank was not at all optimistic about the housing market. “We are managing to a view that home prices are more likely to be headed down rather than up,” he said. Nervousness on the part of consumers, he said, isn’t helping. Because more people are saving money rather than spending it, their credit is relatively strong, but the economy is suffering from the lack of demand. “We’ve got to be careful what we wish for here,” he said. “Credit is improving certainly faster than the economy is.” The thrust of the speech and Q&A session was a brief on Capital One’s own position, which Fairbank and head of investor relations Jeff Norris said was largely conservative. The bank, they said, will be resilient “even in the face of a weak economy.”

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Art Levine: Will Voters Listen? Obama vs. GOP on $180 Billion Tax, Infrastructure Plan

September 10, 2010

In two major speeches this week, President Obama sharpened the contrast with the GOP’s obstructionism over the economy with his proposals to spend $50 billion on infrastructure and provide as much as $130 billion in tax cuts and write-offs for businesses —on top of a $30 billion small business lending bill

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Obama Blasts Bush Tax Cuts, Calls Out John Boehner In Ohio Economic Speech

September 8, 2010

CLEVELAND — Politically weakened but refusing to bend, President Barack Obama insisted Wednesday that Bush-era tax cuts be cut off for the wealthiest Americans, joining battle with Republicans – and some fellow Democrats – just two months before bruising midterm elections. Singling out House GOP leader John Boehner in his home state, Obama delivered a searing attack on Republicans for advocating “the same philosophy that led to this mess in the first place: cut more taxes for millionaires and cut more rules for corporations.” Obama rolled out a trio of new plans to help spur job growth and invigorate the sluggish national economic recovery. They would expand and permanently extend a research and development tax credit that lapsed in 2009, allow businesses to write off 100 percent of their investments in equipment and plants through 2011 and pump $50 billion into highway, rail, airport and other infrastructure projects. The package was assembled by the president’s economic team after it became clear that the recovery was running out of steam. There was a political component, too: With Democrats in danger of losing control of the House in November, Obama is under heavy pressure to show voters that he and his party are ready to do more to get the economy moving and get millions of jobless Americans back to work. However, none of Wednesday’s proposals, nor Obama’s call for allowing tax rates to rise for the wealthiest Americans, seems likely to be acted on by Congress before the elections, reflecting the battering Obama and congressional Democrats have taken in public opinion polls. Obama made one of his strongest appeals yet to allow the tax cuts passed under President George W. Bush – in 2001 and 2003 – to expire at the end of the year on schedule, but just for individuals earning more than $200,000 annually or joint filers earning over $250,000. The changes would affect dividend and capital gains rates and various other tax benefits as well as income from wages and salaries. The president’s strategy – pushing for legislation to save some tax cuts but not all – carries its own risks. Since all the tax breaks would expire automatically at the end of the year if Congress failed to act, that could result in sweeping increases for taxpayers at every income level – a major blow to recovery hopes and a colossal dose of blame for voters to parcel out to lawmakers and the White House. Some influential Democrats, and Obama’s own former budget director, Peter Orszag, have suggested a compromise might be necessary – one to temporarily extend all the tax cuts, perhaps for a year or two – given the current election-year animosity between the two parties. But in his remarks in Cleveland, Obama strongly signaled he wasn’t about to sign off on any such deal. “Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer,” the president said. The administration “is ready this week to give tax cuts to every American making $250,000 or less,” he said. It was a slight misstatement of his own position, since the $250,000 would apply to household income. The threshold for individuals would be $200,000 White House officials said Cleveland was picked as the speech site expressly because Boehner, who probably would become House speaker if Republicans take back control of the chamber in November, laid out his party’s economic agenda here in a fiery Aug. 24 speech. At that time, the Ohio Republican called for Obama to fire key economic advisers and to support an extension of all the Bush tax cuts. Boehner kept up the attack on Wednesday. “If the president is really serious about focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting of federal spending to where it was before all the bailouts, government takeovers and `stimulus’ spending sprees,” he said after Obama spoke. Earlier, Boehner was even more specific on ABC’s “Good Morning America,” saying Congress should freeze all tax rates for two years and pare back federal spending to 2008 levels. The deep recession began in December 2007. White House press secretary Robert Gibbs noted that keeping the Bush tax cuts in effect just for two more years would represent a change from past calls by Boehner to keep them in place permanently. “My question for him is: Are they abandoning the permanent or are they going with the two-year plan? I’ve seen him saying permanent so many times that I tend to believe that,” Gibbs told reporters aboard Air Force One. “That’s his plan and I think that continues to be his plan.” Republicans, and some Democrats, argue that the fragile state of the economy makes this a poor time to raise taxes on anyone – and that increases could stifle wealthier people’s appetite for spending. Obama argued that the rich are more likely to save additional money than spend it. And he said the struggling U.S. economy can’t afford to spend $700 billion to keep lower tax rates in place for the nation’s highest earners. That $700 billion is what the nonpartisan congressional Joint Committee on Taxation estimates it would cost the Treasury to continue tax cuts for top earners over 10 years. What Obama wants to do would cost just over $3 trillion over the same period, the panel estimates. The debate over the Bush tax cuts is an unwelcome one for dozens of vulnerable Democratic incumbents just weeks before Election Day. Already, a handful of Democrats in conservative or swing districts, such as Reps. Gerry Connolly in the northern Virginia suburbs of Washington, D.C., and Bobby Bright in southeastern Alabama, have come out publicly for extending all the cuts – at least temporarily. Sen. Michael Bennet, D-Colo., engaged in a tight re-election battle, said he “would not support additional spending in a second stimulus package” and that any new initiatives such as Obama’s infrastructure package should be paid for with leftover funds in the $814 billion stimulus package passed last year. Still other embattled Democrats, wary of alienating middle-class voters, are siding with Obama. In central Ohio, for example, Rep. Mary Jo Kilroy has said the tax cuts for higher earners should be repealed but middle-income people should see no tax increases. Obama acknowledged recovery had slowed noticeably, with unemployment hovering just under 10 percent. “The middle class is still treading water, while those aspiring to reach the middle class are doing everything they can to keep from drowning,” he said. Polls have shown a steady slippage in Obama’s approval ratings and an accompanying rise in Republican prospects for winning House and Senate seats in November. That has chipped away at Obama’s leverage to get things done in Congress. Obama has sought to frame the election as a choice between continuing his policies or reinstating those pursued by Bush. He acknowledged in an interview with ABC after his speech that “if the election is a referendum on are people satisfied about the economy as it currently is, then we’re not going to do well, because I think everybody feels like this economy needs to better than it’s been doing.” The excerpt was aired Wednesday on ABC’s evening news. Fuller portions of the interview were airing Thursday morning on “Good Morning America.” ___ Tom Raum reported from Washington. Associated Press writers Stephen Ohlemacher and Erica Werner in Washington contributed to this report.

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Dave Johnson: Boehner Trade Plan: Go Back To Disaster

August 25, 2010

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party’s positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it. I write about the specifics of Boehner’s call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an “economy stalled by ‘stimulus’ spending.” But according to FOX News’ Wall Street Journal , yesterday the CBO reported that “the impact of the stimulus program estimated … the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points .” In addition, the Washington Post reported , “The CBO said the act also increased the nation’s gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy.” Boehner also said that “each dollar the government collects is taken directly out of the private sector.” This is the old “taxes take money out of the economy” argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country’s prosperity. If you think that President Eisenhower’s spending on the Interstate Highway System “took money out of the economy” you really need to see someone about your problems and not take them out of the rest of us. Taking direct shots at democracy, Boehner complained about “big government” — namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us — and said, “As Mitch Daniels, the governor of Indiana, recently said, “You’d really be amazed at how much government you’d never miss.” Boehner really has a problem with this whole “We, the People” thing. Boehner on Trade Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration’s record: This is bad enough, but these “free trade” agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower. These “free trade” agreements need to be reviewed and reformed , so they protect wages, the environment., worker’s rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can’t Buy Refrigerators ! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner’s trade ideas everyone just gets poorer and eventually the economy stops. Oh, wait, we DID follow Boehner’s trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that. This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter , sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make. Sign up here for the CAF daily summary .

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Robert L. Borosage: Boehner’s Plan: Half Baked

August 24, 2010

Rep. John Boehner, the perpetually tanned House Minority leader, unveiled his plan to get the economy going today in a speech before the Cleveland City Club. Hold on to your job — if he becomes Speaker, things will get worse. Understandably, Boehner said not a word about the policies that led to the Great Recession. In fact, he said not a word about the economic collapse. Instead, he argued only that America’s economy was in trouble because business was scared to death. It isn’t the worst recession since the Great Depression, the lack of demand and customers that is plaguing businesses; it is the fear of tax hikes and regulation. In response, Boehner detailed a five point plan to “break the ongoing economic uncertainty.” Three of the five points are basically rhetorical. He calls on Obama to pledge to veto any future tax increase. He calls on Obama to fire his economic team. And he pledge to eliminate the 1099 tax return mandate that requires small businesses to report any expenditure on goods and services over $600, an aggravation that Democrats are intent on reversing also. The last two points have greater substance. Boehner would keep tax rates where they are, opposing Obama’s plan to let the Bush tax cuts expire for couples making more than $250,000 a year, or the top 2% of Americans. The Center for Budget and Policy Priorities estimates this would add about $1 trillion to the deficit over the next 10 years. Second, he would impose an immediate cut of about 25% on domestic discretionary spending, returning it back to 2008 levels, repealing any further recovery spending. Later, he suggests that the cut with a “hard cap” (presumably for 3 years) would save $340 billion, recouping a little more than a third of his proposed top end tax cut. That’s it. (Later in the speech, Boehner promises to unveil a more complete agenda in the future, and suggests possibilities, including the conservative standards — less spending, more tax cuts, less regulation, and more corporate trade treaties. Details to come later.) There are some major problems with the Boehner plan. 1. It is a joke. We have over 25 million people unemployed, with an economy that is slowing. The Boehner response is to keep tax rates where they are for the rich, and cut all recovery spending, slashing 25% from domestic discretionary spending. We know two things about this program: It will kill more jobs than it creates; and it will add to, not subtract, from projected deficits. 2. It’s half baked. It is as if Boehner hasn’t noticed what is going on in this country over the last decades of conservative domination. Instead he would exacerbate the worst ruinous trends. For example: We suffer from the worst inequality ever. The top 1% pockets about 20% of all income, and has captured 2/3 of all income growth in the Bush years before the recession. Boehner’s extension of the Bush top end tax cuts will simply add to that in after-tax income. We suffer a costly and growing public investment deficit — in everything from sewers and roads, to education and training, to research and development — areas vital to sustaining a competitive private economy. Slashing non-defense discretionary spending — which includes spending on education, on energy, on the environment, on everything the government does outside of defense and entitlements like Social Security and Medicare — will only worsen that. (And the hints Boehner offers about future plans aren’t reassuring: More trade treaties that led to ruinous trade deficits that force us to borrow $2 billion a day, largely from Chinese and Japanese central bankers; less regulation in the face of what deregulation of the big banks did to the economy, to the citizens in the Gulf, in the coal mines, and in the grocery store buying eggs; turning Medicare into a voucher, and more.) Boehner became an instant YouTube celebrity for his “hell no you can’t” rant on health care reform. So it is understandable why he would want to offer voters some clue about what Republicans are for, not just what they are against. And no doubt the rhetoric of his speech has been dial tested and focused grouped to the last syllable. But as a plan to get the country going, a plan to put people to work, a plan even to “break the ongoing economic uncertainty,” this is just silly. The time would have been better spent working on his tan.

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Biden Mocks Boehner’s Call For Summers’ And Geithner’s Firing: ‘Very Constructive’

August 24, 2010

Vice Presidet Joe Biden reacted with a bit of sniping sarcasm to House Minority Leader John Boehner’s (R-Ohio) suggestion on Tuesday that the president hit the reset button and fire his top two economic advisers. “After months of promising a look at his party agenda for his plans for America,” Biden said, “his chief proposal, when you look at it, apparently was that the president should fire his economic team. Very constructive advice and we thank the leader for that.” Speaking at an event touting the impact of the stimulus on the fields of science and technology, the vice president tailored the first portions of his remarks into a comprehensive rebuttal to Boehner’s speech earlier in the day. “Mr. Boehner and his party ran the economy and the middle class literally into the ground,” Biden said at one point. “I’m still waiting for what it is that they are for… I know what they are against. What I don’t know, other than a tax cut for the top two percent of the taxpayers in America, I don’t know what they are for.” The critiques echoed those offered by others in the Democratic Party, including several members of the House, who hosted a pre-buttal conference call mocking Boehner for a lack of substantive ideas for economic recovery. “John Boehner and the Republican leadership wouldn’t know a new idea if they tripped on it,” Rep. Debbie Wasserman-Schultz (D-Fla.) told reporters on a Monday conference call organized by the Democratic National Committee. But it was not anticipated that Boehner would call for the firing of both Treasury Secretary Timothy Geithner and chief economic adviser Larry Summers. And with hopes of drowning out the Ohio Republican’s much-publicized address, the White House re-calibrated Biden’s remarks and alerted reporters to tune into the speech minutes before it happened. UPDATE : Here are some more excerpts from Biden’s remarks in which he goes after not only Boehner but also the Minority Leader’s deputy, NRCC Chair Pete Session (R-Tex.). Let’s just review a little history here: For eight years before we arrived, Mr. Boehner and his party ran this economy and the middle class into the ground. They took the $237 billion surplus they inherited from the Clinton Administration and left us with a $1.3 trillion deficit, and, in the process, quadrupled the national debt – all before we had turned on the lights in the West Wing. They gave free rein to the special interests to write their own rules at the expense of everybody else. And the sum total of it was the greatest economic crisis since the Great Depression–a crisis that wreaked havoc on families and businesses across this country–a crisis from which we are still digging out. The head of their campaign committee, Representative Pete Sessions, said that if they were to take control of Congress this fall–which, by the way, they won’t–that they would go back to “the exact same agenda” they were pushing before President Obama took office. They think the policies they had in place during the Bush years–the ones Mr. Boehner helped craft and sell–were the right ones. Well, let me tell you, there are millions and millions of Americans who saw their paychecks shrink or their jobs, houses, and savings vanish. Mr. Boehner is nostalgic for those good old days… the American people are not. They don’t want to go back. They want to move forward.

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Richard (RJ) Eskow: Obama’s Vegas Blueprint: Create Jobs, Fight Banks, and Help Real Businesses

July 9, 2010

President Obama gave a major talk on the economic crisis on Friday. While the choice of Las Vegas for its location might be considered ironic, given the fact that Big Bank gambling created the crisis, there’s good news: The President’s speech could serve as a blueprint for an improved economic and political outlook — if the President and his party back it up with action. “Our first mission,” he began, “was to break the freefall of the deepest and most vicious recession since the Great Depression.” That’s exactly the framing that’s been needed for some time. The President should not say that the Dodd-Frank bill will “prevent a crisis like this from happening again,” as he did last week, , since that’s probably not true. In Vegas, he presented it as the first step in a series of needed reforms and stimulus measures, which the public is more likely to accept. And how can reformers push for additional action once they’ve claimed to have “prevented the next crisis”? Politically, the President and his party have to take credit for stopping a massive monthly loss of jobs and creating a slight upward trend, and he did. But they also have to say exactly what he said on Friday: “Of course, that’s not nearly enough. I don’t have to tell you that.” As with financial reform, he must walk a thin line between making the case for what’s been done so far and recognizing the urgency of what remains to be done. He struck the right balance this time. The President’s talk was given after three major (and interconnected) news stories struck Washington: First, large business interests led by the US Chamber of Commerce announced that they plan to raise $200 million to fight Democrats in November. Second, a Carville/Greenberg poll showed that 55% of likely voters think the President is “a socialist.” Lastly, a sudden rash of lobbyist-fed news stories suggested that big corporations aren’t doing their part to help the recovery because their leaders believe that the President is “anti-business.” (We discussed one egregious example here .) Since it’s Vegas, wanna bet it’s merely coincidental that those were the three leading political stories of the week? Didn’t think so. Granted, that “socialist” result is a headline-grabber, and it’s the logical product of a year-long propaganda campaign on the right. But here’s one finding from the same poll that didn’t get much coverage: 56% of likely voters either think that the economy isn’t getting any better (34%) or think it will get worse (22%). Here’s another: Likely voters were almost evenly split when asked to choose between a statement that said “Obama and the Democrats are more concerned with creating jobs for ordinary Americans” (45%) and one that said “Obama and the Democrats are more concerned with bailing out Wall Street” (44%). In other words, people saw a lot of money go to big banks in the bailout, but things don’t look better for them. In their eyes that’s “socialism,” all right — but it’s “Wall Street socialism.” The President was off to a good start in responding to these three narratives. “I believe the greatest generator of jobs in America is our private sector,” he said. That’s a good move. He needs to send the message that he and his party are pro-business. But which business? In an (admittedly oversimplified, yet) important sense, there are two kinds of businesses in the United States: non-productive banking businesses, the largest of whom are places where people get fabulously wealthy by skimming money from the economy and keeping it for themselves. Then there are the other kinds of businesses — the ones that hire people and provide goods or services. The President has to make it clear that he’s for businesses that do things, but that he’ll fight any business that wants to prosper from parasitism or reckless gambling. After all, polls show that Americans like business but hate Wall Street. Legislators and the White House must understand that distinction. They must show that they’re fighting for productive businesses — especially medium-sized and small businesses, since that’s where most of the jobs are — and fighting those who threaten the economy. Nor should Democrats take the “socialism” bait and decide that public sector jobs should be stigmatized. Public sector jobs are a necessary part of the stimulus process. And while the public may lament “socialism,” public sector careers are among our most beloved and respected: Teacher. Public health worker. Cop. Soldier. The implicit blueprint in the President’s speech should be made explicit: “We’re creating jobs, fighting big bankers, and helping real businesses grow.” That means targeted tax credits to stimulate hiring, a comprehensive and focused stimulus plan, and reform which forces banks to lend out the money they get at low interest from the Federal Reserve. In other words, a key part of the government’s strategy should be to help businesses that help people. Call it “entrepreneurial populism.” The Las Vegas speech was a start. “We’ve cut dozens of taxes for the middle class and small business people,” said the President. We must “break down barriers that stand in the way of innovation” and “unleash (our) ingenuity.” He promoted a tax credit to clean energy companies and promised to ask for more. Regarding Dodd-Frank, he said that “we fought to eliminate wasteful subsidies that go to banks” (for administering student loans)” while enacting reforms that will ” help prevent another crisis.” (His use of the word “help” was nuanced correctly — it positions the bill as a start, but acknowledges there’s more to be done.) Obama wasn’t reluctant to take on the Republicans in Vegas, either, decrying “a wall of opposition and obstruction from leaders across the aisle.” That’s the right kind of talk — but it needs to be backed up with action. Too often the President and Congressional leaders have cut backroom deals with Republicans to win their support, only to have it withdrawn anyway. Or they’ve refrained from introducing bills whose passage is in doubt, because Republicans and some Blue Dog Democrats will resist. After a year and half of this appeasement, the public thinks he’s a “socialist” anyway. That means a different approach is called for, one that matches this new rhetoric: Introduce the bills, let their opponents make their opposition public, and give voters the opportunity to hold them accountable in November. The President kept alluding to Harry Reid’s early career as a boxer, but as another former fighter (rockabilly singer Ronnie Hawkins) once said: “You can work the heavy bag as much as you want, but it’s no substitute for getting in the ring.” The sound you hear is the bell being run for the next round. Here’s what wasn’t in the President’s speech, thankfully: The words “national debt” or “Federal deficit.” In another piece of interesting timing, a recent story suggested that the President’s “political advisors” are telling him that the public is worried about Federal spending. so they’re advising against stimulus spending. But context is everything: As the Carville poll suggests, the real problem is that voters have seen a lot of money go to Wall Street and they’re still struggling. Who wouldn’t be opposed to massive spending under those circumstances, when it appears to benefit only the wealthy? Cutting their social safety net would only increase their fear and anger. Wall Street contributions to Democratic congressional candidates are already down 65% this year , so why not make the implicit positions in the President’s Las Vegas speech explicit? It’s time to say that “Wall Street socialism” was the last administration’s specialty, and now that it’s been saved it’s time to make bankers fulfill their part of the bargain. It’s time to talk about helping Main Street businesses thrive so that people can go back to work and the economy can get moving. This speech began to lay out the approach. Now the President and Congress have to go back to Washington and put it into action. Let’s hope that, for once, what happens in Vegas doesn’t stay in Vegas. _______________________________________________________________ (Note: Speech quotes are from the prepared transcript.) Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.” Website: Eskow and Associates

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UAW President King Says Union Will Focus on Organizing U.S. Toyota Workers

June 17, 2010

By Keith Naughton June 17 (Bloomberg) — Bob King , elected yesterday as the 10th president of the United Auto Workers union, said organizing the U.S. factory workers of foreign companies such as Toyota Motor Corp. is his “No. 1 priority.” “If we don’t support Toyota, Honda, Nissan, Hyundai, Kia and all the non-union plants by supporting the right to organize, we cannot win back the concessions we have given up,” King said in his first address today to delegates at the UAW’s constitutional convention in Detroit. King, 63, succeeded Ron Gettelfinger , 65, who helped persuade President Barack Obama to organize rescues of General Motors Co. and Chrysler Group LLC last year. King takes over amid calls from workers to restore the wages and benefits they gave up to bolster the industry, and as membership in the union has fallen to 355,000 from 1.5 million in 1979. UAW members who work for U.S. automakers have each given $7,000 to $30,000 in concessions in the past five years, King said last month. The union surrendered raises, bonuses and cost- of-living adjustments at GM, Ford Motor Co. and Chrysler. It agreed to a two-tier wage system, in which new hires earn about $14 an hour, half the amount paid to hourly production workers. “The only way we can get back what we’ve sacrificed is by coming up with a comprehensive strategy to rebuild the power of the UAW,” King said. Toyota’s Mississippi Plant King also criticized Toyota President Akio Toyoda for moving forward with plans to open a non-union factory in Mississippi after closing the assembly plant it had operated in Fremont, California. The Japanese automaker’s joint venture with pre-bankruptcy GM was its only U.S. plant where workers were represented by the UAW. “The only reason they closed that plant is because it was a UAW plant,” King said. “Mr. Toyoda if you care about safety and quality in America, you’ll go back to Fremont and build Corollas there and not in Mississippi.” Toyota, the world’s largest automaker, will begin installing assembly equipment at the facility in Blue Springs, Mississippi, with a goal of starting production of Corolla compact cars by late 2011, the company said today in a statement. The decision reverses earlier plans to use the plant to build Highlander sport-utility vehicles and Prius hybrids. King said the UAW will conduct protests at Toyota dealerships. ‘Crazy’ Decision “We’re going to show these corporations that if they do something unjust to our members, they’ll pay a price,” King said after his speech, calling the California plant closing “a crazy business decision.” After the convention adjourned, King led the 1,200 delegates along with Teamsters President James P. Hoffa on a march on Detroit’s banking district to protest against Wall Street lending practices. The demonstration was part of a new social activism the union will undertake, King said. “We’ve been under attack for eight years and we hunched down and protected the union,” King told the crowd from the back of a flatbed truck. “We will never have the justice we deserve if we’re not part of a much broader social movement.” The recession triggered by the financial crisis that began in 2008 led to a 35 percent industrywide plunge in U.S. auto sales from 2007 to 2009. Sales this year through May rose 17 percent. As auto sales recovered in the first quarter, GM posted net income of $865 million, Chrysler had an operating profit of $143 million and Ford reported earnings of $2.1 billion. The automakers are boosting production, expanding plants and hiring workers. GM said today it will operate 9 of 11 U.S. assembly plants through the customary summer shutdown because flexibility allowed under the new UAW contract allows the automaker to respond to customer demand. The move will boost GM’s output by 56,000 vehicles. To contact the reporter on this story: Keith Naughton in Detroit at Knaughton3@bloomberg.net .

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Climate-Change Measure Lacks Momentum Even After BP Spill, Democrats Say

June 16, 2010

By Lisa Lerer and Simon Lomax June 16 (Bloomberg) — The BP Plc oil spill in the Gulf of Mexico is unlikely to create enough momentum to pass a comprehensive climate bill sought by President Barack Obama , say leading Senate Democrats. Many Democrats don’t want to vote in this election year on whether to cap the greenhouse-gas emissions linked to climate change, saying they prefer to work in the coming months on legislation directly responding to the spill. “The climate bill isn’t going to stop the oil leak,” said Senator Dianne Feinstein , a California Democrat. “The first thing you have to do is stop the oil leak.” Obama, in a speech to the nation last night, praised a climate plan passed by the House last year and said the U.S. “can’t afford not to change how we produce and use energy.” Earlier this month, he said the only way to develop clean energy is by “finally putting a price on carbon pollution.” The House voted last June to create the first national limits on greenhouse-gas emissions. The measure would regulate carbon dioxide from power plants, refineries and factories through a cap-and-trade program in which companies buy and sell a declining number of pollution rights. Senator John Kerry , a Massachusetts Democrat who introduced similar legislation in his chamber last month, said yesterday that it doesn’t have the votes yet needed to overcome a Republican filibuster. “We don’t have the 60 votes yet, I know that,” Kerry told reporters. “But we’re close enough to be able to fight for it.” November Elections Some Democratic lawmakers have raised concerns that voting on the climate plan could create a political backlash in the November elections. “There’s not a great call for it in the Democratic caucus,” said West Virginia Democratic Senator Jay Rockefeller , who has argued against taking up the bill. Feinstein said last week she believed climate legislation could be passed next year. As an alternative, Democrats are working on an energy plan that would increase safety regulations on offshore drilling, raise or eliminate the cap on oil companies’ economic liability, promote energy efficiency and mandate more use of renewable electricity. “The front wheel of anything we do on energy is going to be addressing regulations and safety with respect to offshore drilling, particularly deep-well drilling,” said Senator Byron Dorgan , a Democrat from North Dakota. Senate Majority Leader Harry Reid , a Nevada Democrat, has asked committee leaders to draft energy provisions to bring to the floor next month. Democrats plan to meet tomorrow to discuss what should be included. Republican Support Reid would be unlikely to include a climate provision in the bill unless it had significant Republican support, Reid spokesman Jim Manley said in an e-mail. Republican backing would be needed to offset likely opposition from Democrats representing some rural and industrial states, who fear capping greenhouse gases would raise electric bills for consumers and business. To counter those concerns, Kerry and Lieberman yesterday released a study by the Environmental Protection Agency that said the plan would cost the average U.S. household less than dollar a day. Still, Senate Republicans and some Democrats from rural states say they see little connection between the oil spill and legislation to cap greenhouse-gas emissions. Coal Emissions “It’s unrelated,” said Senator Ben Nelson , a Democrat from Nebraska. “Obviously the emissions that we are talking about are primarily coal-fired electricity generation from Nebraska. That doesn’t have much to do with the Gulf.” No Republicans have supported Kerry-Lieberman legislation thus far. South Carolina Republican Senator Lindsey Graham , who worked on a climate bill with the pair for months, dropped his support in late April. Republicans said yesterday that Obama shouldn’t use the Gulf spill to rally support for cap-and-trade legislation. The cost of carbon dioxide allowances is effectively a “new national energy tax” that will do nothing to “stop this spill and clean it up,” said Senate Republican Leader Mitch McConnell of Kentucky. The “justifiable public outrage” over the oil spill shouldn’t be employed “as a tool for pushing a divisive new climate change policy,” he said. Energy-Only Bill Senator Jeff Bingaman , a New Mexico Democrat and chairman of the Senate Energy and Commerce committee, said yesterday he plans to advocate for an energy-only bill that passed his panel last June. The measure would require utilities to get as much as 15 percent of their power from renewable sources by 2021. The Senate “should definitely do an energy bill” that doesn’t include a carbon cap-and-trade program, said Senator Kent Conrad , a North Dakota Democrat. Kerry and Lieberman could be given a chance to add their climate plan as an amendment, he said. The White House and other supporters of a climate bill want a comprehensive plan to be the main legislative vehicle, arguing that public concern over the oil spill provides momentum. “Now is the moment for this generation to embark on a national mission to unleash American innovation and seize control of our own destiny,” Obama said in his speech last night. Pollster Joel Benenson said surveys he conducted for the League of Conservation Voters showed that 63 percent of likely voters contacted in May and June said they would support legislation to “limit pollution” by “charging energy companies for carbon pollution in electricity or fuels like gas.” “In the aftermath of the spill, people firmly believe Congress needs to do more than just make BP pay,” wrote Benenson, who conducted polling for Obama’s presidential campaign. “It would take 60 votes in the Senate,” to pass a climate bill, Dorgan said yesterday on C-SPAN’s Washington Journal. “I doubt very much whether those 60 votes exist right now.” To contact the reporters on this story: Lisa Lerer in Washington at llerer@bloomberg.net ; Simon Lomax in Washington at slomax@bloomberg.net .

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BP Escrow-Fund Deal With U.S. Said to Stall Before Obama Meets Executives

June 16, 2010

By Stanley Reed June 16 (Bloomberg) — BP Plc and the Obama administration have failed to agree on an escrow fund covering cleanup costs and claims stemming from the Gulf of Mexico oil spill, people familiar with the negotiations said. The lack of an agreement raises the stakes for a scheduled meeting of President Barack Obama with BP Chief Executive Officer Tony Hayward and Chairman Carl-Henric Svanberg at the White House today. The two sides continue to negotiate over issues including the size of the fund, who would administer it and whether BP shareholders would have to approve the transfer of money required for the account, according to the people, who asked not to be identified describing the private talks. “Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness,” Obama said in a speech from the Oval Office last night. “And this fund will not be controlled by BP,” Obama said. “In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party,” he said. The president’s tone differed from two days ago, when he said during a visit to the Gulf that the two sides were having a “constructive conversation” and that he hoped progress would be made by today’s meeting. Stopping the Leak In his speech, Obama said he had directed BP to devote additional technology and equipment to stopping the leak, the worst in U.S. history. Those efforts should capture as much as 90 percent of the leaking oil “in the coming weeks and days,” he said. The Gulf well is gushing as much as 60,000 barrels of oil a day, the government said yesterday, raising for the fifth time an official estimate that began at 1,000 barrels a day in April. “We share the president’s goal of shutting off the well as quickly as possible,” BP said in a statement after the speech. “We look forward to meeting with President Obama for a constructive discussion.” How the administrator for the escrow fund would be selected is part of the negotiations with London-based BP, and the president’s aides consider today’s talks crucial to resolving differences, according to an administration official who briefed reporters yesterday on condition of anonymity. First Meeting The meeting will be Obama’s first with the BP executives since a company-leased rig exploded on April 20 and collapsed, killing 11 workers. White House Adviser David Axelrod called on June 13 for BP to establish an escrow account for claims tied to the spill. Lawmakers led by Senate Majority Leader Harry Reid , a Nevada Democrat, have said BP should establish a $20 billion fund. BP has spent about $1.6 billion to stop the leak, clean up the oil, and compensate local businesses and residents. Lamar McKay , president of BP America Inc., told a House committee hearing yesterday that the escrow issue remained unresolved. “I don’t think any decisions have been made on a trust account,” McKay said. “We’re going to pay all legitimate claims, so a decision on whether to do a trust fund or account hasn’t been made yet.” BP shares have dropped 48 percent since the spill. They fell 3.8 percent to 342 pence in London trading yesterday, the lowest price since April 1997. Fitch Ratings cut BP’s credit rating six notches yesterday to two levels above junk on concern over the potential cost of cleaning up the spill and meeting future liabilities. To contact the reporter on this story: Stanley Reed in Washington at sreed13@bloomberg.net .

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BP Claims Process: Government Poised To Seize Damage Reward Process From Company

June 15, 2010

PENSACOLA, Fla. (AP) — President Barack Obama is reassuring people in Gulf Coast states that he’s up to the enormous job of helping them recover from the disastrous oil spill, laying the groundwork for a prime-time speech Tuesday night. His chief spokesman said Obama is poised to seize the handling of damage claims from BP, if necessary. Spokesman Robert Gibbs appeared on morning news shows Tuesday as Obama prepared for a second day of briefings – this time in Florida – and as the president prepared to give an address at Pensacola Naval Air Station and fly back to Washington for the 8 p.m. address from the Oval Office. The aim of wresting claims-handling from BP, Gibbs said, would be to make individuals and businesses “whole.” The claims issue is among several difficult problems that Obama will address directly in the speech, his first from the Oval Office. Voicing increasing confidence in his ability to confront the nation’s worst environmental crisis, Obama was ready to outline a comprehensive response and recovery program and was set to assure not only the people from the afflicted region, but all the country as well, that the administration will see to it that America surmounts this crisis. On the matter of the disputed damage payments, Gibbs said, “We have to get an independent claims process. I think everyone agrees that we have to get BP out of the claims processes and, as I said, make sure that fishermen, hotel owners have a fast, efficient and transparent claims process so that they’re getting their livelihoods replaced.” “This disaster has taken their ability to make a living away from them,” he said. “We need to do this quickly, and we have to make sure that whatever money goes into that – that in no way caps what BP is responsible for. Whatever money they owe to anybody in the Gulf, they’re going to have to pay regardless of the amount.” He noted in one interview that Obama “has the legal authority” to make the claims process independent. And Gibbs said “the best way to prevail upon BP is to take the claims process away from BP.” “The president will either legally compel them,” he said, “or come to an agreement with BP to get out of the claims process, give that to an independent entity.” Obama’s address to the nation sets the stage for his showdown White House meeting Wednesday with top BP executives. BP leased the rig that exploded April 20 and led to the leak of millions of gallons of coast-devastating crude. It’s part of an effort by Obama, who’s been accused of appearing somewhat detached as the oil spill disaster has unfolded, to convince a frightened Gulf Coast and a skeptical nation that he is in command. Obama was to deliver the speech upon his return from a two-day swing through Mississippi, Alabama and Florida, his fourth trip to the Gulf since the Deepwater Horizon drilling rig explosion that set off the disaster, but his first outside the hardest-hit state of Louisiana. The trip gave him ammunition for the speech and for his meeting with BP executives where he intends to finalize the details of a victims compensation fund. He visited vacant beaches in Mississippi where the threat of oil had scared off tourists, heard the stories of local employers losing business, watched hazmat-suited workers scrub down boom in a staging facility in Theodore, Ala., and took a ferry ride through Mobile Bay and then to Orange Beach, Ala., where oil has lapped on the shore. He was beginning the day Tuesday in Pensacola, Fla., where he was to attend a briefing and then make remarks at Naval Air Station Pensacola. “We’re gathering up facts, stories right now so that we have an absolutely clear understanding about how we can best present to BP the need to make sure that individuals and businesses are dealt with in a fair manner and a prompt manner,” the president said Monday. “I am confident that we’re going to be able to leave the Gulf Coast in better shape than it was before,” he said. That pledge was reminiscent of George W. Bush’s promise to rebuild the region “even better and stronger” than before Hurricane Katrina in 2005. Bush could not make good on that promise, and Obama did not spell out how he would fulfill his. Tuesday’s speech will give him the chance. Presidents reserve the Oval Office for rare televised addresses. When they take their place behind the desk, it’s a time for solemnity and straight talk – often a moment of history. There is a sense of gravity. One man by himself before one television camera speaking to the nation. Oval Office addresses typically aren’t lengthy discourses like a State of the Union, but if a president has to go for broke, this is where he does it. Bush addressed the nation from the Oval on the evening of Sept. 11, 2001. Ronald Reagan spoke there after the space shuttle Challenger explosion. John F. Kennedy grimly explained the Cuban missile crisis. Richard Nixon announced his resignation. Obama hasn’t used it yet. Not even during the worst economic crisis since the Great Depression. Not to explain painfully high unemployment rates. Or bank and auto company bailouts. Not to speak of terrorism threats. Even when his health insurance plan was in peril, he did not speak from the Oval Office to rally support or explain to Americans why he considered it vital. Gibbs appeared on ABC’s “Good Morning America,” CBS’s “The Early Show,” NBC’s “Today” show and CNN.

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Obama Vows to Restore Gulf States’ Environment, Economy After BP Oil Spill

June 14, 2010

By Hans Nichols and Kate Andersen Brower June 14 (Bloomberg) — President Barack Obama told residents and businesses affected by the oil spill from a damaged BP Plc well in the Gulf of Mexico that government will ensure the coast and their livelihoods will be restored. The president, making his fourth visit to the Gulf of Mexico coast since the April 20 explosion aboard the Deepwater Horizon drilling rig triggered the spill, said the government and BP are in “preliminary” talks about setting up a mechanism to pay claims of damage from the spill. “It’s going to take time for things to return to normal,” Obama said after getting a briefing from federal and local officials and touring a staging facility in Theodore, Alabama. “But I promise you this: things are going to return to normal.” The spill, the worst in U.S. history, has closed as much as 37 percent of the Gulf of Mexico to fishing, cut the number of offshore drilling rigs in the nation by half and polluted 140 miles of shoreline from Louisiana to Florida. It also may be a political threat to Obama as he comes under criticism from Republicans and some Democrats over the administration’s response. Obama is spending two days in the region, staying overnight in Florida. He plans a televised address on the subject at 8 p.m. Washington time tomorrow and the next day he will meet with BP Chairman Carl-Henric Svanberg and other company officials in Washington. Today he defended the government’s action in dealing with the spill. Recovery Effort “We are confronting the largest environmental disaster in our history with the largest environmental response and recovery effort in our history,” he said. Obama said he expects the meeting with BP officials will bring progress on an agreement to have the company establish a multibillion dollar fund to compensate for economic damage caused by the spill. The goal is to make sure that claims are “dealt with justly, fairly, promptly,” he said. “My hope is that by the time the chairman and I meet on Wednesday that we’ve made sufficient progress that we can start actually seeing a structure that would be in place,” he said. While the administration hasn’t set a specific amount, U.S. Senate Democrats, in a letter today to BP Chief Executive Officer Tony Hayward , called on the company create a $20 billion fund to pay for cleanup and economic damages. Demonstration Creating such an account would be “a useful first step for demonstrating that BP intends to meet its commitments,” the letter said. They requested a response by June 18. Hayward is scheduled to appear at a June 17 hearing of the House Energy and Commerce Committee. While reviewing efforts to deal with the spill’s damage, Obama also is preparing to fill the vacancy left when Elizabeth Birnbaum , director of the Minerals Management Service, became the first administration official to step down in connection with the oil spill. Obama may announced his choice to oversee federal management of offshore oil and gas drilling in his speech tomorrow, an administration official said on condition on anonymity. The president has criticized the agency, part of the Interior Department, for having a “cozy” relationship with the industry it regulates and being “plagued by corruption for years.” Obama today also said the government will undertake a multi-agency effort to ensure the safety of seafood taken from the Gulf. Seafood Industry “Seafood from the Gulf today is safe to eat,” Obama said. “But we need to make sure it stays that way.” Commercial fishing along the Gulf coast from Texas to Florida contributes $1 billion to the gross domestic product, tourism and recreation another $13 billion, and oil and gas $11 billion, according to the National Ocean Economics Program. The effects of the spill may be felt for years, he said. “We’re dealing with here is unique because it’s not simply one catastrophic event, it’s an ongoing assault,” Obama said. BP has submitted a new plan to the government that would contain more of the spill faster, Bill Burton , deputy White House press secretary, told reporters traveling with the president. Under the plan, more than 50,000 barrels of oil could be contained per day by the end of June, two weeks earlier than originally proposed, Burton said. Obama is making his fourth visit to the Gulf since the disaster began on April 20 and it is his first to see the impact on Mississippi, Alabama and Florida. Democratic Senator Bill Nelson of Florida told reporters in Pensacola today Obama needs to set up a “military-type chain of command structure” for the spill response. “The White House has been listening to their critics, including this senator, and I think they are making changes,” Nelson said. To contact the reporters on this story: Hans Nichols in Gulfport, Mississippi at hnichols2@bloomberg.net ; Kate Andersen Brower n Washington at Kandersen7@bloomberg.net

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Cameron Prepares U.K. for Budget Cuts That Will Hurt `Every Single Person’

June 7, 2010

By Robert Hutton and Thomas Penny June 7 (Bloomberg) — U.K. Prime Minister David Cameron , preparing voters for the deepest spending cuts in a generation, said the previous Labour government left the public finances in a weaker state than he anticipated. “The overall scale of the problem is even worse than we thought,” Cameron said in a speech today in Milton Keynes , 50 miles (80 kilometers) north of London. “How we deal with these things will affect our economy, our society — indeed our whole way of life.” The U.K.’s Conservative-Liberal Democrat coalition is seeking public backing for cuts that will be the deepest since Margaret Thatcher was prime minister in the 1980s and that will last longer than any other since World War II. The pound has fallen more than 10 percent against the dollar this year amid concern the government will struggle to fix the public finances. Cameron laid the ground for the emergency budget on June 22 in which Chancellor of the Exchequer George Osborne will set out the overall reductions needed to tackle a deficit that swelled to 11.1 percent of gross domestic product in the year through March, among the highest in the Group of Seven. He said Treasury estimates show government debt-interest costs heading toward 70 billion pounds ($101 billion) in five years’ time, up from 31 billion pounds in the last fiscal year. “Today we spend more on debt interest than we do on running schools in England,” Cameron said. “But 70 billion pounds means spending more on debt interest than we currently do on running schools in England, plus on combating climate change, plus all that we spend on transport.” Housing, Education A full spending review in the fall will set budgets for each department for the three years starting April 2011, with the Institute for Fiscal Studies predicting that areas including transport, housing and higher education could face cuts of as much as a quarter. Cameron sought to pin the blame for these cuts on Gordon Brown , Labour’s chancellor from 1997 to 2007 and then prime minister until he lost the election in May. “I think people understand by now that the debt crisis is the legacy of the last government,” Cameron said. “But exactly the same applies to the action we will need to take to deal with it. If there are cuts, they are part of that legacy.” Labour Reaction Labour dismissed the attack. “Labour stopped recession becoming depression,” Liam Byrne , former chief secretary to the Treasury, said in an e-mailed statement. “Because we made the right calls the coalition has inherited an economy that is growing, borrowing which is falling and unemployment lower than in America or Europe.” The pound has fallen 3.2 percent against the dollar since Cameron took office on May 11 and the FTSE 100 Index share index has lost 4.4 percent. The benchmark 10-year government-bond yield has declined 38 basis points to 3.5 percent. As of 1 p.m., the pound was up 0.2 percent at $1.4477, the 10-year gilt yield was little changed and the FTSE 100 was 0.5 percent weaker at 5099.70. “Raising taxes and cutting spending is socially painful. But what’s the alternative, keeping generous budget policies?” Nouriel Roubini, the New York University economist who predicted the financial crisis, said in an interview with Le Monde. “The markets have already sounded the alarm that continuing that way would lead to bankruptcy,” he said. “Austerity isn’t optional.” ‘Fundamental’ Review Osborne over the weekend promised a “fundamental” review of government spending. He and his chief secretary, Danny Alexander , will tomorrow set out their approach and pledge an unprecedented level of public consultation. The effort to build support for cuts is based on a model used in Canada in the 1990s. Osborne met with his Canadian counterpart Jim Flaherty in South Korea during Group of 20 talks at the weekend. “What we want to do is undertake a real examination of where we’re getting value for money in government, of whether what the government does really needs to be done,” Osborne said in a Bloomberg Television interview on June 6. Deputy Prime Minister Nick Clegg told the Observer newspaper in an interview published yesterday that the cuts would not prove a divisive as those implemented by Thatcher. “It is important that people understand that fiscal retrenchment does not mean a repeat of the 1980s,” Clegg said. “We’re going to do this differently.” ‘Credible Plan’ Osborne has already announced 6.2 billion pounds of immediate cuts and said the budget will set out a “credible plan” to eliminate the bulk of the 156 billion-pound deficit over the coming five years, with spending taking the strain. Labor unions urged the government to raise taxes on the rich, saying the proposed spending cuts will disproportionately hit the poor and vulnerable and risk plunging the economy back into recession. “Of course we have to manage the deficit, but there are other ways of reducing it and that includes making those who caused the crisis pay a bit more, and by tackling tax avoidance and evasion,” said Dave Prentis , general secretary of Unison, the largest U.K. public-sector union with more than 1.3 million members. “There was nothing in this speech that told the rich, the banking and financial sector or the City speculators that their privileged way of life will change.” To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net ; Thomas Penny in London at tpenny@bloomberg.net .

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Simon Johnson: Richard Fisher, Senior Fed Official: White House Is Dead Wrong

June 6, 2010

Richard Fisher, president of the Dallas Fed, has long been a proponent of serious financial sector reform.

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Daniel Kahneman, Nobel Prize Winner: Happiness Can Be Bought For About $60,000 Per Year (VIDEO)

June 4, 2010

Money can’t buy happiness — but lack of it can certainly make you progressively miserable, says one Nobel Prize-winning economist. Daniel Kahneman , one of the founders of the now-popular field of behavior economics, delivered a fascinating TED talk earlier this year entitled “The Riddle of Experience vs. Memory,” and got into an interesting discussion with TED host and curator Chris Anderson. (Hat tip to GatesVPblog via My Money Blog .) Arguing that experience is essentially divided into the “experiencing self” and the “remembering self,” Kahnemen suggests that happiness is essentially an act of deftly balancing the two. (They don’t always match up, it turns out.) Here’s Kahneman: We know something about what controls satisfaction of the happiness self. We know that money is very important, goals are very important. We know that happiness is mainly being satisfied with people that we like, spending time with people that we like. There are other pleasures, but this is dominant. So if you want to maximize the happiness of the two selves, you are going to end up doing very different things. The bottom line of what I’ve said here is that we really should not think of happiness as a substitute for well-being. It is a completely different notion. After the speech, Anderson pointed to the result of a 2009 Gallup survey that compared rates of depression to income levels . Here’s the exchange: Chris Anderson: Thank you. I’ve got a question for you. Thank you so much. Now, when we were on the phone a few weeks ago, you mentioned to me that there was quite an interesting result came out of that Gallup survey. Is that something you can share since you do have a few moments left now? Daniel Kahneman: Sure. I think the most interesting result that we found in the Gallup survey is a number, which we absolutely did not expect to find. We found that with respect to the happiness of the experiencing self. When we looked at how feelings vary with income. And it turns out that, below an income of 60,000 dollars a year, for Americans, and that’s a very large sample of Americans, like 600,000, but it’s a large representative sample, below an income of 600,000 dollars a year… CA: 60,000. DK: 60,000. (Laughter) 60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat. Clearly, what is happening is money does not buy you experiential happiness, but lack of money certainly buys you misery, and we can measure that misery very, very clearly. In terms of the other self, the remembering self, you get a different story. The more money you earn the more satisfied you are. That does not hold for emotions… WATCH the full talk (the exchange with Anderson happens around the 18-minute mark):

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Harry Moroz: Governing the Recovery

June 4, 2010

On Wednesday, President Obama articulated a rather forceful argument for the positive role government can play in meeting collective challenges. Lambasting the concept of the Ownership Society (“everyone is on their own”), Obama reminded us of some of the things that government is good at: maintaining a safety net, providing for retired workers, making sure most (!) people have access to health care. One of the hidden, and well-reasoned, implications is that capping oil wells just isn’t one of them. But Obama stopped there. While recognizing the “fragility” of the economy and the need to ensure a strong recovery, the President merely warned against “put[ting] on the brakes too quickly” as the country tries “to get our fiscal house in order.” Even as he tied economic recovery — and its resultant boost to federal revenues — to an improving fiscal condition, he did not mount any sort of robust argument for the necessity of continued government action even as the economy recovers. His speech on the economy quickly became a speech about deficit reduction. The administration’s schizophrenic engagement with extending aid already being provided to state governments for education (and, separately, Medicaid) is revealing. Secretary Duncan raised eyebrows and hopes by sending a letter to Congress that requested inclusion of the education assistance in a supplemental appropriations bill. But the administration’s support has never been made explicit . Indeed, in his speech, the President carefully stated that “we have to work with state and local governments to make sure they have the resources to prevent the likely layoffs of hundreds of thousands of public school teachers across the country over the next few months.” Though this may sound like an endorsement of more assistance, the phrase “work with” is a term of art: the administration supports more aid but, uncertain whether Congress can muster the support, is unwilling to stick its neck out and directly endorse it. A defense of continued federal support for the economy is so necessary because the recovery which we are said to be experiencing is not only fragile but extremely limited. The private sector added only 41,000, total non-census employment appears to be flattening out , and, as Matt Yglesias points out , the public sector lost – lost! – 21,000 non-census jobs. This means that we are neglecting the easiest means to create jobs while pursuing half-baked schemes to stimulate employment through tax credits. Worse, abandoning education assistance would result in layoffs for hundreds of thousands of teachers, make a serious dent in public sector employment. We know that unemployment lags in an economic recovery and we know the same is true for state revenue. But we also know that unemployment assistance has always been extended well beyond the technical end of a recession and that aid for states is a quick and easy way to save jobs. Federal support for job creation is needed just as much halfway through 2010 as it was at the beginning of 2009. It is tepid reaction to this challenge of governance that the Obama administration should be criticized for, not some vague “failure of leadership” on the Deepwater Horizon oil spill.

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British Airways Cabin Crew Continue Strike

May 31, 2010

LONDON — British Airways cabin crew walked out for the 14th day Monday in an on-and-off strike over pay, benefits and working conditions, and a union leader said disruptions could continue into the summer. Striking cabin crew walked off their jobs May 24 for five days and began the new round of strikes Sunday after the latest round of talks collapsed. The cabin crew union has called for another five days of strikes beginning on June 5 if there is no settlement. The airline says it plans to fly more than 70 percent of its long-haul flights, compared to the 60 percent it had operated during last week’s strike, and 55 percent of short-haul flights, up from 50 percent last week. A big sticking point in the dispute is British Airways decision to take away travel benefits for cabin crew who joined in strikes. Tony Woodley, joint general secretary of the Unite union, accused British Airways Chief Executive Willie Walsh of blocking a settlement. And Woodley said the union is preparing for another vote on continuing strikes beyond early June, when the current strike authorization ends. “Willie, we all know there is a deal to be done at British Airways, one that recognizes the real commercial needs and problems of your company as well as our members’ legitimate interests. Unite is ready to do that deal,” Woodley said in his speech to the union conference in Manchester, according to a text released by the union. “But we are not, and never will, be prepared to see our members and our union humiliated, victimized and reduced to ruins, as you seem to want – never.” The British Airlines Stewards and Stewardesses Association, a part of Unite, says it was close to agreeing with BA on a deal that would have cut costs and allowed the airline to restructure. It complains, however, that the airline has taken disciplinary action against more than 50 members and is angry that BA withdrew travel privileges from striking crew. Unite says it represents about 12,000 cabin crew. British Airways says it has made an offer that it believes cabin crew would accept if the union would put it to a vote. The airline says it has offered to reinstate travel concessions to cabin crew – they pay 10 percent of normal airline fares to commute to work – once all elements of its offer were implemented. It has accused Unite of reopening issues that had been settled. The strikes are an additional financial hardship for BA, which reported a record annual loss of 425 million pounds ($611 million) for the year ending March 31. Seven days of walkouts in March cost the airline around 43 million pounds ($63 million).

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British Airways Cabin Crew Continue Strike

May 31, 2010

LONDON — British Airways cabin crew walked out for the 14th day Monday in an on-and-off strike over pay, benefits and working conditions, and a union leader said disruptions could continue into the summer. Striking cabin crew walked off their jobs May 24 for five days and began the new round of strikes Sunday after the latest round of talks collapsed. The cabin crew union has called for another five days of strikes beginning on June 5 if there is no settlement. The airline says it plans to fly more than 70 percent of its long-haul flights, compared to the 60 percent it had operated during last week’s strike, and 55 percent of short-haul flights, up from 50 percent last week. A big sticking point in the dispute is British Airways decision to take away travel benefits for cabin crew who joined in strikes. Tony Woodley, joint general secretary of the Unite union, accused British Airways Chief Executive Willie Walsh of blocking a settlement. And Woodley said the union is preparing for another vote on continuing strikes beyond early June, when the current strike authorization ends. “Willie, we all know there is a deal to be done at British Airways, one that recognizes the real commercial needs and problems of your company as well as our members’ legitimate interests. Unite is ready to do that deal,” Woodley said in his speech to the union conference in Manchester, according to a text released by the union. “But we are not, and never will, be prepared to see our members and our union humiliated, victimized and reduced to ruins, as you seem to want – never.” The British Airlines Stewards and Stewardesses Association, a part of Unite, says it was close to agreeing with BA on a deal that would have cut costs and allowed the airline to restructure. It complains, however, that the airline has taken disciplinary action against more than 50 members and is angry that BA withdrew travel privileges from striking crew. Unite says it represents about 12,000 cabin crew. British Airways says it has made an offer that it believes cabin crew would accept if the union would put it to a vote. The airline says it has offered to reinstate travel concessions to cabin crew – they pay 10 percent of normal airline fares to commute to work – once all elements of its offer were implemented. It has accused Unite of reopening issues that had been settled. The strikes are an additional financial hardship for BA, which reported a record annual loss of 425 million pounds ($611 million) for the year ending March 31. Seven days of walkouts in March cost the airline around 43 million pounds ($63 million).

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Trichet Says Emerging Nations Are a Source of Strength for World Economy

May 30, 2010

By Gabi Thesing May 31 (Bloomberg) — European Central Bank President Jean- Claude Trichet said emerging nations have weathered the global recession better than advanced countries. Federal Reserve Chairman Ben S. Bernanke also said in prepared remarks to a Bank of Korea conference in Seoul today that “as emerging market economies become increasingly important in the global trading and financial systems, the world economy will depend even more on them to maintain strong domestic growth and economic and financial stability.” The International Monetary Fund said last month that emerging economies, including Brazil and Russia, will expand 6.3 percent this year, nearly triple the pace of growth in advanced nations. Europe this month had to save its single currency with a $1 trillion rescue package after Greece’s sovereign debt crisis threatened to spread. “Emerging countries have also been severely affected, but as a group remained a source of strength for the world economy,” Trichet said via video link to the Bank of Korea conference, according to the text of his speech published by the Frankfurt-based ECB. “It is therefore not surprising that the crisis has led to even better recognition of their increased economic importance and need for full integration into global governance.” Trichet also said that “the international community has identified the G-20 as the premier forum for international economic cooperation.” The Group of 20 accounts for about 85 percent of global gross domestic product. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union. Korea holds the presidency this year. The world economy will grow 4.2 percent this year, the Washington-based IMF predicted on April 21, after a 0.6 percent contraction in 2009. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloombeg.net

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Trichet Says Emerging Nations Are a Source of Strength for World Economy

May 30, 2010

By Gabi Thesing May 31 (Bloomberg) — European Central Bank President Jean- Claude Trichet said emerging nations have weathered the global recession better than advanced countries. Federal Reserve Chairman Ben S. Bernanke also said in prepared remarks to a Bank of Korea conference in Seoul today that “as emerging market economies become increasingly important in the global trading and financial systems, the world economy will depend even more on them to maintain strong domestic growth and economic and financial stability.” The International Monetary Fund said last month that emerging economies, including Brazil and Russia, will expand 6.3 percent this year, nearly triple the pace of growth in advanced nations. Europe this month had to save its single currency with a $1 trillion rescue package after Greece’s sovereign debt crisis threatened to spread. “Emerging countries have also been severely affected, but as a group remained a source of strength for the world economy,” Trichet said via video link to the Bank of Korea conference, according to the text of his speech published by the Frankfurt-based ECB. “It is therefore not surprising that the crisis has led to even better recognition of their increased economic importance and need for full integration into global governance.” Trichet also said that “the international community has identified the G-20 as the premier forum for international economic cooperation.” The Group of 20 accounts for about 85 percent of global gross domestic product. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union. Korea holds the presidency this year. The world economy will grow 4.2 percent this year, the Washington-based IMF predicted on April 21, after a 0.6 percent contraction in 2009. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloombeg.net

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Josh Silver: Harold Ford’s Corporate Crusade Against Net Neutrality

May 26, 2010

This week, Harold Ford, Chairman of the Democratic Leadership Council, showed how completely the DLC is captured by industry money, why the US congress is mired in gridlock, and why the government continues to protect the American public: from oil spills to banking crises to mining disasters, and now to the Internet. Big money lobbyists and their puppet politicians’ blind abandonment of reasonable government oversight. Harold Ford is one of those puppets. In his piece , “FCC Re-Designation of Broadband Will Bring Unwanted Market Uncertainty” Ford calls on the FCC to halt their efforts to reestablish the agency’s authority over Internet service providers (ISP’s) like Comcast and AT&T. As I have described in previous posts , the courts recently ruled that changes made by the Bush-era FCC has left the agency in charge of the nation’s communications without authority to oversee the 21st century’s dominant communications platform. This would be funny if it weren’t reality. Phone and cable companies are flooding Capitol Hill with cash and an army of lobbyists, including proxies like Ford, who failed to mention in his Huffington Post piece that he is the honorary co-Chair of ” Broadband for America “, an industry front group that pays him to spin on their behalf. If the FCC heeds Ford’s advice, you can say goodbye to candidate Obama’s promises of universal, affordable Internet access and Net Neutrality. You can say goodbye to the level playing field that the Internet has always been: where all content moves at the same speed, no matter who is sending it. With a broken political system awash in special interest money, Harold Ford is not alone. On Monday, 74 House Democrats signed an industry-written letter that echoes Mr. Ford’s line, calling on the FCC to stand down. The letter is so full of misleading information that it’s hard to know where to begin. And nearly every Republican in congress is toeing the phone and cable line. So tell it like it is, Harold Ford. You’re choosing the big money from the cable and telco juggernaut over the right of the American people to fast, affordable, universal Internet access. You’re ignoring how the US has slipped from 4th to 22nd in broadband speed and adoption. You’re ignoring Harvard Berkman Center’s findings that regulation promoting competition would serve US consumers well. Mr. Ford, you said that “Legal and Agency experts are not carefully examining the economic impact will have on investment decision”? But FCC Chairman Genachowski repeatedly stated his intent to ensure investment continued… just read his speech . Over the past few weeks we saw broadband providers themselves telling investors that they had no plans to slow investment in response to the FCC. Harold, I am looking for the consumers you claim have prospered under the current “light regulatory touch.” You mean all of the Americans who are paying more and getting less than in 21 other nations? Prospering more than in France, where you can get broadband, phone and 300 TV channels for $37 a month? By my estimate, Americans are paying about three times more here thanks to your “light regulatory touch” that abandons competition and other key oversight. Be warned, Mr. Ford, millions of Americans have called for Net Neutrality and universal Internet, and are not content to let shills like you lie to the American people any longer.

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Volcker Says Euro’s Disintegration Is Potential Consequence of Debt Crisis

May 13, 2010

By Simon Clark May 14 (Bloomberg) — Former Federal Reserve Chairman Paul Volcker said he’s concerned that the euro area may break up after the Greek fiscal crisis that sparked an unprecedented bailout by the region’s members. “You have the great problem of a potential disintegration of the euro,” Volcker, 82, said in a speech in London yesterday. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.” European leaders pledged a rescue package of almost $1 trillion this week to counter a mounting debt crisis and restore confidence in the currency. Former U.S. Treasury Secretary John Snow said this week the euro may need a common fiscal policy to survive, a comment echoed by Norman Lamont , who was U.K. finance minister when Britain opted out from the euro in 1992. “Will economic and financial distress finally be resolved by looking toward more integration in a closely integrated Europe, politically as well as economically?” said Volcker, who chairs President Barack Obama ’s Economic Recovery Advisory Board. “I do have my hopes, as a believer in the euro.” The aid package also involved the European Central Bank, which intervened in debt markets after a rout in bonds across the euro region’s periphery. The European Commission in Brussels said it would “strengthen” its deficit oversight and “align national budget and policy planning” under a system of economic policy coordination. Fiscal Union “For the euro to be able to survive long term, fiscal consolidation of some kind — tax policy consolidation, fiscal policy consolidation — is probably necessary,” Snow said. Bank of England Governor Mervyn King also commented on the crisis, saying two days ago that it is “very clear” that the currency region needs a fiscal union “to make the monetary union work.” Soaring bond yields on concern that Greece’s fiscal crisis would spread threatened to shut Spain and Portugal out of debt markets and sparked a weekend of talks with euro-region finance ministers and central bankers. While the resulting 750 billion-euro ($940 billion) financial aid package has calmed bond markets, the euro has continued its slide against the dollar, breaking through the 14- month low reached last week before European leaders unveiled the bailout plan. The euro slid as much as 0.8 percent to $1.2518 at 4:45 p.m. in New York, the lowest level since March 5, 2009. The extra yield that investors demand to hold 10-year Spanish bonds over German bunds, Europe’s benchmark, has narrowed to 99 basis points from 164 basis points on May 7. Spreads on Portuguese debt have fallen by more than half to 163 points. Changes Needed Volcker expressed hope that the euro will survive. “There is strong opinion to keep it going,” he told journalists after his speech at Mansion House, the residence of the lord mayor of the City, London’s financial district. “That does require, I think, changes in the structure of European economic policy.” Closer fiscal union is unlikely to be welcomed in some countries. Ireland’s largest opposition political party said this week the commission proposals give the EU a “final veto” over Irish fiscal policy. Prime Minister Brian Cowen rejected the comments and said that there “will never be a threat” to national tax control. Europe has so far been well-served by the euro, Volcker said. “If you didn’t have that common currency in Europe, they would have bigger problems than they have now.” He declined to elaborate on what European governments should do as he left and walked across the street to visit the Bank of England. “That is up to European governments,” he said. “The nature of the problem does not lend itself to one-word sound bites.” To contact the reporter on this story: Simon Clark in London at sclark4@bloomberg.net

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U.K. Prime Minister David Cameron to Seek Coalition With Liberal Democrats

May 11, 2010

By Robert Hutton and Kitty Donaldson May 11 (Bloomberg) — Conservative leader David Cameron took over as Britain’s prime minister and said he wants to form a coalition with Nick Clegg ’s Liberal Democrats after Gordon Brown stepped down. Cameron, 43, will form the first Conservative administration since 1997 after Brown submitted his resignation to Queen Elizabeth . The monarch appointed Cameron as the new premier in a ceremony at Buckingham Palace in London. Clegg’s party was meeting this evening to discuss Cameron’s proposal for an alliance, forged after five days of talks that followed the inconclusive May 6 election. “We have deep and pressing problems,” Cameron said after he arrived at the prime minister’s Downing Street residence this evening. “For those reasons, I aim to lead a proper and full coalition. That’s the right way to provide this country with the strong and stable, good and decent government this country needs so badly.” The pound rose, buoyed by expectations that Cameron’s party will move to cut the record budget deficit. Sterling climbed 0.8 percent to $1.4963 at 9:15 p.m. in London. “A Conservative-Liberal democrat coalition is the market’s favorite outcome,” said Philip Shaw , chief U.K. economist at Investec Plc in London. Stocks, Gilts With 363 lawmakers in the 650-seat House of Commons , a two- party government might ease investor concern that the failure of the vote to produce a majority would leave Britain with a leader too weak to fix its finances. U.K. stocks and gilts also rose today after reports that Cameron was set to succeed Brown. U.K. government debt will rise to 77 percent of gross domestic product this year and may approach 100 percent by 2014, Standard & Poor’s says. The rating company cut its outlook on the U.K.’s AAA grade from stable in May 2009, saying debt may rise to a level incompatible with its top assessment. The Conservatives and Liberal Democrats agreed during their talks to focus on deficit reduction, while Cameron yielded on the Liberal Democrats’ core demand to overhaul the voting system. The Conservatives and Liberal Democrats disagreed during the campaign over Cameron’s proposal to lower inheritance taxes and Clegg’s bid to eliminate income taxes on those with the lowest incomes and loosen immigration rules. Identity Card Both parties support abolishing Labour’s plans for a national identity card and have talked about splitting up retail and investment banking and introducing a levy on banks. There are differences over policy toward the European Union. Clegg favors dropping the pound for the euro under the right circumstances, a stance opposed by Cameron. Conservative members of Parliament were also meeting this evening. If the Liberal Democrats don’t back a deal, Cameron will have to lead a minority government. At 43 and seven months, Cameron is the youngest U.K. leader since 1812. Tony Blair was four days short of his 44th birthday when he took office in 1997. Brown, 59, quit when talks on a possible Labour-Liberal Democrat coalition collapsed yesterday. His departure brought to a close 13 years of Labour rule in the U.K., during which the longest economic expansion for 200 years was followed by the deepest recession in more than a century. “I have been privileged to learn much about the very best of human nature, and a fair amount too about its frailties, including my own,” Brown said in the speech that ended his 35- month tenure, with his wife Sarah by his side. They then walked down Downing Street, hand-in-hand with their two sons, before getting into the car to see the queen. The Conservatives won 306 districts in the election, a net gain of 97 from the previous vote in 2005. Labour had a net loss of 91 seats to end with 258. The Liberal Democrats lost five seats and now have 57 members of the 650-seat House of Commons. It was the first hung Parliament after an election since 1974. “As leader of my party, I must accept that is a judgment on me,” Brown said of the election result yesterday. To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net ; Kitty Donaldson in London at kdonaldson1@bloomberg.net .

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Bernanke Says Bank Attitudes Toward Lending May Be Shifting Amid Recovery

May 6, 2010

By Scott Lanman and Vivien Lou Chen May 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said he’s optimistic that U.S. banks may start making it easier for customers to get credit after the financial crisis led lenders to tighten standards. “Although bank credit remains tight, I see some reasons for optimism,” Bernanke said today in a speech in Chicago. The economy is recovering, and banks’ senior loan officers expect a “modest reduction in their troubled loans” over the next year, outside of commercial real estate, he said. “As a result, bank attitudes toward lending may be shifting.” Fed policy makers last week reiterated their assessment that “tight credit” is restraining consumer spending, which represents about 70 percent of the U.S. economy. On the business side, banks’ commercial and industrial loans have declined to $1.27 trillion from $1.65 trillion in October 2008, according to data from the central bank. The latest quarterly survey of banks’ senior loan officers, released May 3, showed that most banks reported unchanged lending standards over the past three months and “no net tightening” of standards for small businesses, Bernanke said in his remarks to an annual banking conference hosted by the Chicago Fed. He devoted most of his speech to the Fed’s 2009 stress tests of the 19 biggest U.S. banks. Bernanke and other Fed officials say the project helped stabilize financial markets. Tomorrow marks one year since the examination showed that 10 firms needed to raise a total of $74.6 billion in capital. Identifying Risks Central bankers are trying to apply lessons from the project to better identify emerging risks in the financial system. With the stress tests, “we hoped also to hasten the return to a better lending environment,” Bernanke said today. “Clearly that objective has not yet been realized, as bank lending continues to contract and terms and conditions remain tight. Consequently, restoring the flow of credit through the banking system remains a central objective of the Federal Reserve.” Bernanke, 56, said credit demand remains “tepid” and the economy is “still under stress.” He didn’t elaborate on the outlook for the economy or monetary policy. Last week, the Fed’s Open Market Committee reiterated its pledge to keep the benchmark lending rate at a record low for an “extended period,” saying that while the labor market is showing signs of life, employers remain reluctant to hire, and consumer spending is restrained by tight credit and limited wage gains. Additional Capital Many smaller banks across the country may need additional capital in the next few years because of potential losses from residential and commercial real estate loans, Bernanke said. “We will continue to work closely with smaller banks as they rebuild their financial strength,” he said. The Fed has approved many proposals over the past two years from private-equity investors to take stakes in regional and community banks, Bernanke said. The central bank is fighting a measure in proposed Senate financial-overhaul legislation that would strip the central bank of oversight of 5,000 firms with less than $50 billion in assets. Republican Senator Kay Bailey Hutchison of Texas and Democrat Amy Klobuchar of Minnesota are sponsoring an amendment to the bill to let the Fed keep the powers. Yesterday, Kansas City Fed President Thomas Hoenig and three other regional Fed presidents met with lawmakers to make their case. Nevada Senator John Ensign , a Republican, said the Fed officials “argued very vociferously” to retain oversight. “That concept certainly seemed to have a lot of merit,” Ensign told reporters after the meeting. Senate Banking Committee Chairman Christopher Dodd , the Connecticut Democrat who proposed removing the authority, has called the Fed’s record on bank supervision “abysmal” and has said its reduced role would it allow it to focus on monetary policy. To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net ; Vivien Lou Chen in San Francisco at vchen1@bloomberg.net .

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