U.S. Senate Approves Stimulus Plan–But At What Cost!
The New York Times reported on February 11:
“The Senate approved an economic stimulus bill of some $838 billion on Tuesday, clearing the way for negotiations with the House… The 61-to-37 vote was largely along party lines, as expected… Only a few Republicans voted for the bill… whose support was vital when the bill narrowly cleared a procedural hurdle requiring 60 ‘yes’ votes on Monday.”
The Associated Press reported on February 12:
“Economic stimulus legislation at the heart of President Barack Obama’s recovery plan is on track for final votes in the House and Senate after a dizzying final round of bargaining that yielded agreement on tax cuts and spending totaling $789 billion.
“Obama, who has campaigned energetically for the legislation, welcomed the agreement, saying it would ‘save or create more than 3.5 million jobs and get our economy back on track.’
“The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House. Couples would receive $800 instead of $1,000. Over two years, that move would pump about $25 billion less into the economy than had been previously planned.
“Officials estimated it would mean about $13 a week more in people’s paychecks when withholding tables are adjusted in late spring. Critics say that’s unlikely to do much to boost consumption.
“Millions of people receiving Social Security benefits would get a one-time payment of $250 under the agreement, along with veterans receiving pensions, and poor people receiving Supplemental Security Income payments. An additional $46 billion would go to transportation projects such as highway, bridge and mass transit construction; many lawmakers wanted more.
“The House could vote on the bill as early as Thursday, though Friday seemed more likely. The Senate would follow, but its schedule is less certain… A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August. Car buyers could deduct the sales tax they paid on a new car but not the interest on their car loans.”
“U.S. Unveils New $1.5 Trillion Bank Bailout Plan”
Welt On Line reported on February 10:
“U.S. Treasury Secretary Timothy Geithner on Tuesday announced a plan to take $500 billion in bad assets off the books of struggling banks and expand a Federal Reserve program to support up to $1 trillion in asset-backed securities. The renamed ‘Financial Stability Plan’… will also devote $50 billion in federal rescue funds to try to stem home foreclosures and soften the crushing impact of the deep housing crisis now afflicting the entire economy… After Geithner’s announcement, stock prices fell further and the dollar extended losses while prices for U.S. Treasury debt securities extended gains.
“James Ellman, President of Seacliff Capital in San Francisco, said: ‘Investors want clarity, simplicity, and resolution. This plan is seen as convoluted, obfuscating, and clouded.’ Geithner acknowledged deep skepticism has developed over the fairness and efficiency of a $700-billion bank bailout program approved by Congress in October. He said leaders of some financial institutions that have received money had squandered the good faith that is needed to make the bank rescue effective.”
The Myths of Stimulus Success
In its March on-line edition of the commentarymagazine.com, James K. Glassman wrote about the folly of stimulus. Glassman is the former Under Secretary of State for Public Diplomacy and Public Affairs. We are bringing you the following excerpts from his article:
“Before he was sworn in as President, Barack Obama began to lay out his plans for reviving an American economy that… had declined 3.8 percent in the fourth quarter of 2008, its worst performance in 26 years… He anointed the stimulus proposal with a convenient and vivid metaphor…
“Like payments for broken windows, tax rebates and new roads (the seen) do not come free. The stimulus money that flows to taxpayers, government agencies, and businesses has to come from somewhere (the unseen). During a recession, it is usually borrowed, and the anticipation of taxpayers is that they will have to repay these loans, which means their taxes will rise in the future. This knowledge makes people anxious about spending the extra money, or even about investing it in the kind of ventures that help an economy grow…
“Government simply cannot know enough to direct an economy successfully, and when the President claims that his fiscal stimulus plan will create (or save) at least three million jobs, he is taking a wild, and dangerous, leap…
“In fact, stimulus may be precisely the wrong metaphor… Stimulus—that is, fiscal intervention with the express purpose of speeding up the normal regenerative process…—is unnecessary and almost certainly harmful…
“There may, in fact, be a good reason for government to spend billions of dollars today on building highways, and it has nothing to do with stimulus. It is that long-term interest rates are at historic lows and that the right highways can boost the economy in the long term. There also may be a good reason, again far apart from stimulus, for revising the tax code and reforming Social Security and Medicare. It is that Americans now understand that the economic future is not so assured as they believed a couple of years ago, and it is time for decisions to be made—in a manner careful, sensible, and unstimulated.”
“Popular Rage Grows as Global Crisis Worsens”
Der Spiegel Online wrote on February 10:
“As the global economic crisis deepens, tempers around the world are getting shorter. French and British trade unions are organizing strikes, Putin is sending troops into the streets and Beijing is trying to buy itself calm…
“The global financial crisis has already reached France, bringing business failures, mass layoffs for some workers and reduced working hours for others… Across the English Channel in Britain… demonstrations became a symbol for the fears of the British lower classes, because the country… faces the worst downturn among all highly developed economies…
“In Russia, dismal labor statistics have driven Communists and anti-government protestors into the streets…
“Beijing announced that about 20 million migrant workers — more than the combined populations of Denmark, Sweden and Norway — would likely become unemployed in the coming months… 2009 will be the ‘most difficult’ year since the turn of the millennium.
“About 50 million jobs could be lost worldwide in the next 11 months and more than 200 million people could drift into total poverty, warns the International Trade Union Confederation (ITUC). Guy Ryder, the group’s general secretary, believes that these changes represent a ‘social time bomb,’ and that the resulting instability could become ‘extremely hazardous to democracy’ in some countries.
“In the West, the crisis could cost heads of state their jobs, as was recently the case with the prime minister of Iceland… Cabinets in London, Moscow, Beijing and Paris have been overcome by a sense of helplessness…
“The overwhelming majority of the French are plagued by fears of unemployment, lower incomes and shrinking savings… Two-thirds of the French believe that their government… is not engaging in effective crisis management…
“British Prime Minister Gordon Brown’s popularity is falling even faster than Sarkozy’s… only one in three Britons would vote for [Brown’s] Labour today…
“The Kremlin fears that members of the middle class, loyal Putin supporters, will withdraw their support if the prosperity of recent years vanishes. In December alone, disposable income sank by 11.6 percent, and 5.8 million people are already officially unemployed…”
Germany’s Unhappy Alliance
Deutsche Welle reported on February 9:
“The resignation tendered by Economy Minister Michael Glos comes just months ahead of general elections due Sept. 27, and in the midst of an unprecedented global financial crisis… It’s no secret… that there were strains in his relationship with Bavarian Premier Horst Seehofer. Both men are leading figures of Bavaria’s conservative Christian Social Union (CSU), whose alliance with Chancellor Angela Merkel’s Christian Democrats (CDU) makes up a sizeable proportion of the conservative camp’s national support…”
According to Der Spiegel Online, dated February 9, 2009, the reaction of the German press to this most recent debacle was quite telling:
“Conservative newspaper Die Welt writes: ‘Glos wasn’t the right man and wasn’t capable of doing this job, that was an open secret. But he was allowed to remain in it all these years. That’s not exactly a sign of a government aware of its responsibilities. It’s a sign that the conservatives lack a clear economic direction and have been indulging in party political tactics…’
“Mass circulation Bild writes: ‘The timing couldn’t have been worse! The economy ministry is quitting in the middle of the financial crisis… And CSU leader Seehofer didn’t even give him the opportunity to quit the stage in a respectable way… The conservatives didn’t cover themselves in glory in these chaotic hours of Berlin and Munich. And they have shown how few qualified candidates… they have in this their most important area!'”
Merkel and Benedict Patching Up
Welt On Line wrote on February 9:
“Pope Benedict and German Chancellor Angela Merkel, who had criticised the pontiff over a Holocaust-denying bishop, have had a ‘cordial and constructive’ phone conversation on the issue, the Vatican said. A joint statement by the Holy See and German government spokesman Ulrich Wilhelm said they exchanged views ‘in an atmosphere of great respect’… adding the phone call had been requested by Merkel…
“It has [been] said Pope Benedict, who has expressed his full solidarity with Jews, was not aware of Williamson’s denial of the Holocaust when he rehabilitated the bishops to try to heal a 20-year-old schism within the Church.”
“Obama Means Blood, Sweat and Tears for Germany”
Der Spiegel Online wrote on February 9:
“German enthusiasm for the new US administration could soon fade. The Americans made it very clear at the Munich Security Conference that they expect solidarity from their European allies — and that means blood, sweat and tears.
“This year, it’s going to be hard to escape the slew of German anniversaries. The list includes the Battle of the Teutoburg Forest 2,000 years ago, the invasion of Poland and the outbreak of World War II 70 years ago, the founding of East and West Germany 60 years ago and the fall of the Berlin Wall 20 years ago. In 2009, hardly any other country in the world will spend so much time intensively examining its own past as Germany.
“At the Munich Security Conference, which ran from Friday to Sunday, politicians from all over the world dared to take a look into the future. As difficult as [forecasts] might be in this time of terrorist threats, global financial meltdown and innumerable intractable regional conflicts, one prediction can be safely made: The phase of German military intervention that began 10 years ago during the Kosovo war is in no way coming to an end, despite the fact the majority of Germans wish it would. On the contrary: The era of foreign deployments for Germans and their military forces has just begun.
“In his highly anticipated speech at the conference, US Vice President Joe Biden did not make the slightest effort to talk around the problem. The good news for America’s European allies is that, from now on, Washington intends to ask for their input often and to listen to it. And the bad news? ‘America will do more, but America will ask for more from our partners.’ Biden is obviously referring to Afghanistan, where the Obama administration intends to station an additional 30,000 soldiers in the near future. And let’s make one thing very clear: Unlike the German forces who are helping with reconstruction efforts, the US troops are not going to Afghanistan to build schools or roads. They are going there to kill Taliban fighters, and their commander-in-chief will not be George W. Bush but Barack Hussein Obama.
“Afghanistan — which will be even more heatedly discussed in Germany than usual during this election year — is not the only international conflict in which Germany is playing an active role. There are also the international efforts to prevent Iran from developing nuclear weapons. Here, too, the agenda of the US government appears to be clear: The Obama administration will hold talks with Tehran, but it is also prepared to pursue other avenues if such talks fail to achieve their intended goal. And that goal is non-negotiable: Iran can not be allowed to have nuclear weapons…
“The Americans will be scrupulously careful that the confrontation with Tehran does not develop into a one-on-one battle between the US and Iran. Biden’s message from Munich is the following: Every NATO country and every member of the European Union is now involved, as of today. This is the price for the new trans-Atlantic openness and cooperation.
“… the Germans would prefer to return to the era before the fall of the Berlin Wall, when the German army… obediently remained in its barracks when trouble broke out elsewhere in the world… In this election year, Angela Merkel and Frank-Walter Steinmeier need to explain to the electorate that there can be no way back to the era in which Germany was left in peace… George W. Bush’s departure from office was met with jubilation in Germany… It’s safe to predict that some Obama worshipers in Germany will soon be missing the 43rd president — because things will no longer be as comfortable for Europe as they were during his time.”
More Than 200 Feared Dead in “Suspicious” Australian Bushfires
Welt On Line reported on February 10:
“Australian police combed through a blackened landscape searching for clues in the hunt for possible arsonists on Tuesday as the death toll from the nation’s worst bushfires looked likely to top 200…
“The bushfires which swept through Victoria state on Saturday night were ‘suspicious’ as there were no natural events such as lightning which would have sparked the blazes, said police. State Premier John Brumby said anyone found guilty could face manslaughter or murder charges.
“The disaster area, more than twice the size of London and encompassing more than 20 towns north of Melbourne, has been declared a crime zone by officials…
“Australia is the most fire-prone country on earth, say scientists, and most of its bushfires are ignited by lightning. Fire officials monitor lightning strikes and any fire that does not correspond with a strike is assumed to be started by people, either accidentally or deliberately.
“The bushfire tragedy is the worst natural disaster in Australia in 110 years. The previous worst bushfire was the Ash Wednesday fires of 1983 which killed 75 people.”
Israel Has Spoken
Haaretz reported on February 11:
“With 99 percent of the votes counted, Foreign Minister Tzipi Livni’s Kadima Party is in first place with 28 of the Knesset’s 120 seats, with Benjamin Netanyahu’s Likud Party following closely behind with 27 seats… Despite the poll results, it is not certain that Livni will be able to muster the 61-seat coalition needed to form a government…
“If the exit polls are correct, the right-wing bloc, led by Likud leader Benjamin Netanyahu, will comprise 63-64 seats, while the center-left bloc, headed by Livni, will take 56-57 seats…”
In a related article, the newspaper wrote:
“With a clear advantage to the rightist bloc in Israel’s national elections Tuesday, Benjamin Netanyahu could well end up as the next prime minister, regardless of whether his Likud party won the most votes or came second to centrist Kadima and Tzipi Livni. Late Tuesday night, Netanyahu began contacts with several right-wing parties, including Avigdor Lieberman’s Yisrael Beiteinu.
“By law, the president must consult with all the parties as to who they prefer as prime minister, and whoever is recommended by more Knesset members is given the nod. Hence if the religious and rightist parties all recommend Netanyahu, he would get first crack at forming a government… Both parties rejected the idea of sharing power via a rotation government.
“At Labor Party headquarters, in contrast, the atmosphere was one of unrelieved gloom: The party had been fighting desperately to hang onto third place, and it apparently lost the battle. Before the vote, party chairman Ehud Barak had been angling for the post of defense minister under either Netanyahu or Livni. But Labor officials said Tuesday night that the party’s poor showing made it virtually impossible for it to join a Netanyahu government.”
Hamas Accused of Torture and Murder
Welt On Line wrote on February 10:
“Amnesty International said on Tuesday Hamas fighters in the Gaza Strip had carried out killings, torture and abductions of people accused of helping Israel, during and after the recent Israeli offensive. The abuses have taken place since the end of December 2008…
“At least two dozen men have been shot dead by Hamas gunmen and scores of others have been shot in the legs, knee-capped or injured in other ways intended to cause permanent disability… Others have been severely beaten, tortured or ill-treated, it said in a report.
“Most were abducted from their homes and later dumped, dead or injured, in isolated areas, or found in the morgue of one of Gaza’s hospitals. Some were shot dead in hospitals where they were receiving treatment for injuries, Amnesty said.”
Will Germany Defeat the Lisbon Treaty?
Der Spiegel Online reported on February 11:
“Germany’s high court is taking a closer look at the European Union’s Lisbon Treaty, the document meant to replace the failed EU constitution. Early indications are that it doesn’t like what it sees. If Germany says no, the treaty is likely dead. Commentators can’t decide whether or not that is good…
“During oral arguments on Tuesday, justices asked unexpectedly critical questions… The skeptical tone from the bench continued on Wednesday… [One justice] said he didn’t really understand how Germany’s parliament would benefit from handing over competencies to the European Union.
“In particular, the court indicated deep skepticism about provisions in the Lisbon Treaty which would allow for the EU to have a say in German criminal law. Given the doubts, it seemed this week unlikely that the court would rubber-stamp the treaty without demanding changes. The court also placed a discussion of Article 146 of the constitution on the agenda for Wednesday. The paragraph stipulates that a national referendum must be held if any part of the constitution is superseded…
“Germany is one of four countries which have not yet ratified the Lisbon Treaty — joining Ireland (which rejected the treaty in a referendum last June), the Czech Republic and Poland. The German parliament approved the treaty last April, but President Horst Köhler withheld his signature pending legal challenges filed by a number of appellants, including parliamentarian Peter Gauweiler, a member of Bavaria’s Christian Social Union — the sister party to Chancellor Angela Merkel’s Christian Democrats — and the Left Party. Franz Ludwig Schenk Graf von Stauffenberg, the son of Claus von Stauffenberg, who attempted to assassinate Adolf Hitler in 1944, is also among those who challenged the treaty.
“Indicating the importance Berlin attaches to the treaty, both Foreign Minister Frank-Walter Steinmeier and Interior Minister Wolfgang Schäuble appeared before the court on Tuesday to defend the treaty…
“Should the court rule that parts of the Lisbon Treaty are not in harmony with the German constitution, it would likely mean the end of the document. Any adjustments would mean new negotiations involving all 27 member states. The treaty was already modified following its rejection in 2005. After Ireland voted down the treaty last June, minor adjustments were made in anticipation of a revote. Fundamental questions like those raised by the German court on Tuesday, however, would likely be more difficult to change.
“German commentators take a closer look on Wednesday.
“The Süddeutsche Zeitung writes: ‘… If the justices intervene, which is to be expected, then it will be because the EU’s expansion of competencies has not been followed by an expansion of democracy. Europe is suffering from too little democracy.’
“The economic daily Handelsblatt writes: ‘That the appellants want to stop the construction of the European house was impossible to ignore during Tuesday’s arguments. Germany would be giving yet more power to Europe… But is there a reasonable alternative?’…”
