Florida Senate: The 27-Second Handshake

FL-Sen: The 27-second handshake

by Markos Moulitsas

Fri Jan 29, 2010 at 11:20:09 AM PST

Poor Charlie Crist. His popularity as Florida government may be largely intact, but he’s headed for a massive defeat in the Republican Senate primary. And not massive as in “cash-flush governor gets defeated by little-known cash-strapped upstart”, but massive as in “double-digit blowout”.

Among the ammunition being used against him is this picture, from when Crist endorsed Obama’s stimulus package early last year:

Crist was in a tough spot — ignore the president’s visit, and be accused of political cowardice. The president is visiting bearing several billion in stimulus funds that Crist requested. Greet the president, and fuel the Rubio insurgency.

Of course, making it a 27-second handshake makes it that much more delicious for Crist’s right-wing tormentors. What, did Obama grab him in a vice-like grip and refuse to let go? It would be hilarious if he did.

There is a way for Crist to avoid all this heartache, of course. Switch parties. He’s dead as a Republican. Florida is too expensive for a serious independent run. Become a Democrat, and he has a fighting chance of ever serving in the Senate.

Race tracker wiki: FL-Sen

Ben Bernanke on A.I.G. March 15, 2009 [video]

Real Time With Bill Maher | Opening Monologue | February 20, 2009

Stimulus: How to Know If It’s Working

February 11, 2009

BUSINESS WEEK

Consumer confidence and job creation may be slow to emerge and hard to measure, but boosts in umemployment benefits and food stamps will be fast acting

By Moira Herbst

bama1At his first prime-time press conference, President Obama was asked a central question about the $800 billion-plus economic stimulus package: How will Americans know if it’s working? “My initial measure of success is creating or saving 4 million jobs,” Obama answered.

That was on Feb. 9, a day before the Senate passed an $838 billion version of the bill by a vote of 61-37, following the Jan. 28 passage of an $819 billion version in the House. The House and Senate have begun negotiations to reconcile the measures, which Obama would like to sign into law by Feb. 16, the federal Presidents’ Day holiday. When people have a job, Obama explained, they purchase and invest, allowing companies to do the same and, in turn, to hire more workers as business expands.


Indicators of Success

Yet while job creation is arguably the most important goal of the stimulus package, other parts of the bill will have a much more immediate and visible impact. Food stamp increases and extensions of unemployment benefits will be among the first noticeable effects of the package. Tax credit payments for individuals and families would follow, along with other tax breaks and incentives. Rising consumer confidence and lower unemployment will be far more gradual, and aren’t likely to surface until late 2009 at the earliest.

There’s an understanding among many economists that the sooner a government intervenes in an economic crisis, the more effective it tends to be in getting the economy back on track. That doesn’t mean that precise measurement of success is easy, however. “The problem is, we don’t know what trajectory the economy would take without the stimulus package,” says J. Bradford DeLong, an economics professor at the University of California-Berkeley. “We can’t enter a Star Trek-like divided universe in which we compare what’s happening with the stimulus versus without it. It’s hard to precisely judge its impact.”

DeLong says that looking at interest rates will provide a clearer idea of whether the stimulus plan is working. “If interest rates stay extremely low, the plan is definitely working,” he says. “If Treasury interest rates do start to rise by more than normal levels, then we worry that [the spending] is crowding out private economic activity and discouraging investment.” Specifically, he says that if medium- to long-term Treasury bond interest rates climb two or three percentage points higher in the next year and inflation sets in, the stimulus package is not having its intended effect.

Swift Help for the Neediest

Of course, how one benefits from the stimulus package depends on several factors, including income, professional skills, and where you live. “What you’ll see [in benefit] and when you see it depends on who you are,” says Steve Ellis, vice-president at Taxpayers for Common Sense, a taxpayer advocacy group. “If you are living hand-to-mouth, you should have greater access to food stamps and other assistance right away. If you’re employed and not doing as well but hanging on, you won’t see much change unless a [federally funded] construction project starts up nearby. For them, the government hand will be less visible and less direct.”

Direct assistance for the poor and unemployed, considered as among the most effective stimulus measures, will be the first to take effect. Both the House and Senate bills offer an additional $20.2 billion to extend emergency unemployment benefits for more than 3 million people whose state benefits are set to run out after March. They also offer an extra $25 a week in jobless benefits to millions of workers through the end of the year; the current average weekly benefit is $293.

The packages also would give $7 billion to states that adopt reforms that make it easier for part-time workers, low-wage earners, and women to qualify for benefits. The proposals vary in the amounts by which they would increase food stamp benefits and additional medical assistance for low-income, unemployed workers under Medicaid, but both include spending for these items. An additional $17 billion in the stimulus bills would boost the maximum Pell Grant for higher education by $400 per applicant and provide other financial aid. Along with extended benefits, the unemployed may start to see shorter lines at the unemployment office. Both stimulus bills give states $500 million to help process unemployment applications, which have been overwhelming state systems across the country.

Tax Credits and State Aid

Working and middle-income Americans will benefit from the $82.1 billion in tax credit payments the plans offer. The House plan would give individuals earning up to $75,000 a year a tax credit of $500 and couples earning up to $150,000 a year a tax credit of $1,000. (The Senate bill lowers the income cap to $70,000 for individuals and $140,000 for couples, which critics say would reduce the stimulus effect.) Taxpayers can receive this credit either by claiming a credit on their 2009 and 2010 tax returns or by reducing their withholding from their paychecks. Other tax incentives to encourage auto and home purchases, included in the Senate bill, would be experienced by consumers at the time of purchase.

Later this year, the effects of other spending will become more visible. The bills offer states tens of billions in “state stabilization” money, to fund grants for education and to patch holes that have emerged in many state budgets. (The House bill sets aside $79 billion in state stabilization funds, the Senate bill cuts that to $39 billion.) Another $3 billion is earmarked for state and local law enforcement.

In the meantime, the stimulus plans are expected to create or save jobs in various sectors of the economy. The nonpartisan Congressional Budget Office estimated that the House version of the bill would create between 1.3 million and 3.9 million jobs by the end of 2010. While police officers and teachers might feel the effect immediately, other workers would find jobs later this year on such projects as modernizing electrical grids, building highways, and weatherizing federal buildings.

Metrics May Prove Elusive

Mark Zandi, chief economist at Moodys.com (MCO), says that if the package works according to Washington’s plan, unemployment insurance claims should start to drop in the summer and continue through the fall. He warns, however, that the unemployment rate will be slower to fall because layoffs will offset some of the gains. Some economists say that even as the unemployment rate does begin to fall, it will be hard to measure what would have happened without the economic stimulus plan.

The stimulus is likely to provoke heated “Did it work?” debates for years to come among politicians, economists, and the public. “We are throwing a rock into our nation’s economic pond, and the ripple effects will spread throughout the economy,” says Ellis of the taxpayer group. Still, he says the impact might be more muted than many would hope: the annual U.S. gross domestic product is $13 trillion, while the stimulus package is about $900 billion over several years. Says Ellis: “It’s a big rock, but it’s a very big pond.”

Herbst is a reporter for BusinessWeek in New York.

Banks Keeping Mum on TARP Bailout Funds; Only Morgan Stanley Coming Clean

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Morgan Stanley Is One Bank That Cites a Loan From TARP Money

Other Financial Banks Including Goldman Sachs and CitiGroup Keep Mum on How They Are Using TARP Cash

By CHARLES HERMAN, DAN ARNALL, LAUREN PEARLE and ZUNAIRA ZAKI

ABC NEWS

Dec. 17, 2008—

Banks that were rescued with billions of dollars in public funds have, in most cases, refused to provide specifics about how they have used or intend to use the money.

ABC News asked 16 of the banks that have received money from the Treasury Department’s $700 billion Trouble Asset Relief Program the same two questions: How has your financial institution used the money, and how much has your financial institution allocated to bonuses and incentives this year?

To read the banks’ responses, click here.

Goldman Sachs reported Tuesday that it paid $10.93 billion in compensation for the year, which includes salaries and bonuses, payroll taxes and benefits. That is down 46 percent from a year ago. Goldman Sachs received $10 billion from the Treasury.

“Bonuses across Goldman Sachs will be down significantly this year,” a bank representative told ABC News. The spokesman refused to disclose the size of the bonus pool or how much of the compensation fund of $10.93 billion was planned for bonuses.

“We do not break down the components of compensation; however, most of that number was not bonuses,” he said. Goldman Sachs added, “TARP money is not being paid to employee compensation. It’s been and will continue to be used to facilitate client activity in the capital markets.”

Goldman Sachs has pointed out that seven of its senior executives were forgoing bonuses this year. The company also reported Tuesday that it lost $2.1 billion in the last quarter.

“It looks like Goldman Sachs is treating this as business as usual,” said compensation expert James Reda. “They are taking our taxpayer money. They should be able to account for that money.

“What’s missing from this report is the exact amount of bonuses that were paid,” said Reda. He later added, “They’re hiding the ball.”

Fred Cannon, chief equity strategist with Keefe Bruyette and & Woods, an investment bank that specializes exclusively in financial services, said, “It is difficult to say what the TARP funds are directly used for. In terms of compensation, while TARP funds may not directly pay for compensation, the funds do provide additional overall cash to the companies.”

When pressed for what the TARP money was being used for, Goldman Sachs replied that it is spent to “facilitate client activity in the capital markets.”

Only One Bank Cited a Loan It Made

Of the 16 banks that were contacted by ABC News and asked how they were spending the hundreds of billions of taxpayer dollars, only one bank pointed to a specific loan that it made with the cash. That was a $17 billion loan that Morgan Stanley made to Verizon Wireless.

Morgan Stanley, which received $10 billion from TARP, released its quarterly finances today. The bank announced a dramatic and larger-than-predicted $2.37 billion quarterly loss but an overall year-end profit of $1.59 billion. That was down 49 percent from last year. The bank’s stock price dropped 72 percent this year.

In response to an ABC News email request, Morgan Stanley public information officer Mark Lake confirmed that bonuses are down “approximately 50 percent.”

Besides the Verizon loan cited by Morgan Stanley, the banks declined to detail how they were using the federal funds.

“Tarp money doesn’t go into bonuses,” Lake said, in an email to ABC News.

Wells Fargo said that of the $25 billion it received, it “cannot provide any foward-looking guidance on lending for this quarter [and] Intend[s] to use the Capital Purchase Program funds to make more loans to credit-worthy customers.”

More typical was the generic response by the Bank of New York Mellon, which said of the fortune it had banked in public moneys: “Using the $3 billion to provide liquidity to the credit markets.”

Congress and fiscal watchdogs have been frustrated and upset that the banks do not have to account for the way they are spending these publicly financed bonanzas.

The U.S. Treasury has spent or committed $335 billion of the $700 billion in the TARP fund in an attempt to get banks back in the lending business and to unfreeze the nation’s credit markets.

Last week Congress was angered to learn that giant insurance company American Insurance Group, which received $150 billion in TARP cash to stay afloat, was paying more than $100 million in “retention bonuses” to 168 employees.

That revelation prompted Rep. Elijah Cummings, D-Md., to complain, “It’s absolutely and incredibly wrong that we don’t have more transparency.”

All the Banks That Got TARP Cash Indicate They Are Paying Bonuses

While several banks said that its top executives would skip bonuses this year or its compensation pool was smaller this year than in past years, all indicated that some end-of-year compensation was in the works.

When asked how much the banks were paying out in bonuses and whether TARP funds would be used to finance them, most of the banks did not make such a declaration.

“Incentive compensation not yet allocated,” was as far as JP Morgan Chase, which received $25 billion from TARP, would go.

Bank of America, which got $15 billion from TARP, said only, “Have reduced the incentive targets by more than half. Final awards have not been determined.”

State Street Bank ruled out using TARP to reward its top officers.

“Will not use any of the proceeds from the TARP Capital Purchase Program to fund our bonus pool or executive compensation,” the bank insisted.

Cannon said the banks are being very conservative with their money.

After reviewing the statements the banks provided to ABC News he said, “The banks are expressing good intention in line with the good intention of the program. However, the answers from the bank belie the current challenge; the economy is deteriorating rapidly and making good loans, with strong underwriting into an economy that is falling apart is very difficult.”

ABC News’ MaryKate Burke contributed to this report.

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