Riddle Me This: Why is it so hard to understand that when the government spends money, it results in jobs and economic activity? Today I read somewhere about how hard it is to get the concept across, whereas the concept of cutting taxes is easy. And I heard someone on CNN explain that the money in the federal budget going to earmarks spending isn't much, but "tell that to somebody who's unemployed." What? I think most unemployed people are smart enough to wonder if they can get a job financed by that earmark, let alone discretionary spending as a whole, and especially something like the Recovery Act. The government spends the money-- so somebody gets it. Maybe it's a government employee, who buys stuff that means others are employed, and/or who performs a necessary service for society and the economy, like teachers, or maybe the money is spent directly in the private sector, employing people! Building stuff! Maintaining, staffing stuff! Why is this such a difficult concept????????

The Recovery Act creates jobs--as even the Republicans who were against it know it does, and want those jobs for their districts.

Update: The CBO now says the Recovery Act has employed up to 2.1 million workers, and added up to 3 million workers to the economy, reducing the unemployment rate by more than a point.

The Terminator vs. the Helpless:With this photo of a demonstration against health care cuts in Los Angeles by health care workers and patients, the New York Times story about the California budget cuts: "The cuts Mr. Schwarzenegger has proposed to make up the difference, if enacted by the Legislature, would turn California into a place that in some ways would be unrecognizable in modern America: poor children would have no health insurance, prisoners would be released by the thousands and state parks would be closed. Nearly all of the billions of dollars in cuts the administration has proposed would affect programs for poor Californians, although prisons and schools would take hits, as well."

The Perils of Stupidity

“The consequences of the Senate Republicans’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry unless the President immediately directs Secretary Paulson to explore other short-term financial assistance options.” So said House Speaker Nancy Pelosi, and so say we all.

But while all this was going on Thursday what were the cable news channels chattering about? Trying to pin the scandal caused by a delusional Illinois governor on Barack Obama. Why? Because it's a story they understand. It's scandal. It's politics. And as outrageous as the charges against Gov. B are, it's irrelevant.

It's clear from Fitzgerald's charges that Blago's desperation to find some way to make bucks from the Senate appointment was because he knew he couldn't get anything out of the Obama transition. Everything after that is a minor political story, maybe a minor legal story, and ordinarily worth following. But not 24/7. And not yesterday.

Because in the meantime, a particularly venal, self-important, narrow-eyed nasty and stupid group of Senate Republicans were trying to hold millions of people hostage to satisfy their union-busting cravings.

That was the truly important story of December 11, but it was just too hard for them to report. (The exception to an extent is Rachel Madow and to a lesser extent, Keith.) If the news media isn't all over this story Friday--assuming that by 9 a.m. Paulsen hasn't released some billions of chump change out of his $350 billion which represents tax money paid by those millions who are going to lose their jobs if he doesn't--then there's really no reason to watch them anymore. They are irrelevant.

We're in very, very dangerous waters right now. The usual stupidity may well be enough to sink us.

The Great Recession

Officials finally admit the U.S. is in recession--and has been for a year (talk about a lagging indicator.) Then Friday's job report was a thunderbolt: not only a loss of 533,000 jobs in November and other terrible numbers for the month, but figures for the previous few months revised to show hundreds of thousands of more jobs lost than admitted before.

Together with the grim and grinchy financial sector (though on the unemployment news, the stock market naturally went up), this adds up to something economists and squawking heads don't have a name for--worse than a regular recession, not quite the Depression. So I'm calling it the Great Recession for now.

At least it focused some congressional minds on saving the U.S. auto industry from contributing several million more unemployed. Bridge loans are in the works--if not yet bridges to better companies, at least bridges to the Obama administration and a Congress that can get something more lasting done.

Meanwhile, the Obama transition seems focused on the next round of Cabinet appointments, rumored to be Environment, Energy, Agriculture and Interior. With announcements due perhaps Monday, what's interesting is both the complete mystery about who will be appointed, and (maybe not coincidentally) the lack of big (or at least well-known) names. About the only one with any sizzle is Kathleen Sebelius, and she's mentioned as a possibility for Energy or Agriculture, or Something.

Absent now from the speculated possibilities for EPA is Robert Kennedy, Jr., who took himself out of the running for Hillary's New York Senate seat. Possibly because cousin Caroline Kennedy is interested.

Well, I'd really like to see Robert Kennedy at EPA or Energy. These appointments are opportunities to go left of center, for better balance overall. There needs to be an Asian at cabinet level, too, if at all possible. At least VPE Joe Biden picked a notorious liberal economist for his economics advisor: Jared Bernstein. But with so little to go on, speculation is pointless. And even more important, no fun.

The World According to Zakaria (and other matters)

When I commented on Obama's foreign policy appointments, among others, over at Dreaming Up Daily, I forgot to mention this Newsweek article by Fareed Zakaria, which takes a broad look at America's place in the world and Obama's considerable foreign policy challenges. It's well worth reading it all, but here at least is his conclusion:

"President-elect Obama has powers of his own, too. I will not exaggerate the importance of a single personality, but Obama has become a global symbol like none I can recall in my lifetime. Were he to go to Tehran, for example, he would probably draw a crowd of millions, far larger than any mullah could dream of. Were his administration to demonstrate in its day-to-day conduct a genuine understanding of other countries' perspectives and an empathy for the aspirations of people around the world, it could change America's reputation in lasting ways.

This is a rare moment in history. A more responsive America, better attuned to the rest of the world, could help create a new set of ideas and institutions—an architecture of peace for the 21st century that would bring stability, prosperity and dignity to the lives of billions of people. Ten years from now, the world will have moved on; the rising powers will have become unwilling to accept an agenda conceived in Washington or London or Brussels. But at this time and for this man, there is a unique opportunity to use American power to reshape the world. This is his moment. He should seize it."

Meanwhile, Rachel Maddow is crusading on behalf of the auto companies versus the banks, on the basis of class bias, and she may be having some effect. After mentioning it on one show, showcasing it on another, some Senators were noticeably noting the discrepancy between the hundreds of billions in blank checks to the banks, and the fuss over a fraction of that for auto manufacturers. Senator Chris Dodd was like a wild man.

One irony is that money went to the banks so they would lend it out but they aren't doing that--and because they aren't lending to businesses, let alone consumers, some 40% fewer people are buying cars, creating the need for the Big Three to beg for loans from the federal government.

Late Thursday, ABC was reporting that congressional Dems sent a letter to the Bushites telling them they'd better carve out some chump change for the auto companies from the $700 billion bailout fund. Or General Motors could be gone before Obama gets to the White House.

Economist Paul Krugman has been using the word "scared" lately when confronted with economic prospects. He's especially worried about the unemployment numbers, that we could be losing a half million jobs a month. The first test will be Friday's monthly employment report. You may know the numbers by the time you read this--how close to 450,000 are they? We could hope he's been studying the Great Depression a little too closely.

Update: Seems Krugman was a bit conservative. Official job loss (so it's more that this) was 533,000 in November.

Fast Times in a Slow Economy

Things are happening fast, as Monday saw not only P-E Obama's press conference introducing four members of his economic team, but a statement by President Bush and current Treasury Sec Paulsen emphasizing coordination on the economy between the incoming and outgoing administrations.

Obama holds another press conference Tuesday--a few hours from now--but I haven't seen speculation on whether he'll be announcing more appointments. Maybe his budget director, who wasn't there Monday?

The impression left by the press conference Monday, especially combined with Obama's radio/YouTube address Saturday and his transition team's public statements Sunday, is that Obama saw a dangerous void and is moving quickly to fill it. The Times of London saw it that way: Barack Obama effectively took control of the US economy - two months before he takes office - by declaring that his plan to confront the financial crisis "starts today". As he unveiled his new economic team, Mr Obama struck a very different note from the diffident election winner of three weeks ago who stressed that America is led by only "one president at a time". Today, he appeared fully aware that the US and global markets are looking to him, not President Bush, for solutions to the deepening crisis.

The U.S. stock market responded with the largest two day gains in decades, and Asian markets were following the upward movement this morning. Obama's choices also got pretty strong reviews.

What I found fascinating were some of the things Obama said about his appointees as he introduced them--things that aren't usually part of their media descriptions. For instance...

On Timothy Geithner, Secretary of the Treasury: “Growing up partly in Africa and having lived and worked throughout Asia; having served as Under Secretary of the Treasury for International Affairs – one of many roles in the international arena; and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.”

On Larry Summers, director of the National Economic Council : “As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class. This idea is the core of my own economic philosophy and will be the foundation for all of my economic policies.”

On Christina Romer, director of the Council of Economic Advisors, usually described simply as an expert on the Great Depression. Obama added that she's also an expert on the subsequent economic expansion. “Christina has also done groundbreaking research on many of the topics our Administration will confront – from tax policy to fighting recessions. And her clear-eyed, independent analyses have received praise from both conservative and liberal thinkers alike. I look forward to her wise counsel in the White House.”

As Domestic Policy Advisor, Melody Barnes will be “working hand-in-hand with my economic policy team to chart a course to economic recovery. An integral part of that course will be health care reform – and she will work closely with my Secretary of Health and Human Services on that issue...As executive vice president for policy at the Center for American Progress, Melody directed a network of policy experts dedicated to finding solutions for struggling middle class families."

Obama spoke of the economic stimulus plan: “I think the most important thing to recognize is that we have a consensus, which is pretty rare, between conservative economists and liberal economists, that we need a big stimulus package that will jolt the economy back into shape and that is focused on the 2.5 million jobs that I intend to create during the first part of my administration,” he said. “We have to put people back to work. Now, that runs in parallel with making sure that our financial system is stable. And so we're going to have to do more than one thing at a time. But across the board, people believe that this stimulus is critical.”

He wants this package ready to go ASAP. That probably means his team gets it together by early December, Congress perhaps holds hearings in another lame duck session, but the new Congress definitely begins working on it in early January. He wouldn't want them to actually pass it and send it to the White House until he's been inaugurated--because there will still be another president there-- but soon after.

Also on tap for Tuesday, according to Reuters: U.S. Treasury Secretary Henry Paulson plans to announce on Tuesday the formation of a program to increase the availability of auto loans, student loans and credit cards, the Wall Street Journal reported, citing people familiar with the matter.

Fast times in a slow economy--with Black Friday looming--the now-ominous name of the traditional biggest shopping day of the biggest shopping period of the year: the day that the malls used to love, and this year everyone fears.