Surging U.S. Unemployment Rate Puts Pressure on Obama

By Bob Willis | Bloomberg.com

The jump in the U.S. unemployment rate to the highest level in a quarter century last month suggests the recession is deeper than the Obama administration forecasts and additional measures may be needed to restart growth.

The jobless rate rose to 8.1 percent in February as employers reduced payrolls by 651,000, the Labor Department said yesterday in Washington. Losses have now exceeded 600,000 for three straight months, the first time that’s happened since collection of the data began in 1939.

Unemployment has already reached the average rate the White House projected for the whole year. The administration needs to keep its focus on repairing the banking system and implementing the stimulus rather than get diverted by other goals such as healthcare changes, said John Ryding, chief economist at RDQ Economics LLC in New York.

“They should be focused on stabilization” of financial firms “and stimulus — and that should not only be ‘Job one,’ that should be the only job right now,” Ryding said in an interview with Bloomberg Television. “The question is, is it recession or is it something worse than recession?”

U.S. stocks posted the biggest weekly decline in three months after American International Group Inc. reported a $61.7 billion loss and billionaire investor Warren Buffett said the economy is in “shambles.” …

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Opinion from News Donkey: Obama recently held a White House summit to facilitate progress on the important issue of health care. An underlying pillar of health care is the economy, which is in a state of major distress that is only going to get worse unless Geithner and the US Treasury Department take swift action. However, Geithner is virtually working alone right now. For a nation with the extensive resources of the United States, we really ought to be able to do better than this. Obama may want to hold a summit to facilitate vetting and confirmation for all the Treasury Department positions. It is alarming that of 15 key positions only one has been filled, despite the fact that it has been over four months since the presidential election. One might have thought priority attention would have been given by Obama’s transition team to staffing for the Treasury. Past administrations may not have filled positions for the Treasury any faster, but then they did not face such huge economic challenges either. Health care is an important issue, but the economy is truly an emergency and needs to be more than just a high priority issue along side other issues. Fielding an incomplete team to tackle our huge economic problems is not putting forth our best foot. Washington needs to spend less time worrying about distractions like Rush Limbaugh and instead work non-stop on solving our economic problems.

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Key Democrats Oppose Obama’s Tax Deduction Plan

By STEPHEN OHLEMACHER | Associated Press

WASHINGTON – President Barack Obama’s proposal to limit itemized tax deductions for high earners is running into opposition from key Democrats in Congress who worry that charities and the housing market would be hurt. Senate Finance Committee Chairman Max Baucus questioned Wednesday whether the proposal was viable, a day after his House counterpart also expressed reservations.

Treasury Secretary Timothy Geithner said tax increases on families making more than $250,000 a year are necessary to make a down payment on health care reform and to limit future budget deficits. But, he said, he was willing to work with lawmakers on proposals they objected to.

“We recognize there are other ways to do this,” Geithner told the Finance Committee.

Baucus, a Montana Democrat, said he thought the administration would be flexible on the proposal. “They want health care reform as much as I do,” he told reporters …

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Obama Tells Treasury to Begin Cutting Taxes

By Ross Colvin | Reuters

WASHINGTON (Reuters) – President Barack Obama ordered the U.S. Treasury on Saturday to implement tax cuts for 95 percent of Americans, fulfilling a campaign pledge he hopes will help jolt the economy out of recession.

The tax cuts are part of a $787 billion economic recovery plan passed by the Democratic-controlled Congress over Republican opposition. The aim is to put more money in the pockets of Americans and stimulate the economy by increasing consumer spending.

“I’m pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1st, a typical family will begin taking home at least $65 more every month,” Obama said in his weekly radio address.

“Never before in our history has a tax cut taken effect faster or gone to so many hard-working Americans,” he said …

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Greenspan: Fix System Before Stimulus

By EAMON JAVERS | Politico

NEW YORK – The famously inscrutable Alan Greenspan used some uncharacteristically candid language to describe the dire plight of the American economy Tuesday night.

“Since the collapse of Lehman Brothers in September, we have been exposed to the most rapid and unremitting set of gloomy statistics that I have ever seen,” the former Fed chairman said at the 401st meeting of the Economic Club of New York.

And later, during a brief question-and-answer session at the New York Hilton, he branded the current economic morass a “once-in-a-century type event.”

As for the current debate in Washington over spending versus tax cuts, Greenspan said he has “little to add” about the question of government stimulus spending, but he asserted the government must fix the financial system as a whole before delivering stimulus spending and tax cuts …

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How the Economic Stimulus Plan Could Affect You

By The Associated Press An examination of how the economic stimulus plan will affect Americans. Taxes: The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the ones they own more energy efficient. Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year. The $1,000 child tax credit would be extended to more low-income families that don’t make enough money to pay income taxes, and poor families with three or more children will get an expanded Earned Income Tax Credit … Continue Reading

Stimulus: How to Know If It’s Working

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 | BusinessWeek

At 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 …

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‘We have a deal’

By DAVID ROGERS | Politico

The White House and Senate Democrats secured a deal Friday with moderate Republicans to clear the way for passage of President Barack Obama’s economic recovery plan.

After days of watching from the sidelines, Rahm Emanuel, the president’s chief of staff, came to the Capitol Friday afternoon to help seal the final arrangements, and Majority Leader Harry Reid (D-Nev.) called a Democratic caucus for the evening to go over the revisions with his party.

“We have a deal” said one official, and Sens. Susan Collins (R-Maine) and Arlen Specter (R-Penn.), who were central to the negotiations, were expected to speak on the floor Friday night.

Emanuel came to participate with Reid in meeting with the two Republicans in Reid’s Capitol office. Reid had already signaled to Collins and Specter that he would accept spending cuts in the range of $80 billion. The addition of Emanuel indicates that that more concessions may have been added; having Emanuel present was good political insurance for Reid in dealing with House Democrats down the road.

Final details have not been released, but it appears the package, as initially brought to the Senate floor, will be scaled back by about $82 billion in spending reductions and $25 billion in tax cuts …

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Most Say Tax Cuts Always Better Than Increased Spending

Rasmussen Reports

Paul Krugman, last year’s winner of the Nobel Prize for economics and a regular columnist for the New York Times, recently wrote that you should “write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.”

If you follow that advice, you’ll be writing off a majority of Americans. The latest Rasmussen Reports national telephone survey found that 53% say that it’s always better to cut taxes. Only 24% share Krugman’s views.

Republicans overwhelmingly say it’s always better to cut taxes, and so do 50% of those not affiliated with either major party. Twenty-three percent (23%) of unaffiliateds take the opposite view and agree with Krugman.

Democrats are evenly divided—38% say tax cuts are always better while 34% disagree.

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Senate OKs $15,000 Tax Break for Homebuyers

By DAVID ESPO | Associated Press

WASHINGTON – The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama’s recovery plan.

The tax break was adopted without dissent, and came on a day in which Obama pushed back pointedly against Republican critics of the legislation even as he reached across party lines to consider scaling back spending.

“Let’s not make the perfect the enemy of the essential,” Obama said as Senate Republicans stepped up their criticism of the bill’s spending and pressed for additional tax cuts and relief for homeowners. He warned that failure to act quickly “will turn crisis into a catastrophe and guarantee a longer recession.”

Democratic leaders have pledged to have legislation ready for Obama’s signature by the end of next week, and they concede privately they will have to accept some spending reductions along the way.

Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break for the purchase of new homes only …

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Obama: Catastrophe Coming If Congress Doesn’t Act

By ANDREW TAYLOR | Associated Press

WASHINGTON – President Barack Obama said Wednesday the recession will turn into “a catastrophe” if the economic stimulus is not passed quickly, lobbying anew for the plan as its price tag climbed above $900 billion and drew more criticism.

The president rejected several complaints about the plan, including arguments that tax cuts alone would solve the problem or that longer-term goals such as energy independence and health care reform should wait. Obama opposed such piecemeal approaches.

Instead, he argued that recalcitrant lawmakers need to get behind him, saying the American people embraced his ideas when they elected him president in November.

While urging members of Congress to act swiftly, he also promised to make changes to the legislation, which has been criticized as larded with spending that won’t have an immediate impact on the economy.

“No plan is perfect, and we should work to make it stronger,” Obama told reporters at the White House. “Let’s not make the perfect the enemy of the essential. Let’s show people all over our country who are looking for leadership in this difficult time that we are equal to the task.” …

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Related News: Senate GOP Blocks Extra $25B in Stimulus Package