Reporting from Washington — Invoking an argument used by President George W. Bush, the Obama administration has turned down a request from a watchdog group for a list of health industry executives who have visited the White House to discuss the massive healthcare overhaul.

Citizens for Responsibility and Ethics in Washington sent a letter to the Secret Service asking about visits from 18 executives representing health insurers, drug makers, doctors and other players in the debate. The group wants the material in order to gauge the influence of those executives in crafting a new healthcare policy.

The Secret Service sent a reply stating that documents revealing the frequency of such visits were considered presidential records exempt from public disclosure laws. The agency also said it was advised by the Justice Department that the Secret Service was within its rights to withhold the information because of the “presidential communications privilege.”

Mr. Nicholas tells us the “Citizens for Responsibility and Ethics said it would file suit against the Obama administration as early as today.”

As a candidate, President Obama vowed that in devising a healthcare bill he would invite in TV cameras — specifically C-SPAN — so that Americans could have a window into negotiations that normally play out behind closed doors.

Having promised transparency, the administration should be willing to disclose who it is consulting in shaping healthcare policy, said an attorney for the citizens’ group. …

I guess President Bush’s policies and conduct in the White House are looking more and more inviting to our current President, since he is employing so much of the same behavior. It is fascinating to me that his supporters, who were so virulently opposed to George Bush see nothing wrong with this when their guy does it.

In its letter requesting the records, Citizens for Responsibility and Ethics asked about visits from Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America; Karen Ignagni, president of America’s Health Insurance Plans; William Weldon, chairman and CEO of Johnson & Johnson; and J. James Rohack, president of the American Medical Assn., among others.

“It’s extremely disappointing,” said Anne Weismann, the group’s chief counsel. Obama is relying on a legal argument that “continues one of the bad, anti-transparency, pro-secrecy approaches that the Bush administration had taken. And it seems completely at odds with the president’s commitment . . . to bring a new level of transparency to his government.”

Well, yeah. What is also disappointing is that as usual the inside the beltway folk are formulating policy by giving face time to the big moneymakers on health care. Somehow I doubt that will result in a win-win for those most in need of assistance.

PhRMA, which represents the nation’s drug companies, said it had taken part in two meetings with senior White House officials in the Roosevelt Room. Participants, according to Tauzin, included White House Chief of Staff Rahm Emanuel, along with the CEOs of some major drug companies. Both meetings were closed to the public.

Closed to the public? Transparency all the way. What would be the problem with our knowing what is being discussed? There is certainly widespread agreement that health care reform is needed. But that is where the agreement ends. The current legislation is over 1,000 pages – a labyrinth-like tome that is so confusing, those voting on it neither know how it works or how to explain it.

Distinguished newsman Sam Donaldson penned an article in the Daily Beast today, Obama’s Misguided Media Blitz, which reminds us that while Obama intends to stage another press conference tonight to sell his health care plans to the American people, his time would be better spent actually working on the proposals that are in massive need of a fix before they go to the floor in either the House or the Senate.

Unfortunately, the salesman-in-chief is far too invested selling the sizzle, while masking the deadly details of his proposals. Since he is also supposed to be the chief executive, if he manages health care reform the same way he “managed” the stimulus package — by outsourcing it to the likes of Pelosi et al — we may be in for a world of hurt.

President Obama’s ‘media blitz’ is yet another way to distract from the very information the Citizens for Responsibility and Ethics in Washington are trying to determine – who wields the influence here and what will that mean for the American taxpayer.

Clearly Mr. Van Dyk was a huge fan of this President, thought his campaign “superb” and appreciated his promises of “reaching across party and ideological lines to get the public’s business done.” Van Dyk opines:

“You displayed an intellect and sense of cool that made us think you would weigh decisions carefully and view advisers’ proposals with skepticism.”

You know what I get from that phrase? Since the President acted “cool,” some mighty educated people actually believed this to be more than just a pose on his part. Not unlike Madonna’s use of “Voguing” back in the day. Now perhaps they begin to see that a pose has neither to do with governing nor an ability to adapt to the changing realities on the ground.

At that point, Mr. Van Dyk goes off the rails and we see that his blanket approval has come to an end:

The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.

He then complains of Obama stocking his White House with “Clinton administration retreads who had learned their trade in the never-ending-campaign culture of the Clinton years.” Again, blame Clinton. But who did Mr. Van Dyk think this man was going to hire? He faults Obama for his “reliance on these Clinton holdovers.”

Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an “opportunity” to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.

The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.

Does Van Dyk assume any Democratic president would have been this reckless? Hillary Clinton had different health care proposals, different proposals for helping homeowners in this crisis and a much better understanding of the economy. None of her ideas are being utilized, I’m afraid. She just may have exhibited the good sense Mr. Van Dyk longs for and put the financial floor back under us before attempting a more drastic change. But we’ll never know…

Van Dyk discusses Mr. Obama being unfairly compared to FDR & LBJ. Discussing President Johnson’s “Great Society legislation”…

…at every stage, congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.

Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you’re stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.

President Obama is in over his head, so of course he “outsourced.” Why is this gentleman surprised? Mr. Van Dyk willfully ignores the fact that the biggest culprit here is not a “Clinton retread,” but the Queen Bee herself, Speaker Nancy Pelosi. She crafted the stimulus package behind closed doors and the President willingly allowed her this control. Perhaps that was his devil’s bargain for her help in kicking the ladder out from under Hillary. Republicans were not the only ones to be shut out of the crafting of the Stimulus package. Many Democrats were as well. Van Dyk continues:

This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans — not to mention the bailouts of the financial and auto industries — independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.

He then offers up a prescription for a fix:

- Cut back both your proposals and expectations. You made promises about jobs that would be “created and saved” by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.

It’s time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all — badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?

The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.

- Talk less and pick your spots.

Applause and adulation are gratifying. But the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it’s important and they should listen.

“Let voters see you at your desk!” Doing some “work.” Great ideas!

- Conform your 2009 politics to your 2008 statements. During your campaign, you called for bipartisanship and bridge-building. You promised to reduce the influence of single-issue and single-interest groups in the policy process. Yet, in your public statements, you keep using President Bush as a scapegoat.

You have ceded content of your principal proposals to Democratic congressional leaders who in large part have yielded to special-interest constituencies and excluded Republican leaders from policy formulation. This certainly was the case with the stimulus plan. It has been the case with health and energy legislation, with the notable exception of Sen. Max Baucus’s attempt in the Senate Finance Committee to develop genuinely bipartisan legislation.

He concludes by telling Obama

“You have an enormous reservoir of goodwill among Americans of all persuasions. They want you to succeed. Level with them and trim your proposals to what is practical in the current environment.”

But ironically, it is Mr. Van Dyk’s closing statement with which I most take issue:

You had things right in 2008. Take a timeout. Get back to yourself. Make a fresh start.

He did not have things “right” in 2008 because there is no “self” to ‘get back to’. His campaign was always “words, just words.”

While I graduated college with high honors, I am no genius, yet I figured this out from my living room couch back in January of 2008. I watched this man at a debate and his “performance” told me everything I needed to know. I then looked at his voting record and the corporate interests with whom he surrounds himself, his addiction to pretty sound bytes and an over reliance on canned speeches rather than a resume that indicated he had worked even on a smaller level to achieve his stated goals. His current proposals are loaded with top heavy payback for special interests that arguably got him elected in the first place. Wall Street has gotten bailed out. Not Main Street. He lives in support of an oligarchy, like his immediate predecessor. If these are true Democratic principles, its the first I’ve heard of it.

The obscene amount of money spent on his inauguration, expensive “dates” and pizza parties and his hiring not less than 30 “czars” all of whom require staff and total salaries in the millions are more accurate indicators of the man than any of his campaign rhetoric.

Like Obama’s other supporters, perhaps Mr. Van Dyk has yet to understand that speeches will never equal governing ability. He too, blamed the Clintons for being “polarizing” as Bush was, but how true is his claim? Clinton passed true bi-partisan legislation. He had to, as he was working with a Republican Congress for 6 of his 8 years and did very well in that regard. But in his case, he also had deep knowledge of the economy and a willingness to reach across the aisle and conform to the existing reality. He certainly left the country in better shape than he found it.

President Obama, by contrast is the “salesman in chief.” That is what the DNC wanted. How is he supposed to pull us back to “reality” with his proposals when he clearly did not have these reasoned intentions in the first place, or a true understanding of how to get us there?

Apparently, Mr. Van Dyk has yet to travel the last mile in his awakening.

Remember those Black Panthers who were arrested in Philly for voter intimidation? Well, guess who’s got a friend in the White House? That would be the three men charged – amazingly, the charges have been DROPPED by the Justice Department! Oh, you know I’m not making this up:

Charges brought against three members of the New Black Panther Party for Self-Defense under the Bush administration have been dropped by the Obama Justice Department, FOX News has learned.

The charges stemmed from an incident at a Philadelphia polling place on Election Day 2008 when three members of the party were accused of trying to threaten voters and block poll and campaign workers by the threat of force — one even brandishing what prosecutors call a deadly weapon.

The three black panthers, Minister King Samir Shabazz, Malik Zulu Shabazz and Jerry Jackson were charged in a civil complaint in the final days of the Bush administration with violating the voter rights act by using coercion, threats and intimidation. Shabazz allegedly held a nightstick or baton that prosecutors said he pointed at people and menacingly tapped it. Prosecutors also say he “supports racially motivated violence against non-blacks and Jews.”

The Obama administration won the case last month, but moved to dismiss the charges on May 15.

Click here to see FOX News video from the scene on election day.

Click to watch the incident on YouTube.

The complaint says the men hurled racial slurs at both blacks and whites.

A poll watcher who provided an affidavit to prosecutors in the case noted that Bartle Bull, who worked as a civil rights lawyer in the south in the 1960’s and is a former campaign manager for Robert Kennedy, said it was the most blatant form of voter intimidation he had ever seen. (Emphasis mine.)

In his affidavit, obtained by FOX News, Bull wrote “I watched the two uniformed men confront voters and attempt to intimidate voters. They were positioned in a location that forced every voter to pass in close proximity to them. The weapon was openly displayed and brandished in plain sight of voters.”

He also said they tried to “interfere with the work of other poll observers … whom the uniformed men apparently believed did not share their preferences politically,” noting that one of the panthers turned toward the white poll observers and said “you are about to be ruled by the black man, cracker.”

A spokesman for the Department of Justice told FOX News, “The Justice Department was successful in obtaining an injunction that prohibits the defendant who brandished a weapon outside a Philadelphia polling place from doing so again. Claims were dismissed against the other defendants based on a careful assessment of the facts and the law. The department is committed to the vigorous prosecution of those who intimidate, threaten or coerce anyone exercising his or her sacred right to vote.”

Golly, I am just SO surprised, aren’t you? I just never expected that Obama’s Justice Department would let these three men who were engaging in extreme voter intimidation off!! Ahem. Who am I kidding? Of course I did. I’m just surprised it didn’t happen sooner…

One last note – as a follow-up to all of the GM news, including the closing of plants about which I just wrote, I recommend this post by Uppity Woman, “Congratulations, Comrades and Comradesses! You Are Proud Owners Of Government Motors“! That pretty much says it all! What’s next? California?

Further, the dramatic interview of Martin Wolf below, and the accompanying transcript, demand a fresh look. Wolf [PHOTO] — op-ed columnist for the influential Financial Times — penned “To nationalise or not – that is the question,” with this says-it-all image:

FIRST, check out Larry Johnson’s contribution to the original story:

FROM LARRY JOHNSON: It is important to clarify a point made by Martin Wolf regarding his view that the Obama stimulus package is too small. He is correct.

The Obama plan is simply more government spending on government buildings and hiring, more often than not, more government workers. Although the total appropriation is approaching 800 billion, less than a third of that will be spent by October 2009.

I proposed, for example, giving households where the income is less than $300,000 a $5,000 grant. There are about 100 million households in that category. That would have put an immediate 500 billion back into the economy without incurring a long term U.S. Government commitment.

If the Federal Government also provided a year free of payroll taxes for people who make less than $125,000 that would give each family an average of an additional $3000. As it stands the Obama plan is only going to put around $700 a year in the hands of taxpayers.

You do the math–which is more stimulative. My approach or Barack’s?

Larry’s plan is simple and, best of all, it’s fast and powerful, and floods the economy with cash.

NOW WATCH Martin Wolf:

From Fareed Zakaria’s GPS on CNN: “Zakaria discusses Financial Times columnist Martin Wolf’s bleak predictions for the global economy.” (NOTE: More links to Mr. Wolf’s writings are at the end.)

This is a very serious problem we’re now in. We are in a major, massive, global downturn with a real prospect of getting out of hand. Everything is going very badly. The shrinkage of world output is terrifying.

*************************

Well, the problem with the stimulus package, in my view, is essentially twofold. First, surprisingly, it’s too small. I know $900 billion — or $800 billion — sounds like a lot of money. But this is a $14 trillion economy. And the private sector is in freefall, in my view.

*************************

WOLF: We are in that very rare situation, in my view — it occurs in the West perhaps once every 70 years. It’s a situation described by the famous English economist, John Maynard Keynes. It’s a situation of deficient demand.

So, the government must spend. And it must spend in very large quantities.

So, I think, actually, on my calculations, you wanted a stimulus of six or seven percent of GDP, at least — in the first year. Not…

ZAKARIA: Which is — explain what that is in layman’s (ph) terms (ph)?

WOLF: That would mean about the sums we’re talking about. Seven hundred billion dollars or so should be spent at once.

ZAKARIA: In the first year.

WOLF: In the first year.

ZAKARIA: And in fact…

WOLF: Now.

ZAKARIA: … only $200 billion will be spent…

WOLF: That’s right. Now. We want it spent now. A year from now, in the year — it could be too late.

You’ll be disturbed by Wolf’s commentaries. It’s telling that he is close to economist Nouriel Roubini, who predicted this growing recession.

Here is the THE FULL SEGMENT TRANSCRIPT:

MARTIN WOLF, “FINANCIAL TIMES”: Everything is going very badly. The shrinkage of world output is terrifying.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: It was a week of superlatives — a historically high budget, a record-breaking deficit, new lows for home sales, new highs for unemployment.

In short, another terribly depressing set of economic news this week — not just in the United States, but around the world.

I thought long and hard about whom I wanted to talk to about all of this, and there’s nobody who knows more than Martin Wolf.

Martin is the chief economics commentator at the “Financial Times.” His column is an absolute must-read.

Welcome back, Martin.

MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, “FINANCIAL TIMES”: A pleasure to be here.

ZAKARIA: I’ve been reading your columns over the last few weeks, and I’ve been struck by the fact that you’ve been very critical of the Obama team and their plan.

Explain in a nutshell, what’s the problem?

WOLF: Well, first of all, I think we have to recognize this is a very serious problem we’re now in. We are in a major, massive global downturn with a real prospect of getting out of hand.

Everything is going very badly. The shrinkage of world output is terrifying. And I think this is an event which can only now be compared with the ’30s.

Everything has turned out worse than anybody expected, even the most pessimistic people a year ago. It’s important to remember how much worse it is now than even the most pessimistic, like my friend Nouriel Roubini, thought it would be now.

Against that background, we — I suppose this may have been a fond expectation — hope that the new team — very intelligent people, completely free from the taint of the past — would take hold of the situation and take action so decisive, so comprehensive, so ruthless, that it was clear that, on the worst case scenario, it was going to be turned around.

I think all the segments they’ve dealt with, the three things they’ve dealt with — the stimulus, the financial package, the home situation — they’re the right segments.

But in every case, the policy has been far too cautious, far too politically constrained. And it’s not going to shift expectations. And that’s absolutely obvious it’s what the markets have concluded, and it’s what the world’s concluded.

And I fear now, that this tremendously important opportunity to turn things around has been lost. And that means we may have a really dreadful situation in the world economy — and the whole world, therefore, politically, as well — over the next few years.

So, I think they failed to seize the initiative.

ZAKARIA: All right. Let’s start with the stimulus.

The economic stimulus plan, $900 billion. Obama’s gotten a lot of criticism from the right, that it’s full of pork and things.

But your criticisms are different. Explain exactly what your problem is.

WOLF: Well, the problem with the stimulus package, in my view, is essentially twofold. First, surprisingly, it’s too small. I know $900 billion — or $800 billion — sounds like a lot of money. But this is a $14 trillion economy. And the private sector is in freefall, in my view.

And that’s because the private sector stopped spending, simply, around the world.

ZAKARIA: People and companies have stopped spending.

WOLF: People and companies have just stopped spending.

ZAKARIA: So, the government has to…

WOLF: And so, the government has to spend.

We are in that very rare situation, in my view — it occurs in the West perhaps once every 70 years. It’s a situation described by the famous English economist, John Maynard Keynes. It’s a situation of deficient demand.

So, the government must spend. And it must spend in very large quantities.

So, I think, actually, on my calculations, you wanted a stimulus of six or seven percent of GDP, at least — in the first year. Not…

ZAKARIA: Which is — explain what that is in layman’s (ph) terms (ph)?

WOLF: That would mean about the sums we’re talking about. Seven hundred billion dollars or so should be spent at once.

ZAKARIA: In the first year.

WOLF: In the first year.

ZAKARIA: And in fact…

WOLF: Now.

ZAKARIA: … only $200 billion will be spent…

WOLF: That’s right. Now. We want it spent now.

A year from now, in the year — it could be too late.

ZAKARIA: But you know what? A lot of Obama people say, when you say that is, they didn’t have what they call shovel-ready projects. There wasn’t — you couldn’t find things to spend on.

You don’t — you’re not restricted to just so-called shovel-ready projects. You’re not restricted to investment at all. You can just send people checks. And if it’s not large enough, send them more.

Even if they save some, that’s not so terrible, because you want people to reduce their debt. The crucial thing is, this is a situation in which you need to get money out into the public, to people who will spend. And that can be done, I have no doubt about it, just by borrowing money from the Federal Reserve and sending it.

The trouble is, if everybody decides not to spend in a country where 72 percent of demand was consumption, you know — and this was a big…

ZAKARIA: (UNINTELLIGIBLE) 72 (ph) percent of the economy…

WOLF: … the economy was American consumer demand, and they all decide, “Actually, we don’t want to spend so much. We want to consume only, perhaps 10 percent less than this,” then, of course, you’ve got very weak demand, and there’s nothing in the world, really, to offset this.

The statistic I like to point out, if you look at the world level, is American household spending, consumption, was twice as much — twice as much — as the total GDP of China and India together.

This is really a big part of the world economy.

ZAKARIA: So, explain to an average person watching, what is their life — what is the life of an average family going to look like? If what you’re describing as, you know, a bleak outcome, but a quite likely outcome, a year or two into this, what is their life going to look like?

WOLF: What I’m really imagining here is a world in which over- indebted people are trying to pay down their debt. The level of debt in the household sector — among households in the United States — has doubled relative to their incomes in the last 10 years or so.

So they spend a lot of time saving. They don’t go to the mall. They live more cheaply.

Obviously, we’re assuming here they have a job. A lot of people will be without jobs. Certainly, more of them will be without good, well-paying jobs in this situation, for a long period. So they’re going to be more frugal.

And I think at the aggregate level, the result is that the sort of huge consumption binge we saw — I mean, U.S. households were spending more than their incomes for years and years and years, and borrowing and borrowing. That will all be over.

ZAKARIA: And…

WOLF: And that’s what happened in a different way, of course, in Japan.

ZAKARIA: And it means their 401(k)s, their retirement accounts have been — have dropped in value, so they retire later.

WOLF: Yes. ZAKARIA: It means that…

WOLF: They’re poorer.

ZAKARIA: … no more raises, because companies aren’t doing well enough.

WOLF: They’re poorer than they thought they were.

I mean, part of that was — I’m not predicting the stock market, because the stock market can move everywhere, on anywhere.

But, yes. And house prices are certainly not going back to the peaks that we saw two or three years ago, maybe for a generation.

Their wealth loss is trillions and trillions of dollars. So — and that’s true around the world. Around the world, the loss in equity value is about $40 trillion around the world. So, these are monstrous figures.

Now, in this situation, of course, it’s inevitable. People are cutting back, so there was no big consumption driver.

Corporations aren’t going to go out and invest when they’ve got no demand. And they can’t borrow from the banks, either. We haven’t discussed the failure to fix the banks.

So, for all these reasons, you know, for the private sector, it’s not at all obvious where the demand will come from.

And meanwhile, as I said, I think the government stimulus here is not too bad, here and around the world. It’s just too little.

So, I fear a long period of stagnation, and with a lot of bad news coming out — very bad economically and very bad politically, and very depressing.

ZAKARIA: Martin, stay right here. After the break, what might be even scarier than what you’ve already heard — Martin’s opinion of the Obama administration’s bank bailout. It isn’t good.

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Martin Wolf, the columnist for the “Financial Times,” talking about the Obama plan.

Let’s talk about the other part of this package, the Obama team’s package, which is the bank bailout.

You had been advocating a bank bailout for a long time. The Obama team comes in — fresh team, smart people, you know them all. And as far as you’re concerned, they lay an egg.

WOLF: Yes. I don’t really understand — but I am here in very good company — what exactly they’re trying to do. There is a big debate about how insolvent the banking system is. But I think many people whom I trust would say that, if you understood what’s going to happen to the value of the banking sector’s assets, the claims they have on the rest of the economy, you look at where we are now, it’s going to get worse and worse. So that they are almost certainly grossly undercapitalized — the big banks — if not insolvent.

And that’s clearly what the market thinks.

ZAKARIA: So, what should Obama do?

WOLF: In this situation — let’s first understand the danger. The danger is, it won’t lend. And worse, they’re all trying to reduce their loan book. And that will make the economic situation much worse. So, you need soundly capitalized banks.

Now, if that’s the case, there are essentially only two ways of doing this. One — which is quite wrongly called nationalization — is restructuring under a sort of bankruptcy procedure, which is exactly what the FDIC, the Federal Deposit Insurance Company (sic) does.

ZAKARIA: And the FDIC does this with small banks…

WOLF: Yes.

ZAKARIA: … every — is doing this…

WOLF: Yes, yes…

ZAKARIA: … with small banks every week.

WOLF: Yes.

Now, obviously, the big institutions, it’s much more complex. I understand that. And, of course, they’re incredibly big and important institutions. So, you have to do it quickly and ruthlessly.

And it is possible that this is where they will end up when they do their so-called stress testing. But nobody’s quite clear whether that’s what they want to do. And some of the suggestions we’ve heard from the Federal Reserve chairman, Mr. Bernanke, suggest they’re very unwilling to do something so radical.

Now, the alternative thing to do — which is, I concede, politically very difficult — is just to put in a vast quantity of public capital. In a sense, they’re sort of dripping it in in very small quantities.

But if, of course, the public sector does put in most of the capital — that means the taxpayer is bearing most of the risk — it seems completely unreasonable to say this is a private business.

But the crucial point about it is this. The country cannot prosper if its biggest banks are not seen as being utterly sound, utterly solid institutions, which are capable of coping with the crises that will come. Otherwise you have so-called zombie banks.

We saw that in Japan. Zombie banks won’t lend, can’t lend. They can’t write off bad debt, so they keep on — because they don’t have enough capital — so they keep on relending to bad debtors. They can’t start lending to good new customers, and you basically get a frozen economy.

And that is part of the story. I think that a lot of this is that they’re not prepared to say — the people who invested in the banks and the bank management themselves — the game is over, it’s going to have to change.

ZAKARIA: You have to fire the management…

WOLF: It has to be new. These are — you know, they’re incredibly concerned to keep private sector management of these banks. I think that’s rather (ph) reasonable. We want private banks, and are utterly against nationalized banks.

But these banks, and these bankers? I mean, with a few exceptions, well, you know, they made the mistakes that got us here.

ZAKARIA: The mortgage proposal, the third part of the Obama plan. What do you think of that?

WOLF: Well, as I understand this — it’s not something I’ve looked at quite so closely — the essence of it is to try and reduce, as it were, the cash flow burden for households, lowering interest rates.

Now…

ZAKARIA: So, you lower the interest rate, so that the monthly payment that an average household has is less.

WOLF: Even though they have a house which is worth less than their mortgage.

Now, I don’t know whether that will work. My own view is that the collapse in housing values here is permanent. It’s a long-term loss. That was a huge bubble. We’re not going to see those prices again.

So, there are a great many mortgages which are under water. There’ll be people — and they will remain under water.

I think it’s very…

ZAKARIA: No matter what you do with that…

WOLF: What you do. And there’s nothing you can do about it, because I actually think house prices need to fall. They have to fall to clear — houses have to become cheap, so people will start buying them again and you’ve got a normal market. And that’s going to have to continue, I think, for a little bit longer while prices get really cheap. So, in this situation, what I worry about is that, actually, this won’t solve the problem. It’s a bankruptcy situation. And in a bankruptcy situation, you have to reconstruct the debt. In fact, you have to lower the debt below the value of the property.

Now, whether that is very important to do this through a foreclosure process or through — by keeping people in their homes, that’s a sort of big social decision. And you can take that either way.

But it seems to me, the fundamental point to recognize is, there are bankruptcies. And in bankruptcies, it’s just like the banking issue. There are real losses. And these losses have to be borne by somebody.

And that means, in some way or other, either the government bears them — the taxpayer at large — or the creditors bear them.

ZAKARIA: What grade do you give the Obama team?

WOLF: Well, they’re certainly better than the predecessor in terms of dealing with this. And they’re much smarter, and they have got all the right subjects and right topics.

But in terms of — well, I would say probably a B.

ZAKARIA: And you’re an English grader, so I’m guessing B would translate in America as a D.

WOLF: I don’t know. It’s not a very high grade.

And basically, it’s disappointment, because I think these are incredibly smart people. They understand the problem. And they had a unique, wonderful opportunity to transform everybody’s views of what the U.S. is capable of.

And the U.S., as always, is the only place that can fix this problem, which is now a major global crisis.

ZAKARIA: Martin Wolf, thank you. Very sobering.

And we will be right back.

– END OF SEGMENT –

Visit Fareed Zakaria GPS, a mini-treasure trove of highly useful and interesting information on world politics and economics.

Zakaria’s show is now set to record on my DVR, and I wouldn’t dream of missing it. It’s also a show that requires my full attention. I.e., I cannot do e-mail while it’s on. I have to sit still or lie down, and watch and listen. Carefully. (That doesn’t mean I agree with everything on the show, but that there is sufficient MEAT on the bone that I have a lot to chew on, for hours afterwards.)

Martin Wolf’s writings, forums, and podcasts:

• Listen to Wolf read his weekly column via Podcast
• Read Martin Wolf’s Economists’ Forum.
• Mr. Wolf’s most recent columns, as of March 4, 2009, are “What Obama should tell leaders of the Group of 20” + “Thinking anew on UK monetary policy” + “Japan’s lessons for a world of balance-sheet deflation” + “Why Obama’s new Tarp will fail to rescue the banks” + More columns

And so now, we have finger pointing between senators and representatives, the Department of the Treasury, and the White House. Do I even need to tell you that the White House is COMPLETELY blameless in this?? Oh, you know Obama is taking ZERO responsibility for the tax payers, many of whom have lost their own jobs, not just paying to keep these companies afloat, but giving them BONUSES!!!

Oh, yes – Obama is just railing away, despite his Chief of Staff actually working on the whole piece that had the bonuses in it. Oh, wait – that was two minutes ago. That story has already changed to make everything, absolutely everything, Chris Dodd’s fault. Except – Oh Wait – now we find out that Tim Geithner, the man who can’t even be bothered to download Freakin’ TURBO TAX, has admitted that Dodd was ASKED to put in this little loophole. By the Treasury Department. Oops!

So, um, Chris – how happy are you now that you threw your support to Obama?!?! Hahahahahaha! I mean, karma’s a bitch, ain’t it??

Anywho – the whole issue is discussed fully in the video below (H/T to SusanUnPC for the heads up on the video, and Cheneywatch for the video). Pay special attention to Charles Krauthammer:

Well, I gotta say, I think he makes a pretty good point, and not just because he talks about my team, the New York Yankees! Anyway – yes, in the scheme of things, it is not that much money. But I think what bugs people about it all, besides it being OUR taxpaying dollars, is the hubris of it all.

More importantly, though, is the manner in which the Democrats went about this. They have forgotten that when they are solely in power, they will solely take the blame, too. Rightly so, in this case, I think we can agree. Pelosi crafted this pork-laden stimulus bill, any number of top Democrats, they rammed it through, claiming all kinds of horrors would befall us if they didn’t, then Obama sat on it for a couple of days so he could finish up his SECOND vacation (he’s now on his third – in two months), then jet off to Denver to sign it. Yes, I can see why it was so important for them to use fear mongering tactics, then sit back and relax. And apparently, even THEN, no one bothered to read the damn thing. So we get loopholes like the one Dodd, or Emanuel, or Pelosi, or Reid, or Geithner, or WHOEVER the hell it really was, to allow bonuses for people at AIG. That kind of thing just doesn’t sit very well with a lot of people. Still, it is, as Krauthammer was implying, a smokescreen for the BIGGER issues at hand, at which we should be looking, and that is the proposed Budget, the Economy, and the billions in earmark projects for which we are paying.

Well, wait – let me ask you, in this completely scientific way: Are YOU mad that your money is going to pay these other people’s bonuses, especially at a company that you have already given around $173 BILLION dollars? Yes? Well, David Axelrod doesn’t think you are. I am not kidding. That is his latest message: that the American people don’t give a crap about stuff like this. Greg Sargent had this at The Plum:

Come on, guys, can’t we get the message straight on this one?

Yesterday I noted that Rahm Emanuel had said that Obama saw the AIG fiasco as a “big distraction” from efforts to fix the economy. Later in the day, Obama walked that back, asserting that the public was right to be “angry” about the whole mess and right to find it “consuming.”

Today, another senior Obama adviser, David Axelrod, is throwing in his lot with Rahm and the AIG-isn’t-a-huge-deal camp:

“People are not sitting around their kitchen tables thinking about AIG,” Axelrod said. “They are thinking about their own jobs.”

So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.

Again, this just seems weird politically. Why pretend that folks aren’t pissed off about this at a time when Republicans are moving aggressively to paint Obama as too passive on the issue and position themselves as the outraged and heroic defenders of the taxpapers?

Update: David Kurtz says: “I honestly don’t get what up-side they see politically in taking this tack.” He suggests that it’s “tone deaf.” Agreed on both counts.

I agree on both counts, too, in case you are keeping score.

Has it really only been two months of this guy? Good grief. I wonder who’s going to have to take the fall for Obama next? Hmmm, maybe that new pup the girls are getting (and so much for the whole shelter dog thing – I think we all knew that was just words, too)…

Honestly, I’m getting motion sickness from all of this…

Rep. McCotter comes from Michigan’s 11th Congressional District and is, yes, a Republican. Here’s his YouTube channel and the link to his House Web site. BELOW, REP. McCOTTER ASKS THE SAME QUESTIONS THAT I DID in my story below which, for short, I’ll call “All The President’s Men”:

Along with the aformentioned, I have also previously remarked on my high regard for John Mauldin, one of our Economic All-Stars. John himself possesses an insightful global perspective and has a circle of friends and confidantes that are simply off the charts.

In John’s weekly Outside the Box, he shares with us the perceptions of Michael E. Lewitt. Mr. Lewitt writes at length on topics we have covered here previously, but his level of detail and thoughtful analysis are well worth the read.

Topics covered include:
1. economic policies proposed by Obama administration are not promoting long term growth.

2. market outlook . . . sell rallies as earnings and prices are projected lower by 10-25%.

3. R (ecession) vs D (epression) . . . whatever you want to call it, our economy is going to have low growth at best when growth does return . . . time, time, time . . .

4. changing dynamics in the world of investing mandate that people get further up the learning curve . . . . Come to Sense on Cents!!!

5. bank nationalization, in perception or actuality, is a drag on the economy as a whole and specifically for well managed banking institutions

6. holds particular scorn for the “bank robbery” that occurred at Merrill Lynch during the bonus payouts in late 2008.

7. GM is bankrupt in all but name, so now it is time to deal with the truth and go through the bankruptcy process..

8. Obama’s budget utilizes wildly optimistic economic projections and is set up to fail. Government waste MUST be eliminated.

9. the coming meltdown in eastern Europe “will have major negative consequences for world financial markets.”

As I read Lewitt’s piece, Reality Bites, I kept nodding my head and whispering to myself, ‘that’s right,” “yep, I agree,” and “why doesn’t the media cover this?”

This piece may take two sittings to read, but as you look to navigate your own economic landscape it is a must read. Please share it with friends and colleagues as well.

LD

I am watching the little ones outside my window swing like miniature Tarzans on the rings. I smile as I also worry about what awaits them when they are grown. I envy their obliviousness to the adult world, and at the same time feel anger for what this generation has heaped upon their destinies.

The 787 billion American Recovery and Reinvestment Act of 2009 (“stimulus package”) creates a debt of about $2,600 for every man, woman, and child (including newborns and those coming along to replace those we lose). But add to that the national pubic debt of 10.8 trillion (as of late February, 2009) and that piles on another $38,000 per head—including those little heads. The counter clicks every second adding interest. Ca-ching….Ca-ching….

I know these figures are not cast in stone because the stimulus package may work. Maybe we will somehow get expenses under control and pay a big hunk of that debt off before these little ones–who are now creating abstract masterpieces with thick crayons–graduate from high school.

We can hold on to that hope, but it’s tough when the unemployment rate goes up every day and the stock market goes down. It’s hard to know what to say to friends who get laid off and are losing their homes.

It’s also hard to imagine what a trillion dollars is and how much better things will have to be to pay off what we owe. But here are a couple of interesting factoids adapted from the
Concord Coalition that help bring some sense of connection with this gargantuan figure:

While there are hundreds of billionaires, even the richest amongst them only has assets equaling about 4 or 5% of a trillion dollars.

Or to put it another way, in 2003, the total economic output of only 7 countries was greater than 1 trillion dollars. That means that our total debt is over 10 times as large as the economies (not just the debt) of all but the 7 largest economies in the world.

So as much as I desperately want these kids–who have now switched from chasing the cat to running after Grandpa–to live the American dream, for now I must simply treasure the music of their laughter.

"President Obama has accomplished more in 30 days than any president in modern history," a senior White House official said this morning in a background briefing for TV reporters.

Pointing to legislation on children’s health insurance and the "Lily Ledbetter Fair Pay Act," and most especially the stimulus bill, the official compared President Obama favorably to Presidents Reagan, Clinton and Bush, pointing out that the previous presidents’ major economic bills were all months away from becoming enacted into law at this point in their presidencies.

"He has a set of wins under his belt" as he comes to address a joint session of Congress this evening, the senior White House official said, contrasting the president with Bill Clinton, …

(Boy, was that a vague campaign speech, or what??? DID DAVID AXELROD WRITE THAT SPEECH??? Methinks so. God, he even had me going for a while, I hate to admit … that optimism, those promises … then it hit me [with some therapeutic assistance from the acerbic Larry Johnson] that there was NO THERE THERE. No specifics. Nada. LATER TODAY, I will give you a round-up of bloggers’ reactions, both pro and con. The “pro” responses are ALWAYS worth a laugh …. I cannot wait to look up Andrew Sullivan’s adulatory commentaries ….)

BELOW, more from the always alert Jake Tapper:

This one is just interesting; and I have to hand it to President Obama for adopting this practice — I just WORRY about who is sorting through those letters and WHICH LETTERS he is reading. After all, THE ONE needs those strokes from the folks, doesn’t he. So my bet is that there are far more “oh i love you” than the Rush Limbaugh-generated HATE mail):

“Political Punch: The Impact on a President of Reading Citizens’ Letters”

CHECK OUT MORE TAPPER here. I’m stopping now because I just discovered a gem that deserves its own post.

Lisa Myers comments, at the end of the video, that if the plan goes as planned, it will be at a cost of $250,000 per job.

The Obama administration argues that the cost of doing nothing would be much greater.

I guess time will tell.

a href=”http://www.crainsnewyork.com/article/20090218/INS/902179963/1006″>From Crain’s:

Sen. Schumer has pledged to undo a provision included in the stimulus package that will make it nearly impossible for New York’s banks to hire foreign workers through the H-1B visa program.

The amendment to the stimulus bill, proposed by Sens. Bernie Sanders, I-Vt., and Chuck Grassley, D-Iowa, originally would have banned the visas for any company that received money from the Troubled Assets Relief Program, or TARP. A compromise lifted the ban, but companies will still be required to hire from the growing pool of laid-off American workers first. Advocates say that the mandate is so onerous that it will virtually stop banks from bringing foreign workers into the country.

According to a report released last year by the Partnership for New York City, roughly 13,000 workers in New York, New Jersey and Connecticut are here on H-1B visas. The top visa sponsors in the area are the very same banks that have received TARP money. Those banks also have significant overseas operations, says Kathy Wylde, and this provision will hurt most when the economy turns around and the banks look to hire talent to tap new markets. …

Don’t put the hankie away just yet.

“When they require someone with a language or other skill who they feel is the best person for the job, if they can’t bring them to New York, they will move the function,” says Wylde. “That’s what’s happened in the past when we’ve had a shortage of the H-1B visas.”

Since the bill was signed with the provision included, Schumer will need to undo it in another bill, which could be tough sledding.

“This is a counterproductive amendment that could hurt New York’s economy, and we are going to work hard to change it,” Schumer says.

FROM: “Schumer’s Second Thoughts (Or: This Is Why Reading Legislation Before Voting Is a Good Idea)”

Update: After Bernie Madoff, it appears that the next largest fraudulent investment scheme is centered on an entity known as Stanford Financial. This company has offices in Houston, TX and operated an offshore bank in the Caribbean. While this story is developing it is not surprising that the main principal, Allen Stanford, knew how to play the “Legalized Bribery” game we highlighted yesterday. Who benefitted from his millions in gifts and lobbying? Charlie Rangel (D-NY), Greg Meeks (D-NY), Bill Nelson (D-FL), Pete Sessions (R-TX), former CA governor Gray Davis, and the Democratic Party.

Texas Businessman Sought Influence in Corridors of Capitol

Quality business relationships are always mutually beneficial. If they are not mutually beneficial, then they will not thrive or perhaps even last at all. A strong business relationship, like any personal relationship, needs a foundation of honesty and integrity. As in any relationship, there will be plenty of instances in which the parties have disagreements and misunderstandings. If the relationship is strong enough, it can not only endure through these times but often grow stronger as a result of them. The challenge in any relationship is when one party is conflicted and attempts to serve two masters. These conflicted relationships – whether personal, political, social, or business – must change in order to grow or are doomed to languish and underperform if not die completely.

On Wall Street, a business that so grossly prioritizes short term profits versus long term customer relationships will not grow. Perhaps for a period of time the excess profits will be addicting and mesmerize management, but over time that model will not work. Bear Stearns is a classic example of this principle. From having worked there for 7 years in the 90s, I evidenced it firsthand.

Measuring and assessing the nature of relationships in Washington is extremely challenging. While our elected officials on both sides of the aisle tell us one thing, the backroom dealings, heavy lobbying, and quid pro quo generate tremendous frustration on behalf of the electorate. Are our elected officials oblivious to the details of critical issues and thus ineffective in serving the public interest? I do think this lack of understanding is a serious problem but it is not the biggest problem. The fact is that the business of Washington is a BIG business and the elected officials are the beneficiaries of the largesse bestowed upon them from heavy money lobbying.

Why is it that legislation to support the banking industry does not have clearly stated restrictive covenants? Why is it that a large “stimulus” bill is so loaded with earmarks and lacks real meaningful IMMEDIATE stimulus? Very simply, our politicians on both sides of the aisle are beholden to those moneyed interests who put them in Washington in the first place. Is it truly any wonder why Congress has near single digit approval ratings? It shouldn’t because they are not working for the electorate, they are working for the lobbyists. While President Obama talks about “change” across the board and specifically in regards to lobbying, his campaign and initial maneuvers raise serious doubts about his integrity on this front.

These issues are highlighted in a Boston Globe review of the book, So Damn Much Money written by Robert G. Kaiser. The Globe offers:

Today, members of the House and Senate routinely spend “a fourth or a third of their working hours soliciting those campaign contributions” that once would have “looked a great deal like bribes.”

Kaiser corroborates his findings with the observations of a host of seasoned and savvy Washington insiders. A few will suffice to make the point:

– Former Nebraska Republican senator Chuck Hagel told Kaiser, “There’s no shame anymore. . . . We’ve blown past the ethical standards; we now play on the edge of the legal standards.” Hagel comes to believe that “money and its pursuit [have] paralyzed Washington . . . Nothing truly important for the country [is] getting done.”

– Leon Panetta, a former member of Congress, Chief of Staff in the Clinton White House, and Obama’s newly confirmed CIA director, says that “legalized bribery has become part of the culture.” Members of Congress “rarely legislate; they basically follow the money . . . They’re spending more and more time dialing for dollars.” Panetta laments the quality of people now running for Congress, echoing the conclusion reached by Hagel and other old hands: “It’s all about winning, it’s not about governing anymore.”

Stimulus? Financial Stability Plan? Bipartisan interaction? Campaign finance reform? No, Congress is too busy collecting money to worry about these issues. In point of fact, after having sent my opinion about the stimulus proposal to my new Congressman Jim Himes (D-CT), his office did respond electronically thanking me for my message and simultaneously asked me for a campaign donation for his re-election in 2010. Something is seriously wrong here!!

LD

P.S. For those who care to read more about the incestuous nature of these Washington relationships, a reader was gracious enough to share this link of an interview Bill Moyers had with Simon Johnson, former chief economist for the International Monetary Fund.

 

Well, the Obama stimulus bill has passed. The economy is now Obama’s. For good. Or for ill. Only time will tell.

He fought for it. He sold it. Now Obama will no longer be able to blame Bush for the economy. With passage of this bill, the economy is now his and the Democrat’s.

I hope and pray that it works. Not because I like Obama, but because I don’t want America and my fellow citizens to suffer. I don’t know about all of you, but I don’t do suffering well.

What say all of you?

No doubt I will have the Obots screaming again about being partisan in siding with a Republican spokesman about the “stimulus package”, but GOP Congressional leader John Boehner raises a very important question:

How the hell can anyone have actually read all of the provisions in the 1,100 pages of the plan within the 12 hours before the House was called on to vote on it?

As Boehner points out, Congress voted for a bill that not a single representative had time to read before casting their votes.

The same, of course, goes for the Senate.

A manuscript of that size takes at least a week to read carefully, and even longer to digest before anyone can give a balanced judgment on its provisions. Even Tolstoy’s monumental opus “War and Peace” is shorter, and a lot easier to read and understand, yet even some of the most educated readers take at least a few days to finish reading this book.

What kind of democracy is it that will not allow its citizens to digest and understand a bill of this magnitude before it becomes law?

Of course the Obots will scream that, as the idiot Nancy Pelosi said, it was necessary to rush the bill through as quickly as possible to prevent any further decline in the economic situation.

What has happened, of course, is that a lot of socialist measures have been enacted behind a smokescreen of urgency, when the most important thing is not to rush into anything until all options have been carefully considered.

Careful consideration is the last thing this bill has enjoyed.