MONEY AND WORK

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May 1, 2009

CRASH TALK

Bill Moyers and Michael Winship - [Jo Becker and Gretchen Morgenson in the New York Times] write that Geithner "repeatedly missed or overlooked signs" that the financial system was self-destructing. "When he did spot trouble, analysts say, his responses were too measured, or too late."

In choosing a man to manage the bailout of the banks who's so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what's best for Wall Street is best for America.

With these two as his financial gatekeepers, President Obama's now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.

In fact, other Wall Street insiders - many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest - privately are expressing serious concerns that Geithner, Summers and their associates are leading the President and America's taxpayers down a path toward further economic disaster.

This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, "The banks - hard to believe in a time when we're facing a banking crisis that many of the banks created - are still the most powerful lobby on Capitol Hill. And they frankly own the place." He could say the same of the White House.

NPR - A health care board linked to the UAW that owns a controlling stake in now bankrupt Chrysler needs to begin selling shares as soon as possible to raise cash to meet obligations to retired autoworkers, the union's president told NPR.

The Voluntary Employee Beneficiary Association, or VEBA, which covers the health care needs of retired Chrysler workers "is going to be stressed in order to pay the benefits," United Auto Workers President Ron Gettelfinger said Friday.

"We do not have the ability [to hold a long-term stake] because of the cash needed in the VEBA," he told NPR a day after the nation's third-largest automaker filed for Chapter 11 bankruptcy protection. The health care association will need "as soon as we possibly can …to start selling these shares."

In order to receive billions in government aid, Chrysler agreed to hand over the company's stock in lieu of paying back money it owed to the VEBA. . .Gettelfinger told NPR that the UAW had done everything possible to avoid the bankruptcy but he felt confident the alliance with Fiat would help turn the company around.

Pro Publica - In President Barack Obama's news conference, he said the $787 billion economic stimulus bill has already created or saved over 150,000 jobs. We decided to find out how the president arrived at that figure. The simple answer: guesswork.

It turns out the feds don't have a way to measure exactly how many jobs have been created or saved, so they use projections instead, and it's all rather academic.

The new estimate, like the original one predicting the stimulus bill would save or create 3 to 4 million jobs, came from the Council of Economic Advisers. To get the number Obama used, economists at the council simply prorated their earlier estimates based on stimulus outlays as of April 21.

As we've reported before, the administration's estimates are based on a guess at how much tax cuts and government spending will make the economy grow.

We asked Nigel Gault, an economist with the forecasting firm IHS Global Insight, about what he made of the administration's latest assumptions.

"The only thing they have to go on is how much money has been actually spent," Gault said. But that doesn't tell the whole story. The feds count the money that goes out the door. They don't have close tabs on what happens after that, he said.

"You have to ask, 'Has the money been effectively spent? Has it actually been spent in purchasing goods and services or whatever it was supposed to be purchasing?'" Gault said.

Gault noted that funding for larger projects probably won't be spent all at once. If a city or county starts work on a project, it doesn't hire every worker immediately.

For the record, the U.S. Bureau of Labor Statistics says employment at the end of March stood at 133,019,000 jobs. That compares with 133,682,000 jobs at the end of February, the month Obama signed the stimulus bill.

The administration acknowledges its estimate does not reflect a net gain in jobs.

"It doesn't mean that employment has risen by 150,000," Thomas E. Gavin of the White House budget office said in an e-mail. "Rather, it means that employment is 150,000 jobs better than it otherwise would have been."

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