Economic Recovery Plan by liaoqinmei


									Recovery Plan
  Sample Student

                   Comment [ST1]: You Should put an abstract in
                   when using this Table of Contents Format.

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Table of Contents
Financial Stability Plan.................................................................................................................. 1
   Geithner ..................................................................................................................................... 1
Fish and Wildlife Service ............................................................................................................... 5
   What is species recovery plan? .............................................................................................. 5
   How the plan works .................................................................................................................. 6
Senate Passes Stimulus Plan ........................................................................................................ 9
   What consists of the plan......................................................................................................... 9
Recovery Plan ............................................................................................................................. 12
   What is it? ................................................................................................................................. 12
Recovery Plan The recovery plan: A national jolt to economy........................................... 12
   Obama’s plan for economic recovery ............................................................................... 12

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      Financial Stability Plan

                                                                                                                       Formatted: Normal

      As President Obama said in his inaugural address, our economic strength is
      strength is derived from "the doers, the makers of things."
      The innovators who create and expand enterprises; the workers who provide life
      to companies; this is what drives economic growth.
      The financial system is central to this process. Banks and the credit markets
      transform the earnings and savings of American workers into the loans that
      finance a first home, a new car or a college education. And this system provides
      the capital and credit necessary to build construct a company around a new

      Without credit, economies cannot grow at their potential, and right now, critical
      parts of our financial system are damaged. The credit markets that are essential
      for small businesses and consumers are not working. Borrowing costs have risen
      sharply for state and local governments, for students trying to pay for college
      and for businesses large and small. Many banks are reducing lending, and
      across the country they are tightening the terms of loans.

(2009, February 9). Geithner Introduces Financial Stability Plan. Retrieved February 11, 2009, from Forbes Web site:

                                                                         Page 1
Last Friday, we learned that the economy had lost 3 million jobs last year and an
additional 600,000 just last month. As demand falls and credit tightens,
businesses around the world are cutting back the investments that are essential
to future growth. Trade among nations has contracted sharply, as trade finance
has dried up. Home prices are still falling, as foreclosures rise and even credit     Comment [ST2]: Put as same font as the rest of
                                                                                      the paragraph. If you want it to stand out, use bold,
worthy borrowers are finding it harder to finance the purchase of a first home or     underline, italics, etc.

refinance their mortgage.
Instead of catalyzing recovery, the financial system is working against recovery.
And at the same time, the recession is putting greater pressure on banks. This is a
dangerous dynamic, and we need to arrest it. It is essential for every American
to understand that the battle for economic recovery must be fought on two
fronts. We have to both jump-start job creation and private investment, and we
must get credit flowing again to businesses and families.
Without a powerful Economic Recovery Act, too many Americans will lose their
jobs and too many businesses will fail. And unless we restore the flow of credit,
the recession will be deeper and longer, causing even more damage to families
and businesses across the country.

Today, as Congress moves to pass an economic recovery plan that will help
create jobs and lay a foundation for stronger economic future, we are outlining
a new Financial Stability Plan.

Our plan will help restart the flow of credit, clean up and strengthen our banks,
and provide critical aid for homeowners and for small businesses. As we do
each of these things, we will impose new, higher standards for transparency and

I am going to outline the key elements of this program today. But before I do
that, I want to explain how we got here. The causes of the crisis are many and
complex. They accumulated over time and will take time to resolve.

Governments and central banks around the world pursued policies that, with
the benefit of hindsight, caused a huge global boom in credit, pushing up
housing prices and financial markets to levels that defied gravity.

Investors and banks took risks they did not understand. Individuals, businesses
and governments borrowed beyond their means. The rewards that went to
financial executives departed from any realistic appreciation of risk.

There were systematic failures in the checks and balances in the system, by
boards of directors, by credit rating agencies and by government regulators.

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Our financial system operated with large gaps in meaningful oversight and
without sufficient constraints to limit risk. Even institutions that were overseen by
our complicated, overlapping system of multiple regulators put themselves in a
position of extreme vulnerability.
These failures helped lay the foundation for the worst economic crisis in

When the crisis began, governments around the world were too slow to act.
When action came, it was late and inadequate. Policy was always behind the
curve, always chasing the escalating crisis. As the crisis intensified and more
dramatic government action was required, the emergency actions meant to
provide confidence and reassurance too often added to public anxiety and to
investor uncertainty.

The dramatic failure or near-failure of some of the world's largest financial
institutions and the lack of clear criteria and conditions applied to government
interventions caused investors to pull back from taking risk. Last fall, as the global
crisis intensified, Congress acted quickly and courageously to provide
emergency authority to help contain the damage. The government used that
authority to pull the financial system back from the edge of catastrophic failure.

The actions your government took were absolutely essential, but they were
The force of government support was not comprehensive or quick enough to
withstand the deepening pressure brought on by the weakening economy. The
spectacle of huge amounts of taxpayer assistance being provided to the same
institutions that help caused the crisis, with limited transparency and oversight,
added to public distrust. This distrust turned to anger as boards of directors at
some institutions continued to award rich compensation packages and lavish
perks to their senior executives.

Our challenge is much greater today because the American people have lost
faith in the leaders of our financial institutions and are skeptical that their
government has--to this point--used taxpayers' money in ways that will benefit
them. This has to change.
To get credit flowing again, to restore confidence in our markets, and restore
the faith of the American people, we are fundamentally reshaping the
government's program to repair the financial system.

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Our work will be guided by the lessons of the last few months and the lessons of
financial crisis throughout history. The basic principles that will shape our strategy
are the following:
We believe that the policy response has to be comprehensive and forceful.
There is more risk and greater cost in gradualism than in aggressive action.

We believe that action has to be sustained until recovery is firmly established. In
the United States in the '30s, Japan in the '90s and in other cases around the
world, previous crises lasted longer and caused greater damage because
governments applied the brakes too early. We cannot make that mistake.

We believe that access to public support is a privilege, not a right. When our
government provides support to banks, it is not for the benefit of banks, it is for
the businesses and families who depend on banks ... and for the benefit of the
country. Government support must come with strong conditions to protect the
taxpayer and with transparency that allows the American people to see the
impact of those investments.
We believe our policies must be designed to mobilize and leverage private
capital, not to supplant or discourage private capital. When government
investment is necessary, it should be replaced with private capital as soon as
We believe that the United States has to send a clear and consistent signal that
we will act to prevent the catastrophic failure of financial institutions that would
damage the broader economy.

Guided by these principles, we will replace the current program with a new
Financial Stability Plan to stabilize and repair the financial system and support
the flow of credit necessary for recovery.

This new Financial Stability Plan will take a comprehensive approach. The
Department of the Treasury, the Federal Reserve, the FDIC and all the financial
agencies in our country will bring the full force of the United States government
to bear to strengthen our financial system so that we get the economy back on
We have different authorities, instruments and responsibilities, but we are one
government serving the American people, and I will do everything in my power
to ensure that we act as one.

Our work begins with a new framework of oversight and governance of all
aspects of our Financial Stability Plan.

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The American people will be able to see where their tax dollars are going and
the return on their government's investment; they will be able to see whether the
conditions placed on banks and institutions are being met and enforced; they
will be able to see whether boards of directors are being responsible with
taxpayer dollars and how they're compensating their executives; and they will
be able to see how these actions are impacting the overall flow of lending and
the cost of borrowing.
These new requirements, which will be available on a new Web site, will give the American people the transparency they
These steps build on what we've done already. We've acted to ensure the
integrity of the process that provides access to government support, so that it is
independent of influence from lobbyists and politics. We've committed to
provide the American people with information on how their money is spent and
under what conditions by posting contracts on the Internet. And, importantly,
we have outlined strong conditions on executive compensation.

Fish and Wildlife Service2
                                                                                                                            Formatted: Normal

What is species recovery plan?
Recovery is the process by which the decline of an endangered or threatened
species is arrested and threats are removed or reduced, ensuring the long term
survival of the species in the wild.
At that point the species is recovered, and protection of the ESA is no longer
  (2008, September 28). Endangered Species Program. Retrieved February 11, 2009, from U.S. Wildlife and Service Web site:

                                                                    Page 5
             How the plan works3
             The FWS Recovery Program staff works with partners to take measures to prevent
             the extinction of species, and prepares, coordinates, and implements recovery
             Recovery plans provide a roadmap with detailed site-specific management
             actions for private, Federal, and State cooperation in conserving listed species
             and their ecosystems. A recovery plan is a non-regulatory irregular document. It
             may apply to one species or an ecosystem.

             Recovery of Species under the Endangered Species Act


             Section 4 of the Endangered Species Act (ESA) directs NOAA's National Marine
             Fisheries Service (NMFS) to develop and implement recovery plans for
             threatened and endangered species, unless such a plan would not promote
             conservation of the species. According to the statute, these plans must
             incorporate, at a minimum:
             a description of site-specific management actions necessary to achieve
             recovery of the species,

    (April 2008). Endangered Species Recovery Program. Retrieved February 11, 2009, from U.S. Fish and Wildlife Service Web site:

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objective, measurable criteria which, when met, would result in a determination
that the species be removed from the list; and

estimates of the time and costs required to achieve the plan's goal.

Recovery Plan Development
Section 4 of the ESA allows NMFS to procure the services of public and private
entities to develop and implement recovery plans, including the appointing of
recovery teams. Many, but not all, recovery plans are written by recovery teams
and, in some cases, implementation of plans is guided by recovery teams. NMFS
has made a concerted effort in recent years to include representative
stakeholders (those with an interest in the species) on recovery teams, and to
involve the public in recovery planning.

To assist recovery teams and others in drafting recovery plans, NMFS developed:

      Interim Recovery Planning Guidance [pdf] [380 KB]
       (latest update - September 2007; updated sections linked below and
       indicated on Title Page of main document above)
       Updates to Interim Recovery Planning Guidance

This guidance provides information to ensure consistency among recovery plans
and their usefulness to potential partners in recovering species. The guidance
also stresses the importance of involving stakeholders in the recovery process.
NMFS also follows additional policies, guidances, and regulations associated
with recovery of species.

All recovery plans are made available in draft form and public comments are
solicited before the plan is finalized, ensuring that the public has an opportunity
to provide input in the recovery planning process.

Recovery Implementation
Implementation of recovery actions is the responsibility of all Americans, but
tends to fall largely on Federal, state and local agencies, tribes, interested
organizations and individuals within the range of the species. NMFS' Program on
Cooperative Conservation with States (section 6 of the ESA) was developed to
assist states that have a cooperative agreement with NMFS in developing and
implementing their conservation program for species listed in that agreement,
including providing funding for management, research and monitoring that has
a direct conservation benefit to the species. Conservation actions may also be

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carried out by Federal agencies as part of their obligations under section 7(a)(1)
of the ESA, or as a means to minimize activities that adversely affect a species
as part of an interagency consultation. States, local agencies and private
entities may conduct conservation actions as a means to minimize or mitigate
"incidental take" of species as part of a Conservation Plan under section 10 of
the ESA. Private and public entities and individuals also take actions to recover
species simply because it's the right thing to do or because they have an
interest in seeing the species "delisted".

NMFS conducts periodic reviews of species to ensure that they are listed
appropriately. Because the ESA requires such reviews to be conducted at least
once every 5 years, they're referred to as 5-year reviews.

Recovery for the Northwest Atlantic Loggerhead Sea Turtle Revised

Prevent turtles from becoming extinct

“Loggerhead sea turtles face many domestic and international threats, and
thousands die around the world every year,” said Jim Balsiger, NOAA acting
assistant administrator for NOAA’s Fisheries Service. “This plan will help our
agency and our partners to conserve and recover the species by providing a
blueprint to address threats in the northwestern Atlantic.”

The revised plan reviews and discusses the species ecology, population status
and trends, and identifies threats to the loggerhead turtle in the northwestern
Atlantic. It lays out a recovery strategy to address the threats, based on the best
available science, and includes recovery goals and criteria. In addition, the
plan identifies actions needed to address the threats to the species and
achieve recovery.

An initial recovery plan for the loggerhead turtle was approved on September
19, 1984. This initial plan was a multi-species plan for all six species of sea turtles
occurring in the U.S. On December 26, 1991, a separate recovery plan for the
U.S. Atlantic population of the loggerhead turtle was approved. In 2001, NOAA’s
Fisheries Service and USFWS, which share federal jurisdiction for sea turtles,
initiated the process to revise the loggerhead plan for a second time.

"This report highlights the threats that sea turtles face and offers some new
approaches to better monitor their status," said Sam D. Hamilton, USFWS
southeast regional director. "It will help focus recovery efforts with all the many
partners to help save these magnificent creatures."

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             This revised plan is significant in that it identifies five unique recovery units, which
             comprise the population of loggerhead turtles in the Northwest Atlantic, and
             describes specific recovery criteria for each recovery unit.

             Loggerhead turtles in the northwestern Atlantic mature to reproductive age at
             about 35 years. During their lifetime, they travel and live in the waters of several
             nations, including the U.S. They face many challenges and threats, including
             development and loss of nesting habitat, bycatch in fisheries, and degradation
             of their marine habitats. The recovery of any species takes time, but scientists say
             that for the loggerhead turtle it could take even longer due to the long time to
             reach maturity and the variety and magnitude of the threats they face.

             The recovery plan is available online at NOAA's Office of Protected Resources or
             the USFWS North Florida field office.

             Senate Passes Stimulus Plan

             What consists of the plan4
             Senate passage of an $838 billion stimulus bill triggered an intense round of late-                                      Comment [ST3]: Instead of “$838 billion, you
                                                                                                                                      can write either $838,000,000,000 or 838 billion
             night bargaining on Tuesday, with the White House and key congressional                                                  dollars

             Democrats seeking agreement on a final compromise aimed at combatting the
             worst economic crisis in decades.

             Democratic lawmakers said that in deference to Senate Republican moderates,
             it appeared the bill that eventually goes to President Barack Obama would be
             in the range of $800 billion _ less than the Senate measure or a different bill that
             cleared the House several days ago.

             "That's in the ball park," Senate Finance Committee Chairman Max Baucus, D-Mont.,
             said of the $800 billion figure Tuesday night.

             Baucus had said earlier that $35.5 billion to provide a $15,000 homebuyer tax credit,
             approved in the Senate last week, would be cut back. There was also pressure to
             reduce a Senate-passed tax break for new car buyers, according to Democratic
             officials, while a $40 billion reduction in aid to states appeared likely to stick.

    Taylor, Andrew (2009, February 9). Senate Passes Stimulus Plan. Retrieved February 10, 2009, from The Huffington Post Web site:

                                                                                  Page 9
A provision limiting compensation for top executives of companies receiving federal
bailout assistance appeared likely to be dropped altogether because of an
unanticipated $11 billion budget cost. The officials who disclosed details of the talks did
so on condition of anonymity, saying they were not authorized to discuss them.

The White House weighed in strongly to try to resurrect funding for school construction
eliminated during Senate dealmaking deal making last week, a Democratic official
said, but seemed resigned to limiting aid to the states for local school budgets to the
$39 billion approved by the Senate on Tuesday by a 61-37 vote.

The late-night negotiations reflected an urgency on the part of the White House
and the Democratic-controlled Congress to move quickly against a recession
that has sent joblessness soaring. The officials added that bargainers hoped for
an agreement as early as Wednesday.

Earlier, the Senate sailed to approval of its $838 billion economic stimulus bill with
only three Republicans in favor, Sens. Susan Collins and Olympia Snowe of
Maine and Arlen Specter of Pennsylvania.

Story continues below

Within hours of the Senate vote, White House Chief of Staff Rahm Emanuel and
other top aides to Obama had made the trip to the Capitol for series of
meetings that stretched well into the evening.

Snowe, Collins and Specter are demanding that the final bill resemble the
Senate measure, which devotes about 42 percent of its $838 billion in debt-
financed costs to tax cuts, including Obama's signature $500 tax credit for 95
percent of workers, with $1,000 going to couples.

The $820 billion House measure is about one-third tax cuts.

The GOP moderates also want the final bill to retain a $70 billion Senate plan to
"patch" the alternative minimum tax, or AMT, for one year. The provision would make
sure 24 million families won't get socked with unexpected tax bills more than a
year from now during the 2010 filing season.

The AMT was designed 40 years ago to make sure wealthy people pay at least
some tax, but is updated for inflation each year to avoid tax increases
averaging $2,300 a year. Fixing the annual problems now allows lawmakers to
avoid difficult battles down the road, but economists say the move won't do
much to lift the economy.

Obama and his Democratic allies go into final negotiations on the economic
rescue package with limited ability to make it more to their liking after the
moderate Republicans _ with support from Democrats such as Ben Nelson of
Nebraska _ wrung savings totaling $108 billion in spending from the measure.

The Senate moderates are essential if the final plan is going to pass and get to
Obama's desk, so they're playing hardball.

"My support for the conference report on the stimulus package will require that
the Senate compromise bill come back virtually intact," Specter warned in a

The Senate has a well-earned reputation for emerging the winner in most House-
Senate negotiations, since its rules make passing bills more difficult and typically
require bipartisan votes. Senators tell the House that it's difficult for them to pass
anything that departs from carefully wrought agreements.

Hence the likelihood the final measure will greatly resemble the Senate bill.

"I think they've got a lot of influence on the outcome," said Sen. Kent Conrad, D-
N.D. "It has to do with the simple reality of getting the votes to pass. And whether
somebody likes it or doesn't like it, there's a thing called reality."

House leaders are tempering expectations that they'll restore many of the cuts.

"You cannot allow the perfect to be the enemy of the effective and of the
necessary, and we will not," House Speaker Nancy Pelosi, D-Calif., said.

At the same time, Specter is fighting to preserve an enormous $10 billion
increase for the National Institutes of Health, while Collins obtained $870 million
for community health centers in talks last week.

Reid promised great progress during just the first 24 hours of talks, and the hope
is to reach a deal quickly in order to get the plan to the White House within days.

The competing House and Senate plans have the same basic components
designed to ease the worsening recession: hundreds of billions of dollars in
government money to boost consumption and tax cuts designed to increase
consumer spending and prod business investment.

Obama's allies recognize some of his priorities will be shaved. But they're not
happy about the strong hand being played by the three Senate GOP

"It is so difficult talking with a body that is controlled by three people," said Rep.
Charles Rangel, D-N.Y., a lead House negotiator. "You have no idea."

Recovery Plan

What is it?
A disaster recovery plan (DRP) - sometimes referred to as a business continuity
plan (BCP) or business process contingency plan (BPCP) - describes how an
organization is to deal with potential disasters. Just as a disaster is an event that
makes the continuation of normal functions impossible, a disaster recovery plan
consists of the precautions taken so that the effects of a disaster will be
minimized and the organization will be able to either maintain or quickly resume
mission-critical functions. Typically, disaster recovery planning involves an
analysis of business processes and continuity needs; it may also include a
significant focus on disaster prevention.

Recovery Plan The recovery plan: A national jolt to economy

Obama’s plan for economic recovery
AP – In this Feb. 9, 2009, file photo President Barack Obama holds a town hall
style meeting in support of …

WASHINGTON – America is bringing shock and awe to the home front, using
dollars instead of bombs.

It's the military doctrine of lightning force — fast and brute, or as brute as the
shaken country can manage — applied to the campaign for economic

With a record-busting stimulus plan, the U.S. is marshaling resources against
economic catastrophe in ways not seen since Franklin Roosevelt put the New
Deal in motion.

President Barack Obama is going with the best deal he could get. The stimulus
bill is a landmark legislative achievement for a new president who inherited
economic spoilage along with the spoils of power. Now the nation anxiously
waits to see if it works.

Undermining federal balance sheets that were already deeply in the red,
Obama and Congress settled on a nearly $800 billion plan that aims to spend
more on the crisis at hand than the government has spent waging the Iraq war
for six years.

The idea: fast cash, and lots of it, but with a strategic view to the future.

Some dollars will flow quickly into wallets — and right out again.

The stimulus plan will mean thousands of dollars in tax breaks for first-time home
buyers and people buying new cars. Lower- and middle-income taxpayers will
get an extra $13 a week in their paychecks this year, and about $8 a week next
year. Unemployment checks will go up $25 a week, and keep coming longer.
Food stamp benefits for 30 million Americans will rise. Short-term health insurance
will become more affordable for many losing their jobs.

The success of the stimulus package may be measured less by visible
achievements than by what does not happen — the home that is not
foreclosed, the family that doesn't slip into poverty, the disease that does not go

"The one thing we'll never know is what would have happened if we didn't do it,"
said Nigel Gault, chief U.S. economist for IHS Global Insight.

It's not FDR's deal and these aren't his times.

No federally subsidized artists will paint murals glorifying the muscle of American
workers or the progress belching from smokestacks, as they did in Roosevelt's

No grand compact is to be formed between generations like the one that
promised everyone a federal pension. No institutions will rise to try something
brand new.

"We're not reinventing government," said historian Kenneth C. Davis, author of
the best-selling "Don't Know Much About" series. "We're modifying things that

Yet as the share of the economy taken up by federal spending rises to an
anticipated 30 percent, the nation is grappling again with big questions about
Washington's place in people's lives.

"The stakes are so high now, this is such a big bill, average Americans are
following it," says Princeton historian Julian Zelizer. "It's become a bill that is an
argument about what government can or can't do.

"If there is no effect and in six months we are talking about the same economy
or a worse economy, I think it would be a devastating blow to the president,
Democrats, and to liberal claims about what government can do."

To critics such as Senate Republican leader Mitch McConnell, the package is
the "Europeanization of America." Others call it "Rooseveltian" or "generational
theft" in reference to the debt passed on to the future.

They might envision murals glorifying little more than filled potholes, insulated
windows, depreciated computers.

Obama said it's about more than that, and drew parallels with FDR in speaking
Friday to the Business Council, formed by corporate leaders in the 1930s to
advise Roosevelt's administration.

"We adapted, we changed," he said about those days — and these. "President
Roosevelt understood the new role of government in this new world, that while
extraordinary actions on its part might be the source of recovery, no action on
the part of government, no matter how extraordinary, would alone be the
source of our prosperity."

In his radio address Saturday, Obama said he believed the country "will turn this
crisis into opportunity and emerge from our painful present into a brighter

Democrats and just enough Republicans in Congress — three — saw the
package as the best chance to tamp down the economic wildfires breaking
out across the landscape.

Obama came into office saying he wished to be judged on his first 1,000 days
instead of the usual benchmark of 100. In some ways he will be judged on his
first 10 or 20.

Not even Roosevelt, fast off the mark to deal with a bank crisis, was as fast as this
in achieving something so sweeping, so early.

The enormity of the package left politicians grasping for concrete ways to
convey its size.

Sen. John Thune, R-S.D., spoke of a stack of hundred-dollar bills 689 miles high,
and of bills wrapped side-by-side that would encircle the Earth nearly 39 times.
House Republicans predicted that the package's costs — with interest on the
necessary borrowing — could total more than a trillion dollars, enough money to
buy about 1,000 boxes of Girl Scout cookies for every American.

It was enough to prompt comic Jon Stewart to riff that if you sewed the $100 bills
together, "you would make a blanket for Jupiter."

The stimulus wasn't just about throwing cash at the economy, though.

The package is filled with billions for some of the same goals that Obama
preached about on the presidential campaign trail — renewable energy and
green jobs, computerized medical records, broadband Internet service for
underserved areas.

"There are seeds in this bill for long-term change," says Zelizer. "There are things
that can develop out of the research that can change our lives."

Obama sounded a drumbeat of warnings about the consequences of failing to
act. But Americans didn't need their president to tell them how grim the
economic situation was — and could become.

Forty percent of Americans already have been affected by some sort of job
problem in the past year, be it unemployment, underemployment, layoffs,
reductions in pay or hours, or job losses by members of their households,
according to a poll released Friday by the Pew Research Center. Fifty-six
percent expect things to be worse or about the same a year from now — and
they've got solid grounds for their pessimism.

The country could well suffer a net loss of 2 million to 3 million or more jobs this
year, economists believe. And the unemployment rate, now 7.6 percent, could
top 9 percent by spring of 2010.

The stimulus pull-together was a colossal game of winners and losers shaped
and reshaped by the latest set of hands on the package. The fortunes of
people, schools, towns and other varied interests rose and fell in blinks of time.

Ready to buy another home?

Poof — you just lost $15,000 that legislators had considered providing.

Buying a first home? You're still in luck — the government plans to give you an
$8,000 credit if you buy by the end of November.

A new car? You'll be able to deduct the thousands in sales taxes from your
income tax but not — as was initially proposed — your loan interest as well.

One day, the government proposed to pay 65 percent of the cost of health
coverage for a year for jobless people who lose their workplace insurance. Days
later, it was down to half. Ultimately, the subsidy zigzagged back up to 65
percent, but it expires before the end of the year.

Obama declared an end to pork-barrel politics, but legislators still managed to
look out for favorite projects.

Senate Majority Leader Harry Reid, D-Nev., was quick to point out that a big
chunk of the $8 billion set aside to construct high-speed rail lines could go to a
proposed Los Angeles-to-Las Vegas route. Sen. Arlen Specter, R-Pa., helped
make sure $10 billion was set aside for the National Institutes of Health, a priority
of his.

Long after the dust has settled from the horse trading, the government will be
seen to have moved with unaccustomed speed on policies normally subjected
to years of deliberation and gridlock.

Deficit hawks found their wings clipped as both parties reached for the treasury.
Democrats mainly wished to spend; Republicans, mainly to cut taxes.

After last November, guess who got their way?

Democratic House Speaker Nancy Pelosi said flatly: "We won the election; we
wrote the bill."

The debate was both large and small. Negotiators considered the proper role of
government — and how fast a business can depreciate its equipment.

Entering the 1930s, Americans mainly saw the national government as the entity
that fought wars, ran post offices and enforced a ban on liquor. Federal
spending was only 3.4 percent of the economy.

That more than tripled during the New Deal, topping 10 percent, because of the
explosion of public works and other labor programs, rural modernization, bank
support, and farm and industrial aid.

"It was a transformation of society in a way that hadn't been done since the end
of the Civil War and the end of slavery," Davis said.

The government became the entity that guaranteed a minimum wage,
controlled farm production, supported artists, set workplace standards, insured
deposits in regulated banks and cast the first national safety net for the elderly
and handicapped under Social Security.

"The whole scope of what Roosevelt was trying to do is different but the intent is
clearly the same: relief and recovery during a time of economic stress," said
John Halpin, senior fellow at the Center for American Progress.

The package won by Obama offers "very important but more subterranean
changes in the way the economy works," he said.

Federal spending as a share of the economy shot above 40 percent during
World War II and has hovered around 20 percent most of the years since. That
share was already projected to approach 25 percent before Obama's stimulus

To be sure, there's still considerable disagreement about how much the New
Deal helped to end a depression finally crushed by the humming factories of
World War II.

Even FDR's transformation of the federal government was not universally
recognized at the time for what it was. It may be years before the full measure
of Obama's efforts are taken, too.

In 1936, The Economist magazine pronounced the New Deal a "striking success"
in improving conditions that existed when FDR took office three years earlier.

"If the criterion be Utopian, the achievements of the New Deal appear to be
small," the editors sniffed. "The great problems of the country are hardly

President-elect Barack Obama lays out key parts of Economic
Recovery Plan

Obama’s plan to stimulate the economy

Yesterday we learned that our economy has lost 2 million jobs since the
recession began 11 months ago.

That's why, in today's weekly address, President-elect Barack Obama explains
the key parts of his Economic Recovery Plan -- which will save or create 2.5
million jobs in the next two years.

Yesterday, we received another painful reminder of the serious economic
challenge our country is facing when we learned that 533,000 jobs were lost in
November alone, the single worst month of job loss in over three decades. That
puts the total number of jobs lost in this recession at nearly 2 million.

But this isn’t about numbers. It’s about each of the families those numbers
represent. It’s about the rising unease and frustration that so many of you are
feeling during this holiday season. Will you be able to put your kids through
college? Will you be able to afford health care? Will you be able to retire with

dignity and security? Will your job or your husband’s job or your daughter’s or
son's job be the next one cut?

These are the questions that keep so many Americans awake at night. But it is
not the first time these questions have been asked. We have faced difficult
times before, times when our economic destiny seemed to be slipping out of our
hands. And at each moment, we have risen to meet the challenge, as one
people united by a sense of common purpose. And I know that Americans can
rise to the moment once again.

But we need action – and action now. That is why I have asked my economic
team to develop an economic recovery plan for both Wall Street and Main
Street that will help save or create at least two and a half million jobs, while
rebuilding our infrastructure, improving our schools, reducing our dependence
on oil, and saving billions of dollars.

We won’t do it the old Washington way. We won’t just throw money at the
problem. We’ll measure progress by the reforms we make and the results we
achieve -- by the jobs we create, by the energy we save, by whether America is
more competitive in the world.

Today, I am announcing a few key parts of my plan. First, we will launch a
massive effort to make public buildings more energy-efficient. Our government
now pays the highest energy bill in the world. We need to change that. We
need to upgrade our federal buildings by replacing old heating systems and
installing efficient light bulbs. That won’t just save you, the American taxpayer,
billions of dollars each year. It will put people back to work.

Second, we will create millions of jobs by making the single largest new
investment in our national infrastructure since the creation of the federal
highway system in the 1950s. We’ll invest your precious tax dollars in new and
smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act
quickly to invest in roads and bridges in their communities, they’ll lose the

Third, my economic recovery plan will launch the most sweeping effort to
modernize and upgrade school buildings that this country has ever seen. We

will repair broken schools, make them energy-efficient, and put new computers
in our classrooms. Because to help our children compete in a 21st century
economy, we need to send them to 21st century schools.

As we renew our schools and highways, we’ll also renew our information
superhighway. It is unacceptable that the United States ranks 15th in the world in
broadband adoption. Here, in the country that invented the internet, every
child should have the chance to get online, and they’ll get that chance when
I’m President – because that’s how we’ll strengthen America’s competitiveness
in the world.

In addition to connecting our libraries and schools to the internet, we must also
ensure that our hospitals are connected to each other through the internet. That
is why the economic recovery plan I’m proposing will help modernize our health
care system – and that won’t just save jobs, it will save lives. We will make sure
that every doctor’s office and hospital in this country is using cutting edge
technology and electronic medical records so that we can cut red tape,
prevent medical mistakes, and help save billions of dollars each year.

These are a few parts of the economic recovery plan that I will be rolling out in
the coming weeks. When Congress reconvenes in January, I look forward to
working with them to pass a plan immediately. We need to act with the urgency
this moment demands to save or create at least two and a half million jobs so
that the nearly two million Americans who’ve lost them know that they have a
future. And that’s exactly what I intend to do as President of the United States.

                                                                                     Formatted: Heading 1
Conservatives Deny Reality, Claim Increasingly Popular Recovery Plan Is Losing

Republicans don’t support Recovery Plan

In his Wall Street Journal column today, former Bush adviser Karl Rove claims that
House Republicans “are playing their hand extraordinarily well.” “House
Republicans have used the stimulus bill to redefine their party, present ideas on
how to revive the economy, and force congressional Democrats and the
president to take ownership of the spending programs soon to be signed into
law,” writes Rove.

As proof of their success, Rove claimed that “support for the stimulus is failing“:

The payoff is that support for the stimulus bill is falling. CBS News polling reveals a
12-point drop in support of the bill over the past month. Pew Research and
Rasmussen have turned in similar numbers. The more Americans learn about the
bill, the less they like it.

On Fox News this afternoon, Deputy Managing Editor Bill Sammon pushed the
same message, saying that “public support has gradually declined as more and
more details of this stimulus bill have come to light.” Later, during an interview
with Virginia Gov. Tim Kaine, Fox’s Trace Gallagher said the American people
“support what the president is doing,” but “they don’t support this plan.”

Economic Recovery Plan

For the United States
The United States is facing a depression. Just as Hoover and Roosevelt did in the
early 1930s, the government changes its strategy for assisting recovery every few
months. Congress and the Treasury Department will try something. If it doesn't
work, a month or two later they try something else. This gives them the
appearance of being clueless or helpless or both.

Just as in the Great Depression, uncertainty about government action causes
businesses to defer investment and job creation. Why build a factory if you don't
know what the tax rates are going to be? Is it reasonable to spend cash if
customers' purchasing power continues to drop? (Reference: The Forgotten

Precious little business investment is going forward worldwide. The only chance
for the United States to recover is if we can capture most of this investment. How
can we do that? We would have to convince businesses that this is the best
country in the world in which to invest and operate.

What we need to promise

At a minimum, here are the things that we need to promise business managers:
world's lowest percentage of GDP (among developed nations) spent on
government; only with a low spend will investors have faith that taxes will stay

      corporate governance that relieves investors from worry that profits will be
      siphoned off by management

      flexible capital expense depreciation schedule so that a company
      doesn't have to pay taxes when it is cashflow-negative

      world's best school system and best educated workers

      world's cheapest transportation system and one that is virtually free from
      uncertainty caused by congestion

      predictable product liability system

      less labor market regulation

      immigration that encourages high earners

Some of these promises will be at odds with many Americans' cherished ideals of
what makes a good society. However, due to the risk of a prolonged depression
and competition from other countries, it is better to face the facts now that we
can't afford those ideals.

Reducing Government Spending

                           In 2006 we were spending roughly 36 percent of GDP
on government at local, state, and federal levels (source). This compares
unfavorably with South Korea at 27 percent and Thailand at 18 percent. We can
set taxes for 2009 at whatever level we want, and we can argue about how the
tax burden should be distributed, but businesses won't have long-term faith that
taxes will remain low unless we can reduce spending to internationally
competitive levels. What's wrong with high taxes? Taxes on workers drive up

payroll costs. Taxes on companies reduce the return to investors. Either way
investment and job creation are discouraged.

We'll probably have to do most of the following:

      start paying full Social Security at age 70 rather than the current 67

      reduce the scope of Medicare and Medicaid, e.g., start Medicare at age
      70 rather than the current 65

      start paying public employee pensions at age 70 rather than the current
      system in which many workers may collect benefits starting in their 40s or
      50s (example); the average American will need to work until he or she is
      70 and can't afford to pay taxes to give 53-year-old former public
      employees 100 percent of their old salary, adjusted for inflation, for
      another 30-40 years (example)

      scale back our military ambitions, closing a lot of overseas bases and
      abandoning attempts to build nations (we can still afford to bomb people
      who don't like us)

      eliminate government-owned housing so that these properties can be
      returned to the tax base and used to their full potential (it might be nice to
      be able to offer five years of free housing in some of our most expensive
      cities to illegal immigrants such as Obama's Aunt Zeituni, but we can't
      afford it anymore)

      abandon the war on drugs and associated expenses for police, judges,
      lawyers, and prisons

      eliminate public employee unions; the average American doesn't get a
      union paycheck and can't afford to pay union labor rates; the
      government is not supposed to be such an abusive employer that a union
      is necessary for worker safety

      eliminate the requirement to use union labor on public works projects; it
      shouldn't cost the taxpayers more to build a structure than it would cost
      Microsoft or Google

      eliminate farm subsidies, which raise prices to consumers, distort the
      market by encouraging monoculture and overproduction of crops such
      as corn, and have staggering direct costs to taxpayers (the 2007 farm bill
      was budgeted at $300 billion; source)

What about Keynes?

                            Cut government spending during a depression? What
about classical Keynesian economics? Maybe it was a good idea in 1936, but
the world is a lot more globalized today and there is much more competition
among countries. In 1936 a multinational business did not enjoy free voice-over-
IP telecommunications, cheap air freight, cheap container shipping, nor billions
of workers in low-cost foreign countries who were speaking or learning English.

Japan is a good example of the failure of Keynesian economics in the
globalized era. The country spent hugely on public works projects in the 1990s,
digging an enormous debt hole for its future citizens (170 percent of GDP;
compare to 60 percent of GDP for the U.S. (source)). What was the result? Its
largest corporations invested substantially in growth and created a lot of new
jobs... in China, Thailand, Vietnam, etc. The domestic economy stagnated.

Investor Representation on Public Company Boards

                    Right now the shareholders of a public company are at the
mercy of management. Without an expensive proxy fight, the shareholders
cannot nominate or vote for their own representatives on the Board of Directors.
The CEO nominates a slate of golfing buddies to serve on the Board, while he or
she will in turn serve on their boards. Lately it seems that the typical CEO's golfing
buddies have decided on very generous compensation for the CEO, often
amounting to a substantial share of the company's profits. The golfing buddies
have also decided that the public shareholders should be diluted by stock

options granted to executives and that the price on those options should be
reset every time the company's stock takes a dive.

If current trends continue, the CEO and the rest of the executive team will
eventually have salaries that consume 100 percent of a public company's profits
and they will collect half ownership of the company via stock options every few
years. Who would want to invest in that?

Corporations are supposed to operate for the benefit of shareholders. The only
way that this can happen is if a majority of Directors are nominated by and
selected by shareholders. It may have been the case that social mores in the
1950s constrained CEO-nominated Boards from paying their friend $50 million
per year, but those mores are apparently gone and the present structure in
which management regulates itself serves only to facilitate large-scale looting
by management.

[Photo at right: Typical Greenwich, CT home of Executive VP of Fortune 500

Depreciation of Capital Expenses

                            Suppose you spend $1 million on new machine tools
for a new factory, plus another $1 million to run the tools. You take in $1.4 million
in revenue the first year, so you've lost $600,000 in cash. Under standard rules of
deprecation, however, you can't deduct the full $1 million spent on those
machine tools and therefore you will have to pay tax on a reportable profit of
something like $400,000 minus whatever portion of the machine tools the IRS
allows you to depreciate (complex subject, with each kind of equipment having
its own schedule). So you need to come up with more cash to pay the IRS, even
though you cashflow-negative for the year.

When the economy or an industry goes into the toilet, the government comes
up with various "bonus depreciation" schemes that allow businesses to deduct
capital expenses faster. The idea is to encourage capital spending, which tends
to generate jobs and economic growth.

It looks as though we have moved into the toilet for the foreseeable future. Why
not simply allow a business to deduct capital expenses however seems most
advantageous or sensible to them? If a computer system is expected to last for
two years, the business can deduct half this year and half next year rather than
abide by the standard IRS 5-year schedule for computers. If the business is
cashflow-negative, it can expense enough of its capital expenses in the current
year to reduce its tax bill to zero. The IRS will still get its money eventually
because, just as with the current system, the business's total deduction for a
capital item over the years cannot exceed the original cost.

Want a company to replace its fleet of trucks? Want a company to build a new
factory? These expenditures might result in the company burning through some
cash. Let's not discourage this investment by simultaneously forcing them to raise
more cash to pay a tax bill.


                               We keep talking about school reform but we
never achieve anything except spending more taxpayer money than any other
country on Earth. Businesses don't want to invest based on the hope that 2008's
promises to fix public education will work better than promises made in 2007,
2006, 2005, etc. If our standard high school graduate isn't a lot better educated
than someone from a country with lower labor costs, we are finished.

Nobody has ever made a compelling argument for how having unionized
teachers helps students. Nor has anyone ever made a compelling argument for
how having tenured teachers helps student performance. Our country's best
performing schools (all of them private) have non-unionized teaching staffs. We
can't afford to experiment with unionized teachers anymore. The government
created the right for public employees to unionize and it can remove that right
very quickly if it has the political will.

How good a job would you do at your company if customers were required by
law to buy your product? That's the situation faced by public school
management today. It would be illegal for a 14-year-old not to attend the local
school, unless his or her family can scratch up a huge tuition payment for a

private school. We need to set a deadline by which every American family has
the choice to send children to a school other than the local one. There wouldn't
be a problem with "failing schools" anymore because parents would have
withdrawn nearly all of their kids from such a school and the building would end
up being taken over by a new school with new management.

Currently we force nearly all of our children to attend their local school where
they are taught by unionized mostly tenured employees. It isn't working.
Businesses aren't fooled. We keep slipping behind other countries in the subject
areas that matter in the highest paying jobs. We need to take action drastic
enough to convince investors that our graduates 10 years from now will be fully
competitive with those of the world's smartest countries.

Transportation System Reform

                   Suppose that your business depends on the timely arrival of
supplies or salespeople and customers being able to meet. A traffic jam on the
local highways will cost your business a lot of money. You're paying workers to sit
in traffic instead of doing their job. You're paying more for supplies because it
costs suppliers more to deliver them. We need sensors, wireless Internet, and
congestion pricing for our highways and urban streets so that high-value
business transportation is almost never impeded and companies can predict
their door-to-door travel time. In Boston we spent $15 billion of taxpayer funds on
a few miles of highways and tunnels. It would have made a lot more sense to
buy some $50 wireless Internet base stations so that cars could talk to each
other about whether or not traffic had ground to a halt inside those tunnels.

Mass transit is critical to business in the parts of our country where workers use
public transit to get to work. Public transit unions should be eliminated because
a strike at a mass transit system can shut down an entire city, as has happened
several times in New York due to subway system and commuter rail strikes (see
this New York Times article on the Long Island Rail Road for example). It is difficult
enough to make the decision to invest right now and create jobs. We can't also
ask businesses to wonder if their employees will be able to get to work.

Should we spend more on mass transit? If we can take the funds out of
congestion fees, if we can have the systems built and operated by private
companies using non-union labor... maybe.

Predictable Product Liability System

                      A business making a product that might injure someone has
a reasonable chance of predicting the maximum potential for actual damages
that the product could inflict. If the product kills someone with a salary of
$50,000 per year and 20 working years remaining, that is approximately $1 million
in liability. What a business cannot predict are the punitive damages of $50 or
$100 million that are sometimes awarded by juries. The punitive damage system
has a rational basis. Without it, businesses would be less cautious. But we can't
afford it right now.

We need a fixed range of prices for people killed or injured by products, similar
to workman's compensation but with much higher numbers and taking into
account the victim's age, education level, and other factors that determine
lifetime earning potential. Punitive damages must be eliminated and a
manufacturer's liability for its products or actions should be limited to no more
than 20 years after the product was shipped. (Note that a similar time limit was
signed into law by President Clinton for aircraft manufacturers and had a big
positive effect on the industry.)

Labor Market Deregulation

                                   We may soon have deflation. Workers who
are young or with poor skills need entry-level jobs in order to build skills and
experience. They won't be able to get them if the minimum wage is set higher
than the market-clearing wage. During the Great Depression, Hoover and
Roosevelt tried desperately to prevent wage deflation and insisted on
companies paying workers more than the market-clearing wage. The result was
that a lot of America's workers were overpaid, which was great for them, but
about 30 percent of us were unemployed. The government was powerless to
prevent deflation, in the end, and businesses that could not afford to pay their
workers the minimum wage were forced to shut their doors.

Eliminating state and federal minimum wages would send a message to
business that it will be safe to operate in the U.S. even in the event of deflation.

Our system of discrimination against workers on the basis of race or sex
("affirmative action") should be eliminated. When we were rich we could argue
about the benefits of government, non-profit organizations, and private
companies trying to have a specific mix of race and sex among workers. Now
we can't afford to spend time arguing about whether a person of the right color
or sex was hired. An employer will be lucky to be able to afford to hire anyone
and they should be able to hire the best-qualified candidate without fear that
they will be sued for not hiring someone with the right skin color or
chromosomes. [Note that this is not an argument for eliminating laws requiring
equal opportunity.]

Substitute Web-based Education and Trade for Foreign Aid

                    We don't spend a large percentage of GDP on foreign aid,
but the perception is that the absolute amount is large and nearly all of it is
wasted or siphoned off by Third World officials. Even if aid money reached its
intended population it might not accomplish what we think it will. In A Farewell
to Alms, Gregory Clark, the Chairman of the Economics department at UC
Davis, argues that Malthus was right for most societies throughout most of
human history. Clark points out that giving food aid to a poor country will not
result in raising the subsistence standard of living in that country. Food aid will
result in more babies being born and a larger number of people living at the
same or even lower standard of living. Medical aid or improved hygiene will
result in a larger number of people being able to survive on an even lower daily
calorie intake.

It would send a good message to investors if they knew that all of the money
that they and their workers paid in taxes would be used to improve and
maintain U.S. infrastructure.

Where would it leave poor countries if we eliminated all current foreign aid
programs? The most valuable thing that a poor country can get from the world's
advanced countries is knowledge. This was true when the only way to distribute
knowledge was by physically transporting books, students, and teachers. It
remains true now that the cost of distributing knowledge has fallen nearly to
zero. In terms of long-term development, Wikipedia is already probably more
valuable to poor countries than all of the foreign aid that they receive. So let's
give them more knowledge, but in a way that benefits Americans equally and
does not sound like throwing good money after bad.

There are people all over the U.S. and all over the world who would benefit from
an improved education. We now have the technology to give it to them at a
marginal cost of $0 per motivated student. Putting textbooks, problem sets and
solutions, project challenges, and lectures online costs next to nothing. Providing

Web-based collaboration environments for students to work together with each
other and with volunteer tutors is also inexpensive. Online teaching materials
and online classrooms can make a huge difference in the life of a poor but
motivated person.

Should we call it foreign aid? No. We build it for Americans and if citizens of
other countries want to use it, we welcome them as well. There are plenty of
Americans who need a lot more education if they are to compete in the global

What else do poor people in foreign countries get from Americans? A lot of
private aid and probably much more if we could restore the U.S. economy to
health. Already private donations from Americans are larger than current official
aid (source).

Poor countries also get some help from the existence of the U.S. military. Even in
a scaled-back form, the U.S. military discourages piracy and other lawless
behavior. This makes it cheaper and more efficient to trade. Foreign
governments that are friendly to U.S. policy interests could also avail themselves
of military training and aid.

What else could we do that would sustainably improve the lives of people in
poor countries? Trade! We can buy their products. We can start by eliminating
quotas and tariffs on products from poor countries, especially agricultural
products. It would be nice to continue to enrich America's sugar producers, but
domestic consumers can't afford it anymore and certainly people in poor sugar-
producing countries are suffering because of reduced demand from the U.S.
and the substitution of corn syrup.

Let's start with a simple message that business investors can embrace: "We've
eliminated all U.S. foreign aid spending."

Immigration Policy

                         During our time as a rich country, we in the U.S. have
had a wide variety of immigration policies. We wanted to help political
refugees. We wanted to reunite families. We wanted ethnic diversity.

With our crushing overhang of government debt, entitlement programs, and
public-employee pensions, the only question we can afford to ask about an
immigrant is "How much in taxes will this person pay and for how long?"

Countries such as New Zealand apply a point system. Being young gets points,
as a young person will have more working and taxpaying years before retiring
and drawing on taxpayer funds for healthcare, pension, etc. Being well-
educated gets point, as educated people have higher earnings and pay higher
taxes. Being wealthy gets points. Having a health problem, or children with a
health problem, results in a subtraction of points.

How would recent immigrants to the U.S. do on such a point system? Let's look at
Barack Obama's Aunt Zeituni. She came to the U.S. at the age of 50. She does
not seem to have been especially well educated or wealthy. She seems to have
been a net absorber of taxpayer dollars by (1) having worked only for the
government here, and (2) living at taxpayer expense in city- and state-owned

Surely it would be interesting to talk to Aunt Zeituni, but American taxpayers
would have been a lot better off financially if she had stayed in Kenya and they
had talked to her via an Internet videoconference link.

Unconventional Ideas?
The ideas in this essay have virtually nothing in common with those one hears
from politicians. Why? The perspective of a politician is completely different than
that of a business manager. For the politician, U.S. citizens and corporations are
an endless reserve of potential tax dollars ripe for the taking. The politician's
career goals are generally 2-6 years ahead. An increased tax today will yield an
instant revenue increase. It might take businesses or individuals subject to the tax
5 or 10 years to move their factories or otherwise adjust. By that time the
politician will have moved up to the next office. Giving public employees a
more costly pension may avoid a strike and will cost almost nothing in the short
run. By the time the pension obligation has buried a city or state, the politician
has moved on to a national office.

How about federal politicians? They spend all of their time in Washington, D.C.,
surrounded by wealth and beautiful marble architecture. They give speeches
every day where they refer to the U.S. as the greatest country in the world.
Humans are highly suggestible and we eventually begin to believe our own
rhetoric. A person who is constantly saying how the U.S. is the world's best
country is unable to imagine that a multinational company might move its

headquarters to Ireland or Dubai and turn the U.S. operation into one of many
local subsidiaries.

The business manager sees a newspaper article about how South Korea public
school graduates have the highest math achievement of any nation worldwide
and thinks "Maybe we should set up a laboratory over there." The politician
thinks "How can I use this number to damage my opponent in the next

The more skilled, experienced, and successful the politician, the less likely he or
she is to consider how the U.S. compares to other countries for a long-term
business investment. Unfortunately for the average citizen, without long-term
business investment the U.S. is going to suffer from extremely high rates of

We know what America's future looks like if we continue along our present path.
It looks like Michigan.

Why do so much so quickly? These changes will require a lot of political will,
which normally could not be mustered to alter the status quo. With 20 or 30
percent of Americans facing a realistic probability of losing their jobs, however,
there is a chance that everyone will agree


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