Sunday, December 28, 2008

This'n'That; December 28th [Lobbying;Stimulus]

"K" Street Alive And Well There are probably a few Washington old-timers left who remember when K Street, N.W., was lined with mansions, but there can't be many. K Street is now lined with stolid, 130-foot-high office buildings [Washington has a height limit] filled with trade associations, law firms and lobbyists. I'm not sure who first used K Street as a shorthand term for Washington's lobbying community, but it has stuck -- as we are reminded by the news stories about the guilty pleas entered by lobbyist Jack Abramoff, who seems never to have had an office on K Street itself. The Washington lobbying community goes back a long way. The First Amendment says that "Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances": Lobbyists, like the clergy and the press, are a profession protected by the Constitution. When government makes decisions that affect private individuals and firms and industries, their representatives are going to exercise their constitutional right to try to get the decisions to come out their way. Government is especially likely to make such decisions in time of war. During World War I, when Woodrow Wilson's government nationalized the railroads and seized control of the shipping industry, a Chicago lawyer named Edward Burling made the observation that there was business to be had in litigating wartime claims and joined former Maryland Congressman and Judge Harry Covington to form the firm of Covington & Burling. Today C&B is one of many large Washington law firms, with distinguished lawyers who will surely tell you that they don't do any lobbying; they certainly don't do the kind of things Jack Abramoff did. Former Rep Tony Russo [D-Ill] explained that many construction firms are in dire need of federal assistance to save their businesses in the midst of a national credit slowdown. Rep Eliot Engel [D-NY], a member of the House Energy and Commerce Committee said the impending obama Stimulus Package would likely include incentives for "green" energy production, such as wind and solar power. He also said that Congress may increase taxes on corporations such as oil companies which have earned record profits in recent years. "Companies that are doing well ought to pay their fair share," said Engel. "I don't want to begrudge them the opportunity to make money, but companies that are doing better should pay a little more. [NOTE: The "redistribution of wealth" statement by obama to Joe The Plumber seems to be coming to fruition]" They do on occasion, try to affect government decisions, whether by administrative agencies, administration officials or Congress. Why shouldn't they, it's a perfectly legitimate business.... High-profile Democrat lobbyist Tony Podesta said "Everybody recognizes that, whether thy're in a deep financial distress or merely suffering a downturn, there's a real possibility of lots of legislating next year, so this is no time to abandon Washington. We're talking to lots of new people and signed up some of them. We're really moving." [from: Michael Barone @ WSJ] [NOTE: Podesta Associates was launched in 1988 by Tony and his younger brother John, an expert on law and technology who had worked for the Senate Judiciary Committee. Over the years, Podesta Associates has forged close relationships with big firms like IBM and Genentech, while becoming increasingly sought after by new Silicon Valley players like WebTV. Podesta represents MCI, Textron, Universal, CBS, the Recording Industry Association of America, the National Association of Broadcasters, and The Washington Post. Does this look like a blatant conflict-of-interest to you?? It sure does to me.... I can't find any reference that John ever resigned the lobbying firm or put any financial interests in trust as required by federal law.] More On "K" Street A half-million folks lost their jobs in November; 401[k]s have lost half their value. Given these bleak events and even more bleak forecasts, "K" Street lobbyists expect to continue to 'grow' their fortunes in the forseeable future. "Usually, December is a very slow month on all fronts, but this year it has been incredibly busy," said Steve Elmendorf, a lobbyist and one-time advisor to former House Democratic leader Richard Gephardt [Mo]. "Anytime government gets more active and more involved in your business, you'll look for more help in Washington," he said. "When Democrats control both chambers of congress and the White House, there's no question that government will be more active." They are anticipating that the Democrat control of all facets of Washington politics, sweeping changes [we need {tic}] "promised" by obama will greatly enhance their bank accounts. [tic=tongue-in-cheek] Obama’s stimulus plan won’t stimulate [Do The Math!] [This article was written by Dick Morris, posted: 12/09/08 06:28 PM [ET] http://www.thehill.com/ ] The economic stimulus plans unveiled by President-elect Obama over the weekend won’t do much to help the economy. But they will vindicate all the dreams of liberal Democrats for higher government spending. Of course, the basic choice facing any politician seeking to stimulate a moribund economy is whether to catalyze the supply side with tax cuts on business or the demand side by way of spending increases. Obama obviously made that choice years ago: He will work the demand side. But once a leader makes that decision, he faces another: Will he emphasize important and valuable public works projects or will he just try to pass out the largest amount of money possible? By announcing that he is not “going to throw money” at the economy in the hopes of getting a pulse, Obama signals that he will stress the former approach and fund important public works such as school reconstruction, fiber optic cables, alternative energy generation and the like. The problem is that such projects take a long time to plan and longer to build. Their immediate economic impact is highly attenuated. In all federal capital projects, only about one-quarter of the funds appropriated are actually spent in the fiscal year. It just takes that long to plan, engineer and begin construction. And for every $6 spent in the last stimulus package, only $1 actually got spent on goods or services. Five dollars out of every six in the Bush stimulus package of 2008 went to pay down debt, mortgage or credit card or student loan or home equity, and not into the acquisition of new products or services. So, do the math. If only 25 cents out of every dollar actually is spent in the fiscal year, and only one-sixth of that sum actually gets spent by the workers who get paid on new goods and services, only about 4 cents from every dollar actually stimulates the economy. And who says those 4 cents will be spent on domestically produced products? A lot of the stimulus will just feed Chinese imports, particularly with their low prices. FDR faced just this problem in combating the Great Depression. In the National Recovery Act (NRA), Roosevelt set up the Public Works Administration (PWA) headed by Interior Secretary Harold Ickes (the original one). Ickes was a stickler for making sure nothing was wasted and in keeping the costs down. He managed a spectacularly successful public works program and built, without scandal or corruption, some of our most important national infrastructure. But he took his sweet time doing so. The economic stimulation was slow in coming. Exasperated, FDR did an end-run around Ickes and set up the Works Progress Administration (WPA) under Harry Hopkins. WPA spent its money quickly and on projects involving little overhead or preparation. My mother got a WPA job teaching English to foreigners. Virtually all the WPA funds were spent in the fiscal year and the stimulative effect was immediate. But in opting to go the Ickes route, Obama will find that he leaves a legacy of important contributions to our national infrastructure, but little in the way of real economic stimulation. While a WPA-type approach might hasten the ameliorative impact of the stimulus package, Obama still faces the conundrum that most of those who get extra paychecks as a result of his spending will use the money to climb out of debt. In the ’30s, credit cards didn’t exist and consumer debt was very limited. Most people lived paycheck to paycheck. Extra money equaled extra spending. But now that most consumers will use money to pay down their debts, not to spend it, demand-side stimulation has its limitations. But Obama’s ideology won’t allow him to indulge in tax cuts “for the rich,” which might work to get us out of the depression faster. [It is widely held by both liberal {now 'Progressive'} and conservative economists that FDR's policies and programs prolonged "The Great Depression"] Til Nex'time..........

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