Stocks plunge as promises of a stimulus package fail to ease fears of a recession.

Stocks plunge as promises of a stimulus package fail to ease fears of a recession.

Stocks plunge as promises of a stimulus package fail to ease fears of a recession.

A summary of what's in the major U.S. newspapers.
Jan. 18 2008 6:11 AM

The Thick Red Line

The Los Angeles Times, New York Times, and Washington Post continue to lead with news about the economy and the efforts to reach a compromise on a stimulus package, which also takes the top spot in the Wall Street Journal's world-wide newsbox. Federal Reserve Chairman Ben Bernanke went before lawmakers yesterday, and, as expected, announced the central bank is ready to keep on cutting interest rates and said that fiscal stimulus "could be helpful in principle." President Bush will announce the basic outlines of his stimulus plan today. But, despite all the promises to help the ailing economy, stocks plunged yesterday, "bringing the decline this year to a stomach-churning 9 percent," says the NYT.

USA Todayleads with U.S. military figures that claim approximately 75 percent of the neighborhoods in Baghdad are mostly free of violence and have resumed normal economic activity. When new troops were sent to Iraq as part of the "surge," the figure was closer to 8 percent. Military officials caution that many of these gains could be lost if the Iraqi government doesn't get its act together quickly, and note that they're still wary about handing off too much responsibility to Iraqi security forces.

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Despite Bernanke's insistence that the Fed isn't forecasting a recession, he did acknowledge the economy has slowed down, and the troubles were plainly evident on Wall Street, where analysts began the day with news that Merrill Lynch reported a record $9.8 billion loss  in the fourth quarter. Investors were also met by several reports suggesting there's more trouble ahead. New data showed that home construction last month fell to its lowest level in 16 years. The LAT highlights that "the most distressing report" came from the Fed's Philadelphia bank that reported manufacturing activity in the region seems to be slowing down, which could be a sign of what is to come for the rest of the country. It "was the first number that was truly recessionary," an analyst tells the paper.

All the grim news out of Wall Street added to the sense of urgency in Washington that something must be done, and today everyone picks up on the tone of yesterday's LAT story that said lawmakers seem willing to hold hands across the aisle to get a stimulus package passed. Bernanke refused to give his opinion on whether Bush's tax cuts should be permanent, but emphasized that was part of long-term policy that shouldn't be mixed in with the debate over a stimulus package, which was echoed by the White House. House Speaker Nancy Pelosi described the stimulus package Congress is working on with three words that seem to have become a mantra in Washington these days: "timely, targeted, and temporary." The plans currently in the works would cost about $100 billion, which is in the range that Bernanke called "reasonable."

But, hey, it is Washington, so the Kumbaya moments must have at least a bit of partisan bickering. That came when Senate Majority Leader Harry Reid said he was angry that Bush would outline his stimulus proposal today without waiting for a bipartisan agreement. Both the Post and WSJ report that the current thinking inside the White House is to propose a tax rebate for individuals of as much as $800 plus tax breaks for businesses.

The WP fronts a 2005 internal study by the Bush administration that found 473 days between 2003 and 2005 that don't have any archived e-mail messages for one or more White House offices. Rep. Henry Waxman released the summary of the study after the White House spokesman said there is "no evidence" that there are missing e-mails. The study says a number of offices, including the president's and the vice president's, have days where the archives are empty. One of the advocacy groups currently suing the White House over its failure to keep proper records says there are many more days where the e-mail volume is much lower than normal. The White House insists the study isn't reliable and that employees have never been able to confirm its findings.

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The WP fronts an interview with the CIA's director, Michael Hayden, who says the agency has concluded that allies of Pakistani tribal leader Baitullah Mehsud, with the help of al-Qaida's network, were responsible for the assassination of former prime minister Benazir Bhutto. Coincidentally enough, President Pervez Musharraf's government reached the same conclusion, but other Pakistanis, including Bhutto's family, aren't so sure. The LAT doesn't talk to Hayden but gets pretty much the same information from an anonymous CIA source, and says much of the skepticism is because no proper forensic examination was carried out. One former Pakistani official made clear that even if Mehsud's people were in fact involved, it doesn't mean "the Pakistani army or intelligence agencies did not play a role," reports the LAT.

Moving on to the presidential race, everyone reports a federal judge ruled Democrats can caucus in at-large sites on Saturday that will allow casino workers who have to work that day the opportunity to participate. Some of Sen. Hillary Clinton's supporters have been arguing that the sites are unfair because they give an advantage to casino workers, thousands of whom are employed by a union that endorsed Sen. Barack Obama.

Meanwhile, the LAT fronts a look at how Obama could be hurt by previous statements he made against gambling while he was a state senator. The statements could also affect the California primary, where the ballot will include several gambling initiatives. Clinton's campaign has made a point of making sure local reporters know about the statements, but Obama's campaign insists the senator has made clear there are differences between gambling in Illinois and Nevada.

The WSJ fronts an interesting look at how the influence of the culinary union in Nevada is an example of how "labor unions are showing increased power" in this election. Unions have gained an expertise in get-out-the-vote efforts, and their work could end up having an important effect in swing states during the general election.

On the Republican side, the Post notes that disappointing numbers in Saturday's South Carolina primary could end Fred Thompson's candidacy. The other main Republican candidates (except Rudy Giuliani, of course) have each won a state and could survive a defeat in South Carolina, but Thompson has acknowledged it would be difficult for his campaign to recover if he doesn't do well Saturday. Meanwhile, Mitt Romney has all but given up on South Carolina, and flew to Nevada yesterday to focus on Saturday's caucuses, where, as the NYT notes, he stands a better chance at least in part because the state has a significant population of Mormons.

Iraq's national security adviser, Mowaffak al-Rubaie, writes an op-ed piece for the Post where he says a system must be created to divide Iraq into regions and identifies "five likely federal units." The idea that a powerful central government can control the entire country is simply unrealistic and Rubaie notes that "a key condition for success is that the balance of power should tip decisively to the regions on all matters that do not compromise the integrity of the state."

Early morning wire stories report that former world chess champion Bobby Fischer has died.

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.