President Obama appears to have fallen into a pattern: Every victory is followed by a setback. The New York Times, Washington Post, and the Wall Street Journal's world-wide newsbox lead with Republican Sen. Judd Gregg withdrawing as the nominee for commerce secretary. Gregg said he "made a mistake" accepting the nomination because he had "irresolvable conflicts" with the administration, specifically citing the stimulus package and the handling of the census. The White House was surprised by the decision that made Gregg the third prospective Cabinet secretary to bow out from consideration. The Post notes that "nearly half a dozen" of the White House's top apointees have had to withdraw or faced "embarrassing scrutiny" in the past few weeks. "Since the president took office last month, not a week has passed without the White House responding to a personnel crisis," notes the NYT.
USA Todayleads with word that five states are considering laws that would restrict an employer's ability to use credit checks as part of the hiring process. With unemployment rising, some state lawmakers are saying that otherwise trustworthy people are being prevented from getting jobs. "It's almost like being forever sentenced to debtors' prison," said Hawaii state Rep. Marcus Oshiro. The Los Angeles Timesleads with a look at how the stimulus package would pour about $26 billion into California. It won't be enough to solve all of the state's money woes, but officials say it will help the close the gap a bit. "California cannot do without this bill," one state lawmaker said.
Gregg would have been the third Republican in Obama's Cabinet, but yesterday he said he came to realize that he hadn't thought through the consequences of what it would mean to be part of an administration with which he has many disagreements. He made his announcement in what the WSJ characterizes as a "dramatic fashion" by sending out an e-mail to reporters moments before Obama was set to take the stage in Peoria, Ill.
Gregg specifically cited the stimulus package and the White House's desire to have more authority over the census. But the outline of the stimulus package has been known for weeks, and when he was asked about the census issue, Gregg said that it "was so insignificant that he would not even address it," notes the WSJ. In the past few days, there was an intensifying effort by Republicans to convince Gregg that he wouldn't be happy in the administration, and White House officials believe this is what led him to change his mind.
Obama was clearly not happy with the announcement and said it was all rather strange considering that Gregg was the one who approached the administration with interest in the job (an allegation that Gregg denies). The Post says that White House aides think it's clear "Obama has not been rewarded for reaching across the aisle" and that he feels no obligation to now replace Gregg with another Republican. After two failed nominees, it's unclear who would be able to step in to take the post at Commerce, and the White House says it has no leading contenders.
The NYT, LAT, and USAT manage to include front-page pictures of the late-night crash of a commuter plane in upstate New York. A Continental flight from Newark crashed into a house five miles from the Buffalo airport at around 10:20 p.m. All 48 people aboard and one person on the ground were killed.
A day after congressional leaders announced a deal had been reached on the massive stimulus package, the bill was still being changed. The NYT notes that at certain points yesterday, officials were still unsure about what exactly was in the bill, which was "a bit discomfiting for House Democrats, who had promised at least 48 hours of public review before a vote." The final bill was released late last night. One of the late additions to the bill was a huge tax break for General Motors. Lawmakers also included a limit on pay and bonuses for executives of financial companies that accept taxpayer money from the Treasury and made the provision retroactive. The House is expected to vote this afternoon.
The LAT notes in a front-page piece that about $106 billion of the stimulus package would be destined for education. That amount is less than the House had hoped for but more than was in the Senate version of the bill, and the money would pay for special education, school construction, and retaining teachers, among other things. The WP points out that the bill "would make a significant down payment on Obama's health-care and energy agendas" by providing almost $20 billion for medical records and more than $40 billion for energy-efficiency programs.
In a front-page piece, the WSJ says that getting the bill approved might be easier than actually spending the money. Many offices in the federal government would get a huge influx of cash, and they'll have to go through a dramatic overhaul in the way they do business if they hope to release the money quickly. For example, one "obscure" office in the Commerce Department that has a $19 million budget and fewer than 20 grant officers would suddenly be in charge of deciding who gets $7 billion in grants to expand Internet access. There's probably no place where the challenges are more apparent than at the Department of Energy, which has a $25 billion budget and a record of delays and cost overruns.
The Post points out that, despite Obama's promises, the final bill includes some pet projects that favor specific interest groups or communities. Democrats insist that none of the provisions are what are traditionally known as earmarks, but Republicans say that whatever you call them, they are still wasteful and do little to prop up the economy. For example, the bill includes $200 million for long-awaited compensation for Filipino veterans who served in World War II.
All the papers go inside with the new intelligence chief warning lawmakers that the economic crisis, not terrorism, is the most urgent threat currently facing the United States. In his first appearance before Congress as director of national intelligence, Dennis Blair said the worldwide economic slowdown could lead to political instability and spark new flows of refugees. In addition, economic troubles could prevent "allies and friends" from meeting "their defense and humanitarian obligations." The Post notes this was "the first annual threat assessment in six years in which terrorism was not presented as the primary danger."
The NYT off-leads a news analysis that looks into how a growing number of economists and financial experts are saying that the government needs to get more deeply involved if it has any hope of thawing the frozen credit markets. These analysts say that a number of the nation's largest banks are basically insolvent and that the Treasury program outlined this week to get toxic assets out of balance sheets through a private-public partnership won't solve the problem. Instead, "the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets," explains the NYT. Indeed, these experts claim that the government may have to end up taking the bad assets itself if it hopes to end the credit crisis. It could then hold on to these assets and sell them off when the economy improves.
In its business section, the NYT has a dispatch from Tokyo that says many experts who lived through Japan's "lost decade" say they're surprised the United States isn't moving more aggressively to tackle the economic crisis. "I thought America had studied Japan's failures," a top official during the crisis said. "Why is it making the same mistakes?" Japan tried many of the same tactics that have so far been put forward in the United States, but nothing worked until the government decided to buckle down and take aggressive action, effectively nationalizing a major bank and allowing others to fail. "The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks," one economist said.
The NYT's Paul Krugman says that so far the "administration's response to the economic crisis is all too reminiscent of Japan in the 1990s." Most economists agree the stimulus package isn't big enough, particularly considering that the Treasury still hasn't outlined a plan that could actually work to resolve the financial crisis. Krugman says he's "got a sick feeling … that America just isn't rising to the greatest economic challenge in 70 years." If Obama isn't "stronger looking forward," writes Krugman, "the verdict on this crisis might be that no, we can't."
In the NYT's op-ed page, E.J. Levy points out that "insects and mold in our food are not new," and the Food and Drug Administration actually approves, as long as it's within a certain amount. Tomato juice, for example, can average "10 or more fly eggs per 100 grams." When all is said and done, "you're probably ingesting one to two pounds of flies, maggots and mites each year without knowing it."