A trillion for toxic asset relief, $2 trilllion more in debt.

A summary of what's in the major U.S. newspapers.
March 21 2009 6:02 AM

Where Does It Come From, Where Does It Go?

The New York Times and Wall Street Journal lead with details of the administration's anticipated plan (sketched out by the Los Angeles Times on Monday) for a $1 trillion public-private partnership designed to coax investors to rescue troubled assets from banks. Complicating that picture, the Washington Post leads with the Congressional Budget Office's new projection that, under the current economic rescue plan, annual deficits will force the federal government to borrow fully a third more than the administration had earlier forecast. The Los Angeles Timesbrings it home with a lead story on African-American unemployment in California and nationally, where 13.4 percent of blacks don't have jobs—disproportionately in low-skill sectors—compared with the 8.1 percent average.

In rotten timing for the administration (which only the LAT  had in yesterday's print edition), the CBO came out with a staggering analysis of how far in hoc the United States is expected to be in 10 years under President Obama's budget proposal: After borrowing $9.3 trillion, the national debt would amount to a whopping 82 percent of the size of the economy. That prognosis is gloomier by $2.3 trillion than the administration had let on, which White House budget director and former CBO chief Peter Orszag chalked up to a different calculus for how far the economy has yet to fall. Regardless of who's right, the new numbers have sent pro-administration legislators scrambling to hold together alliances already tied together with a shoestring in order to keep the stimulus on track. One controversial strategy: In order to pass a health care bill, House Democrats may be able to utilize a rule that would get the legislation through on a simple majority vote, whereas before it would need 60 votes to cut off debate.

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The administration's toxic asset disposal plan, officially debuting next week, has three main elements (unavoidable jargon alert!): The Treasury brings a handful of investment firms onboard to raise private capital on a dollar-for-dollar matching basis with federal money, the Federal Deposit Insurance Corporation sets up and largely funds investment partnerships to buy the assets at auction, and more money is funneled through the Federal Reserve-managed Term Asset-Backed Secure Lending Facility. All that is supposed to then free up banks to resume normal lending, but the Journal takes a skeptical investor's-eye view, noting that banker types are smarting from the AIG bonus backlash and leery of the administration's demonstrated tendency to change the rules on bailout deals. The paper also lands heavily on Treasury Secretary Tim Geithner, saying this plan may be his last, best chance to make an impact on the crisis.

Meanwhile, Congress is starting to get blowback for the massive taxes on corporate compensation proposed in the House on Thursday. Chief executives are mobilizing to head off the move, reassuring remaining employees that they won't let the government ax bonuses completely, which the banks say would result in a loss of talented workers to smaller companies. According to the LAT, the outrage-fueled, everything-but-the-kitchen-sink tax plans have scared the bejesus out of not just the likes of Merrill and AIG but also comparatively healthy firms up and down Wall Street, who fear they might be tarred with the same brush. Back on the NYT business page, Joe Nocera calls for sanity, contending that the rhetorical windstorm over AIG malfeasance is distorting the political response to the financial crisis, which he fears may pose a bigger risk to recovery than economic problems on their own.

President Obama himself is seeking to reassure the American people that all that stimulus money won't be wasted; requests for funding must be made in writing. One of those seeking cash is World Trade Center developer Larry Silverstein, with the cooperation of the Port Authority of New York and New Jersey, which just wants to see planned towers get built after the developer hit a rough patch in financing his highly symbolic mega-project. And further down the ladder still, the NYT fronts a heartbreaker from the economic front lines—this time, Fort Lauderdale, Fla.—illustrating that the young are in a battle with the elderly workers whose deflated 401(k)s have forestalled retirement.

To kick off the day's noneconomic news! The Post fronts a look at how Obama's three-minute video message to Iran played in the foreign policy community yesterday: While recognizing the break from Bush's axis-of-evil rhetoric, Iranian officials didn't appreciate the decision to speak over their heads in such a public way. "Statesmen address each other, instead of talking to the people," said one military figure. The message came in advance of a probable face-to-face meeting between Iranian leaders and Secretary of State Hillary Clinton, the NYT reports, and may force hard-liners to—in the Gray Lady's own sainted words—"put up or shut up."

The Post features a pair of newly minted bureaucrats—relatively uncontroversial nominations nevertheless held up by Senate politicking—poised to have an impact on policy via their respective roles on climate change. Jane Lubchenco, the first woman ever to head the National Oceanic and Atmospheric Administration, plans to wield her significantly boosted budget in the service of comprehensive climate monitoring. And the new guy at the Federal Energy Regulatory Commission, Jon Wellinghoff, is getting cracking on one of Obama's job-creation devices, a new "smart grid" to help integrate decentralized renewable energy sources.

Yes, it's still going on: A judge is expected to render a decision soon in the five-month recount dogfight between Norm Coleman and Al Franken in Minnesota. Within days, the Senate could be complete, and the worst post-election overtime since Bush v. Gore finally at an end. In other news of representation, it sounds like the citizens of D.C. are facing a strangely incongruous Sophie's choice: Legislation currently before Congress would grant the District a representative in the House (offset by another in comfortably Republican Utah) while weakening its gun control laws.

Six years after the American invasion, Iraq is now (almost) safe for tourism again, with the first civilian recreational tour group out to see the sights. Not so much in Afghanistan, where an American commander says he's fresh out of troops needed to secure the area, and folks should just expect more things to go wrong in the region.

So it's a rough world out there, and as the LAT tells us, college students are preparing themselves with that great leveler of a decision-making exercise: rock, paper, scissors.

Lydia DePillis is a writer living in New York.