Obama: Don't expect much anytime soon....

Nov 21, 2008 5:39 am US/Central

Obama Advisers To Public: Temper Expectations

Reporting
Mike Flannery

CHICAGO (CBS) ― President-elect Barack Obama and his inner circle fear that some voters expect him to turn around the economy, wind down the war in Iraq and, perhaps, cure cancer -- all by the Fourth of July.

They know they must manage and lower those expectations, CBS 2 Political Editor Mike Flannery reports.

A top economic advisor to Obama had a glum warning for the rest of us Thursday morning: Neither the job market nor the stock market will be turning around any time soon.

"This might be a long haul," said Robert Reich, who was President Bill Clinton's secretary of labor. "2009 is going to be a very hard year. Some economists say we won't be out of this for two years, others are saying it may be three, or four, maybe five years."

Now on Obama's transition team, Reich worries about what happens after the new president is sworn in Jan. 20.

"We all have to be very careful about the expectations that we are putting on this man, our president-elect," Reich said. "If we all assume it's going to be the first 100 days, we're going to be disappointed."

http://cbs2chicago.com/local/Obama.advisers.expecations.2.869896.html


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It's a Bird! It's a Plane!! It's Obaman!!! No, not yet......

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Back Pedalling like a Monkey in the Circus!!!!!

HOPE AND CHANGE or GLOOM AND DOOM????

It will be hard to create jobs
Unemployment is likely to rise during the first year of Obama's term, no matter what steps he takes.

NEW YORK (CNNMoney.com) -- Here's the challenge facing President-elect Barack Obama as he weighs how to create more jobs: another half-million jobs likely will be lost between now and Inauguration Day.

That's not even counting the 200,000 jobs that economists believe employers trimmed last month, according to estimates from Briefing.com. The October jobs report will be released this Friday.

The unemployment rate is expected to climb to 6.3% from 6.1% and match the worst reading of the decade. And economists all seem to agree the worst is yet to come.

At some point next year the unemployment rate is forecast to pass 7%, a level not seen since 1993.

And monthly job losses of 200,000 or more are expected to become the norm, not the exception, as the full impact of the credit crisis is felt more keenly on Main Street.

Economists generally believe there's little Obama can do to stop more job losses in the short-term, even if he's able to get a new economic stimulus package passed by the lame-duck Congress and signed into law by President Bush.

"Superman couldn't change what's in store for the U.S. economy. It's going to be ugly," said Rich Yamarone, director of economic research at Argus Research.

Cont.Here:

http://money.cnn.com/2008/11/05/news/companies/jobs_outlook/index.htm?postversion=2008110514



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McCain's Letter in 2006 Could Have Prevented the Present Financial Crisis!!!

McCain Letter Demanded 2006 Action on Fannie and Freddie
by Human Events
10/10/2008

Sen. John McCain's 2006 demand for regulatory action on Fannie Mae and Freddie Mac could have prevented current financial crisis, as HUMAN EVENTS learned from the letter shown in full text below.

McCain's letter -- signed by nineteen other senators -- said that it was "...vitally important that Congress take the necessary steps to ensure that [Fannie Mae and Freddie Mac]...operate in a safe and sound manner.[and]..More importantly, Congress must ensure that the American taxpayer is protected in the event that either...should fail."

Sen. Obama did not sign the letter, nor did any other Democrat.

View the Letter Here:

http://www.humanevents.com/article.php?id=28973#continueA



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Obama's Speech Auditory Tape Found

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Barney Frank's Bankrupt Ideas

BY INVESTOR'S BUSINESS DAILY

Posted Monday, October 06, 2008 4:20 PM PT

Financial Rescue: Democrats created the mortgage crisis by forcing banks to give loans to people who couldn't afford them. Now Obama and Biden want bankruptcy judges to bail out the same deadbeat homeowners. And once again, Barney Frank is helping. It's been said that history is a lie agreed upon.

Democrats are trying to rewrite history by blaming the Bush administration for the current crisis and claiming that the rescue bill is necessary to save the economy from Republican mismanagement.

More blarney from Barney.

Last Thursday on Fox News, when Bill O'Reilly tried to suggest that both parties might share the blame, House Finance Committee Chairman Frank, in a not atypical meltdown, disowned any responsibility for his lack of oversight over the last two years and his complicity before that.

Frank also claimed: "The fact is, it was 1994 that we passed a bill to tell the Fed to stop the subprime lending. We tried to get them to do it." In other words, those rascally Republicans did it all when they took control of Congress that November.

The legislation he spoke of was the Homeowners Equity Protection Act. It was supposed to empower the Federal Reserve to set the rules on mortgages. Problem was, the Clinton administration had its own ideas of what the rules should be.

The Community Reinvestment Act, first passed in 1977 under Jimmy Carter, was intended to increase minority homeownership. It grew out of charges that banks were "redlining" entire inner-city neighborhoods as bad credit risks. Banks now were forced to perform outreach to these areas.

In the '70s and '80s, banks could show that they were trying to do that by advertising in minority newspapers and having representatives sit on the boards of local groups. In other words, they were rated on the effort made and not on the results achieved. Creditworthiness still mattered.

In 1995, as Howard Husock pointed out eight years ago in City Journal, "the Clinton Treasury Department's 1995 regulations made getting a satisfactory CRA rating much harder. The new regulations de-emphasized subjective assessment measures in favor of strictly numerical ones. Bank examiners would use federal home-loan data, broken down by neighborhood, income group, and race, to rate banks on performance."

Creditworthiness and due diligence no longer mattered. As a 1999 New York Times editorial observed: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Bill Clinton administration to expand mortgage loans among low- and moderate-income people and felt pressure to maintain its phenomenal growth in profits."

On Frank's and Clinton's watch, the Community Reinvestment Act was changed to force the issuance of bad loans. Banks would be rated on the number of loans, not on their soundness. Fannie Mae and Freddie Mac were then encouraged to buy them up. It was all about affordable housing, even if the housing was unaffordable.

"From the perspective of many people, including me, this is another thrift industry growing up around us," Peter Wallison, a resident fellow at the American Enterprise Institute, said back in 1999. "If they fail, the government will have to step in and bail them out the way it stepped up and bailed out the thrift industry." That prediction came true, but it didn't have to.

On Sept. 11, 2003, the Bush administration proposed to Congress a new agency under the Treasury Department to assume supervision of Fannie and Freddie. The new agency would have had the authority to set capital-reserve requirements, veto new lines of business and determine whether the two quasi-government lenders were adequately managing the risk of their ballooning portfolios. When former Treasury Secretary John Snow pleaded for Frank to support Fannie and Freddie reform, Frank responded: "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Democrats believe in affordable housing even if it's at the expense of the vast majority who watch their credit, work hard and pay their mortgages on time. But for the deadbeats, particularly Democratic constituencies, they have ways to make affordable the housing you couldn't afford. So first, they forced them into housing they couldn't afford, and now they give them a financial mulligan.

In the vice presidential debate, Sen. Joe Biden said that "what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal you owe."

To get this bill passed, Obama made a lot of phone calls — particularly to members of the Congressional Black Caucus, including caucus chief Rep. James Clyburn — assuring this would happen.

Those paying their mortgages on time don't get that break.

Rep. Elijah Cummings said Obama told him that, if elected president, he would direct a Treasury Department official to work with homeowners in foreclosure to restructure their loans. Cummings said Obama also told him he'd seek changes in bankruptcy laws allowing judges to reduce what borrowers owe on their home loans.

Section 110 of the rescue legislation has the Orwellian title of "Assistance to Homeowners" — but only for the deadbeats.It describes somebody called a "Federal property manager" who "holds, owns or controls mortgages, mortgage-backed securities, and other assets secured by residential real estate."

Section 110 speaks of "modifications" that this manager can make to these mortgages including not only the reduction of interest rates but the reduction of loan principal.

Not only is Uncle Sam now the world's largest landlord. He can also arbitrarily set the value of property and the amount owed on it at will, thus distorting the free market.

The vast majority of homeowners who pay their mortgages on time get the shaft. They're the ones who'll take up the others' slack. Why? And why is the Community Reinvestment Act still law?

http://www.ibdeditorials.com/IBDArticles.aspx?id=308185654524278

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Sharp Words from McCain for Obama in N.M.

Battlegrounds

By Michael Abramowitz

ALBUQUERQUE -- Continuing the rapid-fire tit-for-tat of the campaign trail, Sen. John McCain (R-Ariz.) plans a sharp new assault on Sen Barack Obama (D-Ill.) this afternoon for what he described as a yawning gap between his rhetoric and his record.

The alleged gap has been a feature of McCain's campaign speeches in recent days, but seldom expressed with the kind of vehemence employed today, when McCain complained that Obama calls him a liar anytime McCain raises questions about his policies or his record. "I don't need lessons about telling the truth to American people," McCain said, according to excerpts released by his campaign. "And were I ever to need any improvement in that regard, I probably wouldn't seek advice from a Chicago politician."

The two campaigns have been exchanging fire at an increasingly rapid pace, with the McCain camp focusing on Obama's association with onetime radical William Ayers and Obama now criticizing McCain's involvement in the Keating Five scandal of the early 1990s. In his speech this afternoon at the University of New Mexico, McCain plans to accuse Obama of thinking "he is above" having to answer questions about his record. "All people want to know is: What has this man ever actually accomplished in government?" McCain asks. "What does he plan for America? In short: Who is the real Barack Obama? But ask such questions and all you get in response is another barrage of angry insults."

As an example, McCain plans to point to the collapse of Fannie Mae and Freddie Mac, saying that he called for tighter restrictions (in 2006) -- but was rebuffed by Democrats in Congress. He has accused Obama of being "silent" on the regulation of the two mortgage giants.

"To hear him talk now, you'd think he'd always opposed the dangerous practices at these institutions," McCain will say. "But there is absolutely nothing in his record to suggest he did. He was surely familiar with the people who were creating this problem. The executives of Fannie Mae and Freddie Mac have advised him, and he has taken their money for his campaign. He has received more money from Fannie Mae and Freddie Mac than any other senator in history, with the exception of the chairman of the committee overseeing them. Did he ever talk to the executives at Fannie and Freddie about these reckless loans? Did he ever discuss with them the stronger oversight I proposed? If Senator Obama is such a champion of financial regulation, why didn't he support these regulations that could have prevented this crisis in the first place? He won't tell you, but you deserve an answer."

http://voices.washingtonpost.com/the-trail/2008/10/06/sharp_words_from_mccain_for_ob.html

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FINANCIAL CRISIS CAUSED BY DEMOCRATS!!!!!

The present economic crisis was caused by the Democrats. And now the one man who tried to stop it is being penalized in his candidacy for president.





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McCain calls revamped bailout bill an improvement

McCain warns that a full-fledged financial disaster could occur if new bailout bill fails
By MIKE GLOVER Associated Press Writer | AP
Oct 1, 2008

Republican presidential candidate John McCain said Wednesday the resurrected financial bailout bill isn't perfect but warned that the nation's financial crisis will become a full-fledged disaster if the plan fails.

In an economic speech Wednesday at the Truman Library and Museum, McCain said the original proposal that failed in the House was flawed because it did not contain taxpayer protections, limitations on executive compensation and sufficient protections for people's bank accounts.

"I am pleased that these are being added to improve the original bill," he said.

If the revised version, up for a vote in the Senate later Wednesday, were to fail, students won't be able to get college loans and families will have trouble buying new homes, he said. Car sales will take a hit and businesses will have difficulty paying employees and securing credit for operations, he said.

"If we fail to act, the gears of our economy will grind to a halt," McCain said.

McCain planned to return to Washington to vote on the bill, which adds substantial tax cuts meant to appeal to Republicans when it reaches the House. The modest changes include an increase on Federal Deposit Insurance Corp. caps for bank accounts from a limit of $100,000 to $250,000.

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President Obama and the Coming Stock Market Crash

How destructive to the U.S. economy would a Barack Obama presidency be?

An exclusive Newsmax analysis warns: There could be a very rough time ahead.

Beneath Obama's flowery rhetoric lies a dangerous economic plan that will wreak havoc on the American economy.

Obama plans to return to the failed policies of high taxation coupled with an expansion of government spending.

Worse, Obama says he is absolutely committed to almost doubling the capital gains rate — something he will easily accomplish with a Democrat Congress.

In the coming months — when investors realize that Obama will raise the cap gains rate — there could be a stampede of asset sales as investors rush to take their profits now to avoid Obama's doubling of the tax rates next year.

All of these issues and more are explored in Newsmax magazine's special report "Obamanomics — the Coming Tax-and-Spend Nightmare," by Wall Street Journal columnist John Fund.

This Newsmax magazine special report gives Americans the first in-depth look at the Democratic presidential candidate's likely strategies — and how they will affect not just the larger economy, but your personal wealth as well.

Indeed, Obama makes no bones about his plans to go on a tax rampage. Not only would he increase the capital-gains tax rate from 15 percent to as much as 28 percent, he wants to allow the 2001 and 2003 Bush tax cuts to expire in 2010, which effectively raises taxes on Americans by tens of billions of dollars.

He also wants to do away with the $102,000 FICA payroll tax cap, which means anyone making over $102,000 would pay an additional 7 percent in taxes on earned income.

And the loan dividend tax rate George Bush implemented? Under President Obama it will be DOA!

If you are concerned about your wealth and family's financial well-being — and that the American economy remains strong — you must read this special report and share it with friends and family.

http://w3.newsmax.com/a/jun08/?s=al&promo_code=6BE8-1


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Burning Down The House: What Caused Our Economic Crisis?

Since you and your kids and their kids and their kids are going to be paying off the biggest bailout in history, you owe to yourself to watch this video:

Poisoning the Well with a few Bitter Words

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Republicans point finger of blame at House Speaker Nancy Pelosi for 'partisan' speech'

30 September 2008
By BRIAN FERGUSON

EVEN before the doomed vote on the $700 billion bail-out plan began in the House of Representatives yesterday, stocks were plummeting as tension mounted.

In Congress, members shouted news of the plunging Dow Jones average as others crowded on the floor during the 40-minute call of the roll, as leaders on both sides struggled to persuade rank-and-file members to support the deal. Within minutes of the ADVERTISEMENTresult, the recriminations had begun.

House Republicans blamed a "partisan" speech by the Speaker, Nancy Pelosi, a Democrat, during the debate. She had blamed George Bush's "reckless economic policies", "fiscal irresponsibility" and an "anything goes economic policy" for the crisis.

After the vote, John Boehner, the Republican minority leader, said: "I do believe we could have got there today, had it not been for this partisan speech the Speaker gave. The Speaker had to give a partisan voice that poisoned our conference."

Later, the Republican presidential nominee, John McCain, said: "I was hopeful the improved rescue plan would have had the votes needed to pass, because addressing the credit crisis is of vital importance to families, small businesses, every working American.

"Now it's time for all members of Congress to go back to the drawing board. I call on Congress to get back, obviously, immediately to address this crisis.

"Our leaders are expected to leave partisanship at the door and come to the table to solve our problems."

Mr McCain also criticised his Democratic presidential rival, Barack Obama, and "his allies in Congress" for their "unnecessary partisanship".

However, Mr Obama himself took a bullish stance when he urged Democrats and Republicans to "step up to the plate, get (a deal] done".

He added: "Understand that, even as you get it done to stabilise the markets, we have more work to do to make sure that main street is getting the same kind of help Wall Street's getting."

And Henry Paulson, the US Treasury secretary, added: "We need to put something back together that works. We need it as soon as possible."

http://news.scotsman.com/latestnews/Republicans-point-finger-of-blame.4540098.jp

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McCain Blames Partisanship, Pelosi; Aide Calls Pelosi "Reckless"

29 Sep 2008 04:00 pm

A statement from Doug Holtz-Eakin has Sen. John McCain casting his lot with House Republicans who blame Democratic add-ons and Speaker Pelosi's pre-vote speech:

"Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.

"Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.

"This bill failed because Barack Obama and the Democrats put politics ahead of country."

And a senior McCain adviser said that Pelosi's speech "was one of the most reckless acts I've seen from a congressional leader in twenty years on the Hill."

A theory making the rounds of some Republicans is that Pelosi purposely sabotaged the bill to be able to blame House Republicans. Imagine, this theory goes, President Bush's making a partisan speech right before the Patriot Act vote.

"Desperate, petty," a Pelosi aide responded. "She is trying to do the right thing here to pass a bill that a lot of our people hated." A Democratic aide added: "The Republicans were worried about votes but they thought that momentum would carry it and both sides would keep working -- was the way they left it. No Republican asked to pull it. And 140 votes was more than what Pelosi promised Boehner."


On the other hand, maybe House Republicans were looking for an excuse?


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Democrats caused crisis

At the root of this mess is not the failure of capitalism but political interference in the market. It was Democrats who pushed for and passed the Community Reinvestment Act of 1977 that forced banks to serve their "whole communities" and required them to offer loans to people who were not credit worthy. In 1995, the Clinton administration's Department of Housing and Urban Development, headed by Andrew Cuomo, implemented new regulations requiring banks to meet numerical quotas in lending and demonstrate the diversity of their borrowers. While housing prices were rising, the bad loans were hidden. But as soon as prices began to fall and adjustable ARMs kicked in, the defaults began. It was Democrats who closed ranks to insulate their pet projects -- Fannie Mae and Freddie Mac -- from proper oversight and regulation.

http://www.kentucky.com/589/story/538809.html

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Monday, September 29, 2008

Pelosi Kills Bailout with Jawbone of an Ass
Well, it was all set, even the GOP members said it was a done deal and they had enough vote to pass the 700 Billion dollar boondoggle known as the economic rescue plan. But a funny thing happened on the way to the most massive bailout in US history, Nancy Pelosi just couldn't keep her mouth shut. Her botox addled mind just could not resist the urge to commit moonbattery on the house floor, and in the process torpedoed the whole shabang. Nice going Nancy.




http://americanarmed.blogspot.com/2008/09/peslosi-snatches-defeat-from-jaws-of.html

Will Pelosi’s second attempt at a bailout include ACORN? Update: Dow loses 777 points, more than on 9/11; Update: $1.1 trillion in market value lost
Sep 29, 2008 4:18 PM by Allahpundit
Super.

Video: House GOP blames Pelosi’s “partisan” speech for bailout failure
Sep 29, 2008 3:21 PM by Allahpundit
Unserious.

Breaking: Bailout bill fails, Dow roller-coasters; Update: Pelosi speech added

ACORN Too MUCH to SWALLOW

One Of The 50 Richest … Pelosi: Financial Bailout Talks Back On Track For ACORN

September 27th, 2008

Save us, Nancy. Save us.

And how about a little ACORN with that credit crisis face-lift …

WASHINGTON - U.S. House Speaker Nancy Pelosi said on Friday that negotiations over a proposed $700 billion Wall Street bailout plan is back on track and lawmakers would work through the weekend to pass a plan.
Pelosi, a California Democrat, and Massachusetts Democrat Rep. Barney Frank, chairman of the House Financial Services Committee, said negotiators made progress all week on the legislation they hope will end a credit freeze and avert a deep downturn in the U.S. economy.

Talks faltered on Thursday after conservative House Republicans unveiled an alternative to a taxpayer-funded bailout. Frank said congressional negotiators are still focusing on altering the plan proposed by Treasury Secretary Henry Paulson. Pelosi ruled out a cut in capital gains tax that was included in the House plan.

(Reuters)
From - House Republican Leader John Boehner:
Dems Want to Reward Scandal-Tarnished “Community Organizing” Group in Economic Rescue BillHouse GOP Fights to Remove ACORN Slush Fund from Economic Rescue Bill; Poison-Pill Proposal Would Ask Taxpayers to Bankroll Group Accused of Voter Fraud Nationwide

Washington, Sep 27 - House Republicans have made clear that they will fight for an economic rescue package that protects the interests of families, seniors, small businesses, and all taxpayers. And as discussions continue in order to forge an agreement that reflects these principles, the American people are taking note of a left-wing giveaway Democrats are pushing to force taxpayers to bankroll a slush fund for a discredited ally of the Democratic Party. At issue is the Association of Community Organizations for Reform Now – better known as ACORN – an organization fraught with controversy for, among other scandals, its fraudulent voter registration activities on behalf of Democratic candidates. Here are just some examples of ACORN’s most recent scandals and unlawful activities:
- “ACORN is a long-time advocacy group with whom Obama was once associated. Recently, though, ACORN workers in two states have pleaded guilty to election fraud, an unlikely recipient of federal largess.” (Fox News Report, 9/26/08)
- “Seven ACORN workers were charged with ‘committing the biggest voter-registration fraud in [Washington] state history.’’ (The Seattle Times, 7/26/07)
- ACORN workers submitted “just over 1,800 new voter registration forms, but there was a problem. The names were made up – all but six of the 1,800 submissions were fakes… The ACORN workers told state investigators that they went to the Seattle public library, sat at a table and filled out the voter registration forms. They made up names, addresses, and Social Security numbers and in some cases plucked names from the phone book. One worker said it was a lot of hard work making up all those names and another said he would sit at home, smoke marijuana and fill out the forms.” (Fox News Channel, 5/02/08)
- “Late last year, a handful of Acorn canvassers in Washington state admitted that they had falsified voter registrations by illegally filling out hundreds of forms with names such as Dennis Hastert, Leon Spinks and Fruito Boy Crispila.” (Wall Street Journal, 7/31/08)
- “Eight workers for a get-out-the-vote effort in St. Louis city and county have pleaded guilty to federal election fraud for submitting false registration cards for the 2006 election, authorities said today. The workers were employed by the Association of Community Organizations for Reform Now (ACORN), gathering voter registrations.” (Associated Press, 4/02/08)
- “Acorn has had a number of missteps. This month its founder, Wade Rathke, resigned after news emerged that his brother Dale had embezzled nearly $1 million from Acorn and affiliated groups eight years ago — information the group kept from law-enforcement authorities and most members. Dale Rathke left the organization only last month.” (Wall Street Journal, 7/31/08)
So how exactly will ACORN be rewarded if the Democrats get their way? Very simple: behind closed doors, ACORN-friendly language was slipped into the Democratic economic rescue proposal by Senate Banking Committee Chairman Chris Dodd (D-CT) and House Financial Services Committee Chairman Barney Frank (D-MA). Take a look:

http://patdollard.com/2008/09/one-of-the-50-richest-pelosi-financial-bailout-talks-back-on-track-for-acorn

Pelosi: It's not a bailout, it's a buy-in

Your Congress and your president (I don't want 'em, you can have 'em) have again agreed on a $700-billion bailout, and this time they say they really mean it. Headlines and links first, and then as always I'd like to hear your thoughts. The Los Angeles Times: "Congressional and administration officials unveiled their $700-billion rescue plan for Wall Street today, setting up the largest government intervention in the economy since the Great Depression."

House Speaker Nancy Pelosi, evidently with a straight face: "This is not about a bailout of Wall Street. It's a buy-in so we can turn our economy around" and protect the assets of ordinary Americans. Well, now I feel so much better about it. I'm buying in! I'm getting a piece of financial products that are so worthless that there's no market for them.The New York Times: "

Congress braced for a difficult vote on a $700 billion rescue of the financial markets after a weekend of tense negotiations produced a plan that Congressional leaders began selling to lawmakers on Sunday as significantly strengthened by new taxpayer safeguards.

"The 106-page bill, intended to ease a growing credit crisis, came after a frenzied week of political twists and turns and still faced some resistance from lawmakers on both the left and right who portrayed it as a dangerous rush to economic judgment.

Bold Bipartisan Leadership for Change department: The New York Times reports, "The two presidential candidates ... both gave guarded endorsements of the bailout plan Sunday."

-- Peter Viles

Main Street Backlash

I don't know about you, but I feel like Wall Street had a big party and I wasn't even invited, but I will be getting the bills for years to come. JC

Main Street turns against Wall Street

A populist backlash is changing America's political climate. Inflamed by the financial crisis and bailouts, a form of class warfare could haunt business leaders for years to come.

By Nina Easton, Washington bureau chief
Last Updated: September 28, 2008: 11:03 AM ET


NEW YORK (Fortune) -- In one frenzied month Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke remade Wall Street. Along the way they may also have recast American politics. A month of historic government interventions shows signs of triggering a political version of climate change - unleashing a new era of class fury that could hurt U.S. companies, business leaders, and wealthy investors for years.

"A potential calamity," predicts Democratic pollster Doug Schoen. "If the reactions we're seeing hold, we could have real spasmodic anger directed at businesses and corporations." And the timing will have consequences, says financier and onetime GOP presidential candidate Mitt Romney: "Unfortunately, politicians have seized on the politics of envy," he told Fortune, "and they are stoking it this election year like I've never seen in my lifetime."

Compared to this, Enron was a warm-up exercise. For all the public outrage over accounting scandals seven years ago, the result in Washington was limited to a financial reporting rule that most Americans have never heard of (though many in the business community still consider Sarbanes-Oxley a destructive overreaction).

By contrast, the implosion of Wall Street, followed by Paulson's escalating series of multibillion-dollar rescues, has fired up populist sentiments that were already building in American politics, promising to reshape legislative battles over everything from tax and trade policies to federal regulation. Union leaders like the AFL-CIO's John Sweeney suddenly sound as if they're in the mainstream of public opinion with statements like this: "One thing is certain. No one - no politician, no investment banker, no television commentator, no economist - should be able to say again with a straight face that here in the United States we just let markets do whatever markets do and everything works out for the best."

Washington hath no fury like Middle America scorned - and there's reason to think it will only get uglier. The government's massive new financial commitments will severely tie the next President's hands in addressing middle-class concerns.

"The next President will have to temper expectations a lot," says Middlebury College economist David Colander, "far beyond what either of the candidates has been willing to talk about."

If that means Republican John McCain gives up on letting the upper middle class keep the Bush tax cuts, it also means that Democrats will have to stop promising ambitious spending programs. Barack Obama rightly says it would be "irresponsible" not to review his spending menu - which includes making health care universal - in light of this new fiscal reality. As for problems like Medicare and Social Security? They'll have to wait.

http://money.cnn.com/2008/09/26/news/economy/easton_backlash.fortune/index.htm?postversion=2008092810&eref=rss_topstories

Tenative Agreement on Bailout

Washington, D.C. - Key lawmakers in Congress have reached a tentative agreement on a bailout proposal that they expect to roll out to their colleagues for final approval Sunday morning. "We've made great progress toward a deal which will work and be effective in the marketplace," Treasury Secretary Henry Paulson, flanked by a bipartisan group of lawmakers, told reporters at 12:30 a.m. Sunday--after nine hours of negotiations that included numerous phone calls with the White House and the input of several top economic minds, including billionaire investor Warren Buffett.

"We've still got more to do to finalize it, but I think we're there," Paulson added. "So far, so good." The "agreement in principle," as Sen. Kent Conrad, D-N.D., described it, is a $700 billion plan that will allow the Treasury Department to buy troubled mortgage-backed securities from firms that are having difficulty selling these assets in the marketplace.

The bailout, to be financed by government bonds, includes provisions to limit executive compensation for the firms that are being bailed out, an equity stake in those firms for taxpayers, an oversight board to account for the bailout process, and a measure to help prevent mortgage foreclosures. The $700 billion will be doled out in tranches of $250 billion immediately, $100 billion upon the approval of the president and $350 billion upon the approval of Congress.

Lawmakers also said there is language in the plan to allow the government to recover some of the money it is spending to buy troubled assets, as well as a provision that allows firms to buy insurance for toxic securities--something House Republicans had requested.

Is it a formal deal? As close to one as lawmakers could hash out, following marathon negotiations. Congressional staff members are working through the night to put the agreement on paper so other members of Congress can examine it before giving it final approval Sunday.

A deal had appeared within grasp Thursday afternoon but fell apart that night when a group of House Republicans issued a rival plan. Under their proposal, companies would pay premiums to insure their frozen mortgage-backed securities, instead of having the Treasury use taxpayer dollars to buy them. In addition, the plan--the fine details of which are still vague at this point--would provide some companies with tax relief, remove unspecified banking regulations and allow them to temporarily suspend dividend payments to free up capital.

Asked after the meeting if the expanded mortgage insurance program needed to be in a compromise, House Minority Leader John Boehner, R-Ohio, said "Our goal here in attempting to come to an agreement is to do our best to protect the American taxpayer."

Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., the respective chairmen of the House and Senate committees for banking, are continuing to support a modified version of the original $700 billion "Paulson Plan," as the administration's proposal has become known. Blunt participated in negotiations Friday and Saturday for House Republicans. Sen. Bob Corker, R-Tenn., said he's "very, very optimistic" that a deal will be worked out, and he's hopeful it will happen over the weekend.

Sen. Judd Gregg, R-N.H., says he believes distressed credit markets Friday morning may have shown lawmakers that there is not much time for discussion. "They're telling us we better do something," says Gregg, who will represent Senate Republicans in the negotiations.

The message that Paulson's plan is aimed at restoring liquidity is getting through to lawmakers. "We don't have a solvency problem, what we're trying to do is to restore liquidity," says Scott Talbott, senior vice president for government affairs at The Financial Services Roundtable, a banking-industry trade association that supports the basic idea of the Paulson Plan.

"I think the chances of it happening are excellent," Talbott says. "The goal is to try to get it done by Sunday, but it could easily slip a little into next week."
When President Bush said Friday morning that "the legislative process is sometimes not very pretty," it was the understatement of the year. And on the eve of the election, there's plenty of political gamesmanship, and even brinksmanship, on display.

Democrats want to stay as far away from being held responsible for the bailout as possible, and may not vote on the bill unless a majority of Republicans will also support. House Republicans can now say that at least they tried an alternative. It was likely that something akin to the Paulson plan--with a few add-ons to soothe reluctant Republicans and Democrats--would emerge over the weekend as the final bailout bill.

White House talks with lawmakers last night erupted into a "shouting match," according to one report. The top Republican on the Senate Banking Committee, Sen. Richard Shelby of Alabama, emerged from the discussions to tell reporters that there was no deal, contrary to what some members of Congress said earlier in the day.