All the papers lead with news that President Bush and House leaders agreed on a $150 billion economic stimulus package. The deal was reached only after multiple negotiations, and everyone notes it was a rare example of bipartisanship in Washington. Most of the $150 billion would go to paying for tax rebates, but the measure would also include tax breaks for businesses as well as a one-year increase in the size of mortgages that could be backed by the government. Taxpayers will receive up to $600 ($1,200 for couples) and an additional $300 per child, but the money begins to decrease when gross income is more than $75,000. People who earned at least $3,000 and paid minimal to no taxes would receive $300. To get this approved, Democrats had to give up hopes of extending unemployment and food stamp benefits, while Republicans agreed in exchange for the business benefits.
The Washington Postnotes “the compromise courts a backlash from the rank and file of both parties,” and complaints were already being heard yesterday. But the New York Times points out that “the deal came together because each side could walk away claiming victory.” USA Today scored an interview with Bush, who insists that “this economy is going to continue to grow” and said the stimulus plan would provide an “insurance policy.” Everyone notes that economists have their doubts about how much the package would help, particularly since rebate checks won’t be received until May, at the earliest. But the Los Angeles Timesemphasizes that more than anything the package “should provide a significant psychological boost to the economy.” The Wall Street Journal notes up high that economists estimate the measure “could boost growth this year by between three-quarters of a percentage point and a full point.” The package would add about $100 billion to the federal deficit, although exact numbers won’t be known until it has been finalized.
The fight over the stimulus package isn’t over as it now has to be approved by the Senate. Several Democratic senators spoke out saying they wanted to alter the package to add spending projects, increase the rebates for the very poor, as well as unemployment and food-stamp benefits. Despite these apprehensions, they vowed to pass the measure by Feb. 15.
The NYT looks into how the rebate checks will prove to be a major strain on the IRS, particularly since they would be issued at the height of the tax-filing season and the agency would have to reprogram “an outdated computer system.”
In an analysis piece inside, the NYT notes that economists “of nearly every ideological stripe” found something to dislike about the proposed stimulus package. The one thing most everyone seems to agree on is that the measure alone won’t be enough to prevent a recession, but many do believe it could make it shorter and less severe. Also inside, the WP wonders whether the bipartisan compromise was only a fleeting moment born out of necessity or if it’s a sign that the two parties will be able to come together in the remaining months of Bush’s presidency. The White House apparently sees the next few months before the nominating conventions as a “window of opportunity” to get things passed through Congress.
In his interview with USAT, Bush said he would put forward a number of new initiatives at his State of the Union address Monday, including a proposal to double the funding to fight against HIV/AIDS abroad. He also promised there would be “a new idea” to combat hunger. The president is determined to end his presidency with some last-minute achievements under his belt and is confident he can make his 2001 tax cuts permanent. “When it’s all said and done, I will have finished it with all my soul and all my might,” he said.
The NYT fronts a look at the broad agreement the Bush administration wants to reach with the Iraqi government that would replace the current U.N. mandate, which expires at the end of the year. Officials know they’re in for a tough fight since it won’t be easy to reach an agreement with the fractured Iraqi government. The administration will ask for continued authority to conduct military operations in Iraq and seeks to gain legal protections for contractors, which is bound to be particularly controversial. As the LAT also details inside, the administration is currently going through an effort to counter claims by Democratic presidential contenders and lawmakers that the agreement would tie the hands of the next president. Officials insist they don’t need congressional approval because the agreement won’t mention future troop levels and also won’t set up any permanent American bases in Iraq. “More than 90 percent of this will be a pretty standard status-of-forces agreement,” a senior official said.
Most of the papers front the announcement by Société Générale, one of France’s largest banks, that it has lost $7.2 billion because of one 31-year-old rogue trader. Jerome Kerviel appears to have been able to circumvent the bank’s internal controls because he had previously worked in the “back office” and knew exactly how they worked. It looks to be the largest fraud of its kind in history, and bank leaders were at a loss to explain why and how it happened, saying that Kerviel acted alone and made no personal profit.
The bank rushed to get rid of Kerviel’s investments this week, and did so before disclosing the fraud yesterday. The interesting question now is whether this sell-off was part of the reason why European markets plummeted Monday. The Fed didn’t know about the bank’s situation and now some analysts say the central bank might have overreacted when it cut interest rates on Tuesday. Some think it’s less likely that the Fed will make another big cut next week.
The WP fronts, and everyone mentions, yesterday’s Republican presidential debate, which was mostly friendly as the candidates spent much of their time talking about economic issues. Mitt Romney did chastise Sen. John McCain for voting against Bush’s tax cuts, but that was the exception in a night where the candidates avoided confrontation. Clearly disappointed that the contenders refused to fight despite his best efforts, NBC’s Tim Russert later said it looked like they had made a “nonaggression” pact.
Never say never … The papers report that Amy Winehouse, who sang, “They tried to make me go to rehab/ I said no, no, no,” has gone to rehab. Winehouse made the move after a video was released this week that showed her smoking what appeared to be crack. The British singer is nominated for six Grammy awards and is scheduled to perform at the show, but it doesn’t seem likely she’ll be able to make it to Los Angeles on Feb. 10.