Just in case the recent flood of depressing economic indicators hasn’t been enough to convey how great this recession really is, the Washington Postleads with more data that came down the pipeline yesterday. Sales of new homes plunged, 13,000 U.S. jobs were slashed, corporate earnings went deep in the red, and unemployment increased. The New York Timesleads with President Obama harshly criticizing Wall Street bankers for receiving nearly $20 billion in bonuses last year even as the economy collapsed. “That is the height of irresponsibility,” Obama said. “It is shameful.”
The Wall Street Journal leads its world-wide newsbox with Illinois senators voting unanimously to remove Rod Blagojevich from office. He will now go down in history as the first Illinois governor to be impeached. USA Todayleads with news that the Super Bowl will mark the first time that federal behavior-detection officers will be used at a major event. The Transportation Security Administration will be sending dozens of these officers, who normally work in airports, to join forces with local police and watch for suspicious behavior among the fans entering the Raymond James Stadium on Sunday. Civil liberties advocates worry that this sets a dangerous precedent. “If we’re going to use this at high-profile sporting events, why not start using it on streets?” an ACLU analyst said. The Los Angeles Timesleads with a judge ordering California officials to comply with Gov. Arnold Schwarzenegger’s order that state employees take two days off a month without pay. The move would represent “the biggest rollback of the state payroll in decades.”
As bad as yesterday’s news on the economy was, it’s expected to pale in comparison with a report on how the U.S. economy did in the last three months of 2008 that will be released this morning. Many think it will show the economy contracted by as much as a 6 percent annual rate, the worst level since 1982. But even without that report, there was plenty of bad news to go around. New home sales tumbled 14 percent in December from the month before, and it was the worst month on record since the early 1960s. Another record was reached in unemployment claims. Around 4.8 million people claimed unemployment insurance for the week ending Jan. 17, the highest level since records began to be kept in 1967. Ford also made history by recording its worst annual performance ever with a $14.6 billion loss. Analysts are now predicting the economy won’t recover until late this year, but many are holding out hope that things won’t get much worse.
Obama criticized Wall Street bankers after he ended a private meeting with Treasury Secretary Timothy Geithner. Saying that “they should know better,” Obama sounded “more like a frustrated schoolmarm than a president,” notes the Post. But it seems clear that with his harsh words Obama sought to reassure lawmakers and the public that he is willing to impose more restrictions on executive compensation before the new administration takes any further steps to rescue banks. Sen. Christopher Dodd, the chairman of the Senate banking committee, said he will call executives to testify if it turns out that any taxpayer money was involved.
After impeaching him, Illinois senators held a second vote to bar Blagojevich from public office in the state. Blagojevich’s troubles are far from over as he could still face federal charges of corruption and could go to prison. After boycotting the state Senate hearings for most of the week, he gave a speech before lawmakers voted. “I have done absolutely nothing wrong,” he said. Lt. Gov. Pat Quinn became the state’s 41st governor last night.
The NYT spent the day with Blagojevich and paints an interesting portrait of a man who was clearly shocked and saddened by the turn of events but remained defiant. “We should have been more selfish, not selfless,” he said. “It sounds probably perverse for me to say that based on what some people are saying about me. But it’s true. My family, we didn’t take advantage of all these things that people do.”
Following up on a WP story from earlier this week, the WSJ fronts word that administration officials are looking into implementing a multipronged approach to stabilize the financial system that would involve buying banks’ toxic assets and offering a guarantee against future losses. No decision has been made yet, but what does seem clear is that the Obama administration wants to put forward a “comprehensive” effort rather than the seemingly haphazard rescues that have been the norm.
There is still one central question, though, which readers will recognize as the same question that was being asked before TARP became a household acronym: How much will the government pay for the toxic assets? Now there’s finally a hint that a roadmap is being created. It seems that what is being called the government “bad bank” would buy only assets that have already been heavily marked down. The other bad assets, which are a substantial amount and would include mortgages and mortgage-backed securities, “would be covered by a type of insurance against future losses.” Many worry that the government will try to do too much and put together too many disparate initiatives that won’t fit together smoothly. “You have to decide, ‘Should I pay Peter? Should I pay Paul?’ You do have to make some choices here,” a former chairman of the White House Council of Economic Advisers said.
The LAT off-leads a look at how Republicans seem to be at a loss over how to respond to Obama’s stimulus package and what they should be proposing as an alternative. Individual Republicans have lots of ideas, but there is no consensus on what their priorities should be or whether the government should get involved at all. “There is not a coherent Republican message at this moment,” a former GOP House member said.
The WP fronts, and everyone covers, news that the Senate passed a bill to expand health insurance to low-income children. The State Children’s Health Insurance Program would continue coverage for 7 million youngsters and would also cover an additional 4 million children by 2013. Significantly, the vote was 66 to 32, with only nine Republicans joining Democrats. Many had hoped that the bill would have broad bipartisan support and that it could pave the way for discussing larger health care issues. But many Republicans dropped their support of the bill, largely because of a new provision that allows states to enroll children of legal immigrants, when an earlier compromise had limited it to those who had been in the country for more than five years.
The NYT and LAT report that Obama is considering offering Republican Sen. Judd Gregg of New Hampshire the position of commerce secretary. The White House denies that Obama has narrowed the list to one candidate. But if Gregg takes the job, it could prove to be a political gift to Democrats because his replacement would be chosen by New Hampshire’s Democratic governor. If the seat were to go to a Democrat, and assuming Al Franken of Minnesota prevails in the ongoing court challenge, Obama’s party would have a filibuster-proof 60-seat majority.
The NYT fronts, and the WP goes inside with, news that the highest-ranking CIA officer ever convicted of espionage tried to continue to sell secrets to Russia from his jail cell via his 24-year-old son. According to court papers, Harold Nicholson was after a “kind of retirement ‘pension’ available to him in Russia.” At first he tried to use fellow inmates to pass on information, but in late 2006, he apparently turned to his son. Russia was at least partly interested in finding out details about how Nicholson got caught to learn how other agents might avoid the same fate.
In a front-page dispatch from Tampa, USAT says that Super Bowl XLIII “has become the Recession Bowl.” The crowds that usually precede the biggest sporting event of the year just aren’t there, and many of the usual big spenders have either canceled or pared down their parties. Playboy, for example, has canceled its party for the first time in a decade. “With so many people out of work, budgets being bad and the bailouts, it almost seemed like, ‘Should we be having a big party?’ ” a spokeswoman said. Ticket resellers aren’t seeing as much interest, and some predict that some seats could drop to face value by Sunday. “You do sense and see the difference,” former Washington Redskins quarterback Joe Theismann said. “It looks like there are a lot of athletes in town with nowhere to go.”