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Senate passes stimulus package

Now the trick is reconciling the House and Senate versions, Washington Post reports. Obama thoughtfully reserves the best quotes for himself:

“When the town is burning, we don’t check party labels,” Obama said. “Everyone needs to grab a hose!”

Mitch McConnell, the Republican senator from Kentucky, summarized what must’ve been on a lot of people’s minds, even those of us who don’t listen to Rush and company:

In debate before today’s Senate vote, Republican leader Mitch McConnell (Ky.) sought to distance the legislation from Obama, who is riding a wave of post-inauguration popularity. He said Republicans had expected Obama to be the author of the stimulus plan. Instead, “it ended up being written by some of the longest-serving Democrats in the House of Representatives, and it showed,” McConnell said.

The outlines of the plan I’ve seen seem primarily larded up with Democratic pet projects. Perhaps the GOP objections have been overblown for partisan purposes (imagine that) — the money will get spent; it’s not like it’s being fire-hosed into space — but I need to see more evidence that borrowing all this money gets the gears of the economy moving again.

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Tom Mangan posted at 10:41 am February 10th, 2009 |

Obama coming to Caterpillar on Thursday

A Wall Street Journal blog post says the prez is coming to Peoria on Thursday:

Obama will hold a live televised press conference tonight at the White House, and travel to Fort Myers, Fla., on Tuesday for another townhall meeting. Spokesman Robert Gibbs said today that Obama will add a stop on Thursday to Peoria, Ill., to visit Caterpillar Inc.

Turns out the Peoria Journal Star is on the story.

Great quote from Obama insider David Axelrod at Huffington Post:

One thing that we learned over two years,” Axelrod added, “is that there’s a whole different conversation in Washington than there is out here. If I had listened to the conversation in Washington during the campaign for president, I would have jumped off a building about a year and a half ago.”

I seem to recall that very same conversation saying Obama had no earthly chance to become president. So maybe he’s on to something.

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Tom Mangan posted at 10:59 am February 9th, 2009 |

More on “free trade” vs. “protectionism”

The BBC wades into the debate over “Buy America” provisions in the U.S. economic-stimulus legislation. This is my favorite quote on the issue to date:

Protectionism is the crack cocaine of economics. It provides an immediate high that leads to economic death. — Richard Fisher, Dallas Federal Reserve president

Interesting link: “Reckless stupidity of Buy American.”

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Tom Mangan posted at 11:32 am February 4th, 2009 |

Caterpillar at center of opposition to “Buy American” language in stimulus bill

Democrats passed the federal stimulus bill yesterday without a single Republican vote. Caterpillar, meanwhile, is trying to talk Congress out of protectionist language designed to prevent U.S. infrastructure dollars from flowing overseas. From today’s Washington Post:

“There is no company that is going to benefit more from the stimulus package than Caterpillar, but I am telling you that by embracing Buy American you are undermining our ability to export U.S. produced products overseas,” said Bill Lane, government affairs director for Caterpillar in Washington. More than half of Caterpillar’s sales — including big-ticket items like construction cranes and land movers — are sold overseas.

“Any student of history will tell you that one of the most significant mistakes of the 1930s is when the U.S. embraced protectionism,” Lane said. “It had a cascading effect that ground world trade almost to a halt, and turned a one-year recession into the Great Depression.”

Just an example from my own experience. I drive a 2006 Honda Element that was built in Ohio by American workers. This car has no nationality, nor do most of the other products bought and sold on this planet. People understandably want trade to produce all winners and no losers, but they might as well try to mint one-sided coins. OK, rant over, back to the headlines.

The New York Times has an informative assessment of how fast the stimulus package, in its current form, can start doing some good. The tax breaks and direct cash aid for extended unemployment and food stamps programs will start helping right away. The aid to states facing crushing deficits will prevent massive layoffs. But what about the infrastructure provisions?

The greatest prospect of delay in spending is on infrastructure. The bill provides $30 billion for highway construction and tens of billions more for other transportation projects, water projects, park renovation, military construction, local housing projects and more.

A Congressional Budget Office analysis found that only 64 percent of the bill’s spending would be completed within 19 months, and spending on construction projects was among the slowest.

If the economic recovery is slow, that timing could work out perfectly, giving the economy a jolt just when faster-acting components are wearing off. But if there is a quicker-than-expected rebound, many of those projects could start just in time to compete with renewed private spending.

Political junkies should keep an eye on what comes next in the Senate. House Republicans who voted against the package obviously expect it to fail badly enough that they can bash Democrats with it in the 2010 elections. The Senate doesn’t have enough Democrats to block a filibuster by Senate Republicans, but the Senate is where the grown-ups live in the U.S. Congress, so they will presumably put the nation’s welfare first (while putting the nation on welfare, essentially) while covering their own hides from responsibility for making the recession worse.

We don’t even want to think about what the markets will do if the stimulus package fails.

I sympathize with the sentiment that reckless debt-chasing got us into this mess and seems unlikely to get us out of it. The critics are all saying “you can’t borrow your way to prosperity,” which sounds sexy but is plainly false. Everybody who took out a mortgage and retired rent-free or bought a car on a loan to get to work and back borrowed his way to prosperity. Any loan you can afford to pay off is not a problem.

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Tom Mangan posted at 9:00 am January 29th, 2009 |

Will states use stimulus funds to close their budget deficits?

Dan Walters, a columnist with the Sacramento Bee, wrote that California, which will be $40 billion in the hole over the next 18 months, might be able to make up some of the difference with federal stimulus dollars.

California’s share of direct spending in the package has been calculated at $21-plus billion, and Jed Kolko, an economist for the Public Policy Institute of California, told an economic seminar in Sacramento Monday that about $14 billion of that could underwrite state education, medical care and other spending programs over the next two years.

What’s this got to do with the fate of giant yellow earthmovers? Well, if California can spend two-thirds of its stimulus bonanza on spending that was going to happen anyway, doesn’t that water down the stimulus effect quite a bit?

I heard the other day that the state of Texas, which usually runs a pretty tight ship, has an $8 billion deficit on its hands. With state budgets drowning in red ink from coast to coast, I can’t help wondering how many are going to be tempted to use Obama’s billions to clean up their balance sheets rather than launch a bunch of big construction projects.

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Tom Mangan posted at 11:35 pm January 27th, 2009 |

What’s next with the U.S. stimulus plan?

We know the U.S. stimulus plan won’t realistically help Caterpillar or the construction industry for several quarters, but what’s happening inside the Beltway today can set the tone for the entire Obama administration. Right now the Republicans have gotten religion on fiscal discipline after eight years of living it up. They still have only one answer to all that ails the nation: cutting taxes.

This article in the San Francisco Chronicle offers a nice overview of the horse-trading over the stimulus package.

Obama’s efforts to reach out to the opposition party are unlike anything witnessed in the last administration or even those before it. He is trekking to Capitol Hill again today for Republican-only meetings in the House and Senate. He has already incorporated large tax cuts in the stimulus to lure GOP support. Obama is looking for two things: at least partial Republican ownership of a risky, costly policy experiment, and avoidance of the kind of partisan rupture that nearly killed a much smaller and less critical effort by President Bill Clinton in 1993.

“We don’t have any pride of ownership,” said White House press secretary Robert Gibbs.

Republicans face risks of their own. While attacking what they call pork and overspending, they do not want responsibility for killing what is now the government’s last, best hope to reverse or at least slow an alarming worldwide economic decline.

So far, Obama’s living up to his promise of a “reach across the aisle” presidency. The final result will be pug-ugly no matter what, but Obama has a canny knack for getting what he wants despite long odds. As much as the Democrats want to say “screw the GOP, we beat ’em fair and square,” they need to be able to avoid culpability in the next election if all goes wrong. Getting the GOP to go along is like insurance (though the GOP could make the cynical calculation to stand aside, let things go to hell and blame it all on the Democrats in 2010. Let’s hope they behave more like grownups.)

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Tom Mangan posted at 8:51 am January 27th, 2009 |

California dozer owners say emissions rules will derail stimulus

Washington Post this morning reports that contractors in the Golden State would just as soon keep their old tractors and not be forced to spend big bucks upgrading them to suit California’s environmental rules.

About $30 billion of Obama’s $825 billion economic stimulus plan is being set aside for highways and bridges. Some of that money would be squandered unless the new president blocks a rule that might keep some earthmovers from doing their economy-lifting work, a group of contractors says.

The Associated General Contractors of America wants Obama to put up a federal barrier to a California clean-air rule that regulates off-road diesel engines already in use. It will require the replacement or retrofitting of the engines of earthmoving equipment. The state has an estimated 180,000 loaders, graders, excavators and other heavy equipment.

“What is the point of stimulus money if it’s used to replace equipment instead of building?” asked Mike Kennedy, general counsel of the Arlington-based group. The regulators “assumed costs could be passed along, but economic circumstances have changed so dramatically that the rule has to be reopened.”

I think about 100,000 Caterpillar employees could answer that question pretty readily.

My guess is the contractors win out on this one, though: I mean, ordering an immediate upgrade on 180,000 diesel engines is a pretty steep request.

The challenge being, the long-run benefits of cleaner-burning engines far outweigh the short-run economic costs. You’ll notice Cat isn’t bewailing clean-rules; it’s building cleaner engines.

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Tom Mangan posted at 11:42 am January 21st, 2009 |

Sector-by-sector breakdown of Democrats’ stimulus plan

Engineering News/Record has perhaps more than you’ll ever need to know about the stimulus plan (considering it’s final form will look like a pancake run through a meat grinder after Congress gets done with it). Lots of digging and scraping happening there, but also:

Native American housing block grants, repairs, rehabilitation, $500 million

Bureau of Indian Affairs, infrastructure (schools, dams, roads, detention and law enforcement facilities) $500 million

Indian Health Service, facilities $550 million

Hmm, do I detect a whiff of Indian casino contributions?

And then there’s

Home weatherization assistance $6.2 billion

National Park Service infrastructure maintenance $1.7 billion

NIH campus modernization, $500 million

I wish my 20 years of observing the wheels of government in motion gave me more confidence that these billions will be spent wisely.

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Tom Mangan posted at 11:03 pm January 20th, 2009 |

My thoughts on Obama’s inauguration

He’s in now. I assembled some thoughts on my home page.

Text of Obama’s inaugural speech here.

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Tom Mangan posted at 9:30 am January 20th, 2009 |

Putting those hard-earned profits to good use

From an update on the inauguration festivities enjoyed by the Illinois contingent:

Caterpillar Inc., for example, sponsored “Illinois State Fair” food that included corn dogs, popcorn and cotton candy. Other themed rooms included an Irish pub, a pizzeria, a sports bar, a 1950s diner and a disco that was sponsored by Microsoft.

I guess that’s an improvement on the Blagojevich Memorial Graft, Corruption and Back-Scratching Brunch.

(Good thing my mom doesn’t work at Cat anymore; she’d have drawn a line in the sand over the cotton candy: imagine what that does to dental benefits costs.)

Bonus link: LifeHacker’s guide to experiencing the inaugural even if you couldn’t score a ticket to D.C.

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Tom Mangan posted at 6:59 pm January 19th, 2009 |