Also in this playlist...
This transcript is automatically generated
Up next on The Journal Editorial Report president Obama's stimulus package passes the house with.
Zero Republican support why his bipartisan appeal didn't work and the built.
Prospects in the Senate but Wall Street titans at the whipping posted vilified for billions and bonuses and other perceived excesses but is that any way to help the economy.
And the administration makes its first green blue but we'll help Detroit felt cars.
The Journal Editorial Report begins right now.
Welcome to The Journal Editorial Report I'm -- Well the post partisan era didn't last long.
After trying to shore up GOP support for -- 819 billion dollar economic recovery package president Barack Obama was handed a one sided victory Wednesday as every house Republican.
And even eleven Democrats.
Voted against the so called stimulus plan debate on the bill is scheduled to begin Monday in the Senate where Democrats hope for a more bipartisan resolved will again.
Joining the panel this week Wall Street Journal columnist and deputy editor Dan -- columnist Mary Anastasia O'Grady and Holman Jenkins.
And in Washington senior economics writer Steve Moore.
Well Steve do you first president Obama why in the Republicans he -- and then he came up and answered their questions on Capitol Hill.
Did so few of them well none of them.
Vote for the stimulus plan.
You know -- I just got back from the Republican House retreat that was held the day after this vote so I talked to dozens of these numbers about you know was this a tough vote -- to vote against a popular president and I even.
Paul the moderate Republicans that twenty or thirty that.
That Obama thought he was going to appeal op when I asked them they said this wasn't really a very hard vote to vote no on this and the reason why is there was just so much pork in this bill.
There were so many items that had nothing to do with job creation of stimulus and we know we wrote about this and our editorials but.
The National Endowment for the Arts 600 million dollars for the federal government to purchase automobiles you know football stadiums all of these things had nothing to do a stimulus I think it was a bridge too far for president Obama I think he's learned a political lesson.
Here but as Steve the conventional wisdom is that this could be a risk for Republicans because if they vote no.
As they have and the economy recovers the Democrats are going to say see these guys can't be trusted with the economy we've we've saved the kind of what do you think about that.
I don't think so I mean look obviously if the economy recovers.
Obama's gonna have a real feather in his -- but -- the Republicans I talk -- they were totally unified.
Yesterday more than I've ever seen them probably since the early 1990s they feel liberated.
They feel that that they do what they told -- -- we like Barack Obama very much personal personally but his policies were so part of a -- on this stimulus -- there was nothing in the Republicans that they liked in the bell.
And this is really is in the billed as the economic stimulus but if you look at the fine print it turns out to be social policy health care policy.
Kind of vote the democratic wish list for an awful long time I'm on on these kinds of issues.
-- you know Paul I think the two and a certain extent from the point of view of Obama's economic advisers.
A lot of that detail is irrelevant I mean their theory is that keynesian economic multiplier and basically they want to push.
So close to 900 billion dollars out the window you could drop from planes as far as there's only give you -- -- -- you'll spend it in Italy -- dollar fifty economic output that is the theory that the -- Larry Summers has been on television saying if you give people money -- hiring comes in with that higher income they spend money it creates more jobs down the road.
That's the theory it doesn't matter how you push the money now let's talk to that famous keynesian economist Mary -- -- Think about this and yeah.
You know I've looked through the bill first -- -- have been just about dropping money out of airplanes that this is about expanding the role of government which is something that Democrats badly want to do there and expand health care to the tune of 87 billion dollars for getting.
They're giving the federal government a larger role in education -- ever had before and there expanding the government mandated renewable energy.
But I looked through the bill to try to find something.
That would actually.
The productive side of the economy that is permanent tax cuts it's not there most of the tax cuts are for lower income families there's a 500 dollar payroll tax holiday.
There are some tax cuts for businesses but they're not permanent and that's not going to help stimulate job creation.
As a political matter home.
President Obama 70% approval in the polls he really could exert some influence over his party on Capitol Hill he chose not to that's an excellent question I mean Republicans took -- matters where he says he want to -- non -- stimulus.
They'll want to a lot of -- -- has that he got and meet people on Wall Street who support mr.
Obama voted for giving money are talking about president policy now.
-- this -- is actually more of -- defeat for him I think in the long run then we're giving -- credit for now Steve do you think that was -- calculation by Obama or what he really just trying to say look this is my opportunity to -- Capitol -- get what it wants and then I can.
Appease them with this bill and then maybe I can use my influence on other things.
Yeah it's an unbelievable pollen in just nine days ago.
Barack Obama was chlorinated you know this the president with 75% approval nobody expected this to happen I think I think the most on personal -- -- right now is Barack Obama himself and the mistake he made is exactly the one at home and just match at.
That he allowed Nancy Pelosi and David -- and all the appropriators.
To write this bill and it became a giant Christmas tree.
That that was indefensible and there's no reason that have happened this there was nothing in this bill as Mary said that Republicans said that they can vote for it had become a liberal wish list of pro.
I mean here's here's an adult now here's the Fed may be Obama's making what is I've got time they would of the voters are gonna give me time to get the economy recover like two years in two years -- economy's better.
This won't really matter how much spending areas and and that and the Democrats will be happy with me because I've let them have the policy choices.
That they want.
And not only that Paul I think the Democrats will be a much stronger position politically in the sense that look closely at what they've done with this bill you have something like 400 billion dollars dedicated to infrastructure spending.
Basically what that means is you're transferring this money to the unions that -- -- the infrastructure projects.
Want some percentage of that money will go into their political funds which will then be used to develop to defeat Republicans and flow back to the contribution war -- of the Democrat.
Aren't what is this a political defeat for the Democrats then this bill it would because if it doesn't market is if it if it -- -- that that's that that's the test and whether or not -- whether -- not a work of right and there's another problem which is how do you -- from -- in the Chinese are now the largest.
Creditor to the US they have over 585.
Billion dollars of US government securities and be in the mood to behind anymore.
And so you know they're going to have to pay finesse and there's going to be a very big debt overhang partner -- what we come back corporate jets lavish offices.
Billions of bonuses the titans of Wall Street are under fire for what many see as wild successes in troubled times but I CEOs.
Getting a bum rap there's a good day ahead.
That is the height of irresponsibility.
It is shameful.
President Obama reacting to report this week that Wall Street employees got more than eighteen billion dollars in bonuses in 2008.
From the previous year but still the sixth largest payout on record the report comes on the heels of former Merrill Lynch CEO John -- being slapped with a subpoena from New York attorney general Andrew Cuomo -- issue the billions of dollars in executive bonuses he doled out.
Late last year just days before Merrill was taken over.
By bank of -- mayor James Freeman joins the panel he's the assistant editorial page editor of The Wall Street Journal James.
John paying job as CEO was to protect shareholder value in selling to Bank of America did he do that as Lehman and others were having their shareholder value wiped out.
That's sounds to me.
He earned a bonus well -- I think it was Greg Fleming who really made the BankAmerica deal happen but.
I knew that he was he was an employee of -- that's right that's right but don't isn't CO get the credit well here's the problem I I was appalled as our president but unfortunately he's appalled so he now wants to give the banks more money I think this shows you -- Injecting taxpayer capital into the banks was a mistake.
I'll read -- but that's a second -- question of what you did this -- up where the bonuses justify an Obama Hillary out of fifteen billion dollar fourth quarter loss beta they -- lost twelve billion.
-- a certain who may not accepted a ten billion in the fall from taxpayers and now want to make the Bank of America merger happen.
Another twenty billion.
-- -- Why don't think I don't think you can separate the good to whether the TARP was a good idea -- John -- the Troubled Asset Relief Program that of the program for injecting capital right and the way to program operated was that they gave them money but they did not.
Loose their equity basic management not.
I mean that in itself was a force structure if you start.
-- funneling money into.
Private sector company and the ownership and management are separated you're gonna have these kinds of problems.
Is a problem on two levels as a business case if you're saying we've got to tell these bonuses or people will leave -- where they gonna go.
The only place they might goes to other firms getting taxpayer money who now have the cash to hire them.
War hey you know if you look at developer of principal point of view what's really bizarre and has got to -- taxpayers is.
The people who work at Merrill seem to be less concerned about the since the systemic risk of Merrill failing.
Then the politicians in Washington we've taken the money to save -- -- home is their.
Business case for these bonuses and yet it these are the assets of these companies and people looking at people you know -- Morgan Stanley had -- -- a bunch of Merrill brokers with a big lucrative contract he was said that's the free market if Merrill pays the money instead we -- -- you know corruption it sits.
The fact is that these are very competitive businesses they're going to have to stay competitive where they're going to die the government -- not donate money to and it merely invested in them but they have to keep doing what they do.
You know what Barack Obama and Douglas is beating up on Wall Street Chris Dodd is talking about confiscating.
-- -- on -- ordering the treasury try to confiscate let's put some facts on the table.
Bonus doesn't 2008.
Across Wall Street are down 40%.
The biggest drop in thirty years the average bonus is a 112000.
Dollars and most of the people working on Wall Street make relatively small salaries they depend on the bones at the end of the year to actually.
Create a real source of income she's so what well.
-- I just I mean first -- Morgan Stanley is another recipient of government money so if they're luring people away they're doing it in part with tax dollars but again it is going to be drug cartel and say -- -- -- we -- we we -- yeah we tax taxpayers to make enormous sacrifices and we're now saying that people these firms are not that concerned about the health of the -- they're saying -- automatic -- if I don't get my bonus from world what about.
What about repairing the firm's capital structure could -- three billion at -- -- been used to but may perhaps offset some positions in the in the mortgage but you have market but how do you own a position to make that call based on what you know all you know is that the with a bonus pay them off.
Houghton -- and our money went into these firms that are losing body of there's still paying -- to what I think I hear you saying is that the government now because it's a shareholder.
Should simply come -- and set the pay of of of of everybody within Merrill Lynch and I thank you can't make more than tax dollars.
You know -- my argument is to say it's it's time to get the government out and no further investments as soon as possible.
Get the government out no further investments this is the folly of it because the government is trying to save Merrill noted Merrill is trying to save Merrill hearings -- James were in.
Okay we're in this is that now the question is how do we make -- going concern to get that they get their financial system moving again right so what -- we can't.
For disclosure I mean we have do we have to accept that that all of these payments were to people who are generate profits for the firm does that might be true but it perhaps they should disclose that.
We median -- right now but there's nothing stopping Obama in the new administration from saying look either banks are -- And they should get new capital they should recapitalize the private sector for they should liquidate.
And under those conditions the CEOs who have done a poor job in managing risk and that's what they're paid for.
Lose their jobs I mean what's interesting about John McCain is that he was redecorating his office in the fall of 2007.
That was well after what happened in August 2007 went.
The big sub prime crisis blow up everybody knew there were sitting on a powder -- where they should've.
-- and John Thain was still spending money isn't -- that was happening was he a good -- I don't think.
Some Holman is there any way to get for the taxpayers what to do what Chris -- SA which is to get legally legally these bonuses back from 2000.
Not that I can think of that would destroy the businesses it would destroy the morale of the entire industry and since taxpayers are gonna only get their money back at this business recovers I think it would mean that smart enough taxpayers -- -- the governor of New York the drop on Wall Street -- the revenue loss to New York State in 2008 was one.
Billion dollars they need a healthy Wall Street.
Wall Street incidentally in the 2008 election cycle -- 141.
Million dollars of the political parties if you think the Democrats are going to destroy Wall Street you've got.
And don't feel too bad for -- thing because if he loses he's not that he's lost his job under this new stimulus bill he can get Medicaid.
All right still ahead kick -- in the auto industry when it's now why president Obama's first environmental order.
May be something that really hurt Detroit.
For too long Washington has been asleep at the wheel when he comes to the environment.
Now critics point -- finally has a partner.
And an -- in Washington at the White House.
President Obama signed an order this week directing the Environmental Protection Agency to reconsider an application by California and more than a dozen other states to set stricter limits on greenhouse gas emissions from cars and trucks.
It opens the way for higher fuel efficiency standards nationwide victory for the green lobby for sure but.
What will -- do to Detroit's already struggling auto makers Wellman we don't.
A piece of Chrysler -- a piece of GM now the taxpayers what does this mean for that.
It means that we should expect to get our money back and I thought enough.
-- very this California thinking LB sitting in mileage standards for the country it'll probably be 42 miles per gallon or so.
-- Tony -- which is almost on.
You can't make that with any today's cars -- get maybe a Prius and some very small cars.
The problem with this also is that you can't so even if you can make the standard you can't get consumers to pay enough for the car.
For all the technology you have to put into it to meet these standards and so this is of formula for losing money forever in the auto business what kind of retooling cost you talking about to meet those answers tens of millions of bill as they were talking about a hundred billion dollars just to meet federal standards this ups the federal standard by ten or 20%.
You know you can do the math it's big money and Americans still have not shown an interest.
It bought at least outside of some precincts and Hollywood and other places in buying.
A lot of these.
Hybrid cars as long as gas prices are low the only thing that would reconcile the conflicting -- and our auto bailout would be five or ten dollar gas and could happen.
But I wouldn't bet on -- I don't.
The end you know last month fall on the sale of light trucks rose to about 50% of auto sales Peres in May when gasoline prices were high they were down around 40% -- is when gas Felton young bucks a gallon in most of the country so as soon as the price -- gas fell assailed those trucks rose and the only way you're going to stop people from buying.
Larger cars and trucks is if you force them and ordered them to which is the direction this -- heading.
This isn't good fiction creation either because this all adds something between two could add between two and 7000 dollars to the sticker price of a car.
But there's a whole bunch of small engine manufactures and places like Wisconsin.
They also would have to online with these rules and not it's going to be very hard on on small businesses also.
Games as a political matter you've got real tension here between the greens on the coasts who favor of these obviously California Arnold Schwarzenegger are Republicans is thrilled.
With this but the blue collar workers say United Auto Workers and the and the people who work in manufacturing in the midwest -- the Democrats.
They're going to suffer because this or have a tougher time why is who what how you explain well Obama's coming down in this tension within his own party.
Well I I guess hosting involved things I would I would hope at some point the politicians would that I realized that the worrying trend hasn't been there since 1998 but assuming leaving never -- yourself yeah I think quest to put.
Yeah -- I mean I.
Honestly although it is going to be painful for the industrial midwest very -- -- probably on the wrong side of history here but.
This seems like the kind of thing a state ought to be able to decide on its own from from a constitutional perspective I think -- That's another reason I wouldn't want to live in California it's going to be expensive and it's obviously going to reverberate in the job loss in the rest of the country but that's the point isn't it that this is -- only just about California California setting its own rules and you can live in California make that choice fine.
But there than the fact is isn't is a home and write that this is going to spread those rules across cards across the country it's hard to see as -- -- the California economy is.
Then it wouldn't force changes everywhere more expensive.
Manufacturing in the midwest and more expensive cars in the rest of the kind of what about this blue collar.
Green collar tension among Democrats home let's let it be curious things about this if you want to test market you're environmental and energy goals.
Why would you pile unsustainable costs on the most visible industry in America -- very moment that taxpayer.
-- having to ballot out in some -- this looks like Obama's visit but from the country would it would really cost to follow his.
Green dreams and give us a chance to think twice.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- So where does final time on the on the green issues.
Caterpillar tractor cut 20000 jobs last week.
This is not something that he's going to be able to paper over he's gonna he's going to answer for -- here from the Michigan Democrats objecting to this or they just gonna go say.
Hey you've given us a bailout will have to leave it that.
I think workers are going to be parents sat.
All right Mary thanks we have to take one more break when we come back our hits and misses of the week.
Winners and losers picks and pants hits and misses it's our way of calling attention to the -- and though worst of the week Mary first.
Hit for the 75 anniversary of amateur night at the Apollo theater.
The theater has been an institution in Harlem since 1914 but in 1934.
A guy by the name of Ralph Cooper senior took his radio show.
To the theater and started this amateur night and some of the young contestants who got there start there include Ella Fitzgerald Stevie Wonder and James Brown this was sort of an early version of American Idol so happy birthday is a lot to celebrate there.
-- -- to his honor Mayor Bloomberg he is not being around we are -- New York mayor now Bloomberg who has a plan to cut the Salton restaurant food 20% over the next five years.
This is none of his business he really ought to be focusing on economic growth in the city and maybe ought to just tell people to take more potassium and -- -- writes if.
-- can you believe it snail mail is even going to get slow work.
How the Postal Service wants to go to up five days a week from six days a week you know this mail is getting slower more expensive all the time my solution -- Get rid of the postal monopoly lets let federal express and Fred Smith deliver the mail that way people will still be able to get their weekend Wall Street Journal.
See but isn't the this -- the Postal Service already kind of fading away because of email and FedEx and UPS.
This and that's what their volume is way down pol but why do we give a legal monopoly so when no one else can deliver mail let's open it up in 20% three communications and transportation.
Thank heaven for the technological change otherwise we'd never would have happened okay thanks Steve.
And remember if you have your own hit or miss Lisa and I said JER at foxnews.com.
That's it for this week's edition of The Journal Editorial Report.
Thanks to my panel and a lot of you for watching I'm Paula you go we'll have to see right here.
Filter by section