According to TPMDC, “the fight to add mass transit money to the stimulus bill is far from over“:

Senate Democratic Vice Chairman Chuck Schumer (NY) just mentioned on a conference call with reporters that he’ll be introducing a version of Rep. Jerrold Nadler’s (D-NY) amendment to add $3 billion in public transportation cash to the economic recovery pot.

While this would be a solid addition to the stimulus — bringing the total amount dedicated to transit to more than $15 billion — there would still be only “half as much money for mass transit as for highways.” This is a terrible ratio, as we’ve noted at The Wonk Room before.

The stimulus needs to provide a boost to the economy, but not at the expense of creating urban sprawl and encouraging more gas-guzzling driving habits. A concurrent goal to economic stimulus is working towards a green economy, and thus, as Matthew Yglesias wrote, “insofar as some of the highway projects envisioned in the bill can’t fit within the two-year stimulus window, we ought to drop the projects.”

Despite her hearing having occurred on January 9, Rep. Hilda Solis (D-CA), President Barack Obama’s nominee for Labor Secretary, has yet to be confirmed by the Senate Health, Education, Labor and Pensions Committee. What’s the holdup? Senate Republicans are evidently burying her in paperwork:

The nomination of Rep. Hilda L. Solis, D-Calif., for Labor secretary has been lingering in the Senate as Republicans raise extra questions for her, effectively forestalling a confirmation vote…Although the written questionnaires don’t constitute an official hold on Solis’ nomination, the paperwork has the same delaying effect.

According to the White House, Solis has “responded to more than 15 sets of written questions from the committee,” but the committee “has taken no action on her appointment and has none scheduled.”

One issue with Solis’ confirmation seems to be her support for the Employee Free Choice Act, which Solis co-sponsored and voted for in the House in 2007. Much like their opposition to the auto rescue in December, blocking Solis may be nothing more than a conservative attempt to send a message on Employee Free Choice. As the New York Times editorial board wrote:

The delay in confirming Ms. Solis isn’t because the Senate needs to know more. It’s a way for Republican senators to score tough-guy points with business constituents who are driven to distraction by the thought of unions.

Yesterday, reacting to a New York State Comptroller report showing that Wall Street banks doled out $18.4 billion in bonuses in 2008, President Obama denounced the practice as “shameful.” “That is the height of irresponsibility. It is shameful, and part of what we’re going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility,” Obama said emphatically. The same day, the Congressional panel overseeing the Troubled Asset Relief Program (TARP) recommended that financial regulators revoke bonuses for executives of firms seeking government help.

Appearing this morning on CNN, however, former New York mayor Rudy Giuliani stridently defended the practice of enormous bonuses untethered to actual performance, warning that ending the tradition “really will create unemployment”:

GIULIANI: I remember when I was mayor, one of the ways in which you determined New York City’s budget, tax revenues, was Wall Street bonuses. Wall Street had a billion, two billion in bonuses, city had a deficit. Wall Street had 15 to 20 billion, New York City had a 2, 3 billion surplus. And it’s because that money gets spent. … It does have a reverse effect on the economy, if you somehow take that bonus out of the economy. It really will create unemployment. It means less spending in restaurants, less spending in department stores. So everything has an impact.

Watch it:

Even as he was pushing for more billions to be handed out to failing businessmen, Giuliani railed against President Obama’s tax cuts for the poor: “That’s not stimulating the economy, that’s solving some kind of social agenda.” He was more explicit last week, condemning the tax cuts as “welfare” with Fox News’ Sean Hannity:

GIULIANI: Yes, if — somebody is not paying taxes is going to get a check from the government, then that is welfare. You haven’t earned it, that’s a welfare payment. I think he’s going to have to abandon that in light of the economic situation.

HANNITY: Are you thinking that he’s really — he’s going to abandon all these things?

GIULIANI: I think so.

Conservatives raised the “welfare” scarecrow throughout the presidential campaign, even though the claim is bogus. As Factcheck.org pointed out, “a worker can be a ‘taxpayer’ whether or not they owe any income tax.” Nearly every worker pays Social Security and Medicare taxes — “totaling 7.65 percent on every dollar of earnings” — and Americans pay federal taxes every time they buy gasoline or pay a phone bill, for example. Congressional Budget Office figures show that even the lowest-earning households pay about 4.3 percent of their income to federal taxes.

At the end of the CNN segment, Giuliani pushed for more bailout funds for investment banks. In other words, Giuliani is all for Wall Street welfare that fuels a skyrocketing cost of living, but virulently opposed to tax cuts for the poor that help fuel an economic recovery.

Yesterday, the House passed the American Recovery and Reinvestment Act on a 244-188 vote, with every Republican voting against the legislation. Now the bill passes to the Senate for debate and a potential vote next week.

The Senate version of the legislation is not entirely in sync with the House’s version. As McClatchy reported last week, the Senate Finance Committee has already “added some provisions desperately sought by corporate America“:

The Senate bill includes a pro-business tax provision called bonus depreciation, which would allow companies accelerated write-offs of existing equipment and inventory if they make new purchases. The Senate version also incorporates a complicated but important provision that the U.S. Chamber of Commerce and other business groups are pushing. This measure, which isn’t in the House bill, would allow some companies to reduce taxes if they buy down their debt between late 2008 and 2011.

Even with these extra business provisions — which conservatives have complained are absent from the House bill — 9 out of 10 Republicans on the Finance Committee voted against the draft.

Sen. Mitch McConnell (R-KY) said just few weeks ago that “I don’t think [the stimulus is] going to have any problem getting over 60 votes.” He also reportedly promised that Senate Republicans “would not filibuster against the stimulus package.” Will McConnell keep his word? Or will conservatives continue to deride the economic recovery while advocating a return to Bushonomics?

Our guest blogger is James Kvaal, Senior Fellow at the Center for American Progress Action Fund.

House Republicans claimed yesterday that their alternative economic recovery plan –- a Bush-like package of tax cuts — would create 6.2 million jobs. As Rep. John Boehner (R-OH) said during a press conference:

We have an analysis by the president’s senior economic adviser who also shows that tax cuts actually provide more immediate relief and more jobs than spending, so you get more — a bigger bang for the buck. Well, using the methods and economic models developed by the president’s top adviser — and when those are applied to our Republican plan, it shows the Republican plan could create as many as 6.2 million jobs over the next two years.

House Republicans proceeded to all vote against President Barack Obama’s American Recovery and Reinvestment Act. But in claiming support from Obama economic advisor Christina Romer, they misapplied her past work and ignored her more recent and relevant work.

The Republican statement cites a 2007 paper by Romer on the economic benefits of tax cuts. But as noted across the blogosphere, Romer’s conclusion was that the economic environment complicates the assessment of policy changes, not that tax cuts are the most effective way to create jobs:

What Romer and Romer’s study (and their earlier work on monetary policy) shows is not that tax cuts are uniquely effective, but rather that failing to consider the reasons for policy changes leads to underestimates of the effects of all types of stimulus.

A more recent paper Romer coauthored concluded that government investment create more jobs than tax cuts. As this table that Romer and Jared Bernstein compiled shows, government spending has a stronger multiplier effect, and is therefore stronger stimulus:

As Reagan advisor Martin Feldstein wrote, “While good tax policy can contribute to ending the recession, the heavy lifting will have to be done by increased government spending.” Mark Zandi, chief economist at Moody’s Economy.com recently explained why: though tax cuts act more quickly, they “do not have the same economic bang for the buck as increased government spending, as households will save some of the tax cuts or use them to repay debt, and purchase imported goods.”

Conservatives have been selecting one small provision after another to justify their opposition to the proposed economic stimulus package; one of the latest is a measure sending $50 million to the National Endowment for the Arts. On the House floor today, Rep. David Obey (D-WI) defended the provision. He noted that it represents a small sliver of the stimulus, which will keep local organizations and artists working, and that “we have an obligation to salvage as many jobs as we can” regardless of field:

People in the arts field are losing their jobs just like anybody else. You have local arts agencies, you have local orchestras, local symphonies, local arts groups of all kinds who are shutting down, laying people off and in a number of instances going bankrupt. This is a small, tiny effort to keep some of those people employed over the next two years. I make no apology for it. We have an obligation to salvage as many jobs as we can, regardless of the fields in which people work.

Watch it:

One of the key components of any economic recovery package needs to be an investment in infrastructure. As Rep. Peter DeFazio (D-OR) said, “We want a recovery that’s solid and based in investment and productivity, and that points us at building things that will serve us decades to come.”

Underscoring how desperately needed infrastructure investment is, the American Society for Civil Engineers (ASCE) released a report today in which it “assigned an overall D grade to the nation’s infrastructure and estimated that it would take a $2.2 trillion investment…over the next five years to bring it into a state of good repair.” Some of the key grades and findings:

- Roads got a D-. Americans spend 4.2 billion hours stuck in traffic a year at a cost of $78.2 billion, or $710 for each motorist.

- Levees got a D-. Most of them are older than their designed lifespan and privately owned, with repair costs put at $100 billion.

- Water facilities, wastewater treatment, and waterways got a D-. Leaky pipes lose an estimated seven billion gallons of clean drinking water every day, while aging sewage systems send billions of gallons of untreated wastewater into waterways each year.

- Dams got a D. 4,000 dams were deemed deficient and half of those considered to have “high hazard potential.”

The ASCE also found that more than 25 percent of the nation’s bridges “are structurally deficient or functionally obsolete.” CleanTech has put together a map showing the extent of the bridge problem; each green dot signifies a bridge that is “structurally deficient“:

This parade of bad news illustrates just how necessary infrastructure investment is, economic woes aside. But the bonus is that these investments provide significant fiscal stimulus “bang for the buck,” with a return of $1.59 for every $1 spent. Of course, some infrastructure projects will take a while to get rolling — and stimulus dollars should not be spent on roads to nowhere — but given the extent of the nation’s economic problems and the jobs it would create, there’s no justification for not devoting a healthy dose of the stimulus towards them.

In his New York Times column yesterday, economist Paul Krugman criticized the “bad faith economics” of those “reaching for any stick they can find with which to beat proposals for increased government spending.”

In response, American Enterprise Institute scholar Phil Levy wrote a blog post for Foreign Policy today, calling himself a “Bad Faith Economist” who considers the stimulus plan “bad news” because the proposed spending would occur too slowly.

To back his conclusion, Levy wrote:

If one compared a tax cut now to spending years down the road, then it would be no contest -– tax cuts would win. In fact, that’s pretty much the choice we face. According to press reports of an unreleased CBO study, only $26 billion of $355 billion in new spending would occur in the current fiscal year. Another $110 billion would come in Fiscal 2010. That’s less than 40 percent of the total by September 2010.

We agree that Levy is a bad faith economist, but not for the reason he cited.

The problem is that Levy used numbers from “an unreleased CBO study” that is not an actual study. It was simply “a preliminary calculation of the spending schedule for one portion of the stimulus bill.”

Levy is hardly the only one parading this incomplete report around. ThinkProgress found that the TV media alone cited it 81 times in the last six days, and the Wall Street Journal and the Washington Times also hopped on board. But Levy’s post is extra laughable because it came out the day after the CBO released its complete assessment of the stimulus plan.

The official CBO analysis of the entire stimulus bill found that it “would cost the federal government about $816 billion over the next 10 years and that approximately $526 billion, or about 65 percent, would be spent by the end of September 2010.” And as Kevin Drum added, “most of the spending that comes in FY2012 or later is either for projects that simply take more than two years to complete (highways, school repairs) or infrastructure improvements that have long-term paybacks (renewable energy programs).”

As CBO Director Doug Elmendorf wrote regarding yesterday’s report, “This is the first cost estimate that CBO has prepared for [the stimulus plan] in its entirety.” Perhaps next time, Levy will take his cues from the actual office that he is citing, instead of Glenn Beck and Lou Dobbs.

As The Wonk Room has noted before, America needs to reverse its falling rate of educational attainment. Confirming the extent of the problem, ACT has released new data showing that for the last two decades, the rates of retention and graduation at America’s universities have been stagnant. Chart via The Quick and the Ed:

As Chad Aldeman wrote, “Over a period when enrollment increased more than twenty percent, it is the failure of our nation’s colleges and universities to increase student retention and graduation rates that [is] causing our higher education stagnation.”

On MSNBC today, Rep. Kevin McCarthy (R-CA) made an appearance to tout the conservative solution to the economic crisis — corporate tax cuts — and deride some of the infrastructure spending included in the proposed economic recovery package. Anchor Norah O’Donnell, though, was having none of it, pointing out the lack of logic in McCarthy’s assessment:

REP. MCARTHY: Refurbishing a building, putting new grass down in a mall. That doesn’t create buildings. That doesn’t creates jobs.

O’DONNELL: Really? I would think you have to hire somebody to put the new sod down on the National Mall.

Watch it:

O’Donnell was spot on in demolishing the right-wing myth that infrastructure investment won’t create jobs, and that the plan to repair the National Mall means simply spending money on “grass.” It’s common sense that repairing and upgrading roads, bridges, ports, water and sewage systems, electric grids, schools, and yes, the Mall, will require workers. And with the news that American companies announced 55,000 more layoffs yesterday, spurring job creation is even more essential.

Moody’s Economy.com has calculated that “with the stimulus, there will be 4 million more jobs and the jobless rate will be more than 2 percentage points lower by the end of 2010 than [it would be] without any fiscal stimulus.” An analysis by the Center for American Progress Action Fund, meanwhile, found that infrastructure investment creates more than 60,000 jobs for every $10 billion spent, versus just 10,000 jobs for every $10 billion spent on a corporate tax cut.

There is one thing that McCarthy got right, though. Putting down sod does not, in fact, create buildings.

Furthering its insistence that corporations will be the saviors of the economy, the Chamber of Commerce sent a letter to members of the Senate Finance Committee today approving of the business tax cuts in the Senate’s proposed economic stimulus package, but urging that more be added.

As McClatchy reported, the Senate included provisions “desperately sought by corporate America” that are not in the House’s version of the bill. However, the Chamber suggested “other provisions” — like “reduc[ing] the corporate capital gains rate to 15%” — to further transform the legislation into a corporate tax cut goodie bag.

Useful provisions — like investments in mass transit — have already been booted from the stimulus to make space for ineffective, industry driven tax breaks. With its letter, the Chamber is only encouraging these poor decisions.

In staking out their opposition to the economic recovery package, conservatives have been peddling a variety of myths. One of their favorites is that taxpayers will pay $275,000 for every new job:

Rep. John Boehner (R-OH): All told, the plan would spend a whopping $275,000 in taxpayer dollars for every new job it aims to create, saddling each and every household with $6,700 in additional debt.

Rep. Jerry Lewis (R-CA): [T]his bill will spend a shocking $275,000 for each new job created (assuming they actually materialize). Even worse, this calculation is only a partial measure of cost…It is more than likely the private sector could have created more than one job for $275,000 – especially considering the average U.S. household income is around $45,000.

Today, Paul Krugman broke down this “bogus talking point“:

[I]t involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years. It’s as if an opponent of the school lunch program were to take an estimate of the cost of that program over the next five years, then divide it by the number of lunches provided in just one of those years, and assert that the program was hugely wasteful, because it cost $13 per lunch.

Joe Klein called the number “phony-baloney propaganda,” while Dean Baker noted that “the media have been typically derelict in simply reporting this number without making any assessment to evaluate it.”

As Scott Lilly pointed out, the actual cost per job is closer to $50,000, without taking into account the “substantial number of additional jobs [created] beyond 2012.” And even if the conservatives’ number was anywhere close to accurate, their proposed job creation program — tax cuts — would cost more than three times as much per job. As Christian Weller and John Halpin found, “even under the most optimistic assumptions about the relationship between tax cuts and jobs,” President Bush’s 2001 tax cut cost $871,000 for every job created.

Of course, the recovery package is meant do a lot more than create jobs. It will also spark economic activity, which means the jobs won’t simply disappear when the stimulus runs out. And it will invest in education, health care, and infrastructure, raising our standard of living for years to come. To act as if the package is solely about job creation — when it also has to fill the economy’s “output gap” — is disingenuous.

Yesterday, House Republicans delivered an economic recovery plan to President Barack Obama. Along with the to-be-expected permanent corporate tax cut, the plan includes a $7,500 home-buyers credit, “in order to encourage responsible buyers to enter the market and stabilize [housing] prices.”

As the Center for American Progress’ Andrew Jakabovics noted, this credit has been pushed for by the real estate industry, and “will only save the average buyer the equivalent of a latte a month, which is not likely to incentivize anyone who is not already planning to buy a home.”

To address declining housing prices, the “flood of foreclosures” needs to be halted, but that is not something conservatives are willing to support. Instead, they’d rather craft a gift credit for special interests.

Today, during an appearance at the National Press Club, Sen. Mitch McConnell (R-KY) delivered a two-minute diatribe against the Employee Free Choice Act, announcing that “this is an issue on which there will be no bi-partisanship,” and that the act will “fundamentally harm and Europeanize America”:

I came here to speak about bi-partisanship, but this is an issue on which there will be no bi-partisanship…This is an outrageous proposal. It will fundamentally harm America and Europeanize America and we will have a big political fight over this.

Watch it:

First, the stat that McConnell trotted out from former Labor Secretary Elaine Chao (who is also McConnell’s wife) was completely distorted. He claimed that only 7 percent of the private sector (about 8.8 million workers) being unionized indicates that workers don’t want to join unions. However, an AFL-CIO survey found that there are 60 million American workers who say that they would join a union if they could.

So why is the percentage so low? As The Wonk Room has repeatedly noted, it’s because employers do everything that they can to prevent unions from organizing. As Ezra Klein explained:

People get fired. Employees are forced into captive meetings where they are threatened and intimidated and warned of plant closures. Union supporters get brutal shifts, unpredictable schedules,and cruel workplace treatment. Those things are happening.

And since McConnell warns that Employee Free Choice will “fundamentally harm and Europeanize America,” it’s worth pointing out that — even using data from the conservative Heritage Foundation — countries with the highest degree of “economic freedom” have “far more worker-friendly labor laws than we do in this nation.” This includes not just Europe, but Australia and Canada. As Seth Michaels noted, “In giving corporations veto power over how workers form unions, the United States is a rare exception among industrialized democracies.”

Employee Free Choice is not about the ludicrous concept of “eliminating the secret ballot” or “Europeanizing America.” As Paul Krugman said, it’s about enabling America “to take a huge step toward recapturing the middle-class society we’ve lost.”

Today, The Hill reported that some lawmakers are upset over the “tactical decision…to leave a bankruptcy ‘cram-down’ provision out of the economic stimulus package“:

Obama and Democratic congressional leaders say they strongly support it, but the financial industry and Senate Republicans oppose it. So the White House and Democratic leaders worry that making the provision part of the stimulus would complicate their efforts to build GOP support in the Senate.

This provision would allow bankruptcy judges to modify — or ‘cram down’ — mortgages payments “for homeowners who owe more than their home is worth.” Currently, bankruptcy judges are not able to modify loans on a primary residence (but can modify loans on second-home mortgages). Giving judges this power is critical to addressing the housing crisis, and should be included in the stimulus package.

According to a report in the Wall Street Journal, federal judges themselves “are eager to have the power to restructure mortgages for struggling debtors because it could save hundreds of thousands of homeowners from foreclosure.” As Samuel L. Bufford, a U.S. bankruptcy judge in Los Angeles explained, this provision “gets around the problem that many mortgages have been turned into securities and sold to multiple investors”:

The bankruptcy system depends on people making deals, but the deal-making piece of it has disappeared when it comes to mortgages because of the way mortgages were sold and packaged…There’s nobody on the lender side to do the deal unless you [get permission] from investors, and that’s impossible.

For what it’s worth, bailed out financial giant Citigroup also supports the measure, much to the chagrin of the banking industry.

In addition to helping distressed homeowners, speeding mortgage modification has a stimulative effect, thus meriting its inclusion in the stimulus bill. An interest rate reduction from 9 percent to 5 percent on a $150,000 mortgage would put more than $4,800 back in an American family’s pocket each year, which could be spent on consumer goods, increasing demand to fill the economy’s “output gap.”

As Mark Zandi, chief economist of Moody’s Economy.com, wrote this week, the problems facing distressed homeowners “are clearly everyone’s problems.” It’s outrageous that steps such as these are still being debated so long after the housing crisis was obviously in full swing.

Mortgage payment calculations after the jump. Read more

Today, UCLA released its 43rd annual “American Freshman” survey, which shows that “the economic crisis is pushing growing numbers of college freshmen to look for part-time jobs, scrounge for financial aid and turn down admission offers”:

A record proportion, more than 49%, reported that they will need a job this year to help pay expenses, up from 47% the previous year. And 8.5% of students said their ultimate choice of college was strongly affected by not being offered financial aid by their first-choice campus, the highest such response since the question was first asked 24 years ago.

This comes on the heels of a study from the non-profit Delta Project — which used data gathered before the recession began — that found “college students are covering more of what it costs to educate them, even as most colleges are spending less on students.”

Making matters even worse, the economic downturn means states must cut their budgets, and funding for universities has been one of the first casualties. Governor Arnold Schwarzenegger (R-CA) has proposed a $66.3 million budget cut for the California State University system, while Arizona’s state legislature has identified “$314 million that could be cut from the universities over the next 18 months.”

Currently, the stimulus bill being crafted in Congress includes a temporary $2,500 tax credit to help pay for college, and a “measure to temporarily increase the maximum Pell Grant for undergraduates by $500.” Congressional conservatives — who are having a hard time supporting any stimulus measure that is not a corporate tax cut — have balked at these provisions, claiming that spending on education “will not provide an immediate stimulative impact.”

But one of the the key goals for stimulus spending is to put money into the hands of those who will spend it immediately, and these provisions would do just that. By definition, the credits must be used right now for a specific purpose, which will hopefully minimize waste and increase transparency. And if the credits make more students able to afford college, thus enabling universities to raise more revenue and avoid layoffs, then all the better.

Plus, the credits would provide more than stimulus. They are also an investment in human capital, and as former Secretary of Labor Robert Reich wrote, our human capital is “in short supply. And without adequate public funding, the supply will shrink further.” For all of these reasons, college credits are a winning proposition, and a no-brainer for inclusion in the stimulus package.

Yesterday, TPMDC highlighted a speech given by Rep. Jim Oberstar (D-MN) before the U.S. Conference of Mayors. During the speech, Oberstar explained that investments in mass transit were removed from the economic recovery plan kicking around Congress in order to make room for tax cuts:

[W]e set forth this $85-billion initiative from our committee. It’s been reduced in the final going. We expect that it’ll come out somewhere around $63 billion, but $30 billion for highways. The reason for the reduction in overall funding — we took money out of Amtrak and out of aviation; we took money out of the Corps of Engineers [...] — was the tax cut initiative that had to be paid for in some way.

Infrastructure investment provides a far more effective stimulus than tax cuts, so this seems to be a step in the wrong direction. Furthermore, devoting almost half of the money appropriated for transportation initiatives to highways would be a troublesome development.

There is an undeniable need to repair “truly imperiled” roads and bridges, but widespread spending on highways is something that will come back to haunt us later. As Dean Baker wrote in the Guardian, “While not all highways are bad, highways that promote the pattern of sprawl that we have seen in many metropolitan areas over the last 30 years are bad”:

We should not be making it easier for people to live long distances from their jobs, so that they have lengthy commutes each day. This would directly counteract efforts in other areas to reduce energy consumption and greenhouse gas emissions…[I]t doesn’t make sense to pay money to develop more fuel-efficient cars so that they can go further on each gallon of gas, and then go out spend tens of billions of dollars building highways that encourage people to drive more.

A much better way to spend stimulus dollars would be on light-rail, commuter rail, and other mass transportation projects. Also, as Matthew Yglesias pointed out, “there are plenty of ways to do mass transit stimulus funding that have nothing to do with breaking new ground on projects,” such as financing “fare cuts or service expansions.” Indeed, investing in transportation should not be code for simply building more roads to nowhere.

Today, Mark Zandi, chief economist of Moody’s Economy.com, released his analysis of the stimulus plan House Democrats put forth last week. Zandi concluded that the plan “will not reverse the current recession, but it will provide a vital boost to the flagging economy”:

With the stimulus, there will be 4 million more jobs and the jobless rate will be more than 2 percentage points lower by the end of 2010 than without any fiscal stimulus. Without stimulus, unemployment will rise well into the double digits by this time next year, and the economy will not return to full employment until 2014.

Zandi also highlighted an important point that has been somewhat lost in the hoopla surrounding the stimulus: a solution to the housing crisis — the very root of the economic downturn — has still not been found. Data shows that foreclosures in 2008 increased 80 percent from 2007 and 225 percent from 2006. Zandi rightly noted that these problems facing homeowners “are clearly everyone’s problems“:

[P]olicymakers’ most serious missteps so far have come from acting too slowly, too timidly, and in a seemingly scattershot way…Debate about whether it is fair to help stressed households stay in their homes appears quaint. Their problems are clearly everyone’s problems. Only concerted, comprehensive and consistent government action will instill the confidence necessary to restore financial stability and restart economic growth.

Indeed, the foreclosure epidemic hurts everybody, as foreclosed properties drag down home values, making it harder for neighbors to sell or refinance, which could result in even more foreclosures.

Zandi suggested that money from the Troubled Asset Relief Program (TARP) be used “to fund a much larger and more comprehensive foreclosure mitigation plan.” This is an approach long-advocated by the Center for American Progress, and since the Senate voted last week to release the second tranche of TARP funds into the waiting arms of the Obama administration, there is a golden opportunity to implement it.

Today, President Barack Obama’s nominee for Treasury Secretary — president of the Federal Reserve Bank of New York Timothy Geithner — went before the Senate Finance committee for his confirmation hearing. Geithner “faces a grilling in Congress” after reports surfaced that he failed to pay self-employment taxes on his 2001-2004 returns while working at the International Monetary Fund.

As the New York Times reported, at the hearing Geithner wasted no time in addressing the controversy about his missed taxes. He said his mistakes were careless and avoidable but “completely unintentional.” He apologized to the committee, saying “I should have been more careful.”

The right-wing has been pushing Senate conservatives to block Geithner’s confirmation due to the tax mix-up:

Michelle Malkin: Will any GOP Senator stand up to failout bailout serial tax evader Tim Geithner, or will they all do the lemming dance now and whine about how nobody could see his shortcomings later?

Newt Gingrich: Senate Republicans should make it clear that they will not permit a tax evader to become the secretary of the Treasury.

But when it came to predicting the economic crisis, Geithner has been much more prescient than the man he has been tapped to succeed, Henry Paulson.

In June of 2006, the Senate confirmed Paulson with a simple voice vote. Paulson was called “a very strong choice” and “the right man at the right time” by lawmakers.

Paulson’s tenure, though, was a disaster, and throughout the current economic crisis he consistently maintained that the financial system was “safe and sound.” Geithner, meanwhile, was warning that financial innovation and a weak housing market were threatening to topple the economy. The Wonk Room has assembled a timeline comparing Geithner’s cautionary statements with Paulson’s public insistence that everything was fine. Here is an example:

Geithner: Financial innovation is creating systemic risk.

There are aspects of the latest changes in financial innovation that could increase systemic risk…The complexity of many new instruments and the relative immaturity of the various approaches used to measure the risks in those exposures magnify the uncertainty involved. [Speech at the Global Association of Risk Professionals 7th Annual Risk Management Convention & Exhibition in New York City, 2/28/06]

Paulson: The world economy is stronger than I have ever seen it.

We are fortunate to face our long-term challenges from a position of strength. As a participant in financial markets for more than thirty years, I say with confidence that over the last couple of years, the world economy has been stronger than I have ever seen it. [Speech at CBI National Conference, 11/28/06]

Read the entire report here.

Cross-posted at ThinkProgress.