This morning all of our smartphones and email inboxes were filled with alerts from the papers — the economy is growing and the recession really seems to be over. Of course it “officially” ended six months ago but we long ago lost any belief in economists or their data. But note what the stories this morning said — consumer spending led the charge. Look at the Wall Street Journal’s lead graph:

The U.S. economy’s expansion slowed at the start of 2010, but the rise in consumer spending which drove it bodes well for the future.

If consumers are spending more they are by definition feeling better about the economy and that generally translates into feeling better about the current people in power. Not always, but generally and that bodes well for the Dems. Not that you’d know it from the news. While we can fully expect Maddow and Olbermann to point this out it’s unlikely we’ll be hearing anything from Fox or CNN any time soon about this because it doesn’t fit their narrative.

The political spin cycle now runs 24/7 and the cable nets have become video versions of the blogosphere — fast, furious and fundamentally useless as sources of journalism. Unless by journalism you mean the minute-by-minute chronicling of the rumor mill. So the storyline for now is set — the Democrats are headed for disaster in November, Obama is on a roll (until he isn’t), the Republicans are having an existential crisis and the Tea Party brigade holds all the cards. Nice story if any of it held water. Like much of what passes for news on these “news” networks, this story has shreds of truth that have been repurposed to build a simplistic, almost fictional, tale of political intrigue. The problem is people actually believe it’s based on reporting and facts, when it’s pretty clear it is not.

For junkies it’s fun to get caught up in the daily drama but let’s see what all these polls say in September. If the jobs picture is improving then as the GDP is now (and jobs are almost always a lagging indicator of economic conditions), history indicates that Democrats will probably lose seats in Congress, but not control over either or both chambers. So instead of watching the blowhards on cable, check in each month with the jobs report. It’ll tell you way more about what November holds than the ferocity of the Tea Baggers.

U.S. Treasury Secretary Tim Geithner

Ummm. Haven’t we heard this before? The Treasury needs a ginormous wad of cash to bail out the financial system and it will explain just what it will do with all that money…later.

Yeah it’s deja vu in DC with Treasury Secretary Tim Geithner doing his best Hank Paulson imitation while announcing the Obama Administration’s $2.5 trillion plan to save the banks.

Come again? Two-point-five-what? Trillion? As in 1,000,000,000,000? Yes, $2.5 trillion.

The plan is to use the unspent half of the original $700 billion “Bush bailout” and then commit as much as another $2.15 trillion in taxpayer money to help sort out the good banks and good loans from the bad while closing the difference between what millions of Americans owe on their homes and what their homes are worth.

The plan as presented, tanked.

As the NY Times put it, “the initial assessment of the plan from the markets, lawmakers and economists was brutally negative, in large part because they expected more details.”

Republicans and Democrats alike were openly hostile to the idea as it was vaguely presented. Alabama Republican Richard Shelby summed the problem up best in a blunt question to Geithner: “Is there a concrete plan here?” Geithner admitted there was not — yet. “You’re right. We are going to be very careful to flesh out the details.”

Wall Street was no more kind (although you might want to pause here and ask, “Who gives a crap what Wall Street thinks? They have about as much credibility here as Chris Brown would as a counselor in a domestic violence clinic).

The central problem is that a majority of Americans were never sold on the fundamental concept that spending $700 billion in taxpayer money to “bail out” the very banks that made horrifically bad and dumb decisions was the right thing to do. Last fall the Bush team managed to take the public’s skepticism and turn it into outright anger by swinging wildly from one plan to another as it spent the first $350 billion in TARP funds.

It didn’t help when bankers used the money to pay giant bonuses (for a job well done!), refurnish their palatial offices (as a reward for excellent management!), and sock away cash for a future buying spree (because that’s what companies do!) instead of actually lending again. And of course that money seems to have done nothing to keep the economy from sliding further into the toilet. How many jobs have been lost since TARP passed? The American public has good reason to be mad and suspicious.

So what the hell is Obama doing sending his Treasury Secretary out to sell another bailout — this one costing and unfathomable $2.5 trillion — without having a solid set of details about how that rather incredible sum will be spent? It’s just plain dumb.

Obama and Geithner tried to soothe frayed nerves by saying details of the critical housing component would come quickly but that’s really not good enough. If Obama learned any lesson from the Bush team it’s that playing a very strong first card works wonders in Washington. Even if it’s a bluff (or a lie — see “Weapons of Mass Destruction”).

Instead the White House will now be playing catch up and defense on what is the single most critical piece of the economic recovery puzzle. Wildly inflated home prices are what got us into this mess and until we can all figure out how much these homes are actually worth, subtract the difference, and determine who’s going to pick up what share of the tab, the economy will not recover.

The Geithner/Obama plan to deal with this may work. Once they figure out what it is.

Bring on Some Geeks!

I know you’re all waking up this morning talking about the stimulus football but I can’t let pass what happened earlier on Sunday without notice.

The US government is about to spend 800 billion or 900 billion or a trillion dollars on a stimulus “program” and that was, rightly, the topic of every one of the major Sunday political television talk shows. Shows that are the closest thing America still has to relatively thorough discussions of critically important issues. Ha!

This week ABC, CBS, CNN, Fox, and NBC showed just what they think of any serious discussion about the largest single spending bill in the history of this country — a bill that could stave off another Great Depression or sink us deep into one. There were plenty of politicians and analysts to trade talking points and, as usual, virtually no intervention from any of the hosts to insert some reality into the mix. Incredible assertions passed by with nary a peep. And worst of all, amidst all the various guests on all the various shows there was but one, count ‘em, one economist.

Now I know economists aren’t the first people who come to mind when you are programming television but we’re talking about a trillion bucks folks! Bring on some geeks!

NBC’s Meet the Press was the lone show that bothered to have an economist on to ask him about the stimulus program and what he thought about it. Unfortunately David Gregory invited an economist who was also an advisor to John McCain’s Presidential campaign! Mark Zandi is the chief economist at Moody’s Economy.com and actually supports the stimulus plan as it is unfolding. But really, couldn’t NBC find an economist who wasn’t on the payroll of a recent political candidate?

I guess beggars can’t be choosers. Especially when you have to undergo head-snapping drivel from elected officials who can’t even be bothered to read the stimulus bill. Check out Arizona’s other Republican Senator Jon Kyl (on Fox News Sunday): “The centerpiece of this is a $500 rebate to folks, about 27 percent of whom don’t even pay federal income tax. That didn’t work last year. It’s not going to work this year. And so that’s not a good place to start.”

Where to begin? First it is NOT a “$500 rebate to folks” it is instead roughly $10 a week less taken out of workers’ checks for taxes. Second the rebate checks Kyl says didn’t work (and he’s right) were the work of the President he supported (Bush) and were mailed out as a single check. People did exactly what most economists said they would do with it — pay off debts and put it in the bank. They did not spend it. So third, Kyl’s contention that this stimulus program’s tax rebate won’t work is absurd on it’s face and he knows it. Too bad Chris Wallace didn’t bother reminding the fine Senator of that.

And then there’s David Gregory questioning John Kerry:

MR. GREGORY: “Martin Feldstein, conservative economist at Harvard but a proponent of the stimulus plan, offered criticism this week about that.  This is what he said: ‘The plan is to give a tax cut of $500 a year for two years to each unemployed person. That’s not a good way to increase consumer spending. Experience shows that the money from such temporary, lump-sum tax cuts is largely saved or used to pay down debt. Only about 15 percent of last year’s tax rebates led to additional spending.’ Senator Kerry, will people go out and spend this money?

SEN. KERRY: “Probably not. Some of them will, obviously, pay down debts; some of them will pay their rent, stay in their–hopefully stay in their rental home at this point.”

Whoa! These guys are unbe-fricken-lievable. Gregory quotes from an economist who simply gets what’s in the plan wrong and then Kerry doesn’t bother to correct him. Senator Kerry, in the form known as “Sunday Morning Political Show” you are the designated Democrat. The least you can do is understand a central element of your party’s stimulus bill — an element that the GOP has been using against you by lying about it — and correct the record.

Of course what would really have been nice is to discuss any of this with an honest-to-God independent economist. But I ask too much. Gaahhhd! (Thanks Napole0n)

Capitol Hill

Facts? Who needs facts when you can have Republicans and Democrats trading misleading charges about the stimulus plan? Republicans say the $825 billion plan is just a vast waste of money, filled with non-essential items that Democrats want to push through under the over of “crisis.” They add it will take way too long to effect the economy.

Democrats have a different take, defending every dollar as critical to the recovery. House leaders defended money for contraceptives as necessary to help states (45 of which are now running budget gaps) offset the cost of family planning services in these desperate times.

Now we have some real analysis by some real non-partisan numbers crunchers and it’s pretty enlightening. Remember late last week when it seemed like every cable news anchor repeatedly quoted a Congressional Budget Office study showing that only 38% of the money would actually be spent by September of 2010? Horrors! Proof the bubbly ones said that the Republicans “had a point.” Well, they didn’t.

That CBO “study” was not a study — it was a brief look at a portion of the stimulus package. Now the CBO has done a study on the whole enchilada and — quelle surprise — far more of the money gets spent upfront than Republicans were claiming. The full analysis shows that almost two-thirds of the money (64%) would be spent by Sep 2010 and therefore circulating in the economy.

In other words it’s pretty “stimulating” according to David Leonhardt writing in today’s NY Times. But it still falls short of Obama’s pledge to get 75% of the money out there fast. Keep in mind Federal “spending” in this case includes actual spending and tax cuts since they cost the government revenue.

Then there’s the report card put together by the non-partisan Tax Policy Center which grades the ten major tax cut components of the stimulus package as it appeared over the weekend (note: the package will change slightly as the Senate and House hammer out a compromise over their respective versions). The TPC looked at how much “bang for the buck” each dollar of Federal tax reduction will have on the economy in the short-term (which they unhelpfully fail to fully define although they seem to consider it the 2009-2010 timeframe).

Of the ten, only four get B+ or B grades and three of them are the ones Democrats have most vociferously championed. Those include the payroll tax reduction and an increase in the earned income tax credit — both of which would quickly put relatively small amounts of cash in the pockets of the working poor who are most likely to immediately spend it and thereby stimulate the economy.

The other 6 gets C’s or D’s including one of Obama’s pet projects (investment credits for renewable energy) and several business tax credits Republicans have loudly favored.

But getting back to the original argument here — does this package actually move money into the economy quickly? — the TPC report confirms the CBO’s findings showing that the tax cut portions do. The TPC’s four top-graded tax cuts will put $173 billion into the economy quickly while the six lowest-graded will provide just $42 billion in economic benefit over the longer term.

So while there’s plenty of room to debate what’s actually in the package — only $9 billion for mass transit? — the faux debate over whether it will work and work quickly has been settled. Let’s see if the cable newsies catch on.