News Day – January 29: Stimulus heads for MN; St. Paul “cutting the bone”

Economic Stimulus – despite GOP no votes President Barack Obama’s economic stimulus package passed the House without a single Republican vote, despite his outreach efforts. Paul Krugman, Nobel-prize winning NYT economics columnist asks, “Aren’t you glad that Obama watered it down and added ineffective tax cuts, so as to win bipartisan support?” The Daily Kosexcoriates the eleven Dems who voted against the stimulus, and especially Blue Dog Jim Cooper (D-TN) for “his FU to Obama” after getting the Pres to agree to a February “fiscal responsibility summit.”

Back in MN, the Strib and both pick up an AP report saying that MN will get more than $477 million from the plan to upgrade highways and bridges, as part of the $30 billion national transportation package.

Cutting the bone “Anticipate park and library closures, and public safety reductions.” That’s the message from St. Paul, in light of reductions in Local Government Aid under the Pawlenty budget plan. The PiPress reports that city’s entire budget is about $200 million annually, and that Mayor Coleman says the city has to cut $43.8 million. That, says council member Melvin Carter, means cutting the bone. For example, closing all libraries and eliminating all 34 rec centers would save only $36 million.

And — big surprise here — Tom Scheck at MPR reports that business groups like Pawlenty’s tax cut plans, which would reduce business taxes by $268 million over the next two years.

Goodbye, Challenge The MN Housing Finance Agency said it will cut $8.5 million from the Challenge Program, which funds new affordable home construction, in response to the governor’s budget cuts. Session Daily reported that the agency plans to focus on rehabilitating existing housing stock and subsidizing rentals, and wants $1.5 million transferred from the state Disaster Relief Contingency Fund to help 80 families currently living in shelters, which would require declaration of a federal disaster.

MN Job Watch U.S. union ranks are growing, reports the Washington Post, showing “the first significant increase in 25 years.” The numbers are still small, with union membership growing from 12.1 percent in 2007 to 12.4 percent in 2008, according to the BLS. In the 1950s, union membership was about one-third of the work force. Union leaders said most of the growth came in government workers, as private employers continued to use union-busting tactics to intimidate employees. The BLS report says only 7.6 percent of private-sector employees are unionized, compared to 37 percent of government employees. According to an AP report, Minnesota union membership dropped from 16.3 percent of the work force in 2007 to 16.1 percent in 2008, with the number of union workers dropping from 400,000 in 2007 to about 392,000 in 2008.

In other MN job news, the Rochester Post-Bulletin reports that IBM laid off workers yesterday, but has not released number son how many, and may be making more cuts.

Ramstad to Harvard The PiPress reports (via AP) that former U.S. Rep. Jim Ramstad is heading off to Harvard. Ramstad will be a fellow at Harvard’s Kennedy School of Government Institute of Politics.

Bad news drives bank stock prices higher That’s right. Financial stocks rose even as banks showed bigger losses. Wells Fargo stocks went up 31 percent, reported Chris Serres in the Strib, despite its announcement of “a multibillion-dollar loss, falling revenue and a doubling of bad loans.” The Strib says that investors thought the news would be even worse. And they may also be reacting to hopes for more bailout money. To be fair, Wells Fargo’s losses have something to do with a one-time event:

Wells Fargo executives, by contrast, appear to be preparing for the worst by taking dramatic steps to shore up its balance sheet after buying Wachovia, which is saddled with many exotic mortgage loans that are going soar as the housing market deflates. On Wednesday, Wells Fargo said it took $37.2 billion in credit write-downs Dec. 31 related to Wachovia’s loan portfolio. The bank also increased its allowance for loan losses — money banks set aside to cover bad loans — to $21.7 billion in the fourth quarter from $8 billion as of Sept. 30.