After the holiday break, there will be no getting away from the financial and economic issues that have dominated the 2009 agenda. Vital decisions will be taken in January, particularly concerning the government's debt level. Here are the latest happenings:
The Senate on Christmas eve approved in a straight party-line vote the lifting of the federal government's debt limit by $290 million. That's enough to carry it through the next 60 days, at which time the issue will have to be revisited. The House already had approved the measure. Up to $1.9 trillion, it is thought, will be required above the present debt limit to finance government borrowing through 2010.
Also on Christmas eve the Treasury Department announced it would cover unlimited losses at Fannie Mae and Freddie Mac, the government-run mortgage giants, over the next three years. Previously available Treasury funds had been capped at $200 billion for each entity.
The same day, wholly by coincidence, the companies announced new compensation packages for their CEOs which could bring them up to $6 million annually. The packages were approved by Treasury and the Federal Housing Finance Agency, which regulates Fannie Mae/Freddie Mac. Other officers also are scheduled to receive multimillion-dollar 2010 compensation. The arguments offered on behalf of the rich packages were the same made earlier by big banks now emerging from TARP supervision — that is, that valuable talent would be lost if compensation were reduced.
House-Senate negotiators will be considering final content of health-care legislation at the same time the debt-ceiling and Fannie Mae/Freddie Mac matters are being debated. The prospective public cost of the health legislation thus is sure to get renewed attention.
Mark Jan. 19 on your calendar. By then, health negotiators should be preparing final legislation for a vote in both houses. Senate Majority Leader Harry Reid has pledged to bring the debt-limit issue to the floor on that date.
Correction: I wrote in my Dec. 23 article on the political climate for the year ahead: The deep recession seems to be ending, with the unemployment rate being gradually reduced in 2010. In that story, however, I committed a careless computation error in suggesting the jobless rate could be reduced at mid-year to 8 percent. A vigilant reader crunched the numbers independently and correctly found that number unrealistic. Macroeconomic Advisors, a leading private forecasting firm (with which, disclosure requires, I once had a several-year consulting relationship), projects that the jobless rate will fall to only 9.6 percent by year's end. A disappointing number but more accurate than mine.
