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bloomberg.com — Federal Reserve officials, after taking the historic step of cutting the benchmark interest rate to as low as zero, are calling for greater government spending to help revive the U.S. economy. San Francisco Fed President Janet Yellen said yesterday at an economics conference in San Francisco that "it's worth pulling out all the stops" with an economic recovery package. Charles Evans, president of the Chicago Fed, told the same gathering he believes a "big stimulus is appropriate." The remarks underscore the view of many economists that unprecedented fiscal measures are needed to combat the yearlong recession, and come ahead of meetings this week between President-elect Barack Obama and congressional leaders.

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bloomberg.com — U.S. regulators working to untangle Bernard Madoff’s alleged $50 billion Ponzi scheme are probing other money managers suspected of using similar tactics, two people with knowledge of the inquiries said. The U.S. Securities and Exchange Commission is pursuing at least one case in which investors may have been cheated out of as much as $1 billion, according to a person, who declined to name the manager and asked not to be identified because the probe isn’t public. Regulators may discover additional Ponzi arrangements as declining stock markets prompt investors to withdraw their cash and they question how their money is being managed.

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reuters.com — U.S. drivers need to pay more gas taxes and new user fees to fix crumbling roads and bridges and ease congested highways, a transportation commission is set to recommend to Congress later this month. U.S. gasoline taxes should be raised 10 cents a gallon to help fund improvements, at least until new systems are created to charge drivers for how much they use roads, according to a draft copy of recommendations from the National Surface Transportation Infrastructure Financing Commission. "We've basically had a 30-year experiment in this country in under-investing in surface transportation infrastructure," said Robert Atkinson, president of the Information Technology and Innovation Foundation and chairman of the commission.

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ft.com — The U.S. Treasury set out for the first time a basic framework it uses to evaluate whether a troubled financial institution is systemically important enough to justify emergency aid. The criteria were contained in reports to Congress under the Emergency Economic Stabilization Act, which created the $700 billion bail-out fund. The criteria were disclosed amid pent-up demand from investors for greater transparency and predictability on the app-roach to financial rescues.The reports raise the possibility of other financial groups qualifying for a rescue along similar lines to the aid for Citigroup in November, which involved the government in buying $20 billion of preferred stock as well as in joining regulators to guarantee problem assets.

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online.wsj.com — President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs. The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.

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boston.com — President-elect Barack Obama will arrive in Washington tomorrow and renew his push for a plan to rescue the struggling US economy - including an estimated $600 billion to $800 billion stimulus package that a growing number of skeptical Republicans signal they may fight. Obama will benefit from a bigger Democratic majority in both houses of the new Congress, but leading GOP lawmakers declare they have had little say and warned yesterday that they will use their power to sidetrack any stimulus bill until they are satisfied.

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washingtonpost.com — Lowering expectations for quick passage of an economic stimulus bill, Senate Majority Leader Harry M. Reid rejected setting "some false deadline" for delivering legislation to President-elect Barack Obama in favor of a more deliberate approach that allows Congress to get the package right "the first time." Congressional leaders had hoped to hand Obama an economic assistance package immediately after he is sworn in Jan. 20, but that looks increasingly doubtful as the legislation grows in complexity and size. In separate interviews this morning, Reid and House Majority Leader Steny H. Hoyer said the process could take six more weeks.

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politico.com — A group of Democratic governors warned Friday that without as much as $1 trillion in federal assistance, many states will not be able to pay their bills in the next year. The $1 trillion the governors are seeking would be spent to prevent cuts in social services and education, as well as “shovel ready” infrastructure projects that could begin with 18 months. The group has presented its plan to the transition team and congressional leaders.

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nytimes.com — President-elect Barack Obama and Congressional Democrats are considering major expansions of government-assisted health care insurance and unemployment compensation as they begin intensive work this week on a two-year economic recovery package. The proposals indicate the sorts of potentially long-range changes that Mr. Obama intends to push in his promised American Recovery and Reinvestment Plan, as he named it in his weekly Saturday address on the radio and YouTube. They will be combined with one-time measures that are more typical of federal stimulus packages to jump-start a weak economy, like spending for roads and other job-creating public works projects.

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washingtonpost.com — With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world's appetite for financing U.S. government spending. But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.

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