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As the New York Times reported Sunday, within the Obama White House a fierce debate is raging about what to do next about jobs and the economy. But on the same day Americans learned advisers David Plouffe and Bill Daley are pushing President Obama to put forward only proposals which can pass Congress as part of his continuing quixotic quest for the political center, the Times' Sheryl Gay Stolberg became the latest to document that it no longer exists.

Which is one more reason why President Obama not only must aggressively promote the job creation programs America are so desperate for. He should take a page from the GOP playbook while doing so. After all, the same Republicans who claimed the economy was the party's "number one priority" immediately pushed draconian anti-abortion restrictions, a stillborn repeal of the health care reform law and a disastrous balanced budget amendment they knew would never become law.

It's time for Barack Obama to start making Republicans offers they can't refuse. And if they do, they'll be on record for having said no to the economic recovery measures the American people so badly need.

1. The States' Rights Act. Republicans claim to love states' rights. Among them should be the right to get help from Washington to limit the cataclysmic budget shortfalls and layoffs now gripping cash-strapped state and local governments. The States' Rights Act would do just that.

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They still don't seem to get it: It's not really a recovery without jobs. There was no recovery. There was only the federal government propping up the banking industry, and it didn't really fool anybody:

After showing signs of a fledgling recovery from the worst downturn in decades, the U.S. housing market appears to be heading back toward the doldrums, as the expiration of a lucrative tax credit for buyers and increased uncertainty about the economy cause home sales to plummet.

The sudden weakness in residential real estate has struck nearly every region of the country, according to recent government and industry data, driving down sales of new and previously owned homes alike in May. On Thursday, the National Association of Realtors said an index that measures sales contracts signed on existing homes plunged 30 percent in May, more than twice what analysts had forecast, to the lowest level since the group started tracking the numbers in 2001.

Those sharp declines come despite record-low mortgage rates and historically cheap home prices. The market's renewed fragility highlights concerns about whether the U.S. economy will hurtle back into recession and illustrates the impact of the nation's high unemployment rate, now at 9.7 percent. On Friday, the government will issue jobless figures for June that could signal what is in store for housing and economic growth.

As long as people are without jobs or fear losing their livelihoods, they are unlikely to commit to buying a home and saddling themselves with 30 years of mortgage payments.

"It sounds simplistic but it bears repeating: 'No job = No house,' " Mike Larson, an analyst with Weiss Research, wrote in a note to clients Thursday. "With so many Americans unemployed or underemployed, the housing market is going to keep hurting."

Gee, I wonder how much they pay Mike to come up with insights like that. Is Weiss Research hiring, I wonder?

And here's more bad news -- or maybe "good" bad news, because the administration will find this hard to ignore:

Payrolls declined by 130,000 last month, according to the median estimate of 82 economists surveyed by Bloomberg News. Private employment, which excludes government jobs, rose for a sixth consecutive month, the survey showed.

The pace of hiring signals it will take years for the world’s largest economy to recover the more than 8 million jobs lost during the recession that began in December 2007. The turmoil in financial markets brought on by the European debt crisis raises the risk that employment will slow, depriving American households of the income needed to maintain spending.

I wouldn't worry. After all, so many of the jobless are considering suicide, it should cut into the jobs-needed number considerably.

So it looks like Goldman Sach's strategy is going to be "deny, deny, deny." "We didn't mean it like that," "You're misinterpreting," and "We wouldn't dream of it."

And yet, here we stand, in the smoking rubble of the American dream. And there they are, laughing it up in Park Avenue penthouses. Time for some karma, baby!

Goldman Sachs sought to protect itself from a collapsing housing market by selling mortgage investments that it knew were likely to fail and taking other steps that helped spread risk throughout the financial system, according to the findings of a Senate investigation released Monday.

The investigation by the Senate Permanent Subcommittee on Investigations suggests that Goldman's actions may also have helped fuel the financial crisis by creating risky investments and then ensuring that other parties were exposed when they lost value.

Excerpts of hundreds of internal Goldman documents released by the committee show that Goldman created and sold complex investments backed by risky home loans. Then, Goldman also bet against those investments by buying a type of insurance that would pay out if the underlying home loans went bad.

"Goldman Sachs was slicing, dicing, and selling toxic mortgage-related securities on Wall Street like many other investment banks, but its executives continue to downplay the firm's role in the financial engineering that blew up the financial markets and cost millions of Americans their jobs, homes, and livelihoods," said Sen. Carl Levin (D-Mich.), chairman of the subcommittee.

"Goldman Sachs made billions of dollars from betting against the housing market, and it placed those bets in some cases at the same time it was selling mortgage related securities to its clients," Levin said. "They have a lot to answer for."

The findings of the Senate probe come as Goldman Sachs chief executive Lloyd Blankfein and several other current and former Goldman officials come to Washington to testify before the subcommittee on Tuesday. The panel is using Goldman as a case study of how investment banks fueled the financial crisis.

In prepared testimony released by Goldman, Blankfein says that the firm must do "a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky."

He also said "we didn't have a massive short against the housing market and we certainly did not bet against our clients. Rather, we believe that we managed our risk as our shareholders and our regulators would expect."

But internal e-mails show that Goldman did expect to make big profits off the decline in housing.

Somewhere, Matt Taibbi is laughing his butt off as the Vampire Squid goes down. Now when do we see the criminal charges - not just against Goldman Sachs, but the rest of the gang involved in crashing our economy for their own gain?

The Securities and Exchange Commission filed charges Friday against Goldman Sachs, one of the most successful but vilified banks on Wall Street, for misleading and defrauding investors in selling a financial product based on subprime mortgages.

In filing the civil suit against Goldman Sachs, the agency is targeting one of the banks that largely escaped the wreckage of the financial crisis and, with the help of various forms of government aid, emerged stronger.

The SEC's suit strikes at a practice that was one of the main causes of the financial crisis: the creation of poisonous investments derived from home loans made to borrowers who couldn't afford the houses they were buying.

The suit also drags into a legal maelstrom Paulson & Co., the firm of legendary hedge fund manager John Paulson, who made billions of dollars by betting against the housing market in the years before it went bust. He and his firm have not been accused of wrongdoing.

Goldman Sachs had no immediate comment. Paulson & Co. also had no immediate comment.

In this case, the SEC alleges that Goldman Sachs created and marketed a financial product known as a collateralized debt obligation, often referred to as a CDO, whose value was linked to that of home loans. The SEC says the bank failed to tell investors important information about the investment -- in particular that Paulson & Co. played a central role in helping Goldman assemble the CDO while the hedge fund at the same time placed bets that the CDO would lose value.

McClatchy has more.

And from the American Prospect:

One note of caution: These are hard cases to prove. Even if Goldman Sachs officials knew how crappy these financial instruments were, they also got solid ratings from the bond-ratings agencies, giving Goldman a real out. If the SEC brought this case, they must have a high level of confidence, but now they need to execute what will undoubtedly be one of the most high-profile financial fraud cases since Enron.

Incidentally, the fact that hedge-funder John Paulson played a role in picking these securities helps confirm the argument that I made in my review of Michael Lewis' book The Big Short: Even the investors with the foresight to see the bubble and bet against it were acting as pernicious speculators who helped drive the bubble up and exacerbate its consequences, not as hero intellectuals tweaking the nasty big banks. These were symbiotic relationships that hurt regular Americans and the economy, make no mistake about it.

This news will only give more momentum to the Democratic financial-reform plan and, hopefully, more impetus toward strengthening the bill in any number of key areas where it could be improved.

Elizabeth Warren is so sensible and credible. Why don't more people in the Obama administration listen to her?

Banks and homeowners alike need to take a more realistic view about how to stem the tide of foreclosures overtaking the housing market and the economy, the head of a government watchdog panel told CNBC.

The more than $700 billion the government allocated toward dealing with foreclosures has only made a minor dent in the problem, said Elizabeth Warren, chairwoman of the Congressional Oversight Panel for the Troubled Asset Relief Program.

That's because those on both sides of the equation are not taking a proactive enough approach, she said.

"We have to sober up on this and say, 'Look, it's time to get realistic,'" Warren said. "It's time for the banks to get realistic about the value of the second mortgages, it's time to be realistic about doing some principal writedowns."

But the onus is not entirely on banks. Homeowners with distressed mortgages also may need a reality check.

"Some of you should stay in your homes...and some of you don't belong in those homes and you've got to be moved out," Warren said. "And frankly, those houses need to get back onto the market and get into the hands of people who can afford them."

"In other words, acknowledge the problem, deal with it, write off the losses and start rebuilding an economy on solid ground."

It's a complicated problem that comes down to which lien takes precedence, and the previous administration attempt to help people who are in over their head due to second mortgages was a failure. The program was also stymied by the unwillingness of banks to take losses on the loans:

Programs to help distressed borrowers so far have focused on lowering the payments on their primary mortgage. But during the go-go years of the housing market, millions of homeowners took out a second or even third loan backed by their home. Many were piggyback mortgages, which enabled home buyers to put little or no money down, while others took advantage of rising home prices to secure home-equity lines of credits.

Now, these secondary loans are aggravating the foreclosure crisis, adding an extra burden that can be the difference between borrowers digging out of debt and losing their home. The extra mortgages also make it far more unwieldy for lenders to untie the knot of excessive debt and provide relief to borrowers. And even when borrowers do get help with their primary mortgages, the second loans can continue to bedevil homeowners, raising the risk they will default later.

The Obama administration is about to ramp up its efforts to tackle second mortgages as part of an aggressive program announced by the White House on Friday to address foreclosures. Other steps include a requirement that lenders offer temporary mortgage relief to unemployed borrowers and increased incentives for lenders to cut loan balances for borrowers who owe more than their homes are worth.

It disturbs me that the administration is so focused on property values instead of useful strategies like allowing bankruptcy judges to reduce mortgage values. But hey, what do I know?

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can't obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.

Hmm. Maybe it would be a good idea to, oh, I don't know, add another tier onto unemployment benefits?

As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.

The rate at which J.P. Morgan Chase seized properties, for example, peaked in the middle of 2008 and fell steadily last year, according to a February investor report. But the bank expects repossessions to increase this year, nearly doubling to 45,000 by the fourth quarter.

There is a lot of despair out there, and the commercial real estate foreclosures are just beginning. Maybe it would be a good idea if we just helped people losing their homes instead of trying to reinflate the housing bubble?

I hope this works. But we're facing a wave of commercial mortgage failures, and I don't think we have a stable enough economy to take it:

For more than a year, the government pulled out the stops to revive home buying by driving down mortgage rates.

Now, whether the housing market is ready or not, the government is pulling out.

The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama's efforts to get the economy on track.

Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize home buying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.

"We did what we thought was necessary to stabilize the market, but we don't think the government should continue special efforts forever," said Michael S. Barr, an assistant secretary at the Treasury Department. "As you bring stability, private participants come back in. We do expect this now that the market has stabilized. I'm not going to say there will be no effect on rates, but we do think you are seeing market signs and market signals that there should be an orderly transition."

So we continue to prop up the housing market, probably because it provides the only positive economic news lately. Is this good for the long-term economy? I dunno, I guess it depends on how talented you are at pretending:

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.

The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term.

But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009.

The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac's chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.

The administration faced a congressionally mandated deadline of Dec. 31 to increase the amount of aid it could provide to Fannie Mae and Freddie Mac, which together have already received $111 billion in assistance.

Treasury said Thursday that its decision did not mean the firms would need $200 billion or more apiece, but that it instead was seeking to assure markets that the government would stand behind the companies. In a statement, Treasury said the move "should leave no uncertainty about the Treasury's commitment to support these firms as they continue to play a vital role in the housing market during this current crisis."

The next time some bobblehead starts talking about how this crisis "is about people living beyond their means", remind them of this latest proof that the financial services industry was thoroughly and aggressively corrupt, and that was a much bigger problem:

WASHINGTON -- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren't fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.

The Securities and Exchange Commission issued a blistering report on how profit motives had undermined the integrity of ratings at Moody's and its main competitors, Fitch Ratings and Standard & Poor's, in July 2008, but the full extent of Moody's internal strife never has been publicly revealed.

Moody's, which rates McClatchy's debt and assigns it quite low value, disputes every allegation against it. "Moody's has rigorous standards in place to protect the integrity of ratings from commercial considerations," said Michael Adler, Moody's vice president for corporate communications, in an e-mail response to McClatchy.

Insiders, however, say that wasn't true before the financial meltdown.

"The story at Moody's doesn't start in 2007; it starts in 2000," said Mark Froeba, a Harvard-educated lawyer and senior vice president who joined Moody's structured finance group in 1997.

"This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be 'business-friendly,' but was consistently less likely to assign a rating that was tougher than our competitors," Froeba said.

After Froeba and others raised concerns that the methodology Moody's was using to rate investment offerings allowed the firm's profit interests to trump honest ratings, he and nine other outspoken critics in his group were "downsized" in December 2007.