This is not the first time this question has been asked. Jeff Jarvis started this discussion back in 2008, and covered the topic in his book entitled What Would Google Do? However, in recent times with the banking sector in so much turmoil and facing the ire of so many, the question probably is not whether a Google might come along and start a bank, but when will an Amazon, Google or Facebook weigh in to this space?

Unlikely? Sceptical? Let me challenge that thought with a simple fact. Google already has a banking license...

Yes. Since late 2007 Google has held a banking license issued by the Central Bank of the Netherlands- De Nederlandsche Bank. The license is nominated as being for digital banking services. They're not the only ones looking at financial services to extend their brand. As of May of 2007 Pay Pal has held a banking license from Luxembourg. HP has banking licenses in a few countries, allowing it to issue loans and leasing agreements. The publisher of the online science-fiction game "Entropia Universe" has a banking license from the Swedish Financial Supervisory Authority and this enables it Entropia to encourage trade of their virtual currency used in their online world. What about Apple? Well as far as we know they don't have one...yet.

What's wrong with your bank?
Many feel today that the big banks have got too big, have lost touch with their customers. They seem more interested in speculating on the assets they hold to create profit, than basic banking services to their customer. The criticism is often levelled that these banks feel they are big enough that if you don't like it, they'll just ignore you.

The fundamental issues that customers face today, however, are relatively simple to fix. For example, when you go down to your bank to apply for a loan or a credit card, they ask you all the same questions they've already asked before a million times before. Banks have a habit of hiking up fees without any warning, and you can't do anything about it. When you do need a new loan or changes to your mortgage, you feel like you have to beg just to get some consideration. No matter how many times you ring the bank, you have to repeat the same story you've already given to the last person you spoke to.

The question at hand, however, is Would Google build a better bank? The immediate answer might be - it couldn't be worse than what we've got now. The question really is how could a Google or someone like them build a better bank?

Simplicity is a service in itself
"The perfect search engine," says co-founder Larry Page, "would understand exactly what you mean and give back exactly what you want." This was the power behind Google's early success obviously, but we could easily paraphrase this for banking - the perfect bank would understand what you need and give you exactly what want...

Google has built its business around ten key business principles, what they like to call "Then things we know to be true". A number of these principles would come into play in creating a different type of banking environment for customers Google Style. Focus on the user and all else will follow, fast is better than slow, you don't need to be at your desk to need an answer, you can make money without doing evil, there's always more information out there, you can be serious without a suit, and great just isn't good enough. How would this manifest in a better bank?

Are you ready?
Whether it is Google, Apple or a fresh start-up, the likelihood of a new retail financial services organization stepping into the fray over the next few years is extremely high. As Google learned with its search engine opportunity for innovation is often borne out of either customer frustrations or simply a better way of doing things. Given our recent experiences with the big banks, is it unthinkable that someone might try to innovate your banking experience?

More on Google

PRESIDENT OBAMA 10 days ago set out one important element in the needed structural reform of the financial system. No one can reasonably contest the need for such reform, in the United States and in other countries as well. We have after all a system that broke down in the most serious crisis in 75 years. The cost has been enormous in terms of unemployment and lost production. The repercussions have been international.

More on Barack Obama

by Kristin McCracken

In the latest addition to the adventure genre, North Face (Nordwand), director Philipp Stölzl tells the story of Toni Kurz (Benno Fürmann) and Andreas (Andi) Hinterstoisser (Florian Lukas), two Nazi climbers who in 1936 made a daring attempt to ascend the north face of the Eiger. Known as “the last problem of the Western Alps,” this treacherous route seemed to defiantly challenge climbers near and far. Was it insurmountable? Who was brave enough even to try? Kurz & Hinterstoisser’s story is very well known in Alpine regions of Europe and in certain mountaineering circles, but the film is gripping—perhaps even more so— to those of us unfamiliar with their fate.



To a certain point, the Eiger was mastered earlier—and more visibly— than its Alpine peers: a train route was blasted through the mountain as early as 1912, allowing thrill seekers without any athletic ability the chance for breathtaking views from stomach-dropping heights. The film makes great use of these (and higher) vantage points, and depicts life both on the mountain and in the hotel nestled above the treeline just below the north face. In the summer of 1936, tourists at the hotel were afforded a front-row seat to the drama of the climb, attempted by both the German duo and their two Austrian challengers. In the film, one of these spectators is Kurz’s childhood sweetheart, and as we watch the events unfold through her eyes, we are kept in nail-biting suspense, rooting for these (Nazi, and thus unlikely) heroes. The film evokes such notable depictions as Kevin Macdonald's Touching the Void (based on Joe Simpson's marvelous book) and Jon Krakauer's Everest epic Into Thin Air.
 
Tribeca Film talked with Stölzl (also credited as one of the film’s writers) about the German mountain films that inspired him and the many challenges in bringing this story to the screen: developing the backstory, hunting for financing in the European market, making his Nazi characters endearing, and conquering the Eiger in his own unique way.
 
Note: It’s kind of tough to do an interview about the film without giving away the ending; to that end, what's posted here is spoiler-free. More of the story (with spoilers noted) is posted with the full article on TribecaFilm.com.


Philipp Stölzl

Tribeca Film: Please tell us a little about the old German climbing films that were your inspiration.
 
Philipp Stölzl: The climbing films were thought of as sort of a blockbuster genre in the 1920s and 30s. In Germany, people didn’t really travel far—the mountains were the main place for people to go, so they walked and they climbed. Because the more famous climbers were stock heroes, the admiration for climbing was reflected in the movie theaters; thus there were a lot of mountain movies in these years, starting in the 20s and ending during WWII.
 
TF: How did the Nazis get involved with these films, and with climbing?
 
PS: The Nazis loved mountain climbing. The whole idea of climbing fits into the way the Nazis saw death—dying for an ideal was a metaphor, that you could become a willing hero in the war against the rock. When you look at the early mountain movies, they are very symbolistic, with a visual type of language. They were connected to a German Romantic vision of nature, with the mountain as a character. The Nazis really, when you look at the Leni Riefenstahl’s [the Nazi propagandist] documentaries, clearly liked the powerful, visual language. After the war, people had to look for new images, since the mountains were loaded with the whole terror of the Nazis.


Spectators' view from the chalet/hotel at the foot of the Eiger

TF: Is the chalet at the foot of the mountain as it was in the 1930s, or has it been more built up? How realistic was its portrayal in the film?
 
PS: [The hotel] is still [virtually] the same [today], and would have been a prime location to shoot, but we couldn’t afford it. The historic part of what happened at the hotel is pretty realistic. The hotel itself has 60-70 beds, and given the timing [summer], it was sort of a tourist hotspot. The special thing about the Eiger is that there is a public arena—the hotel is at about 2300 meters [up the mountain, above the treeline], which is a very, very high spot for a tourist hotel. The train [through the mountain] was finished in 1912, very early—people were starting to make money off of nature; it’s sort of an early mass tourism place.
 
TF: The cinematography was breathtaking. How did you technically pull off the climbing scenes in blizzard conditions? Were they a combination of actual locations and sets? How grueling was the shoot on the mountain?
 
PS: The whole mountain stuff takes forever and forever—after a long, exhausting day, we would get one or two good shots. Then we shot a lot of documentary-style stuff: a couple of weeks in a mountain cabin, below the face. Then we shot using doubles [on the mountain], and then more main drama with the actors in a refrigerated set. We had a hall, normally meant to cool down vegetables, 15 degrees, and we just did our work inside, with rented snow machines like the ones ski resorts use.
 
TF: It still sounds brutal.

PS: It’s actually more brutal than shooting on a mountain, because at least there you are moving a lot. In the fridge set, you just stand around a wait, and you don’t need to haul everything, so you get cold.



TF: You are a mountain climber yourself. Can you identify with the need to conquer big challenges?

PS: I am familiar with it. I come from Munich, close to the Alps, and as a boy, I went climbing and walking easy routes. We went to all these locations, and I became sort of a more higher-level mountaineer. (I am far from climbing the North Face, but I spent a lot of time with professional mountain climbers.) After we finished the movie, a group of us climbed the Eiger—the actors, the producers, the cameraman, and me—but not the north face. It’s a two-day route. Because there is a train inside the mountain, you can get out on the backside. It’s one day through the glacier, and then you stay in a hut on a ridge, and then you start climbing up the ridge. It’s a beautiful route.

Continue reading on TribecaFilm.com (Warning: contains spoilers!)
More on Germany

This Week's Top Stories in Foreign Affairs:

Desperate or Deliberate Moves from North Korea?
Behind the bells and whistles of US President Barack Obama's State of the Union where the US President claimed that sanctions are working against North Korea, the international pariah state continued to make concrete belligerent moves in its foreign policy this week. The week began on Sunday with Pyongyang accusing Seoul of declaring war by announcing that it would make a preemptive attack if it suspected the South of planning a nuclear attack. Following this, the North has carried out a series of "military exercises" along a disputed naval border with the South, lobbing missiles and artillery towards the contentious line. Although Pyongyang calls these drills "routine", Seoul and its allies are watching tensely. Meanwhile, North Korea arrested another American in addition to Robert Park, a missionary who was arrested Christmas Day. This second American had allegedly trespassed into the isolated state evidently investigating human rights issues. This arrest is sure to raise tensions between Washington and the US again, just as they had been during the imprisonment of two American journalists earlier this year. Such tension was already evident as Washington rebuffed an offer from Pyongyang to reopen talks on locating American remains from the Korean War. The US responded to the proposal by saying that the North should first come clear and clean on its nuclear ambitions.

The State of the Union - What Else?
It was a given that something would be left out of US President Barack Obama's State of the Union address. Although the President focused much of his speech precisely on what it was intended to do (present the state of the union) many analysts and pundits have remarked that it was volume-low on foreign policy (only 11 out of 69 minutes). Why did he sideline foreign policy? Whether it should have included more foreign policy items is beside the point here. The items he brought up were competition in alternative energy markets, sanctions on Iran and North Korea, commitment to the Doha trade talks, and an urge to get trading partners to play by the rules for imports and exports. He also emphasized that the wars in Iraq and Afghanistan are winnable and controllable. Remarkably missing from the speech was any mention of Israel-Palestine, or instability in Pakistan and Yemen. Both of these nations are key fronts in America's war against terrorism, and have been a focal point in foreign policy. This is telling, as Secretary of State Hillary Clinton skipped out on the State of the Union address to meet in London with world leaders to discuss the deteriorating situation in Yemen and Islamist extremists' growing presence there.

War Reports:

Afghanistan/Pakistan
65 nations gathered at a Donors Conference in London to pledge support to the struggling nation and Afghan President Karzai sought to reassure international leaders that Afghanistan is on the right track. This was a tough task for Karzai, who's election was greatly contested and who has yet been able to name a complete Cabinet. During this conference, Karzai clearly stated his intention to foster reconciliation as a key component of his domestic policy, including making peace through tribal councils with Taliban leaders. This is in contrast to the American and NATO strategy to reintegrate low level factions of the Taliban. Taliban leaders have scoffed at this initiative. Meanwhile, a convoy bringing key NATO supplies to Afghanistan was attacked in the key port city of Karachi (a rare and troublesome occurrence).

Iraq
Three coordinated car bombs rocked Baghdad, and killed over 30 people on Monday. One target, the Hamra hotel, is a noted haunt for foreign journalists. Analysts believe this is an effort of insurgents seeking to undermine the upcoming Parliamentary elections on 7 March. Far more likely to disrupt the elections has been the Justice and Accountability Commission's insistence that its disqualification of hundreds of candidates, many of them Sunni, is legal and non-partisan. Some people have suggested, though officials have denied it, that Iranian influence has played a part in the Commission's decisions. Meanwhile, US and Iraqi security forces both confirmed that wanted insurgent Abu Khalaf was killed in the restive area of Mosul.

Analysis in Brief:

Palestinian reconciliation?
On Monday, analysts groaned that Hamas and Fatah were no closer to reconciling their nearly 3-year territorial split amid the expiration of the term of the Palestinian parliament. Then on Thursday, Hamas suggested it was interested in resuming talks via Egyptian moderators in Cairo. Meanwhile, Israeli Defense Minister Ehud Barak told Egyptian President Hosni Mubarak that it was willing to begin low-level talks with the Palestinian Authority. If this small goodwill translates into something larger then we could be in another round of Mideast negotiations.

Belarus buys in and Moscow Enhances Its Sphere of Influence
Following all the hype last week with pro-Russian v. pro-Russian runoff in Ukraine's elections, another former Soviet republic, Belarus, made news this week. Minsk and Moscow reached a deal after a month of back-and-forth proposals concerning oil deliveries. The agreement states that Belarus' tariffs for oil will only increase by 11 percent. It allows Europe to make a sigh of relief... until next year. Clearly, a solution for energy security for Europe is far off so long as nations like Belarus and Ukraine base large portions of national revenue on transit fees for natural resources.

Shaky Status-Quo in Southern Lebanon
Following a Lebanese Parliamentary resolution allowing Hezbollah to keep its arms as long as Israel poses a threat to Lebanese sovereignty and growing worry that Hezbollah is rearming, Israeli leaders have said that the entire Lebanese state, not just Hezbollah, will be the target of Israeli aggression should the border situation escalate. And more recently, Lebanese leaders have claimed to have obtained French guarantees to support Lebanese infrastructure in case of an Israeli attack. Despite this saber rattling on both sides, heads of the U.N. Interim Force in Lebanon (UNIFIL) remain optimistic that conflict will not break out again, though they say both sides could do more to promote peace.

First Peacetime Sri Lankan Elections
Incumbent Mahinda Rajapaksa is re-elected President with 58% of the vote against 40% for opposition leader General Sarath Fonseka. Fonseka says he is contesting the results and security forces surrounded his hotel, but this drama will subside with time. Both Fonseka. as former head of the Army, and Rajapaksa are credited with ending the 26 year civil war the Tamil Tigers. The political allies then suffered a split over who should receive credit for the victory. The winner is now tasked with actually rehabilitating and maintaining a peaceful country, a harder task than merely winning the election.

This Foreign Affairs Roundup can be read on the Simple Intelligence Site or the Huffington Post World Page every Friday.

More on North Korea

President Obama is Proposing a $5,000 Tax Credit for Each New Worker a Company Hires

(Originally posted at amazonwatch.org)

Ecuador's historic proposal to keep some 850 million barrels of crude that lay beneath the country's stunning Yasuní National Park hit a familiar roadblock last weekend, as President Rafael Correa undermined his own negotiating team, denounced foreign donors, and threatened to drill in the ITT oil block (named for the oil wells Ishpingo, Tambococha, Tiputini) in June.

The Yasuní-ITT initiative seeks international compensation to the tune of $350 million per year-half of its forgone oil revenues -- to permanently keep the oil in the ground and thereby avoid deforestation and the emission of some 410 million tons of CO2 that would be eventually be released into the atmosphere if the oil was extracted and consumed.

In his weekly radio address January 9, Correa slammed the team led by Minister of Foreign Affairs Fander Falconi for accepting conditions that were "unacceptable" and "shameful." Correa called the effort a threat to the country's sovereignty, just as the team prepared to seal a deal for an international trust fund administered by the UN Development Program which would help provide donor countries with financial guarantees, given Ecuador's politically turbulent history. The deal was to be signed and announced at a government press conference at the COP15 climate negotiations in Copenhagen, Denmark last December. But due to internal conflicts, the announcement had been scuttled at the last minute.

"Let the northern countries keep their money," Correa declared, sending shock waves through Ecuador and the world, who had rallied around the proposal. This was not the first time Correa has auto-sabotaged the initiative's chances, though it may have been his last opportunity, as the proposal's credibility and donor confidence may be beyond repair.

Joan Martinez Alier, a professor at the Autonomous University of Barcelona, Spain, has been instrumental in the design of the proposal and a founder of its core principle of climate debt.

"For President Correa, it wasn't enough to boycott the signing of the trust fund with UNDP from afar, he had to destroy the entire initiative," says Martinez Alier. "Maybe he felt cornered by the reality that finally the trust fund would be established, the environmentalists would win, the prospect of oil drilling snuffed out, so he undercut his own Minister and negotiating team, and questioned the integrity of the UNDP under the pretext that the terms of the agreement were 'shameful'."

Launched in 2007, the project is a bold proposal from a net oil exporter and OPEC member, seeking to keep its largest oil deposit-some 20% of its reserve -- permanently underground. The initiative is the first of its kind, and a sea change from past administrations' drill-baby-drill policies that have destroyed much of the Amazon and saddled the country with close $14 billion in external debt. The initiative was based on the idea of "climate debt" -- that countries in the North (Annex 1) bear a historic responsibility for global environmental problems like climate change due to their continued level of exorbitant resource consumption, and therefore owe a debt to developing countries in the global south who have differentiated, but shared responsibilities.

Yasuní National Park is a United Nations Biosphere Reserve and home to some of the planet's last indigenous peoples living in voluntary isolation. Yasuní is comprised of more than 2.4 million acres of pristine primary tropical rainforest and boasts the highest concentration of floral and faunal species anywhere in the world. The park contains some 4,000-plant species, 173 species of mammals and 610 bird species, and almost as many tree species in 2.5 acres as found in all of North America. Yasuní also contains more than 100,000 insect species per hectare -- the highest level of insect diversity in the world. In 1999, the Ecuadorean government designated 1.8 million acres of the Park as a "No Go Zone," prohibiting any type of resource extraction in perpetuity. The reserve is home to the Tagaeri and Taromenani, two nomadic clans of uncontacted Huaorani indigenous people living in voluntary isolation.

But despite its unique vision, the project has been riddled by contradictions from the Ecuadorean government since its announcement in 2007. After the official launch of the proposal, Correa's explanation of the initiative led many around the world to believe it was a ransom, rather than an effort to save one of the world's most important places and a proposal for joint North-South cooperation in a country where oil accounts for 60 percent of its exports. The government's insistence on a 1-year deadline to raise close to $4.5 billion dollars, was also seen as an impossibility by potential donors and undercut the proposal's perceived viability. Financial and political guarantees were slow in coming, in part because there were three Foreign Affairs ministers in three years.

While the government made the case for using the funds to make a transition to cleaner, sustainable energy, among other national development priorities, Correa's administration instead approved drilling in an oil block next the ITT and inside Yasuní, and granted dozens of new mining concessions.

The project has also been questioned over the last few months for changing its financial compensation mechanism to include the potential use of carbon markets, and the controversial UNFCCC mitigation program REDD (Reducing Emissions from Deforestation and Degradation).

With each advance, Correa hobbled the initiative. Many wonder whether this was just his latest act of sabotage to an initiative that has insulated him from environmental groups' criticism, all the while laying the groundwork for drilling. Insiders point to factions within Correa's cabinet that did not want a deal to be signed, as well as last-minute pressure from Petroecuador and other interested oil companies.

Many contend that there has been an internal boycott of the initiative by Petroecuador since the initiative was first launched. Indeed, a recent article in the El Comercio newspaper contends that Petroecuador has been actively preparing drilling plans for months. At a press conference the day following his resignation, Falconi declared, "Evidently there are oil interests wanting to drill."

Since his last surprise announcement, the government has proclaimed anew that it is committed to the initiative, and that it will hire new staff. It has also backed away from his threat to begin drilling in June 2010. But in doing so, Correa has backed himself into a corner. Not only does this appear to be the nail in the coffin for the proposal, but the initiative itself has raised the profile of Yasuni's importance to a global level, which will make any drilling in ITT risky business for any company, and a political liability for President Correa.

Under Ecuador's constitution, no oil drilling is allowed in national parks, unless it is of 'national priority.' If a project is indeed deemed so, as the ITT block is, then a national consultation would have to be carried out. Correa himself said that if the proposal fails, he would call a referendum, asking Ecuador's public whether drilling should occur. He also offered to put his own position on the line to ask civil society whether he should continue as the Andean nation's president.

However, by their own choice, the Tagaeri and Taromenane don't have a vote, and no one should have the right to decide their fate for them. Unfortunately for both uncontacted groups and for the world, the fate of Ecuador's visionary solution to address climate change may have met its long foreseen end.

More on Gas & Oil

Designed to help small businesses, two proposals would reward companies for hiring new workers and for giving pay raises or increasing the hours of existing workers.

Acting quickly on a pledge in his State of the Union address, President Obama today will unveil a proposal to give a tax credit of up to $5,000 to companies for every new employee they add to their payrolls this year.

WASHINGTON — The Senate voted Thursday to allow the government to go a whopping $1.9 trillion deeper in debt, offering a vivid election-year reminder that the government has to borrow 40 cents of every dollar it spends.

The measure would put the government on track for a national debt of $14.3 trillion – more than $45,000 for every man, woman and child in the United States. And the debt is increasingly held by foreign nations such as China.

The budget for the current year is about $3.5 trillion and the deficit will probably match last year's $1.4 trillion. The government would have to borrow to cover that $1.4 trillion.

The measure passed 60-39 under ground rules insisted upon by Republicans that required 60 votes to pass it. Democrats and allied independents control 60 seats – for now – and were only able to win the vote because Republican Sen.-elect Scott Brown of Massachusetts has yet to be seated.

While Thursday's vote went smoothly, it came after weeks of difficult negotiations between the White House and both House and Senate Democrats.

Moderate House "Blue Dog" Democrats came away with a tough new "pay-as-you-go" budget law to make it harder to run up the deficit with new tax cuts or federal benefit programs. Senate Democrats won a promise from President Barack Obama to name a bipartisan task force to come up with a plan for dealing with the spiraling debt – but one whose recommendations are unlikely to ever see an up-or-down vote.

Meanwhile, Obama won symbolic support for his proposal for a partial domestic spending freeze.

A 56-strong majority of senators supported a plan, by Sens. Jeff Sessions, R-Ala., and Claire McCaskill, D-Mo., that was strikingly similar to Obama's freeze on domestic programs annually funded by Congress. It failed because 60 votes were required, but the tally serves as a positive sign that even though there's significant opposition from Democratic liberals, Obama's domestic freeze is likely to be adopted when Congress debates its budget.

The debt limit increase comes as a relief to Democrats worried about having to cast multiple, bite-sized increases in the debt in the run-up to the critical midterm elections this fall. Instead, the new limit would allow majority Democrats to avoid another vote until after the midterm elections this fall.

The House is slated to vote on the debt legislation next week to send it to Obama to be signed into law. The new pay-as-you-go rules, approved by the Thursday on a 60-40 vote, should help House leaders round up the votes, despite the political anxiety caused by Brown's stunning win in heavily-Democratic Massachusetts last week.

The new budget rules are designed to curb the spiraling deficit by requiring spending increases or tax cuts to be "paid for" with cuts to other programs or tax increases. If the rules are broken, the White House budget office would force automatic cuts to programs like Medicare, farm subsidies and veterans' pensions.

The idea is that the threat of cuts to such popular programs would be enough to block Congress' free-spending ways, but skeptics say lawmakers can find ways around them fairly easily. Weaker pay-as-you-go rules are in place already, but have been routinely waived.

The new rules would have the force of law and would make it harder to extend permanently some tax cuts – especially on large estates and middle-class tax filers threatened by the alternative minimum tax – that expire at the end of this year.

Lawmakers would be able to extend President Bush's middle-class tax cuts past their expiration a year from now even though they would add another $1.4 trillion to the debt over the next decade. But the top rate for individuals making more than $200,000 and couples earning over $250,000 would rise from 35 percent to 39.6 percent.

Extended unemployment benefits for the long-term jobless coming to a vote next month may also be exempt at a cost of tens of billions dollars more.

Republicans generally opposed the rules as a recipe for tax increases. There had been a few GOP supporters in the past, but Republicans who had voted for the rules in earlier years switched their positions and opposed them.

They included John McCain of Arizona, facing a primary battle with former Rep. J.D. Hayworth, who's winning support from conservative anti-tax "tea party" activists.

Obama's promise to name a bipartisan deficit task force promises to have less of an impact.

Unlike a proposal rejected this week that would legally bind Congress to vote on a commission's plans, there's no way to force the Senate to take a vote on the panel's recommendations. Those would likely blend tax increases with painful spending curbs to programs like Medicare, Medicaid and Social Security – which would probably die as a result of a filibuster.

The President wants businesses that hire new employees this year to get $5,000 per hire, in the form of a tax credit. That will come to about $33 billion. It's good step. He's also supporting a cut in the capital gains tax for small businesses. That makes sense; after all, small businesses generate most jobs.

But here's the problem. Both of these measures, and many of the other tax cuts he's proposing, give ammunition to supply-siders who think the way out of this awful economy is simply to cut taxes on businesses. If a new jobs tax credit is a good idea, why not a cut corporate income taxes? If it's useful to reduce capital gains taxes for small businesses, why isn't it useful to reduce them for all businesses?

The answer, of course, is that across-the-board supply-side tax cuts for businesses don't increase the demand for the things businesses produce. They're useful only to the extent businesses are confident consumers are out there, able and willing to buy. Carefully targeted -- as are the cuts the President is proposing -- they can give businesses an extra nudge to hire. But without adequate demand, they're useless.

So what's the President's new proposal for boosting overall demand? Hmmm. Turns out, he's not really proposing anything new on that score. (Some who watched his State of the Union the other night thought they heard him call for a second stimulus. Actually, he didn't, and as far as I can tell he doesn't plan to.) His political advisors are telling him to emphasize deficit reduction instead. And that's what he did Wednesday night when he talked about a "freeze" on discretionary spending, and a "commission" to look for ways to cut the deficit.

I can understand why Obama's political advisors are pushing him in this direction. Many Americans borrowed too much during the boom years before the Great Recession, and now they're paying the price. So they naturally analogize their own plight to that of the federal government and the economy as a whole. The government is too deep in debt, they reason. Logically, that means the only way out of the nation's economic doldrums is for the government to mend its ways. The government has to reduce its budget deficit just like American families have to reduce theirs.

This analogy is faulty, of course. If John Maynard Keynes taught us anything, it's that a federal budget is not at all like a family budget. In fact, it's precisely because families have to pull in their belts that the federal government has to let its belt out. When consumers and businesses aren't buying much of anything, the government has to fill the gap. That's the only way to get jobs and get the economy moving again. Once the economy is percolating, the government can pull back. By then, tax revenues will soar, and the long-term deficit will shrink. (And yes, entitlement reform is probably necessary in the long term. But here again, it's vitally important to separate the long term from the now.)

But if the public learns the wrong set of lessons -- that tax cuts for businesses are good, and deficit reduction starting now is good -- there's no hope for getting wise policies out of Congress. The debate is framed all wrong.

The President -- any president -- is the nation's educator in chief. Everything he proposes contains an implicit lesson. The economic lesson President Obama ought to be teaching is that targeted tax cuts, mostly for small business, are good to the extent they give businesses a nudge toward creating more jobs. But businesses won't begin to create lots of jobs until they have lots of customers. And that won't happen until lots more Americans have work. The only way to get them work when businesses aren't hiring is for government to prime the pump.

One final lesson I wish he'd teach: The best and fastest way for government to prime the pump is to help states and locales, which are now doing the opposite. They're laying off teachers, police officers, social workers, health care workers, and many more who provide vital public services. And they're increasing taxes and fees. They have no choice. State constitutions require them to balance their budgets. But the result is to negate much of what the federal government has tried to do with its stimulus to date.

We need a second stimulus directed at states and locales. I wish our educator-in-chief would say that loud and clear, explain why, and then do it.

Cross-posted from RobertReich.org.

More on Barack Obama

Today at El Centro del Pueblo in Echo Park, we got this tax season off to the right start by letting residents know that FREE tax assistance is available. During this period of financial instability, families throughout Los Angeles need as much support as possible.

Most residents can't afford to hire an accountant to sift through the pages of the federal tax code and too many assume that they have nowhere to turn for assistance. So today, we sent a clear message to low-income residents:
We will not allow you to miss the opportunity to cash in on your hard work.

We want to ensure that ALL qualifying households can reap the benefits of the Earned Income Tax Credit, or EITC. Local families can visit Volunteer Income Tax Assistance (VITA) sites and receive FREE help with their tax returns.

Tax preparation experts will be on-hand to take you step-by-step through the process and make sure low-income, working Angelenos claim the EITC - one of the most effective ways to alleviate poverty and one of the surest routes to sound financial footing.

In 2009, local VITA and AARP Tax-Aide sites helped residents collect approximately $13.5 million in extra tax credits-a 23% increase from previous year-and $36.8 million in total tax refunds-a 45% increase. Through the help of nearly 2,000 volunteers, we saved over 39,000 low-to-moderate income tax filers $6 million in basic tax preparation fees.

This year, the credit can translate to a refund of up to $5,657, a figure that can equal nearly two months of income for many families.

And this year, through our FamilySource Centers and One-e-App system, we have added 21 additional free tax preparation sites which include screening for EITC eligibility.

The success of this effort rests on volunteers, so if you believe in this program like I do consider donating some time to make sure Los Angeles families get the tax credits they deserve.

To determine your eligibility for EITC or learn about volunteer opportunities, dial 2-1-1 or go to http://www.EITC-LA.com.

No hard-working family should ever lose the chance to get ahead - especially when resources exist and assistance is available. Together, let's make this tax season a bit more pleasant for everyone.

More on Family