Noble prize winning economist calls for $1 trillion stimulus

Noble prize winning economist Joseph Stiglitz has joined the ranks of those urging that the stimulus package being developed by President-elect Barack Obama's economic team be "very big."

Stiglitz writes: "A large stimulus package can always be trimmed later if it’s not needed because the economy returns to health faster than most economists think. But we need to plan for what looks to be a deep and long downturn. By relying heavily on automatic stabilizers — expenditures like increased unemployment benefits and revenue sharing with states — we can dose out the medicine as needed. The deeper and longer the downturn, the greater the spending.

Faint measures would be foolhardy. A weaker economy will suffer lower tax revenues, more foreclosures and more bankruptcies. Once a firm is bankrupt, you can’t unbankrupt it by providing a stronger stimulus later on."

The op ed is linked.

Barack Obama calls for bold stimulus program to create jobs and jumpstart the economy

President-elect Barack Obama annouced Saturday that he had begun work on a bold, two-year economic stimulus plan designed to create 2.5 million jobs by investing in public works programs to repair the country’s failing infrastructure, its failing schools and in alternative energy programs.

“We’ll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy," he said. "We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

Invest in the Big 3 with conditions

BizTimes.com posted an article I wrote about the automobile industry, "Bail out the Big Three with strings attached."

It is linked here.

New Deal stimulus & the Great Depression

An entire revisionist cottage industry has emerged attributing the Great Depression to intrusive government.

Curt's letter to mid coast views earlier this week parroted this analysis.

Noble Prize winning economist Paul Krugman corrected the record when he responded to a similar suggestion by conservative commentator George Will.

MJS's wrong on Big 3, auto workers & the UAW!

The Milwaukee Journal Sentinel (MJS) is nothing but consistent when it comes to editorializing on labor relations. While it expresses regret over the loss of family supporting jobs and Milwaukee's nationally high and very stubborn poverty rate, it has never missed an opportunity to push for wage or benefit concessions for unionized workers.

A year and one half ago, when the economy was expanding with corporate profits the highest since the Gilded Age and labors’ take the lowest, the editorial board urged three separate groups of local employees to agree to concessions.

First, County employees were urged to be “realistic”and praised for accepting higher health care premiums and scaled back pension and sick leave benefits.

Then Milwaukee’s Harley Davidson workers were urged to accept lower wages for new employees and changes in their health and pension plans even as Harley generated record revenues and rewarded its executives with huge compensation increases.

Shortly afterwords, the editorial board urged Kenosha’s Chrysler Engine Plant employees, members of UAW Local 72, to "be realistic" and accept “painful concessions” from the company's new owner, the private equity firm, Cerberus, even though Cerberus hadn't even asked for them.

More recently, it has supported eliminating firefighter and Milwaukee County jobs and opposed requiring employers to provide their employees with paid sick days. But its recent editorial that advocates letting the U.S. auto industry with its 3 million middle class jobs go out of business takes the cake. It blithely ignores that the U.S automobile industry is:

• the backbone of America's manufacturing sector


• responsible for 1 out of every 10 private sectors jobs and $150.7 billion in personal income


• critical to America's national defense

The editorial also ignores that failure would cost $156.4 billion in government revenues over just three years at a time when the economy is reeling, unemployment soaring and the deficit approaching one trillion dollars.

Not only does the MJS editorial advocate allowing the Big Three to go bankrupt, but it targets the United Auto Workers Union (UAW) and its middle class members for unjust criticism. It is so loaded with tired, inaccurate and anti-labor rhetoric it could have easily have been cut and pasted from a 1970s' Heritage Foundation report.

Here's what the MJS editorial writers alleged about the UAW and its members and the facts:

A second bailout won't make up for decades of mismanagement and union intransigence...

The U.S automobile industry has been mismanaged. Congress has responded by appropriating $25 billion to assist the industry in developing a new generation of energy efficient vehicles and green technologies. But the industry's current crisis is driven by the credit markets collapse and the resulting recession. One million three hundred thousand (1.3 million) private sector jobs have been lost causing consumer spending to decline for the first time since the early 1970s. As a result, car sales for all auto companies including Toyota have plummeted.

The Big Three are seeking a bridge loan to help it deal with the most severe economic downturn since the Great Depression.

The UAW has been anything but intransigent. The 2003 and 2007 contracts cut billions of dollars in costs for the Detroit 3. In 2007, new hire wage rates were halved to $14 per hour, new hires got reduced health care benefits and were not included in the existing defined benefit health plan. In addition the creation of the VEBA for retiree health care saved the companies $33 billion in future health care obligations.

The UAW has also allowed many sub assembly operations traditionally done in-house to be outsourced to suppliers and has agreed that certain non-core functions like housekeeping could be contracted out to lower paid workers.

The Detroit 3 and the UAW have been operating as if they were in bankruptcy for the last several years. One hundred thousand (100,000) autoworkers have lost their jobs in just the last two years as auto companies have closed plants and reduced capacity.

The overhaul should include severe cost reductions and the end of onerous union rules that hamper productivity.

The UAW long ago recognized that world class quality and high levels of productivity are essential. The UAW at plants like the Chyrsler Engine Plant in Kenosha and the GM Assembly Plant in Janesville have worked in partnership with management to improve quality and productivity. The Chrysler Kenosha Engine plant has been recognized as an industry leader in team based manufacturing techniques modeled on the same operating systems used by Toyota.

But bankruptcy is a system for reorganization - companies continue to operate in Chapter 11. Jobs would be lost, lots of jobs, and a bankruptcy for any of the three companies would be painful. But all 3 million jobs tied to the industry would not vanish. Other companies have emerged from bankruptcy stronger. The airlines repeatedly have foundered only to re-emerge.

The truth is, the Big Three would most likely face a Chapter 7 liquidation not a Chapter 11 reorganization. It is highly unlikely that the Detroit 3 could get debtor in possession financing to continue operating or that consumers would buy cars, the 2nd largest consumer purchase, from bankrupt companies.

It's astounding that the MJS would suggest that the U.S. airline industry is a model. That industry has been a basketcase for almost thirty years. It is currently hemorrhaging billions of dollars and tens of thousands of middle class jobs while reducing routes and capital investment and increasing fares. It is a model for the failure of deregulation.

The truth is, the government has delayed this day of reckoning for years. It bailed out Chrysler in the late 1970s, imposed quotas on Japanese imports in the 1980s, and for decades let the Detroit automakers build gas guzzlers under sham federal fuel-efficiency standards. For its part, the UAW kept fighting for expensive benefits and embracing a 1950s worldview even as the automakers were crashing

The Chrysler bail out was an unmitigated success story. When the federal government offered its help, Chrysler was responsible for one out every one hundred private sector jobs, most located in urban areas. The loans were repaid in full ahead of schedule. A viable Chrysler continued to exist providing family supporting jobs, health care and pensions to tens of thousands of workers and retirees around the nation and in Wisconsin.

Quotas were never imposed on foreign automobile competitors, although Japanese companies adopted voluntary trade restraints in the early 1980s.

Perhaps the MJS editors are confusing the Big Three with Harley Davidson which successfully restructured under the protection of actual quotas.

It is also untruthful and irresponsible to maintain that the UAW embraced a 1950’s mentality as the automakers were crashing. As a result of the 2003 and 2007 contracts the cost gap between the Detroit 3 and Toyota will be eliminated.

Anyone who has been inside a UAW represented Ford, GM or Chrysler plant recently will attest to the strong union commitment to streamlined work rules designed to build high quality vehicles at low cost.

According to the authoritative Harbour Report, the UAW represented Chrysler Belvidere assembly plant was the most productive car assembly plant in the United States in 2007 topping every foreign owned plant. Another UAW plant, a Chrysler joint venture engine plant in Dundee, Michigan was the most productive engine plant in this country last year.

Wisconsin is the home to hundreds of automotive supplier firms such as Johnson Controls, Dana Holding Company, Charter Wire, and Stratech. Tens of thousands are employed at these companies. We have begun to see the impact of GM's shutdown in Janesville which now has the highest unemployment rate in the state. We simply cannot afford to allow this critical industry to go bankrupt. Congress should provide the Big Three with a bridge loan to help it survive the current recession and retool for the next generation of green vehicles and middle class jobs. The MJS should listen to our new President. It needs to reexamine its blind faith in market fundamentalism with its anti-labor animus and support policies that actually promote the middle class and family supporting jobs.

John Drew, UAW Local 72 President (1996-2004), UAW International Representative Region 4

Michael Rosen, Professor of Economics, MATC

China enacts large stimulus-U.S. needs one!

Sixty-seven thousand (67,000) Chinese factories have closed and tens of thousands of workers have been laid off since the beginning of the year. As a result, the Chinese government announced a $568 billion stimulus program, 7% of GDP, aimed at bolstering its faltering economy.

The United States has lost 1.3 million private sector jobs since January while the ranks of the long-term unemployed have grown at record rates.

Goldman Sachs economists are predicting that the unemployment rate (now 6.5%) will rise to 8.5% by the end of next year and go even higher in early 2010 because "U.S. domestic demand and production are dropping sharply." The cumulative trough-to-peak projected increase of more than 4 percentage points in the jobless rate would be the most since World War II.

Like China, the United States needs a bold stimulus program.

Nobel Prize winning economist, Paul Krugman, is urging U.S. policy makers to think big, suggesting a back-of-the- envelop number of $600 billion. That's a significantly smaller percentage of the U.S. economy than the Chinese plan, but much bigger than the $300 to $400 billion plans currently being discussed in Washington.

Krugman notes that if the stimulus package is larger than needed and the economy overheats, the Fed can easily raise interest rates to head off the threat of inflation. But if the stimulus is too small, there is nothing the Fed can do since interest rates are already at historic lows.

The Bush administration and Congress moved quickly when Wall Street and its highly paid CEOs were teetering on the edge of financial collapse. Now that the middle class is facing a similar catastrophe they are dithering while America is burning.

Krugman's column is linked here.

Obama's election: death of the southern strategy

The New York Times reports that:

Southern counties that voted more heavily Republican this year than in 2004 tended to be poorer, less educated and whiter, a statistical analysis by The New York Times shows. Mr. Obama won in only 44 counties in the Appalachian belt, a stretch of 410 counties that runs from New York to Mississippi. Many of those counties, rural and isolated, have been less exposed to the diversity, educational achievement and economic progress experienced by more prosperous areas.

The increased turnout in the South’s so-called Black Belt, or old plantation-country counties, was visible in the results, but it generally could not make up for the solid white support for Mr. McCain. Alabama, for example, experienced a heavy black turnout and voted slightly more Democratic than in 2004, but the state over all gave 60 percent of its vote to Mr. McCain. (Arkansas, however, doubled the margin of victory it gave to the Republican over 2004.)

Less than a third of Southern whites voted for Mr. Obama, compared with 43 percent of whites nationally. By leaving the mainstream so decisively, the Deep South and Appalachia will no longer be able to dictate that winning Democrats have Southern accents or adhere to conservative policies on issues like welfare and tax policy, experts say.

That could spell the end of the so-called Southern strategy, the doctrine that took shape under President Richard M. Nixon in which national elections were won by co-opting Southern whites on racial issues. And the Southernization of American politics — which reached its apogee in the 1990s when many Congressional leaders and President Bill Clinton were from the South — appears to have ended

Wisconsin needs economic stimulus that assists workers and the economy

Since January, the economy has shed 1.3 million private sector jobs, over half a million in the last two months. More than ten million Americans are now out of work including tens of thousands in Wisconsin.

Not only are workers losing they jobs, they are having a harder time finding new ones. The number of people who are involuntarily working part-time has dramatically increased, by 544,000 in October, bringing the two-month rise to a record 844,000. The U-6 index, the broadest measure of labor market slack, rose to 11.8 percent, tying the rate for January 1994 (when the measure was first established) as the highest on record.

The percentage of long-term unemployed (more than 26 weeks) rose by 1.2 percentage points to 22.3 percent. It had been 17.9 percent just a year ago. And the average duration of unemployment increased by 1.3 weeks to 19.7 weeks. The two-month rise of 2.3 weeks in average duration is the sharpest increase ever.

For those remaining on the job, wages and hours of work have declined. As a result, consumer spending, the economy's engine for almost three decades, has fallen (by a 3.1% annual rate) for the first time since 1974.

The recession is causing a precipitous decline in state and local government revenues. Wisconsin is facing a record $5 billion budget deficit; New York $12.5 billion. California recently cut its spending by $7 billion.

Nationally states and local government will be forced to slash spending by $100 billion because they are required to balance their budgets. The consequent reduction in demand will make what is already a very nasty recession even worse.

Congress needs to enact a stimulus plan immediately. It should be based on three principals:

1) minimizing the human suffering that is caused by widespread unemployment and underemployment;

2) generating the biggest and quickest bang for the buck;

3) increasing investments in strategic areas that strengthen the economy in the long run.

Wisconsin Congressman Paul Ryan's proposal to cut investment taxes misses the boat on all counts. Ryan and his Republican brethren, including President Bush, remain ideologically committed to the notion that the only acceptable federal response is to cut investment taxes. This approach is wrong on three counts.

• First, cutting capital gains and dividend taxes which are already taxed at lower rates than earned income won't help the 10 million people who have lost their jobs or those who can't find full time work.


• Second, tax cuts on non-existent profits and dividends won't stimulate the economy because unearned (investment) income has plummeted with the real economy's decline. Ryan's proposal amounts to little more than a brazen attempt to use the crisis to enact tax breaks for very wealthy people.


• Third, cutting investment taxes is ineffective because in an economy where credit markets remain tight, interests rates high and consumer demand is declining, business tax cuts won't stimulate increased investment. Businesses don't invest in research and development or new plant and equipment unless there is a demand for what they produce. Yet, consumer spending fell last quarter for the first time since the early 1970's. And that didn't include the impact of the credit crunch which hit in October. We need to stimulate demand (public and private) which will jump start the economy and allow investors to respond to the market.

The current economy demands a stimulus package that will provide immediate relief to the unemployed and provide maximum economic bang for the buck.

Most of the money from the original tax rebate stimulus was saved rather than spent thus blunting its stimulative benefit. By comparison, other options—such as infrastructure spending on deteriorating roads, bridges, mass transit and sewer systems, aid to states, increased food stamps, and unemployment insurance (UI) benefits—are much more cost-effective because they are more likely to channel money directly into the economy.

Mark Zandi from Moody’s Economy.com estimates that each dollar of refundable tax rebates only boosts GDP by about $1.26, while each dollar of infrastructure spending could provide a $1.59 boost.

Not only are many of these stimulus options more effective than tax rebates, but they also have the added benefit of assisting those hardest hit by the downturn, ensuring necessary public services are provided and tackling long-standing infrastructure needs that would lower transportation costs, decrease traffic, and increase future business productivity.

Zandi’s analysis also shows what doesn’t work as stimulus: a variety of tax breaks for corporations and wealthy individuals which cost over twice as much as they return to the economy. Yet, these are the very breaks that Congressman Ryan and President Bush support.

The Congress needs to shift its focus from Wall Street to Main Street and craft a stimulus package that grows the economy from the bottom up, provides emergency aid to states and local government and invests in the nation's infrastructure. Such an approach will not only create jobs and help those who need it the most, but prevent state and local spending cuts that would make the recession worse and have the added benefit of rebuilding the nation's deteriorating infrastructure creating the basis for long term economic growth and a shared prosperity.

The time to act is now!

Keith Olberman: Proposition 8 is discrimination!

In memory of Miriam Makeba, Mama Africa

Miriam Makeba, the South African singer whose voice stirred hopes of freedom among millions in her country with music that was banned by the apartheid authorities she struggled against, died overnight after performing at a concert in Italy on Sunday. She was 76.

Widely known as “Mama Africa,” Ms. Makeba was a prominent exiled opponent of apartheid after the South African authorities revoked her passport in 1960 and refused to allow her to return after she traveled abroad. She was even prevented from attending her mother’s funeral after touring in the United States.

“I never understood why I couldn’t come home,” Ms. Makeba said, as quoted by The Associated Press, during an emotional homecoming in Johannesburg in 1990 as the apartheid system began to crumble. “I never committed any crime.”

Music was a central part of the struggle against apartheid. The South African government censored many forms of expression, while many foreign entertainers refused to perform in South Africa and discouraged others from doing so in an attempt to isolate the white authorities and show their opposition to the regime.

From abroad, Ms. Makeba acted as a constant reminder of the events in her homeland as the white power structure struggled to contain or pre-empt unrest among the black majority.

Ms. Makeba wrote in 1987: “I kept my culture. I kept the music of my roots. Through my music I became this voice and image of Africa, and the people, without even realizing.”

Many of her most famous songs are on Youtube. In the following video, Ms Makeba leads a stadium in singing N'Kosi Sikeleli Africa, the the South African national anthem. It is a fitting memorial to her passing.

Ms Makeba's New York Times' obituary is linked.

Toddlers' world changes with Obama's win

Reflection on Obama's win by Doug Udell

The day after the election I sat observing a student teacher at work in an inner city placement.
As I admired the spirit and energy of the group of toddlers at play in her room I couldn't help thinking, do they know their world has been changed today? Something that was not previously possible has become so. Virginia, the cradle of the civil war, went blue and helped propel a black citizen into the presidency. Well over two centuries in the making, all of us were here when it happened. Many of us helped.

And if all goes well those toddlers will one day think little of it, this huge thing, no more of note than watching a black man or a Latino take his turn at bat on any summer day in any of two dozen scheduled major league baseball games around our country.

Yes, it was a good day. Maybe we haven't fully arrived, maybe the mountaintop is still up there somewhere, maybe we're still climbing-but heavens, turn around for a moment and take a look at that view!

In electing Obama we reclaimed our country!

Frank Rich writes:

On the morning after a black man won the White House, America’s tears of catharsis gave way to unadulterated joy.

Our nation was still in the same ditch it had been the day before, but the atmosphere was giddy. We felt good not only because we had breached a racial barrier as old as the Republic. Dawn also brought the realization that we were at last emerging from an abusive relationship with our country’s 21st-century leaders. The festive scenes of liberation that Dick Cheney had once imagined for Iraq were finally taking place — in cities all over America.

For eight years, we’ve been told by those in power that we are small, bigoted and stupid — easily divided and easily frightened. This was the toxic catechism of Bush-Rove politics. It was the soiled banner picked up by the sad McCain campaign, and it was often abetted by an amen corner in the dominant news media. We heard this slander of America so often that we all started to believe it, liberals most certainly included. If I had a dollar for every Democrat who told me there was no way that Americans would ever turn against the war in Iraq or definitively reject Bush governance or elect a black man named Barack Hussein Obama president, I could almost start to recoup my 401(k). Few wanted to take yes for an answer.

So let’s be blunt. Almost every assumption about America that was taken as a given by our political culture on Tuesday morning was proved wrong by Tuesday night.

The column is linked.

Krugman calls for bold New Deal

Paul Krugman writes that the nation needs a New Deal:

...right now happens to be one of those times when ...good morals are good economics. Helping the neediest in a time of crisis, through expanded health and unemployment benefits, is the morally right thing to do; it’s also a far more effective form of economic stimulus than cutting the capital gains tax. Providing aid to beleaguered state and local governments, so that they can sustain essential public services, is important for those who depend on those services; it’s also a way to avoid job losses and limit the depth of the economy’s slump.

So a serious progressive agenda — call it a new New Deal — isn’t just economically possible, it’s exactly what the economy needs.

The bottom line, then, is that Barack Obama shouldn't’t listen to the people trying to scare him into being a do-nothing president. He has the political mandate; he has good economics on his side. You might say that the only thing he has to fear is fear itself.

Here's the article.

Change is gonna come-November 4, 2008

This post and day are dedicated to a generation of men and women most of whom are not here to cast their votes, but whose life-long commitment to the American ideals of justice and equality helped make it happen:

My father, Sam, and friends and mentors, Jack Rosenberg and Seymour Lefco, who never lost their faith that this nation could do better and their commitment to making it live up to its promise. They would have reveled in casting their vote for Barack Obama today;

My Uncle Jimmy Ginsburg, with an 8th grade education but life-long appetite for knowledge, and his wife, Gert, who helped organized the American Federation of Teachers in Baltimore Maryland. They fought against Jim Crow in Baltimore, their segregated home town and in Madison, Wisconsin when it was unpopular. They would be first in the voting lines today;

Aunt Evelyn, who worked for more than 30 years at Briggs and Stratton and never forgot her southside roots. She was a union maid who never missed an election until today;

Aunt Ida who photographed Rosa Parks at the Highlander House when they were young woman training to challenge southern segregation in the early 1950s. Their dream of a world that is fair and just is a little closer today;

And my mom, who raised her children to listen to and be generous with their hearts and speak with their voice;

All would have cast their ballots for Barack Obama!

And to all the men and women of the greatest generation who lived through the Great Depression, defeated fascism, created the New Deal, Social Security, Medicare and the blue collar middle class, ended legal racial segregation and have despaired as their efforts to build a decent and inclusive society for working men and women have been undermined by the reckless policies of privatization, deregulation and financial liberalization.

Today is for all of them.

Obama salutes his Grandmother as quiet hero

Barack Obama's grandmother dies

Barack Obama's grandmother, whose personality and bearing shaped much of the life of the Democratic presidential contender, has died, Obama announced Monday, 1 day before the election. Madelyn Payne Dunham was 86. Obama announced the news from the campaign trail in Charlotte, N.C. The joint statement with his sister Maya Soetoro-Ng said Dunham died peacefully late Sunday night after a battle with cancer.

They said: "She was the cornerstone of our family, and a woman of extraordinary accomplishment, strength, and humility. She was the person who encouraged and allowed us to take chances."



Obama learned of her death Monday morning while he was campaigning in Jacksonville, Fla. He planned to go ahead with campaign appearances.

The family said a private ceremony would be held later.

Last month, Obama took a break from campaigning and flew to Hawaii to be with Dunham as her health declined.

Obama said the decision to go to Hawaii was easy to make, telling CBS that he "got there too late" when his mother died of ovarian cancer in 1995 at 53, and wanted to make sure "that I don't make the same mistake twice."

The Kansas-born Dunham and her husband, Stanley, raised their grandson for several years so he could attend school in Honolulu while their daughter and her second husband lived overseas.

Her influence on Obama's manner and the way he viewed the world was substantial, the candidate himself told millions watching him accept his party's nomination in Denver in August.
"She's the one who taught me about hard work," he said. "She's the one who put off buying a new car or a new dress for herself so that I could have a better life. She poured everything she had into me."

Obama's nickname for his grandmother was "Toot," a version of the Hawaiian word for grandmother, tutu. Many of his speeches describe her working on a bomber assembly line during World War II.

Madelyn and Stanley Dunham married in 1940, a few weeks before she graduated from high school. Their daughter, Stanley Ann, was born in 1942. After several moves to and from California, Texas, Washington and Kansas, Stanley Dunham's job landed the family in Hawaii.
It was there that Stanley Ann later met and fell in love with Obama's father, a Kenyan named Barack Hussein Obama Sr. They had met in Russian class at the University of Hawaii. Their son was born in August 1961, but the marriage didn't last long. She later married an Indonesian, Lolo Soetoro, another university student she met in Hawaii.

Obama moved to Indonesia with his mother and stepfather at age 6. But in 1971, her mother sent him back to Hawaii to live with her parents. He stayed with the Dunhams until he graduated from high school in 1979.

In his autobiography, Obama wrote fondly of playing basketball on a court below his grandparents' 10th-floor Honolulu apartment, and looking up to see his grandmother watching.

It was the same apartment Obama visited on annual holiday trips to Hawaii, a weeklong vacation from his campaign in August, and his pre-election visit in October. Family members said his grandmother could not travel because of her health.

Obama with his grandparents Madelyn and Stanley Dunham (aka Toot and Gramps) at his high school graduation in 1979.

Madelyn Dunham, who took university classes but to her chagrin never earned a degree, nonetheless rose from a secretarial job at the Bank of Hawaii to become one of the state's first female bank vice presidents.

"Every morning, she woke up at 5 a.m. and changed from the frowsy muu-muus she wore around the apartment into a tailored suit and high-heeled pumps," Obama wrote.

After her health took a turn for the worse, her brother said on Oct. 21 that she had already lived long enough to see her "Barry" achieve what she'd wanted for him.

"I think she thinks she was important in raising a fine young man," Charles Payne, 83, said in a brief telephone interview from his Chicago home. "I doubt if it would occur to her that he would go this far this fast. But she's enjoyed watching it."

Stanley Dunham died in 1992, while Obama's mother died in 1995. His father is also deceased.

When Obama was young, he and his grandmother toured the United States by Greyhound bus, stopping at the Grand Canyon, Yellowstone Park, Disneyland and Chicago, where Obama would years later settle.

It was an incident during his teenage years that became one of Obama's most vivid memories of Toot. She had been aggressively panhandled by a man and she wanted her husband to take her to work. When Obama asked why, his grandfather said Madelyn Dunham was bothered because the panhandler was black.

The words hit the biracial Obama "like a fist in my stomach," he wrote later. He was sure his grandparents loved him deeply. "And yet," he added, "I knew that men who might easily have been my brothers could still inspire their rawest fears."

Obama referred to the incident again when he addressed race in a speech in March during a controversy over his former pastor, the Rev. Jeremiah Wright. "I can no more disown him than I can my white grandmother," he said.

Dunham was "a woman who loves me as much as she loves anything in this world but who once confessed her fear of black men who passed her on the street."

Still, much of who Obama is comes from his grandmother, said his half sister.
"From our grandmother, he gets his pragmatism, his levelheadedness, his ability to stay centered in the eye of the storm," she told The Associated Press. "His sensible, no-nonsense (side) is inherited from her."

Madelyn Lee Payne was born to Rolla and Leona Payne in October, 1922, in Peru, Kan., but lived much of her childhood in nearby Augusta.

She was the oldest of four children, and she loved to read everything from James Hilton's "Lost Horizon" to Agatha Christie's "The Murder of Roger Ackroyd."

Dunham and her husband were "vicious" bridge players, according to her brother Jack. After retirement, the two of them would take island cruises and do little but play bridge and a more difficult version called duplicate bridge.

Statement by John and Cindy McCain on the death of Barack Obama's grandmother:

ARLINGTON, VA -- Today, U.S. Senator John McCain and Mrs. Cindy McCain issued the following statement on the passing of Barack Obama's grandmother, Madelyn Dunham:

"We offer our deepest condolences to Barack Obama and his family as they grieve the loss of their beloved grandmother. Our thoughts and prayers go out to them as they remember and celebrate the life of someone who had such a profound impact in their lives."

Stay in line-Don't be stopped from voting!

Who is John McCain and who are his friends?