It’s been a year since Americans have gone to the polls, but as they do on Tuesday President Barack Obama may be less excited than he was last year, particularly in Virginia and New Jersey where his fellow Democrats are facing trouble.

Republicans are hoping to capture the governors’ mansions in those two states to rebuild some momentum after being trounced by Democrats last year. They also are trying to make it a referendum against Obama’s agenda to overhaul the U.S. healthcare system and financial regulatory structure as well as his plans to address climate change.

In Virginia where Obama won narrowly in 2008, Republican Bob McDonnell has built a sizable lead over Democrat Creigh Deeds while in traditionally Democratic-leaning New Jersey Republican Chris Christie is neck and neck with Democratic incumbent Governor Jon Corzine.

Obama has campaigned for both of his fellow Democrats but that may not be enough for them to win.

While Republicans are salivating at their prospects in those two races, Democrats are eyeing a congressional race in upstate New York to replace a Republican lawmaker who became Obama’s Army secretary. Conservative Party candidate Doug Hoffman was barely ahead of Democrat Bill Owens in the traditionally Republican district.

After tremendous infighting, the Republican candidate, Dede Scozzafava, withdrew from the race and endorsed the Democrat, highlighting the rift between moderates and the conservatives of the Republican party.

Elsewhere, the Federal Reserve’s Federal Open Markets Committee begins a two-day meeting this morning to discuss interest rate policy and whether the U.S. economy is starting to build its own momentum towards a recovery.

And the Senate Environment and Public Works Committee will begin working on a climate change bill, but unhappy Republicans are threatening to boycott the session.

- Photo credit: Reuters/Jonathan Ernst (Obama returns from a campaign trip to New Jersey)

President Barack Obama began his summer vacation by sending a specific message to the White House press corps.

 ”He wants you to relax and have a good time,” Deputy Press Secretary Bill Burton said as Air Force One carried the first family to the Massachusetts island where they are spending a week-long holiday. “Take some walks on the beaches. Nobody is looking to make any news, so he’s hoping that you guys can enjoy Martha’s Vineyard while we’re there.”

“I asked him if he had a message for the press corps, and that’s what it is,” Burton said.

Right.

No president really leaves the news behind when he takes time off, but Obama’s 7-day break would be a busy news week, even if it ended now — just halfway through.

On Monday, the Obama administration said it was setting up a new group to interrogate terrorism suspects in accordance with established rules, to be overseen by the Federal Bureau of Investigation, rather than the Central Intelligence Agency.  His attorney general, Eric Holder, named a special prosecutor to probe CIA prisoner abuse cases.

On Tuesday, Obama broke the news perhaps most keenly awaited by financial markets. He announced that he would nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The decision on whether Obama would retain the central banker as the economy struggles to recover from recession had been widely expected, but not until later in the year.

And on Wednesday, Obama faced the news of the death of his friend and former U.S. Senate colleague, Ted Kennedy, issuing an overnight statement and making brief remarks at the farm where he is spending his vacation.

The president has squeezed in some relaxation in between his news events. He has played golf twice, gone out to dinner, visited with friends and hit the beach at least once. And his five-book reading list totals more than 2,300 pages.

And at least Obama has an easy answer for critics who said he shouldn’t be taking a break with his healthcare reform plan struggling, a stumbling economy and violence up in Iraq and Afghanistan.

He hasn’t.

Photo credits: U.S. President Barack Obama watches his tee shot (Brian Snyder/Reuters) Obama watches as Bernanke speaks (Jason Reed/Reuters) Obama leaves the podium after making a statement to the press following the death of U.S. Senator Ted Kennedy (Jason Reed/Reuters)

Watch out for the quiet ones in the War of the Wonks (OK so we’re being a bit dramatic).

Mild-mannered Ben Bernanke gets to keep his five-star financial job as Federal Reserve Chairman, winning out over speculation that President Barack Obama was thinking about replacing him with Larry Summers, known among other things for his outsized ego.

Delving into the past of the grey-beard, here are some clues about what propelled him to become the nation’s economic engineer — a job he managed to hold on to despite a national unemployment rate approaching 10 percent.

Bernanke was a bit of a rebel as a child, evading work at the family drug store on Main Street in Dillon, South Carolina, to read comic books, as he revealed when accepting the “Order of the Palmetto” from his hometown.

He took risks as a young adult, leaving the known of  South Carolina for the unknown of  Harvard where he recounts, “I took in the scene, so foreign to my experience, and I said to myself, ‘What have I done?’”

Whatever he was doing, it worked. He ended up teaching economics at Princeton. And he’s been recognized for his industriousness with a bit of Interstate highway named after him.

He’s very interested in the international — we hear he likes British fiction like authors Anthony Trollope and PG Wodehouse. And the domestic — he’s a big fan of baseball.

Bernanke also drinks Diet Dr Pepper and Diet Coke (we’re not quite sure of the meaning of that, but hey it is the Fed we’re talkin’ about).

Put it all together and voila! It produces a Fed Chairman.

Two days after arriving in Martha’s Vineyard, President Barack Obama is taking a break from his vacation to make some news: he will announce that he is nominating Ben Bernanke to a second term as chairman of the Federal Reserve.

Investors have given Bernanke, whose current term expires on Jan. 31, 2010, high marks and had widely expected his reappointment.

But the announcement is being made earlier than expected and comes not just during Obama’s family vacation but also on the day that the White House Office of Management and Budget and the non-partisan Congressional Budget Office both release their midyear budget updates.

The reports are expected to show the government will spend a record $1.6 trillion more than it collects this year and nearly double its outstanding debt over the next 10 years.

The grim fiscal picture could provide fodder for opponents of Obama’s costly plan to overhaul the healthcare system.

So why is Obama interrupting his vacation to announce Bernanke’s renomination? Does he hope to inject a sense of continuity and stability by erasing doubt over who might lead the Fed?

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Photo credit: REUTERS/Jason Reed (Obama and friend Eric Whitaker wave as they golf on Martha’s Vineyard)

Alan Greenspan may have retired as chairman of the Federal Reserve, but his insight is still in hot demand, so much so that Senate Republicans invited him to be their guest speaker at their weekly policy lunch.

Per his normal practice, Greenspan declined to tell reporters what he told the lawmakers behind closed doors, but that did not stop a few senators from spilling the beans.

New Hampshire Republican Senator Judd Gregg said the former Fed chief talked mostly about the need to address the long-term budget deficit, specifically the Medicare healthcare program for the elderly and those with disabilities. The U.S. deficit is expected to crest at more than $1.8 trillion in fiscal 2009 which ends Sept. 30.

On the economy, which has been in a recession since December 2007, Greenspan apparently offered a slightly brighter picture. That would match  what more and more economists are saying — that the recession is in the process of bottoming out and look for a recovery to take root in the current quarter.

“I think he thinks things are improving,” Gregg told reporters.

Greenspan offered some “encouraging thoughts, banks are better off than they were six months ago,” said Nebraska Republican Mike Johanns. “On housing, if I remember correctly, (Greenspan offered) some indication that things were bottoming out, but again I think that’s reflective of what others are saying.”

One senator who has been pressing to boost transparency at the Fed, South Carolina’s Jim DeMint, said he was unable to corner Greenspan and ask him about efforts to give authority to the Government Accountability Office to audit the central bank’s operations.

DeMint’s effort earlier this month to attach a provision that would give the GAO such oversight was blocked in the Senate.

“We ran out of time, and there were or six or eight guys who jumped in front of me asking questions” of Greenspan, DeMint said. He said Greenspan’s presentation focused on the unsustainable debt level and if that was not dealt with, “we are on a collision course with disaster.”

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- Photo credit: Reuters/Kevin Lamarque (Greenspan testifying to Congress in 2008)

After the Obama team’s big announcement on health care and an even bigger deficit, now comes the hard part — actually sitting down and figuring out how much it’s going to cost, and how to make it cost less. President Barack Obama’s first public appearance today is a round-table discussion with business leaders on cutting employer health care costs.

Later, behind closed doors at the White House, Obama and Vice President Joe Biden meet with Commanding General Raymond Odierno, the head of the Multi-National Force-Iraq, and U.S. Ambassador to Iraq Chris Hill. Then the president meets with Defense Secretary Robert Gates, one day after Gates replaced the top U.S. Afghanistan commander.

In congressional action, Homeland Security Secretary Janet Napolitano faces questions about her department’s 2010 budget from both sides of Capitol Hill. Lisa Jackson, who heads the Environmental Protection Agency, also faces budget questioning from the Senate Environment and Public Works Committee.

Despite talk of early signs of economic recovery, a U.S. Federal Reserve official sounded a note of caution. Things are better than they were, but the crisis isn’t over yet, Atlanta Federal Reserve President Dennis Lockhart said: “I believe that conditions are now calmer but it is too soon to breathe easy.”

As if to confirm this, the U.S. trade gap widened in March for the first time in seven months — but not as much as some analysts had feared. So though the news isn’t good, it isn’t as bad as it could be.

Perhaps this counts as one of those “green shoots” of economic recovery we keep hearing about? You tell us: is this a sign the economy is turning?

Photo credit: REUTERS/Jim Young (President Obama in the White House Rose Garden, April 28, 2009)

It’s Good Friday and U.S. financial markets are closed, but the government is open for business.

President Barack Obama will discuss financial conditions in a meeting this morning with Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp head Sheila Bair, Securities and Exchange Commission chief Mary Shapiro and Comptroller of the Currency John Dugan.

Obama is expected to make some brief public remarks at the end of the meeting.  The White House session comes amid tentative signs of recovery in ailing financial and retail sectors, according to a front page story in the Washington Post.

The standoff between a U.S. warship and Somali pirates continues in the Indian Ocean. Pirates were able to recapture Maersk Alabama Captain Richard Phillips after he tried to swim to safety in an escape attempt on Friday.

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Photo Credit: REUTERS/Ho New  (U.S. Navy destroyer Bainbridge in Jan 2008 file photo. The USS Bainbridge arrived on Thursday off the Somali coast)

Spring blew into Washington this morning and the signs are everywhere: the cherry blossoms are starting to come out, magnolia trees are budding and at the White House, workers are digging up the lawn.

Um, what?

As it turns out, the Obamas are part of the local food movement and plan to grow veggies in a patch of lawn on the executive mansion grounds. This was front page news in The New York Times, and a big headline in The Washington Post’s well-read Style section.

Calling up memories of the “victory gardens” of World War II, when Americans were encouraged to grow their own produce to help the war effort, the White House garden is not a brand new idea. John Adams and Eleanor Roosevelt had gardens, while Woodrow Wilson had a flock of sheep and the Clintons grew some vegetables in pots on the White House roof.

The Obamas seem to be taking gardening to a whole new level. They’ll have some 55 varieties of produce, from a patch of mixed berries — blueberries, blackberries and strawberries — to hot peppers, kale, collards and spinach, according to the Times, which featured a garden layout in their coverage.

Roger Doiron, founder of the nonprofit Kitchen Gardeners International, was elated. “I’m thrilled for the Obama family and for all who will be inspired by their example to grow gardens of their own this year.”

Alice Waters, the chef at the celebrated Chez Panisse restaurant in California and a booster of local eating, probably isn’t surprised. Back in January, she told Reuters she was heartened by signs from Michelle Obama that the president was concerned about childhood obesity and sustainable farming. “I’ve spoken to him through his wife,” Waters said then. “I’m encouraged.”

For those not into gardening, Federal Reserve Chairman Ben Bernanke is set to speak at midday on a familiar topic to Washington-watchers: “Financial Crisis and Community Banking.”

Photo credit: Cherry blossoms near the Washington Monument on March 27, 2008. REUTERS/Yuri Gripas

It’s not just U.S. stocks that are on a roller coaster ride in reaction to congressional testimony by Federal Reserve Chairman Ben Bernanke and other top officials.

Fed staff stock plunged on Wednesday when they put their boss in an awkward position during Bernanke’s testimony before Congress on the financial bailout and efforts to stabilize the swooning economy.

Rep. Scott Garrett testily reminded Bernanke that he was still waiting for answers for a letter he sent in December.

“We need to move on some of these issues,” Garrett said.

“You have not received a reply?” Bernanke asked, sounding surprised.  

When Garrett said he had not, the Fed chairman took time out from discussing the narrowly averted global financial meltdown to assure the lawmaker he would crack down on his wayward staff.

“After some concerns about this, I have asked staff to try to put a one-month limit on (response) time.  And so, clearly, that has not been met in this case, and I will check up on the situation,” Bernanke said.

Later, however, Fed bureaucrats received a sort-of compliment from Rep. Michael Capuano, who was upset the government has yet to make clear how it plans to purge the financial system from assets that have lost value because they are linked to delinquent mortgage loans.

Capuano marveled that the government now calls them “legacy” assets instead of “toxic” assets.

“It’s a good term,” Capuano said.   “Whoever made it up, give them a raise, because it sounds much better than toxic assets.” 

Bernanke could not suppress a smile. 

Will that encourage officials to start calling bank nationalization “pre-privatization,” as some observers have suggested?

A trillion dollars is a million million dollars or 12 zeros after the one.

And that’s how much apparently every program costs to save the U.S. economy these days.

Treasury Secretary Timothy Geithner outlined what he called “a new financial stability plan” to help restart the flow of credit, strengthen banks, and  “provide critical aid for homeowners and for small businesses.”

His proposal included a program in which the FDIC, the Federal Reserve, and the private sector would establish a fund, using government financing, to deal with bad assets weighing on financial firms.

“We believe this program should ultimately provide up to $1 trillion in financing capacity, but we plan to start it on a scale of about $500 billion, and we will expand it based on what works,” Geithner said.

Another piece of his plan would commit up to $1 trillion (there’s that number again) to support consumer and business lending with the Treasury and Federal Reserve working together to “kick-start the secondary lending markets.”

All that is separate from the economic stimulus legislation being fought over on Capitol Hill right now,  which is running about $800 billion (add $200 billion and that’s another trillion). 

Geithner, who came to the job with a bit of a tax issue in his past, showed that he was well aware of the math for his proposed economic rescue programs.

“Now, many of the programs I’ve discussed involve very large numbers,” he said.

And again.  “But I want to be candid:  This strategy will cost money, it will involve risk, and it will take time.”

“But as costly as this effort may be, we know that the cost of a complete collapse of our financial system would be incalculable for families and for businesses and for our nation,” he said.

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Photo credit: Reuters/Jim Young (Geithner unveils financial rescue plan)