Opinion

The Great Debate

The Democrats’ opportunity in the supercommittee’s failure

By Nicholas Wapshott
All opinions expressed are his own.

Thanksgiving, I don’t have to remind you, marks the settling of irreconcilable differences between the early settlers and the original Americans, the burying of the hatchet, as it were, between Christians and heathens. If only this Thanksgiving marked the same.

The Congressional supercommittee that was created to find $1.2 trillion in spending cuts has until November 23, the night before Thanksgiving, to find a way to pay down the national debt. But things look bleak. Former Bill Clinton chief of staff Erskine Bowles, whose own deficit cutting plan dribbled into the sand, told the committee the prospect of their reaching an agreement is no more than 50-50. If there is going to be any burying of the hatchet this Thanksgiving, it may be deep in someone’s cranium.

The arguments in the committee echo the ill-tempered debate in the summer over extending the federal debt ceiling. As before, the Democrats will only agree to entitlement cuts if the Republicans agree to raise taxes on the wealthy. As tax breaks for the rich have become an article of faith for Republicans, compromise seems unlikely. Intransigence is the order of the day.

But there is a significant difference between the obduracy on display in July and the obduracy that may doom an agreement this time around. In the summer, the Republicans were calling the shots: agree to a debt deal without tax increases for the top earners or we’ll allow the government to default on its debts and the dollar to be downgraded. This time failure to come up with a deal will automatically trigger $1.5 trillion in spending cuts, starting in January 2013. The slash and burn program was built in to the debt ceiling deal to spur the committee to agree. Neither side, it was thought, would want such brutal cuts, divided evenly between the military and benefits for the old and the unfortunate.

This would appear to give the advantage to the Republicans, the party of small government, who favor deeper cuts made more quickly. They should take care what they wish for, because there are considerable benefits to the Democrats if the scale and substance of the automatic cuts become real. The president set out on his reelection campaign in earnest two months ago when he demanded the Jobs Act, a $447 billion Keynesian stimulus by another name, be passed, despite knowing it never would be. Since then he has been on a bus tour to key election battlegrounds such as Ohio, Virginia, and North Carolina, telling his audiences he could find them the jobs they crave if only the Republicans would be reasonable.

What happens after Obama’s jobs bill dies?

By Nicholas Wapshott
The opinions expressed are his own.

You can add to the list of hollow cries from history–such as “Ban the Bomb!” and “Bring the Troops Home!”–the president’s favorite refrain, “Pass the Jobs Bill Now!” Like the rest, Obama’s oft repeated demand is a sham, a mere slogan. Neither he nor his party, and certainly no Republican, believes Congress is going to pass even a small part of the bill, for it combines two elements his opponents detest the most: public works and higher taxes on the rich.

While the GOP squabbles over which of a barely electable field to pick as its candidate, Obama has already begun his reelection campaign in earnest. The simple message he is taking on the road is that Congress should “pass the jobs bill now!” That’s a plea he knows is sure to be ignored, leaving him in a position, he believes, to blame persistent joblessness on the Republican obstructionists. He is onto something. As Jimmy Carter found out, Americans hold their presidents to account when the economy is tanking; they expect them to improve the economy and are prepared to fire them when they don’t. It is a lesson for conservatives who believe that governments can’t and shouldn’t attempt to change the economic weather. Voters blame the government anyway, whether they intervene or not.

Obama, like Franklin Roosevelt, believes in trying to fix the symptoms of a broken economy, while his GOP opponent, whoever it turns out to be, must hold to the Hayekian orthodoxy insisted upon by the Tea Party and the Republicans’ fiscally conservative wing that there is nothing much governments can or should do to improve the economy and that stimulus spending either does not work at all or will only make the smallest of differences in the short term. As Obama gleefully knows, a rival promising austerity, the long haul, a far worse economy before it gets better, and a dim light at the end of a long, long tunnel will be running against the spirit of optimism that Americans feel and like to hear from their leaders.

from Ian Bremmer:

Obama’s secret for new jobs

Ian Bremmer sat down with Reuters' Paul Smalera to discuss President Obama's plans to boost the American economy. Watch here:

Pelosi or Boehner may still have to walk the plank

One of the ironies of America politics is that the House of Representatives, designed to be the “mob” of political power, is the top-down, well-run branch of government, and the Senate is the every man for himself body. Unlike the Majority Leader of the Senate, the Speaker has immense sway over the House and can, when necessary, bend it to her will.

With that type of power, it’s not surprising that its leaders have to ward off intra-party threats to their power. In John Barry’s The Ambition and the Power, Barry compares overthrowing a Speaker or Minority Leader to Regicide. And, though unlikely, both sides of the aisle are talking about just such an event.

Pelosi may be forced to, or even want to step down if her party loses the House. Even if the Democrats win, numerous Blue Dogs have intimated in the campaign that they will not vote for her (Heath Schuler claimed that he will run against her if no one else does). Others have talked about electing a whole new House team for the Democrats.

Institutional failure week

-The opinions are the author’s own-

By the end of this week, the U.S. will face a government that is unable to act to aid the economy and a Federal Reserve that is unable to stop.

The stock market may well rise on this dysfunctional combination, only serving to prove that the economy and market are becoming fundamentally disconnected.

Tuesday’s election may well deliver a split Congress with the Republicans in control of the House of Representatives and the Democrats clinging to a narrow majority in the Senate. This means that there is no chance of further meaningful stimulus and that Democratic timidity will likely harden into an intransigence to match that of the Republicans.

US intelligence spending – value for money?

America’s spy agencies are spending more money on obtaining intelligence than the rest of the world put together. Considerably more. To what extent they are providing value for money is an open question.

“Sometimes we are getting our money’s worth,” says John Pike, director of GlobalSecurity.org, a Washington think tank. “Sometimes I think it would be better to truck the money we spend to a large parking lot and set fire to it.”

The biggest post-Cold War miss of the sprawling intelligence community was its failure to connect the dots of separate warnings about the impending attack on New York and Washington on September 11, 2001. It also laid bare a persistent flaw in a system swamped by a tsunami of data collected through high-tech electronic means: not enough linguists to analyse information.

Wall Street’s biggest trade of the year

Wall Street’s famed army of lobbyists does not seem to have had much success pushing back on the regulatory overhaul bills now being considered by the U.S. Congress.

The Street remains perilously isolated in Washington, deserted even by its normal friends. As a result it has little influence over the course of bills that will have a significant impact reshaping the industry over the next few years and risks being steamrollered.

Isolation is the result of a basic miscalculation about how angry voters are about the financial crisis and its aftermath in terms of lost jobs and income.

Live Debate: Breast cancer screening and mammography

cancerSweeping new U.S. breast cancer guidelines released on Monday recommend against routine mammograms for women in their 40s, and suggest women 50 to 74 only get a mammogram every other year.

The new guidelines by the U.S. Preventive Services Task Force, an influential panel of independent experts, would sharply curtail the number of breast mammograms done in the United States, sparing women the worry of false alarms and the cost and trouble of extra tests.

But U.S. cancer experts say the altered schedule may mean more women will die from breast cancer.

Profile of courage

kennedy2By John Aloysius Farrell — the views expressed are his own. This article first appeared on GlobalPost.

The death of Sen. Edward Kennedy will cost the United States not just a passionate voice for economic and racial justice, but also its irreplaceable champion of a liberal, less belligerent, humanistic foreign policy.

Step back to Friday, October 11, 2002, when only 23 U.S. senators voted against the resolution authorizing President George W. Bush to go to war in Iraq.

from Commentaries:

Time for the Fed to stand up to its critics

John M. Berry is a guest columnist who has covered the economy for four decades for the Washington Post and other publications.

By John M. Berry

Financial crises and the policies to deal with them top the agenda at the Kansas City Fed's Jackson Hole conference. But what is actually going to be on everyone's mind at the august gathering is the uncertain future of the Federal Reserve itself.

Many members of Congress want to clip the Fed's wings for failing to prevent the crisis and for its actions since the meltdown began two years ago. In particular, most are angry about government bailouts, starting with the $29 billion in Fed backing for the purchase of Bear Stearns by JPMorgan Chase.

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