James Pethokoukis

Politics and policy from inside Washington

Is Paul Ryan running for president?

Aug 9, 2011 17:16 UTC

A tantalizing item in The Hill is sure to prompt much speculation:

Rep. Paul Ryan (R-Wis.) made a foray Tuesday into the GOP presidential race, asking for donations to launch ads in Iowa defending his 2012 budget, and Republican presidential candidates’ support for it.

Ryan, the chairman of the House Budget Committee, sent an email through his political organization, the Prosperity Project, to push back against a campaign led this week in Iowa by the Democratic National Committee (DNC) to frame GOP presidential candidates as extremists.

“The DNC is attacking all of the candidates for their support of my Path to Prosperity budget,” Ryan wrote in an email. “We have to fight back. With your support, I’m planning on launching a counter-attack to educate Iowa voters about the Path to Prosperity and how it’s the only plan currently on the table that saves Medicare.”

The email is the first visible sign by a House or Senate Republican leader to affect the race for the Republican nomination. Ryan didn’t endorse any particular candidate, and sought to bolster the field as a whole in Iowa, the state hosting the first nominating contest of the 2012 cycle.

“The 2012 Presidential Election is a critical opportunity to establish our priorities of cutting spending, eliminating deficits, paying down the debt, and restoring economic growth,” Ryan wrote in his email. “With Iowa’s important role as an early state in the political process, I hope you’ll recognize the need to take our fight there right now.

Maybe Ryan is just trying to make sure his plan has an influence on the GOP 2012ers. Or perhaps he is sowing seeds in the key caucus state for a 2016 run. Or both. And who could blame him for wanting to defend his much-attacked and much-distorted policy proposal.

But the current field still seems unsettled enough that Ryan probably yet has a window to jump into the race. Betting markets, for instance, have Mitt Romney and Rick Perry more or less tied at 33 percent. I would imagine Ryan, currently at 1 percent, would be running roughly even with those guys the day after he announces … if he announces, which I still doubt he will. But if Rick Perry can get into the GOP race in mid-August and be seen as viable, Ryan could certainly wait until September.



Dear James,

Like me, you’re a real “birther,” right? Meaning you are breeding above (or way above) the replacement rate.

So what if somebody said, Hey I have the best job in the world for you, and all you have to do is not see your 0-, 1-, 2-, and 4-year olds (using my numbers, here) for the next 10 or so years?

I would say, Go to hell, probably, or something close. Ryan will say same, I suggesst, as you reasonably would.

God bless your mission at Reuters!

-jordan keiser
kc mo

Posted by sophile | Report as abusive

Will China shift economic gears?

Aug 9, 2011 16:58 UTC

Hey, China’s got economic problems, too. Excellent piece on the challenges facing the Middle Kingdom:

The lift that keeps the ‘build-it-and-they-will-come’ model going – largely policy inertia tied to a massive stimulus plan and tight relationships between banks, state-owned companies, and local governments – can’t defy economic gravity forever. .. A policy shift towards building the middle class would bring a host of benefits: Freeing up financial resources to capital-starved small- and medium-sized enterprises to create durable job growth; reduced cement and steel production, two of China’s most energy intensive industries, to help lower inflationary pressures in commodities like coal, oil, and iron ore while also cutting emissions; and a boost in domestic consumption to relieve trade tensions as personal incomes rise along with imports.

This will require a degree of political will unseen to date. Economic modernization now risks stalling at best, and reversing at worst, with increased government control. … Without a true middle class revolution, China’s economic foundations will increasingly rest on shifting sands. Ghost towns will remain empty, property investors will see diminishing returns, and banks will struggle with increasing defaults. China may be a victim of its own success, arriving at an economic fork in the road sooner than expected – one path leads to enriching the masses, the other back to business as usual.

I doubt whether such political will exists in Beijing. Lots of powerful people and their families are getting rich from the current economic arrangement, so why push preemptive change. Like a football coach, leaders will keep running the same play until it clearly fails to work. That is my guess, at least.

Waist deep in the Big Muddle

Aug 9, 2011 16:56 UTC

A needed dose of Larry Kudlow to counter my gloom:

The S&P downgrade is a fiscal warning, not an economic event. And the growing fear of U.S. recession may not pan out. There are still plusses out there, believe it or not.

1) Our financial system is in vastly better shape than it was in September 2008. Vastly better shape.

2) The Federal Reserve is highly accommodative, as illustrated by the upward-sloping yield curve. Using the yield-curve measure alone, the chances of recession based on historical analysis are very low.

3) And energy prices are coming down, with oil moving toward $80 a barrel. Oil analyst Peter Beutel points out that gasoline prices in the last two weeks have fallen by 35 to 40 cents. Adding in other oil-related savings, the energy-price drop amounts to a $100 billion tax rebate for consumers.

4) Plus, corporate profits will continue to rise while business balance sheets are pristine and chock full of cash. Consider the combination of solid productivity, moderate wage rates, and falling commodity prices. These are all plusses for the economy and stocks.

So in light of all these factors, it seems to me that the economy can hold up. It’s not the kind of rapid growth I’d like to see. But it’s not the deep and dark recession that seems to be embodied in the stock market plunge. … The American free-enterprise system can weather these shocks, and I believe favorable political and policy changes are on the way

So no Great Recession 2.0, just a continued muddling though. High unemployment. Weak growth, with maybe a negative GDP quarter here and there. The American economy getting boiled one degree at a time.  I am not sure what policy changes are coming. President Obama hinted at some new ideas in his speech yesterday. One can hope.

A crisis of confidence in economy — and Obama

Aug 9, 2011 00:29 UTC

Barack Obama’s presidency was birthed by economic collapse and financial crisis. Opportunity for a second term is now in growing danger of termination by the very same forces. After its Monday plunge, the U.S. stock market has fallen 18 percent since late April. (During his January State of the Union address, the president pointed to a “roaring” market as one sign his Keynesian policies were working.)

And the economy is advancing at such a slow pace that it risks sliding back into recession. Goldman Sachs thinks the nation’s GDP will expand just 1.7 percent this year and 2.1 percent in 2012, leaving the unemployment rate stuck at well over 9 percent. The firm sees a one-in-three risk of a downturn over the next six to nine months. Other financial firms think the odds are closer to 40 percent or even 50-50.

Then, once again, there’s Wall Street. Not only were bank stocks hammered in the sell-off, the cost to insure their bonds against default soared. Standard & Poor’s downgrade of U.S. government debt may have been a factor since Uncle Sam is backstopping the sector. (More evidence “too big to fail” is alive and well.) But there are also concerns about U.S. bank exposure to European banks and, in turn, their exposure to European government debt. (Sovereign defaults and a EU banking crisis would also slow economic growth in a key market for U.S. exports.) And, coming full circle, banks here still face billion in potential mortgage losses, a problem that another recession would only worsen.

In short, there is again a crisis of confidence in the U.S. economy – but in Washington, too. During his brief speech yesterday at the White House, Obama did nothing to calm jittery markets, perhaps achieving just the opposite. He blamed Tea Party Republicans for the debt downgrade. He said government discretionary spending couldn’t be cut much further. He called for raising taxes. And he repeated his demand for a mini-version of the 2009 stimulus – temporary tax cuts, infrastructure spending, more unemployment benefits.

The stock market, already falling before Obama spoke, saw selling accelerate as Obama made it clear he had no new ideas to offer. And he certainly gave no hint that he’s ready to adopt Republican ideas such as cutting business taxes or slashing regulation. Instead of a pivot, Obama stayed firmly planted in the anti-growth policies of the past two-and-a-half years. He’s even keeping Tim Geithner as Treasury secretary, practically begging the poor guy to stay. (Indeed, it was almost exactly a year ago that Geithner penned his “Welcome to the Recovery” op-ed.)

Americans have seen this movie before. And it didn’t end well. No one wants a sequel, least of all Obama. But the way things are going, another president-elect might be able to utter pretty much the same words on Nov. 6, 2012, as Obama did on Nov. 4, 2008:

The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America – I have never been more hopeful than I am tonight that we will get there. I promise you – we as a people will get there.




One day plunges don’t mean much to me any more. ~5 (biz) day movement matters more. How this week ends is more significant, imo.

If this week closes below 10,000, a lot of folks are going to be looking for something new to add to the end of their very long machine-trading if-then-else software logic statement after “buy US treasuries.”


Posted by DanFarfan | Report as abusive