Washington Extra – Just Keep Smiling

August 30, 2010

bernanke1In the past few days we have seen the president and the chairman of the Federal Reserve both standing up and insisting they had more cards at their disposal to rescue the faltering American economy. In truth, though, both men look like they are holding weak hands, and are reduced, for the time being, to putting a brave face on things.

With short-term interest rates already at zero, Ben Bernanke has few cards he can play, and none of them feel like sure-fire winners. One is to restart an aggressive program of purchasing government securities to drive long-term interest rates down still further, another is to cut the interest rate on reserves, and a third, desperate measure would be to raise the inflation target. None of those cards are likely to be played unless things get significantly worse.

In theory President Barack Obama has more options at his disposal, but it is far from clear what he can actually get through Congress in election season. Today Obama promised that his economic team was “hard at work in identifying additional measures” to support the economy and boost hiring. But he had few new ideas to offer, besides extending tax cuts for the middle class that are set to expire this year, increasing government support for clean energy development, and rebuilding more U.S. infrastructure.

obama_economy1Obama did say he was considering “further tax cuts to encourage businesses to put their capital to work creating jobs here in the United States,” and he also appealed to Senate Republicans to drop their “blockade” of a bill meant to make credit more easily available for small businesses. More details of his proposals are promised in the days and weeks ahead, and we will be watching to see if he unveils anything that feels like more than a band-aid.

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Here are our top stories from today…

Obama says discussing new steps on economy

President Barack Obama, under pressure to bolster the economy, said he and his economic advisers are discussing additional steps to generate job growth such as more tax cuts for businesses. Obama, just back from a 10-day vacation, appeared in the White House Rose Garden to show his concern about the economy, which some experts believe is in danger of slipping into a double-dip recession.

For the full story by Steve Holland, click here.

Consumer spending offers hope on economy

Consumer spending rose at the strongest pace in four months in July, supported by a small gain in incomes that offered hope consumers will be able to keep contributing to a modest economic recovery. Analysts said the 0.4 percent increase in spending reported by the Commerce Department was a relief after a raft of weak data for July and helped ease fears the economy was sliding back into recession.

For the full story by Lucia Mutikani, click here.

Obama widens sanctions on North Korea

President Barack Obama broadened financial sanctions on North Korea and froze the U.S. assets of four North Korean citizens and eight firms in part to punish it for the sinking of a South Korea warship. Obama signed an executive order that allows the United States to block the assets of North Korea entities that trade in conventional arms or luxury products, counterfeit currency or engage in money laundering, drug smuggling or other “illicit economic activity” that supports the government or its leaders.

For the full story by Arshad Mohammed, click here.

U.S. to decide on genetically altered fish

Health officials are set to rule on whether a faster-growing, genetically engineered fish is safe to eat, in a decision that could deliver the first altered animal food to consumers’ dinner plates.  The fish, made by Aqua Bounty Technologies Inc, is manipulated to grow twice as fast as traditional Atlantic salmon, something the company says could boost the nation’s fish sector and reduce pressure on the environment.  But consumer advocates and food safety experts are worried that splicing and dicing fish genes may have the opposite effect, leading to more industrial farming and potential escapes into the wild.

For the full story by Susan Heavey click here.

U.S. to propose labeling greenhouse gases from cars

The United States will propose new labels for passenger vehicles, detailing for the first time their greenhouse gas emissions while also changing measurements of fuel economy. The labeling proposed by the Environmental Protection Agency and the Department of Transportation would allow consumers to compare cars in terms of emissions blamed for warming the planet and to see how far they could drive on new technologies and traditional gasoline engines.

For the full story, click here.

Defense trade reform to boost jobs, security: Obama

Streamlining export restrictions on defense goods and high-technology products will help create manufacturing jobs while boosting national security, President Barack Obama said.

To read more of this story by Doug Palmer, click here.

Roger Clemens pleads not guilty to lying charges

Former baseball pitching star Roger Clemens pleaded not guilty to six counts that he lied and obstructed a congressional investigation about whether he used banned substances to enhance his performance.

For the full story by Tabassum Zakaria, click here.

Folksy Warren is symbol in debate over Wall Street

Elizabeth Warren is folksy and plain-spoken and favors cardigans over Washington power suits. Many on Wall Street view her as their worst nightmare but she is a hero to liberal activists and consumer groups. This autumn, Warren, a contender to become the top consumer financial regulator, could become a focal point in a political debate over how far government should go to rein in the financial sector and other corporate interests.

For the full story by Caren Bohan, click here.

Some opinion from one of our editors…

China’s economic model isn’t the answer for the U.S.

Forget the “Ground Zero mosque,” Michelle Obama’s Spanish holiday and even the oil spill in the Gulf of Mexico. When future historians look back to the summer of 2010, the event they are most likely to focus on is China’s emergence as the world’s second-largest economy.

For the full piece by Chrystia Freeland, click here.

And from elsewhere…

Earl becomes major hurricane, could swipe east

Hurricane Earl turned into a major Category 3 storm as it lashed northeast Caribbean islands on a track that could see it swiping the East Coast in the next few days, the National Hurricane Center said. But the Miami-based center said it was too early to say what part of the eastern seaboard might take a direct impact from Earl, the second major hurricane of the 2010 Atlantic season.

To read more of this story, click here.

Factbox: Primetime Emmy nominees in key categories

The 62nd Primetime Emmy Awards, television’s highest honors, took place in Los Angeles this weekend.

To read a list of Emmy winners in the major categories, click here.

Photo Credits: REUTERS/Price Chambers (Federal Reserve Chairman Ben Bernanke enters the Jackson Hole Economic Symposium in Grand Teton National Park, Aug. 28, 2010)  REUTERS/Jason Reed (Obama speaks about the economy from the Rose Garden)

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