Washington Extra — Not another stimulus
On Wednesday, President Barack Obama plans to announce his latest package of plans to stimulate the sagging U.S. economy, most of which are already known. It was hardly a surprise to see Republicans quickly positioning themselves to block the plans, but more disappointing to the White House must have been the cautious response even from the president’s fellow Democrats on the Hill, who simply said they were looking at the proposals. Even more damning, perhaps, was the verdict from the financial markets, which greeted the news with a big yawn. Both the Dow and the S&P indices ended the day more than one percent lower, dragged down by fresh growth worries in Europe. Economists on Wall Street said the plans would not do enough for small businesses or to solve the Democrats’ biggest economic and political problem: finding work for the 14.9 million unemployed. There are big questions, too, about how the plans will be paid for. “If he chooses to take away a corporate tax break to pay for this proposal, the net gain is zero,” said Andrew Busch at BMO Capital Markets. “This is likely why U.S. stocks are not seeing much of a bounce on the news.”
Last week White House economic adviser Christina Romer left town with a plea for a new deficit-financed economic stimulus. Today it was the turn of former budget chief Peter Orszag to go public with his prescription for the economy and taxes, views which differ from those of his former boss. Orszag suggested that the Bush-era tax cuts should be extended for all Americans for another two years in an effort to spur the economy, with a promise they will be allowed to expire altogether at the end of 2012. It is a view which makes some economic sense, but is unlikely to get much traction with a president likely to be campaigning for re-election that same year.
Some interesting interviews on the first day of the Reuters Aerospace and Defense Summit here in Washington. The CEOs of Lockheed Martin and of Boeing’s defense wing said both companies were well aligned for the new reality of huge fiscal deficits and tight defense budgets. Both men expressed strong support for the administration’s recently announced export control reforms, as well as new plans to extend and expand tax credits on research and development. Lockheed Martin’s Robert Stevens said he also saw the global security environment changing significantly in coming decades: withdrawals from Iraq and Afghanistan, coupled with threats from the Korean peninsula, Iran and China meant resources were likely to be shifted away from land and towards air and naval defense systems.
Finally, strong words today from State Department spokesman P.J. Crowley on a Florida pastor’s plans to burn copies of the Koran on the anniversary of the 9/11 attacks. Crowley said the actions were “un-American”, and appealed to the world’s public not to assume that any action by the obscure Dove World Outreach Center, which boasts only around 30 members, represented anything larger about the United States. Sadly, one can only shudder at the thought of images of Americans burning the Koran being repeated endlessly on TV screens across the Muslim world.
Here are our top stories from today…
Analysis: Obama plan may miss the most important mark – jobs
President Barack Obama’s new stimulus plan directs government assistance to some of the strongest parts of the economy without solving the biggest problem: finding work for the 14.9 million unemployed. The three main ideas he plans to introduce on Wednesday — $50 billion in infrastructure spending plus two sets of business tax incentives — could provide a modest burst of activity in a slow-growing economy.
For more of this story by Emily Kaiser, read here.
Congress Republicans wary of Obama economy plan
Republicans in the Congress showed little willingness to help President Barack Obama approve $350 billion worth of measures to boost the economy with midterm elections less than two months away. Obama’s plans for billions of dollars in tax breaks for businesses are policies that Republicans typically embrace, but the party has little motivation to give the Democratic White House a win.
For more of this story by Thomas Ferraro and Steve Holland, read here.
Lockheed says aligned for “new reality”
Lockheed Martin Corp is well aligned with the Pentagon’s priorities as the defense industry braces for a “new reality” shaped by massive deficits, tighter budgets and rapidly changing security threats, Chief Executive Robert Stevens said. Lockheed, the world’s largest defense contractor, expects to reach an agreement with the Pentagon “any day now” for a fourth batch of F-35 fighter jets, and it sees no major obstacles in the way of an agreement, Stevens told the annual Reuters Aerospace and Defense Summit.
For more of this story by Andrea Shalal-Esa and Karen Jacobs, read here.
Boeing cuts costs as defense outlook dim
Boeing Co’s defense unit is working to cut overhead and improve productivity, given the outlook for flat defense spending in the United States and Europe, the company’s top defense executive said. Boeing expects to expand international sales and grow in areas such as cyber security and unmanned systems, Dennis Muilenburg, chief executive of the defense, space and security division, told the annual Reuters Aerospace and Defense Summit.
For more of this story by Andrea Shalal-Esa and Soyoung Kim, read here.
Democrats seek allies in consumer agency debate
Key Democratic lawmakers hope to exploit the rare August return of the House of Representatives to intensify pressure on the White House to nominate Elizabeth Warren as head of the new consumer financial protection agency. Representative Carolyn Maloney and House Financial Services Chairman Barney Frank are urging President Barack Obama to act swiftly to nominate Warren — who has alienated Wall Street and Republicans in her role as a watchdog of the government’s $700 billion bailout of the financial system.
For more of this story by David Clarke, read here.
Obama decision on consumer job, CEA may come soon
President Barack Obama may be moving closer to making a decision on two key economic jobs: the top consumer financial regulator and chairman of the White House Council of Economic Advisers. “I can’t rule out that, at some point, that may come during the week,” White House spokesman Robert Gibbs said when pressed on the timing of an announcement about the two positions.
For more of this story by Caren Bohan, read here.
Ex-budget chief differs with Obama on U.S. tax cuts
Tax cuts should be extended for all Americans to help spur the economy, but even the middle-class cuts should end in two years, former budget director Peter Orszag said. Orszag’s views differed from those of his former boss, President Barack Obama.
For more of this story by Caren Bohan, read here.
NIH to use BP cash to study spill health effects
The National Institutes of Health said it would use $10 million from BP to start a multiyear study to look at the potential health effects from the oil spill in the Gulf of Mexico.
For more of this story by Maggie Fox, Health and Science editor, read here.
What we are blogging…
State Dept: church Koran burning plan “un-American”
There have been lots of angry words over plans by an obscure Florida pastor to burn copies of the Koran on the anniversary of the 9/11 attacks. But State Department spokesman P.J. Crowley pulled out the biggest gun of all in his effort to distance the government from the pastor’s incendiary proposal — he called it “un-American.”
For Andrew Quinn’s full blog, click here.
Google to start TV service this autumn
Google Inc will launch its service to bring the Web to TV screens in the United States this autumn and worldwide next year, its chief executive said, as it extends its reach from the desktop to the living room.
For the full story, click here.
Can money buy happiness? Maybe, up to $75,000
Can money really make you happy? Not really, but up to about $75,000 a year can ease the pain of life’s stresses, researchers reported. A survey of 1,000 Americans shows they are overall fairly happy, and more money equals more satisfaction up to a point, Daniel Kahneman and Angus Deaton of the Center for Health and Wellbeing at Princeton University in New Jersey found.
For the full story, click here.
For more stories from our Washington correspondents visit www.reuters.com and stay informed.
Photo Credit: REUTERS/Brendan McDermid (Traders work on the floor of the New York Stock Exchange, September 7, 2010)