Tales from the Trail

Washington Extra – Shuffling the pack

September 9, 2010

cabinetWe hear the White House is not wildly pleased with former budget chief Peter Orszag for abandoning the party line on tax policy this week. Now Democrats in Congress are beginning to distance themselves from President Barack Obama’s push to let taxes rise for the wealthiest Americans. We are unlikely to see this resolved before the mid-terms anyway, and there are still several different ways this could pan out. One possible compromise would be a short extension of the tax cuts for the rich and a longer extension for the middle classes, keeping any crucial decisions as far away from the 2012 campaign season as possible.

More today on the potential for a reshuffle in Obama’s inner circle after the November elections, especially if Rahm Emanuel departs for Chicago. Democratic sources tell us Larry Summers, never that happy in his role, might be among those who leave, but that Treasury Secretary Tim Geithner is likely to stay the course.

One administration official who is flagging his own retirement is Defense Secretary Robert Gates. As we report from our Aerospace and Defense Summit in Washington this week, Gates used to be viewed by the defense industry with apprehension, but these days many industry executives see his efficiency drive as both sensible and as the best way to protect the overall defense budget. It seems he will be missed.

Elsewhere, a glimmer of hope on the economy with some data on trade and jobless claims that might see some economists revising up their forecasts for third quarter growth.  And a nice blog from our Summit lifting the lid on the exclusive and secretive “Conquistadores del Cielo” club, an annual gathering of the head honchos of the aviation world, for some informal bonding and maybe a little rodeo in Wyoming.

Here are our top stories from today:

Data shows economic recovery still on track

New claims for unemployment benefits fell more than expected last week to a two-month low, while the trade deficit narrowed sharply in July, hopeful signs for the stuttering economic recovery.  The data helped to calm fears of a sharp slowdown in growth and implied the economy could start working its way out of a soft patch.

For more of this story by Lucia Mutikani Doug Palmer, click here.

SCENARIOS- Climate action faces tough odds after election

Comprehensive climate control efforts, already in serious trouble in the Congress, could suffer more setbacks if Republicans take control of the House of Representatives or Senate in November’s congressional elections.  Most Republicans are dead-set against legislation imposing mandatory reductions of greenhouse gas emissions from smokestacks and tailpipes.

For more of this story by Richard Cowan, click here.

Analysis: Obama has tenuous grasp on Democrats over taxes

Democrats in Congress are distancing themselves from President Barack Obama’s push to let taxes rise for the wealthiest Americans, fearing it will further harm them in November’s mid-term elections.  Obama stood firm on his stance in a fiery speech this week addressing the looming increase of all individual taxes.

For more of this analysis by Kim Dixon, click here.

Analysis: Obama to weigh broad changes in White House team

The likely exit of top aide Rahm Emanuel gives President Barack Obama the chance to make broader staff changes as his Republican rivals look set for a resurgence in November’s congressional elections. The prospect of Republicans taking control of the House of Representatives and possibly the Senate in the November 2 elections would force Obama to move in a more centrist policy direction as he lays the groundwork for his 2012 re-election bid.

For more of this story by Caren Bohan, click here.

Senate, House eye action on China currency

A volatile political environment is boosting the possibility that lawmakers will pass legislation designed to prod China into letting its currency rise more rapidly against the dollar. “The chances are certainly on the rise, I think for two reasons,” Jeremie Waterman, senior director for China at the Chamber of Commerce, told Reuters.

For more of this story by Doug Palmer and Glenn Somerville, click here.

Defense industry not cheering Gates’ retirement

Defense industry executives once viewed Defense Secretary Robert Gates with apprehension. But now that he is flagging his retirement, some worry about the future once he is gone. Many executives are still hesitant to speak of Gates’ departure at all.

For more of this story by Phil Stewart and Andrea Shalal-Esa, click here.

More doctors no panacea for healthcare: report

Medicare patients with more doctors to choose from do not necessarily get more or better care, researchers reported in an analysis demonstrating how complicated healthcare reform will be. The Dartmouth Atlas analysis questions the Obama administration’s hopes that health insurance reform legislation passed in March will do much to improve healthcare by helping 32 million more Americans get health insurance and providing more primary care.

For more of this story by Maggie Fox, Health and Science Editor, click here.

Health reforms cause bump in spending: report

U.S. reforms will slightly accelerate the rise in healthcare spending, according to a survey, handing Republicans more ammunition as they attack the Obama administration’s legislative victory. The survey, conducted by Centers for Medicare and Medicaid Services (CMS) auditors, said the spending bump is modest, and the more dramatic change is in how money is spent as roughly 32 million Americans gain coverage.

For more of this story by Susan Heavey, click here.

F-35 engine fight gives rivals sense of deja vu

Rival engine makers Pratt & Whitney and General Electric Co say their almost epic struggle over a potential $100 billion engine market for the new F-35 fighter jet is giving them an odd sense of deja vu. For years, top U.S. Defense Department officials have tried to cancel the F136 engine being developed by GE and Britain’s Rolls-Royce Group PLC as an alternative to the F135 engine built by Pratt & Whitney, a unit of United Technologies Corp. Then each year, Congress has defied veto threats and White House pressure to keep the program alive.

For more of this story by Andrea Shalal-Esa, click here.

U.S. appeals court puts on hold stem cell funding ban

A U.S. appeals court granted on Thursday an Obama administration request for a temporary stay that lifts a judge’s ban on federal funding of research involving human embryonic stem cells.

For more of this story by James Vicini and Jeremy Pelofsky, click here.

What we are blogging today…

Revealed: Why ‘Conquerors of the Skies’ are homing on Wyoming

There must be something about Wyoming at this time of year. Several participants at the Reuters Aerospace and Defense Summit held in Washington this week said they were heading out West — but declined to say what was taking them so far from hard-nosed airline investors and Pentagon accountants.

For the full blog by Tim Hepher, click here.

The Quest to put Solar Power Back on the White House

Bill McKibben, founder of the green group 350.org, is on a quest to convince President Barack Obama to put solar panels back on the roof of the White House. He’s at the end of a journey to Washington from Maine in a van fired by biodiesel carrying one of the 32 panels Jimmy Carter unveiled in 1979 during the first press conference on the White House roof.

For the full blog by Timothy Gardner, click here.

From elsewhere …

Florida pastor abandons Koran-burning plan

A Christian pastor he was canceling a plan to burn the Koran, which had drawn international condemnation and a warning from President Barack Obama that it could provoke al Qaeda suicide bombings. Terry Jones, who heads the tiny Dove World Outreach Center church in the Florida university town of Gainesville, told journalists outside his church in this Florida town that he was calling off his plan.

For more of this story by Ben Gruber, click here.

New York finally sees progress at Ground Zero site

Nine years after the September 11 attacks, visible progress is finally being made toward rebuilding the World Trade Center site known as Ground Zero. Delays from political, security and financing concerns have dominated the public image of the roughly $11 billion project in the absence of a gleaming new skyscraper or memorial to those who died when al Qaeda hijackers destroyed the Twin Towers.

For the full story, click here.

For more stories from our Washington correspondents visit www.reuters.com and stay informed.

Photo Credit: REUTERS/Larry Downing (Obama speaks in a cabinet meeting while  Orszag (foreground) listens, June 22, 2010)

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