Washington Extra – Gridlock and the fiscal deficit

September 21, 2010


The term gridlock may have first entered the vocabulary during the 1980 New York transit strike, reportedly coined by “Gridlock Sam” Schwartz, chief traffic engineer in the city’s transport department.  In those days it was definitely not something to aspire to. It is a different story in 2010.

“Gridlock’s not all bad,” Republican Senator Richard Shelby told the Reuters Washington Summit today, citing the need to “slow things down” politically.  His fellow Senator and Tea Party champion Jim DeMint would probably go even further.

But is that really what lies in store after the midterm elections?

Republican and Democratic speakers on the first day of the summit agreed on one thing above all else: that the other party is to blame for the lack of bipartisanship in Washington.

But is there any room for common ground if Republicans gain more power after November? There was not much sign of it today, except on the need to get to grips with the country’s medium- to long-term fiscal problems.

The big question is how to go about it. Republicans, of course, would like to see a radical and immediate mccain12overhaul of government spending.  Senator John McCain also returned to a favorite theme to argue that Republicans need to listen to the Tea Party and put an end to “corruption” in Washington, the system of earmarks  and “pork” attached to almost every piece of legislation.

White House Press Secretary Robert Gibbs, for his part, would not be drawn on how Democrats would like to tackle the deficit, but did say the president would put some ideas and issues on the table after the elections — “and we’ll see if the Republican Party is serious about meeting him halfway.”

One way or the other, this is shaping up to be one of the most interesting debates of the second half of the Obama presidency.

Here are our top stories today…

Reuters Summit – Deficit may be rare consensus issue
Political gridlock looks inevitable with a Republican resurgence in November’s congressional election but compromise is possible in one vital area — cutting spending and the massive budget deficit, speakers told the Reuters Washington Summit.

For the full story by John O’Callaghan,  click here.

Reuters Summit –  Key senator wants to reopen Wall Street bill
Republicans will reopen the broad Wall Street reform law and overhaul the newly created consumer protection bureau if they regain control of Congress after the November elections, a leading lawmaker said. Richard Shelby, the top Republican on the powerful Senate Banking Committee, said lawmakers must revisit the legislation enacted this summer, which is the broadest overhaul of financial rules since the Great Depression.

For the full story by Dave Clarke and Rachelle Younglai,  click here.

For more on  Shelby’s remarks about how Federal Reserve Chairman Bernanke supports privatizing Fannie Mae and Freddie Mac, click here.

Reuters Summit – U.S. parties will struggle to cooperate – pollster

President Barack Obama and his Democrats are likely to suffer a repeat of former President Bill Clinton’s defeat by Republicans at midterm elections in 1994. But that’s where the similarities end. Clinton turned that vote loss around and tacked to the center, working with the Republicans in Congress on welfare reform. He won re-election two years later. But the political climate now is more polarized and it will be difficult for Obama’s Democrats to work with resurgent Republicans, pollster Cliff Young of Ipsos Public Affairs told the Reuters Washington Summit.

For more of the  story by Alistair Bell, click here.

Reuters Summit – U.S. lawmaker wary of Chinese oil firms
Wary that Chinese oil companies could be undermining new U.S. sanctions against Iran, the chairman of the House Foreign Affairs Committee said he would push the Obama administration to investigate. Representative Howard Berman told the Reuters Washington Summit that he and the top Republican on the foreign affairs committee, Ileana Ros-Lehtinen, will meet administration officials soon over concerns foreign oil companies, some of which have U.S. subsidiaries, are violating the new law.

For the full story by Tom Doggett and Susan Cornwell, click here.

For more highlights from Reuters Washington Summit, click here.

Obama says China has not done enough on yuan
President Barack Obama said that China has not done enough to raise the value of the yuan, keeping up tough American rhetoric on Chinese policy as lawmakers weigh new legislation to punish Beijing. A bipartisan group of former cabinet officials warned Congress, however, that action against China for not letting its currency rise faster could backfire on the United States.
For more on Obama’s comments about his administration’s economic policies, click here.

Recession ended in June 2009: NBER
The recession ended in June 2009, making it the longest downturn since the Great Depression of the 1930s, the National Bureau of Economic Research said. The NBER, considered the arbiter of U.S. recessions, said it chose that month based on examination of data including gross domestic product, employment and personal income.

For more on the story, click here.

Homebuilder sentiment stays in doldrums
Home-builder sentiment remained stuck at a 1-1/2-year low in September, the latest suggestion the sector is in for a painful and prolonged climb back to health. The National Association of Home Builders and Wells Fargo said that their Housing Market Index for single family homes held for the second straight month at 13 — the lowest level since March 2009.

For more of this story by Corbett B. Daly, click here.

Bailout cop expands staff as TARP expires
The Treasury’s $700 billion bailout fund officially expires in two weeks, but not for Neil Barofsky, the top cop for the Troubled Asset Relief Program. He’s hiring new staff and opening four regional branch offices to pursue TARP-related fraud cases and monitor remaining taxpayer investments for years to come.

For the full story by David Lawder, click here.

Report criticizes FBI probes of activists
The FBI improperly launched investigations of U.S. activists after the September 11 attacks, miscast peaceful protests as acts of terrorism and in one case prompted FBI Director Robert Mueller to provide inaccurate testimony to Congress, the Justice Department said.

For more of this story by David Morgan, click here.

House Republicans set to unveil agenda Thursday
Republican leaders in the U.S. House of Representatives plan to announce their “governing agenda” on Thursday, just weeks before the Nov. 2 congressional elections that they hope give them control of the chamber now held by President Barack Obama’s fellow Democrats, aides said.

For the full story by  Thomas Ferraro, click here.

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

Photo credit: REUTERS/Kevin Lamarque (House Foreign Affairs Committee Chairman Howard Berman (D-CA);Senator John McCain (R- AZ) speak at the Reuters Washington Summit Sept. 20, 2010.)

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