Washington Extra – Chicken and ducks
The wrangling continues over the Bush-era tax cuts. President Barack Obama said he was confident Democrats and Republicans could break the deadlock and reach a deal soon. But with time running out, there is something of a game of chicken being played by the two sides. Each is watching to see who blinks first, and with the economy still struggling, both know the stakes are high.
Texas Republican Congressman Jeb Hensarling warned of the risks of failure: “In a lame duck session, a lame duck Congress should not turn our economy into a dead duck economy.”
Let’s just hope they don’t duck the issue.
Here are our top stories from Washington today…
Think brussels sprouts and cauliflower are agricultural commodities? Think again.
While the financial bailouts tossed to automakers, banks and other groups during the recent economic crisis left a funny taste in the mouth of some Americans, one former U.S. regulator hopes efforts to prevent another panic doesn’t go rotten.
The U.S. Commodity Futures Trading Commission is immersed in drafting dozens of rules to assist it in increasing oversight of the once opaque over-the-counter derivatives market, widely blamed for exacerbating the recent financial crisis.
Among the rules it must craft is what the definition of an agricultural commodity is? Of course, corn, cotton, soybeans and livestock, among other items, fall into this realm.
But what about those “other foods” such as brussels sprouts, artichokes, cauliflower, or anything with curry? A former CFTC chairman says they are “abhorrent to American sensibilities” and should be banned.
“Like every U.S. citizen, there are certain agricultural commodities that are abhorrent to me,” said Philip McBride Johnson, who is now with the law firm Skadden, Arps, Slate, Meagher & Flom.
In a comment letter to his former agency, he said there is a “natural link” between defining an agricultural commodity and a provision in a law that requires the regulator to protect the public by forbidding the listing of certain products that “are abhorrent to American sensibilities.”
Clearly banned under this act are financial products based on wars, terrorism, and assassinations. If Johnson has his way, regulators will be able to protect consumers from a dozen foods that don’t mesh with his palate.
Washington Extra – Ducking the issue
We were all primed for the release of the Treasury’s global currency report this afternoon, which would have included a ruling on whether China was a currency manipulator. But a decision was taken to delay the report until after the Group of 20 summit in Seoul in mid-November.
Pressure from lawmakers and business had been mounting on President Barack Obama to act, but the delay shouldn’t come as a big surprise. After all, Treasury Secretary Tim Geithner told Congress last month he wanted to rally the G20 around the issue and take a multilateral approach. Perhaps more importantly, the administration is conveniently ducking the issue until after the Nov. 2 congressional elections.
Some Democrats, who have made China’s currency practices an issue in their campaigns, are disappointed today. Our Breakingviews columnist James Pethokoukis says Obama should be given credit for resisting populist pressures for the second time this week, after also declining to heed appeals to impose a national moratorium on home foreclosures.
That may be true but Obama also knows no amount of populism is going to help his party in the midterms, and he is already looking ahead.
It is safe to assume the president wants to avoid starting the second half of his term embroiled in a damaging trade war with China, which also happens to be the largest holder of U.S. government debt. The administration clearly thinks a direct confrontation would be counterproductive, make the Chinese dig in their heels and, if they stop buying U.S. debt, potentially push up long-term interest rates. There are also big issues to address around market access and intellectual property rights, which confrontation would have obscured.
So for now, Geithner keeps the ball and brings it with him to the G20 finance ministers’ meeting, which precedes the leaders’ summit. But if the multilateral approach fails to yield results, then the focus shifts to the Senate and a possible vote on the lower chamber’s currency bill in the lame duck session.
