Tales from the Trail

Texas Governor Rick Perry, front-runner in the race for the Republican presidential nomination, said on Monday President Barack Obama’s  economic stimulus program  created “zero” jobs.

Not so, according to the Congressional Budget Office, the non-partisan budget arbiter for lawmakers.

Congress in 2009 passed the $830 billion economic stimulus, known as the American Recovery and Reinvestment Act, which included both spending measures and tax cuts.

According to the CBO:

As of June, between 1 million and 2.9 million Americans owed their jobs to the recovery act. In the second quarter of 2011 the recovery act added or preserved 550,000 full-time jobs. The recovery act brought down the unemployment rate by between 0.5 and 1.6 percentage points in the second quarter of 2011.

The Texas governor, who has touted his jobs creation record, gave his assessment of the U.S. economic stimulus program during Monday’s CNN/Tea Party sponsored Republican candidates debate in Tampa, Florida.

Perry shared the stage with former Massachusetts governor Mitt Romney, Minnesota Rep. Michele Bachmann, Texas Rep. Ron Paul, business executive Herman Cain, former Pennsylvania Sen. Rick Santorum, former Utah governor Jon Huntsman and former House Speaker Newt Gingrich.

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.

Just a few quick thoughts ahead of the Labor Day weekend. President Barack Obama plans to unveil a package of measures to stimulate hiring and the economy next week, although we are assured this will absolutely not be a second stimulus. I guess that means it won’t have a major price tag attached, in terms of its effect on the deficit. But you also have to wonder how much effect it will have on the economy, even if Obama manages to get any of it through Congress.

Some relief, then, that this week’s economic numbers have not been as grim as many had feared. The private sector is not dead and buried, if today’s payrolls report is anything to go by. But don’t expect growth or hiring to pick up nearly fast enough to save the Democrats from pain in November.

Finally, take a look at our special report on the Food and Drug Administration’s efforts to crack down on increasingly aggressive marketing tactics by drug companies. Critics accuse Big Pharma of pushing medicines on people which they often do not need, without fully disclosing the risks. Sadly, even the FDA admits it is outgunned, and lacks the resources to keep pace.

If rescuing the U.S. economy from the Slough of Despond wasn’t enough, President Barack Obama took a stab at finding peace in the Middle East today. Obama is determined to forge a new relationship with the Muslim world, and presumably would like to unquestionably earn the Nobel Peace Prize he was awarded last year. But getting embroiled in the Middle East is a risk for the president, not least because failure to reach an accord could set back his efforts to win over Muslims and achieve solidarity over Iran. Ordinary Israelis and Palestinians are not optimistic about this latest peace effort, and experts say the one-year deadline to reach a deal does not appear very realistic. Nevertheless, it is hard to argue with Obama’s opening remarks today, and his hope that “extremists and rejectionists” should not be allowed to derail the peace process.

It is often interesting when high-ranking officials leave office and get the chance to unburden themselves. White House economist Christina Romer was no exception today, issuing an impassioned plea for more economic stimulus measures, even if they push up the fiscal deficit in the short term. “The only sure-fire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view we should be moving forward on both fronts,” she said in a speech at the National Press Club. “I desperately hope that policymakers on both sides of the aisle will find a way to finish the job of economic recovery,” she added. WashingtonExtra won’t be holding its metaphorical breath.

Finally today, another win by a Tea Party favorite in Alaska this week underlines that the movement is not just a passing fad, and has the staying power to be  a significant factor in November’s Congressional elections. What’s more, Democratic hopes that radical Tea Party candidates will alienate moderate voters and energize Democrats are not being realized. In fact, Tea Party favorites are already ahead of Democratic rivals in the opinion polls in Colorado, Kentucky and Florida, and only slightly behind in Nevada.

What do central bankers and slalom skiers have in common? Bobbing and weaving, for one thing.

Federal Reserve Chairman Ben Bernanke sat in front of lawmakers for a second day on Thursday to deliver his semi-annual assessment of the economy, cleverly sidestepping the obstacles they placed to his right and left. With election season fast approaching, each side wanted ammunition for their campaigns, and for their partisan readings of the economy.

Not surprisingly, the resolutely apolitical Bernanke trod carefully. For the Democrats, there was comforting agreement that this week’s bill to regulate Wall Street had placed the financial system on a sounder footing and reduced the risk of another devastating financial crisis. Last year’s $862 billion economic stimulus had saved or created somewhere between one and three million jobs, Bernanke said, and the government was right to run a fiscal deficit in 2010 to support the economy.

Have you seen these signs?

They’re at the center of a running debate that flared up Wednesday on Capitol Hill.

The roadside signs are meant to show Americans construction projects funded by economic stimulus money, the Obama administration says.

But some Republican lawmakers have long argued that funds spent on the stimulus signs are a waste of taxpayers’ money and are politically motivated.

The White House is stepping up its efforts to call out Republicans for what Democrats see as hypocrisy over the $787 billion stimulus package.

Republicans have slammed the bill as wasteful and ineffective at creating jobs but the Obama administration says some of the same politicians who have lambasted the package have lined up for a share of the money for their states and districts.

“Independent economists credit the Recovery Act with growing the economy and for two million jobs that otherwise wouldn’t exist,” President Barack Obama told a gathering of the nation’s governors at the White House.

A student in Pennsylvania offered President Barack Obama a way to boost the economy that probably hasn’t been on the table at the White House.

“Mr. Obama, I really appreciate how you’re trying to stimulate the economy to help this country out,” the second-year student began in addressing the president on his visit to Allentown.

Then he noted that in college he had been studying “some criminology…”

If it walks like a stimulus and quacks like a stimulus, is it a stimulus?

That’s the question being thrown at White House spokesman Robert Gibbs this week. And he has so far refused to bite.

In yesterday’s White House media briefing, “stimulus” came up five times, but never once uttered by Gibbs.

His responses were “recovery plan” and “safety-net policies.”

While the $3 billion “Cash for Clunkers” blockbuster is over, Congress is not finished with Detroit.

No one is talking about a “Return of Clunker” or “Son of Clunker” sequel, but it still looks as if car companies will renew their part in the congressional agenda even as another humongous production — healthcare — threatens to swallow the Capitol whole.

A priority for Democrats everywhere is to push the benefits of economic stimulus and pound the podium on job creation. Thursday, the focus is on the future of manufacturing in the economically hard-hit Midwest — a battleground in any election scenario.