Tales from the Trail

The First Draft: Bernanke, budget trump vacation – for a bit

OBAMA/Two days after arriving in Martha’s Vineyard, President Barack Obama is taking a break from his vacation to make some news: he will announce that he is nominating Ben Bernanke to a second term as chairman of the Federal Reserve.

Investors have given Bernanke, whose current term expires on Jan. 31, 2010, high marks and had widely expected his reappointment.

But the announcement is being made earlier than expected and comes not just during Obama’s family vacation but also on the day that the White House Office of Management and Budget and the non-partisan Congressional Budget Office both release their midyear budget updates.

The reports are expected to show the government will spend a record $1.6 trillion more than it collects this year and nearly double its outstanding debt over the next 10 years.

The grim fiscal picture could provide fodder for opponents of Obama’s costly plan to overhaul the healthcare system.

Republicans seek economic wisdom from Greenspan

Alan Greenspan may have retired as chairman of the Federal Reserve, but his insight is still in hot demand, so much so that Senate Republicans invited him to be their guest speaker at their weekly policy lunch.

FINANCIAL/Per his normal practice, Greenspan declined to tell reporters what he told the lawmakers behind closed doors, but that did not stop a few senators from spilling the beans.

New Hampshire Republican Senator Judd Gregg said the former Fed chief talked mostly about the need to address the long-term budget deficit, specifically the Medicare healthcare program for the elderly and those with disabilities. The U.S. deficit is expected to crest at more than $1.8 trillion in fiscal 2009 which ends Sept. 30.

The First Draft: Green shoots and budget talk

USA-OBAMA/After the Obama team’s big announcement on health care and an even bigger deficit, now comes the hard part — actually sitting down and figuring out how much it’s going to cost, and how to make it cost less. President Barack Obama’s first public appearance today is a round-table discussion with business leaders on cutting employer health care costs.

Later, behind closed doors at the White House, Obama and Vice President Joe Biden meet with Commanding General Raymond Odierno, the head of the Multi-National Force-Iraq, and U.S. Ambassador to Iraq Chris Hill. Then the president meets with Defense Secretary Robert Gates, one day after Gates replaced the top U.S. Afghanistan commander.

In congressional action, Homeland Security Secretary Janet Napolitano faces questions about her department’s 2010 budget from both sides of Capitol Hill. Lisa Jackson, who heads the Environmental Protection Agency, also faces budget questioning from the Senate Environment and Public Works Committee.

Good Friday: Obama discusses economy

It’s Good Friday and U.S. financial markets are closed, but the government is open for business.

President Barack Obama will discuss financial conditions in a meeting this morning with Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp head Sheila Bair, Securities and Exchange Commission chief Mary Shapiro and Comptroller of the Currency John Dugan.

Obama is expected to make some brief public remarks at the end of the meeting.  The White House session comes amid tentative signs of recovery in ailing financial and retail sectors, according to a front page story in the Washington Post.

First Draft: White House “victory garden”

USA/Spring blew into Washington this morning and the signs are everywhere: the cherry blossoms are starting to come out, magnolia trees are budding and at the White House, workers are digging up the lawn.

Um, what?

As it turns out, the Obamas are part of the local food movement and plan to grow veggies in a patch of lawn on the executive mansion grounds. This was front page news in The New York Times, and a big headline in The Washington Post’s well-read Style section.

Calling up memories of the “victory gardens” of World War II, when Americans were encouraged to grow their own produce to help the war effort, the White House garden is not a brand new idea. John Adams and Eleanor Roosevelt had gardens, while Woodrow Wilson had a flock of sheep and the Clintons grew some vegetables in pots on the White House roof.

Fed staff in trouble, but cited for raise, too

USA/It’s not just U.S. stocks that are on a roller coaster ride in reaction to congressional testimony by Federal Reserve Chairman Ben Bernanke and other top officials.

Fed staff stock plunged on Wednesday when they put their boss in an awkward position during Bernanke’s testimony before Congress on the financial bailout and efforts to stabilize the swooning economy.

Rep. Scott Garrett testily reminded Bernanke that he was still waiting for answers for a letter he sent in December.

Treasury’s guide on how to spend 12 zeros after the 1

A trillion dollars is a million million dollars or 12 zeros after the one.

And that’s how much apparently every program costs to save the U.S. economy these days.

Treasury Secretary Timothy Geithner outlined what he called “a new financial stability plan” to help restart the flow of credit, strengthen banks, and  “provide critical aid for homeowners and for small businesses.” FINANCIAL/BAILOUT

His proposal included a program in which the FDIC, the Federal Reserve, and the private sector would establish a fund, using government financing, to deal with bad assets weighing on financial firms.

First Draft: double vision

WASHINGTON – Don’t rub your eyes. Despite the early hour, you weren’t seeing things when White House Press Secretary Robert Gibbs somehow managed to be in two places at once.

He showed up on ABC and NBC morning television shows at the same time to talk about how President Barack Obama has no hard feelings toward Republicans who refused to vote for the economic stimulus, and in fact had them over to the White House last night for a cocktail party among other guests.OBAMA

It was a neat trick, Gibbs being questioned on different channels by different TV personalities about the same issue at the same time.

First draft: House to vote on economic stimulus

President Barack Obama faces his first big political challenge as the House of Representatives is due to vote on a $825 billion package to stem the U.S. recession. 

OBAMA/Despite a trip to Capitol HIll to woo Republicans on Tuesday, most House Republicans are expected to oppose the proposal. But Democrats were confident they had enough votes to get the package approved as they seek a final bill for Obama to sign into law by mid-February.

The Federal Reserve meets to review options on how to restore U.S. growth, with a statement by the Federal Open Market Committee around 2:15 p.m. EST (1915 GMT). The Fed is discussing how to revive the economy now that traditional interest-rate cutting tools have been exhausted. Fed officials are expected to discuss uncoventional measures to improve financial market operations.

Obamanomics and the Federal Reserve

Barack Obama economic adviser Laura Tyson said at the Democratic National Convention on Monday that U.S. financial regulation needs modernizing, but hedged on how big a role to give the Federal Reserve.

Tyson, former chair of the Council of Economic Advisers in the Clinton administration, said she believes the Fed failed to crack down on subprime mortgage lending in recent years.

“What we have learned from the past two years … is that the old form of regulation is broken,” Tyson said.