Washington Extra – Breaking glass
The new IMF chief is an accomplished negotiator, an international relations expert and a European finance minister.
The newly elected managing director also made history, and it had nothing to do with credentials. Christine Lagarde in 2011 becomes the first woman to head the IMF.
This is also the year when two women might start vying for the 2012 Republican nomination for president — Michele Bachmann is running, Sarah Palin has yet to reveal her intentions.
Hillary Clinton raised more than a few eyebrows when she broke the first lady mold and ran for Senate after leaving the White House. But when she ran for the 2008 Democratic nomination for president, few batted an eye.
Still, the novelty of women presidential candidates is unlikely to wear off until one takes office.
Here are our top stories from Washington…
Let’s fight…
The overnight news of Dominique Strauss-Kahn’s resignation sets up a global battle over who will succeed him in the IMF’s glass-and-steel headquarters in Washington. But, of course, that’s not the only fight in town.
The bipartisan group of budget negotiators now known as the Gang-of-Six-Minus-One is expected to meet today to try to salvage hopes of a budget compromise after a shouting match over Medicare sent Republican Senator Tom Coburn to the exit door.
Medicare is the third-rail political issue that recently had Republicans showing signs of retreating from House Budget Chief Paul Ryan’s Republican reform plan. Critics call it a blueprint for privatizing the federal government’s healthcare program for the elderly.
But all politics is local. And the national Medicare litmus test is likely to take place far from Washington.
A proxy war over Medicare-as-2012-campaign-issue is shaping up around next week’s special congressional election in one of New York’s most conservative districts, where the Ryan plan has given Democrats the chance for an upset. Conservative groups are pouring tons of money into the contest and veteran Capitol Hill staffers are expected to parachute in soon to help get out the vote.
The Medicare issue is the same albatross that started hanging out with Newt Gingrich this week, after the Republican White House candidate trashed the Ryan reform plan as right wing “social engineering.” The former House speaker apologized amid a storm of criticism from fellow conservatives. He’s since had “help” from potential presidential rival Sarah Palin, who in a TV appearance urged him not to back down in the face of … lamestream media criticism? hmmm … but who otherwise made sure she underscored his offending language.
Palin, who has been in and out of the spotlight in recent months, says she’s still considering a White House run. That could make for a nice rumble between her and Michele Bachmann, that other woman in Republican circles who rivals Palin as an outspoken darling of the Tea Party movement.
Down to the wire…
House Budget Committee Chairman Paul Ryan expects his fellow Republicans to wait until the “last minute” to strike a deal that averts national default by raising the $14.3 trillion limit on the U.S. debt.
Failure to reach a deal could trigger a new global financial crisis, according to analysts and Democrats including President Barack Obama. But on Monday, the day the U.S. debt reached its current statutory limit, Ryan told an Illinois AM radio station that “we’re going to negotiate this thing probably up through July, that’s how these things go.”
“That’s how these things go” could place negotiations at the very doorstep of an Aug. 2 deadline, which is when the Treasury Department believes it will exhaust its bag of tricks for staving off a financial apocalypse.
Ryan’s comments came a day after Senate Republican Leader Mitch McConnell advised CNN’s viewers to see the approaching default deadline as a source of opportunity.
Meanwhile, inflation worries buttressed by still-way-high gas prices are driving U.S. states to consider making silver and gold coins legal tender. South Carolina is the latest to consider legislation to that effect, joining over two-dozen others in a trend that began this month in Utah.
What happens among the states often has a way of entering the circuitry of presidential politics, as Mitt Romney discovered with the healthcare reforms he championed in Massachusetts.
But at the moment, the presidential campaign debate is focused on Medicare, specifically the mini-GOP civil war between Newt Gingrich and Ryan over the latter’s Medicare reform plan. Newt, currently on the defensive, is being taken to the woodshed today by one of the strongest conservative voices in the United States: The Wall Street Journal Editorial Board.
Washington Extra – Will it fly?
It wasn’t quite spilling the beans, but White House spokesman Jay Carney did in one sentence clearly list the top three options being considered on Libya: humanitarian aid, enforcing the U.N. arms embargo, and contingency planning for a potential no-fly zone.
Then it got a bit murky.
“I just want to stress that the military options that we talk about are not limited to a no-fly zone, but include a no-fly zone as an option,” Carney said.
“It’s a serious option … and it’s not a simple one that you can simply say, ‘Oh, let’s have a no-fly zone, snap your fingers and it happens’.”
Deploying ground troops to Libya was at the bottom of the list. “No option has been removed from the table,” Carney said. But, “ground troops is not sort of top of the list at this point.”
Arming the rebels was an option that the White House was clearly uncomfortable talking about in public.
“I think that it would be premature to send a bunch of weapons to a post office box in eastern Libya,” Carney said. “We need to not get ahead of ourselves in terms of the options we’re pursuing.”
Washington Extra — Not in the mood for war
French Finance Minister Christine Lagarde said today she was not “in the mind or the mood for war”, describing it as “totally inadequate, inappropriate and unnecessary.” Phew.Global finance chiefs met over breakfast in Washington, just as the September employment report showed the U.S. economy was still shedding jobs and sent the dollar tumbling to a 15-year low against the yen. How about that to focus the mind.
The question is whether they can come up with some form of words at the IMF meetings over the weekend to calm the markets, to show that they are determined to address the imbalances that underlie the tensions over currencies.
Foreign exchange intervention by the Chinese to keep the yuan low is, after all, only part of the story. The bigger problems are the uneven pace of global economic growth, the weakness of the U.S. economy that is fuelling the dollar’s decline, and the export-oriented policies of many other countries.
Everyone knows that countries running huge trade surpluses, like China, need to spend more at home. And everyone is beginning to realize that they can’t afford not to help the United States, that a weak U.S. economy and weak dollar is a problem for everyone.
But a stronger yuan? That might be a problem, after China’s Wen Jiabao made the extraordinary assertion this week that a rapid rise would lead to “social and economic turbulence. In China’s one-party state, where the fear of social unrest is deeply rooted, that is not a line authorities will want to cross.
Breakfast is over. Now it’s time for the world’s financial masters to prove their mettle, and come up with a credible plan.
Here are our top stories from Washington today…
Washington Extra – Trade Protection
We travel the Karakoram Highway from China to Pakistan on today’s edition of Washington Extra. Driving the agenda for Reuters today is news that the United States could be heading for another trade row with China, after it announced plans to toughen rules against what it sees as unfair trade practices. A number of the proposals are likely to irk Beijing and could provoke retaliation.
It is all part of the Democrats’ “Make it in America” agenda to save manufacturing jobs at home. Critics will no doubt see it as more evidence that President Barack Obama is a closet protectionist. Others argue that this is a shrewd move from the administration to head off still more damaging moves from Congress.
Over at the IMF, Pakistan’s finance minister is in town seeking more help to salvage his country’s economy in the face of the devastating floods. The mood so far seems hopeful. Abdul Hafeez Shaikh said Pakistan wanted to keep pursuing an $11 billion IMF loan program and demonstrate its resolve to take tough economic decisions, dismissing reports that it might abandon the program. The IMF, for its part, is already urging donors to give grants, not loans, for rebuilding projects, to avoid adding to Pakistan’s heavy debt burden.
While we are on the subject of the IMF, an interesting little row is developing which could throw the global lender into disarray. The United States is urging Europe to give some of the seats it occupies on the IMF’s 24-member board to emerging market countries to reflect their growing global economic weight. You won’t be surprised to learn that Europe has balked at the idea of yielding some of its nine chairs — because it is divided over how to do it. The sides face an Oct. 31 deadline when the mandate of the existing board expires. “The IMF will be in crisis unless a solution is found in time,” a senior board official said.
Here are our top stories from today…
U.S. lays out plan to strengthen anti-dumping regime
Who’s not for funding U.S. troops?
Usually congressional debates over funding U.S. troops are fights where lawmakers try to best each other praising them and throwing as much money as possible at them for fear of appearing less patriotic than someone else.
But Republicans and Democrats in the House of Representatives are girding for an all-out brawl over a roughly $95 billion bill to fund the troops fighting in Afghanistan and Iraq — but not because of that money but rather because of provisions to shore up the International Monetary Fund.
While most in Washington know what the IMF is, many Americans do not. It provides loans to governments around the world trying to weather financial crises and get their economies back on track.
President Barack Obama asked Congress to bless his plan for extending a $100 billion line of credit to the IMF amid the global economic meltdown, boost the U.S. membership contribution by $8 billion and endorse the IMF’s plan to sell 400 tons of gold.
Republicans argue that it is unrelated to funding the U. S. troops and should be considered on its own merits, instead of being tucked into the money bill at the last minute by Democrats who control both the House and Senate.
“I will oppose this legislation if it is loaded up with billions in spending that is unrelated to our military’s core mission of protecting our nation and our interests,” said Republican Minority Leader John Boehner, a sign that most Republicans could oppose the bill.
And, just who is going to purchase all that gold? I quite
agree regarding the funding of the troops. No matter where
they are, they must receive funding. Americans owe them
that much.
