Tales from the Trail

Washington Extra – Slipping away

congress1The Democrats’ chances of retaining control of the House of Representatives are slipping away. Our latest Reuters/Ipsos poll suggests that Republicans are poised to win around 227 seats and Democrats about 208 seats in next month’s election. Unemployment is top of the agenda for voters, and there is no good news coming on that front between now and November 2 (the next reading on the jobless rate doesn’t even come until the Friday after the election). That means there is very little chance that Democrats can pull off a late surge.

Also slipping away is President Barack Obama’s approval rating, to a new low in our poll, with much of the decline coming from his own Democratic supporters. His handling of the economy remains a leading cause of the drop. Again, any hope of energizing the Democratic base now looks slim.

More interesting is the race for control of the Senate. Ipsos says the poll numbers suggest Democrats will win 52 seats to 48 seats for the Republicans, the same margin predicted by the poll of polls compiled by Real Clear Politics. But a number of races are still very close.

Here are our top stories from Washington today…

Republicans likely to take House at election

American voters unhappy at high unemployment are set to oust Democrats from control of the House of Representatives in November, a Reuters-Ipsos poll projected. The national poll found that Americans plan to vote for Republicans over Democratic candidates by 48 percent to 44 percent, an edge that will likely give Republicans around 227 seats in the House to 208 for the Democrats.

For more of this story by Steve Holland, read here.

For a graphic showing the poll results, click here.

For a factbox on Senate poll averages from Real Clear Politics, click here.

States probe mortgage industry practices

All 50 U.S. states launched a joint investigation of the mortgage industry, a move some experts fear may slow sales of foreclosed homes and threaten the recovery of the fragile housing market. The state attorneys general are looking at allegations some banks did not properly review files or submitted false statements to evict delinquent borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the recession.

A Social Security reality check for deficit hawks

President Barack Obama’s fiscal commission is expected to recommend changes to Social Security to help reduce the deficit when it issues its report in early December.FRANCE-PENSIONS/ But protests in France over pension reforms there could serve as a reality check to U. S. deficit hawks who want to raise the U.S. retirement age  and make other benefit changes to the popular  retirement plan.

While they may not go on strike or take to the streets in protest — like is happening in France over a plan to raise the retirement age from 60 to 62  –  older Americans are more likely to show up at the voting booth in November than other groups.

A new survey by the influential AARP, which advocates for older Americans and has 35 million readers for its magazine, shows that lawmakers who embrace deficit reduction  proposals that include cuts for Social Security may do so at their own peril.

Washington Extra – Nobel committee polishes Diamond’s credentials

After irking the Chinese with the award of the Nobel peace prize last week, the Nobel committee set a few feathers flying in Washington today by awarding the economics prize to Peter Diamond, an MIT professor who has also been nominated by President Barack Obama for a spot on the Board of Governors of the Federal Reserve.pdiamond

Diamond’s nomination to the Fed job has been held up by Senate Republicans who have questioned his qualifications. At the time Richard Shelby, the most senior Republican on the Senate Banking Committee said the current uncertain environment would not benefit from board members deciding monetary policy “who are learning on the job” and told Reuters Diamond was a “behavioral man” who had no background in monetary policy and the economy.

It is a probably little conspiratorial to suggest the Nobel committee was deliberately tweaking Republican noses by recognizing Diamond along with two other leading economists for their work in helping to explain unemployment and jobs markets. Nevertheless, critics are bound to seize on this, along with Obama’s peace prize last year and Paul Krugman’s economics prize in 2008, to draw their own conclusions.

Washington Extra – Obama kills the bill

Last night Reuters correspondent Scot Paltrow revealed that a bill had sailed through the Senate last week — without public debate — which would have made it significantly harder for homeowners to challenge improper attempts to foreclose on their houses.foreclosures2 The legislation, which was sitting on President Barack Obama’s desk for his signature, would have forced courts to recognize out-of-state notarizations, including those stamped en masse by computers in other states, a practice critics say has been used improperly to push through foreclosure orders. Computer notarizations, now valid in around a dozen states, would effectively have become legal nationally, and challenges to improper notarizations made in other states would have become harder and costlier.

Today, after the story became public, the White House announced that Obama was sending the legislation back to the House of Representatives for further discussion – a so-called “pocket veto.” Given the rising chorus of lawmakers calling for all foreclosures to be suspended, the legislation now looks dead.

As Reuters Breakingviews columnist James Pethokoukis wrote today, the foreclosure scandal is lousy timing for Wall Street, the fallout likely to further erode the financial industry’s standing among the general public and in Washington. That could make it harder for Wall Street to influence lawmakers and regulators next year as they seek to implement and flesh out this year’s sweeping financial reforms.

Washington Extra -Soothing business, suing business

President Barack Obama had some soothing words for business leaders at the White House today, telling them that, despite some impressions to the contrary, he was really on their side after all. Financial regulatory reform was necessary, but “it is important now that there is a period of healing and consolidation and implementation that is less disruptive.”

Presumably the head of American Express was not invited to the meeting, on the day that the Justice Department decided to sue the company, saying its rules preventing merchants from encouraging consumers to use cheaper, rival cards violate antitrust law.amex It is the latest salvo in the administration’s battle with credit card companies, who it accuses of scalping consumers. Amex typically charges higher fees to merchants than rival cards, with the justification that its clients are richer and spend more.

Advocates of the government’s action say credit cards cost significantly more in the United States than abroad, and tough measures are required to open up the market and protect consumers. But the American Bankers Association expressed some valid doubts that merchants would actually pass on any savings from the Justice Department’s action to those consumers.

Washington Extra – Obama and the young vote

obama_rallyIf  President Obama really wants to get his groove back with young voters, he might want to get a bit more in synch with their musical tastes and a bit less in line with songs their parents — and grandparents — listened to. He’s got about 2,000 songs on his iPod, but – as he put it – his selections are more weighted to his childhood – his very young childhood – than to much that 20-somethings are listening to today.

“There’s still a lot of Stevie Wonder, a lot of Bob Dylan, a lot of Rolling Stones, a lot of R&B, a lot of Miles Davis and John Coltrane. Those are the old standards,” Obama said in an interview with Rolling Stone magazine released on Tuesday. He also listens to a lot of classical music. “I’m not a big opera buff in terms of going to opera, but there are days where Maria Callas is exactly what I need,” he said.

The president was born in 1961, which makes him little more than a toddler when some of his favorite artists had their biggest hits, something he and his handlers might want to keep in mind as he tries to connect with young voters and urge them to turn out in force on Nov. 2. The famed diva Callas was born in 1923, and died in 1977, when Obama was 16.

Washington Extra – Two to tango

One of the more surreal experiences at the Reuters Washington Summit this week was hearing Republicans saying they are prepared to work with President Barack Obama over the next two years and then listing their priorities – which started with undoing and repealing almost everything he has done in the past two.

republicansToday, at the Tart Lumber Company in Virginia, John Boehner unveiled the Republicans’ “Pledge to America” – a glossy 45-page booklet meant to set out their agenda for government. “Republicans have heard the American people,” said Boehner, the party’s leader in the House of Representatives.

As expected, there were howls of derision from the left. Many conservative commentators rallied behind the proposals to cut spending, lower taxes and balance the budget, but not everyone is happy. In his column, Reuters Breakingviews columnist James Pethokoukis argued that Republicans had missed the chance to make the case for the kind of serious fiscal reform the United States desperately needs.

Washington Extra – Gridlock and the fiscal deficit

summit

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.

Washington Extra – I see your gauntlet, and raise you a gauntlet

On Friday, President Barack Obama threw down the gauntlet to Republicans on taxes, effectively daring them to vote against a tax cut for the middle classes, just so that they can give an average of $100,000 in tax cuts to millionaires.

boehner_MitchOver the weekend, Republican leader of the House John Boehner seemed to shirk the challenge, but on Monday, Senate minority leader Mitch McConnell picked up the gauntlet and threw it right back. McConnell has promised to introduce legislation “today” to ensure that “no one in this country pays higher income taxes next year than they are right now.” There are no Republicans who support a tax hike, he said, effectively daring Democrats to vote for higher taxes when the economy is in the mire.

Washington Extra is not sure who will blink first. But whichever side you take in this debate, one thing is for sure: this “wrestling match,” as Obama called it, or game of high-stakes political poker if you prefer, does the economy no good at all.

Washington Extra – Shuffling the pack

cabinetWe hear the White House is not wildly pleased with former budget chief Peter Orszag for abandoning the party line on tax policy this week. Now Democrats in Congress are beginning to distance themselves from President Barack Obama’s push to let taxes rise for the wealthiest Americans. We are unlikely to see this resolved before the mid-terms anyway, and there are still several different ways this could pan out. One possible compromise would be a short extension of the tax cuts for the rich and a longer extension for the middle classes, keeping any crucial decisions as far away from the 2012 campaign season as possible.

More today on the potential for a reshuffle in Obama’s inner circle after the November elections, especially if Rahm Emanuel departs for Chicago. Democratic sources tell us Larry Summers, never that happy in his role, might be among those who leave, but that Treasury Secretary Tim Geithner is likely to stay the course.

One administration official who is flagging his own retirement is Defense Secretary Robert Gates. As we report from our Aerospace and Defense Summit in Washington this week, Gates used to be viewed by the defense industry with apprehension, but these days many industry executives see his efficiency drive as both sensible and as the best way to protect the overall defense budget. It seems he will be missed.