Tales from the Trail

A smart move by Republican leader John Boehner today, or a nicely laid trap if you prefer. Boehner echoed yesterday’s call from former White House budget director Peter Orszag, for a two-year extension to the Bush-era tax cuts for all Americans. Boehner appealed for both parties to “do this together” to “show the American people that we understand what is going on in this country.” There was, of course, one big difference between Boehner’s and Orszag’s suggestions – the Republican leader conveniently left out the all-important promise to let  all the tax cuts expire at the end of that two-year period. Not surprisingly, President Barack Obama swiftly rejected the offer, insisting that the country could not afford to extend tax cuts for the rich. “This isn’t to punish folks who are better off — God bless them – it is because we can’t afford the $700 billion price tag,” he said in Ohio. You get the feeling this partisan battle isn’t going to be settled easily or early, and the lingering uncertainty this creates is probably not good news for the economy. Expect the blame game to continue.

Elsewhere today, a lovely special report on the Tea Party and how the upstart is growing up and going back to school, determined to shed its amateur status. If it succeeds, the movement’s influence could well extend beyond November and into the 2012 presidential race, although who that might ultimately benefit is very much an open question. Take a look also at our exclusive report on how the Pentagon’s top watchdog has abandoned efforts to do in-depth audits of defense contracts, leaving billions of dollars of taxpayer money at risk from  overpayments and fraud.

Meanwhile, another blame game continues over the Gulf oil spill, with BP’s own investigation not impressing Democratic congressman and critic Edward Markey. “This report is not BP’s mea culpa,” he said. “Of their own eight key findings, they only explicitly take responsibility for half of one. BP is happy to slice up the blame as long as they get the smallest piece.”

Finally today, it could be time for a game of musical chairs at the White House. Washington is wondering how long Obama’s abrasive right-hand man Rahm Emanuel is going to be sticking around, now that the Chicago mayor’s job has come free. It would be ‘”an unbelievably attractive opportunity,” said David Axelrod, while Robert Gibbs pointed out that the job “doesn’t come around a lot.”   Rahm, we are told, has not decided yet, but already people are talking about possible successors. The early field includes: deputy national security adviser Tom Donilon; Vice President Joe Biden’s chief of staff, Ron Klain; and Obama confidante Valerie Jarrett. Even more tantalizing, perhaps, is the possibility that his departure could represent the start of a shake-up of the president’s inner circle after the November elections.

Here are our top stories from today…

BP and partners trade blame for oil spill

A BP investigation of the Gulf of Mexico disaster played down its own role in the world’s worst offshore oil spill and pointed the finger at what it said were failures by contractors. The 193-page internal report drew fire from a prominent lawmaker and one of the contractors, Transocean Ltd, called it a “self-serving” attempt by the British energy giant to escape responsibility for the “fatally flawed” design of its deepsea Macondo well.

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.

Well at least no-one walked out, as one Middle East veteran remarked to me after the meeting between Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas today. In fact, as our chief blogger Toby Zakaria observed, the public atmospherics between the two men were not too bad.

Seventeen years ago, President Bill Clinton practically forced Israeli Prime Minister Yitzhak Rabin and Palestinian leader Yasser Arafat to shake hands at the White House while observers held their collective breath. No such nudges were needed this week. Not only were there several, lingering handshakes, but even a brief animated conversation and a whispered aside.

But before we get carried away, my colleague Matt Spetalnick reminded us of all the obstacles facing the latest effort to forge peace in the Middle East. In decades of halting peace efforts, rarely has an Israeli-Palestinian peace process started with lower expectations. There were soaring words in public about the need for difficult compromises, but behind closed doors, the biggest tangible achievement was apparently an agreement to talk again.

Suggestion of the day. Encourage top officials to undertake some basic training in what to say and write in public. Specifically, try and avoid insulting and tactless remarks in print, on camera, in public or in front of journalists.

Alan Simpson, the Republican co-chairman of the president’s deficit commission, has a reputation for blunt speaking, but obviously was not paying much attention when Gen. Stanley McChrystal lost his job earlier this year. Simpson has already apologized for his email, to the executive director of the Older Women’s League, in which he compared the handing out of government retirement benefits to “milking a cow with 310 million tits.”

“When I make a mistake,” Simpson said, “it’s a doozy.” Which at least got me consulting the online dictionary. Nevertheless, there have already been calls for him to fall on his sword.

A year and a half  into his presidency, Americans appear to be growing more uncertain about Barack Obama’s religion.

A Pew Research Center survey shows that nearly one in five Americans — 18 percent — believe Obama is a Muslim, up from 11 percent in March 2009.  Meanwhile only about one third of Americans surveyed correctly describe Obama as a Christian, a sharp decrease from the 48 percent who said he was a Christian in 2009.

The survey was completed in early August, before Obama backed the controversial construction of a proposed mosque and Muslim cultural center near the site of the Sept. 11, 2001 attacks in New York.

Fear returned to global financial markets today, with stocks sinking and the dollar rising sharply on renewed worries about an economic slowdown in China and the United States. President Barack Obama met with senior economic adviser Larry Summers and “talked through some scenarios” on what was playing out around the globe, and how to keep the U.S. recovery on track.

Obama, signing a bill meant to boost U.S. manufacturing, said he was determined to do everything possible to hasten the economic recovery. The problem is – how much more can he do?

Legislation to support small businesses and manufacturing and bolster state finances might be saving jobs, but are unlikely to make much of a difference if American consumers remain reluctant to buy, or if the global economy takes another turn for the worse.

President Barack Obama wrapped up his 49th birthday bash with perhaps the ultimate gift for a basketball fan.

Someone arranged for Obama to play  hoops with a “dream team” of NBA stars — past and present – (and UConn Huskies superstar Maya Moore) at Fort McNair, a short distance from the White House.

It was a private game, meaning the White House press pool was not allowed into the gym to capture images. But we’re told Carmelo Anthony, Derek Fisher, Dwyane Wade, Grant Hill, LeBron James, “Magic” Johnson, Alonzo Mourning, Bill Russell, and David West were among those in the lineup. Kobe Bryant was there too, but didn’t play.

As the administration focuses on Iran, we take a look today at the fallout – a disturbing deterioration in relations between the United States and Brazil.

Our exclusive report from Washington and Brasilia describes how a row over Iran has pushed relations between the two Western hemisphere economic giants to “rock bottom.” The fallout from Iran remains worse than either side will acknowledge publicly, and there is a real risk of a longer-term drift that could threaten trade and business ties. “They’re in the freezer,” was how an upper-level source in Brasilia characterized relations.

It is especially disappointing, of course, since both sides had anticipated improved ties under President Barack Obama, who made a point of fawning over his Brazilian counterpart Luiz Inacio Lula da Silva last year, calling him “my man” and “the most popular politician on Earth.”

In the immortal words of Marilyn Monroe (although not in quite the same tone of voice): Happy Birthday Mr. President.

Barack Obama is spending his 49th birthday away from his family, and by the sound of it is in need of a little bit of TLC. At an AFL-CIO event earlier today, his host union President Richard Trumka joked that they had wanted to give the president a cake, but the Secret Service nixed the idea.

“I’m a little disappointed there wasn’t a cake, though,” Obama said. “I’m going to have to talk to Secret Service.”

President Barack Obama on Tuesday urged people in Colorado to support his pick to run for U.S. Senate in their state, jumping into a close Democratic  primary race in which the other  candidate is  backed by former President Bill Clinton.

Obama has put his weight behind current Colorado Senator Michael Bennet, who was appointed to take over the seat vacated by Ken Salazar, whom Obama selected to be secretary of the Interior at the beginning of his term.

“He’s been a breath of fresh air in a town with a lot of hot air,” Obama told a telephone conference call with Bennet and listeners, who quizzed the freshman Senator about the attack ads he has endured. Obama said this was par for the course in politics.