Tales from the Trail

Washington Extra — Not another stimulus

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.wallst 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.

Finally, strong words today from State Department spokesman P.J. Crowley on a Florida pastor’s plans to burn copies of the Koran on the anniversary of the 9/11 attacks. Crowley said the actions were “un-American”, and appealed to the world’s public not to assume that any action by the obscure Dove World Outreach Center, which boasts only around 30 members, represented anything larger about the United States. Sadly, one can only shudder at the thought of images of Americans burning the Koran being repeated endlessly on TV screens across the Muslim world.

Here are our top stories from today…

Analysis: Obama plan may miss the most important mark – jobs

President Barack Obama’s new stimulus plan directs government assistance to some of the strongest parts of the economy without solving the biggest problem: finding work for the 14.9 million unemployed. The three main ideas he plans to introduce on Wednesday — $50 billion in infrastructure spending plus two sets of business tax incentives — could provide a modest burst of activity in a slow-growing economy.

Washington Extra – Fears of economic stagnation

dowFear 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.

The First Draft: what about the pork?

So the Democratic-controlled Congress finally sent President Barack Obama a $410 billion bill to fund the government through the rest of the year. But it’s full of “earmarks” — billions of dollars earmarked for lawmakers’ pet projects.ROMANIA/

Obama has repeatedly criticized Congress for including the so called “earmarks” or pork in various legislation but he is expected to sign the spending bill. However, he also plans to make a speech criticizing the whole process of earmarks.

Question is — does he speak out against the pork then sign the bill? Or sign the bill then criticize it? Obama is due to speak about “earmark reform” at 11:20 EDT/1520 GMT.

from Global Investing:

The end of the Bush stock market

Today marks the end of the Bush stock market.

He has presided over the evisceration of more than $4.6 trillion of U.S. stock market wealth as measured by the S&P 500.

By comparison, the S&P 500 gained more than $9 trillion in value under the eight years of Bill Clinton's administration.