Washington Extra – Major breach
In this post-9/11, ultra-high security era, it is hard to believe that the bomb-proofing specs of a new Defense Department building in the DC area would be on public view. Then again, the Internet is a tough beast to manage.
Reuters reporters Mark Hosenball and Missy Ryan discovered the sensitive information about Mark Center — where 6,400 Defense Department personnel are scheduled to move later this year — on a public website maintained by the Army Corps of Engineers.
Out of concern for the security of personnel who will work there, Reuters is not disclosing most of the details in the 424-page document stamped “For Official Use Only.”
But Hosenball and Ryan found an alarming detail on Mark Center: It is designed to resist threats posed by vehicle bombs detonated outside the building’s security perimeter carrying the equivalent of 220 pounds of TNT. That is far less than the amount of explosive used in the 1993 bombing of New York’s World Trade Center and 1995 bombing of the Alfred Murrah Federal building in Oklahoma City.
A Corps spokesman said the public posting was a mistake and that the government was working to take it down. But he acknowledged that it might have been sitting there since the document’s date -2009. Little comfort to 6,400 employees.
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Washington Extra – Chicken and ducks
The wrangling continues over the Bush-era tax cuts. President Barack Obama said he was confident Democrats and Republicans could break the deadlock and reach a deal soon. But with time running out, there is something of a game of chicken being played by the two sides. Each is watching to see who blinks first, and with the economy still struggling, both know the stakes are high.
Texas Republican Congressman Jeb Hensarling warned of the risks of failure: “In a lame duck session, a lame duck Congress should not turn our economy into a dead duck economy.”
Let’s just hope they don’t duck the issue.
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Washington Extra – Ducking the issue
We were all primed for the release of the Treasury’s global currency report this afternoon, which would have included a ruling on whether China was a currency manipulator. But a decision was taken to delay the report until after the Group of 20 summit in Seoul in mid-November.
Pressure from lawmakers and business had been mounting on President Barack Obama to act, but the delay shouldn’t come as a big surprise. After all, Treasury Secretary Tim Geithner told Congress last month he wanted to rally the G20 around the issue and take a multilateral approach. Perhaps more importantly, the administration is conveniently ducking the issue until after the Nov. 2 congressional elections.
Some Democrats, who have made China’s currency practices an issue in their campaigns, are disappointed today. Our Breakingviews columnist James Pethokoukis says Obama should be given credit for resisting populist pressures for the second time this week, after also declining to heed appeals to impose a national moratorium on home foreclosures.
That may be true but Obama also knows no amount of populism is going to help his party in the midterms, and he is already looking ahead.
It is safe to assume the president wants to avoid starting the second half of his term embroiled in a damaging trade war with China, which also happens to be the largest holder of U.S. government debt. The administration clearly thinks a direct confrontation would be counterproductive, make the Chinese dig in their heels and, if they stop buying U.S. debt, potentially push up long-term interest rates. There are also big issues to address around market access and intellectual property rights, which confrontation would have obscured.
So for now, Geithner keeps the ball and brings it with him to the G20 finance ministers’ meeting, which precedes the leaders’ summit. But if the multilateral approach fails to yield results, then the focus shifts to the Senate and a possible vote on the lower chamber’s currency bill in the lame duck session.
Washington Extra – Goldilocks Geithner
Not too hot, not too cold, just right.
U.S. Treasury Secretary Timothy Geithner performed a delicate balancing act on the Hill today. On the one hand, Geithner had to tell an increasingly angry Congress that he was serious about trying to persuade China to revalue its currency, the yuan. On the other, he wanted to head off the kind of unilateral action from Congress that could provoke a trade war, and endanger the administration’s efforts to engage Beijing on a whole slew of issues.
Democratic Senator Charles Schumer raged that “China’s currency manipulation is like a boot to the throat of our recovery,” and accused Geithner of being the only person in the room who did not believe China was manipulating its currency.
“I share your frustration,” was the first part of Geithner’s message to Congress, acknowledging that the pace of the yuan’s appreciation had been too slow. But leave the response to us was the other, unspoken part of the message today. The administration would use the upcoming G20 summit in Seoul in November to try to mobilize other world powers to pressure China for trade and currency reforms, Geithner vowed, adding officials were looking at all the tools at their disposal to “encourage” the Chinese to move more quickly.
China has already warned that pressure from Washington could backfire, and the administration clearly does not want to be caught in the crossfire between a furious Congress and a prickly Beijing. Geithner also seemed to downplay the chances that the administration would declare China a currency manipulator in October. “The only thing that I would observe is, wishing something does not make it so, and issuing a report that requires me to go consult changes nothing,” he said.
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Geithner vows to take China currency dispute to G20 Treasury Secretary Timothy Geithner vowed to rally other world powers to push China for trade and currency reforms as he was grilled by lawmakers demanding a crackdown on Beijing’s policies. China warned that pressure from Washington could backfire. For more of this story by Doug Palmer and David Lawder, read here.
Mr. Geithner can complain all he wants. China holds $847 billion in United States Treasuries. If they decide to stop buying Treasuries, who’s going to lose the battle? As well, China spent $32 billion last year buying resource companies around the world in an attempt to secure their own resource future, including a 10% stake in Syncrude. With China now being the largest energy consumer in the world and the second largest economy, they are in the driver’s seat whilst the United States becomes increasingly less powerful. Here’s an article on China’s energy needs and how they will drive oil prices in the future:
http://viableopposition.blogspot.com/201 0/08/china-now-number-1-and-number-2-par t.html
Geithner tells Congress: calling China names doesn’t get you anywhere
U.S. lawmakers are mad and want Treasury Secretary Timothy Geithner to step in and call China a name – ”currency manipulator” — which may not sound like much on city streets but can be quite an insult in world financial circles.
“At a time when the U.S. economy is trying to pick itself up off the ground, China’s currency manipulation is like a boot to the throat of our recovery. This administration refuses to try and take that boot off our neck.” That’s not a Republican raging against President Barack Obama’s Treasury Secretary, it’s Senator Charles Schumer, a Democrat from New York (where Wall Street happens to be located).
“Mr. Secretary, although there may be some modest disagreement about what to do, I’m increasingly coming to the view that the only person in this room who believes that China is not manipulating its currency is you,” Schumer said.
The New York senator, never one to hold back when it comes to words, let loose on Geithner at a Senate Banking Committee hearing on China’s exchange rate policies which are a source of friction with the United States.
“What is the administration so afraid of? You know we are right. You know the United States is put at a terrible disadvantage and you refuse to act. What are you afraid of?” Schumer bellowed.
They were about the loudest fireworks to emerge from a hearing that was fairly drama-free given the controversial subject matter. Especially since Geithner has come under general fire from Republicans and other Obama critics over the struggling economy with some even calling for his ouster.
It is within the powers of the Treasury Department to declare China a “currency manipulator” in its next foreign exchange report due on Oct. 15 — which is what lawmakers want. But Geithner, without tipping his hand on what the semi-annual report would conclude about China’s currency tactics, said it really wouldn’t accomplish anything to pin such a label on Beijing.
Apparently, the Chinese have learned from the economic failures of socialism, while the US Congress has learned nothing.
It was just a game of golf!
Ever since he played golf with President Barack Obama last week, New York newspapers have been rife with speculation that Mayor Michael Bloomberg is being wooed by the administration to replace Timothy Geithner as Treasury Secretary.
The White House dismissed the speculation as fantasy and Bloomberg dismissed the idea. But still as summer draws to an end, what else is there to talk about going into the Labor Day holiday weekend except the lackluster U.S. economy?
More bad news for Obama on Friday with the unemployment rate rising to 9.6 percent. The economy is not creating jobs fast enough to reduce the unemployment rate and give Democrats more comfort going into the Nov. 2 congressional elections with their majority in Congress at stake.
Some pundits suggest the gossip may be less about Bloomberg, who is serving a hard fought third term as mayor, and more about Geithner, who has come under fire from both the right and the left about his advice to Obama on the economy and the role he played in the 2008 government rescue of Wall Street.
As White House economic adviser Christina Romer leaves her post on Friday, following the departure of Peter Orszag as head of the Office of Management and Budget at the end of July, Obama so far is standing by his treasury secretary.
Would he really want to follow the advice of House Republican Leader John Boehner and fire Geithner and his National Economic Council Chairman Larry Summers just before an election that could put Republicans in charge of the House of Representatives?
Besides, some of the sourcing on the raft of speculation about Bloomberg has been thin as noted by a New York Magazine item pointing to a source used by another publication as ”one Democrat, who may or may not be the mayor’s hairstylist.”
Washington Extra – homing in on the American dream
Sounds like people had plenty to say about the future of Fannie Mae and Freddie Mac at a Treasury forum today. For example, Bill Gross of PIMCO, who oversees more than $1 trillion in assets, called for a massive program to refinance mortgages at low rates as a way to lift the economy – a more sweeping recommendation than Treasury organizers had anticipated. “It is not tenable to leave in place the system we have today,” Treasury Secretary Timothy Geithner acknowledged, but said the government must still have some role.
The bailed-out mortgage giants have received nearly $150 billion in taxpayer funds since they were placed in government conservatorship, and are likely to need tens of billions of dollars more to survive.
A new Reuters/Ipsos poll on the Kentucky Senate race shows Republican Rand Paul, a Tea Party favorite, with a narrow 5 point lead over Democrat Jack Conway among likely voters. The poll also probed voter views on the controversy about Paul’s alleged college pranks, and found that 53 percent of Kentucky voters had not heard anything about it. Among Republicans, 12 percent said the stories made them more likely to vote for Paul.
And if you haven’t seen it yet, check out our blog for a rap video promoting Elizabeth Warren to become the new consumer sheriff in town…
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Obama seeks new design for housing, Fannie/Freddie
The Obama administration called for “fundamental change” at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage giants and housing policy that affects millions of Americans and billions in investment. Treasury Secretary Timothy Geithner raised basic questions about the government’s long-standing role in subsidizing the $10.7 trillion housing market and supporting the historic “American dream” of home ownership.
from Summit Notebook:
The Geithner approach: make the best of bad choices
Ever wonder how the U.S. Treasury Secretary gets through some of the most economically stressful times this country has seen in a while -- does he go for long runs? Sleep two hours a night?
Timothy Geithner has been in the job less than a year, and came in after the economy had slumped into recession. Now unemployment is approaching 10 percent, he's had to navigate through an economic stimulus package, and on top of all that the weakness of the U.S. dollar has other countries questioning whether it should still be the reserve currency.
Enough problems, we imagine, to give anyone a big giant headache and more than a few sleepless nights.
So what does Geithner do under the weight of it all?
"I've been in the middle of this for quite a long time," he said in an interview at the Reuters Washington Summit on Tuesday. (Remember, before this job, Geithner was president of the New York Federal Reserve Bank).
His general approach, Geithner said, is to "focus on trying to make sure you're making the best of a bunch of bad choices."
And to make sure "you are helping the president make sensible decisions," he said.
The First Draft: Obama courts autoworkers, Biden visits Iraq
President Barack Obama courts autoworkers in Ohio and union leaders in Pennsylvania on Tuesday.
Obama meets workers at a General Motors plant in Lordstown, Ohio, and later addresses a convention of the AFL-CIO labor federation in Pittsburgh. Vice President Joe Biden is in Iraq for visits with U.S. troops and Iraqi leaders.
Back in Washington, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, briefs lawmakers on the war in Afghanistan.
And Senate Finance Committee Chairman Max Baucus is still pushing to finalize his panel’s proposal for reforming the U.S. healthcare system this week.
A USA Today poll published on Tuesday showed Americans split over healthcare reform, even after Obama’s pitch to a joint session of Congress last week. The poll said 50 percent favored reform and 47 percent opposed it.
Treasury Secretary Timothy Geithner said on Tuesday Obama is committed to getting the U.S. fiscal house in order once the economy is on a solid footing.
He said Obama could do that without breaking his campaign pledge not to raise taxes on people earning less than $250,000 per year.
U.S. senator seeks details of Geithner’s ‘colorful language,’ gets nowhere
U.S. Senator Jim Bunning asked a Treasury Department official the question other lawmakers had avoided at a banking committee hearing on Wednesday — so, what about that profanity-laced tirade by Treasury Secretary Timothy Geithner?
Assistant Treasury Secretary Michael Barr, on hand to testify about credit rating agencies, played down the drama of Geithner’s widely reported “conversation” on Friday with regulators who were refusing to toe the Obama administration’s financial reform line.
Barr said he attended the meeting in question, where sources said Geithner used expletives in urging cooperation from Federal Reserve Chairman Ben Bernanke and others.
“The secretary made clear the regulators are free to defend their own agency prerogatives. They’re independent agencies … We had a long discussion about macro-prudential versus micro-prudential regulation, the kind of conversation that we have had with them on many occasions,” Barr said. But Bunning, a Kentucky Republican known for his bluntness, wasn’t buying this bland description of a closed-door session that sources described as tense and uncomfortable. Under pressure from Bunning, Barr replied, “I won’t characterize the exact verbiage that was used … senator, you will not be surprised to learn that in Treasury, as occassionally up on the Hill, there’s some colorful language.”
Said Bunning, “I’ve been accused of that. I understand.”
Anti-bomb buildings don’t exist, what it exist are bombs no sufficiently powerful. But this problem can also be solved by the technology. If I have to bet I prefer to bet in the bomb and not in the building.