Tales from the Trail

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.

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.

Over 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.

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.

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.

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.

Tom Daschle doesn’t want to be a distraction. Nancy Killefer doesn’t want to be a distraction. Timothy Geithner has already been a distraction.

What these three high-profile nominees to President Obama’s White House have in common, besides not wanting to be distractions, is that they apparently don’t know how to do their taxes. Daschle, the former senator and Obama’s choice for health secretary, and Killefer, a former assistant Treasury secretary and nominee to oversee the government’s budget, have withdrawn their nominations because of tax indiscretions. Geithner has been confirmed but his path to the top of Treasury was also marred by tax troubles that some fear may come back to haunt him.

Besides begging the question why do smart people not know how to do their taxes, it also throws a shadow over Obama’s quest to have a fast, smooth transition to power.

Not likely. But Treasury Secretary Hank Paulson might want to dust off his resume because if the Academy of Management is right, he’s probably not going to be getting many fat offers to serve on corporate boards after leaving government in January.With Democrats in control of both Congress and the White House starting Jan. 20, high-ranking Republicans in the outgoing Bush administration will be less marketable for boardrooms positions, according to the association.”If a party is shut out of both congressional houses plus the executive branch, as Republicans will be, its members’ chance of joining the board of a large corporation is about 30 percent less than it would otherwise be,” said Richard Lester of Texas A&M University, who carried out a study for the Academy of Management.Helping Paulson and several of his White House colleagues, though, is that Cabinet members are the most likely among retiring governmental officials to be recruited to serve on corporate boards.”They were more than twice as likely as former senators, and more than five times as likely as former representatives, to be appointed corporate directors during the 16 years covered by the research — 1988 through 2003,” according to the association.Not to pick on Paulson — there are more than a dozen Cabinet members — but he has become one of the highest-profile, most controversial of Bush’s aides for the way he has been handling the $700 billion financial industry bailout.But Paulson’s a survivor. This former Nixon administration official left government the first time around in 1973 (like a lot of his colleagues) and quickly worked his way up the ladder at investment firm Goldman Sachs, finally serving as chairman and CEO when he got his Treasury job.Photo credit: Reuters/Larry Downing  (U.S Treasury Secretary Paulson with President Bush outside Treasury Building in Washington)

While White House hopefuls Republican John McCain and Democrat Barack Obama wasted no time trading barbs in their second presidential debate, they agreed on the one man they would like to see running their Treasury Department to help pull the U.S. economy out of a tailspin: investment guru Warren Buffett.

“A supporter of Senator Obama’s is Warren Buffett. He has already weighed in and helped stabilize some of the difficulties in the markets and with companies and corporations, institutions today,” McCain said.

“I like Meg Whitman, she knows what it’s like to be out there in the marketplace.  She knows how to create jobs.  Meg Whitman was CEO of a company that started with 12 people,” McCain said, referring to one of his own economic advisers who used to run online auction giant eBay.

WASHINGTON – Sometimes it’s hard to tell when John McCain is joking.
 
Take his interview Tuesday with journalists at The Des Moines Register.
 
The Republican presidential candidate acknowledged the financial bailout measure before Congress was not perfect, but he said it was unacceptable to do nothing and admonished lawmakers for failing to pass a rescue plan.
 
Then, without cracking a smile or missing a beat, he added this little nugget: “I’m not saying this is the perfect answer. If I were dictator, which I always aspire to be, I would write it … a little bit differently.”
 
With the Treasury secretary likely to have a huge amount of power under any bailout scheme, McCain was asked what sort of person he was looking for to fill that job. He said Treasury Secretary Henry Paulson had been doing admirably.
 
“I think a person along Paulson’s lines,” McCain said. Given the fragility of Wall Street, he added, any candidate “probably has to have a sound grounding in the financial markets and that aspect of America’s economy.”
 
The Arizona senator said if elected he would recruit the brightest and the best for his Cabinet, Democrat or Republican, in government or in business.
 
“I’ll go out and ask them to serve the country for a dollar a year,” he said.
 
He mused aloud about who might be enticed into government service: billionaire Iowa businessman Warren Buffett, eBay founder Meg Whitman, or Fed-Ex chief Fred Smith.
 

McCain strongly objected when a questioner suggested his running mate, Sarah Palin, was not as experienced as others he named as potential government servants.
 
“She’s been a mayor. She’s been an overseer of billions — I don’t know how many billions of dollars of natural resources. She’s been a member of the PTA (Parent Teacher Association). She’s been a governor,” McCain said.
 
He express skepticism when told many people, including now some conservative Republicans, questioned her level of experience.
 
“Really? I haven’t detected that,” he said.
 
“Now, if there’s a Georgetown cocktail party person who quote calls himself a conservative and doesn’t like her, good luck, good luck, fine,” McCain added.
 
“I think that the American people have overwhelmingly shown their approval. Are there people who will be detractors of her? That’s fine. That’s fine. That’s what politics is all about.”

Click here for more Reuters 2008 campaign coverage.

Photo credit: Reuters/Brian Snyder (McCain speaks at Truman Presidential Library  in Independence, Missouri, on Wednesday)