Tales from the Trail

“Many commonsense Americans like myself  saw this day coming,” Sarah Palin says of the Standard & Poor’s downgrade of the U.S. credit rating and the fallout in the markets.

In what reads like an economic policy statement, the former Alaska governor and possible presidential candidate says she is “surprised that so many people seem surprised by S&P’s decision.”

“Weren’t people paying attention over the last year or so when we were getting warning after warning from various credit rating agencies that this was coming?” she said in a lengthy posting on her Facebook page.

Palin, who is still weighing whether to join the crowded race for the 2012 Republican presidential nomination, says she even sounded some of those warnings herself.

“Back in December 2010, I wrote: ‘If the European debt crisis teaches us anything, it’s that tomorrow always comes. Sooner or later, the markets will expect us to settle the bill for the enormous Obama-Pelosi-Reid spending binge.’ ”

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.”

It seems slightly surreal to see a concerted attempt to rally support behind a radical plan to bring the U.S. budget deficit down to a manageable level, while at the same time Republicans and Democrats haggle over the extent of tax cuts which will achieve exactly the opposite.

But deficit hawks will be pleased to see support growing for the final draft Simpson-Bowles deficit-cutting plan, a plan all but written off a few weeks ago. Two more votes were pledged today, bringing the number of commission members in favor to 9. The hurdle of 14 votes that would trigger congressional consideration still looks elusive, but many of the proposals that form the plan may have legs.

The atmosphere around the Bush-era tax cut talks was altogether less bipartisan today, with Democrats forcing a vote through the House to extend the cuts for the middle class only. Incoming House Speaker John Boehner dismissed the vote as a “political maneuver” and then used a bit of verbal maneuvering to call it “chicken crap,” without quite calling it that.

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.

Here are our top stories from Washington today…

White House memo outlines new anti-leak measures

The White House has set up a special anti-WikiLeaks panel after the embarrassing flood of State Department cables leaked by the website, and its proposals include teams of inspectors who would prowl government agencies looking for ways to tighten security. A four-page draft memo circulated by the White House says President Obama’s national security staff has created an “Interagency Policy Committee for WikiLeaks.”

Alan Simpson and Erskine Bowles think it may be a new day in American politics, one where politicans who hike taxes and alter Social Security stay in office.

Simpson, a former Republican senator, tells MSNBC’s “Morning Joe” that he sees evidence of change whenever he strolls through an airport: “I can tell you, we used to get lots of signals. I get more thumbs up now than other digits.”

The pair, co-chairs of President Barack Obama’s National Commission on Fiscal Responsibility and Reform, have proposed cutting the U.S. budget deficit by reducing defense spending, eliminating tax breaks, hiking the gasoline tax and altering Social Security, Medicare and Medicaid.

When it comes to framing economic policy, it looks increasingly as though Republicans are winning the debate. Not only have they made “stimulus” almost a dirty word but there seems to be a growing feeling that deficit-financed spending is not a great way to pull the economy out of a recession. Forget the conclusions of the bipartisan Congressional Budget Office about how the bailouts and stimulus of 2008 and 2009 saved millions of jobs. Forget the global consensus around the need for coordinated stimulus after the financial crisis. The American public is simply not convinced.

The Reuters/Ipsos poll released today found 57 percent of Americans believe that, when economic times are tough, cutting the deficit is a better way to create jobs than deficit-financed stimulus.

With the U.S. congressional elections just six weeks away, this finding is bad news for President Barack Obama as he struggles to convince people that Republicans drove the economy into a deep ditch and Democrats are hard at work pulling it out.

It’s too early to tell whether President Barack Obama’s new approach to China will be more successful than his predecessor’s. But this week’s high-level dialogue in Washington underlined how the balance of power is shifting.

The U.S. side, determined to be more respectful and less confrontational, tiptoed around the sensitive issue of China’s currency, avoiding any public appeal for an upwards revaluation in the yuan.

There was a passing reference to the rights of China’s ethnic and religious minorities, but no sign the other side would take any more notice of foreign interference in its internal affairs than it has in the past.