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Posts in "The Economy"
June 24, 2014
It took less than 72 hours after his election for Kevin McCarthy to reveal an unambiguous and extremely consequential way he’ll be different from his predecessor.
In what’s looking like the year’s hottest dispute between small-government crowd and the business community, the incoming House majority leader took a surprising side on Sunday. The Californian is joining the hard core fiscal conservatives who want to close the Export-Import Bank, which for eight decades has been one of the main tools at the government’s disposal for helping American businesses.
The agency steps in when private credit is scarce or expensive. Using money borrowed from the Treasury, it either makes or guarantees loans so U.S. companies can expand their exports of aircraft, farm machinery, power generation equipment, telecommunications hardware and even gourmet food. The right reviles this as a prime example of corporate welfare and derides the Ex-Im Bank as an agent of crony capitalism.
During his time in the Republican leadership Eric Cantor was an anchor for the opposite side, which argues that such credit financing is a no-risk way to leverage taxpayer dollars in the interest of creating jobs and sustaining the nation’s manufacturing base. The Virginian was more responsible than anyone else for steering the Ex-Im Bank to temporary safety two years ago, when the waves of conservative criticism first got big enough to pose a potential threat. He was so well known as a defender of the bank that stock in one of its biggest customers, Boeing, plunged 3 percent the day after Cantor lost his primary, wiping away all its gains so far in the year.
The anxiety was fueled in part by anticipation that the Ex-Im Bank’s most influential House critic, Financial Services Chairman Jeb Hensarling of Texas, would run for majority leader. When he demurred, allowing the majority whip to secure his promotion with ease, the big companies relaxed a bit — because McCarthy had been on Cantor’s side in 2012 in supporting the current reauthorization of the agency.
But all elections have consequences, and two of them were on display when McCarthy revealed his 180-degree change of position on “Fox News Sunday.” The winner’s pivotal bloc of supporters will need to feel rewarded sooner than later, so it was only a matter of time before the new floor leader would need to stake out a strong position on legislation that’s a top priority of his allies in the tea party faction.
Not to mention an important rival who took a pass this time around could change his mind as soon as November, when leadership elections for the 114th Congress will be held. So it made sense for McCarthy to act quickly to shrink some of the ideological daylight between himself and Hensarling. Full story
May 1, 2014
Long before Wednesday’s totally predictable Senate vote blocking a bill to increase the minimum wage, President Barack Obama and his fellow Democrats in Congress had embraced their guaranteed consolation prize.
It’s a construct as venerable as the Capitol itself: They will not have the bill, but they are plenty satisfied to have the issue.
In fact, especially if some sunshine newly cast on policy deliberations in the Clinton administration can be considered instructive, the Democrats may have gotten just what they wanted all along from one of the first big show votes of the campaign season.
“This is all about politics,” Minority Whip John Cornyn declared before the Senate came up five votes short of advancing the minimum wage legislation beyond a GOP filibuster. “This is about trying to make this side of the aisle look bad and hard-hearted.”
To support that assertion, the Texas Republican introduced into the record a document that his side views as powerful past-is-prologue evidence, unearthed from an avalanche of papers created in Bill Clinton’s White House and being released this year by the National Archives. It’s a January 1998 memo to the president about that year’s minimum wage debate. The author was Gene Sperling, who then ran the National Economic Council. Sperling, of course, returned to that job during the Obama administration, leading the NEC for three years ending this March, as Obama’s own minimum wage goals were evolving. Full story
November 14, 2013
Janet L. Yellen faced intense and skeptical questions from several Republicans on the Senate Banking Committee, but nothing appeared to threaten her prospects for becoming the next chairman of the Federal Reserve.
While almost all the public and congressional attention is focused on the intensifying travails of the health care law, Wall Street is paying more attention to the Yellen confirmation hearing. If confirmed, she will be a dominant player in federal monetary and fiscal policy for at least the next four years — longer, probably, than the anxiety over Obamacare’s implementation. Full story
November 12, 2013
Updated 4:32 p.m. | One month before their no-penalty-attached deadline, budget negotiators will convene Wednesday morning for only their second public meeting. There’s still no sign anything was accomplished behind the scenes since the opening session two weeks ago — except maybe a downgrading of the already de minimis expectations.
As a practical matter, a grand bargain fell off the table almost as soon as the government reopened in October, and ever since then, the scope of the talks has been narrowed to one modest topic: how much discretionary spending to permit in the final two-thirds of this fiscal year. Full story
September 24, 2013
Top Senate Democrats signaled today that they may amend the continuing resolution to last only seven weeks, to Nov. 15 instead of Dec. 15. That would move the fall’s second shutdown showdown to just after the looming dogfight over the debt limit.
The Democratic plan, which has not been finalized, would complicate this week’s stopgap spending imbroglio with a secondary issue that is important for many lawmakers but has nothing to do with the matter consuming the public’s attention. Conservative Republicans continue to demand that Obamacare be denied any funding in the new fiscal year as a condition for keeping the government open.
With the first test votes set for Wednesday — and top Republican leaders abandoning the quixotic filibuster effort orchestrated by Sen. Ted Cruz of Texas —Democrats are sure that by the end of the weekend, they will be able to remove the defunding language from the bill the House passed last week. Full story
September 18, 2013
The prospect of a partial government shutdown increased significantly this morning.
President Barack Obama made it emphatically clear that he is not in any way open to negotiating a delay or a weakening of his health care law. He spoke just minutes after House GOP leaders announced plans to pass legislation this week that would make defunding Obamacare their condition for stopgap spending until December and an increase in the debt limit good for at least a year.
The president, in remarks to corporate executives at the Business Roundtable, said he won’t allow a “faction” of the most conservative Republicans to “extort” such a concession from him because that “would fundamentally change how American government functions.”
“We will blow the whole thing up unless you do what we want? That can’t be our recipe for governing,” he said in characterizing the Republican plan. He also contended that this could jeopardize the economic recovery by rattling financial markets close to the next two budget deadlines — the start of the fiscal year in a dozen days and the Treasury’s need to borrow money beyond the legal limit sometime in the middle of October.
The remarks were perhaps the president’s most succinct and confrontational yet in this fall’s intensifying version of the budget wars that have consumed so much of Washington’s energies for the past three years. He is hoping to win the battle for public perception the same way Bill Clinton did during a series of shutdowns at the end of 1995. Republicans then were overwhelmingly viewed as petulant and blamed for allowing federal services to grind to a halt because they didn’t get their way in negotiations over cuts in social programs.
Speaker John A. Boehner, who was on a lower rung of the GOP leadership ladder back then, remembers the political beating his side took and has been openly resistant to tactics that could lead to a repeat performance. But the Ohio Republican was quickly overruled at a closed-door meeting of his caucus this morning, and he and Majority Leader Eric Cantor emerged to explain that their latest strategy in the budget battle is to tie straightforward spending and debt provisions to at least two poison pills — provisions to prevent any spending to implement the health care law, which is to take a major step in October with the opening of insurance exchanges, and a requirement that Obama allow construction of the Keystone XL oil pipeline, which he has remained ambivalent about for two years.
There is no way the Democratic Senate would approve legislation defunding Obamacare, no matter its other provisions,. And the odds the Keystone language would survive look only slightly better.
There were some indications in Boehner’s remarks that he might countenance a strategy, only slightly different from the one he was forced to abandon last week, in which the Senate would strip out the provisions it found objectionable and send back to the House a relatively clean measure with the two fiscal provisions — continuing discretionary spending until Dec. 15 at the current sequester-clipped levels (an annualized rate of $988 billion), and permitting the Treasury to borrow whatever it deems necessary through next fall, and presumably beyond the midterm elections.
If the Senate at least goes on the record with a roll call sticking up for Obamacare — such a vote has never happened, even as the House has voted 40 times to defang or repeal the law — the leadership’s hope would be that a sufficient bloc of House conservatives would feel they had done the best they could to promote their cause, relent and allow the budget crisis to be avoided in the nick of time.
At least for today, though, the atmospherics on both sides suggest that a government shutdown lasting at least a few days might be required to focus the negotiators’ minds.
August 2, 2013
The White House reacted to today’s middling employment numbers by insisting that the less-than-expected addition of 162,000 new jobs is just a reminder the economy won’t get any better until the sequester is turned off.
Republicans in Congress reacted by saying much less than they usually do about the monthly jobs reports — and then turning out the lights at the Capitol for the next five weeks.
That reticence was in part because the headline-grabber was a July unemployment rate of 7.4 percent, a drop of two-tenths of a point to the lowest figure since Barack Obama was elected president.
Beyond that, the GOP leadership has gone essentially mute on the sequester and its strategy for keeping the government operating beyond Sept. 30, the last day of fiscal 2013.
That’s because their caucuses this week essentially rejected both of the clearest options: House Republicans on Wednesday signaled they were unwilling to maintain the deep spending cuts in domestic programs for another year, and on Thursday their Senate colleagues signaled their almost unanimous unwillingness to abandon them.
Senators then scattered for the summer, leaving House members on their own to close up the Capitol shop this afternoon.
The House said goodbye after passing a pair of GOP measures designed to help House rank-and-file members with their political messaging during the August recess — without any hope the Democratic Senate will ever consider either bill.
One would require Congress itself to sign off on any new federal rules with more than modest economic impact. The other would prohibit the IRS from implementing any provisions of the 2010 health care law — the 40th time, by most counts, the House has voted to repeal, defund or otherwise block Obamacare.
Republicans describe both pieces of legislation as job creators, arguing that businesses will be eager to expand and bolster their payrolls once they know Washington is not going to be regulating them as much.
“Persistent long-term unemployment, discouraged people leaving the workforce, and millions taking part-time jobs because they have no choice are not signs of a strong recovery,” said House Majority Leader Eric Cantor, R-Va. “While the president is giving speeches, Republicans are taking action.”
The president says the best thing for the economy would be federal investments in infrastructure spending and dropping the across-the-board spending reductions that began this spring.
“With the recovery entering its fifth year, we need to build on the progress we have made so far and now is not the time for Washington to impose self-inflicted wounds,” said Alan Krueger, chairman of Obama’s Council of Economic Advisers.
The facts from the latest Labor Department surveys don’t give either side a preponderance of the persuasive evidence. Instead, they offer all of Washington this week’s second reminder that the economic recovery remains modest. (The economy grew at an improving but still tepid 1.7 percent annual rate in April, May and June, the government said Wednesday.)
July was the 34th consecutive month of jobs gains, although revised data for the previous two months, combined with the new figure, show the economy has created an average 175,000 jobs a month since May — not enough to appreciably absorb the backlog of people who have been without work since the recession.
The job gains were concentrated in retail, food services, financial activities and wholesale trade. Construction employment fell, but manufacturing rose for the first time in five months, with 6,000 new positions added. Government employment at all levels stayed essentially flat.
The jobless rate, which comes from a different survey, ticked down either because people who were hunting for jobs found work or gave up looking.
The unemployment rate for adults younger than 29 was 11.6 percent; for African-Americans, it was 12.6 percent.
July 31, 2013
President Barack Obama was armed with better than expected news about economic growth when he went to the Capitol today, where he’s having separate meetings with House and Senate Democrats but having nothing at all to do with Republicans.
The economy grew at a seasonally adjusted annual rate of 1.7 percent this spring, the Commerce Department reported. The consensus view of economists was for the second quarter expansion to be just under 1 percent — which would have been such a meager number as to suggest an impending stall.
The new number for April, May and June is also better than the government’s 1.1 percent revised gross domestic product growth estimate for January, February and March.
And so, instead of having to pitch his policies in the face of concerns about economic sluggishness, Obama was able to suggest an impending acceleration during his back-to-back meetings with the two Democratic caucuses. He was planning to ask lawmakers for help selling his agenda during the August recess, after which Congress will be unavoidably returned to decisions about spending levels and the debt ceiling.
“Jobs. Middle Class. Growth,” the president said as he left his hourlong meeting with House members in the Capitol Visitor Center and headed to his session with senators. (The House Democrats provided Obama, who turns 52 on Sunday, with a dark chocolate cake topped with a fondant presidential seal.) Full story