Jobs Report Disappoints, So Does Economy
“As US economic data continue to surprise on the downside, markets are fearful that the ‘soft patch’ becomes something much more serious, despite absurdly accommodative monetary policy. If that happens, the global economy will be as defenseless as Goldilocks would be if she were faced by a big bad wolf.”
-- Sebastien Galy, senior currency strategist at Société Générale, mixing his metaphors for the Financial Times.
The U.S. economy added only 54,000 jobs in May, down nearly 150,000 from April and far below the 200,000 needed to accommodate new workers entering the workforce or to begin to reduce the historically high numbers of the long-term unemployed.
It has been a dismal week of economic news – not likely what President Obama was expecting when he scheduled a trip to Ohio to tout his auto bailout package.
While Obama points to the recouping of some of the massive sums of federal funds pumped into failed automakers GM and Chrysler, the sales struggles of late and the soggy performance of GM’s re-released stock have directly mitigated some of Obama’s argument that the unpopular bailout was a crucial driver of economic growth.
But it is the general weakening of the economy – a slip from anemic growth to possible double-dip recession again, that does the most damage to Obama’s re-election message.
While Democrats may be gloating over the uncertainty and perceived weakness in the Republican field, continued economic woes would make it nearly impossible for Obama to win another term.
While Obama continues a multi-front war with Republicans on energy policy, foreign military actions, and debt, he will need to make the actual jobs pivot he has promised in order to survive 2012.
Debt Warnings Undermine White House Stance
“The secretary reiterated to us that the president does not have a plan that we can score. And that’s truly what we want to do because you can’t compare plans if the president doesn’t give us one. For me, it’s a failure of leadership.”
-- Rep. Kristi Noem, R-S.D. talking to about a meeting with Treasury Secretary Timothy Geithner about an administration request to raise the federal borrowing limit.
When bond rating house Standard & Poor’s cut the outlook on U.S. debt from “stable” to “negative” two months ago, the administration said that it was really more interested in what Moody’s had to say on the subject.
Well, Austan Goolsbee, here’s your answer.
Moody’s sent a warning to the federal government that if Republicans and Democrats couldn’t come up with a plan to cut the debt and increase the government’s borrowing limit, the agency would feel obliged to slash Uncle Sam’s Aaa bond rating.
While S&P’s simply expressed general pessimism that Washington could solve the expanding debt crisis, Moody’s has set specific benchmarks. If the government raises the debt limit without substantial deficit reductions or if the government begins shutting down because of an impasse over the debt limit, the Aaa could go away.
Now, investors don’t really believe that the U.S. won’t pay its obligations. The loudest voices about default have been from Democratic negotiators who claim Republicans are trying to cause a repeat of the Panic of 2008.
But, like S&P’s, Moody’s is basically saying that its analysts see that a dysfunctional Washington may not be up to this task.
There are lots of reasons to thinks so.
A report commissioned by Sen. Tom Coburn, R-Okla., shows the U.S. gave away $1.4 billion in foreign aid to nations from which the federal government has borrowed money. That, of course, just sounds crazy. How far gone from fiscal probity does a government have to be in order to believe that giving aid to and borrowing money from China and Russia is sensible? This is not the conduct of a government ready to get serious about its debt.
Moody’s is making a general endorsement of the kinds of plans put forward by Speaker John Boehner, moderate Senate Democrats and others: directly tie the debt hike to current and future cuts. Whether it is Boehner’s dollar for dollar plan or the caps on future spending favored by many in the Senate, the demand is that Washington shape up.
This all ramps up the pressure for President Obama and like-minded Democrats in Congress to at last come up with a plan. Obama opted to not take on long-term debt issues in his annual budget and has so far refused Republican demands that he come to the table with a cuts proposal in order to obtain more borrowing power. Republicans, after all, have a long-term plan from Rep. Paul Ryan and a short-term plan in the form of Boehner’s dollar-for-dollar proposal.
While the Obama Democrats will be cheered by the fact that Moody’s backs up some of their warnings about the dangers of default, the latest report means that the Democratic plan of refusing to offer a plan is unsustainable.
Treasury Secretary Timothy Geithner fled a meeting with House freshman Republicans after being hectored repeatedly for having no plan. Geithner had intended to lecture the frosh on the consequences of fiscal brinksmanship, but ended up getting the lecture himself. Telling lawmakers that they could not make a debt hike conditional on cuts the same day as Moody’s said that is exactly what the government must do would be a hard case for even a more skilled spokesman than Geithner.
Given the mounting pressures, it looks like his flight presages a larger retreat by the administration on its stance.
House Getting Ready to Rumble on War Powers
“We appreciate our NATO allies, but this Constitution trumps NATO – trumps every other group the president discussed. It’s the constitution we have to be worried about. This has to be forever. At this point, NATO is a sock puppet of the U.S.”
-- Rep. Dennis Kucinich, D-Ohio, talking to reporters about the Libyan war.
House members will have their choice today on two measures relating to the Libyan civil war.
One, offered by Ohio Democrat Rep. Dennis Kucinich, would call on President Obama to withdraw U.S. forces from the conflict. The other, offered by House Speaker John Boehner, is essentially a warning to the president to obtain authorization for the war effort from Congress or face a future withdrawal order.
Obama’s most ardent supporters in the House, like Minority Leader Nancy Pelosi, are trying to steer members away from both measures, warning that Democratic votes against the war will undermine the president’s clout.
But there is bipartisan war fatigue in Congress. Not only is there anger that Obama has continued to prosecute the stalemated Libyan war without congressional approval but with his nation-building strategy in Afghanistan.
Lawmakers in both parties have come to disapprove of Obama’s Wilsonian international aims. Republicans fault him for not using the military’s lethal power and instead relying on soft power and squishy international institutions. Many Democrats consider even that exercise of power to be an unacceptable continuation of Bush-era militarism.
Just about everybody on the Hill thinks it costs too much and that Obama is giving Congress the brush off.
Boehner’s offer is aimed at giving fed up Republican lawmakers a chance to express their outrage without acting precipitously. There was considerable GOP support for Kucinich’s plan, which Boehner hopes to bleed off by giving members a way to send a message to Obama.
But, remember, the constitutional crisis is only two weeks away. Under the 1973 War Powers Resolution Obama only has that long to pull out of the Libyan war or be in full violation. He did not seek Congressional authorization in the first two months of U.S. involvement, and is now in the one-month period provided by the law to withdraw.
But the administration seems bound to try to swat down Congress on this, talking tough to reporters and declaring that the president is allowed to participate indefinitely in any conflict of his choosing so long as the resources involved are limited.
But the point of the War Powers Act was to prevent presidents from making small commitments that turned into large ones. By giving commanders in chief two months to act unilaterally, Congress hoped to give modern flexibility but prevent old-fashioned despotism and militarism.
The level of support for Kucinich’s plan will be a strong indicator for how ready Congress is to tangle with the imperial presidency.
Potential Challengers Test Romney’s Weaknesses
“Everybody running for president has a problem; that’s his problem. The reality is that Obamacare and Romneycare are almost exactly the same, it’s not very helpful trying to distinguish them.”
-- Former New York Mayor Rudy Giuliani talking to reporters while testing the presidential waters in New Hampshire
The complaint among Republicans about their presidential frontrunner might be summed up in the menu for Mitt Romney’s Thursday campaign kickoff in New Hampshire.
Attendees were offers bowls of Ann Romney’s “world-famous” chili, but what was served up was a heart-healthy, mildly spicy chicken and white bean soup. After being promised heat and something that would stick to their ribs, curious Republicans got California cuisine.
As Romney continues his uneasy dance with the Republican base, there are lots of folks looking to cut in. Sarah Palin soaked up Romney’s spotlight on Thursday, making her first incursion into New Hampshire just hours after Romney’s chicken chili was cleared away.
Today, it’s Rudy Giuliani, who has waded deeper into his waters testing and will today venture a little further out. Giuliani blew off New Hampshire in 2008 and has considerable resentment to overcome there if he really is going to make another run.
But with Romney and the other top-tier contender in the race, Tim Pawlenty, not captivating voters, there’s every reason for Giuliani to wonder if he wasn’t just four years too soon. Soon-to-declare Rep. Michele Bachman has a core following but looks unlikely to be able to attract broad-based support, especially in places like New Hampshire and Florida.
Beyond Palin and Giuliani the last remaining potential candidate who could really shake up the race is Texas Gov. Rick Perry. Those three will all be watching Romney and Pawlenty in the coming days and weeks to see if it’s not too late to spice things up.
Weiner Picked a Bad Time to Downplay Cyber Threats
“These allegations are very serious. We are obviously very concerned about Google’s announcement regarding a campaign that the company believes originated in China to collect the passwords of Google e-mail account holders.”
-- Secretary of State Hillary Clinton talking to reporters about Internet espionage.
A senior legislative aide told Power Play that while Weiner has been careful not to make any comments that could trigger an ethics investigation, “security could be a consideration.”
“At some point, the leadership may need to get a better understanding of what happened here,” the aide said. “It’s ridiculous, but because he won’t go to [Capitol Police] or the FBI, they don’t have any way to know whether this is part of some larger risk.”
Aside from his own unforced errors in dealing with the crotch shot posted on his Twitter feed, the New York Democrat has not been helped by the spate of news this week about actual cyber-security issues.
In one week, we’ve seen reports about hack attacks on Lockheed Martin and other defense contractors and on China-based information raids targeting private accounts of White House officials and other senior government officials. Not coincidentally, the Defense Department has also made clear that the U.S. reserves the right to respond to cyber attacks with actual bombs and bullets.
Weiner, who now allows that “it could be” a photo of his groin in a state of arousal that landed on the Internet, but remains adamant that he did not post the picture. The scenario that Weiner has left open is that someone else had a photo of his, er, constituent services, and posted it on his feed.
But Weiner, whose office called the police Thursday when a local reporter from his district tried an ambush interview, might have done better in his efforts to downplay the incident if it hadn’t happened the same week that we had a series of cyber-security scares with the government.
Weiner said he didn’t want to waste taxpayer dollars on an investigation and tried to downplay the whole incident as a prank. But even under his benign telling of the tale, it is still an instance in which someone sought to discredit a member of the government, one who is married to a senior official at the State Department.
It could be a botched blackmailing, an effort to cause trouble for the Secretary of State, a jilted former lover seeking revenge on the congressman, the start of an effort to discredit individual members – no one knows because all that’s available for inspection is the incident itself and then Weiner’s non-denial denials.
Weiner has promised that his private investigators will get to the bottom of the incident and that he will reveal the findings, but his fellow lawmakers may be running out of patience.
Weiner’s efforts to downplay the incident might have fared better on a week that didn’t highlight our government’s vulnerabilities to cyber attacks and the aggression of our foes in this theater of war.
And Now, A Word From Charles
“He is running on the economy, not on a theory or the size of government, not running an ideological campaign. He said…I have run a company, saved the Olympics. I was a governor.
“He is trying to make himself disappear and be the opposite of Obama. It’s a smart strategy. It’s the only one given his problem with Obamacare he could adopt. I think it could work, although he will have a hard time, as you said, on that central problem of Romneycare.”