Happy Fiscal New Year!
On the first day the fiscal 2011, the Obama administration is touting stimulus success and says that more stimulus can move through Congress, even with Republicans poised to make gains this November. But neither the administration nor its fiscal commission has answers to the $13.5 trillion (and growing) debt problem, pundits say.
TOP STORY -- WaPo’s Lori Montgomery previews a WH report that says the $814 billion stimulus is meeting its deadlines with little fraud or waste. Key nuggets: 70 percent of the money has been spent; lower-than-anticipated costs allows another 3,000 projects; complaints filed on less than 2 percent of awards.
Montgomery writes: “[T]he report challenges public perceptions of the stimulus aid as slow-moving and wasteful - an image that has fueled voter anger with the dominant party. Even some former skeptics who predicted that the money would lead to rampant abuse now acknowledge that the program could serve as a model for improving efficiency in government.” http://wapo.st/bxYGQz
Rebuttal -- Look at the jobs data, says former Sen. Phil Gramm (R-Texas). “There are 4.6% fewer people employed in the U.S. today than at the start of the recession. Euro zone countries have lost 1.7% of their jobs. Total employment in the U.K. is down 0.6%, G-7 average employment is down 2.4%, and OECD employment has fallen 1.9%.” WSJ: http://bit.ly/9oGPUy
TreasSec Geithner suggests that GOPers after November could support Obama’s package of investment tax breaks, infrastructure spending and extension of Bush tax cuts. http://bit.ly/cfMp4O
Jobless claims decline: “Initial unemployment claims fell by 16,000 to 453,000 in the week
ended Sept. 25, the Labor Department said in its weekly report
Thursday. New claims for the previous week, ended Sept. 18, were
revised upward to 469,000 from 465,000. Economists polled by Dow Jones
Newswires had predicted new claims would fall by only 5,000.” http://bit.ly/cEcGcV
NEW YEAR'S PARTY POOPER -- Fiscal Times: “Deficit Commission at a Stalemate as Time Runs Out”
Edmund L. Andrews writes, “After a desultory public meeting on Wednesday, dominated by presentations about ‘performance budgeting,’’ the commission adjourned for a six-week break. When they convene again, they will have three weeks – including Thanksgiving weekend – to agree on all their recommendations. ... But at the moment, members haven’t agreed on the basics.” http://bit.ly/cAGz31
PARTY FAVOR -- NYT’s Jackie Calmes finds that the much-maligned TARP will cost far less than expected, if it costs anything at all. “Even as voters rage and candidates put up ads against government bailouts, the reviled mother of them all — the $700 billion lifeline to banks, insurance and auto companies — will expire after Sunday at a fraction of that cost, and could conceivably earn taxpayers a profit.” http://nyti.ms/ayisas
Third Way unveils package of deficit-reduction proposals. Key parts: more healthcare cost containment, phased-in Social Security reforms, restructuring of federal pensions and fun ideas such as a receipt showing taxpayers what they’re getting for their money. http://bit.ly/aFyPbB
TAX CUTS = MORE DEBT -- Derek Thompson likes WH economist Austan Goolsbee’s video argument on the Bush tax cuts, but says it’s incomplete because it doesn’t address its debt impact (roughly $3 trillion over 10 years). http://bit.ly/dyBx6Z
Keith Hennessey says the WH is misleading when he attacks Republicans for the deficit impact of extending all the Bush cuts. “If the President thinks that Republicans are irresponsible for proposing $700 B of ‘tax cuts’ that he opposes because of the deficit effect, why is he OK with the other $3.1 trillion of deficit effect?” http://bit.ly/bB88A6
FED FRIDAY -- Bernanke says the Fed has to provide more help. "The unemployment rate is still almost 10 percent, inflation is
quite low, and the Federal Reserve has the responsibility ... to do our
part to help the economy recover and make sure that jobs come back to
the United States." Reuters: http://fxn.ws/9fjCUU
A Reuters investigation scrutinizes the Fed's ties to the private sector... "By necessity, the Fed spends a considerable amount of time talking to investment managers, bank economists and market strategists. Doing so helps it gather intelligence about the market and the economy that is invaluable in informing the bank's decisions on borrowing costs and lending programs. ... But a Reuters investigation has found that the information flow sometimes goes both ways as Fed officials let their guard down with former colleagues and other close private sector contacts." http://reut.rs/9lvd5q
Renowned derivatives trader Taleb says Fed “will be gone” within 25 years because of deficits. HuffPo: http://huff.to/9NBRGz
FINREG FRIDAY -- Elizabeth Warren, in WSJ op-ed, says the focus for the Consumer Financial Protection Bureau will be: “Can consumers understand the product?” "For consumers, this would mean products that are easy to understand and compare. For lenders, regulatory compliance costs might be reduced. Competition would flourish, but in ways that consumers can see, such as better service and lower prices."
Arianna Huffington tells NPR where she puts her money: “I'm not in stock. I'm in very boring treasuries. And I have a house. And that's why America cannot become a third-world country, because then my treasuries would be in serious trouble. This whole book is completely self-interested — to protect my treasury bonds.” http://n.pr/9z1z3W
YUAN REVAL -- Krugman finds Levin bill on China to be step in the right direction. http://nyti.ms/bO97b9
Ryan Avent says Krugman’s not considering the downsides of a currency/trade fight. http://bit.ly/9ONcei
Baucus to China -- The Senate Finance chairman says he'll meet with Chinese officials to talk economic and trade issues next month. "China's currency undervaluation hurts American ranchers and farmers, American exports and American jobs. I have long said that China must take meaningful action to address its currency practices and we must be vigilant in pushing China on this issue." http://bit.ly/d442mQ