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Posts For: August 7, 2011

Obama’s “Decider” Moment

There was minimal doubt President Obama would keep Treasury Secretary Tim Geithner at his post. If Obama were in his second term, or for some other reason not running for reelection in the near future, he might consider cashing in on the near-term gain in public approval that would come with holding his own administration accountable for the mess the president and his advisors have made.

Instead, the president had his “decider” moment—though with less emotion and fanfare than his predecessor’s. The president “asked Secretary Geithner to stay on at Treasury and welcomes his decision,” reads the recently released statement. But make no mistake—this was the moment Obama echoed George W. Bush.

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There was minimal doubt President Obama would keep Treasury Secretary Tim Geithner at his post. If Obama were in his second term, or for some other reason not running for reelection in the near future, he might consider cashing in on the near-term gain in public approval that would come with holding his own administration accountable for the mess the president and his advisors have made.

Instead, the president had his “decider” moment—though with less emotion and fanfare than his predecessor’s. The president “asked Secretary Geithner to stay on at Treasury and welcomes his decision,” reads the recently released statement. But make no mistake—this was the moment Obama echoed George W. Bush.

“I hear the voices, and I read the front page, and I know the speculation. But I’m the decider, and I decide what is best. And what’s best is for Don Rumsfeld to remain as the secretary of defense,” President Bush told reporters in April 2006. Rumsfeld had been taking heavy criticism from all sides for his stewardship of the Iraq War. Congressional Republicans were hoping Bush would fire Rumsfeld before the mid-term elections that fall, allowing someone to take the blame before the GOP faced the voters again. They had no such luck; Bush kept Rumsfeld until after the elections, when it became clear the public needed to hold someone accountable, and then let him go.

Geithner’s time as Treasury secretary has been, by any honest account, miserable. The administration’s policies have failed even by the president’s own metrics, leaving Obama and Geithner with no reasonable defense of the policies. So Geithner tried to leave, and the administration asked him to stay. He tried to leave again this week, and the administration asked him to stay, again. But Geithner has been there since the beginning, and there is no escaping his responsibility for the administration’s economic policymaking—he either concocted the schemes or assented to them. Which of the two doesn’t really matter at this point, primarily because Obama has been consistent in one regard: he refuses even to consider accepting responsibility for anything, instead choosing to blame his political opponents.

We’ll see if the voting public buys it. They usually don’t.

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The Next Washington Food Fight

If members of Congress wonder why their institution has only an 8 percent approval rating with the public, they might want to take a look here.

By far the most important congressional power—and therefore the most important congressional responsibility—is its power over the purse.  Yet with the end of the fiscal year coming up in less than eight weeks, not a single one of the 12 appropriations bills has been sent to the President. Only one has been passed by the Senate, only six by the House. Three haven’t even been voted out of committee in the House.

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If members of Congress wonder why their institution has only an 8 percent approval rating with the public, they might want to take a look here.

By far the most important congressional power—and therefore the most important congressional responsibility—is its power over the purse.  Yet with the end of the fiscal year coming up in less than eight weeks, not a single one of the 12 appropriations bills has been sent to the President. Only one has been passed by the Senate, only six by the House. Three haven’t even been voted out of committee in the House.

There was, of course, no budget for 2011, only a series of continuing resolutions. The current one runs out at midnight, September 30 at the end of the fiscal year. Assuming the rest of the appropriations bills do not make it to the president’s desk by then (an assumption about as safe as assuming the sun will rise in the east tomorrow morning), a new continuing resolution will be needed to prevent a shutdown of the government for lack of funding.

Given the battle royal we have just finished over the debt ceiling increase, that continuing resolution will not come about easily or quietly.

The S&P downgrade makes it only more urgent the Republican majority in the House use its political leverage to extract maximum concessions on spending restraint from the Senate and the president. Sen. Chuck Schumer will, of course, call that hostage taking (as if he wouldn’t do exactly the same thing if the situation were reversed). But if that’s what it takes to end business as usual in Washington, then so be it. Schumer will be furious but the American people will not.

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Obama Campaign to Ramp Up Blame Game

Obama’s 2012 campaign is shaping up to be the polar opposite of his optimistic 2008 run. While his last race emphasized post-partisanship and hope, his new campaign can be boiled down to just five words: Better the devil you know.

The Obama campaign realizes that he hasn’t been the transformative and restorative president he promised to be, and he won’t try to pretend otherwise. Instead, the president will point out the small positives (at least he didn’t send the country into a depression) and focus mainly on the negatives of his opponents (a Republican in the White House would make things even worse than they are now).

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Obama’s 2012 campaign is shaping up to be the polar opposite of his optimistic 2008 run. While his last race emphasized post-partisanship and hope, his new campaign can be boiled down to just five words: Better the devil you know.

The Obama campaign realizes that he hasn’t been the transformative and restorative president he promised to be, and he won’t try to pretend otherwise. Instead, the president will point out the small positives (at least he didn’t send the country into a depression) and focus mainly on the negatives of his opponents (a Republican in the White House would make things even worse than they are now).

The New York Times reports:

At the same time, Mr. Obama is expected to begin a nationwide effort to warn the country of what Republican leadership, in his view, looks like, Democratic advisers say. That means the president will single out Florida, Ohio and Wisconsin — three states where Republican governors clashed with civil servants, for instance — as a warning of what could happen if a Republican takes the White House. (“Get those nurses and firefighters who lost their job on television,” one Democratic adviser said.)

In those three states and others, like Pennsylvania, where a disproportionate number of voters are older, Mr. Obama will hold his Republican rival responsible for proposals to replace Medicare with a smaller voucher system and to make Medicaid a limited block grant to the states.

Fear of the unknown is a strong tool for incumbents, but it remains to be seen whether this message will resonate with the American people, especially just three years after Obama ran such a hopeful and biographically-centered campaign. Will such a cynical strategy leave some of his 2008 supporters feeling cheated or duped? Also, like many politicians, Obama is notoriously egocentric: will he be able to flourish in a campaign that is centered on the faults of his rivals, as opposed to his own brilliance?

Either way, he doesn’t have much of a choice. With few “progressive” options to fix the economic crisis (another stimulus isn’t likely to fly with most Americans), the only viable route is for Obama to run a backward-looking campaign and hope that the Republicans nominate an unelectable candidate.

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RE: The U.S. Is Downgraded and Obama Will Be Too

I could hardly agree more with John that the downgrade by S&P of the country’s credit rating marked a “terrible day” for the United States and will prove a “colossal disaster” for Barack Obama. As John says, the Republican TV ads practically write themselves and the greatest spinmeisters in the country won’t be able to help the president wriggle free from the blame for this deeply embarrassing debacle. Philip Klein at the Washington Examiner makes clear just how much of the blame belongs to President Obama and the overwhelmingly Democratic Congress of his first two years. So intent were they on turning the United States into a social democracy à la (bankrupt) Europe, that they didn’t even try to limit spending or address the skyrocketing deficits.

A plentitude of warning signs about the unhappiness of the electorate was ignored and explained away, usually with an elitist disdain that would have made the inhabitants of Louis XVI’s Versailles look like Mother Teresa: The Tea Party’s birth in the summer of 2009 with the raucous  town hall meetings, the results in New Jersey and Virginia of the election of 2009, the election of Scott Brown in deepest blue Massachusetts in January 2010. Even the nationwide Republican electoral tidal wave in  November 2010 apparently did not really get Obama’s attention. In February he produced a budget that wasn’t even a rearrangement of the deck chairs on the fiscal Titanic. It called for borrowing trillions more in order to buy additional deck chairs. Even the Senate, still controlled by Democrats, rejected it by a vote of 97-0. In April he called for a “clean” debt ceiling increase, i.e., not coupled with any spending cuts.

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I could hardly agree more with John that the downgrade by S&P of the country’s credit rating marked a “terrible day” for the United States and will prove a “colossal disaster” for Barack Obama. As John says, the Republican TV ads practically write themselves and the greatest spinmeisters in the country won’t be able to help the president wriggle free from the blame for this deeply embarrassing debacle. Philip Klein at the Washington Examiner makes clear just how much of the blame belongs to President Obama and the overwhelmingly Democratic Congress of his first two years. So intent were they on turning the United States into a social democracy à la (bankrupt) Europe, that they didn’t even try to limit spending or address the skyrocketing deficits.

A plentitude of warning signs about the unhappiness of the electorate was ignored and explained away, usually with an elitist disdain that would have made the inhabitants of Louis XVI’s Versailles look like Mother Teresa: The Tea Party’s birth in the summer of 2009 with the raucous  town hall meetings, the results in New Jersey and Virginia of the election of 2009, the election of Scott Brown in deepest blue Massachusetts in January 2010. Even the nationwide Republican electoral tidal wave in  November 2010 apparently did not really get Obama’s attention. In February he produced a budget that wasn’t even a rearrangement of the deck chairs on the fiscal Titanic. It called for borrowing trillions more in order to buy additional deck chairs. Even the Senate, still controlled by Democrats, rejected it by a vote of 97-0. In April he called for a “clean” debt ceiling increase, i.e., not coupled with any spending cuts.

The arrogance and obliviousness has not been limited to President Obama, of course. As the estimable Peter Berkowitz points out in the Wall Street Journal, it is the whole liberal end of the American political spectrum that, in its death spiral, has been lashing out at all who dare to criticize it, American politics’ remake of King Lear.

But I’m afraid this credit downgrade will prove more than embarrassing to the country and to the president whose feckless arrogance made it inevitable. Europe’s debt crisis is getting worse by the day and no one knows what to do about it. As Peter Osborne of The Telegraph (h/t Instapundit) relates the European  leaders are out of their depth.

We are in uncharted waters here. In all previous financial crises, no matter how greedy and stupid investors, bankers, brokers, and industrialists might have acted, there was always the power of the state, armed with state resources, to come to the rescue. That is no longer the case. This is a sovereign debt crisis. It is the lenders of last resort who need to be bailed out now.  Unless God is willing to cut a really big check, this could get very ugly very fast.

Market crashes always come about because of a build up of long-term problems. But they are usually precipitated by a particular, not always important, event. In 1873 it was the sudden, totally unexpected bankruptcy of Jay Cooke, perhaps the most prominent banker in the country, thanks to his extraordinary (and extraordinarily successful) efforts to help finance the Civil War. In 1929, it was a talk by an obscure stock market analyst named Roger Babson, speaking at a luncheon in Wellesley, Massachusetts,  who predicted that “sooner or later a crash is coming.” When news of the speech crossed the broad tape at 2:00 PM on September 3rd, 1929, the mood on Wall Street changed in an instant from the-sky’s-the-limit to the-sky-is-falling. The market declined sharply in the last two hours of trading that day, bumped downhill for the next six weeks, and crashed on October 29th.

Was the S&P downgrade of the creditworthiness of the government of the richest and most economically dynamic country the world has ever known the “Babson break” of 2011? We’ll soon find out.

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Will Bachmann Be Downgraded?

While there is little doubt the downgrading of the U.S. credit rating is a terrible blow to President Obama, the question remains whether the Standard & Poor’s decision will have an impact on the Republican field. Virtually all the GOP contenders have already weighed in with tough criticism of Obama, laying the responsibility for the sinking U.S. economic shift on the president. But it is far from clear whether the credit shakeup or fallout from the debt ceiling crisis will either help or hurt any of the Republicans.

Ironically, the loudest voice condemning the president came from Rep. Michele Bachmann–who is  hoping to win this week’s Iowa Straw Poll–who declared the president was AWOL on the issue and flatly claimed because the downgrade happened on Obama’s “watch,” it was his fault. That’s a message that resonates with Tea Party activists who applauded Bachmann’s stand on the debt ceiling as well as other Republicans who rightly see the president’s spending spree and insistence on raising taxes as the primary cause for the country’s predicament. But many Americans, including some conservatives, aren’t thrilled with the role played by Tea Partiers and absolutists like Bachmann who seemed unfazed by the possibility of a default and did nothing to help advance a fiscal compromise. That means the country’s credit downgrade may ultimately prove to be a problem for Bachmann’s candidacy.

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While there is little doubt the downgrading of the U.S. credit rating is a terrible blow to President Obama, the question remains whether the Standard & Poor’s decision will have an impact on the Republican field. Virtually all the GOP contenders have already weighed in with tough criticism of Obama, laying the responsibility for the sinking U.S. economic shift on the president. But it is far from clear whether the credit shakeup or fallout from the debt ceiling crisis will either help or hurt any of the Republicans.

Ironically, the loudest voice condemning the president came from Rep. Michele Bachmann–who is  hoping to win this week’s Iowa Straw Poll–who declared the president was AWOL on the issue and flatly claimed because the downgrade happened on Obama’s “watch,” it was his fault. That’s a message that resonates with Tea Party activists who applauded Bachmann’s stand on the debt ceiling as well as other Republicans who rightly see the president’s spending spree and insistence on raising taxes as the primary cause for the country’s predicament. But many Americans, including some conservatives, aren’t thrilled with the role played by Tea Partiers and absolutists like Bachmann who seemed unfazed by the possibility of a default and did nothing to help advance a fiscal compromise. That means the country’s credit downgrade may ultimately prove to be a problem for Bachmann’s candidacy.

Though Bachmann started off her run as someone who only appealed to Christian conservatives and Tea Partiers, it soon became apparent her strong start gave her the opportunity to be heard by a broader segment of her party. Her breakout in the polls in June and July established her as a serious contender and appeared to knock fellow Minnesotan Tim Pawlenty back into the second tier.

But as much as the Tea Party still remains a potent force within the GOP, it would be pointless to deny a bit of its luster was lost in the debt ceiling debate. A number of the GOP candidates opposed the various compromises, especially the deals proposed by House Speaker John Boehner. But of the major contenders, only Bachmann was in a position to vote no on all of them. She did exactly that while proclaiming she would oppose any rise in the debt ceiling.

It is true attempts to shift the blame for both the debt standoff and the credit downgrade onto the Tea Party will be a main Democratic talking point for the next year. It may be that few Republicans will buy into this argument, and those that do wouldn’t have voted for Bachmann anyway. But Bachmann has higher hopes than merely being the Tea Party candidate. If she is going to survive the early primaries and challenge Mitt Romney and perhaps Rick Perry in the states that follow, her task is going to be to convince mainstream Republican voters she is serious enough and sufficiently electable to gain their trust. The events of the last week may have made that job a lot harder.

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No More Liberal Roulette

Let’s acknowledge that the Tea Party played Russian roulette with America’s future. Which means it took five bullets out of the loaded revolver the U.S. had to its head and gave the country a fighting chance.

But it wasn’t enough. S&P has lowered our credit rating from AAA to AA+. We’re a worse bet than the UK, France, Canada, Germany, and 11 other countries that still enjoy triple-A status.

Did this happen because American politicians weren’t playing nicely? The uncertainty of the debt-ceiling debate contributed to the decision, but only in that it cast doubt on the U.S.’s ability to do precisely what S&P had said was necessary to avoid this outcome—the enacting of serious spending cuts.
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Let’s acknowledge that the Tea Party played Russian roulette with America’s future. Which means it took five bullets out of the loaded revolver the U.S. had to its head and gave the country a fighting chance.

But it wasn’t enough. S&P has lowered our credit rating from AAA to AA+. We’re a worse bet than the UK, France, Canada, Germany, and 11 other countries that still enjoy triple-A status.

Did this happen because American politicians weren’t playing nicely? The uncertainty of the debt-ceiling debate contributed to the decision, but only in that it cast doubt on the U.S.’s ability to do precisely what S&P had said was necessary to avoid this outcome—the enacting of serious spending cuts.
The Tea Partiers were trying to stop the very thing that has now come to pass. Their critics mistake dire economic reality for merely “playing politics.” No one was interested in tying up the Democrats just to make them look bad. The brinksmanship was about halting the federal debt and the threat it poses to us all. In reality, the Obama administration began this discussion at the brink. When the debt-ceiling first came up, Democrats wanted no spending cuts, period. Forget Russian roulette, that’s liberal roulette and the odds are 100% against survival. Anything that the GOP proposed afterward was necessarily a walk back from the edge.

That the debate in Congress was messy doesn’t mean one side wasn’t right. If you think the Tea Party was reckless, consider the nonchalance of Barack Obama. On July 14, S&P issued a report spelling out—in plainest English—what it would take to secure our credit-rating: “If Congress and the Administration reach an agreement of about $4 trillion [in debt reduction], and if we … conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the ‘AAA’ long-term rating and A-1+ short-term ratings on the U.S.” The very next day, Obama held a press conference at which he assured the American people, “It turns out we don’t have to do anything radical to solve the problem.” Not only did the great pragmatist have no plan; he didn’t know he needed one.

That was the press conference during which Obama was all smiles and joked about his hope-and-change campaign. It was the last time we saw him in a good mood because the rest of Washington would soon grasp the point he missed, and that killed all his fun. If Obama couldn’t do it his way, he wasn’t interested, so he exited the debate and left Congress trying to stave off the inevitable. It should be no surprise that yesterday, one day after S&P made good on its word, Obama delivered his weekly address and said absolutely nothing about the downgrade. The threat wasn’t a problem for our president and neither is the reality.

Now, thanks to S&P, the rest of the country may grasp the magnitude of the change that’s needed.  If not, the tenor of the spending fights ahead will make the debt-ceiling debate look like a beer summit.

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