Commentary Magazine


Topic: Ben Bernanke

Bernanke’s Last Meeting

Ben Bernanke will preside over his last meeting of the Federal Reserve Open Market Committee today and give his last news conference as chairman of the Federal Reserve Board of Governors. Then he will step down, and leave his reputation to the hands of history. No one can say he had an easy time of it as chairman.

He became chairman in February 2006, when times were prosperous, unemployment low, and the stock market high. But he was soon caught up in the greatest financial crisis since the Great Depression, a crisis that required strong, decisive Fed action to prevent a financial collapse. That Bernanke certainly provided, pouring money into the economy and rescuing from bankruptcy some of the country’s largest financial institutions.

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Ben Bernanke will preside over his last meeting of the Federal Reserve Open Market Committee today and give his last news conference as chairman of the Federal Reserve Board of Governors. Then he will step down, and leave his reputation to the hands of history. No one can say he had an easy time of it as chairman.

He became chairman in February 2006, when times were prosperous, unemployment low, and the stock market high. But he was soon caught up in the greatest financial crisis since the Great Depression, a crisis that required strong, decisive Fed action to prevent a financial collapse. That Bernanke certainly provided, pouring money into the economy and rescuing from bankruptcy some of the country’s largest financial institutions.

The recovery from that crisis is now in its fifth year, the most reluctant recovery since the Great Depression lingered on year after year in the 1930s. This has forced the Fed to pursue a policy of “quantitative easing,” a euphemism for further increasing the money supply. As it has been buying federal and mortgage-backed bonds (recently at the rate of $85 billion a month) the balance sheet of the Federal Reserve has increased enormously. Getting those assets off its books (and thus reducing the money supply) will be a long and very tricky process. If the Fed does it too slowly, inflation will take off; too quickly, and the economy could sink back in recession. But that will be Janet Yellen’s problem, not Ben Bernanke’s.

It is far too soon to know how history will judge Bernanke. The reputation of Alan Greenspan, chairman from 1987 to 2006, has sunk since he retired as chairman, as it has become clear that he waited far too long to begin tightening and thus damping down the housing bubble that was at the heart of the 2008 crisis. Paul Volker (1979-1987) has seen his reputation only rise. His brave policy (supported by President Ronald Reagan) of inducing a sharp recession in order to break the back of the 1970s inflation produced over twenty years of unprecedented prosperity. Arthur Burns, chairman from 1970 to 1978, is credited, if that’s the word, with being far too accommodative of government borrowing and thus responsible in large measure for the terrible inflation of the 1970s. His successor, G. William Miller, was chairman for only a year and a half and never earned much respect in office or later.

Certainly Bernanke was a strong hand at the wheel of the world’s most powerful bank at a time of great crisis. A weak hand could have produced not a crisis but a catastrophe. For that the country owes him thanks.

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The Fed Stands Pat on the Stimulus

In a bit of a surprise, the Federal Reserve’s Open Market Committee voted 11-1 to continue its program of buying $85 billion worth of federal and mortgage bonds in order to continue stimulating the economy. It had announced in June that it would begin cutting back on these purchases by the end of the year and many expected it to begin doing so today. 

Both Paul Krugman who wrote earlier this week, “Memo to the Fed: Please don’t do it” and the financial markets, which love low interest rates, are happy. The S&P 500 index hit a new high on the news.

By buying these bonds, the Fed is, in effect, creating money, almost $1 trillion a year in new money. Since the financial meltdown in 2008, the Fed has created many trillions of dollars trying to stabilize the economy and then revive it. At some point it will have to begin to reduce and then reverse its bond purchases and get that money back into its capacious vaults lest a virulent inflation break out.

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In a bit of a surprise, the Federal Reserve’s Open Market Committee voted 11-1 to continue its program of buying $85 billion worth of federal and mortgage bonds in order to continue stimulating the economy. It had announced in June that it would begin cutting back on these purchases by the end of the year and many expected it to begin doing so today. 

Both Paul Krugman who wrote earlier this week, “Memo to the Fed: Please don’t do it” and the financial markets, which love low interest rates, are happy. The S&P 500 index hit a new high on the news.

By buying these bonds, the Fed is, in effect, creating money, almost $1 trillion a year in new money. Since the financial meltdown in 2008, the Fed has created many trillions of dollars trying to stabilize the economy and then revive it. At some point it will have to begin to reduce and then reverse its bond purchases and get that money back into its capacious vaults lest a virulent inflation break out.

The timing will be tricky, to put it mildly. Too quickly and it could throw the economy back into recession. Too slowly and we could be back to the 1970′s, with double-digit inflation.

Let’s hope they get it right.

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The Fed Hints

One major part of the job of the Federal Reserve is to keep the economy on an even keel, not booming too much nor going into recession. (The other major parts are to protect the banking system, and to prevent inflation.) So when the Great Recession hit in 2008, the Fed dropped the Fed Funds rate to near zero, which has the effect of lowering interest rates generally, hopefully stimulating the economy. It also began flooding the street with money through open-market operations, buying federal bonds, thus increasing the cash balances of banks, giving them more money to lend.

That’s the easy part of keeping the economy on an even keel. The tricky bit is when and how abruptly to reverse course. The balance sheet of the Fed has grown enormously in the last few years and at some point the money it has created has to be withdrawn from the economy, again by open-market operations, this time selling federal bonds. If that weren’t done, it’s possible a 1970s inflation could break out. But there is always strong political pressure to keep money cheap.

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One major part of the job of the Federal Reserve is to keep the economy on an even keel, not booming too much nor going into recession. (The other major parts are to protect the banking system, and to prevent inflation.) So when the Great Recession hit in 2008, the Fed dropped the Fed Funds rate to near zero, which has the effect of lowering interest rates generally, hopefully stimulating the economy. It also began flooding the street with money through open-market operations, buying federal bonds, thus increasing the cash balances of banks, giving them more money to lend.

That’s the easy part of keeping the economy on an even keel. The tricky bit is when and how abruptly to reverse course. The balance sheet of the Fed has grown enormously in the last few years and at some point the money it has created has to be withdrawn from the economy, again by open-market operations, this time selling federal bonds. If that weren’t done, it’s possible a 1970s inflation could break out. But there is always strong political pressure to keep money cheap.

The economy has clearly been improving, with corporate profits up and housing prices now rising. Since most families’ net worth is concentrated in their homes, a rising housing market makes people feel richer. And that makes them more likely to go out and buy, pumping up the economy. To be sure, unemployment is stubbornly high, but it’s a lagging indicator, tending to recover more slowly than other economic indicators.

So Ben Bernanke, the chairman of the Federal Reserve, has begun to hint that the Fed’s quantitative easing is drawing to a close. It’s been buying $85 billion worth of federal bonds a month. The markets have been reacting badly to Bernanke’s Delphic pronouncements. The Dow was above 15,300 last Tuesday. Right now it’s below 14,700, a drop of four percent. With the prospect of interest rates rising, bonds have been declining as well.

But these are short-term flutters in the stock market. It is corporate profits that determine the movement of equities. As long as corporate profits are strong and growing, the market will not swoon. Rising interest rates, however, will cause bond prices to decline in proportion.

The Fed has an unenviable job right now. If it acts too slowly, inflation could set in. If it acts too quickly, the economy could be tipped back into recession. And those with a dog in the fight—which is practically every interest group in the country—will be pushing hard to get its way.

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Get Ready for Obama’s Great Recession

As John Steele Gordon rightly points out, Ben Bernanke’s latest attempt to bail out a failing economy by manipulating interest rates isn’t likely to be met with any more success than his first two tries. Some Democrats may think the Federal Reserve’s decision to print more money will inflate the economy enough to get President Obama re-elected. The assumption is that it will cause a rise in the stock market that will be interpreted as a sign that the recovery has finally succeeded. However, the result of another dose of inflationary economics, compounded by growing debt, unemployment and less than 2 percent growth may be another recession that will come on the heels of the current anemic recovery.

The constant refrain coming from the administration and its defenders has been that a change of course away from the president’s reliance on trying to spend our way out of the economic ditch would be a return to the failed Republican policies of the past that created the problem in the first place. But as James Pethokoukis writes at the American Enterprise Institute blog, it is cheap money and too much debt that caused the so-called Great Recession that the president inherits. That recession ended in the summer of 2009. It was followed by a recovery for which the president once took credit. But the feeble nature of that revival is something he still blames on his predecessor. Thanks to the continuation of the spending and debt binge that took place over the last four years, the country may soon be faced with another Great Recession no matter who wins in November. But it is not likely that most Americans will be willing to blame that one on George W. Bush.

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As John Steele Gordon rightly points out, Ben Bernanke’s latest attempt to bail out a failing economy by manipulating interest rates isn’t likely to be met with any more success than his first two tries. Some Democrats may think the Federal Reserve’s decision to print more money will inflate the economy enough to get President Obama re-elected. The assumption is that it will cause a rise in the stock market that will be interpreted as a sign that the recovery has finally succeeded. However, the result of another dose of inflationary economics, compounded by growing debt, unemployment and less than 2 percent growth may be another recession that will come on the heels of the current anemic recovery.

The constant refrain coming from the administration and its defenders has been that a change of course away from the president’s reliance on trying to spend our way out of the economic ditch would be a return to the failed Republican policies of the past that created the problem in the first place. But as James Pethokoukis writes at the American Enterprise Institute blog, it is cheap money and too much debt that caused the so-called Great Recession that the president inherits. That recession ended in the summer of 2009. It was followed by a recovery for which the president once took credit. But the feeble nature of that revival is something he still blames on his predecessor. Thanks to the continuation of the spending and debt binge that took place over the last four years, the country may soon be faced with another Great Recession no matter who wins in November. But it is not likely that most Americans will be willing to blame that one on George W. Bush.

Bernanke’s third chorus of interest rate cuts is a last-ditch attempt to save Obama’s recovery. But we may look back on it next year as the moment when the next Great Recession became inevitable. In the long run, only a program that aims to reform our out-of-control spending, tax cuts to fuel real economic growth and to create wealth, and sound money policies from the Fed will create a genuine recovery.

But a steady diet of more spending, debt and cheap money has set the stage for a transition from a weak recovery to another collapse. Indeed, the bad employment numbers show that the recovery never reached some sectors of the economy or the army of unemployed Americans. That means that for many Americans the downturn we may have to face next year will feel more like the tail end of a double dip recession than a fresh downturn.

President Obama is hoping Bernanke’s latest stunt will give him the boost he needs to stay ahead of Mitt Romney in the final weeks of the campaign. But the long-term impact of the Fed chairman’s QE3 may merely pave the path for a poor economy that will make a second term a misery for both Obama and the American people.

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Bernanke’s Hammer

It’s an old saying that if your only tool is a hammer everything begins to look like a nail. Ben Bernanke, the Chairman of the Federal Reserve Board, has now decided to take a third whack at unemployment by another round of “quantitative easing,” using “open market operations” to manipulate interest rates.

In March 2009, the Fed launched a $1.25 trillion program to buy up mortgage backed securities in hopes of jump-starting the economy. This massive injection of liquidity into the economy certainly helped the stock market (which bottomed that month) and stabilized the economy. The second bout of qualitative easing, however, in November 2010, when the Fed began buying $600 billion in treasuries, had far less effect. Will this one help? The promise to buy $40 billion of mortgage-backed securities a month for the indeterminate future has already sent stocks soaring around the world, but anything that tends to lower interest rates and increase the money supply sends investors out of bonds and dollars and into commodities and stocks. The theory is that higher stock prices will have a “wealth effect,” making people think they’re richer and therefore more willing to spend money. But since the move is likely to make commodities costs more (both oil and gold rose yesterday) it’s at best doubtful that it will work.

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It’s an old saying that if your only tool is a hammer everything begins to look like a nail. Ben Bernanke, the Chairman of the Federal Reserve Board, has now decided to take a third whack at unemployment by another round of “quantitative easing,” using “open market operations” to manipulate interest rates.

In March 2009, the Fed launched a $1.25 trillion program to buy up mortgage backed securities in hopes of jump-starting the economy. This massive injection of liquidity into the economy certainly helped the stock market (which bottomed that month) and stabilized the economy. The second bout of qualitative easing, however, in November 2010, when the Fed began buying $600 billion in treasuries, had far less effect. Will this one help? The promise to buy $40 billion of mortgage-backed securities a month for the indeterminate future has already sent stocks soaring around the world, but anything that tends to lower interest rates and increase the money supply sends investors out of bonds and dollars and into commodities and stocks. The theory is that higher stock prices will have a “wealth effect,” making people think they’re richer and therefore more willing to spend money. But since the move is likely to make commodities costs more (both oil and gold rose yesterday) it’s at best doubtful that it will work.

And how much lower can interest rates go? Mortgage rates were at 3.55 percent on Wednesday, down from 4.09 a year ago. That’s the lowest rate for a 30-year fixed rate mortgage in memory. The ten-year treasury bond is paying a piddly 1.86 percent. Interest rates cannot go below zero, after all. Banks won’t pay you to borrow their money.

And all this is storing up big trouble in the future. The Fed has increased its balance sheet enormously by buying up assets and, in effect, printing the money to pay for them. Getting that money back is going to be very, very difficult to accomplish without slowing the economy once again or setting off a nasty bout of inflation.

Sometimes the best thing to do is nothing. Unfortunately, it is very difficult for politicians (and while Bernanke is not, strictly speaking, a politician, it’s close enough for government work) to do nothing.

 

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FROM THE JANUARY ISSUE: ‘The Problem with Printing Money’

The Federal Reserve’s dramatic new intervention into the U.S. economy—a $600 billion purchase of Treasury bonds that was immediately branded with the nautical nickname of QE2—had barely gotten underway in November 2010 before the Fed itself began sending signals that it had a public-relations disaster on its hands. In a speech to European central bankers in Frankfurt only two weeks after the policy was announced, Fed chairman Ben Bernanke said he didn’t like using the term “quantitative easing”—much less “QE2” —because it didn’t precisely describe what the central bank was trying to do by running the printing presses overtime.

To read the rest of this article from COMMENTARY‘s January issue, click here.

To become a subscriber to COMMENTARY — online or print – click here.

The Federal Reserve’s dramatic new intervention into the U.S. economy—a $600 billion purchase of Treasury bonds that was immediately branded with the nautical nickname of QE2—had barely gotten underway in November 2010 before the Fed itself began sending signals that it had a public-relations disaster on its hands. In a speech to European central bankers in Frankfurt only two weeks after the policy was announced, Fed chairman Ben Bernanke said he didn’t like using the term “quantitative easing”—much less “QE2” —because it didn’t precisely describe what the central bank was trying to do by running the printing presses overtime.

To read the rest of this article from COMMENTARY‘s January issue, click here.

To become a subscriber to COMMENTARY — online or print – click here.

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Time for the Fed to Back Off

Fed chairman Ben Bernanke was interviewed by CBS News’s 60 Minutes. Over at e21 (with which I am affiliated), David Malpass does a careful fisking of Bernanke on the issue of the second round of quantitative easing (QE2) — a rather esoteric monetary issue but one that has significant economic ramifications.

In Malpass’s words, “Having the Fed buy bonds in the absence of a crisis is unprecedented and raises many risks — it manipulates markets, creates a bigger overhang when the Fed tries to unload the bonds, risks capital losses at the Fed if interest rates rise, and puts taxpayers and the dollar at risk by shortening the maturity of the outstanding national debt.”

My concern is that given the dismal jobs report on Friday, in which we learned that unemployment increased to 9.8 percent and private-sector job creation was anemic, the Fed will be tempted to get more, not less, aggressive. It shouldn’t, for reasons laid out by Mr. Malpass.

Fed chairman Ben Bernanke was interviewed by CBS News’s 60 Minutes. Over at e21 (with which I am affiliated), David Malpass does a careful fisking of Bernanke on the issue of the second round of quantitative easing (QE2) — a rather esoteric monetary issue but one that has significant economic ramifications.

In Malpass’s words, “Having the Fed buy bonds in the absence of a crisis is unprecedented and raises many risks — it manipulates markets, creates a bigger overhang when the Fed tries to unload the bonds, risks capital losses at the Fed if interest rates rise, and puts taxpayers and the dollar at risk by shortening the maturity of the outstanding national debt.”

My concern is that given the dismal jobs report on Friday, in which we learned that unemployment increased to 9.8 percent and private-sector job creation was anemic, the Fed will be tempted to get more, not less, aggressive. It shouldn’t, for reasons laid out by Mr. Malpass.

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A Significant Letter

The Wall Street Journal has an article this morning about an open letter sent to Federal Reserve Chairman Ben Bernanke, a letter signed by leading economists and investors.

The letter says this:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.”  In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Given the list of influential individuals signing this letter, it is sure to set the financial world (and therefore the political world) abuzz. That is all to the good. We need a vigorous debate about the Fed’s plan to buy $600 billion in additional U.S. Treasury bonds. It will, after all, have the effect of monetizing the debt and devaluing the dollar, and it risks triggering inflation. And oh, by the way, it won’t create jobs.

It is exactly the wrong policy at exactly the wrong time.

Defenders of the Fed’s policy will undoubtedly argue that this letter (which was largely organized and coordinated by the economic website e21, which I’m delighted to be affiliated with) amounts to a political attack on the independence of the Fed. That assertion is silly. Are we to believe that in a free society, the Fed and its policies are somehow immune to criticism – that when the Chairman speaks, no contrary voices are allowed to be heard?

The letter to Chairman Bernanke doesn’t argue that the Fed doesn’t have the right or the power to pursue its policy; it is simply questioning the wisdom of those policies. And its policies are manifestly unwise. It will deliver another body blow to an economy that is already weak and reeling.

This debate reminds me nothing so much as the economic debates that took place in 1981, at the dawn of the Reagan presidency, when issues that were thought to be somewhat esoteric (like monetary policy) were at the heart of our economic and political conversations. We learned then that the right monetary policy can make a huge contribution to economic growth. And we are leaning now that the wrong monetary policy can do the opposite.

The Wall Street Journal has an article this morning about an open letter sent to Federal Reserve Chairman Ben Bernanke, a letter signed by leading economists and investors.

The letter says this:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.”  In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Given the list of influential individuals signing this letter, it is sure to set the financial world (and therefore the political world) abuzz. That is all to the good. We need a vigorous debate about the Fed’s plan to buy $600 billion in additional U.S. Treasury bonds. It will, after all, have the effect of monetizing the debt and devaluing the dollar, and it risks triggering inflation. And oh, by the way, it won’t create jobs.

It is exactly the wrong policy at exactly the wrong time.

Defenders of the Fed’s policy will undoubtedly argue that this letter (which was largely organized and coordinated by the economic website e21, which I’m delighted to be affiliated with) amounts to a political attack on the independence of the Fed. That assertion is silly. Are we to believe that in a free society, the Fed and its policies are somehow immune to criticism – that when the Chairman speaks, no contrary voices are allowed to be heard?

The letter to Chairman Bernanke doesn’t argue that the Fed doesn’t have the right or the power to pursue its policy; it is simply questioning the wisdom of those policies. And its policies are manifestly unwise. It will deliver another body blow to an economy that is already weak and reeling.

This debate reminds me nothing so much as the economic debates that took place in 1981, at the dawn of the Reagan presidency, when issues that were thought to be somewhat esoteric (like monetary policy) were at the heart of our economic and political conversations. We learned then that the right monetary policy can make a huge contribution to economic growth. And we are leaning now that the wrong monetary policy can do the opposite.

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Obama — a Weak Advocate for Free Trade

Obama’s international endeavors are going about as well as his party’s electoral efforts. The latest flop: ”The presidents of the U.S. and South Korea were unable to overcome disputes over cars, cattle and domestic politics, potentially killing the biggest bilateral trade deal the U.S. has taken up in more than a decade.” It is worth examining why the president couldn’t make a deal.

In essence, Obama has refused to stand up to domestic advocates of protectionism — a failure that stands in contrast to the actions of past presidents from both parties. And, no doubt, the South Koreans calculated that they might as well try to wait him out. It sure doesn’t seem that Obama was on the side of the angels — or of free trade. This tells you all you need to know:

Labor leaders and some powerful politicians from both parties praised Mr. Obama for not going ahead with a deal they characterized as bad for U.S. workers. “President Obama is exactly right in holding out for a deal that puts working people’s interests first,” said Richard Trumka, president of the AFL-CIO.

Translation: Obama caved to protectionist elements in the U.S.

As a result of this and Ben Bernanke’s printing press, we are increasingly isolated and becoming the object of our trading partners’ criticism:

The trade-talk failure came on top of criticism from other G-20 nations concerning the Federal Reserve’s move to pump billions into the U.S. economy, potentially weakening the dollar.

“This reinforces the opinion of many key global and business leaders that the U.S. isn’t really committed to global engagement and is instead pushing mercantilist, beggar-thy-neighbor policies,” said Matthew Slaughter, a former member of George W. Bush’s Council of Economic Advisers.

As for the particulars, it seems as though Obama wanted to hang on to some protectionist provisions just a little longer. (“One stumbling block was Korea’s refusal to change a provision in the 2007 pact that provided an immediate end to a 2.5% tariff the U.S. levies on imports of Korean cars. … The U.S. wanted the tariff reduced gradually, while Korea eliminates safety and environmental rules that U.S. auto makers, led by Ford, said help keep Korea the world’s most closed car market.”)

Congress has traditionally been more protectionist than the White House, the result of intense lobbying by both U.S. businesses and Big Labor. A strong presidential hand has been required to rebuff protectionist sentiment and negotiate free-trade agreements that are essential to America’s prosperity. To his credit, Bill Clinton did just that. But Obama has neither the will nor the interest in following this approach. This spells trouble for the U.S.:

Meanwhile, the European Union and other nations have signed far more bilateral deals than the U.S. since 1994 when the North American Free Trade Agreement came into effect, displeasing some U.S. industrial companies. “We as a country have essentially taken two years off” from pursuing trade agreements while the rest of the world goes full speed ahead, said Eaton Corp. Chief Executive Alexander Cutler on Thursday. “If you want to have a vibrant economy, you have to have access to the fastest-growing parts of the world.”

You would think a president who ran on the promise to “restore our standing” in the world and end the supposed cowboy unilateralism of his predecessor would understand this.

Obama’s international endeavors are going about as well as his party’s electoral efforts. The latest flop: ”The presidents of the U.S. and South Korea were unable to overcome disputes over cars, cattle and domestic politics, potentially killing the biggest bilateral trade deal the U.S. has taken up in more than a decade.” It is worth examining why the president couldn’t make a deal.

In essence, Obama has refused to stand up to domestic advocates of protectionism — a failure that stands in contrast to the actions of past presidents from both parties. And, no doubt, the South Koreans calculated that they might as well try to wait him out. It sure doesn’t seem that Obama was on the side of the angels — or of free trade. This tells you all you need to know:

Labor leaders and some powerful politicians from both parties praised Mr. Obama for not going ahead with a deal they characterized as bad for U.S. workers. “President Obama is exactly right in holding out for a deal that puts working people’s interests first,” said Richard Trumka, president of the AFL-CIO.

Translation: Obama caved to protectionist elements in the U.S.

As a result of this and Ben Bernanke’s printing press, we are increasingly isolated and becoming the object of our trading partners’ criticism:

The trade-talk failure came on top of criticism from other G-20 nations concerning the Federal Reserve’s move to pump billions into the U.S. economy, potentially weakening the dollar.

“This reinforces the opinion of many key global and business leaders that the U.S. isn’t really committed to global engagement and is instead pushing mercantilist, beggar-thy-neighbor policies,” said Matthew Slaughter, a former member of George W. Bush’s Council of Economic Advisers.

As for the particulars, it seems as though Obama wanted to hang on to some protectionist provisions just a little longer. (“One stumbling block was Korea’s refusal to change a provision in the 2007 pact that provided an immediate end to a 2.5% tariff the U.S. levies on imports of Korean cars. … The U.S. wanted the tariff reduced gradually, while Korea eliminates safety and environmental rules that U.S. auto makers, led by Ford, said help keep Korea the world’s most closed car market.”)

Congress has traditionally been more protectionist than the White House, the result of intense lobbying by both U.S. businesses and Big Labor. A strong presidential hand has been required to rebuff protectionist sentiment and negotiate free-trade agreements that are essential to America’s prosperity. To his credit, Bill Clinton did just that. But Obama has neither the will nor the interest in following this approach. This spells trouble for the U.S.:

Meanwhile, the European Union and other nations have signed far more bilateral deals than the U.S. since 1994 when the North American Free Trade Agreement came into effect, displeasing some U.S. industrial companies. “We as a country have essentially taken two years off” from pursuing trade agreements while the rest of the world goes full speed ahead, said Eaton Corp. Chief Executive Alexander Cutler on Thursday. “If you want to have a vibrant economy, you have to have access to the fastest-growing parts of the world.”

You would think a president who ran on the promise to “restore our standing” in the world and end the supposed cowboy unilateralism of his predecessor would understand this.

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RE: Fed’s Plan to Rev Up Printing Press Gets Thumbs Down

The overwhelmingly negative response to the Fed decision to print up $600B to buy bonds is intensifying as Russia and China joined European nations in slamming the move. This report explains:

Mr. Obama returned fire in the growing confrontation over trade and currencies Monday in a joint news conference with Indian Prime Minister Manmohan Singh, taking the unusual step of publicly backing the Fed’s decision to buy $600 billion in U.S. Treasury bonds—a move that has come under withering international criticism for weakening the U.S. dollar.

Gold topped $1,400 an ounce on fears of inflation as investors voted thumbs down on Ben Bernanke’s plan. And the number of critics is growing, leaving the U.S. isolated:

Germany’s criticism echoes that from other countries, including Brazil and Japan, which have complained about potential spillover from the Fed’s action. Printing more dollars, or cutting U.S. interest rates, tends to weaken the dollar and makes U.S. exports more attractive. The accompanying rise in the value of other countries’ currencies tends to damp their exports and can fuel inflation or asset bubbles, as emerging-market officials note. U.S. officials maintain the Fed’s action is about stimulating domestic demand, and that a weaker dollar is a consequence, not an objective.

On Monday, China’s Vice Finance Minister Zhu Guangyao said the U.S. isn’t living up to its responsibility as an issuer of a global reserve currency. …

The top economic aide to Russian President Dmitry Medvedev said Russia will insist at the G-20 summit that the Fed consult with other countries ahead of major policy decisions.

Luxembourg Prime Minister Jean-Claude Juncker, who is chairman of the euro-zone finance ministers, also weighed in on the Fed move, saying: “I don’t think it’s a good decision. You’re fighting debt with more debt.”

These concerns are entirely justified. Moreover, one can’t help but appreciate the irony: the “cowboy” George W. Bush was lambasted for “going it alone” and making the U.S. a pariah in the world. But worldwide resentment over the U.S. is surging as Obama is forced to lamely defend his moves as “pro-growth” (which speaks volumes about the administration’s economic illiteracy, for not even his defenders would claim that currency devaluation=growth). We hear that the “blunt criticism of U.S. policy is in large part payback for a longstanding stance by Washington policy makers that the American economy should serve as a model for others. The heated rhetoric also stems from fears that the U.S. may be looking for a back-door way to set exchange-rate policy in a way that favors the U.S.”

Combined with the incessant shin-kicking of our allies (e.g., Eastern Europe, Israel, Honduras, Britain), this latest move certainly strengthens Obama’s critics here and abroad. They contend that through a combination of ill-conceived policies and rank incompetence, Obama is rendering the U.S. less influential and less respected, which is increasing instability in the world. All and all, it is a textbook example of the perils of deploying liberal statism at home and shrinking America’s stature overseas. Unfortunately, this is not a graduate course at Harvard or a symposium at the New America Foundation. It is all too real, and unless we arrest the panoply of bad policies, America and its allies will be poorer and less safe. We already are.

The overwhelmingly negative response to the Fed decision to print up $600B to buy bonds is intensifying as Russia and China joined European nations in slamming the move. This report explains:

Mr. Obama returned fire in the growing confrontation over trade and currencies Monday in a joint news conference with Indian Prime Minister Manmohan Singh, taking the unusual step of publicly backing the Fed’s decision to buy $600 billion in U.S. Treasury bonds—a move that has come under withering international criticism for weakening the U.S. dollar.

Gold topped $1,400 an ounce on fears of inflation as investors voted thumbs down on Ben Bernanke’s plan. And the number of critics is growing, leaving the U.S. isolated:

Germany’s criticism echoes that from other countries, including Brazil and Japan, which have complained about potential spillover from the Fed’s action. Printing more dollars, or cutting U.S. interest rates, tends to weaken the dollar and makes U.S. exports more attractive. The accompanying rise in the value of other countries’ currencies tends to damp their exports and can fuel inflation or asset bubbles, as emerging-market officials note. U.S. officials maintain the Fed’s action is about stimulating domestic demand, and that a weaker dollar is a consequence, not an objective.

On Monday, China’s Vice Finance Minister Zhu Guangyao said the U.S. isn’t living up to its responsibility as an issuer of a global reserve currency. …

The top economic aide to Russian President Dmitry Medvedev said Russia will insist at the G-20 summit that the Fed consult with other countries ahead of major policy decisions.

Luxembourg Prime Minister Jean-Claude Juncker, who is chairman of the euro-zone finance ministers, also weighed in on the Fed move, saying: “I don’t think it’s a good decision. You’re fighting debt with more debt.”

These concerns are entirely justified. Moreover, one can’t help but appreciate the irony: the “cowboy” George W. Bush was lambasted for “going it alone” and making the U.S. a pariah in the world. But worldwide resentment over the U.S. is surging as Obama is forced to lamely defend his moves as “pro-growth” (which speaks volumes about the administration’s economic illiteracy, for not even his defenders would claim that currency devaluation=growth). We hear that the “blunt criticism of U.S. policy is in large part payback for a longstanding stance by Washington policy makers that the American economy should serve as a model for others. The heated rhetoric also stems from fears that the U.S. may be looking for a back-door way to set exchange-rate policy in a way that favors the U.S.”

Combined with the incessant shin-kicking of our allies (e.g., Eastern Europe, Israel, Honduras, Britain), this latest move certainly strengthens Obama’s critics here and abroad. They contend that through a combination of ill-conceived policies and rank incompetence, Obama is rendering the U.S. less influential and less respected, which is increasing instability in the world. All and all, it is a textbook example of the perils of deploying liberal statism at home and shrinking America’s stature overseas. Unfortunately, this is not a graduate course at Harvard or a symposium at the New America Foundation. It is all too real, and unless we arrest the panoply of bad policies, America and its allies will be poorer and less safe. We already are.

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The Lightbulb Goes on

As this report explains, the Fed will not come to the Democrats’ rescue, at least not in time to stave off a shellacking in November:

Fed chief Ben Bernanke said Friday the nation’s central bank would take action to prop up the economy if absolutely necessary. … He did not pledge any immediate, dramatic steps to goose growth and suggested the bank’s remaining tools might not work very well anyway. The mild statement from Bernanke, while soothing to investors, creates a potentially serious political problem for the Obama administration and congressional Democrats, some of whom are feeling their House majority slip away with every passing piece of bad economic news.

The more candid in the left’s blogosphere get that the Democrats are in very big trouble. David Corn, for example, confesses: “It doesn’t appear that Obama has forged and maintained that sort of bond with a majority of voters. Democrats were hoping that a summer economic turn-around would ease the way toward the fall elections. But no such harvest is looming.” They have only figured this out recently? Well, denial is an attractive coping mechanism. And there is reason not to freak out donors and activists with predictions of impending doom.

However, reality is seeping in, and candor is breaking out after months and months of pooh-poohing polls, assuring themselves ObamaCare was essential to their political survival, and lamely trying to sow dissension in Republican ranks (Tea Party vs. mainstream GOP!). Despondency may follow.

As the dismal news piles up and liberals give up the pretense that the economic and electoral outlook is bright, how much worse will the polling get for those Democrats on the ballot in November? And do the pollsters have models to gauge just how depressed the Democrats’ turnout will be? We’ll see, but Democrats are wise, I think, to prepare themselves for the deluge.

As this report explains, the Fed will not come to the Democrats’ rescue, at least not in time to stave off a shellacking in November:

Fed chief Ben Bernanke said Friday the nation’s central bank would take action to prop up the economy if absolutely necessary. … He did not pledge any immediate, dramatic steps to goose growth and suggested the bank’s remaining tools might not work very well anyway. The mild statement from Bernanke, while soothing to investors, creates a potentially serious political problem for the Obama administration and congressional Democrats, some of whom are feeling their House majority slip away with every passing piece of bad economic news.

The more candid in the left’s blogosphere get that the Democrats are in very big trouble. David Corn, for example, confesses: “It doesn’t appear that Obama has forged and maintained that sort of bond with a majority of voters. Democrats were hoping that a summer economic turn-around would ease the way toward the fall elections. But no such harvest is looming.” They have only figured this out recently? Well, denial is an attractive coping mechanism. And there is reason not to freak out donors and activists with predictions of impending doom.

However, reality is seeping in, and candor is breaking out after months and months of pooh-poohing polls, assuring themselves ObamaCare was essential to their political survival, and lamely trying to sow dissension in Republican ranks (Tea Party vs. mainstream GOP!). Despondency may follow.

As the dismal news piles up and liberals give up the pretense that the economic and electoral outlook is bright, how much worse will the polling get for those Democrats on the ballot in November? And do the pollsters have models to gauge just how depressed the Democrats’ turnout will be? We’ll see, but Democrats are wise, I think, to prepare themselves for the deluge.

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Flotsam and Jetsam

Thanks to the NAACP, Hallmark was forced to remove from the shelves space-themed cards that used the phrase “black hole.” The group’s professional grievants apparently misheard the second word. No kidding.

Thanks to Barack Obama, the Middle East is more dangerous than ever: “The Gaza flotilla incident might have been a great setback to the radical camp had the United States reacted sharply, defending Israel, condemning the jihadists on board and their sponsors in Turkey, blocking UN Security Council action, and refusing to sponsor another international inquiry that will condemn Israel. And Israel’s interests were not the only ones at stake: The blockade of Gaza is a joint Israeli-Egyptian action to weaken Hamas. But the American position reflects the Obama line: carefully balancing the interests of friend and foe, seeking to avoid offense to our enemies, or, as Churchill famously described British policy in the 1930s, ‘resolved to be irresolute.’ Middle Eastern states, including Arab regimes traditionally allied with the United States, view this pose as likely to get them all killed when enemies come knocking at the door.”

Thanks to Obama, Bobby Jindal has regained a lot of stature. He appears to be what Obama is not — competent, engaged, and proactive.

Thanks to Jon Stewart, Tim Pawlenty gets to show that he has a sense of humor.

Thanks to Leslie Gelb, we are reminded that things can always be worse: Robert Gates departs, Hillary Clinton goes to the Defense Department, and Chuck Hagel goes to the State Department. Oy.

Thanks to Harry Reid and Nancy Pelosi, “a new Rasmussen Reports national telephone survey finds that just 19% of voters think it would be better for the country if most incumbents in Congress were reelected this November. Sixty-five percent (65%) disagree and say it would be better if most were defeated. Sixteen percent (16%) aren’t sure.”

Thanks to Obama, “people close to the president [Harmid Karzai] say he began to lose confidence in the Americans last summer, after national elections in which independent monitors determined that nearly one million ballots had been stolen on Mr. Karzai’s behalf. The rift worsened in December, when President Obama announced that he intended to begin reducing the number of American troops by the summer of 2011.” It’s no surprise, then, that “Mr. Karzai has been pressing to strike his own deal with the Taliban and the country’s archrival Pakistan, the Taliban’s longtime supporter. According to a former senior Afghan official, Mr. Karzai’s maneuverings involve secret negotiations with the Taliban outside the purview of American and NATO officials.”

Thanks to Ben Bernanke, Rep. Gerry Connolly makes a fool of himself and his Republican challenger has a boffo campaign ad.

Thanks to Obama and the Democratic Congress, you’re probably not going to get to keep your health-care plan: “Over and over in the health care debate, President Barack Obama said people who like their current coverage would be able to keep it. But an early draft of an administration regulation estimates that many employers will be forced to make changes to their health plans under the new law. In just three years, a majority of workers—51 percent—will be in plans subject to new federal requirements, according to the draft.”

Thanks to Israel, there is a place in the Middle East where gays are not persecuted: “Tel Aviv embraced Israel’s GLBT community Friday as it hosted the 13th annual gay parade.Dozens of policemen and civilian police watched on as thousands marched, dancing and waving rainbow flags.”

Thanks to the economic-policy wizardry of the Obama administration: “U.S. consumers unexpectedly ratcheted back spending on everything from cars to clothing in May, adding to concerns that a volatile stock market and high unemployment are increasingly weighing down the economic recovery. The Commerce Department reported Friday that sales at retail establishments — including department stores, gas stations and restaurants — fell 1.2% in May from the previous month. The decline, driven by sharp drops in autos and building materials, was the first and largest since September 2009, when sales fell 2.2%.”

Thanks to the NAACP, Hallmark was forced to remove from the shelves space-themed cards that used the phrase “black hole.” The group’s professional grievants apparently misheard the second word. No kidding.

Thanks to Barack Obama, the Middle East is more dangerous than ever: “The Gaza flotilla incident might have been a great setback to the radical camp had the United States reacted sharply, defending Israel, condemning the jihadists on board and their sponsors in Turkey, blocking UN Security Council action, and refusing to sponsor another international inquiry that will condemn Israel. And Israel’s interests were not the only ones at stake: The blockade of Gaza is a joint Israeli-Egyptian action to weaken Hamas. But the American position reflects the Obama line: carefully balancing the interests of friend and foe, seeking to avoid offense to our enemies, or, as Churchill famously described British policy in the 1930s, ‘resolved to be irresolute.’ Middle Eastern states, including Arab regimes traditionally allied with the United States, view this pose as likely to get them all killed when enemies come knocking at the door.”

Thanks to Obama, Bobby Jindal has regained a lot of stature. He appears to be what Obama is not — competent, engaged, and proactive.

Thanks to Jon Stewart, Tim Pawlenty gets to show that he has a sense of humor.

Thanks to Leslie Gelb, we are reminded that things can always be worse: Robert Gates departs, Hillary Clinton goes to the Defense Department, and Chuck Hagel goes to the State Department. Oy.

Thanks to Harry Reid and Nancy Pelosi, “a new Rasmussen Reports national telephone survey finds that just 19% of voters think it would be better for the country if most incumbents in Congress were reelected this November. Sixty-five percent (65%) disagree and say it would be better if most were defeated. Sixteen percent (16%) aren’t sure.”

Thanks to Obama, “people close to the president [Harmid Karzai] say he began to lose confidence in the Americans last summer, after national elections in which independent monitors determined that nearly one million ballots had been stolen on Mr. Karzai’s behalf. The rift worsened in December, when President Obama announced that he intended to begin reducing the number of American troops by the summer of 2011.” It’s no surprise, then, that “Mr. Karzai has been pressing to strike his own deal with the Taliban and the country’s archrival Pakistan, the Taliban’s longtime supporter. According to a former senior Afghan official, Mr. Karzai’s maneuverings involve secret negotiations with the Taliban outside the purview of American and NATO officials.”

Thanks to Ben Bernanke, Rep. Gerry Connolly makes a fool of himself and his Republican challenger has a boffo campaign ad.

Thanks to Obama and the Democratic Congress, you’re probably not going to get to keep your health-care plan: “Over and over in the health care debate, President Barack Obama said people who like their current coverage would be able to keep it. But an early draft of an administration regulation estimates that many employers will be forced to make changes to their health plans under the new law. In just three years, a majority of workers—51 percent—will be in plans subject to new federal requirements, according to the draft.”

Thanks to Israel, there is a place in the Middle East where gays are not persecuted: “Tel Aviv embraced Israel’s GLBT community Friday as it hosted the 13th annual gay parade.Dozens of policemen and civilian police watched on as thousands marched, dancing and waving rainbow flags.”

Thanks to the economic-policy wizardry of the Obama administration: “U.S. consumers unexpectedly ratcheted back spending on everything from cars to clothing in May, adding to concerns that a volatile stock market and high unemployment are increasingly weighing down the economic recovery. The Commerce Department reported Friday that sales at retail establishments — including department stores, gas stations and restaurants — fell 1.2% in May from the previous month. The decline, driven by sharp drops in autos and building materials, was the first and largest since September 2009, when sales fell 2.2%.”

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Flotsam and Jetsam

There’s a smart argument for building up Palestinian institutions and encouraging economic growth as a prelude to peace. But the Obami have reversed it, spreading poverty as they stagger through the “peace process.” Insisting on a settlement freeze has only put the squeeze on Palestinian workers: “These are skilled construction workers, men who actually rely on jobs in those ‘illegitimate’ settlements for their livelihoods, and they’ve been penalized harshly by the moratorium—they used to earn $40 a day; now, if they’re working at all, they’re getting $13.  ‘The settlement freeze has only brought more poverty,’ [says] Abdel Aziz Othman. … If you were of a sardonic cast of mind, you might call this the freeze to nowhere.”

Sen. Dianne Feinstein opposes the KSM trial. Sen. Kirsten Gillibrand wakes up and opposes it too. (Did they think it was a good idea up until the Massachusetts Senate race?) Who thinks this is still going to happen? Not Rep. John Boehner. But Obama does. It seems he’s outside the bipartisan consensus on this one.

Why didn’t Obama move to the center like Bill Clinton did? The New York Times explains: “So the gamble underlying Mr. Obama’s speech seems to be that he can muddle through the November elections with perhaps 20 or 30 lost seats in the House, and a handful in the Senate, and avoid the kind of rout that led Mr. Clinton to declare the end of the big government era.” That doesn’t look like such a great bet these days, especially since “Mr. Obama has seen the passion of his own political base wither.”

Obama’s attack on the Supreme Court may turn out to be as politically tone deaf as his Gates-gate comments: “A noted Supreme Court historian who ‘enthusiastically’ voted for President Obama in November 2008 today called President Obama’s criticism of the Supreme Court in his State of the Union address last night ‘really unusual’ and said he wouldn’t be surprised if no Supreme Court Justices attend the speech next year.” When Obama loses the law-professor vote, he’s in real trouble.

Ben Bernanke is confirmed for another term as Fed chairman by a 70-30 vote. A good warning for Obama, perhaps, of the dangers of letting populist, business-bashing rhetoric get out of hand.

Sen. Judd Gregg goes after the MSNBC hosts: “You can’t make a representation and then claim you didn’t make it. You know, it just shouldn’t work that way. You’ve got to have some integrity on your side of this camera, too.” Yowser.

Republicans are getting feisty. Sen. Jon Kyl on the SOTU: “First of all, I would’ve thought by now he would’ve stopped blaming the Bush administration for the mess that he inherited. And I don’t think that the American people want a whiner who says, woe is me. It was a terrible situation. And more than a year after he’s sworn in, he’s still complaining about the Bush administration.”

There’s a smart argument for building up Palestinian institutions and encouraging economic growth as a prelude to peace. But the Obami have reversed it, spreading poverty as they stagger through the “peace process.” Insisting on a settlement freeze has only put the squeeze on Palestinian workers: “These are skilled construction workers, men who actually rely on jobs in those ‘illegitimate’ settlements for their livelihoods, and they’ve been penalized harshly by the moratorium—they used to earn $40 a day; now, if they’re working at all, they’re getting $13.  ‘The settlement freeze has only brought more poverty,’ [says] Abdel Aziz Othman. … If you were of a sardonic cast of mind, you might call this the freeze to nowhere.”

Sen. Dianne Feinstein opposes the KSM trial. Sen. Kirsten Gillibrand wakes up and opposes it too. (Did they think it was a good idea up until the Massachusetts Senate race?) Who thinks this is still going to happen? Not Rep. John Boehner. But Obama does. It seems he’s outside the bipartisan consensus on this one.

Why didn’t Obama move to the center like Bill Clinton did? The New York Times explains: “So the gamble underlying Mr. Obama’s speech seems to be that he can muddle through the November elections with perhaps 20 or 30 lost seats in the House, and a handful in the Senate, and avoid the kind of rout that led Mr. Clinton to declare the end of the big government era.” That doesn’t look like such a great bet these days, especially since “Mr. Obama has seen the passion of his own political base wither.”

Obama’s attack on the Supreme Court may turn out to be as politically tone deaf as his Gates-gate comments: “A noted Supreme Court historian who ‘enthusiastically’ voted for President Obama in November 2008 today called President Obama’s criticism of the Supreme Court in his State of the Union address last night ‘really unusual’ and said he wouldn’t be surprised if no Supreme Court Justices attend the speech next year.” When Obama loses the law-professor vote, he’s in real trouble.

Ben Bernanke is confirmed for another term as Fed chairman by a 70-30 vote. A good warning for Obama, perhaps, of the dangers of letting populist, business-bashing rhetoric get out of hand.

Sen. Judd Gregg goes after the MSNBC hosts: “You can’t make a representation and then claim you didn’t make it. You know, it just shouldn’t work that way. You’ve got to have some integrity on your side of this camera, too.” Yowser.

Republicans are getting feisty. Sen. Jon Kyl on the SOTU: “First of all, I would’ve thought by now he would’ve stopped blaming the Bush administration for the mess that he inherited. And I don’t think that the American people want a whiner who says, woe is me. It was a terrible situation. And more than a year after he’s sworn in, he’s still complaining about the Bush administration.”

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Flotsam and Jetsam

In a must-read piece, Richard Haass, a self-described “card carrying realist,” gives up on “engagement,” declares himself to be a neocon when it comes to Iran and supports regime change there: “The nuclear talks are going nowhere. The Iranians appear intent on developing the means to produce a nuclear weapon; there is no other explanation for the secret uranium-enrichment facility discovered near the holy city of Qum. Fortunately, their nuclear program appears to have hit some technical snags, which puts off the need to decide whether to launch a preventive strike. Instead we should be focusing on another fact: Iran may be closer to profound political change than at any time since the revolution that ousted the shah 30 years ago.” Actually, the only “realistic” policy at this point is regime change.

More data for the Obami to ignore on how “dissatisfaction with the direction of the country, antipathy toward federal government activism and opposition to the Democrats’ health-care proposals” lifted Scott Brown to victory: “Health care topped jobs and the economy as the most important issue driving Massachusetts voters, but among Brown voters, ‘the way Washington is working’ ran a close second to the economy and jobs as a factor. Overall, just 43 percent of Massachusetts voters say they support the health-care proposals advanced by Obama and congressional Democrats; 48 percent oppose them. Among Brown’s supporters, however, eight in 10 said they were opposed to the measures, 66 percent of them strongly so.’”

Now Sen. Chris Dodd says the Democrats should take a break from health-care reform — “a breather for a month, six weeks, and quietly go back and say the door’s open again.”

For once the voters are with Dodd: “Sixty-one percent (61%) of U.S. voters say Congress should drop health care reform and focus on more immediate ways to improve the economy and create jobs.”

Not enough votes to confirm Ben Bernanke? Kind of seems as though all the wheels are coming off the bus.

In politics, winning is always better than losing: “The National Republican Congressional Committee (NRCC) says Scott Brown’s win in Massachusetts has yielded more interest and commitments from potential GOP House candidates to run for Congress in the midterms this year. . . . The Brown victory should give Republicans momentum going into 2010, as it will likely spur Republican political donations and conservative activism, as well as preventing Democrats from passing much of their agenda and putting President Obama and congressional Democratic leaders into a defensive mode. An influx of Republican House candidates would be an added boon.”

When it rains, it pours. Big Labor deserting the Democrats? “SEIU chief Andy Stern took a hard shot at Dem leaders just now for considering a scaled-down health care bill, strongly hinting that labor might not work as hard for Dem candidates in 2010 if they failed to deliver real and comprehensive reform.” Can’t blame them – unions spent millions and millions electing Obama as well as the Democratic congressional majorities and what have the Democrats delivered?

Seems as though union voters are already deserting the Democrats: “Republican Scott Brown’s victory in the Massachusetts Senate race was lifted by strong support from union households, in a sign of trouble for President Barack Obama and Democrats who are counting on union support in the 2010 midterm elections. A poll conducted on behalf of the AFL-CIO found that 49% of Massachusetts union households supported Mr. Brown in Tuesday’s voting, while 46% supported Democrat Martha Coakley.”

Obama complains of running into a “buzz saw” of opposition in Congress. Has no one ever disagreed with him? Did he expect everyone to simply sign on? I guess the presidency is really hard.

From the New York Times: “A Tennessee man accused of killing a soldier outside a Little Rock, Ark., military recruiting station last year has asked a judge to change his plea to guilty, claiming for the first time that he is affiliated with a Yemen-based affiliate of Al Qaeda. . .If evidence emerges that his claim is true, it will give the June 1, 2009, shooting in Little Rock new significance at a time when Yemen is being more closely scrutinized as a source of terrorist plots against the United States. Mr. Muhammad, 24, a Muslim convert from Memphis, spent about 16 months in Yemen starting in the fall of 2007, ostensibly teaching English and learning Arabic.”

In a must-read piece, Richard Haass, a self-described “card carrying realist,” gives up on “engagement,” declares himself to be a neocon when it comes to Iran and supports regime change there: “The nuclear talks are going nowhere. The Iranians appear intent on developing the means to produce a nuclear weapon; there is no other explanation for the secret uranium-enrichment facility discovered near the holy city of Qum. Fortunately, their nuclear program appears to have hit some technical snags, which puts off the need to decide whether to launch a preventive strike. Instead we should be focusing on another fact: Iran may be closer to profound political change than at any time since the revolution that ousted the shah 30 years ago.” Actually, the only “realistic” policy at this point is regime change.

More data for the Obami to ignore on how “dissatisfaction with the direction of the country, antipathy toward federal government activism and opposition to the Democrats’ health-care proposals” lifted Scott Brown to victory: “Health care topped jobs and the economy as the most important issue driving Massachusetts voters, but among Brown voters, ‘the way Washington is working’ ran a close second to the economy and jobs as a factor. Overall, just 43 percent of Massachusetts voters say they support the health-care proposals advanced by Obama and congressional Democrats; 48 percent oppose them. Among Brown’s supporters, however, eight in 10 said they were opposed to the measures, 66 percent of them strongly so.’”

Now Sen. Chris Dodd says the Democrats should take a break from health-care reform — “a breather for a month, six weeks, and quietly go back and say the door’s open again.”

For once the voters are with Dodd: “Sixty-one percent (61%) of U.S. voters say Congress should drop health care reform and focus on more immediate ways to improve the economy and create jobs.”

Not enough votes to confirm Ben Bernanke? Kind of seems as though all the wheels are coming off the bus.

In politics, winning is always better than losing: “The National Republican Congressional Committee (NRCC) says Scott Brown’s win in Massachusetts has yielded more interest and commitments from potential GOP House candidates to run for Congress in the midterms this year. . . . The Brown victory should give Republicans momentum going into 2010, as it will likely spur Republican political donations and conservative activism, as well as preventing Democrats from passing much of their agenda and putting President Obama and congressional Democratic leaders into a defensive mode. An influx of Republican House candidates would be an added boon.”

When it rains, it pours. Big Labor deserting the Democrats? “SEIU chief Andy Stern took a hard shot at Dem leaders just now for considering a scaled-down health care bill, strongly hinting that labor might not work as hard for Dem candidates in 2010 if they failed to deliver real and comprehensive reform.” Can’t blame them – unions spent millions and millions electing Obama as well as the Democratic congressional majorities and what have the Democrats delivered?

Seems as though union voters are already deserting the Democrats: “Republican Scott Brown’s victory in the Massachusetts Senate race was lifted by strong support from union households, in a sign of trouble for President Barack Obama and Democrats who are counting on union support in the 2010 midterm elections. A poll conducted on behalf of the AFL-CIO found that 49% of Massachusetts union households supported Mr. Brown in Tuesday’s voting, while 46% supported Democrat Martha Coakley.”

Obama complains of running into a “buzz saw” of opposition in Congress. Has no one ever disagreed with him? Did he expect everyone to simply sign on? I guess the presidency is really hard.

From the New York Times: “A Tennessee man accused of killing a soldier outside a Little Rock, Ark., military recruiting station last year has asked a judge to change his plea to guilty, claiming for the first time that he is affiliated with a Yemen-based affiliate of Al Qaeda. . .If evidence emerges that his claim is true, it will give the June 1, 2009, shooting in Little Rock new significance at a time when Yemen is being more closely scrutinized as a source of terrorist plots against the United States. Mr. Muhammad, 24, a Muslim convert from Memphis, spent about 16 months in Yemen starting in the fall of 2007, ostensibly teaching English and learning Arabic.”

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