It’s no secret that Republicans have had a hard time find their message, not just in the most recent election cycle, but also since the new Congress was seated last month. The most recent folly has been on the sequester — relatively small cuts to expected rates of spending that are set to take effect on March 1st.
While many House Republicans are quite content to let these cuts happen as scheduled, Speaker John Boehner and others in leadership are trying to pressure Obama, who says the cuts would hurt the economy even though he initially signed off on them, into substituting defense cuts with reductions in other areas of the budget. The problem is their messaging, as Byron York explains:
In a Wall Street Journal op-ed Wednesday, House Speaker John Boehner describes the upcoming sequester as a policy “that threatens U.S. national security, thousands of jobs and more.”
Which leads to the question: Why would Republicans support a measure that threatens national security and thousands of jobs? Boehner and the GOP are determined to allow the $1.2 trillion sequester go into effect unless President Obama and Democrats agree to replacement cuts, of an equal amount, that target entitlement spending. If that doesn’t happen — and it seems entirely unlikely — the sequester goes into effect, with the GOP’s blessing.
It has been difficult for the Obama Administration to spin Friday’s jobs report. Analysts were predicting that they economy would create up to 100,000, but the numbers reported by the Bureau of Labor Statistics showed that only 80,000 jobs were created in June; far below the 120,000 to 150,000 needed each month just to keep up with population growth.
Even though the report was a less than encouraging sign that the economy is recovering, leave it to Rep. Debbie Wasserman Schultz to try to put a happy face on such pathetic numbers:
There was a breakthrough of sorts yesterday with the Gang of Six, a bipartisan group of Senators, that agreed to $3.7 trillion deficit reduction plan that they believe can break a filibuster in the chamber. The proposal was viewed favorably by President Barack Obama. Even Larry Kudlow, host of CNBC’s The Kudlow Report, had nice things to say about it.
House Minority Leader John Boehner backtracked on comments he made over the weekend by asserting his support for extending all of the Bush tax cuts, which are set to expire at the end of the year:
“We should stop all the hikes because that is what’s best for the economy,” Boehner said on Twitter, as some House Republicans did their best to further smother any talk about Boehner cutting some deal with Democrats.
“Leader Boehner and I agree that we must do everything possible to stop these job killing tax hikes,” said Rep. Dave Camp (R-MI), the top Republican on the House Ways and Means Committee.
As other Republicans joined in, it left many unsure whether Boehner had just given a less than stellar response on “Face the Nation”, or whether he really would sign off on a deal.
Other Republican leaders shot down the idea of a compromise, like Boehner, backing extention of all the tax cuts. Boehner is also asking Speaker Nancy Pelosi to not use House Rules to increase the threshold needed to extend the tax cuts.
Over in the Senate, Mitch McConnell introduced the Tax Hike Prevention Act of 2010, which would extend current tax rates, prevents the return of the marriage penalty and deals with the Alternative Minimum Tax. It also touches on the Death Tax, but to what extent is unclear.
Last week, President Barack Obama discussed Social Security in Columbus, Ohio, which is no surprise since entitlement program is often brought up in an election year, especially when Democrats are expecting losses:
President Barack Obama pledged Wednesday that the Social Security system won’t be privatized while he is in the White House.
In a town-hall style meeting with a few dozen residents of Columbus, Ohio, Obama said “modest” changes can keep the government pension system solvent for decades.
Republicans have called for transforming the government program to a private savings account as a way to help keep it going as America’s aging population stresses its financial health.
“It will not be privatized as long as I’m president,” Obama said to applause, noting that the economic recession and Wall Street collapse would have devastated the savings of retirees under a privatized Social Security system.
He said Social Security needed adjustments, rather than a total overhaul.
“There are some fairly modest changes that can be made without any newfangled schemes that can keep it running for 75 years so everybody gets what they deserve,” Obama said.
Obama declined to name what those “modest changes” would be for a program with trillions in unfunded liabilities. One of the ideas that Obama often promoted in his campaign was lifting the cap on taxable wags, which is only a seven year fix. Nevermind that by raising taxes, you’re putting economic growth at risk. Benefits cuts are also an idea, but I doubt Democrats have the stomach for it.
Larry Kudlow, an economist and host of CNBC’s The Kudlow Report, writes that Ben Bernanke should withdraw his re-nomination unless he can gather bi-partisan support:
Bernanke sees deflation and depression threats everywhere. That’s one of his biggest problems. He cut his academic teeth on studying the Depression, which seems to have blinded him from the modern use of sophisticated financial-market signals in our new, globalized, high-tech, rapid-information world.
The mostly free-market economy has made its adjustments for better business profitability and consumer-balance-sheet corrections. Because of that — and along with close to $4 trillion in new capital gains from the massive stock market rally as well as the Fed’s ultra-easy free-money policy — economic recovery is picking up steam. GDP growth will surprise on the upside in the quarters ahead.
But Bernanke’s zero-interest-rate policy and continued money creation through the expansion of the Fed’s balance sheet continues to fight an emergency that ended this past spring. Given the end of the emergency and the onset of recovery, a still easy 1 or 2 percent federal funds rate would be more appropriate than zero.
According to Rasmussen, the public doesn’t trust Bernanke anymore. Only 21 percent of Americans favor his reappointment as Fed chair, while over 40 percent want a new face at the helm of the central bank. If that sentiment is echoed in the Senate, and if Bernanke receives 35 or more votes against him in the floor vote, it will not have been a truly bipartisan reconfirmation. And without that, I don’t see how he can effectively govern as Fed chairman.