Wonkbook: What matters for jobs; the Tea Parties vs. the appropriators; would more stimulus have saved the Dems?
If you ask most candidates or political consultants what this election is about, they'll say "jobs." If you ask them what the next Congress will actually do about jobs -- no matter who wins -- they'll get rather quiet. Voters may be angry about unemployment, but there's little reason to believe the 112th Congress will solve, or even substantially ameliorate, the problem.
At this point, that seems largely up to the Federal Reserve. So reports that the Fed is likely to kick off its effort to reinvigorate the economy with $500 billion in asset purchases are arguably the most important news on jobs this week, and the Fed's announcement of its actual policy choice -- and not the election results -- will be the most important news on jobs next week. It's true, of course, that the Fed's asset purchases, which give the economy access to new money, would do much more if Congress would commit to actually spending that money so that it creates jobs in the real economy rather than sitting around in the Treasury Department. But since no such commitment seems to be forthcoming no matter who wins on Tuesday, all eyes are -- or should be -- on Ben Bernanke.
Welcome to Wonkbook.
The Fed will likely announce $500 billion in new asset purchases over six months, reports Robin Harding: "William Dudley, president of the New York Fed, suggested in a recent speech that $500bn of asset purchases 'would provide about as much stimulus as a reduction in the federal funds rate of between half a point and three-quarters of a point'...Given that the central bank also needs to buy about $30bn of Treasuries a month to reinvest early repayments from its portfolio of mortgage-backed bonds, if the target figure were $500bn, six months is likely to be the minimum time needed to get there. The big question for markets - and the big debate within the Fed - is about what to do beyond the initial move. The immediate issue for November is whether to signal a bias towards further easing."
Tea Partiers might be disappointed by the GOP House's committee chairmen, reports Janet Hook: "The most politically sensitive post is leading the House Appropriations Committee, which has been a central target of the tea-party critique of earmarks and growth of spending even during years of GOP control of Congress...The leading candidates for the panel's chairmanship, Reps. Jerry Lewis (R., Calif.) and Rep. Harold Rogers (R., Ky.), are longtime members of the panel who have been stalwart defenders of earmarks."
The White House should have been more aggressive at combating unemployment, writes David Leonhardt: "White House officials respond to these criticisms by pointing out that they helped break the back of the worst financial crisis in 80 years and that Republicans opposed nearly every tax cut or spending increase Democrats proposed. That’s all true. But I keep coming back to the fact that this administration is full of people who knew that financial crises tended to produce weak recoveries -- and that the typical policy mistake was being too timid. 'We’re just not going to make that mistake,' Timothy Geithner, the incoming Treasury secretary, told me, as Mr. Obama was preparing to take office. 'We’re not going to do that. We’ll keep at it until it’s done, whatever it takes.'"
A $1.2 trillion stimulus wouldn't have saved Democrats, writes Kevin Drum: "For calendar 2010, CBO estimates that the stimulus bill reduced unemployment by something between 0.7 and 1.8 points. Split the difference and the consensus average is about 1.2 points. A stimulus bill that was 50% bigger would therefore probably have reduced unemployment by 0.6 points more than the actual bill. If this is in the ballpark, it means that with a bigger stimulus bill unemployment today would be 9%, not 9.6%. That would have been well worth the price, but just because it was worth doing doesn't mean it would have made a big electoral difference."
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Acoustic version interlude: Superchunk plays "Detroit Has a Skyline".
Still to come: The GOP might be wiling to go after tax deductions; education reform doesn't look good in the next Congress; an non-governmental panel wields considerable power over Medicare spending; better chairs might save our schools; and a walrus does situps.
Spending cuts alone won't balance the budget, so the GOP might accept backdoor increases in taxes:, writes Lori Montgomery: "GOP leaders concede that point and say they are open to broader bipartisan approaches to tackling the nation's budget problems. Boehner, for instance, has embraced the possibility of higher taxes, suggesting in a speech in Cleveland this summer that lawmakers should look at clearing out the 'undergrowth of deductions, credits, and special carve-outs' in the tax code that are little more than 'poorly disguised spending programs.'"
Sources in China suggest government support for the US's trade imbalance plan, report Geoff Dyer and James Lamont: "Li Daokui, a member of the central bank’s monetary policy committee and professor at Tsinghua University, said on Tuesday there had been 'good progress' at the weekend meeting of G20 finance ministers in South Korea which had moved debate from the 'surface issue' of nominal exchange rates to 'talking about the substance of rebalancing world trade'...His comments suggest support in China for the US proposal of setting limits on current account surpluses and deficits at around 4 per cent of GDP...Several articles in the Chinese business press have also indicated the government would be comfortable with the surplus target at that level."
New Democrats have forged an alliance with the pharmaceutical and financial industries, report Sebastian Jones and Marcus Stern: "Over the past two years, their members have helped biotech companies win lucrative patent extensions during healthcare reform, fought to ensure that banks receiving TARP money didn't have to trim executive bonuses, and helped block a proposal to allow bankruptcy judges to adjust home mortgages--a step many experts believe would have reduced foreclosures. As they gathered for their May retreat, the New Democrats were working on what would become their biggest victory yet: weakening key components of financial-services reform legislation."
European manufacturing jobs are being outsourced to the US, reports Peter Whoriskey: "The trade debate in the United States usually focuses on the jobs lost to factories in the developing world. But the recession has forced countless skilled workers in this country to consider jobs they would have rejected in the past. They now offer foreign manufacturers a resource that was far less common just a few years ago: cheaper wages for better talent. 'We are a low-wage country compared to Germany,' said Kristin Dziczek, director of Labor and Industry Group at the Center for Automotive Research. 'And that helps put jobs here.' But the price of having a more globally competitive workforce means more in America could fall well short of the middle-class living standards that manufacturing workers once could expect."
The Fed won't help keep the government's emergency loans from 2008 secret: http://bit.ly/bCYgIY
Lowering interest rates can't kick the economic recovery into gear, writes Martin Feldstein: "Previous downturns were caused by the central bank’s efforts to reverse or prevent inflation by hiking short-term interest rates. When the central bank succeeded, it lowered those rates and the economy bounced back. Because the downturn was not caused by high interest rates, lowering them could not lift the economy out of recession. The Obama administration therefore turned to fiscal policy - tax cuts and a range of spending programs. Unfortunately, the fiscal stimulus was not well enough designed to get the economy onto a strong, self-sustaining growth path. And, now that those stimulus programs are coming to an end, there is a danger that the economy will slide back into slow growth or even recession."
Adorable animals getting fit interlude: A walrus does exercises.
An American Medical Association panel may drive up Medicare costs, report Anna Wilde Mathews and Tom McGinty: "The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules...Its critics fault the committee for contributing to a system that spends too much money on sophisticated procedures, while shorting the type of nuts-and-bolts primary care that could keep patients healthier from the start--and save money."
Education reform's prospects aren't good under a GOP Congress, writes Seyward Darby: "The administration’s blueprint for NCLB, which is already several years overdue for reauthorization and desperately needs restructuring, probably won’t pass, maybe not even in pared-down form. Congressman John Kline, the top House Republican on the Education and Labor Committee, told Education Week in September that, while he supports reauthorization in principle, teachers and superintendents in his Minnesota district are 'frankly not real thrilled with the blueprint.'...And what about new pre-K legislation? It would require more federal dollars, so don’t count on it."
Lobbyists are already chatting up would-be Republican committee chairs, report Eric Lipton and David Herszenhorn: "Mr. Camp is slated to take over the powerful, tax-writing House Ways and Means Committee if Republicans win the majority next week, transforming this low-key conservative Republican almost overnight into one of the most powerful men in town...Former aides to Mr. Camp, who now work as lobbyists, are checking in with their onetime boss, chatting with him and his aides about staff appointments he might make when he takes over the Ways and Means Committee, and what tax or health care issues will be at the top of his agenda. Other lobbyists have gone to his staff to try to get to the head of the line in presenting proposed tax changes that will benefit their clients."
Credit cards increase junk food consumption: http://bit.ly/b12zhX
Darrell Issa would focus on trivialities as House oversight chair, writes Ruth Marcus: "In Issa's world, the Securities and Exchange Commission's lawsuit against Goldman Sachs in the midst of congressional debate about financial reform 'reeks of a political motive,' as he told CNBC. Issa demanded an investigation and told Don Imus that the SEC's inspector general launched a probe 'because he sees there's something rotten in how [the SEC] did it and when they did it.' Five months, a review of 3.4 million e-mails and 32 sworn interviews later, the inspector general found zero evidence of political considerations or collusion. Issa was hardly contrite that his accusations had proved groundless."
Obama shouldn't dismiss personal investment accounts for Social Security, write William Shipman and Peter Ferrara: http://bit.ly/bSPp0X
Better chairs could improve school performance, writes Linda Perlstein: "It's very rare for students to actually have a chair and desk that fit them right--one study put the number at one in five. In fifth grade...it's not uncommon for the shortest student to be 18 inches shorter than the tallest. If a chair is too big for a child, his or her feet dangle and the hard edge of the seat digs into the hamstrings, both of which, Dennerlein says, forces the brain to pay attention to something other than geometry worksheets. A too-high backrest and too-deep seat kill any chance at lumbar support. Furniture that's too small isn't any better."
Electronics hacking interlude: A see-through t-shirt, using an LCD screen and a tiny camera.
The White House will announce $2.5 billion in high speed rail funding, reports Josh Mitchell: "California will receive more than $900 million mostly to build a route running through the Central Valley, Sen. Barbara Boxer (D., Calif.) said. That project is part of broader plans for a 790-mile system extending from San Diego to Sacramento. The state earlier was awarded $2.25 billion in federal stimulus funds for the project, with construction possibly set to begin in 2012...Florida will receive $800 million for a proposed passenger-rail line extending from Orlando to Tampa...The state won a $1.25 billion award in stimulus money to develop the 84-mile link. Both projects are part of President Barack Obama's effort to build a national 'high-speed' rail network."
The US and Europe are working together to reduce dependence on Chinese rare earth minerals: http://nyti.ms/bmsuTN
A public-private partnership is boosting electric cars in six cities, writes Emily Badger: "The Department of Energy last year put up a $100 million grant, funded by the stimulus bill, for the most ambitious experiment to date deploying electric vehicles and infrastructure in America. The public-private partnership, called the EV Project, expects by next fall to have humming 8,300 vehicles, thousands of at-home chargers and hundreds of commercial plug-in sites in six states -- or 'laboratories.'."
Environmentalists should want expensive dirty energy but also cheap clean energy, writes Adam Werbach: http://bit.ly/aRlRWh
Geothermal is a carbon-light energy source, writes Nina Shen Rastogi: "According to recent life-cycle analyses by Argonne National Laboratory, geothermal power plants emit between 18.7 grams to 103 grams of CO2-equivalent per kilowatt-hour--polite little hiccups compared with the 1,234.9 g/kWh belched out by coal or the 487 g/kWh by natural gas. (Those figures include building and running the power plants as well as extracting the fuel.) Unlike conventional coal-fired plants, geothermal plants emit very little sulfur dioxide and no nitrogen oxides, which are the precursors of acid rain. And unlike wind or solar power installations, geothermal power doesn't fluctuate with the weather."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: Andrew Harrer Photo
| October 27, 2010; 6:38 AM ET
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