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Posted at 6:45 AM ET, 01/21/2011

Wonkbook: RSC details $100B in spending cuts; Obama admin appoints GE CEO

By Ezra Klein


You should be watching for three different fights over the budget this year. The two that people are mostly expecting is the fight between Democrats and Republicans on cuts and the fight between Democrats and Republicans on funding the implementation of the health-care law. The one that hasn't gotten as much attention -- but that's actually likely to come first -- is the battle between the Tea Party wing of the Republican Party, which wants to cut the budget by $100 billion this year, and the more establishment-oriented members, who've set their sights substantially lower.

That fight kicked off yesterday when the Republican Study Committee -- which represents two-thirds of House Republicans, including almost 75 freshman -- brought out a package of cuts that'd slash $100 billion from non-defense discretionary spending and bring spending back to 2006 levels in the years after that. But reading their legislation, you can see why more experienced members of their party might balk: $30 billion in savings omes from immediately selling off Fannie Mae and Freddie Mac, which would potentially throw a weak housing market into total chaos. Another $16 billion comes from repealing the help the federal government is giving states to handle Medicaid costs, which would potentially send a couple of states that are already teetering on the edge of bankruptcy right over the cliff. Amtrak would lose pretty much its entire federal subsidy, as would the Corporation for Public Broadcasting and the National Endowment for the Arts. Funding for high-speed rail is eliminated, and so too is more than $40 billion in stimulus funds, most of which are obligated to projects that have already begun.

For all that, this is a healthy document: It shows what very deep cuts in spending would actually look like. Democrats, I imagine, will be quite interested in debating it. Whether or not Republican leadership will be as enthusiastic remains to be seen.

Top Stories

Conservative House Members have proposed an alternative set of budget cuts, reports Lori Montgomery: "Congressional conservatives on Thursday demanded far more dramatic reductions in government spending than House GOP leaders have recently proposed, in the first sign of a fissure between old-guard Republicans and tea-party-backed newcomers. Members of the conservative Republican Study Committee said the GOP must keep its campaign pledge to immediately slice at least $100 billion from non-defense programs, an effort that would require lawmakers to reduce funding for most federal agencies by a third over the next seven months. And the group called for even deeper cuts over the next decade to return non-defense spending to 2006 levels... With 165 members - including 73 freshmen, many of them elected with tea party support - the study committee represents more than two-thirds of House Republicans."

Download the legislation itself:

Both sides can claim gains from the US-China summit, reports John Pomfret: "Chinese President Hu Jintao's just-concluded summit with President Obama was a win both for the Communist Party and for Hu himself, demonstrating once again the Chinese government's reliance on ceremony to bolster its standing among its people. China's state-run newspapers ran enormous photographs of Hu with Obama, a not-so-subtle message that China is now the United States' equal on the world stage...The Chinese side, as it often does during summits, brought its checkbook, inking deals for aircraft and other heavy machinery, agricultural products and software that could be worth $45 billion for U.S. firms. China also indicated that it would give U.S. companies better treatment and do more to protect their intellectual property."

GE CEO Jeffrey Immelt will replace Paul Volcker as leader of Obama's economic advisory panel, reports Perry Bacon: "President Obama will restructure one of his economic advisory councils, shifting its focus to job creation and competitiveness and naming General Electric chief executive Jeffrey Immelt as its head, the administration announced early Friday morning. Immelt will lead the newly created President's Council on Jobs and Competitiveness. It will replace the Economic Recovery Advisory Board, which has been chaired by former Federal Reserve Chairman Paul Volcker. In a statement, Obama announced that Volcker will step down next month from his role advising the administration. The council's new leadership and mission reflects the administration's shift from trying to halt the recession to broader efforts to improve the U.S. economy and create jobs."

Boosting manufacturing is key to the recovery, writes Jeffrey Immelt: "The assumption made by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong. But there is nothing inevitable about America's declining manufacturing competitiveness if we work together to reverse it...America cannot expand its manufacturing base without greatly increasing the volume of goods it sells overseas. That is why I applaud the free-trade agreement recently concluded between the United States and South Korea, which will eliminate barriers to U.S. exports and support export-oriented jobs."

Swedish dance-pop interlude: Lykke Li plays "I Follow Rivers" live.

Got tips, additions, or comments? E-mail me.

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Still to come: The Fed is heading into its first policy meeting of the year; House Republicans have committed to look into health care reform alternatives; Verizon is suing the FCC over net neutrality; GOP staff is holding private meetings with energy lobbyists; and a British member of parliament forgets to turn off his musical tie while making a speech on the floor.


The Fed faces uneven economic indicators ahead of its latest meeting, report Neil Irwin and Dina ElBoghdady: "As the Federal Reserve gears up for its first policy meeting of 2011, its leaders face the challenge of making sense of an economic picture that is encouraging - including upbeat reports Thursday on housing and unemployment - yet still unnerving. Private economists are generally expecting U.S. economic growth to accelerate a bit in 2011, perhaps to 3.5 percent or so from a pace last year below 3 percent. At their meeting Tuesday and Wednesday, Fed officials will present their own forecasts, which will be made public in mid-February, and discuss the prospects for growth in 2011. The Fed is almost certain to maintain the policy it announced late last year of trying to encourage growth by buying about $75 billion in Treasury bonds each month through June."

Policymakers want to let states declare bankruptcy to avoid a bailout, reports Mary Williams Walsh: "Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers. Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign. But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid...Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout."

Chinese president Hu Jintao held private meetings with member of Congress on economic and other issues:

Big banks want to replace Fannie and Freddie with themselves, reports Louise Story: "As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation’s largest banks are offering a few suggestions. Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities -- that would be stamped with a government guarantee...Housing industry consultants and people familiar with recent meetings at the Treasury Department say these banks view the government’s overhaul of the mortgage market as a potential profit opportunity. Treasury officials have met with executives from several institutions, including Wells Fargo, Morgan Stanley, Goldman Sachs and Credit Suisse, according to a public listing of the meetings."

House Republicans might demand a vote on a balanced budget constitutional amendment in return for an increase in the debt limit, report Molly Hooper and Shane D'Aprile:

China is mired in a monetary mess, writes Paul Krugman: "The root cause of China’s muddle is its weak-currency policy, which is feeding an artificially large trade surplus. As I’ve emphasized in the past, this policy hurts the rest of the world, increasing unemployment in many other countries, America included. But a policy can be bad for us without being good for China. In fact, Chinese currency policy is a lose-lose proposition, simultaneously depressing employment here and producing an overheated, inflation-prone economy in China itself. One way to think about what’s happening is that inflation is the market’s way of undoing currency manipulation. China has been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage."

Republicans have no clue what they want to cut, writes Brad Plumer:

Horrors of war interlude: The avian toll of Angry Birds.

Health Care

House Republicans say they will begin the "replace" stage of their health care strategy, reports Jennifer Haberkorn: "Fourteen Democrats joined all House Republicans to pass the first step in the 'replace' part of the GOP’s 'repeal and replace' plan for health care reform. The House on Thursday approved a resolution directing four committees to work on alternatives to the health-care reform law Democrats passed last year. It passed 253-175. Republicans say the resolution is just the start of the effort to reshape the Obama administration’s signature legislation. The House voted yesterday to repeal the entire law, but Senate Democrats have pledged to block that effort.

The House leadership is backing bills meant to block health care reform from funding abortions:

The continuing Republican attack on the bill's CBO score will have consequences, writes Ezra Klein: "beneath it is something more insidious: an effort to discredit the last truly neutral, truly respected scorekeeper in Washington. The facts don't support the particular case the Republicans want to make, so they're trying to take down the people who supply the facts. But once that's done, it can't easily be undone. And the true loser will be the very thing Republicans claim to care most about: the deficit. If getting the CBO's seal of approval ceases to matter, then political parties will cease to try. That's when the "smoke and mirrors" will really begin: when bills just have to sound good rather than pencil out. When there are no skeptical budget experts sending legislation back to the authors with a note that says, "Sorry, not there yet." When policy debates are decided by who can yell the loudest rather than who can write the best bill."

Replace has to follow repeal, writes Charles Krauthammer: "This does not absolve the Republicans from producing a health-care replacement. They will and should be judged by how well their alternative addresses the needs of the uninsured and the anxieties of the currently insured. But amending an insanely complicated, contradictory, incoherent and arbitrary 2,000-page bill that will generate tens of thousands of pages of regulations is a complete non-starter. Everything begins with repeal."

States are making deep cuts to mental health programs, report Marc Lacey, Kevin Sack, and A.G. Sulzberger: "Unlike many of her fellow governors, Jan Brewer of Arizona knows well the inner workings of her state’s mental health system: her son has schizophrenia and was committed to a state hospital more than 20 years ago after being found not guilty by reason of insanity of sexual assault and kidnapping. Although she rarely speaks of her son’s crisis, Ms. Brewer has long been an advocate for the mental health system, pushing for state money for drugs and community programs. But with Arizona and other states across the country facing huge budget holes, Ms. Brewer and many of her fellow governors in both parties are presiding over what is being described as a dismantling of the safety net for the mentally ill."

Three Senate Democrats are urging the House to reform health care reform's tax reporting requirements:

Domestic Policy

Verizon is suing the FCC over its new net neutrality rules, reports Cecilia Kang: "Just weeks after the Federal Communications Commission adopted its first-ever rules aimed at regulating Internet access, Verizon Communications on Thursday filed a federal lawsuit to overturn the controversial order. Verizon argues that the FCC does not have the legal authority to mandate how Internet service providers treat content on their networks...The FCC's rules are supported by consumer groups and Web giants such as Google and Facebook. Verizon filed its case in the same federal court - the U.S. Court of Appeals for the District of Columbia - that ruled last April that the FCC overstepped its authority in trying to sanction Comcast for blocking Web traffic."

Michelle Obama is partnering with Wal-Mart on a healthy foods program:

The Republican Study Committee's budget cuts plan heavily targets federal workers, reports Lisa Rein: "The Republican Study Committee, who unveiled the plan, called their proposal the 'Spending Reduction Act of 2011,' and they said it delivers on campaign promises to cut non-defense spending from the federal budget. It would extend President Obama's pay freeze on federal employees from two years to five, cut the civil service by 15 percent through attrition over a decade, and prohibit federal workers from serving as union officials on government time. The lawmakers claimed these and other changes they proposed would help eliminate $2.5 trillion in spending over that 10-year period. Republicans have already moved this month to reduce congressional salaries by 10 percent and force federal workers to take two-week furloughs."

The public is wary of entitlement cuts:

Great moments in legislating interlude: A musical tie goes off during a speech in the House of Commons.


The GOP is holding closed-door talks with energy lobbyists, report Darren Good and Robin Bravender: "With the backing of GOP caucus leaders, aides for House Energy and Commerce Chairman Fred Upton (R-Mich.) and Senate Environment and Public Works Committee ranking member Jim Inhofe (R-Okla.) are seeking unwavering support from a host of industries for an all-out push to block federal and state climate rules...The roster of those attending the invitation-only gathering is being kept under lock and key, though it is believed to include the American Petroleum Institute, National Mining Association, National Rural Electric Cooperative Association, U.S. Chamber of Commerce, and others."

A key GOP subcommittee chair opposes blocking the EPA's authority to regulate cliamte change:

Sen. Joe Manchin (D-WV) wants to limit the EPA's ability to regulate mining:

The EPA is hiring another former Hill staffer to help defend its climate regulations, reports Darren Samuelsohn: "Michael Goo, most recently the staff director of the now-defunct House Select Committee on Energy Independence and Global Warming, will join EPA’s Office of Policy as associate administrator, a job that answers directly to Administrator Lisa Jackson, E&E News reported. Goo spent the past two years working for Select Committee Chairman Ed Markey (D-Mass.), playing a key role in promoting the cap-and-trade bill that passed the House in June 2009...Goo is the latest former Democratic staffer to land in the Obama EPA as it prepares for battle with Republicans over global warming and air pollution regulations. Joel Beauvais, a Markey staffer since 2007, is leaving later this month to be a special counsel in Jackson’s office."

Nancy Pelosi pressed Hu Jintao on climate change:

Courts won't let the EPA delay a new regulation, reports Stephen Power: "A federal judge on Thursday rejected the Obama administration's request to delay by more than a year controversial new regulations targeting emissions of mercury and other hazardous air pollutants from industrial boilers. The ruling by U.S. District Judge Paul Friedman is a setback for the White House, which is trying to demonstrate to business leaders that it is prepared to moderate the pace of new regulation. The Environmental Protection Agency, which sought the delay, said it was disappointed by the ruling giving it just an additional 30 days to issue the rules. The EPA in a statement that it would move to issue rules 'significantly different' than the ones the agency proposed in April 2010."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: House GOP Flickr.

By Ezra Klein  | January 21, 2011; 6:45 AM ET
Categories:  Wonkbook  
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Next: Could we replace the individual mandate?


It sure looks to me we are in a mad rush to dismantling everything we built up in this country over the last 80 years, since the Great Depression.

This dismantling started when Reagan took office and declared war on the US gvmt and its ability to invest in or manage our own country, and when Reagan envisioned and started the free trade movement, which has now caused millions of jobs and numerous entire industries to be exported overseas and across the borders.

The SK trade agreement will not reverse this trend. Opening up other countries to US exports will not succeed until such time as our labor and environmental standards have degraded to the point where they match the countries in question.

Instead, what is needed is that WE need to erect our own protections, much in the way Japan, Europe, China, SK, India and other countries have done. This will be a painful transition to get back to where we were before Reagan's free trade era was instantiated. But it must be done.

We also need to wean ourselves from oil and coal, and this process will take some time. This too will be painful, but must be done.

Alas, the neo-conservatives and their transnational and oil sheik friends will block every attempt at ending free trade and energy independence, and this is much of what Citizen's United is designed for.

Oddly enough, I think Reagan, a man I voted twice for when I was in the USAF, is unlike the other conservatives of today. I think he would have understood some of his mistakes and would have acted to back off on them and to restore some balance. So I don't put the blame totally on him. For example, Reagan raised taxes later on out of recognition he was creating too much debt--a blasphemy by today's GOP standards, as evidenced by how they blasted the recent Illinois tax raises.

Posted by: lauren2010 | January 21, 2011 7:57 AM | Report abuse

Hey Obama

Get OUT of Afghanistan and Iraq NOW.

All that treasure and blood lost there is a waste because we will never be able to transform those societies with war. In Iraq, Christians are being hunted down like dogs; they were safe before we got there. The Taliban is just as strong as ever. We'd have to kill half the men, or more, in those countries before we got them to even think about surrendering. That's how the Nazi's were defeated.

While you are at it, close down our bases in Europe. That's another total waste, i.e. corporate welfare.

I'm a former USAF vet, and a believer of a strong national defense, but we are only weakening ourselves with these foolish wars and foreign bases.

We would be more secure if we did what I say above and then halved the defense budget and spent all that saved money on helping build schools and hospitals and farms and power plants and water facilities overseas and insisting on Arab rulers to institute significant reforms for their people to improve their standard of living.

We need to be shepherds, not soldiers.

Posted by: lauren2010 | January 21, 2011 8:42 AM | Report abuse

Worth noting: The Republican party wants $4 trillion added to the debt over the next 10 years to expand the Bush tax cuts. the $2.5 trillion over 10 years in spending cuts proposed here, if they are actually real and actually able to be implemented, would still leave the Republicans $1.5 TRILLION SHORT when it comes to covering the cost of their proposed full expansion of the Bush tax cuts.

So, their most aggressive cut proposals--proposals most people think would so compromise important programs that they will not be supported by enough Republicans to pass (much less by Democrats), their most unrealistic, aggressive pie-in-the-sky effort even in its first, least-specific draft, actually CREATES a profound structural imbalance that guarantees trillions more in deficits for decades to come. Over the next 10 years, it INCREASES THE DEFICIT BY $1.5 TRILLION. (And this is before we get to abolishing the estate tax.)

Can we please, please, please stop pretending Republicans care about the deficit? They don't care about the deficit.

Posted by: theorajones1 | January 21, 2011 9:16 AM | Report abuse

They DO CARE about the deficit.

Because the higher they can make it in the short-term, the quicker gvmt at all levels will collapse and then they can realize a tax-free, laissez faire economic society.

Posted by: lauren2010 | January 21, 2011 9:24 AM | Report abuse

--*The continuing Republican attack on the bill's CBO score will have consequences, writes Ezra Klein: "beneath it is something more insidious: an effort to discredit the last truly neutral, truly respected scorekeeper in Washington [...]".*--

That "truly neutral, truly respected" is a euphemism for simplistic, garbage-in dependent, and eternally useful in a "lies, damned lies, and statistics" sort of way, by demagogues and charlatans (and propaganda practitioners, like Klein.)

Posted by: msoja | January 21, 2011 10:17 AM | Report abuse

Ezra, I know your not a finance regulations expert per se, but I would love to hear you expand on the awkward, if accidental, juxtaposition of the Republican's idea to sell FNMA and FRMC immediately, and the report by Louise Story you note in Wonkbook saying that private banks hope to start issuing government guaranteed mortgages.

It's as if being too big too fail isn't enough for the banks - they still want individual securities guaranteed by the government. Look what terrible assets they sold without a government guarantee, and think about what they would do if they got a new one. Frightening, but please expand on this if you care to.

Ethan D

Posted by: ethanadennison | January 21, 2011 10:20 AM | Report abuse

This is great news. I doubt deficit king Obama will necessarily go for it, but maybe they can shove it down his throat.

The next things to do:

1. Repeal the IDEA act of 1990, or at least significantly modify it so it doesn't continue resulting in massive cost overruns in education.

Savings: $15 billion

2. Reduce federal education spending to 2008 levels.

Savings: $50 billion

3. Reduce federal medicaid spending to 2008 levels.

Savings: $100 billion.

Why does anyone on the left even pretend to care about the deficit?

Posted by: krazen1211 | January 21, 2011 10:21 AM | Report abuse

Worth noting: The Democrats' social security act of 1965 already added $4.9 trillion to the deficit over the next decade.

Medicaid benefits spending over the next 10 years is projected to be $4.9 trillion. These amounts are in addition to that spent by federal and state governments on the State Children’s Health Insurance Program (SCHIP).

At this rate, Medicaid growth is projected to slightly exceed growth in overall health care expenditures, which is projected by CMS actuaries and economists to increase by 6.7 percent per year over the next 10 years, or over twice the rate of general inflation. Additionally, Medicaid’s share of the Gross Domestic Product (GDP) is projected to reach about three percent in 2017

Posted by: krazen1211 | January 21, 2011 10:27 AM | Report abuse

The federal Individuals with Disabilities Education Act provides a set of protections for 6.6 million students — about 13 percent of total student enrollment — who have dyslexia, autism, intellectual disabilities, blindness, or other impairments that affect educational performance. Those students are entitled to a "free, appropriate public education" in the least-restrictive environment that meets their needs. Fail to provide such services, and parents can sue in federal court.

Those guidelines have led to the perception that special education is an untouchable expense, even in lean economic times. While states and school districts are encouraged to squeeze out every dime in other areas of spending, trying to save money in special education services is thought to be a third rail: Touch it, and you'll get shocked.

Why are we breaking our school budgets?

And the percentage of children in the age 3 to 21 population receiving special education services has also increased.

1976-77 - 8.3%
1980-81 - 10.1%
2003-4 - 13.7%

Posted by: krazen1211 | January 21, 2011 10:34 AM | Report abuse

Over 4/5 if current deficits are attributable to BushJr, not Obama.

Posted by: lauren2010 | January 21, 2011 10:50 AM | Report abuse

"But there is nothing inevitable about America's declining manufacturing competitiveness if we work together to reverse it...America cannot expand its manufacturing base without greatly increasing the volume of goods it sells overseas."

Spoken from the CEO of a business that has actually sold off most of it's manufacturing base to overseas concerns for the last 20 years. GE only exports the big ticket items like aircraft engines and switchgear that are not easily reproduced in other nations, and as I have stated before are the only conceivable areas to increase exports.

Posted by: johnmarshall5446 | January 21, 2011 11:16 AM | Report abuse

Krugman is half right. (which from me is high praise!)

It's far more advantageous for China however to try curb inflation in a full employment economy than it is to try to maintain an authoritarian form of government in the face of high unemployment and low growth as the Soviets and most other of these type of governments have found out.

Posted by: johnmarshall5446 | January 21, 2011 11:22 AM | Report abuse

"As the Federal Reserve gears up for its first policy meeting of 2011, its leaders face the challenge of making sense of an economic picture that is encouraging - including upbeat reports Thursday on housing and unemployment - yet still unnerving."

Unfortunately for the President, there is not going to be a big boom in employment. Hedge fund manager David Tepper this morning on CNBC echoed my comments for many months here that businesses have learned how to be very profitable with many fewer workers. They are not going to hire until it's absolutely clear they need more people.

Don't look for anything lower than 9% unemployment on a sustained basis until the end of 2011, and if we get down to 8% by the end of 2012, Obama should be doing cartwheels.

Also, not to sound like the broken record I am, the 10 year is closing on 3.5% which would be about 100 basis points up in 6 months, in SPITE of QE2. This means the 30 year fixed mortgage is closing on 5%. Housing is not going to recover for a long time at these creeping rates.

Don't turn the economy into this year's "Waiting for Godot"!

Posted by: johnmarshall5446 | January 21, 2011 11:37 AM | Report abuse

"The assumption made by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong."

The jobs will be lost no matter what happens. Labor will steadily be replaced by capital. Manufacturing is where agriculture was perhaps three generations ago - fighting to preserve manufacturing jobs in 2011 is like fighting to preserve farming jobs in 1931.

Is Germany an export oriented powerhouse? Well, it has lost 3 million manufacturing jobs since 1991 (26.3% of the total), compared with 6 million in America (31.0% of the total). Japan? It has lost nearly 5 million manufacturing jobs since 1991, or 30.7% of the total. In 2050, no advanced country is likely to have more than a few percent of its work force in manufacturing. Total output, of course, will be far higher than today.

"That is why I applaud the free-trade agreement recently concluded between the United States and South Korea, which will eliminate barriers to U.S. exports and support export-oriented jobs."

At least the man supports free trade.

Posted by: justin84 | January 21, 2011 12:18 PM | Report abuse

Also, not to sound like the broken record I am, the 10 year is closing on 3.5% which would be about 100 basis points up in 6 months, in SPITE of QE2.


I still think yields rose because of QE2. Suppose the Fed buys $600 billion worth of treasuries, and because of that action current investors holding $800 billion worth of treasuries revise their inflation/growth forecasts and wish to trade into another investment (commodities, stocks, etc). In order to bring the incremental $200 billion worth of demand into the market, yields need to rise.

If QE2 works as the Fed advertises, you'd expect to see higher inflation expectations and a higher wicksellian real interest rate, meaning that Treasury prices fall and yields rise.

If QE2 only ended up driving up demand for treasuries without any macroeconomic effects, then prices would rise and yields would continue to fall.

"This means the 30 year fixed mortgage is closing on 5%. Housing is not going to recover for a long time at these creeping rates."


Posted by: justin84 | January 21, 2011 12:43 PM | Report abuse

justin wrote:

"If QE2 only ended up driving up demand for treasuries without any macroeconomic effects, then prices would rise and yields would continue to fall."

No the opposite has happened because the government is attempting to stabilize the market for T's, which has only partially worked. It's virtually the same as a stock buyback program conducted in a down market. The company replaces absent buyers in an effort to keep prices from falling.

You can almost time the fall in T's to when Bernanke announced his goal of 2% inflation to combat deflationary tendencies. With the government backing such a program, the flight from the bond market accelerated and the yield curve started it's rise.

Even Bill Gross has recommended cutting back on government bonds

Today the purchases of the US government itself and China, dwarf all other purchasers of Treasuries put together by the billions. were they not so involved, I think that yields would be at least another 100 basis points higher, perhaps more.

As always good chatting with you!

Posted by: johnmarshall5446 | January 21, 2011 2:23 PM | Report abuse

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