The fundamentals of the economy remain anemic: unemployment is still above 8 percent, GDP growth is stuck at 1.5 percent and a whole host of indicators suggest that the recovery has weakened. With Republicans blocking White House attempts to improve the economy, the best hope for workers lies with the Federal Reserve.
After a two-day meeting, though, officials at the Federal Reserve announced that while they know the economy’s getting worse, they won’t do anything about it yet:
The Federal Reserve took no new steps to support the economy Wednesday, but it said in a statement that it was ready to act if job growth did not improve. The statement, released after a meeting of the Fed’s policy-making committee, said that the rate of economic growth had slowed in recent months and was likely to remain ‘moderate over coming quarters.’ As a result, the Fed said it expected the unemployment rate to decline ‘only slowly.’ But the central bank deferred any effort to improve the situation at least until the committee’s next scheduled meeting in mid-September.
“The committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said
At this point, the Fed’s inaction has passed from ill-advised to disgraceful. On a policy level, the Fed has a dual mandate: to combat inflation and unemployment. Inflation is expected to be below 2 percent for the next five years, an extremely healthy number that should give the Fed plenty of room to print money. But instead, while millions stand in unemployment lines, Ben Bernanke and company sit on their hands.
But a disturbing indifference to Americans’ economic plight isn’t the only thing holding the Fed back: Republicans have played their part as well, stoking false fears about inflation and warning the Fed that it better not act “politically”, with the somewhat ironic threat that “Bernanke backs off or political interference comes next.”
In the past, frustrated Democrats have accused the GOP of trying to stall the recovery until after the election. Until the Fed decides to actually do something, Democrats and liberals should make a political and policy case more directed at the Fed, too: as of right now, the Fed is holding the economy back, and the Republicans are putting party over country in encouraging the agency to stay idle.
* Obama camp slams Romney’s low tax rate — and tax plan: The Obama campaign is out with a scorching new ad in eight swing states that hits Romney over that report finding that his tax plan would result in a tax hike for the middle class — while also highlighting Romney’s own low rate in the process. “Mitt Romney’s middle class tax increase: He pays less; you pay more,” the ad conclues.
Dems view that Tax Policy Center report as a gift, one that allows them to cut through the noise and make it plain that Romney’s plan would either explode the deficit or raise middle class taxes to pay for a huge tax cut for the rich. This ad makes that case, but adds the crucial ingredient that Romney himself belongs to the class that would benefit. — gs
* The next tea party victim: Hot on the heels of Ted Cruz’s victory in the Texas Senate Republican primary, the far right is making noise about Wisconsin. Karen Tumulty reports that Tommy Thompson is no longer a lock for the GOP nomination for Senate, now that he’s in the crosshairs of national conservatives.
At this point, other than Maine’s Susan Collins, I cannot think of a Republican senator who is not either on the far right or mortally afraid of being primaried by someone to their right. Observers are right to worry that such extremism will only make it harder for legislation to pass Congress, but it’s also worth noting that, in our two-party system, no major party has stayed a major party by doing what the GOP is now doing.
* Republicans desperate to avoid defense cuts: With the sequester cuts looming, House Republicans are pressuring Harry Reid to act to avert defense cuts by saying the House is willing to interrupt its August recess “if the Senate comes up with a package of budget reforms that would avoid massive cuts in defense funding.”
But whose side is the public on when it comes to defense spending? Obama is now attacking Romney for proposing to increase it, a sign of where public sentiment may be headed, and polling suggests Americans prefer defense cuts to entitlement cuts.
* “Romney’s cultural illiteracy”: In The Post, Fareed Zakaria takes Romney to task for his remarks on Israeli and Palestinian culture. As Zakaria points out, history is replete with states and cultures (China, Muslim countries and, yes, Israel) once thought prone to lagging economically that within a generation became engines of growth.
* Class segregation on the rise: A new study from the Pew Research Center says “residential segregation by income” is on the rise. Pew writes that “28% of lower-income households in 2010 were located in a majority lower-income census tract, up from 23% in 1980, and that 18% of upper- income households were located in a majority upper-income census tract, up from 9% in 1980.”
Political scientists have shown that lawmakers are vastly more sensitive to wealthy constituents than poor ones; if the wealthy almost never have to interact with the poor, one can only assume the latter’s needs will receive even less attention.
* Our decrepit power grid: As India recovers from a power outage that knocked out electricity for 650 million people, the Post’s Ashley Halsey reminds us that Americans should be worried about our own electricity. “The U.S. grid is aging and stretched to capacity,” she writes.
If only there were some plan for increasing infrastructure spending...oh wait, President Obama has one that Republicans have blocked.
* Chick-fil-A Appreciation Day: Hundreds of thousands of customers crowded Chick-fil-A on Wednesday to back CEO Dan Cathy’s opposition to same-sex marriage. Organizers are claiming victory; evangelist Rick Warren tweeted that Cathy told him the chain “set a world record today.” On the other hand, if the anti-gay marriage movement is reduced to making stands at fast-food chains instead of at the ballot box, that doesn’t say much for the movement’s long-term prospects.
* And the quintessential Romney answer? In the wake of Romney assuring ABC “I tend to tell people what I actually believe”, Ruth Marcus unearths a strikingly indirect answer that Romney gave to a question about abortion in 2006:
“I can tell you what my position is, which is — and it’s in a very narrowly defined sphere — which is, as candidate for governor and as governor of Massachusetts,” Romney said, “what I said to people was that I personally did not favor abortion, that I am personally pro-life. However, as governor, I would not change the laws of the commonwealth relating to abortion.
“Now I don’t try and put a bow around that and say, what does that mean you are? Does that mean you’re pro-life or pro-choice? Because that whole package, meaning I’m personally pro-life but I won’t change the laws, you could describe that as — I don’t think you can describe it in one hyphenated word.”
Now there’s a profile in candor.