Wonkbook: Dissent on both sides
Ezra is on vacation until November 7th.
1) Ben Bernanke will face dissent on both sides at this week's Fed meetings, reports Binyamin Appelbaum: "When the Federal Reserve’s policy-making committee meets on Tuesday and Wednesday, 5 of the 10 voting members will arrive in open disagreement with the chairman, Ben S. Bernanke, about the direction of monetary policy. Three conservative members say the Fed has already done too much. Two liberals say the Fed needs to do much more....A growing number of economists outside the Fed have advocated the more aggressive approach of permanently changing the central bank’s focus, from the level of inflation to a broader measure of growth -- the present value of economic output -- that would similarly make clear that the Fed was willing to tolerate a higher level of inflation in the short term. That approach, however, has gained little traction within the central bank."
2) Obama's off to deal with the Europe crisis at a G-20 meeting, reports David Nakamura: "Obama is scheduled to depart Washington late Wednesday for a two-day trip to Cannes, France, where the heads of the world’s 20 largest economies will gather for the Group of 20 summit. Organizers said the meetings will focus on how to contain Europe’s debt crisis while also trying to forge consensus on a path to stimulating worldwide economic growth, even as many countries, including the United States, wrestle with painful budget cuts. The trip, the first for Obama outside the United States since he attended a smaller summit in France in the spring, could provide a crucial test of whether his political problems at home have compromised his influence abroad."
3) The supercommittee won't try to do a big tax reform, reports Kristina Peterson: "Members of the congressional deficit-reduction committee are cooling to the idea of completing a comprehensive overhaul of the tax code by their November deadline, making it more likely the details of any major tax changes will be handled later by House and Senate tax committees, according to congressional aides from both parties. While some policymakers outside of the Joint Select Committee on Deficit Reduction have expressed skepticism the group could handle a major tax overhaul within its tight deadlines, the 12 lawmakers on the bipartisan panel haven't publicly ruled out a tax-code rewrite. With the supercommittee's Thanksgiving deadline fast approaching, some lawmakers from both sides of the aisle have started to view tackling a full rewrite of the country's myriad tax laws as too challenging."
4) Republicans' economic braintrusts vary considerably, reports Sara Murray: "Mr. Romney rolled out a broad 59-point economic plan to cut corporate taxes, reduce government spending and take a hard line on China. Top advisers include Gregory Mankiw, a Harvard University economist, and R. Glenn Hubbard, the dean of Columbia University's business school. Both served as heads of the Council of Economic Advisers during George W. Bush's administration. Mr. Perry's economic plan so far is centered on an optional flat tax, slashing government spending and overhauling the country's energy policies. He has veered toward economic advisers who have similar views, such as former presidential candidate and media executive Steve Forbes and David Malpass, a former chief economist at Bear Stearns who worked in the Reagan administration."
1) Bernanke should set a nominal GDP target, writes Christina Romer: "Mr. Bernanke needs to steal a page from the Volcker playbook. To forcefully tackle the unemployment problem, he needs to set a new policy framework -- in this case, to begin targeting the path of nominal gross domestic product. Nominal G.D.P. is just a technical term for the dollar value of everything we produce...Economic research showed years ago that targeting nominal G.D.P. has important advantages. But in the 1990s, many central banks adopted inflation targeting, a simpler alternative. As distress over the dismal state of the economy has grown, however, many economists have returned to the logic of targeting nominal G.D.P...It would be a powerful communication tool. By pledging to do whatever it takes to return nominal G.D.P. to its pre-crisis trajectory, the Fed could improve confidence and expectations of future growth."
2) "Weaponized Keynesianism" is incoherent, writes Paul Krugman: "Republicans -- who normally insist that the government can’t create jobs, and who have argued that lower, not higher, federal spending is the key to recovery -- have rushed to oppose any cuts in military spending. Why? Because, they say, such cuts would destroy jobs. Thus Representative Buck McKeon, Republican of California, once attacked the Obama stimulus plan because 'more spending is not what California or this country needs.' But two weeks ago, writing in The Wall Street Journal, Mr. McKeon -- now the chairman of the House Armed Services Committee -- warned that the defense cuts that are scheduled to take place if the supercommittee fails to agree would eliminate jobs and raise the unemployment rate. Oh, the hypocrisy!"
3) Conservatives can be egalitarians too, writes Ross Douthat: "The story of the last three decades, in other words, is not the story of a benevolent government starved of funds by selfish rich people and fanatical Republicans. It’s a story of a public sector that has consistently done less with more, and a liberalism that has often defended the interests of narrow constituencies -- public-employee unions, affluent seniors, the education bureaucracy -- rather than the broader middle class. The alternative to this liberalism...should be a kind of small-government egalitarianism, which would seek to reform the government before we pour more money into it, along lines that encourage upward mobility and benefit the middle class. This would mean seeking a carefully means-tested welfare state, a less special interest-friendly tax code, and a public sector that worked for taxpayers and parents rather than the other way around."
4) Concerns about a European "contagion effect" are overplayed, writes Edward Lazear: "Our financial crisis was caused by factors that affected the entire system, just as all corn kernels pop when they are warmed by the same flame. This lesson is important because interpreting our crisis as primarily a contagion event leads to the wrong strategies for dealing with potential disasters. After Lehman, Europeans seem to be so taken with worries of contagion that they are failing to emphasize remedies that actually have a chance of making things better. In their case, and in ours, the solution is primarily a reduction in the bloated size of government expenditures that come about by making promises that cannot be kept."
New music interlude: Tom Waits' "Bad as Me".
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Still to come: The head housing regulator is pushing back against his critics; a lawsuit threatens states' ability to regulate health insurance premiums; Social Security's starting to add to the budget deficit rather than reduce it; House Republicans are subpoenaing the administration on Solyndra; and a corgi attacks an ice cube.
The top housing regulator is pushing back against critics, reports Nick Timiraos: "The nation's top housing-finance regulator pushed back against criticism that he isn't doing enough to help the troubled U.S. housing markets, saying that critics were asking him to do the bidding of Congress. Edward DeMarco, acting director of the Federal Housing Finance Agency, made the comments days after his office unveiled a major overhaul of a program to refinance mortgages that are underwater. The program is open for loans backed by Fannie Mae and Freddie Mac, which is regulated by the FHFA. Congressional Democrats and former Obama administration officials have pointedly criticized the FHFA and Mr. DeMarco in recent weeks for too narrowly interpreting the agency's mandate. They say the agency should be taking steps to reduce loan balances for some troubled borrowers that owe much more than their homes are worth."
China isn't promising any aid to Europe, report Dinny McMahon and Aaron Back: "Chinese and European officials sought to play down expectations about when and how China may deploy its vast financial resources to help bail out indebted countries in Europe. A Chinese Vice Finance Minister said China must first see the details of a new European bailout fund before making any commitments. 'We of course must wait until its structure is extremely clear,' Zhu Guangyao told a press briefing. 'And moreover, this investment must be decided on after serious, technical discussions.' Klaus Regling, the chief executive of the European Financial Stability Facility, flew into Beijing on Friday on the first stop of a tour around Asia to drum up support for Europe. He told reporters he doesn't expect 'any precise outcome' from his visit to China and said 'it's too early to say what kind of amounts might be envisioned.'"
Bank of America is rethinking its debit card fee, reports Nelson Schwartz: "After setting off a firestorm of criticism from consumers, Capitol Hill and the White House, Bank of America is rethinking elements of its plan to charge customers $5 a month to use their debit cards. Although bank officials said their thinking was 'evolving' and no firm conclusions had been reached, the bank is likely to broaden the number of customers exempt from the fee. Customers who hold Bank of America credit cards, directly deposit wages into the bank or hold a minimum balance will not be charged under a new plan. Previously, the bank said the minimum balance required to avoid the fee was $20,000, but lowering that minimum is also possible. The hesitation at Bank of America comes as other banks are also pulling back, at least for now."
EPI is the 99%'s think tank, writes Steven Pearlstein: "How did the Occupy Wall Streeters know to highlight 'the other 99 percent'? Chances are they got it from the Economic Policy Institute, the Washington think tank that this week will celebrate its 25th anniversary. And it’s not just lefty protesters who turn to EPI for data on wages, income and unemployment. So does just about every economist and economics reporter in the country, whether they agree with EPI’s liberal policy prescriptions or not. 'Really reliable, professional, carefully thought-out,' Kevin Hassett, director of economic policy studies at the conservative American Enterprise Institute, said of EPI’s data and analysis...EPI was worrying about rising income inequality when most Republicans, and many economists, were still claiming it was all just a statistical mismeasurement."
Occupy Wall Street shouldn't oppose the Fed, writes Jake Blumgart: "The Federal Reserve needs a wakeup call. Perhaps an Occupy Wall Street-shaped wakeup call. Instead of waving nonsensical 'End the Fed' signs and aping the talking points of a reactionary Republican, occupiers should demand that the Fed be made more democratically accountable and that policymakers seriously execute its dual mandate to maintain stable prices and full employment. One significant step toward these goals would be the democratizing of the Fed’s Open Market Committee (OPM), which controls interest rates, the nation’s money supply--the monetary policy side of the institution. ..Barney Frank is working on legislation to remove the regional Fed presidents from the OPM and replace them with presidential appointees who would be more democratically accountable."
Corgis are excellent interlude: Bandit the corgi attacks an ice cube.
A lawsuit is challengings states' ability to regulate health insurance premiums, reports Julie Appleby: "A lawsuit challenging Maine’s authority over health insurers’ profit margins is drawing national attention from state regulators worried about the impact on their power to hold down rate increases. The state’s highest court has scheduled oral arguments Nov. 10 on a case brought by a Maine unit of WellPoint, one of the nation’s largest health plans. Anthem Health Plans of Maine argues that regulators violated state law and the U.S. Constitution when they reduced requested premium increases in each of the past three years, depriving the company of 'a fair and reasonable return.' In 2009, the insurer sought to increase premiums by more than 18 percent for policies sold to individuals, igniting a public outcry. A rate increase averaging 10.9 percent was eventually approved."
Social Security isn't paying its own way anymore, reports Lori Montgomery: "In 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s. Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits. But while talk about fixing the nation’s finances has grown more urgent, fixing Social Security has largely vanished from the conversation."
Unions are seeking to draw new members from the Occupy movement, reports Melanie Trottman: "Union members who descended on Occupy Wall Street encampments armed with tents, food and organizational expertise hope to turn young demonstrators into enduring labor allies, part of a larger effort to rejuvenate the movement's aging ranks. In the throngs of unemployed 20-somethings gathered in cities across the U.S., labor leaders see a chance to improve their movement's image with a generation of future workers who will be crucial to unions' survival. In 2010, the average union worker was 45 years old, up from age 38 in 1983, said John Schmitt, an economist at the left-leaning Center for Economic and Policy Research. At the same time, overall union membership fell to 11.9% of the U.S. work force from 20.1%. Liz Shuler, the 41-year-old secretary-treasurer of the AFL-CIO, flew to New York three weeks ago to check out the Zuccotti Park protest in lower Manhattan."
Car ad interlude: Clark Olson wants to sell you his 2000 model Toyota Carolla.
House Republicans are subpoenaing the administration on Solyndra, reports Darren Samuelsohn: "The House Energy and Commerce subcommittee investigating Solyndra will vote Thursday to issue a subpoena to the White House for all internal documents on the failed California solar company, including President Barack Obama's BlackBerry messages. Reps. Fred Upton and Cliff Stearns said in a joint statement Friday that they were taking the extraordinary step because White House lawyers have repeatedly rejected their requests but have not formally invoked executive privilege...Specific White House officials listed in their request include former White House chief of staff Rahm Emanuel, senior adviser Valerie Jarrett, former National Economic Council Director Larry Summers and Ron Klain, the former chief of staff to Vice President Joe Biden."
The administration is reviewing all its renewable energy loans, reports Scott Wilson: "The White House has authorized an independent review of all loan guarantees made by the Energy Department to foster green technology amid fallout from the bankruptcy this year of Solyndra, the California company that received a $535 million loan through the program. White House officials said Friday that Chief of Staff William M. Daley ordered the review, which will evaluate the entire $35.9 billion loan portfolio made to support the private-sector development of new technologies that could help improve the economy and create jobs. The review is a tacit acknowledgment that the loan program, defended by President Obama and his senior advisers for weeks, has raised enough internal concern that an outside assessment is necessary to clear the air and determine its future."
Nebraska could throw a wrench in plans for the Keystone pipeline, reports Monica Davey: "With a federal decision anticipated soon on whether an oil pipeline will be allowed to run from Canada through the nation’s midsection, lawmakers in Nebraska are being summoned on Tuesday to an unexpected legislative session over the issue, which has stirred up a level of rancor that few had predicted...The outcome of the session, which could last for two weeks, seems uncertain. For one thing, no one knows how many members of Nebraska’s 49-member unicameral Legislature will support adding standards that would give the state new control over pipelines within its borders. At least some of the lawmakers have expressed concern that adding regulations now might land Nebraska in a legal battle over the project."
Closing credits: Dylan Matthews is a student at Harvard and a researcher at The Washington Post. Wonkbook is compiled and produced with help from Michelle Williams.