RCP Obama vs. Romney: Obama +1.4%; 7-day change: Obama -0.5%.
RCP Obama approval: 46.4%; 7-day change: -0.5%.
Quick note: For all the talk of Mitt Romney’s flailing campaign and President Obama’s devastating attacks on Bain Capital, you’ll notice that the dashboard hasn’t changed very much in the last few weeks. Now, perhaps the swing is yet to come. Or perhaps the effect is being seen in the fact that Obama isn’t dropping in the polls despite the poor jobs numbers. But given that a lot of the political punditry appears to have already moved onto the question of whether Romney’s counterstrike will work, it’s worth keeping in mind that we don’t even have good evidence that Obama’s recent attacks have worked.
Top story: Bernanke on the Hill
Bernanke said the Fed could take more action but gave no indication they would. “Federal Reserve Chairman Ben S. Bernanke defended the Fed’s economic policy before a House panel on Wednesday, saying that the central bank is doing what it can to reduce unemployment and could take additional steps ‘if we conclude that we’re not making progress towards higher levels of employment.’ But he declined to offer any hint of new action by the central bank to boost the economy.” Zachary Goldfarb in The Washington Post.
Summary: The Fed can do more to reduce unemployment. But it’s also doing all that it reasonably can to reduce unemployment. But don’t worry, if things get worse, there’s more it can reasonably do. Though it’s also true that over the last year, the Fed’s own numbers show things have gotten worse, and the Fed has declined to do more. This is the tao of Bernanke. And if you’re not confused, you’re not paying attention.
Scary takeaway: What are the chances that Ben Bernanke does not actually believe he can do much more but he doesn’t want the market to know that?
House Republicans said Fed action could hurt the economy. “Mr. Bernanke avoided commitments during two days of Congressional testimony, but he told a Senate committee on Tuesday that the Fed was prepared to expand its efforts if it concluded that job growth had stalled. Republicans on the House Financial Services Committee, which hosted Mr. Bernanke on Wednesday, wasted little time in responding. They questioned whether the Fed’s existing efforts were bolstering growth and suggested any benefits had been exhausted. They fretted that the Fed was seeding higher inflation and postponing a necessary reckoning with the federal debt…Democrats made no countervailing effort to convince Mr. Bernanke that he should take additional action, instead congratulating the Fed chairman in the manner of people confident that they were speaking to an ally.” Binyamin Appelbaum in The New York Times.
@BCAppelbaum: Rep: Do you think QE works? Bernanke: Yes. Rep: Really? Bernanke: Yes. Rep: But I think it doesn’t work.
The Fed’s latest beige book found ‘tepid’ job growth. “The U.S. economy expanded at a moderate pace in June and early July but the jobs market showed only ‘tepid’ gains, the Federal Reserve said in a report released Wednesday…Three districts, New York, Philadelphia and Cleveland, noted that economic activity was expanding at a slower pace than it had during the late spring.” Kristina Peterson and Eric Morath in The Wall Street Journal.
Bernanke outlined options for further easing. “Federal Reserve Chairman Ben S. Bernanke outlined options to ease policy further in case the flagging economic recovery fails to lower unemployment. Easing tools include further purchases of Treasuries and mortgage-backed securities, and altering the Fed’s language on the outlook for interest rates, Bernanke told the Senate Banking Committee in Washington yesterday. Another option is to use the so-called discount window for direct lending to banks.” Craig Torres and Jeff Kearns in Bloomberg.
FLASHBACK: What Bernanke was saying five years ago. “Five years ago, July 18, 2007, Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee as he is today. The housing bubble was bursting, cracks in the global financial system were just beginning to appear, but Bernanke didn’t sound terribly worried or prescient. There was a lot of talk about housing, subprime mortgages and related regulation. No one, neither the chairman nor the members of the committee, raised the possibility that the U.S. might be on the verge of recession or a financial crisis that would rival the Great Depression. A month later, the Fed would make the first of a series of extraordinary moves to avoid an economic calamity. But none of that was yet evident.” David Wessel in The Wall Street Journal.
Read Bernanke’s 2007 testimony: http://1.usa.gov/NzcGsn.
YGLESIAS: The Fed isn’t an innocent bystander in its forecasts. “Under the circumstances, the Fed doesn’t get to just observe that the economic outlook is darkening. They are making it darker. It is true that central bankers aren’t wizards who can just make anything they want happen. The U.S. economy faces real supply-side constraints. So sometimes a central banker needs to say ‘hey, we’re running up against real restraints so unless someone else does something to solve those problems we’re going to need tighter money and slower growth to head off inflation.’ But that’s not what Bernanke is saying here. Nor is he offering a forecast. He’s stating a policy preference–namely a preference for a short-term slowdown in demand growth–and members of Congress aren’t really challenging him on why that’s his preference.” Matthew Yglesias in Slate.
EL-ERIAN: The Fed can’t save the economy. ”The Fed is stuck in a widening dichotomy between the need for a policy response and an increasingly impotent tool kit. I suspect that Bernanke and his colleagues recognize that their policy effectiveness is waning. Yet, understandably, they are unwilling to stand idle given the paralysis in virtually every other part of the economic policy apparatus. In the meantime, too many politicians seem willing to maintain the myth that the Fed can lead the domestic economy out of its current malaise. It cannot. The best it can do is slow a de-leveraging that, in the absence of proper growth dynamics, eats away at the traditional resilience and entrepreneurship of the US economy.” Mohamed El-Erian in The Financial Times.
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1) WESSEL: Technology could help keep tuition down. “Can technology restrain the cost of higher education without diminishing what students learn?…Some praise technology in the classroom as a cure-all; others label it a sure way to destroy all that is good in education. There have been lots of assertions, but little evidence. Until now. In a carefully crafted, foundation-funded experiment that has received less attention than it deserves, Ithaka S+R, a higher-education think tank, enticed 605 undergraduates at six public-university campuses in New York and Maryland to agree to be assigned randomly to one of two courses. Half took a conventional introductory statistics course that met three hours a week. The other half took a computer-assisted course that met once a week and relied on an interactive, online statistics course…The statistically sound result: Students in the online course did just as well as those who took the conventional course. No better, no worse.” David Wessel in The Wall Street Journal.
2) KLEIN: Romney could have been a great candidate. “A better, alternate Romney would tell a very different story. He would explain that one reason the U.S. economy is stronger than those of other developed nations is that Americans are unsentimental; we keep our labor markets flexible, force our business leaders to fear takeovers and buyouts, and let struggling companies die…He would also need to tell a more honest story about the human costs. Rather than denying that Bain’s activities sometimes hurt workers, he would admit it. Rather than offering paeans to free enterprise and risk taking, he would acknowledge that the modern economy isn’t fair and is sometimes downright cruel…The solution, he would say, isn’t to make our companies less competitive. Rather, the answer is to make our government more compassionate and more effective in helping those left behind.” Ezra Klein in Bloomberg.
3) BITTMAN: Climate change won’t wait. “Here’s what American exceptionalism means now: on a per-capita basis, we either lead or come close to leading the world in consumption of resources, production of pollutants and a profound unwillingness to do anything about it. We may look back upon this year as the one in which climate change began to wreak serious havoc, yet we hear almost no conversation about changing policy or behavior…Only reducing carbon emissions can keep matters from becoming worse. Thus the argument for a tax on carbon has never been stronger, but neither has the power of the energy companies to compel legislative paralysis on this issue.” Mark Bittman in The New York Times.
4) HUNTSMAN: Conservatives should fight crony capitalism. “This is the challenge facing conservatives: how to roll back the political power of incumbent business and political interests in order to protect the dynamism that has always been the cornerstone of America’s success…Structural problems within our political institutions incentivise crony capitalism: the best connected perpetuate their policy preferences, be they outdated weapons systems or subsidies for big bank bailouts. At the heart of the problem is the ‘revolving door’…Ultimately, to address the trust deficit between citizens and their government, we must change the incentive structure in our capital city. Term limits for Congress, sensible campaign finance reform and stopping the revolving door for those in Congress and the White House are at the core of these changes.” Jon Huntsman in The Financial Times.
5) SOVERN: Consumers should be required to hire mortgage counselors. “This month the Consumer Financial Protection Bureau proposed new rules to clarify the terms of housing loans for millions of homeowners. This sounds like a minor improvement, but in fact it’s a significant step toward preventing another subprime disaster…Many consumers seem uninterested in reading even the shorter loan forms in use during the subprime crisis. When I had my assistant survey mortgage brokers in 2009, more than two-thirds reported that less than 30 percent of their borrowers spent more than a minute with the disclosures…Life is filled with complexities, and we have a way to deal with them: hire an expert. Indeed, consumers who cannot or will not understand mortgage disclosures should be required to hire mortgage counselors.” Jeff Sovern in The New York Times.
Top long reads
Steven Mufson on the gritty side of the oil boom in North Dakota:“Donny Nelson is the epitome of old-time North Dakota. A lean, sharp-featured man sporting a thick goatee, jeans and dirty boots, Nelson is the grandson of homesteaders. Over the past century his family has collected 8,000 acres of prime cattle grazing acreage and cropland. But now Nelson has some unwanted company: Oil prospectors. This remote corner of North Dakota is the site of the biggest U.S. oil rush in decades. It is pumping new supplies into oil markets and swelling state coffers; advocates say it could help reduce U.S. dependence on foreign oil. But the boom is also spreading a degree of chaos across the rural towns and gently undulating pasturelands here.”
Australian indie pop interlude: Architecture In Helsinki play “Contact High” live on Adam Hills in Gordon St Tonight.
Got tips, additions, or comments? E-mail me.
Still to come: Republicans struggle with the online sales tax; defunding advances; the Postal Service is set to default; Republicans push drilling; and a mama polar bear helps her cub out of the water.
The sequester will hit domestic programs. “For all the hysteria in Washington over sequestration, you’d be forgiven for believing it only affects defense…Nobody seems to be talking about the other $500 billion in reductions — to Head Start, child care and AIDS programs, as well as many other domestic programs that face across-the-board cuts. The limited lobbying and political attention on the domestic end of the sequester reveals the brutal reality of how Washington works when it comes to budgets: Industries with the biggest companies and the most powerful lobbyists still drive the conversation.” Seung Min Kim in Politico.
Note, too, that the sequester is cutting deep into the non-defense discretionary spending that already got cut by $950 billion in the debt-ceiling deal. And that bucket of spending is smaller, in total, than defense spending. So the real cuts to that category, once you add everything up, are much worse than they appear.
The House voted to mandate details on how the sequester would be implemented. “The House voted Wednesday to force the Obama administration to detail exactly how it would carry out $1.2 trillion in mandated budget cuts looming next year, the latest shot in a battle over military and domestic spending. The legislation, which sailed through the House 414-2 on Wednesday, is similar to a measure passed in the Senate that calls on the administration to detail the fiscal pain to government agencies…The House bill requires President Barack Obama to send Congress a detailed report on the impact of sequestration on both the defense and domestic sides within 30 days of the bill becoming law.” Seung Min Kim in Politico.
Some Republican governors are pushing a federal online sales tax bill. “Despite the support of about a dozen GOP governors, conservative Republicans on the Hill have a way to go before they are willing to support a federal bill on online sales tax. The lawmakers tend to view — or fear their constituents will view — the measures as a tax increase…In recent months, Republican governors have joined some Democratic counterparts in voicing support for a federal bill, sometimes as they announced deals in their states to open Amazon distribution centers or an agreement with Amazon to begin collecting sales tax at a future date…Conservative lawmakers have other concerns. One is whether supporting the bill is in violation of the Americans for Tax Reform’s no new taxes pledge, something many Republicans have signed. The organization has yet to make a determination about whether support is in violation.” Michelle Quinn in Politico.
The IMF wants the ECB to do stimulus. “The International Monetary Fund, warning of ‘a sizable risk’ that some euro zone countries could suffer a debilitating decline in prices, called on Wednesday for the European Central Bank to pump money into the region’s economy by buying huge volumes of government bonds…In a report critical of euro zone policy, the I.M.F. said that there was a 25 percent risk of consumer price deflation before 2014 and that the danger was greatest in countries, like Italy, where growth was slow and the government was counting on tax increases to reduce its huge debt.” Jack Ewing in The New York Times.
The economy is slowing as housing shows signs of life. “The U.S. economy is downshifting, even as the housing sector is finally showing signs of life. A report Wednesday showed builders broke ground for more new homes in June than in any month in nearly four years. But the upturn comes as several other pockets of relative strength for the economy have wavered. Consumer spending is sputtering, manufacturing growth has slowed, and businesses have grown cautious about splurging on new machines and computers. Most economists now expect second-quarter growth to come in much slower than the first quarter’s tepid 1.9% pace, and they say that the outlook is darkening.” Neil Shah, Jie Jenny Zou, and Nick Timiraos in The Wall Street Journal.
@grossdm: As we’ve been saying for months: here comes housing. Housing starts thru 1st half of ’12 up 26.5% from 1st half of 2011
Remix interlude: The evolution of PC games.
Conservative attacks on subsidies could lock governors into Medicaid levels. “Many conservatives believe one of the best ways to weaken the Affordable Care Act is to challenge the subsidies it provides to help people buy insurance….The healthcare law expands Medicaid eligibility beginning in 2014. It also includes a ‘maintenance of effort’ (MOE) provision that prevents states from cutting their existing Medicaid rolls ahead of the expansion. As shorthand, most people say the MOE lasts until 2014. Technically, though, it expires once the Health and Human Services Department certifies that an insurance exchange ‘established by the state … is fully operational’ — the same language used to describe exchange subsidies. In short, Republican governors could be stuck with the MOE forever if conservatives win their argument about the law’s insurance subsidies.” Sam Baker in The Hill.
Another college sued over the contraception mandate. “Another prominent religious college has filed suit against the Obama administration over a policy meant to ease women’s access to free birth control. The suit from Ill.-based Wheaton College — dubbed the ‘Notre Dame’ of Protestant higher education — states that the controversial policy violates the religious freedom of people who object to birth control or consider forms of it equal to abortion…Wheaton’s move comes one day after a federal judge dismissed a large suit over the mandate on the grounds that the policy has not yet taken effect. That suit was filed by the Republican attorneys general of seven states and three Catholic groups based in Nebraska.” Elise Viebeck in The Hill.
The Postal Service is set to default for the first time. “The Postal Service, faced with continuing financial losses because of a drop in mail volume, expects to default for the first time on its annual payment for future retiree health benefits. The $5.5 billion payment, which was deferred from the 2011 fiscal year, is due Aug. 1. The Postal Service is also scheduled to make a $5.6 billion payment for 2012 in September. A spokesman for the agency said that barring intervention from Congress, it would default on both payments…The Senate approved a bill in April that would, among other things, stretch out payments that the agency has to make into its health care fund for future retirees over 40 years, lowering the annual payment to about $2.5 billion. The Senate bill would also return $11 billion that the Postal Service overpaid into one of its pension funds. But the House has not taken up its version of the measure, and it is not likely to come up for a vote before lawmakers break for the August recess.” Ron Nixon in The New York Times.
@mattyglesias: If companies needed the government’s help to mail bills to people, then the world would be just like the one we live in.
Republicans introduced a bill to stop changes to the welfare work requirement. “Sen. Orrin Hatch (R-Utah) introduced a bill Wednesday addressing President Obama’s decision to waive work requirements in the Temporary Assistance for Needy Families (TANF) law. Hatch said the Preserving Work Requirement for Welfare Programs Act would have a companion measure introduced in the House by Rep. Dave Camp (R-Mich.)…Hatch accused the Obama administration of telling states that they no longer need to follow the work requirements in TANF…Hatch said his bill would not change TANF, just make it clear that the president doesn’t have the authority to change the law.” Ramsey Cox in The Hill.
With a little help from our friends interlude: A mama polar bear helps a polar bear cub out of the water.
House Republicans are pushing drilling again. “House Republicans renewed their attack on President Obama’s energy policies on Wednesday, advancing legislation that would require the administration to offer up more areas for drilling off America’s coasts. In a 24-17 vote, the House Natural Resources Committee approved a bill that would require the Interior Department to open up parts of the Atlantic and Pacific coastlines that the White House has deemed off-limits for drilling until at least 2017. The GOP bill would also impose a more aggressive schedule for lease sales off Alaska’s coast…The bill approved Wednesday would mandate 28 lease sales from 2012 to 2017, an increase over the 15 that the Obama administration has planned.” Zack Colman in The Hill.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.