Two articles in today's Wonkbook are, in different ways, fundamentally asking the same question: How can a president stuck around 45 percent in the polls and who has suffered such a bad year done so little to shake up his staff?
In Sunday's New York Times, Jackie Calmes explored the close relationship between President Obama and Treasury Secretary Tim Geithner. "The question for outsiders as varied as Tea Party Republicans and liberal Democrats," she writes, "is why Mr. Obama would be so insistent that Mr. Geithner stay. As Treasury secretary, he was the highest-ranking member of a team that underestimated the depth of the downturn, and he has managed both to anger Wall Street firms and to be a target of criticism at Occupy Wall Street rallies."
And it's not just that Obama has sought to keep Geithner as head of the economics team. The National Economics Council is now headed by Gene Sperling, who entered the Obama administration as one of Geithner's advisers, and the Council of Economic Advisers is now headed by Alan Krueger, who entered the Obama administration as part of Geithner's Assistant Treasury Secretaries. The economic-policy team has been Geithnerized.
Nor is it just that Daley has seen his wings clipped. It would make sense, on some level, to keep Daley as chief of staff or appoint Pete Rouse to the position. But to enter a limbo where they are both doing part of the job has created confusion inside the White House and raised eyebrows outside of it. The White House neither seems open to integrating outsiders nor able to make decisive personnel changes. And the president himself seems both adverse to firing people and to bringing new people in to replace them.
If the economy turns and Obama's campaign team guides him to reelection, the president's loyalty to his staff will, of course, be seen as another example of the his admirable ability to ignore the nearsighted demands of DC conventional wisdom and play the long game. If the next year does not go so well, however, the judgments on his staffing decisions will be considerably more harsh.
1) A supercommittee deal is likely to pass the buck on taxes, reports John McKinnon: "A top House Republican raised the possibility Sunday of pushing a tax-overhaul effort to next year, as part of a broader deficit-reduction effort that is closing in on a deadline just days away. 'There could be a two-step process that would hopefully give us pro-growth tax reform,' Rep. Jeb Hensarling (R., Texas) said on CNN's 'State of the Union.' Mr. Hensarling is a co-chairman of the deficit-cutting supercommittee that faces a Nov. 23 deadline for reaching agreement on a plan to cut at least $1.2 trillion from projected future deficits. The approach could ease the path to an agreement, by allowing Congress to reach the outlines of an agreement on tax revenues and spending cuts this year, while postponing the difficult details of a tax overhaul until next year, and handing the issue back to the congressional tax-writing committees."
2) Jackie Calmes profiles the relationship between President Obama and Tim Geithner: "For Mr. Obama, however, Mr. Geithner has emerged as the indispensable economic adviser who has outlasted every other member of the original inner circle and whose successes easily outweigh his missteps. That Mr. Obama went to such lengths to keep Mr. Geithner, after not having done the same with others on his economic team who had left at midterm, underscored how much he had come to rely on Mr. Geithner. The question for outsiders as varied as Tea Party Republicans and liberal Democrats is why Mr. Obama would be so insistent that Mr. Geithner stay. As Treasury secretary, he was the highest-ranking member of a team that underestimated the depth of the downturn, and he has managed both to anger Wall Street firms and to be a target of criticism at Occupy Wall Street rallies."
3) Europe appears to be coming back from the brink, report Neelabh Chaturvedi, Stelios Bouras, and Liam Moloney: "Greece and Italy--whose fiscal and political crises have set off ever-bigger scares among global investors--took concrete steps toward budgetary austerity Friday, helping soothe markets for the moment. Even as investors welcomed indications that Greek and Italian politicians were putting aside partisanship to begin to repair national finances, however, worry emerged over the rising borrowing costs of the euro zone's No. 2 economy, France. In Rome, Italy's Senate overwhelmingly approved a package of growth-boosting measures that are likely to pave the way for the resignation of longtime Prime Minister Silvio Berlusconi as soon as this weekend, and the appointment of an interim government."
4) Or maybe not, writes Paul Krugman: "So Munchau says that the Germans believe that the installation of Mario Monti will solve everything. The president of the Bundesbank has ruled out any lender of last resort actions by the ECB. And Gavyn Davies does the math on Italian stabilization; it’s not pretty unless rates come way down, and restoring cost-competitiveness looks impossible without a higher inflation target for the eurozone, a point I keep trying to make. Maybe the markets will continue a relief rally for a little while. But as far as I can see, Eurodämmerung is still very much on track."
5) Obama's made progress on a Pacific trade pact, report Laura Meckler and Tom Barkley: "The United States and eight other nations agreed to the basic framework for an Asia-Pacific free-trade pact, President Barack Obama said on Saturday while vowing that the U.S. would engage heavily in the region on a range of issues...The Trans-Pacific Partnership forms a key economic plank in Obama's push to demonstrate that the U.S. remains a dominant player in a region increasingly influenced by China. The talks are significant for the potential as a path to a future free-trade area with Asian and Pacific nations, a region that accounts for nearly 45% of global trade and incorporates some of the world's fastest-growing economies...The next step for Japan is to meet separately with all nine countries all in the TPP so they can assess whether the country is prepared to meet their standards."
1) Obama's advisers are tightening their grip around him, writes Ed Luce: "Both Ronald Reagan and Bill Clinton, America’s two most successful recent presidents, acquired the habit of ejecting close friends when something better was on offer. Even George W. Bush forced himself to break the Cosa Nostra when he finally sidelined Karl Rove, his electoral “boy wonder”, six years into his presidency. In his reluctance to change his kitchen cabinet, Mr Obama is an exception – indeed, his campaign inner circle is actually strengthening its grip on the White House. The group, which most prominently includes Valerie Jarrett, the longstanding Chicago friend and mentor to the Obamas; David Plouffe, the 2008 campaign manager; and David Axelrod, who is now shepherding Mr Obama’s re-election campaign from Chicago, last week clipped the wings of Bill Daley, the president’s hapless chief of staff.
2) Pro-wealth culture is not without its flaws, writes Tyler Cowen: "the traditional, pro-wealth cultural vision has a great appeal for me. But I must admit that it is showing some wear and tear, which may partly be why the criticisms made by the demonstrators at Zuccotti Park have so much resonance. The first problem is that higher status for the wealthy can easily lead to crony capitalism...Critical differences are lost, like the distinction between earning money through production for consumers, as Apple has done, and earning money through the manipulation of government, which heavily subsidized agribusinesses have done...The second problem is that many conservatives have become so attached to their cultural vision that they have ceded sound, technocratic reasoning to the left and center."
3) The Euro is past the point of saving, writes Nouriel Roubini: "Clearly, the eurozone’s muddle-through approach no longer works. Unless the eurozone moves toward greater economic, fiscal, and political integration (on a path consistent with short-term restoration of growth, competitiveness, and debt sustainability, which are needed to resolve unsustainable debt and reduce chronic fiscal and external deficits), recessionary deflation will certainly lead to a disorderly break-up. With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun. Sequential, coercive restructurings of debt will come first, and then exits from the monetary union that will eventually lead to the eurozone’s disintegration."
4) Mitt Romney's veterans' health care proposal would be a disaster, writes Paul Krugman: "Mitt Romney’s latest really bad idea, unveiled on Veterans Day: to partially privatize the Veterans Health Administration (V.H.A.). What Mr. Romney and everyone else should know is that the V.H.A. is a huge policy success story, which offers important lessons for future health reform. Many people still have an image of veterans’ health care based on the terrible state of the system two decades ago. Under the Clinton administration, however, the V.H.A. was overhauled, and achieved a remarkable combination of rising quality and successful cost control. Multiple surveys have found the V.H.A. providing better care than most Americans receive, even as the agency has held cost increases well below those facing Medicare and private insurers."
5) The US is falling behind on income mobility, writes Scott Winship: "What is clear is that in at least one regard American mobility is exceptional: not in terms of downward mobility from the middle or from the top, and not in terms of upward mobility from the middle -- rather, where we stand out is in our limited upward mobility from the bottom. And in particular, it’s American men who fare worse than their counterparts in other countries. One study compared the United States with Denmark, Norway, Sweden, Finland, and the United Kingdom. It found that in each country, whether looking at sons or at daughters, 23 to 30 percent of children whose fathers were in the bottom fifth of earnings remained in the bottom fifth themselves as adults -- except in the United States, where 42 percent of sons remained there."
Swedish pop interlude: "Would You Say Stop?" by Acid House Kings.
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Still to come: Obama could put a Republican on the Fed; the administration is working to boost health care employment; the Senate could investigate law schools; Bush's energy team is now on Team Romney; and skating in the New York subway.
Regulations don't actually kill jobs, reports Jia Lynn Yang: "Data from the Bureau of Labor Statistics show that very few layoffs are caused principally by tougher rules. Whenever a firm lays off workers, the bureau asks executives the biggest reason for the job cuts. In 2010, 0.3 percent of the people who lost their jobs in layoffs were let go because of 'government regulations/intervention.' By comparison, 25 percent were laid off because of a drop in business demand...Economists who have studied the matter say that there is little evidence that regulations cause massive job loss in the economy, and that rolling them back would not lead to a boom in job creation. Firms sometimes hire workers to help them comply with new rules. In some cases, more heavily regulated businesses such as coal shrink, giving an opportunity for cleaner industries such as natural gas to grow."
Obama could appoint a Republican to the Fed, reports David Wessel: "The White House, which has been looking for months for a Republican for one of the two vacancies on the Federal Reserve Board, is seriously considering a former Treasury official in the George H. W. Bush administration, said people familiar with administration deliberations. Jerome Powell, 58, worked on Wall Street before joining the Treasury in 1990 and eventually became undersecretary for domestic finance. After leaving the Treasury in 1993, he was, among other things, a partner at private-equity firm Carlyle Group for eight years. As reported previously, the leading candidate for the other opening on the seven-member Fed board is Jeremy Stein, a Harvard University finance economist who worked in the White House in the Obama presidency. Officials cautioned that no announcement was imminent."
Banks are quietly ramping up consumer costs, reports Eric Dash: "Even as Bank of America and other major lenders back away from charging customers to use their debit cards, many banks have been quietly imposing other new fees. Need to replace a lost debit card? Bank of America now charges $5 -- or $20 for rush delivery. Deposit money with a mobile phone? At U.S. Bancorp, it is now 50 cents a check. Want cash wired to your account? Starting in December, that will cost $15 for each incoming domestic payment at TD Bank. Facing a reaction from an angry public and heightened scrutiny from regulators, banks are turning to all sorts of fees that fly under the radar. Everything, it seems, has a price...Banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past."
The mortgage settlement could send small checks to foreclosed-upon homeowners, reports Arthur Delaney: "A coalition of attorneys general led by Iowa AG Tom Miller and federal housing chief Shaun Donovan is currently pushing for a $25 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and Ally Financial (formerly known as GMAC). At issue is bad mortgage servicing and fraudulent foreclosure paperwork...The deal as currently stands would extract $17 billion worth of mortgage modifications and principal reduction for struggling borrowers, among other things, according to a source familiar with the situation. Another $3 billion would be set aside to boost refinancing. And from $5 billion paid directly to state and federal governments, foreclosure victims abused by one of the five banks would be eligible for restitution payments of around $1,500 or $2,000."
A flat tax wouldn't simplify the tax code, writes Alan Blinder: "Many useful steps could be taken to simplify the personal income tax. But, contrary to much misleading rhetoric, flattening the rate structure isn't one of them. The truth is that 100% of the complexity inheres in the definition of taxable income, which takes up millions of words in the tax laws. None inheres in the progressive rate structure...Figuring out your taxable income can be quite an effort. But once that is done, most taxpayers just look up their tax bill on an IRS-provided table. Those with incomes above $100,000 must perform a simple calculation that involves multiplying two numbers together and adding a third. A flat tax with an exemption would require precisely the same sort of calculation. The net reduction in complexity? Zero."
Vintage film interlude: The title sequences of Saul Bass.
The Obama administration is working to increase the health care workforce, reports Sarah Kliff: "The Obama administration will announce Monday as much as $1 billion in funding to hire, train and deploy health-care workers, part of the White House’s broader 'We Can’t Wait' agenda to bolster the economy after President Obama’s jobs bill stalled in Congress. Grants can go to doctors, community groups, local government and other organizations that work with patients in federal health-care programs such as Medicare and Medicaid. The funds are for experimenting with different ways to expand the health-care workforce while reducing the cost of delivering care. There will be an emphasis on speed, with new programs expected to be running within six months of funding."
The Supreme Court response to Social Security could provide clues for its response to health care reform, reports Robert Barnes: "Justice Benjamin N. Cardozo, writing for a seven-justice majority...said that only a system of old-age benefits that were national, rather than different by state, would serve the day’s needs. Such logic leads to an interesting agreement between both sides of the battle over the health-care act: that a single-payer health-care system funded by a tax would not raise constitutional questions. 'I’ve said from Day One that if Medicare is constitutional, Medicare for everyone is constitutional,' said Randy E. Barnett, the Georgetown law professor who is representing one set of challengers to the health-care act. Walter Dellinger, a strong supporter of the health-care act, said he finds it hard to believe that if a single-payer plan would be constitutional, 'that the court would then stand in the way of a more market approach' of relying on private insurers to provide coverage."
The DC circuit decision shows the Supreme Court two ways forward on health care, writes Noah Feldman: "Silberman’s decision, then, was an expression of old- fashioned legal reasoning: He just didn’t find the arguments for unconstitutionality convincing. He was joined by Judge Harry T. Edwards, a Jimmy Carter appointee with whom Silberman has sometimes joined on labor-relations issues, a legal specialty the two of them share. Silberman’s opinion is a powerful signal to Justice Kennedy -- a fellow Reagan appointee -- that one can be a good conservative and still uphold the law...Here, Kavanaugh was sending a distinct message to Kennedy: You don’t have to go there. If he were to follow Kavanaugh’s lead, Kennedy could conclude that the court must wait a few years before deciding whether mandatory coverage is constitutional."
Law schools could face a Senate investigation, reports Ashby Jones: "U.S. Senate staff members are gathering a trove of information about legal education in the U.S., including figures on law school job placement and student-loan debt, in response to questions about whether the nation's law schools have been luring students with bogus data. The information could serve as a backdrop to hearings on legal education that U.S. senators are 'strongly considering,' according to a congressional staffer. So far this year, Sen. Barbara Boxer (D., Calif.), has sent three letters to the American Bar Association, a section of which accredits law schools, urging the organization to do more 'to increase its efforts to protect current and prospective law school students from misleading information.'"
There's a pizza loophole in new school lunch rules, reports David Rogers: "The white potato loophole in new dietary rules for school lunches just got bigger - about the size of a slice of pizza. That’s the latest from the green vegetable front as the Food and Nutrition Service tries to stay on track with its proposal, while also coping with major corporations piling on behind the House and Senate Appropriations committees that govern the Agriculture Department’s budget. The potato and French-fry industry scored the first breakthrough last month when the Senate adopted an amendment that voided the proposed FNS limits on starchy vegetables. Now negotiations with the House have expanded to help pizza makers preserve their claim that tomato paste packs a much outsized wallop as a vegetable."
Don't try this at home interlude: Skating in the New York subway.
Bush's energy advisors are flocking to Romney, reports Darren Samuelsohn: "George W. Bush-era energy policy wonks are finding a new home with Mitt Romney. The former Massachusetts governor can count on support from a who’s who of former Bush officials willing to raise money, brainstorm policy ideas and generally help spread the word among the ranks of like-minded GOP energy experts. Already on board the Romney train are Jim Connaughton, who ran Bush’s White House Council on Environmental Quality for all eight years; former Assistant Energy Secretary Andy Karsner; former EPA air chief Jeff Holmstead; and former EPA congressional affairs liaison Edward Krenik. The former Bush officials all told POLITICO that they don’t have official roles in the Romney campaign. But they confirmed their support for Romney."
"Smart grids" are facing opposition, reports Steven Mufson: "The smart grid has been one of the most talked-about issues in energy policy. Experts -- and manufacturers of equipment and software -- have promoted the idea that 'smart meters' could enable utilities to flip household appliances on and off to ease the load of summertime electricity demand and that the devices would help homeowners manage their refrigerators, lights and air conditioning, even controlling them remotely with cellphones, laptops or tablets. Smart grid technology is also seen as critical for integrating renewable energy sources onto grids designed to carry power one way only, from big clunky generating stations to the home...Yet many utilities have come to the conclusion Izzo has: You can install smart meters in homes, but the homes probably still have dumb appliances and homeowners who are too busy to be bothered."
Green tax credits could vanish soon, writes Karen Hube: "Federal energy tax incentives play a big role in jump-starting a green energy movement. Yet now there is a good chance they will be scaled back significantly -- or eliminated altogether. Already, the residential tax credit was cut back by Congress from $1,500 to $500 for this year, triggering a 16 percent decline in sales of windows and doors for the industry in the first six months of the year, according to the Windows and Doors Manufacturers Association. That credit -- along with the builders’ $2,000 credit and various tax incentives for businesses -- is set to expire at the end of this year unless extended by Congress. But even if they are extended, energy incentives are still at risk, particularly if the Republicans win control of the White House in next year’s election, says Clint Stretch, director of legislative affairs at Deloitte & Touche."
Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.