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Obama’s Mishandling of Bernanke

Friday, January 22nd, 2010

Jake Tapper reported last night that Ben Bernanke’s re-nomination to be Fed Chairman is suddenly in trouble:

ABC News has learned that the Senate Democratic leadership isn’t sure there are enough votes to re-confirm Ben Bernanke for another term as chairman of the Federal Reserve.

The White House expressed confidence in Bernanke’s nomination today, but if his nomination does falter, they have only themselves to blame.

From the moment the President announced Bernanke’s re-nomination, rather than maximize the chances of a smooth confirmation process with a formal ceremony at the White House, the Administration played politics.

To refresh people’s memories: According to Reuters, Obama first decided to re-nominate Bernanke in July for another term as Fed Chairman. But he did not tell Bernanke until nearly a month later, at an Oval Office meeting in mid-August. Even then, the White House held the news until the following week, so it could make the re-nomination on the same day that OMB was releasing a worsening budget forecast — thereby stepping on one bad economic story with a bigger, better one. Nevermind that the President was on vacation that day.

Their ploy produced a bizarre photo-op, of the President and the Fed Chair making the major announcement sans ties, in a distinctly un-presidential setting. Reported the Associated Press:

Obama made the announcement while on vacation on the island of Martha’s Vineyard off the coast of Massachusetts after aides said initially that the president intended a news-free week there. Both he and Bernanke sported the open-collar look. …

The announcement also came nearly concurrently with a piece of bad economic news. Obama interrupted his vacation to telegraph his decision just ahead of a White House report that gave more bleak assessments of the nation’s deficit picture.

Figures released by the White House budget office on Monday foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May.

The White House press shop must have thought they were pretty clever that day. But they look like idiots now, with the nomination suddenly on the ropes.

The war budget surge

Wednesday, January 13th, 2010

President Obama’s allies often credit him for counting future war costs in his budget, something President Bush did not do on the grounds that future war costs are impossible to predict and will only invite a more politicized and inaccurate budget process.

President Bush’s policy is now looking a lot better.

As the Associated Press reports today, President Obama will request an additional $33 billion for war funding, mostly to pay for his surge in Afghanistan. What’s more, as the AP reports about the upcoming budget requests:

The 2010 budget contains about $128 billion for military operations in Iraq and Afghanistan.

That figure would rise to $159 billion next year under the proposals prepared for Congress.

The Pentagon projects that war funding would drop sharply in 2012, to $50 billion, and remain there through 2015. That is a calculation that the United States will save money from the withdrawal of forces in Iraq, as well as a prediction that the Afghanistan war will begin to wind down in the middle of 2011.

The $159 billion now being requested for 2011 exposes just how foolhardy the White House’s new budget policy really is. Less than a year ago – in May 2009 – the White House said it would only need $50 for 2011, and then had the gall to count that relatively low number as “deficit reduction” (see pages 8 and 32 here).

So when the White House now predicts it will only need $50 billion to fund wars in 2012 and beyond, take that number with a big grain of salt.

Awkward revisions

Tuesday, December 22nd, 2009

There was a bit of awkward messaging out of the White House this morning, as President Obama declared that businesses were on the rebound, on the same day that the U.S. Commerce Department revised downward its GDP estimates for the third quarter, in large part because of a shrinking private sector.

Reports the AP on Obama’s message:

President Barack Obama says businesses have “enormous opportunities” to start growing and hiring again if they can get the capital they need as the nation emerges from recession.
“We feel very optimistic that the worst is behind us,” the president said.

And the AP on the revised GDP numbers:

The Commerce Department’s new reading on gross domestic product for the July-to-September quarter was slower than the 2.8 percent growth rate estimated a month ago. …
The main factors behind the downgrade were that consumers didn’t spend as much, commercial construction was weaker, business investment in equipment and software was softer and companies cut back more on their stockpiles of goods.

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