Economy

Before Sunset

One way to judge the health of our political system is to divide the president’s agenda into three categories. First are the items that seem like they’d be hard to accomplish and actually are hard—health care reform and cap-and-trade come to mind. Then come the items that sound easy to the uninitiated but turn out to be pretty hard—like eliminating wasteful farm subsidies or obsolete weapons systems. Lots of presidents have taken on these programs only to find that they have powerful, well-organized defenders.

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Noam Scheiber: Obama's tough new approach to Wall Street is ... a lot like the old one.

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Interesting aside from OMB Deputy Director Rob Nabors just now in a call with reporters about the spending freeze, in response to a question about the negative reaction from congressional appropriators*: I remember the president said something to me that always stuck. When we sat down to ask if both houses [of Congress] could pass health care bills, a lot of people reacted negatively [because it had never been done before]. But the president said, don’t bet against me.

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As I mentioned this morning and in my recent piece, not everyone in the administration was enthusiastic about the freeze idea from the get-go. Some were concerned about shifting to deficit-reduction mode too quickly, while job-growth was still a big problem. (The National Economic Council, for one, was initially pretty skeptical.) At the same time, some in the administration who worried about the deficit didn't see the freeze as a huge help in that regard.

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The big news today is that Obama plans to propose a freeze on domestic discretionary spending in Wednesday's State of the Union address. For what it's worth, I talked to some administration officials about the thinking behind this in December, not long after the idea was first floated. Here's the gist of what I found: Within the administration, White House budget director Peter Orszag appears to have settled on another solution.

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The Wall Street Journal reports that a lot of the bank executives who shunned last year's World Economic Forum in Davos are quietly returning this year. Which could get a little awkward, since the execs will rubbing elbows with the global glitterati right around the time the average American is fulminating against their outrageously high bonuses. How's a banker to deal with the potential PR problem? According to the Journal, the answer is ...

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The White House background briefing is that their proposals would freeze biggest bank size “as is”--this makes no sense at all. Twenty years of reckless expansion, a massive crisis, and the most generous bailout in human history are not a recipe for “right” sized banks. There is a lot of work the administration hasn’t done on the details--this is a classic policy scramble, in which ducks have not been lined up.

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So Bernanke may be in even worse shape than I thought. The Times says Harry Reid isn't sure he has 60 votes for confirmation. In fact, he's not even sure he'll support Bernanke himself. The most telling detail in the piece: Senate Democrats leaders had contemplated trying to hold a vote on Mr. Bernanke’s nomination to a second term this week, but were forced to hold off after several senators unexpectedly voiced opposition to his confirmation at the party’s weekly luncheon on Wednesday. Democratic leaders asked for a show of hands and though aides would not provide a precise count, Mr.

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If I had to guess as I write this, I'd say no. But the trendlines for the Fed chairman aren't moving in the right direction. Today's Wall Street Journal had a piece noting that the Fed chairman was headed toward a closer than expected vote in the Senate next week, with Dems Byron Dorgan and Jeff Merkley joining Bernie Sanders, the Senate's chief Bernanke-hater on the left, as opponents of a second term.

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Update: the Senate needs to hold a new hearing for Ben Bernanke--here’s the full proposal. Ben Bernanke’s reconfirmation as chair of the Federal Reserve is in disarray. With President Obama having launched, on Thursday morning, a major new initiative to rein in the power of--and danger posed by--our leading banks, key Senators rightly begin to wonder: Where does Ben Bernanke stand on the central issue of the day? There are three specific questions that Bernanke must answer, in some convincing detail, if he is to shore up his weakening cause in the Senate. (1) Does he support the President’s pr

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