Nutter's Washington

Congressional Review and a Look Forward

 Congress is returning to Washington after Labor Day recess to take up where they left off. The session this year has been cantankerous and a battle between the Democrat-controlled Senate and Republican House with the Administration unable to push any consistent legislative agenda.

The bulk of political energy has been spent on fiscal issues. The House passed a budget, the Senate did not. There was a final resolution of the 2011 Fiscal Year spending bills but to date none of the FY 2012 appropriations bills have passed. The Federal Debt Limit increase that passed right before the August recess provided the drama, the entertainment and the example of a broken political dialogue and leadership.

The Lull Until Labor Day, an Earthquake and Hurricane

It has been an interesting week in Washington DC this week. On Tuesday, an earthquake shook me out of my comfy office chair. I know, an earthquake and the politicians were not around. The streets and sidewalks filled up with office workers waiting like sheep for the buildings on topple on them drinking their double skinny lattes. The commute has been light this week as residents and politicians have fled for vacation destinations. The Memorial Bridge, which I cross every morning from Virginia in heavy-often mix master fashion- has been empty. Now, we wait for Hurricane Irene, gathering supplies, checking the gas tank, flashlights in fist—all waiting for the power to go out. One could say the power has been out in DC for a long time already. 

The President seems to be getting his golf games in with his elite and erudite friends and contributors. The White House floats a trial balloon every day of some great job creation idea. It is housing initiatives, entitlement reform, tax changes,  shovel- ready infrastructure, some meaningless and ineffective private-public partnerships to move the deck chairs around.  I wonder where all these great ideas have been? It does not bear the space to go over all the economic missteps since Mr. Obama seized power. However, it will be interesting to see all the details but it is like staying to see the end of a bad movie, one where you know the outcome and should have flicked the channel long ago. I prefer House Hunters re-runs. 

Is Gold the next Bubble?

The price of gold is approaching 1900 USD per ounce. That is amazing for a material that does not produce any wealth except for those that trade it.   Gold is a commodity that is used in a few industrial processes, does a few neat things like coats the helmets of astronauts and is beautiful adorning a women. Historically, it has been a haven for troubled times and hedge against inflation. 

 At these price, an investor has to ask, how high can it go and who will buy it from me?  (like the house you paid too much for) 

I saw the internet bubble too late. I got the housing bubble about right. The gold bubble could be the next one and when it corrects, it will do so at a rapid rate and give no mercy. In any event the rise in gold at such a rapid rate is bad news, bad news. If the price breaks, considerable money will be lost. If it contineus up, it indicates economic weakness. 

Be very wary! 

Obama: New Plan is on its Way!

The Dow Jones Industrial Average dropped like the old proverbial rock yesterday and who knows about today. Short term swings are not troubling but long term trends are. Since peaking some weeks ago, the DJIA has reflected global troubles, particularly in the European bank sector, and a loss of confidence here at home. The President has been out on a campaign bus swing, berating the Tea Party and Republicans in general. Now he is taking a vaca among high income taxpayers. If only the country had followed the lead of the President as he reminds us, we would all be in high cotton with the birds singing. Oh, I thought that is what was done in the last Congress with health care expansion, financial restrictions and the so-called stimulus. Silly me, I forgot about the Arab Spring, hurricanes, earthquakes and the other things to blame. 

The President has announced he would give a major address after Labor Day to present his plan to stimulate jobs, raise taxes on the chosen ones and reduce the deficit. I think I have heard this all before. Wasn’t there a big time economic speech in April? And, what has the Administration been doing all this time, like the last 3 years? But now they promise some “new ideas.”  For what are the waiting?

SuperCommittee, Employment Taxes and Warren Buffett

Congress is in recess for a few more weeks. The President is riding around the Midwest in an armored-plated bus. Iowa is out of the news, thank goodness for a few more months. The federal deficit is increasing about $4 billion today and tomorrow plus for days on end. Not to despair, there is plenty going on.

The Congressional Leadership announced last week the names of the Members who will take the twelve spots on the Joint Committee to reduce the deficit, the so-called Super Committee. This august body is directed to come up with a plan to reduce the Federal deficit about $1.2 trillion or so in the next ten years. Big Deal, but that is another subject. If it does not act or if Congress does not approve of the plan, there will be some pre-ordained spending limits in certain areas. Of course, it is a bit more complicated than this but not worth the detail here.

Pawlenty out: Predictable but a Loss

Former Republican Governor Tim Pawlenty announced yesterday he is abandoning his attempt to secure his party’s nomination for President. He quit, in other words. That is the news, the more interesting thing is why and what happened? Where did it all go wrong?

 Mr. Pawlenty has been a successful politician and has a good personal story. He seemed to have done a decent job as Governor of Minnesota, a fairly tough state for Republicans. He was a tad boring but at ease in being so. He hinted for some period of time his interest in being President. Announcing in May, he assembled a respected campaign team and gathered considerable national attention. He did not appear to be extreme one-way or the other. He was someone who seriously could be President. Now, he is out. Probably money issues, expectation issues and a realization this was not going to happen. In the beginning, he tried to position himself as an alternative to Mitt Romney but lost focus and now it appears that Texas Governor Rick Perry will fill that slot.

Obama: More of the Same

President Obama yesterday defended the nation's fiscal health and decried Washington partisanship. Does that mean things are going well? I think this means he did not take any responsibility for anything and just finger-pointed at Republicans. Very productive, once again. Real leadership. 

As a result of Standard and Poor's downgraded the nation's  triple-A credit rating the President declared as the stock market continued to drop during his remarks  "We didn't need a ratings agency to tell us that we need a balanced, long-term approach to deficit reduction." Oops, did I miss the part where he presented an economic plan? Maybe a new suggestion? Have I missed the last 800 plus days the Senate has not even passed a budget? Did I miss the 97-0 rejection vote on the Obama budget. Has the projected additional $10 trillion in new debt in the next 10 years gone away? Has the Government stopped borrowing 40 percent of what it spends and accumulating a deficit of about $4.5 billion a day?  

Obama said, the real problem is "a lack of political will in Washington" and that the nation's challenge is "the need to tackle our deficits over the long-term." And so said Mr. $ 4 Trillion Deficit and counting. If we just get rid of those awful Tea Party folks,( oh, and the richies too) you know the guys who won the last election No credibility here. I doubt anyone is listening anymore. 

Hard to make any of this up. Harder yet to have any faith in the government and even harder to see any improvements to come and time soon. People are scared, nervous, disillusioned and sometimes bitter. 

The economy in this country is powerful and tough. It can and will come back but Government usually only hinders, gets in the way, makes things worse. Certainly that has been the case of this Administration. Maybe they will get it, but probably not. Solutions are not just about addressing the debt, it is only part of the way back. I am feeling a bit discouraged today. 

Stop the Bush Bashing and Step Up

Stock markets around the world took a huge plunge yesterday. As of this morning, the DJIA is down again. The economy did add a bit over 100,000 jobs last month but not enough to dent the unemployment rate. All very bad news. 

The reaction of the White House was typical. Blame Bush. Bash him. I was not big fan of President Bush but as far as I know he has been gone for more than 2 1/2 years. Stop it! Take some responsibility. It is Obama's economy. It is his watch. He must bear the good and the bad. It was his plan for the stimulus and more regulation. It is his fiscal policies that are in place. His deficits. It really makes the President look silly, petty and small to continue with this tactic. I think the public is smarter than to believe that nonsense except for the real zealots. 

The jolt to the markets undermines confidence. It makes people feel poorer. They will cut back which will have a vibrating effect. I do not know if the much-talked about double dip recession will occur or not. If It does, then more people will be in for a very very rough time.  It will also mean the President will not survive re-election.  Wonder if he will blame Bush for that? 

Congress and the Debt Aftermath: What is next? Jobs and other things?

The Federal Debt Limit increase has been signed into law. The posturing, crowing and bickering on this matter are over for the time being. Congress has fled Washington for the about a month or so. Back home to ride in parades, attend town halls and raise campaign funds.

A quick comment on the aftermath because listening to the liberals and reading the press, one could conclude the end is near. Poor people will be eating cat food, the birds will quit singing and Americans will be moving to Mexico to find work. Stop the whining! The fact is-and everyone knows this-the debt limit so-called spending reductions will have a bare minimum effect on government spending. There are no drastic reductions. Government spending will still increase, Federal debt will not diminish, it will increase at the rate of about $4 billion a day. None of the decisions are actually binding on future legislatures; they can change anything they want at any time. In a sense, the entire process was more symbolic than substantive.

Grading the Debt Deal: The Good, Bad and the Useless

The following was published as on Outside the Box column on Marketwatch.com

http://www.marketwatch.com/story/grading-debt-deal-the-good-bad-and-the-useless-2011-08-01?siteid=nbch

It seems nothing is ever easy. In politics, that is almost always the case. Even the simple goal such as raising the federal debt limit so the government can continue to borrow to fund its enormous deficit becomes an almost Herculean task. After months of wrangling, negotiating, walkouts, taunts and name-calling, the political system has yielded a result. The federal debt limit will be increased, and the direction of federal spending will be slightly altered. Now, it is time to grade the results and the elected politicians who created it.

 The “deal” intends to save (note the word “save” rather than “cut”) $917 billion over the next 10 years and raise the debt ceiling to carry the government through the end of this year and mostly likely until early 2013 without another Congressional vote on the limit itself. A new Joint Congressional Committee would be formed to come up with an additional $1.5 trillion in deficit reduction o be voted on before the end of this year. It is all complicated. For a description from the CBO,  http://www.cbo.gov/doc.cfm?index=12357