Friday, February 26, 2010

Economic Events of the Week

Friday February 26 - NAR Existing Home Sales, GDP (preliminary)

Front Page News
At Health Care Summit, Obama Tells Republicans He's Eager to Move Ahead (Washington Post)

Washington Update
Traction for Banking Regulation (New York Times)

Financial Markets News
CBO Offers Sober Jobs and Budget Outlook (Capital Gains and Games)
Bernanke Says Deficit Action Is Key (Wall Street Journal)

Editorials and Commentaries
There's No Plan B on Health Care (Klein in Washington Post)
A Historic and Dangerous Senate Mistake (Frist in Wall Street Journal)
After the Summit (New York Times)
Defining ObamaCare Down (Wall Street Journal)

Front Page News

At Health Care Summit, Obama Tells Republicans He's Eager to Move Ahead (Washington Post)

President Obama declared Thursday that the time for debate over health-care reform has come to an end, closing an unusual seven-hour summit with congressional leaders by sending a clear message that Democrats will move forward to pass major legislation with or without Republican support. Democratic leaders face a heavy lift in reviving their stalled bill, a process that would involve intricate parliamentary maneuvering and carries no guarantee of success. But Obama signaled that if meaningful GOP cooperation does not materialize in the weeks ahead, he is ready to proceed without bipartisan support and risk the political consequences.

Arnold Kling grades both parties' performance at the summit (neither do well) while James Capretta addresses the question of how the reform proposals influence future premium increases (hotly debated at the summit), concluding "if the Obama plan were enacted, premiums in the individual market would go up, a lot". For a full run down of the summit, see the New York Time's Prescriptions blog which live-blogged the entire event.

Washington Update

Traction for Banking Regulation (New York Times)

The prospect of a financial regulatory overhaul’s passing Congress brightened on Thursday, as representatives of the banking industry left a meeting with the Treasury secretary saying that they had agreed on the need to get a bill through Congress this year. Members of the Senate Banking Committee, which has wrestled for months over the legislation, said they believed an accord might be possible, though significant differences remained over the extent of new consumer protections, among other matters.

Financial Markets News

CBO Offers Sober Jobs and Budget Outlook (Capital Gains and Games)

Congressional Budget Office Director Doug Elmendorf addressed the National Economists Club luncheon today in D.C. His job outlook was grim: "More pain of unemployment lies ahead of us than behind us." That's because this recession has had much more permanent job loss than past recessions and because our recovery is likely to be weak, with subpar job growth. The deficit outlook is grim also. We closed FY09 last September 30 with a 9.9% of GDP deficit, and CBO estimates this year, FY10, will end at about 9%.

Bernanke Says Deficit Action Is Key (Wall Street Journal)

Federal Reserve Chairman Ben Bernanke faced a barrage of questions about the risks of a rising federal deficit as he delivered his semiannual economic report to Congress this week. Mr. Bernanke's repeated response during a pair of hearings was that markets haven't lost faith in the U.S. economy yet. But he said the situation could change quickly without a credible plan from lawmakers to bring projected government spending in line with tax revenue. Mr. Bernanke said deficits need to be brought down to 2.5% to 3% of the nation's gross domestic product to be sustainable.

Editorials and Commentaries

There's No Plan B on Health Care (Klein in Washington Post)

The Wall Street Journal has a splashy piece this evening on the White House's plan B for health-care reform: a fallback approach that would cover 15 million people, do less to reform the system and cut costs, and carry a lower price tag. Call it health-care lite. But at this point, health-care reform either passes or it dies. Democrats are all in on this one. They know it, Republicans know it, and maybe more importantly, they know the Republicans know it. Letting health-care reform fail is indistinguishable from conceding the 2010 election. There's no real fallback plan. If Democrats fall back, they fall.

A Historic and Dangerous Senate Mistake (Frist in Wall Street Journal)

Using the budget reconciliation procedure to pass health-care reform would be unprecedented because Congress has never used it to adopt major, substantive policy change. The Senate's health bill is without question such a change: It would fundamentally alter one-fifth of our economy. Applying the reconciliation process is dangerous because it would likely destroy its true purpose, which is to help enact fiscal policy consistent with an agreed-upon congressional budget blueprint. Worse, using reconciliation to amend a bill before it has become law in order to avoid the normal House and Senate conference procedure is a total affront to the legislative process.

After the Summit (New York Times)

The main lesson to draw from Thursday’s health care forum is that differences between Democrats and Republicans are too profound to be bridged. That means that it is up to the Democrats to fix the country’s dysfunctional and hugely costly health care system. Mr. Obama should jettison any illusions that he can win Republican support by making a few more changes in bills that already include many Republican ideas. Republican speakers made clear that the only thing they would accept is starting over from scratch. That would be the end of sweeping reform.

Defining ObamaCare Down (Wall Street Journal)

A bipartisan health-care consensus will remain elusive after yesterday's marathon summit, as expected, though viewers who stuck out the full seven-plus hours could be forgiven for wondering what happened to all the liberals. General anesthesia? To listen to President Obama and his closest Democratic allies, you'd think John McCain had won the election and their bill had been drafted by Paul Ryan, Tom Coburn and the scholars at the American Enterprise Institute. Yet the reality is that there is a vast philosophical and policy gulf on health care in Washington. Everyone agrees there are severe problems in the health-care markets. The disagreement is over solutions.

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