Washington Political Press Has Got Obama's Back
Political writers are usually confused on economic issues, but Washington DC political writers just seem to parrot the Obama Administration’s talking points. A typical example is Pete Schroeder’s and Vicki Needham’s article for The Hill Blog: “Shutdown Could Keep Fed Pumping in 2014.” In support of the Administration’s effort to gain leverage in the coming House and Senate budget committee negotiations, the writers claim our nation is so damaged by Republicans trying to stop runaway deficit spending that the U.S. Federal Reserve will be forced to crank up the printing presses to prevent our collapse. As a former bond trader, I never saw any business fail from borrowing too little money. But the Washington DC press shifting blame from the Obama Administration’s grim performance seems to be a requirement for a press pass.
Barack Obama is in a very challenging situation this early in his second term. His Presidential approval rating is at historic low levels of 43%, down 10% from a year ago and down 20% from when he first took office. The only solace the President can claim is that Public Policy Polling recently determined Congress is less popular than “Toenail fungus, hemorrhoids, cockroaches and dog poop.” But Congress has never been “popular” over the last two hundred years. As Will Rodgers said, “If I studied all my life, I couldn't think up half the number of funny things passed in one session of congress.”
But in the eyes of the American people, the president stands as government’s commander and chief, and a recent poll by Pew Research Center for the People and the Press report that an all-time-low of only 19% trust the government he commands. The Administration may be claiming victory in forcing the Republicans to go down in defeat on principal, but Democrats now “own” Obamacare and the deficit.
Writing for The Hill as “covering $$”, Pete Schroeder’s tweets seem to clearly indicate his political sympathies. Schroeder straightforwardly reported that Democrat House Minority Leader Nancy Pelosi will appoint liberals Clyburn, Lowey, and Van Hollen as her budget negotiators. But he took a swipe at conservatives when he stated that “3 of the 4 budget conferees Boehner just named (Ryan, Black, Price) voted against the CR/debt limit deal. Tom Cole only yes.”
Schroeder offered no justification for his theory that “The Federal Reserve is expected to keep pumping stimulus into the economy for the next few months due to the recent government shutdown.” He knows that Standard & Poor’s credit rating agency did estimate $24 billion of shutdown loss, but that was before the Congress agreed to pay laid-off federal employee for the time of the shutdown and the billions of dollars federal workers collected from unemployment insurance payments.
Even if the loss is $24 billion, the United States federal, state and local governments spend $6.5 trillion a year: $24 billion is just over one day of government spending.
Schroeder did acknowledge more Federal Reserve money-printing is “likely to fuel a new round of criticism from Republican lawmakers, who say the Fed’s decision to pump trillions of dollars into the economy was wrongheaded and could have major repercussions down the road.” But on his blog he countered this argument when he highlighted: “IMF Head Christine Lagarde thanks US for passing deal, says it will "essential" to reduce drama going forward, calls for replacing sequester.”
Most economists, including me, believe the Federal Reserve Chairman Ben Bernanke’s money printing has been completely ineffective at creating job growth. But it did create new bubbles in the stock and commodity markets. Those inflated prices for oil, food and other essentials have acted as an added “tax” on working people in America and prevented the economy from going through a normal recovery.
After five years of unending money creation by the Federal Reserve, Schroeder and Needham are hanging by a pretty thin thread to claim the Republican’s effort to cut the deficit will force more money printing. But in making that argument as Congressional budget negotiations heat up, the Washington political press has got Obama’s back.