Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Bernanke Gives Up
OurFuture.org's Richard Eskow: "Bernanke indicated that the Fed's 'quantitative easing' policy was coming to an end. A reporter asked, should you really do that with unemployment near 9%? A cloud of phantom Bernankes arose in response. Jobs are important, said one. Jobs are part of our dual mandate, another agreed. But policies to address long-term unemployment are outside of our mission, frowned another. Yes, another agreed, nodding sadly. Unfortunately, we're a macroeconomic institution. One of the Bernankes appeared to be struggling to say something - something important. Yes, yes, we whispered. Say it! Say, 'Quantitative easing and discount windows can only help the entire economy when they're accompanied by government policies which require the banks to use the advantages they bring in an economically constructive way.' But that Ben Bernanke fell silent. Then he shivered, grew translucent, and faded from sight. Another Bernanke spoke in his place. Strategies for addressing long-term unemployment were, he said, 'out of the scope of the Fed.'"
Bernanke Puts Fighting Inflation Over Creating Jobs
Bernanke suggests more dramatic action isn't necessary to stimulate growth. W. Post: "Forecasters expect a Commerce Department report scheduled to be released Thursday to show weak first-quarter growth in gross domestic product ... dragged down by higher fuel prices, winter weather and other factors. 'Most of the factors that account for the slower growth in the first quarter appear to us to be transitory,' Bernanke said."
Economy "slowed to a crawl" in official GDP report released this AM. NYT: "The slowdown was largely the result of a widening trade deficit, a larger decrease in federal government spending, and higher commodity prices, which reduced the amount of pocket money that households and businesses had available to spend."
Ezra Klein interprets, says Bernanke is choosing inflation fighting over jobs: "...Bernanke made it quite clear that the fear of future inflation, and not the crisis of current unemployment, would be foremost in the Fed’s mind ... he said the Fed had done a lot for jobs, and he said the Fed had to worry about inflation, and he said that in all conventional ways, the Fed’s policies were going to remain loose. Left unsaid was that of course the Fed could do more for jobs .. left implicit was Bernanke’s real answer to the question: it won’t do more because it is afraid to do more."
Time's Michael Grunwald argues Bernanke "doesn't want" to prioritize jobs: "...there is stuff he could try to do, even with interest rates as low as they could go. He could stop paying banks interest on their reserves, so they’d be more likely to loan them out instead. He could even try to spark up a little inflation—through words or more quantitative easing—to pull money out of corporate coffers and bank accounts ... He just doesn’t want to. And he doesn’t seem to want Congress to do anything, either."
Brad DeLong argues Fed is aiming for an unnecessarily low inflation target, in NYT: "...with current Federal Reserve policy, we are looking forward to a likely 1 percent core inflation rate for at least another year, and more likely three ... Would that we had a 2 percent per year inflation target — or even a 3 percent per year inflation target. In that case, recovery would be faster. Unemployment would be lower."
Panetta Pentagon Nomination May Mean Military Spending Cuts
President expected to name Leon Panetta to head Defense, push for spending cuts. The Hill: "Obama two weeks ago said he wanted to find another $400 billion in savings from defense spending over the next 12 years, something [current Defense Sec. Robert] Gates was said to be resisting ... Shifting Panetta to DOD 'probably means bigger cuts to the defense budget,' said Loren Thompson of the Lexington Institute."
Simpson-Bowles plan backed deeper military spending cut of $1 trillion notes AP.
Reid Backs Cap On Size Of Deficits
Sen. Maj. Leader Reid backs a cap on the size of the deficit, as part of debt limit deal. AP: "...the mechanism would involve a new law binding Congress to reduce the deficit. The Nevada Democrat didn’t give further details, but several proposals on Capitol Hill would trigger automatic spending cuts or tax increases if Congress can’t meet spending or deficit targets."
"Gang of Six" still struggling to agree. Politico: "The Gang of Six senators working on a bipartisan deficit-reduction deal held a senators-only conference call Wednesday afternoon ... There’s hope the gang can unveil its proposal by May 5, when Vice President Joe Biden begins holding deficit talks ... But Senate aides emphasized that the Gang of Six has yet to strike a deal because of lingering disagreements.
"Cantor Proclaims ‘America Pays Its Bills,’ Then Threatens Not To Raise Debt Ceiling" reports Wonk Room's Pat Garofalo.
House GOPers plan package of deep cuts to go with debt limit increase. HuffPost: "The pieces being considered for the package include a mix of hard discretionary spending caps, substantial cuts to mandatory spending, a reduction in federal government hires and a fail-safe “trigger” option that would force additional cuts if Medicaid reforms or spending cuts are not enacted by a certain date."
Senate will have to vote up-or-down on the House GOP budget. HuffPost: "'There will be an opportunity in the Senate to vote on the Ryan budget to see if Republican senators like the Ryan budget as much as the House did,' Reid said..."
Rep. Paul Ryan is dishonestly selling the House GOP budget, argues TNR's Jonathan Chait: "Asked if he is 'trying to balance the budget on the backs of the poor and the elderly,' Ryan replies: 'We're saying to anybody who's 55 or above, "No changes to your Medicare whatsoever.' ... The biggest problem here is that Ryan turns the question into one entirely about Medicare. He imposes a massive, disproportionate share of his cuts on programs that aid the poor and elderly, yet ... he evades the issue of the poor completely."
Calls To End Oil Subsidies, As ExxonMobil Rakes It In
ExxonMobil reports near-record profits this AM. AP: "ExxonMobil earned nearly $11 billion in the first quarter, a performance that will likely land it in the center of the national debate over high gasoline prices ... Anticipating a strong reaction to the results from drivers and politicians, Exxon said on a company blog Wednesday that it has little control over the price of oil, which has risen to nearly $113 per barrel."
Reid plans to press on ending subsidies to Big Oil. The Hill: "Reid, on a conference call with reporters Wednesday, said he hopes to 'get it done as soon as I can procedurally in the Senate.' 'We need to take away the subsidies of the five major oil companies,' he said."
Amtrak might get federal funds to bring high-speed rail to Northeast. WSJ: "Amtrak, previously blocked from receiving federal money for high-speed rail, is now in the running for a big chunk of the $2 billion in funds freed up by Florida's decision to cancel a fast-train project earlier this year ... [Amtrak] is lobbying for $1.3 billion in federal money to upgrade service on its Northeast Corridor between Boston and Washington so that trains could eventually reach 160 miles an hour ..."
Low expectations for next round of international climate talks in December. NYT: "Major greenhouse gas-emitting nations on Wednesday ruled out reaching a global agreement to limit such gases at a meeting this year in Durban, South Africa, but they pledged to continue working toward that goal in future."
Breakfast Sides
Chrysler to pay back taxpayers soon. NYT: "...on Thursday, the company will announce a milestone in its comeback effort, declaring its intention to repay its $7.5 billion in high-interest loans — $5.8 billion to the United States government and $1.7 billion to Canada’s — as soon as next month by selling new bonds to investors."
State may raise taxes and cut benefits to deal with unemployment insurance shortfalls. NYT: "As persistently high unemployment has drained the funds that are used to pay jobless benefits, more than two-thirds of the states expect to raise taxes on businesses this year to replenish them ... Some analysts say that states kept unemployment taxes too low during boom years, so their trust funds were ill-prepared to weather the downturn. Now states find themselves forced to raise taxes on employers just as they need them to create jobs, and to consider cutting benefits while huge numbers of people are relying on them to survive."
