Spending Daily August 10, 2012

Obama: Let’s Bail Out Every Industry
Politico reports, “President Obama, while villifying Mitt Romney for opposing the auto industry bailout, bragged about the success of his decision to provide government assistance and said he now wants to see every manufacturing industry come roaring back. ‘I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,’ he said. ‘Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.’”

U.S. Financial Markets “prettiest horse at the glue factory”
McClatchy reports, “Hiring picked up much faster in July than expected. Car sales remain solid. Home prices are climbing again in parts of the country. It all points to a strong second half of 2012, right? Not necessarily. Weighing against growth are the ongoing debt crisis in Europe, a clear slowdown in China and uncertainty over a bitter presidential election, expiring Bush-era tax cuts and the possibility of steep, across-the-board cuts in government spending. That’s led most economists to predict sluggish growth at best for the latter half of the year, and some even whisper that recession is possible next year…Given debt problems abroad, U.S. financial markets have been the prettiest horse at the glue factory.” Douglas Holtz-Eakin, a former director of the Congressional Budget Office said, ‘If you start to lose the beauty contest, you are still in the glue factory. You don’t have to be an economist to figure out what happens: You go south and the only question is for how long.’”

Sec. of Energy Fought Officials Questioning Solyndra Loan Agreement
The Wall Street Journal reports, “Secretary of Energy Steven Chu fought back opposition from some of President Barack Obama’s top economic advisers at a White House meeting last summer to ensure government backing of a $1.4 billion project slated to use solar panels made by now-bankrupt Solyndra LLC, according to newly released emails. … Two days after Mr. Chu visited the White House on June 14, 2011, an Energy Department official boasted to a colleague that Mr. Chu’s performance was ‘close to an annihilation’ of those who questioned the deal, according to the emails released Thursday. The skeptics included Jacob Lew, who was then the director of the White House Office of Management and Budget and is now White House chief of staff, and Treasury Secretary Timothy Geithner, according to the emails.

Postal Service Loses $5.2B, Calls on Congress for Help
Bloomberg reports, “The U.S. Postal Service’s announcement yesterday that it lost $5.2 billion in its third quarter added to calls for Congress to help the agency that’s supposed to run itself like a business and in many ways can’t. The Washington-based service yesterday reported its 11th consecutive quarter of losses and said it may lose $15 billion in the fiscal year that ends Sept. 30. The service said it still will make payroll for its workforce of 530,000 and pay suppliers when it temporarily runs out of cash in October… Postmaster General Patrick Donahoe called on Congress, which is in recess until September, to pass legislation that will help it cut costs. … ‘It’s going to take a calamity,’ said James O’Rourke, a University of Notre Dame management professor. ‘When the post office literally runs out of money to pay its employees and suppliers, that’s what it’s going to take to get Congress to act. They’ve shown little interest to this point.’ Resistance from Congress prompted the service to abandon plans earlier this year to close as many as 3,700 rural post offices, part of its strategy to reduce its size in an era of less hard-copy mail and more e-mail. In 2006, Congress passed a law requiring the service to pay now for future retirees’ health care, something the Postal Service says it can’t afford and that its unions say is unnecessary.”

U.S. Exports Grew in June
The Wall Street Journal reports, “U.S. exports bucked a world-wide trade slowdown in June but face serious headwinds from the recession throughout much of Europe and softening growth in Asia. The U.S. trade deficit with other countries narrowed to $42.9 billion in June from $48 billion a month earlier, the Commerce Department said Thursday, as imports fell and exports grew. Exports, which have been a pivotal contributor to the economic recovery, were strong almost everywhere except to Europe, where a recession and a protracted sovereign-debt crisis have sapped demand. Europe’s lackluster appetite for U.S. goods was more than countered by countries such as China, where reliance on U.S. exports continues to expand, even as that economy has slowed from double-digit growth… Thursday’s figures indicate that the U.S. remains as yet unscathed by—but in the path of—an economic downdraft affecting the rest of the world.”

Bowles Calls for “serious national debate about our debt”
Erskine Bowles editorializes in The Washington Post, “The most important lesson Al [Simpson] and I learned on the commission is that to fix the debt, everything must be on the table. … So although I give Romney credit for pledging to reform the tax code to reduce loopholes, his current proposal will not take us to the promised land. … Obama hasn’t gone as far in cutting spending, particularly in health care, as is necessary to stabilize the debt at a reasonable level and keep it on a downward path as a percentage of the gross domestic product. … Over the next four years, the United States will need to do much more to address its long-term debt than either party has been willing to do. This fall, the American people deserve a serious national debate about our debt, not easy promises. To avoid the most predictable economic crisis in history, we must let the numbers do the talking.”