The Herald Bulletin

Afternoon Update

Breaking News

May 25, 2013

Improving economy changes political landscape

WASHINGTON — Alleged misbehavior by the Internal Revenue Service and other federal agencies gives the GOP something else to talk about and investigate as the economy clearly, if slowly, recovers on President Barack Obama's watch, robbing Republicans of a central argument against Democrats.

Amid a series of recent positive economic reports, the GOP is revving up its portrayal of the Obama administration as scandal-ridden and inept, while largely abandoning the party's where-is-the-recovery criticism.

Republicans had little choice, given that the economy has gained considerable strength over the past 18 months. Today, the federal budget deficit is shrinking rapidly and tax receipts are rising. Consumer confidence and spending are up, as are auto and housing sales. Stocks are near all-time highs.

Such improvements give U.S. policymakers some rare breathing room, even if the nearly 12 million people still out of work don't discern the brighter picture.

While unemployment is at 7.5 percent, it's down from the 10 percent of October 2009. Also, recent job creation in the private sector has been relatively strong.

Republicans, who earlier stressed the weak recovery and what they depict as Obama's economic mismanagement, are now busy denouncing his administration on several fronts: for allowing the IRS to target conservative groups for extra tax scrutiny; for engaging in an alleged cover-up on the nature of a deadly terrorist attack on a U.S. post last September in Benghazi, Libya; and for secretly seizing records of journalists from The Associated Press and Fox News.

Obama and Democrats are trying to look beyond the ethics investigations to talk up the recent economic gains and the president's efforts to promote more jobs. He's been trying to draw attention to his job-creation ideas in a series of out-of-town events before audiences of workers.

As a result of fiscal improvements, the annual federal budget deficit will drop this year to $642 billion after four straight years of $1 trillion-plus annual shortfalls, the bipartisan Congressional Budget Office reported this past week.

The Treasury says it will pay down a small portion of the national debt this quarter for the first time in six years.

As the rebound gains steam, Republicans stand to lose what had been one of their strongest hands for the 2014 elections: asserting ineffective economic stewardship from the Democrat in the White House and those on Capitol Hill.

But they pick up another compelling issue, one that touches directly on Obama's core 2008 campaign promise to restore public confidence in the ability of government to produce results in an effective and evenhanded way.

There's "no question" that the alleged scandals are taking the attention of many politicians away from economic concerns, said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and top economic adviser to Republican Sen. John McCain's 2008 presidential campaign.

"What's more politically potent? Another round of complaining on the budget and the economy or the IRS, AP and Benghazi? I think it's the latter," said Holtz-Eakin, who now heads the American Action Forum, a conservative public-policy institute. Besides, "both sides were tired of the budget battle," he added.

Holtz-Eakin and many other economists emphasize that the improvements probably will be short-lived because Congress has yet to seriously address tax overhaul or fast-rising costs of programs such as Social Security, Medicare and Medicare. "It remains an OK recovery, not a sterling one," he said.

Part of the deficit decline comes from the higher tax rates that went into effect this year and from improving corporate profits. But some is due to temporary events such as bailout paybacks by government-controlled mortgage giants Fannie Mae and Freddie Mac, and higher tax payments from wealthy people and corporations shifting income into 2012 to avoid paying higher 2013 taxes. Also, U.S. borrowing costs are at historic lows.

For now, the three controversies plaguing the administration are consuming most of the political oxygen in Washington.

"Congress basically can't walk and chew gum at the same time, so they'll focus on these scandal things for a while longer," said veteran budget analyst Stanley Collender.

With annual deficits shrinking, Republicans are more likely to focus more on the $16 trillion national debt, which is still going up, instead of deficits, which are going down, Collender said.

The declining deficit also means that another knock-down partisan fight in Congress over raising the government's borrowing limit now won't happen until October or November instead of early summer as originally envisioned.

The present dynamic, with Obama and his Democratic allies forced onto defense in three separate matters, is not lost on Republican leaders hoping to pick up seats in the House and regain control of the Senate next year.

House Speaker John Boehner, R-Ohio, opened a news conference Thursday by asserting that "jobs continue to be our No. 1 priority" before he quickly moved to "the IRS scandal" and other alleged administration improprieties.

The matters now being investigated by multiple congressional committee "all feed and fuel the narrative of government intrusiveness and a government that is too large," said Thomas E. Cronin, a presidential historian at Colorado College.

"To some extent, the Obama administration has accidentally given Republicans a whole new line of attack," Cronin said.

1
Text Only
Breaking News
  • SPT-HB0725-ColtsCamp-080.jpg Colts Camp Update: Colts urging caution with vets, injured players

    Reggie Wayne isn't the only veteran player whose snaps are being watched as practice begins at Indianapolis Colts training camp.

    July 25, 2014 1 Photo

  • Holiday World plans new winged roller coaster

    The Holiday World amusement park in southern Indiana is building a new $22 million roller coaster that it says will launch riders to 60 miles an hour in 3.5 seconds, with a 14-story loop and four inversions.

    July 25, 2014

  • World Cup over, but some Argentines won't go home

    Local media reports say tens of thousands of Argentine fans remain in Brazil. They appear to be overwhelmingly young and male: Most are in their 20s, and less than a third of them are women.

    July 25, 2014

  • Doctor: Patient killed caseworker before gunfight

    A doctor told police that a patient fatally shot a caseworker at their hospital complex before the doctor pulled out his own gun and exchanged fire with him and wounded him, a prosecutor said Thursday night.

    July 25, 2014

  • Feds plan review of FSSA over Medicaid backlog

    Federal officials are reviewing Indiana's procedures for enrolling residents in Medicaid after finding the state had 80,000 low-income residents awaiting approval in May.

    July 25, 2014

  • Very bad week: Airline disasters come in a cluster

    Nearly 300 passengers perish when their plane is shot out of the sky. Airlines suspend flights to Israel's largest airport after rocket attacks. An airliner crashes during a storm, and yet another disappears. Aviation has suffered one of its worst weeks in memory, a cluster of disasters spanning three continents.

    July 24, 2014

  • Indiana receives 245 children caught at US border

    New federal data show more than 200 unaccompanied children caught at the U.S. border have been placed with sponsors in Indiana.

    July 24, 2014

  • Witness: Teen's plane didn't show obvious distress

    A man who saw a plane flown by an Indiana teen who was killed during an around-the-world flight attempt says the aircraft was flying low but didn't show any obvious signs of distress before diving into the ocean off American Samoa.

    July 24, 2014

  • Ryan Dalziel takes Brickyard Grand Prix pole

    Defending race winner Ryan Dalziel earned his first IMSA TUDOR United SportsCar Championship pole position of the season Thursday in qualifying for Friday's Brickyard Grand Prix.

    July 24, 2014

  • Ohio State marching band chief fired after probe

    Ohio State University fired the director of its celebrated marching band on Thursday after determining he ignored a "sexualized" culture of rituals including students being pressured to march in their underwear and participate in sexually themed stunts.

    July 24, 2014

Featured Ads
More Resources from The Herald Bulletin
AP Video
Raw: Air Algerie Flight 5017 Wreckage Virginia Governor Tours Tornado Aftermath Judge Faces Heat Over Offer to Help Migrant Kids Kerry: No Deal Yet on 7-Day Gaza Truce Kangaroo Goes Missing in Oklahoma More M17 Bodies Return, Sanctions on Russia Grow Gaza Residents Mourn Dead Amid Airstrikes Raw: Deadly Tornado Hits Virginia Campground Ohio State Marching Band Chief Fired After Probe Raw: Big Rig Stuck in Illinois Swamp Cumberbatch Brings 'Penguins' to Comic-Con Raw: Air Algerie Crash Site in Mali Power to Be Restored After Wash. Wildfire Crashed Air Algerie Plane Found in Mali Israel Mulls Ceasefire Amid Gaza Offensive In Case of Fire, Oxygen Masks for Pets Mobile App Gives Tour of Battle of Atlanta Sites
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Helium
Front page
Poll

Do you think Madison County and its cities need stricter pet ownership laws?

Yes, animal abuse is rampant in our area and something needs to be done.
Yes, but it may not help. It’s difficult to enforce such laws.
No, the laws are fine as they are.
Not sure
     View Results