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There is nothing like a key appointment in Washington to polarize the senses. Friday was the last day in office for National Economic Council Director Lawrence Summers, one of several key voices for the White House on fiscal and economic policies.
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This week, President Barack Obama is expected to name his replacement. Pundits, of course, have been busy sorting through the list of possibilities, which could be an early indication on how the president intends to manage his next two years.
From a political perspective, the Holy Grail is a lower unemployment rate. But that can be accomplished, in theory, with policies that favor corporations, including banks, that have been the target of federal and public scorn of late. It can also be accomplished, in theory, with stimulus spending that elicits scorn from Republicans.
Looming larger each day in 2011 will be a debate on steps to lower the federal deficit of approximately $1 trillion and the new director will be a critical adviser and pitch man for decisions concerning when and what to trim.
The Washington Post on Monday named Gene Sperling as the most likely choice for the position, given he held it under President Bill Clinton and is considered a Washington insider able to work with Democrats and Republicans. On that score alone, the appointment will be a telling one. That is to say, the president is caught between a rock and a hard place, having to work with Republicans but hoping not to alienate his liberal base.
As 2010 rolled to a healthy conclusion in U.S. stock markets, economic forecasts grew rosier and rosier. The main reasons: Consumers beat expectations with holiday spending, the Federal Reserve Bank was just getting started with a policy of buying $600 billion in long-term securities and the tax bill would put dollars in the pockets of both those who were employed and those who weren't through a payroll tax break and an extension in unemployment benefits.
But Republicans are likely to spend the year popping out of their chairs with efforts to make good on their campaign promises to lower the federal deficit.
If the thematic push to lower spending resonates with voters, it could be an interesting year.
House leaders have already agreed to tackle one behemoth and swat at one trifle, The Wall Street Journal reported.
The big one is the new healthcare law, which will likely be under siege just as soon as Republicans can devise methods to attack it. Expect a frontal assault -- a complete appeal -- and when that falls short, expect Republicans to hack away at the bill in bits and pieces.
Republicans will also attempt to lower the budget for the House itself – a symbolic gesture, the Journal reported, given the savings amount to $25 million, a drop in the bucket given the size of the federal budget.
In international markets Monday, the Nikkei 225 index in Japan lost 1.12 percent and the Shanghai composite index in China rose 1.76 percent. The Hang Seng index in Hong Kong added 1.74 percent and the Sensex in India gained 0.25 percent.
In Australia, the S&P/ASX 200 shed 0.94 percent.
In midday trading in Europe, the FTSE 100 in Britain lost 1.19 percent while the DAX 30 in Germany gained 1.18 percent. The CAC 40 in France rose 1.87 percent and the Stoxx Europe 600 added 0.81 percent.
