Economic Outlook: Poker faced

By ANTHONY HALL, United Press International  |  Aug. 2, 2011 at 9:00 AM
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The U.S. House and Speaker John Boehner proved Monday there is life after the Tea Party comes to town.

In passing a compromise bill to raise the federal debt ceiling with a formula nobody seems to like, there was unity in discord on Capitol Hill with a 15-minute vote that gives the Obama administration permission, if it passes in the Senate, to spend another $2.4 trillion, which should get the government through 2012 before the issue has to be visited again.

The bill kicks the can down the road.

That most often repeated lament in Washington has come true once again with legislatures passing the buck to a committee of 12 evenly divided between Democrats and Republicans, who will be charged with making the tough choices for one and all.

Perhaps finding 12 about-to-retire lawmakers would do the trick, as we -- the media, the voters, the lobbyists -- have created a political version of a steroid scandal in Washington, a political scene in which everyone sounds tough and nobody is.

Don't be fooled: This is between tax and spend and don't tax and spend. In the end, 95 Democrats voted no, but so did 66 Republicans. That is more than a few members of both parties disagreeing with their leadership.

The bill leaves entitlement programs intact, putting a 2 percent cap on reductions the committee can recommend Social Security and Medicare. It calls for a balanced budget amendment, a demand Republicans decided was their idea.

Democrats felt the bill was not progressive; it doesn't raise additional revenue from the wealthy or corporations, asking only that programs that help the poor be sacrificed. Republicans in turn complained the bill, which calls for $917 billion in spending cuts initially, cut too deeply from defense spending. "This is the best defense number we're going to get," Boehner said before the vote.

And who speaks for the middle of the road in this case?

"Everybody had to give something up. People on the right are upset. People on the left are upset. People in the middle are upset," said Senate Majority Leader Harry Reid, D-Nev, The Wall Street Journal reported.

It brings to mind what Paul McCartney said when a reporter asked him why all four of the Beatles were such nice guys. McCartney said, "Because we're not stupid. We know when there are cameras in the room."

In Washington, everybody is upset about the bill when the cameras are pointed at them. Take away the spotlight and it is guaranteed that everyone's expression changes.

In international markets Tuesday, Japan's Nikkei 225 index fell 1.2 percent, while the Shanghai composite index in China slipped 0.91 percent. The Hang Seng index in Hong Kong dropped 1.07 percent, while the Sensex in India fell 1.12 percent.

In Australia, the S&P/ASX 200 fell 1.43 percent.

In midday trading in Europe, the FTSE 100 index in Britain shed 0.68 percent, while the DAX 30 in Germany lost 0.99 percent. The CAC 40 in France dropped 1.02 percent, while the Stoxx Europe 600 fell 1.33 percent.

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