The nation posted an anemic growth rate of 0.6% in the fourth quarter of 2007, hampered by the residential housing market and halving expectations from 1.2% GDP annual growth. In response to the slowdown, the Federal Reserve dropped its lending rate a half-point for the second time in eight days. It underscores the analysis that inflation has now become a secondary concern for the Fed:
The Federal Reserve reduced short-term interest rates on Wednesday for the second time in eight days, meeting widespread expectations by investors on Wall Street for a big rate cut.
In lowering its benchmark Federal funds rate by half a point, to 3 percent, the central bank acknowledged that it is now far more worried about an economic slowdown than rising inflation, and it left open the possibility of additional rate reductions.
“Financial markets remain under considerable stress, and credit has tightened further for some businesses and households,” the central bank said in a statement accompanying its decision. In addition, it said, recent data indicated that the housing market is still getting worse and the job market appears to be “softening.”
Taken together, the back-to-back rate cuts totaling 1.25 percent amounted to the Fed’s most aggressive effort in years to head off a recession. By comparison, the Fed under Alan Greenspan reduced the overnight rate by only a half-point after the terrorist attacks on Sept. 11, 2001.
The markets didn’t respond much to the announcement. It kicked off a short-lived rally, but it became apparent that traders had already factored in an expected Fed move. It might show the global markets that the US takes the economic slowdown seriously and keep them from panic selling, but otherwise, the rate cut looks like business as usual at the moment.
King Banaian of SCSU Scholars takes a look at the underlying issues in the slowdown:
If you just took the headline number — 0.6% growth in the fourth quarter, worst quarter in five years, versus a market expectation of 1.2% — you would think the GDP report today lays the foundation for believing recession is imminent and that the Fed’s expected move to cut interest rates another 50 bp would be more in line with what one would expect in a recession (though it might not yet meet the Taylor rule expectation.) But some are noting that the disappointment is more than made up by the housing sector and a very sharp selloff from inventories (knzn refers to a near-3% growth rate in ” nonresidential final sales”, which I think I know what that means.)
Well, nice try. Without the foreign sector, gross domestic purchases rose only 0.2% in the quarter, and real final sales decelerated from 4% in the third quarter to 1.9%. (Which means, btw, that real final sales to domestic purchasers — not overseas — was lower at 1.4%.) So while we might have some explanation for missing the expectation of 1.2%, you could hardly say we should have beaten it. The very best interpretation would be that the numbers generated little new information about the state of the economy.
I’ll be talking with King later today (special time of 1 pm CT) at Heading Right Radio to dissect the numbers. The economics chair of St. Cloud State University will walk us through the numbers, explain their meaning, and we’ll talk about the impact of the report on the political races of 2008.
Last week, John Fund took some heat over his reporting, based on multiple sources, that John McCain said he might not be inclined to nominate another Samuel Alito to the Supreme Court, because he wore his conservatism on his sleeve. That created a stir and a puzzled rebuttal from the McCain camp, which noted that he had supported the actual Alito nomination. They didn’t deny that McCain made the remark, but noted that Fund couldn’t give a specific time and place for it and doubted it had been said at all.
Today, Robert Novak corroborates Fund and places the remark and its timing:
I found what McCain could not remember: a private, informal chat with conservative Republican lawyers shortly after he announced his candidacy in April 2007. I talked to two lawyers who were present whom I have known for years and who have never misled me. One is neutral in the presidential race, and the other recently endorsed Mitt Romney. Both said they were not Fund’s source, and neither knew I was talking to the other. They gave me nearly identical accounts, as follows:
“Wouldn’t it be great if you get a chance to name somebody like Roberts and Alito?” one lawyer commented. McCain replied, “Well, certainly Roberts.” Jaws were described as dropping. My sources cannot remember exactly what McCain said next, but their recollection is that he described Alito as too conservative.
This actually makes it slightly worse. The Fund quote implied that McCain wouldn’t appoint an Alito because he thought Alito was too overtly conservative. Novak’s report shows that it wasn’t Alito’s overtness, but his conservatism that McCain found unattractive. That won’t help convince conservatives to trust McCain on judicial nominations.
People should be cautious before jumping to too many conclusions, though. First, McCain did support both Roberts and Alito in their confirmations, and by all accounts enthusiastically. That arguably could have come from the deference Presidents should have in selecting their own judicial appointments, too, rather than enthusiasm for the choice itself. Second, McCain’s preference for a Roberts still speaks volumes about why he’d be a much better choice in a general election over a Hillary Clinton or Barack Obama. I find McCain’s response a little more reassuring overall.
Nevertheless, as George Bush found out with the Harriet Miers nomination, the conservative base sees the judicial nomination power as one of the most important roles for a President. Alito got his nomination because of conservative ire over his pick of Miers. It demonstrated that nothing will provoke the base as much as a fumble on judicial picks; this looks like a fumble, but not an unrecoverable one. McCain could address the issue by giving a few names of who he might have in mind for Supreme Court nominations, or at least naming a couple of advisers he’ll use to make those decisions. His new endorser, Rudy Giuliani, took that approach by naming an entire panel of experts to his campaign for just that purpose.
Of all the arguments against Hillary Clinton’s nomination, her tenure on the board of Wal-Mart may be the most ironically damaging. Democrats survive on the money that labor unions generate, and they have a passionate hatred for the nation’s largest retailer, which has successfully kept unions from organizing their workers. John Edwards and Barack Obama have repeatedly demonized Wal-Mart, even though most analysts agree that its low prices and job opportunities represent a net benefit to lower-income communities.
Hillary has attempted to parry criticism of her Wal-Mart connection by claiming that she did what she could to press for positive change while on the board. ABC News has reviewed hours of stockholder meeting videotapes and finds no evidence that she ever pushed Wal-Mart to be more union friendly:
In six years as a member of the Wal-Mart board of directors, between 1986 and 1992, Hillary Clinton remained silent as the world’s largest retailer waged a major campaign against labor unions seeking to represent store workers.
Clinton has been endorsed for president by more than a dozen unions, according to her campaign Web site, which omits any reference to her role at Wal-Mart in its detailed biography of her. …
An ABC News analysis of the videotapes of at least four stockholder meetings where Clinton appeared shows she never once rose to defend the role of American labor unions.
The tapes, broadcast this morning on “Good Morning America,” were provided to ABC News from the archives of Flagler Productions, a Lenexa, Kan., company hired by Wal-Mart to record its meetings and events.
Republicans will likely laugh at this line of attack. It’s not one voters will see in a general election, should she win the nomination. The Right sees this obsessive focus on Wal-Mart as a strange passion indeed. People don’t have to shop or work at Wal-Mart, and I don’t do either, but they certainly have the right to argue against unionization if they desire, as long as they follow the law in doing so. They also can offer whatever wages they desire; they have to compete for labor in what has been for years a very tight market, and so they have to be able to beat other retailers to get the best workers.
Populists like Edwards and Obama see it differently, and so do the labor unions, which need the hundreds of millions in dues that a unionized Wal-Mart employee pool would produce. Hillary showed little impulse to help them in that effort when she had the opportunity. That might have come back to bite her in the primaries, but the unions appear to have agreed to forgive her for her failure. They continue to line up in support of Hillary.
Maybe this will signal an end to the Wal-Mart obsession of the Left. Like most obsessions, it has been irrational and damaging to the credibility of those who indulge in it. It reveals a lack of respect for free markets and even employee choice, neither of which surprise anyone considering its source. Both the Left and the Right have plenty of reasons to oppose Hillary, but this is the least of them.
One final thought regarding last night’s debate keeps reverberating, and that comes from the repeated assertion from John McCain that he led for patriotism, not for profit. No one can doubt that this is true, and no one can doubt John McCain’s patriotism and sacrifice for this country. He has also, in the Senate, been a leader on national issues far more than others like John Kerry, for instance; he takes very public stands on issues and drives major legislation. Regardless of what people think of those positions, he has never let an overwhelming desire to safeguard his political career guide his decisions, and Iraq may be the best example for conservatives.
However, this line — and McCain’s dismissive attitude towards the business class in last night’s debates as a collection of managers — signals a massively tin ear, especially among Republicans. Leading for patriotism is a wonderful motive. However, he got that opportunity because a lot of Americans who work hard for profits generate enough taxes to pay for the military and for the government that McCain has helped govern for a quarter-century. The people McCain wants to lead as President often lead for profit, and won’t appreciate the aspersion this phrase that McCain uses in every appearance casts on their own motives.
We seem to have come a long way from “The business of America is business,” and in some ways, that’s not altogether bad. The engine of America still remains its free market and respect for private property, which funds and fuels all of the other efforts our nation produces. While military service and public office are high callings, it isn’t necessary to denigrate the people leading in the business community to make that point.
UPDATE: Michelle Malkin reminds us that Reagan knew better than to demonize and denigrate free-market leaders.
UPDATE: I’m not going to put this in a separate post, for a reason I’ll explain in a moment. Mitt Romney won this debate. He looked crisp, sharp, had facts at his command, and exuded confidence.
McCain not only looked old and tired, constantly leaning on his arms and speaking in a monotone, he made a very poor showing in trying to falsely stretch a Romney quote from April into an endorsement of a withdrawal. That’s not only ridiculous, it’s blatantly a smear. As I pointed out earlier, John McCain in January 2007 actually did talk about ending the mission if surge milestones didn’t get met by the Iraqi government, making this a pretty dumb choice for a line in the sand. And even Anderson Cooper had to talk over John McCain to tell him he got it wrong.
I liked the format. Anderson Cooper did better here than he did at the YouTube debate, and it obviously allowed the candidates to mix it up. I’ll have more in the show, but the actual debate probably won’t move the needle much. Romney won the last debate, and it didn’t do him much good later in Florida.
UPDATE II: Here’s what McCain said in January 2007:
McCain said Thursday that he hadn’t yet decided on precise benchmarks. “They’d have to be specific, and they (Iraqi government officials) would have to meet them,” he said.
Asked what penalty would be imposed if Iraq failed to meet his benchmarks, he said: “I think everybody knows the consequences. Haven’t met the benchmarks? Obviously, then, we’re not able to complete the mission. Then you have to examine your options.”
So what was McCain talking about in this passage? More troops, or not completing the mission? He didn’t use the supposedly verboten word “timetables”, but unmet benchmarks have to have timetables to be unmet, and clearly McCain had some timeframe in mind with this remark. Like I said, he drew a really dumb line in the sand with this issue.
UPDATE III: John at Stop the ACLU has Romney’s original interview up at his site.
Original post follows …
The remaining Republican hopefuls square off at the Reagan Ranch in California. Will Mitt Romney make the sale, or will John McCain prevail? It won’t take long to find out — the debate will air live on CNN tonight, starting at 8 pm ET/7 pm CT. The two will join Mike Huckabee and Ron Paul live from the Reagan Ranch in Simi Valley, California.
Of course, the whole gang from Heading Right will live blog the debate. At 10:30 ET/9:30 CT, join us at Debate Central for our traditional post-debate wrap-up at BlogTalkRadio. Rick Moran, Fausta Wertz, and Duane “Generalissimo” Patterson will pick the winners and the losers!
NOTE: Tomorrow’s Heading Right Radio show will start at 1 pm CT rather than 2 pm CT; I forgot to warn people at the end of today’s show.
A new Gallup poll shows Hillary Clinton has lost most of her once-dominant national lead over Barack Obama, just as the race turns towards a clarifying Super Tuesday primary date. She has tumbled six points in nine days, while Obama has gained eight in the same period. With John Edwards exiting the race, Obama has momentum and seems poised to pick up more steam (via Memeorandum):
Barack Obama has now cut the gap with Hillary Clinton to 6 percentage points among Democrats nationally in the Gallup Poll Daily tracking three-day average, and interviewing conducted Tuesday night shows the gap between the two candidates is within a few points. Obama’s position has been strengthening on a day-by-day basis. As recently as Jan. 18-20, Clinton led Obama by 20 points. Today’s Gallup Poll Daily tracking is based on interviews conducted Jan. 27-29, all after Obama’s overwhelming victory in South Carolina on Saturday. Two out of the three nights interviewing were conducted after the high-visibility endorsement of Obama by Sen. Edward Kennedy and his niece Caroline Kennedy.
Clinton’s lead in the three-day average is now 42% to Obama’s 36%. John Edwards, who dropped out of the race Wednesday after Gallup conducted these interviews, ended his quest for the presidency with 12% support. Wednesday night’s interviewing will reflect the distribution of the vote choice of former Edwards’ supporters as well as the impact, if any, of Hillary Clinton’s popular vote win in Florida on Tuesday.
National polls have come back to the forefront as over 20 states get ready to go to the polls or caucuses on Tuesday. The two face each other for the first time in a head-to-head debate which promises to be a watershed event in their contest. Hillary has to find ways to blunt his momentum and to recover that sense of inevitability, or she could face a very difficult Super Tuesday. If she does not gain an overwhelming majority of delegates, she may find even more Democrats willing to abandon her for Obama, just as Ted Kennedy has already done.
We expected a nail-biter from the GOP. We may get one from the Democrats as well. Can a call to Al Gore be far behind?
In what looks to be a bona fide movement behind the campaign, John McCain has not just become the Republican frontrunner but the national leader in the presidential sweepstakes. In a poll taken before his Florida victory, Rasmussen has McCain leading Hillary Clinton by eight points and Barack Obama by six. It caps an improbable comeback by a man whom the media laughed off as dead in the water six months ago:
The latest Rasmussen Reports survey of Election 2008 shows Republican frontrunner Senator John McCain with single-digit leads over Democratic Senators Hillary Clinton and Barack Obama. McCain now leads Clinton 48% to 40%. He leads Barack Obama 47% to 41%.
In a Rasmussen Reports poll conducted mid-January, McCain was two points behind Clinton, five behind Obama. A couple days later McCain won the South Carolina primary.
McCain has led Clinton in four of the last five polling match-ups conducted by Rasmussen Reports. He has had the edge over Obama in three of the last four polls. (see history and trends). Following his victory in Florida, Rasmussen Markets data indicates that McCain is the overwhelming favorite for the Republican Presidential nomination.
The crosstabs have some revealing information. McCain loses among women to Hillary, but only by three points, and he beats Obama by five. He beats Hillary among men by a whopping 22 points, but only edges Obama by eight with males. He ties or wins outright in every age category except 18-29 against Obama and Clinton.
In the race demographics, a couple of telling points. McCain gets 19% of the black vote against Hillary and 20% against Obama, but Obama gets a lot more overall, 77% to 59% for Hillary. This indicates that the Clinton campaign has seriously damaged their support in the African-American community and that the GOP has a chance to make an argument for their support — if the Democrats don’t nominate Barack Obama. Hillary beats McCain in the “Other” category, presumably dominated by Hispanics, 57% to 37%. Obama beats him here as well, but only 49%-46%, which might indicate that Hillary’s outreach to Hispanics has succeeded outside of Nevada.
Most interestingly, conservatives back him in both matchups. He gets 70% against Hillary and 67% against Obama, with only a maximum of 13% saying they will cast their vote elsewhere. He plays in the margin of error with both Hillary and Obama for moderates, trailing by three points. Liberals only give him 18-19% and he loses Not Sure to Hillary by six points, but he beats Obama in Not Sure by 24 points.
It looks like most conservatives will not walk away from McCain in either head-to-head contest. McCain could build on that with his decision to attend CPAC, as noted at The Corner. Just showing up shows that he recognizes the damaged relationship with the activists in the conservative base that could help him win, if he gets the nomination. It’s a moment for both those conservatives and McCain to reach out for accommodation and assurances.
Note: This post will remain on top until show time; newer posts may be found below.
Today on Heading Right Radio (2 pm CT), The Campaign Spot’s Jim Geraghty and I review last night’s Florida primary win for John McCain and talk through its impact. We also look ahead to tonight’s debate and ponder what each candidate must do.
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Which target got a million-dollar missile in the rear yesterday? ABC News reports that Pakistani officials believe they killed someone high up the al-Qaeda food chain with a missile strike yesterday, but they’re not saying who it might be. Hopes have been raised in the past, but usually have wound up either killing lower-level figures or, as George Bush famously noted, a camel and a ten-dollar tent:
Pakistani intelligence sources say they believe a “high-value” al Qaeda target was killed in a missile strike yesterday in the country’s tribal region bordering Afghanistan.
U.S. officials said there was no indication that the target was Osama bin Laden or his deputy Ayman al Zawahri, but one senior official told ABCNews.com the strike was aimed at one particular figure.
“We don’t know whether we got him yet, we are sorting through it,” the official said, indicating the intended target was a top leader of the terror group.
The Pakistanis may also be aiming at Baitullah Mehsud, a particular thorn in their side. He reportedly masterminded the assassination of Benazir Bhutto and may have sent the ill-fated mission to Europe for the transportation system attacks, which got foiled by Western intelligence services. The capture of those men could have given the Pakistanis a good idea where to find Mehsud.
Last week, reports emerged that Osama bin Laden had begun writing personal notes to Taliban and AQ leaders in Pakistan and Afghanistan. Those communications could have tipped off the coalition against AQ as well. Ayman al-Zawahiri’s more frequent communiques to the West could also have left him vulnerable. We know who it wasn’t; despite the outrage Adam Gadahn generates among Americans, the traitor isn’t considered a high-value target by anyone other than Adam Gadahn.
We’ve been through these reports before. Most of the time, they turn out to be nothing. We’ll hope that they took out a top level AQ or Taliban leader, but we’ll wait for confirmation before celebrating.
In the wake of the loss in Florida yesterday, Mitt Romney needs to focus on tonight’s debate to break out as the conservative choice for the nomination. John McCain has taken leads in significant Super Tuesday states, and tonight will be the last national audience for all of the remaining candidates before 21 states go to the polls or the caucuses. Romney has to ignite conservatives and make this a binary race across a clear ideological line.
Some feel that the moment has already passed. Writers at The Corner and Dick Morris have resigned themselves to a Romney loss before more than 10% of the necessary delegates have been won. Others, like my friend and indefatigable Romney supporter Hugh Hewitt, argue that the numbers show that no one can win next week. The truth lies in between, as Hugh has the numbers correct but avoids acknowledging the role momentum plays.
Romney has one big advantage, but it will only be an advantage this week. He has better organizational strength and more resources. He can be more places at the same time as John McCain, which makes a difference when 21 states hold their contests on the same day. He can get his message across to more people simultaneously after this debate, and do it more often. After February 5th, that becomes far less necessary as we go back to a series of one- or two-state primary dates that stretches into April, when Pennsylvania goes to the polls.
If Romney wants to build momentum and define the race in binary conservative vs moderate terms, he has to start tonight and get aggressively positive about his credentials. He has only a few days in which he can crowd McCain out of the messaging. If he can’t do that tonight and for the next five days, he will have little chance of prevailing, especially if McCain takes a big delegate lead next week.
What does McCain need to do? He needs to reach out to conservatives. He started last night with a gracious victory speech, but he needs to address the real and honest concerns on policy that conservatives still have with McCain. They need to see McCain promise to go after the Democrats with the same fervor that he went after Republicans over the years, and he has to convince them that he won’t go back on his word on border security and tax cuts. After this debate, he has to make a significant outreach effort, and CPAC would be the best place to do this.
We will live-blog this debate, as always, at Heading Right this evening, starting before the 8 pm ET start. We will also have our normal Debate Central recap afterwards; time TBA.