Washington News

Republicans Criticize Obama For Including War Funds In Defense Cuts Congressional Republicans are criticizing the Obama Administration for including funding for the war in Afghanistan among the automatic defense cuts slated to begin in 2013. The Hill reports in its "Defcon Hill" blog that while Obama Administration officials say funding for the war must be part of the cuts required under the new law, House Armed Service Committee Chairman Buck McKeon "says the money dedicated to Overseas Contingency Operations (OCO) was never intended to fall under the budget axe." The Hill notes that OMB officials said the decision "was not up to them, because there was no exemption for preserving the war funding in the law."
Republicans "Desperate" To Undo Sequestration The New York Times reports that Republicans who helped create sequestration "as a bludgeon to force a bipartisan budget accord are now desperate to undo it. Indeed, some of the loudest advocates for blocking the cuts...voted to create them." However the Times notes that "the threat they created may be doing its job. [Sen. Lindsey] Graham is openly talking about revenue increases to offset the costs. Even South Carolina's ardently conservative House members, Mick Mulvaney, Joe Wilson and Jeff Duncan, said last week that they were ready to talk."
Defense Cuts May Emerge As Political Liability For Democrats Politico reports, "From the Navy shipyards of Norfolk to the aerospace industry hangars in Southern California - and in the corporate towers of defense contractors inside the Beltway - the so-called sequester is not only an urgent policy matter but could be a political liability for lawmakers from defense-heavy districts." The NRCC "has slammed Democratic lawmakers like Reps. Larry Kissell of North Carolina, Bill Owens of New York and John Barrow of Georgia for rejecting plans to save cuts from hitting Forts Bragg, Drum and Gordon. 'These Democrats are already on record opposing common-sense reforms that would avoid these devastating cuts to local jobs and America's military,' said Paul Lindsay, an NRCC spokesman."

Wall Street Resisting New Capital Requirements The Wall Street Journal reports that the biggest US banks are pressuring the Fed to ease capital requirements it is planning to announce this week as part of the Dodd-Frank Wall St reform law. Nevertheless, Fed governor Daniel Tarullo says, "Given the damage that the failure of a systemically important firm could inflict on the financial system, it is critical that regulators, markets, and taxpayers have confidence that these firms have the capacity to absorb large and sometimes unexpected losses and continue to serve as a well-functioning financial intermediary."
Banks Buoyed By Widening Spread Between Treasuries And Mortgage Rates The Financial Times reports that banks' profits have been boosted by the falling yields on Treasuries, which have dropped at a faster pace than the interest rates on mortgages.
Group Warned JPMorgan To Improve Risk Controls The New York Times reports that JP Morgan Chase officials dismissed an "urgent warning" more than a year ago from CtW Investment Group that the bank's risk controls needed to be improved. The Times adds, "Now, after disclosing a $2 billion trading loss at JPMorgan in May and watching the bank's market value drop by more than $25 billion, those officials are expected to follow one of the group's recommendations, strengthening the board panel that oversees risk. Still, that will not address weaknesses that critics say undermined the power of the bank's chief risk officer." JPMorgan officials "insist there was no structural flaw in risk management or setting position limits. ... But the critics maintain that having successfully navigated the financial crisis in 2008, JPMorgan's risk officers became complacent about the danger posed by the chief investment office's increasingly aggressive bets."
BofA Shareholders Were Not Told Of Merrill Lynch Losses The New York Times reports that while Bank of America executives were warned in advance of the bank's $50 million purchase of Merrill Lynch in December 2008 that "losses at the investment firm would most likely hammer the combined companies' earnings in the years to come," shareholders "were not told about the looming losses, which would prompt a second taxpayer bailout, of $20 billion, leaving them instead to rely on rosier projections from the bank that the deal would make money relatively quickly." The disclosure, "coming to light in private litigation, is likely to reignite concerns that federal regulators and prosecutors have not worked hard enough to hold key executives accountable for their actions during the financial crisis."

Negotiators Appear To Be Far From Deal On Highway Bill The Washington Times reports that house and Senate negotiators appear to be far from reaching a deal "to keep federal highway, rail and transit programs funded beyond June." House Majority Leader Eric Cantor "said he was 'hopeful' a long-term 'highway bill' could be hammered out by the end-month-end deadline. But if not, he suggested House GOP leaders are ready to accept a temporary stop-gap funding measure to ensure federal transportation projects don't screech to a halt." Meanwhile, House Minority Leader Nancy Pelosi "said she is 'hearing rumors' that closed-door negotiations aren't going well and that another short-term extension may be eminent - a move she said would be 'completely inappropriate.'" The Times notes, "A sticking point is a Republican push to include a provision for the construction of the Keystone XL oil pipeline."
States Mull Miles-Traveled Taxes To Fund Highway, Bridge Projects USA Today reports that as states seek new ways to tax motorists to pay for highway and bridge repairs and improvements, several states including Minnesota, Oregon, Washington, and Nevada, among others are considering plans to tax drivers "for how many miles they travel rather than how much gasoline they buy." USA notes that the biggest obstacle to the miles-traveled tax "has been privacy concerns" as motorists object to a government-mandated box in their vehicle monitoring the miles they travel.

Campaign News

Walker Retains Wisconsin Lead, But Contest Seen Coming Down To Turnout The Wisconsin gubernatorial recall election, now less than 48 hours away, was a big topic on the Sunday morning political talk shows and continued to receive network news coverage. The consensus is that Republican Gov. Scott Walker maintains the advantage to retain his job, but that get out the vote efforts and turnout could be decisive. The latest RealClearPolitics average shows Walker at 51% to Democratic rival Tom Barrett's 44.4%.
Poll Shows Tightened Race; Walker Ahead 50%-47% A Public Policy Polling survey of 1,226 likely voters conducted over the weekend shows Wisconsin Gov. Scott Walker (R) leading Milwaukee Mayor Tom Barrett (D) 50%-47%. The race has tightened from last week, when a Marquette Law poll had Gov. Walker leading 52%-45%, and three weeks ago, when a PPP poll had Gov. Walker ahead 50%-45%. The poll found 51% of likely voters approved of Walker, while 47% did not. The poll also showed Walker leading among men, whites, and seniors. Barrett, meanwhile, led among women and young voters.
"A Relaxed" Walker Meets Constituents, Urges Voter Mobilization. The Milwaukee Journal Sentinel reports on Sunday's Brown County dairy breakfast, where Walker and Barrett appeared to serve scrambled eggs to families. There, "a relaxed Walker said at the huge dairy farm that his administration had laid out a clear plan to balance the budget and enact reforms, create more than 30,000 jobs and hold the line on property taxes on homes." In the afternoon, Walker stopped at his Germantown campaign office, where he urged supporters to mobilize voters.
Priebus Uses Recall Election To Criticize Obama's Record Republican National Committee Chairman Reince Priebus said on CBS' Face The Nation, "Scott Walker is talking about his record. He's talking about the fact that his reforms are working, that people are getting back to work, that businesses are coming in." The Hill blog says Priebus used the Wisconsin recall election as a springboard to criticize President Obama's record. He said Walker "is one of those special people that has made promises and kept promises. [Obama's] a president who is in love with the sound of his own voice but who hasn't been able to follow through on too many promises."
National Impact Examined Thomas Beaumont of the AP says whatever the outcome on Tuesday both sides of the national campaign will highlight they reasons why both Obama and Romney should campaign hard for Wisconsin's 10 electoral votes. "There's an acknowledgement that neither side is likely to wake up Wednesday with a clear edge, given there's so much time left before November." With a similar bent, the New York Times says a GOP win on Tuesday could trigger "a wave of adjustments in the lineup of swing states." Gov. Walker said that for Republicans "to make inroads in this state, they have to talk about what they're going to do to take on the powerful special interests to ultimately make the tough decisions that are more about the next generation than just the next election." For its part, the Washington Times cites RNC Chairman Reince Priebus who "predicts that if Wisconsin goes red in November, it will mean 'lights out' for Mr. Obama."
George Will said on ABC's This Week that the election reflects on a smaller scale the national challenge to reign in the public sector. He said Mayor Barrett "has used the Walker reforms to save $19 million in the Milwaukee budget itself, so he's running against a man whose reforms he's emulating and using." Similarly, the Wall Street Journal says in an editorial that the race matters nationally because it will test whether individual taxpayers can rein in entitlements that are protected by, and benefit, special interests.
Bill Clinton, Top Republicans Stump In Wisconsin The CBS Evening News says, "[Bill Clinton] flew in five days before the vote to stump for Democrat Tom Barrett. ... Move the camera 25 miles to the west and there was South Carolina Gov. Nikki Haley turning up the volume" for Walker.

Obama, Romney Aides Trade Shots Over Weak Jobs Numbers Friday's unemployment report continues to generate a great deal of media coverage and was the subject of much of the debate on the Sunday morning talk shows. Coverage last night and this morning portrays the Romney campaign as eager to spotlight the unemployment rate as evidence that President Obama's policies have not succeeded, while the Obama campaign continues its recent focus on Mitt Romney's job-creation record in Massachusetts.
For instance, NBC Nightly News reported that there was "more fallout from the disappointing jobs report," as "Romney surrogates went on the attack, putting the President's senior campaign strategists on the defensive." Meanwhile, senior Obama staff responded by criticizing Romney's economic record as Massachusetts governor. David Axelrod said of then-Gov. Romney: "He had the wrong economic philosophy, and he failed." For its part, The AP cites Romney adviser Eric Fehrnstrom who claimed on ABC's This Week that the President's "policies are not working," and suggested that this is due to the President lacking "any prior executive leadership experiences." NBC Nightly News featured Romney adviser Kevin Madden, who said: "If we had a President who had a record to run on, he would do so." Fehrnstrom added, "This president came into office without any prior experience running anything." The Washington Times reports that on Fox News Sunday, Romney adviser Ed Gillespie said, "This administration, the policies are hostile to job growth."
The Hill noted that on ABC's This Week, Obama Campaign deputy manager Stephanie Cutter acknowledged the economy was still in recovery. She noted that while Obama "had presided over the creation of '4.3 million private-sector jobs, the issue is that we're not adding jobs fast enough,'" a product of partisan lawmakers obstructing key job creation measures, Cutter argued. Reuters reported that on CBS's Face The Nation, David Axelrod said Romney "offers himself as a job creator, a kind of economic oracle and he's saying the same exact thing as he said 10 years ago when he ran for governor of Massachusetts." Axelrod continued, "What happened? Massachusetts plunged to 47th in job creation. They lost manufacturing jobs at twice the rate of the country and created jobs at one-fifth the rate of the rest of the country. It wasn't the record of a job creator."
McDonnell: Stimulus Spending Benefitted Virginia Dan Eggen, in the Washington Post , said that in an appearance on CNN's State of the Union, Virginia Gov. Bob McDonnell "wandered off script somewhat Sunday as a surrogate for" Romney, "conceding that President Obama's stimulus measures helped his state weather the economic crisis." McDonnell is quoted as saying, "Did it help us in the short run with health care and education and spending to balance the budget? Sure. Does it help us in the long term to really cut the unemployment rate? I'd say no."
Hispanics' 11% Unemployment Rate Could Present Romney An Opportunity USA Today reports, "With last week's job report showing Hispanic unemployment on the rise, Republicans see a chance to draw voters from a group that voted overwhelmingly for President Obama in 2008." USA Today goes on to report that "the Hispanic unemployment rate jumped from 10.3% in April to 11% in May." However, USA Today notes that the President "still holds a commanding 65%-25% lead with Hispanics."

McCotter Ends Write-In Campaign The Detroit News reports, "US Rep. Thad McCotter, plagued by a criminal probe into his nominating petitions, on Saturday said he is ending his write-in campaign for re-election." The decision came on the heels of a decision by Michigan's Secretary of State's office that Rep. McCotter was ineligible for the August 7 primary ballot due to "widespread invalid and tampered petition signatures. ... The petitions revealed widespread photocopying to double and in some cases triple the number signatures, altered tracking numbers and apparent copying and pasting of past signatures." After a request from McCotter and the Secretary of State's office, "The Michigan attorney general launched its criminal investigation Thursday of the suspect signatures." The only GOP candidate on the ballot in the 11th district is Kerry Bentivolio, "a high school teacher and veteran...inspired by the Tea Party." Former state Sen. Loren Bennett announced that he will begin a write-in campaign, while former state Rep. Andrew "Rocky" Raczkowski is considering joining the race as well.
In his Detroit News column, Nolan Finley writes that Rep. McCotter's decision to quit the race was not because he couldn't "multi-task", as a statement he released suggested. Finley believes that the reason he decided to quit the race was because of the expense and complexity of a write-in campaign, the lack of support from the Republican leadership in the 11th district, and the difficulties that would be a result of the ongoing criminal investigation from the Attorney General's office.