Election Day Implications
With Republicans expected to make large gains in today’s elections, speculation has started to focus on what the election’s impact will be on recently passed major legislation including the healthcare and financial services reform bills. While the most likely outcome will be two years of legislative gridlock, if Republicans are able to take back the majority in the House of Representatives, the House will be expected to pass bills that defund key parts of the healthcare and financial services reform bills. However, the question will be whether such bills will be able to pass the Senate. The possible new Republican House majority will likely increase oversight of the key agencies implementing the bills, thereby frustrating the agencies’ abilities to implement and to enforce the new regulations.
Third Quarter GDP Figures Released
On Friday, the U.S. Department of Commerce released its report for third quarter GDP showing that the domestic economy grew by 2% in the third quarter, which is up from the last quarter but still below expectations. The GDP breakdown showed that spending by Americans, accounting for about 70% of demand in the U.S. economy, rose at a rate of 2.6%. The price index for personal consumption expenditures excluding volatile food and energy items, rose by an annualized 0.8% in the third quarter, slowing down from the second quarter’s 1.0% increase. Friday’s report also showed that federal government spending and investment rose by 8.8%, following a 9.1% increase in the second quarter.
TARP Inspector General Releases Third Quarter Report
Last Tuesday, nearly two years after the TARP bill’s passage, TARP Inspector General Neil Barofsky released his quarterly report to Congress which suggested that the Treasury Department engaged in a politically motivated attempt to hide losses at bankrupt insurance giant AIG with “manipulated” data. The report cited Treasury’s failure to disclose that it had changed its valuation methodology and should have published a side-by-side comparison of its new numbers with what the projected losses would be under the auditor-approved methodology. The report also criticized the Treasury for its claims that the Home Affordable Modification Program (HAMP) has helped 1.3 million homeowners by reducing their monthly payments. Barofsky’s report claims that only 467,000 HAMP modifications have been permanent, and the remaining modifications have been only temporary changes that may ultimately fail to keep families in their homes and may do additional harm by depleting troubled homeowners’ savings, increasing outstanding principle on loans, and further damaging borrowers’ credit scores.
President and Secretary of State Travel to Asia
On Friday, President Obama will make a state visit to India as part of a larger mission to Asia. The President’s longest foreign trip to date will also make stops in Indonesia, South Korea, and Japan. During his visits, the President plans meetings with the countries’ leaders to discuss broad economic and national security concerns. While in India, the President is set to announce a purchase by India of Boeing transporters worth between $4.5 billion and $5.8 billion. Secretary of State Hillary Rodham Clinton also embarked last week on a series of diplomatic meetings in Asia including stops in Vietnam, China, Cambodia, Malaysia, Papua New Guinea, and Australia.
If you have any questions regarding any of these issues, please contact:
Matt Jessee, Policy Advisor
1 314 259 2463