AT&T’s T-Mobile deal could be affected by election

By Lucas Shaw

Mon Nov 28, 2011 10:19pm EST

NEW YORK (TheWrap.com) – The chances of an AT&T-T-Mobile merger grow dimmer by the day, but there may yet be hope on the horizon for the telecommunications giants — next year’s election.

The telecom industry has benefited from a change in administration before: In the 1990s, the Federal Communications Commission opposed SBC’s acquisition of AT&T during a Democratic administration, only to later approve it under a Republication administration.

The current FCC administration has already indicated its displeasure with the proposed deal, which would unite AT&T, the country’s second largest wireless communications service provider, and T-Mobile, the fourth largest.

That prompted AT&T and Deustche Telekom, which owns T-Mobile, to remove their application.

The two companies may still file with the commission again, and the Department of Justice’s antitrust lawsuit is slated for February.

While they would need the approval of both the FCC and DOJ to move forward, both of those opponents may change their tune after the election.

If Barack Obama loses to a Republican, who would then make new appointments, rest assured the regulatory environment will become more favorable.

“If the Republicans win, there is a new FCC and a Republican administration will be a lot more positive toward this merger than a democratic one,” said longtime telecom analyst Roger Entner, founder of Recon Analytics.

Each Republican candidate has been outspoken about reducing the government’s regulatory enforcement. The most famous example is Rick Perry calling for the abolition of the Environmental Protection Agency — and then leaving that off his list of three, er, two departments he’d get rid of.

But each candidate has made clear that America needs to be more friendly to business. Herman Cain says America is ready for a businessman as chief executive. As Cain’s candidacy continues to shoot itself in the foot, enter multimillionaire Mitt Romney.

Romney’s new rival Newt Gingrich has spent the past few years as a lobbyist — or a public advocate. Either way, he is unlikely to increase oversight of any billionaires.

Cult favorite Ron Paul is more a libertarian than a Republican, so one can only imagine how much deregulation would happen if he were elected.

In this case, the regulatory issue is that only four telecom companies dominate the U.S. market, and the acquisition would reduce that number to three. There would be two giants — Verizon and AT&T — and Sprint, large but much smaller than the other two.

The arrival of a Republican president doesn’t mean the deal would simply pass through without a fight, but it does mean that AT&T and T-Mobile may be cleverly stalling. By withdrawing their FCC application, they not only prolong the process, but prevent some of the information about the deal’s impact from getting out sooner.

Jeff Kagan, an independent tech analyst, said the situation reminded him of SBC’s attempted acquisition of AT&T in the late 1990s.

At the time, Reed Hundt, the chairman of the FCC under President Bill Clinton, said such a deal was unthinkable.

In 2004, with a business-friendly Republican administration — and AT&T weaker than it once was — the deal got approved.

So could such a shift happen if a Republican is elected?

“That’s what happened in the past,” Kagan said.

The DOJ case begins in February, and that may come out in AT&T’s favor. The FCC has also indicated it needs to approve the withdrawal of the application, but AT&T says it is in the right and can withdraw when it wants.

Either way, many analysts have placed the deal on its deathbed.

“I don’t know if it’s dead, but it’s clearly on life support,” said Christopher King, analyst at Stifel Nicolaus. “They have an uphill battle and, quite frankly, even if they win the lawsuit against the DOJ they still need to get FCC approval, which is likely to be even more difficult.”

Yes, the FCC seems to be a major impediment.

AT&T and T-Mobile said they removed their application from the FCC to focus on their antitrust case with the Department of Justice — and that may be true in some respects. However, when FCC Chairman Julius Genachowski said that the deal was not in the public interest back on November 22, it was clear to everyone that the FCC was against the merger.

Entner said he thinks the FCC has been particularly hostile to the deal.

“If you look at it, the FCC did the press conference on the Tuesday before Thanksgiving,” Entner said. “Couldn’t that have waited a week and everybody would have had a nice Thanksgiving?”

The FCC has declined to comment further, referring everyone to its comment on November 24, when it said it would consider the two companies’ request that the application be withdrawn.

Kagan believes the FCC is doing the right thing because the merger would be bad for the market. But whether you think the deal is a good idea or not, most people seem to agree that this FCC has no intention of approving it.

And that’s where the election comes in.

“I’m sure would prefer a different administration with a different head of the FCC and somebody to be more favorable to a merger happening,” Kagan said. “But even if it’s a Republican administration, it doesn’t necessarily mean it’s going to happen.”

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Obama names critic of large banks to FDIC board

WASHINGTON | Thu Oct 20, 2011 10:59pm EDT

(Reuters) – President Barack Obama on Thursday nominated a prominent critic of large banks for a key banking industry regulatory post.

The White House said Obama tapped former Kansas City Federal Reserve Bank President Thomas Hoenig to be vice chairman of the board of directors of the Federal Deposit Insurance Corporation, a regulator that insures individual bank accounts up to $250,000.

Hoenig has been a critic of large banks, arguing they still pose a threat to the financial system and that the 2010 Dodd-Frank financial oversight law did not do enough to address the issue.

“We must make sure that large financial organizations are not in position to hold the U.S. economy hostage,” Hoenig told a meeting of the Women in Housing and Finance in February. “We must break up the largest banks.”

Hoenig served as head of the Kansas City Fed from 1991 until October 1, 2011.

If confirmed by the Senate, he would replace Martin Gruenberg as vice chairman of the FDIC board. Gruenberg has been nominated to be chairman. Former Chair Sheila Bair stepped down in July.

Another current FDIC board member, Thomas Curry, has been nominated to be head of the Office of the Comptroller of the Currency.

The full Senate has yet to vote on either the Gruenberg or Curry nomination.

(Reporting by JoAnne Allen; Editing by Peter Cooney)

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Romney says would not put limits on emissions

By Jason McLure

LEBANON, New Hampshire | Wed Aug 24, 2011 10:54pm EDT

(Reuters) – Presidential candidate Mitt Romney, in danger of losing his 2012 Republican primary front-runner status, on Wednesday he would not place restrictions on carbon emissions if elected.

Romney, the former Massachusetts governor, also said he does not know if human activity is the primary cause of climate change and does not favor spending heavily on climate solutions.

Asked about global warming at a town hall meeting in Lebanon, New Hampshire, Romney said he believed the world is getting hotter and humans contribute in some way to the change — but could not judge to what extent.

“Do I think the world’s getting hotter? Yeah, I don’t know that but I think that it is,” he said. “I don’t know if it’s mostly caused by humans.”

“What I’m not willing to do is spend trillions of dollars on something I don’t know the answer to.”

In June, a day after launching his second bid for the White House, Romney caused a stir by saying he thought humans had contributed to climate change to some extent.

At that time he made a call for a reduction of “emissions of pollutants and greenhouse gases that might be significant contributors” to climate change — a suggestion that was not made on Wednesday.

A Romney aide said the candidate has not altered his position on climate change.

A study by the National Academy of Sciences in 2010 found that “climate change is occurring, is caused largely by human activities and poses significant risks.” That view is backed by most climate scientists. But surveys have shown that many Republicans do not agree — especially those who are more likely to vote in the primary elections.

Two polls on Wednesday showed Romney, a narrow front-runner in the Republican field for much of the year, has lost the lead in the Republican nominating contest, trailing Rick Perry by double digits. The Texas governor recently jumped into the race.

Campaigning in New Hampshire last week, Perry, who is typically more of a social conservative, called climate change a “theory that still has not been proven” and labeled the science behind it “politicized.”

Romney also said on Wednesday that he would make weaning the United States from imported energy from the Middle East a priority over reducing carbon emissions.

Still, using additional domestic nuclear, natural gas, and other resources could have a side benefit of cutting carbon emissions, Romney said. “My view is pursue a strategy which gets us into energy independence which has as a byproduct it gets us into less CO2 emitting.”

He criticized a bill backed by President Barack Obama that would have capped carbon emissions and allowed polluters to buy and sell rights to emit carbon.

“I do not believe in cap and trade and I do not believe in putting a carbon cap” on polluting industries, Romney said.

(Reporting by Jason McLure; editing by Ros Krasny and Bill Trott)

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Romney, on rare visit to Iowa, rips Obama on economy

By John Whitesides

PELLA, Iowa | Wed Aug 10, 2011 9:24pm EDT

(Reuters) – Mitt Romney, on a rare visit to Iowa on Wednesday, said Americans were “fearful, but not panicked” about the economy and predicted voters would deny President Barack Obama a second term for his economic failures.

The Republican presidential front-runner said Obama would lose in Iowa and elsewhere in the general election in November next year because his policies had impeded economic growth and dented confidence.

“He is not up to the task of leading the country at a time of economic crisis,” Romney told reporters after a round-table

with 14 local business leaders in Pella, in southeastern Iowa, where he touted his business experience.

“The president’s policies have made it more difficult for enterprises to grow and thrive at a time when this economy is in trouble,” Romney said, adding Obama had created a sense of uncertainty amid fraught debt-ceiling negotiations in Washington and wild swings in the stock market.

“They’re fearful but not panicked,” Romney said of Americans. “They’re discouraged, but not so frightened that they can’t move forward.”

During an evening visit to a local party fund-raiser in Des Moines, Romney said the United States was in crisis. “You’ve got a lot of people in this country that are hurting, that are suffering, because of his policies,” he said.

Romney, making just his second visit to Iowa this year, promised to compete in the state’s 2012 nominating contest even though he is not participating in Saturday’s straw poll, a traditional but nonbinding test of candidate strength.

“You’ll see me plenty in Iowa,” said Romney, who has focused most of his time and resources on New Hampshire, Florida and other states that hold their contests after Iowa.

He will attend a fund-raiser, visit the state fair on Thursday and participate that night in a televised Republican presidential debate but leave before Saturday’s straw poll.

Iowa’s kickoff contest is dominated by the state party’s big bloc of social and religious conservatives, a group that is suspicious of the former governor of liberal Massachusetts and his views on issues like abortion and healthcare.

WANTS TO COMPETE IN REAL CONTESTS

Romney, who won the Iowa straw poll in 2007 but fell short in the caucuses after spending millions of dollars, said he will not compete in straw polls “because I want to use our financial resources to participate in actual election contests that generate delegates.”

He has fallen behind conservative rival Michele Bachmann in Iowa polls and has been a shaky national front-runner in the Republican race. His standing could face a new challenge this weekend when Texas Governor Rick Perry is expected to signal his intention to run.

Perry, a staunch social and religious conservative, has stressed his record of job growth in Texas and could compete with Romney for support from the party’s business wing. Romney refused to be drawn into a discussion of Perry.

“He’s a fine man and a fine governor. The record of Texas speaks for itself,” he said.

As he has throughout the campaign, Romney said his background running a company made him the best Republican for lifting the U.S. economy out of trouble. Romney headed a private equity firm and led the Salt Lake City Olympics.

He said he was not worried that Iowans would punish him next year for not participating in the straw poll or devoting enough attention to them.

“The people of Iowa are far less concerned with the process of politics and far more concerned about the future of America,” he said.

(Editing by Christopher Wilson)

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SCENARIOS-Dwindling options left for debt limit talks

By Tim Reid

WASHINGTON, July 22 | Fri Jul 22, 2011 9:04pm EDT

(Reuters) – Talks between President Barack Obama and Republicans to raise the U.S. debt limit collapsed on Friday after John Boehner, the top Republican in Congress, walked out of negotiations.

With just 11 days before an Aug. 2 deadline, when the Treasury Department says the United States will run out of ways to service government debt without an increase in the borrowing cap, options to avert a devastating default are narrowing.

Obama and Boehner both said on Friday night they are confident the United States will not default. Here are some scenarios for raising the limit by the August deadline.

MCCONNELL “FALLBACK” PLAN

A backup “failsafe” plan first proposed by Mitch McConnell, the top Senate Republican, has reemerged as perhaps the most realistic option that will allow the debt limit to be raised in time.

Through a complex back-and-forth between the White House and Congress, it would allow Obama to raise the debt limit by $2.4 trillion in three installments through November 2012, when Obama and most lawmakers are up for re-election.

The Obama administration says the borrowing cap needs to be extended by $2.4 trillion to let the U.S. government meet its obligations through that time period.

Under the McConnell plan, Republicans would not have to vote to raise the debt limit.

Obama said on Friday that “at a minimum” the debt has to be raised and that he will take responsibility for that if the McConnell plan passes Congress.

AN ALL SPENDING CUTS, NO REVENUES PLAN

The great sticking point in the debt talks has been the question of taxes. Obama has wanted a “balanced” approach to deficit reduction — a combination of spending cuts and revenue increases. Obama said on Friday he had been seeking $1.2 trillion in revenues by closing tax loopholes, but not hiking tax rates.

The House Republican leadership has insisted that any deal that involves revenue increases will not have the votes to pass the chamber, and it was the issue of revenues that led to the collapse of talks on Friday.

One package that could pass the House is a deal that contains just spending cuts. Yet whether that could pass the Democratic-controlled Senate is far from clear.

TALKS RESUME

Friday night saw Obama and Boehner both hold press conferences. Boehner blamed Obama’s demands for more revenues on the impasse. Obama blamed House Republican intransigence.

It offered both the chance to claim how far they had been willing to go to reach a deal. It is not inconceivable that after the drama of Friday night — and the shock of negotiations breaking down — the air could be cleared and Obama-Boehner talks could resume.

Remarkably, it emerged on Friday night — after insisting for weeks that revenue increases were out of the question — that Boehner had been looking at $800 billion in revenue increases through tax loophole closures before the talks collapsed, suggesting a deal was closer at hand than thought.

Boehner said he had accepted an invitation to return to the White House on Saturday for more talks with Obama, along with the top Democrats in the House and Senate and the top Senate Republican.

OBAMA INVOKES THE CONSTITUTION

Some have argued that Obama could ignore Congress and order continued borrowing, by relying on the 14th Amendment of the U.S. Constitution, if it fails to raise the debt limit.

The fourth section of the 14th Amendment states the United States’ public debt “shall not be questioned”.

Former Democratic president Bill Clinton said this week that if it came to averting default, he would invoke the 14th Amendment, raise the debt ceiling and “force the courts to stop me”.

Obama said on Friday White House lawyers had explored the option and they are “not persuaded” that it is a winning argument. But he did not rule it out. (Reporting by Tim Reid)

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Exclusive: Treasury secretly weighs options to avert default

By Richard Cowan

WASHINGTON | Thu Jul 7, 2011 7:26am EDT

(Reuters) – A small team of Treasury officials is discussing options to stave off default if Congress fails to raise the country’s borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday.

Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the U.S. government the authority to borrow more money.

But behind the scenes, top Treasury officials have been exploring ways to prevent a financial meltdown that would be triggered if the government were unable to pay its bills on time, sources told Reuters.

Treasury has studied the following issues:

– Whether the administration can delay payments to try to manage cash flows after August 2

– If the U.S. Constitution allows President Barack Obama to ignore Congress and the government to continue to issue debt

– Whether a 1985 finding by a government watchdog gives the government legal authority to prioritize payments.

The Treasury team has also spoken to the Federal Reserve about how the central bank — specifically the New York Federal Reserve Bank — would operate as Treasury’s broker in the markets if a deal to raise the United States’ $14.3 trillion borrowing cap is not reached on time.

The U.S. government currently borrows about $125 billion each month. The Obama administration wants Congress to raise the limit by more than $2 trillion to meet the country’s borrowing needs through the 2012 presidential election.

The contingency discussions, which have remained a closely guarded secret throughout weeks of negotiations with Congress over the debt ceiling, are being led by Mary Miller, Assistant Secretary for Financial Markets, who is effectively custodian of the country’s public debt.

Miller’s team has debated whether Obama could ignore Congress and order continued borrowing — by relying on the 14th Amendment of the U.S. Constitution — if it fails to raise the borrowing cap.

The fourth section of the 14th Amendment states the United States’ public debt “shall not be questioned.” Some argue the clause means the government cannot renege on its debts.

Obama dismissed talk of invoking the amendment on Wednesday. “I don’t think we should even get to the constitutional issue,” he said. “Congress has a responsibility to make sure we pay our bills. We’ve always paid them in the past.”

HINT OF PLAN B COULD HURT TALKS

The White House declined to comment on the discussions at Treasury, but administration officials sought to tamp down talk of relying on the 14th Amendment.

There has been growing speculation in Washington in recent days that the administration could use the amendment to ignore the congressionally imposed limit on the amount of money the United States can borrow.

“Despite suggestions to the contrary, the 14th Amendment is not a failsafe that would allow the government to avoid defaulting on its obligations,” said White House spokeswoman Amy Brundage.

Miller’s team has discussed the Government Accountability Office’s 1985 assessment that Treasury has the authority to prioritize payments in the event of a default — an option Treasury officials have been wary of.

The administration’s nightmare scenario is that investors panic at the prospect of a default, triggering a crisis that eclipses the 2008 financial meltdown. That could plunge the U.S. economyinto another recession, something that could doom Obama’s re-election prospects in 2012.

Some conservative Republicans have argued the Treasury can prioritize payments and manage a default. The administration wants to keep lawmakers focused on the August 2 deadline, and even a hint of a “Plan B” could lessen the urgency to strike a deal by then.

“As we have said repeatedly over the past six months, there is no alternative to raising the debt limit,” Treasury spokeswoman Colleen Murray said when asked to comment on the Treasury discussions.

“The only way to prevent a default crisis and protect America’s credit-worthiness is to enact a timely debt limit increase, which we remain confident Congress will do.”

TREASURY OFFICIALS MUM

Obama meets leaders from both parties at the White House on Thursday as he seeks to get an agreement to cut trillions from the U.S. deficit, which Republicans have demanded in exchange for their support to raise the debt limit.

The fear of any loss of momentum in the debt and deficit talks is so great that even in their private conversations with former colleagues and investors, administration officials are refusing to admit to contingency discussions.

“There has to be contingency planning,” said one former Obama administration official. “But they won’t even tell me that.”

That view was echoed by numerous former officials from the Clinton, Bush and Obama administrations.

“You have to have a backup plan. If you are relying on Congress to avoid the possibility of an Armageddon, you can’t just bet on that,” said Keith Hennessey, who headed the White House National Economic Council during President George W. Bush’s administration.

In August, the Treasury will take in roughly $172 billion, but is obligated to make $306 billion in payments — meaning it cannot pay about 45 percent of its bills without borrowing more money, according to the Bipartisan Policy Center, a Washington think tank.

That would force the administration to make some difficult choices, even though officials believe emergency measures will buy little time and cannot stave off an economic catastrophe.

OPTIONS “PRETTY UGLY”

If Treasury were to decide to delay some payments, one option could be to postpone a disbursement of more than $49 billion to Social Security recipients that is due on August 3.

It would be a politically explosive step but one that could allow the government to temporarily pay bondholders to try to avoid foreign investors dumping U.S. Treasuries and the dollar.

The administration has warned that any missed payments, including those to retirees, veterans and contractors, would be default by another name, and the Treasury team still has concerns that any contingency plan would prove unworkable.

Steve McMillin, a former deputy director of the White House Office of Management and Budget under Bush, said Treasury has options but most of them are “pretty ugly.”

If Treasury were to decide to delay payments, it would need to re-program government computers that generate automatic payments as they fall due — a massive and difficult undertaking. Treasury makes about 3 million payments each day.

From their second floor offices in Treasury, Miller and Fiscal Assistant Secretary Richard Gregg, are the lieutenants Geithner is relying on if the administration’s first option of negotiating a deal with Republicans falls apart.

“She’s dealing with this day in and day out,” said a former Treasury official.

The former official said Treasury aides were “speaking with Congress on a daily basis,” giving them the latest updates on receipts and when default could occur.

The source said White House Chief of Staff Bill Daley and other officials regularly ask Miller for information.

“Every day they talk about the debt ceiling. The night before, they get the most recent numbers,” the source said.

Michael Barr, a former Treasury official who worked closely with Miller, said he spoke with Miller and Gregg a month ago.

“They were exploring if there were any legal and practical alternatives. It was not obvious to them that the president has the legal authority to pick and choose who gets paid,” he said.

Barr added: “It is not obvious that even if they had legal authority, that as a practical matter you can do it.”

As recently as June 21, Miller told a group of sovereign debt holders in London that there is no Plan B and assured them that the debt limit would be raised before August 2.

Publicly, Treasury has maintained there is no contingency plan. “Our plan is for Congress to pass the debt limit,” Geithner said late in May. “Our fall-back plan is for Congress to pass the debt limit, and our fall-back plan to the fall-back plan is for Congress to pass the debt limit.”

(Additional reporting by Rachelle Younglai, Tim Reid, and Caren Bohan Editing by Ross Colvin and Jackie Frank)

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Sarah Palin says jury duty comes before bus tour

By Yereth Rosen

ANCHORAGE, Alaska | Thu Jun 23, 2011 12:25am EDT

(Reuters) – Former Alaska Governor Sarah Palin said on Wednesday she was pausing her “One Nation” bus tour to answer the call of jury duty and denied media reports her much-hyped multi-state jaunt had been cut short.

“The next leg of the tour continues when the time comes,” she said in a message posted on Facebook. “In the meantime, no one should jump to conclusions — certainly not the media with their long track record of getting things wrong or just making things up.”

The 2008 Republican vice presidential nominee has hinted she may run for president in 2012, and many have viewed her bus tour as a possible campaign warm-up should Palin ever declare herself a White House candidate.

Palin kicked off her tour over the Memorial Day holiday weekend and visited a number of historic sites along the East Coast.

Responding to a flurry of reports on Wednesday that several stops had been removed from her itinerary, Palin went online to clarify her plans.

“It hasn’t been canceled,” she wrote. “As I said myself at the end of the East Coast leg of the tour, the summer is long, and I’m looking forward to hitting the open road again.

“The coming weeks are tight because civic duty calls (like most everyone else, even former governors get called up for jury duty) and I look forward to doing my part just like every other Alaskan,” her message said.

Palin’s Facebook post did not say when her jury service might start or when she had been summoned to serve.

The online political outlet RealClearPolitics.com reported that Palin might return to the political limelight to promote the upcoming film documentary of her career, “The Undefeated,” due to premiere in Iowa and other early caucus and primary states before its July 15 nationwide release.

(Writing by Alex Dobuzinskis; Editing by Steve Gorman and Jerry Norton)

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U.S. has healthy companies, troubled politics: ex-IMF economist

By Kevin Lim

SINGAPORE | Wed Jun 15, 2011 6:27am EDT

(Reuters) – U.S. companies are doing well but the country is faced with entrenched political divisiveness that makes reaching any kind of compromise on the budget deficit difficult, former IMF chief economist Raghuram Rajan said on Wednesday.

He said U.S. firms are enjoying huge profits and will likely step up hiring in the second half as margins remain at elevated levels.

The country’s politicians are, however, unlikely to agree on how to resolve the widening deficit and related issues like Medicare until after next year’s presidential election.

“The bottom line is the underlying private sector economy in the United States is extremely profitable at this point and is looking to grow,” Rajan said at an investment conference in Singapore.

“For the first time, I have heard my private sector businessmen friends talk about investing in the United States, especially in manufacturing,” said Rajan, a professor at the University of Chicago’s Booth School of Business and also economic adviser to the Indian prime minister.

The former International Monetary Fund chief economist said the high profit margins enjoyed by U.S. firms are unlikely to be competed away anytime soon as neither the high margins that usually attracted new entries nor higher input costs seemed to be materializing.

“It’s reasonable to accept some sort of narrowing of those margins over time but I don’t see the mean (average) revision happening as quickly,” he said.

“Especially at the small and medium business level, they are still struggling for capital, and so it’s hard to see a huge amount of new entry.”

“As far as the input costs being bid up, it seems to be that apart from commodity prices, labor costs are still relatively contained, although that depends on whether it’s skilled labor or not,” he added.

His remarks were in contrast to several U.S. equity strategists, who said at the Reuters 2011Investment Outlook Summit last week that optimism about robust profits may be waning.

“History suggests that about one year after the ISM peaks, margins peak,” said Goldman Sachs Chief U.S. Equity Strategist David Kostin.

The Institute for Supply Management’s closely watched manufacturing index peaked in February, at 61.4, and is now just holding in expansion mode, above 50. It was 53.5 for May.

SARAH PALIN

Turning to the political situation in the United States, Rajan said President Barack Obama and his Republican opponents will likely agree to raise the country’s $14.3 trillion debt limit by August 2 to avoid the first default in U.S. history.

However, he did not expect any progress on how the government can boost revenue or reduce expenses to reduce the deficit, as a growing number of U.S. politicians and voters on the left and right shared a common distrust of Obama and Wall Street and were less inclined to compromise.

“I call this the ‘Sarah Palin-isation’ of U.S. politics,” Rajan said, referring to the Republican former vice-presidential candidate.

“To my mind, one of the reasons Sarah Palin has so much following amongst the broader public is partly because she doesn’t represent the elite, she doesn’t know much history (and) she doesn’t know much economics,” Rajan told delegates at the Singapore conference, which was organised by Japan’s Nomura.

“I think that is her great strength: the fact that she doesn’t know and therefore isn’t part of the crowd that drives the kinds of compromises that politics necessarily involve.”

As such, any meaningful negotiations will only take place after the next year’s presidential election, he said, adding that the Democrats will likely retain the presidency with the Republicans controlling Congress, forcing both sides to seek common ground.

(Editing by Kim Coghill)

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Romney charges that Obama has “failed America”

By Ros Krasny

BOSTON | Thu Jun 2, 2011 10:17am EDT

(Reuters) – Mitt Romney, the multi-millionaire former governor of Massachusetts, will kick off his second bid for the White House on Thursday with a hard-hitting economic message charging that “Barack Obama has failed America.”

The apparent front-runner in a wide open Republican field, Romney will start his campaign in New Hampshire, the early-voting state where a win in next February’s primary election would boost his chance of winning the party nomination to face Democratic incumbent President Barack Obama in the November 2012 general election.

Romney will blame “the Obama economy” for the job losses and home foreclosures that have plagued Americans during the president’s first term and helped renew fears that the economy could soon dip back into recession.

The economy is perhaps Obama’s main weakness, although polls say the president is still favored over all potential Republican opponents.

Polls show Americans are also concerned about federal spending, the mounting national debt and a budget deficit projected to reach $1.4 trillion this year.

“Government under President Obama has grown to consume almost 40 percent of our economy. We are only inches away from ceasing to be a free-market economy,” Romney will say in his speech, according to excerpts released by his campaign.

By contrast, Romney says he would balance the federal budget and cap federal spending at 20 percent of gross domestic product, or less, if elected president.

Most opinion polls show other Republican hopefuls like former House of Representative Speaker Newt Gingrich and former Minnesota Governor Tim Pawlenty trailing Romney by a wide margin, although surveys are volatile this early in the race.

“In a relatively open field, Mitt Romney at this juncture is the front-runner from an organizational and fund-raising standpoint,” said Republican strategist Ford O’Connell.

Romney has a powerful fund-raising apparatus in place. He raised an astounding $10.25 million in an eight-hour phone-a-thon in Las Vegas last month. Contacts from Romney’s days running the venture capital firm Bain Capital are another rich source of campaign donations.

But Republican media star Sarah Palin, the former Alaska governor and 2008 vice presidential nominee, has been creeping up behind Romney in some polls. She is expected in New Hampshire later on Thursday as part of an East Coast bus tour that has fanned speculation she could soon announce her own White House bid.

Romney’s biggest stumbling block could be his support as governor for a Massachusetts healthcare program that became a model for Obama’s national healthcare overhaul. Many Republicans detest what they derisively call “Obamacare.”

Many wonder whether Romney is conservative enough for the current Republican Party. With Tea Party movement activists on the rise, the party has shifted to the right since the 2008 election.

REPUBLICAN MOOD

“In a less polarized environment, Romney would have vaulted to the top of the Republican hopeful list,” said Ross Baker, professor of political science at Rutgers University in New Brunswick, New Jersey.

“Now, a moderate and responsible former office-holder has lost a great deal of appeal to angry and frustrated people. Someone who can offer stability is seen as rather dull.”

Romney’s Mormonism also might be a hindrance to winning votes in from evangelical Christians in the south.

The tag of flip-flopper haunts Romney after he shifted positions on issues such as abortion, gay rights and gun control to position himself for the Republican nomination in 2008, after governing more from the center in Massachusetts.

Still, as the only prominent moderate among current Republican contenders, Romney could benefit as his more conservative rivals fight among themselves.

“Romney, as the only recognizable moderate Republican, is in a nice position to be fighting over the bigger piece of the pie,” said Andrew Smith, director of the survey center at the University of New Hampshire. “If he gets in the 35 percent range of votes, he will win in New Hampshire.”

Recent polls have put Romney’s support in the state at 28 percent to 32 percent.

Romney has been expected to struggle in more conservative states like Iowa and South Carolina but a new Public Policy Polling survey in Iowa shows Romney leading there.

Romney’s personal style has also been tweaked. After being criticized for his overly formal, CEO-type look in 2008, Romney has gone business-casual, often appearing tie-less in open-necked shirts and crisply pressed jeans.

“A lot more people like this Romney more than the 2008 Romney,” O’Connell said. “But he has to demonstrate himself to be a fiscal conservative.”

(Additional reporting by David Morgan in Washington; Editing by Vicki Allen)

 

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Republicans suggest deal possible on healthcare

By Andy Sullivan

(Reuters) – Top congressional Republicans said on Sunday they would be open to a compromise on healthcare costs, one of the biggest stumbling blocks in a deal to get the United States’ debt under control.

Representative Paul Ryan, the chairman of the House of Representatives Budget Committee, said he would “absolutely” be willing to negotiate with Democrats, who have hammered his plan to scale back government-run health plans for the poor and the elderly.

With Ryan’s plan headed for likely defeat in the Democratic-controlled Senate, that chamber’s top Republican said it was time for “an adult conversation” on ways to keep healthcare costs under control.

“Let’s just stipulate that nobody is trying to throw Grandma off the cliff,” Senate Republican Leader Mitch McConnell said on “Fox News Sunday.”

Health reform is a top sticking point as the two sides try to hash out a budget deal that would give lawmakers political cover to back an increase in the country’s borrowing authority.

And as the 2012 election season gets underway, it is shaping up to be a top campaign issue as well.

Ryan’s proposal to partially privatize the Medicare health plan for the elderly has already imperiled the presidential hopes of one Republican, Newt Gingrich, who faced a fierce conservative backlash last week after he described it as “right-wing social engineering.”

Polls show that Ryan’s proposed changes are unpopular with voters, and McConnell said he is not urging his fellow Republicans to support it when it comes up for a vote in the Senate this week.

“We have other budgets that Republicans are pushing,” McConnell said. “We’re not going to be able to coalesce behind just one.”

The United States reached its $14.3 trillion debt limit last week, and the Treasury Department says it can stave off a default until early August.

Experts say a default would push the country back into recession and roil markets across the globe.

Republicans and some Democrats say they won’t back a ceiling increase that does not include steps to rein in the debt load, which has more than doubled over the past decade.

In talks led by Vice President Joe Biden, top lawmakers have agreed to at least $150 billion in spending cuts, but that is far short of the $4 trillion in deficit reduction that outside experts say is needed to stabilize the debt over a 10-year span.

On healthcare, the two sides are separated by a gulf of trillions of dollars. Ryan’s plan would save $2.2 trillion by scaling back Medicaid, the government-run health plan for the poor, and repeal President Barack Obama’s signature health reform program, the 2010 Affordable Care Act.

Obama, in turn, has proposed saving $480 billion by accelerating reforms in the program — a non-starter for Republicans who insist it must be repealed.

Speaking on NBC’s “Meet the Press,” Ryan said compromise was possible — reversing an earlier stance that a deal on healthcare would not be reachable until after the election.

“Of course, absolutely,” Ryan said, when asked if he would be open to negotiation. “Of course we would, this is the legislative process. But let me be clear: We are the only ones who have put out a plan.”

Democratic Representative Chris Van Hollen, a participant in the Biden talks, said Washington could find savings by lowering the price the government pays for prescription drugs, rather than scaling back benefits for patients.

Van Hollen repeated Democrats’ contention that any debt-reduction plan requires higher taxes, saying Republicans’ reluctance to consider them forced Ryan to push his unpopular cuts to Medicare and Medicaid.

“You can’t do it with a one-sided, lopsided approach,” he said on “Meet the Press.”

McConnell declined to say on Fox whether more tax revenue would be part of a final deal, but later in the day he reiterated his firm anti-tax stance.

“There will be no tax increases in connection with raising the debt ceiling. We’re talking about spending reductions,” he said in a prepared statement.

(Editing by Philip Barbara and Eric Beech)

reuters.com