Limping along

“The head of the World Bank says Obama is failing to lead on global trade, reports Howard Schneider: "World Bank President Robert Zoellick launched a blunt critique of the Obama administration’s trade policy Sunday and in a separate interview said the United States was failing to assert its natural leadership in the global economy. In an address to be delivered at a World Trade Organization meeting in Geneva on Monday, Zoellick cites the United States by name as 'dumbing down' the ongoing and largely stalled Doha round of world trade talks. He elaborated in an interview, saying he was concerned that none of the major trading nations are talking ambitiously about how to lower global trade barriers -- putting economic growth at risk, particularly for the less-developed countries on which the bank’s work focuses."

Republicans have lost the debt standoff, writes Ross Douthat: "It turns out that Republicans didn’t have a plan for transitioning from the early phase of a high-stakes political negotiation, when the goal is to draw stark lines and force the other side to move your way, to the late phase, in which the public relations battle becomes crucial and the goal is to make the other side seem unreasonable, intransigent and even a little bit insane. Winning the later phase doesn’t require making enormous compromises, or giving up the ground you’ve gained. But it requires at least the appearance of conciliation...For Republicans, this would have required one of two maneuvers: either modestly scaling back the size of the spending cuts they were seeking, or finding a few places in the tax code...where they could live with raising revenue by eliminating a tax break or capping a deduction."

A default would hurt everyone's ability to borrow, writes Ezra Klein: "If the federal government’s borrowing costs rise, so will everyone else’s. Mortgages rates will jump, car loans will be harder to come by, universities won’t be able to float bonds, cities won’t be able to fund themselves. Treasuries are supposed to set the rate of 'riskless return' -- the price of loaning someone money and knowing, with perfect certainty, that they’ll pay you back, with interest. So when lenders decide how much to charge, they start with the riskless rate and then add to it to cover the risk that you won’t pay them back, and the inconvenience of having to wait for you to pay them back. It’s a practice called benchmarking, and it’s everywhere: in your mortgage, your credit card, your car payments, the loan you took out to hire three new employees at your business."

The whole political system is in thrall to the banks, writes Paul Krugman: "Ever since the current economic crisis began, it has seemed that five words sum up the central principle of United States financial policy: go easy on the bankers. This principle was on display during the final months of the Bush administration, when a huge lifeline for the banks was made available with few strings attached. It was equally on display in the early months of the Obama administration, when President Obama reneged on his campaign pledge to 'change our bankruptcy laws to make it easier for families to stay in their homes.' And the principle is still operating right now, as federal officials press state attorneys general to accept a very modest settlement from banks that engaged in abusive mortgage practices."

Obama needs to take a stand for more jobs spending, reports E.J. Dionne: "State and local budgets all across the country are a shambles. Teachers, police, firefighters, librarians and other public servants are being laid off...President Obama knows this. 'As we’ve seen that federal support for states diminish, you’ve seen the biggest job losses in the public sector,' he said in his July 11 news conference. 'So my strong preference would be for us to figure out ways that we can continue to provide help across the board.' So why not do it? 'I’m operating within some political constraints here,' Obama explained, 'because whatever I do has to go through the House of Representatives.' Excuse me, Mr. President, but if you believe in this policy, why not propose it and fight for it? Leadership on jobs is your central job right now."”