Blame game could 'boomerang' on Obama, strategist says

When signs of a severe economic downfall emerged more than two years ago, then-candidate Barack Obama was quick to point a finger at the man he hoped to replace.
Seventeen months into his administration, the message is often the same, and Republicans say it's time for him to drop the Bush bashing and take ownership of the problem.
"Nothing makes a president look weaker than pointing the finger at past administrations," said Republican strategist Ron Bonjean. "By blaming somebody, it looks like you are playing politics and people just want jobs. They don't care about whose fault it is. Playing the blame game only boomerangs on yourself."
Obama repeated that message this week when talking about the still-sputtering economy, twice reminding those at a town-hall meeting in Wisconsin that he "inherited" the economic mess.
It's a familiar message from his days on the campaign trail when criticisms of President Bush were as common as policy proposals.
"History will not judge President Bush kindly for his failure to act in a way that could have prevented or alleviated this economic crisis," Obama said in March 2008 shortly after Bear Sterns' collapse, slamming Bush for failing to instill confidence in the American people.
Recent surveys suggest Obama isn't the only one holding the Bush administration and Republicans culpable.
Though the Democrats controlled Congress in the last two years of the Bush administration and have controlled both the White House and Congress for a year and a half -- 41 percent of people surveyed in a recent CNN/Opinion Research Corp. poll said Republicans are responsible for the current economic problems. Twenty-eight percent blamed Democrats, and 26 percent said both parties share responsibility.
According to a Washington Post/ABC poll conducted in April, 59 percent blamed Bush for the economy, compared with 25 percent who said Obama is at fault.
Job numbers released Friday got mixed reviews. The Labor Department reported the U.S. economy lost jobs for the first time this year, as modest hiring by businesses only partly offset the end of temporary Census Bureau jobs.
The unemployment rate fell to 9.5 percent from 9.7 percent in May. Economists had forecast it would climb to 9.8 percent, but the improvement was due mostly to discouraged job seekers not bothering to look for work and no longer being counted in the labor force.
Obama on Friday vowed to do everything in his power to create jobs, but the problem, according to economist Barry Bosworth, is there's not much more he can do.
"What can he do on the jobs other than sit around and wring his hands in agony?" he asked. "What could he do? That's the fundamental problem that we now face because it's a global problem."
Coming out of the Group of 20 conference, it was clear Obama's plans to continue stimulus spending weren't in step with other nations'.
"The whole world is going to turn toward fiscal restraint now, and he can either join it or he'll be an outlier," said Bosworth, a senior fellow at the Brookings Institution and a former adviser to President Carter.
After the numbers came out, Obama said the country is headed in the right direction but added, "The recession dug us a hole of about 8 million jobs deep."
House Speaker Nancy Pelosi, D-California, echoed the positive indicators, noting that they followed "nearly a decade of failed Republican policies."
But Bosworth said it's not fair to put all of the blame on the past administration.
"They didn't cause that crisis. Lots of people contributed to it. I really do not think that you can blame administrative authorities for what happened. You can blame a lot of economists because we didn't see it coming in the exact way it did, but there were many dimensions," he said, pointing out that in retrospect it's easy to recognize there was an unbalanced economy.
Bosworth said Obama now needs to move away from blaming Bush because the worst of what happened wasn't Bush's fault.
"I don't see that we are looking at a crisis that was caused by the Bush administration, and I don't think we are looking at a crisis where the Obama administration has a fundamentally different response to the crisis," Bosworth added, noting that the Troubled Assets Relief Program was passed under the Bush administration.
Economic recovery has been slow, but there are signs of improvement. The stock market, while wobbly, has risen since the lows reached shortly after Obama took office, and the economy is growing again.
Democratic strategist Julian Epstein said Obama needs to make the argument that the economy is on the climb and the stimulus has worked.
"The message has got to be optimistic and positive. It can't simply be, 'I inherited a mess and I'm doing the best I can.' It's got to be, 'I inherited a mess, but we've turned the corner and things are getting a lot better,' " he said.
The White House needs to go on a confidence campaign and perhaps take a page from President Reagan's playbook, Epstein said.

"He really needs to spell out how we are coming back and it's morning in America again," he said. 

Source: CNN

Bill would give president emergency control of Internet

Internet companies and civil liberties groups were alarmed this spring when a U.S. Senate bill proposed handing the White House the power to disconnect private-sector computers from the Internet.

They're not much happier about a revised version that aides to Sen. Jay Rockefeller, a West Virginia Democrat, have spent months drafting behind closed doors. CNET News has obtained a copy of the 55-page draft of S.773 (excerpt), which still appears to permit the president to seize temporary control of private-sector networks during a so-called cybersecurity emergency.

The new version would allow the president to "declare a cybersecurity emergency" relating to "non-governmental" computer networks and do what's necessary to respond to the threat. Other sections of the proposal include a federal certification program for "cybersecurity professionals," and a requirement that certain computer systems and networks in the private sector be managed by people who have been awarded that license.

"I think the redraft, while improved, remains troubling due to its vagueness," said Larry Clinton, president of the Internet Security Alliance, which counts representatives of Verizon, Verisign, Nortel, and Carnegie Mellon University on its board. "It is unclear what authority Sen. Rockefeller thinks is necessary over the private sector. Unless this is clarified, we cannot properly analyze, let alone support the bill."

Representatives of other large Internet and telecommunications companies expressed concerns about the bill in a teleconference with Rockefeller's aides this week, but were not immediately available for interviews on Thursday.

A spokesman for Rockefeller also declined to comment on the record Thursday, saying that many people were unavailable because of the summer recess. A Senate source familiar with the bill compared the president's power to take control of portions of the Internet to what President Bush did when grounding all aircraft on Sept. 11, 2001. The source said that one primary concern was the electrical grid, and what would happen if it were attacked from a broadband connection.

When Rockefeller, the chairman of the Senate Commerce committee, and Olympia Snowe (R-Maine) introduced the original bill in April, they claimed it was vital to protect national cybersecurity. "We must protect our critical infrastructure at all costs--from our water to our electricity, to banking, traffic lights and electronic health records," Rockefeller said.

The Rockefeller proposal plays out against a broader concern in Washington, D.C., about the government's role in cybersecurity. In May, President Obama acknowledged that the government is "not as prepared" as it should be to respond to disruptions and announced that a new cybersecurity coordinator position would be created inside the White House staff. Three months later, that post remains empty, one top cybersecurity aide has quit, and some wags have begun to wonder why a government that receives failing marks on cybersecurity should be trusted to instruct the private sector what to do.

Rockefeller's revised legislation seeks to reshuffle the way the federal government addresses the topic. It requires a "cybersecurity workforce plan" from every federal agency, a "dashboard" pilot project, measurements of hiring effectiveness, and the implementation of a "comprehensive national cybersecurity strategy" in six months--even though its mandatory legal review will take a year to complete.

The privacy implications of sweeping changes implemented before the legal review is finished worry Lee Tien, a senior staff attorney with the Electronic Frontier Foundation in San Francisco. "As soon as you're saying that the federal government is going to be exercising this kind of power over private networks, it's going to be a really big issue," he says.

Probably the most controversial language begins in Section 201, which permits the president to "direct the national response to the cyber threat" if necessary for "the national defense and security." The White House is supposed to engage in "periodic mapping" of private networks deemed to be critical, and those companies "shall share" requested information with the federal government. ("Cyber" is defined as anything having to do with the Internet, telecommunications, computers, or computer networks.)

"The language has changed but it doesn't contain any real additional limits," EFF's Tien says. "It simply switches the more direct and obvious language they had originally to the more ambiguous (version)...The designation of what is a critical infrastructure system or network as far as I can tell has no specific process. There's no provision for any administrative process or review. That's where the problems seem to start. And then you have the amorphous powers that go along with it."

Translation: If your company is deemed "critical," a new set of regulations kick in involving who you can hire, what information you must disclose, and when the government would exercise control over your computers or network.

The Internet Security Alliance's Clinton adds that his group is "supportive of increased federal involvement to enhance cyber security, but we believe that the wrong approach, as embodied in this bill as introduced, will be counterproductive both from an national economic and national secuity perspective.

Source: cnet

Wall Street hopes to extend hot streak

Although many bulls are on the beach, stocks may continue their summer surge this week. But experts say more recovery evidence is needed to keep rally going

NEW YORK , Investors are hoping the surprisingly strong summer market rally will last at least one more week -- before any second-guessing in the fall kicks in.

"We saw a huge rebound at the end of last week and that will probably carry over," said Richard Hughes, co-president of Portfolio Management Consultants. "But the trading volume is going to be very light."

The S&P 500 has jumped just shy of 52% since hitting a 12-year low on March 9. Bets that the sky is not falling after all and the economy will recover - paired with generous fiscal and monetary stimulus - have boosted the market.

But the recent leg of the advance has been run on thin trading volume, even for summer. Low volume tends to exaggerate market moves.

"It won't be until September that we'll be able to really see how it settles," Hughes said. "The focus is shifting from wondering when the recession is going to end to wondering what a recovery is going to look like," he said.

Next week brings reports on personal income and spending, as well as home prices, all of which are important in the bigger discussion about how the consumer is holding up. A revision of second-quarter gross domestic product (GDP) is also on tap.

Confirming a recovery: Last week, Fed chief Ben Bernanke said the U.S. economy is nearing a recovery, although the pace will be slow as unemployment stays high.

Reports on housing and manufacturing showed surprising gains last week, while the closely-watched weekly jobless claims report showed more Americans filed for first-time benefits than economists were expecting. In the weeks ahead, Wall Street is going to be looking for more confirmation that a recovery is underway.

"Typically when you're moving from recession to expansion, you get numbers that conflict with each other, like the jobless claims," said David Chalupnik, head of equities at First American Funds. "That trend will continue."

He said that of greater interest in the weeks ahead will be "how quickly the economy makes the transition" into a period of expansion and whether the consumer starts spending again. Consumers have jumped into the government's soon-to-end Cash for Clunkers program, but have otherwise held back on non-essentials..

On the docket

Monday: There are no market moving events on the schedule Monday.

Tuesday: The August consumer confidence index from the Conference Board is expected to have risen to 48.8 from 46.6 in July, according to a consensus of economists surveyed by Briefing.com.

The S&P/CaseShiller home price index, a measure of 20 major cities, is expected to have fallen 16.4% in June versus a year ago after falling 17.1% in May. If that estimate turns out to be accurate, it would be the third month in a row that the pace of declines has lessened.

In May, the report showed that home prices rose versus the previous month, the first monthly increase in almost 3 years.

Wednesday: New home sales are expected to have risen to an annualized rate of 390,000 in July from an annualized rate of 384,000 in June. The Commerce Department report is due after the start of trading.

July durable goods orders are expected to have risen 3.2% after falling 2.5% in June. Orders, excluding transportation, are expected to have risen 1% after rising 1.1% in June. The Commerce Department report is due in the morning.

The weekly crude oil inventories report from the Energy Information Administration is also due in the morning.

Thursday: Second-quarter gross domestic product growth (GDP) is expected to have contracted at a 1.4% annualized rate, worse than the initially reported 1% rate, but not as sharp as the 6.4% decline in the previous quarter. The Commerce Department report is due before the start of trading.

A report is also due in the morning on weekly jobless claims.

Toll Brothers (TOL) reports results in the morning. The homebuilder is expected to report a loss of $1.26 per share versus a loss of 18 cents a year ago, according to a consensus of analysts surveyed by Thomson Reuters.

Dell (DELL, Fortune 500) reports results after the close. The computer maker is expected to have earned 23 cents per share versus 31 cents a year ago, according to forecasts.

Friday: The Commerce Department releases reports on July personal income and spending before the start of trading.

Income is expected to have risen 0.1% after falling 1.3% in June. Spending is expected to have risen 0.2% after rising 0.4% in June. The PCE Core deflator, the report's inflation component, is expected to have risen 0.1% after rising 0.2% in June.

The University of Michigan's consumer sentiment index, due shortly after the start of trading, is expected to be revised up to 64.8 from the originally reported 63.2.

Source : CNN