Photograph by David Paul Morris/Bloomberg

Shoppers in San Francisco.

Even as snowfall whitens horizons across the U.S. today, the economic skies are brightening for many American households.

Two key hurdles consumers faced last month have dissipated: gasoline prices are on the retreat, and delayed cash returns from the Internal Revenue Service are beginning to arrive in Americans’ mailboxes and bank accounts. Those changes, along with rising stock prices and reduced debt, mean U.S. consumers should have the wherewithal to overcome a payroll-tax increase that will take 2 percent more out of take-home pay this year.

Last month showed the highest average gasoline price for any February since AAA, the largest U.S. automobile group, began tracking data in 2004. Through March 24, the average cost of a gallon of regular gas had dropped 2.8 percent, compared with a 5.2 percent gain for the month on average during the past five years. The fuel’s cost usually rises in March, which means the current decline will be seem even larger when the figures are adjusted for seasonal variations.

Then, workers in the U.S. are getting tax refunds back that were delayed as Congress wrangled over the set of budget cuts consumer spending political capital and tax increases known as the fiscal cliff. Taxpayers had received $191.8 billion in returns through March 21, $15.1 billion less than at the same point last year, data from the Treasury Department show. That gap has narrowed since the end of February, when there was a $23.8 billion shortfall that also reflected an additional day because of the leap year.

Worried earlier about how higher gas prices and the payroll tax hike would hurt household purchases, economists have now upped projections for consumer spending in the first quarter.

Consumption will advance at 1.6 percent pace from January to March, accelerating throughout the year, compared with an earlier estimate of 1.4 percent, according to a Bloomberg survey of 63 economists.

That’s good news for the world’s largest economy, of which consumer spending accounts for 70 percent. Greater demand for goods and services will help the expansion speed up from the 0.1 percent pace it recorded from October to December.

See the full report at Bloomberg.com. 

Original post is Cheaper Gas, Tax Refunds: Consumer-Spending Pocket-Power by Political Capital.

Photograph by Bill Clark/CQ-Roll Call/Getty Images

Rep. Paul Ryan, left, and Rep. Pete Sessions, right, arrives for a House Republican Conference meeting.

The House’s Republicans, assembled at a retreat outside Williamsburg, Virginia, are discussing the “virtues” of passing a short-term increase in the federal debt limit.

So says Rep. Paul Ryan, the House Budget Committee chairman from Wisconsin.

“We are discussing the possible virtues of a short-term debt-limit extension so that we have a better chance of getting the Senate and White House involved in the discussion,” Ryan told reporters outside the private meetings.

President Barack Obama is insisting on an increase with no strings attached.

It’s not like they’ve never done this before.

The debt limit has been periodically raised since its creation in 1917, when Congress and President Woodrow Wilson authorized the Treasury to issue long-term securities to help finance entry into World War I. Since 1960, Congress has raised or revised the limit 79 times, including 49 times under Republican presidents, according to the Treasury Department, noting the U.S. never has defaulted on its obligations.

The last time Congress fought over raising the ceiling, Obama signed an increase on Aug. 2, 2011, the day that Treasury warned U.S. borrowing authority would expire. Standard & Poor’s cut the nation’s credit rating.

The bond market yawned, and hasn’t stirred this time either.

Yields on 10-year Treasury bonds, a benchmark for everything from mortgages to corporate borrowing costs, are down from more than 5 percent in 2007, before the financial crisis of 2008. They are yielding under 2 percent today.

The nation has never defaulted on its debt, the Treasury Department says.

Obama insists it isn’t about to start now — as Republicans talk about only a short-term extension of the borrowing authority.

Jim Rowley and Roxana Tiron contributed from the Republican retreat. 

Original post is Ryan: Republicans Eye Short-Term Debt-Ceiling Increase at Retreat by Political Capital.

President Barack Obama takes his lobbying of executives public today when he meets at the White House with the heads of General Electric, Ford, Honeywell and American Express to ask them to back his plan to impose higher taxes on the wealthy to cut the deficit and avert going over the so-called fiscal cliff. He’ll also hold his first press conference since his re-election.

It’s decision day in Congress, with House and Senate Republicans and Democrats choosing their leaders for the 113th Congress. House Minority Leader Nancy Pelosi announces whether she plans to relinquish her post, while independent Senator-elect Angus King of Maine decides which party he’ll caucus with.

Senior FBI officials are expected to brief the House and Senate Intelligence Committees on their handling of the Petraeus investigation, ABC News reported. Officials are expected to lay out how the case was developed and argue that there were no politics involved. The case is so critical that FBI Director Robert Mueller may attend to defend the bureau, according to the report.

Also today, a House panel holds a hearing on meningitis deaths while Federal Reserve and Federal Deposit Insurance Corp. officials discuss Basel III rules before the Senate Banking Committee. And the Bipartisan U.S.-China Economic and Security Review Commission issues its annual report, calling China ‘‘the most threatening actor in cyberspace’’ as the country’s intelligence agencies and hackers use increasingly sophisticated techniques to gain access to U.S. military and defense contractor computers, according to a draft. The report, mandated by Congress, will probably recommend specific penalties to blunt China’s encroachment.

With assistance from Jim O’Connell

Original post is Washington Daybook: The Art of Lobbying by Political Capital.

Photograph by Jim R. Bounds/Bloomberg

A sales manager ties balloons to General Motors Chevrolet vehicles at a dealership in Wake Forest, North Carolina.

The Obama administration managed quite a deal for U.S. taxpayers when it rescued General Motors Co., Chrysler Group LLC and their financing arms in 2009, according to Moody’s Investors Service.

The bond rating service issued an endorsement of the auto bailout that started under President George W. Bush and was expanded by President Barack Obama to almost $82 billion.

In its report, Moody’s said the federal government would have lost more than $30 billion in revenue and spending had GM and Chrysler gone bankrupt. The company would have been “forced” to liquidate in the absence of government funds, Moody’s said.

That estimate of lost revenue alone is $5 billion more than the Treasury Department’s forecast in August that the auto bailout may cost the government $25.1 billion.

“While the price of the auto bailout was high, the cost of not acting would have been higher,” Sophia Koropeckyj, a managing director at New York-based Moody’s, wrote in the report issued yesterday. “Without assistance, the auto industry would eventually have recovered, as would the U.S. economy. But the process would have taken longer, caused more hardship, and cost more to taxpayers.”

If Chrysler alone had liquidated, the U.S. would have lost about 145,000 more jobs in 2009 and 2010, Moody’s estimated.

The Obama administration has said it was split on whether to save the company before eventually deciding to back an alliance with Italian automaker Fiat SpA.

If GM filed bankruptcy and liquidated, the economy would have lost about 550,000 additional jobs, Moody’s said. Those two bankruptcies combined may have led to failures of auto suppliers that supply Ford Motor Co., which “could have tumbled as well,” according to the report.

“This would have increased job losses to nearly 800,000 more than the baseline expectation,” Koropeckyj wrote.

Obama’s campaign has made the auto industry rescue a focal point of his reelection bid, with Vice President Joe Biden and strategist David Axelrod using the mantra “Osama bin Laden is dead, and General Motors is alive.”

Republican presidential nominee Mitt Romney said during the candidates’ second debate on Oct. 16 that Obama followed his recommendation in letting GM and Chrysler go bankrupt. Romney was misstating his earlier position. He opposed any use of taxpayer dollars to bail out the automakers.

Original post is Obama’s Auto Bailout: Moody’s OK by Political Capital.