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The tea leaves: All about economic recovery

Let’s get right down to business. August will be all about economic recovery, or at least about reading the tea leaves for signs of it.

Already a majority of economists polled by The Wall Street Journal believe the recession is over, and just this week the Federal Reserve indicated it also sees the recession coming to an end—the Fed held interest rates steady and close to nothing, meaning it’s still very inexpensive for banks to borrow money from the U.S. government.

But the Fed also said it’s going to start backing off one of the recovery programs it instituted to help get the economy in better shape, which many viewed as a positive sign about what it thinks about the economy.

Earlier news that home prices rose in July had many calling a housing bottom, meaning that prices had likely found a floor (they’re off about 30% since the peak). And the “cash for clunkers” program helped push July car sales to their first year-over-year improvement since April 2008.

Certainly the stock market is happier too, the Dow is up 45% since its March lows.

So is it all roses and full steam ahead?

The battle over the public option

Washington may be empty with Congress on recess and even the Obamas headed to Martha’s Vineyard, but August is shaping up to be anything but quiet.

With the battle for health care reform in full gear, the fight moves from Washington to our hometowns, where town hall meetings hosted by Democrats to sell their strategy are already underway.

So far they’ve been anything but quiet with protesters—many organized by conservative groups that are providing talking points—shouting down the moderators, including Health Secretary Katherine Sebelius.

But the Democrats are facing heat from supporters too, in part because the Blue Dogs, who we wrote about last week, struck a deal weakening a key component of the Democrats’ push for health reform in one of the House bills (there are three): the public option.

To go public or not
While they disagree on many levels about how to enact reform, conservatives and liberals say they agree some kind of reform is necessary. That said, the main dividing line between the two camps pits those in favor of a government-run, public insurance option (mainly liberals) against those who aren’t (mainly conservatives).

The arguments for a public option go mainly like this: