By TOM RAUM
WASHINGTON (AP) â¿¿ For U.S. policy makers, events that seem at first like positive developments can sometimes unexpectedly bite back.
When federal budget deficits finally began to shrink in early spring as recovery from the Great Recession advanced, economic growth started inching down â¿¿ not up.
And when Federal Reserve Chairman Ben Bernanke suggested last week that continued economic gains might allow the central bank to begin withdrawing financial life supports "later this year" â¿¿ a statement that sounded like good news â¿¿ it triggered a multiday sell-off in the stock and bond markets.
It's not just economic policy. Foreign policy under President Barack Obama also hit a few recent snags.
While in Europe, Obama reached out to Russia to negotiate new reductions in nuclear arsenals of both countries â¿¿ and drew a quick rebuff from Moscow. Obama also welcomed a new initiative for peace talks with Afghanistan's Taliban militants. But Afghan President Hamid Karzai renounced the formula the next day and refused to participate in the talks.
"We had anticipated that at the outset, there were going to be some areas of friction, to put it mildly, in getting this thing off the ground," Obama said of the Taliban outreach.
The episodes serve as a reminder of how tricky negotiating both economic and foreign policy can be in a complex and interconnected world, rife with political challenges at home and overseas. And that in economics, diplomacy and politics, speaking too clearly sometimes has a price.
Obama has little room to maneuver domestically given harsh partisan divides in Congress. And there is scant appetite in either party â¿¿ or money in government coffers â¿¿ for expensive new fiscal initiatives to further spur growth and job creation.
The previous two Fed chairmen â¿¿ Alan Greenspan and Paul Volcker â¿¿ often seemed deliberately obscure when discussing Fed strategy. It wasn't always clear what they meant, but their public comments rarely triggered huge market selloffs either. Bernanke has made a point of being transparent.