Progressive Breakfast for August 22

Morning Message

A Simple Plan To Balance Trade And Bring Back All Those Jobs

Trade is supposed to be balanced. Instead we have been running continuing trade deficits since the late 1970s. A trade deficit drains our economy and forces consumers, businesses and government to borrow, just to keep going. This means that jobs, factories, entire industries and literal boatloads of money have been leaving the country – it really adds up because we do this every single year ... There has to be a reckoning. We have not faced that reckoning yet, but it is inescapable. It has to happen. We have to tackle this as a country, with a national plan.

Questions Swirl Around Bank of America Settlement

$16.65B settlement “Less Painful Than It Looks” finds NYT: “The actual financial burden for Bank of America, however, may not exceed $12 billion … Bank of America wrote down many of its troubled mortgages years ago. And investment firms, not Bank of America, may now own some of the loans that get written down, potentially shielding the bank from a financial hit … Tax analysts [also] estimate that Bank of America could derive $1.6 billion of tax savings … Some consumer advocates said that while the deal was flawed in many ways, it provided more relief than the other settlements … ‘it offers more principal reductions, more money for blighted areas and more money for new mortgages to low- and moderate-income home buyers,; said Bruce Marks, founder of the Neighborhood Assistance Corporation of America.”

“BofA Credited in U.S. Deal for Other Firms’ Consumer Aid” reports Bloomberg: “Some of that may be satisfied as borrowers get mortgage help from firms that bought their loans or servicing rights from the bank … That can even apply to assets the bank already sold … ‘It’s not just that they’re getting credit for stuff they would do otherwise, this is getting credit for something somebody else is doing,’ Kevin Stein, associate director of the California Reinvestment Coalition…”

“Bank of America Papers Show Conflict and Trickery” reports NYT: “Documents released as part of the $16.65 billion settlement between Bank of America and the Justice Department read like a highlight reel of the mortgage sins that fed the 2008 financial crisis … Mr. Mozilo said Countrywide [which BofA acquired] should stop holding those loans on its books. Yet for the next two years, according to the documents, Countrywide continued to originate pay option loans — which had interest rates that would reset after a few years — and sell them to Wall Street … One Bank of America employee describes trying to ‘trick’ a system that screened mortgages that the Federal Housing Administration agreed to insure …”

Obamacare May Save The Senate

Vulnerable Dems embracing Obamacare. The Hill: “The most overt emphasis on healthcare came this week, when Sen. Mark Pryor (D-Ark.) debuted an ad centered on his 1996 bout with cancer and his vote for the 2010 legislation, which protects people with pre-existing medical conditions from losing insurance coverage … Other endangered members such as Sens. Mary Landrieu (D-La.), Kay Hagan (D-N.C.), and Mark Begich (D-Alaska) have taken a different tack, choosing to attack the Republican governors in their home states for rejecting the law’s expansion of Medicaid …”

“Only 4 anti-Obamacare House Dems left” notes Politico: “The dramatic downsize underscores not only how consequential the health care law vote was but how quickly moderate Democrats have been eliminated on Capitol Hill … They are pushing a ‘fix it’ line — as in, they didn’t support the law, but now that it’s here, they don’t want to repeal it. Instead, they want to repair the flaws they see in the legislation. Polling backs up the strategy.”

Some Things In Washington Are Working

Obama has successfully reduced poverty, argues Tali Mendelberg, and Bennett L. Butler in NYT oped: “Mr. Obama earmarked 17 percent of his budget for these needs, versus Mr. Clinton’s 12 percent and Jimmy Carter’s 8 percent … tax and transfer policies lowered the poverty rate by only 1 percentage point in 1967, under President Lyndon B. Johnson, but by almost 13 points in 2012 …”

The nuclear option worked too. Politico: “…Democrats have churned through confirmations of dozens of new judges — giving them lifetime appointments that will extend the administration’s influence for years to come. Over a roughly equivalent period during the 113th Congress, the Senate confirmed 36 district and circuit judges before the rules change and 68 after …”

Breakfast Sides

Inflation hawks should be ignored, says NYT’s Paul Krugman: “The point is that when you see people clinging to a view of the world in the teeth of the evidence, failing to reconsider their beliefs despite repeated prediction failures, you have to suspect that there are ulterior motives involved … when economic myths persist, the explanation usually lies in politics — and, in particular, in class interests.”

Publicly traded companies should make their tax returns public, says W. Post’s Catherine Rampell: “[There is an] array of eye-glazingly complicated tax avoidance strategies adopted by America’s biggest companies … The basic rationale behind tax transparency is that shareholders (and creditors and the general public) deserve to know what publicly traded companies are doing, particularly if complicated tax acrobatics are distorting their operational and investment decisions.”