Focus Quickly Returns To Economic Recovery
W. Post claims resistance in the Senate to a larger bill (after, per NYT, Senate votes for a larger bill):
Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy .. Moderate Republicans are trying to trim the bill by as much as $200 billion, although Democrats working with those GOP senators have not agreed to a specific figure ...
For now, the Senate bill remains a work in progress. "We're trying to find a way to reach 60" votes, Majority Whip Richard J. Durbin (D-Ill.), the Senate's chief vote counter, told reporters. "A number of Democrats have said they want to see changes to the bill before they can vote for it."
Durbin predicted that "100 decisions" will be "made between now and when we deliver the bill to the president's desk."
To remove obstacles from the measure's path, Reid said numerous items could fall by the wayside. "The president, the Democratic leaders, the Republican leaders certainly have every intention of moving forward to getting everything out of the bill that causes heartburn to a significant number of senators," he told reporters yesterday.
What Senate leaders cannot predict is which provisions will stay in and which will fall out. It also remains unclear whether Democrats are willing to tamper with measures that are considered high priorities for Obama, but that tackle longer-term challenges such as health-care reform and alternative energy development, rather than providing the quick jolt of expanded unemployment and food-stamp benefits and individual tax relief.
The most ambitious effort to cut the bill is being led by Sens. Ben Nelson (D-Neb.) and Susan Collins (R-Maine), moderates in their parties who share a dislike of the current version. Collins is scheduled to visit Obama at the White House this afternoon. "I'm going to go to him with a list" of suggested deletions, she said.
Nelson said he and Collins have agreed to "tens of billions" in cuts, although he said he is skeptical that the effort will reach Collins's target of $200 billion in reductions. The pair has counted up to 20 allies in their effort, with more Democrats than Republicans at this point.
Among the items that the Collins-Nelson initiative is targeting: $1.1 billion for comparative medical research, $350 million for Agriculture Department computers, $75 million to discourage smoking, $20 million in Interior Department funding, $400 million for HIV screening and $650 million for wildlife management.
The medical research measure, aimed at developing uniform treatment protocols, is an Obama priority and part of the foundation he is trying to build for health-care reform.
USA Today says Obama will meet with Nelson, Snowe and Collins, but defends size of bill: " ... On Wednesday, the president will meet at the White House with Maine Republican Sens. Susan Collins and Olympia Snowe as well as moderate Nebraska Democrat Ben Nelson -- three senators who represent the middle ground [SIC] in the 100-member body. Collins and Nelson want to eliminate much of the spending on future investments that, they say, won't create jobs immediately ... Obama said there are limits to his flexibility. 'The overwhelming bulk of the package is sound,' Obama said on ABC. 'Most of the programs that have been criticized as part of this package amount to less than 1% of the overall package.'"
Conservatives Move From Attacking "Pork" to Attacking The Poor
In WSJ, GOP Sen. Tom Coburn deems health care, education and aid to squeezed states as not economically helpful: "Less than 10% of the bill could be considered true stimulus, if one assumes tax credits and infrastructure spending will jolt the economy. The other 90% of the bill represents one of the most egregious acts of generational theft in our nation's history, with taxpayer money going to special-interest earmarks, an ill-conceived bailout to states, and permanent spending increases that expand government's reach in areas like health care and education."
Media Matters: "[MSNBC's Mika] Brzezinski persists with food stamp claim, despite economists' flat rejection"
Media Matters: "Ignoring stimulus effects, CNN's Romans uncritically reported 'safety net spending doesn't necessarily create new jobs'"
ACORN's Bertha Lewis on HuffPost: "Think the economic recovery package was all about contraceptives and a $4 billion payout to ACORN? (We wish.) Think again. What conservative bullies like Rush Limbaugh and Sean Hannity are not telling us in their drearily familiar, windbag attacks on the desperately needed economic recovery package is that it contains a wealth of provisions that put money directly into the economy through programs aimed a low- and moderate-income families. These types of programs are not only essential to the survival of working families facing hardship at every turn, but they put money into the hands of folks who will immediately spend it in the local economy on things like food, transit, clothes, and school supplies. In fact, Moody's Economy.com chief economist Mark Zandi says that investing in the food stamp program (SNAP) will provide $1.73 in GDP growth for every $1 invested. "
Oxdown Gazette's Scarecrow: "Republicans’ Stimulus “Wasteful Spending” List: Is that All They’ve Got? ... if this list, which only adds up to about 2 percent of the total, is all the Republican are complaining about, then the rest of the stimulus package must be pretty good."
ThinkProgress: "McCain Opposes Recovery Package Because It Has ‘Corporate Giveaways’ That He Once Campaigned For"
Obama Sets Record Straight
President Obama on ABC World News Tonight:
t I want to be absolutely clear here that the overwhelming bulk of the package is sound, is designed to put people back to work, help states that are in desperate straits, help families who are losing jobs and health care, and it's designed to make sure that we've got green energy jobs for the future. In fact, most of the programs that have been criticized as part of this package amount to less than one percent of the overall package. And it makes for good copy, but here's the thing -- we can't afford to play the usual politics at a time when the economy continues to worsen.
President Obama on NBC Nightly News:
Nobody disputes that we should extend unemployment insurance. Nobody disputes that it is important for us to make sure the people who lose their jobs through no fault of their own still have some meaningful access to health care. Nobody disputes that if we don't use some of this money, this enormous expenditure, to deal with our energy dependence or the rising cost of health care, that we are going to continue to be in a very perilous situation 10 years from now or 20 years from now. So are there ways that we can improve the bill? Absolutely. And I want to continue to work with Democrats and Republicans to find some common ground.
But what I can't accept is the politics as usual, where we think about scoring points instead of acting. We've lost a million jobs in the last two months. We can't afford another four million jobs lost this year. And every economist that I talk to projects that if we don't act quickly, we could end up seeing a much more severe situation than we're seeing right now.
KATIE COURIC: Sen. Mitch McConnell said over the weekend that surely you're privately embarrassed by some of the product that came out of the house version and let me just mention some of the spending in this package: $6.2 billion for home weatherization, $100 million for children to learn green construction, $50 million for port modernization water and wastewater infrastructure needs in Guam, $50 million for the NEA, the National Endowment for the Arts. Even if some of these are a legitimate use of taxpayer dollars, Mr. President, why are they included in this bill designed to jumpstart the economy and create jobs right now?
PRESIDENT OBAMA: Well, let's think about it. We're going to weatherize homes, that immediately puts people back to work and we're going to train people who are out of work, including young people, to do the weatherization. As a consequence of weatherization, our energy bills go down and we reduce our dependence on foreign oil. What would be a more effective stimulus package than that? I mean, you're getting a threefer. Not only are you immediately putting people back to work but you're also saving families on your energy bills and you're laying the groundwork for long term energy independence. That's exactly the kind of program that we should be funding.
Obama on "Buy American" Provisions
CHRIS WALLACE: Strip out the "buy American" provision for steel and iron in the bill, which a number of our allies are saying is too protectionist?
PRESIDENT OBAMA: I agree that we can't send a protectionist message. I want to see what kind of language we can -- we can work on this issue. I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade.
MyDD's Charles Lemos: "These 'Buy America' provisions are not tariffs and do not alter any of the various free trade agreements currently in force. The provisions articulate a sound public policy goal, the creation of high-paying jobs in America's foundries and steel mills. This bill is, after all, an American fiscal stimulus bill not one to spur the economies of China, South Korea, Brazil or Luxembourg ... I am hoping that when the decision is made, it's the Vice President who is the last man in the room."
D-Day: "Let's go over this again: provisions like this are CURRENT LAW for federal procurement. When the federal government purchases, they purchase American goods. Just like every other country does. China is building a huge railroad with their initial stimulus package made entirely out of Chinese products. Every country does this. It's not controversial in the least."
OurFuture.org's David Sirota: "You'll recall that when McCain took this stance during the campaign, Obama aired ads and released campaign material touting himself in the industrial heartland as the candidate who will stand up for Buy America laws. Now, Obama's top aides seem to be working for McCain's objectives. National elections should have consequences, and campaign promises in key swing states should be fulfilled. Call your senator and tell them to vote against the McCain amendment and stand up for Obama's campaign promises."
Senate Grapples With Amendments
NYT: "The Senate on Tuesday pushed the cost of the economic stimulus package above $900 billion by adding billions for medical research and tax breaks for car buyers. Angling to spur automobile sales as part of the economic stimulus package, the Senate voted to add an $11 billion provision to the bill that will allow most Americans to claim a tax deduction for the sales tax and any loan interest on the purchase of a new car between Nov. 12, 2008, and the end of 2009."
Senate Republicans demonstrated Tuesday that they could close ranks to force changes in the stimulus plan, defeating one Democratic effort to significantly boost the spending in the package and helping advance a tax deduction for car buyers.
But in a fluid debate over the bill, Republicans also agreed late Tuesday to an amendment from Tom Harkin, D-Iowa, that would add $6.5 billion for the National Institutes of Health, pushing the cost of the bill to $901.7 billion.
And a proposed tax break for companies that bring home profits from foreign operations, favored by many Republicans, was blocked.
...
GOP conservatives were gleeful after they sustained a budget point of order blocking an amendment from Patty Murray, D-Wash., that would have added $25 billion in additional infrastructure spending to the bill (HR 1).
“We’re back in the game,” said Sen. James M. Inhofe, R-Okla., who raised the point of order that drew a 58-39 vote, two votes short of the 60 needed.
...
Murray’s amendment sought to boost the bill’s highway funding from $27 billion to $40 billion, its transit funding from $8.4 billion to $13.4 billion, and its water and sewer funding from $6 billion to $13 billion.
“Investing in construction projects is the tried-and-true way to put people back to work,” Murray said.
But many Republicans objected, saying they supported adding money for infrastructure but wanted it offset with cuts elsewhere.
Two Republicans — Christopher S. Bond of Missouri and Specter — voted with the Democrats. Mary L. Landrieu, D-La., voted with the Republicans. Edward M. Kennedy, D-Mass., and Judd Gregg, R-N.H., did not vote.
Baucus, one of the floor managers of the bill, said he expects another attempt to increase infrastructure funding. “It’ll come back again,” he said.
But he appeared to bow to political reality when asked if there would have to be an offset. “We may have to trim up something. I don’t want to say full [offset], but something,” he said.
Why Not Bigger? Why Not More Transit?
NYT's David Leonhardt explores concerns that the bill isn't bigger:
"At these sizes, finding ways to spend the money can actually become a problem. High-speed rail cannot be built quickly. States and cities can build only so many highways. As for the military, administration officials say they asked the Pentagon for a list of temporary projects that could begin soon. But the $10 billion of spending in the current bill covers them. Military barracks can be built quickly. Fighter jets cannot, especially when defense contractors are already operating at nearly full capacity..."
"Why not redouble efforts to find a few other ways to spend money quickly? More than 50 mass transit agencies across the country are cutting services or raising fares, and the stimulus bill does nothing for them."
TNR's Brad Plumer adds: "Giving transit agencies aid to balance their budgets would prevent layoffs, and could even be used to enable fare cuts for buses and trains—a de facto tax break that benefits people likely to spend the extra money. This is spending that Congress could disburse right away, and the whole thing would be terrific from an enviro standpoint. Is there any good reason we're not doing this? I'm genuinely curious."
Grist's Kate Sheppard on Boxer-Inhofe (!) highway amendment: "Transit advocates are irate at reports from Capitol Hill that Sen. Barbara Boxer (D-Calif.), chair of the Environment and Public Works Committee, might support an increase to highway funding in the economic-stimulus bill ... Transportation for America, a coalition lobbying for better transit policy, sent out an action alert on Tuesday urging folks to contact Boxer's office."
Beat The Press' Dean Baker says bigger is not hard: "Actually, it is not difficult to design a stimulus package that could provide a larger boost to the economy. For example, if Congress offered a generous tax credit for firms to provide health care insurance to workers who are not currently covered (and opened up Medicare to everyone) it could easily raise the stimulus package to the size advocated by Krugman and others. Alternatively, Congress could provide tax breaks to support substantial reductions in the work week or work year, while leaving pay unchanged. Either mechanism could productively add $200 to $300 billion to the size of an annual stimulus package. Of course, economists who could not recognize an $8 trillion housing bubble may not be creative enough to understand these policies."
Alan Blinder offers ideas for fast spending in WSJ: "To fast-acting spending, like projects that are really -- I mean really -- shovel-ready. To federal grants that forestall state and local government cutbacks and tax increases. To payroll tax cuts, rather than business tax cuts. And to other tax cuts and transfer payments for people who live hand-to-mouth -- expanded unemployment benefits and health insurance for the unemployed being two excellent examples. And if you really want to think big, I've suggested turning state sales tax rates negative for a year or so, with the federal government making up the lost revenue."
Bad Bank Alternatives
George Soros in WSJ opposes the "Bad Bank" concept for the next stage of the financial bailout:
..it would be a mistake to take the "bad bank" route, especially when there is a way to adequately recapitalize the banks with currently available resources. The trick is not to remove the toxic assets from the banks' balance sheets but instead put them into a "side pocket," as hedge funds are doing with their illiquid assets. The appropriate amount of capital -- equity and unsecured debentures -- would be sequestered in the side pocket.
This would cleanse bank balance sheets and transform them into good banks but leave them undercapitalized. The same $1 trillion that is now destined to fund the bad bank could then be used to infuse capital into the good banks.
Although the amount needed to recapitalize the banks would be more than $1 trillion, it would be possible to mobilize a significant portion of the required total amount from the private sector. In the current environment, a good bank would enjoy exceptionally good margins. Margins would narrow as a result of competition, but by then the banking system would be revitalized and nationalization avoided.
The scheme I am proposing would minimize valuation problems and avoid providing a hidden subsidy to the banks. Exactly for that reason it is likely to encounter strong resistance from vested interests.
As does Robert Borosage in HuffPost:
There is a sensible way to go forward: do what the government does routinely with badly run banks that face insolvency. As Rob Johnson, the former chief economist of the Senate Banking Committee at the time of the Savings and Loan crisis, and a member of my board at the Institute for America's Future, describes it:
"Put them in receivership. Replace the managers. The shareholders take their losses. Make an independent assessment of the assets. Net out the credit default swaps that are the scariest threat to all. If necessary, the creditors take a hit, and have some of their loans turned to equity shares. If necessary, strip out the toxic assets, with federal contractors selling them over time. Reorganize a stronger and smaller bank and sell it back to private investors or merge it with other banks."
The FDIC knows how to do this, and has done so with banks large and small. ... Admittedly, taking on the commanding heights banks at once would be a formidable challenge. But it would be a lot less costly and a lot more certain than continuing the voodoo.
You can hear the howls: this is nationalization, socialism, un-American. No, it is how the FDIC has operated since the Great Depression to deal with the incompetent, the unlucky, the scoundrels and wastrels that run banks into the ground. It enforces responsibility. Managers get fired, rather than pocket bonuses. Shareholders lose their investments, rather than getting a taxpayer funded boondoggle. Creditors are protected, but only to an extent. The zombies are put to rest; the strong carry on.
New Executive Compensation Rules
NYT: "The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan. Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends ... Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back."
Sen. Bernie Sanders gave qualified praise on MSNBC's Rachel Maddow Show:
Visit msnbc.com for Breaking News, World News, and News about the Economy
Will Loss Of Daschle Setback Healthcare Reform?
Health care advocates lamented Mr. Daschle’s departure. “This is a very real setback for the administration because Daschle has unique qualifications,” said Drew E. Altman, president of the Kaiser Family Foundation, which focuses on health policy. “His withdrawal might result in a loss of momentum, but I don’t think it’s a fatal blow.”
William A. Galston, a former policy adviser to President Bill Clinton who is now at the Brookings Institution, said Mr. Daschle combined political, policy and legislative experience. “I’ve been trying to wrack my brain to think of another person who could bring those three things together,” Mr. Galston said. “I’m not getting very far.”
Others played down Mr. Daschle’s importance, pointing to Mr. Obama’s commitment to the issue. “That’s not dependent on Tom Daschle or any one person other than Barack Obama,” said Richard J. Kirsch, the national campaign manager of Health Care for America Now, a grass-roots coalition.
Skeptics of Mr. Obama’s approach to health care were relieved. “We had some serious concern about Daschle’s desire to rush health care reform and push something through as quickly as possible,” said James P. Gelfand, senior manager of health policy at the United States Chamber of Commerce. “The administration could come up with a better consensus-builder.”
... Senator Max Baucus of Montana, chairman of the Finance Committee, and Senator Edward M. Kennedy of Massachusetts, chairman of the health committee, have been pushing forward on legislation for weeks ... Mr. Baucus said Tuesday that he had spoken with Mr. Kennedy and planned to take up a health bill by summer. He dismissed the importance of the Daschle withdrawal. “It’s barely a little ripple in the water,” he said. “It’s not a wave, just a ripple.”
LA Times: "Nonetheless, many lawmakers said Tuesday they have no plans to slow down."
The Treatment's Jonathan Cohn: "Can health care reform go ahead, this year, even without Tom Daschle? Yes. Does this episode--and Daschle's absence--make the task of enacting health care reform harder? Yes, although how much harder is difficult to say right now ... as one senior administration official just told me, 'the most passionate advocate for health reform in the administration is staying put--right in the Oval Office.'"
The Plum Line: "Daschle’s Deputies Remain, Which Bodes Well For Health Care Reform"
Climate Crisis: Boxer Announces Principles
Yesterday's announcement highlighted how much the political ground has shifted in Washington on climate change. Boxer, alluding to last year's failed cap-and-trade bill, said, 'A lot of those who voted against us are no longer here, and they have been replaced by some of the people behind me.' But it also underscored the challenge lawmakers face in enacting a federal carbon cap. Boxer would not specify the exact emissions reduction targets she will seek, identify which Republicans might support her panel's eventual proposal, or estimate when the full Senate might take it up for a vote...
...key players outside Washington are also reaching out to the new administration on the issue. Mary Nichols, who heads the California Air Resources Board, met with [the EPA] yesterday ... "You have to have caps" on carbon, Nichols said in an interview before the meeting. "If you start out with the conception you're doing the best you can, that's never going to be good enough."
Grist's Kate Sheppard: "The principles call for a bill that uses a market-based system to reduce greenhouse-gas emissions, with both short- and long-term targets. But Boxer declined to say what those targets might be or whether she endorses the goals set out by President Barack Obama, who in his campaign called for reducing emissions to 1990 levels by 2020, and 80 percent below 1990 levels by 2050 ... Boxer called for revenues from the auction of emission credits to be used for renewable-energy and energy-efficiency programs, assistance to consumers, worker transition programs, and domestic and international adaptation efforts. She did not say what percentage of credits should be auctioned off versus given out to emitters free of charge. Obama has called for 100 percent of the credits to be auctioned. Boxer said only, 'We'll look at that.'"
Climate Progress sees no legislation this year
Conservatives Set Sights on Solis
Weekly Standard and RedState try to make "conflict of interest" hay out of Labor Secretary nominee Hilda Solis supporting the Employee Free Choice Act, and being a member of non-profit that supports the Employee Free Choice Act.
SCHIP Expansion Becomes Law Today
The Page: "The president will sign a bill into law in the East Room Wednesday afternoon extending health care coverage to 11 million low-income children."
