Big Push For Public Health Plan Option
The Hill on grassroots efforts to secure a public health plan option, and efforts to undermine it: "liberal groups are waging a national grassroots campaign this week to demand that all Americans be given access to government-run public health insurance plans. They are also demanding lawmakers support a procedural tactic that would allow Senate passage of healthcare reform without any Republican votes ... Sen. Ron Wyden (D-Ore.), a member of the Finance Committee, has authored a healthcare reform proposal that would only make government-run public insurance plans available in areas where people have a limited choice of private insurance plans. This is not acceptable to liberal activists."
The Treatment's Jonathan Cohn reports on new Institute for America's Future report by Jacob Hacker on public health plan option:
The effort to reach and persuade skeptics was evident in the rhetoric. Some proponents of the public plan option have described it, quite brazenly, as a first step towards a single-payer system. (I’m pretty sure I’ve done that on a few occasions.) But the title of Hacker’s paper is “Healthy Competition” and the emphasis, throughout, is on how a public plan might co-exist with private competitors--each one improving the other, based on their varying strengths and weaknesses...
...Hacker also emphasizes a point he, and other public plan advocates, have made before: That a public plan is an essential backstop to private plans, since--even with the best regulations--some private insurers might find ways to avoid covering sick people or addressing their needs properly. In other words, a public plan is essential to make sure private plans don’t keep conducting business the way many of them do now.
But it is on cost control where, Hacker says, the advantages of a public plan are most apparent. It’s not just that public insurance plans operate with lower administrative costs. It’s also that public plans have more bargaining leverage--and, to some extent, are more willing to use their bargaining leverage--than private insurers. A recent report from the Lewin Group backs up this claim: It found that a public plan, using government bargaining power, could reduce premiums dramatically--by around 30 percent...
...[the arguments] are also a response to a paper, published in the last few weeks, by two other influential health care experts, John Bertko and Len Nichols [which] sketched out a public plan option based loosely on existing state employee insurance plans. The key distinction between their proposal and Hacker’s was that theirs would not give the plan--or plans, as it were--government leverage to set payment rates.
The rationale for the Bertko-Nichols plan was, in many ways, political: If a public plan can’t operate the way that Medicare does, it wouldn’t threaten doctors and hospitals the same sort of pricing power--nor would it threaten the insurance industry with extinction. Such a scheme would not have the same ability to control costs, innovate, or even provide the same measure of security. But, as my colleague Harold Pollack wrote recently, it might be the best alternative politically.
Public plan proponents aren't ready to make that concession. And in the new paper, Hacker argues that a real public plan shouldn’t arouse so much fear and suspicion.
"Democratic leaders agree that they are further along on a wide-ranging overhaul of health care than they are on Obama's revolutionary climate change agenda. Senate Finance Committee Chairman Max Baucus (D-Mont.) has been holding talks on health with insurance industry representatives, labor unions, hospital executives and -- perhaps most important -- key Republican lawmakers.
Sen. Charles E. Grassley (Iowa), the ranking Republican on the Finance Committee, warned that proposals for a government-funded competitor to private insurers and a health-care board with broad powers could meet GOP resistance to such deep federal intrusion into the private markets. But, he added, "I'm not saying anything will be impossible at this point."...
...Many Democratic senators are beginning to privately voice concern that the House will produce a health-care bill that effectively traps people in a public federal plan, which also would risk the support of the almost 100 business-friendly House Democrats.
Boston Globe on new WH health care office: "Perhaps signaling the next item on the Obama administration's agenda, the president today signed an executive order establishing a White House Office of Health Care policy to advise him on health care issues."
National Review's Ramesh Ponnuru pens NYT oped knocking down strawman arguments for universal coverage, but never addresses the main argument that health care for all is the best way to cut costs.
WH Signals Flexibility On Polluter Payments In Carbon Cap
The Obama administration might agree to auction only a portion of the emissions allowances granted at first under a cap-and-trade system to limit greenhouse gas pollution, White House science adviser John P. Holdren said yesterday, a move that would please electric utilities and manufacturers but could anger environmentalists...
..."The idea, obviously, is to end up with a bill that reflects both the thinking of Congress and the administration, a bill that the president can sign," Holdren said, adding of a 100 percent auction, "whether you get to start with that or get there over a period of time is something that's being discussed."
...In an e-mail, White House spokesman Ben LaBolt wrote that Obama "said during the campaign that his preferred approach was a 100 percent auction to create incentives for companies to reduce their greenhouse gas emissions" and continues to back that goal. "Members of Congress are looking at a variety of policy options to help us make that transition, and the administration will be flexible during the policymaking process as long as those larger goals are met," LaBolt said. ..
...Keith Trent, chief strategy, policy and regulatory officer for Duke Energy, said his company is hoping for at least a 10-year transition period to a 100 percent auction so it can install emission controls without raising electricity costs too high. He added that emitters would still have an incentive to cut carbon dioxide because of the overall federal cap on carbon emissions: "The cap is what makes the system's environmental integrity, and you can't exceed that cap because you need an allowance to do it."
But environmental advocate Erich Pica, director of economic programs for Friends of the Earth, said giving utilities free allowances would be less efficient than rebating the revenue from auctions directly to taxpayers. A 100 percent auction, Pica said, "forces the polluters from Day One to pay for the transition to a clean energy economy, and keeps low- and middle-income consumers whole during the transition."
Energy aide Joseph Aldy says WH is talking to right-leaning Dems about climate compromise. WSJ:
Mr. Aldy said the administration had reached out to moderate Democrats in the Senate who have expressed reservations about current proposals to cap greenhouse-gas emissions. Nearly a dozen lawmakers from states with heavier reliance on coal-fired power plants and energy-intensive industries last year blocked a more lenient climate proposal in the Senate.
Many of those same senators have written to Mr. Obama warning against trying to push a bill with 100% auction and outlining some of their concerns. Legislators are concerned that auctioning off so many credits would cost industries too much, and they want a larger portion of the revenue funneled into low-carbon energy technologies and energy-intensive sectors.
EARLIER Grist's David Roberts argues that other parts of House bill would compensate for weakness in carbon pollution payments.
Mother Jones' Kevin Drum reacts negatively: "Getting there over time is what the Europeans tried, of course, and it was a disaster. Basically, it meant nearly a decade of wasted effort until they finally got close to a 100% auction. Blecch. Still, at this point I suppose I'll be grateful if we put any kind of plan in place at all, since I assume the one thing we will get 100% of is Republican opposition."
"A portion of the revenue from any U.S. system capping carbon emissions must go toward softening the impact of higher energy prices on consumers, a White House official said on Wednesday," reports Reuters.
Capturing carbon from burning coal also top WH priority. Dow Jones:
The capture and storage of carbon dioxide is a top priority for the Obama administration, a senior White House official said Wednesday. While the mining sector and coal-powered utilities have been lobbying the administration for funding to help develop technology that hasn't yet been proven feasible at a large scale, many environmental groups with close ties to the White House have been urging the government to shy away from the technology, saying it holds false promise.
"This is a priority for the administration," Joseph Aldy, special assistant to the president for energy and the environment, said at an energy conference here. "We know that it's going to be important to try and help push on this technology...and it's going to be really a key part of the energy portfolio as we move ahead," Aldy said.
W. Post on congressional timing for legislation: "House Energy and Commerce Chairman Henry A. Waxman (Calif.), whose panel is simultaneously crafting the House's climate and health-care bills, said his committee will move first on legislation to limit carbon emissions from companies while allowing those that fall under the limits to trade their permits to heavier polluting companies. Waxman is hoping to send legislation to the House floor no later than Memorial Day, but in the Senate, where leaders acknowledge they are far from 60 votes, the Environment and Public Works Committee just hopes to approve its version by the end of the year."
NYT piece gives wet kiss to coal lobby, playing up risks in climate legislation to poor consumers of low-cost coal power, ignoring measures to make clean energy more affordable and make it easier to use less power.
Wind power already produces more jobs than coal mining explains Climate Progress' Joe Romm
Holdren raises possibility of "geoengineering" to protect climate as a last resort. AP: "The president's new science adviser said Wednesday that global warming is so dire, the Obama administration is discussing radical technologies to cool Earth's air ... One such extreme option includes shooting pollution particles into the upper atmosphere to reflect the sun's rays ... 'It's got to be looked at,' he said. 'We don't have the luxury of taking any approach off the table.'"
EARLIER Chris Mooney urged early discussions of geoengineering: "One thing about geoengineering, after all, is that not only may we want to do it, but we might also have reason to be concerned about someone else doing it—so the more dialogue, the better."
"More than two dozen organizations – from the research, advocacy, faith-based, labor, and civil rights communities – have formed the Climate Equity Alliance to help ensure that the strong policies needed to reduce greenhouse gas emissions also protect low- and moderate-income households and expand economic opportunity. Core principles here.
NYT reports other nations frustrated at slow pace from US: "many said the lack of any numbers from the United States was holding up progress. 'Countries are very, very nervous to come forward without seeing the United States’ numbers,' said Harald Dovland, the official in charge of negotiations among countries that signed the Kyoto Protocol."
Stress Test Results Previewed
NYT cites unnamed sources with early stress test results on banks:
What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.
That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say...
...But the tests, which are expected to be completed by the end of this month, are being conducted out of public view. Federal law prohibits the unauthorized disclosure of the results of any bank examination, including the stress tests. Some investors wonder if the new tests are rigorous enough, given the potential problems lurking inside the banking industry.
Naked Capitalism rolls eyes: "Quelle Surprise! Bank Stress Tests Producing Expected Results! ... They all will be declared to pass in some form, no matter how dreadful they really are (if the remedy is putting in more Federal dollars, rather than a receivership, then the fiction that the money is not being wasted must be preserved). But so as to look sufficiently tough, some banks will be treated harshly. If it winds up being, say, Fifth Third (which I am told by John Hempton is a very well run bank, publishes much more honest financials than its peers, but is in simply terrible geographies, Michigan, Ohio. Florida) and not Citi, then we know the process is not just hopelessly politicized, but shamelessly so."
Big Picture's Josh Rosner on "Stress Test Insanity: " This test was predicated on irrationally benign macroeconomic assumptions and was reverse engineered. C’mon, we can all now acknowledge the actual fact the NY Fed is literally owned by the banks, it doesn’t even need to be captured. Good thing that although Wall Street’s expectations were falsely set to believe there was something to this 'stress test' there is not a single regulator in Washington that I have spoken with that took it seriously."
Fortune sees stress tests helping small banks: "Regulators are kicking the tires at the biggest financial institutions this month. The administration says this risk-checking regime, together with plans to remove toxic assets and raise new capital, will leave surviving banks stronger and more able to support the economy. But some big banks may not pass the stress tests -- and even those that do may still seek to slim down after years of expansion. A deal announced this week shows how those trends could spell opportunity for banks that haven't been scorched by the meltdown of the past two years."
CNN/Money.com reports Fed expectation of higher unemployment: "Federal Reserve policymakers lowered their economic outlook for the rest of the year at its meeting last month, suggesting that they may not be done taking unprecedented steps to try and jumpstart a recovery. According to the minutes of the Fed's latest policy meeting, which were released Wednesday, the central bank said that gross domestic product, the broadest measure of economic activity, is likely to flatten out in the second half of 2009 and expand only slowly next year. The Fed also said that it now expected the unemployment rate to rise more steeply into early next year before 'flattening out at a high level over the rest of the year.'"
One Fed banker expects unemployment to break 10%. BBC: "Richard Fisher, a member of the Federal Reserve's interest-rate setting committee, said the central bank would use 'every tool' to fix the economy."
NYT on expected life insurance bailout: "The question is whether the Treasury will pour billions more into shoring up the life insurers or subject each to rigorous testing, then determine which are viable and perhaps force quiet mergers and divestitures for those deemed too weak to save. A spokesman for the Treasury said that the criteria for insurers were still being developed and that it would probably be at least two weeks before any of them got their answers."
NYT on new proposal for private bailout investment funds:
As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.
The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats...
...The funds, the thinking goes, would buy troubled mortgage securities from banks, enabling the lenders to make the loans that are needed to rekindle the economy. Many of the loans that back these securities were made during the subprime era. If all goes well, the funds will eventually sell the investments at a profit.
But, as with any investment, there are risks. If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could suffer significant losses
Calculated Risk rolls eyes: "I assume PIMCO, BlackRock and others will charge minimal or no fees for individual investors. You, too, can help bailout Citigroup and BofA! (in addition to your taxes)"
New EFCA Ads
The Hill: "American Rights at Work (ARAW), a labor advocacy group affiliated with several unions, plans a nationwide buy for the ad to play on cable television across the country. It will begin during the two-week congressional recess now under way. The ad targets financial companies that have asked for government bailouts for lobbying against the card-check bill, which would make it easier to form unions. The ad does not specify which financial firms have lobbied against the bill."
Obama To Enter Immigration Debate. Lou Dobbs Prepares Fresh Scowl.
NYT: "Mr. Obama plans to speak publicly about the issue in May, administration officials said, and over the summer he will convene working groups, including lawmakers from both parties and a range of immigration groups, to begin discussing possible legislation for as early as this fall. Some White House officials said that immigration would not take precedence over the health care and energy proposals that Mr. Obama has identified as priorities. But the timetable is consistent with pledges Mr. Obama made to Hispanic groups in last year’s campaign. He said then that comprehensive immigration legislation, including a plan to make legal status possible for an estimated 12 million illegal immigrants, would be a priority in his first year in office."
Bush Holdover Undermining Product Safety
WSJ reports on calls for Nord's ouster: "The pressure on the White House to appoint a new head of the Consumer Product Safety Commission rose again on Tuesday when Florida Democratic Sen. Bill Nelson called for the ousting of acting chairman and commissioner Nancy Nord. Nelson, citing 'a serious problem' with an agency and a leadership he says is doing too little to help Florida residents affected by 'tainted' Chinese drywall, wrote to President Barack Obama to ask that Nord be forced to resign for 'neglect of duty.'"
Auto Update
CNN reports WH auto task force back in Detroit: "They will be in Detroit through the end of the week and will be returning next week as well. The goal is to accelerate the process that the President laid out last Monday..."
Time reports GM is "venue shopping" for a possible bankruptcy: "Lawyers — particularly those based in New York and Wilmington — say that the process helps shepherd complicated cases into the hands of experienced judges. Yet some legal experts argue that venue shopping is a way for companies to run from local suppliers, creditors and employees, making it tougher for those groups to file claims and otherwise participate in the case."
LA Times reports suggests auto industry can't be saved without clean energy government policies that raise gas prices and create demand for energy-efficient cars.
W. Post on fuel-efficiency program: "Next month, $25 billion in loans aimed at producing more fuel-efficient cars will start flowing to suppliers and automakers -- just not to the two companies most in need of funding, General Motors and Chrysler. The Energy Department program dictates that companies must be 'financially viable' to receive the loans. And last week, the Obama administration ruled that, at least for now, both GM and Chrysler cannot meet that benchmark. "
"GM says Volt isn't dead yet," reports McClatchy.
AP on aid for auto suppliers: "The Treasury Department opened a $5 billion financing support program on Wednesday to help auto suppliers keep parts flowing to General Motors Corp. and Chrysler LLC as they try to rebound with billions in government aid. The program, first announced last month, will provide government guarantees for the financing of auto parts that have been shipped to the Detroit carmakers but have not yet been paid for. The funds will be made available from the government's Troubled Assets Relief Program, or TARP..."
Terrance Heath contributed to the making of this Breakfast.
