Budget Deal Fast-Tracks Health Care, May Put PAYGO On Path
Politico: "The more immediate fight will be health care, where the budget gives Obama an invaluable backstop if Republicans attempt to stall this initiative past Oct. 15. Conrad said Democrats are still hopeful that a bipartisan deal can be reached prior to that. But if that fails, then the budget would trigger a process allowing the Senate to consider the issue on an expedited basis in which Democrats would no longer need 60 votes to cut off debate."
CQ on possible PAYGO compromise: "Most details had been decided earlier in the day, but negotiators were working into the evening to assuage the concerns of the Blue Dog Coalition, a group of fiscally conservative House Democrats who want the Senate to commit to advancing a bill this year that would put into law the pay-as-you-go rule, which requires tax cuts and new mandatory spending to be offset with tax increases or budget cuts elsewhere in the budget."
CNN adds: " Separately, conservative Democrats in the House, who have been pushing for a strong statement from leadership on fiscal responsibility in the budget, may have some of their concerns addressed. A Democratic aide told CNN that House Speaker Nancy Pelosi and House Majority Whip Steny Hoyer are drafting a letter to Senate leaders 'throwing down the gauntlet' to insist that a pay-as-you-go system be followed, which would require new federal spending to be offset with budget cuts or tax increases."
Sen. Judd Gregg goes unhinged. CQ: "The most controversial provision in the agreement is a fast-track procedure called reconciliation. It would allow Democrats to pass an overhaul of the nation’s health care system and student aid legislation with a simple majority in the Senate ... The Senate Budget Committee’s ranking Republican, Judd Gregg of New Hampshire, blasted Obama for supporting reconciliation, saying he could understand the president’s shaking the hand of Venezuelan President Hugo Chavez but 'I can’t understand embracing his politics, basically shutting down the minority.'"
Senate Republicans and right-leaning Dems lose attempt to further cut the estate tax. The Hill: "The framework also seeks to extend the current policy on the estate tax ... President Bush and the GOP Congress had provided exemptions from the tax for individuals who made less than $3.5 million and couples who made less than $7 million, and both Obama and House Democrats had sought to continue that policy. Senate Republicans and centrist Democrats, including Sen. Blanche Lincoln (Ark.) and Sen. Mary Landrieu (La.), had included in the Senate plan higher levels of estate tax relief."
Health Care Fight Enters Next Phase
The Hill on the next phase of the health care fight: "Allied liberal groups such as MoveOn.org, the Campaign for America’s Future and the big labor unions already have their knives out, targeting Republicans and centrist Democrats with advertising, grassroots organizing and public-relations campaigns designed to pressure them to support reform ... Baucus will meet with committee members from both parties Wednesday to review parts of his health reform bill in the first of three such closed-door meetings. Afterward, Baucus and Grassley will jointly address the press, suggesting that a bipartisan health reform bill remains a possibility."
Progressive Caucus will push public health plan option at WH today. CQ: "...liberals are pressing Obama to make sure that any deal includes a government alternative to private insurers. Raúl M. Grijalva, D-Ariz., co-chairman of the Congressional Progressive Caucus, says the 78-member group will push for a government-run insurance option in a scheduled meeting at the White House. 'Some of our members want a single-payer system. But at a minimum, as a caucus, we want a public plan option,' Grijalva said. He and Lynn Woolsey, D-Calif., another CPC co-chairman, warned party leaders in an April 2 letter that CPC members 'will not support legislation that does not include a public plan option.'"
Politico on public plan option polling by Kaiser, which is high when described accurately: "Sixty-seven percent said they favored 'a public health insurance option similar to Medicare to compete with private insurance plans,' while 29 percent opposed it. When told the public option would lead to a government-run health care system, 41 percent said they still favored it. But when proponents were then told the public option would give government an unfair advantage over the private market, support for the idea dropped to 32 percent ... Support for the public plan jumped to 78 percent when people were told it would give consumers more options."
Rep. Jan Schakowsky and HCAN's Richard Kirsch challenge weak lobbyist claims in HuffPost: "...the main argument that the industry and the right has with offering the choice of a public health insurance option is that too many Americans will choose it. If private insurers are really more efficient than government, they shouldn't have any trouble competing with a public health insurance plan. It's the height of irony that the defenders of free markets are opposed to competition. But when it comes to health care, which is a public good, public insurers really are more efficient."
More conservative misinformation. Politico's Ben Smith: "The group Conservatives for Patients Rights [CPR] went after Obama's health care plans today with, in part, a harrowing description of waiting lists for health care in Canada from a former head of the Canadian Medical Association, Dr. Brian Day. An advocate of Obama-style reform, however, sends over another interview with Day that exposes some of the nuance of the debate, and suggests he's not exactly a fan of the American system either. Indeed, while he sees some role expanded for competition and private care, one of his central talking points seems to be that he's not — gasp — suggesting some sort of 'two-tiered, American-style medical care.' ... Day is asked whether other countries have similar waiting lists for surgery. Day responds that Germany, France, Switzerland, Austria and England don't have similar problems — and slams the U.S. system."
Still more lies. Media Matters busts CPR for distorting comparative effectiveness research to claim it means government intrusion into personal medical decisions. More on comparative effectiveness from Ezra Klein.
Health Care For America Now's Jason Rosenbaum contrasts NYT and W. Post opeds on public option: "the Times editorial endorsing the idea of a public health insurance plan relies on facts for its arguments, while the Post relies on misleading statistics."
Carbon Cap Negotiations Grind in House
Politico on delay in House bill mark-up:
[Rep. Henry] Waxman has his hands full winning votes in the committee, and it’s one of the reasons he moved Monday to postpone a bill markup scheduled for this week ... The bill markup was scheduled to take place over two weeks, so there is still plenty of time for the authors to meet their self-imposed Memorial Day deadline after a flurry of hearings on the topic last week ...
...There are two major holdups: the proposed cap on carbon emissions and stringent requirements for utilities to embrace renewable sources of energy. To get the votes for this legislation, Democrats are trying to do some horse trading within their party.
For example, Rust Belt Democrats want protections for energy-intensive industries, like steel and concrete producers; coal state Democrats want Waxman to reduce his emissions targets for 2020 so utilities have more time to develop clean-coal technology; and Southern Democrats want to minimize the requirements for renewable energy production, which would help Southern utilities.
Oil Patch Democrats, like Texas Rep. Gene Green, want money set aside for oil refineries dealing with new regulations. Dingell wants protections for the domestic auto industry. And North Carolina Rep. G.K. Butterfield wants to ensure low-income households receive financial assistance to offset the higher costs of electricity if this legislation is ever signed into law.
A group of Midwestern Democrats, meanwhile, wants 15 percent of the carbon allowances set aside for industries, like steel, paper and aluminum production, that face stiff overseas competition. The proposal — negotiated by Reps. Jay Inslee and Mike Doyle (D-Pa.) — would help manufacturing industries fend off international competition from less regulated countries like China and India.
A Democratic committee aide suggested the negotiations are going well but Waxman and others needed more time to build support.
More details on sticking points from ClimateWire.
Grist's Kate Sheppard notes delay is in part thanks to House Republicans looking to derail the bill: "Moderate Democrats on the panel have circulated a list of proposed changes they’d like to see in the bill before they move to debate. Meanwhile, Republicans on the panel—many of whom don’t believe climate change is actually a problem—have requested another day of hearings on the topic. Under House rules, the majority is obligated to grant their request."
The Hill finds Rep. Chris Van Hollen lowering expectations and contradicting Speaker Pelosi: "Democrats, including Speaker Nancy Pelosi (D-Calif.), had previously indicated they would pass a climate bill through the House by the August congressional recess ... Van Hollen, 50, became the highest-ranking House Democrat to say that even if an agreement is reached, the House may not vote on a cap-and-trade bill if the bill appears to have little hope of clearing the upper chamber."
More from Politico on veterans effort to pressure right-leaning Dems: "The group VoteVets is targeting two red state Democrats, pressing them to support the Democratic version of cap and trade. ... The ad, targeting Reps. John Barrow of Georgia and Jim Matheson of Utah, is expected to run in three districts starting later this week, a group spokesman said."
Ezra Klein on conservative misinformation on costs: "The Republican argument on cap and trade is assumed to be pretty good -- it'll raise your energy prices! -- but doesn't seem to have left the Republican leadership particularly confident. After all, every dollar cap and trade raises is a dollar that can be rebated to consumers, making the system either neutral for individuals or genuinely progressive. And that's probably what will happen. But that's harder to oppose. So we're getting a lot of lies ... It's sensible stuff. That may be why, a couple years ago, one observer commented, 'I think if you have mandatory carbon caps combined with a trading system, much like we did with sulfur, and if you have a tax-incentive program for investing in the solutions, that there's a package there that's very, very good. And frankly, it's something I would strongly support.' That observer? Newt Gingrich."
Bank of America, CitiGroup Complain About Stress Test Results
WSJ: "Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, according to people familiar with the situation ... Executives at both banks are objecting to the preliminary findings ... The findings suggest that government officials are using the stress tests to send a tough message to struggling banks ... it is unlikely that they are the only banks the Federal Reserve has determined might need more capital ... [Government officals say that banks directed to raise more capital shouldn't be viewed as insolvent. Instead, the capital is intended to cushion the banks against potential future losses under dire economic conditions. Federal officials say they won't allow any of the top 19 banks to fail ... it is unclear how flexible the government will be about adjusting the results, especially as banks plead their cases individually."
NYT's Andrew Sorkin questions the value of the stress tests: "Any banks that actually might 'fail' the test, and I put those words in quote marks for a reason, will be given six months to raise new capital on their own or accept capital from the government. But what private investor is going to invest in any of the failing banks, knowing full well that the government may end up coming in later on and diluting the investor’s stake?"
FDIC wants authority to shut down giant financial institutions: "Federal Deposit Insurance Corp. Chairman Sheila Bair, looking beyond stress tests that will determine the health of the top 19 U.S. banks, said her agency should have the authority to close even the biggest lenders. The 'too-big-to-fail concept' should be 'tossed into the dustbin,' and the FDIC should have the power to close 'systemically important' financial firms, Bair said in a New York speech yesterday. 'Given our many years of experience resolving banks and closing them, we’re well-suited to run a new resolution program,' she said."
Senate to approve independent commission to investigate financial crisis today, as part of mortgage fraud bill. Bloomberg: "The U.S. Senate is poised to approve legislation giving the government more power to prosecute mortgage and financial fraud and creating a commission to investigate the causes of the economic crisis. The measure, scheduled for a vote at noon today, would make it easier to prosecute fraud in trading commodities futures, including options and debt derivatives, legal experts said. Trading in debt derivatives such as credit default swaps helped trigger the economic collapse. Such cases would be put under the same criminal law as securities fraud. "
LA Times on applicants for toxic assets program: "The government's plan to have private money managers partner with the Treasury to buy and manage banks' toxic assets has attracted more than 100 applicants, according to a source familiar with the program ... The turnout at least shows that many fund managers believe they can make money off the program. And if they win taxpayers should as well -- if all goes as planned, and if fraud and self-dealing aren't rampant."
GM Deal Would Give US Majority Stake
NYT on bondholder resistance to Treasury GM offer: "...If bondholders approve the debt-for-equity exchange, they would own about 10 percent of G.M., making them a minority shareholder in a company controlled by the Treasury and the U.A.W.’s retiree trust. According to the offer, the Treasury would own at least 50 percent of G.M. in exchange for forgiving about $10 billion in federal loans. The union trust, in turn, would receive a stake of about 39 percent. A committee of big G.M. bondholders on Monday called the offer a “a blatant disregard for fairness for the bondholders” and an example of “political favoritism” toward the U.A.W. ... Representative Thaddeus McCotter, a Michigan Republican, is concerned that some bondholders want the company to go bankrupt because they also hold credit-default swaps insuring them against losses. He is urging the Treasury secretary, Timothy F. Geithner, to disclose which G.M. bondholders have default swaps from the American International Group, the insurance company that was bailed out by the government."
Bloomberg on prospect of majority government stake in GM: "'Government ownership wasn’t done by design, but by default,' said Harley Shaiken, a labor professor at the University of California at Berkeley. 'It transcends the debate about government ownership, because it’s necessary to rescue the industry and I think the government has no long-term goal to control the automakers. No question, we’re in uncharted waters.'"
Emptywheel laments: "another, perhaps more realistic plan, but still one that doesn't help them out of their dealer problems. And one that kills another brand in the process"
W. Post on threat to minority car dealers: "Since the 1970s, General Motors has led the way in providing opportunities for minorities to own car dealerships. The automaker pioneered special training programs and put money behind candidates for new dealerships. Now, after almost four decades of slow but steady progress, minority dealers are increasingly worried that the latest wave of GM cuts could erode any gains ... Nearly a third of GM's minority dealers sell Pontiacs..."
W. Post on auto financing obstacles: "The Treasury Department is racing to engineer the sale of Chrysler's financing arm in a move the administration deems vital to saving the troubled automaker, but other federal agencies have not given their support, sources familiar with the matter said. The Obama administration wants the nation's largest auto-financing company, GMAC, to buy Chrysler Financial, which is the primary source of lending for Chrysler dealerships and car buyers ... But GMAC needs a new round of backing to buy its longtime rival ... The FDIC, created to backstop the banking industry, is balking out of concern that its resources would be drained in support of an auto manufacturer. And the Fed, which regulates banks, would need to grant a waiver from a long-standing rule that separates banking and commerce."
Durbin Announces Home Bankruptcy Deal, Bankers Still Opposed
HuffPost's Ryan Grim on mortgage reform compromise heading to Senate floor:
After weeks of negotiations between Senate Democrats and major players in the financial industry, a compromise bankruptcy reform deal has been reached, Majority Whip Dick Durbin (D-Ill.) said on the Senate floor Monday night. Whether it will pull 60 votes, the number needed to overcome a GOP filibuster, is a question that will be answered later this week when the Senate takes up Durbin's amendment to the House-passed bankruptcy bill.
In order to garner the support of conservative Democrats and a few Republicans, the proposal has been watered down. The bankruptcy legislation will still allow homeowners to renegotiate mortgages in bankruptcy - the so-called cram down provision - but only under strict conditions. The banking industry has lobbied fiercely against cram down, but Durbin said on the Senate floor Monday night that the compromise was supported by Citigroup, which has been at the negotiating table...
...[Said Durbin,] "The amendment I'm going to offer will make a modest change in the bankruptcy code with a lot of conditions. It won't apply across the board. This amendment limits assistance in bankruptcy to situations where lenders are so intransigent that they are unwilling to cooperate with the foreclosure prevention efforts already underway - Obama's homeowner assistance and stability plan and the Congressionally-created HOPE For Homeowners, which this bill will greatly improve." If banks refuse to take part in either of those programs, which allow homeowners to renegotiate mortgages under certain conditions, then a bankruptcy judge would be able to reduce a homeowner's monthly payment.
Durbin didn't release any further details. The compromise, which he said is also supported by the Center for Responsible Lending, AARP and the Leadership Council on Civil Rights, is being shared with wavering members and staff leading up to the vote. Meanwhile, the banking lobbyists are furiously lobbying against it...
Breakfast Sides
Florida Republicans reject stimulus funds for unemployed. NYT: "Republican legislators say that they do not want to increase the burden on Florida’s unemployment trust fund when it is running out of money. Some statewide business groups, already bracing for an expected increase in unemployment taxes, also objected to the changes ... But Gov. Charlie Crist of Florida said he supported changing the law to draw the extra federal money. 'I think taking it is important,' Mr. Crist said. 'I know the people need it, especially those who may be facing unemployment. I wish it would be reviewed again.' Democrats have accused Republican lawmakers of leaving money on the table."
Military contractor lobbyists try to play jobs card to save wasteful projects. W. Post: "The defense industry and its supporters argue that the proposals by Defense Secretary Robert M. Gates will increase unemployment during a historic economic crisis ... Gates and other Obama administration officials argue that job-loss fears are overstated, and note that the Pentagon's overall budget would increase by $20 billion, to $534 billion, under the plan released this month. Proclaiming the need to "reshape the priorities of America's defense establishment," Gates called for halting or cutting a host of programs that have been plagued by delays, cost overruns or performance problems, including the F-22, the C-17, a fleet of new presidential helicopters and the Future Combat Systems program."
HuffPost's Art Levine on ongoing grassroots efforts for Employee Free Choice: "...all that doom-saying doesn't take into account the ongoing grassroots efforts in support of the legislation, key Labor Department appointments -- or the spate of local media coverage. These pieces run the gamut from broadcast and newspaper accounts of events to pro-union op-eds and editorials, and it's all gone on under the radar of the national media."
