Budget Moves To Full Votes Next Week, Simple Majority Rule Still On Table
Budget expected to pass next week. W. Post: "Voting along party lines yesterday in the Senate and late Wednesday in the House, the budget panels agreed to support a spending blueprint that would generate a projected $1.2 trillion deficit in the fiscal year that begins in October, but would dramatically narrow the gap between spending and revenue as the economy recovers over the next five years ... Democrats expect the blueprints to easily win approval of the full House and Senate next week. Even Senate Democrats who have complained about the massive deficits generated by Obama's policies are not likely to block the proposal."
Bloomberg reports Sen. Reid may eventually link health care reform with carbon cap legislation: "Senate Majority Leader Harry Reid said he is open to financing an overhaul of the U.S. health-care system with revenue generated from efforts to rein in greenhouse gas emissions. Reid, a Nevada Democrat, told reporters yesterday Democrats are determined to finance the cost of any expansion of health care with savings found elsewhere in the government’s budget in order to avoid widening the federal deficit. 'I don’t think we should take anything off the table as to what we’re going to do with health care, what we’re going to do with this carbon that’s killing our country with global warming,' said Reid. 'But the one thing that in our budget that’s very clear: We pay for everything.'"
CQ reports Reid open to using Senate budget rules allowing simple majority to pass major policy reforms, and quotes skeptics as also keeping door open:
Unlike its House counterpart, the Senate resolution, adopted on a 13-10 party-line vote [in committee], includes no reconciliation instructions for legislation to implement President Obama’s health and education policies. Such provisions would allow the bills to move without the threat of a Senate filibuster.
But Reid, D-Nev., left the door open to reconciliation in the blueprint to be worked out by House and Senate negotiators, despite misgivings from some top committee chairmen and strong GOP opposition. “We’re taking nothing off the table,” Reid told reporters...
...Senate Finance Chairman Max Baucus, D-Mont., has said he’s against it. But when asked Thursday if he would vote against a conference report containing reconciliation, he said, “I’ll cross that bridge if and when we get there.”
Joseph I. Lieberman, I-Conn., a reconciliation skeptic who caucuses with Democrats, had almost the same response. “I haven’t crossed that bridge,” he said.
And reconciliation has many ardent supporters, at least in its use as a backstop in case Democrats can’t get enough Republican backing to reach the 60-vote threshold to end debate. “If they [Republicans] are not going to do it bipartisanly, that has to be an option,” said Sherrod Brown, D-Ohio...
...Sen. Ben Nelson, D-Neb., opposes reconciliation and said “quite a few” Democrats are against it, but he declined to say who or how many.
Carl Levin, D-Mich., was among several senators who sent a letter to leadership opposing reconciliation for energy cap-and-trade proposals. But he was noncommittal about how he would vote. “I don’t want to lay down a threat of my particular vote, but it [reconciliation] is a serious matter to me,” Levin said.
Jim Webb, D-Va., opposes reconciliation to move a cap-and-trade program. But he is less passionate about its uses on other legislation. “I’d just have to take a look at it,” Webb said.
Mark Warner, D-Va., said that while he agrees with Conrad’s position on reconciliation, he wasn’t sure how he would vote. “We’ll see what happens as the process goes on,” he said.
John Kerry, D-Mass., would prefer not to use reconciliation, he said. But he added, “I think we have to reserve the right to do it.”
ThinkProgress: "McCain Concedes Republicans Have No Case In Opposing Budget Reconciliation"
Inclusionist's Matt Lewis on budget strategy focusing on growth: "Baker stressed policy-driven economic growth ... Dionne stressed revenue raisers and waste reduction ... The path to budget enlightenment lies between these two perspectives. The solutions they propose are different but compatible and necessary, and they both seem to reject deficit reduction with cuts to good programs. But the unanswered question is, how much of each is needed to get the debt in line long term? So much depends on how much growth investment and consumption-rearranging actually produces, and as far as I can tell there's no consensus guess. My instinct is to error on the side of growing the economy and taxing when the need becomes clearer, but I could be wrong. And I'll reiterate Dean Baker's point that the focus of the budget debate needs to be on the economy first and the debt second. Government debt certainly didn't get us into this mess, and paying too much attention to it now won't get us out."
Public Health Plan Option: Will Senate Flinch?
Sen. Max Baucus tells Time's Karen Tumulty his support of public plan option is tepid: "What Baucus had to say will not give much comfort to those who support the idea of a public plan as it is presently being proposed. He strongly suggested that its main value, at this point, is as a bargaining chip to get the health insurance companies to agree to other things that reformers want to see: 'Essentially, it's to keep it on the table to encourage the private health insurance industry to move in the direction it knows it should move toward—namely, health insurance reform, which means eliminating pre-existing conditions, guaranteed issue, modified community ratings ... the public option helps encourage the private companies to move in that direction, because they're worried. We might have to modify the public option to get enough votes. I hear some concerns among Republicans about the public option. The main purpose is to keep the health insurance feet to the fire." (via Eschaton)
Politico quotes House Maj. Leader Steny Hoyer backing public plan option, and sets August as "target" for legislation: "a public option clearly is going to be necessary, President Obama has indicated that." The Hill reports Hoyer will coordinate House health care efforts.
Ezra Klein examines the different ways a public plan option could be structured.
Health Care for America Now's Jason Rosenbaum checks in on the debate over the MA model:
...there has been a great debate going on over at The New Republic over the Massachusetts health care plan. Diane Archer from the Campaign for America's Future argues that Massachusetts is not a model for national reform, mostly because it doesn't include a method to control costs. Jonathan Gruber, who helped architect the Massachusetts reforms, argues that doing coverage first leads to cost control in the future, and that Massachusetts got it right.
I've argued before that I'm not sure the notion that costs follow coverage makes sense. The best, and maybe only way to control costs is to have a competing public health insurance option, and if that option is as non-negotiable as the insurance industry says it is, then getting them on board for coverage doesn't mean it will be any easier to control costs with a public insurance option later on. In the meantime, you're just subsidizing poor-quality, expensive private insurance...
...Today, Anthony Wright of Health Access California (an HCAN state partner) argues that the Massachusetts model may indeed not quite apply, mostly because Massachusetts is a pretty unique state, with a long history of health care spending, a relatively rich and educated workforce, and a different state insurance market that's already much more regulated. Instead, he points to California as a possible model:
Wonk Room's Igor Volsky translates top health insurance lobbyist: "Government Role In Health Care Is Fine…As Long As It’s For Supporting Health Insurance Industry"
Politico's Ben Smith on new right-wing attack ad. claiming health care plan lacks details.
House Republican Budget Mocked For Having No Numbers
WH Press Sec Gibbs: "It took me several minutes to read it"
Matt Yglesias: "Mike Pence Doesn’t Know What the Deficit Would Be if Mike Pence’s Budget Were Implemented"
MyDD's Todd Beeton: "They Took The Bait"
Bayh Bloc Mocked For Having No Positions
D-Day: "Stop Picking On Us, We Don't Stand For Anything ... 'We literally have no agenda,' Bayh shot back. 'How can they be threatened by a group that has taken no policy positions?'"
Wonk Room's Brad Johnson criticizes Bayh's concern about carbon cap legislation, as Bayh plays up regional splits on MSNBC: "If you don’t do it right, you run the risk of sending jobs from our country, like your home state of Pennsylvania, and mine of Indiana, to other countries with lower emission standards ... you’ll probably need 60 votes because it affects so many states economically that if you don’t do it in the right kind of way, you’re taking money from carbon intensive states like Ohio, Michigan, Indiana, Pennsylvania, West Virginia, and redistributing it to California, New York."
New Markets Regs Proposed, Others Delayed
Politico on Geithner's testimony:
...the administration didn’t go as far as many on Wall Street expected — and ducked some much tougher moves, like cracking down on CEO pay, shaking up the Securities and Exchange Commission and creating a national insurance regulator...
...To be sure, Treasury Secretary Timothy Geithner’s proposal does ask for vast new authority to regulate hedge funds, insurance companies and private equity firms long outside the government’s reach. And it would break the long-standing code of omerta that has ruled the secretive hedge fund industry, by allowing government inspectors to peer inside the funds that turn billions in profits with little reporting or oversight...
...But Geithner and President Barack Obama pulled their punches in other key areas, apparently responding to political pressure from Capitol Hill and a timing crunch imposed by next week’s G-20 economic summit in London ...
Observers suggest that several of the items not included in the administration’s announced plan could still be done in separate efforts later in the year...
LA Times foresees "fierce resistance from the financial industry" against new rules.
The President meets with bank executives at noon today.
Temporary Takeovers Still Possible
The Atlantic's Simon Johnson urges temporary bank takeovers and breaking into smaller pieces:
To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible...
...This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy. Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail.
D-Day concurs with Johnson: "...the only way to properly wind this down is to shrink the power and influence of the industry, as would be done in any other emerging country when the bankers grow too big and the elites start stealing everything. This is must reading."
Mother Jones' Kevin Drum questions practicality: "Johnson's solution is twofold: nationalize the bad banks and then carve them up into a bunch of small banks so they can never harm us again. I have my doubts. Not about nationalization, which I suspect is inevitable, but about the size of individual banks being at the root of our problem. As Johnson himself suggests, banks would have to get pretty damn small — smaller than Lehman Brothers and Bear Stearns were — before their failure could be tolerated, and I'm just not sure we live in a world where that's practical."
Stimulus Working
Bloomberg reports optimism from two Fed chiefs: "The presidents of two regional Federal Reserve banks voiced confidence the U.S. economy will show signs of recovery by year-end, responding to unprecedented monetary stimulus and a $787 billion fiscal package ... Richmond Fed President Jeffrey Lacker cited several 'favorable signs' for the economy, including stabilization in retail sales and continued improvements in wages and salaries. Recent gains in home sales and residential construction also suggest that the rate of decline in gross domestic product may be easing after a 6.3 percent annual pace of contraction in the fourth quarter, the worst performance since 1982."
Breakfast Sides
Bloomberg reports on new legislation to discourage exotic mortgages: "The repayment risk on exotic mortgages would have to be shared by the lenders under a law proposed by Democrats in the U.S. House of Representatives. The legislation would prohibit lenders from 'directly or indirectly' hedging or transferring a minimum retained credit risk on most nontraditional mortgages, including some loans that have adjustable interest rates or require little documentation of a borrower’s income. The bill, introduced yesterday, is being sponsored by Representatives Barney Frank of Massachusetts, and Melvin Watt and Brad Miller of North Carolina. Borrowers lured by low introductory interest rates to Alt-A mortgages, which typically require little or no proof of income, are defaulting at a record pace as the mortgage terms on such loans often leave homeowners with higher monthly payments and in some cases an increase in the principal amount. The legislation introduced today is designed to curb 'predatory' lending and encourage the use of traditional 30-year, fixed-rate loans."
CQ reports Baucus looking to accelerate tax reform: "Baucus introduced legislation that would permanently extend most of the tax rate reductions enacted in 2001 and 2003, while letting tax rates for top earners revert to higher levels ... The ambitious tax bill Baucus has in mind would come a year ahead of schedule. If Congress does nothing, all of the tax rate reductions during the Bush administration would expire at the end of 2010, and rates in place at the end of the Clinton administration would return ... the White House has appeared to prefer dealing with a tax bill in 2010."
W. Post on forthcoming auto rescue plan: "President Obama said yesterday that his administration will offer the auto industry an aid package that will require General Motors and Chrysler to make 'painful' and 'pretty drastic' changes. The aid package for the companies will be unveiled in the next several days, he said, and will be contingent upon the companies adopting business plans that reflect the fact that they have a smaller share of the auto market."
Mother Jones' Jonathan Stein on public campaign financing: "OpenSecrets.org's Capital Eye blog reports that a bill establishing public financing for House and Senate campaigns will be introduced next week."
LA Times on new immigration reform proposal: "liberal advocates of giving undocumented immigrants a path to citizenship are launching a risky strategy to push lawmakers and the White House to take up their cause. They are devising a proposal in which millions of undocumented workers would be legalized now, while the number of foreign workers allowed to enter the country would be examined by a new independent commission, and probably reduced. It is a calculation designed to win a new and powerful ally, organized labor, which favors a limit on foreign worker visas. But it risks alienating businesses that rely on temporary workers and could turn off key Republicans such as Sen. John McCain of Arizona, who in the past has crafted his own compromise plan for legalization."
Plum Line: "Plumbers Union Rips Joe The Plumber For Campaigning Against EFCA."
Terrance Heath contributed to the making of this Breakfast.
