G-20 Disagreements Persist
NYT on continued disagreement over global regulation: "[France President Nicolas] Sarkozy added that tougher regulation — he has called for a 'global regulator' that would be able to reach inside the borders of the United States and other large nations to deal with international financial firms — is 'nonnegotiable.' ... The United States, Britain and Japan will push for more immediate stimulus and “systemic risk” regulators that mostly operate within national borders; Germany and France will push the opposite position, probably with some support from the Czech Republic. That leaves China and Russia, among others, to exploit the division to play a significant role, though if tradition holds the major differences are likely to be smoothed out in wording in a final communiqué that each country interprets differently."
BBC on overnight talks: "Banking regulation is expected to be tightened, and measures are expected on tax havens and bankers' pay. However, UK Business Secretary Lord Mandelson told the BBC there were still disagreements over a number of issues. '[Disagreements] persisted overnight,' Lord Mandelson told the BBC News channel, particularly over levels of funding for the IMF, regulation of tax havens and measures to boost global trade."
Bloomberg on regulation disagreements: "'It’s not at all clear why Sarkozy and Merkel are making such a show,' said Morris Goldstein, a former economist at the International Monetary Fund and senior fellow at the Peterson Institute for International Economics in Washington. 'On regulation, the differences really aren’t that big.' ... Sarkozy said the summit draft doesn’t do enough to attack tax cheats and there must also be a 'global decision' to crack down on traders’ bonuses. Another concern of the euro-area’s biggest countries was that not enough hedge funds will be subjected to oversight."
NYT's Kristof: "For Americans like me who deeply believe in multilateralism, all this is enormously disappointing and makes us doubt Europe’s seriousness."
Obama Points Toward Ending Trade Deficit
President Obama appears to be looking to reduce the trade deficit. NYT: "Mr. Obama appeared to be preparing the world for a reshaped global economy in which the United States no longer was the ultimate export market for the world’s established and emerging powers."
Time's Michael Scherer: "The issue of [trade] imbalances is not expected to play a big role in the coming G-20 communiqué ... But Obama clearly signaled that the issue is on his radar, and that policy shifts may be coming. In practice, this means measures in the medium term that will encourage greater consumption and spending in developing nations like China, and more saving and less debt in the U.S. Although he was vague, Obama discussed what would amount to a reworking of the basic economic physics that governs our world. It's a delicate balance, however, because too much savings in the short term could delay an economic recovery.
TPMCafe's Dean Baker gives a wake-up to Europe on trade: "The trade deficit of the United States and other bubble countries was the surplus of France and Germany. Now that the bubble has burst, the United States and the other bubble countries no longer have the wealth to support their high levels of consumption. This means that France and Germany will not be lifted out of this downturn by export demand. IIf France and Germany want to get on the path to recovery any time soon, they have no choice but to do it via increased domestic demand."
Conservative Budgeting: More Poverty AND More Debt!
W. Post: "After getting blasted last week for presenting a budget plan light on details, House Republicans yesterday unveiled a more complete proposal that would cut taxes for businesses and the wealthy, freeze most government spending for five years, halt spending approved in the economic stimulus package and slash federal health programs for the poor and elderly ... the national debt would continue to climb under the GOP plan, topping out at around 75 percent of the economy,"
Ezra Klein puts it in perspective: "These numbers are not right. Though nor is it clear they're really wrong. They're just sort of...made-up. The theory of the Republican plan appears to be that it allows Republicans to say that 'The Republican budget achieves lower deficits than the Democratic plan in every year, and by 2019 yields half the deficit proposed by the president.' And that's sort of true. If the Republican budget were adopted and its assumptions proved accurate, deficits would be lower than Obama is proposing. Also, the economy would collapse and seniors would die in the gutters and schools would crumble and Americans would literally choose to pay higher tax rates than they were being offered. But the estimated deficit would go down a bit."
Wonk Room's Pat Garofalo on conservative difficulty with defending ramifications: "MSNBC’s Contessa Brewer questioned Rep. John Shadegg (R-AZ) about this, asking “'if you are cutting your tax revenue and cutting spending, how is that going to stimulate the economy?' Shadegg’s response was that drilling for oil offshore and in ANWR would be stimulus enough"
The Plum Line on Senate Republicans: "Will Senate GOP Leadership Join House GOP And Produce Own Budget? Nope."
OurFuture.org's Bernie Horn on what to expect from Congress on the budget this week including the blizzard of Senate amendments that may last through Saturday.
CBPP has detailed analysis on the House and Senate budget resolutions.
Media Matters: "Myths and falsehoods relating to President Obama's budget proposal"
Carbon Cap Will Need 60 Votes
The Hill reports overwhelming vote to prevent global warming legislation from passing with simple majority: "More than two-dozen Senate Democrats crossed the aisle to vote to ban the use of the controversial budget reconciliation process to make it easier to pass climate change legislation ... By attaching the cap-and-trade system to the budget resolution by way of the reconciliation process, cap-and-trade supporters would have lowered the number of votes needed to pass it in the Senate from 60 to 51 ... The restriction on using reconciliation was proposed by Sen. Mike Johanns (D-Neb.) as a budget amendment. It was approved 67-31, with 41 Republicans and 26 Democrats voting for it."
TPMDC's Brian Beutler notes the ban would only be for a year: "I should note that the budget resolution isn't law and this amendment applies to this budget resolution and this budget resolution only. You shouldn't draw too many conclusions from that, of course, but it's probably important to note, amidst all of this arcana, that the Senate hasn't foreclosed on the option for all budgets in the future."
Grist's David Roberts on House global warming strategy:
One of the striking features ... is that it lumps everything together in a single bill. I know some folks aren't big on this strategy, and I've been on the fence myself, but I've pretty much come to see it as both smart and inevitable ...
...the cap-and-trade part of the package is by far the least popular and easiest to demagogue. So conventional wisdom has been that Dems should lead with the more popular energy and grid stuff. But those aren't a cakewalk either -- there's plenty of regional opposition to renewable energy standards and a whole set of jurisdictional and local battles around the grid. The fact is, doing these pieces separately would mean three, four, possibly five bruising legislative battles, culminating in a battle over cap-and-trade that, in my estimation, simply can't be won on its own in this Senate. No one in D.C. has the appetite for that, not this year.
So they've decided, uncharacteristically for Democrats, to double down. They are piling all this stuff into one big-ticket, high-profile, must-pass bill. Just as there will be "a healthcare bill" -- and not four disparate, complicated healthcare bills only wonks can understand -- there will now be a green economy bill. For it or against it...
...There is now a single point of focus, a put-up-or-shut-up moment. Anyone who wants to transition to a green economy or get the country off foreign oil or prevent global warming knows what to get behind.
Baltimore Sun reports Rep. Chris Van Hollen introduces carbon cap that makes all private polluters pay for polluting public sky and returns all revenue to consumers. (Waxman-Markey bill is presently silent on how much polluters should pay.)
Climate Progress: "MIT Professor tells GOP to stop ‘misrepresenting’ his work and inflating the cost to families of cap-and-trade by a factor of 10."
Mark-To-Market Change Expected Today
FT on how it may help banks short-term, hurt economy long-term: "Large US banks like Citigroup, Bank of America and Wells Fargo stand to receive a surprise first-quarter earnings boost from Thursday’s expected loosening of controversial accounting rules by the Financial Accounting Standards Board ... The changes will make it easier for companies, including banks, to value assets using their own internal models rather than market prices. They will also only have to recognise a part of any impairment in their profits. Proponents of the changes, such as Citi, BofA, Wells and their political allies, argue the current regime unfairly magnifies losses by requiring banks to use market prices even though those prices are illiquid and often from fire sales. Critics say changing the rules would further undermine investor confidence in the battered sector by reducing the transparency of banks’ balance sheets [and] counters the US government’s bid to create a liquid market for troubled assets through private/public partnerships."
USA Today opinion page offers pro and con.
Mother Jones' Steve Aquino: "Last week I was speaking with a Congressional staffer who said quite bluntly that the big problem with marking these assets to market was that there was no market for them. So Geithner had to create that market, and the only way to make it worthwhile for the banks and investors is to allow banks to overvalue those assets, even if the banks are unloading their worst, most risky ones. If the asset tanks, the bank—and perhaps the economy in the long run—still wins, the private investor loses a little, and the taxpayer loses big."
Will WH Split GM In Two?
W. Post: "The Obama administration's auto task force has pressed General Motors to consider a form of bankruptcy that would split the company in two, with one entity containing the unprofitable units and the other in essence becoming the new GM consisting of the company's more successful brands, people familiar with the matter say. The company prefers not to ever enter bankruptcy because the mere word would stir fear among consumers and further damage sales. But GM will be forced to do so if it fails to win concessions from its bondholders, union and dealers within 60 days. Then bankruptcy court would compel GM stakeholders to make sacrifices, rehabilitating the company by clearing away billions of dollars of debts from its balance sheet. "
AP skeptical: "Bankruptcy for autos might not be easy or quick"
Emptywheel reports from Mich. presser with new recovery czar Ed Montgomery: "The bulk of the questions reflected the urgency of the situation in ways that weren't designed to elicit real information: Will you lower the unemployment rate in Michigan? What can you do before Chrysler goes into bankruptcy in thirty days? Do you realize that if GM goes under, Michigan's unemployment may double? What can you do in thirty days? How many cars do they have to sell not to get put into bankruptcy in 30 days?"
Will Bank CEOs Be Next?
Geithner leaves the door open. Reuters: "U.S. Treasury Secretary Timothy Geithner said Wednesday he would consider forcing out chief executives of banks that receive government bailouts if they were not managing their businesses properly. In an interview with CBS, Geithner said economic recovery depends on a financial system that effectively provides credit, and the government would hold companies receiving public aid accountable."
NYT on new House bill to curb exec pay: "The bill adopted by the House on Wednesday would bar companies that received a capital infusion from the federal government from paying any bonus or other compensation that is 'unreasonable or excessive' as defined by the Treasury, until they had repaid their bailout money to the government. The companies would also be barred from paying any bonus that was not 'directly based on performance-based measures.'"
Digby smacks pro-greed conservatives: "So, Alan Grayson's bill passed the House today, after a hilariously incoherent debate by the Republicans. They are determined to stand up for the right for wealthy people to loot the public treasury. I realize that it is a fundamental tenet of their philosophy -- they really believe that wealthy people are morally superior and that when the economy sputters due to their ineptitude and greed, average working people should step up and dedicate a portion of their income to ensuring that the rich don't suffer the loss of their well deserved compensation. That's what serfs are for."
More Stimulus Pumping, But Will All States Turn On Spigot?
AP on education stimulus money: "Education Secretary Arne Duncan on Wednesday released the first $44 billion in economic stimulus money directed to schools, but said strings will be attached to the next round of aid ... States must report on: Teacher quality and evaluation systems[,] School restructuring under the No Child Left Behind law and also on charter schools[,] Scores on state and national tests to show whether state standards are rigorous enough [and] States also must report on how many high school graduates go on to earn college credits."
NYT: "The data is likely to reveal that in many states, tests have been dumbed down so that students score far higher than on tests administered by the federal Department of Education. It will also probably show that many local teacher-evaluation systems are so perfunctory that they rate 99 of every 100 teachers as excellent and that diplomas often mean so little that millions of high school graduates each year must enroll in remediation classes upon entering college. Such information, Mr. Duncan’s letter said, 'will reveal both strengths and underlying challenges.'"
WH can't stop govs from refusing stimulus dollars. Deadline tomorrow. McClatchy: "A state legislature can't apply for funds from a key pot of education money in President Barack Obama's $787 billion economic stimulus plan if the state's governor fails to do so, the White House budget director said in a letter released Wednesday. With governors facing a deadline of this Friday to seek their states' shares of $48.6 billion in the recovery package's State Fiscal Stabilization Fund, White House budget director Peter Orszag's opinion puts more pressure on a handful of Republican governors who oppose the stimulus plan..."
NYT reports Sens. Schumer and Feinstein have plans for rejected stim money: "Senator Charles E. Schumer, Democrat of New York, and Senator Dianne Feinstein, Democrat of California, are looking to lend some bi-coastal muscle to a bill that would provide incentives for motorists to trade in their old cars for more fuel-efficient models ... Mr. Obama said he wanted to work with lawmakers to redirect money from the $787 economic recovery legislation to create such a program. And Mr. Schumer and Ms. Feinstein are drafting a letter to the president that would call for using as much as $1.7 billion intended to expand state unemployment benefits, but that so far has been rejected by six Republican governors who oppose the increase.
AP on rural stimulus and VP visit to NC: "About $1.8 billion in federal stimulus money was released Wednesday to help strengthen rural communities by supporting loan guarantees and loosening credit for small-town home buyers, Vice President Joe Biden said ... The newly released aid, part of the $10.4 billion that the stimulus package directs to rural housing projects, is expected to help about 15,000 families nationwide with loan guarantees and other home-buying needs in rural areas ... The stimulus plan also includes about $2 billion for community health centers, and approximately $500 million already has been sent to clinics nationwide. North Carolina's 27 community health clinics, which provide low- or no-cost health care to uninsured patients, will receive $8.6 million."
Great Scott!
NYT profiles leading conservative attacker of health care reform, scandal-tainted Rick Scott: "Once lauded for building Columbia/HCA into the largest health care company in the world, Mr. Scott was ousted by his own board of directors in 1997 amid the nation’s biggest health care fraud scandal. The company’s guilty plea and payment of $1.7 billion to settle charges including the overbilling of state and federal health programs was taken as a repudiation of Mr. Scott’s relentless bottom-line approach ... 'He’s a great symbol from our point of view,' said Richard J. Kirsch, the national campaign manager for Health Care for America Now. 'We cannot have a better first person to attack health care reform than someone who ran a company that ripped off the government of hundreds of millions of dollars.'"
Health Care for America Now's Jason Rosenbaum sums up Rick Scott's excuse: "everyone else in the HMO era that was the '90s was breaking the law, too"
Daily Kos' mcjoan rounds up momentum for public health plan option: "Key support is lining up for a public option in pending health care reform. That includes incoming HHS Secretary Kathleen Sebelius, who declared her support for it in testimony yesterday in her first confirmation hearing ... This comes along with the news (via Lindsay Beyerstein) that the five committee chairs that have jurisdiction--Reps. George Miller, Waxman, and Rangel and Senators Baucus and Kennedy all support the public option, though Baucus has been a bit wavery on that one. (Which makes Gov. Dean's public advocacy effort on a public option still very relevant.)
HuffPost's Linda Bergthold: "No Recovery in Sight -- Unless We Pass Health Reform
WH Still Thinking About Social Security
WSJ: "a top Obama budget official said the administration would have to take a close look at the GOP proposal on Social Security, and hinted that the White House would have more to say on the issue soon. Rob Nabors, deputy director of the White House Office of Management and Budget, reiterated the administration’s view that the most urgent budget problem in the entitlements area is not Social Security but the soaring cost of health care ... But Nabors added that administration officials would spend some time “looking at” the GOP proposal on Social Security, and promised that the public will be seeing more from the administration on the issue as the budget process unfolds."
Rep. Steny Hoyer defends deficit spending now, while casting eye on cutting Social Security benefits in WSJ oped: "...the single most important thing we can do to get our budget under control is to deal with the costs of our entitlement programs: Social Security, Medicare and Medicaid. Fixing Medicare and Medicaid is inseparable from health-care reform. We will never be able to control the growth in spending of these programs as long as health-care costs continue to increase at more than twice the rate of inflation. We know the policy options necessary to make Social Security fiscally sound: restraining the growth of benefits, bringing more revenues into the system, and raising the retirement age, among others."
Terrance Heath contributed to the making of this Breakfast.
