Will EPA Move on Capping Carbon?
FT reports EPA is about announce plans to cap carbon, which could prod Congress: "President Barack Obama’s administration is preparing to ratchet up pressure on Congress to pass climate change legislation this year by declaring its authority to regulate greenhouse gas emissions through the Environmental Protection Agency ... An announcement could be made this week, according to several environmental groups briefed about the plans. The EPA did not respond to calls ... Regulations would not come into force at once but the declaration would intensify pressure on Congress to pre-empt EPA action by passing its own legislation to curb industrial emissions."
Saturday NYT speculated on possible EPA climate action:
Has the administration scaled back its global-warming goals, at least for this year, or is it engaged in sophisticated misdirection? Maybe some of both. While addressing climate change appears to be slipping down the president’s list of priorities for the year, he is holding in reserve a powerful club to regulate carbon dioxide emissions through executive authority.
That club takes the form of Environmental Protection Agency regulation of the gases blamed for the warming of the planet, an authority granted the agency by the Supreme Court’s reading of the Clean Air Act. Administration officials consistently say they would much prefer that Congress write new legislation to pre-empt the E.P.A. regulatory power, but they are clearly holding it in reserve as a prod to reluctant lawmakers and recalcitrant industries and as evidence of good faith to other nations.
Industry lobbyists and members of Congress who are engaged in writing energy and global warming bills say they are well aware of the E.P.A. process bearing down on them. “Once the Supreme Court declared carbon dioxide to be a pollutant under the Clean Air Act, E.P.A. had no choice but to act,” said Representative Rick Boucher, a moderate Democrat from a coal-producing region of Virginia. “Most people would rather have Congress act. We can be more balanced; we can take into account the effects on the economy. But if we don’t undertake this, E.P.A. certainly will.”
Still, the agency’s regulations would take months to write and years to become fully effective. Meanwhile, Congress is already starting work on energy and climate legislation, though without significant guidance from the White House, at least in public.
India remains opposing to strong climate protection treaty without significant aid. W. Post: "'If the question is whether India will take on binding emission reduction commitments, the answer is no. It is morally wrong for us to agree to reduce when 40 percent of Indians do not have access to electricity,' said a member of the Indian delegation to the recently concluded U.N. conference in Bonn, Germany ... In a policy document released in January, India calls for industrialized countries to commit to significant emission reduction targets while aiding sustainable development in developing nations with funds and technology. 'But it was informally made very clear to us by the developed countries that there will be no money available for developing countries because of the global economic slump,' said the Indian delegate..."
Clean energy congressional town hall series starts today with GOP Sen. Arlen Specter, announces youth enviro group Focus The Nation.
Climate Progress' Joe Romm analyzes compromise possibilities in Congress.
Sacramento Bee reports ethanol pioneers are folding as Big Oil moves in: "As their industry struggles, their old nemesis, the oil industry, is prepared to gobble up the remains. Oil refiner Valero Corp. just agreed to buy seven bankrupt ethanol plants in the Midwest for 30 cents on the dollar. 'The industry has a very bright future,' said [Neil] Koehler, Pacific Ethanol's president and chief executive, in an interview last week. 'It's a question of who the players are going to be.'"
KING: How much of a part of the future is this?
SALAZAR: It's a very huge part of the future. The outer shelf has 1.57 billion acres, that's a massive plate.
KING: A lot of your friends, people who support your political coalition who don't like this. They think it's dangerous for the environment, they think it's risky the environment.
SALAZAR: We need a comprehensive energy plan. We need to do more with efficiency and we need to do a lot with alternative fuels and renewable energies. We move forward with the mass technologies, but in the meantime, we need to make sure that we're also developing our oil and gas resources so we break our dependence on foreign oil.
KING: But we will be reliant on oil for how long?
SALAZAR: You know, for the foreseeable future. There is no way that we are going to replace the oil and gas that we're using today, John, in a matter of four, five, 10 years. We'll continue to depend on oil and gas as we transition over to higher efficiency and to alternative fuel.
KING: And based on this, if you were to have a conversation with the governor of California or the governor of Florida, whose citizens are very wary of this, they don't want it off their shores, what would you tell them?
SALAZAR: I would tell them to make sure they're making informed decisions. I think there might be something to be said about the placement of where these rigs actually go ... Today we're standing some 75 miles away from the shoreline and it has a different impact on the coast than if we were actually in the marshes or right next to the coastline. So, I think some of it has to do with where the resources are located. Some of it has to do with the technology that has been developed. I think the technology has come a long ways. There was a time, I think, when there was a lot of pollution that actually occurred from these rigs. I think now they'll tell you that there is very little pollution that actually occurs. Have you had any spills since you've been here?
KING: It sounds like you're saying they should at least open their minds to thinking about this more.
SALAZAR: President Obama has said that the outer continental shelf should be on the table, as part of a comprehensive energy package. So, how exactly that will happen is something that we will be deciding over the next several months. And at the end of the day, we are going to have production. We are pro-production, but we also are going to transform our energy economy from an oil-based, carbon- based economy over to a new energy economy of renewables and the vast technologies.
KING: And as this debate has started in the new administration, your critics and Republicans in Congress -- and not all Republicans and some people outside the Congress say what you want to do in terms of greenhouse gases, cap and trade, is essentially a carbon tax on hard-working America.
SALAZAR: You know, they are wrong. I think it's a false choice that is being set up by those who are in opposition to us addressing the issue of carbon emissions...
KING: Could that mean though to deal with it that American households, American families might have to pay more?
SALAZAR: I think what it will mean is that we're going to have to change what we're doing now. So I think there may be changes in the lifestyles of Americans. As we look at the country in ten years of now, it will probably be different in terms of how our homes are constructed, the kinds of vehicles that we drive and other kind of efficiencies we use.
KING: If you turn on a television, the different parties, the different interest in this debate often fight it out with television ads, just like politicians do. Big ads running now say there are no such things as clean coal. Shows a family choking in their house. Is there clean coal?
SALAZAR: There can be clean coal technologies and there is clean coal technologies. But part of what has happened is there has been a failure to move forward in the investment to find out how we can sequester the carbon. You know, coal is to the United States what oil is to Saudi Arabia. The problem is, when you burn it, you have such high emissions of CO2. We could capture CO2 and we could sequester it in geologic formations, but that technology is something that has to be developed. And one of the things that President Obama and the stimulus package has invested a significant amount of money in, to see how we can burn coal in a clean way.
"Ken Salazar, the new U.S. Interior Secretary, plans to visit Alaska on Monday and Tuesday to gather opinions about the federal government's proposed oil and gas lease sales in the Beaufort Sea, Chukchi Sea and the Bristol Bay region. That input will be included in the Obama administration's offshore energy plan, scheduled for completion in six months," reports Anchorage Daily News.
Public Health Plan Option Stays In Spotlight
On Fox News Sunday, Sen Evan Bayh (D-Ind.) says he's "agnostic" on public health plan option, yet supportive of "government role as a backstop." ThinkProgress has video.
NYT plays up concerns from labor advocate-turned-corporate lobbyist Richard Gephardt: "...Mr. Gephardt says universal or near-universal coverage cannot pass this year — and he is urging the White House to defer that goal until it enacts cost-saving reforms in health care delivery ... One old friend links Mr. Gephardt’s assessment to his lucrative new career as a lobbyist. 'He’s advising a lot of big corporations,' said Tom Buffenbarger, president of the machinists’ union." Change.org's Tim Foley reacts: "Dick Gephardt Has Been Replaced by a Cylon."
Beat The Press' Dean Baker slaps W. Post's Robert Samuelson for misrepresenting Obama's health care proposal: "Robert Samuelson Didn't Read Obama's Health Care Plan That would be fine, except that he's writing about it on the Washington Post's oped page. He warns readers that Obama's plan will drive up costs while possibly offering little benefit in terms of better health. Of course that is possible, but the plan is quite explicitly designed to lower costs."
Joe Paduda looks at Lewin study on public plan options impact on private insurers: "Lewin's study assumes the governmental plan would pay Medicare rates, which would enable the Feds to undercut private payers' premiums by more than twenty percent. That's a huge assumption as providers would not have to accept Medicare rates. In fact, as I've pointed out before, they could refuse to participate at all..."
Health Care Blog's Matthew Holt posts letter to the editor from a conservative Utah resident converted to supporting public health plan option after being laid off then seeing national health insurance while visiting son's family in London: "if President Barack Obama's health-care plan gets changed to exclude a public option, then it is not health-care reform."
Goldman Hopes To Pay Back TARP
Guardian further confirms Goldman Sachs plan to repay TARP loan: "Goldman Sachs is this week preparing to tap shareholders for as much as $6bn (£4bn) to repay the $10bn it was given by the US government as part of the Treasury Department's $700bn bailout scheme. A source close to Goldman Sachs told the Guardian that details of the cash call would most likely come after the banking group reveals its first quarter earnings in New York, on Tuesday which are expected to be strong."
TARP inspector general shrugs off concerns of banks pulling out. FT: "The mood in Washington has changed and now banks that indicate they will pay the money back (partly to avoid edicts from politicians on how they should run their operations) are being encouraged by Congress to do so. But there is an apparent risk to future programmes from oversight creep, with the Treasury needing the participation of hedge funds and private investors in its attempt to get toxic – or 'legacy' – assets off banks’ balance sheets to encourage new lending. Mr Barofsky is unconcerned: 'Every player in the market who is playing by the rules – we won’t be a deterrent to them,' he said. 'I don’t credit any claims that we’re scaring good players out of the programme,' he added."
Baseline Scenario's Simon Johnson notes the impact of new rules on executive compensation: "If you cast your mind back to when executive compensation and bonus limits first reached the mainstream debate, you may recall people saying these would be ineffective and the issue is a red herring. These points do not now seem compelling. People who work at the big banks are quite irked by what they see as unjustified limits on their bonuses. Some of the 'talent' is jumping ship. Big bank leadership is lobbying hard to remove the restrictions or, failing that, for the right to pay back government TARP funds in order to escape the bonus cap - leading firms, such as Goldman Sachs, seem poised to raise new capital to that end."
ALSO Barofsky hunting for TARP fraud. FT: "'I hope we don’t find a single bank that’s cooked their books to try to get money but I don’t think that’s going to be the case,' said Mr Barofsky..."
AIG move raises questions on market reform. FT: "AIG confirmed that its financial products unit, whose soured bets on credit default swaps forced the company into government hands last year, did not adopt the 'Big Bang' protocol that has been signed by more than 2,000 market participants. The protocol, created under the auspices of International Swaps & Derivatives Association, is intended to make it easier for investors in the opaque market for credit derivatives to know what will happen to their contracts if debt defaults occur. It came into force on Wednesday. AIG Financial Products opted to eschew the protocol and make bilateral agreements with counterparties ... AIG FP’s move raised eyebrows, with worries that because AIG is not a signatory to the new credit derivatives regime, it could choose not to abide by a credit event ruling. Senior bankers and AIG downplay AIG FP’s absence from the protocol as the unit unwinds its legacy positions, runs down its portfolio and is no longer an active participant in the market." Economic Populist's Robert Oak reacts.
HuffPost's Robert Kuttner previews Tuesday congressional hearing: "...one leader to watch is Rep. Carolyn Maloney, chair of the Joint Economic Committee. Her next hearing, scheduled for Tuesday, is must-viewing. It will feature Nobel Laureate Joseph Stiglitz; former IMF chief economist Simon Johnson, whose recent piece in the Atlantic Monthly compared the US to third-world kleptocracies, and Thomas Hoenig, the most outspokenly critical of the regional Federal Reserve Bank presidents."
EFCA Battles Rages On
OpenLeft's Adam Green: "Is the Chamber of Commerce Using Bailout Money to Attack Workers? ... There are two things you can do right now to take action: 1) Join the Facebook group: "Petition: Chamber of Commerce Shouldn't Use Bailout Money to Attack Workers." (If not on Facebook, sign the petition here.) 2) Email top Chamber execs. Ask them if the Chamber is rejecting money from bailout recipients so that taxpayer funds aren't used on these ads..."
Politico on EFCA prospects and polls: "The hot contest over [the Employee Free Choice Act]may have cooled for the moment, but labor has rolled out a national TV ad and grass-roots campaign to coincide with the congressional recess, and there is still a chance that a stripped-down version of the bill will pass this year ... when it comes to the Employee Free Choice Act, the [polling] task is made more complicated by another major factor: the public’s near-total lack of knowledge on the subject."
WSJ on Chamber ad strategy: "The U.S. Chamber of Commerce is launching a $1 million television advertising campaign that takes a new line of attack against the Employee Free Choice Act, highlighting a provision that would allow federal arbitrators to set the rules for unionization if management and employees fail to negotiate their own deal .. The new Chamber ads will hit the airwaves in Nebraska, Virginia, Louisiana, North Dakota and Colorado..."
HuffPost's Art Levine rebuts Chamber ads: "Here are the full details about the reality of the arbitration provision, and they're worth reading as the myths about arbitration continue to spread with the same indifference to the truth as the secret ballot falsehood..."
AFL-CIO leaders run EFCA oped in Montana Standard: "Working people across Montana have been living in an economic crisis for years, taking on longer hours, second jobs, credit cards and toxic loans just to stay afloat. Even though worker productivity has soared over the last 25 years, families here and across America have struggled to maintain their toehold in the middle class."
Arkansas small biz owner announces support in Times Record letter: " As an owner of a small business ... I constantly worry about the current credit crunch, expenses, overhead, skyrocketing health costs and how in the world I’m going to make a profit. Imagine that: I am in the driver’s seat, and I am worried; just imagine how employees must feel. I am not opposed to paying a fair wage. I am not opposed to employees being union. If employees want union representation, either through recognition or secret ballot, the choice of how to get there should be their choice, not mine."
Lobbyists Gear Up To Kill Obama Student Loan Savings Plan
NYT on brewing fight over ending public subsidies to private student lenders:
The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.
The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell grants for the poorest students.
But the proposal has ignited one of the most fractious policy fights this year. Because it would make spending on Pell grants mandatory, limiting Congressional control, powerful appropriators are balking at it. Republicans say the plan is proof that Mr. Obama is trying to vastly expand government. Democrats are divided, with lawmakers from districts where lenders are big employers already drawing battle lines.
At the same time, the private loan industry, which would have collapsed without a government rescue last year, has begun lobbying aggressively to save a program that has generated giant profits with very little risk.
Speaking of lobbyists, W. Post reports: "In a remarkable illustration of the power of lobbying in Washington, a study released last week found that a single tax break in 2004 earned companies $220 for every dollar they spent on the issue -- a 22,000 percent rate of return on their investment." Angry Bear's Stormy reacts: "And just how exactly has the 2004 Job Creation Act fared ... Dismally, of course."
GM Bankruptcy Possibility Percolates
NYT: "The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend ... The preparations are aimed at assuring a G.M. bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in G.M. and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders. President Obama, who was elected with strong backing from labor, remained concerned about potential risk to G.M.’s pension plan and wants to avoid harming workers, these people said."
WSJ on bondholder resistance: "General Motors Corp.'s strategy for a quick trip through bankruptcy court is likely to spark legal challenges from bondholders worried about getting steamrolled. Key members of an ad hoc committee representing GM bondholders have begun preparing arguments against the auto maker's bankruptcy plan, according to people familiar with the strategy."
McClatchy talks to unsettled GM workers.
Boomers Forced To Delay Retirement, Take Pay Cuts
NYT on the consequences of a weak private pension system: "The oldest baby boomers have already begun retiring. But with retirement accounts plunging in value, more older workers than ever are trying to stay in the work force. And some unemployed boomers, frustrated after months of fruitless searching, have concluded that their only option is to turn their backs on successful careers and start over at much lower pay. "
Infrastructure Push
In the coming months, Congress will consider a bill to set aside as much as $450 billion for highway and other infrastructure projects over a span of six years. House aides said members of Congress intended to insert special projects, or earmarks, into the bill, despite warnings from Obama that he wanted to rein in such spending.
As yet, the Senate has not decided how it will handle earmarks in the bill, said an aide to Sen. Barbara Boxer (D-Calif.), chairwoman of the Environment and Public Works Committee.
Rendell cautioned in an interview that if the bill was larded with earmarks, it could jeopardize the political consensus needed to modernize the nation's network of roads...
...The stimulus bill signed by the president contained $150 billion for infrastructure. And a national infrastructure "bank" proposed by the president would set aside just $25 billion spread over five years. The memo [from Schwarzenegger, Rendell and Bloomberg] to Obama talked of a vastly larger outlay: $500 billion injected into the new infrastructure bank through debt financing...
...A powerful Senate Democrat, Finance Committee Chairman Max Baucus of Montana, has taken aim at the infrastructure bank proposal, objecting that it could become a vehicle to underwrite public housing and water treatment systems important to cities, at the expense of rural areas.
Broad Tax Reform Unlikely This Year
CQ cover story reviews prospects for tax changes:
This was supposed to be THE year. Reformers of all stripes — and everyone who had their eyes on molding the tax code to suit their particular ideals — were all confident that 2009 would give them the opportunity to toss out the old and bring change to the way the U.S. government collects the revenue it needs to operate.
That’s because the clock is ticking ever closer toward midnight on Dec. 31 of 2010, when almost all the tax cuts pushed into law by George W. Bush are set to expire at once. The political and economic cataclysm that may result has long been seen as an inducement for the 111th Congress and Bush’s successor to start developing a tax system for the 21st century, and perhaps overhauling the federal income tax for the first time in 23 years.
Those expectations have been dashed completely. They’ve become additional victims of the worst financial collapse since World War II coupled with what is already the most prolonged recession in a generation. The economic crisis has fundamentally altered the shape of tax deliberations. And beyond that, President Obama has placed overhauling the health care system, limiting greenhouse gas emissions and imposing new financial regulations higher on the domestic agenda. So hope for broad-based changes this year in the way the federal government raises revenue has mostly been jettisoned. And the grand debate, if it ever happens, has almost certainly been kicked down the legislative road for at least another year.
But that doesn’t mean taxes are entirely off the table for 2009 — anything but. In confronting the economic crisis, lawmakers in the first months of this year have already stitched some additional provisions onto the 3.7 million-word income tax code as a means to rapidly funnel financial assistance to companies and individuals. In addition, the financial reality has reinforced a changing political reality, making ideas that were previously difficult to imagine now more broadly acceptable.
For example, it seems likely that congressional Democrats, following Obama’s lead, will move aggressively to increase taxes on the wealthiest Americans in order to help the poorest. The president laid out a vision for sweeping changes in tax policy during his campaign. That vision included making the code more progressive, ending the Bush-era tax cuts for the topmost earners and enacting new tax cuts for the middle and working classes. Some portions of that package are increasingly gaining acceptance on Capitol Hill.
Additionally, there’s renewed talk about making adjustments to the way the income of corporations is taxed. But the tenor of that talk has changed.
Suggestions for overhauling the corporate code previously involved taking away some tax breaks and rewarding companies with a lower tax rate that might leave many or even most of them no worse off than before. The talk is now focused on curtailing international tax avoidance and allowing some extra revenue to flow into the federal Treasury to improve an increasingly bleak deficit forecast.
