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Compromise Possibility After WH-Union Meeting

WH hints at compromise over health insurance tax after union meeting. NYT: " President Obama told union leaders at a private White House meeting on Monday that he remained committed to taxing high-cost insurance policies as a way to drive down health costs. But he also signaled that he was willing to amend the proposal to 'make this work for working families,' a senior administration official said."

LAT on possible compromise: "Democratic negotiators are exploring a possibility that would not eliminate the tax entirely, but raise the threshold at which it applies in order to ensure that more middle-income Americans are spared. To make up the lost revenue, Democrats might boost the Medicare payroll tax on high-income Americans."

"The union presidents declined to discuss the meeting when it was over," reports Bloomberg.

Earlier in the day, AFL-CIO President warns Dems of consequences if bad bill is passed. AP: "Trumka warned that Democrats risk catastrophic election defeats similar to 1994 if they fail to come up with a health bill labor likes. 'A bad bill could have that kind of effect – a place where people sit at home'"

"Firefighters Rip Obama For Breaking Campaign Promise Over Cadillac Tax" reports TPMDC.

W. Post/Fortune columnist Allan Sloan comes out against the tax: "But if you look at the actual workings of the plan, you come away far less impressed. You discover that more than 80 percent of the money it raises would come from individuals paying higher income, Social Security and Medicare taxes -- not from soulless employers and insurers. You also discover that the biggest portion of the money comes from people who make less than $200,000. That's not exactly rich -- especially not for those of us in high-cost areas on the East and West coasts."'s Richard Eskow knocks tax supporters for admitting uncertainty: "People are saying that the so-called Cadillac tax 'might fall flat" and 'has real problems.' And those are its defenders. I can't remember any new policy in recent history whose own advocates had so many complaints with its design."

Unions also pushing for a single national health insurance exchange, reports LAT.

The Treatment's Jonathan Cohn explains the benefit of a national exchange: "[The fear is] individual states won't manage their exchanges aggressively enough--either because the people put in charge lack the expertise or the political officials overseeing them are in the pockets of the health care industry. (Believe it or not, industry lobbyists frequently have even more sway at the state level.) In addition, exchanges will likely be responsible for administering subsidies to people who need help buying insurance. But the subsidies will be coming from the federal government, which means states won't have as much incentive to manage the use of those subsidies wisely. The best counter-argument to the national argument is that state officials would be in a better position to negotiate contracts, since they'll have a much sharper feel for the local markets ... But that's not an argument against national exchanges so much as it is an argument for allowing states to opt out of the national exchange--and to take over management--once they've demonstrated ability to do the job on their own. And the House plan already includes such a provision ... Understood properly, the House plan doesn't actually require all states to be part of the national exchange. It merely sets a high standard for what the exchanges should do--and allows states to handle the job as long as they can meet that standard. That's exactly how it should be."

CQ reports insurance lobby fighting to block national exchange: "“'he House feels very strongly these state exchanges won’t work,' said Rep. Diana DeGette, D-Colo. 'Some states would opt out. You couldn’t get uniform national benefits. The sense I had is that the House is going to stand firmly for its position that we need a national exchange.' companies, state insurance commissioners and many centrist Democrats prefer the Senate plan [for 50 state exchanges], saying it leaves more discretion in the hands of local officials ... Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s trade association, said a national exchange would duplicate or make unnecessary the work of the [state] insurance commissioners."

HCAN's Jason Rosenbaum makes case for House employer mandate: "...the Senate provisions would incentivize large employers to cut hours for employees or provide the cheapest health care possible to avoid the fine."

Krugman criticizes FireDogLake for charging economist Jonathan Gruber for conflict of interest. FDL's Jane Hamsher demands Krugman apology.

Politico suggests Senators are more optimistic than House members of reaching deal before State of the Union.

WH Planning Form Of Bank Tax, But Not Financial Transaction Tax

President Obama looking at levying fee on banks to help cut budget deficit. NYT: "President Obama will try to recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, administration and Congressional officials said Monday. The president has yet to settle on the details, and his senior economic advisers are weighing a number of options as they finish the budget proposal Mr. Obama will release next month ... The administration previously rejected two ideas that have received much attention in recent months: a transaction tax on financial trades and a special tax on executives’ bonuses. The most likely alternatives would be a tax based on the size and riskiness of an institution’s loans and other financial holdings, or a tax on profits."

Bloomberg discusses possible tax options, difficulty in finding one that sticks to banks: "Piggybacking on the existing corporate income tax is one ... although companies without net profits don’t pay any income taxes. An excise tax would likely be paid regardless of whether an institution is profitable. Finding something to levy also is challenging, tax experts said. Options range from assets, to payroll size, to average wages paid to top executives. No matter what basis is chosen, [Tax Policy Center's Roberton] Williams said, companies will try to reduce its use of that particular method."

WSJ on possibility of tax weighted to bank's degree of risk-taking: "One option under consideration involves placing a fee on a bank's liabilities, a number that theoretically represents the amount of risk a bank takes on, according to officials familiar with the matter. That approach would also have the effect of tamping down banks' risky behavior, another administration goal. Another option would be to target bank profits, these people said. It's unclear precisely who would be subject to the fee. A person familiar with the matter said it's unlikely for now to target auto companies or American International Group Inc., all of which are still struggling. Homeowners who benefited from government-funded housing help also wouldn't pay the fee."

Bank lobby gears up to oppose any tax. W. Post: "'"The industry is starting to recover, the economy is starting to recover, and a tax would hinder both the industry and the economy -- and for that matter, the American people,' said Scott Talbott of the Financial Services Roundtable, a trade group that represents the largest financial companies."

Simon Johnson promotes excess profits tax on NYT's Room For Debate: "...the target is not profits per se, but high profits made by individual banks that are big relative to the system ... Imposing an excess profits tax will not be easy -– there are too many ways to game the system -– and, at a minimum, an effective tax will require a high degree of cooperation at the level of the G20."

Fed seeks to block release of info on bailout recipients. Bloomberg: "The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history. The U.S. Court of Appeals in Manhattan will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by Bloomberg LP, the parent of Bloomberg News."

Democracy May Kill Undemocratic Deficit Commission

Senate co-sponsor of Pete Peterson's deficit commission proposal can't find the votes to pass it. The Hill: "Sen. Judd Gregg (R-N.H.) told The Hill on Monday that the proposal he’s pushing with Senate Budget Committee Chairman Kent Conrad (D-N.D.) doesn’t have the 60 Senate votes necessary to pass. An amendment creating the fiscal commission will get a full Senate vote next week during a debate over a bill raising the debt limit."

Dean Baker notes commission would gut Social Security: "...the proposal would place major cuts in Social Security on the table. This is troubling for two reasons. First, current and near retirees will badly need their Social Security after the Wall Street boys' machinations destroyed their home equity and retirement accounts. The vast majority of middle-income families will have very little other than Social Security to support them in retirement. However, plans to cut Social Security are even more troubling because they amount to an effective default on a portion of the national debt ... it was the greed of the Wall Street crew and the inept policy prescriptions of many of these deficit hawks that brought down the economy. They should not be allowed to take what little the rest of us have left while walking away unscathed themselves. If defaulting on the debt held by Social Security is on the agenda, then the commission better have a partial default on all government debt on its agenda."

PR Watch's Lisa Graves notes The Fiscal Times advisory board includes top CIGNA official: "...the only question is when, not if the Fiscal Times will publish their analysis of the health reform bill and push their agenda as 'news' on the pages of the Washington Post."

Senate Proposal To Prevent EPA From Cutting Carbon Written By Lobbyists

W. Post scoops that Sen. Murkowski turned to polluter lobbyists for assistance on crafting anti-EPA amendment: "Sen. Lisa Murkowski (R-Alaska) is likely to postpone offering an amendment next week that would bar the Environmental Protection Agency from regulating carbon dioxide as a pollutant under the Clean Air Act, according to sources familiar with the matter ... The maneuvering comes as The Washington Post has confirmed that two Washington lobbyists, Jeffrey R. Holmstead and Roger R. Martella, Jr., helped craft the original amendment Murkowski planned to offer on the floor last fall ... Murkowski spokesman Robert Dillon said the senator ... has not made a final decision on whether to offer her amendment on Jan. 20, but her staff is presenting her with multiple options."

McClatchy adds: "Dillon said Murkowski may introduce the legislation next week as an amendment to a Senate bill that raises the limit on how much money the U.S. government can borrow. She also is considering going forward with a 'disapproval resolution,' a rarely used procedural move that prohibits rules written by executive branch agencies from taking effect."

Grist's Daniel Weiss praises Obama for major clean energy advances after one year in office: "...President Obama did much of what he promised ... These achievements will have real world impact. By 2011, the American Recovery and Reinvestment Act, P.L. 111-5, will double the generation of renewable electricity from the wind, sun, and earth. ARRA will also lead to energy efficiency retrofits in 1 million homes by 2012. And President Obama’s new fuel economy standards would save 1.8 billion barrels of oil. Additional benefits will accrue as the president and Congress finish some 2009 clean-energy initiatives and additional efforts are launched in 2010."

China's Economic Rise Amplifies Calls For Reform

NYT edit board chastises China's currency policy, warns of protectionist responses: "While the strategy is still working for China, it is exacerbating economic weakness around the globe. ... If China continues its beggar-thy-neighbor currency policy, it will make it even harder for countries and the global economy to revive. As overextended governments wind down their fiscal stimulus, many economies will have to rely on exports as a crucial source of demand while their consumers restructure their sorry personal finances."

NYT news analysis suggests China can't sustain boom with changing interest and currency rate policies: "At home, ordinary citizens and economists alike worry that the government’s decision to flood the economy with cash has created speculative bubbles — in housing, in lending — that could burst with disastrous effect. But curbing speculation requires moves, such as raising interest rates, that could crimp the sprees of investment and industrial expansion that are the main contributors to growth. Abroad, the pressure on China to revalue its currency, the renminbi, is strengthening, and it seems sure to intensify after trade statistics released Sunday showed that China’s yearlong downturn in export growth reversed in December. Keeping the renminbi fixed at a low rate against the dollar boosts China’s exports and its economy. But increasingly, it angers its trade partners."'s Dave Johnson notes conservatives are waking up to the results of conservative trade policies: "So NOW the conservatives are looking at what they have done, and they are very afraid. They borrowed from China year after year, and now they are afraid that China will use all that borrowed money to collapse the dollar. If you are on any right-wing mail lists half of the emails you receive are saying that dollar could collapse any minute."

China dropping barriers to wind tech imports reports Green Energy Reporter: "Is there a political angle here too? ... It’s difficult for Chinese companies to cry foul about protectionism when they have home-made restrictions of their own. Still, big wind companies, like the Danish Vestas Wind Systems A/S shrugged at today’s news. A spokesman said, 'The ruling will make no difference to our operations, as 70 percent to 80 percent of our turbines are already made in China.'"

Stimulus Did Create Transportation Jobs

Transportation Sec LaHood blogs pushback on AP, GOP for sloppy stimulus analysis: "According to AP's analysis, 'a surge in spending on roads and bridges has only barely helped the beleaguered construction industry.' That's what my math teachers used to call comparing 'apples and oranges.' Referring to the 'construction industry' when transportation stimulus spending is only designed to help the transportation construction industry ... the Census Bureau reported that highway and street construction spending in November was 5.7% higher than it was in November a year ago, and other public transportation construction spending was up 18.8% from a year ago. By contrast, overall construction spending was down 13% from a year ago, to the lowest level in six years. And even that rise in public spending conceals the fact that states, counties, and municipalities have all cut their transportation construction budgets drastically ... on top of tens of thousands of laid-off workers back on the job, Federal stimulus spending is reducing that drastic shortfall in other public transportation spending, making it possible for tens of thousands of workers to retain their jobs and never even hit the unemployment rolls."

Streetsblog reports WH working on long-term transportation bill, after resisting the past year: "One key ingredient in the Obama administration's effort to carve out a stronger federal role in local planning, of course, is the still-stalled six-year federal transportation bill. And [Deputy Transportation Sec. Beth] Osborne -- seemingly aware of the value of that legislation in removing longstanding obstacles to coordination -- told the [Transportation Research Board] meeting that 'Capitol Hill has asked DOT to craft its own version of a transportation reauthorization bill,' according to ClimateWire. A legislative outline from Transportation Secretary Ray LaHood, who spent much of 2009 urging lawmakers to put off discussion of the next six-year bill until 2011, would be an undeniable boost to Democrats who have long urged the administration to play a more active part in solving the puzzle of long-term financing. But the political hurdles to enacting a new federal transport bill this year remain steep, as ITS America President Scott Belcher remarked ... 'Everybody wants to get past the elections' before passing new long-term legislation,' Belcher said, 'and they want to get past the election because they don't want to raise taxes.'"

CQ reports new worker protections may be attached to jobs bill: "There is some talk, mostly from outside groups, that Senate Democrats will include organized labor’s top priority — legislation making it easier for workers to vote to unionize — as part of a new jobs bill. Business leaders warn that such a move could doom a jobs package, while labor leaders are telling Democrats not to take their members’ support for granted.

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