The daily Progressive Breakfast serves up what progressive movement members need to know to start their day
"Financial Crisis Responsibility Fee" Announcement Today
NYT has details in advance of presidential statement: "The new tax on banks, insurance companies and brokerages with more than $50 billion in assets would start after June 30 and seek to collect $90 billion over 10 years ... the levy but would remain in force longer if all losses to [TARP] are not recovered after a decade. Administration officials now say that the losses from the $700 billion loan program created in October 2008 are likely to reach around $117 billion, which is about a third of the losses that the government projected just last summer ... The administration is calling the tax a 'financial crisis responsibility fee,' a name that suggests its political purpose as well as its fiscal implications ... taxable assets would exclude what is known as a bank’s tier one capital - its core finances, which include common and preferred stock, disclosed reserves and retained earnings ... The administration’s objective in excluding a bank’s equity and insured deposits is to tax just its holdings that relate to risk-taking."
CQ on tax's policy objective to constrain bank size: "The fee serves a double purpose, the official added, by also giving the administration a boost in its effort to move a financial regulatory overhaul that would encourage institutions to become smaller ... The proposal is expected to have the support of most Democrats on Capitol Hill, but House Republicans have already been vocal about their opposition to the idea."
CNN/Money assesses prospects of other bank tax proposals: "[Rep.] Barney Frank, D-Mass., will hold a hearing on Wall Street compensation next week. On the agenda will be consideration of bonus taxation ... Lawmakers may effectively raise taxes on income earned by managers of hedge funds and private-equity funds. [Analyst Anne] Mathias thinks the proposal might pass, but not before the mid-term elections in November ... Bills in the House and Senate propose a new excise tax on financial firms for their securities transactions ... 'It's very much on the table,' [Grant Thornton's Mel] Schwarz said. But, he added, 'I'd be surprised to see it pass this year.' ... Mathias believes some change to the [offshore] repatriation rules could pass by the end of the year but not before the mid-term elections."
McClatchy suggests uphill battle remains to restrain executive pay: "Washington lawmakers long have threatened clamps on executive pay, but past efforts have been thwarted by pressure from industry officials, confusion among members of Congress about whether to tackle such problems alone or to go instead for a comprehensive regulatory overhaul, and not least by the fact that political parties and candidates count on Wall Street for campaign funds. 'Things have gotten much more complicated, and the expertise is now with people who have an interest in the status quo,' said George Bittlingmayer, a professor of finance at the University of Kansas School of Business. Many experts think that getting meaningful change will be difficult. The Obama administration, they said, is staffed with top economic advisers who are tied into the status quo and too often beholden to bankers."
First Day of Financial Crisis Commissions Fails To Impress
OurFuture.org's Les Leopold says, "The Big Boys Got Away And The Big Questions Weren't Asked": "Phil Angelides, the former Democratic California State Treasurer and chairman of the commission, came out swinging at Lloyd Blankfein, CEO of Goldman Sachs. But he ended up shadow boxing ... Angelides' almost cornered Blankfein with the question of whether or not Goldman Sachs would have gone under had it not been bailed out by the taxpayer. Blankfein again successfully parried the punches by saying no one knows...that they were doing the best they could...better than everyone else ... Angelides missed the chance to nail him. It was the perfect time to bring up the fact that AIG gave Goldman Sachs our money to cover its bets at 100 cents on the dollar ... It's only Day One,and we should cut them some slack. But they will have to develop a sense of drama or they might fade away."
Baseline Scenario's Simon Johnson wants more Citigroup reps to be grilled: "If we stop with a few verbal slaps on the wrist and a relatively minor new levy, then we have achieved basically nothing. We need people more broadly to grasp the dangerous financial 'risk system' we have created and to agree that it needs to be dismantled completely. One way to do this would be for the Commission to call key people from Citigroup to testify. This would not be as part of a large panel with other firms. This would be a drill down into the history, structure, and attitudes involved in building what became the country’s largest bank – and then in driving it into the ground."
"Financial Crisis Inquiry Begins With Goldman Sachs Denying It Relied On Goverment Support" reports Wonk Room's Pat Garofalo.
W. Post on the bankers' attempt at contrition: "Though the executives did not go as far as commissioners wanted in recognizing responsibility for the crisis, all four bankers struck a conciliatory tone and admitted to missteps and poor decisions. They agreed that they had carried too much risk on their books and failed to anticipate the precipitous decline in real estate values that triggered the credit crunch."
Marathon Health Care Talks Make Unspecified Progress
Politico suggests long talks mean success is near: "...the marathon session signaled that House and Senate leaders — with the president in the room for much of the day — were far closer to resolution on the issues that have divided the two chambers for months."
Agreement to modify insurance tax, but not how. CNN: "'What I believe you will see is a lessening of the tax's impact on a broad subset of people,' [Rep. Rob] Andrews said. But Andrews said there is no agreement yet on how to do this, though several ideas on the table include raising the threshold, changing the index, or carving out some types of plans currently hit by the tax."
Telecom companies join unions to oppose insurance tax, talk of consequences. NYT: "In a letter to Congress joined by two union presidents, the executives, Ivan G. Seidenberg of Verizon and Randall L. Stephenson of AT&T, said the excise tax would 'impact health plans covering tens of millions of workers' in various industries. To avoid the tax, they predicted, many employers would cut back on dental and vision coverage."
LAT explores Medicare payroll tax proposal: "Democratic congressional leaders are considering a new strategy to help finance their ambitious healthcare plan -- applying the Medicare payroll tax not just to wages but to capital gains, dividends and other forms of unearned income ... It could also help shore up Medicare's shaky finances, and the burden of the new tax would fall primarily on affluent Americans, not the beleaguered middle class. But the concept also carries political risks: Many older Americans, one of the nation's most potent voting blocs, could see their tax bills rise because they often depend on savings and investment income in retirement ... It is not clear whether the Democratic healthcare negotiators would limit the scope of any Medicare tax on investments. But when the liberal group Citizens for Tax Justice recently drafted such a proposal, it provided an exemption for the first $50,000 of such income for the elderly ... Democrats like Rep. Robert E. Andrews of New Jersey ... favor the proposal because it would make the flat-rate Medicare tax more progressive."
NYT explores debate over national v. state-based insurance exchanges: "Policy analysts say consumers have benefited from the close supervision of some states, like Massachusetts, which a few years ago revamped its market so insurers were obliged to cover everyone and offer consumers a comprehensive set of benefits. California, too, is well known for its aggressive regulation of insurers on consumers’ behalf. But many other states give insurers much more leeway in deciding whom and what they must cover, how much they can charge and even, in some cases, when they must pay claims ... mocrat of Nebraska, is a former governor, state insurance commissioner and insurance executive who strongly favors the state approach. His support is considered critical to the passage of any health care bill. But many House Democrats ... say they plan to insist on a national exchange and putting the federal government in charge."
Politico reports that some Dems "worry" if Sen. Ben Nelson's final vote is secure because of right-wing backlash in Nebraska.
Pharma lobbyist tells CQ industry willing to accept deeper discounts in Medicare drug program to close "donut hole": "... the additional money is far from a done deal. The industry could withdraw its support if it concludes that a final agreement contains other policies that work against its interests. The lobbyist described the amount the industry is considering offering as between $15 billion and $20 billion, though other sources would not confirm that the range is that high ..."
Anti-trust exemption under fire in wake of insurance lobby revelations. The Hill: "Nineteen Senate Democrats on Wednesday called for the health insurance industry to lose its long-held anti-trust exemption after news surfaced that insurance companies have spent millions in a concealed effort to oppose healthcare reform. President Barack Obama also signaled that he would support repealing anti-trust exemptions ... major health insurance companies represented by AHIP say they are not at all worried about the Democrats’ threat to end their anti-trust exemption. 'We could care less,' said an industry source. The industry source said that repealing the anti-trust exemption would impact property casualty insurers that share information to set rates. Large healthcare companies that have many policyholders would have enough internal data to operate without much disruption, the source said ... A spokesman for [Sen. Ben] Nelson said his boss opposes repealing the exemption because doing so would not affect large health insurance companies but hurt smaller companies that depend on data sharing."
Ezra Klein criticizes expected loss of House employer mandate: "It looks like the House's employer mandate is going to fall to the Senate's free rider provision. The free rider provision ... has been improved over its earlier incarnations, but is still a bad, complicated approach that will make it cheaper for many employers to hire, say, a 20-something on his parents’ insurance plan than a 40-something who'll need to go to the exchanges ... it makes different job applicants unequally expensive, and thus could lead to labor discrimination."
With Conrad-Gregg Plan Floundering, WH Pushes Debt Commission Compromise
CQ reports on status of WH-Congress negotiations on anti-Social Security/Medicare debt commission push: "Both senators [Conrad and Gregg] have said they are concerned a commission created by executive order will have no teeth, since it couldn’t constitutionally require Congress to take action, and its recommendations would be ignored. But House Majority Leader Steny H. Hoyer, D-Md., who supports the commission proposal and also participated in the White House meeting, said it would probably have to be created by executive order. 'Neither Conrad nor Gregg think they have the votes,' he said. The proposal will be considered as an amendment to legislation raising the debt ceiling that will be on the Senate floor next week ... As part of any deal, House Democrats also want legislation to codify the pay-as-you-go budget principle, which requires the cost of new tax cuts and mandatory spending to be offset. The White House backs this idea, but Conrad has been reluctant to go along with it, arguing it exempts some costly policies such as extending middle class tax cuts.'"
Record Foreclosures Expected in 2010
"A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast," reports Bloomberg.
New Justice Dept. effort on fight mortgage bias. NYT: "The Justice Department is beginning a major campaign against banks and mortgage brokers suspected of discriminating against minority applicants in lending, opening a new front in the Obama administration’s response to the foreclosure crisis ... the new push will instead center on a more recent phenomenon critics have called 'reverse redlining.' In reverse redlining, a mortgage brokerage or bank systematically singles out minority neighborhoods for loans with inferior terms like high up-front fees, high interest rates and lax underwriting practices. Because the original lender would typically resell such a loan after collecting its fees, it did not care about the risk of foreclosure."
Murkowski's Defense: “A Sixth-Grader Could Have Written It."
Sen. Murkowski tries to distance herself from dirty energy lobbyists. Politico's Glenn Thrush: "[Murkowski spokesperson] Robert Dillon said that his boss consulted Jeff Holmstead and Roger Martella Jr. not because they were connected to the energy industry — but because they both had technical expertise as former high-ranking officials with President George W. Bush's Environmental Protection Agency .. When I asked Dillon if his boss had written the amendment herself — or the lobbyists had — he responded: 'Of course she wrote it herself! It's not a complicated amendment ... A sixth-grader could have written it!'"
Earthjustice's Trip Van Noppen attacks Murkowski amendment on HuffPost: "If Sen. Murkowski succeeds, big polluters will cheer, but our health—and the planet's health—will suffer. So, too, will the ability of the EPA to reduce global warming pollution from some of the worst offenders, like coal-fired power plants. Moreover, her success could pave the way for further erosions of the laws that protect us from pollution."
CAP's Podesta and billionaire Pickens team up to push natural gas fuel. Green Inc.: "Mr. Pickens and Mr. Podesta [held] a joint news media briefing on Wednesday to talk about legislation that would grant large tax breaks to fleets of heavy trucks if they switch from diesel fuel to natural gas."
New study finds "carbon offset" beats "carbon tax" even though it's the same policy reports The Vine's Brad Plumer.
Cape Wind decision expected by Interior Dept. by April reports NYT: "[Sec. Salazar's] sense of urgency on reaching a decision on Cape Wind appeared to be a sign that he was leaning toward approving it."
New transit funding rules elevate "livability" criteria. NYT: "Administration officials said they were reversing guidelines put in place by the Bush administration that called for evaluating new transit projects largely by how much they cost and how much travel time they would save. Transit advocates have long complained that such cost-effectiveness tests have kept many projects from being built — especially light-rail projects, since streetcars are not fast — and made it much harder for transit projects to win federal financing than highway projects. Mr. LaHood said the administration would establish new guidelines that take what he called 'livability' into account — evaluating projects not only by how much they shorten commutes but also by their environmental, community and economic benefits."
