Each morning, Bill Scher and Terrance Heath serve up what progressives need to affect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
Scramble To Save Bernanke Re-Appointment
White House aides, top GOP Senators predict Bernanke confirmation reports Bloomberg.
Treasury Sec. Geithner plays fear card, says Bernanke defeat would shake financial markets, in wide-ranging Politico interview, but is "confident" Bernanke will win re-appointment.
Baseline Scenario's Simon Johnson rejects claim Bernanke is needed to calm markets. "The White House is telling people that if Bernanke is not reconfirmed there will be chaos in the markets and the economic recovery will be derailed. This is incorrect. The danger here is uncertainty – the markets fear a prolonged policy vacuum."
Several leading Senators including Sen. Maj. Leader Reid announce support, while Sen. Min. Leader McConnell won't say and McCain is "leaning against": "...there are now 25 senators who back Bernanke and 13 who oppose him..."
W. Post on disingenuous GOP strategy: "Republicans ... are playing a game of rope-a-dope. Many want confirmation for Bernanke -- a Republican first appointed by President George W. Bush -- preferring him over other candidates Obama might consider. But few are committing their votes, in an attempt to force Democratic leaders to gin up as much support as possible from their side of the aisle."
Krugman offers reluctant endorsement of Bernanke, urges focus on unemployment: "...critics have a strong case [but] I favor his reappointment, but only because rejecting him could make the Fed’s policies worse, not better ... If Mr. Bernanke is reappointed, he and his colleagues need to realize that what they consider a policy success is actually a policy failure. We have avoided a second Great Depression, but we are facing mass unemployment ... And it’s the Fed’s responsibility to do all it can to end that blight."
WH sticking with Geithner too, despite turn to populist reform. NYT: "The White House reiterated confidence in Mr. Geithner, notwithstanding criticism from both ends of the political spectrum. And the Obama administration joined its most conspicuous adversaries — leaders of the Republican Party and Wall Street — in scrambling to rescue Mr. Bernanke. Such rare bipartisan teamwork shows that even broad populist anger has limited power. But as Mr. Obama prepares for the State of the Union address, neither he nor anyone in Washington can be confident of what those limits are, or when they will next be overrun."
Meanwhile, the Nation's William Greider says Geithner will be the first to go: "Geithner was effectively repudiated by the president last week when Barack Obama abruptly announced a new, more aggressive approach to financial reform. But the immediate threat to Geithner is the scandal of collusion and possibly illegal behavior gathering around the Federal Reserve Bank of New York for its megabillion-dollar takeover of insurance giant AIG. Tim Geithner is standing in the middle of the muck because he was still president of the New York Fed in the fall of 2008 when it rescued AIG with tons of public money (now totaling $180 billion). The facts of the deal are catching up with him now and none are good, since they raise doubts about his competence and his public integrity. This scandal has smoldered for several weeks in newspaper business sections, but is about to grab front-page attention."
Reuters digs up new revelations of intense secrecy between NY Fed and AIG during bailout talks: "...officials at the New York Fed were only comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission after getting assurances from the regulatory agency that 'special security procedures' would be used to handle the document ... Lawmakers on Capitol Hill have labeled the AIG bailout, in which the New York Fed created a special entity to purchase those securities from the banks at essentially their face value, a 'backdoor bailout' for the 16 financial institutions. The new batch of emails, along with others that have become public in recent weeks, reveal that some at the New York Fed had gone to great lengths to keep the terms of the bailout private and the SEC may have played a role in contributing to some of the secrecy surrounding the AIG rescue package."
Bankers hope Davos conference is opportunity to lobby against new WH proposal to limit bank size. FT: "Senior Wall Street bankers heading to the World Economic Forum will use the meeting in Davos to lobby regulators against a rigorous implementation of Barack Obama’s plan to cap the size and trading activity of banks ... Executives said they would push quietly against the reforms to avoid giving the US president the 'fight' he promised last week. George Soros, the billionaire financier, welcomed the president’s plan and predicted it could reshape big Wall Street banks. 'If the legislation were carried through, it would certainly mean the end of Goldman Sachs as we know it,' he said."
WH preparing to phase out support of the housing market. W. Post: "The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own ... A few federal officials and many industry advocates disagree, saying the government is exiting too soon. They offer dire warnings of higher rates and a slowdown in home sales."
Dean Baker argues the support has only propped up the housing bubble: "If the Post had talked to anyone familiar with the fundamentals of the housing market they would have told them that prices are still 15-20 percent above trend levels. The extraordinary level of government support ... has temporarily stopped the correction from the bubble. However, this correction is virtually certain to continue once these supports are withdrawn."
Major banks reduce expected levels of compensation in hopes of dampening criticism. Bloomberg: "Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank ... set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion. The total fell short of the $46.1 billion five analysts expected this month and is almost $10 billion less than what some analysts estimated in October ... Even with lower amounts allocated in the fourth quarter, the compensation costs are enough to pay each employee at the three firms $336,843, more than six times the U.S. median household income of $50,303 in 2008."
Financial Crisis Inquiry Commission prepares to wield subpoena power, focus on CitiGroup. WSJ: "[The commission] intends to use subpoena powers to get information it wants from banks and government agencies as it focuses on the role of pay, subprime lending, securitization practices and other issues in the market meltdown ... Citigroup Inc., not a focus of the commission's first round of hearings earlier this month, will get scrutiny from the commission soon—possibly through a separate hearing of its own, people familiar with the inquiry said."
Middle-Class Relief In The State of The Union
WH previews to NYT proposals to be featured during Wednesday's State of the Union address: " President Obama will propose in his State of the Union address a package of modest initiatives intended to help middle-class families, including tax credits for child care, caps on some student loan payments and a requirement that companies let workers save automatically for retirement ... By focusing on ... struggling families squeezed between sending their children to college and caring for elderly parents ... Mr. Obama hopes to use his speech on Wednesday to demonstrate that he understands the economic pain of ordinary Americans. The proposals also include expanded tax credits for retirement savings and money for programs to help families care for elderly relatives ... Such programs are, notably, much less far-reaching than Mr. Obama’s expansive first-year agenda ... Top advisers to the president insist that Mr. Obama is not in retreat and are resisting any comparisons to the kind of small-bore initiatives that the last Democratic president, Bill Clinton, used to try to get his presidency back on track."
AP reports we won't be hearing the word "stimulus": "Gone at the White House is talk about 'stimulus,' a word the public seems to associate more with bank bailouts and wasteful spending than new jobs. Instead, White House officials now talk about 'target ideas' that 'will have a positive impact on private sector hiring.'"
Murky Signals On Health Care From White House
The Hill quotes WH press sec suggesting short delay in health care reform: "...Robert Gibbs said on 'Fox News Sunday' that the administration has been in conversations with congressional leaders on whether to take a break for a month or two from healthcare and focus on economy/jobs bills or keep pressing ahead ... Gibbs made clear, however, that the landslide upset in Massachusetts meant little change for the president’s policy goals."
Time's Joe Klein finds Sunday show rhetoric failing to chart clear course on health care: "I'm still not sure where the Administration stands on health care reform--all in, partly in, all out...and if partly in, which parts?"
Washington Monthly's Steve Benen recoils at WH aide saying health care is in "pause mode": "I interpret 'pause mode' to more likely mean, 'Let's kick this down the road a couple of months and see if the polls look any different.' This would be a terrible mistake. ... Giving opponents of reform more time to undermine public support and trash necessary legislation hasn't worked up until now..."
Rick Gell at Alternet says the late Ted Kennedy would get behind the Senate version: "Democrats - get a grip. If Senator Ted Kennedy were alive today, he would be imploring House Democrats to immediately approve the historic and imperfect Senate version of the Health Care Bill - word for word ... Get the Senate version onto Obama's desk tomorrow ... stand on the steps of the Capital and celebrate."
Huffington Post's Paul Begala urges Dems to pass the Senate version and avoid a repeat of 1994: "I understand and share the frustrations of progressives. They compromised before the debate even began, giving up on Medicare for all and settling for its weak cousin, a public option. The progressive wing of the Democratic Party has been everything that the reactionary wing of the Republican Party has not: open-minded, pragmatic and respectful of the views of others. The Republicans' obstinacy has been rewarded by the voters, who sent Scott Brown to the Senate as the candidate of change who promised to defend the status quo on health care. So why do I urge further flexibility? ... I am convinced that Democrats lost the Congress in 1994 because we failed to pass health care."
FireDogLake urges the opposite -- defeat of the Senate bill, holdout for public option: "The Senate bill not only lacks a public option, but is an ungodly mess of corporate giveaways that will make healthcare even more unaffordable to middle class Americans."
Ezra Klein warns Sen.-elect Scott Brown, Massachusetts voters don't think he should obstruct health care reform: "[A] majority of people who voted for Martha Coakley and a plurality of non-voters support the bill. Brown voters, however, are brutally opposed. [But] a majority of Coakley voters, non-voters and Brown voters say they approve of the Massachusetts health-care reforms, which are very similar to the national plan."
Debt Commission Vote Slated For Tuesday
Senate to vote Tuesday on creating undemocratic anti-SocSec/Medicare debt commission, as outside group forms its own. NYT: "The blue-ribbon group of 18 to 20 members will be led by Pete V. Domenici, a Republican former senator from New Mexico ... and Alice Rivlin, a Democrat and former budget director ... Their goal is to, by December, give Congress and Mr. Obama a multiyear plan to raise tax revenues and pare spending, especially for the Medicare and Medicaid programs ... That puts their task force on the same timetable as the commission that the president and senior lawmakers, including a few Republicans, are considering. The Senate is to vote Tuesday ... the bill is expected to fail, despite Mr. Obama’s endorsement on Saturday ... Mr. Obama is poised to announce, perhaps in his State of the Union address on Wednesday, that he is establishing a bipartisan commission by executive order. While he could not require Congress to hold votes on any recommendations of a presidential commission, Democratic leaders have tentatively agreed that they would."
Barbara Kennelly warns of reckless cuts to Social Security in oped refuting USA Today edit board: "Creating a commission that places a big red target on Social Security is an incredibly bad idea because Social Security is not the problem ... Slowing the rate of growth in health care spending nationwide, revisiting our tax priorities, and closing the long-term Social Security shortfall are judicious strategies that can bolster the economic picture for our country. However, these are not the stated goals of commission proponents."
Politico argues GOP leader wants commission to fail so right-leaning Dems force repeated, politically damaging debt ceiling votes: "[Sen. McConnell] made clear that he doesn’t want such a large increase [in the debt ceiling] now and would prefer to bleed the Democrats politically by forcing regular votes on successive smaller increases between now and November’s elections. If the commission were to pass, it would make it easier for Democrats to pull together their forces and some moderate Republicans and pass a long-term debt ceiling bill. It is in McConnell’s interest, therefore, to defeat the idea, quite apart from the whole question of spending vs. taxes. On the Democratic side, Obama’s endorsement [of the debt commission] Saturday is aimed at the same debt ceiling vote. By siding with Conrad now, the White House hopes to get the support of fiscal moderates, even if the commission fails."
Climate Bill: Not Dead Yet
Boston Globe reports bipartisan climate bill talks with Sens. Kerry and Graham resumed after Massachusetts election, included Chamber of Commerce: "Kerry accompanied Senator Lindsey Graham, a South Carolina Republican, and Senator Joseph Lieberman, a Connecticut independent, to a White House meeting on Wednesday with presidential chief of staff Rahm Emanuel to discuss shaping a bipartisan bill. The trio met Thursday with officials of the US Chamber of Commerce, which has been critical of “cap-and-trade’' measures ... At the meeting, the senators said they were focusing on a strategy that would provide subsidies to kick-start construction of nuclear power plants, encourage the development of technology that would bury carbon emissions created by the burning of coal, and promote offshore drilling. Although the chamber will make no commitment until a bill is unveiled, [spokesman] Bruce Josten, said that 'generally we were in synch'..."
Climate Progress praises direction of the talks: "While I wouldn’t be thrilled with all conceivable provisions such a [nuclear] title might have, the overwhelming majority are unlikely to have a significant impact or even cost the taxpayers much money, as long as nuclear power plants remain so damn expensive ... most of the potential drilling provisions bother me less than the nuclear ones ... We need to keep our eyes on the prize — a shrinking economy-wide cap, coupled with major provisions to boost energy efficiency and and other clean technologies."
The Vine's Brad Plumer notes "cap-and-dividend" approach may be incorporated: "The 'cap-and-dividend' idea championed by Susan Collins (R-ME) and Maria Cantwell (D-WA) seems to be garnering some interest. (Under this proposal, carbon would essentially be taxed at the source—at the mine or the well—and most of the proceeds would be refunded directly to households. See this analysis for pros and cons.) Alaska Republican Lisa Murkowski says she hasn't ruled out co-sponsoring the Cantwell-Collins bill. And Graham recently said he expects a Senate compromise to involve a 'hybrid' of cap-and-trade and cap-and-dividend."
NYT edit board urges passage of climate bill: "...even before [the MA election] we were hearing two reasons why a bill could not pass: The Senate won’t have any strength left when it finishes with health care, and the nation cannot afford a bill that implies an increase in energy prices. The first reason is defeatist, the second greatly exaggerated. The climate change bills pending in the Senate would not begin to bite for several years, when the recession should be over. The cost to households, according to the Congressional Budget Office, would be small. A good program would create more jobs than it cost. The list of reasons to pass a climate bill, on the other hand, is long and persuasive."
