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"The Virtual Summit on Fiscal and Economic Responsibility for People Who Did Not Wreck the Economy" continues. VAT warnings, Social Security scapegoating, military pork and more.

Derivatives Crackdown Clears Committee

Ag committee passes tough derivatives bill. One GOPer breaks ranks. McClatchy: "Sen. Charles Grassley, R-Iowa, joined 12 Democrats in approving the new limits, the first time this year that a Republican senator has sided with the opposition on sweeping financial legislation. Grassley said he voted for the measure because 'transparency is the right policy,' though he warned that he might vote against the final bill."

Derivatives bill splits with WH on swaps. Bloomberg: "Under one part of a derivatives bill approved yesterday by the Senate Agriculture Committee, banks would have to spin off their swaps trading desks, which have generated billions of dollars in profits ... It faces objections from members of both parties and even the Obama administration ... Banks will likely flood Capitol Hill with lobbyists in an effort to get the provision stripped..."

President Obama in NYC to address Wall Street exec today, will urge lobbyists to stand down. W. Post: "...Obama will call on financial executives to abandon what he says is their 'furious efforts' to block an overhaul bill by hiring an army of lobbyists..."

Harry Moroz says Michael Bloomberg's warnings that financial reform will harm New York City are outweighed by the long term benefits: "Even if Mayor Bloomberg is
right and the financial reform bill reduces financial sector profits ... Reducing New York's reliance on wealthy securities workers could refocus the City's financial services industry on less profitable, less risky activities and realign its economy to foster more good jobs that permit a middle-class standard of living."

W. Post's E.J. Dionne says President Obama is starting to tie origins of financial crisis to conservative policies: "'In this entire year and a half of cleaning up the mess, it's been tough because the folks very responsible for a large portion of this mess decided to stand on the sidelines,' Obama declared. 'It was as if somebody had driven their car into the ditch and then just watched you as you had to yank it out, and asked you: "Why didn't you do it faster -- and why do I have that scratch on the fender?" And you want to say: 'Why don't you put your shoulder up against that car and help to push?"...' In one paragraph, Obama did what many of the dispirited in his party have long been urging him to do: He linked the economic mess to past Republican policies..."

Sens. Dodd and Shelby say they are close to a deal. W. Post: "'If no last-minute hurdles arise, Senate Majority Leader Harry M. Reid (D-Nev.) plans to hold a test vote Monday, aides said. If he gets 60 or more votes, he could move ahead with formal debate on the bill..."

Why are GOPers softening their stance? TPMDC: "This afternoon, entering a Republican caucus meeting, the Republican Deputy Whip John Thune candidly acknowledged that the politics just aren't playing out for the GOP, and that members don't want to take a tough vote against regulating Wall Street."

Some GOPers still want to filibuster first procedural "test vote" to increase bargaining leverage. CQ: "'There’s not a lot of optimism we can get it fixed until we have a test vote,' said South Carolina’s Jim DeMint. But Democrats also appear to believe that a GOP filibuster will work in their favor by putting Republicans on the record as opposing a bill the majority can portray as reining in Wall Street."

Maine GOP senators may alter final bill. The Hill: "...Democrats have been forced to consider compromises in the financial regulatory reform bill thanks to Snowe’s and Collins’s holdout ... [They will] probably drop a proposal to create a $50 billion [liquidation] fund ... Democrats are also considering letting prudential regulators, such as the Office of the Comptroller of the Currency ... enforce new regulations designed to protect consumers. Liberals wanted the Consumer Financial Protection Bureau to enforce those new rules."

Open Left's Chris Bowers notes CBO scores liquidation fund as a deficit cutter: "The biggest way to reduce the deficit is to prevent another financial meltdown[, yet most] 'deficit hawks' act in bad faith, and don't care about the deficit."

New progressive legislation would break up the banks. Tapped's Tim Fernholz reports: "Sens. Sherrod Brown, Ted Kaufman, Robert Casey and Sheldon Whitehouse are introducing a new financial-reform bill, the Safe Banking Act of 2010 ... Imposing a strict 10 percent cap on any bank-holding-company’s share of the United States’ total insured deposits, Reducing the maximum amount of non-deposit liabilities at financial institutions ... Setting into law a 6 percent leverage limit for bank-holding companies and selected non-bank financial institutions."

Sen. Ted Kaufman tells Ezra Klein that, "We need to pass something so a similar crisis doesn't happen for another 50 years.": "As they say, good fences make good neighbors. The Senate should put the fences up. And then the regulators can come in and do their work. But they need good rules."

Goldman execs to face Senate investigations committee on Tuesday reports NYT.

ProPublica continues reporting that other banks did deals like those at the core of the SEC's lawsuit against Goldman: "As we've been reporting, other banks did deals similar to the one at the center of the SEC's lawsuit against Goldman Sachs ... In the past several days, a legal back and forth has emerged between Merrill Lynch and the Dutch bank known as Rabobank, which is accusing Merrill of essentially doing the same kind of deal Goldman is being sued for..."

Earth Day Puts Added Spotlight On Emerging Climate Compromise

Energy lobbies faring relatively well in Congress. Politico: "...drafters of the Senate climate bill have bent over backward to court all three industries [coal, oil and nuclear], believing that their support can help win over Senate moderates and stave off the type of million-dollar attack-ad campaigns that the U.S. Chamber of Commerce and the American Petroleum Institute ran against the House climate bill last summer."

Mother Jones' Kate Sheppard tries to parse Kerry words downplaying notions of a gas tax: " Yesterday Sen. John Kerry (D-Mass.) attempted to squash the idea he and his colleagues have ever contemplated including a gas tax in the climate bill ... Pretty sure the idea came from … the bill's coauthors ... It's not entirely clear if what's going on here is a rhetorical shift (nobody likes the word "tax" of course), or an actual policy change ... from everything I'm hearing on the Hill, there are still lots of loose ends to be tied up ... the constant shifting has raised concerns about whether Kerry and his colleagues can deliver."

Climate Progress' Joe Romm on what to look for in the upcoming bill: "... my criteria for judging the bill focuses on whether it will create the conditions that will allow more desperate policy makers in the not-too-distant future to have a realistic chance of getting on the necessary path ... when we are that desperate, probably in the 2020s, we’ll want to already have: substantially dropped below the business-as-usual emissions path [and] started every major business planning for much deeper reductions..."

Regional split brewing over pre-empting state emissions standards. CQ: "In the Senate, several moderate Rust Belt Democrats said their support would hinge on pre-empting existing state laws ... the two liberal Senate Democrats from California ... could withhold their support if their state law is pre-empted ... One idea under consideration, advanced by [Sen. Barbara Boxer] would grandfather in an exemption for California’s clean air laws ... That could spur a flurry of complaints from other states..."

Top WH climate aide warns no climate bill just means getting a carbon cap without aid for dirty energy producers. Politico: "...EPA [has] the authority to treat greenhouse gases as a pollutant under the Clean Air Act ... The difference is EPA won’t have the authority to dole out billions of dollars to help affected industries adjust to the new emission caps ... The threat of EPA action is one of the chief arguments Sen. Lindsey Graham (R-S.C.) is using to encourage business groups to embrace the energy reform legislation he is sponsoring with Sen. John Kerry (D-Mass.)..." EPA continues to roll out climate rules reports The Hill.

Sen. Maria Cantwell keeps pushing her cap-and-dividend alternative, in Yale Environment 360 interview: "... as opposed to doing a trading platform, we think that the CLEAR Act — a limited auction on those who are putting carbon in the marketplace — is the way to easily have that reduction in carbon and help our economy with the most predictable signal we could possibly do."

Immigration reform may come before climate bill in Congress. WSJ: "In a leadership meeting late Tuesday, Senate Majority Leader Harry Reid said he would bring immigration legislation to the floor this year, and House Speaker Nancy Pelosi of California said she would try to move the bill if it passed the Senate first, according to three Democratic officials. With limited time available for action this year, both leaders said they would put immigration ahead of energy on their priority list, the officials said."

Pelosi downplays. The Hill: "[The Speaker's] aide stressed that the discussion was not about doing one of the high-profile issues instead of the other ... 'It is all about what the Senate can move first and pass,' the aide said Wednesday."

Parties ready to spar over annual summer gas price spikes. Roll Call: "House Republicans are anticipating with relish next week’s unveiling of Senate climate change legislation [and will] claim that Democrats’ energy policies will kill jobs and pound Americans’ pocketbooks ... But Democrats say they are confident that Obama’s March 31 announcement that he will expand drilling ... will allow them to co-opt the GOP message on gas prices this time around ... [And] they plan to recast the debate over climate change, focusing on energy independence and green jobs."

Grist's David Roberts on why carbon caps can save much more money than presently advertised: "Using the CBO's standard modeling, the agency determined that [the House carbon cap bill] will cost the average household $90 worth of purchasing power in 2012 ... Dems' only response will be, 'Hey, $90 isn't that much!' That's not exactly a political winner. But here's the thing: the CBO is only modeling the cap-and-trade program ... What about the other two-thirds of the bill? There's a whole efficiency title ... electric car provisions, grid provisions, renewable energy provisions ... What would happen if these policies were integrated into the economic modeling used by the CBO? I suspect that the outcome would be much more favorable."

Budget Cmte Battle: Who Wants To Kill The Economy More?

Senate Budget Cmte chair Kent Conrad jousts with GOP over who can bring the most pain. CQ: "Judd Gregg of New Hampshire, the ranking Republican on the Budget Committee, said GOP members plan to offer an amendment calling for discretionary spending levels that would be below those in the draft fiscal 2011 resolution put forward by panel Chairman Kent Conrad ... Conrad emphasized that his budget outlines a path for dropping deficits from $1.4 trillion, or 9.8 percent of gross domestic product, in fiscal 2010 to $545 billion, or 3 percent of GDP, in fiscal 2015. Charles E. Grassley, R-Iowa, called the plan 'a one-way ticket to the debt problems being experienced by the government of Greece,'..."

Conrad includes reconciliation instructions, likely to be used for tax changes. The Hill: "The budget drafted by Sen. Kent Conrad (D-N.D.) allows the tax-writing Senate Finance Committee to move 'jobs legislation' through the reconciliation procedure ... Asked whether it would be used to extend expiring tax policies, such as the George W. Bush-era tax breaks for the middle class, Conrad said on Wednesday that it would be up to the Finance Committee to choose which jobs bill to push through using reconciliation."

AP sees the President open to possibility of a value-added tax: "For days, White House spokesmen have said the president has not proposed and is not considering a VAT ... When asked if he could see a potential VAT in this nation, the president said: 'I know that there's been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It's something that would be novel for the United States. And before, you know, I start saying "this makes sense or that makes sense," I want to get a better picture of what our options are.'"

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