MORNING MESSAGE: The DC/Rest-Of-Us Divide
OurFuture.org's Dave Johnson: " There is a 'deficit commission' but no jobs commission. There are millions of people needing jobs and millions of jobs that need doing, but Washington won't 'spend,' even on badly-needed infrastructure investment. People over 50 (laid off because they were paid more or their health care was expensive) can’t find jobs but the DC elite discuss raising the retirement age to 70. The deficit commission proposes cutting back the already-meager “safety net” while cutting tax rates for the really rich even more. And while all of this goes on the rest of the people in the country are worried about jobs, foreclosures, bills, jobs, wages, jobs, and jobs – the things that matter to regular people."
Liberal Path To Deficit Reduction Doesn't Skip The Jobs
Liberal path to deficit reduction proposed by commission member Rep. Jan Schakowsky. CBS: "Rep. Jan Schakowsky (D-Ill.) said today her plan could reduce the deficit by $427.75 billion in 2015, surpassing the president's $250 billion target, without burdening the middle class -- something the commission leaders' plan failed to do ... Her plan includes proposals to raise taxes and modify Social Security without changing the benefits it pays out, among other things. It also calls for a $200 billion stimulus investment ... The congresswoman's plan would achieve defense spending cuts by cutting unnecessary weapons systems, reducing troop levels and other measures. Her plan also calls for imposing more taxes on companies that outsource jobs and raising revenue in certain ways, such as letting the Bush tax cuts expire for the wealthiest Americans and treating capital gains and dividends as regular income."
Wonk Room's Pat Garofalo praises Schakowsky plan: "This is a serious proposal, and should be given as much consideration as the Bowles-Simpson proposal and the proposal reportedly dropping [today] from Alice Rivlin, another commission member ... Schakowsky has shown that it is feasible to balance the budget without blowing a huge hole in discretionary spending and she does it while also taking into account the threat of climate change and the revenue that cap-and-trade can generate) ... she’s shown that there is a way to balance the budget while simultaneously protecting the middle class and making important investments ..."
Rivlin plan to be announced today, will cut more than Simpson-Bowles. NYT: "The plan provides $2 trillion more in savings than the draft proposal from the commission chairmen, ... Over all, Medicare and Medicaid growth would be limited; some benefits would be reduced ... the plan would increase payroll tax revenues from affluent taxpayers and reduce future retirees’ benefits except for low-income people ... The plan would freeze other spending, saving an estimated $1.1 trillion from military programs and $1 trillion from domestic programs through 2020." Sketchy details in Rivlin oped at W. Post.
"Moderate" Derek Thompson of the Atlantic takes Schakowsky seriously, but prefers Simpson-Bowles slightly: "Is this a plan to reduce the deficit? Absolutely. But it is mostly a plan to increase taxes on businesses, rich people ... Employers would pay the government more of their employees' wages, while owing the feds more of their own wages, too. And investors would pay the government more of their investment income from corporate stock returns. A deficit reduction plan should also be a pro-growth plan. But the concentration of higher taxes on business, investment and upper-middleclass workers is troublesome, especially as the bottom half of the country is asked to give up practically nothing on top of enjoying its lowest effective tax rates in recent history."
TNR's Jonathan Chait argues Simpson-Bowles lets down the deficit hawks: "...there's too much pain imposed on people with low incomes. More problematically, the Tax Policy Center has broken down the distribution of the tax changes. The commission's plan would be more progressive, and would tax the rich at higher rates, than the Bush era tax code. But it would be less progressive and would tax the rich at lower rates than the Clinton-era tax code. That's a total non-starter ... the ideal liberal solution isn't politically feasible. But there's a floor and this plan falls below it."
Ezra Klein briefly explains what causes deficits, and it's not a "spending problem": "Basically, deficits happen when recessions happen. Anytime GDP shrinks, deficits explode. Sustained growth, by contrast, tends to bring the budget into balance. That's not to say policy doesn't matter. If you put $4 trillion of tax cuts on the deficit, you need a whole lot of growth to make that back up. But policy -- and even control of the White House -- matters a lot less than the economy does."
Conservatives Attack Fed For Trying To Spark Job Growth
GOP Rep. Mike Pence and Sen. Bob Corker team up to strip Fed of mandate to pursue full employment. NYT: "The latest proposal appears to be gathering support among Republicans, who will control the House starting in January, but is all but certain to be blocked by Democrats if it reaches the Senate."
New Tea Party attacks on Fed action are incoherent argues TNR's Noam Scheiber: "... the Tea Party is generating a formidable attack on the Fed’s monetary-policy prerogatives by fusing longstanding critics of easy money (the Pauls) with the people who just want to rail against elites ... this turns out to be the latest, most audacious step in a decades-long effort by conservative elites to enlist the working class in undermining institutions that were previously insulated from politics, and which can only really function outside the political realm."
"Fed may hesitate" on further action in wake of conservative attacks. Bloomberg: "While central bank officials are pressing ahead with the $600 billion bond-buying program announced this month, analysts said the criticism may fan dissent within the Fed over the quantitative-easing policy ... [Dem Rep. Barney Frank] accused Republicans of lining up with China and Germany in opposing the Fed’s credit easing."
WH aides meet with top CEOs, hear much whining. WSJ: "...CEOs also said uncertainty about government policy on taxes and regulation remained a barrier to unlocking $2 trillion in capital sitting in the treasuries of U.S. non-financial businesses ... Mr. Geithner told the CEOs that resolution of the heated debate between Democrats and Republicans over extending a package of individual and corporate tax cuts was crucial to job growth, and assured them it would get resolved."
New GOP idea, same as the old GOP idea. Less rules, less accountability for business. WSJ: "[Rep. Kevin] McCarthy said Republicans wanted to consider ways to reduce the regulatory burden on businesses. One idea he floated: creating a way for start-up companies to list stock on public exchanges without having to comply with all Sarbanes-Oxley financial reporting and accounting rules..."
President Seeks Unified Front On Tax Cuts
President seeks to unify Dems on tax cut compromise. Politico: "...President Barack Obama sought to reassure House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid in a conference call Monday that he wanted a permanent extension of the Bush tax cuts only for the middle class ... What remains unclear is how far the White House and Democratic leaders are willing to go in compromising with Republicans..."
Top GOPer rejects all compromise ideas. Politico: "[Rep. Peter] Roskam also shot down key compromise proposals being floated by Democrats on Capitol Hill ... A temporary extension of the Bush tax cuts — even if it includes all tax brackets — is unacceptable because it would perpetuate uncertainty in the business community ... A plan to extend the tax breaks for those earning less than $1 million and eliminate them for those making more than that also is a no-go, he said, because it will still affect some businesses ..."
GOP's claims that tax cuts for wealthy would create jobs make no sense, says W. Post's Steven Pearlstein: "Unable to defend more tax cuts for the rich, Republicans like to pretend that their real concern is for job creation, citing the fact that about half of all business profits now flow through partnerships and small corporations that are taxed at personal rates. But ... few of those businesses earn more than $250,000 in profit, and those that do tend to be very successful hedge funds and law firms that are flush with cash and unlikely to be dissuaded from hiring extra employees or make new investments because of a 4 percentage-point change in the marginal tax. Because most hiring and investment can be done with pre-tax dollars ... the tax rate is largely irrelevant to those decisions."
Foreclosure Fraud Settlement?
Talk of settlement in foreclosure fraud scandal. W. Post: "State attorneys general and the country's biggest lenders are negotiating to create a nationwide fund to compensate borrowers who can prove they lost their home in an improper foreclosure ... , helping banks avoid lengthy and costly court challenges from homeowners and aiding state investigators in their efforts to seek relief for homeowners ... Discussions are continuing over the size of the fund, who would administer it and what kind of proof homeowners would have to present ..."
Naked Capitalism rips mortgage bankers for weak testimony to Congress: "The financial services industry members offered not merely tired bromides, but repeated flat out lies: we always try to save borrowers; we don’t foreclose on people who aren’t delinquent; we don’t make money from foreclosing (no joke, the Chase guy said that); we never consider out second liens in our foreclosure decisions (huh? only true on a case by case basis, utter bunk at the institutional level); we don’t have any conflicts (double huh, every business has to make tradeoffs); yes, we make mistakes, but we correct them as soon as we learn about them (yeah, right)."
Earmark Flip-Flops
Rep. Michelle Bachmann opposes earmarks ... except for her stuff. HuffPost: "...Rep. Michele Bachmann (R-Minn.) told the Minneapolis Star Tribune that she wants to redefine exactly what an earmark is. Specifically, she said, transportation projects should not be placed under the umbrella. 'Advocating for transportation projects for ones district in my mind does not equate to an earmark,' said the Minnesota Republican. 'I don't believe that building roads and bridges and interchanges should be considered an earmark...'"
GOP Sen. Lindsey Graham hedges too. Salon.com's Alex Pareene: "[Graham said,] 'I respect the spirit in which this moratorium has been agreed to and hope it will lead to a better use of taxpayer dollars. However, I maintain the right to seek funding to protect our national security or where the jobs and economy of South Carolina are at risk. If the Obama Administration and their bureaucrats in the federal agencies take action against the best interests of South Carolina, I will take swift action to correct their wrongs.' Back home, Graham's constituents would really just like a measly $400,000 to 'study the feasibility of deepening the Charleston harbor,' and I am guessing that it will turn out that that project is vitally important to national security and also it won't count as an earmark."
Jamelle Bouie writes that Tea Partiers apparently want government bureaucrats, instead of congresspeople, to spend your money : "...it's ironic that the call for banning earmarks has come from the radical, 'repeal the 17th Amendment!' wing of the Republican Party. If there's anyone in politics who would be invested in protecting their institutional prerogative against the president, it would be the self-proclaimed "originalists" who worship at the altar of the Founders (and save some affection for Andrew Jackson as well). As it stands, an earmark ban would save very little (about $17 billion), and cede most of Congress' spending authority to the president, which is why the White House has been nothing but supportive of this move."
Senate Dems defend earmarks. The Hill: "'We have a constitutional obligation and responsibility,' said Majority Leader Harry Reid (D-Nev.). 'I have an obligation to the people of Nevada.' ... 'I’m not ready to throw in the towel. Apparently Mitch McConnell is,' said Sen. Ben Nelson (D-Neb.) ... 'The arguments being made to ban earmarks are that it’s going to reduce spending. That’s nonsense. It’s not. It just changes who decides — from elected officials, on the basis of what they’re hearing from local folks, to nameless, faceless bureaucrats.' ... It could become practically impossible for Democrats to hold onto the practice. Republicans take over the House of Representatives in January, and GOP leaders there have already pledged to follow a similar ban. And President Obama’s statement on Monday, which praised the GOP decision, may make it difficult for Senate Democrats to insert or defend any earmarks in appropriations bills."
Free Trade R.I.P.
Corporate leaders bury "free trade" label. WSJ: "They declared support for free trade—rebranded 'rules-based trade' after pollsters Peter Hart and Bill McInturff warned that the phrase 'free trade' had become toxic with voters."
NYT suggests even if Obama wins a few more concessions from Korea, trade deal may not pass Congress: "Even if the Koreans agree to gradually drop a ban on imports of American beef from older cattle and agree to a slower phase-out of American tariffs on imports of Korean cars while eliminating safety and environmental rules that help keep the Korean market one of the world’s most closed, 'the Korea trade pact is not O.K., and it won’t be a trade agreement that I’ll want to vote for,' said Senator Sherrod Brown, Democrat of Ohio. He also suggested that the Colombia and Panama trade pacts would fare no better with liberals; Mr. Brown said all three agreements would cost Americans jobs."
China criticizes US probe into its clean energy subsidies. WSJ: "The China Chamber of International Commerce, in a letter to U.S. Trade Representative Ron Kirk dated Nov. 12, said Washington shouldn't ignore the huge potential offered by new energy cooperation and should change its stance 'before this issue further jeopardizes the U.S.-China trade relations.' The letter was released the same day U.S. Energy Secretary Steven Chu announced in Beijing that a $150 million project with China to develop new energy technologies had commenced."
Currency debate splits importers and exporters and multinationals. NYT: "Big American multinational manufacturing companies can feel the pinch of dollar-renminbi fluctuations. In many cases, though, they have set up operations in China and elsewhere that let them hedge by doing business in local currencies. But currency exchange rates are a much bigger factor for the many small and midsize American companies that still manufacture on shore, like Staco. They tend to embrace a dollar policy that would make their export prices lower. Meanwhile, the American companies most likely to oppose Washington’s currency fight with Beijing are businesses like PS Brands — Wal-Mart would be another good example — that get their goods from China and sell them in the United States. Those companies’ balance sheets are likely to suffer, and American consumers more likely to feel the effect, when the cost goes up on Chinese imports — whether socks, sofas or smartphones."
Health Care Breakthrough
Obama proposes major health care quality plan in next phase of Affordable Care Act implementation. LAT: "...many experts think [this] could be one of the most far-reaching benefits of the new healthcare law ... the quality-improvement campaign is quietly winning the support of corporate leaders, consumer groups, doctors and healthcare experts across the political spectrum ... The drive to improve the quality of medical care comes amid mounting evidence that patients are suffering in the current system — further driving up costs ... There is growing evidence that if doctors work more closely together, their patients are hospitalized less frequently, recover more quickly from illness and suffer fewer complications."
MT Gov. looks to sell prescription drugs cheap through Medicaid. AP: "[Gov.] Schweitzer said the federal government can get cheap drug prices for Medicaid, the federal program for seniors and low-income residents, because of Congress' negotiations with special interest groups. Those prices are far less than the price for those on Medicare, which usually serves the elderly, or private insurance plans, he added ... He is seeking a waiver from Centers for Medicare & Medicaid Services to allow the unique prescription drug program in Montana."
Time's Kate Pickert uncovers the real story behind incoming GOP Rep. Andy Harris's complaint about his employer-subsidized health insurance: "...Harris was apparently shocked to discover that the health insurance system does not work very well, even for gainfully employed workers. Oftentimes, Americans can't go from job to job with seamless health insurance coverage. Those who, like Harris, experience a coverage gap - or who are self-employed - may have to shop in the individual market, which - without reform - is far more onerous and far more expensive. No one wants to go there if they don't have to - hence, Harris's protest..."
Slim Chance For Bipartisanship On Clean Energy
Reid pushes off vote on natural gas exploration and supporting electric cars. The Hill: "...'positive' talks with Republicans suggest the prospect of a bipartisan deal to advance the measure later this year, a Reid aide said Wednesday ... But Reid was not expected to get the 60 votes needed for cloture, or ending debate, on the measure, which raises revenues by increasing a per-barrel fee on oil companies."
Vote to handcuff EPA on greenhouse gases may not happen this year. The Hill: "Reid earlier this year pledged to Rockefeller that he would bring up the measure. But the Nevada senator told reporters in the Capitol Tuesday that it’s unclear if there’s enough time in the lame-duck session."
Solar industry pushes for extension of Recovery Act grants. NYT: "[Tax credits] became almost useless because they were supposed to work by allowing a company with profits to reduce the tax on those profits if it has spent money on solar or wind installations. Suddenly, far fewer had profits. So to tide the industry over the recession, Congress stipulated in the Recovery Act that for the next two years, it would give the help in the form of grants instead of tax credits. The two years are about over but the economic woes are not, so the solar industry is asking for a two-year extension ... The solar lobby has given up on getting a national renewable energy standard during the lame-duck session of Congress but hopes lawmakers will raise the issue next year."
Breakfast Sides
VP Biden reminds that massive stimulus program administered without massive fraud and waste. USA Today: "As of Sept. 30, there have been 4,809 complaints and tips alleging wrongdoing, according to the Recovery Accountability and Transparency Board ... The inspectors general had more than 560 open investigations into those complaints — a small fraction of the 210,000 stimulus contract and grant recipients. Excluding tax cheating, less than $3 million in stimulus money has been found to involve fraud, Biden said."
President backs vote on DREAM Act immigration reform this year. CNN: "[Dem Rep. Luis] Gutierrez told reporters that Mr. Obama committed to make phone calls to members to push for comprehensive reform, but will ask for support on the DREAM measure 'as down payment.' ... Both Senate Majority Leader Harry Reid (D-Nevada) and House Speaker Nancy Pelosi (D-California) have indicated they hope to bring the bill to the floor ..."
GOP leaders delay meeting with President, after being exposed and humiliated last time they met publicly. Politico: "The roots of the partisan standoff that led to the postponement of the bipartisan White House summit scheduled for Thursday date back to January, when President Barack Obama dominated a GOP meeting in Baltimore to deliver a humiliating rebuke of House Republicans ... Democrats, speaking on anonymity, say the delay was self-serving – because Boehner and McConnell are still in the process of organizing their respective caucuses and haven’t yet put together clear positions to parry Obama."
Josh Marshall notes that the incoming House freshmen sound an awful lot like the class of '94: "...the funny thing is that for anyone who remembers 1994, the quotes from the newly elected folks sounds pretty much exactly like the crew from 1994. The message they've absorbed is 1) don't request earmarks, 2) don't get indicted and 3) don't get caught having an affair ... while John Boehner, both temperamentally and by dint of having lived through the first round of this, seems very attuned to the dangers of running headlong into the White House along the 1995/government shutdown model, something like a third of the members of his caucus seem to see things very differently."
GOP may try to install ideologue in Congressional Budget Office. Politico: "Congressional Budget Office Director Douglas Elmendorf wants a new four-year term. And he’s got the support of North Dakota Sen. Kent Conrad, the Democratic chairman of the Senate Budget Committee who usually would make the call ... House Minority Leader John Boehner of Ohio, who is preparing to be the next House speaker, reportedly is still angry about Elmendorf’s role in health care and could block Elmendorf’s appointment. And some Democrats are expecting him to do just that."
Virginia still blue? TPM's Josh Marshall: "Virginia, we're told, is one of those states that went blue in 2010 but has now bounced back to its reddish norm. But the first poll looking at 2012 presidential matchups shows President Obama beating all four Republican frontrunners -- two by 11 points ... it's an instructive example of how you can easily read too much into a low turnout midterm election."
