MORNING MESSAGE: Beware Simpson-Bowles "Revenue Neutral" Tax Reform
OurFuture.org's Robert Borosage: "Alan Simpson and his investment banker co-chair Erskine Bowles recommend as part of deficit reduction lowering tax rates, particularly those on the top. ... they promise the lower rates will be accompanied by cleansing the tax code of various tax deductions and expenditures that mostly benefit the rich ... Only we've played this game before. In the 1980s, bipartisan reforms lowered tax rates across the board, particularly those on the top, and cleansed a tax code riddled with corproate and fat cat deductions. "Revenue neutral" we were told. And then Lucy pulled the football. They eliminated the deductions but not the corporate lobbyists."
Simpson-Bowles has only half the votes it needs, so far. The Hill: "The votes of confidence lifted hopes that the proposal could move forward, though it still faces an uphill climb to win the 14 votes necessary to be adopted by the commission at a vote scheduled for Friday ... several House Republicans on the commission signaled opposition. It’s also unclear whether the commission’s liberals will support the proposal ..."
Getting 14 is impossible, says Politico: "At least six members indicated they will oppose the plan, leaving Simpson and Bowles two votes shy of the 14 votes President Barack Obama set as a threshold for any recommendations by the commission when he created it in February."
NYT speculates on what happens next: "What is unclear is whether that outcome would consign the plan to a dusty shelf along with many past commissions’ well-intended but politically unpalatable recommendations for addressing the nation’s fiscal imbalances, or whether Mr. Obama or the Republicans in Congress will move aggressively to pursue at least some of its measures ... Some Democrats said the White House remained interested in that possibility."
As does Daily Kos' Chris Bowers: "1. The commission will not issue a final report. ... 2. There will never be a Congressional vote on the recommendation package. ... 3. Congress will draw up its own budget. ... 4. Budget Committees will likely propose more severe recommendations."
W. Post reports commission members showing signs of compromise: "Sen. Richard J. Durbin (D-Ill.), one of the panel's most influential liberals, embraced a proposal to raise the retirement age to 69 in 2075 ... Rep. Jeb Hensarling (Tex.), a leader of the GOP's conservative wing, said he could live with a proposal to cut military spending and increase overall federal tax collections as long as income tax rates were lowered, spending cuts were enforced and Democrats agreed to reexamine the growth of spending envisioned under the recent health-care law. And Sen. Tom Coburn (Okla.), one of the Republican Party's most respected voices on budget matters, came close to signing on to the package, saying, 'This problem is so real, Tom Coburn can't have everything he wants.'"
NYT edit board criticizes final plan: "[Simpson-Bowles] fails to call for significant near-term stimulus spending to counter the effect of deficit reduction. It also aims for an arbitrary — and dangerously low — spending target of 21 percent of the economy, a level that would make it impossible to meet coming challenges. In tax reform, it does not consider a value-added tax and a financial transactions tax."
Final plan clamps down on public employee pay, not on private contractors. W. Post's Joe Davidson: "The earlier draft said 250,000 non-defense contractors should be cut and suggested slicing Pentagon contractors by more than half. It's not clear why, but this time, they emerged without a scratch."
Senate GOP Promises Roadblock Until Dems Relent On Tax Cuts
Senate GOPers formally threaten to block nearly all legislation until their tax cut demands are met. NYT: "The Republican maneuver came just as Senate Democrats seemed within reach of the votes needed to authorize repeal of the military’s 'don’t ask, don’t tell' ... Mr. McConnell’s announcement of an all-out blockade came just a day after he applauded Senator Christopher R. Dodd, the retiring Connecticut Democrat, for a farewell address in which Mr. Dodd called for greater civility and cooperation among lawmakers ... Democrats went to the floor and attempted to bring up numerous bills, including a measure to extend jobless benefits and a measure to promote clean energy...Senate Republicans said they would even block a major food safety bill that the Senate adopted just on Tuesday but must be voted on again because of a parliamentary glitch."
No GOP concessions in first round of tax cut talks. The Hill: "Sen. Charles Schumer (D-N.Y.) recently proposed extending all the George W. Bush-era tax cuts except for people making more than $1 million annually. Republicans quickly rejected that plan ... Republican negotiators are likely to use bargaining chips that have nothing to do with taxes ... Senate Republicans have softened their stance on the Strategic Arms Reduction Treaty (START) in recent days and have said they will not back an unemployment-benefits bill until a tax deal is in place."
House will vote on ending Bush tax cuts for the wealthy today, GOP whines. The Hill: "Rep. Roy Blunt (R-Mo.) said Pelosi’s decision to vote on the Democratic tax bill clashes with Obama’s effort to build bipartisan consensus."
Sen. Min. Leader McConnell predicts tax cuts for the wealthy will be extended. CNN quotes: "We're going to have an extension of all the current tax rates, the only issue is how long."
Tim Fernholz, at The American Prospect, questions linking unemployment benefits to tax cut deal: "Upper-income tax breaks, of course, cost far more than the unemployment benefits but have a smaller economic benefit -- the wealthy generally save their marginal income rather than spend it ... it seems that Congress is on a course for an agreement to endorse, during a time of record-setting income inequality, high deficits, and low tax rates for the rich, further taxes breaks for the wealthy, while managing to scrape together a pittance for the unemployed. Or they will do nothing. Certainly, no plan to create jobs appears poised to pass Congress in the next six months"
Ezra Klein at WaPo says Republicans are just daring Democrats to reform the filibuster: "...Republicans are sure that they can abuse the rules as much as they'd like and Democrats won't dare do a thing about it. McConnell's blanket filibuster now joins Richard Shelby's blanket hold as the two most egregious acts of procedural brinkmanship in a Congress that's been chock-full of rules-based obstruction."
Fed Audit Begins
Fed audit shows much wider intervention during financial crisis that previously known. NYT: "Citigroup, struggling to stay afloat, sought help from the Fed at least 174 times during one remarkable 13-month period. Barclays, the British bank, at one point owed nearly $48 billion to the Fed. Even better-off banks like Goldman Sachs took advantage of Fed loans offered at rock-bottom rates. The Fed’s efforts to stave off a financial crisis reached far beyond Wall Street, touching manufacturers like General Electric, the Detroit automakers and Harley-Davidson, central banks from Britain to Japan and insurers and pension funds in Sweden and South Korea ... 'I think our actions prevented an even more disastrous outcome,' said Donald L. Kohn, who was the Fed’s vice chairman during the crisis ... But Senator Bernard Sanders ... reached a different conclusion ... '... the American people are finally learning the incredible and jaw-dropping details of the Fed’s multitrillion-dollar bailout of Wall Street and corporate America ... Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations.'"
GOP Rep. Rand Paul may have new perch to attack Fed for trying to stimulate job growth. The Atlantic's Joshua Green: "One important indicator will be who is chosen to lead the House subcommittee that oversees the Fed ... First in line for the job is Representative Ron Paul of Texas ... Paul says that he will indeed go after the Fed, whose current strategy he considers to be 'insanity.' This would add the force of a major House subcommittee -- with investigative and subpoena powers, and able to hold hearings -- to the anti-Fed campaign, which would surely roil the markets and further interfere with the struggle to engineer a recovery."
Pressure on Fed to withdraw proposed rule weakening homeowner protection. McClatchy: "In a letter to the Fed's Board of Governors, dozens of groups that oppose the measure, including the National Consumer Law Center, the NAACP and the Service Employees International Union, say the proposal is bad medicine at the wrong time ... Since 1968, the Truth in Lending Act has given homeowners the right to cancel, or rescind illegal loans for up to three years after the transaction was completed if the buyer wasn't provided with proper disclosures at the time of closing ... Critics say the proposed change by the Fed would render the rescission clause useless." EARLIER OurFuture.org's Zach Carter "The Fed's New Foreclosure Predator Bailout."
Fannie and Freddie on hot seat at Senate hearing regarding foreclosure scandal. W. Post: "One of the country's top banking regulators testified Wednesday that Fannie Mae and Freddie Mac were partly responsible for the national breakdown in foreclosure practices because they created an unwieldy bureaucracy of loan servicers and lawyers, resulting in flawed practices and shoddy legal documents. But representatives of the two giant mortgage companies told a Senate hearing they were not to blame because managing foreclosures was the job of other firms they hired."
Alternet's Nomi Prims offers ten reasons how the audit shows we'd be better off without Ben Bernanke: "The Banks Bernanke Made Bigger are Still Bigger ...Even if Bernanke understood the causes of the Great Depression, he didn't apply them ... The Fed is still subsidizing Wall Street at Main Street's Expense..."
Drilling Expansion Called Off
Obama withdraws plan for expanding oil drilling in Gulf and Atlantic Ocean. Change.org's Jess Leber: " Today, citing too much risk of another disaster, the Administration reversed that decision. This ensures there will be no drilling in these areas until at least 2017 ... [But] the Administration is still very open to drilling by oil companies in the Arctic's fragile Beaufort and Chukchi seas."
Top GOPer criticizes drilling move. LAT: "The probable incoming chairman of the House Natural Resources Committee was also critical. 'We shouldn't allow this single event to disrupt our long-term need for an all-of-the-above energy plan that includes the responsible development of our nation's oil and gas resources,' Rep. Doc Hastings (R-Wash.) said."
Virginia pols eager to drill upset. W. Post: "Virginia Gov. Robert F. McDonnell (R), who spoke to Salazar by phone Wednesday, called the new policy 'an irresponsible and shortsighted decision.' ... A spokesman for Sen. Mark Warner (D-Va.) said that 'while it is appropriate to take the time to incorporate lessons learned from the gulf disaster, Senator Warner sees no reason to delay this process for what realistically could be another seven years or more.'
Interior Sec. suggests drilling decision could be revisited under broader energy plan. The Hill: "He said the administration would be 'willing to entertain' a discussion about the moratorium in the area – but only if it’s part of a 'balanced' energy package that emphasizes efficiency, renewables and R&D into green energy technologies."
EPA chief ready to fight to maintain authority over greenhouse gas regulation. W. Post: "[Lisa] Jackson shows little inclination to pull back on the many rules her agency is in the process of finalizing, including new limits on carbon dioxide emissions from industrial sources such as power plants, oil refineries and chemical plants."
Ethanol supporters in Senate fight back against bipartisan attempt to end subsidies. The Hill: "A bipartisan group of Corn Belt senators — led by Budget Committee Chairman Kent Conrad (D-N.D.) and Finance Committee Ranking Member Chuck Grassley (R-Iowa) — are calling on Senate leaders to extend federal ethanol support that’s slated to expire at year’s end ... Thirteen other senators signed the letter ...
China and US move closer to agreement on greenhouse gas monitoring. AP: "...an understanding on measuring emissions would be an important step that could help break the long-standing deadlock on reducing pollutants ... The much disputed issue involves how nations account for their actions to limit emissions and to what extent they will allow other countries to review their books.
Race for House Science Cmte chair between denouncer of climate science and questioner of climate science reports NYT.
House GOP will terminate climate committee reports Boston Globe.
Health Care Repeal Plan Splits GOP
GOP fracturing over health care repeal strategy. The Hill: "Tea Party lawmakers are balking at the House Republican leadership’s plan to simultaneously repeal and replace President Obama’s healthcare law ... [Rep. Steve King] argues that any approach that seeks to tie 'replacement' provisions to a repeal bill would run contrary to the idea of an open and transparent Congress that GOP leaders have promised ... Should Republicans adopt a strategy of first repealing and then replacing at a later date, Democrats would criticize them for seeking to eradicate the popular parts of the law."
New GOP governors admitting they will have to implement health care reform. CQ: "'I want to get all the money I can, without strings,' Maine Governor-elect Paul LePage said after meeting with top GOP lawmakers in the Capitol. 'I favor repeal and replace, but, look — I have to be in a position of designing a Medicaid program that’s got to work,' said Ohio Governor-elect John Kasich ... Oklahoma Governor-elect Mary Fallin said she plans to apply for HHS grants to help her state implement the law in a way that gives the state and its residents flexibility."
New DREAM Act Introduced
Senate Dems introduce latest version of DREAM immigration reform with additional compromises. Politico: "[It] would bar illegal immigrants from receiving in-state college tuition; drops the age of eligibility to 29 from 34; would not grant permanent legal status to anyone for at least 10 years; would restrict eligibility for those who commit certain misdemeanor crimes; and would limit individuals from being able to sponsor family members for U.S. citizenship, among other changes. Those who receive conditional legal status under the DREAM Act also would be ineligible for Medicaid, food stamps and other government-funded benefits ... Reid spokesman Jim Manley said the earliest his boss could file cloture would be Thursday, possibly setting up a test vote next week."
House will take DREAM vote, possibly next week reports CQ.
W. Post edit board backs DREAM Act: "By offering a leg up to youngsters with unblemished records and promising futures, the DREAM Act would, at a stroke, turn workers in the underground economy into taxpayers; expand the military's recruitment pool at a time when war has stretched it thin; and induce more people from modest backgrounds to attend college, gaining critical skills to keep America competitive."
Breakfast Sides
TNR's Noam Schieber argues that corporate leaders will soon find Dems more appealing that tea party GOPers: "...corporations are suddenly in a much more precarious position than they were prior to the election ... The GOP wants to defeat Democrats at all costs. Big business has to make a more sophisticated calculation: It wants to defeat Democrats, since GOP rule typically means lower taxes and fewer regulations. But, unlike the GOP, the shorter-term costs of achieving this goal matter quite a bit to Corporate America. Republicans might accept a double-dip recession as the price of vanquishing Democrats. But, to most corporate managers, such profit-destroying horrors outweigh the benefits of GOP rule ... All of which makes the business community’s greatest source of leverage over Democrats—the threat of ousting them on Election Day—significantly less credible."
"Tea Party Caucus Takes $1 Billion In Earmarks" reports Hotline On Call: "...the 52 members of the caucus, which pledges to cut spending and reduce the size of government, requested a total of 764 earmarks valued at $1,049,783,150 during Fiscal Year 2010..."
