MORNING MESSAGE: Crisis Report Puts Focus Back On Wall St.
OurFuture.org's Richard Eskow: "Today's Financial Crisis Inquiry Commission's report couldn't come at a better time ... when the nation's capital is convinced that CEOs need appeasing rather than policing, the FCIC report is a badly needed return to reality ... There are those who would argue that the Great Recession was unavoidable, but that's not true. It could have been avoided with stronger regulations, the deterrent effect of criminal prosecutions, and wiser heads than Alan Greenspan and Ben Bernanke at the helm of the nation's economy."
Conservative Dissenters Try To Weaken Crisis Report
Conservatives release dissents in hopes of undercutting financial crisis commission conclusions. NYT: "One dissent points to broad economic forces that contributed to the credit and housing bubbles that built up during the last decade, including a glut of savings in developing Asian countries that began accumulating in the late 1990s and provided the fuel for mortgage-backed investments in the United States and Europe ... The other dissent argues that decades of government policies to promote homeownership are to blame ... . Those who had hoped for an authoritative account that would sear the public consciousness now seem pessimistic."
Dissenters' arguments don't hold up, finds Economist's View's Mark Thoma: "I don't think the conclusion that better regulation would not have stopped the crisis follows from the factors they list. By their own admission, the reason that factors 1 and 2 led to factor 3 was 'an ineffectively regulated primary mortgage market.' So right away better regulation could have stopped the chain of events the led to the crisis."
Official report fingers banker pay. Bloomberg: "Wall Street firms’ soaring pay pushed traders to disregard risk and limited regulators’ ability to lure top talent to police banks..."
Battle Lines Forming On Cutting Government
Senate Dems attack conservative GOP budget plan for risking loss of 1 million jobs. W. Post: "Democrats argued, for instance, that doing away with $4 billion in small business loans would cost 161,600 jobs; that eliminating federal support for Amtrak would cost 160,000 jobs; and that cutting off funding for the national health care overhaul would put up to 400,000 jobs at risk. The Democratic report also stated that 4,000 FBI agents, 3,000 food safety inspectors and 6,000 nuclear safety workers would lose their jobs if the spending cuts passed, endangering the country's security."
21 Senate GOPers announce support for a balanced budget constitutional amendment reports The Hill.
Freeze plan chafes community organizers. WSJ: "President Barack Obama said in his speech Tuesday that he has 'proposed cuts to things I care deeply about, like community action programs.' The line, apparently, was news to the National Community Action Foundation ... [Executive Director David] Bradley, whose group has strongly supported the Obama administration, said in a statement this afternoon that president’s remarks were 'extremely troubling' and 'ill-conceived.'"
Grist's Tom Philpott worries freeze will undermine high-speed rail: "High-speed rail networks do not materialize with the snap of a finger or the uttering of words, no matter how inspiring. They cost money: public money ... So far, the federal government (under Obama's stimulus plan) has committed $2.3 billion [to California's planned system], and California voters coughed up another $10 billion by voting for a bond issue. So that's $12.3 billion of the $42 billion necessary."
Energy Sec. previews clean energy budget increases. Politico: "The strategy includes doubling the number of the department’s energy innovation hubs to six and adding more than $8 billion for new clean-energy funding ... money would be paid for by cutting tax subsidies for fossil fuel producers ... Concerning the specifics of what DOE will be willing to cut — or not — Chu said simply that 'you’ll have to stay tuned' for release of the president’s budget request next month."
GOP caucus is divided on military spending. NYT: "The discordant Republican voices on military spending have bred confusion on Capitol Hill, among military contractors and within the military itself, where no one is exactly sure what the members backed by the Tea Party will do ... But so far, few Tea Party-backed members on the House Armed Services Committee have said specifically where they would cut [and] several spoke up in favor of favorite military programs or of protecting military installations at home..."
House Armed Services Chair resisting Pentagon-backed cuts. W. Post: "... at the direction of the White House, the services have projected $78 billion more in cuts in overall Pentagon spending in the five years beginning in 2012. [Rep. Buck] McKeon took issue with those reductions, saying the military services are not allowed to reallocate savings derived from shrinking the size of the Army and Marine Corps."
Gallup shows opposition to cutting most everything government actually does. Daily Kos' Jed Lewison: "... there's supermajority opposition to cutting education, Social Security, and Medicare. And there's more opposition to cutting anti-poverty programs than to reducing military spending."
AFL-CIO and U.S. Chamber of Commerce release joint statement supporting President's call for infrastructure investment.
Deficit projected to be higher this year, following tax cut deal. NYT: "The new figures highlighted the need for action to raise the government’s debt ceiling in coming months..."
Social Security Changes Not Ruled Out
WH aide David Axelrod leaves door open to Social Security changes at blogger roundtable. Daily Kos' Chris Bowers: "[Axelrod said,] 'Among younger Americans, there’s a profound suspicion that Social Security isn’t even going to be there. And among older Americans, there’s a great deal of anxiety about tampering with it. And our goal is to make sure that the program is strong and secure. The President laid out his principles last night, and we’re willing to have a discussion, but those principles are going to inform the discussion.' ... President Obama strikes generally strong notes in defense of Social Security when it comes to other possible ways to cut the program. However, other than privatization, both he and his administration are unwilling to get too specific about where the line is drawn."
Matt Yglesias unswayed by defense of freeze at roundtable: "An awful lot of progressive dialogue with the administration just keeps coming around to the same one point ... According to the Obama administration the nation’s fiscal problem is mostly due to entitlements. And according to the Obama administration in the short-term there’s a large output gap. So why a short-term discretionary spending freeze?"
Republicans Want Corporate Tax Cuts, Not Tax Reform
Republicans reject corporate tax reform that increases revenue, or is simply revenue-neutral. Wonk Room's Pat Garofalo: "By implementing corporate tax reform that is revenue-positive, Congress would simply be following in the footsteps of Ronald Reagan’s 1986 tax reform. 'Despite lowering the statutory corporate tax rate from 46 percent to 34 percent, the 1986 act closed so many corporate loopholes that, it increased corporate income taxes by more than a third,' Citizens for Tax Justice noted. Or is Reagan now too radical on taxes for today’s Republicans?"
Matt Yglesias sees tax reform happening quietly: "The right way for the White House to engage with this issue is (a) vaguely, and then (b) in private. They need to try to credibly signal to reform-minded Republicans on the Hill that the President and his team won’t attack people who put technocratically sound proposals on the table."
GOP Begins Hearings Attacking Health Reform
Health care debate plays out in congressional hearings. W. Post: "Joe Olivo, co-owner of a printing business in Moorestown, N.J. [testified that] his insurer has informed him that his plan will be discontinued. The reason, said Olivo, is that the plan does not offer the level of preventative care coverage required by the new law ... Rep. Bill Pascrell (D-N.J.) questioned Olivo's account, noting that many of the law's minimum requirements for plans do not apply to those already in existence before the law was passed. 'It sounds like your carrier may have pulled a fast one on you,'..."
WH aide Stephanie Cutter rebuts testimony from Medicare actuary: "...the Actuary discounts proposals that other independent experts credit with getting at the root causes of health care cost growth ... The Actuary has also raised concerns that implementing these cost control measures may not be possible. Once again, we disagree."
More Republican states are considering asking for federal Medicaid waivers. Bloomberg: "Arizona Governor Jan Brewer asked for U.S. permission on Jan. 25 to reduce Medicaid eligibility and drop coverage for 280,000 people ... That may prompt more to seek release from some Medicaid obligations ... Democratic governors are acting to curb Medicaid costs within the federal rules."
High Unemployment Not Going Anywhere
CBO projects high unemployment through 2016. HuffPost: "[CBO] puts the national unemployment rate above 9 percent through 2011 and 8 percent through 2012. Unemployment will fall to a more 'natural rate' only in 2016, when CBO estimates it will reach 5.3 percent -- a projection roughly in line with private-sector figures."
Fed formally decides to continue bond-buying program to support job creation. NYT: "They took note of a rise in commodity prices, but reiterated their view that long-term inflation expectations had been stable and inflation had trended downward ..."
Breakfast Sides
Senate Dems, hunting for bipartisan compromises, start with "modest initiatives." W. Post: One starting point under discussion is a slate of pending non-controversial judicial nominations ... Another early test could come when the Senate attempts to change a [tax compliance] provision in the health-care law that small-business owners say would overly burden them ... The new centrism also could come into focus during [the Korea] trade debate ...'"
NYT profiles solider who suffered an illegal foreclosure while serving in Iraq: "Even though some of the nation’s military families have been sending their breadwinners into war zones for almost a decade, some of the nation’s biggest lenders are still fumbling one the basic elements of this law — its foreclosure protections ... only a judge can authorize a foreclosure on a protected service member’s home ... By 2005, violations of the civil relief act were being reported all across the country, some involving prominent banks like Wells Fargo and Citigroup."
