Fiscal Responsibility, Redefined
Campaign for America’s Future hosts media conference with Dean Baker, James Galbraith, Nancy Altman and Roger Hickey, attacking Pete Peterson’s defamation of Social Security and Medicare in advance of WH “Fiscal Responsibility Summit.” Full audio here.
Key quote from Dean Baker: “we don’t have an entitlement crisis. we have a health care crisis … the horror stories that the Peterson foundation and others have put out there, talking about $54 trillion unfunded liability — this is a health care story … if we could zero out Medicare and Medicaid, we could just go ‘OK Mr. Peterson, you win, we’re getting rid of Medicare and Medicaid tomorrow,’ our economy would still be devastated because we haven’t fixed health care.”
Roger said that several of them had been told they might be invited to the summit, but no formal invitation had been issued yet (though Pete Peterson has his invitation). And while they had initially been told that the summit would address Social Security, Medicare and Medicaid (which Ezra [Klein] claims [OMB Director Peter] Orszag is desperately trying to separate), now they’re hearing from administration sources that nobody is sure.
“It may well be that the plan has been modified” said Galbraith, who was up on the Hill several weeks ago and says the assumption was that the underlying economic problems would be over quite quickly so by the time the summit occurred they could move on to other questions (which is pretty much what Digby says).
“But the administration is getting a reality check, it’s got bigger fish to fry” said Jamie. “These problems are simply not the result of the Bush treasury bobbling the ball. We’re seeing a true meltdown.”
Economist James Galbraith, on a conference call Thursday set up by the group Campaign for America’s Future, called it “unfortunate that the White House chose to frame the issues of Monday’s meeting” the way it has.
“Threatening, or appearing to threaten, the stability of Social Security benefits is not a constructive contribution,” Galbraith said. “Its effect is to raise the anxiety of the working population for whom Social Security and Medicare represent an increasingly important part of their long-term future.”
Toby Chaudhuri, spokesman for the left-leaning think tank Campaign for America’s Future, said that liberals are concerned Obama may fall for “a trap set by budget hawk elites.”
Roger Hickey, the think tank’s co-director, said that Obama should avoid cutting benefits and other forms of public investment when the country is in recession.
“In an effort to get bipartisan consensus, the White House could get locked into a path of austerity,” Hickey said.
Groups and lawmakers on the left also oppose the bipartisan commission plan. According to the proposal, which is being pushed by Conrad and Gregg in the Senate and Reps. Jim Cooper (D-Tenn.) and Frank Wolf (R-Va.) in the House, the plan that the commission would produce would receive an up-or-down vote from the House and Senate and wouldn’t be subject to many amendments from the rest of Congress.
House Speaker Nancy Pelosi (D-Calif.) and House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) have dismissed the need for such a commission, arguing that any reform should be considered by committees and should be able to be amended by other lawmakers.
Politico’s Ben Smith reports: “Peterson at Fiscal summit, but no special role”
In a letter, Pelosi asked the chairs to “conduct rigorous oversight of all aspects of federal spending and government operations to help achieve deficit reduction and long term fiscal responsibility” and to “scrutinize our budget, promote efficiency, and reduce waste in government spending.”
The request begins to satisfy a new rule, proposed by Rep. John Tanner (D-TN) of the conservative Blue Dog Coalition and passed by the House in January, that would require committees to hold at least three hearings per year on waste, fraud, and abuse in the federal agencies that fall within their purview.
With the stimulus having thrown regular spending rules momentarily out the window (calling for Pay-Go a week after an unfunded $787 billion behemoth seems a bit incongruous), Pelosi has signaled to Congress’ deficit hawks among them an influential faction of her own party that party leaders will keep an eye on restraint and seek to trim in other areas as billions are spent to bail out the financial sector and the public.
Is NYT Health Care Story Accurate?
NYT reports: “many of the leading figures in the nation’s long-running health care debate have been meeting secretly in a Senate hearing room. Now, with the blessing of the Senate’s leading proponent of universal health insurance, Edward M. Kennedy, they appear to be inching toward a consensus that could reshape the debate.
Many of the parties, from big insurance companies to lobbyists for consumers, doctors, hospitals and pharmaceutical companies, are embracing the idea that comprehensive health care legislation should include a requirement that every American carry insurance.”
BUT if such a mandate did not come with a public plan option — the approach backed by President Obama and key congresspeople Sen. Max Baucus and Rep. Henry Waxman — everyone would be forced into purchasing private insurance, making insurance lobbyists very happy.
The article does not mention the proposal. Why may that be? Note this NYT passage:
A business lobbyist involved in the talks said: “The lack of acrimony, the air of cooperation toward a common end, is quite refreshing. If the Republicans were a party to these intense discussions, that would ease the path to enacting health care reform.” This lobbyist, like most other participants, spoke on the condition of anonymity, saying that Senate aides had threatened to expel anyone who divulged details of the work group.
Why are business lobbyists leaking? To promote their agenda. Note this Sunday W. Post analysis about the confusion around the Treasury financial bailout strategy:
Part of the reason expectations about the plan “got out of whack” was that the Treasury attempted to bring banking regulators into their strategy sessions, in an effort to muster a coordinated government response, a senior official said. The regulators advocated for particular ideas and leaked them to the news media. The markets, in turn, began to pin their hopes on such proposals.”
In other words none of these suckers are prepared to stand up and scream loudly that employer-based health insurance sucks and is the cause of our asinine system. But neither do any of them have a solution for the insoluble problem of how to get low wage paying employers to cover their low wage employees with really expensive health insurance.
So the result is we’ll not tackle employer-based insurance, and more and more companies will drop it, and Medicaid expansion will be the de facto public policy option preferred by this consensus. After all no way will AHIP and the AMA want to see a real public plan option offered. Which will result in an unsustainable combination of poor programs for poor people being treated poorly. And we’ll be back here in a few years again wondering what happened to the “universal” system.
…the only real successful way to create a universal insurance system is to put aside this inane desire to come to consensus to solve the insoluble…
The Treatment’s Jonathan Cohn has a positive take: “I’m not sure Obama and his advisers were thinking that far ahead in early 2007, when they decided on their health care proposal and ditched the mandate idea. But it’s certainly possible to imagine the deal-making playing out in a way that enacts a mandate but spares Obama political fallout from it. At least in terms of policy outcomes, that wouldn’t be such a terrible thing.”
OurFuture.org’s Monica Sanchez: “True Competition a Myth in the Private Health Insurance Marketplace … Giving people a choice of public health insurance would bring much needed competition to a health care system dominated by insurance companies with oligopoly power and large provider conglomerates.”
Beat The Press’ Dean Baker knocks W. Post for saying deficits prevent health care reform: “Psssst, Don’t Tell the Post, Fixing Health Care Saves Money”
Echidne of the Snakes: “As a step toward universal health care, Congress needs to end the two-year waiting period for Medicare, and all states should require insurance companies to write Medigap policies for people under 65 if they do so for people 65 and older.”
More Conservative Hypocrisy on Stimulus
NYT: “Republicans Hail Parts of Bill That Few of Them Supported”
Salon.com: “GOP governors take the (stimulus) money and run … for higher office, and away from their earlier statements about how much they hate the whole idea of the stimulus.”
Brutal Economic News Continues
Beat The Press’ Dean Baker on awful industrial production numbers: “The Fed reported that output in manufacturing fell 2.5 in January. It revised the December decline downward by 0.6 percentage points to 2.9 percent. This puts that annual rate of decline over the last three months at an incredible 26.7 percent.”
NYT’s Paul Krugman quotes Fed board: “All participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011, even absent further economic shocks; a few indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation.”
Phil Gramm is WSJ shifts from “This is a mental recession” to “This crisis is not my fault.”
Not to worry. Shorter W. Post’s Michael Gerson: Recessions can be fun!
Obama in Canada: NAFTA
President Obama warned on Thursday against a “strong impulse” toward protectionism while the world suffers a global economic recession and said his election-year promise to renegotiate the North American Free Trade Agreement on behalf of unions and environmentalists will have to wait … That could anger some of Obama’s staunchest labor supporters, who blame NAFTA for sending American jobs oversees by not requiring a level playing field in the areas of labor and the environment.
But some of those allies said Thursday that they are giving the president more time to make good on his promise and praised Obama for finding a sophisticated way to express support for trade and changes to NAFTA.
“I am happy for him to frame his way of positioning the issue any way he wants, as long as he actually delivers on the issue,” said Lori Wallach, the director of Public Citizen’s Global Trade Watch division. “If down the road Obama doesn’t deliver on the policy, there will be a whole lot of really upset people.”
Obama in Canada: Climate
The leaders announced what they called “a clean energy dialogue” to work out their differences on environmental issues, among the thorniest between the United States and Canada, and engage in joint research on technology to reduce carbon emissions.
The United States is the biggest importer of Canadian oil, and Mr. Harper has been trying to win an agreement to exempt Canada’s vast tracts of oil sands, which may contain up to 173 billion barrels of recoverable oil bound into sand and clay, from any new American environmental regulations. Mr. Obama is under intense pressure from environmentalists to resist that effort.
“We’re not going to solve these problems overnight,” the president said.
His statements were just ambiguous enough to satisfy both American environmentalists and the Canadian oil industry.
Grist’s Kate Sheppard: “Beyond dialog and promised investments in technology, there weren’t a whole lot of answers from either leader on how their governments will deal with energy and climate in the short term.”
Earth2Tech on Energy Dept. moving fast to spend stimulus funds: “Secretary Steven Chu has made hasty work of shaking up the Department of Energy. Today the agency announced a series of reforms designed to expedite the dispersal of loans and loan guarantees … This means new allotments for the smart grid, advanced batteries, alternative-fuel vehicles and the array of clean energy initiatives supported by the stimulus will likely avoid languishing in the kind of multiyear application and evaluation process used for the $25 billion low-interest loan program for fuel-efficient vehicles and the Loan Guarantee Program for clean energy technologies.”
CNBC’s Santelli Bravely Defends Wall Street Against Evil Foreclosure Victims
FireDogLake’s Scarecrow: “CNBC’s Santelli Calls Struggling American Homeowners ‘Losers’”
He gets a standing ovation from the traders at that point, and then he asks them if they want to pay for their neighbor’s mortgages, and they boo. Then he goes off about how Cuba used to have mansions and when they went “from the individual to the collective, they started driving ’54 Chevys.” It’s right-wing backlash stuff at its absolute best.
Lost from this complaint is the plain fact of predatory lending, that lenders got cash rebates to put people in crappy, high-interest mortgages, that they hid terms of the agreement and denied disclosure, and that all of those hardworking folks are seeing their property values plummet as a result of millions of foreclosed homes glutting the market. To the tune of $6 trillion dollars in home value.
National Review’s Kathryn Lopez appears to forget that Sarah Palin lost: “Watch for the Palin-Santelli 2012 Signs”
Ripping Off The Unemployed
For hundreds of thousands of workers losing their jobs during the recession, there’s a new twist to their financial pain: Even when they’re collecting unemployment benefits, they’re paying the bank just to get the money — or even to call customer service to complain about it.
Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what’s on the card.
Business Week on laid off workers having to fight for severance: “Managers dealing with the trauma of mass layoffs increasingly have something else to worry about: the law. A growing number of jettisoned employees are filing lawsuits for severance pay under the federal Worker Adjustment & Retraining Notification (WARN) Act, and politicians are stiffening rules to protect workers. On Feb. 1 the state of New York lengthened the amount of notice employers must give workers under the WARN Act to 90 days from 60. It also made the law applicable to companies that lay off as few as 25 employees, vs. the previous minimum of 50. Congress is now mulling ways to strengthen the act, and states such as New Jersey and Illinois have beefed up employee protection laws.”
AP on homelessness prevention in the stimulus: “In the coming months, the Housing and Urban Development Department will oversee at least a tenfold increase in spending on programs designed to prevent homelessness, officials said Thursday. Tucked within the economic stimulus bill recently signed by President Barack Obama was $1.5 billion to help families pay rent, make a security deposit, pay utilities and cover other housing expenses.”
FT on reshaping the role of Fannie and Freddie: The Obama housing plan announced this week draws Fannie Mae and Freddie Mac yet more tightly into the embrace of federal government and shows their importance to housing policy. The latest moves, including doubling the public capital available to the government-sponsored enterprises to $200bn apiece, firm the implicit guarantee on their debt to the brink of making it explicit. … This raises the question as to whether at some point the administration might abandon the remaining ambiguity about their status and declare that it stands full-square behind their debts.”
W. Post: Mortgage Rescue Eligibility Still Being Finalized
Financial Bailout, Financial Reform
Most banks no longer hold the loans they make, content to collect interest until the debt comes due. Instead, the loans are bundled into securities that are sold to investors, a process known as securitization. But the securitization markets broke down last summer after investors suffered steep losses on these investments. So banks and other finance companies can no longer shift loans off their books easily, throttling their ability to lend…
…The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.
W. Post on the new SEC: “Securities and Exchange Commission Chairman Mary Schapiro plans to look into whether the boards of banks and other financial firms conducted effective oversight leading up to the financial crisis, according to SEC officials, part of efforts to intensify scrutiny of the top levels of management and give new powers to shareholders to shape boards. ”
Bringing Transparency Back
AP on new reporting requirements for stimulus spending: “President Barack Obama’s top budget aides are putting in place strict reporting requirements for all federal agencies that will be involved in spending parts of the $787 billion economic stimulus package. Obama’s budget chief, Peter Orszag, released a 25,000-word document this week that details exactly how Cabinet and executive agencies, states and local organizations must report spending the money designed to save or create more than 3 million jobs over the next two years. It’s a strict system meant to streamline reports so they can be displayed on the administration’s new Web site, Recovery.gov.”
NYT on budget honesty: “For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials.”
Bringing Justice Back
Can we stop the right-wing judiciary from catering to corporations and give citizens access to courts? NYT: “…a February 2008 court ruling … barred patients or their survivors from suing makers of complex medical devices … if the Food and Drug Administration has approved their sale. … Two House Democrats, Henry A. Waxman of California, the chairman of the House Energy and Commerce Committee, and Frank Pallone Jr. of New Jersey, the head of its health subcommittee, plan to reintroduce soon legislation that would effectively nullify the Supreme Court decision. A similar Senate bill … is expected to be reintroduced in coming months. The lawmakers, as well as patient advocates and others, say the Supreme Court’s medical device decision has left patients legally powerless against what they criticize as spotty oversight of products by the F.D.A.”
D-Day wraps up the end of the California crisis: “25 Things About The California Budget … Done for the Facebook reference: I may not get to 25.”
Mother Jones’ David Corn sees Newt Gingrich driving the Republican Party.
Bloomberg: Chrysler Renews GM Merger Idea in Survival Plan to Obama Panel
Terrance Health contributed to the making of this Breakfast