Health Care Dominates Fiscal Summit
McClatchy: “President Obama will convene a White House meeting next week to address runaway health-care costs. On Monday he called it key to reining in federal spending as he tries to balance plans to spend the country out of a recession with shoring up its long-term fiscal health.”
The Treatment’s Jonathan Cohn also notes: “…budget director Peter Orszag reiterated President Obama’s commitment to reforming health care this year. America faces as an entitlements problem, but, Orszag reminded everybody, ‘Health care reform is entitlement reform.’”
Media Matters slaps AP for egregious misreporting: “AP’s Liz Sidoti falsely reported that at his fiscal responsibility summit, President Obama ‘called the long-term solvency of Social Security “the single most pressing fiscal challenge we face by far.”‘ In fact, Obama made that comment in reference to ‘the rising cost of health care.’”
The Hill reports that “Obama is sending a clear message to Congress and the public that he is not setting aside his ambitious healthcare agenda” but also notes “Some Democrats and liberal activists want the Senate to use the budget reconciliation process to [avoid needing a 60-vote supermajority and] advance healthcare reform. Baucus rejected that approach.”
TPMDC’s Matthew Cooper: “The scene was incredible really, a press conference with members of Congress and think tankers instead of reporters asking questions. I’ve really never seen anything like it and whether it and events like it can really change the tone in Washington, of course, remains to be seen. One indication it won’t? This statement from Charles Grassley, the ranking Republican on the Senate Finance Committee … ‘…we’re hearing from some people that we can’t reform government entitlement programs until we reform the entire health care system. The problems with our health care system need fixing, but for a lot of people, health care reform is code for spending more, not less.’”
After attending the summit, Campaign for America’s Future co-director Roger Hickey sat down for an interview with OurFuture.org’s Isaiah Poole, and expressed satisfaction with the WH focus on health care, and concern with the push from Pete Peterson allies for an undemocratic approach to slash Social Security and Medicare benefits.
LA Times looks at how liberals countered conservative attempts to distort the “comparative effectiveness” health care provision in the stimulus bill: “That kind of response didn’t happen 15 years ago, said Chris Jennings, one of the leading architects of the Clinton administration healthcare campaign. ‘This time, there was a much more effective push-back,’ he said.”
Ezra Klein flags key items from various media pool reports of the summit.
Social Security Downplayed
Digby on the importance of making noise: “I have always believed that one of [the Obama administration's] very clever plans was to make “entitlement reform” all about health care. … The problem is that, like “bipartisanship” it takes two to tango. It’s really neat that they are all saying that entitlement reform is really about health care reform, but David walker and the Blue Dogs and everybody else to the right of Maxine Waters thinks “entitlement” reform, where everybody’s got to have some skin in the game, includes social security. I hope they can finesse it. But I’m not going to shut up and assume they can because it’s quite clear (and I have heard this from several sources, despite Robert Gibbs’ evasions earlier) that unless some lefties had made some noise, they would have had the Pete Peterson Show at the White House today to showcase their fiscal responsibility bonfides — and they would have announced a Social Security Summit.”
Robert Reich criticizes the austerity goal: “The President’s message on fiscal responsibility — that he’ll cut the current one by half by the end of his first term — is smart politics right now, but it may be dumb politics by November of 2012, and doesn’t make much economic sense regardless.”
A Nation of Santellis?
Politico claims “Obama’s test” is dealing with “a nation of Santellis,” citing conservative pollster Rassmussen that “55 percent of those surveyed thought federal mortgage subsidies to those most at risk of losing their homes would be ‘rewarding bad behavior.’”
BUT new W. Post poll finds strong support for the housing plan: “Although Obama has encountered near-unanimous GOP opposition to his stimulus plan in Congress and widespread criticism for a housing bailout plan that some say rewards people who have been fiscally irresponsible, 64 percent of those polled back the economic recovery package, and the same percentage support the mortgage proposal.”
USAToday/Gallup poll depicts a slightly more conflicted electorate. “… the new president, [has] a reservoir of support and a 62% job approval rating … On Obama’s plan to help some homeowners who can’t pay their mortgages, a 59% majority call the aid ‘necessary’ — but a 51% majority also call the taxpayer-funded rescue ‘unfair.’”
Meanwhile, The Hill reports: “House Democrats unveiled a wide-ranging bill on Monday evening to prop up the housing market and most contentiously, empower bankruptcy judges to modify mortgages.”
In Santelli’s world, our government would do nothing and leave victims at bigger prey for scams. Miami Herald warns: “Loan modification companies offer, for an upfront fee or monthly retainer, to negotiate with lenders to save homes. The pitch includes assurances that billions are available to bail out homeowners — and that lenders are eager to avoid foreclosing. In the worst cases, the firms do nothing and pocket the money. Others make an earnest but unsuccessful attempt to help, then refuse to refund clients’ money. Either way, homeowners lose thousands of dollars they could have paid their lenders.”
Fresh Cries Of Pork
BUT the $3.8 billion is less than 1 percent of the overall bill, and as reported in USAToday, is a 5% reduction in earmarks from the previous fiscal year. Further, McClatchy notes Democratic leaders boasted of a 43 percent reduction in earmarks the year before that.
Having said that, is there unseemly “pay to play” to be found? Harper’s Ken Silverstein: “Arizona Republican Jeff Flake put out a press release tonight saying that he had found ‘at least eight earmarks in the omnibus spending bill for clients of the PMA Group, an earmark lobbying firm reportedly under federal investigation.” Flake’s list is below. He didn’t reveal the members of congress who sponsored the earmarks, but I’ve added their names in parenthesis, based on information circulating on the Hill. A number of the sponsors, including Congressmen Pete Visclosky, Tim Ryan and Mike Doyle, are major recipients of PMA campaign donations.”
Those Silverstein lists are all Democrats, though per Media Matters, an earlier CQ report about pay-to-pay allegations involving PMA in a 2007 bill snared congresspeople from both parties.
CQ Politics reports that the House Ethics committee will vote on whether to start an investigation into PMA-fueled earmarks. (via Political Wire)
Stan Collender eviscerates House Minority Leader Boehner statement on the bill for wildly inaccurate numbers: “I can’t imagine how Boehner is coming up with the numbers to support his ‘largest increase’ claim unless he’s comparing the amount that will be included in the bill to what would be spent if there were no bill at all, that is, if the domestic departments and agencies covered by these appropriations were shut down. The increase over the previous year is actually likely to be relatively small.”
“Take Over Banks” Beats “Nationalize Banks”
USAToday/Gallup observes: “When it comes to stabilizing banks, public attitudes vary depending on the language used. Half of the 1,013 people called in the survey were asked about the government ‘temporarily taking over major banks in danger of failing;’ 54% approved. Half were asked about the government ‘temporarily nationalizing major banks in danger of failing;’ 57% disapproved.”
Take Over CitiGroup?
NYT reports: “The Obama administration says it has no plan to nationalize banks outright, and government officials say they want to avoid taking a big stake in Citigroup. The hope is that more equity capital from the government, supplied through the conversion of preferred stock, will help Citigroup pass a new ‘stress test’ that federal regulators are preparing to administer to 20 or so large banks. The administration’s strategy seems to point in the direction of stopping short of outright nationalization — where the government takes control — and stepping up regulatory scrutiny.”
The most drastic measure would be to effectively place the bank into a receivership situation where regulators take over the company, kick out the management and maybe even sell off parts of the business … This approach worked for Sweden and Finland in the early 1990s and Japan more than a decade ago …
…Others suggest that the case of insurance giant American International Group could wind up being a model for what happens to Citigroup. Last September, the government took a nearly 80% stake in AIG in order to keep it from bankruptcy. So far, the government has lent the insurance giant about $150 billion and there were reports Monday that it is in talks for even more aid…
…Of course, there is also the argument for doing nothing. Both top executives and industry groups have endorsed such an approach in recent days.
More Aid For AIG?
American International Group Inc. is seeking an overhaul of its $150 billion government bailout package that would substantially reduce the insurer’s financial burden, while further exposing U.S. taxpayers to its fortunes, people familiar with the matter say.
Under the plan, the government loan of up to $60 billion at the heart of the bailout would be repaid with a combination of debt, equity, cash and operating businesses, such as stakes in AIG’s lucrative Asian life-insurance arms. AIG and the government have been discussing the changes since December and plan to announce them by Monday when the insurer is expected to report fourth-quarter results, the people said.
Government approval would signal a complete turnabout in its approach to the insurer since it first intervened to rescue it: from that of a creditor to one of a potential owner.
At the time of the original bailout in September, the government imposed what many considered onerous interest rates and deadlines for AIG to repay its loans by selling off assets. It quickly became clear, however, that the erosion of the value of AIG’s assets and worsening financial crisis would make it difficult to meet the goals without jettisoning assets at fire-sale prices…
The plan would entail a wholesale restructuring of the company. AIG would continue to try to sell some assets to repay its obligations but other assets would be transferred to the government in lieu of cash repayment.
The assets, expected to include some of AIG’s Asian holdings, would likely be spun off and may be taken public with the government owning a major stake, according to people familiar with the discussions. AIG’s debt to the government would be reduced by an equal amount.
One major sticking point is how to value the assets, especially because prices are in rapid decline. Similarly, the government could end up the outright owner of certain businesses, which presents myriad issues, both operational and regulatory…
…The latest changes under consideration could require the government to increase its exposure to potential losses, if they lead to the government essentially insulating AIG from some losses on risky assets still in its portfolio, even if it doesn’t actually put up any more dollars right away. With Citigroup Inc., for instance, the government has agreed to shoulder most losses on $301 billion of assets.
As of Sept. 30, AIG was exposed to commercial mortgage-backed securities originally valued at at least $20 billion, but that sector has been hit hard during the downturn.
Yet insuring against losses on troubled assets might be another imperfect solution. Such protection has been used in other cases — Citigroup and Bank of America Corp. — and the share prices of both companies have kept falling.
AIG is in talks with the US government over a new bail-out aimed at giving the stricken insurer, which is already 80 per cent-owned by the authorities, fresh capital to absorb an expected fourth-quarter loss and more time to sell assets … A new bail-out of AIG would be the third time in five months that the US taxpayers have come to the rescue of a company that was once a global insurance powerhouse and is now fighting for its survival.
Under the planned bail-out, which has not yet been finalised and could still change, the government would swap some of the $60bn five-year loan it extended to AIG in November, and maybe some of the $40bn in preferred stock it owns, for equity.
The debt could also be swapped for new obligations with different terms in order to give AIG more time to repay the loan. The company has been slow in selling off assets to pay back the government aid as potential buyers struggled to raise funds.
In return for the additional capital, AIG could cede ownership of some of its businesses or assets to the government. The government would then securitise them, putting them in discreet funds to be managed by outside managers.
W. Post on new Ford-UAW agreement, “…possibly creating a model settlement for the other two major U.S. automakers as they battle to fend off bankruptcy. The deal, announced yesterday, would allow Ford to pay as much as half of its $13.2 billion obligation to retirees with stock rather than cash, a bargain that essentially relieves the company of the cash requirement but makes health care a far riskier proposition for retirees.”
W. Post on auto emissions standards: “The Obama administration is considering establishing national rules for regulating greenhouse gas emissions for automobiles, according to White House officials, a move backed by both auto manufacturers and some environmentalists.”
The Overhead Wire: Meeting Hints at Greater Transit Funding from Obama Administration”
AP on the success of publicly funded family planning: “Publicly funded family planning prevents nearly 2 million unintended pregnancies and more than 800,000 abortions in the United States each year, saving billions of dollars, according to new research intended to counter conservative objections to expanding the program”
Terrance Heath contributed to the making of this Breakfast.