Obama Challenges Obstructionists On The Budget, as “Bayh Bloc” Forms
THE PRESIDENT:: …Now, there are those who say these plans are too ambitious; we should be trying to do less, not more. Obama is trying to do too much, they say; just focus on Wall Street, focus on the banks.
AUDIENCE: Nooo –
THE PRESIDENT: Well, I say our challenges are too large to ignore…
…you know, I’ve said before, when you’re President you’ve got to walk and chew gum at the same time. (Applause.)
It would be nice — it would be nice if I could just pick and choose what problems to face and when to face them, and say, no, I’m sorry, hold off on health care; Afghanistan, let’s put that aside for a while. You know, I would sleep a little easier. But that’s not the way it works. It doesn’t work that way for you. It doesn’t work that way for you — you don’t get to choose between paying your mortgage bills or your medical bills.
You don’t get to choose between paying your kids’ tuition and saving enough for retirement. You don’t get to say, well, I’m sorry, hold on a second, you know, I really got to take on some issues at home here so I don’t think I’m going to go to work for a week. It would be nice to do, but you don’t do that. You need to take all these problems on. And you need a government that’s going to help you on all these problems, that will do the same. That’s what leadership is all about. (Applause.)
And that’s what this debate on the budget is all about — about whether we are willing to do what needs to be done not only to get our economy moving right now, but to put it on the road to lasting, shared prosperity. It can be easy to lose sight of this. It’s easy for pundits to get on TV and put their ratings ahead of their own sense of responsibility, and try to oversimplify what’s at stake. It can be difficult to break free from the partisanship that’s held sway in Washington for so many years. But that’s what we have to do. That’s what this moment requires.
For all of you know deep down — and what folks in Washington sometimes forget — in the end, a budget is not merely numbers on a page or a laundry list of programs. It’s about your lives; it’s about your families; it’s about your dreams for the future.
HuffPost: “Dem ‘Centrists’ Plot To Push Back On Obama Agenda,” as Sen. Bayh announces “bloc” of 15 right-leaning Senate Dems, per Roll Call, “quietly maneuvering to keep open the option of vetoing two of President Barack Obama’s most ambitious agenda items this year — climate change and health care reform.”
CQ Politics: “Liberal groups are already outraged. In a statement, Robert Borosage, co-director of Campaign for America’s Future, said the various groups of centrist Democrats — which also include the House ‘Blue Dogs’ — provide ‘more treacherous opposition’ to Obama’s agenda than even the Republicans. He hinted that the centrists were making themselves vulnerable to opposition in their next Democratic primaries, noting that ‘Blue Dog Democrats who support conservative special interests over the voters who elected them should be challenged.’”
OurFuture.org Dog The (Blue) Dogs campaign expands with announcement of Bayh Bloc members.
The Atlantic’s Chris Good: “Liberal activist group USAction will air TV ads pressuring four Blue Dog Democrats on the House Budget Committee to support President Obama’s budget, the group announced today. It also started robocalls targeting the members last week. The members are Reps. Marion Berry (AK), Allen Boyd (FL), Charlie Melancon (LA), and Chet Edwards (TX).”
Booman Tribune explains politics to Bayh’s Bloc: “One thing I hope that centrist Democrats understand is that the American people do not care one little iota whether Obama’s proposals pass through the Senate using normal procedure or through the use of the budget reconciliation process. The people voted for Obama and he retains a high level of popularity and confidence. The people support his health care and energy plans. If those plans do not pass through the Senate because we cannot muster 60 votes, the people are going to be unhappy. If those plans pass with 51 votes by using the budget reconciliation process (which precludes use of the filibuster) the people are going to be relieved.”
ThinkProgress’ Ryan Powers: Who Are The Anonymous ‘Three Or Four’ Senators In Bayh’s Blue Dog-Style Coalition?: “The following members have been reported as attending Bayh’s meetings in recent weeks, but are not named in today’s press release: Sen. Robert P. Casey Jr. (D-PA). Sen. Amy Klobuchar (D-MN), Sen. Mark Pryor (D-AR). Additionally, Bayh told MSNBC this morning that yesterday’s meeting featured a presentation by Budget Committee Chairman Kent Conrad (D-ND) on the upcoming budget debate. ”
MyDD’s desmoinesdem worries the bloc would hurt fellow Dems: “If Democrats carrying water for corporate interests sink ‘the change we need,’ Democratic base turnout could drop significantly, as it did in 1994. Most of the Moderate Dems Working Group members will not face the voters until 2012 and 2014, but their obstruction could harm many other Congressional Democrats.”
Congress Matters’ David Waldman doesn’t think Bayh can hold his Bloc: ” No doubt Bayh has convened such a group. Thing is, though, they’re not voting with him. But as long as Bayh can dine out on just the value of the press conferences, and the stories subsequently generated claiming that his deviancy is ‘moderate’ when it often actually defies strong public opinion keep flowing, I’m sure he couldn’t care less whether anything actually happens or not.”
TNR’s Jonathan Cohn busts Sen. Judd Gregg for flip-flopping on using Senate budget rules to pass reforms with a simple majority vote.
George W. Bush used reconciliation for tax cuts, ANWR drilling, Medicaid cuts, Medicare tax changes, trade authority, and much else. Judd Gregg — now the Senate’s leading reconciliation skeptic — voted for every single one of these initiatives. Under Clinton, reconciliation was used to reform welfare, balance the budget, and, by the Republicans, to enact the Contract With America (Clinton vetoed).
The restrictions on what reconciliation can consider are not really intrinsic to the process. Rather, they’re a function of the so-called “Byrd rule,” which limits reconciliation to legislation that changes spending, forces neutrality outside the 10-year window (that’s why Bush’s tax cut are set to expire this year), and imposes all manner of restrictions on it. If not for the Byrd rule, you could basically do anything under reconciliation. In practice, it would merely take a majority of senators on the Budget Committee to dismantle it. If that was done, reconciliation would make the Senate an effective 50-vote institution, just as the filibuster made it an effective 60-vote institution … If the Democrats decide passing health reform or averting climate change is more important than respecting rules passed by their elderly colleagues, then they can change the rules.
New Hampshire Sen. Judd Gregg, the ranking Republican on the Senate Budget Committee, warned that the growing debt burden reflected in CBO figures is too big to be easily dismissed. “The CBO re-score is going to be an eye-opening event for a lot of people who want to finesse this,” Gregg told POLITICO. “You cannot finesse the coming fiscal calamity we are facing, the size of the debt in the out years and the size of the deficit in the out years.”
Gregg refused to discuss any of the CBO estimates. But behind the scenes, Senate Budget Committee Chairman Kent Conrad (D-N.D.) has begun to aggressively raise warnings with the administration and his colleagues about the data…
…White House Budget Director Peter Orszag, who met with House Democratic leaders Wednesday evening, is himself a former CBO director and veteran of scoring former President George W. Bush’s budgets in the past. Orszag said he had yet to see any of his old colleague’s deficit numbers but said CBO’s economic growth numbers lagged behind Blue Chip forecasts and this would be a drag then on the Obama plan.
Conrad is adamant that the numbers require budget adjustments…
Health Care Budget Battle
…top aides to the president met Wednesday evening in the Capitol with House Democratic allies on moving the plan ahead, including an effort to use expedited budget procedures to advance Obama’s healthcare initiative past Senate filibuster threats…
…Speaker Nancy Pelosi (D., Cal.) said later that using reconciliation at least to advance healthcare reform was a serious option still for the House. “We just want to get a budget passed and we want to get healthcare passed. Whatever the path is to do that is fine,” Pelosi told POLITICO.
The speaker said she better understood the reluctance to use the same expedited procedures in the case of the cap-and-trade revenue provisions related to climate change. But she clearly would like to keep the reconciliation option alive at least through the House debate and into final talks with the Senate next month. “I would like cap-and-trade too, but if we’re going to get one, healthcare is it,” she said. “Healthcare, I would hope we could do under reconciliation.”
THE PRESIDENT: …some on the other side have said, oh, Obama, he’s a tax-and-spend Democrat — tax and spend. Well, it turns out, yes. You know, what I’ve said is we should return to the tax rates that we had under Bill Clinton, which means — which means this: which means that for people who are making more than $250,000 a year, they would pay instead of 36 percent, they’d pay 39 percent. Like, a 3 percent increase on their tax rate.
Now, these folks can afford it. They were rich — they were rich back in the ’90s. It’s not like suddenly they’re going to have to go to the poor house. But what that does is it allows us to pay for health care reform for a lot of people who are out there working every day but are just one illness away from bankruptcy.
Now, that’s — I don’t think that’s unreasonable. I don’t think that’s socialism. I think that’s part of understanding that we’re all in this together and that if the middle class is working well, if working people are doing well, then everybody does well.
TPMCafe’s Peter Dreier warns of reporters calling Obama heath plan “costly”: “The use of the word ‘costly’ to describe Obama’s health care proposal illustrates the way that bias creeps into journalism and frames the public debate on this important issue. In reality, Obama’s proposal, as outlined during his campaign and by his health care advisors, would reduce health care costs.
Health Care Blog’s Matthew Holt adds: “…why are health care reform costs always quoted as ‘$1.5 trillion’ or whatever. Why are they not quoted like everything else, in annual terms?. After all $1.5 trillion over 10 years is a pretty small fraction of the $30+ trillion we’re going to spend on health care in the next 10 years.”
Wonk Room’s Igor Volsky also provides context: “$1.5 trillion isn’t chump change, but it’s nothing if compared to the full cost of inaction. A $1.5 trillion plan (much of it paid for, just like the President’s $634 billion allocation) is meant to bend the curve on health care spending. Otherwise, total health spending will double ‘by 2020– rising from a projected $2.6 trillion in 2009 to $5.2 trillion by 2020 to consume 21 percent’ of the GDP . As premiums increase over time, millions of Americans will lose their jobs, many more will forgo coverage, file for bankruptcy due to unaffordable health care costs, and die due to complications from being uninsured. ”
Health Care for America Now’s Jason Rosenbaum on MA’s lack of public plan: “Basically, the Massachusetts model is good because it has indeed expanded coverage, but it’s bad because it hasn’t controlled costs, mostly because it lacks a public health insurance option to force private insurance to compete. Thus, it’s unsustainable as a national model.”
OurFuture.org’s Monica Sanchez on public support for public health plans already in place: “For all the false alarm ringing over ‘socialized medicine’ when a choice of public health insurance is discussed, little is said about the tens of millions of people in the United States who are currently—happily—getting their health care through a public health plan of one kind or another, and the tens of millions more who want to have that choice available to them.”
The Rural Blog on private insurer subsidies within Medicare (which President Obama strips out in his budget): “Medicare Advantage doesn’t seem all that advantageous for rural areas”
TNR’s Jonathan Cohn offers behind-the-scenes report on how President Obama pushed health care reform over the skepticism of some advisers: “Obama has long struck many observers as an extremely cautious politician, and his handling of the banking crisis and the economic stimulus bill has tended to reinforce that perception. The trajectory of the health care debate inside his administration, however, suggests that Obama is not always as cautious as he might seem. He can think big. He can take risks. And he can bring his advisers to him–rather than the other way around.”
Major Fed Move To Lower Mortgage Rates
Bloomberg on “Rambo Fed”: “By committing to buy Treasuries and double his purchases of mortgage debt, Federal Reserve Chairman Ben S. Bernanke signaled his determination to avoid a repeat of the Great Depression and his willingness to pump as much cash into the economy as needed to end the current crisis … With the purchases of Treasuries and housing debt, Bernanke is effectively using the Fed’s powers to print money and aim it where he and other officials believe it will have the greatest impact in lowering borrowing costs … The Federal Open Market Committee’s decision was unanimous, indicating the agreement to start buying Treasuries quelled disputes over how the central bank should expand its balance sheet. Richmond Fed President Jeffrey Lacker and others favored government-debt purchases instead of intervening in credit markets, as Bernanke has pioneered in the past six months.”
Bloomberg on possible mortgage rate impact: “U.S. mortgage rates may fall to the lowest since World War II after the Federal Reserve announced plans to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds. The rate on a 30-year fixed mortgage may fall to 4.5 percent, the lowest since the 1940s, said Mike Larson, real estate analyst at Weiss Research in Jupiter, Florida … The central bank is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting their prices and thus lowering their yields. That allows banks to reduce the rates on new mortgages and still ensure profitable sales of the securities.”
FT adds: “This could help prompt a flood of refinancing applications in the coming days as borrowers rush to take advantage of cheaper home loan rates.”
NYT on Fed strategy: “Fed officials have been wrestling for months with the fact that lenders remain unwilling to lend and borrowers are unwilling or unable to borrow. Even though the Fed has been creating money at the fastest rate in its history, much of that money has remained dormant. The Fed’s action is an expansion of its effort to bypass the private banking system and act as a lender in its own right.”
Matt Yglesias adds: “The goal here is to make interest rates on mortgages extremely low. That way homeowners will be able to refinance their loans at low rates and save on their monthly payments. That, in turn, will free up money that can be used to buy stuff, encouraging a return of production and retail jobs and a revival of business investment. At any rate, that’s the theory. We’ve never before been in a situation where this is actually tried on a substantial scale.”
Calculated Risk on stimulus effect: “If the Fed’s actions drive mortgage rates to an effective rate of 4.5% on all outstanding mortgage debt that would be about $190 billion in stimulus (on an annual basis). However not all homebuyers will be eligible for a 4.5% interest rate mortgage. But even half that stimulus would be significant.”
Brad DeLong wants more: “Here we go. Finally action on a scale that might be a third as big as will ultimately be needed.
This is a step in the right direction for now both fiscal and monetary policy are aligned on the course of greater spending. In short, it’s a one two punch. My worry [is the] US economy may be in the throes of a structural adjustment that takes years to correct…
…The FOMC’s decision is not without risk. The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply. Again to do so, it is resorting to printing money and ballooning its balance sheet. This will dilute the value of the dollar. In the near-term, the action will balloon the value of the assets the Federal Reserves holds by almost 50%, to more than $3 trillion. Longer-term that could make it difficult for the central bank to suck that money out of the system once the economy starts to recover.
The concern among economists is the the exit strategy, that is that the Fed will find it difficult to sell such massive volumes of assets when the economy does begin to recover. The concern is that if the Fed doesn’t handle the task adeptly, the nation could face a period of high inflation because too much money would be in circulation. And if we are in a structural adjustment, that is the nation’s jobless rate will continue to rise, that combination of inflation and high employment is lethal to the electoral prospects of those in power when it does hit.
Carbon Cap Update
A year ago, the Select Committee for Energy Independence and Global Warming, chaired by Ed Markey (D-Mass.), was the only committee that discussed climate policy regularly, and it lacks the power to mark up and move legislation.
Now, with climate-action advocate Henry Waxman (D-Calif) at the helm of the Energy and Commerce Committee, that panel is getting right down to work. Its subcommittee on Energy and Environment, chaired by Markey, has been hosting at least two hearings a week for the past month on the details of climate policy. Waxman expects the committee to approve climate legislation before Memorial Day. Both Waxman and Markey introduced cap-and-trade plans last year, and plan to stick with that approach.
But the Ways and Means Committee, which has primary jurisdiction over tax policy, is also flexing its muscle on climate legislation, on the grounds that either a cap-and-trade system or a carbon tax would generate revenue. The committee has ramped up hearings on climate policy, and its members are submitting legislation for consideration. In addition to [the carbon tax bill from Rep. John] Larson, Rep. Chris Van Hollen (D-Md.) has introduced a cap-and-dividend plan, a form of cap-and-trade that refunds to citizens the proceeds generated by auctioning carbon credits. And committee member Jim McDermott (D-Wash.) said last week that he, too, intends to introduce a climate bill in the coming weeks, though he hasn’t specified whether it will be a cap-and-dividend or a carbon-tax plan.
The issue of dueling committees became obvious last Thursday, as Markey’s Energy and Environment Subcommittee held a hearing on “Consumer Protection Provisions in Climate Legislation,” while at the same time, three floors down in the Rayburn House Office Building, McDermott’s Ways and Means Subcommittee on Income Security and Family Support held its own hearing on “Protecting Lower-Income Families While Fighting Global Warming.”
In the Senate, things start to get complicated. Sen. Jeff Bingaman (D-N.M.) is chair of the Energy and Natural Resources Committee. Bingaman introduced renewable energy standard legislation in the 110th Congress, which was removed from a larger energy bill amid Republican opposition. Bingaman wants to proceed on separate bills for RES, for energy in general, and for climate change (likely in the form of a cap-and-trade bill).
Until recently, Senate Majority Leader Harry Reid (D-Nev.) seemed to be fine with that idea. After President Barack Obama called for climate change legislation during his address to Congress, however, Reid changed his tune. He is now pushing for a comprehensive bill that will include all three elements. Bingaman has argued that each piece of the agenda will require finesse to reach the 60-vote Senate cloture threshold, and he’s reluctant to combine the different objectives.
Wonk Room’s Daniel J. Weiss and Kalen Pruss on another flaw with giving away pollution permits for free: “…the Congressional Budget Office (CBO) testified on March 12 that providing free allowances to utility companies won’t do anything to help their middle and low-income families cope with higher energy costs caused by reducing pollution … Instead, low-income families could enjoy a net benefit from a cap-and-trade system if all emissions allowances are sold in the free market … ‘[rebate payments] could actually more than offset the average increase in spending on energy-intensive goods by low-income households.’”
Climate Progress: House GOP pledge to fight all action on climate. “Why do conservatives hate your children?”
W. Post on the costs we’re already paying: “While the nation debates the cost of climate change — whether the price of electricity and gasoline should increase because of their greenhouse gas emissions — the problem already has a price tag on the Chesapeake Bay. Sea levels are rising almost twice as fast in the Chesapeake region as in most of the world, and waterside communities are spending millions to keep the water from eroding yards, marshes and sandy beaches. The area’s beaches are dealing with the same bad luck: The land is dropping, climate change is altering currents and the oceans are inching up.”
WonkRoom’s Brad Johnson on latest Glenn Beck conspiracy theory: “After Carol Browner, President Obama’s climate and energy adviser, said that a smart grid means ‘we can get to a system where an electric company will be able to hold back some of the power so that maybe your air conditioner won’t operate at its peak, you’ll still be able to cool your house, but that’ll be a savings to the consumer,’ Beck argued that would lead to ‘one-world government’ with ‘Czar Browner’ in charge of everyone’s air conditioners.”
Obama Alludes to EFCA Support At Town Hall
THE PRESIDENT: …I have already said that we are going to promote Davis-Bacon. We think it is important that unions have the opportunity to organize themselves. (Applause.)
Now, you know, sometimes, you know, the business press says, oh, that’s anti-business. And whenever I hear that I’m always reminded of what Henry Ford said when he first started building the Model T — and he was paying his workers really well. And somebody asked him, they said, why are you paying your workers so well? He said, well, if I don’t pay them well, they won’t be able to buy a car.
Think about that. Part of the problem that we’ve had with our economy over the last decade at least is that … the way it was growing was that wages and incomes for ordinary working families were flat for the entire decade…
…So when I say that we should make it easier for unions to organize and observe Davis-Bacon, all I’m trying to do is to restore some balance to our economy so that middle-class families who are working hard — (applause) — they’re not on welfare, they’re going to their jobs every day, they’re doing the right thing by their kids — they should be able to save, buy a home, go on a vacation once in a while. You know, they should be able to save for retirement, send their kids to college.
That’s not too much to ask for; that’s the American Dream. And the only way we get there is if we have bottom-up economic growth instead of top-down economic growth. (Applause.)
Vote Today on AIG Bonuses
Bloomberg: “U.S. House Democratic leaders have set a vote for today on a proposed 90 percent tax on executive bonus payments by companies receiving more than $5 billion in federal bailout funds.”
McClatchy focuses on larger problem: “Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG’s ability repay its $170 billion in loans from taxpayers has eroded significantly.”
AFL-CIO blog on new trade strategy: “Trade experts from throughout the Americas say U.S. trade policies must be completely revised and existing agreements renegotiated and agree with the Obama administration’s proposal to renegotiate part of the North American Free Trade Agreement (NAFTA) that allowed unsafe Mexican trucks to drive on U.S. highways. In a forum hosted by the International Labor Rights Forum, the Global Policy Network and the Economic Policy Institute, trade union leaders from the United States, Mexico, Central America and Colombia said that existing and proposed trade agreements have failed to live up to their promise and have actually made things worse.”
W. Post on military spending:
“A top Pentagon budget official told a congressional panel yesterday that the military is reexamining how it uses contractors and how it spends money on large, costly weapons programs.”
Terrance Heath contributed to the making of this Breakfast.