House, Senate Budgets Leave Key Details For Later
The Hill on how Congress is trying to save fights over health care and climate for later: “Though the budget plans put forth by Obama, Spratt and Senate Budget Committee Chairman Kent Conrad (D-N.D.) are largely similar, the congressional versions include less details. For instance, while Spratt and Conrad have called for new reserve funds for healthcare and energy independence, they have left the drafting of specific legislation to the relevant committees. Obama has said he would pay for most of the healthcare fund through new taxes on the wealthy and for the clean energy initiatives through new cap-and-trade, carbon emissions system.”
Grist’s Kate Sheppard also reports: “The legislators did, however, include placeholder language that will allow them to create a ‘reserve fund’ that can be used for clean energy development, and left their options open for a separate cap-and-trade bill down the line.”
The Hill on timing, following last night’s House budget cmte approval: “The Senate Budget Committee will mark up Conrad’s budget Thursday. Both chambers are expected to take up the budget resolutions next week. ”
WH budget director Peter Orszag downplays lack of detail, during press conference:
ORSZAG: With regard to health care, exactly as under our budget submission, both the House and Senate include deficit-neutral reserve funds to kick-start the health reform process…
…With regard to energy, again, exactly as under the President’s budget. We had a deficit-neutral reserve fund, and both the House and Senate marks also have a deficit-neutral reserve fund for clean energy….
… under both our budget proposal and under the deficit-neutral health reserve fund in the House and Senate mark, what will now happen is the committees are now tasked with reporting out health reform legislation that nets to zero, just as under our budget.
Now, it is true that the level of specificity in our budget proposal it was — you know, was greater, or there was more specificity about what could go into that reserve fund and in the budget resolution. But that’s natural. That’s what sort of happens at a — during a budget resolution. A budget resolution is not legislation and it’s typically written at a higher level of aggregation and with less granularity than the President’s budget submission is…
…With regard to climate change, there’s already legislation that is being considered on the House side. The Senate is also active. The fact that it’s not treated in the budget resolution the same way that we proposed in no way means that the House and Senate can’t take the legislation up. And in fact, I think some may argue that the political economy of getting climate change done this year may actually be better outside of the — outside of the budget resolution than inside of it.
Each of the two houses’ plans envisions substantial increases in core non-defense domestic programs over the Bush administration’s final year — $35 billion in the case of the Senate and $42 billion for the House — although both are smaller jumps than the administration’s figure of almost $50 billion. Those differences are relatively modest in the context of spending more than $500 billion on the programs involved.
Both House and Senate are embracing Obama’s core defense budget, granting a 3.8% increase and endorsing his assumption of $50 billion annually for wars in Iraq and Afghanistan, a figure many believe is too low as the war in Afghanistan continues to escalate. But defense spending slows further in subsequent years, which is sure to put pressure on acquisition of weapons systems.
On taxes, the Democrats followed Obama’s lead in agreeing to extend many of the Bush-era tax cuts that were enacted in 2001 and 2003. An exception was made in the case of cuts that applied to upper-income wage earners.
Much of the savings for next year would come by jettisoning Obama’s plan to spend more on the Treasury Department’s financial-sector bailout, a move that would reduce the deficit but would not prevent the president from seeking the cash. Spratt also rejected Obama’s proposal to extend a tax break for businesses that lose money. And he trimmed $7 billion from a funding request for other government agencies, with the bulk of the reduction targeting international programs.
The House proposal would make bigger changes in future years, slicing another $60 billion from Obama’s request for non-defense programs and rejecting the president’s proposal to permanently exempt millions of middle-class families from the expensive alternative minimum tax. Like the Senate, the House also scrapped Obama’s plan to extend an $800 tax cut for working families that was temporarily enacted in the economic stimulus package…
…One key difference between the House and Senate blueprints is a decision by House leaders to include a procedural shortcut to help pass Obama’s health-care initiative, as well as his plan to expand federal aid for college students. The maneuver, known as reconciliation, would allow the Senate to approve those measures with 51 votes instead of the usual 60, meaning Democrats could pass them without any GOP votes.
House leaders say they do not plan to use the maneuver for Obama’s climate-change initiative — a contentious proposal, known as cap and trade, to force industries that emit greenhouse gases to purchase permits to pollute– though the House blueprint leaves open that possibility.
Crooks and Liars posts MSNBC “Hypocrisy Watch” segment, busting obstructionist conservatives for previously using budget reconciliation to pass policy reforms.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) and House Appropriations Chairman David Obey (D-Wis.) are opposed to provisions in Obama’s budget plan that would remove private banks from the federal student loan program and transfer the expected savings — $94 billion over a decade, according to the CBO— to a new program that would instead guarantee Pell Grant funding for eligible students.
Lobbyists tracking the debate said Conrad and Obey’s objections center largely on Obama’s proposal to take the popular Pell Grant program out of the annual appropriations process – with all the political horse-trading that implies — and instead guarantee that the program will be paid for based on a set formula…
…the CBO’s scoring of Obama’s budget may ultimately give the White House the upper hand in the battle with Conrad and Obey. … Its estimate that Obama’s proposal removing banks from the federal student loan system would save $94 billion over 10 years was roughly double the $47.5 billion that the president’s team projected. Those savings, if they can be achieved, would effectively come out of the pockets of banks that currently are administering and making the loan…
…Conrad is under some pressure from his home state to preserve a role for banks in the federally backed student loan program … At least one Democrat, Sen. Blanche Lincoln (D-Ark.), is already on the record opposing Obama’s plan, saying 98 percent of federally-backed student loans in Arkansas are initiated through the private sector.
The Hill earlier reported opposition to Obama’s student loan plan by Sen Ben Nelson and Rep. Paul Kanjorski.
W. Post reports defense lobbyists scrambling to resist cuts.
WSJ on fight to fairly tax Big Oil: “The Obama administration’s push to raise taxes on the oil industry is reigniting a battle the industry fought and won last year. Under pressure to narrow projected deficits, President Barack Obama’s 2010 budget proposal calls for raising more than $31 billion over the next decade by eliminating the oil and gas industry’s eligibility for various tax breaks … Speaking to the American Petroleum Institute this month, Interior Secretary Ken Salazar cited a recent report by the Government Accountability Office that said the U.S. receives a low share of revenue for oil and gas resources compared with other countries. In an interview Wednesday, Mr. Salazar signaled that the administration might reconsider some proposed tax increases on small, independent producers … In general, he added, ‘the oil and gas companies have all the incentives they need’ for exploration and output.”
Politico reports right-leaning Dems upset at efforts to pressure them to support President’s budget priorities. Bayh pleads dumb: “’We literally have no agenda,’ Bayh shot back. ‘How can they be threatened by a group that has taken no policy positions?’”
CNN reports DNC running ads in support of the President’s budget
Deficit Excuses Debunked
OurFuture.org’s Robert Borosage rips suddenly deficit-conscious conservatives: “Now as the economy verges on a depression, Republicans are indicting Obama for raising spending and deficits. This is like a gambling addict squandering the family fortune in a Las Vegas blowout and then scolding his wife for borrowing money to keep the kids in college”
TPMCafe’s Dean Baker chastises economically illiterate media: “To put the point so simply that even a Washington Post editor can understand it: because the media highlighted the views of the people who were ranting about the deficit rather than the views of people who understood the economy, we both got a wrecked economy and larger deficits. The moral to this story is that the economy must take priority, not only because the state of the economy is what most directly determines people’s well-being, but also because the state of the economy will be the most important determinant of the deficit.”
HuffPost reports Sen. Snowe sees the stimulus already working: “‘Even those who were opposed to the stimulus spending will see some of the projects that are underway in their communities as they’re initiated,’ she added. ‘I’ve just been meeting with a lot of municipal officials and really it is amazing the number of projects that are getting under way.’”
Where Does Health Care Go From Here?
MyDD: Reid Open To Health Care Fast-Track? Sen. Maj. Leader expresses willingness to use budget reconciliation process.
Wonk Room’s Igor Volsky frets over placeholder strategy: “Ezra Klein and Jonathan Cohn are reporting that some Democrats are interpreting Conrad’s decision as an opportunity for Congress to exert more control over the process and finance health reform sooner … But the senator’s decision to place a big undefined X on the face of the health care reserve fund also burdens Congressional reformers … Conrad is rolling the die: theoretically, Congress could now spend more than $634 billion on health care — provided that it can pay for all of it — but it could also end up spending less, a lot less.”
Howard Dean Gets Behind Public Insurance Plan Option
Democracy For America launches “Stand With Dr. Dean” petition: “We support healthcare reform that allows individual Americans to choose either a universally available public healthcare option like Medicare or for-profit private insurance. A public option is the only way to guarantee healthcare for all Americans and its inclusion is non- negotiable.”
ePluribus Media’s Connecticut Man1 urges single-payer backers to get behind Dean: “I may be a strong single payer advocate but I am no fool. There is a line in the sand that can not be crossed in this fight. If there is no public option – and not some junk insurance that is on par with most private policies, but a decent public option that covers everything a Doctor thinks should be covered – then it will not be health reform at all. Just more of the same.”
Blue Mass Group’s Charley on the MTA mocks insurance lobby: “Isn’t the health insurance industry basically making our own case for us when they say stuff like this? … I mean, you don’t even need to do a lobbyist-to-honest-English translation. They’re saying straight-up — We can’t deliver as good a product as the government. Save us!”
Newshoggers’ Ron Beasley on insurance lobby’s attempted concession to stop discriminating against the sick: “The insurance companies know that the American people are not happy. They also know that unless a superficial patch is put into place now, that includes private insurance, in two, three or maybe four years there will be a single payer system that will not include them. That is the only reason we are seeing some flexibility from the insurance industry now. Those 100 million dollar a year salaries are threatened along with the future of the Republican party. For the insurance company executives this has nothing to do with being better citizens but everything to do with survival. ”
Economy Nearing Bottom?
W. Post on glimmers of turnaround: “What gives some economists hope is a recent string of not-so-bad news that suggests, at least for now, that the recession is not getting worse. Retail sales, for instance, have held steady recently. And there are signs that the housing market is stabilizing … Forecasters, for their part, stress that even after the worst is over, the economy will be fragile for some time. Recovery is expected to be weak, especially in the housing market, because there’s so much excess inventory. Consumers are still deeply in debt, unemployment is still on the rise, and countries around the world remain mired in recession, crippling demand for U.S. goods.”
Geithner To Announce New Market Rules
Treasury Secretary Timothy Geithner was scheduled to outline the proposals in testimony Thursday before the House Financial Services Committee…
…The program the administration was presenting to Congress will also include a recommendation for creation of a systemic risk regulator, possibly at the Federal Reserve, to monitor risks to the entire system.
…The administration, pushing Congress to act quickly on its reform agenda, sent Congress a 61-page bill dealing with the expanded powers to seize control of nonbank institutions late Wednesday. The House Financial Services Committee, chaired by Rep. Barney Frank, D-Mass., has indicated it could move on the measure as early as next week.
However, it was unclear how fast the rest of the financial reform agenda might move through Congress. Geithner was providing only a broad outline of the other proposals, with many thorny details remaining to be worked out.,,
…The administration is proposing that hedge funds and other private pools of capital, including private equity funds and venture capital funds, be required to register with the SEC if their assets exceed a certain size. The threshold amount has yet to be determined, officials said.
The proposal on credit default swaps and other derivatives would require the markets on which they are traded to be regulated for the first time, and for the buying and selling of these instruments to be conducted in ways that will foster greater oversight.
NYT predicts: “…the proposals are all but certain to provoke criticism from all sides — traders who say the rules are too intrusive and policy experts who say the approach is too vague.”
Rep. Barney Frank (D-Mass.), who has spearheaded the effort to give the Fed formal authority over the largest banks, investment firms, insurance companies and other entities that pose a systemic risk by this spring, now intends to move on that action in summer.
His counterparts in the Senate, however, appear more reluctant. “Whether or not those vast powers will reside at the Fed remains an open question,” Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) said at a hearing last week, particularly given the Fed’s “increasing number of responsibilities and the obvious mistakes the Fed made in the run-up to the current crisis.”
This week, Dodd seemed open to giving that authority to some sort of council of financial regulators, rather than entrusting it entirely with the Fed. He has been particularly critical of what he views as the Fed’s failure to protect consumers in the years before the crisis.
Toxic Asset Plan Being Gamed?
Naked Capitalism: “It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership.” Seeing The Forest adds: “So it’s Wednesday and the program is already corrupted.”
TARP Payback Update
Charlotte Observer reports banks are itching to pay back TARP funds: “Banks are publicly declaring their intent to pay back loans from the Troubled Asset Relief Program, or TARP, as quickly as they can … The banks complain about the rules that the U.S. Treasury keeps imposing on them retroactively, sometimes in ways that seem arbitrary or driven by constituents’ anger. [BUT] Analysts at Goldman Sachs Group Inc. predicted this month that only a few banks will be able to pay back TARP this year. That’s because doing so will hurt capital levels – which regulators are keeping close tabs on.”
Anonymous Liberal on the AIG exec resignation letter: “…when companies fail, lots of innocent people get screwed. Lots of promises aren’t kept. That’s why companies declare bankruptcy: because they can’t afford to live up to their promises. Had the government allowed AIG to fail last fall, DeSantis wouldn’t have received anything. He’d be like many other people who woke up one morning to find their lives turned upside down by this recession. On second thought, given that Mr. DeSantis can apparently afford to give his entire $750,000 bonus to charity, I suspect he’d be much better off than most people who have suffered through the failure of their employer. [Further,] It’s striking to me that the very same people who are outraged by DeSantis’s treatment showed no sympathy at all for the nation’s autoworkers.”
Auto Rescue Plan Soon
WSJ updates on Obama’s auto task force: “Within days, just over a month after setting to work, they’ll begin announcing decisions. Interviews with task-force members indicate that the administration doesn’t want to let General Motors Corp. and Chrysler LLC slip into bankruptcy protection … Instead, the task force is expected to say that it sees viable futures for both GM and Chrysler, but only if there are sacrifices from their managements, unions and GM’s bondholders. The team will also lay out a firm timeline for action. The government is prepared to lend the companies more money. The two companies have requested $22 billion more — including $9 billion for the second quarter. But the task force may not disburse new aid immediately, choosing instead to preserve that as leverage.”
Bloomberg: Citigroup May Manage Distribution of U.S. Aid to Auto Suppliers
Politico reports Senators pushing compromise following Sen. Specter’s flip-flop: “On Wednesday, Specter warned business that the fight was far from over. ‘I put a little caveat in my floor statement: Card check is going to come back. It’ll be reconsidered,’ he said. ‘And we may be, America may be looking at a Senate which has 60 or more Democrats, and I think that behooves Republicans and the business community to try to resolve this.’”
AFL-CIO continues campaign: “Grassroots Support for the Employee Free Choice Act Grows”
Private pension system weakens. USA Today: “The battle for a secure retirement is about to get even tougher. Several new surveys of company executives show that they plan to reduce or suspend their company’s retirement-plan contributions this year.”
LA Times on new wilderness protections: “Congress on Wednesday approved the largest expansion of the wilderness system in 15 years, bestowing the highest level of federal protection on 2 million acres in nine states and launching one of the most ambitious river restoration efforts in the West. The bill, the first major conservation measure set to be signed by President Obama, would designate as wilderness almost as much land as was set aside during George W. Bush’s entire presidency.”
OpenLeft’s David Sirota: “Populist Caucus Organizes Around Trade and Globalization”
Terrance Heath contributed to the making of this Breakfast.