Simple Majority Vote For Health Care?
The Hill reports likely Senate support for simple majority vote on health care reform, including possibly Bayh: “Democrats appear to have the votes for a budget measure that would allow reform of the nation’s healthcare system with just 51 Senate votes. … ‘The fastest route to healthcare reform, the better,’ said Sen. Bob Casey Jr. (D-Pa.). ‘If that means supporting healthcare through reconciliation, I would.’ Sen. Jon Tester (D-Mont.) said that reconciliation rules, which would allow Democrats to bypass a Republican filibuster, should be used for healthcare if Republicans resort to obstructionist tactics … in perhaps a sign that the centrists will eventually go along with party leaders, Sen. Evan Bayh (D-Ind.) said that he isn’t opposed to the use of reconciliation for healthcare.”
CQ notes it remains unclear whether ending subsidies for private student lenders can also get a simple majority vote in the Senate: “…two powerful committee chairmen sharply differed in their assessment…”
AP covers Senate health care roundtable, highlights possible Medicare reforms: “Medicare should become the test lab for making the entire health care system less wasteful, experts told a receptive Senate Finance Committee. Savings could be used to strengthen Medicare itself, or plowed into covering the uninsured … The new approach for seniors would stress close follow-up care by their family doctors and nurses. That’s aimed at keeping chronically ill patients from having to be hospitalized repeatedly … Primary care doctors, the generalists who care for patients day in and day out, would be paid more. Specialists, who tend to order more tests and procedures, would face closer scrutiny of their decisions. Hospitals could be penalized if patients don’t get adequate follow-up care and wind up being repeatedly readmitted for the same problems.”
The Treatment’s Jonathan Cohn reports on “A New Twist on the Public Plan:” “… the government could run a public plan, in a manner similar to the way it runs Medicare, but without paying the exact same rates that Medicare does. As it happens, Princeton economist Uwe Reinhardt floated just such an idea last weekend … the government could promise that the new public plan would pay better than Medicare–say, by 10 or 15 percent on average. That should ease the concerns of insurers, providers, and other groups worried that a public plan wouldn’t pay sufficiently high rates. But in exchange for the higher payments, industry groups–particularly doctors and hospitals–would have to stop resisting changes in the way government pays for medical services … Curious to hear more about it? Watch today’s testimony on health reform before the House Ways and Means Committee. Reinhardt will be testifying.”
Geithner Soothes Markets, Worries Economists
“Treasury Secretary Timothy Geithner indicated that stress tests will show most of the 19 biggest U.S. banks have enough capital and said those needing more may convert government preference shares into common stock as well as seek investments from private sources,” reports Bloomberg.
Krugman responds: “There are 1,722 institutions on the Fed’s list of ‘large commercial banks’. And I have no doubt that most of these banks — indeed, the vast majority — are in fine shape. That’s because they’re regional institutions that never got into the risky games played by the big guys. But the big guys are where the money is … it’s perfectly possible that the ‘vast majority’ of US banks are well-capitalized, but that banks with, say, a third of the system’s assets are insolvent … Treasury knows the difference between raw numbers of banks and asset holdings, even if the press seemed to miss the distinction, and if he’d meant to say that the vast majority of assets are held by sound banks, he would have.”
Brad DeLong concurs: “The failure to assure us that the vast majority of bank assets are in well-capitalized institutions seemed to me to speak volumes. Nobody ever thought that the vast majority of banks are not well capitalized–it’s the highly leveraged New York high flyers.”
“The Obama administration has indicated for the first time that it will let some big banks repay their bailout cash early, estimating that at least $25 billion will come back to the government in the next year,” reports LA Times.
Geithner Hints at High Bar In Letting Banks Repay Aid, headlines W. Post.
Geithner against exec pay limits in toxic assets program. CQ: “An unanswered question with the investment program — designed to remove toxic assets such as mortgage-backed securities from banks’ ledgers — is whether participants will be subject to strict executive compensation limits. Treasury is writing a draft rule that would clarify restrictions on the program. The rule will be published for comment ‘hopefully in the next couple of weeks,’ Geithner said. But, he added, ‘it’s my judgment that those compensation restrictions do not need to apply to” the investment program.’”
AP scoop on stress test bias: “The government’s ‘stress tests’ of 19 large banks take a harsher view of loans than of other troubled assets, according to a Federal Reserve document obtained by the Associated Press. That approach favors a few Wall Street banks while potentially threatening major regional players. Regulators will use the tests to determine which banks are healthy, which need more capital and which might fail if the recession worsened.” Naked Capitalism reacts: “the broad outlines confirm yet again that crony capitalism trumps taking the best course of action for the financial system.”
“Regulators will begin briefing banks Friday about how they fared in government-performed ‘stress tests,’ giving lenders an opportunity to debate the findings before they’re made public a week later, according to government officials. The discussions will signal to some banks whether they’ll need to seek additional capital, either from private investors or the Treasury Department,” reports WSJ
WSJ on bank lobbying to lower cost of TARP payback: “At issue are ‘warrants’ the government received when it bought preferred stock in roughly 500 banks over the past six months as part of TARP. The warrants allow the government to buy common stock in the banks at a later date so taxpayers can receive more of a return on their investment when the banking industry recovers. Many banks want to return their TARP money and, as part of that effort, want to expunge the warrants. To do that, banks must either buy them back from the government or allow the Treasury to sell them to private investors. Today, most of the warrants are essentially worthless, because their exercise price is higher than where most banks’ stocks are trading. But the government believes the warrants still have value, since they give the Treasury the right to buy common stock at a set price for 10 years.”
Mortgage and Credit Card Reforms Face Corporate Resistance
NYT spotlights bank lobby influence on mortgage and credit card reform: “The banks have made it difficult for Congressional Democrats and the White House to give stretched homeowners a stronger hand in negotiating lower monthly payments on mortgages and to prevent credit card companies from imposing higher fees and interest rates. Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting — both pro-consumer measures. To turn the tide, Democrats are calling in their big gun — President Obama — to pressure the executives at the largest credit card lenders. In coming weeks, officials say, the administration intends to make a major push on consumer finance issues, possibly including tough new lending standards for homeowners seeking mortgages.”
Geithner on mortgage reform. Politico: “‘We are supportive of carefully designed changes’ to bankruptcy law, Geithner said, in response to a question from Elizabeth Warren … ‘It’s a difficult balance to get right, as you know,’ he continued. ‘But the president is supportive of this.’”
CQ on House credit card bill: “Amid growing political pressure on the credit card industry to ease terms for consumers, the House Financial Services Committee will mark up a bill Wednesday that would set new limits on when card companies can raise interest rates and assess finance charges and fees. Chairman Barney Frank said President Obama, who plans to meet with industry executives this week, has expressed his support for the bill (HR 627) and suggested some amendments that Frank plans to add on the floor next week … The Massachusetts Democrat said the president’s support would help a credit card bill get through the Senate.”
Taxpayer subsidized companies can still pay for lobbyists. W. Post: “Top recipients of federal bailout money spent more than $10 million on political lobbying in the first three months of this year, including aggressive efforts aimed at blocking executive pay limits and tougher financial regulations, according to newly filed disclosure records. The biggest spenders among major firms in the group included General Motors, which spent nearly $1 million a month on lobbying, and Citigroup and J.P. Morgan Chase, which together spent more than $2.5 million… major bailout recipients have spent more than $22 million on lobbying in the six months since the government began doling out rescue funds…”
New Carbon Cap Cost Estimates from EPA
EPA releases new cost estimates for carbon cap. CQ Politics: “The EPA also said the bill’s average annual cost per household would be between $98 and $140, leading proponents to say the bill would have a relatively modest impact. ‘When you combine this analysis with cost-saving measures from updated energy efficiency measures and weatherization, the savings will pile up for consumers,’ [Rep. Ed] Markey said in a statement. However, the EPA assumed the government will auction the allowances and return most of the revenue to consumers. President Obama favored that approach in his budget proposal, but the bill leaves the issue unresolved.”
Wonk Room on comprehensive cost analysis from Union of Concerned Scientists: “Waxman-Markey Clean Energy Act Can Cut Pollution, Create $465 Billion In Wealth A Year … UCS analyzed the economic, emissions, and energy effects of their recommendations for clean energy, clean vehicles, and global warming standards. The UCS approach … is similar to that in the American Clean Energy Security Act, released … by Reps. Henry Waxman (D-CA) and Edward Markey (D-MA). The analysis finds that by 2030, net household savings will reach $900 a year, while oil use drops 6 million barrels a day and global warming pollution is cut in half”
Grist’s Kate Sheppard reports from House energy & climate hearings: “Tuesday’s hearing, at which committee members offered opening statements, was the equivalent of the ceremonial opening pitch at a baseball game—all show, no impact. But it indicated that getting the committee to sign off on the bill will be far from easy. The real action starts on Wednesday, when EPA administrator Lisa Jackson, Energy Secretary Steven Chu, and Transportation Secretary Ray LaHood will kick off a parade of high-profile witnesses. Testimony from Al Gore, other environmental leaders, and a passel of corporate bigwigs will follow throughout the week. Some Republicans on the committee appear willing to participate in shaping the bill rather just demanding that it be scrapped. At the same time, a number of committee Democrats are none too excited about the legislation.”
“Speaker Nancy Pelosi promised again Tuesday the House would pass a climate-change bill by the end of this year, despite the entrenched reservations of moderate Democrats,” reports Politico.
CQ Politics on Senate status: “On the Senate side, Majority Leader Harry Reid , D-Nev., said he would wait for the House to take the lead. But Reid said the Senate would probably develop its own climate bill in addition to looking at the House’s version. Some Senate Democrats have suggested that the move would allow the Senate to pass an energy bill without a greenhouse gas emissions cap, then adopt the provisions in conference.”
“Senator Reid Signals that Climate Bill May Take Two Years, observes Enviroknow. “Here’s why that should be good news,” says Climate Progress’ Joe Romm.
Some Democrats looking to weaken targets. Bloomberg: “Several Democrats, including John Dingell of Michigan, raised concern that provisions in the draft would require the U.S. to generate 25 percent of electricity from renewable sources by 2025. He called that target ‘aggressive,’ and said it ‘might be more than states can handle.’”
“The Interior Department will announce new rules today that clear the way for the first offshore wind turbines to be erected along the Atlantic Coast. The rules will set long-awaited guidelines for offshore leases, easements and royalty payments that the Bush administration worked on for years but did not complete … At least two projects appear set to go — a development by Massachusetts-based Cape Wind Associates and one by Deepwater Wind, in Rhode Island. Other projects in New Jersey, Delaware and New York are close behind,” reports LA Times.
China complaining about possible carbon tariff in House bill. FT: “A top adviser to the Chinese government on Tuesday warned that a proposed US border tax on carbon sensitive materials ‘smells of protectionism’ and could spark retaliation from developing countries … In March, Steven Chu, US energy secretary, told Congress that a carbon border tax would help ‘level the playing field’ with countries with looser carbon standards.”
Miami Herald looks at household savings from city smart grid project: “When Kevin Linn of Coral Springs received a special power meter last October, he was able to check his usage day by day and hour by hour via the Internet. He found spikes in midday when no one was home … He adjusted the water heater to operate only from 5 to 7 a.m. and 8 to 10 p.m., the times his family of four needed hot water. He swapped the pool pump for a more efficient model. So far, FPL records show that he’s saving about $13 a month, but Linn reports, ‘My bills are $100 a month less than my neighbors’. Linn’s experience may be what awaits residents of Miami-Dade County, all of whom are expected to get smart meters in the next two years as part of an ambitious project by Florida Power & Light to create what Miami Mayor Manny Diaz has called ‘the first truly smart-grid city in the nation.’”
Time also covers the Miami smart grid, and notes stimulus role: “…the Energy Smart Initiative might never have gotten off the ground without a lot of help from Washington. Half the $200 million price tag of the first phase of the project will be coming from federal stimulus spending, and there’s more to come. Along with the $3.3 billion in grant money set aside by the Department of Energy for smart grid tech, another $615 million is set to be spent on projects for energy storage and monitoring.”
Sacramento Bee on expected low-carbon fuel standard in CA: “This week, the California Air Resources Board is set to adopt a … low-carbon fuel standard … to cut the carbon footprint of the state’s motor fuels 10 percent by 2020. It will influence what powers your car – from hydrogen to electricity to biofuels – for decades to come. It’s likely to drive federal policies. And it will guide billions of dollars of investment in alternatives to petroleum. But the plan doesn’t encourage much of a long-term role for corn-based ethanol, currently the most widely used alternative fuel. A key provision makes ethanol accountable for a ripple of potential impacts around the world, such as deforestation in the Amazon. That makes ethanol’s carbon footprint larger, and its attractiveness to investors lower.”
Billions Stashed in Offshore Tax Havens
The Obama administration’s nascent proposals to tax offshore profits may have a sizable impact on the likes of Pfizer Inc., Cisco Systems Inc., Coca-Cola Co. and Hewlett-Packard Co., which shelter tens of billions in income offshore annually … Just 10 of the largest companies accumulated nearly $58 billion in such earnings during 2008, representing about $20 billion in potential tax revenue. Total U.S. corporate tax receipts last year were around $304 billion…
…A full repeal of the deferral rules is considered unlikely. One potential blueprint is the proposal made by Rep. Charles Rangel (D., N.Y.), chairman of the tax-writing House Ways and Means Committee, in a tax overhaul bill introduced in 2007 that would disallow certain deductions. Currently, companies can get deductions in the U.S., even though the spending may generate overseas income on which they never pay U.S. taxes.
The lack of detail in the Obama proposal has opened up a new debate on what the tax reform should look like. Critics abound on both sides: Some argue that the laws encourage companies to manipulate their books to aggressively shift taxable income to low-tax countries overseas, such as Ireland and Singapore. Some corporate tax directors say the rules unfairly “trap” cash overseas, forcing companies to borrow domestically to get cash and propose that the U.S. only tax earnings generated within the U.S.
The Obama administration … is now tossing a few morsels of hope to free-trade advocates … indicators that the White House is ready to move forward on stalled trade pacts with Panama and Colombia, despite the strong objections by some congressional Democrats…
…Lori Wallach, director of Public Citizen’s Global Trade Watch, warns Obama risks repeating former President Bill Clinton’s mistake in pushing the North American Free Trade Agreement early in his tenure at the White House.
“Let’s put it this way: The last time a new Democratic president took on a Bush trade agreement despised by his base, the result was the destruction of the political momentum and honeymoon he needed to pass health care reform and the defeat of the Democratic majority in the next midterm election,” Wallach said, referring to NAFTA.
Obama’s actions and statements on the Panama and Colombia pacts could be nothing more than prudent diplomacy, she suggested. With both countries eager to finalize deals, Obama needs to look as if he’s responding to their requests — but that doesn’t mean he actually has to send the deals to Congress.
The Hill: “Trade critics on Capitol Hill are complaining about comments by Ron Kirk, Obama’s trade representative, who on Monday said Obama does not want to renegotiate the North American Free Trade Agreement (NAFTA) after all. ‘I’m disappointed,’ Sen. Sherrod Brown (D-Ohio) said of Kirk’s comments. ‘The president needs to understand there is strong opposition to more-of-the-same trade deals.’ Freshman Sen. Kay Hagan (D-N.C.) also expressed disappointment.”
Jonathan Tasini: “The reason being given is dumb and, frankly, disingenuous: that in the current economic environment, renegotiating NAFTA would discourage trade. That’s nonsense. … trade levels today are being effected by the larger collapse of consumer spending and debt levels–neither of which is going to be improved by not renegotating NAFTA or hurt by renegotiating NAFTA. Indeed, you can argue, as I have, that so-called ‘Free trade’ has depressed wage levels–which means people have less money to spend–and that improving labor provisions will raise wages and, in turn, help peoples’ pocketbooks.”
Manufacture This on trade deficit with China: “The $266 billion that China racked up last year from its subsidized trade surplus with the U.S. affords Beijing plenty of opportunities. And one of them is an expansion of China’s submarine fleet…”
Game of Chicken With Chrysler
“The latest debt reduction offer by Chrysler LLC’s lenders is unacceptable because it would yield the lenders an unjustified return, an Obama administration official said Tuesday,” reports Reuters.
“General Motors Corp., trying to avoid a U.S.-backed bankruptcy on June 1, may close plants and scrap models as much as four years sooner than planned to lower its break-even point … allowing earlier plant and job reductions, people briefed on the talks said. GM said March 31 that by 2014 it would trim 6,122 dealers to 4,100 and 43 nameplates to 36, cutting U.S. assembly capacity from 2.8 million cars and trucks to 2 million,” report Bloomberg.
W. Post Steven Pearlstein maps out his expectation: “Given the amount of money it is likely to put into the automakers, the government will be entitled to more than half of the stock of the reorganized companies. Then there is the union’s health fund, which will probably be entitled to stakes of 20 to 25 percent, reflecting not only the reduced cash payments it will receive but also all the other concessions made by active and retired workers. At Chrysler, there’s also the matter of Fiat’s contribution of technology and management services, which it offered for a 20 percent share. That leaves only about 10 to 15 percent of each company. Bankers and bondholders will kick and scream and call it unfair, but in the end they’ll take it because, like everyone else in this adventure, they’ll conclude that it’s better than the alternative. And that’s the way GM and Chrysler will be saved.”
“Tell President Obama: Stand Up For Auto Workers,” urges Change To Win.
Terrance Heath contributed to the making of this Breakfast.