Climate Compromises Announced in House
Initially, the bill called for electricity producers to generate 25% of their power from renewable sources like wind and solar by 2025. That target has been lowered to 15% by 2020, with as much as 5% coming from improvements in energy efficiency.
The deal also makes more modest cuts in greenhouse gases. The draft unveiled in March called for a 20% reduction by 2020 in the emissions blamed for global warming. The version that will be unveiled later this week will call for a 17% reduction from 2005 levels by 2020. While that early pollution goal goes further than the president has called for, it still falls short of what other countries are calling on the United States to commit to by December, when a new international agreement to reduce global warming pollution will be negotiated in Copenhagen, Denmark.
Other details of the bill still need to be worked out, such as how the allowances to emit greenhouse gases will be distributed. Obama has called for a 100% auction and would use the billions in revenue to help fund renewable energy technologies and to offset higher energy prices for middle-class households. Waxman said Tuesday that the Democrats on the committee had agreed to give 35% of the allowances away for free to local electricity distribution companies to help ease costs. Allowances will also be doled out to auto manufacturers to help them develop cleaner cars.
Politico reports Waxman is confident, coal/oil Dems more restrained: “Chairman Rep. Henry Waxman, (D-Calif.) said he will release a bill on Thursday, with a mark-up planned for Monday. He expects to meet his self-imposed deadline and pass a bill out of committee by the Memorial Day recess. ‘I believe we will have the votes for passage of this bill next week,’ said Waxman. Still, several of the most demanding Democrats on the committee said things were far from finished. ‘I’m not prepared to characterize things at the moment as being resolved,”‘said Rep. Rich Boucher, (D-Va.). ‘Nothing is agreed until everything is agreed.’”
W, Post indicates enviro orgs supportive: “At the Natural Resources Defense Council, which has pressed for caps on emissions, Daniel Lashof said that the changes were acceptable.”
Treehugger: “Although some big chunks have been taken out, it’s still, well, better than nothing. But it’s starting to look a lot more like Europe’s ineffective first cap and trade go ’round in a number of ways…”
Grist’s David Roberts smokes out media reports falsely implying OMB opposed EPA ruling on climate.
The Hill: Democrats from oil- and gas-producing states are pushing back against the Obama administration’s plans to end tax breaks for U.S. energy companies. Democratic Sens. Mark Begich (Alaska) and Mary Landrieu (La.) have launched bipartisan talks with the administration to save the tax breaks, according to their offices.
Funding Health Care Reform
USA Today: Senate Democrats are taking a closer look at the idea of at least limiting the tax break. Senate Finance Chairman Max Baucus, D-Mont., said the exemption helps the well-off more than the poor, who are less likely to receive health care through work. “The current tax exclusion is not perfect,” Baucus said. “We should look at ways to modify the current tax exclusion so that it provides the right incentives.” Baucus said the idea of repealing the break entirely is “just not going to happen,” but said Congress could cap the amount of benefit made available tax-free. He also said lawmakers may set an income limit so the exemption would not apply to high-paid employees … Gerald Shea of the AFL-CIO said limiting the tax break is “a step in the wrong direction” because it could punish employees who negotiated for better health care coverage rather than higher wages. Also, some employees pay more for health care insurance because of factors outside of their control, including the size of their company, he said.”
NYT’s David Leonhardt argues: “You can imagine a bill that mixes together lots of different revenue sources, in typical sausage-making style. But it’s hard to get to $90 billion [a year] without changing the deduction for employer-provided health insurance.”
AP on the range of possibilities: “…the financing package for Obama’s plan is likely to include a mix of tax increases and spending cuts in federal health programs. Among the possibilities: tax increases on alcoholic beverages, tobacco products and sugary soft drinks, and restrictions on other health care-related tax breaks, such as flexible spending accounts. But some taxes don’t seem to be on the table, such as a federal sales levy to pay for health care or a new payroll tax.”
Time’s Karen Tumulty reports on wasteful healt care spending: “By some estimates, as much as $700 billion of the $2.3 trillion that we spend on medical care each year is on unnecessary treatment that is not doing anything to make us healthier — and could even be hurting us. Obama Administration budget director Peter Orszag notes that all sides now are starting to agree that four big changes are needed: 1) Health information technology … 2) Comparative effectiveness research to evaluate what works best and what doesn’t … 3) New financial incentives … More emphasis on prevention and wellness”
Change.org’s Tim Foley cautions: “It’s easy now to make political points saying you object to this or that – and Democrats have been far more guilty of taking financing options off the table than Republicans thus far – but it just makes everything that much harder. I totally understand the notion that talk of financing may be premature until we’ve determined the package of reforms – but suffice to say, taking options of the table is far more premature.”
TPMDC talks to CAF’s Roger Hickey about good and bad from WH-insurer health care event: “‘These guys are saying we’re making sacrifices [so] you don’t have to do a public insurance plan.’ But, he adds, if their goal was to take the public option off the table, they didn’t succeed. ‘They didn’t want to say that publicly with the President standing there because the President is still committed to the public insurance option. If that was the goal of their public relations effort, they failed.’”
Obama keeps pressure on insurers to follow through on savings pledge. CBS: “President Obama sent a letter to the industry groups who committed to reducing the growth of costs, putting some personal pressure on the organizations to follow through on their word. The letter asks the organizations to update the administration by early June on the progress they have made toward fulfilling their commitment.”
Bloggers Deliver Antitode to Media Hysteria Over Social Security & Medicare
OurFuture.org’s Bernie Horn: Let us be clear (and truthful): Social Security is not broken, and Medicare can only be fixed by comprehensive health care reform. The Trustees project that Social Security’s trust fund reserves will be exhausted in 2037. If absolutely nothing is done over the next 28 years, the program would then pay about 75 percent of scheduled benefits, rather than full benefits. There is no crisis requiring immediate action. Medicare, on the other hand, will exhaust its trust fund for hospital expenses by 2019 unless we work to get skyrocketing health care costs under control.”
CEPR: “as a result of the economic collapse there is even more uncertainty than usual around the long-term projections. This is a good reason to put off for the moment any plans to substantially alter the program.”
Mother Jones’ James Ridgeway: “…in terms of solvency, the giant government program is still running 28 years ahead of Citibank, Bank of America, and the other behemoth private financial institutions run by the high-paid geniuses of Wall Street (and much longer, if you count the years when the bubble was expanding). In addition, the Social Security trust fund is still in better shape than it was a decade ago…”
Angry Bear’s coberly: “The Big Story, according to The Media, is that ‘Social Security Will Run Out of Money Sooner Than Expected!’ But this is a completely insignificant fact …. The date the Trust Fund runs out has no practical meaning whatsoever. The Significant Fact is that the Trustees Say (on p 13) that we can pay for Social Security forever with a 3.4% increase in the payroll tax. That means that a 1.7% extra deduction from your paycheck will pay for you to live an average of 7 years (about 30%) Ionger than the people who retired in 1985, the last time the tax rate was set (page 89). And the best news is that you don’t have to take that tax hike all at once. You can take it at half of one tenth of one percent per year. That’s about 35 cents per week per year. And the raises stop in 2030 to give the Trust Fund a chance to run out of money like it was always supposed to. By 2030 you will be making about 25% more than you are today, so you will have lots more dollars left after paying the tax than you have now.”
Robert Reich: “Yes, I know, the post-war Baby Boom is moving through the population like a pig through a python. The number of retirees eligible for benefits will almost double to 79.5 million in 2045 from 40.5 million this year. But we knew that the Boomers were coming then, too. What we didn’t know then was the surge in immigration. Yet immigrants are mostly young. Rather than being a drain on Social Security when the Boomers need it, most immigrants will be contributing to the system during these years, which should take more of the pressure off.”
Reuters quotes Sen. Chuck Grassley spinning the trustees report to argue against public health plan option: “When we can’t afford the public health plan we have already, does it make sense to add more?”
New Health Dialogie’s Sarah Axeen: “While part of the shortfall in financing can be attributed to the recession—which provided lower-than-expected income tax receipts—the real problem is the ever-escalating cost of health care. Unless we can do something to reign in system-wide health care cost-growth, the continuing financing problems highlighted in this report will only worsen.”
What Else Was In Those Stress Tests?
Largely unnoticed in last week’s government report on the condition of the nation’s biggest banks was the disclosure that five of them, topped by Bank of America, could lose $99 billion from the kinds of exotic bets that sank the global economy. Even that figure, however, could prove to be exuberantly optimistic if the economy hits new depths, a McClatchy analysis has found.
Moreover, the regulators’ recent “stress tests” on bank holding companies didn’t fully measure the cash squeeze those institutions could face if souring conditions forced them to post tens of billions of dollars in additional collateral on some of their insurance-like bets, known as derivatives. The banks’ financial reports to regulators for the quarter ending March 31 also tell a potentially ominous story about their holdings of derivatives, instruments whose value is tied to an underlying asset, such as a pool of subprime mortgages. Seventeen of the 19 largest banks reported that, in the event of an economic catastrophe, they face combined derivatives losses exceeding $568 billion.
FT reports investors whining about transparency in toxic assets program: “Under changes made last week to the Senate version of mortgage foreclosure legislation, investors holding at least 10 per cent of a PPIP fund will have to be disclosed to the Treasury by the fund manager … One company [told FT that] would add to investors’ nervousness that they could be excoriated by politicians if they made large profits … ‘This amendment sends a clear message that we will not accept fraud or abuse of taxpayer money,’ said [Sen. Barbara Boxer…"
NYT on plans for broader exec pay rules: "Obama administration officials are contemplating a major overhaul of the compensation practices in the financial services industry, moving beyond banks to include more loosely regulated hedge funds and private equity firms … Among the ideas under consideration are incorporating compensation as a 'safety and soundness' concern on official bank examinations as well as expanding the existing regulatory powers of the Securities and Exchange Commission and Federal Reserve to obtain more information regarding compensation … Any overhaul is likely to be tied to the Obama administration’s broader efforts to curb systemic risks to the economy. That means the new rules could apply to financial firms like hedge funds or private equity firms that never accepted money from the Troubled Asset Relief Program…"
AP reports recession helping companies cut wages: "With nearly 14 million Americans unemployed, a growing number of people are competing for a dwindling number of job openings, allowing some employers to drive down pay and benefits for new hires."
Can We Go Home Again?
Time's Douglas McIntyre: "Foreclosures took a frightening jump up in April[, moving] up 32% over April of last year and hit 342,038 … The by-products of the news will challenge the government’s plan to help people stay in their homes through programs like mortgage payment modifications. The programs were meant to build a foundation under housing prices and keep worthy homeowners in their houses by reducing monthly payments. But, homes in foreclosure at not candidates for the assistance. People are also less likely to want to take advantage of programs that allow them to keep properties that are still falling in value because of a deteriorating housing market.”
…with an average of 660,000 US workers a month losing their jobs since November, unemployment threatens to slow President Barack Obama’s efforts to stem housing market losses. The problem has given the Making Home Affordable programmes new urgency.
The programmes are designed to expedite mortgage modifications by standardising the jumble of bank and agency efforts to streamline borrowers into new loan terms. They provide mortgage servicers, lenders and borrowers with incentives to begin the process, and cash for successful modifications. Last month the Obama administration expanded the scheme to include second mortgages, which have thus far hindered efforts to keep struggling borrowers in their homes and which few lenders have been willing to modify.
Programmes of this kind can take months to get off the ground and their success is still uncertain, but mortgage industry experts say they are a big step in the right direction. The challenge now is sorting out borrowers who will respond well to modifications from those who simply cannot afford their homes and should be foreclosed on. Private sector efforts are already under way to help
Does Saving GM Mean Saving Jobs?
Robert Borosage calls for conditions on GM rescue: “Saving good jobs in America can’t be done simply by rescuing GM or Chrysler. The Europeans get this. The Italians provided $1.7 billion in aid to Fiat, on the condition that the plants stay open in Italy. France loaned $8.5 billion to its big three automakers, but again with pledges to retain jobs in France … Demanding that taxpayer dollars go to save jobs here will be denounced as protectionist. But it is squandering billions in public moneys on companies that then move jobs abroad that will fuel a protectionist fury. ”
USA Today on pleas from auto dealers: “Car dealers from around the nation will be in Washington Wednesday to urge President Obama’s automotive task force to let the economics, not the government, decide which car dealers should shut down, and when. The task force has been pushing General Motors to trim its dealer ranks faster than the several years originally planned as part of its overall restructuring. Speeding up that process will only dump 180,000 more workers onto unemployment rolls in a recession, the dealer group argues.”
‘Unions Air First Ad Hitting Democrat Arlen Specter,” pressuring him to back EFCA, reports The Plum Line
NYT on states waiting for stimulus funds: “Some states and cities are beginning to complain that the money has yet to reach them. Others have been slow to get their paperwork to Washington … Obama administration officials, however, say the pace of the stimulus program is on schedule, and even if the federal checks are not yet in the mail the effects of the stimulus are beginning to reverberate: the promise of the federal money has been enough to get states to start construction work and to retain some jobs that were in jeopardy.”
Terrance Heath contributed to the making of this Breakfast