Each morning, Bill Scher and Terrance Heath serve up what progressives need to affect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
China Currency Debate Not Done
Geithner adds Thursday visit with Chinese Vice Premier to foreign trip itinerary. NYT: “Economists said they did not expect Mr. Geithner’s visit to Beijing to produce any immediate breakthroughs on currency policy … [Economist Stephen] Green said that there was virtually no chance that China would announce a move during or immediately after the Treasury secretary’s visit. ‘The game plan is to move gradually to more flexibility in the second quarter,’ he said.”
Geithner looks to G-20 to apply multilateral pressure. Bloomberg: “Seven months after the G-20 replaced the G-7 as the steering committee to rebalance the world economy, Geithner is calling such bodies ‘the best avenue for advancing U.S. interests’ on China’s currency. G-20 finance chiefs meet in Washington in two weeks.”
Geithner praises India to enlist support for pressuring China. FT: “Washington’s praise for India’s ‘steady hand’ in the global financial crisis and an economy with domestic demand as its motor is in marked contrast to concerns in the US Congress about China lowering the value of the renminbi to maintain its export-led economic model … ‘I am confident that China will decide it’s in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the [financial]crisis,’ Mr Geithner told NDTV, an Indian television network.”
Congressional Dems prepare to act on Chinese currency if Obama administration doesn’t. Politico: “Several Senate Democrats told POLITICO they believed they had the support to pass some kind of measure to pressure Obama on China if the administration doesn’t make some kind of move soon. ‘If Obama doesn’t act, we will be forced to act,’ said an aide to a senior Senate Democrat. ‘There’s simply too much pressure and unhappiness over this in the country.’ … ‘It’s a bipartisan issue and there aren’t that many of them left,’ said AFL-CIO deputy chief of staff Thea Lee.”
FT’s Martin Wolf challenges top Wall Streeters who deny Chinese currency manipulation: “…Stephen Roach of Morgan Stanley has argued that differences in savings behaviour determine current account balances and the Chinese surplus cannot determine the US overall deficit. I find neither argument persuasive. If the Chinese currency influences the dollar exchange rates of China’s competitors, as it surely does, it will definitely affect multilateral balances.”
NYT’s Paul Krugman similarly challenges Joe Stiglitz: “…what really gets me is that Joe is thinking of savings as an independent determinant of the trade balance. I tried to clear this up 23 years ago; here we go again. Imagine that US savings rise and China’s savings fall, holding the exchange rate constant. Does this painlessly reduce the US trade deficit? No, it doesn’t.” (via Economist’s View)
Coburn Threatens To Block All Future Jobs Bills
Campaign for America’s Future launches grassroots effort to pass Local Jobs For America Act providing aid to states and cities to create or save one million jobs.
Sen. Tom Coburn threatens to filibuster every bill that effectively invests in creating jobs and alleviating unemployment. The Hill: “Sen. Tom Coburn (R-Okla.) on Tuesday vowed to block all future spending bills in the Senate that aren’t fully ‘paid for’ with cuts to other spending programs … ‘It’s pretty clear what they’re doing here is following the lead of Sen. Bunning,’ said a senior Democratic aide. ‘And they were perfectly happy to vote for the Bush tax cuts that were unfunded.’”
“44 Percent Of Unemployed Americans Have Been Jobless For Six Months Or Longer”, notes Wonk Room’s Pat Garofalo.
Unemployment higher for Iraq & Afghan war vets. USA Today: “Unemployment for male Iraq and Afghanistan war veterans has tripled since the recession began, rising from 5% in March 2007 to 15% last month, Labor Department statistics show … The high unemployment is forcing servicemembers to make difficult choices, [Veterans of Foreign Wars' Joe] Davis says. ‘People are making decisions: “Do I get out now and go into the unemployment line or do I stay and be subject to another deployment?”‘”
Democrats prepare to end Bush tax cuts for the wealthiest. USA Today: “When Congress takes up Obama’s proposed $3.8 trillion budget this year … Tax cuts for individuals with income above $200,000 and couples above $250,000 would be eliminated. The effective tax increase on the upper income would yield about $41 billion next year and $969 billion over the next decade, according to the Treasury Department … One group representing more than 700 wealthy Americans pledged to donate members’ 2010 tax cuts while lobbying for the cuts to be eliminated next year … Andrew Roth of the anti-tax Club for Growth said … Obama and Democrats probably will win the legislative battle this year, he said, but ‘we’re going to make it tough on them politically.’”
Citi Faces Crisis Commission, Goldman Denies Double-Dealing
Greenspan, Citi officials testify today to Financial Crisis Inquiry Commission.
Goldman Sachs denies betting against clients. McClatchy: “Goldman Sachs’ top officers denied in a letter to shareholders made public Wednesday that the company bet against investors who bought its subprime mortgage securities in 2006 and 2007 … The Permanent Investigations subcommittee of the Senate Homeland Security and Governmental Affairs Committee began an investigation of Goldman’s mortgage securities dealings in response to a McClatchy series in November. McClatchy reported that Goldman had marketed more than $40 billion of securities tied to risky home loans in 2006 and 2007 while secretly betting on a downturn in the housing market.”
Naked Capitalism dissects: “On Goldman’s betting against its clients, the firm mentions only in passing that it used CDOs to lay off mortgage risk. The reason the use of a CDO is important is that, while the offering documents contemplated all sorts of outcomes, investors would assume that Goldman was acting as an intermediary and had devised its CDO merely to satisfy market demand and lay of mortgage pipeline exposure, acting as an intermediary. But in using a CDO to create a short position, Goldman would have the incentive to dump the very worst dreck possible into the CDO. And had Goldman disclosed its role, investors would have looked at the deal much harder.”
Mike Konczal warns more local governments to be screwed by Wall Street fraud: “There are more disasters waiting to happen here. [SEC adviser] Rick Bookstaber walks through his worries on the muni market as being the next subprime disaster … Pushing for stronger derivatives regulation, what looks to be the next big battle for financial reform in the Senate, could make a real difference…”
Wall Street reform debate pits bank lobby money versus grassroots army. McClatchy: “…banks are spending a lot of last year’s record profits to influence the debate … banks are spending a lot of last year’s record profits to influence the debate … consumer groups allied under the banner Americans for Financial Reform are taking the issue to the streets, planning protests in front of banks and the offices of lawmakers who voted against the legislation in committees.”
Fed minutes subtly warn Congress to back off. HuffPost’s Shahien Nasiripour: “the Federal Reserve fought back today with a little-noticed move that seemed to send a message to Congress: we use our oversight authority over banks to help us shape the direction of the economy. So, Senate Banking Committee Chairman Christopher Dodd, don’t take it away.”
CA Gov. Gets Ammo To Gut Public Pensions
Gov. Schwarzenegger commissions study finding massive shortfall in Calif. public pension, but Calpers pension fund disputes method. NYT: “An independent analysis of California’s three big pension funds has found a hidden shortfall of more than half a trillion dollars, several times the amount reported by the funds … Calpers challenged the research, saying it was ‘out of sync with governmental accounting rules and actuarial standards of practice.’”
Dean Baker slaps NYT for overhyping story: “The basic story is that if you assume a 4.14 nominal rate of return on pension fund assets, then the state’s pension liabilities look really really bad. The big question that readers should ask is, so what? … Anyone want to take a bet that California’s pension funds will do better than this?”
Health Reform Aftermath
WH officials have work cut out for them to end confusion about what’s in health reform law. McClatchy: “Questions reflecting confusion have flooded insurance companies, doctors’ offices, human resources departments and business groups.”
NYT’s David Leonhardt argues we need to pursue less health care to save money and reduce health risks from overtreatment: “The final step is the bluntest. It involves changing the economics of medicine, to reward better care rather than simply more care … The tax subsidies for health insurance will shrink, which should help people realize medical care is not free. And doctors who provide good, less expensive care won’t be financially punished as often as they now are.” Dean Baker argues Leonhardt ignores key cost driver: “Remarkably, this discussion did not mention the effect of patents in complicated decisions on treatment and raising costs … they give a party (the patent holder) a huge stake in misrepresenting the issues.”
WH Doubles Down On Pricing Carbon
Clean energy and climate protection bill “absolutely crucial priority” this year for President, says Larry Summers. The Hill: “…in a Washington, DC speech at a conference hosted by the federal Energy Information Administration[, Summers] said there is ‘increasing evidence’ of bipartisan support, citing work on legislation in the Senate … He drew several connections between energy and the economy. For instance, he noted that power companies and other businesses need certainty about emissions policy to make investments.”
Climate Progress notes Summers and WH climate aide Carol Browner insist on putting price on carbon: “… both said the president would not budge when it comes to placing a first-ever price on domestic greenhouse gas emissions.”
Enviros organize to protect EPA role in regulating emissions. Greenwire: “…members of the coalition 1Sky already have rallied outside the regional offices of 10 senators and seven House members … The Sierra Club, meanwhile, is targeting about 40 House members with phone calls and office visits … Kerry and his fellow senators who are crafting a new climate bill are considering language that would bar EPA from regulating greenhouse gases … needed in the bill to gain support from moderate Democrats and Republicans, Sen. Joe Lieberman (I-Conn.) has said.”
House progressives try to shape final climate bill, but won’t make early threats. The Hill: “‘Drawing the line in the sand too quickly was part of the lesson we learned on healthcare,’ the co-chairman of the Congressional Progressive Caucus, Rep. Raúl Grijalva (D-Ariz.), told The Hill … Other House lawmakers have also refrained from specific threats on climate change legislation, in a nod to the political reality of the Senate confirmed by the healthcare debate.”
Transportation industry, advocates pressing Kerry group to link any increase in fuel tax to transportation projects. Streetsblog: “Many details of the Kerry-Graham-Lieberman approach remain unclear, including how much of the revenue raised by the new fuel fee would be rebated back to taxpayers rather than set aside for other uses. But one Hill source familiar with the issue said that the very act of raising gas taxes for non-transportation purposes would be a very bad sign for future federal reform efforts … the groups are far from any consensus on how such revenue should be spent.”