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.
After Senate Passage, Lobbyists Eye House-Senate Conference
Bill now heads to conference to be reconciled with House version. TPMDC’s Brian Beutler on what to expect: “…House and Senate aides expect that the legislation the President signs will call for several, though not all, of the Senate’s stronger provisions–but will aim not to lose the support of any swing vote senators. Likewise, the White House will push to adopt the Senate’s narrower Fed Audit provision, and to weaken the Senate’s derivatives title, which calls for financial firms to spin off their swaps desks. However, the final derivatives title will likely still be stronger than the House-passed version, which, after an intense, below-the-radar lobbying effort, includes a number of loopholes and carve outs for favored industry players. That also means that the progressive goal of a stand-alone consumer protection agency will be a heavier lift than the agency called for in the Senate bill, which would be housed inside the Fed.”
Bloomberg notes resolution authority fund approach needs to be smoothed out: “Negotiators will have to reconcile differences over a pre- paid $150 billion fund created by the House bill to cover the government’s cost of unwinding a failing financial firm. The Senate bill requires the industry to repay the government only after a company collapses. Frank said yesterday he wouldn’t push to keep the industry-financed pre-paid fund in the bill.”
Bank lobbyists look to weaken bill in conference. Politico: “…the conference committee offers the last opportunity for the banking industry to influence the most sweeping overhaul of the nation’s financial regulatory system since the Great Depression, setting up a massive behind-the-scenes lobbying effort to influence the bill.”
Democrats aim to get final bill on President’s desk by July 4 reports Politico.
Americans for Financial Security endorses, with caveat. Statement from Heather Booth: “The Senate bill stops banks from recklessly gambling with our money and sheds light on the behind-the-scenes deals that went on at places like Goldman Sachs. The bill needs to be further strengthened in negotiations with the House [with] Senator Cantwell’s language on derivatives and the Reed-Grassley language to make sure private equity managers are regulated.”
Tapped’s Tim Fernholz on the progressive reaction: “While this legislation is undoubtedly stronger than many observers anticipated and a major step towards reform, it has also left some progressives with a bitter taste in their mouths — notably Cantwell and Feingold, who opposed the bill — but also Senator Ted Kaufman, whose amendment to cap the size of the banks was defeated early. While he supported the bill, Kaufman issued a statement lamenting that it was not stronger and urged his colleagues to consider size restrictions ‘before another financial crisis — like the one unfolding today in Europe — visits our shores.’”
TNR’s Noam Scheiber on the hits taken by the big banks: “…it has effectively taxed bigness [with] a handful of new mandates and regulations—like oversight by a soon-to-be-established consumer financial protection agency, as well as limits on fees for debit-card transactions—from which small and medium-sized banks are exempt. Other reforms—such as a bill Congress passed last year to limit hidden credit-card fees and make statements more transparent, and new restrictions on trading derivatives—would disproportionately dent profits at megabanks. These banks tend to have far bigger credit card operations, and are the only bona fide derivatives brokers around. The big banks typically complain that these efforts will drive them out of this or that line of business, or at least curtail their activity significantly … that’s not necessarily a bad thing.”
Harsh assessment by TPM’s David Kurtz: “Historians will probably conclude that the package of reforms was surprisingly modest given the depth and severity of the 2008-09 financial crisis. A harsher historical judgment might find that the political and economic power wielded by the financial industry in the late 20th and early 21st centuries was so extensive that it could weather a near total collapse of the system without having to yield its power or privilege.”
Economics of Contempt argues Lincoln’s derivatives provision is DOA in House-Senate conference: “I know the banking industry is going to freak out about the fact that Blanche Lincoln’s disastrous Sec. 716 is still in the bill, but they shouldn’t sweat it. It will get stripped out in conference — everyone (save for Blanche Lincoln) recognizes that Sec. 716 simply cannot become law. Dodd knows what he’s doing.”
Sen. Chuck Grassley one of four GOPers to support the bill. MyDD’s desmoinesdem: “Grassley typically wouldn’t be the only conservative Republican voting with a handful of New England moderates. Like Howie Klein, I wonder whether Grassley was concerned about this bill becoming an election issue. Democrat Roxanne Conlin’s campaign blasted Grassley yesterday for joining the Republican filibuster of the bill.”
Party leaders draw political lines. W. Post: “… Obama’s populist rhetoric will be aimed squarely at Republicans who slowed the legislation, with aides saying they will be accused of standing with megabanks rather than with average citizens. Republicans plan to push back against that argument, encouraged by polling they say suggests that voters want action to produce jobs, not Wall Street-bashing.”
Summer Jobs Creation Added To Sweeping Tax Legislation
$1B summer jobs program, reduced hedge fund tax break, included in major tax bill slated for vote next week. Politico: “An unwieldy amalgam of state aid, infrastructure investments, tax cuts and extended jobless benefits, the massive bill is a sleeping giant in this political year and uniquely captures the hard choices facing a government beset by record deficits and an uncertain economy … asked whether he would have 60 votes to quell a filibuster, Senate Finance Committee Chairman Max Baucus (D-Mont.) answered flatly, ‘We will.’ … To reduce the deficit impact, tax writers have agreed to a series of revenue offsets worth close to $56 billion, including a temporary 24-cent-per-barrel increase in oil industry fees … the most prolonged fight has been one pitting powerful venture capital and private-equity interests against a House-backed reform targeting investment fund partnerships who now shelter income as ‘carried interest’ at the lower capital gains rate of 15 percent …”
NYT’s Paul Krugman reminds our crisis is jobs, not debt. ” Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.”
Fed slightly improves its jobs forecast. W. Post: “The Fed’s leaders now expect gross domestic product to expand to 3.2 to 3.7 percent this year … They also expect the unemployment rate to fall to the 9.1 to 9.5 percent range by the end of the year.”
Fed governor details how Europe debt crisis could spread overseas, though deems scenario “unlikely.” NYT: “If sovereign debt problems were to broadly affect Europe, American banks could face large losses on their overall credit exposures, as asset values declined and loan delinquencies mounted. Money market mutual funds that hold commercial paper and certificates of deposit issued by European banks also would be hurt. The result could be a further contraction in bank lending.”
Stronger Fuel-Efficiency Rules On Tap
Obama to announce strengthening of fuel-efficiency standards. NYT: “Under rules that were eventually formalized last month, new cars have to meet a combined city and highway fuel economy average of 35.5 miles per gallon by 2016 … The plan Mr. Obama will announce on Friday will order further improvements in fuel efficiency for cars and light trucks made in 2017 and beyond, and in medium and heavy trucks made in 2014 through 2018 … Mr. Obama’s directive will [also] order more federal support for the development of new-generation cars like advanced electric vehicles…”
TNR’s Brad Plumer summarizes new report on how the American Power Act would reduce energy usage: “…oil consumption would drop quite a bit, coal use would go down, and even natural gas would drop a bit (this despite the fact that the bill has incentives for natural gas, which is the cleanest of fossil fuels). Nuclear does very well. Interestingly, the bill would make virtually no difference to the solar and wind industries. But that’s not too surprising—the Senate’s renewable energy standard is woefully weak … if environmentalists wanted to strengthen the bill, boosting the efficiency and renewables sections seems like one of the most promising routes of attack…”
Key lab analyzing spill for government also works for BP. NYT: “Some people are questioning the independence of the Texas lab. Taylor Kirschenfeld, an environmental official for Escambia County, Fla., rebuffed instructions from the National Oceanic and Atmospheric Administration to send water samples to the lab … Federal officials say that they remain in control and that the concerns about any potential conflicts are overblown.”
BP admits oil spill much bigger than original estimate. LAT: “BP’s success at drawing oil from a leaking pipe has proved that official estimates of the size of the Gulf of Mexico spill have been too low. The company effectively admitted as much Thursday when it said that a tube inserted into the broken pipe connected to its blown-out well is collecting as much as 5,000 barrels of oil and 15 million cubic feet of gas a day, even as a live video feed shows large volumes continuing to billow into gulf waters.”
BP’s coverup of the extend fo damange in the Gulf is beginning to unravel. Grist’s Miles Grant:: “After testifying before the House Transportation & Infrastructure Committee on Wednesday, National Wildlife Federation President and CEO Larry Schweiger says he’s more convinced than ever that the disaster is being compounded by a cover-up…”
“Too big to fail” isn’t working out for the oil industry either. Grist’s David Roberts: “The main argument against raising the cap is that it will price small, independent oil companies out of the offshore drilling market-they just can’t afford insurance with a cap that high. Which of course raises the question: If they can’t afford to insure against the damage they’re capable of doing, why should they be allowed to drill? … Offshore oil companies privatize profit and publicize risk by necessity…”
State Government v. Right-Wing Fiscal Insanity
Colorado voters face ballot initiatives designed to hamstring government’s ability to raise revenue and issue bonds. Stateline: “According to some estimates, the state tax cut proposals could hack at least 25 percent out of the state’s general fund, not counting cuts to local governments and school systems. ‘Are we really ready for the anarchy of an uneducated population that we can’t lock up in prison?’ [Colorado Springs school CFO Glenn] Gustafson asks.”
“Christie Becomes Latest GOP Governor To Threaten To Veto Tax Increase On The Wealthy” reports Wonk Room’s Pat Garofalo.
Sen. Dorgan not giving up on allowing cheaper drug imports. CQ: “… he is determined to press for another floor vote on the “reimportation” issue when the food safety measure (S 510) moves to the floor. The bill was slated for possible action this month but has been nudged aside in the rush to complete a fiscal 2010 war supplemental bill and a package of tax cuts and social spending by the Memorial Day recess … Majority Whip Richard J. Durbin of Illinois says he’s concerned that the Dorgan proposal could complicate the food safety bill.”
Immigration advocates blame Rahm for slow-track strategy on reform reports LAT.