Editor’s Note: Progressive Breakfast was delayed this morning due to technical difficulties beyond our control.
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. Bill Scher is off this week.
Dems Get Votes for Financial Reform
With Sens. Brown and Snowe signalling support, financial reform moves closer to a filibuster-proof majority: “Maine Republican Olympia Snowe came out in favor of the sweeping overhaul Monday, saying ‘I intend to support passage of the legislation when it’s brought before the Senate.’ She added, ‘While not perfect, the legislation takes necessary steps to implement meaningful regulatory reforms, create strong consumer protections and restore confidence in the American financial system.’ Earlier, Sen. Scott Brown (R., Mass.) sounded a similar theme about the so-called Dodd-Frank bill. In a statement, Brown also noted that the legislation ‘isn’t perfect,’ but that it’s a ‘better bill than it was when this whole process started,’ citing safeguards designed to forestall another financial meltdown as well as consumer protections. In addition, ‘it is paid for without new taxes. That doesn’t mean our work is done,’ Brown said.”
Also in Finance, the FDIC gained more power to evaluate banks: "Federal bank regulators have agreed to give the Federal Deposit Insurance Corporation unlimited authority to investigate banks, clarifying the agency’s power, which was in question during the financial crisis. The F.D.I.C.’s board on Monday approved an agreement between the agency and regulators at the Federal Reserve and the Treasury Department. It spells out the F.D.I.C.’s authority to make special examinations of banks. It was approved 5 to 0. Federal bank regulators were widely criticized during the financial crisis for failing to signal high-risk practices before the institutions failed. The F.D.I.C., which takes over failed banks, has said it lacked access to information it needed to evaluate banks’ risk.”
It’s Still The Economy, Stupid
Wall Street is having it’s best recovery since the Great Depression: “Many Americans are still waiting for an economic recovery. But for corporate America, a recovery of sorts is already at hand. The corporate earnings season, that quarterly rite of Wall Street, begins in earnest on Monday, and investors are hoping for some good news. Major corporations are expected to report some of their strongest profits in years. ‘It has been one of the strongest profits recoveries ever,’ said David S. Bianco, chief United States equity strategist for Bank of America Merrill Lynch. ‘You have got to go back to the Depression to find a profits recovery that outpaces this one. The question on many economists’ minds is whether this corporate recovery will last — and if it does, when it will yield jobs for recession-weary Americans.”
Small businesses say that banks aren’t lending: “The worst may be over for small businesses struggling to obtain credit, but this important corner of the financial system doesn’t show signs of recovering very quickly, according to officials and business leaders who gathered at the Federal Reserve for a one-day conference. ‘Overall, the survey data seem to suggest that current economic conditions for small businesses, though still quite challenging, are less dire than they were in 2009,’ said Robin Prager, an assistant research director at the Fed, at the forum on small-business lending. …Small business owners and the groups that represent them said they haven’t seen lenders becoming more lenient. ‘It still feels very depressed,’ said Leslie H. Benoliel, executive director of the Philadelphia Development Partnership, one of the area’s largest providers of micro-enterprise business advice.”
Fed. Chair Ben Bernanke called on banks to boost lending to small businesses: “Federal Reserve chairman Ben Bernanke on Monday called on banks to do all they could to lend to small businesses, pointing out that they were ‘central’ to creating jobs. Credit conditions for small businesses have barely improved since the depths of the financial crisis. This is emerging as one of the main barriers to a strong economic recovery in the US. ‘The formation and growth of small businesses depends critically on access to credit. Unfortunately, those businesses report that credit conditions remain very difficult,’ Mr Bernanke said at a Federal Reserve conference on small-business lending being held in Washington. Mr Bernanke noted that small companies created about 60 per cent of gross overall new jobs in the US. A lack of new jobs – which pay wages that therefore support consumption – is the biggest concern about the health of the US economic recovery.”
Don’t count on the Fed to stimulate the economy. Federal Reserve Governor Elizabeth Duke says it’s not gonna happen: “Federal Reserve Governor Elizabeth Duke said the central bank has no current plans to deploy additional tools for stimulating the economy. The Fed could alter its communications strategy, lower the interest rate it pays on excess reserves or replace mortgage- backed securities that are rolling off its balance sheet, Duke said today in an interview with Bloomberg Television, when asked what tools the central bank has at its disposal. ‘I would emphasize there are no plans to do that at this point,’ she said.
‘There are a lot of reserves out there in the system,’ Duke said. ‘We don’t think the barrier is there’s not enough money out there.’ She also said ‘I think we are in the right place’ on monetary policy.”
When American consumers go down for the count, they will take the economies of several countries with them: “It’s not just that one out of four Americans is unemployed or underemployed (working part-time, overqualified, or at a lower wage than before). More significantly, the Great Recession burst the housing bubble that had let American consumers turn their homes into ATMs. Now the cash machines are closed. So the Administration figures foreign consumers will have to fill the gap. Problem is, most other economies also relied on American consumers. Remember the trade gap? Americans used to be the world’s biggest and most reliable customers — sucking in high-tech gadgets assembled in China, car parts from Japan, shirts and shoes from Southeast Asia, and precision instruments from Germany. With American consumers pulling back, these other economies have also been slowing down. Their unemployment is rising.”
The next wave of the foreclosure crisis may be building right now — nearly 2.4 million Americans with prime loans seriously delinquent on their mortgage: “They are the new face of the housing crisis. Unlike subprime borrowers, most of these homeowners did everything right. They bought houses they could afford and used standard mortgages. But falling home prices and a protracted recession have pushed them into a classic squeeze: They can’t keep up their mortgage payments because someone in the household has lost his or her job. They can’t sell because they owe more than the home is worth. ‘In the next 12 months it’s going to be tragic — most people are just starting to fall behind now,’ said Avi Liss, a lawyer helping homeowners avoid foreclosure in the Boston area. According to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure between 2009 and 2012. Is there a solution? Yes, but it’s controversial. Congress would have to force banks to write off part of homeowners’ troubled loans as a way to keep them in their homes.”
Ezra Klein has five practical (and one impractical) ways Congress can improve the economy by November: “If elections are dependent on the economy, then the obvious question is what, if anything, can Democrats in Congress actually do to improve the economy between here and November? The answer, even if they had the votes, is probably not that much. But that’s not to say nothing. First, Congress can pass policies to keep things from getting, or feeling, worse. Unemployment insurance and state and local aid are probably the biggest players here. If unemployment insurance isn’t extended, millions of unemployed Americans will stop getting checks. As angry as they are about the economy now, they’ll be much angrier after Congress deserts them.”
The unemployment benefits standoff is going to continue for at least another week, as the Senate waits for Robert Byrd’s replacement: “Senate Democrats will remain one vote short of the 60 needed to reauthorize unemployment benefits for the long-term jobless at least until the end of the week, as West Virginia Gov. Joe Manchin says he wants to wait until the state legislature has cleared up the law on how to fill the Senate seat left behind by the late Robert Byrd (D-W.Va.). …Senate Majority Leader Harry Reid (D-Nev.) has repeatedly said that Senate Democrats need Byrd’s replacement to break the filibuster by Republicans and Nebraska Democrat Ben Nelson, whose approval — had he decided to give it — would have ended the endless debate that has already cut off unemployment checks to some 2.1 million people.”
Republicans not only don’t like the unemployed, but they lie about them too: “In the latest example, we see Pennsylvania Attorney General Tom Corbett (R), the frontrunner in this year’s gubernatorial race, arguing publicly that jobless workers in his state are choosing not to work, preferring to live on meager unemployment aid. …I obviously can’t speak with confidence about what some guy told some other guy who in turn told Corbett. But the general argument is getting quite tiresome. ‘The jobs are there’? No, they’re really not. Nationwide, there are five applicants for every one opening, which is a terribly painful ratio. Pennsylvania’s unemployment rate is currently at a 26-year high. Corbett not only seems confused about economic conditions, but his animosity about the jobless’ attitudes is awful. Yes, I can appreciate the fact that an unemployed worker who’s exhausted his/her benefits will be more desperate to take any job than an unemployed worker who’s still receiving public aid. But this dynamic matters a whole lot more when there are plenty of job opportunities for those who want them. That’s just not the current reality.”
Robert Samuelson diagnoses the recessions stranglehold on some Americans: “Another theory — more powerful, I think — is that the Great Recession, though jarring to almost everyone, has been most disruptive and disillusioning to those who were previously the most protected. It punctured their cocoons so unexpectedly that they became more cautious and fearful, whereas those who even in good times faced job loss and income shifts (many blacks, the young and the poor) were less surprised. One legacy of the Great Recession is that insecurity and uncertainty have gone upscale. People feel more exposed. They tend to plan for the worst rather than hope for the best. Their reluctance to make major purchase commitments (a new car or home) validates their pessimism by retarding recovery.”
Jon Kyl Says The Darndest Things
Sen. Jon Kyl has shown the GOP’s hand on deficits and tax cuts: “‘[Y]ou should never raise taxes in order to cut taxes,’ Jon Kyl said on Fox News Sunday. ‘Surely Congress has the authority, and it would be right to — if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that’s what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.’ What’s remarkable about Kyl’s position here is that it appears to be philosophical. ‘You should never have to offset cost of a deliberate decision to reduce tax rates on Americans,’ he said. Never! This is much crazier than anything you hear from Democrats. Imagine if some Democrat — and a member of the Senate Democratic leadership, no less — said that as a matter of principle, spending should never be offset. He’d be laughed out of the room.”
They rarely every say it, but Kyl plainly laid bare the GOP’s philosophy: “We rarely see it said quite so openly as all that. Except that it wasn’t really a very honest statement, because where Kyl says “Americans” what he in fact means is those who earn more than $250,000, because they’re the only Americans who’ll be affected. As for the impact of the Bush tax cuts on the deficit, opinions of course differ. The Center on Budget and Policy Priorities, which I would tend to trust, reported that the cuts accounted for around $240 billion of the 2004 deficit. The Heritage Foundation begs to differ but it acknowledges that the cuts had a minimal negative deficit impact of $58 billion. Either way, they were not deficit neutral. But see, under Republinomics, they don’t have to be. Rich people are good, see.”
First, he showed the GOPs hand (and political philosophy) on deficits and tax cuts. Now Sen. Jon Kyl says unemployment benefits are a “necessary evil”: “Kyl said that the government would prefer not to have to pay unemployment benefits. ‘It’s a necessary evil in a sense. You’d like not to have raise revenue in order to pay people for not working – or not to pay them for not working, but because they can’t get work. You want them to get work so you don’t have to pay them. It’s something the government would just as soon not have to do if it could avoid it,’ he said. ‘To me, you shouldn’t look at it as an economic matter. It’s a humanitarian matter. You’ve got people who are out of work who can’t find work, you want to help them out. Families need help. That’s why you provide it. You don’t do it because it’s going to stimulate the economy.’”
Chris Weignant suggests how Democrats should respond to Jon Kyl: “Democrats have a wonderful opportunity here to hoist Republicans on their own petard. Any time a Republican starts talking about tax cuts, the first thing out of a Democrats’ mouth in response should be: ‘Well, how are you going to pay for these tax cuts so they don’t hike the deficit?’ Republicans are already on the record opposing a relatively modest unemployment benefit extension, for the sole reason that ‘it adds to the deficit.’ So they’ve laid down the rules they’re supposed to be standing up for. Meaning it is entirely fair game to ask them “How will you pay for your proposed tax cuts?” Since they never have an answer to this question — other than the widely-discredited and thoroughly-debunked ‘tax cuts pay for themselves’ nonsense — this immediately leads to framing the issue as: ‘You’re OK with adding seven hundred billion dollars to our debt to give wealthy taxpayers an enormous Christmas present in the form of tax cuts — without even pretending to pay for it — but you howl when we try to keep millions of out-of-work Americans from financial ruin for a fraction of the same price?’ In fact, Democrats really should go completely on the offensive on this issue. I know the “family budget” metaphor is both overused and oversimplified to begin with, but it seems to be the one that has taken hold among the public, so this might be the way to go.”
Deepwater Drilling And Gulf Update
BP is ready to test a new cap on it’s runaway oil well: “BP prepared on Tuesday to test a new cap on its runaway well, arresting the flow of oil which has been gushing into the Gulf of Mexico for the last 12 weeks. As the oil giant prepared for a potential turning point in the worst offshore oil spill in U.S. history, it also said its plans to sell non-core assets, which will help pay for a $20 billion clean-up fund, were moving forward. ‘We are in discussions with a number of companies about a number of assets. Talks are going well,’ spokeswoman Sheila Williams said in London, declining to give details. In Dubai, Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed al-Nahayan said the emirate was considering an investment in BP.”
NYT reports on BP’s “History of Boldness and Costly Blunders”: "From its base in London, the company struck bold deals in politically volatile areas like Angola and Azerbaijan and pushed technology to the limit in the remotest reaches of Alaska and the deepest waters of the Gulf of Mexico — 'the tough stuff that others cannot or choose not to do,' as its chief executive, Tony Hayward, once put it. The company also led an industry wave of cost-cutting and consolidation. It took over American competitors like Amoco and Atlantic Richfield and eliminated tens of thousands of jobs in several rounds, streamlining management but forcing the company to rely more heavily on outside contractors. For a long time, BP’s strategy seemed to pay off. But on April 20, the nightmare situation occurred: the Deepwater Horizon drilling rig exploded, killing 11 workers and sending millions of gallons of oil gushing from BP's Macondo well like so much black poison. Although the accident is still under investigation, preliminary findings by Congressional investigators indicate that BP made a series of decisions that compounded the chances of disaster."
The BP spill or leak, or whatever you want to call it, is a true disaster on a number of levels, many not easily seen or realized by most Americans: “In terms of the big picture, the BP disaster marks the beginning of the real decline of America as an empire and a world power. Make no mistake that people in many parts of the world today openly mock our nation for its near-complete inability to truly rally as a people and to show a true spirit of nationalism in the face of adversity. It’s summer, and countless numbers of high school and college students are jobless, not to mention millions of jobless workers, yet nobody considers hiring any of these people for disaster clean up. We are told that the BP disaster is a national problem and a national emergency, if not an international one, yet there is no real sense of urgency anywhere, except perhaps for the pressing problem of immigration in Arizona. It’s too bad fish and water mammals and sea birds don’t vote. If they did, this disaster would have been behind us weeks ago.”
Interior Sec. Ken Salazar has issued a revised ban on deep-water oil drilling: “U.S. Interior Secretary Kenneth Salazar issued a revised ban on deep-water oil drilling that he said may allow new wells if the industry shows it has raised safety standards. The policy announced today may let some deep-water operations resume earlier than the six-month pause ordered by the Obama administration May 27, according to an e-mailed statement today from the Interior Department. A federal judge rejected the initial moratorium, imposed in response to the BP Plc oil spill in the Gulf of Mexico. ‘I remain open to modifying the new deepwater drilling suspensions based on new information,’ Salazar said in the statement. ‘But industry must raise the bar on its practices and answer fundamental questions about deepwater safety, blowout prevention and containment, and oil spill response.’”
Is It 2012 Already?
Never mind this November. Eyes are already on the 2012 race. And Sarah Palin has emerged as the million dollar woman: “Sarah Palin's political action arm raised more than $865,000 in recent months, and now has more than $1 million on hand to give to favored candidates in the run-up to the fall midterm elections. That's quite a cash cushion. And in politics, donations – especially donations made as a vote nears – are favors that can produce return favors, with interest, in years to come. 'We're going to really help a lot of Republican candidates get a chance to win,' said SarahPAC treasurer Tim Crawford.”
Newt Gingrigh says he’s “never been this serious” about running for President: “Gingrich, 67, told The Associated Press that he would focus on helping Republican candidates through the midterm elections in November, then decide in February or March whether to seek the GOP nomination. ‘I’ve never been this serious,’ Gingrich said. ‘It’s fair to say that by February the groundwork will have been laid to consider seriously whether or not to run,’ he said. Gingrich, in Des Moines for a fundraiser and workshop for local Republican candidates, predicted President Barack Obama would be a one-term president. Obama’s poll numbers have dropped below 50 percent, and Gingrich predicted they would continue to fall, making him vulnerable in 2012.”
E.J. Dionne writes that the left needs a “right brain”: “Passion counts in politics. It motivates a movement’s most fervent followers but can also carry moderates attracted to those who promise change and profess great certainty about how to achieve it. Barack Obama got himself elected president by understanding this. Passion may come especially hard to Democrats this year, and even in the best of times it can be difficult to muster among liberals. …On paper, Democrats have a rational solution to their political math problem. They must still find the passion that executing it will require.”
Meanwhile, polls show that confidence in President Obama has reached an all-time low: “Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy. Regard for Obama is still higher than it is for members of Congress, but the gap has narrowed. About seven in 10 registered voters say they lack confidence in Democratic lawmakers and a similar proportion say so of Republican lawmakers. Overall, more than a third of voters polled — 36 percent — say they have no confidence or only some confidence in the president, congressional Democrats and congressional Republicans. Among independents, this disillusionment is higher still. About two-thirds of all voters say they are dissatisfied with or angry about the way the federal government is working.”