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.
Getting What They Paid For
What did corporate donors win? LAT: “The Republicans’ big election gains will make the new Congress more business-friendly, with incoming leaders in the GOP-controlled House pledging less government involvement in the private sector and more scrutiny of new regulations. President Obama also appeared to get the message … he acknowledged that he had not found ‘the right balance’ between increasing regulation to protect consumers and setting ‘the right tone publicly’ to encourage businesses to expand … Business desperately wants the tax cut extension [for the wealthy] and approval of foreign trade agreements, but a legislative stalemate on other issues wouldn’t be all bad, said [US Chamber of Commerce's] Bruce Josten.”
Money mattered, concludes NYT: “While it is hard to sort out the exact difference they made, their success rate, particularly in races in which Republican challengers would have otherwise been badly outgunned, raises the prospect that a relatively small number of deep-pocketed donors exerted an outsize influence on Tuesday’s results.”
Public Citizen report follows the money. HuffPst: “Out of 74 contests in which power changed hands on Tuesday, outside spending benefited the winner in 58 races. Just 14 of the losing candidates received more help than their opponents from these groups.”
New House Leaders Snuggle Up To Wall Street
House GOP aims at Wall St. reform, might find Senate Dem support. LAT: ” … Analysts already predict [Obama's proposed] bank tax is dead with the Republican gains … Bachus said Wednesday he would pursue ‘vigorous oversight’ of the financial reform law and would try to revise new regulations on complex securities known as derivatives … n the Senate, retiring Banking Committee Chairman Christopher J. Dodd (D-Conn.) is likely to be replaced by Sen. Tim Johnson (D-S.D.). South Dakota is home to Citigroup Inc.’s credit card operation, and Johnson is viewed as more friendly to the industry than Dodd was. Johnson said Wednesday that lawmakers should wait to see the specific derivatives rules proposed by regulators before seeking revisions … Republicans also are expected to push aggressively to dismantle the seized housing-finance giants Fannie Mae and Freddie Mac … Democrats also want to overhaul the housing-finance system, and the administration is required under the financial reform law to produce a plan by January.”
House GOP leaders want to take out the consumer protection bureau. Wonk Room’s Pat Garofalo: “Republicans on the House Financial Services committee have made no secret of their desire to defund and defang portions of the Dodd-Frank financial reform law, particularly the newly-created Consumer Financial Protection Bureau (which does not stand on its own, divorced from the Congressional appropriations process, until July 2011). And now that they’ve gained a majority in the House of Representatives, the GOP’s game plan is kicking into gear.”
Public comments to Financial Services Oversight Council on implementing the Volcker rule due tomorrow. Simon Johnson on the significance: “State Street and the other big banks mostly just want to be left alone. ‘We’re big boys and we can take care of ourselves’ is their refrain – and you will now hear this echo far and wide, at least in the House of Representatives as we head into 2011 … The designers of the details of the Volcker Rule — and their political masters — should not repeat Mr. Greenspan’s tragic and costly mistake. We need a real firewall between custodian banks and the funds with which they are connected in any form.”
Wall Street profits are down, but bonuses are up. NYT: “Trading is down and new regulations threaten to take a bite out of future profits. Some firms have been handing out pink slips. Morgan Stanley even posted a loss in its last quarter. Yet Wall Street pay seems to defy gravity: Bonuses will be up this year, according to a study to be released on Thursday by a Wall Street compensation expert, Alan Johnson.”
Traders taking pay cuts. Bloomberg: “Wall Street traders, who typically receive the fattest year-end bonuses among bank employees, are poised to suffer the biggest pay cuts as revenue at their divisions dropped an average of 12 percent so far this year. Goldman Sachs Group Inc., the New York-based bank that makes most of its money from trading … slashed average compensation 26 percent in the first nine months. By contrast, Charlotte, North Carolina-based Bank of America Corp., which employs branch managers and brokers as well as bankers and traders, raised average pay 10 percent.”
Foreclosure scandal hurting Freddie Mac bottom line. Reuters: “Freddie Mac, the provider of residential mortgage financing, said on Wednesday that weakness in housing led to a third-quarter loss of $4.1 billion and another draw from the Treasury to maintain its positive net worth. The company warned that costs might increase ‘significantly’ as snags in the foreclosure processes at major loan servicing companies increased delays ”
Geithner met with homeowner advocates about HAMP. HuffPost: “Geithner, [PICO's Ken] Kelley and others in the meeting said, seemed very sympathetic to the problems Kelly described, which are typical of many HAMP complaints. ‘He actually reacted positively, so I was very hopeful because I thought he was just going to listen,’ Kelly said. ‘He did say there are legislative guidelines that can hinder him on doing anything.’ … Though Geithner did not promise any game-changers, the meeting attendants all told HuffPost he seemed genuinely sympathetic to homeowners who have had bad experiences in the program.”
“Showdown” Over Health Reform Repeal?
Sen. Jim DeMint predicts “showdown” over defunding health reform, but Wonk Room’s Igor Volsky skeptical: “As former Senator Tom Daschle explained in a recent interview, ‘a lot of what we did in health care reform has more of an entitlement than a discretionary funding base. So as an entitlement, they would really have to change the law rather than simply not fund in order for it to be effected. The entitlement sections of the legislation are going to be fairly immune from defunding.’”
AP agrees: “…tinker and tweak is as far as they’re likely to get.”
NYT’s Peter Orszag reminds that scrapping heath reform means running up the debt: “The health care law starts the arduous process of shifting the medical payment system away from an emphasis on quantity of care and toward an emphasis on quality … it creates penalties for hospitals with high rates of readmission … It expands the practice of making a single payment for treating a specific condition … it provides for accountable care organizations that financially bind doctors and hospitals so that they offer the coordinated care that experts believe would save money in complex cases. But these are modest first steps, and what’s required is a process to build on them over time. So the health care reform act creates an Innovation Center to experiment with new strategies … , the legislation creates an Independent Payment Advisory Board, a panel of independent medical experts who will look for more ways to improve Medicare’s cost-effectiveness … All this may not fit on a bumper sticker, but it is more promising than anything that would.”
Health reform pounded by lying ads. Wonk Room’s Volsky: “Americans didn’t oppose the actual law as much as they opposed the GOP’s version of the law, which as everyone has documented is full of lies and distortions … Opponents of the legislation, including independent groups, have spent $108 million since March to advertise against it … six times more than supporters have spent …”
Yet Americans still don’t want it repealed. TNR’s Jonathan Cohn: “…a journalist asked President Obama about the one in two voters who say they favor repeal of the Affordable Care Act. Obama noted that one in two don’t want repeal, which is true. But Obama actually understated the case. The proportion that oppose repeal is actually larger than one in two. A lot larger … the numbers change when the pollsters ask follow-up questions…”
GOP’s Top Tea Partier Threatens Global Economic Meltdown Over Debt Hysteria
GOP Sen. Jim DeMint urges Congress to destroy America’s credit, collapse global economy. CNN: “DeMint also addressed what he think Republicans should do about raising the debt ceiling when Congress returns so the government can continue to print and spend money. ‘I think Republicans will say no,’ DeMint told CNN’s Chief National Correspondent John King. ‘Unless that raising of the debt ceiling is accompanied by some dramatic spending cuts … Republicans will not support an increase in the debt limit.’”
“Fiscal austerity now will guarantee a Democratic loss in 2012,” warns Robert Kuttner at New Deal 2.0.
What debt hysteria? Voters approve most state bond measures. Stateline: “In the clearest sign that Americans view state borrowing as a beneficial financing tool for long-term projects, Colorado voters soundly rejected a constitutional amendment that would have limited state and local governments from issuing debt altogether.”
Pensions for state workers under threat from new governors. Stateline: “The election of Republican governors in Alabama, Nevada, Pennsylvania, Tennessee and Wisconsin and an independent in Rhode Island who have all embraced 401(k)-style plans was a defeat for organized labor … Several other candidates for statewide offices elected Tuesday also have said they believe state employee pension plans eventually will run out of money unless new hires receive retirement benefits more in line with those of the private sector.”
New governors plan to close budget gaps through spending cuts alone. Stateline: “…at least 12 of the nation’s new governors have ruled out tax hikes, even as they face billions in collective deficits. All of them are Republicans except New York Democrat Andrew Cuomo … many other budget experts worry that states cannot simply cut their way out of the budget problems they face today.”
Dean Baker rebuts Peter Orszag’s “progressive” argument for Social Security cuts: “[Says Orszag] ‘acting now would allow changes to take effect more gradually, cushioning the blow.’ … It is important to understand this argument … In other words, if we squeeze some money out of the current cohort of near retirees, we will have to get less money out of people in 2050 and 2060 … the vast majority of near retirees will have almost nothing other than Social Security to support themselves in retirement … the deficit hawks who want ‘changes to take effect more gradually’ want to kick again the people whose wealth was destroyed due to the incredible economic mismanagement of these deficit hawks.”
Tax Cut Debate Quickly Resumes
Sen. Maj. Leader Reid says Dems won’t back permanent extension of Bush tax cuts for the wealthy. The Hill: “Pointedly, however, Reid signaled Democrats would likely vote against a wholesale extension of the 2001 and 2003 tax cuts signed by President George W. Bush, which expire at the end of the year. Democrats would agree to extending the cuts for middle-class families, Reid said, but allowing them for wealthy Americans ‘is not going to happen’ because it would cost $4 trillion.”
Though a temporary extension on the table. NYT: “…Mr. Obama’s overture opens the door for extending those top tax rates at least for a year as Republicans play from a strengthened hand in coming weeks … Republicans continue to insist on a long-term extension for all the tax cuts … even as they protest the mounting federal debt … The Democrats’ goal is to ‘de-couple’ the tax cuts for middle and high incomes … Some Republicans say they will accept only a deal that extends the tax cuts for the middle class and the wealthy in tandem.”
Next Steps On Energy
President doesn’t budge regarding EPA action on greenhouse gases, but offers compromises on nuclear and natural gas. NYT: “Instead of seeking a broad approach to energy and climate change, Mr. Obama said, he would look for smaller policy bites that could attract Republican support. He said he hoped to generate wide support in the new Congress for further development of electric vehicles, for converting some of the nation’s heavy truck fleet to run on natural gas, for incentives for energy efficiency in buildings and appliances, and for more emphasis on renewable energy and nuclear power.”
Cap-and-trade formally shelved. AP: “‘Cap-and-trade was just one way of skinning the cat; it was not the only way,’ Obama said at a news conference a day after Democrats lost control of the House. ‘I’m going to be looking for other means to address this problem.’ … He said it was important, in whatever solutions are pursued, ‘not to have us ignore the science, but rather find ways that we can solve these problems that don’t hurt the economy.’”
W. Post’s Stephen Stromberg laments “piecemeal” approach to energy policy: “This approach to energy policy is much more costly to the federal government than cap-and-trade would have been, which could derail the effort in a deficit-hawkish House. And the president was clear — and correct — about what this would not be: a complete solution to energy independence or climate change. Still, Obama insisted, ‘When it comes to something like energy…let’s not wait. Let’s start making progress on those things we do agree on.’ As long as this process of picking winners and losers doesn’t do more harm than good. And that’s a planet-sized ‘if.’”
“It’s Not The Climate Bill, Stupid” notes NRDC’s Rob Perks: “…a whopping 84% of Democratic representatives who voted for the House climate bill won their elections yesterday … nearly 60% of those who voted against the bill went down in defeat … when voters who chose the Republican candidate were asked in an open ended question to name their biggest concern about the Democrat, only 1 percent cited something related to energy or cap and trade … the mid-term election was about the economy, stupid…”
But denying climate science may have lost Colorado for the GOP argues Climate Progress’ Joe Romm.
“There are no Republican freshmen, in the House or Senate, who admit the [climate] science is real,” reports Wonk Room’s Brad Johnson.
House GOP Already Fracturing?
Incoming Speaker Boehner throws an elbow to Rep. Michelle Bachmann. Is the House GOP fracturing already? The Hill: “Within hours of House Republicans’ major victory, the battle for the conference chairmanship quickly heated up … [Boehner] has stayed out of the race, but a source close to leadership says he would ‘not stand for’ having Bachmann as the fourth-ranking House Republican.”
Though Bachmann just like Boehner, neither can say what exactly they would cut. CNN: ” Rep. Michele Bachmann, R-Minnesota, refused to identify specific cuts to the federal budget while, at the same time, criticized what she called ‘over-the-top’ spending for an upcoming presidential trip … the White House said in a written statement that the figures cited by the Republican lawmaker ‘have no basis in reality.’”
Progressive Caucus Leader Says Dems “Weren’t Bold Enough.”
Progressive Caucus Co-Chair Lynn Woolsey says Democrats lost the House because “we weren’t bold enough”: “The final results of the 2010 mid-term elections have yet to be tallied, but progressives have already begun their soul-searching. Progressive Caucus Co-Chair Lynn Woolsey, congresswoman from California, told Pacifica News Radio that the Democrats lost the House because ‘we weren’t bold enough.’ If they had started off with a jobs bill, Woolsey said, their position would be different tonight. And, Woolsey said, ‘We could have done a much better job of letting people know what we had accomplished.’ As of Nov. 3, the caucus’s other co-chair, Raul Grijalva of Arizona, was still fighting for his House seat in close race against Republican Ruth McClung.”
Most of the House Dems who opposed jobless aid, now jobless notes Salon’s Alex Pareene.
Digby says the Blue Dogs “used the Party as a fire hydrant”, and paid for it: “I think when you run against your own party in this age of polarization you are begging the electorate to vote for your opponent. We aren’t in an age of ticket splitting and the parties are breaking pretty clearly along ideological lines … This new era is going to require more partisan cohesion to get anything done and to stop the things the Party doesn’t want done. This seems like a good thing to me. Fewer Blue Dogs means fewer saboteurs within the party creating the illusion that there is a progressive governing majority.”
David Moberg explains why the Democrats got “shellacked” and how they can come back: “What a majority of voters do want, as veteran consultant Vic Fingerhut argues, is for the Democrats to live up to their main and most effective historic claim on voters’ support–to stand up for the interests of working people against big business and the rich … They face an ideological right, corporate interests and a bloc of voters hostile to all taxes and to ‘big government,’ but even many voters who cast votes against them–or stayed home–do not agree with the Republican attempts to “undo” the progressive role of government.”
Alternet’s Joshua Holland offers “7 Things Progressives Need to Keep in Mind”: ” Midterm elections, unlike presidential races, are a collection of low-turnout, localized contests rather than a barometer of the nation’s ideological tilt … The electorate is hopping mad, but they still dislike Republicans … Blue Dogs took the brunt of it … This was a wave of right-wing turnout, but few have changed their positions…”
Still Can’t Find That Mandate
AFL-CIO’s Mike Hall sees no conservative mandate in the final polls: “When asked about specific Pledge to America agenda items, just 34 percent of all voters and 49 percent of Republicans support extending the tax cuts for the wealthy. By almost the same small numbers, they support rolling back Wall Street reform. Among other proposals from Republican candidates this fall, only 29 percent of all voters and 35 percent of Republicans back raising the Social Security retirement age, while only 28 percent of all voters and 45 percent of Republicans back privatizing Social Security. Reducing or eliminating the minimum wage draws the support of just 18 percent of all voters and 25 percent of Republicans.”
LAT sums up the conflicting messages from voters: “Voters say they hate gridlock, but many also seemed to hate the prolific legislative output of the Obama administration and the Democratic majorities in the House and Senate. Asked what lawmakers should make their top priority in the next Congress, nearly 4 in 10 said reducing the federal deficit. A like number said spending money to create jobs, a move that would increase the deficit. (Two in 10 said cutting taxes, which would also increase the debt.) … Nearly 8 in 10 said in a Pew Research poll that lawmakers’ unwillingness to work together was a major problem. But in a subsequent survey, nearly half said they admired a politician who sticks to principle rather than compromising.”
Amanda Marcotte, at Slate, explains why Sharron Angle and other Mama Grizzlies lost: “The main problem with Mama Grizzly candidates is that they present a contradiction, laying claim to feminism while denouncing most feminist ideals.”
Fed Moves To Mixed Reaction
The Fed tries to jolt the economy, announces $600B bond purchase to reduce interest rates. NYT: “Ordinarily the Fed’s main tool for spurring economic growth is to lower short-term interest rates. But those rates are already near zero. With no more room to go, it has to find another route to stimulate demand. That route is to buy government bonds, which increases demand for them and raises their prices, pushing long-term interest rates down.”
Bernanke explains move in W. Post oped: “…, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating … lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
NYT’s David Leonhardt rounds up varying reactions to Fed move: “…many of the hawks who warned about inflation earlier this year repeated those warnings anew … there is still no good evidence of it. Some economists are optimistic that [the Fed] has finally found the right balance. Manoj Pradhan, a global economist at Morgan Stanley, pointed out that bond purchase programs lifted growth in Europe and the United States last year — and a broadly similar approach also helped end the Great Depression … Others, though, wonder if the program is both too late and too little … One thing seems undeniable: the Fed’s task is harder than it would have been six months ago.”
Mark Thoma in the “too little” camp: “The purchase should have been much larger, and it should have involved longer term Treasury securities … The language in the Press Release about maintaining stable expectations was also disappointing to those who have ben advocating a higher inflation target. This is not, by any means, a bold plan … it’s hard to imagine the Fed doing anything more than moving at a ‘measured pace,’ a pace too slow to do much except chip away at the margins. With fiscal policy out the window and a timid, tip-toeing Fed, we’re likely headed for an agonizingly slow recovery.”
Conservatives in the “too much” camp. NYT: “[Rep. Mike] Pence and his allies are replaying a dispute that permeated Washington in the mid-1930s, when the economy was crawling out of the Great Depression. Conservative Democrats pushed Franklin D. Roosevelt to cut back on spending, and argued for tight monetary policy. Many economists argue that the result was a second downturn just before the outbreak of World War II…”
Krugman says “Meh.”: “… $600 billion really isn’t a lot when you’re trying to move a $15 trillion economy.”