Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Mortgage Reform: The Beginning Of The End?
OurFuture.org’s Richard Eskow: “Only two short years after Wall Street’s fraud and greed brought down the world’s economy, a Beltway think tank is proposing to put taxpayers on the hook for mortgages written and administered by the same corporate miscreants. And that’s the Democratic proposal. The Republicans want to double down on a failed strategy of ‘privatizing’ government mortgage financing, while at the same time cutting back on regulation and oversight … If we don’t see stronger proposals than these in the coming months, this will be remembered as … the beginning of the end, the moment when the next wave of privatization began and the way was paved for a collapse that may be even greater than the one we’re in today.”
Fannie/Freddie Reform Proposals Expected Friday
White House to propose “range of options” for Fannie/Freddie reform Friday. NYT: “One possibility favored by some of President Obama’s economic advisers, and by many Republicans, would not create any federal replacement for Fannie and Freddie, leaving the private markets to provide mortgages for most Americans. The alternative approaches instead would continue some form of federal mortgage backstop … Timothy F. Geithner, the Treasury secretary, and Shaun Donovan, Housing secretary, are among the advisers who believe that the government must provide a backstop for the industry, in part to ensure the loan availability. Some of the president’s economic advisers, however, believe that such a guarantee amounts to an unnecessary subsidy, transferring taxpayer money to private lenders.”
WSJ adds: ” The housing and banking industries have advanced proposals arguing that [limited and implicit government] guarantee is needed to maintain a healthy market .. Others argue that because investors might assume the government will step in during a crisis, it is better to make guarantees explicit and charge up front for them … But some economists and regulators have warned any new government backstops would put too much risk on taxpayers.”
High-Speed Rail To Be Featured In Obama Budget
High-speed rail major focus on upcoming presidential budget. The Hill: “The White House announced a plan Tuesday to spend $53 billion over six years … part of a long-term plan to provide 80 percent of the U.S. population with access to high-speed rail within 25 years … The plan also clarifies the long-term federal role in passenger rail that will provide states and cities with more certainty to make long-term transportation plans for their communities.”
Treehugger’s Brian Merchant praises: “Obama has long considered high speed rail one of his pet projects, but the funding allotted never seemed to live up to his aspirations. The $6 billion in the stimulus and $7 billion in the budget were seen as a good start; tentatively encouraging — this can be considered a major commitment.”
House GOPers slam rail proposal. Time: “Judging from the reaction of the House Transportation and Infrastructure Committee chairman, John Mica, who is actually one of the more supportive Republicans when it comes to rail, Obama shouldn’t count his winnings yet. ‘This is like giving Bernie Madoff another chance at handling your investment portfolio,’ Mica said … Transportation Secretary Ray LaHood predicted that Obama and Biden would be remembered for high-speed rail the way Dwight Eisenhower is for the interstate highways and Lincoln is for the transcontinental railroad.”
President’s budget will include $7,500 tax rebate on electric cars. The Hill: “Asked how soon the program could get off the ground, Energy Department assistant secretary David Sandalow said the proposal is subject to Congressional approval.”
EPA chief to defend action on climate in House testimony today reports AP.
Senate Dems call on House GOP to end subsidies for Big OIl. Speaker rebuffs. The Hill: “‘I’d be curious what Sen. Schumer’s Democratic colleagues think about this proposal to raise sky-rocketing gas and energy prices and destroy American jobs,’ Boehner spokesman Michael Steel said.”
WH econ aide warns against cutting too deep and too fast. McClatchy: “‘In my view, the market could not be saying more clearly that they don’t have a problem with the federal government borrowing right now,’ [Austan] Goolsbee said. ‘If they did, long rates (interest rates on long-maturing bonds) should be rising.’ Cutting federal spending sharply now would be like saying, ‘”Well let’s pull the rug out from under the recovery,”‘Goolsbee said.”
President to propose pilot program to shield taxpayers from programs that don’t work. NYT’s David Leonhardt: “…nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus — but only if agreed-upon benchmarks show that the program is working. If it falls short, taxpayers owe nothing … The Obama administration’s seven pilot programs would create bonds for, among other areas, job training, education, juvenile justice and care of children’s disabilities.”
Budget won’t include corporate tax reform specifics reports Bloomberg.
GOP Resists Call To Help States
GOP resists Obama plan to suspend automatic tax increases on states for unemployment insurance. NYT: “[Republicans] warned that the plan would ultimately force many states to raise their unemployment taxes in the years to come … [But] Republican lawmakers could find themselves under pressure from Republican governors, whose states owe the federal government billions of dollars. The [Obama] administration is also betting that employers will back the proposal, especially in states where their taxes would otherwise go up.”
Tea party leader likens Obama tax relief for states to “more drugs” reports Media Matters.
State plan doesn’t go far enough, argues New Deal 2.0′s Marshall Auerback: “Start by making sure state and local governments do not lay off workers or cut back on vital programs … Add emergency revenue sharing to states and cities by picking up increased shares of Medicaid … Have government temporarily pay most of the cost of COBRA coverage for laid off people who lose their health insurance … Expand unemployment insurance to cover part-time workers…”
Texas Republicans pledge to close massive budget gap with only spending cuts. NYT: “About 10,000 state employees are in danger of getting pink slips. House and Senate leaders have said they plan to cut aid to schools by $10 billion, a move that would force the layoffs of thousands of teachers and increase class sizes. Lawmakers are also contemplating slicing Medicaid payments to doctors and other providers by 10 percent … Many lawmakers think [Gov. Rick] Perry is more concerned about laying the groundwork for a run for national office than averting painful budget cuts.”
House Conservative Revolt Brewing
Some House GOPers break from leadership on size of spending cuts, risking shutdown. Politico: “…the House Appropriations Committee voted, 27-22, Tuesday evening to move ahead with Republican plans for cutting close to $40 billion [this fiscal year.] … Arizona Rep. Jeff Flake and Rep. Cynthia Lummis of Wyoming … voted ‘no’ to protest the cuts being too small … There’s genuine danger — especially if the leadership loses control of the debate — that events could spin out of control and lead to a government shutdown.”
Conservative revolt derails bipartisan bill to extend aid to workers displaced by trade. CQ: “That Republican leaders were unable to rally support for the bill signaled trouble ahead for the new House majority in reaching consensus on upcoming spending and budget matters … Many Republicans, under pressure from conservative activists, remain reluctant to advance [the trade assistance program] without a commitment from the administration to send all three pending trade deals to Congress for approval.”
House Majority Whip expects continuing resolution to include defunding of health reform law, despite leadership refusal to put the language in and signal unity. Politico: “House Majority Leader Eric Cantor says the bill to fund the government for the rest of the year will have language to withhold funding from the health care law by the time it passes the House next week … . But Cantor still didn’t promise that the defunding language would be in the bill from the beginning … Cantor’s pledge got a lukewarm reaction from outside groups that would prefer that House Republicans just cut off the funding in the original bill.”
GOP Sen. Richard Shelby backs increasing retirement age “every several years.” HuffPost: ” He mocked the recommendation of President Barack Obama’s deficit commission, which he said would raise the Social Security retirement age in 2025 (actually, not until 2027). ‘America will be burned by then — and a lot of us will be dead,’ he said.”
No Compromise On Individual Mandate
White House pledges not to budget on retaining individual mandate. HuffPost: “‘The president supports it,’ the press secretary said of the mandate. ‘We have gone to court to maintain it … we believe that individual responsibility is a foundation.’”
House GOPers who refused government health coverage learning about private market. Politico: “…talk to some of the 16 freshman lawmakers who have declined their government health benefits, and you’ll hear a different side of the story — about tough out-of-pocket expenses, pre-existing conditions and support for health reforms that would help those who struggle with their coverage.”
GOP congressman and doctor Phil Gingrey leading fight to cap rewards to malpractice victims, involved in $500,000 malpractice settlement. NYT: “The money was paid in 2007 to settle a medical malpractice lawsuit brought against several doctors … The lawsuit claimed, among other things, that Dr. Gingrey and two other obstetricians in the same practice failed to properly diagnose the woman’s appendicitis. Her appendix burst, leading to the loss of her fetus and other complications including a stroke … The case included an accusation by the woman’s husband that Dr. Gingrey, contrary to hospital records, had not checked on his wife for several hours …”
Consumer Financial Protection Bureau Has An Enforcer
New enforcement chief for Consumer Financial Protection Bureau pledges aggressive action. WSJ: “Several federal regulators are slated to transfer some of their powers to the new agency on July 21. … Republican lawmakers are trying to blunt the Consumer Financial Protection Bureau’s powers and crimp its budget. … [Richard] Cordray said mortgages, credit cards and student loans are high on his enforcement agenda … Firms operating on ‘much more of a wild and woolly basis’ than big banks are the most likely source of ‘aberrant and abusive practices,’ he said.”
Fed proposes new standard for “systematically important” companies. LAT: “… banks and non-bank financial firms would be considered ‘significant’ and subject to greater oversight if they have more than $50 billion in total consolidated assets … Financial firms that aren’t bank holding companies would be subject to the heightened oversight if they [have] at least 85% of revenues or assets related to a host of financial activities already set into law.”