The So-Called Compromise

Ambinder had rumblings last night, and now there's a clear split among employers, with Starbucks, Costco and Whole Foods proposing an alternative organizing bill to supplant the Employee Free Choice Act.

As business and labor gird for battle over legislation that would make it easier for workers to organize, the debate could be transformed by a "third way" proposed by three companies that like to project a progressive image -- Costco, Starbucks and Whole Foods.

Like other businesses, the three companies are opposed to two of the Employee Free Choice Act's components -- a provision that would allow workers to form a union if a majority sign pro-union cards, without having to hold a secret ballot election, and one that would impose binding arbitration when employers and unions fail to reach a contract after 120 days.

But the companies' CEOs say that they also recognize that just opposing the legislation, dubbed "card-check," is not enough, because of the widespread perception in Democrat-dominated Washington that there is not a level playing field between labor and business. So the CEOs have come up with ideas they hope will form the basis of new legislation.

Their proposal would maintain management's right to demand a secret ballot election, and would leave out binding arbitration. The proposal would keep the third main element of the "card-check" bill -- toughening the penalties for companies that retaliate against workers before union elections or refuse to engage in collective bargaining. But it would also toughen penalties for union violations, and it would make it easier for businesses to call elections to try to decertify a union.

To address labor's concern that businesses intimidate workers before elections, it would set a fixed period in which an election must be held, limiting the delays that give employers time to exert pressure. The proposal does not specify what the time period should be.

The proposal would also provide unions equal access to workers before elections -- for instance, by allowing organizers to address workers on a lunch break in the company cafeteria just as management can.

Um. Would this improve upon current law? Probably, although the decertification provision is probably ripe for abuse. Does it come anywhere near what is needed to fix the broken bargaining process? No, in a word. Without binding arbitration on contracts, and without the option for majority sign-up, you keep labor in a box, and keep the playing field tilted toward management. This statement from AFL-CIO Government Affairs Director Bill Samuel reflects labor's concern:

The Employee Free Choice Act is about protecting the fundamental freedom of workers to bargain with their employers for a better life and to join a union without corporate interference and harassment.

The proposal being circulated by these companies falls short of meeting these standards.

We are open to discussing the legislation with parties who are legitimately concerned with protecting workers.  However, a proposal coming from corporations, some of whom have their own history of violating workers' rights, is simply not an alternative that lives up to giving workers back the freedom to form unions.

Of particular concern is the removal of majority sign up – which exists under current law - and the removal of the arbitration provisions. Removing the arbitration provisions will allow companies to continue to stall and delay and refuse to negotiate a contract in good faith.

That said, there are positive and negative elements to this from the perspective of politics.

The positive is the perceived split among business. Anti-union forces oppose this deal, and the cracks among businesses can be exploited.

However, these companies, particularly Starbucks and Whole Foods, are no friends of labor. The NLRB cited Starbucks for illegally firing three union organizer baristas in New York City and prohibiting employees to discuss union issues at work. Whole Foods' CEO compared unions to herpes: "It doesn't kill you, but it's unpleasant and inconvenient and it stops a lot of people from becoming your lover." These are not good-faith negotiating partners.

And the bigger negative is that this now becomes the "sensible centrist" alternative, the Solomonic way, that the bipartisan fetishists can push forward and consider themselves beloved by all rational people. Just look who brokered this deal:

The effort is being led in Washington by Lanny Davis, a former special counsel to President Clinton. Davis said he has approached about 20 Senate offices and gotten an overwhelmingly encouraging response. The Employee Free Choice Act has majority support in both chambers, but there are signs it may have trouble getting a filibuster-proof 60 votes in the Senate, where several centrist Democrats who previously supporting it are expressing reservations.

Sen. Mark Pryor (D-Ark.), a centrist ambivalent about card-check, praised the companies' proposal. "I appreciate good faith effort that could result in a reasonable compromise on what has become a highly polarizing matter," he said.

You can just see where this can go, ending in a half-measure that will fail to solve the problem. It's the old "Washington compromise" all over again. And only workers get screwed, so who cares, right?

Inside-Outside Movement On The Restoration Of Science

After some ridiculous obstructionism, John Holdren and Jane Lubchenco finally won confirmation to the Administration positions of science advisor and head of the National Oceanic and Atmospheric Administration (NOAA), respectively. Lubchenco's agency conducts most of the federal government's research into climate change, and so an expanded policy role for her means better data and a better understanding of the overall challenges that accompany a warming planet. The stimulus gave the NOAA budget a 20% increase, and now that will be put to use in forming a National Climate Service.

One of her first initiatives, she added, will be to establish a National Climate Service, loosely modeled on the National Weather Service.

"NOAA has a key role to play in providing the fundamental knowledge about the climate system, providing data as to how the system is changing and taking all of that information and providing it in a way that's easy to understand in order to make decisions," she said.

Hopefully the increased data and better modeling can prove to policymakers that the costs of NOT dealing with climate change far outweigh the up-front costs. In fact, the cap and trade system proposed in the federal budget pays for itself through charging business for permits to pollute, and funnels much of that to Americans to offset increased energy prices. There is no fiscal and certainly no ecological reason to ignore climate change any longer. As Lubchenco notes, "long-term economic prosperity depends on a healthy environment."

While Lubchenco promises more institutional information on the impact of climate change, the lack of legitimate PUBLIC information poses a real danger to the political will to set policies to combat it. That's why Chris Mooney's op-ed refuting George Will's nonsensical denialism means a lot. The Washington Post didn't print Mooney's rebuttal out of an internal conscience, but because progressives and environmentalists placed real pressure on them. Getting the record on Will's lies in print at his own paper represents a big victory. We're not going to stamp out anti-science covering for industry polluters overnight, but the combination of bottom-up calls for change and a real commitment from the executive branch and the relevant agencies can be powerful.

Israel Sticks Their Thumb In Obama's Eye

Barack Obama's historic outreach to Iran signals a US-led effort to re-engage the world and settle differences through constructive diplomacy rather than divisiveness and belligerence. The problem for this prospect is the continued structures throughout the would that will resist it. Case in point, Israel. MJ Rosenberg's compelling analysis suggests that Shimon Peres intentionally undermined the Obama message to Iran.

Yesterday, when the New York Times inexplicably gave Shimon Peres' insulting message to Iran equal play with President Obama''s, I thought it might be no coincidence.

Peres, who is an uberhawk on Iran, suddenly sends "greetings" to the Iranian people urging them to rise up against their government at the same moment that Obama respectfully addressed the "Islamic Republic of Iran" with the most conciliatory US message in decades. Coincidence? Maybe.

Of course, the Iranians would not view it that way. They would see America and Israel playing "good cop, bad cop," diminishing the effect of Obama's remarkable overture.

I hear that the White House is furious.

Today's Times reports that when asked about the Israeli move, Press Secretary Robert Gibbs said, "I know we notified our allies about our message last evening," saying he did not know if the Israelis had been notified.

Of course, they were. No other ally is as concerned about Iran as Israel so Jerusalem must have been at the top of the list of those notified.

Given the prevailing belief in the Muslim world that Israel and the United States speak with one voice, Peres' message nullifies, at least in part, Obama's. The distraction is obvious. And we're just a few weeks away from an even more conservative, more hardline government in Israel than the current one. Needless to say, the neocons are thrilled because they fundamentally oppose peace. Bad news, made worse by the fact that I doubt the Obama foreign policy team will force the Israelis to suffer any consequences for this.

California's Most Important Traffic Jam

Perhaps the most important part of Barack Obama's Southern California trip, in my view, was not hearing the perspectives of a nervous public, or checking out battery technology in Pomona, or using the bully pulpit to speak to the nation on the Tonight Show. It's that he got stuck in traffic.

He got caught in traffic on the 110. He bantered with Jay Leno. And he sought to reassure people worried about the sagging economy and the spiraling national debt.

President Obama ended a two-day swing through Southern California on Thursday, a trip that exposed him to both celebrity and everyday struggles. Like many people navigating the freeways at midday, he was briefly tied up in traffic, his motorcade wheezing along at 10 mph as he made his way from west of downtown Los Angeles to Burbank. But he also got to trade quips on "The Tonight Show" with Leno, mixing a sober assessment of the AIG bonus scandal with details about his life inside the White House.

Traffic has actually improved in the LA area over the last six months, at least in peak hours with less workers traveling. But it remains incredibly difficult to move for large chunks of the daytime, which decreases productivity and causes harmful and unnecessary carbon emissions. Los Angeles' transit infrastructure has been abysmal for so long that few remember how it was built, along streetcar lines. Increased revenue from Measure R can spark a transit revival, with a subway to the sea, a Green Line to LAX, and increased light rail and bus service throughout the region, but that will take years if not decades, especially without federal aid. And this goes back to the need for smart growth solutions to reduce the need for highway travel for work.

Clearly, the status quo is unsustainable. Just ask the guy in the motorcade stuck on the 110 last Thursday.

Why Not Anger?

Shorter everyone who presumes to speak for everyone: This rabble-rousing is sure making it harder to continue with our legalized theft!

I don't want to completely dismiss the pushback from those who find the public anger over the AIG bonus babies distasteful. Without question, the larger scandal concerns the counter-parties and the use of AIG as a conduit to reward multinational banks, especially because the company made the counter-parties whole instead of forcing them to take a haircut. Joe Nocera makes additional good points. But whines that people are angry about the wrong thing hardly obscures the fact that people ought to be angry, extremely angry, at the hash financial, political and media elites have made of our collective economic well-being.

This anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing.

It makes perfect sense that those who are satisfied with the prevailing order -- because it rewards them in numerous ways -- are desperate to pacify public fury. Thus we find unanimous decrees that public calm (i.e., quiet) be restored. It's a universal dynamic that elites want to keep the masses in a state of silent, disengaged submission, all the better if the masses stay convinced that the elites have their best interests at heart and their welfare is therefore advanced by allowing elites -- the Experts -- to work in peace on our pressing problems, undisrupted and "undistracted" by the need to placate primitive public sentiments.

While that framework is arguably reasonable where the establishment class is competent, honest, and restrained, what we have had -- and have -- is exactly the opposite: a political class and financial elite that is rotted to the core and running amok. We've had far too little public rage given the magnitude of this rot, not an excess of rage. What has been missing more than anything else is this: fear on the part of the political and financial class of the public which they have been systematically defrauding and destroying.

Consider that AIG is currently suing the federal government, which owns the company, for the return of $306 million in tax overpayments. I don't see these same elites shaking their heads soberly at AIG for their "populist anger" at trying to get $300 million from the entity that handed them $185 billion. Oh yeah, and with the real amount of the bonus increasing (now it's $218 million), before long the amount in bonuses and the amount requested from the government in tax overpayments will be equal, I'm willing to bet.

I agree that the fact that populism moved the House to pass the admittedly crude excise tax bill represents a great hope that finally, politicians are more worried about the public perception than their standing among the elites (the Senate remains out of reach, but only for now). People understandably reject a government and an economy owned by elites, and desire a voice in their affairs again.

And that's the point: only this true, intense, and -- yes -- scary public rage can serve as a check on ongoing pilfering by the narrowed monied factions who control our Government for their own interests and who otherwise have no reason to stop. Who else is going to impose those checks? The bought-and-paid-for, incomparably subservient, impotent and inept Congress? The establishment-loyal, vapid political press? An executive branch run by the very people who are most vested in, dependent on, and loyal to the financial system that produced these disasters? Only a healthy fear of the populace -- exactly what has been missing -- can achieve that.

Now rage can lead to bad outcomes, but I struggle to see how it could be functionally worse than the society of the pwned in which we live currently.

Lucian Bebchuk and Dean Baker have more.

Now Can We Call It A Quagmire?

Along with everything else in this busy week, the pressing problems in Afghanistan and Pakistan continue to percolate. Obviously the establishment impulse, as authored by John McCain and Joe Lieberman, is to escalate, escalate, escalate. But their prescriptions call for a counter-insurgency commitment that, though unexpressed, would require hundreds of thousands more troops. The Administration won't go that far, instead preferring a smaller escalation that cannot pull off such a COIN strategy, along with a civilian surge to rebuild Afghan civil society (which I actually support), and a doubling of the Afghan security forces, which could lead to unintended negative outcomes.

...one of the smartest defense analysts I know raised a concern a few weeks ago that while yes, more Afghan soldiers might be less expensive than we are, a massive security apparatus of 400,000 men might be more than the Afghan economy can sustain over the long term. I know our near term goal here is to secure as much of the population as quickly as possible, but I hope that at the very least someone is thinking about that rather serious caveat emptor.

Under such a strategy, we either commit to a costly manpower commitment or a costly financial commitment to keep an outsized Afghan army clothed, fed and armed. And meanwhile, the real problem isn't even in Afghanistan, but in Pakistan, where the Administration is mulling a wider war.

President Obama and his national security advisers are considering expanding the American covert war in Pakistan far beyond the unruly tribal areas to strike at a different center of Taliban power in Baluchistan, where top Taliban leaders are orchestrating attacks into southern Afghanistan.

According to senior administration officials, two of the high-level reports on Pakistan and Afghanistan that have been forwarded to the White House in recent weeks have called for broadening the target area to include a major insurgent sanctuary in and around the city of Quetta.

Mullah Muhammad Omar, who led the Taliban government that was ousted in the American-led invasion in 2001, has operated with near impunity out of the region for years, along with many of his deputies.

Already, there has been an expansion of drone attacks into Pakistan, the very unsustainable activity that angers civilian population and has led pro-escalation advocates to call for more troops in Afghanistan. Will the same advocates call for troops in Baluchistan under the same principle?

Pakistan needs support before they fall into instability. But the military's strength and their continued understanding with the Taliban fighters, suggest a Chinese box scenario, where we get deeper and deeper without being able to extract ourselves.

Ugh. Ugh.

Will Regulations Save Us?

The supposed saving grace of the Geithner bank bailout is that at least regulations will be imposed that would eliminate the possibility for this to ever happen again. At least that's Europe's view, as well as Obama's long-term position:

But I think the most important thing that we can do is make sure that we put in a bunch of financial regulatory mechanisms to prevent companies like an AIG holding the rest of us hostage. Because that's -- that's the real problem.

The problem is not just what's happened over the last six months. The problem is what was happening for years, where people were able to take huge, excessive risks with other people's money, putting the entire financial system at risk -- and there were no checks, there were no balances, there was nobody overseeing the process.

Just enforcing the laws already on the books would represent an improvement over, say, the past thirty years. But any confidence that some kind of regulatory overhaul is imminent gets sapped by the first major "reform".

The Financial Accounting Standards Board, pressured by lawmakers to change the fair-value rule blamed for worsening the financial crisis, proposed permitting companies to use “significant judgment” in valuing assets [...]

Fair-value, also known as mark-to-market accounting, requires companies to set values on most securities every quarter based on market prices. Wells Fargo & Co. and other companies argue the rule doesn’t make sense when trading has dried up because it forces banks to write down assets to fire- sale prices.

What this boils down to is that the government will allow banks to pretend that their worthless assets are worth significantly more than what the market will pay for them. In other words, banks will rescue themselves from insolvency by using the magical power of bullshit.

You can't blame this one on the Bush Administration.

Meanwhile, the next regulatory move appears to be vesting more power in the Fed, which failed to regulate the banks the last time. I agree with a new authority to oversee massive financial industry risk and their exotic products, but not with an unaccountable and secretive board that won't even account for the trillions of dollars in hastily printed money they've spent on bank assets.

Regulators have plenty of authority right now. Their reticence to really challenge elites and risk a short-term loss in GDP to protect a larger meltdown reflects a lack of will.

Looking back with 20/20 hindsight the issue isn’t so much that we needed better “rules” as it is that we needed regulators we took seriously the idea that cracking down on private sector funny business is their job. Instead, we seem to have mostly had regulators who regarded the laws on the books as an unfortunate and anachronistic departure from a pure laissez faire ideal. So you got things like the SEC prosecuting celebrities on tenuous charges, but no real oversight of a mortgage sector run amok. When you look back at the trajectory leading up to the crisis, the problem of “deregulation” isn’t so much that there’s some particular rule that was removed during the Greenspan Era that could have saved us as it is that the mindset that drove the legislative agenda of deregulation ultimately proved paralyzing to policymakers.

Certainly, if anything would destroy the mindset of Randian laissez-faire capitalism, it would be the events of the past six months. But given the clear signs from this allegedly "socialist" Administration thus far, I'm not so sure.

You Shall Be Judged By Your Deeds

Since my last Sarah Palin brought out the trolls, why not double my pleasure? Here's The Anchorage (Wolf) Assassin tut-tutting the President's ill-advised comment about the Special Olympics:

"I hope President Obama’s comments do not reflect how he truly feels about the special needs community.”

Here's Palin turning down a boatload of money for... wait for it...

The biggest single chunk of money that Palin is turning down is about $170 million for education, including money that would go for programs to help economically disadvantaged and special needs students. Anchorage School Superintendent Carol Comeau said she is "shocked and very disappointed" that Palin would reject the schools money. She said it could be used for job preservation, teacher training, and helping kids who need it.

That's our Sarah! She says "thanks but no thanks" to internal logic.

...Palin is also deeply in debt from legal bills. Not engaging in ethically and legally questionable activities may have reduced those costs.

Buying Off The Banksters

My college friends and I used to call anything this truly horrific a-good.

The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.

The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.

To help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders.

I don't have to rehash the arguments against this idea, just link to them. Basically, the government will subsidize investors to overpay for bad assets, meaning that cash will simply flow from taxpayers to banks. Instead of shrinking the wealth and value of the financial sector relative to the greater economy, this plan would keep it in place. The White House clearly sees paying off the banksters as equal to saving the economy, making the solution far more expensive than the problem, especially considering that this probably won't work. John Cole sums it up:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

At this point, the only thing we should offer a significant class of banksters is a plea deal. Instead Geithner will preserve the institutions.

If you want to truly fill yourself with dread, consider that the Federal Reserve started buying mortgage-backed securities as early as August 2007, bought up a bunch more in January, and just announced the purchase of even more THIS WEEK. And yet Treasury needs to eat some of this crap as well. That's how many of these little buggers are out there.

OK, I'm going to go watch college basketball and slowly rock back and forth.

...Me again. James Kwak hits on something, connecting for me the Geithner plan to modify loan terms, thus reducing the value of mortgage-backed securities by definition, and this TALF plan, which would overpay for them well above their true value. The investors of the MBS could actually sue under the Takings clause of the Fifth Amendment, if structured improperly. What a fucking mess.

Friday Random Ten

OK, I loaded this thing up with some new stuff, so hopefully nobody will be able to guess the year in which I purchased the iPod anymore.

Bangs - They Might Be Giants
Leg Of Lamb - Queens of the Stone Age
I've Got A Flair - Fountains of Wayne
Give A Little Love - Rilo Kiley
The Yeah Yeah Yeah Song - The Flaming Lips
Rear View Mirror - Grandaddy
Maybe I'm Amazed - Paul McCartney
Tamagotchi Press Officer - Momus
Dream Girl - The Baldwin Brothers
Fallen From The Sky - Glen Hansard

OK, not yet. And I had to download Maybe I'm Amazed to edit my sister's wedding. It's a credit to me that I haven't pulled it off the device. So there!

"Done" Sounds Like A Good Idea

Joe Friedberg, the attorney for Norm Coleman in his battle to keep the 59th Democratic seat out of the US Senate admits defeat:

Q. Joe, are you done?

A. Yes, I'm done.

Q. Let me ask you in a different way. Is Norm done?

A. Well, I think that we have been trying this case with the appeal record in mind, and that's where we're going, and it's going to be a very quick appeal, and then I will know whether or not it worked.

Q. Well, when you say quick appeal, are you confident that you are going to lose the case in front of the three-judge panel? By losing the case, I mean Norm ends up with less votes.

A. I think that's probably correct that Franken will still be ahead and probably by a little bit more. But our whole argument was that it was a constitutional argument, and it's an argument suitable for the Minnesota Supreme Court, not for the trial court. So we will see whether we were right or not.

Actually their whole argument was not an argument, but a way to obstruct Al Franken's seating for as long as possible. Our deliberative judicial process allows such obstruction, but let's not kid ourselves about arguments being suitable for one court and not another. Slowly working through the process was the whole point.

So, months after the election, and several weeks after the Supreme Court trial, Coleman's own lawyer admits that his client will wind up in worse shape than before, and that he was arguing to the wrong court this whole time to intentionally set up an appeal. Since the loser pays in Minnesota courts, at least Coleman will get his money's worth on Al Franken's lawyer. Of course, while Friedberg failed in court, he did his actual job well - it's almost April and Minnesota continues to have one US Senator.

Sacramento Tent City Update

Last week I took a look at the growing Bushville on the American River in Sacramento, which has been garnering national attention as a powerful symbol for these troubled economic times. It was clear at that time that the city government led by Mayor Kevin Johnson needed to do something to ameliorate the situation. The decision has been made.

Sacramento Mayor Kevin Johnson promised to first make alternative shelter space available for the estimated 150 men and women who inhabit the squalid encampment near the American River, at the edge of the city's downtown.

Johnson, who toured the area with California Governor Arnold Schwarzenegger a day earlier, said he hoped to have the ramshackle settlement cleared of tents and debris in the next two to three weeks.

"We want to move as quickly as we can," he told a news conference, insisting the city was determined to treat the tent dwellers with compassion.

"They are people out there. We have to do whatever we can do," he said. "We as a city are not going to shy away from it. We're going to tackle it head-on."

Advocates for the homeless applauded the mayor's action. Municipal authorities in Sacramento have been debating the fate of the tent city for weeks.

150 seems like a very low number, when news outlets have reported as many as 1,200 homeless staying in the encampment. Of course, that could simply be a matter of media overhype (local shelter organizers apparently fed this as well). However, even if the numbers are correct, finding shelter space for 150 deals with those made homeless as of today. With unemployment skyrocketing, there will be more left homeless tomorrow. And next week. And next month. While most in the encampment did not fit the profile of the "recession homeless" (a closer look reveals that the tent city grew out of multiple closures of other shelters, which is probably because of the recession anyway, so we can go around and around on this), such a group does exist and will need help over the next year as the state struggles. The fact that so many homes lie vacant and are owned by Fannie Mae and Freddie Mac, i.e. the US taxpayer, suggests there are solutions to this problem beyond the short term if creative solutions are made.

Quoting the Wall Street Journal Editorial Page For The First Time

Big thanks to The Wall Street Journal editorial board for admitting, after years and years, that the Employee Free Choice Act does not eliminate the secret ballot:

The bill doesn't remove the secret-ballot option from the National Labor Relations Act but in practice makes it a dead letter. The bill allows a union to automatically organize a worksite if more than 50% of workers simply sign an authorization card, so pressure for employees to sign in public view would be enormous. The legislation also imposes a contract through binding arbitration if labor and management reach a stalemate.

The rest of it is untrue, but they are accurate in one respect - the bill doesn't remove the secret ballot from the National Labor Relations Act. In fact, what the WSJ doesn't tell you is that employees can call for a secret ballot election if 30% of them request one. Therefore, the rights of the minority in the workplace are protected and the secret ballot is in no way eliminated.

The editorial has some other missteps, like quoting a National Labor Relations Board study from 2005 (which has an interest in preserving the status quo) instead of the voluminous research showing firings and intimidation of organizers by management before elections. But you have to appreciate them finally giving up the number one talking point on the right. Expect this line to be used in lots of pro-Employee Free Choice Act materials.

This doesn't presume safe passage, of course. Arlen Specter is being pulled in so many directions, as the most important swing vote on the matter, that he could absolutely flip, and there are plenty of squishy moderate Democrats who want no part of the law. They are only betraying their constituents, of course. And now that the most dishonest rhetoric from the right has been neutered, perhaps they will have no recourse as well.

The Dangerous Politics Of Cap And Trade

I mentioned earlier that I am less hopeful on getting meaningful carbon pricing legislation through Congress this year than getting health care reform. The main reason is that too many Americans experience the broken health care system directly for politicians to evade public anger over it. Climate change is simply more abstract, making it a tougher sell. And you can very easily turn the idea of capping emissions and selling carbon credits at auction to polluters into "an energy tax." This is from a letter from GOPers on the Senate Environment and Public Works Committee to their colleagues, and the rhetorical gambit is clear.

The President's 2010 Budget proposal contains a risky, ill defined new energy tax that has the potential to continue the economic recession for many years to come. We are writing this letter to alert you to this situation and ask that you join us in a budget resolution amendment to strike and such provision.

Specifically, the President's 2010 Budget proposal asks to collect $646 billion dollars in new "Climate Revenues" from the American people. The government will collect these new revenues through a cap and trade scheme in which " allowances" are sold to the highest bidder. The government won't tax consumers directly, but it will impose new costs on energy producers and users who will in turn pass those higher costs on to consumers, which will result in higher electricity bills, gasoline prices, grocery bills, and anything else made from conventional energy sources. In short, consumers will feel as if they are paying a new tax on energy.

The stated price tag for this new energy tax is $646 billion, yet recent news reports indicate that administration officials are privately admitting their program will actually generate between "two and three times" this amount of revenue, or between $1.3 trillion and $1.9 trillion. However, these numbers represent only the cost from 2012 through 2019. The budget summary describes the energy tax extending at least through 2050. At the 2012 through 2019 average annual rate, families and workers would face through 2050 between $6.3 trillion and $9.3 trillion in higher energy taxes.

Left unsaid is that the government would funnel most if not all of that tax to those same consumers in the form of the "Making Work Pay" tax credit. Really this is an effort to keep the oil industry in business - and the industry obviously believes it can work, as they divest from renewable energy and into biofuels, the production of which emits just as much carbon.

There are good signs as well - Lindsay Graham and John McCain have signed on to climate change legislation, but of course they would like nothing more than to eliminate the auction for carbon credits and give away polluting rights for free. That was the structure of the McCain-Lieberman (later Lieberman-Warner) cap and trade bill from last session. The hint toward using budget reconciliation clearly got McCain and Graham out of their chairs on this one. But a bad climate bill that ditches auctioning off pollution rights wouldn't be anything to cheer about. It would reward big business, plain and simple.



As Brad Plumer notes:

You see what happens if the permits are auctioned off and the revenue is divided among Americans equally. The overall impact is actually progressive, and lower-income households come out ahead—the extra amount they pay for dirty energy is more than offset by the rebate. But if the permits are given out to companies for free, it's only wealthier Americans who benefit—they're the ones running the companies making windfall profits, after all—while everyone else gets squeezed.

Given the option of another tax break for the wealthy or movement on other issues like investing in renewables and a hard standard for electricity generation... let's say it's a toss-up.

Dodd Held Hostage

I really feel bad for Chris Dodd getting caught up in the populist fury over AIG, in a way that is truly unfair to him. He wrote an executive compensation amendment for the stimulus. He was hounded by Treasury officials and Administration leaders to water it down, and wanting to keep at least some of the provisions in the bill he did so. There was no indication that AIG executives stood to benefit when he made changes to the bill. In fact, language that is LAW TODAY would still allow the Treasury Department to claw back bonuses if they found compelling public interest (which, according to Dodd, is happening as we speak). Despite the media and conservative jabber he's been completely consistent on this issue, the facts of which have been well-known for over a month. The flip-flop from the conservative business press, which a month ago were calling Dodd's amendment too restrictive and are now calling it a giveaway, is astonishing.

Here he is at a press conference today. Sadly, I'm not sure it'll be enough. The right was already smearing Dodd for a sweetheart mortgage he apparently received through Countrywide, and this offered another opportunity to pile on. Instead of the greater lesson that executive compensation is a festering problem that we must deal with (good again on Ben Bernanke for addressing that today), commentators are pointing fingers and deciding on Dodd as the scapegoat. "He gets all that campaign money from AIG!" No shit, so the chairman of the Senate Banking Committee gets campaign contributions from financial services interests? They apparently swayed him so much that he only offered an amendment to take all their bonuses away!

The end of Dodd's statement is particularly good:

"Standing in a community of my state, this isn't about my job, it's about their jobs. It's about their future and their children. And I'm not in the business of getting re-elected to office, I'm in the business of doing my job that I got elected to do. And I'm going to do my job."

I think he understands the reality, and that this all may cost him re-election. Scapegoating is a very easy and familiar action, but it doesn't make it right. And anyway, plenty in government knew about these bonuses. Talk to them for a minute.

American Journalism

Many expected the giant freak-out today over an ill-worded joke in the middle of a longish interview focused on finance and macroeconomics, despite the White House's immediate apology and regret. It's the stuff of partisan food fights, so let the mashed potatoes fly. Whatever, and Obama shouldn't have said it. But the episode has been instructive for, if nothing else, revealing what a massive tool Jake Tapper is:

Everything you need to know about the DC journo establishment, from ABC News White House correspondent Jake Tapper's Twitter feed:

Breaking- PrezObama on Leno jokes about being a bad bowler- says it's "like the Special Olympics or something" http://tinyurl.com/bholeno about 12 hours ago from TwitterBerry

Am trying to imagine the reaction if President Bush joked that his bowling skills recalled the Special Olympics. 3 am- we just landed in dc about 6 hours ago from TwitterBerry

Preparing for day of hypocrisy: conservs who would normally defend the SpecOlymp joke acting offended, liberals saying lighten up. Sigh about 3 hours ago from TwitterBerry

Moments after David Kurtz posted that writing of the script of the day before it happens, Tapper blocked him from reading his Twitter feed. And then he blocked Adam Serwer. And then, after the heat rose, he unblocked Kurtz. You can read the whole extended whine at Tapper's feed, claiming somehow that "rudeness" ruins his nice conversation with his Twitter compatriots... which is not the point, since he was responding to journalists slagging him on their blogs by cutting them off.

Favorite comment on this sorry affair: "Arguing on the internet is like working for ABC News. Even if you win, you're still Jake Tapper."

Twitter is kind of a useless tool anyway, perfect for media types who can't think beyond 140 characters, but the pissiness it's bringing to the fore is most amusing.

Wanted: Political Will

Douglas Holtz-Eakin, John McCain's chief economist during the Presidential campaign, makes the case for temporary bank nationalization. That it comes after a swipe at the federal government's ability to participate in the economy makis it even more jarring.

I remain convinced that the financial crisis is the greatest threat to the U.S. economy. It should be the top policy priority and, since I think it will be very expensive, the top budgetary priority as well. Unfortunately, at the moment it does not appear that either the public or the Congress displays any willingness to devote more taxpayer dollars to addressing the crisis. We need to shift the policy tactics and the public perception right now.

The right thing to do is to apply the principles of responsibility and competition, and the lessons of history to get this right. The most important lesson is that failed, insolvent banks cannot be permitted to continue to operate using taxpayers’ subsidies. Letting these “zombies” walk the financial system was at the heart of the savings and loan crisis and the slow Japanese recovery from its financial crisis. These institutions should be taken over, their management and shareholders suffer the consequences of their failure, and the assets re-sold to private sector entities as fast as is feasible. That’s good policy: discipline failure, promote real competition, and use assets effectively in the private sector.

Doing business that way eliminates “bailing out the banks” and “saving AIG” from the public discussion, and hopefully will make taxpayers more willing to open their wallets to solving the problem. Yes, it will be costly – but the cost is the price of not allowing the unwinding of individual institutions to cause a chain reaction of financial collapse.

If an economist who is predisposed to bash government, who ran a campaign for an anti-government crusader, can understand the necessary steps to get us out of this mess quickly and with the least damage possible, this really is no longer an ideological issue. You have Douglas Holtz-Eakin, Alan Greenspan and Harold Meyerson on the same side of an issue, ferchrissakes. And Meyerson hits on the main reason why this hasn't been done yet - a continued thrall to the banksters instead of a dispassionate analysis of the best option for the entire population instead of a handful of elites.

But Geithner's indulgence of bankers' indulgences is fast becoming the Obama administration's Achilles' heel. The AIG debacle is the latest in a series of bewildering Geithner decisions that threaten to undermine the administration's efforts to restart the economy. So long as it's Be Kind to Bankers Week at Treasury -- and we've had eight straight such weeks since the president was inaugurated -- American banking, and the economy it is supposed to serve, will remain paralyzed. The Geithner plan to restart the banks provides huge taxpayer subsidies to hedge funds, investment banks and private equity companies to buy the banks' toxic assets without really having to assume the risk. That's right -- the same Wall Street wizards who got us into this mess, using the same securitization techniques that built mountains of debt within a shadow financial system that remains unregulated, are the saviors whom Geithner has anointed to extricate us -- with our capital, not theirs -- from the mess that they created.

A more plausible solution would be for the government to assume control of those banks that are insolvent, as it routinely does when banks go under. It could then install new management, wipe out the shareholders, take the devalued assets off the banks' books, restart lending and restore the banks to private control at a modest profit for the taxpayers. There may be reasons that Geithner's plan makes more sense than this one, but if they exist, Geithner has failed to explain them.

There are simply too many questions with the public-private partnership idea. I understand the desire to keep the ultimate costs low. But considering that the quantitative easing program being run out of the Fed is virtually GUARANTEED to lose the country $200 billion at the low end, I don't think we should fool ourselves anymore with the bromide that a bailout can pay for itself. We either pay now or light a bunch of money on fire and pay more later. And so trying to make hedge fund managers partners in a scheme that is fated to fail, with only the private interests taking the upside, makes no sense. The ultimate question that supersedes everything right now, as even Ben Bernanke acknowledges, is whether or not we will have the political will to take the necessary steps.

In fall 1997, a key issue for Indonesia’s IMF program was whether the government could close the banking operations belonging to one of President Suharto’s sons. There was an epic and fascinating struggle and, in the end, the government did not have sufficient political will or power. The subsequent loss of US support, and further currency and economic collapse is (messy and painful for many) history.

It is striking that Ben Bernanke now asks whether the United States today has sufficient political will.

Right now, I'm not seeing it.

...Today Bernanke is trying to build the political will out of the sand we currently have.

"We have such a regime for insured depository institutions, but it is clear we need something similar for systemically important nonbank financial entities," he said in prepared remarks to a community bankers convention in Phoenix.

"Improved resolution procedures for these firms would help reduce the too-big-to-fail problem by giving the government the option of safely winding down a systemically important firm rather than keeping it operating," he said.

You Feel Lucky?

The CBO re-scoring of the budget is going to severely hurt efforts at progressive reform, and I don't think there's much use in denying that. The current deficit for FY2009 is $600 billion dollars more than first thought, because the recession's depth and severity wasn't expected to this degree. And while the numbers actually argue for a deeper public investment in the economy, as the normal economic tools for growth clearly aren't operative, there are enough fiscal scolds in Washington to make this re-scoring forcethe Administration to scale back their goals.

But I hope that's not the case. And this game of hardball on health care needs to continue to be played.

House Democrats, in consultation with the White House, will give Republican lawmakers until September to reach a compromise on President Obama's signature health-care initiative -- otherwise, they will use a shortcut to move the measure through Congress without Republican votes.

After meeting late Wednesday with senior White House officials, House Democratic leaders decided to include the shortcut in the budget proposal they will unveil next week, congressional sources said.

Known as budget reconciliation, the shortcut would permit lawmakers to roll Obama's health-care proposals into a bill that cannot be filibustered, meaning Democrats could push it through the Senate with 51 votes, instead of the usual 60. Since Democrats control 58 seats in the Senate, they could approve a reconciliation bill without Republican votes or the support of some reluctant conservatives in their own party.

Republicans have blasted the idea of reconciliation, saying it would severely undermine bipartisanship.

There's no bipartisanship to undermine. What it WOULD undermine is obstruction. And our problems are too great for obstructionism to continue.

I'm less confident about cap and trade - Obama is not as good a messenger on that topic, and if something must be given up, I expect it would be that specific policy, while a federal renewable portfolio could be advanced - but weirdly more confident about health care, despite the negative report from the CBO. Now, if the scolds want to pay down the debt some more, we can take a look at the military budget...

...another reason to be optimistic about health care reform is that the various competing chairs in the House are working together. Jurisdictional issues can become large rifts, and so having everyone working together is very important.

Holiday Engagement

Barack Obama's message to the Iranian people on Nowruz, their new year's holiday, is the first historic thing he has done. Obviously the domestic agenda will swamp everything else in the short term, but in retrospect, historians will remember this message, fulfilling his promise to offer a new level of engagement to the whole world, without the silly constraints American bullies put on themselves.



I've put the whole text in case you can't watch the video right now. The Farsi script was also placed on their website, along with a subtitled video. A celebratory video will not unfreeze relations overnight. Indeed, the near-term headline in the region will probably be the two Navy warships colliding in the Straits of Hormuz, which will set the conspiratorial tongues wagging. But it is a powerful symbol, the extended hand to the clenched fist. Obama, as per usual, speaks to the common humanity that transcends culture, and the need to resolve differences through mutual respect and international cooperation (Russia is responding well to calls for a deal on Iran, so we are not lifting the entire bale here). This is just his negotiating style, summed up by the line from a Persian poem he quotes: "The children of Adam are limbs to each other, having been created of one essence." Obviously the policy differences get in the way of this approach - this would be a better method - but at the end of the day we're all human beings, and tone matters. It will be harder for Iranian hardliners to call the man in that video the great Satan. The pressure for a resolution will increase. The lowered voices are less susceptible to demagoguery.

Of course the words must match the action - but I am very happy to see this outreach.

THE PRESIDENT: Today I want to extend my very best wishes to all who are celebrating Nowruz around the world.

This holiday is both an ancient ritual and a moment of renewal, and I hope that you enjoy this special time of year with friends and family.

In particular, I would like to speak directly to the people and leaders of the Islamic Republic of Iran. Nowruz is just one part of your great and celebrated culture. Over many centuries your art, your music, literature and innovation have made the world a better and more beautiful place.

Here in the United States our own communities have been enhanced by the contributions of Iranian Americans. We know that you are a great civilization, and your accomplishments have earned the respect of the United States and the world.

For nearly three decades relations between our nations have been strained. But at this holiday we are reminded of the common humanity that binds us together. Indeed, you will be celebrating your New Year in much the same way that we Americans mark our holidays -- by gathering with friends and family, exchanging gifts and stories, and looking to the future with a renewed sense of hope.

Within these celebrations lies the promise of a new day, the promise of opportunity for our children, security for our families, progress for our communities, and peace between nations. Those are shared hopes, those are common dreams.

So in this season of new beginnings I would like to speak clearly to Iran's leaders. We have serious differences that have grown over time. My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community. This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect.

You, too, have a choice. The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right -- but it comes with real responsibilities, and that place cannot be reached through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization. And the measure of that greatness is not the capacity to destroy, it is your demonstrated ability to build and create.

So on the occasion of your New Year, I want you, the people and leaders of Iran, to understand the future that we seek. It's a future with renewed exchanges among our people, and greater opportunities for partnership and commerce. It's a future where the old divisions are overcome, where you and all of your neighbors and the wider world can live in greater security and greater peace.

I know that this won't be reached easily. There are those who insist that we be defined by our differences. But let us remember the words that were written by the poet Saadi, so many years ago: "The children of Adam are limbs to each other, having been created of one essence."

With the coming of a new season, we're reminded of this precious humanity that we all share. And we can once again call upon this spirit as we seek the promise of a new beginning.

Thank you, and Eid-eh Shoma Mobarak.

I Love You, Man

Listen to Arnold Schwarzenegger's budding bromance with President Barack Obama:

“When have you ever seen a president be that out there?”

That was a mesmerized Arnold Schwarzenegger after Obama’s town hall meeting.

“I’ve never seen that,” Schwarzenegger said to a couple reporters as he and his wife, Maria Shriver, tried to make an exit. “Usually people are so guarded. The aides are always so guarded. They’re so afraid that you will blow it or that you will make news that’s unintended and all those things.”

Schwarzenegger continued to gush about Obama.

“But I think he’s so smart,” he said. “He’s so clear with his thinking and he’s so well informed and has been dealing with policy in all this and is also very philosophic it’s almost like. I think he’s just like – I think it’s beautiful.”

Given his record, I can see why Arnold would be so enchanted by a politician who actually knows the issues he talks about.

He accompanied the President back to Washington today for talks on infrastructure. Maybe someone in the White House will ask him why his staff is leaning toward rejecting stimulus money for extended unemployment benefits, and why he has given no public position.

The White House Vegetable Garden

I hope this starts a trend. Sustainable lifestyles are healthy lifestyles.

On Friday, Michelle Obama will begin digging up a patch of White House lawn to plant a vegetable garden, the first since Eleanor Roosevelt’s victory garden in World War II. There will be no beets (the president doesn’t like them) but arugula will make the cut.

While the organic garden will provide food for the first family’s meals and formal dinners, its most important role, Mrs. Obama said, will be to educate children about healthful, locally grown fruit and vegetables at time when obesity has become a national concern.

In an interview in her office, Mrs. Obama said, “My hope is that through children, they will begin to educate their families and that will, in turn, begin to educate our communities.”

I love the symbolism. Throughout the Presidential campaign we heard various candidates, including Obama, state that we have a disease care system, not a health care system. That's not just a function of a lack of preventive care, but the way in which Americans live and eat. In low-income communities fresh produce is often not even available. But we can plant community gardens, in a large swath of land offered by municipalities (I'm quite certain that there are a few vacant lots out there) or in individual homes. And we can move our children and ourselves to better food options. And we can, by taking that responsibility, reduce the need for the exorbitant external costs associated with obesity.

This has inspired me. I currently don't have the space for a garden, but I've been meaning to get one of those small planters on rollers to grow a few crops. Thanks, Michelle.

Nobody Puts Palin In The Corner

You didn't think Sarah Palin would let Mark Sanford and Rick Perry have all the fun, did you?

Following the lead of the other 2012 GOP presidential contenders, Gov. Sarah Palin (R-AK) announced today that she would reject nearly half the $930 million Alaska was set to receive from the economic stimulus package. Like Gov. Mark Sanford (R-SC), Palin is set to further cripple the state’s education system:

The biggest single chunk of stimulus money that Palin is turning down is $160 million for education. There’s also $17 million in Department of Labor funds (vocational rehabilitation services, unemployment services, etc.), about $9 million for Health and Social Services and about $7 million for Public Safety.

Nobody is going to out-stupid Sarah Palin. Do you hear? NO ONE!

At least when all the wingnuts go Galt, they'll have a big empty state with no economic activity to hang out in.

It goes without saying that rejecting free money in an economic downturn is about the silliest thing you can possibly do. And it's not based on some great principle on Palin's part; she's taking $514 million, after all, and in the past has received ridiculous amounts of largesse from the taxpayer.

You know, if the money goes back into the pie, and can get out to the states that desire it, this might not turn out so bad. You can envision it as sort of a redistribution of federal money from the recipient states who typically get more back for their tax dollars (largely red states, incidentally) to the donor states, like California. You can't force these grandstanders to help themselves, so, you know, good luck.

I eagerly await to see how Greta Van Susteren's Scientologist husband spins this one.

Why AIG Matters

I didn't think it was necessary to spell out why $165 million dollars in bonuses for individuals who tore down their companies is probably a bad thing. But there does appear to be a mild backlash against the over-the-top nature of the public anger, including from White House officials. And given that the numbers are a fraction of one percent compared to the bailout money AIG took from the government (that will never get paid back) or the Fed's huge program to buy up mortgage-backed securities, they may have a point. So, OK.

Obviously there's a political importance because the nation is following the issue so closely. But far more essential than that is how this is tied to income inequality and the stratifying gap between the rich and poor. Kevin Drum is absolutely correct to note that the standard practice in corporate boardrooms is to call bonuses a reward for performance right up until the moment that the performance tanks, at which point they become necessary for retaining talent.

Of course they got their comp locked down when they saw the storm ahead of them. This is what executives always do. Back during the dotcom bubble, corporations handed out trainloads of cheap stock options even though the practice was heavily criticized. Why? Because the stock market was going up and it was a nearly guaranteed way to make lots of money. After the bust, they suddenly took the criticisms to heart and largely stopped the practice. Why? Because the stock market was going down and it wasn't easy money anymore [...]

What happened at AIGFP is standard practice throughout corporate America. America's corporate titans like to talk endlessly about performance-based pay and how capitalism rewards risk, but in real life compensation packages are almost always constructed to avoid as much risk as possible. If you work in a growing industry, your bonus depends on raw growth rates. If you work in a declining industry, your bonus is linked to relative growth rates. If the market is up, your bonus is paid in stock. If it's not, suddenly deferred comp and increased pension contributions are the order of the day. Heads you win, tails you win.

The AIG traders who got this sweetheart deal are nothing special. Management probably didn't even think twice about it. Of course you switch from performance bonuses to retention bonuses when the market looks stormy. What else would you do?

The decoupling of risk and profit is the issue here. Corporate titans never rise and fall on the merit of their superior intellect, and there has been a great shift to mke sure profits, both personal and corporate, are kept in private hands, while the risk is socialized. When times are flush nobody really cares about or at least pays attention to this; when the same people who wrecked the economy feel entitled to their ungodly profits, people get understandably upset.

And the tone-deafness on this from the Administration, therefore, while striking, does not surprise. The Treasury Secretary is now admitting that he asked Chris Dodd to take out the executive pay caps from the stimulus. His rationale? "We wanted to make sure it was strong enough to survive legal challenge." Actually, they wanted to make sure Wall Street didn't pull the pin out of the grenade.

If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains?

"It would become the biggest naked position on Wall Street," one longtime Financial Products executive said, "and everybody would exploit it." [...]

"Nobody is going to give (the bonus money) back and then stay," said one of the firm's employees. "If they give back the money, then they will walk. And they will walk into the arms of AIG's counterparties."

The sense of entitlement to a system that rewards them regardless and shovels massive amounts of money and power in their direction. Heck, we learned today that 13 bailed-out companies owe $220 million in back taxes and lied to Congress about it. OF COURSE they did. That's the system they've created - protections for their corporate bottom line, riches for them personally, crumbs for everyone else. Reaganomics basically set this in motion 30 years ago, and the system has been in place for so long that any alternative path is like the true forms on the outside of the cave instead of the shadows on the inside we think represent reality. But the public knows intuitively that they've been getting a raw deal for decades, and the bonuses are only a small part of the story.

James Galbraith has an amazing piece about the limitations of the Obama economic team to reinvent a new economic ideal, rewarding work instead of wealth, returning the business of finance to its narrow role of facilitating capital flows, etc.

The deepest belief of the modern economist is that the economy is a self-stabilizing system. This means that, even if nothing is done, normal rates of employment and production will someday return. Practically all modern economists believe this, often without thinking much about it. (Federal Reserve Chairman Ben Bernanke said it reflexively in a major speech in London in January: "The global economy will recover." He did not say how he knew.) [...]

Geithner’s banking plan would prolong the state of denial. It involves government guarantees of the bad assets, keeping current management in place and attempting to attract new private capital. (Conversion of preferred shares to equity, which may happen with Citigroup, conveys no powers that the government, as regulator, does not already have.) The idea is that one can fix the banks from the top down, by reestablishing markets for their bad securities. If the idea seems familiar, it is: Henry Paulson also pressed for this, to the point of winning congressional approval. But then he abandoned the idea. Why? He learned it could not work [...]

The government must take control of insolvent banks, however large, and get on with the business of reorganizing, re-regulating, decapitating, and recapitalizing them. Depositors should be insured fully to prevent runs, and private risk capital (common and preferred equity and subordinated debt) should take the first loss. Effective compensation limits should be enforced—it is a good thing that they will encourage those at the top to retire. As Senator Christopher Dodd of Connecticut correctly stated in the brouhaha following the discovery that Senate Democrats had put tough limits into the recovery bill, there are many competent replacements for those who leave.

Ultimately the big banks can be resold as smaller private institutions, run on a scale that permits prudent credit assessment and risk management by people close enough to their client communities to foster an effective revival, among other things, of household credit and of independent small business—another lost hallmark of the 1950s. No one should imagine that the swaggering, bank-driven world of high finance and credit bubbles should be made to reappear. Big banks should be run largely by men and women with the long-term perspective, outlook, and temperament of middle managers, and not by the transient, self-regarding plutocrats who run them now [...]

This cannot be made to happen over just three years, as we did in 1942–44. But we could manage it over, say, twenty years or a bit longer. What is required are careful, sustained planning, consistent policy, and the recognition now that there are no quick fixes, no easy return to "normal," no going back to a world run by bankers—and no alternative to taking the long view.

The AIG scandal represents a reminder of the way things WERE, when Masters of the Universe ruled the world and dared anyone to challenge them. There are raw economic benefits to getting executive compensation under control - the economic burst that would come from a steep reduction in the inequality gap, with a concurrent stronger middle class, reindustrialization, and the rise of labor unions. But there are even bigger implications. It means wresting control over our country away from the ones who ruined it, who are trying to threaten, cajole and intimidate their way into maintaining control. For two years a campaign captivated America with the promise that the people have power, that mass collective action can create change. But we don't. And the bonus babies have proved it. Now there's a choice, that policymakers will eventually have to make but which can be pressured from the bottom.

Who runs this country?

CA-10: Field Clearing For DeSaulnier

Tom Torlakson took himself out of the running for the seat that will soon be vacated by Ellen Tauscher, and in the process he endorsed his friend Mark DeSaulnier:

Assemblymember Tom Torlakson, D-Antioch, said today he will continue his campaign for state schools chief and not run for a congressional seat currently held by Rep. Ellen Tauscher....

In making the announcement, Torlakson, who has held elective office in Contra Costa County for 30 years, said he would endorse Senator Mark DeSaulnier, D-Concord, to succeed Tauscher....

"The East Bay has been fortunate to have been served by Congresswoman Ellen Tauscher the past 12 years, and I wish her well as she prepares for this important new position with the Obama Administration," said Torlakson. "Mark DeSaulnier is the best person to continue her tradition of strong and effective leadership in Congress. He has the experience, intelligence, and character necessary to represent the residents of the district. I am pleased to endorse him and offer my full support for his upcoming campaign."

DeSaulnier isn't the most vocal member of the state legislature, but he is the chair of the Senate Labor Committee, and has been talking about the urgent need for reforming the insane state budget process since last October, including through a Constitutional convention. He's been a reliably good Democratic vote at all levels. Based on what I've been hearing, the unions are ready to line up behind DeSaulnier and they have a decent amount of fundraising power in this district.

Can we do better? In a shortened election cycle, I don't know. It's pretty clear to me that DeSaulnier is better than Joan Buchanan. I would rather see someone not in the legislature for the selfish reasons of having to pass another budget deal.

...CapAlert is floating Brent Jones as a candidate, which apparently is a tradition in this district stretching back to when he was still with the 49ers. Na Ga Happen.

Building Livable Communities

Ray LaHood, the Secretary of Transportation, has a post up at the Department of Transportation's blog, one of the ugliest-looking blogs I've ever seen, what I imagine a blog from 1982 would look like if they had blogs or the public Internet back then... but I digress, because the content is excellent:

Today, I was proud to address my former colleagues in the House of Representatives and co-present a DOT-HUD partnership to help American families gain better access to affordable housing, more transportation options, and lower transportation costs.

As I told House members, “One of my highest priorities is to help promote more livable communities through sustainable surface transportation programs.” That means roads, rails, and transit. It means safer passage for pedestrians, for bicyclists.

After housing costs, transportation takes the biggest bite out of the typical household budget. That's why a partnership between HUD and DOT can be so effective; we have the ability to ease the largest financial burden on many American families. We're talking about 60% of the average working American family's expenses. HUD Secretary Donovan and I can cut these costs by focusing our departments' efforts on creating affordable, sustainable communities.

While so many of the decisions about smart growth and livable communities are typically made at the local, the federal government can absolutely play a role in encouraging better development decisions, either through the bully pulpit or grants in aid. Housing, transportation and energy are all intimately linked. A community with residential and commercial spaces close together, which provides durable transit options between home and work, whether through bike lanes or light rail or whatever, allows for reducing carbon emissions through auto transit. It means a more vibrant neighborhood and a higher quality of life. Communities that cater just to businesses get abandoned at night. Bedroom communities are sleepy during the day. It doesn't make any sense. Not to mention that reducing housing and transportation costs in tandem frees up money for economic activity for small businesses that cater to the area.

Desmoinesdem has a ton more on this initiative, which I find very exciting. Land use and urban planning is the most important aspect of government that gets overlooked. The implications of a smart growth policy are boundless. Also, check out the Complete Streets project, which has legislation pending in Congress (S. 584 and H.R. 1443) that would ensure a fuller range of infrastructure investment on travel including "driving, bicycling, walking, or taking public transportation."

Republicans In Disarray

They had no idea what to do. Vote yes and turn away from antitax ideology and upset almighty Limbaugh. Vote no, and wind up on the wrong side of the public, whose anger is palpable.

The answer? They split almost exactly down the middle on taxing bonuses for executives who received TARP money. The vote was 328-93, with 85 Republicans for it, and 87 Republicans against it.

Beautiful. Who knew this could be a wedge issue? I knew that Republicans had a long record of opposing executive pay caps, but turning on a dime never bothered them before. Meanwhile, even the efforts to blame the Obama Administration for the bonuses are becoming complicated:

Bloomberg News reports that Neil Barofsky, inspector general for the Troubled Asset Relief Program (TARP), told the House Ways and Means oversight subcommittee today that the Bush administration “specifically contemplated” paying bonuses to AIG employees in its November agreement to provide federal bailout funds to the failing insurance giant:

The TARP contract between AIG and Treasury “specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG’s senior partners,” Barofsky said.

I'm somewhat agnostic on this legislation - hopefully it begins the process of dealing with compensation rather than ends it - but Republicans have no idea how to deal with this.

Borrowing Into Health Care Minutiae

Jonathan Cohn, one of the more knowledgeable health care writers out there, has an interesting defense of the proposal to tax health care benefits as a means to overall reform. His argument appears to be that John McCain's conception of taxing health care benefits offered nothing in the exchange, while Obama at least offers... something.

To be clear, such a move would happen in the context of an entirely different health reform proposal than McCain was suggesting. McCain's plan would have undermined employer-sponsored insurance and forced large numbers of people to purchase insurance as individuals through an unregulated market, where it can be incredibly tough to buy decent coverage. Obama's reforms, if executed properly, would make good coverage available to everybody. And they'd still leave in place most employer-sponsored insurance. Changing the tax treatment of health benefits would simply provide a nice way of financing these reforms.

Employer-provided health insurance is a quirk of the 1940s, when it was seen as a way to increase job market stability. Unfortunately, as currently constructed this has transformed into a tax break for very wealthy employees and their coroprations, reinforcing inequality. I think taxing all health care benefits would be wrong, but capping the amount excluded for the benefit of funding a plan that offers affordable care to the broadest number of people makes a good deal of sense, particularly if the cap was phased in progressively, and ultimately I think that's where Obama's team will fall on this. The budget does not provide the funds needed to enact reform, so no sacred cow can really come off the table at this point.

Looking at another piece of health reform, the public option, the Chairman of the health insurance lobby, AHIP, has apparently endorsed the inclusion of a public plan with Medicare bargaining power that would lower prices for consumers by 20-30%. I say "apparently" because he appended the endorsement shortly afterward:

Updated: Halvorson's office e-mails with a correction. When Halvorson signed the document, he privately attached a "signing statement" expressing concerns about -- you guessed it -- the public plan. Sort of like an insurance policy in case anyone noticed. I have the letter for download here. The wording remains a bit vague, so I've asked for an interview with Halvorson in which he can clarify his stance.

Halvorson also runs Kaiser Permanente, which has always been a little more daring than his compatriots in the health insurance world. By and large insurers would rather not compete on price and quality and instead just have customers funneled to them. And of course they wield a certain amount of political power. But public option advocates have something going for them - the enormous popularity of public plans. Seeing the outrage over soldiers possibly having to use private insurance instead of the VA for treating combat injuries should be a warning to those who would kill a public plan. The principles are exactly the same.

Health services provided by the Veterans Health Administration (VHA) are truly socialized medicine, because the doctors and other health care providers who serve veterans work for the government and the government owns and runs the hospitals and other health care facilities where veterans get treatment. The VHA treats over 5 million veterans a year.

It may surprise you to know that in the U.S. members of Congress and Presidents have a long history of also enjoying the socialized medicine taxpayers provide for them. In fact, members of Congress have the choice many of them want to deny you. They can choose a private health insurance plan through the Federal Employees Health Benefits (FEHB) program or they can get top-notch medical care at government facilities, like the Bethesda Naval Medical Center in Maryland [...]

But the socialized medicine veterans, members of Congress and U.S. Presidents enjoy is not what Barack Obama is proposing when he includes a choice of public health insurance in his health reform plan. The public health insurance plan being discussed as part of national health reform would work more like Medicare, in which the government runs the insurance coverage, but the doctors, hospitals and other health care providers people go to are the same private, independent providers that currently care for them.

In fact, people with Medicare currently have the choice of public health insurance or private plans that contract with Medicare. About eighty percent of the 44.8 million older and disabled Americans who have Medicare coverage—about 35.4 million people—choose the government-run public plan over the private Medicare plans.

It is the choice 73 percent of voters want, including Democrats (77 percent), Independents (79 percent), and Republicans (63 percent).

Seems elementary to me. Harness the power of public opinion and even Congress will be forced to listen.

New Registration Numbers Show More Increases For Democrats

The latest report of registration, current up to February 2010, shows that voters have continued to register Democratic in higher numbers even since the general election. There are now 17.3 million registered voters, 74.4% of all eligible adults, and Democrats have a 2.32 million vote advantage over Republicans. By the percentages, the state consists of 44.52% Democrats, 31.14% Republicans, and 19.99% decline to state, with smaller parties rounding out the rest of the voters.

2010 is the last year before a new census and new district lines, so the district-level numbers only apply for the next election cycle. Still, a close reading makes clear where Democrats should be focusing their registration efforts and resources for the next year.

In Congress, there are two Republican-held seats where Republicans hold less than 40% of the registration share, seen as a key dividing line. Those are Dan Lungren's CA-03 (39.7% Republican-37.7% Democratic) and, surprisingly, Buck McKeon's CA-25 (39.7% Republican-39.2% Democratic), which has changed dramatically over the past few years and could be ripe for a well-funded, legitimate challenger. With only 351,421 registered voters in CA-25, there are additional non-voters waiting to be registered there to tighten up those numbers even further. CA-19 also has a shortfall of voters which could lead to a tightening of the rolls.

In the State Senate, the only even-numbered seat (the ones up for election in 2010) that deserves a focus is SD-12, where Jeff Denham is termed out. There are 47.5% registered Democrats and 33.1% registered Republicans. Democrats in that region are fairly conservative, and so there may not be a progressive coming out of that district, but there's no reason on Earth why Democrats shouldn't own that seat. Especially since there may be 100,000 unregistered voters out there.

As for the Assembly, the numbers look good in AD-05, AD-26 (Dems have a 42-39 lead in registration), AD-30 and AD-36, with a few other marginal possibilities based solely on the voter reg. numbers (AD-38, AD-63, AD-64, and AD-65 come to mind). There is absolutely a path to pick up three seats and a 2/3 majority in the Assembly, if the net is cast wide enough.

Of course, oftentimes Democratic officials focus too much, in my view, on voter registration statistics, and shoudl recruit good candidates and give them the resources they need to compete instead. But in this off-year, registration stats offer an opportunity to determine where to target. You can dig through them yourself at the Secretary of State's page.

Listening To The Generals

If you haven't been following it, Christopher Hill, a career diplomat who negotiated some of the better deals with North Korea under the Bush Administration, has been nominated for the post of US Ambassador to Iraq, and conservatives are flipping out because, well, that's what they do. Despite his credentials and history in the foreign service, they claim he has no experience in the region; really they are displeased with his actual negotiation with North Korea, which circumvented Dick Cheney and the neocons. Now the top US commanders in Iraq are voicing their displeasure with the GOP holdup of Hill's nomination:

There's one as yet unremarked constituency increasingly disturbed by some Republican senators' efforts to block the confirmation of former North Korea envoy Christopher Hill to be the next U.S. ambassador to Iraq: the U.S. military.

Sources tell The Cable that Centcom commander Gen. David Petraeus, top Iraq commander Gen. Raymond Odierno, and Defense Secretary Robert Gates are frustrated by the delay in getting a U.S. ambassador confirmed and into place in Iraq, and support Hill's confirmation proceeding swiftly [...]

"I would not at all be surprised if military commanders in Iraq are frustrated that they don't have a new ambassador in position," added Gen. William Nash (ret.), the former top U.S. commander in Bosnia, now a senior fellow at the Council on Foreign Relations. "The issues are far more political and economic than they are military and U.S. efforts need to move forward on those fronts. That's particularly critical in the execution of the withdrawal plan."

Asked if Republican objections to Hill that he is not a Middle East expert are legitimate, Nash said the opposition is "being difficult to be difficult. I have known Chris Hill for 14 years. He is a wonderful diplomat and exactly the kind of guy we need in Iraq."

Today is the sixth, that's right the sixth anniversary of our misadventure in Iraq, and the fiends who got us in this mess in the first place refuse to cease making life harder on this country. They cannot conceive of a world where economic development and diplomacy supersede the task of the military, so they want a subservient ambassador. Of course, the fact that the generals prefer Hill shows the hypocrisy of the neocons on this. They only listen to the advice of the commanders on the ground when it agrees with their aims. And they never take into account the hopes and desires of the people in the countries over which they mean to project power. The neglect of reconstruction and economic development in the war effort leads to outcomes like the water being undrinkable in Baghdad six years after the beginning of the war.

These are contemptible people.

Watch The GOP Blow This

House Democrats offered the excise tax for bonuses from firms that took TARP Money, the "Stuff AIG Act," and based on the chatter on the floor this morning, it looks like the Republicans will block it, which is frankly AMAZING. Because the bill came up without a rule, it requires a 2/3 vote, so this is a rare opportunity for House Republicans to obstruct and they can't miss out on that. But with the country pretty dead-set against AIG execs keeping their bonus money, you have to wrack your brain to think of a stupider position that allowing the bonuses to go forward.

Looks like the Republicans may throw their weight against the TARP bonus tax.

Yep. Boss Limbaugh has issued his veto, and the GOP pays fealty.

But talk about trying to have your cake and eat it too! Limbaugh says they have to reject the bill as excessive, but Republicans are afraid to do that. Despite being idiots, they're not idiots.

So what's the hook? They oppose the 90% tax, they claim, because... it's not 100%!

Yep. That's actually it. That's what Boehner just said on the floor.

Republicans are upset because they wanted higher taxes. Mark your calendars [...]

Not looking good. Simply not enough GOP votes to get this through, so far. Sometimes they don't come to the floor to speak when they're afraid, so there could be some hidden GOP votes out there, hiding from Boss Limbaugh. But we'll need about 60 of them.

Just hilarious. The ads write themselves.

Check out team laundry collector Eric Cantor this morning unable to commit to any solution, wanting to sound all fiery and populist but without a clue how to actually produce:



When faux populism runs up against bank lobbyists and rigid ideology, I think we can divine who wins. Somehow they believe they can turn this into a confiscatory taxation issue. Um, allow me to let you in on something: nobody in the country cares if AIG executives have to pay a lot of taxes. I mean, good luck with it, I'm sure you'll be just as successful as you were in the 2006 and 2008 elections, but here on Planet Earth, the proper political move is clear.

Late on today I can explain why bonuses representing a pittance of the overall bailout matter. For now, let us savor the implosion of the GOP, who found a nicely wrapped present under their tree and threw it in the garbage.

...Barney Frank said this two years ago during a similar vote on the Executive Compensation Act, which gave shareholders more say over CEO pay. It applies today:

I often disagree with my colleagues on the other side, but I have rarely been as baffled by the illogic of their arguments as I am today. I do not recall the last time I heard such a hodgepodge of inconsistency and innaccuracy. This is a bill that has been condemned for being A) bullying and intrusive and B) toothless. The toothless bully is, I guess, a new concept.

...Grover "Thou Shalt Not Tax" Norquist:

Grover Norquist, the top anti-tax activist in the Republican Party, has given ABC an answer about whether Republicans can vote for the AIG-bonus tax and still be in accordance with the anti-tax pledge that the vast majority of them have signed with Norquist's group, Americans for Tax Reform.

The answer: Yes, you can -- but only if it includes additional offsetting cuts in taxes or spending, too. Norquist seems to acknowledge here that the AIG tax is itself a kind of spending decrease -- the government is taking back money it already spent -- but he wants more tax decreases, too.

"If your goal is to recoup the resources that you've given people that you hadn't thought would be spent this way, you can make it not a tax increase simply by having an offsetting tax cut on honest taxpayers," Norquist explained. "Or you could do the same thing by cutting the amount of money that you were going to give AIG in the next tranche that they'll demand, so you can have the withdrawal of the resources done in less spending."

Regardless of the particular matter at hand, it's fascinating to watch Republicans drown in a pit of their own ideology.