Why We Need Hearings On Insurance Industry Practices

Some weak-kneed Democrats aren't so keen on seeing Henry Waxman grill the insurance industry over their immoral policies of denying care. They probably don't want to jeopardize their campaign contributions. But Waxman and others aren't listening to them, and will move forward.

“It’s completely fair to talk about profits and reserves and compensation and how they make their decisions,” said Rep. Jan Schakowsky (D-Ill.), a leader of the Progressive Caucus. “Let them come and make their case.” [...]

Regardless, Waxman and the House Energy and Commerce Committee appear to be heading forward.

Rep. Bart Stupak (D-Mich.), chairman of the Investigations subcommittee, said Tuesday that most of the nation’s 52 largest insurance companies met Monday’s deadline to submit documents on their profits and compensation to executives and board members. He also said a hearing is being put together.

“We will be doing hearings on different aspects of the insurance industry, including this,” Stupak said. “I hope that by the end of this week we’ll have a schedule set … I’d like to do another one of these, at least one or two, this month.” [...] “Blue Cross Blue Shield, which is the insurer of last resort in Michigan, they’re raising their rates 22 to 40 percent,” Stupak said. “How do you justify that when inflation is basically zero? Where is the money going? Is it going for healthcare? Or executive compensation?”

“I think it’s part of the mix, in that our committee needs to look at it,” said Rep. Gene Green (D-Texas). “I remember a quote from Sen. [Charles] Schumer [D-N.Y.] sometime this year … he said that some of those healthcare CEOs’ packages would even make Exxon-Mobil blush.”

Just so it's clear, here are the types of policies that Blue Dog Dems would rather not have discussed publicly in Congress in the middle of a debate over health insurance reform:

• The South Carolina Supreme Court ordered Assurant to pay 10 million dollars for rescinding the policy of a 17 year-old after he tested positive for HIV.

• Several insurance companies in the individual market consider pregnancy optional and don't cover maternity care. What's more, others refuse to cover any woman who has had a Caesarian section, considering it a "pre-existing condition".

That's really the tip of the iceberg. The stories of runaway profits, lavish lifestyles for CEOs and denials of care causing suffering and death have been chronicled over and over at Sick For Profit. The public ought to know about them, at least as much as they think they do about death panels, and if Congress can find a way to raise attention, all the better.

Deal Of The Century

So Max Baucus will reveal his long-awaited wet kiss of a bill tomorrow, with subsequent votes in committee in the coming week. We've already seen an outline of it, so we know that it would still cripple people financially who have the temerity to get sick, it would criminalize people who do not buy inadequate private coverage from the insurance industry, it would incentivize employers to offer crappy coverage and discriminate in hiring against people who have no coverage from a family member, and it would not include a public insurance option to compete with private plans. It won't even include a trigger, because the original trigger backer, Olympia Snowe, has decreed that it's a dead letter. Those weak state-based co-ops designed to allow nonprofits like Blue Cross, some of which control 90% of the insurance market, to access billions in government seed money, will be as close as we get in the Finance Committee to a public option. Seemingly, the only reason for the death of the trigger is that Susan Collins said they might lead to a (horrors!) public option, and Snowe probably wants her along as cover for a final bill.

You can pretty much tell what a steaming pile of garbage the Baucus bill would be by the fact that the drugmakers are going all in to support it.

The drug industry’s trade group plans to roll out a series of television advertisements in coming weeks specifically to support Senator Max Baucus’s health care overhaul proposal, according to an industry official involved in the planning.

The move would be a follow-up to the deal that drug makers struck in June with Mr. Baucus and the White House. Under that pact, the industry agreed to various givebacks and discounts meant to reduce the nation’s pharmaceutical spending by $80 billion over 10 years.

Shortly after striking that agreement, the trade group — the Pharmaceutical Research and Manufacturers of America, or PhRMA — also set aside $150 million for advertising to support health care legislation.

President Obama has cited the deal with the group as signifying a new era of cooperation. But some critics say the advertising fund could be wielded against alternative approaches to health care legislation. Some House Democrats, including Henry A. Waxman of California, are seeking drug industry givebacks not covered in the deal with Mr. Baucus and the White House.

You rarely see bribes like this spelled out so succinctly and directly. $150 million is certainly more money than has been spent on health care advertising to date. And it's all going toward the Baucus plan, based on a quid pro quo agreement. Other committee chairs like Henry Waxman want to find more savings that what Big Pharma agreed to by letting the government to bargain for lower drug prices, like many other industrialized nations. But Baucus dutifully abided by the deal, and so his plan will get the ad backing. Matt Taibbi further explains.

The $150 million it committed to support Obama’s bill is now being rolled out in pro-reform ads, which are being aired mostly in the districts of freshman congressmen. The ads are cheesy, half-hearted tripe blandly supporting the weak-as-fuck remnants of Obama’s health care plan, an example being this “Eight Ways Health Reform Matters To You” ad that salutes the end of coverage denials for those with pre-existing conditions.

Now we’re also seeing pressure from a group of freshmen and Blue Dogs, who have composed a letter to a quartet of House Committee chairs requesting that the Waxman language be removed from the health care bill and replaced with the PhRMA language, which happens to be the language the White House is pushing and which will appear in the Baucus bill in the Senate. The pro-PhRMA language retains the preposterous government subsidy to the pharmaceutical industry in the form of laws banning Medicare from negotiating market rates. It is completely useless and of no possible social benefit to anyone except pharmaceutical companies, but this group still managed to get 60 people to sign this bill.

What does this letter say? Does it argue that the PhRMA language is better for America than the Waxman language? Does it say it will cost taxpayers less and provide cheaper drugs to more people? Hilariously, no. What it says is that this PhRMA language, while worse than the Waxman language, is not quite so bad as you think (it doesn’t save as much as the Waxman language, but it still has a 50 percent price reduction, which isn’t terrible!). Moreover, the letter says, substituting this language will help the bill get passed! Here’s the actual language, addressed primarily to Waxman:

“Your efforts to remove this onerous burden on Medicare beneficiaries… are to be greatly commended. However the commitment by President Obama and the AARP to support legislation that would provide a 50 percent reduction is a dramatic step forward in helping fill the doughnut hole. Equally important, it moves us toward our goal of health care legislation.”

In other words, your attempt to put in a real reform is cool and all, but PhRMA has us by the balls, so help us out.

At the same time, the drug industry is employing scumbag from way back Tony Coelho, who may be single-handedly responsible for Democratic silence in the face of the decimation of American manufacturing in the 1970s and 1980s, to attack comparative effectiveness research, another part of the Obama plan. I guess there's nothing two-way about that loyalty.

While we were going back and forth on a public option, this backroom deal to fund future Democratic campaigns (I don't believe for a second that the $150 million will be spent now, but on protecting conservative Democratic incumbents who protected drug industry profits next year) in exchange for backing off a huge subsidy to giant corporations was put into motion. Baucus' delay actually may have crimped this and forced Big Pharma to start spending now. With industry out in front, however, a bill will probably pass.

Just don't read it so closely.

The Waxman Book Report Continues

Henry Waxman must be coming up with one hell of a document about the insurance companies. He's been researching them since at least July, and yesterday he requested even more information. This time, he's investigating the extension of the rescission process to the small business arena.

"I began looking into the practices of the health insurance industry in the last Congress and was deeply disturbed by what we uncovered," said Chairman Waxman. "As part of our ongoing investigation, we are now looking into the practice of health insurance companies terminating the coverage of small businesses when their employees become ill and their health insurance claims increase. We need to better understand how widespread this harmful and destructive practice has become, and how it is impacting small businesses and their employees across the country."

"As we continue our investigation into business practices in the health insurance industry, the treatment of small businesses remains a concern," said Chairman Stupak. "We have documented examples of insurance companies raising small business premiums by an unsustainable amount or canceling a policy once it is discovered a covered employee is sick. Much like rescissions in the individual market, this practice is alarming. To better understand how prevalent this practice is and precisely how many small businesses are impacted, we are asking some of the largest insurers to provide information on their small business policies."

The Committee is requesting information and documents for small group policies, including their renewal rates, factors used to determine premium rates, and the maximum premium rate increases.

Because insurers basically guarantee issue to the businesses with whom they deal, the only way they can punish - and hopefully force to drop - a business from continuing to work with them is by unsustainably raising the premiums. You cannot do this with a large company like a Wal-Mart, but small businesses are essentially just a step removed from the individual marketplace in terms of their leverage. So insurers can afford to price those businesses out of the market, if they have employees on their books who actually need to use their health insurance.

That's an incredible admission by the insurance companies that they simply cannot afford to maintain their profits and pay for anyone's health care. So they engage in terminating coverage whenever humanly possible, even when the individual gets it through an employer, to avoid that payment.

Waxman typically engages in slow, deliberate investigations that gradually extract a maximum of damaging information out of the opponent. In this case, he's asked for all of these materials in a rush, and some of the deadlines coincide with Congress' return to Washington. I think he's writing a book - the definitive study of how the health insurance business really works, to be delivered at precisely the moment when Congress reaches the final stages of debate on health insurance reform.

Waxman's Gambit

Henry Waxman's move to ask insurance companies for their records on compensation and perks is as consequential a move as any member of Congress has made in the fight over health care reform, because it has the potential to change the entire narrative around the issue. It's seen as so successful on Capitol Hill, in fact, that Jay Rockefeller is supplementing it.

A U.S. Senate Democrat asked the top 15 health insurers to explain what portion of premiums go to profits versus patient care, putting further pressure on the companies to explain their business practices as Congress considers sweeping health reform legislation.

In letters to the companies on Friday, Sen. John Rockefeller also asked for information about how insurers disclose financial practices to customers [...]

"Too often consumers are not getting a fair deal for what they pay, they are not getting the protections they deserve, and the insurance companies are awash in profit," Rockefeller, chairman of the Senate Commerce, Science and Transportation Committee, said in a statement.

The letters were sent to companies including UnitedHealth Group, Wellpoint and Aetna, the committee said.

Robert Zirkelbach, a spokesman for the health insurance lobby AHIP (America's Health Insurance Plans), dismissed the Rockefeller probe as a way to "shift the focus" to the insurance industry. I think Rockefeller and Waxman would argue that the insurance industry deserves such a focus.

Waxman actually initiated his investigation back in July, right around the time he was negotiating with House Blue Dogs over concessions in his bill in the Energy and Commerce Committee. At the time, he was responding to examples of astroturf (fake grassroots) efforts performed by the insurance companies. Seeing the ferocity of their efforts, Waxman surely assumed that the industry was concerned primarily with protecting profits over being any kind of partner for reform.

Earlier this week, Waxman sent letters requesting detailed financial information including compensation, revenue and profit numbers to 52 insurance companies with annual premiums greater than $2 billion.

But nearly a month earlier, on July 21, Waxman and Investigations Subcommittee Chairman Bart Stupak sent letters to AHIP and Dewey Square Group asking for emails and internal documents about a news report in April that several senior citizens had not written letters to the editor submitted under their names.

Waxman’s committee’s spokeswoman said Waxman was merely trying to gather information critical to the health care debate.

“If we're going to get health costs under control, we need to make sure that our private health insurance dollars are spent as efficiently as possible. That means our premium dollars should be paying hospitals and physicians for providing health care, not wasting resources on administrative bloat,” she said.

The connection between the astroturfing campaigns, which industry is paying millions to lobbyists to conduct, and industry profits is obvious. Those campaigns to weaken the health care reform bill are being carried off using customer premiums.

The results of the Rockefeller and Waxman probes are due right when the House and Senate return from recess. If used skillfully, these reports can weave a narrative - whether industry participates in them or not - of insurance company excess at a time when the system is broken and millions have been denied coverage. And despite the AHIP mouthpiece's claims, this "shifts the debate" to where it ought to be - not on mythical stories and smears about reform, but about the fundamental choice between filling the pockets of an already bloated insurance industry or providing for the general welfare of all Americans. While I'm well aware that insurers are not the only problem with the health care system, they are the one actor that adds nothing of value to the process, and changing their incentives, toward lower cost and better quality instead of how to deny care, will have an impact on the system at large.

The Plaintive Wail Of The Not-Quite-As-Obscenely-Rich

There's a new sub-genre in journalism, tracking the travails and hardships of the not-quite-as-obscenely-rich. Inequality is still at its highest level since the Gilded Age, mind you, and the top 1% still rakes in 35% of all compensation, but selected still-rich individuals lost a little of their fortunes. This is the stuff of front-page news.

Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management. Monthly income from stock dividends, which is concentrated among the affluent, has fallen more than 20 percent since last summer, the biggest such decline since the government began keeping records in 1959.

Bill Gates, Warren E. Buffett, the heirs to the Wal-Mart Stores fortune and the founders of Google each lost billions last year, according to Forbes magazine. In one stark example, John McAfee, an entrepreneur who founded the antivirus software company that bears his name, is now worth about $4 million, from a peak of more than $100 million. Mr. McAfee will soon auction off his last big property because he needs cash to pay his bills after having been caught off guard by the simultaneous crash in real estate and stocks.

“I had no clue,” he said, “that there would be this tandem collapse.”

You really have to be kidding me with this. The stock market dropped 40%, so we're talking about paper value, not real but imagined wealth. And none of it was real anyway. That same stock market is now at a 52-week high at today's close, so the first thing to come back in this so-called recovery has been the fortunes of these same lamented rich people. The jobs for everyday Americans, not so much.

The ostensible premise of the article, that lesser yields for the rich may lead to a flattening of income distribution and maybe some relief for the middle and lower classes, is proven wrong by the middle of the article.

Few economists expect the country to return to the relatively flat income distribution of the 1950s and 1960s. Indeed, they say that inequality is likely to remain significantly greater than it was for most of the 20th century. The Obama administration has not proposed completely rewriting the rules for Wall Street or raising the top income-tax rate to anywhere near 70 percent, its level as recently as 1980. Market forces that have increased inequality, like globalization, are also not going away.

No, the real reason for this article is so super-rich people can read about other super-rich people and not feel so bad about poor people dying in the streets because of their hoarded fortunes. For example, here's Mike Bloomberg, of all people, singing a dirge for the poor little rich people.

Billionaire Mayor Michael Bloomberg defended multibillion-dollar pharmaceutical companies and their chief executives on Friday, declaring that they "don't make a lot of money" and shouldn't be scapegoats in the health care debate.

The mayor – and wealthiest person in New York City with a fortune estimated at $16.5 billion – made the comments on his radio show Friday during a discussion about health care.

"You know, last time I checked, pharmaceutical companies don't make a lot of money, their executives don't make a lot of money – not that they couldn't be better," Bloomberg said.

Pharmaceutical CEOs are known to make millions, with generous salaries, stock options and other perks.

This is a guy who bought the Mayoralty in New York for $100 million dollars over two terms, talking about people who routinely make tens of millions of dollars and hold hundreds of millions more in stock options, telling the public that the plebes shouldn't revolt because things are tough all over and those pharmaceutical CEOs are barely scraping by.

Well, tell you what then. As long as CEOs from the insurance and drug industries are basically pikers, they should have no problem adhering to Henry Waxman's request and providing readouts of their salaries and perks, so they can prove to the world once and for all that they're in this for the saving of lives and not the filthy lucre. Surely they'll agree to that.

Maybe they'll even tell the New York Times what a bad year they're having.

Waxman: Show Me The Money

(I have been hired as a blog fellow for Brave New Films and their Sick For Profit campaign, exposing billionaire health insurance CEOs and their profiting off of denying care. Join the campaign on Facebook)

It's a little shocking that the story of health insurance CEO largesse hasn't been told, by and large, by the Congress in the debate over health care reform. The debate has covered public options and "death panels" and Nazi comparisons and cost curves without addressing the fact that for-profit health insurance companies add almost nothing of value to access or quality of care and exist only to skim off the top and keep as much of their premiums as possible. And they rake in giant profits at the same time. Now Henry Waxman, no stranger to Congressional investigations, wants to put a dollar sign on those profits, specifically what money goes where.

Two powerful House Democrats have sent a letter to insurance companies asking them to provide detailed information about their conferences and retreats, executive pay, and other business practices [...]

The Waxman-Stupak letter asks companies to provide, by mid-September, the compensation packages of any employee or officer who made more than $500,000 in any year from 2003 to 2008. It also asks the companies to list all their board members and their compensation.

The congressmen also want information "listing all conferences, retreats or other events held outside company facilities from January 1, 2007, to the present."

In addition, the letter demands more basic information, such as the companies' total revenues, net income, and total dividend payments, as well as premium revenue, sales expenses and profits.

It seems like, especially considering the prominence of the subject of health care over the past few months, this should be public information. Here's the full letter.

We already have a pretty good understanding of the profits of the insurance companies, as well as the rewards of their CEOs, in salary, options, and additional perks. That was the subject of Sick For Profit, which in the first installment exposed Steven Helmsley, the CEO of United Health Group, and his $13.2 million in compensation in 2007, his $6 million dollar home in Minnesota, and his $744 million in unexercised stock options ($127 million of which he exercised in 2009). But Waxman asking for this information puts it into an investigation. And that gives it a different feel. He can use subpoena power. He can haul the CEOs before the committee. He is in the best position to contrast the 47 million people without health insurance, and the 40 million who are underinsured, with these obscene profits.

This could get interesting.

A Compromise In The Other Direction

While the deal reached between Henry Waxman and a core group of Blue Dog Democrats on the health care bill in the House Energy and Commerce Committee was reported as offering modest concessions, in truth the subsidies would have really dried up for families making between 300-400% of federal poverty level. Progressives revolted, mainly because the subsidy climb-downs attack the larger idea of offering affordable health insurance for everyone, the central goal of the program. So they revolted, and Waxman had to re-bargain with everyone to get a decent compromise of the compromise.

Liberals and a small core of conservative Democrats set aside long-standing ideological differences early Friday to cut a deal that should allow the House Energy and Commerce Committee to approve a sweeping health care bill, breaking a two-week deadlock that threatened President Barack Obama’s top domestic priority.

Blue Dog Democrats on the committee, who are the linchpin in the House health care debate, agreed to allow their liberal colleagues to cut billions from existing government-funded health care programs in order to restore some $50 billion to $65 billion in subsidies set aside in the bill to help middle-income families purchase coverage.

This final agreement should clear the way for committee passage later today. Energy and Commerce is the last of the three House committees to consider the bill, so passage will put the package in the hands of party leaders for a titanic fight when Congress returns in the fall over the government's role in health care [...]

The Blue Dogs preserved one of their main objectives: de-coupling the so-called public plans from Medicare, a change that gives health care providers the right to negotiate payments with the government.

Those rates were only scheduled for the first three years anyhow. My guess is that will be returned when the House bills get merged from all three committees in September, especially if progressives keep up the pressure. What's important now is to get the Energy and Commerce bill out of committee.

Let's understand how this happened. Blue Dogs held out for a deal. Progressives, instead of taking it to get the larger goal, revolted and got 57 names on a letter vowing not to support any Blue Dog compromise. The Blue Dogs, who came into this wanting to kill the public plan option, ending up voting it out of committee in Energy and Commerce and allowing for expanded subsidies. And progressives are STILL not satisfied, as it should be, because Medicare rates and providers should be tied to the public plan over its entire lifespan, and the plan (and the insurance exchange) should be available to everyone regardless of employer.

Moreover, the liberals also expressed a political concern, saying House leaders had compromised too early. “Under the agreement, private insurers are coming off unscathed,” said Representative Peter Welch, Democrat of Vermont.

He added, “They do quite well — too well, frankly.”

Representative Eliot L. Engel, Democrat of New York, said, “The public plan was eviscerated” under the deal announced Wednesday to get the bill moving again in the Energy and Commerce Committee.

Mr. Engel was less than enthusiastic about the resulting legislation. “It’s not a terrible bill,” he said, “but it’s not what I had hoped for.”

There was an abortion policy amendment in the committee that tries to split the difference by affirming that insurers "would not be required or forbidden to cover abortion." I'd prefer that the public plan be accorded the same benefits toward the most widely used outpatient procedure in America that 90% of all private plans cover, and we'll see where that debate goes.

Also hurting the Blue Dogs' cause is this WaPo front-pager, almost unquestionably meant to coincide with progressive discontent over the compromise, showing the amount of health industry money these so-called fiscal conservatives are swimming in.

The roiling debate about health-care reform has been a boon to the political fortunes of Ross and 51 other members of the Blue Dog Coalition, who have become key brokers in shaping legislation in the House. Objections from the group resulted in a compromise bill announced this week that includes higher payments for rural providers and softens a public insurance option that industry groups object to. The deal also would allow states to set up nonprofit cooperatives to offer coverage, a Republican-generated idea that insurers favor as an alternative to a public insurance option.

At the same time, the group has set a record pace for fundraising this year through its political action committee, surpassing other congressional leadership PACs in collecting more than $1.1 million through June. More than half the money came from the health-care, insurance and financial services industries, marking a notable surge in donations from those sectors compared with earlier years, according to an analysis by the Center for Public Integrity.

A look at career contribution patterns also shows that typical Blue Dogs receive significantly more money -- about 25 percent -- from the health-care and insurance sectors than other Democrats, putting them closer to Republicans in attracting industry support.

Most of the major corporations and trade groups in those sectors are regular contributors to the Blue Dog PAC. They include drugmakers such as Pfizer and Novartis; insurers such as WellPoint and Northwestern Mutual Life; and industry organizations such as America's Health Insurance Plans. The American Medical Association also has been one of the top contributors to individual Blue Dog members over the past 20 years.

Progressives are running the absolute right game in the House, forcing compromises in their direction and making sure they will be heard in this debate. Unfortunately, on the other side of the Capitol, you have health care policy literally in the hands of Chuck Grassley, who is promising his party he won't strike a deal on any bill with Democrats while SITTING IN ON MEETINGS AIMED AT STRIKING A DEAL in the Senate Finance Committee. The unicameral legislature concept is looking better and better every day.

Hold Everything

Progressives on the Energy and Commerce Committee shut down the markup scheduled for this afternoon while they look at the compromise made.

House Energy and Commerce Chairman Henry Waxman (D-Calif.) postponed the health bill markup that he planned to hold Wednesday afternoon amid a backlash from liberals to the deal that he cut earlier with four conservative Blue Dog Democrats.

Waxman told reporters that he intended to keep meeting with committee Democrats on Wednesday night, resume the markup Thursday and still finish the bill Friday.

“[Energy and Commerce Democrats] have a lot of questions about the legislation, and I think it’s more important that we sit in the Democratic Caucus and let people ask questions, get answers, hear each other out,” Waxman said.

Good. As long as we're slowing down the bill, at least progressives can force some changes to it instead of going along with whatever compromise gets hashed out by the Blue Dogs. They should also inform their counterparts, many of whom come from rural areas, that they'll never vote for their farm subsidies if they sabotage this bill. They won't vote for their pork barrel projects and will join with Republicans to take them out of appropriations. They will simply make it difficult for Blue Dogs to bring home the bacon in the way they currently do. The Blue Dogs exist through power in numbers. The Progressive Caucus has MORE numbers, and they can use them.

Energy And Commerce To Mark Up - HC Out Of All Committees By The Recess

After reports overnight of no deal with House Blue Dogs, now there are reports of a compromise being reached and a markup session in the Energy and Commerce Committee scheduled for just a couple hours from now.

Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) has cut a deal to reconvene his committee and vote on the Democrats' sweeping health care bill, with a goal of completing work by the time lawmakers leave town for the summer on Friday.

There won’t be a vote before the full House before the August recess, but the committee breakthrough – after tense negotiations with Blue Dog Democrats – is a significant step for the Democrats.

"After two weeks of very long and intense negotiations, I'm proud to report that we've reached an agreement that will allow health care reform to move forward," said Arkansas Rep. Mike Ross, a top negotiator for Blue Dog Democrats on the Energy and Commerce Committee.

After all this, the Blue Dogs will only allow four of their members to vote on this package in committee.

And here's what they got for their troubles:

The Blue Dogs also succeeded in cutting $100 billion from the overall cost of the bill, bringing the total price tag under $1 trillion. The legislation will now exempt small businesses with a payroll less than $500,000 from paying for any government-sponsored health coverage - double the $250,000 in the initial draft. Doctors and other health care providers would also be allowed to negotiate their payment rates with the government-sponsored health care arm.

The new version of the bill also has a breakthrough on the concept of health care “co-ops,” seen by some as an alternative to a public plan. States would be allowed to create co-ops for residents to buy private insurance. But the Waxman-Ross deal will also keeps the "public option" of government-sponsored health care.

That first paragraph has internal contradictions all over it. The Blue Dogs "succeeded" in cutting costs from the bill - but the two subjects mentioned ADD to the bill's costs. Exempting more small businesses from the employer mandate means less money from small businesses that do not provide insurance for their employees. And allowing providers to negotiate payment rates with the public option, as well as opt out of the network, means higher costs and less choice for individuals who purchase their plans. It's not really fiscally responsible. It also doesn't explain where those cuts came from. I'm hearing that this comes through "enhanced delivery system reforms" and cutting the expansion of Medicaid as well as the "affordability credits" for those who lack insurance. I'm guessing that they lowered the subsidy level to 300% of the federal poverty line. Matt Yglesias argues that not many people in between 300-400% FPL lack insurance, but it would still provide an additional burden on their bank accounts.

Where would this compromise leave health care reform? All three committees in the House will have passed their bills, but members would go home for recess while those bills get merged by the leadership. That puts the House trajectory on line with the Senate, where the Finance Committee is making progress toward a goal of passing their bill out before the recess. So in that intervening month, while progressives and conservatives do hand-to-hand combat in town hall meetings and on the airwaves, Nancy Pelosi and Harry Reid have to figure out what to keep in and out of the various bills, for floor votes in September.

Meanwhile, the White House has released eight guarantees that would emerge from any health care bill, which all sound like insurance reform, the line they've been using recently, and which don't include anything to really transform the system.

* No Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

* No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

* No Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

* No Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

* No Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

* No Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

* Extended Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

* Guaranteed Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

OK. These are all solid reforms that would help a lot of people. But they are incremental reforms at the edge of the policy. I understand the thinking - these are the consumer-based reforms people will actually see. But they'd see a public option in competition with an industry that currently denies coverage and does everything they can to get out of paying for treatment. I fear that nothing more fundamental is being attempted out of a fetishistic need for bipartisanship that trumps common sense and the actual prevailing political reality.

Over at Senate Finance, judging by the reports coming of the committee, a solonic gang of six -- three Democrats, including chairman Max Baucus of Montana, and three Republicans, including ranking member Charles Grassley of Iowa -- are turning out a bill whose resemblance to anything the president has championed is accidental and incidental. To secure Republican support, they oppose a public plan. To secure Republican support, they oppose employer mandates, even on the largest corporations. (And many of America's biggest employers are retailers with a proven record of not providing coverage to their workers: Wal-Mart, our largest, employs 1.4 million Americans, most of whom it does not cover.) The solonic six may end up requiring employers to fund subsidies for employees who need them, but that could create the bureaucratic nightmare to end all bureaucratic nightmares -- 700,000 Wal-Mart employees, say, bringing their tax returns to work so management can investigate ("You sure you reported all your income?") and stall ("Doesn't your spouse work at Home Depot? Why don't they pay the subsidy?") and investigate and stall.

Sounds like a plan to secure universal coverage by the middle of the next century [...]

Problem is, bipartisanship ain't what it used to be, and for one fundamental reason: Republicans ain't what they used to be. It's true that there was considerable Republican congressional support, back in the day, for Social Security and Medicare. But in the '30s, there were progressive Republicans who stood to the left of the Democrats. Nebraska Republican George Norris, who for decades called for establishing public power companies to compete with price-gouging private companies, was the father of the Tennessee Valley Authority. In the '60s, Rockefeller Republicans supported civil rights legislation and Medicare.

Today, no such Republicans exist. In New England and New York, historically the home of GOP moderates, Republicans occupy just two of 51 House seats. Nationally, the party is dominated by Southern neo-Dixiecrats. In their book "Off Center," political scientists Jacob Hacker and Paul Pierson compared congressional Republicans of different eras and concluded that a Republican House member in 2003 with a voting record that placed him at the median of his party was 73 percent more conservative than the median GOP member of the early '70s.

Max Baucus, then, isn't negotiating universal coverage with the party of Everett Dirksen, in which many members supported Medicare. He's negotiating it with the party of Barry Goldwater, who was dead set against Medicare. It's a fool's errand that is creating a plan that's a marvel of ineffectuality and self-negation -- a latter-day Missouri Compromise that reconciles opposites at the cost of good policy. Obama should thank the solonic six for their work, and, as much as is politically practicable, ignore it.

Exactly. You don't negotiate with crazy.

There's still a fight to be had on the public option, the design of the insurance exchanges in which a public option sits, and several other features. Ultimately the Blue Dogs appear more nervous than obstructionist, so August will be consequential. I hope OFA is ready.

...Really, negotiate with this?

This unidentified man decided he was doing the Tea Party-anti-reform effort a real solid by hanging freshman Maryland Democratic Rep. Frank Kratovil in effigy [note the creepily expert knotted noose] with a placard "Congress Traitors The American [and a word that looks like "idol"].

The event — a rally in Salisbury, Md. on the Eastern Shore — was attended by members of the business-funded Americans for Prosperity, a group that includes James Miller, a Federal Trade Commission chairman and budget director during the Reagan administration.

...More info on the Waxman-Blue Dog deal. They lowered the rate of the subsidy between 300-400% FPL, rather than eliminating it. And as stated above, the public option remains, albeit weakened because it can't use Medicare bargaining rates at all, but rates negotiated by the Health and Human Services Secretary.

Always Darkest Sausage-Making Before The Dawn

Ezra gives the 10,000-foot view of today's health care crackup in the House, and Henry Waxman's dicey choice on how to resolve it:

The central issue here is simple enough: The Blue Dogs want Waxman to make concessions he doesn't want to make. The sticking points, according to sources close to the process, are the public plan -- Blue Dogs still want a trigger option -- and the administration's proposal, which the Blue Dogs support, to create an independent commission able to set Medicare payment rates and make reforms. Waxman and others worry that a Republican administration and Congress could use this panel to undermine the Medicare program.

You can take Waxman's statements one of a couple ways. His willingness to bring the bill directly to the floor undermines the bargaining power of the Blue Dogs: It means they don't have veto power over the bill. This could, in other words, be a negotiating tactic on Waxman's part to soften the Blue Dogs' position. But if that doesn't work, it could also mean exactly what it says: That he's going to push the bill straight to the floor.

That would ensure some bad headlines, and an angry Blue Dog caucus. But versions of this bill have passed two other committees. Energy and Commerce isn't strictly necessary. Waxman's threat to bring the bill to the floor means that Pelosi and Waxman think they have the votes whether or not Energy and Commerce approves the legislation. And that may not be such a bad outcome, either for the Democrats or the Blue Dogs.

But Blue Dogs might balk, because they don't want to walk the plank on a bill if the Senate Finance Committee won't walk it either. We're basically seeing a game of chicken, between Waxman and the Blue Dogs as well as between the House and the Senate. Nobody wants to take the tough vote first. But somebody has to, in order to get the ball rolling.

Brian Beutler discerns tension and chaos on the Hill, but I've heard different. I heard Waxman and Mike Ross have stated that talks are ongoing and that a markup could be held as early as Tuesday. And that Steny Hoyer said publicly at a press conference that votes could happen next week. So we don't really know what's going on quite yet. It's hard not to despair just as a reflex, but I wouldn't just yet.

The End Around The Blue Dogs

One of my co-guests on NPR today was Henry Cuellar, a Blue Dog. And 30 minutes goes fast with three guests, so I didn't get to confront him and his arguments as much as I wanted. For instance, McAllen, TX, is in his district, and that was the subject of the widely touted Atul Gawande piece in The New Yorker about disparities in health care delivery and effectiveness. But Cuellar pretty much harped on costs, costs, costs as an impediment to getting something done. I countered that cost control and expanding access, in many cases, are complementary. This makes the Blue Dog argument incoherent. They want to cut costs, but they are reluctant to enact the reforms that actually would do it. Not to mention the fact that they talk of fiscal responsibility while trying to carve out funding for rural health care, for example, which is the exact opposite of cost-cutting. And Steven Pearlstein picks up on this today.

The challenge for the Blue Dogs is that they want an America where everyone has insurance but are reluctant to force workers to buy it or employers to help pay for it.

They understand that achieving universal coverage will require subsidies for low-income workers and small businesses, but they insist that none of those changes add to the federal deficit or raise anyone's taxes.

They want to introduce more competition into the private insurance market, but not if it comes from a government-run insurance plan.

They complain constantly about the need to rein in runaway Medicare costs while at the same time demanding higher Medicare reimbursement rates for doctors and hospitals in rural areas.

You see what I mean about mushy centrism?

Yes. Yes I do.

The truth is that the Blue Dogs are slaves to entrenched power, serving the interests of powerful lobbies rather than the middle-income voters in their districts. Cutting subsidies to 300% of poverty level from 400% would make health care less affordable to working people - and it's only being considered in the House because Blue Dogs want to protect those making half a million a year from a surtax.

Henry Waxman refuses to let the Blue Dogs make chicken salad out of the House plan. He's talking about bypassing his committee entirely and bringing the bill already voted out of two other committees to the floor.

Chairman Henry Waxman (D-Calif.) says there is "no alternative" but to have healthcare legislation bypass his Energy and Commerce Committee if Blue Dog Democrats don't accept a deal worked out Friday.

Waxman is now playing a game of legislative chicken with the Blue Dogs. He's hoping the inclusion of a study on Medicare reimbursement rates in the healthcare overhaul will be enough to placate the centrist Democrats, who say the government program short-changes hospitals and physicians in their rural districts.

If that’s not, the seven Blue Dogs could join with the committee's Republicans to "eviscerate" healthcare reform, and that’s something Waxman will not tolerate.

"I won't allow them to hand over control of our committee to Republicans," Waxman told reporters.

Just like that, this morning, word leaked that Democrats in the House have agreed to include President Obama's "MedPAC on steroids" proposal to assemble a team of health care policy experts to make annual recommendations about Medicare, including reimbursement rates and delivery changes, that would face an up or down vote in Congress. This deal was the result of late night negotiations between Rahm Emanuel and the Blue Dogs. But they do not seem to have fully satisfied them.

At some point, I think you do have to pull the trigger. Matt Yglesias makes the moral case, that good legislation matters more than good process.

Something a lot of progressive legislative leaders seem to have forgotten until this Congress actually got under way is that historically congressional procedure is a challenge to be surmounted when you want big change to happen. It’s not actually a fixed feature of the landscape that people “have to” accommodate themselves to. For years you couldn’t get a decent Civil Rights bill because segregationists controlled the Judiciary Committee that had jurisdiction. This problem was “solved” by just deciding to bypass the Judiciary Committee. When you decide you want to get things done, you find a way to get them done. Even the allegedly sacrosanct filibuster rule has been changed repeatedly over the years. The law is the law and the constitution is the constitution, but the rules of congressional procedure are not law. They’re internally made rules, they’re subject to change, and the criteria for a good set of rules is that you want rules that produce good legislation and good governance.

If the internal rules are in place you should work to change them if they obstruct a change both the majority of Americans and the majority of the Congress clearly want.

...by the way, I agree with Pearlstein that Medicare might not be the best program to use for reforming the system:

The problem with using Medicare to serve as the leading edge of reform, however, is that it relies on a patient population, the elderly, that is least able and willing to embrace change. A better vehicle would be the new government-run insurance option that has become a political must-have for House leaders and President Obama. In return for dropping their opposition to such a "public option," the Blue Dogs could have insisted that it not be structured as a fee-for-service plan along the lines of Medicare but rather offer services through a network of high-quality, lower-cost hospitals and clinics that use teams of salaried doctors to provide coordinated care, along the lines of the Mayo and Cleveland clinics that Obama is always touting. In a competitive market, the success of such a government-run plan would force other insurers to follow suit.

...so the Blue Dogs claim that talks broke down today to resolve differences with Waxman, and I have to say he appears to be full of it. He says that Waxman took things off the table that, an hour before, Waxman was hailing in public as part of a breakthrough agreement? Doesn't pass the smell test. Someone's lying.

The Blue Dogs Go To Work

Mike Ross, apparently the point person for the Blue Dogs on health care, says he has the votes to defeat the bill in the Blue Dog-heavy Energy and Commerce committee, if he doesn't get certain changes.

A leader of the conservative "Blue Dog" Democrats told CNN Wednesday he and other group members may vote to block House Democrats' health care bill from passing a key committee if they don't get some of the changes they want.

"We remain opposed to the current bill, and we continue to meet several times a day to decide how we're going to proceed and what amendments we will be offering as Blue Dogs on the committees," said Rep. Mike Ross, D-Arkansas.

Ross said the bill unveiled Tuesday by House Democratic leaders did not address concerns he and other conservative Democrats outlined in a letter late last week to Speaker Nancy Pelosi.

The conservative Democrats don't believe the legislation contains sufficient reforms to control costs in the health care system and believe additional savings can be found. Their letter to leaders raised concerns about new mandates on small businesses. Blue Dogs also say the bill fails to fix the inequities in the current system for health care costs for rural doctors and hospitals.

Of course, this is inconsistent. You cannot control costs in the health care system while demanding higher payments to rural doctors and hospitals. I wonder if anyone has pointed that out. The same with the mandates on small businesses. House Democratic leaders actually exempted small businesses from the employer mandate with a higher amount of payroll than what was initially in their discussion draft - up to $250,000. But the Blue Dogs want larger small businesses to be exempted as well. That means less money in the system, because businesses would pay 8% of payroll for each employee if they don't provide health care. So the Blue Dogs want both cost controls, less cost controls, and more targeted health spending. It's not supposed to make any sense.

In addition, freshman Jared Polis is trying to derail the surtax on the wealthy used as a mechanism in the House bill to pay for it.

And Rep. Jared Polis (Colo.), meanwhile, was circulating a draft letter among freshman Democrats to Pelosi opposing the $544 billion income tax surcharge on the wealthy, arguing it would hit many small businesses and manufacturers.

“Especially in a recession, we need to make sure not to kill the goose that will lay the golden eggs of our recovery,” Polis wrote. “By concentrating the cost of health care reform in one area, and in one that will negatively affect small businesses, we are concerned that this will discourage entrepreneurial activity and job growth.”

That objection was gaining steam Wednesday among freshmen and others from wealthy suburban districts, as business groups stepped up their attacks.

Actually, what the surtax does is add extra brackets, which should have been done long ago and should actually go further.

The lack of an instinct for self-preservation strikes me. If health care doesn't pass, the primary part of the President's agenda, the 2010 midterms could get ugly. And the first people to pay the price would be Blue Dogs in conservative districts and freshmen, the same people grousing at the provisions of the bill. Some of that is legislative sausage as they look to get paid off - but the cost of not having a bill for these members of Congress is great. Henry Waxman puts it best:

Energy and Commerce Chairman Henry Waxman (D-Calif.) said he will meet with Ross, along with others, and plans to amend the bill again tomorrow himself.

But he urged them to work to pass the bill instead of tearing it down.

“Can a bunch of Members bring a bill down? Yeah. Then what? ... Democrats have a lot at stake in this legislation, the president has made this his No. 1 priority,” he said. “We’re going to have to come together.”

(notice, too, that the public option was not part of any of these concerns. The blogosphere is missing the mark here)

...Here's Ben Nelson also being an idiot and attributing the idiocy to his constituents.

Consensus By A Thousand Cuts

Environmentalist Henry Waxman and seeming global warming denier Collin Peterson are moving to an agreement on a climate and energy bill.

House Democrats are within sight of agreement on a comprehensive energy and global warming bill, but it is still unclear if they have satisfied enough rural and fiscal conservative lawmakers to guarantee the votes for floor passage by next week.

"I think we made some real progress," Rep. Ed Markey (D-Mass.) told reporters yesterday as he left a meeting with House Speaker Nancy Pelosi (D-Calif.), Energy and Commerce Chairman Henry Waxman (D-Calif.) and Agriculture Chairman Collin Peterson (D-Minn.). "There's still black smoke going up. The white smoke, however, we might be able to send some up, but only after we have resolved these final issues. We made some real progress in that meeting. But it's not final yet."

Waxman described a "conceptual understanding that we're now looking at in more detail" with Peterson, adding that the work now rests on staff to come up with legislative language that could be unveiled as soon as today or Monday.

Peterson also sounded an optimistic note yesterday about the negotiations. "We got a couple things resolved," he told E&E. "They came up with a new idea that has good possibilities. We're going to take a look now and see if it works."

It doesn't look like a huge set of concessions, mainly on rural electricity and carbon allowances as well as the EPA ruling on biofuels (that's going to be near-impossible to dislodge, and it's a shame), but of course we've been nicking at this thing for a long time, taking away a little something here and a little something there. I still think we have a decent bill that's worth passing, particularly because of the job possibilities in the energy space - 1.7 million jobs looks pretty good right now. But it's a far cry from what's needed.

Waxman-Markey Clears Energy And Commerce Committee

At long last, the House Energy and Commerce Committee blew through the hundreds of Republican amendments and passed the Waxman-Markey climate and energy bill out of committee. While the bill is certainly not as good as it could be, it does represent a step in the right direction, and given the wrangling in Congress there are months upon months to get it right. Left to their own devices, members of Congress will only hurt the bill, in all likelihood, which is why movement pressure must be brought to bear on the politicians. President Obama has clearly sequenced health care first in the queue, but his voice will be needed in this debate.

The other lever in this debate could actually be China. Their demands for the upcoming Copenhagen conference will include targets that are much deeper than what Waxman-Markey now provides, and without those targets, I assume China will reject any move to cap their own emissions. Apparently China and the US are holding secret talks on how to deal with climate change and have reached some kind of preliminary understanding, and if Congress can be made to comply with this kind of leverage, maybe the bill can get strengthened.

The real end point is the global summit in Copenhagen in December, so perhaps that can be used like a vice to force the bill through. At any rate, we'll need to be on top of this.

...more from the Sierra Club. Wow, Republican Mary Bono Mack (CA-45) ended up voting for the bill. That's significant. Apparently we only lost 4 Dems, all Blue Dogs: Ross, Melancon, Matheson, and Barrow.

Still Time To Strengthen Waxman-Markey

Henry Waxman will suffer the endless string of GOP amendments to his climate and energy bill only until today, before he puts the hammer down and moves the bill out of committee. He's even hired a speedreader in case the GOP wants to delay the bill some more by having the whole 900-page behemoth read in full. Waxman wants the bill out of committee rather than being held up by procedural silliness and self-serving amendments. You can watch this thing drag on over at C-SPAN 3.

But of course, once the bill leaves committee, that's not the end of the story. While the Chairman believes he has the votes, and the Energy and Commerce committee is generally more conservative than the House as a whole, the bill has plenty of other hurdles. Charlie Rangel and the Ways and Means Committee wants his hands on it, and he will prioritize health care well before this bill. Collin Peterson over at Agriculture wants a piece of it as well. And Waxman wouldn't commit yesterday to this bill even reaching the House floor before August.

My point in bringing this up is that there are months to go before the final bill takes shape. Various fiefdoms in the Congress want to put their fingerprints on it, and nothing will happen quickly. This is important, because there's substantial debate over whether this bill represents a true compromise that everyone can live with, or a flawed bill that would not have the kind of impact that makes it worth the many giveaways involved. Brad Plumer at TNR highlights the biggest, but by no means the only, compromise.

One of Waxman's biggest compromises, the one attracting the most attention, was that roughly 85 percent of the pollution permits under the bill's carbon cap-and-trade system will be given out to companies for free, rather than auctioned off by the government [...]

If Congress auctioned off all or most of the pollution permits under a cap-and-trade system, companies would have to pay more for the allowances, and the U.S. government would raise more revenue. That'd be money Congress could then rebate directly back to consumers to soften the blow of higher energy prices; or it could spend some of the money on clean-energy research or efficiency projects (many of which won't necessarily come about just because there's a price on carbon). Right now, there's less money in Waxman-Markey for both of those things.

Ultimately, Plumer believes that, while the bill is flawed, it would still represent a step forward and progressives ought to support it. The Economist appears to disagree, noting the looser cap on emissions (now 17% below 2005 levels by 2020 instead of 20%). Adam Siegel calls it a coal subsidy bill because it subsidizing the fossil fuel industry far more than renewables. The bill is so large and includes so many competing measures that it's impossible to really divine what it would do at this point. But there are many months left to make that determination and find the points where it can be improved.

Progressives will either have to eat these compromises or reject anything this mushy, depending on the political movement that grows up around the issue, and right now, that movement is relatively silent.

There are two ways to overcome the political hurdle. Either cut deals with the coal, oil, auto and utility industries that weaken (but hopefully don't completely undermine) the legislation. Or convince voters in those areas that their interests are not the same as those of fossil fuel CEOs, motivating them to take action and putting public pressure on key congresspeople to back stronger climate protection legislation.

Cutting deals can be handled behind closed doors in the halls Congress. Generating public pressure requires major grassroots mobilizing.

The political reality Reps. Henry Waxman and Ed Markey had to face is there has been no major grassroots mobilizing in the broader progressive movement. While poll numbers show strong support for strong legislation, there has been no grassroots intensity to back that up, to convince skittish politicians that the public is demanding action immediately, and will hold politicians accountable if they don't follow through.

...broad, deep, relentless and coordinated grassroots mobilization is the only thing that can put a wedge between special interest lobbying and Congress. If we aren't present in the halls and offices of Congress, you better believe every day corporate lobbyists are.

Bill Scher is absolutely right. But there's a larger question about political capacity here. All these problems hitting at once really dilutes the energy that can be put to any one topic. We have a couple wars, a financial meltdown, major health care legislation and about 100 other things going on. The President prioritized health care and that's what has gotten much of the activism. The enviro groups haven't done their job of building a movement outside of throwing a couple ads on the air. But I wonder what they really could have done. And I also wonder if there won't be possibilities for movement pressure down the road. We're at the beginning, not the end, of this fight.

...Just to be clear, I think the bill should be improved. Giving away pollution credits will put the burden of transforming the energy sector on the poor and not save anyone on their electric bills. The renewable energy standard ought to be strengthened up to at least 25%. My point is we have a lot of time to do this, but the enviro groups have to take the lead.

Compromise of the Art

Paul Krugman writes today about the watered-down climate bill, but more specifically the difficulty among the progressive movement to figure out the tipping points in the face of all the compromising and atom-splitting:

In a way, it was easy to take stands during the Bush years: the Bushies and their allies in Congress were so determined to move the nation in the wrong direction that one could, with a clear conscience, oppose all the administration’s initiatives.

Now, however, a somewhat uneasy coalition of progressives and centrists rules Washington, and staking out a position has become much trickier. Policy tends to move things in a desirable direction, yet to fall short of what you’d hoped to see. And the question becomes how many compromises, how much watering down, one is willing to accept.

We can apply this to a lot of legislation coming out of Washington, but Krugman specifically looks at the climate bill. We all knew that the initial Waxman-Markey bill would represent the leftward bound of the policy. Predictably, coal-state Dems reacted unfavorably, and sought concessions, the most important being the softening of both the cap on carbom emissions and the renewable energy standard, as well as the inclusion of emissions allowances to polluters, instead of selling off all allowances 100% at auction. Not only will this giveaway to polluters push more of the costs of implementation onto the poor and give a windfall to groups like coal plant executives, but it won't stop electricity producers from raising their prices even though that's the entire point of the allowances. What's more, this doesn't seem to be enough for Senate Democrats:

Another senior aide said Waxman’s “pragmatic approach … will be appreciated in the Senate” but cautioned that the deal is unlikely to fully satisfy Senate moderates who are looking to temper the bill even more.

“Rick Boucher does not equal Evan Bayh does not equal Debbie Stabenow,” the senior Senate Democratic aide said of the Democratic Senators from Indiana and Michigan, respectively. Bayh and Stabenow have expressed reservations about cap-and-trade provisions, which would cap emissions and allow industries to trade for pollution permits.

“There are a substantial number of moderate Democrats who are uneasy at best,” the knowledgeable Senate Democratic aide noted.

Basically, plenty of Democrats would rather see absolutely nothing pass.

Given all of that, as long as the cap is hard and cannot be gamed, this will drive down emissions, coupled with the new fuel economy standard for cars, not to mention all of the initiatives on energy efficiency and renewable standards in the bill). And if anyone can shepherd through a bill of this magnitude and make sure it doesn't get totally de-fanged, it's Henry Waxman. His policy style is to keep working on an idea and taking small victories until the full flower of the policy is realized. Obviously it's an open question whether Waxman-Markey will amount to enough of a victory to support.

And that's really the fault line in this debate. If you accept that voters care about climate change, and want to see real action, a light-as-a-feather bill could alienate the young voters who care about it the most, and frustrate those who see no way for Congress to deal with such an abstract yet devastating issue, especially given all the special interests seeking the destruction of the legislation (This, by the way, is why Republicans are backing a carbon tax, because they know it's politically impossible and an attempt to stop the main bill cold). Where is the tipping point, where do progressives draw the line? And since we really do have a short window for dealing with mitigating climate change until we're powerless to stop it, if the subsequent bill would fail to reach its intended goals, wouldn't it be used as a symbol of Democratic failure?

There are strategic issues in addition to policy issues at work here. It's hard to figure what's right.

What's 3% When The Planet Is Boiling Anyway?

Democratic leaders on the Energy and Commerce Committee and coal-state holdouts reached a deal on energy and climate legislation that lowered the threshold for the carbon cap to a level where I'm trying to determine its value.

House Democratic leaders are scaling back plans to curb global warming and make the transition to cleaner energy in the hopes that they can get a bill passed this year.

"We have resolved a good number of the issues," said (Henry) Waxman, who chairs the panel and has set a Memorial Day deadline for it to clear the committee. "I believe we will have the votes for passage of this bill next week." [...]

Initially, the bill called for electricity producers to generate 25% of their power from renewable sources like wind and solar by 2025. That target has been lowered to 15% by 2020, with as much as 5% coming from improvements in energy efficiency.

The deal also makes more modest cuts in greenhouse gases. The draft unveiled in March called for a 20% reduction by 2020 in the emissions blamed for global warming. The version that will be unveiled later this week will call for a 17% reduction from 2005 levels by 2020.

While that early pollution goal goes further than the president has called for, it still falls short of what other countries are calling on the United States to commit to by December, when a new international agreement to reduce global warming pollution will be negotiated in Copenhagen, Denmark.

Other details of the bill still need to be worked out, such as how the allowances to emit greenhouse gases will be distributed. Obama has called for a 100% auction and would use the billions in revenue to help fund renewable energy technologies and to offset higher energy prices for middle-class households.

Waxman said Tuesday that the Democrats on the committee had agreed to give 35% of the allowances away for free to local electricity distribution companies to help ease costs. Allowances will also be doled out to auto manufacturers to help them develop cleaner cars.

As expected, the original Waxman-Markey bill represented the most leftward option, and that already was pre-compromised a bit. Now we have a smaller cap, a smaller renewable mandate, and a greater amount of carbon credits handed to polluters. And that's just to get it out of committee in the House. To clear the full House might take another dent or two, and then to clear the Senate will require a whole other set of compromises.

I think by the end, the bill will require Al Gore to fly less and that's about it.

I'm wondering where the vaunted Obama organization is in all of this. They have started to ramp up an effort to pass Obama's health care bill, but only based on his "principles" and not on any specific language or hard issue, like a public option. On energy, supposedly just as key a pillar in the Obama agenda, they have been silent. Bills get constructed now, not at the end of the process when it turns to an up or down vote on the floor. Surely the details matter, unless the goal here is simply to get anything done that can be called "reform" in a moderately credible way. I fully recognize the "art of the compromise" rhetoric about politics, and as long as these bills are seen as beginnings and not endings, we can live with them. But a little volume at the BEGINNING of the process rather than a rush at the end would help, Mr. President. Unless you see these bills at data points on your re-election resume instead of deadly serious legislation that affects all of our lives.

Climate And Energy Bill Hanging By A Thread

I think that, at the end of the day, the Obama agenda on education and even on health care will make its way through the Senate. It may not look exactly like what he campaigned on, particularly on health care. But something's going to happen. Obama should be able to mass substantial bipartisan support on education reform, considering that he sides with reformers over teacher's unions, and the previous bipartisan deal on education is showing signs of success. And the budget reconciliation instructions on health care really offer a big stick to force a solution, even to conservative Democrats.

On climate and energy legislation, I'm really not so sure. People have a visceral relationship to health care and education - it's their bodies and their kids. Arguments about the climate and alternative energy, while just as important, exist in the abstract, and are ripe for conservative misinformation, particularly around costs (see the "national energy tax" fearmongering). Progressives can push back on this nonsense, and thanks to Paul Krugman for giving this a shot, particularly using conservative market principles:

To be sure, there are many who insist that the costs would be much higher. Strange to say, however, such assertions nearly always come from people who claim to believe that free-market economies are wonderfully flexible and innovative, that they can easily transcend any constraints imposed by the world’s limited resources of crude oil, arable land or fresh water.

So why don’t they think the economy can cope with limits on greenhouse gas emissions?

However, even though the Republicans are rank hypocrites on this issue, they can make an abstract debate more concrete with the constant efforts to label this a tax. Right now, Americans support regulating greenhouse gas emissions, even if it raises energy prices (and I can give this to you in more than one poll). However, just the mere action of conservative fearmongering is, I suspect, enough to waver those Blue Dog conservative Democrats who don't want to pass this bill anyway, as well as give an excuse for coal-state Democrats who resist change. Therefore, you're seeing this week Reps. Waxman and Markey hunting for votes on Capitol Hill.

House Democratic leaders appeared to still be short of the votes needed to pass climate-change legislation out of a key subcommittee, but a spokeswoman for one of the lawmakers leading the talks said negotiations were continuing.

Several moderate Democrats on the House Subcommittee on Energy and the Environment said Thursday that fundamental issues such as how to soften the impact of the legislation on constituents and industries in their regions are still unresolved and that the panel might not be ready to vote on the measure by next week as Democratic leaders have called for.

The qualms expressed over legislation sponsored by House Energy and Commerce Waxman (D., Calif.), and Edward Markey (D., Mass.) along with possible Republican obstruction, point to the difficulty Democrats are having in finding consensus on climate and energy issues.

“I don’t think the votes are there in the subcommittee,” Rep. G.K. Butterfield (D., N.C.) said in an interview. Mr. Butterfield said he was particularly concerned about the bill’s impact on low-income Americans, adding “What do I tell a single mom making eight dollars an hour?”

You can see the nonsense bubbling to the surface already. With a properly constructed cap and trade system that rebates significant money to lower-income Americans, they would actually be better off than with no system and continued pollution into their communities. But that doesn't matter. Butterfield and his fellow conservaDems are delaying, offering poison pill amendments, and emboldening Republicans to obstruct. These proposed amendments fly in the face of the science, loosening the carbon cap and generally seeking to keep polluters in business.

Some of the areas of the bill where Democrats are engaged in give and take are obvious.

A group led by Rep. Rick Boucher (D-Va.), wants to weaken the 2020 emission limits from the draft's 20 percent cut target, bringing it down to the 6 percent level spelled out last fall in legislation he produced with former Energy and Commerce Chairman John Dingell (D-Mich.) [...]

Rep. Mike Doyle (D-Pa.) said Boucher's group has endorsed the electric utility industry's call to set aside 40 percent of the proposed cap-and-trade program's allowances for free distribution to regulated local distribution companies within the electricity sector. The free credits would be phased out around 2025, which he said roughly lines up with projections of widespread deployment for carbon capture and storage at coal plants.

Doyle said the group also has recommended setting 15 percent of the credits aside for free allocation to U.S. industries considered most vulnerable to international competition, including steel, pulp, paper, cement and glass. Another 5 percent should also be walled off for petroleum refineries, he said.

Turning to the renewable electricity standard, Doyle said the moderate and conservative Democrats want Waxman to trim down his proposal from a 25 percent standard by 2025 to a less aggressive 15 percent requirement. Some states cannot meet the higher limits, he said, and they also want the definition of renewables expanded to include nuclear power.

And then you have refinery-state Dems wanting to protect their jobs. And coal-state Dems wanting to exempt coal. And nuclear-industry flaks wanting money for nuclear. There are just too many competing interests here. Now you know why Obama officials call ConservaDems the bad guys.

Unfortunately, the abstract nature of the debate obscures the urgency of legislation as soon as humanly possible. America cannot really make progress along with the world on mitigating the worst effects of climate change without a major effort like Waxman-Markey. We've already lost too much ground to stop a boiling planet, and if we let this slide, things will only get worse.

Can we really prevent global warming? Or should we be thinking more about adaptation? Building coastal fortifications may be cheaper than halting the release of CO2.

Right now, the climate scientists feel that if all humans shut off carbon emissions today, it will still glide up by about 1 degree centigrade. In the business-as-usual scenarios, Nicholas Stern says there's a 50 percent chance we may go to 5 degrees centigrade. We know what the Earth was like 5 or 6 degrees centigrade colder. That was called the Ice Ages. Imagine a world 5 degrees warmer. The desert lines would be dramatically changed. The West is projected to be in drought conditions. And certain tipping points might be triggered. We can adapt to 1 or 2 degrees. More than that, there is no adaptation strategy.

What do you mean by tipping points?

There's lots of carbon in vegetation that has grown and died in the northern tundras of Russia, Canada. Normally what happens when a tree falls and dies is the microbes come and gobble it up and they recycle in terms of carbon dioxide, methane. But in the frozen tundra, those microbes are asleep. So the big fear is that once the tundra thaws, those microbes wake up, they digest all that carbon. It goes up in the atmosphere. At that point, no matter what humans do, it's out of our control. This is the realization in the last decade that has caused many of us to get very, very concerned. Adaptation at 1 or 2 degrees will be painful, it will cause a lot of hurt and pain, but adaptation at 5 or 6 degrees—I'm terribly frightened that that's catastrophic.

Aren't we in pretty bad trouble no matter what we do? We're not going to be able to stop burning fossil fuels for quite a while.

We're in the great ship Titanic, the Earth is, and it's going to take a half century to really turn the ship. But that doesn't mean we can't start doing it today, and we must. It's possible that the United States can greatly reduce its use of energy in our buildings, which consume 40 percent of our energy, and our personal vehicles.

The scientists are warning that 2/3 of total coal reserves must be left unused if we want to stop the catastrophe that Dr. Chu is talking about here. We cannot afford to give anyone a break or hold off on a cap. This is bigger than any one district.

Two things in the corner of supporters of Waxman-Markey. One, the EPA has the authority to massively regulate emissions, including possibly implementing cap and trade if they so choose. So ConservaDems and coal-state pols can either come up with a solution or have it taken from their hands. The other trick we may have is the return of reconciliation.

This is a little bit deep in the weeds, but you may recall that back in early April when the Senate was debating the budget, Sen. Mike Johanns (R-NE) introduced an amendment meant to prevent the Senate from passing climate change legislation through the reconciliation process, and it passed by a wide margin.

Well, in conference, that amendment was stripped out completely. Mike Johanns is very unhappy. But that doesn't mean that a cap-and-trade program will absolutely be established during the reconciliation process. And it doesn't mean that Democrats will be hanging the threat over Republicans' heads the way they are with health reform. In fact, the conference report basically says this won't happen. But technically there won't be anything (other than Senate politics) stopping Democrats from doing so.

So many Democrats voted against reconciliation in the Senate that trying to pull that trigger would probably not work. But at least there's another option. Those of us who want meaningful climate and energy legislation need something to hang on. Because it's real tough out there.

The Battle Begins On Climate Legislation

Today is the 39th anniversary of Earth Day, which drew 20 million people to events in 1970. Without the Internet. Or Fox News promotion. And the House of Representatives used the anniversary to fire the starting gun for major climate change legislation:

Congress is launching the “mother of all climate weeks” on Tuesday, with a monster hearing designed to push forward global warming legislation.

Fifty-four witnesses will testify on climate change legislation in three full days before the House Energy and Commerce Committee, topped off with an appearance from Al Gore on Friday. The committee will also hear from EPA Administrator Lisa Jackson, Energy Secretary Steven Chu, Transportation Secretary Ray LaHood and high-profile representatives from business and the environmental movement.

As I noted last week, Chairman Henry Waxman seeks to get the bill out of committee by Memorial Day. The hearings are taking place right now. The efforts for legislation got a major boost with an EPA report suggesting that the consumer cost would be far less than the claims being made by Republicans.

With Republican critics of the bill zeroing in on the cost to consumers and industry, a pivotal issue will be how to mitigate the bill’s economic impact. Under a cap-and-trade plan, overall emissions would be limited and polluters would be issued emission allowances, which they then could buy and sell.

An EPA analysis released to the committee on Tuesday found that the price of emission allowances would be less than projected for a similar bill the Senate debated but did not pass last summer. Allowance prices would range from $13 to $17 per ton of emissions in 2015, and $74 to $96 per ton in 2050, the EPA reported. Last year, the agency projected that the Senate bill would cost $20 to $50 per ton in 2015 and $160 to $200 per ton in 2050.

The agency said forecasts have changed in part due to lower projected growth in gross domestic product, which means industrial output of greenhouse gases will be lower than expected.

“With lower forecast emissions, the allowance prices necessary to achieve the goals set in the discussion draft are also reduced,” the EPA said.

The EPA also said the bill’s average annual cost per household would be between $98 and $140, leading proponents to say the bill would have a relatively modest impact.

“When you combine this analysis with cost-saving measures from updated energy efficiency measures and weatherization, the savings will pile up for consumers,” Markey said in a statement.

In addition, the benefit to energy companies, having the certainty of a cap and carbon pricing, so they can manage their businesses and support the kind of innovation needed to get under the caps, would actually provide long-run savings as well, apart from mitigating the worst effects of climate change (which would cost lots of money).

Of course, Republicans will continue to smear and fear about consumer costs, even though revenues from cap and trade can roll back to ratepayers. In fact, the Republican opposition to this bill represents throwing a bunch of junk at the wall to see what sticks. They are vacillating between denying the science and focusing on costs, and the result is muddled.

The Senate clearly wants to follow the House's lead, and this will be a long process. But in the meantime, there are steps the Administration can take to improve our energy outlook, like allowing offshore wind turbines; and the looming EPA regulations under the Clean Air Act can work as a vice to force the Republicans to either allow a cap and trade system or get steamrolled by the executive branch.

It's exciting to see a very real transition to a new energy economy, and the hard work of the policymakers committed to moving forward. I urge you to watch these hearings.

...This is awesome from new Obama Administration advisor Van Jones.

Waxman: Focus on the Cap

The EPA today took a major step in declaring greenhouse gas pollution a danger to the public, increasing the urgency to regulate CO2.

Environmental Protection Agency Administrator Lisa Jackson is officially confirming today that greenhouse gas pollution endangers the health and welfare of the American public, finally obeying the mandate set down by the U.S. Supreme Court on April 2, 2007. Following a review from the White House and agencies across the administration, Jackson is announcing this morning that she has signed the Clean Air Act endangerment finding for six greenhouse gases. By the time the decision is finalized after two months of public comment, it will have been nearly two years since the EPA was blocked by the Bush White House from issuing such a finding.

The implications of this ruling loom large over proposed climate and energy legislation under consideration in the Congress. I agree with Barbara Boxer that this finding will provide a serious boost to those efforts, because now the EPA is obligated under the Clean Air Act to regulate carbon emissions.

The EPA's endangerment finding will open the door for the Obama administration to regulate greenhouse-gas emissions under the 1970 Clean Air Act.

Although the president would prefer not to tackle this issue through his administration's regulatory power, the threat of EPA regulation could be used as a hammer to persuade moderate senators of both parties to get behind cap-and-trade legislation.

"What it says to the senators on the fence is that it's not really a question of whether regulation is happening. It's a question of how it will happen," a senior aide to Boxer told ABC News.

Call it "blackmail," as the corporate lobbyists do in this piece, or call it what it is, a requirement under the law mandated by the Supreme Court. So the obstructionists can block legislation in Congress and watch the EPA enact strict mandates, or they can have a say in the regulation. Their choice.

Respective of Congressional legislation, I recently had a great opportunity to sit down as part of a lobbying delegation with Henry Waxman, my Congressman and the chair of the House Energy and Commerce Committee, to discuss the Waxman-Markey clean energy legislation introduced on March 31. There are actually two bills, one in Energy & Commerce and one in the tax-writing Ways and Means Committee, both following similar tracks and expected to be out of committee by Memorial Day. And it can be argued that this provides a wealth of options for Congress to consider in pricing carbon, and thus the multiplicity of bills makes sense. But clearly, by virtue of its expansiveness and impact on a host of energy/climate issues, not just carbon pricing and hard caps but energy efficiency and renewable energy standards, the Waxman-Markey bill will be the template for energy legislation in this Congress.

Waxman brings an interesting perspective to the debate. He believes that the best way to get energy legislation through the Congress is to just start moving it, with tight deadlines, and dare the Republicans to stop it. He frames the issue as one of national security, to reduce our dependence on foreign sources of energy; of environmental imperative, to mitigate the catastrophic impacts of climate change; and of economic necessity, to move the country into a renovated, clean energy economy.

There's a lot of talk about how the cap and trade portion of the bill will be handled. The bill is somewhat murky on these points. The potential exists in the bill for offsets that would give a substantial portion of the carbon permits away for free. And the bill has no mention of how the revenues gained from what permits are auctioned off would be used (Waxman said that he would like to see some money directed to ratepayers, and some money directed to R&D for innovation in the energy space, and he would like to see the money targeted rather than applied as a broad tax cut). But Waxman de-emphasizes these concerns in favor of looking at the cap part of cap and trade. If the cap is firm and based on what the scientists have set as a goal to mitigate the effects of climate change, he reasons, the rest will fall into place. He used the example of acid rain, which used a similar cap and trade system in the 1980s. Industry feared that they'd have to spend billions for compliance, but lawmakers focused on the cap, and the problem was resolved for 1/10th of the expected cost. The goal, then, must be the cap. Waxman believed that offsets would have to be verifiable, and in exchange for the offsets there would have to be more reductions (a 1-to-1 1/2 ratio rather than 1-to-1). But if that's the cost to make the bill more politically attractive, Waxman is content to focus on the cap. Waxman also responded to a question I had about Europe's cap and trade system, which was marred by offsets and giveaways, by saying that the committee worked with Europe's regulators in drawing up the legislation, and that they will not fall into the same traps.

Waxman also played up the economic possibilities of the legislation, that only the innovation unleashed by having to get under the cap will be sufficient to actually create valuable goods for America and "get us out of the recession." Dozens of new industries can be developed and tremendous potential realized through innovation and technological advancements.

The other problematic element of the bill, for the progressive citizen lobbyists in the room with me, was the inclusion of clean coal technology in the bill, something that has been accepted by the White House and the Department of Energy as part of the solution. The typical response to this is that India and China will keep using coal even if the Western world stops, and we'd better come up with a way to capture and store the carbon produced or else our efforts will come up lacking. Waxman said that "we have to figure out if we can keep coal in our future." Obviously, the cap will eventually be too stringent for coal to remain a going concern in the United States without capture and storage technology advancing. And hopefully, the cap can force that, and develop new industries and new exports in the process. I don't know that I totally agree with that, but it's the party line on this, anyway. And besides, renewable energy has its own trade-offs.

Overall, I am far more optimistic about the prospects of climate and energy legislation coming through the Congress than I was before walking into that meeting. We still need to work hard to make the bill stronger, but the combination of the EPA ruling and the deliberate pace of the legislation moving through the House could provide the necessary momentum. We have to get this done, and hopefully we can create that sense of urgency. Also, we need to use the leverage of the EPA ruling to ensure this bill doesn't get weakened as it goes through the legislative sausage-making.