The Secret Letter

I'm hearing from sources about a letter to Harry Reid from a collection of liberal Senators, led by Sens. Jay Rockefeller and Sherrod Brown, insisting that Reid publicly commit to putting a public option in any health care bill that reaches the Senate floor. There's a big difference between having a public option in the bill before the fact or trying to get it in by amendment. It's likely that amendments to the bill will require a 60-vote threshold, therefore it would take 60 votes to get a public option into the bill if it's absent, or 60 to get one out of the bill if it's present. Nobody has said that there are those numbers of votes to do either of those actions. So whether the bill comes to the Senate floor with a public option or not is a crucial decision. The four people in that room making that decision are Max Baucus of the Finance Committee, Tom Harkin of the HELP Committee, Harry Reid and someone from the White House. A lot of this will depend on the White House's inclination, and they certainly floated their support over the weekend. But Reid's public statements have been noncommital.

The liberal faction in the Senate, led by Rockefeller and Brown but also for the first time including Sen. Barbara Boxer, want a real commitment. According to sources, Sen. Reid will meet with this faction at 5pm ET. Senator Reid's office confirms that this meeting will be held today. So presumably, some kind of accommodation will be offered, although the liberal Senators in the meeting will seek a definitive commitment, I'm told.

There have been various talks from public option supporters in the Senate about wanting to see it in the final bill, but this is the furthest it has gone, to my knowledge. Some Senators, like Sen. Boxer, are going on the record insisting a public option for the first time. Of course we don't know what form this "public option" will take - the Wall Street Journal reports today that Tom Carper's state-based approach is gaining support among Senate moderates, and Debbie Stabenow in a press conference today confirmed that this is a possibility:

In a press conference this morning with other Democratic senators, Sen. Debbie Stabenow (D-MI) -- member of the Senate Finance Committee and a supporter of a robust public option -- says it's a "broad definition."

"The states are one way to go," she said

Sen. Robert Menendez (D-NJ), who also sits on Finance and supports a public option as enthusiastically as Stabenow does, added, "There are state options that are devised in such a way that only a region of the state is included, in which case that's not really a significant public option."

"If the whole state is included in a public option -- they have that option -- well that's a much more significant standard than some that have been proposed," Menendez told reporters.

I would assume that Reid may offer this as a compromise inclusion in the bill. We'll see if the Brown-Rockefeller faction will take the deal. Certainly they are pushing very hard for a higher standard than that. And with the House of Representatives close in getting majority support for a public option using Medicare +5% rates, perhaps that gives them some leverage too.

...Greg Sargent reports that Nancy Pelosi just floated a lesser public option with negotiated rates, not Medicare +5%, to the Dem caucus, prompting outrage. I'm seeing a convergence here, with the Senate pushing up from the rank and file to get any public option into the bill, and the House pushing down from the leadership to get a public option that can pass the Senate.

Byrd, Brown Keys To Climate Fight; EPA Steps Up

Yesterday's release of the Kerry-Boxer climate bill found at least one surprising supporter - West Virginia Senator Robert Byrd.

Senator Byrd put out a statement making surprisingly supportive noises, saying he’s “glad” that Kerry and Boxer incorporated his suggestions and promising to keep working on the bill with them. A Kerry aide says Byrd’s comments came after Kerry lobbied Byrd’s staff extensively in one-on-one meetings.

Now, I'd rather have the Senator from West Virginia who is physically able to perform - Jay Rockefeller criticized the bill - praising the bill, but if Byrd is reachable, that does widen the list of reachable Senators. The Hill reports that Sherrod Brown of Ohio could be a key:

The Ohio liberal has been working diligently behind the scenes on behalf of manufacturers, seeking concessions from two Democrats who share his views on most other policy matters [...]

For starters, he thinks the Senate climate change bill needs to invest significantly more to help U.S. manufacturers, which face a competitive disadvantage with companies in China and other countries with less strict environmental rules.

Brown wants Boxer to increase the size of rebates to manufacturers that consume large amounts of energy, and give more assistance to small- and midsized manufacturers trying to retool their businesses to compete in the clean-energy economy.

Perhaps most controversially, Brown wants the Senate to consider imposing tariffs on foreign competitors operating in countries with lax rules for greenhouse gas emissions.

“Carbon dioxide emissions expand if a company closes down in Toledo, Ohio, and moves to Shanghai, where the emissions standards are weaker,” he said. Brown describes this phenomenon as “carbon leakage.”

Democrats such as Sens. Debbie Stabenow (Mich.), Carl Levin (Mich.) and Bob Casey Jr. (Pa.) say they have the same concerns as Brown and acknowledge that he has been a leading advocate for industrial states.

“His voice on manufacturing is really important,” said Stabenow of Brown.

I'm actually pleased that there is a voice for manufacturing in the Senate, though I don't necessarily agree with all of Brown's proposals, many of which are admittedly parochial. But I strongly support carbon adjustment tariffs. It's just a fact that greenhouse gas emissions should be factored into the price of goods, and such a tariff would be a way to do that. If Wal-Mart sells me a set of tube socks for $2, the cost to the environment and eventual cleanup is far higher.

The good news yesterday is that the Obama Administration stepped up. The EPA issued a new rule on regulating greenhouse gases emitted at stationary sources, and it could prove a motivator for Congress to get something done.

Appearing at a climate summit in Los Angeles today, Environmental Protection Agency Administrator Lisa Jackson will announce the administration’s plan to regulate industrial global warming pollution, with or without the support of Congress. In May, the Environmental Protection Agency proposed global warming standards for motor vehicles, applauded by the auto industry. Under the rules of the Clean Air Act, when these regulations go into effect in March 2010, all major greenhouse gas polluters — from coal-fired power plants and oil refiners to methane-emitting landfills — are automatically subject to regulation:

Under EPA’s current interpretation of PSD [Prevention of Significant Deterioration] and title V applicability requirements, promulgation of this motor vehicle rule will trigger the applicability of PSD and title V requirements for stationary sources that emit GHGs.

Today’s proposed rule — which allows public comment until December — technically is a “tailoring rule” to limit regulation of global warming pollution to emitters of 25,000 tons of carbon dioxide a year, instead of the automatic statutory amount of 250 tons. This 250-ton standard would cover about four million businesses and homes — the “glorious mess” President Bush used as an excuse for his inaction. The EPA plans to raise the pollution limit to 25,000 tons, so that only 14,000 industrial pollution sources nationwide would be covered by the regulations, 11,000 of which are currently covered by the Clean Air Act permitting requirements already.

Raising that pollution limit means that churches or schools, who emit over 250 tons, would not be targeted. But it does mean that thousands of power plants will get permits showing they are working to reduce carbon dioxide emissions. That sets a date - March 2010 - for the fight. And Congress can either provide their own counterpart legislation or get out of the way. That's helpful to Kerry and Boxer's efforts.

Tea-Leaf Reading On Health Care

I'm going to play against type for a second.

I'm going to be an optimist.

There are actually lots of signs out there that health care reform will get done, and even a few that it won't be totally awful.

On the "getting done" part, this is uncontroversial. Without a bill that Democrats can sell to the public as a victory, they will get wiped out in 2010. They cannot live with failure. Dems in the House all have to face the voters, while some Senate moderates can hide this cycle. But regardless, the pressure from the White House and those vulnerable members of Congress to get something done will be intense. Furthermore, Blue Dogs are resigned to a bill.

Even after the tough town-hall-style meetings, unrelenting Republican assaults and a steady stream of questions from anxious voters, interviews with more than a dozen Blue Dogs and their top aides indicate that many of the lawmakers still believe approval of some form of health care plan is achievable and far preferable to not acting at all.

“I can’t tell you how comprehensive it will be, but I do believe something will get passed,” said Representative Michael Arcuri, a second-term Blue Dog Democrat from New York.

The political temperature of the Blue Dogs — and their ideological counterparts in the Senate — after the five-week recess is crucial. As representatives of some of the nation’s most conservative territory represented by Democrats, they potentially have the most to lose if a Democratic bill spurs a backlash. Even with healthy majorities in Congress, every Democratic vote is critical given the reluctance by some Democrats to consider a major overhaul and near blanket Republican opposition.

One lawmaker in the group, Representative David Scott of Georgia, said his determination to enact a health care overhaul had been increased over the recess because of what he called the spread of misinformation and other unfair tactics engaged in by the opposition.

“I think now more than ever we must get strong in our resolve to pass health care insurance reform legislation,” Mr. Scott said.

Scott is the Rep. who had a swastika painted on a sign in front of his office.

The Blue Dogs know that they will be first in line to go down if health care fails. They can try to claim in their districts that they saved the world from the eee-vul intentions of Hussein X, but that won't work. After a failed effort, anyone with a D in front of their name will be toast. And the Blue Dogs will be first up to the sacrifice pit.

Meanwhile, there are actual, definable signs that the public option will have to be a part of whatever comes out of a must-pass bill. For one, labor supports it strongly. Few interest groups in the Democratic Party hold more influence. House Dems would be dead without labor. Second, members of Congress are putting their own pressure on the President. Like Ohio's Sherrod Brown.

"I think the president needs to step forward," Sen. Sherrod Brown, D-Ohio, said this week, "be more specific, more aggressively fight for a strong health reform bill with a strong public option. I think he's going to do that."

Then you have Blanche Lincoln setting up for what I actually think is a way to support a public option and claim that she stopped the liberals from doing their worst:

Sen. Blanche Lincoln (D-AR) has been tepidly supportive of a public option in the past, so her comments to reporters today come as a bit of a head-scratcher. "I would not support a solely government-funded public option. We can't afford that," Lincoln said.

Nobody has called for a government-funded public option. The House bills have it paid for through consumer premiums, with a modicum of start-up money. She appears to be girding herself for a premium-supported public option.

Now, this could all be completely off base, as you have to practically read hieroglyphics to understand what's coming out of politicians in Washington these days. But we know with a fair degree of certainty that:

1) there has to be a health care bill
2) conservative Dems know it and won't stand in the way
3) liberal Dems sound confident that the President will push for a strong public option
4) conservative Senate Dems seem to be playing a kabuki game about it

Sure, you have ConservaDems not up for re-election next year like Ben Nelson arguing for more bipartisanship (although even the examples he gives are already addressed by the House bills). But in general, the momentum is actually pushing in favor of a bill, and maybe even a good one. You can base your beliefs on that, or unnamed sources in the White House. We'll see.

Fair Trade Contingent Now Formidable Opponent

Ron Kirk made some controversial comments affirming that the Obama Administration has no plans to reopen NAFTA, but would look to address labor and environmental concerns outside of the agreement. Whereupon David Sirota's head exploded. Or actually not - he made some side comments about the virtues of campaign promises, but he also stated that "I still hold out hope - based on the White House's rhetoric - that even though Obama is going back on his promise to reopen NAFTA, there will nonetheless be progressive trade policy changes soon." That's kind of interesting, and I think the optimism comes from the set of allies in Washington for progessive trade policy, moving the country in a new direction:

Trade is emerging as a source of friction between President Obama and congressional Democrats.

Trade critics on Capitol Hill are complaining about comments by Ron Kirk, Obama’s trade representative, who on Monday said Obama does not want to renegotiate the North American Free Trade Agreement (NAFTA) after all.

“I’m disappointed,” Sen. Sherrod Brown (D-Ohio) said of Kirk’s comments. “The president needs to understand there is strong opposition to more-of-the-same trade deals.” Freshman Sen. Kay Hagan (D-N.C.) also expressed disappointment.

Kay Hagan's opposition in particular is interesting. She has not taken any high-profile stands as a freshman, to my knowledge, and starting with trade means that she considers it an important issue to her constituents. The President will simply be bound by a very large and strong fair-trade component on Capitol Hill. The Colombia and Panama FTAs will offer a testing ground. Here's what Kirk had to say:

Mr. Kirk, who as mayor of Dallas was known as a strong advocate of free trade, also said the administration planned expeditious reviews of pending trade agreements with Colombia and Panama.

He said that Colombia had made “remarkable progress” in reducing violence — attacks against labor activists have been a key sticking point — but that other issues remained, and he vowed intensive consultation with Congress on the matter.

The Bush administration signed the agreement with Colombia in November 2006. But Congressional Democrats and United States labor groups have said the Uribe government must do more to stop the antilabor violence and hold perpetrators accountable, a position Mr. Obama supported during his campaign.

Regarding Panama, Mr. Kirk said that differences on labor standards, and the question of the country “possibly being a tax haven,” needed resolution.

Certainly, taking these concerns seriously, and putting conditions on these free trade agreements, represents a change in and of itself.

Stay tuned.

Progressive Backbone of the Stimulus

The Progressive Caucus lists the very good provisions as part of the stimulus package, and they are hard to argue with:

• Unemployment benefits (UI) extension. Cost = at least $12.7 billion

• Anti-hunger provisions

* SNAP - 20% temporary increase in maximum food stamp level above the FY2009 level for two years. Cost = approximately $24 billion and increase in funds for state food stamp administrative costs Cost= $250 million;

* WIC - increase funding to make up for shortfall not covered in the current Continuing Resolution. Cost = $450 million and increases for management information system and related infrastructure improvements. Cost = $50 million;

* School meals - provide a 15% increase in funding for breakfast and school lunch programs. Cost = $1 billion;

• Medicaid payments to states (FMAP). Cost = at least $15 billion

• LIHEAP assistance to provide low-income Americans relief from higher energy costs. Cost = at least $5 billion

• Job creation via down payment on rebuilding America's infrastructure and schools, starting with massive investment in commercialization of green technologies and related job training that promote environmental protection and energy independence. Cost = at least $100 billion

** In general:
• No funds for Iraq or Afghanistan wars and no funds for defense procurement.
• Prevailing wage to be paid for jobs created and upholding of Davis-Bacon Act

Add it up and that comes to $157.5 billion in progressive priorities as described by the caucus, in the plan. You can add another $3 billion in transit funding that just passed as an amendment via voice vote. I would of course like to see more, but that's a pretty decent foundation, and of course it doesn't count the middle-class and lower-class tax cuts.

Wingnuts can cherry pick the bill to death (Republicans are now FOR people getting STDs? And don't they realize that treating STDs cost money and that all preventive medicine saves in the long run?) but I would guess these priorities are staying. We're not even a quarter of the way through the process, but I'm less agitated than I could be.

And it goes without saying that these idiots who ran the economy into the ground for years and created this crisis should not be listened to by anyone.

"The Republican answer to everything is tax cuts, we've tried it for eight years it hasn't worked for the economy, that's what they always say...Their answer is always tax cuts no matter what the question is and it simply hasn't worked. We've had eight years of deregulation, privatization and tax cuts for the rich and look where it's gotten us. It's not a surprise that this economy's in such bad shape because of those policies, we don't want to do more of them." - Sherrod Brown

If Democrats still exist on cable news, they would do well to say that over and over and over again. Bipartisanship is a phantom. Republicans won't vote for this package at all, because they have no political reason to do so. Also they are congenitally wired to do the very opposite of this prescription. It isn't worth reaching out anymore.

Well, That Could Have Gone Better

I watched almost all of the hearings in front of the Senate Banking Committee, and I have to say that the mood I gauged from the public comments of the Senators is extremely damaging to President Paulson's hopes of a stick-up for $700 billion. Chris Dodd came out and called the Paulson plan unacceptable. Richard Shelby, the Republican ranking member, is skeptical that the plan would even work. I didn't hear really any positive comments, and Sherrod Brown's were pretty representative:

To Bernanke: "I haven't received one phone call from a constituent that's been positive. I don't think people making $50,000 a year are interested in bailouts out executives whose country club fees are many times that. Does Wall Street owe the American people an apology?"

The anger in the Dirksen Senate office building reflects the anger in the country at the prospect of giving a significant portion of the Federal treaasury away, no-strings-attached, to those rich people who created the problem in the first place. The CEO compensation issue may be somewhat irrelevant, but if ordinary Americans see the through-line between their wallets and billionaire executives' luxury racing craft then the deal is politically impossible and will face a great revolt. What's more, the big banks are threatening not to participate in the bailout if their bonuses are taken away, so it is a factor, and I think Senator Obama is exactly right:

First, the plan must include protections to ensure that taxpayer dollars are not used to further reward the bad behavior of irresponsible CEOs on Wall Street. There has been talk that some CEOs may refuse to cooperate with this plan if they have to forgo multi-million-dollar salaries. I cannot imagine a position more selfish and greedy at a time of national crisis. And I would like to speak directly to those CEOs right now: Do not make that mistake. You are stewards for workers and communities all across our country who have put their trust in you. With the enormous rewards you have reaped come responsibilities, and we expect and demand that you to live up to them. This plan cannot be a welfare program for Wall Street executives.

There are bigger issues, however, and that's whether or not taxpayers get equity stakes in these banks who are relieving their distressed assets. In arguing against that, Ben Bernanke gave the game away.

"I believe that under the Treasury program, auctions and other mechanisms could be devised that will give the market good information on what the hold-to-maturity price is for a large class of mortgage-related assets. If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.

First, banks will have a basis for valuing those assets and will not have to use fire sale prices. Their capital will not be unreasonably marked down …"

This should be read in the context of Brad Setser’s calculations: he finds that if Treasury pays a price that seems appropriate given the poor quality of the assets, “The hit to the banks balance sheet might be too big” — the losses would be much larger than the amounts banks have already acknowledged, so that their capital position would be severely weakened.

So the plan only helps the financial situation if Treasury pays prices well above market — that is, if it is in effect injecting capital into financial firms, at taxpayers’ expense.

What possible justification can there be for doing this without acquiring an equity stake?

The Wall Street Journal sees the same issue. And Markos finds a key quote that connects the executive pay issue and the equity stake issue and proves that this is really about making rich people richer.

Straight from the horses' mouth, the White House's press lackey:

"With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them."

Careful how you deal with them? How about you LET THE FUCKING FREE MARKET HANDLE IT then? If they want taxpayer funds to bail out their incompetence, they give up equity, they accept limits on executive compensation. If they don't want those conditions imposed on them, they don't take our money.

Simple, right? And if they don't take our money, who cares? They are strong and successful! And the taxpayers don't have to give up a dime. Everyone wins!

I am now certain that this is all a giveaway to the GOP's friends on Wall Street and an effort to financially handcuff the next administration. It has little to do with saving the economy. Otherwise, Treasury and White House officials wouldn't be talking about bribing and arm twisting these banks into taking government handouts.

Not to mention the fact that Paulson flat-out lied about wanting oversight in the bill when he presented a plan that stated his actions would be "non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

I don't quite know where this is going to go - the Congress and the White House have ignored the entreaties of the American people before. But the movement is away from the stick-up and toward something with an upside for the taxpayer. Chuck Schumer talked about a short-term plan to test the system and waiting until the next Presidency to make a full solution. Chris Dodd is doing a great job so far, and I don't know where it's going, but this doesn't totally feel like a steamroll right now.

UPDATE: Hilarious. The Republican Study Group - basically hard-right conservatives - have released their counter-proposal for the bailout. It includes suspending the capital gains tax for two years, privatizing Fannie and Freddie, and repealing the Humphrey-Hawkins Full Employment Act. In case you thought that the GOP suddenly got religion on economics and wanted to move forward without throwing money at rich people at the expense of the poor.

Sherrod Brown: National Treasure

To Bernanke: "I haven't received one phone call from a constituent that's been positive. I don't think people making $50,000 a year are interested in bailouts out executives whose country club fees are many times that. Does Wall Street owe the American people an apology?"

Now talking about equity stakes in the affected companies. He's got Paulson and Bernanke on the run. Brown is giving voice to this refrain:

Henry is playing the role of Colin Powell in selling a disastrous plan to the American people. We all know how that turned out.

I have come to the conclusion that the bailout bill cannot be fixed and thoughtful members of Congress should simply say no. This is closer to the Social Security privatization fight - where only saying no until privatization was off the table - than the minimum wage increase fight, where Republicans extracted billions in tax breaks for business as the price of paying poor people a little bit more. Liberal congressional leaders are treating the bailout like the minimum wage deal. It is not. This vote is the bookend signature act of the Bush Administration to be coupled with the first vote authorizing Bush to invade Iraq. The details are not particularly relevant. Reports out of Washington say that the Bush Administration is comfortable adding in the notion of taxpayers getting an equity stake in bailed out Wall Street firms, but only if it is option, and not a requirement. And just who do you think is going to take that option? Not Henry Paulson.

There's a serious question to be asked about whether this is an effort to rescue the financial markets or an effort to drain the federal treasury and block a progressive agenda.

...see also Bernie Sanders, another progressive hero, calling for a progressive tax so that the wealthiest Americans can pay for this bailout. Christ, even Jim Bunning is questioning that credit card debt and student loans have been crammed into this bill. This may be a situation where Congress rumbles and grumbles and then passes a shit bill, but I'm not sure...

Social Security, Anyone?

I don't think the Obama campaign has made this clear enough:

As it happens, though, not that long ago we had a rare political moment in this country, a moment where the public sat up and took notice of economic policy -- and spoke out and made its voice heard too. When George W. Bush made it to term #2, he decided to try to privatize social security to reward his supporters on Wall Street with a new source of capital, customers, and fees. (Those would be the same people whose firms are now cratering under the weight of the bad debt they recklessly took on while Republican regulators looked the other way). But as it turned out, we Americans were not about to let our elected representatives turn over our social security taxes to Wall Street financiers to gamble with if it meant losing the guaranteed income that has allowed millions upon millions of American seniors to live out their sunset years with at least a basic measure of dignity.

But while ordinary Americans spoke out, John McCain stood with Bush (hugged him awkwardly in public, even), against the American people. In fact, just six months ago, McCain again let slip his fondness for privatization.

I have been scratching my head why this has not been talked about more, especially since Obama has been having trouble winning votes among seniors. There may well be some good reason I'm missing why it hasn't been a top argument thus far.

There is no good reason. I will note that Sherrod Brown, the populist Senator from Ohio, made this point today, and hopefully that's a harbinger of things to come.

"Just imagine if Bush and McCain had had their way and privatized Social Security," said Brown. "People would have seen their private social security accounts just disintegrate the last two days. And imagine what that would mean in rural America, urban America, suburban America and small town America?"

It's one thing to say that McCain's record shows him to be captive to special interests and lobbyists, or that he has considered himself to be the king of deregulation and as a Senator has sought to remove any and all burdens from corporate interests. And it's important to correct the record on this, now that McCain is running away from it. But those are true statements but not visceral ones. Even the familiar line that McCain "gave tax breaks to companies that ship jobs overseas," while effective, doesn't have broad resonance for everyone.

The fact is that from 2001 to today, the stock market has gained, in the best analysis, 1%. And depending on the choice of stocks, an individual portfolio may have incurred significant losses in those years. And this is the system to which George Bush and John McCain want to turn over your retirement savings. Before Social Security it was commonplace to witnesses large numbers of elderly men and women in poverty, struggling to survive. This is the Republican vision of America.

It seems significant.

UPDATE: Turns out Obama snowed me. He released this unannounced attack ad on this very issue in Michigan.



The unannounced attack ad is really an innovation of this campaign.