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Wonkbook: All about Kerry-Lieberman; Big April budget deficit; Elena Kagan's nickname

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Financial regulation continues its slow march through the Senate today, with eight amendments likely to come up for a vote. We're starting to hear talk of a final vote on Tuesday. Meanwhile, John Kerry and Joe Lieberman brought out their "American Power Act," but it's being greeted with a sort of respectful sympathy, not calls for action. Notice that the president is in Buffalo, New York to talk jobs, not climate.

Over in the House, they're finishing up the "America COMPETES Reauthorization Act of 2010." Details here. The Labor Department will release weekly numbers on jobless claims, as well as import and export data. Ben Bernanke is giving a speech in Philadelphia, Elizabeth Warren is addressing SEIU, and I'm listening to the new National album. It's really good.

Welcome to Wonkbook.

Top Stories

The American Power Act: Bill text; section-by-section summary; three-pager that doesn't tell you much (all pdf). Here's a chart that compares it to Waxman-Markey and Obama's campaign proposal.

The Senate prospects look poor, reports Ben Geman: "Majority Leader Harry Reid (D-Nev.) praised the measure and vowed to seek action this year, but acknowledged it will need 'significant' bipartisan backing. Reid last year compared moving climate change legislation to a 'headache.'...Senate Finance Committee Chairman Max Baucus (D-Mont.) said he is taking a look at the measure, but noted 'we have a big, heavy schedule,' when asked if the committee would work on the bill."

Kerry makes his pitch to Green activists: "You know where I've been and continue to be on all the major environmental fights since even before I became a senator. As a lieutenant governor, I focused on acid rain and we laid the groundwork for the successful fight on the Clean Air Act in 1990, with the support of the first President Bush and bipartisan support from Congress. In stark contrast to that effort to find a bipartisan way forward, I led the successful filibuster -- against the urging of many in our Democratic caucus -- to defeat the second President Bush's plan to drill in and destroy the Arctic National Wildlife Refuge. I point to these twin examples because I think they're evidence that I know when to dig in and fight, and I also know when and how to find the path to getting something done across the aisle." http://bit.ly/aVnGdL

The April budget deficit is the largest on record, reports the AP: "The Treasury Department said Wednesday that the federal deficit for April soared to $82.7 billion, the largest imbalance for that month on record. That was significantly higher than last year's April deficit of $20 billion and above the $30 billion deficit that private-sector economists had expected."

"The government generally runs surpluses in April, as millions of taxpayers file their income tax returns. But income tax payments were down this April, reflecting the impact of the recession, which has pushed millions of people out of work.
Total revenue for April was down 7.9 percent from a year ago, dipping to $245.3 billion."

Memos from her time on the Domestic Policy Council paint a centrist picture of Elena Kagan, reports Josh Gerstein: "Supreme Court nominee Elena Kagan urged President Bill Clinton to take centrist stances in several battles over issues like abortion and family leave when other administration officials or allies were pressing for a more aggressively liberal approach, according to documents at the William J. Clinton Presidential Library. The memos reviewed by POLITICO suggest that, during her time as a White House deputy domestic policy adviser, Kagan fit comfortably within a cadre of Clinton aides known for centrist impulses. And Clinton often appears to have sided with Kagan’s approach."

Thurgood Marshall nicknamed Kagan "shorty,", reports Robert Barnes: When she takes her spot just feet from the bench, it is clear why her former boss, Justice Thurgood Marshall, nicknamed her Shorty. 'This may take awhile,' she told the court once while cranking down the lectern as she prepared to follow a particularly tall advocate from the other side."

Fashion interlude: Japan's prime minister has louder shirts than you do.

Table of Contents: Reactions to and analysis of the Kerry-Lieberman bill; EU tries to take more control of its members' budgets (and more economic news); Blanche Lincoln's derivatives language survives GOP challenge (and more FinReg news); a one-cent gas tax to help the Gulf (and other environmental news).

Kerry-Lieberman

The Senate energy bill is flawed, but worth passing, writes Brad Plumer: "It's true, the Kerry-Lieberman bill as written almost certainly isn't the optimal path for cutting U.S. greenhouse-gas emissions as quickly and cheaply as possible. The logic of getting 60 votes in the Senate sort of dictates that whatever legislation emerges from that chamber is going to be deeply—even horribly—flawed. But putting even a small price on carbon and beginning the process of nudging industries toward efficiency and clean power is an important step."

It's a "nudge" towards a solution, not a full solution, writes Andrew Revkin: "My sense is, with climate, the world is in the realm where a 'nudge' matters. Even with all the compromises aimed at political consensus, the bill would surely create more incentives for speeding deployment of energy options other than conventional burning of coal and oil. Yes, there will be more money for research on energy frontiers. But given that most revenues generated by the bill are slated to be sent back to consumers to blunt its impact on wallets, it’s hard to perceive this effort as sparking the kind of energy quest needed to decarbonize a world heading toward roughly 9 billion people seeking lives enabled by abundant energy. Still, a vote against the bill is, in essence, a vote for stasis unless naysaying lawmakers propose a serious new approach."

"Looking back through U.S. history, two things always seem to be true of green legislation. The first is that curbing pollution always turns out to be far easier and cheaper than anyone predicted. The second is that environmental regulations do get strengthened over time. The Clean Air Act was shabby and loophole-ridden when it was first enacted in 1963, but Congress steadily improved it over the years when inadequacies were found and after fears that the bill would wreck the economy proved unfounded. And I do think the same dynamic will hold true of climate legislation."

The same old "cap-and-tax,", writes Daniel Foster: The perversely-named 'American Power Act' retains the cap on carbon emissions 'credits' and a tax of at least $12 per ton on carbon produced by large emitters, while imposing broad new regulations on industrial, transportation, and energy infrastructure. It aims to reduce carbon emissions by 17 percent over ten years and 83 percent over 40 years. The tax 'floor' of $12 would be indexed at inflation plus 3 percent, while the tax 'ceiling' would be set at $25 and be indexed to inflation plus 5 percent. The proposed federal cap-and-tax system would eliminate existing state-run efforts, and pay off those states for lost revenue."

It's more like cap-and-fee, writes Tim Mak: "For utilities, the Senate version is much more permissive than the House bill. It tightly regulates the future market for emissions permits in the utilities’ favor, assuring them that the price will never rise above $25 a ton or be allowed to fall below $12. This is much closer to a fee or tax than to cap-and-trade."

The American Power Act wastes $2 billion a year on carbon capture, writes Robert Bryce: "That’s a lot of money for a technology whose adoption faces three potentially insurmountable hurdles: it greatly reduces the output of power plants; pipeline capacity to move the newly captured carbon dioxide is woefully insufficient; and the volume of waste material is staggering. Lawmakers should stop perpetuating the hope that the technology can help make huge cuts in the United States’ carbon dioxide emissions."

The American Power Act is stronger than the House on transportation, writes Brad Plumer: "Kerry and Lieberman took a very different tack on this subject than the House did—and it's a stunning improvement. For starters, the cap-and-trade program would generate about $7 billion in revenues from selling carbon permits to oil companies and refineries. That money would then get split evenly in three ways:

"1) One-third would go toward federal grants for big transportation projects. This could include anything from new freight rail lines to, say, a marine highway system that could replace existing truck infrastructure...2) Another third would go toward the Highway Trust Fund. The catch here is that money would specifically have to go toward projects that decreased greenhouse-gas emissions. So the money couldn't just be used to build gobs of new highways out to the exurbs...3) The last third would go toward local land-use planning. This is the most intriguing bit. As Elana Schor notes, the concept here has its origins in a green transportation bill authored by Delaware Senator Tom Carper. States and metro areas would develop their own plans to reduce transport emissions—by investing in rail or promoting denser development or building sidewalks or curbing sprawl or whatever they wanted to do—and plans that were more ambitious would get more money."

The climate bill was changed due to the oil spill, reports John Broder: "One of the central elements of the Senate bill — incentives to increase domestic offshore oil production — has been radically rewritten in recent days, in the aftermath of the explosion and fire on a drilling rig in the gulf on April 20, leaving an undersea well leaking oil that has yet to be stanched. Instead of providing for a broad expansion of offshore drilling, the Kerry-Lieberman measure would have the effect of drastically limiting oil operations off the Atlantic and Pacific coasts by giving states the right to veto any drilling plan that could cause environmental or economic harm."

Know thyself interlude: Are you an asker or a guesser?

Economy

The EU is taking more fiscal control over its members, reports Matthew Dalton: "In the new budget process, the European Council, which represents the national governments, and the commission would identify the EU's main economic challenges early each year. Then governments would take this analysis into account when preparing their budgets for the following year, which would be submitted to the commission and evaluated."

We need to pick two out of democracy, globalization, and the nation-state, writes Dani Rodrik: "Deep down, the crisis is yet another manifestation of what I call 'the political trilemma of the world economy': economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance."

Ian McKellen teaches Ricky Gervais how to act interlude: http://bit.ly/adB71S

Financial regulation

Risk-retention survived and mortgage-underwriting standards failed in yesterday's Senate votes, reports Victoria McGrane: "The amendment offered by Sen. Bob Corker (R., Tenn.) was rejected, 63-36. The Obama administration supports the risk-retention rule as a way to rebuild investor confidence in securitization markets, but mortgage lenders and other critics contend the risk-retention requirement would dry up credit. Mr. Corker's amendment also called for new mortgage underwriting rules, including a requirement that the borrower make a down payment of at least 5%. Democrats and a number of outside groups opposed the 5% down payment, claiming it would hurt minority and low-income first-time home buyers."

A final vote on financial reform could come as soon as Tuesday, reports Greg Hitt: "Discussions are under way on a strategy to wrap up debate on the financial regulation overhaul in the Senate, and Senate Democrats on Thursday are expected to meet behind closed doors to talk about the way forward...Under one scenario being discussed, a final vote could come as soon as Tuesday after a possible vote on Monday to shut off debate on amendments."

Blanche Lincoln's derivatives proposal survives challenge, reports Meredith Shiner: "The alternative offered by Republicans Saxby Chambliss of Georgia, Judd Gregg of New Hampshire and Richard Shelby of Alabama would have weakened the Lincoln language dealing with the complicated market instruments—language they believed "overreached" its objective by threatening to force out derivative products from banks and financial institutions. The amendment failed, 39-59."

Greece will be facing the same crisis in two to three years, writes Mark Weisbrot: "The tens of thousands of Greeks in the streets have it right, and the E.U. economists have it wrong. You cannot shrink your way out of recession; you have to grow your way out, as the United States is doing (albeit too slowly). If the E.U. and the I.M.F. will not offer a growth option to Greece, the country would be better off leaving the Euro and renegotiating its debt."

"Argentina tried the 'internal devaluation' strategy from mid-1998 to the end of 2001, suffering through a depression that pushed half the country into poverty. It then dropped its peg to the dollar and defaulted on its debt. The economy shrank for just one more quarter and then had a robust recovery, growing 63 percent over the next six years."

The Dodd bill is a recipe for cronyism, write Clifford Asness and Aaron Brown: "Regulatory staff will be working constantly with private-sector counterparts. People who play ball with regulators can count on favors and subsidies for themselves and barriers for their competitors and enemies. This will be a two-way capture. Regulated institutions will get fat on government-legislated profit, and regulators will look good by getting private firms to throw money at any problem that bothers Congress. People will move back and forth between the private and regulatory sectors. The Dodd bill is perfectly designed to create the largest and most powerful crony system in history."

Recipe interlude: Bruschetta with ricotta, honey, and lemon zest.

Environment

The White House is asking Congress to raise the gas tax by one cent to help the Gulf, reports Jared Favole: "Senate Finance Committee Chairman Max Baucus (D., Mont.) said the provision to raise the oil-spill tax to nine cents a barrel from eight cents could be added to legislation extending jobless benefits and expired tax provisions, which could come to a vote in Congress by the end of May. The one-cent increase would raise about $5 billion over 10 years to help offset the cost of the tax package, which is nearing $200 billion. The tax could go to 10 cents a barrel in 2017. "

BP did not prove to regulators that its blowout preventer would shut down a well, reports Jennifer Levitz: "BP PLC, the oil giant that leased the rig that sank into the Gulf of Mexico after a disastrous fire last month, did not provide required proof to regulators that its blowout preventer would be able to shut down a well in an emergency...the agency requires operators to submit proof that they have functioning shear rams—which sever and seal pipes in the event of an emergency—BP did not submit that proof with its permit for the Deepwater Horizon, the rig that sank."

Closing credits: Wonkbook is compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Tidewater Marine Photo.

By Ezra Klein  |  May 13, 2010; 7:22 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Reconciliation
Next: Climate change bill in a tough spot

Comments

all this is great Ezra but today you MUST (imo) link to Lewis Black's tirade last night on The Daily Show about Glenn Beck. It's hysterical! Oh wait, I'll do it.

http://www.thedailyshow.com/watch/wed-may-12-2010/back-in-black---glenn-beck-s-nazi-tourette-s

Posted by: visionbrkr | May 13, 2010 7:59 AM | Report abuse

The American Power Act is all fine and dandy, but it's never going to be enacted into law. Neither is any other reform. The Dems had their chance prior to Kennedy's death and squandered it. They were too afraid to act on their mandate and majority, only passing health reform after it was obvious they had to show something for all their bravado, and now the neocons are returning to power and will work as hard as they can to resume our march towards madness.

Perhaps we would be better served if we talked about videos as vision is doing.

P.S. I think the stupidest people in America are the independents, who are swinging back like mindless pendulums towards the right, where every insane and nihilist and recession-causing idea of the last 30 years has originated. Unbelievable.

Posted by: Lomillialor | May 13, 2010 8:09 AM | Report abuse

has anyone else noticed that the emotional tone of financial regulation debate in congress is very different from the health care debate?

Posted by: jamesoneill | May 13, 2010 9:23 AM | Report abuse

P.S. I think the stupidest people in America are the independents, We gave you a chance and you blew it. To bad so sad!

Posted by: obrier2 | May 13, 2010 9:25 AM | Report abuse

"Democrats and a number of outside groups opposed the 5% down payment"

That's insane. After what's happened in the housing market, how can anyone be seriously opposed to 5% down payment? I'm sorry, but if you can't come up with 5%--not 10%, not 15%, but 5%--you don't need to be buying the item. You are almost certain to default on your loan at some point. You are 100% guaranteed to default if there is a recession and the housing market collapses and your housing values decrease . . . if you can't come up with the 5% down you're unlikely to be continuously capable to pay for the house insurance or pay for the necessary repairs and upkeep to maintain your home's viability. So when the bank forecloses, the property itself will be falling apart. Here's a fine nihilist and recession-causing idea that's originates and is perpetuated by the left, and is being fought against (unsuccessfully, so far) by the right. I mean, 5% is too low, when it comes down to it, but they can't even get on board with that?

I can see why independents just might be swinging back to the right.

@Lom: "P.S. I think the stupidest people in America are the independents, who are swinging back like mindless pendulums towards the right, where every insane and nihilist and recession-causing idea of the last 30 years has originated."

Impulsive and emotional, perhaps, more than stupid. But it could also be that the performance of the left, as well as their ability to honestly make their argument and legislate in a manner that is consistent with their pledges, plays a role. You can blame the independents if you like, but there's always an opportunity to convince independents that the other side is wrong, and if you're (or your party is or its representatives are) doing a piss-poor job of making that case, it's not entirely the independents' fault.

For example, FDR and the Democrats won seats in 1934 and 1936, after having the Democrats having assumed power in a landslide in 1932. It's possible to win people over, emotional and impulsive though they may be.

If your side is too smart or too busy or too important to do that, then eventually you will lose elections. And lose in the arena of ideas.

Posted by: Kevin_Willis | May 13, 2010 9:49 AM | Report abuse

@visionbrkr: Lewis Black is dead right on Glenn Beck's Nazi tourettes. That was actually very, very good. Although I've never been a big fan of Lewis Black's presentation (or Glenn Beck's). But he's got Glenn dead to rights.

That being said, back when I'd listen to Glenn Becks radio show, circa 2006, he'd keep going on about how the economy was teetering on the edge and the housing market was about to implode and we'd soon being going through another Great Depression (and something about Nazis) and I thought he was crazy. Turns out he had the economy thing right.

Posted by: Kevin_Willis | May 13, 2010 9:58 AM | Report abuse

@Kevin Willis,


the best part.

Mother Teresa had a moustasche and Hitler had a moustasche. MOTHER TERESA is HITLER!

I've gotta admit that show (and Black, Oliver and Wyatt Cenac specifically) is my one thing that I love that's liberal!

oh also liked the little dig at Al Gore too!

Posted by: visionbrkr | May 13, 2010 10:04 AM | Report abuse

@KW: despite me being a "progressive" I agree that 5% should be a bare minimum for purchasing a house. If we really want to help the poor and minorities with housing, we should provide more rent subsidies and not saddle people with debts they can't pay. I hope to the invisible sky wizard that this is just a bargaining chip for some other proposal.

Posted by: srw3 | May 13, 2010 10:09 AM | Report abuse

@KW: You can blame the independents if you like, but there's always an opportunity to convince independents that the other side is wrong, and if you're (or your party is or its representatives are) doing a piss-poor job of making that case, it's not entirely the independents' fault.

I think you are making the assumption that independents are always in between the left and right. I don't think that is true. Lots of independents are disgruntled republicans that are either upset about 1 issue or think that the republicans are not far right enough for them (read tea partier/bagger). Some independents are left of the dems (not hard to do). I don't think one can assume that all independents are moderates.

Posted by: srw3 | May 13, 2010 10:15 AM | Report abuse

srw3,

as you'd expect, I agree with your housing requirements 100%. As you may not expect I agree with the subsidies issue too.

Posted by: visionbrkr | May 13, 2010 10:18 AM | Report abuse

@srw3: "If we really want to help the poor and minorities with housing, we should provide more rent subsidies and not saddle people with debts they can't pay."

I agree with that 100$.

"I don't think one can assume that all independents are moderates."

I don't think that assumption is at all in what I said. To make it explicit, I'm saying that anyone who might vote for one party one time and for another party another time, for whatever reason, can be talked to. They can be convinced, or disappointed. When the Democrats won repeatedly in 1932, 1934 and 1936, there would have to have been Republicans voting for them, former Republicans, former Democrats-turned-Republican-turned-Democrat, and various independent party sorts voting for them.

More to the point, if 60% of independents are voting for Democrats one year and then 60% are voting for Republicans the next, there's a percentage of them that are looking at voting for the other side (or independents who participated in the previous cycle are sitting out this one, and vice versa). Since they are clearly capable of changing their minds, they are clearly amenable to being convinced, either by performance in office, or dialog on the stump.

Complaining about how stupid independents are is sort of like Martin Brest complaining that Gigli flopped at the box office because American audiences are so stupid. Maybe American audiences could be a little more nuanced . . . but that's not the only problem there. There was the marketing, the release window, the number of theaters it opened in, the reviews, and then the movie itself. The moviemakers have an obligation to win over the audience, just as politicians have an obligation to win over the voters.

Posted by: Kevin_Willis | May 13, 2010 10:38 AM | Report abuse

@ visionbrkr : I've gotta admit that show (and Black, Oliver and Wyatt Cenac specifically) is my one thing that I love that's liberal!

don't you like

-the end of child labor
-health and safety regulations in the workplace
-FDA
-food inspections
-clean air and water acts
-EPA (created under Nixon but pushed by Dems)
-NIH
-social security
-medicare (despite its current problems)
-the Apollo program
-CHIP
-FDIC
-public health service and CDC
-universal suffrage (women)
-universal public education
-FOIA
-civil rights and voting rights act (progressive, not necessarily democrat/dixiecrat)
-ADA
-CPSC

Posted by: srw3 | May 13, 2010 10:40 AM | Report abuse

@kw: I think that this is the money quote " I don't think one can assume that all independents are moderates." I am not saying that some independents, in your example 40%, can't be persuaded. I think that the number of independents that consistently vote for one party is the majority (50-70%) of independents. I think that republicans get more of the "independents" this election cycle because lots of independents are republicans that are unwilling to admit that they are actually republicans after the bush years.

Posted by: srw3 | May 13, 2010 10:48 AM | Report abuse

Ian McKellen's acting lesson is very funny. By way of contrast, here's a real acting lesson he gave many years ago:

http://video.google.com/videoplay?docid=7225091828250988008#

Posted by: tim37 | May 13, 2010 10:54 AM | Report abuse

@kw: Complaining about how stupid independents are

I don't believe that is anywhere my previous post. I do think that a substantial number of "independents" are to the right of republicans (hard to do, think tea partiers) or to the left of democrats (very easy to do, considering the shift of centrist to what used to be mainstream republicans in the 70s).

Posted by: srw3 | May 13, 2010 11:00 AM | Report abuse

srw3,


haha ok here goes.

Child Labor-- kids today are lazy they need to learn a strong work ethic ;-)

my workplace is an office--no safety issues here other than the occasional paper cut.

FDA--ya really great job with all the high fructose corn syrup etc that they allow in our foods.

food inspections, clean air and water acts, EPA-- ya i guess you've got me there. I'm in NJ and we've gotta keep these beaches clean!

NIH-- how effectively are they using our money? who knows. could private enterprise do it better. maybe.

social security-- i'm 39. I'm not counting on it and even if its there it'll be a drop in the bucket of what we'll need by that time. anyone that counts on social security as their main source of income is in some serious trouble.

Medicare-- what's so good about it? All it has going for it is price controls. i give you props for at least admitting its "issues"

Apollo program-- ya that's nice and all but hard to see its relevance to my everyday life especially in relation to its costs.

CHIP--sure its nice and a good safety net is important but again (thankfully) i have no need for it. Also in various states its being dropped or severely cut back due to funding issues.

FDIC--thanks to my high taxes I don't have much savings so not much need here. also not a lot of banks in NJ went belly up recently.

CDC--so its good news to tell us how horrible we are in relation to the rest of the world healthwise :-) they also scared the crap out of us with H1N1.

universal sufferage, civil rights, ADA, --well sure I've got daughters and they deserve to vote and everyone should be treated equally (except progressives ;-)

FOIA-- sometimes its better not to know!

cpsc-- who doesn't like a little lead in their kids toys!


alright I admit it, I'm a closet liberal!!


Posted by: visionbrkr | May 13, 2010 11:20 AM | Report abuse

@vb: If you want to have less intrusive more libertarian government, I hear that Somalia and Congo have really favorable real estate values these days...;-)

Posted by: srw3 | May 13, 2010 1:44 PM | Report abuse

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