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