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Wonkbook: Obama's line-item veto; the GOP in conference; federal budget waste

Dylan Matthews is writing Wonkbook while Ezra is in China.

President Obama wants a line-item veto, which his administration says will, unlike Bill Clinton's, pass constitutional muster. The GOP has picked a set of FinReg skeptics to represent it in conference committee; will the group be effective or ignored? And a federal management expert alleges that there is $1 trillion in waste in the federal budget over 10 years.

Welcome to Wonkbook.

Top Stories

Obama is requesting a variant on the line-item veto, reports Lori Montgomery: "Under the proposal, Obama and future presidents would have 45 days to comb legislation for pork-barrel projects they deem unnecessary and send a list of rescissions to Capitol Hill. Congress would then have 25 days to approve the entire list or reject it without changes. The proposal is a variation on the line-item veto, which was approved by a Republican Congress in 1996 and used by then-president Bill Clinton to slice more than $2 billion from spending bills before being ruled unconstitutional in 1998. White House budget director Peter Orszag said the new proposal would pass legal muster because, unlike the line-item veto, which 'gave the knife to the president,' Congress would retain ultimate control over the budget scalpel." Will Elena Kagan's stand on executive power help during the inevitable court challenge?

Every GOP conference committee member for FinReg opposed the bill, reports Carrie Budoff Brown: "The Republican conferees are expected to be Banking Committee ranking member Richard Shelby of Alabama, Agriculture Committee ranking member Saxby Chambliss, Bob Corker of Tennessee, Judd Gregg of New Hampshire and Mike Crapo of Idaho, according to interviews with the senators. All five senators opposed the bill. House Financial Services Committee Chairman Barney Frank (D-Mass) will chair the conference -- a post that rotates between the House committee and the Senate Banking Committee -- his spokesman said Monday." Democratic conferees have not been announced but are expected to include Chris Dodd and Blanche Lincoln, as well as Patrick Leahy and Tom Harkin.

The federal government can save $1 trillion over 10 years by cutting waste, writes NYU bureaucracy expert Paul Light: "* Save $100 billion by eliminating needless management layers throughout the bloated federal hierarchy. The flattening of government should not be restricted to the political class at the top. It should also target the middle and lower-level managers who strangle information as it flows upward at agencies such as the Federal Bureau of Investigation, where early clues to the September 11 terrorist attacks were never advanced.

* Save $200 billion by eliminating many of the federal jobs about to be vacated by the baby boomers. It will be tempting to fill the roughly half million jobs with the next federal employee in line but many of the posts were created by automatic promotions as the baby boomers aged. There are only two ways to know whether the jobs are needed. The first is to examine each job as it is exited and make a deliberate decision to fill it. The default should be no. The second is to leave the job open for six months and see if the work is done faster with fewer hands." Light emphasizes that this might not even result in a net loss of federal jobs.

Ursine interlude: A bear who knows kung fu.

Table of Contents: Auto dealers won a big exemption from FinReg rules (and other FinReg news); the Minerals Management Service ignored environmental warnings about drilling (and other energy news); more workers are quitting than being laid off (and other economic news); and video games could work as a crime reduction tool (and other domestic policy news).

FinReg

A resolution instructing conference committee to exempt auto dealers from FinReg passed the Senate, reports David Herszenhorn: "In a sharp rebuke of President Obama, the Senate voted on Monday to direct conference negotiators to make sure that the final version of a sweeping financial regulatory bill includes a special exemption to shield automobile dealers from the oversight of a new Bureau of Consumer Financial Protection. The vote was 60 to 30, with Republicans unanimously in favor of the instruction to the conferees; 29 Democrats and one independent were opposed. The instructions to conference negotiators are nonbinding, but the vote was more than symbolic in that it articulated the views of a supermajority of the Senate.

Mr. Obama had spoken out forcefully against any exemption for auto dealers, and even issued a rare, formal statement opposing a floor amendment by Senator Sam Brownback, Republican of Kansas, that would have inserted the exemption into the bill. Mr. Obama denounced the exemption as a 'loophole' that would allow auto dealer-lenders to engaged in abusive practices that could hurt car buyers."

The fall of the euro is helping American homeowners, reports Nick Timiraos: "The financial turmoil in Europe is providing an unexpected windfall for American home buyers, as international money seeking a safe haven is flowing into the U.S., pushing domestic mortgage rates to the lowest levels of the year and back near 50-year lows. A real estate agent leaves an open house for a home for sale in San Francisco. Falling mortgage rates could lift the U.S. housing market. The housing industry had been bracing for months for a period of rising mortgage rates, triggered by the end of the Federal Reserve's $1.25 trillion mortgage-securities purchase program. Conventional wisdom held that mortgage rates would rise as the Fed pulled back from propping up the market. Instead, many in the industry now say rates could drift as low as 4.5% this summer from 4.86% now, instead of rising to 6% as some economists projected, making for significantly lower payments for Americans buying homes or refinancing their mortgages."

FinReg gives the Fed more power, but also more accountability, reports Neil Irwin: "The Fed's long-standing official mission has been to ensure maximum employment and stable prices. In practice, the Fed has also made the pursuit of a stable financial system a goal; it was founded as a response to the financial panic of 1907. But the legislation, people inside and outside the Fed acknowledge, would make stabilizing the financial system more explicitly a part of the central bank's mission. The open question is whether it would give the Fed the power it needs to meet that responsibility. As the past decade has shown, Fed officials have had plenty of blind spots and shown lack of foresight. And even if the central bank's leaders did their jobs perfectly, financial crises have existed for as long as capitalism has, and no legislation is likely to prevent them entirely. All of which leaves the Fed's credibility exposed the next time the financial system shudders -- and central banks rely on their credibility to instill confidence in the economy. 'This has the potential to be pretty dangerous for the Fed,' said Anil Kashyap, an economist at the University of Chicago Booth School of Business. 'It seems to me the Fed could be left with the appearance that it's in charge of everything, but in fact not really be in charge.' "

A report calls for early action by regulators in stopping banking crises, reports Matthew Saltmarsh: "National regulators should have the power to intervene early in a banking crisis, including the right to replace senior management at troubled companies, a group representing the world’s largest financial firms recommended on Monday. The comments were part of a report by the group, the Institute of International Finance, as governments were moving toward new rules on bank supervision. The group also recommended that the costs of future bank failures be shouldered by shareholders and creditors, rather than taxpayers. The report said policy makers should be able to order capital increases or restructuring via debt-equity swaps; to identify business units vital to the financial system and transfer those to third parties where necessary; and to delay termination clauses in financial transactions to buy time for struggling firms -- for a short period."

Ben Bernanke makes less than regional Fed chairs, reports Sudeep Reddy: "Two of the Federal Reserve's regional bank presidents earn salaries more than double that of the central bank's chairman, a quirk arising from the fact that the Fed outposts are private institutions owned by commercial banks in their districts. New York Fed President William Dudley and San Francisco Fed President Janet Yellen each makes more than $410,000 a year, the U.S. central bank disclosed Monday in its annual report. Federal Reserve Chairman Ben Bernanke is paid $199,700. The Federal Reserve Board, which Mr. Bernanke leads, is an independent government institution, and so his salary is set by law and equals the pay of cabinet members. The salaries of regional Fed officials, who play a key role in setting interest rates, are based in part on the cost of labor in the cities where the banks are located. The pay of the other 10 regional bank presidents as of the end of 2009 ranged from $276,800 for St. Louis Fed President James Bullard to $374,400 for Kansas City Fed President Thomas Hoenig, who is the longest-serving official on the Fed's policy committee. The other governors on the Fed board earn $179,700 a year, equal to most sub-cabinet officers such as deputy secretaries. That means Ms. Yellen, who is President Barack Obama's nominee to be the next Fed vice chairman, would see her pay more than halved if she is confirmed to the post in Washington."

The next crisis could come from the collapse of municipal bonds, writes Janet Morrissey: "Bankruptcy is a particularly unnerving prospect for bondholders. Municipal securities are a $2.8 trillion market, according to Municipal Market Advisors. An avalanche of investors sought refuge in the sector in recent years, lured by the stable, tax-free nature of muni bonds. More than $69 billion flowed into long-term municipal bond mutual funds in 2009, up from only $7.8 billion in 2008 and $10.9 billion in 2007, according to the Investment Company Institute. Another $15.2 billion has been added so far in 2010. But increasingly munis are seen as vulnerable to the same forces that have put companies and some sovereign governments in crisis. 'The whole system is pretty fragile,' says Brian Fraser, a partner at the law firm Richards Kibbe & Orbe LLP. 'The assumption has always been that municipalities aren't going away and that they can always raise taxes to pay debt,' but that's no longer the case, he says. He noted how Jefferson County, which is teetering on bankruptcy, was unable to raise sewer rates to meet its sewer bond obligation. Adds Richard Raphael, executive managing director at Fitch Ratings: 'This is the worst downturn ... and most pressured environment for municipals in decades.' "

FinReg focuses on handling, not preventing, future crises, writes Andrew Ross Sorkin: "Neither version of the legislation seeks to pre-emptively break up any big banks or impose a tax on size in hopes of averting a future disaster. (I’m not sure that would have worked anyway, considering that most of the academic literature suggests size is not the ultimate problem.) Instead, the bills focus on mitigating the disaster once it happens, through a process called 'resolution authority.' The legislation would give the government the power to take over a failing institution and dismantle it in an orderly way, rather than have it file for bankruptcy and let the industry suffer the collateral effects of that (think Lehman). In theory, resolution authority, which I have long been a proponent of, should be the end of 'too big to fail.' But in practice, at least the way it is described in the legislation, it may not be able to deliver on President Obama’s pledge. That is, we may still have taxpayer-led bailouts. The problem is that resolution authority can be quite expensive. For example, Fannie Mae and Freddie Mac, the mortgage giants that were put through a resolution process that was similar to the proposed one but not quite the same, have already cost taxpayers more than $130 billion. That is more than any of the other rescued companies, and the bill is far from a final one."

Retro sci-fi interlude: What if "The Empire Strikes Back" were released in the 1950s?

Energy

The Minerals Management Service ignored warnings about the environmental impact of offshore drilling, reports Juliet Eilperin: "The federal agency responsible for regulating U.S. offshore oil drilling repeatedly ignored warnings from government scientists about environmental risks in its push to approve energy exploration activities quickly, according to numerous documents and interviews. Minerals Management Service officials, who can receive cash bonuses in the thousands of dollars based in large part on meeting federal deadlines for leasing offshore oil and gas exploration, frequently changed documents and bypassed legal requirements aimed at protecting the marine environment, the documents show.

This has dramatically weakened the scientific checks on offshore drilling that were established under landmark laws such as the Marine Mammal Protection Act and the National Environmental Policy Act, say those who have worked with the MMS, which is part of the Interior Department."

Transocean, the owner of the BP oil rig that exploded, thrived on a reputation for daring-do, report Clifford Krauss and Tom Zeller: "Throughout its history, Transocean has been known for pushing the envelope. The company, the leading player in offshore oil drilling, proudly breaks records for drilling the deepest wells, while finding ways to keep oil and gas flowing under the most extreme pressures and temperatures. On the financial side, Transocean has pursued aggressive tax strategies and bought up competitors. The sinking of the Deepwater Horizon platform and the widening oil spill from the underwater well has damaged the company’s image of discipline and technological know-how. It has also dragged the secretive company and its chief executive, Steven L. Newman, uncomfortably into the public eye.

'Transocean is dominant, but the accident has definitely tarnished its reputation for worker safety and for being able to manage and deliver on extraordinarily complex deepwater projects,' said Christopher Ruppel, an energy expert and managing director of capital markets at Execution Noble, an investment bank. 'The story of this tragic accident will play on for weeks and months, continuing to put Transocean and its work into question.'"

BP is offering $500 million to study the impact of the oil spill, reports Jake Sherman: "BP has committed up to $500 million to studying the impact its massive oil spill will have on the animals and environment of the Gulf of Mexico and the Gulf Coast. The company on Monday announced a 10-year effort to probe how the thousands of barrels of oil that have escaped into the open water will affect the surrounding wildlife. Rep. Ed Markey (D-Mass.) asked for the fund to be created last week in a letter to BP, Transocean and Halliburton officials. The money will also investigate the response to the spill. BP CEO Tony Hayward said the effort will be a 'key part of the process of restoration, and for improving the industry response capability for the future.' Louisiana State University will get the first chunk of cash in the company’s decade-long research project to examine immediate impacts of the spill."

Ken Salazar is easing up on BP, report Campbell Robertson, Clifford Krauss, and John Broder: "Senators and administration officials visiting the southern Louisiana town of Galliano lashed out again at BP on Monday, saying they were 'beyond patience' with the company. The day before, Interior Secretary Ken Salazar, who early in the crisis vowed to 'keep the boot on the neck' of BP, threatened to push the company out of the way. But on Monday, Mr. Salazar backed off, conceding to the reality that BP and the oil companies have access to the best technology to attack the well, a mile below the surface, even though that technology has proved so far to have fallen short of its one purpose. The government’s role, he acknowledged, is largely supervisory and the primary responsibility for the spill, for legal and practical reasons, remains with the company.

'The administration has done everything we can possibly do to make sure that we push BP to stop the spill and to contain the impact,' Mr. Salazar said. 'We have also been very clear that there are areas where BP and the private sector are the ones who must continue to lead the efforts with government oversight, such as the deployment of private sector technology 5,000 feet below the ocean’s surface to kill the well.' "

Coast Guard Commandant Thad Allen agrees that BP must remain in control, reports Carol Lee: " 'To push BP out of the way would raise the question, replace them with what?' Allen told reporters at the White House, saying the government didn’t have the expertise or the equipment to plug the gushing oil pipe a mile below the ocean’s surface. Later, Allen acknowledged there might be some legal authority that would allow the U.S. government to take over the operation, but said his recommendation would be to keep BP in charge. 'I’m the national incident commander, and right now the relationship with BP is the way I think we should move forward,' Allen said."

Bobby Jindal and others are pushing the administration to take more control, report Glenn Thrush and Carol Lee: "Earlier, Louisiana officials, as they watch helplessly while oil fouls fragile marshland, destroying plants and killing birds and fish, also stepped up their calls on the Obama administration to push aside BP and take charge of the cleanup. 'We have been frustrated with the disjointed effort to date that has too often meant too little, too late to stop the oil from hitting our coast,' Louisiana Gov. Bobby Jindal said during a Monday news conference at Port Fourchon with Homeland Security Secretary Janet Napolitano and Interior Secretary Ken Salazar. 'BP is the responsible party, but we need the federal government to make sure they are held accountable and that they are indeed responsible. Our way of life depends on it,' Jindal said. Gen. Russel L. Honore, who helped oversee the government’s response to Hurricane Katrina, didn’t criticize the administration’s actions -- but suggested the federal government could assert more control by declaring a national disaster in the Gulf."

BP has been a menace since long before the spill, writes Bob Herbert: "It’s not as if we didn’t know that BP was a menace. On March 23, 2005, a series of explosions and fires at the BP Texas City refinery killed 15 people and injured 180 others in what was described by investigators as 'one of the worst industrial disasters in recent U.S. history.' John Bresland, the chairman of the U.S. Chemical Safety Board, reminded us in March, on the fifth anniversary of the tragedy, that an intensive investigation by the board had 'found organizational and safety deficiencies at all levels of the BP Corporation.' The Texas City conflagration was just part of BP’s execrable pattern. On Oct. 25, 2007, the U.S. Department of Justice issued the following announcement: 'British Petroleum and several of its subsidiaries have agreed to pay approximately $373 million in fines and restitution for environmental violations stemming from a fatal explosion at a Texas refinery in March 2005, leaks of crude oil from pipelines in Alaska, and fraud for conspiring to corner the market and manipulate the price of propane carried through Texas pipelines.' "

Propaganda interlude: Insult generator using terms from the North Korean news agency.

Economy

More workers are quitting their jobs than getting laid off, reports Joe Light: "In February, the number of employees voluntarily quitting surpassed the number being fired or discharged for the first time since October 2008, according to the Bureau of Labor Statistics. Before February, the BLS had recorded more layoffs than resignations for 15 straight months, the first such streak since the bureau started tracking the data a decade ago. Since the BLS began tracking the data, the average number of people voluntarily leaving their jobs per month has been about 2.7 million. But since October 2008, the average number dropped to as low as 1.72 million. In March, it was about 1.87 million. And recent sentiment indicates that the number of employees quitting could continue to grow in the coming months. In a poll conducted by human-resources consultant Right Management at the end of 2009, 60% of workers said they intended to leave their jobs when the market got better. 'The research is fairly alarming,' says Michael Haid, senior vice president of global solutions for Right Management. 'The churn for companies could be very costly.'" Experts credit an improved job market for workers looking to advance and poor morale at cost-cutting firms.

The Chinese economy is suffering from a lack of name labels, reports John Pomfret: "Quick: Think of a Chinese brand name. Japan has Sony. Mexico has Corona. Germany has BMW. South Korea? Samsung. And China has . . . ? If you're stumped, you're not alone. And for China, that is an enormous problem. Last year, China overtook Germany to become the world's largest exporter, and this year it could surpass Japan as the world's No. 2 economy. But as China gains international heft, its lack of global brands threatens its dream of becoming a superpower. No big marquee brands means China is stuck doing the global grunt work in factory cities while designers and engineers overseas reap the profits. Much of Apple's iPhone, for example, is made in China. But if a high-end version costs $750, China is lucky to hold on to $25. For a pair of Nikes, it's four pennies on the dollar."

Job prospects are improving for college graduates, reports Steven Greenhouse: "This spring’s college graduates face better job prospects than the dismal environment encountered by last year’s grads. But that doesn’t mean the job market is thriving. Average starting salaries are down, and employers plan to make only 5 percent more job offers to new graduates this spring compared to last spring, when job offers were down 20 percent from 2008 levels, according to a survey by the National Association of Colleges and Employers, which tracks recruitment data. Liam O’Reilly, who just graduated from the University of Maryland with a bachelor’s degree in history, said he had applied to 50 employers — to be a paralegal, a researcher for a policy organization, an administrative assistant — but he had gotten hardly any interviews. While continuing to search for something he truly wants, he has taken a minimum-wage job selling software that includes an occasional commission."

Retailers are sounding a note of caution, reports Andria Cheng: "The results so far this year have been encouraging. About two-thirds of the nation's retailers have turned in earnings that topped analysts' expectations, with profits up a healthy 26% on average from a year earlier, according to Thomson Reuters. But that doesn't appear to be sustainable. Wall Street analysts forecast retail-profit growth will slow to 17% in the second and third quarters this year and to 11% in the fourth quarter, Thomson Reuters data show. 'There are headwinds coming,' Robert Samuels, an analyst at brokerage Phoenix Partners said in an interview. 'The second half of the year could be a lot tougher than the first half. Consumers are still very cost-conscious and not exactly free-spending. Business is still very unpredictable.' While such major retailers as Wal-Mart Stores Inc., Home Depot Inc., Gap Inc., Macy's Inc. and Kohl's Corp. reported improved first-quarter results, the upswing in consumer spending wasn't enough to alter earlier full-year outlooks for many of them beyond minor adjustments to capture results from the strong first quarter."

Cities and states are still suffering budget-wise, reports Conor Dougherty: "State and local governments are continuing to cut jobs and spending as they struggle to close budget gaps, according to a report by the National League of Cities. The report, released Monday, included a survey that showed three out of four cities said they faced worsening budget woes over the past year, with seven in 10 cutting jobs and capital projects in response. The report underscores how a retrenchment in the government sector, combined with higher taxes, is weighing on the economic recovery just as the private sector has begun adding jobs and showing other signs of a turnaround. Cutbacks 'are a concern for the recovery,' says William Fox, an economics professor at the University of Tennessee who focuses on state budgets. 'But states are doing the right thing -- states' responsibility is to balance their budgets.'

The plight of state and local governments matters greatly to the broader economy. The nation's 89,000 cities, school districts and other local governments are big employers and spenders. The state and local government sector employs about 20 million people, representing 15% of the jobs in the U.S. State and local governments spend or give out about $2.2 trillion a year, everything from gas to fill up police cars to health insurance for their employees."

Germany is trying to save the euro on its own, with mixed success, writes William Boston: "Whatever Merkel was thinking this week, Germany's unilateral surprise actions did nothing to calm the panicked financial markets; instead, they seemed only to throw oil onto the flames. As European Finance Ministers gathered in Brussels on Friday to discuss how they could work more closely together in developing fiscal policies, their frustration with Merkel was evident. 'Today's meeting is to coordinate economic policies,' said Elena Salgado, Spain's Economy Minister, in a radio interview. 'Obviously the decision taken in Germany was not an example of coordination.' Commentators have characterized Germany as being at war with the financial markets, and analysts warn that Merkel is jumping into a battle she cannot possibly win. 'The Germans are no closer to understanding that the markets are not the problem,' says Simon Tilford, chief economist at the London-based Center for European Reform. 'The markets are right to be uncertain about the sustainability of the euro zone in its current form.' "

Larry Summers is a terrible economic spokesman, writes Dana Milbank: "His speech showed signs that it was heavily vetted. It had so much on-the-one-hand/on-the-other-hand content that Summers even began with a mention of Harry Truman's desire for 'a one-handed economist.' On the one hand, 'I cannot agree with those who suggest that it somehow threatens the future to provide truly temporary, high-bang-for-the-buck jobs and growth measures,' Summers said. 'On the other hand, those who recognize the fiscal and growth benefits of strong expansionary policies must also recognize that it is simultaneously desirable to provide confidence that deficits will come down to sustainable levels.' On the one hand, 'whenever global risk aversion has increased ... we're seen as a source of strength,' he said. 'On the other hand, if there were ever a moment when that turned out not to be the case, that would probably be a moment when we had taken things much too far.'

On the one hand, Summers is a brilliant economist. On the other hand, Obama clearly needs somebody else to sell his economic message."

Garage-rock interlude: Japandroids play "Young Hearts Spark Fire".

Domestic Policy

Evidence suggests video games could reduce crime, writes David Leonhardt: "Video games can not only provide hours of entertainment. They can also give people — especially young men, who play more than their fair share of video games and commit more than their fair share of crimes — an outlet for frustration that doesn’t involve actual violence. Video games obviously have many unfortunate side effects. They can promote obsessive, anti-social behavior and can make violent situations seem ordinary. But might video games also have an upside? I’m willing to consider the idea.

One piece of economic research, looking at violent movies, seems to offer some support for the idea. It found: 'violent films prevent violent crime by attracting would-be assailants and keeping them cloistered in darkened, alcohol-free environs. Instead of fueling up at bars and then roaming around looking for trouble, potential criminals pass the prime hours for mayhem eating popcorn and watching celluloid villains slay in their stead.' That quotation is from my colleague Peter Goodman, who wrote about the research in 2008. The full study, by Gordon Dahl and Stefano DellaVigna, was eventually published in the Quarterly Journal of Economics."

Not even war spending is immune from deficit hawkery, reports David Rogers: "As much as the greatest deficit focus has been on domestic spending, the reality is that the president’s expansive foreign policy — including increased U.S. commitments in Afghanistan and Pakistan — is also a strain on the budget. And this can pose a real crunch for the party. The Senate Budget Committee set off a stir this spring when it proposed a $4 billion cut from the State Department and foreign aid appropriations request for the coming year. No less than Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, weighed in last week with House and Senate leaders, stressing the importance of civilian aid to military operations. 'Our troops, Foreign Service officers and development experts work side by side in unprecedented and ever-increasing cooperation as they execute our strategic programs,' Mullen said in a letter to Senate Majority Leader Harry Reid (D-Nev.). And then he added a handwritten warning at the bottom: 'The more significant the cuts, the longer military operations will take and [the] more and more lives are at risk!' "

Studies suggest firms can profit by investing in workers, reports Steven Greenhouse: "Giving pay incentives to low-level workers and investing in their health and well-being can increase companies’ productivity and profits. Moreover, listening to the suggestions of low-level workers can go far to save companies money. Those are among the findings of a six-year international study led by Jody Heymann, who is founding director of the Institute for Health and Social Policy at McGill University and was founding director of the Project on Global Working Families at Harvard. The overarching theme of her report, 'Profit at the Bottom of the Ladder,' published by Harvard Business Press, is that it is good business for companies to invest in and listen to their workers — not just high-level ones, but also those on the bottom."

The Supreme Court will question the ability of consumers to sue auto companies for safety violations, reports Brent Kendall: "The Supreme Court agreed Monday to decide whether federal regulations that set vehicle-safety standards should prohibit product liability lawsuits against car makers for installing lap-only seat belts. The court will consider a California lawsuit against Mazda Motor Corp. that stems from a 2004 fatal collision involving a 1993 Mazda MPV minivan. A rear-seat passenger wearing a lap-only seat belt was killed, and her family alleges that the lap-only belt was to blame. Two California courts ruled that the plaintiffs' lawsuit couldn't proceed because it was preempted by federal law. U.S. Solicitor General Elena Kagan had urged the Supreme Court to hear the case, arguing that the California courts and other courts have interpreted federal law too broadly to bar lawsuits against car makers that installed lap-only belts. She said the federal regulations were meant only as minimum standards."

Financial reformers can learn from health-care reformers, writes Tim Fernholz: "[Health Care for America Now] has recently focused on the implementation of the health-care reform legislation. Two weeks ago, Rome says, the group helped 25,000 activists provide public comments to the Health and Human Services Department on a relatively obscure rule the department was crafting under the bill's authority. The public-comment period is typically taken advantage of by lobbyists and industry stakeholders, so inserting the voice of citizens concerned with the common good has the opportunity to shift the playing field. The same approach should be taken by bank reformers. Regulators will consider some 18 studies commissioned in the bill and figure out how to write rules that apply bans on proprietary trading, higher prudential standards for the banks, and the like. Similarly, picking regulators at the various offices -- including this summer's chance to nominate a new national bank regulator at the Office of Comptroller of Currency -- should be a focal point for activists."

Elena Kagan is a bit of a free speech zealot, especially on campaign finance, writes Richard Hasen: "The president has repeatedly criticized the Citizens United decision, and even did so when he introduced Kagan as his nominee, saying, 'I think it says a great deal about her commitment to protect our fundamental rights, because in a democracy, powerful interests must not be allowed to drown out the voices of ordinary citizens.' Then, Sen. Specter reported after meeting with Kagan that she had criticized the Citizens United decision, saying the Supreme Court majority did not show enough deference to Congress. But what's a better predictor of Kagan's beliefs on campaign finance regulation? An argument for her client or her own writing on the subject? In a 1996 law review article, Kagan criticized that 1990 Supreme Court case upholding the PAC requirement for corporate express advocacy on grounds that such laws might be a cover for incumbents trying to protect themselves from political competition. Not all liberals believe campaign finance restrictions are constitutional, and some have vocally supported the result in Citizens United. It is quite possible that a Justice Kagan would vote to strike down, rather than uphold, new campaign finance restrictions that come before the court. The truth is that Sen. McConnell may be alienating a future ally in his war on campaign finance laws with the suggestion that she's itching to ban books."

-- Dylan Matthews is a student at Harvard and a researcher at The Washington Post.

By Washington Post editor  |  May 25, 2010; 8:41 AM ET
 
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Comments

"The government’s role, he acknowledged, is largely supervisory and the primary responsibility for the spill, for legal and practical reasons, remains with the company."

The entire BP/Haliburton/Transocean disaster is an object lesson in market failure. We're told all the time how markets are prefect, how they make efficient decisions, and how any regulation will cost consumers money.

Hah. The market put a price of $75 million on cleanup, since that is what the government - our Reps and Senators - set. And they did not price one dime extra into their calcuations of how to operate, how to plan for disaster, how to address failure.

And now we have before our eyes a shining example of how the market is failing us, how government has been thoroughly corrupted - Murkowski and Inhofe out there with some flim-flam crap about how raising liability caps will choke off competition - when competition will NEVER be the reason that environmental protection will get properly costed in to drilling.

Posted by: RalfW | May 25, 2010 9:52 AM | Report abuse

I had a comment here that did not appear because it was moderated. That comment took time to research and write, and it in no way broke rules. So mods, please find my comment and post it here ASAP.

Posted by: Lomillialor | May 25, 2010 10:56 AM | Report abuse

Lomillialor,

The same thing happened to me, and I notice that the time stamps are wrong for the comments that now appear. Looks like the blog software may be buggy.

Posted by: Patrick_M | May 25, 2010 4:26 PM | Report abuse

Patrick I was told that I had included links and as a result the software flagged my comment as spam. Don't know why they didn't override the deletion afterward.

Posted by: Lomillialor | May 25, 2010 10:28 PM | Report abuse

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