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Wonkbook: Climate bill unlikely; major Medicare cuts scheduled; Obama's stimulus demands


In his first Oval Office speech Tuesday night, President Obama will demand that BP fund an independently-run fund to pay for the Gulf cleanup. That's the deliverable, at least. The bigger question is whether he uses the speech to make the case for a climate bill? Right now, the Senate is trending towards doing an energy only bill instead. Tuesday's speech could be the last chance for climate legislation to get a hearing.

Meanwhile, Congress has allowed cuts in Medicare doctors' payments to take effect. Obama is demanding that Congress provide $50 billion in aid to state and local governments. And should a gallon of gas really cost $4.60?

It's Monday. Welcome to Wonkbook.

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The BP spill is leasing Congress towards an energy bill, not a climate bill, writes John Broder. "There is growing sentiment for a measure that penalizes BP, imposes higher costs and tougher regulations on offshore drillers and takes some steps toward reducing overall energy and petroleum consumption. But despite the outrage over the spill, there appears to be limited appetite in the Senate for a broad-based effort to cap greenhouse gas emissions across the board."

Does a gallon of gas actually cost $4.60?

Obama wants to force BP to establish an independently-run cleanup fund, reports Jackie Calmes: "President Obama will use his first Oval Office speech Tuesday night to outline a plan to legally compel BP to create an escrow account to compensate businesses and individuals for their losses from the oil spill in the Gulf of Mexico, administration officials said on Sunday."

Not having passed a "doc fix", Congress will allow Medicare doctors' payments to drop by 21 percent this week:

Obama wants $50 billion in federal aid in further stimulus, reports Lori Montgomery: "President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid 'massive layoffs of teachers, police and firefighters' and to support the still-fragile economic recovery."

Download Obama's letter:

Playbook had Mitch McConnell's response: “[E]ven in the face of public outrage, Democrats are showing either that they just don't get it on this issue of the debt, or that they just don't care. Right now, among other challenges, we have a debt crisis, a jobs crisis, a housing crisis, a financial crisis, and an oil spill that the American people clearly don't believe government is effectively responding to. So you can understand the American people's skepticism when they're told that simply adding more government is the solution to government's previous failures.”

Goo goo ga joob interlude: The world's saddest walrus.

Table of Contents: The US is starting to use foreign aid to clean up the Gulf (and other energy news); members of Congress tend to invest heavily in the areas they regulate (and other economic news); and doctor and nurse retirements threaten to make health care reform's implementation difficult (and other domestic policy news).


The US is using foreign aid to help with the Gulf cleanup, report Juliet Eilperin and Glenn Kessler: "In late May, the administration accepted Mexico's offer of two skimmers and 13,779 feet of boom; a Dutch offer of three sets of Koseq sweeping arms, which attach to the sides of ships and gather oil; and eight skimming systems offered by Norway."

Louisiana's treasurer fears the cost of the BP spill could drive the firm into bankruptcy:

Environmentalists are embracing the Obama administration despite the spill, reports Josh Gerstein: "'President Obama is the best environmental president we’ve had since Teddy Roosevelt,' Sierra Club chairman Carl Pope told the Bangor Daily News last week. 'He obviously did not take the crisis in the Minerals Management Service adequately seriously, that’s clear. But his agencies have done a phenomenally good job.'"

Green groups are also using the spill as a fundraising tool:

Shallow-water drilling operations in the Gulf are confused by the administration's regulatory policy, report Dana Hedgpeth and Steven Mufson: "rig owners say that confusion over safety regulations issued last week by the Interior Department and uncertainty about additional rules Interior says are on the way could extend delays in the issuance of shallow-water permits, creating a de facto moratorium. And that could force companies to idle rigs and furlough thousands of workers. Since the April 20 accident, the number of rigs actively drilling in shallow water of the gulf has dropped by half."

Obama is trying to ease tensions with Britain over the BP disaster:

Bill Gifford looks at two books on geoengineering, and its possible unintended consequences:

Deborah Gordon and Daniel Sperling argue we can't count on oil companies to invest in renewable energy: "Yes, conventional oil supplies are peaking, and Big Oil needs to replace dwindling resources to survive. But faced with a choice between oil -- even oil that is ever dirtier and more dangerous to extract -- and alternative fuels, the industry is still betting on the devil it knows. And so Big Oil is drilling deeper and finding ways to convert unconventional oil -- petroleum extracted by means other than traditional wells, from sources such as oil sands, coal and oil shale -- into gasoline, diesel and jet fuels."

Canadian rock interlude: Wolf Parade plays "What Did My Lover Say? (It Always Had to Go This Way)".


Members of Congress tend to invest heavily in industries they regulate, report Robert O'Harrow Jr. and Dan Keating: "On the House Agriculture Committee, which holds sway over farm policies and subsidies, members had farming and agribusiness investments worth five times on average the amount held by other colleagues in the House. Many of the committee members' holdings were in family farms. Nothing prevents those members from also receiving farm subsidies, and in the past, some have. Likewise, House Energy and Commerce Committee members, who routinely hold hearings about telecommunications and computer issues, had heavier than average investments in companies such as Oracle, Nokia, AT&T and Verizon."

A stronger dollar is rattling investors:

Expiring estate tax cuts won't affect many estates, reports David Kocieniewski: "According to the Tax Policy Center, a research group, unless Congress revises the law by Jan. 1, the number of estates affected in 2011 would increase to 44,200 next year from 5,500 in 2009. Even so, that figure represents less than 2 percent of the 2.5 million Americans expected to die next year, and is far below historical levels. In 1976, 139,000 estates representing 7.6 percent of all deaths were taxed when the exemption was set at $60,000 (nearly $230,000 in buying power today). And these figures also don’t take into account the world of estate planning, where numbers can be fungible."

EJ Dionne wants short-term stimulus spending and long-term deficit reduction:

The financial crisis and Gulf spill both show the failure of regulation, writes Gerald O'Driscoll: "The regulatory state did not prevent excessive risk taking whether in financial services, nor perhaps in offshore oil drilling. Government response to crises once they occur is slow and inept. All this is not because either Republicans or Democrats are in power, but because big government doesn't work. It can't deliver on its promises. Big government overpromises and underdelivers. In reaching to do more, big government accomplishes less."

Robert Samuelson argues that pessimism about economic recovery could create a double-dip recession:

Consumer confidence is up even as consumer spending declines, reports Ylan Mui: "An early reading of consumer sentiment by the University of Michigan and Reuters jumped to the highest level in more than two years. But the U.S. Commerce Department reported that retail sales dropped 1.2 percent in May, ending a seven-month streak of gains."

Violence, scandal, corruption, and controversy interlude: David Rothkopf explains why Americans should love soccer.

Domestic Policy

Doctor and nurse retirements threaten to dull the impact of health care reform, reports Darryl Fears: "Health-care economists and other experts say retirements in that group over the next 10 to 15 years will greatly weaken the health-care workforce and leave many Americans who are newly insured under the new legislation without much hope of finding a doctor or nurse. Nearly 40 percent of doctors are 55 or older, according to the Center for Workforce Studies of the Association of American Medical Colleges."

Clinton-era memos show Elena Kagan to be a political animal, reports Alec MacGillis: "Her advice often veered into politics. In one memo, she noted that a University of Chicago law professor helping on the case had suggested an amicus brief by members of Congress in support of Clinton. She discouraged the idea, warning that 'if only Democrats joined, the brief would increase the partisan feel of the case' and that 'getting such a brief might be difficult -- and our efforts to do so might become public.'"

Federal pressure is coming down on for-profit colleges and universities, report Elaine Korry and Liz Willen: "New federal rules, expected to be formally proposed in coming days, would tighten oversight of the industry. One much-debated proposal would cut federal aid to for-profit schools in certain cases if graduates spend more than 8 percent of their starting salaries to repay loans. Sen. Tom Harkin (D-Iowa) also plans this month to begin hearings on the industry, examining recruiting practices and student loan default rates."

A consensus around abolishing fee-for-service care in emerging in Massachusetts, reports Naftali Bendavid: "There is fairly broad agreement on how to fix the system. A state commission -including representatives of government, insurers, doctors and hospitals-recommended in July that Massachusetts adopt a "global payment" system. Health professionals would be paid for caring for patients over a certain period of time, rather than compensated for each test or treatment. Implementing the fixes, though, will take years."

Deficit concerns may threaten funding for the war in Afghanistan:

The US needs paid parental leave, writes Sharon Lerner: "Earlier versions would have given all workers 26 weeks for medical leave and 18 for parental leave. But in its anemic final form, the Family and Medical Leave Act grants only 12 weeks off and covers only a little more than half of workers, leaving out those who work for companies with fewer than 50 employees or who have logged less than 1,250 hours in the past year. And because the leave is unpaid, many of those who are covered can't afford to take the time off."

Public schools are being forced to rely on private donations to get by:

Closing credits: Wonkbook compiled with the help of Dylan Matthews. Photo credit: Saul Loeb-AFP/Getty Images.

By Ezra Klein  |  June 14, 2010; 6:30 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Reconciliation
Next: The Woody Allen school of rapid response


It is frustrating to hear about BP oil spill. I cannot believe they could not fix this problem for more than a month, just think about millions of people and animals got affected by this, I got this in email and if you would like to voice your opinion enter what you think at your opinion will help them to find what really people think of this oil spill.

Posted by: chrisjerico | June 14, 2010 6:57 AM | Report abuse

"Consumer confidence is up even as consumer spending declines"

Because as consumers spend less and reign in their budgets, they feel more confident, because they are being more disciplined. On more than once occasion I felt the best about my personal finances when I was the poorest, but the bills were under control and my spending was in check.

"EJ Dionne wants short-term stimulus spending and long-term deficit reduction"

Or does he want to have his cake and eat it, too? Go for the long-term deficit reduction, first and foremost. Stimulus spending has a spotty record, and usually takes places in an environment where many other factors may help, or hinder, the economy. I love that Dionne ends his article "But it happens to be the right policy." Actually, that's not obvious. It's not even the most likely conclusion. And all the specifics given are stop-gaps--funding for teachers and Medicare and whatnot, all of which could be useful but works only to maintain the status-quo, and cannot be said to be stimulative.

Although, I'm from the school that believes any spending that isn't infrastructure spending that creates roads and bridges (yes, even "bridges to nowhere", because that's how nowhere becomes somewhere, because there's a bridge and you can get to it) and whatnot is not stimulative in the long-run. Spending that does real improvements, and provides infrastructure around which new business can be conducted, is stimulus.

Everything else is maintenance, the benefit of which goes away the minute the stimulus money is spent.

And tax cuts, which provides an incentive to do more economically productive work, as you get to keep more of the money you earn doing said economically productive work. Except in the financial sector, where getting to keep more of the money you earn apparently inspires everybody to game the system. So, no perfect solutions, I suppose.

Posted by: Kevin_Willis | June 14, 2010 8:57 AM | Report abuse

"Clinton-era memos show Elena Kagan to be a political animal"

Naturally. Not surprising, but probably not terribly relevant to how she'd do on the court. I doubt I'll care for Kagan's jurisprudence (given that Clarence Thomas is one of my favorite Supreme Court justices) but I don't have much sympathy for the conservatives whining about Kagan. Look, it could be _a lot_ worse, and, anywho, you don't want quasi-liberal to leftist judges on the court? Win elections. Easy as that. So many of the same people complaining that Republicans weren't conservative enough or had drunk the Beltway Kool-Aid and so wouldn't vote for them are now complaining about Kagan.

Hey, you taught that Republicans who had lost their way a lesson, right? You get what you get and you don't pitch a fit.

Posted by: Kevin_Willis | June 14, 2010 9:01 AM | Report abuse

"A consensus around abolishing fee-for-service care in emerging in Massachusett"

Could be a good thing, but I'm guessing the law of unintended consequences will end up making it all a mess.

"Public schools are being forced to rely on private donations to get by"

In related news, parents may also be forced to participate more in their children's education, and occasionally send paper or other supplies to their children's classes to "help out". It's a national tragedy.

Being part of a public school system, I get to see it from the inside. It's . . . complicated. ;)

"The US needs paid parental leave, writes Sharon Lerner"

And who's going to pay for it? The taxpayer. Eventually, no matter how great something would be, we've got to understand that we cannot afford to pay for it for everybody, unless the end goal is to commit a form of national economic suicide.

"Health-care economists and other experts say retirements in that group over the next 10 to 15 years will greatly weaken the health-care workforce and leave many Americans who are newly insured under the new legislation without much hope of finding a doctor or nurse"

And here it comes. "Yes, HCR is awesome. Totally. But, unfortunately, all the doctors and nurses are coincidentally retiring, so you're healthcare is going to get way worse. But not because of HCR! No, no way. HCR actually is going to make it much better than it would have been, without HCR. You should thank us. What? You're still not happy? All right, then, if you insist. We'll nationalize the nations hospitals. And the pharmaceutical companies. Because you want us to."

"Robert Samuelson argues that pessimism about economic recovery could create a double-dip recession"

It's those rotten average citizens. Darn them! If only people would get onboard and realize how totally awesome Obama is, then things would be great. But if they don't get their heads right, and start telling the pollsters everything is great and it's all because of the Democrats, they're going to cause another recession. And it will be all their faults.

Posted by: Kevin_Willis | June 14, 2010 9:24 AM | Report abuse

"The regulatory state did not prevent excessive risk taking whether in financial services, nor perhaps in offshore oil drilling. Government response to crises once they occur is slow and inept. All this is not because either Republicans or Democrats are in power, but because big government doesn't work"

I don't subscribe to the WSJ, so I couldn't read the whole article. And I agree that neither of these crisis have much to do with either who is in power, or who was in power previously (unless one were to say that the blame lies with imminently fallible humanity; I could agree with that). And "big government" works on a sliding scale--i.e., the closer it comes to central planning, the more it tends to fail at it's goals.

However, big government clearly works--just not as well as advocates promise, or others would wish it to. Also, I'm curious what the alternative is? Small government would be less expensive, and perhaps the disaster would have happened just the same, but at much less cost regarding regulatory bench-sitting and supposed "oversight". But it seems hard to argue that smaller government would have done any better at preventing the crisis.

At least, in the case of BP. Arguably, the legislative branch doing much less could have prevented the financial crisis, or helped to mitigate. If depression era laws had simply been maintained, the financial crash would have been much less likely. And all the government would have had to do is not mess with what was clearly working. Or, working well enough.

Posted by: Kevin_Willis | June 14, 2010 9:25 AM | Report abuse

We learned today the real reason we are still in Afghanistan: oil and raw gold.

I ask, how did we find time/money to test for the presence of vast mineral resources when what we are supposed to be doing there is killing people?

Posted by: Lomillialor | June 14, 2010 9:50 AM | Report abuse

They say: "Only 5000 barrels of oil are leaking per day?"

And: "One trillion dollars worth of minerals exist in Afghanistan."

So I ask, what are the proper multipliers so we can come up with accurate figures?

Posted by: Lomillialor | June 14, 2010 9:56 AM | Report abuse

I pray every day for an end to FFS.

Thank you Mass!!!!

And I'm sorry FULLY PAID FMLA for every American? Small businesses across the country would go under on that one.

Posted by: visionbrkr | June 14, 2010 10:58 AM | Report abuse

great newsweek article. I hope it gets picked up by some other bloggers, you summarize externalities wonderfully.

Posted by: tplante | June 14, 2010 3:01 PM | Report abuse

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