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Wonkbook: BP capturing 1/500th the oil it promised; Dems losing Wall Street; teachers against Obama; WH divisions on stimulus

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In the Gulf, documents show that BP is collecting less than 1/500th the amount of oil it initially told regulators it could collect each day. Back in Washington, FinReg is threatening Democratic prospects by causing a dramatic dropoff in Wall Street fundraising, the two main teachers' unions are not happy with Obama's education agenda, and the White House's economic team is arguing for further stimulus but the political team is arguing for deficit reduction.

It's Monday? Tuesday? One of them. Welcome to Wonkbook.

Top Stories

BP's oil recovery efforts have amounted to less than 1/500th what they promised, reports Kimberly Kindy: "In a March report that was not questioned by federal officials, BP said it had the capacity to skim and remove 491,721 barrels of oil each day in the event of a major spill. As of Monday, with about 2 million barrels released into the gulf, the skimming operations that were touted as key to preventing environmental disaster have averaged less than 900 barrels a day."

Wall Street donors are turning away from Democratic candidates due to FinReg, report T.W. Farnam and Paul Kane: "The two congressional committees have raised $49.5 million this election cycle from people giving $1,000 or more at a time, compared with $81.3 million at this point in the last election. Almost half of that decline in large-dollar fundraising can be attributed to New York, according to a Washington Post analysis of records filed with the Federal Election Commission. Donors from that area have given $8.7 million this year, compared with $23.9 million at this point in the 2008 cycle, with most of those contributions coming from big contributors in the financial sector."

The economists in the Obama administration want more stimulus, but the political hands are resistant, reports Jackie Calmes: "Those pressing for more stimulus measures include Christina Romer, the chairwoman of the Council of Economic Advisers; Jared Bernstein, economic adviser to Vice President Joseph R. Biden Jr.; and the Treasury secretary, Timothy F. Geithner...More focused on deficits...are his chief strategist, David Axelrod, other political advisers and Rahm Emanuel, the White House chief of staff, according to Democrats. Their lone supporter among the top economic aides is Peter R. Orszag, the budget director, who will leave the administration this month."

The President should never side with his political team over his economic team, writes Matthew Yglesias: "The single most important factor determining a president’s political fortunes is the fate of the economy. Tradeoffs can exist in the form of things that are short-term economic pain for long-term economic pain. But there’s no real tradeoff between 'unpopular but growth-boosting measures that ultimately make you more popular' and 'popular but growth-strangling measures that ultimately make you less popular.' When it comes to macroeconomic management, it’s results that matter most."

The National Education Association and the American Federation of Teachers' conferences showed strong opposition to Obama's education record, reports Sam Dillon: "The largest union’s meeting opened here on Saturday to a drumbeat of heated rhetoric, with several speakers calling for Mr. Duncan’s resignation, hooting delegates voting for a resolution criticizing federal programs for 'undermining public education,' and the union’s president summing up 18 months of Obama education policies by saying, 'This is not the change I hoped for.'"

Anti-optimism and cartoons interlude: Barbara Ehrenreich on the downsides of positive thinking - with animated illustration!

Still to come: The best debate you'll read on global warming -- and what to do about it; how the auto-dealers escaped FinReg; Brooks and Krugman both want to extend unemployment benefits; corporations are finding the earmark ban easy to bypass; and an orangutan goes swimming.

Economy/FinReg

David Brooks has a few ideas for stimulus: "First, extend unemployment insurance; that’s a foolish place to begin budget-balancing. Second, you need to mitigate the pain caused by the state governments that are slashing spending. You need a program modeled on Race to the Top. You will provide federal money now to states that pass responsible long-term budget plans that will reduce spending and pension commitments. That would save public-sector jobs and ease contractionary pressures without throwing the country into a fiscal-debt spiral."

Jared Bernstein is concerned the recovery is not being felt by most Americans, reports Michael Fletcher: "Bernstein, 54, has pondered that challenge for nearly two decades, and as executive director of the administration's Middle Class Task Force, his job is to address it. He said the reasons the middle class has not fared well in the modern economy are complicated. Increased globalization, technology, diminishing bargaining power for many workers, reduced unionization and slack in the labor market all share responsibility, he said."

It's looking hard for the SEC to prove that Goldman Sachs committed fraud: http://bit.ly/dDsyh0

Paul Krugman tries to explain why unemployment benefits are now expiring for people: "The Senate went home for the holiday weekend without extending benefits. How was that possible? The answer is that we’re facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe it’s possible to clear up some of the confusion."

Unemployment fraud hovering at about 2 percent: http://bit.ly/cJz2FO

James Suroweicki explainshow the auto dealers cut themselves out of FinReg: "Lobbying isn’t just about money. The companies that lobbied most successfully around the financial-reform bill didn’t necessarily pay the most. Instead, they were able to bring grassroots pressure to bear on individual congressmen and to present themselves as remote from Wall Street. The auto dealers were perfectly placed to make this pitch: there are some eighteen thousand auto dealerships around the country, employing close to a million people, which means that every congressman has lots of constituents whose livelihood depends on a dealership."

Gerald Seib argues Obama should focus not on jobs or the deficit but on economic growth: http://bit.ly/dtJ9FB

Yves Smith and Rob Parenteau argue that profit-seeking is hurting economic growth: "The reason for all this saving in the United States is that public companies have become obsessed with quarterly earnings. To show short-term profits, they avoid investing in future growth....Rather than incur such expenses, companies increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in purely financial speculation. But this means they also short-circuit a major driver of economic growth."

Indie video interlude: The Pains of Being Pure at Heart's "Say No to Love".

Energy

BP is still profiting from sales to the Defense Department: http://bit.ly/aaswHd

Kenneth Rogoff argues the political moment is right for a carbon tax: "Why might a carbon tax be viable now, when it never has been before? The point is that, when people can visualize a problem, they are far less able to discount or ignore it. Gradual global warming is hard enough to notice, much less get worked up about. But, as high-definition images of oil spewing from the bottom of the ocean are matched up with those of blackened coastline and devastated wildlife, a very different story could emerge."

The best debate you'll read on global warming: Jim Manzi argues the costs exceed the benefits. Brad Plumer disagrees.

China is worried about the effects of growth on its emissions footprint, reports Keith Bradsher: "Until recently, projections by both the International Energy Agency and the Energy Information Administration in Washington had assumed that, even without an international energy agreement to reduce greenhouse-gas emissions, China would achieve rapid improvements in energy efficiency through 2020. But now China is struggling to limit emissions even to the 'business as usual' levels that climate models assume if the world does little to address global warming."

Oil companies receive billions in tax subsidies from the federal government: http://nyti.ms/bP0V8A

Obama ignored a district court's warning on offshore drilling, report Neil King and Keith Johnson: "The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea, relying on an 'irrational' environmental analysis of the risks of offshore drilling. The April 2009 ruling stunned both the administration and the oil industry, and threatened to delay or cancel dozens of offshore projects in Alaska and the Gulf of Mexico. Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision."

Adorable animals being adorable interlude: A swimming orangutan.

Domestic Policy

The period of congressional reform is ending, and the period of regulator reform is beginning, writes Ezra Klein: "The Wall Street bill, for instance, has more than 30 studies in it and does not prescribe things like the level of capital a bank has to hold or the precise way the Volcker rule is implemented or what is to be done about the ratings agencies. It leaves those decisions to regulators. Both bills require the creation of institutions, such as the Consumer Financial Protection Bureau and the state health insurance exchanges. And both require existing agencies, like the Federal Reserve and the Centers for Medicare and Medicaid Services, to take on much larger roles."

Corporations are finding ways around the House's ban on earmarks to profit-making companies, report Eric Lipton and Ron Nixon: "Companies have shown remarkable ingenuity in skirting the rule or veiling their requests through nonprofit organizations, the Times review found. Among the examples: The Virtual Reality Medical Center, a California-based company that sells visual simulation headgear as an experimental form of medical therapy, had sought nearly $6 million in earmarks before the ban. Soon after, company officials instead proposed that the money go to the Interactive Media Institute, a nonprofit group controlled by the center’s top executives, which had been set up to sponsor educational conferences."

Fareed Zakaria argues Obama should be worried about losing CEOs' support: "Most of the business leaders I spoke to had voted for Barack Obama. They still admire him. Those who had met him thought he was unusually smart. But all think he is, at his core, anti-business. When I asked for specifics, they pointed to the fact that Obama has no business executives in his Cabinet, that he rarely consults with CEOs (except for photo ops), that he has almost no private-sector experience, that he's made clear he thinks government and nonprofit work are superior to the private sector. It all added up to a profound sense of distrust."

Uwe Reinhardt argues that lower medical technology costs will drive down long-term health care expenses: http://nyti.ms/aigGZx

Obama offers little support for organic farmers, writes Heather Rogers: "Obama is making some changes at the USDA, but they're the type of improvements that appear larger than they really are. Sustainable agriculture proponents don't want to complain because finally they're getting something. But these incremental changes won't be enough to ensure farmers can stay on their land and sell their produce at reasonable rates. Neither will they clear the path for a new generation of farmers to participate in remaking the food system."

Monica Potts explains what such support would look like: http://bit.ly/a69gDO

Closing credits: Wonkbook compiled with the help of Dylan Matthews. Photo credit: Pete Souza/White House.

By Ezra Klein  |  July 6, 2010; 6:57 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Reconciliation
Next: India vs. China

Comments

Who cares about Wall Street??? LONG AGO, Wall Street lost all of Main Street and all of the young people (including those who will be two or four years older since the last Presidential election and who can vote in 2010 and 2012) and all of our senior citizens who saw their savings disappear (because of WALL STREET) and many of my former Republicans. WE ALL KNOW THAT IT WAS THE REPUBLICAN PRESIDENT AND HIS PARTY, AS WELL AS THEIR WALL STREET FRIENDS, WHO PUT OUR COUNTRY IN THIS TERRIBLE CONDITION. As for contributions, OUR PRESIDENT will never lack for those as you well know!!!!

Posted by: Formerrepublican | July 6, 2010 7:33 AM | Report abuse

All good news, Ezra.

Reality is setting in. The "annointed one" is fast becoming the irrelevant one.

Posted by: WrongfulDeath | July 6, 2010 8:09 AM | Report abuse

Duncan never had the requisites or qualifications to be the CEO of education in Chicago, much less the Department of Education in the Obama Administration. Duncan's policies are not support by both qualitative and quantitative educational research. Duncan's work in Chicago was non-existent since he does not know what real school reform is since he has no experience leading such a process. I am glad the NEA spoke up finally.

Posted by: edtechlab | July 6, 2010 8:12 AM | Report abuse

Love that new Pains of Being Pure at Heart song.

Posted by: benmbrennan | July 6, 2010 8:28 AM | Report abuse

OBAMA never had the requisites or qualifications to be IN THE SENTATE, much less the PRESIDENT OF THE UNITED STATES. OBAMA'S policies are not supportED by both qualitative and quantitative research. OBAMA'S work in Chicago was non-existent since he does not know ANYTHING since he has no experience leading ANTS TO A PICNIC. I am glad the AMERICAN PEOPLE HAVE AWAKEN.

Posted by: island1 | July 6, 2010 8:36 AM | Report abuse

Ezra,
Might it be possible to provide the gist of the story you link to, especially when it is behind a paywall?

The WSJ article on "Unemployment Fraud" ends the free-access snippet with "...the most common type of unemployment fraud is..." after noting that the "fraud rate" is relatively stable between the two years they cite.

Filling in the blank from imagination I get

... not actively looking for work
... filling out resumes in crayon

Posted by: grooft | July 6, 2010 8:44 AM | Report abuse

"Jim Manzi argues the costs exceed the benefits [of a carbon tax]. Brad Plumer disagrees."

A great piece by Manzi. Reading Plumer's response, I get the feeling that Plumer read Mazi's piece . . . yet didn't really quite read it. And wants to claim to understand Manzi's points, while at the same time belittling them (the zombie uprising line).

Still, I agree with Ezra. A good debate.

BTW, Formerrepublican: is the excessive use of ALL CAPS meant to prove your former-Republican bonafides?

Posted by: Kevin_Willis | July 6, 2010 8:59 AM | Report abuse

@island1: Who do you think HAS AWAKENED with their CAPS-LOCK KEY mysteriously sticking and UNSTICKING?

The only "awakening" I read in this Wonkbook had to do with the NEA and the American Federation of Teachers, and their problem seems to be that the Obama admin is advancing policies that are not liberal, nor pro-union, enough for them.

This is not a "Wow, Obama is way too liberal" moment. They thought they were voting for someone who was going to advance a much more liberal agenda than he is.

Posted by: Kevin_Willis | July 6, 2010 9:07 AM | Report abuse

What Dr Reinhardt forgets is that when doctors OWN stakes in imaging centers the savings don't go to the consumers. They go directly into their pockets. He knows this but he conveniently forgets this. sigh.

Posted by: visionbrkr | July 6, 2010 9:22 AM | Report abuse

The Jared Bernstein article contains the first mention I have seen in a while about the Middle Class Task Force. It would be helpful to know more about the status of that project, and how much influence (if any) the group is having on the shaping of White House economic policy.

Posted by: Patrick_M | July 6, 2010 10:28 AM | Report abuse

The Manzi article is literally the best piece I've read from a conservative on climate change. There's lots for a liberal proponent of climate change legislation, like me, to think about in that and to consider as we try to figure out a plan of attack for addressing climate change. And, of course, I hold out hope that conservatives who deny the existence of anthropogenic climate change (Kevin, I think that's better and different than "deniers", but I'm still looking for a good, short term) will read the piece and suddenly decide to come to the table in hashing out some kind of compromise legislation.

A few things that I thought of, though I'm not an expert by any means: Obviously the first goal of Manzi's piece was to talk about the economic impacts of addressing climate change versus the economic impacts of taking no action. But like a great many aspects of our lives, the impact of climate change isn't just economic. IIt would be cold comfort, so to speak if increased farming in Canada due to global warming balanced out the economic impact of the mountains near where I grew up no longer support downhill skiing due to insufficient snowfall. And, of course, there's the impact of global warming on the ecosystems and habitats around the world, which I'm not sure are factored into an economic analysis, but certainly aren't irrelevant.

And as Plumer says, it's not like the costs of global warming are incurred evenly throughout the world. Yes, from a cynical point of view the US cover a great amount of latitudinal space on the globe, so our net negative impacts from global warming will be balanced somewhat (decreased agriculture in Southern California might be balanced by increased agriculture in Northern California) within our economy. But most countries aren't as big as we are. A country in Southern Asia or Northern Africa might have its economy devastated while countries nearer to the poles may get all the benefits.

And let's be honest here, there's a large chunk of conservatives and the legislators who represent them who simply aren't participating right now. As Plumer suggests, if conservatives rallied around a reduction in payroll taxes as a tradeoff for implementing a carbon tax we might get something done. One of the best suggestions I've heard in a while (I think from our own Kevin Willis here) is a tradeoff between the corporate tax rate and a carbon tax, paired with closing corporate tax loopholes. That's a serious suggestion, but we're just not getting a lot of those from conservatives in this debate.

Posted by: MosBen | July 6, 2010 10:34 AM | Report abuse

Man, sorry for the long post which nobody will read.

Anyway, Kevin, I didn't take Plumer's reference to a zombie uprising to be a sign that he hadn't read Manzi's piece or was trying to belittle it. Like jokes about a robot uprising, I just took that as a restatement of a funny internet meme that crops up from time to time. And in general I thought it fit in with Plumer's point, which you could certainly disagree with, that Manzi's reasoning would lead to not taking any action in addressing a serious problem because we're always presented with a lot of somewhat unlikely catastrophes on the horizon.

Back to my thoughts, the frustration for me isn't that Al Gore's not getting the power to unilaterally write, pass, and enforce laws across the world addressing climate change. Even if my thinking tends to agree with Gore, there's simply a lot of low hanging fruit with this problem that we're not even trying for, and again, it's mostly because a significant portion of the conservative movement refuses to participate in addressing climate change in even a minimal way. When President Obama suggested that people make sure their tires were properly inflated he was mocked by conservatives, even though this can increase fuel efficiency. We could be trying to encourage the installation of white roofs on houses or lighter surfaces for roads, which could massively reduce the amount of heat they absorb from the sun. We could be investing in public transit systems to make it easier for people to give up their solo commute. We could be investing in a more efficient power grid that would make it more cost effective to take solar power from the South West to other parts of the country.

Posted by: MosBen | July 6, 2010 10:46 AM | Report abuse

We simply don't need public employee unions or tenure for school teachers. It is true that teachers are being scapegoated for having "failing schools", when the real problem is the incoming quality of the students. If they are being measured on non-longitudinal measures (measures that don't take into account the level of the students at the beginning of the year), that's something for the policy people to fix as the mentally challenged NCLB act is remade.

Posted by: staticvars | July 6, 2010 10:50 AM | Report abuse

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