Wonkbook: Korea deal back; thaw with teachers; coal plants proliferate
Dylan Matthews is writing Wonkbook while Ezra is on vacation.
Correction: An earlier version of this post incorrectly stated that credit card penalty fee rules were part of the financial regulation bill; they are part of the Credit Cardholders’ Bill of Rights.
The Obama administration is launching a renewed lobbying effort behind the South Korea free trade agreement. Meanwhile, Obama and Education Secretary Arne Duncan are reaching out to teachers unions after months of acrimony. And despite widespread opposition and imminent EPA regulation, the construction of old-style coal plants shows no signs of abating.
It's Monday. Welcome to Wonkbook.
The administration is gearing up for a new push on the South Korea free trade pact, reports Howard Schneider: "The agreement would eventually eliminate tariffs between the two countries. Because those levies are typically higher on the South Korean side, administration officials estimate the deal could mean more than $10 billion annually in increased U.S. exports to Seoul and tens of thousands of new U.S. jobs. South Koreans say they would benefit from lower prices -- some tariffs on food imports from the U.S. are as high as 40 percent -- and a more efficient flow of investment in and out of their country."
Teachers unions and the Obama administration are undergoing a rapprochement, reports Kendra Marr: "Just last month, delegates at the NEA convention took a position of 'no confidence' on Race to the Top, the administration’s multi-billion-dollar sweepstakes to encourage schools to adopt Obama-backed policies. 'Today, our members face the most anti-educator, anti-union, anti-student environment I have ever experienced,' Van Roekel told thousands of attendees. But the union president has since dialed it back. 'Everyone assumed I was only talking about the Obama administration,' he told POLITICO. 'I was talking about states, too.'"
32 traditional coal plants have been built since 2008 or are under construction, reports Matthew Brown: "Approval of the plants has come from state and federal agencies that do not factor in emissions of carbon dioxide, considered the leading culprit behind global warming. Scientists and environmentalists have tried to stop the coal rush with some success, turning back dozens of plants through lawsuits and other legal challenges. As a result, current construction is far more modest than projected a few years ago when 151 new plants were forecast by federal regulators. But analysts say the projects that prevailed are more than enough to ensure coal's continued dominance in the power industry for years to come."
Swedish techno interlude: The Knife play "Heartbeats" live.
Still to come: Credit card fees are rising; beneficiaries from the $20 billion BP spill fund will have to waive the right to sue; $30 billion in tech spending is under scrutiny as the administration looks for budget cuts; and a contraption to turn plastic products back into oil.
Following penalty fee regulations taking effect yesterday, credit card rates are at historic highs, reports Ruth Simon: "In the second quarter, the average interest rate on existing cards reached 14.7%, up from 13.1% a year earlier, according to research firm Synovate, a unit of Aegis Group PLC. That was the highest level since 2001. Those figures look especially stark when measuring the gap between the prime rate -- the benchmark against which card rates are set -- and average credit-card rates. The current difference of 11.45 percentage points is the largest in at least 22 years, Synovate estimates."
Ylan Mui runs down the new credit card rules.
Housing wealth is down and won't recover for a long time, reports David Streitfeld: Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up. 'People shouldn’t look at a home as a way to make money because it won’t,' Mr. Baker said. If the long term is grim, the short term is grimmer. Housing experts are bracing themselves for Tuesday, when the sales figures for July will be released. The data is expected to show a drop of as much as 20 percent from last year."
High earners are already planning for the Bush tax cuts' expiration.
There is still considerable disagreement within the administration on an expected housing overhaul, reports Zachary Goldfarb: "One option under consideration is simply to require mortgage lenders to provide a portion of their loans to affordable housing, essentially putting the burden on the private sector. Another idea being discussed is to put the onus on government agencies such as the Federal Housing Administration, which makes loans to borrowers who cannot afford to make a standard down payment. A third choice would be a hybrid...the government could make private firms pay a fee into a federally administered fund that would subsidize affordable housing."
Wall Street firms could be facing deep job cuts.
Paul Krugman breaks down who benefits from making all of the Bush tax cuts permanent: "The policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few -- the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year -- would be $3 million over the course of the next decade."
A panel of experts proposes everything from benefit cuts to increased immigration to keep Social Security solvent.
CFOs are systematically poor economic forecasters, writes Richard Thaler: "This puts a new light on the recent comment by Ben S. Bernanke, the Federal Reserve chairman, that the economic outlook was 'unusually uncertain.' Although I instinctively share that assessment, these results suggest that it may be an illusion: Yes, things feel more uncertain after bad times, but severe market downturns tend to occur after long bull markets when we are feeling least uncertain. In the C.F.O. survey conducted in mid-2007, for example, the average lower bound was for a market return of 0.2 percent in the next year. In other words, the worst-case scenario anticipated by the group was a flat market. Of course, the market was soon to begin its plunge."
Political science on YouTube interlude: Sean Theriault explains why parties in Congress have become more polarized.
Victims of the BP spill must waive their right to sue in order to receive compensation from the $20 billion spill fund, reports Angel Gonzalez: "Mr. Feinberg said claimants could file claims for up to six months of emergency payments between Monday, Aug. 23, and Nov. 23, a 90-day period. He said claimants won't have to waive any rights to sue BP if they receive emergency payments, and that there is no maximum limit for payouts. In addition to emergency payments, claimants can also apply for a lump sum final payment to settle their claim. Mr. Feinberg said that individuals should expect to receive payments 48 hours after finalizing a claim, and businesses would be compensated within seven days."
Federal investigators want to speak with spill witnesses again.
The administration predicted 23,000 lost jobs from the deep-water drilling ban, report Stephen Power and Leslie Eaton: "They show the new top regulator or offshore oil exploration, Michael Bromwich, told Interior Secretary Ken Salazar that a six-month deepwater-drilling halt would result in 'lost direct employment' affecting approximately 9,450 workers and 'lost jobs from indirect and induced effects' affecting about 13,797 more. The July 10 memo cited an analysis by Mr. Bromwich's agency that assumed direct employment on affected rigs would 'resume normally once the rigs resume operations.'"
Australia, even with plentiful non-renewable resources, is moving toward green energy.
Mining waste heaps are providing an unlikely home for renewable energy sources, writes David Rosenfeld: "Hundreds of proposed abandoned mine sites have been floated by the U.S. Environmental Protection Agency for renewable energy projects under a two-year effort called Re-Powering America’s Land. The program encourages private developers to transform abandoned mines, landfills, Superfund sites and brownfields into something positive. In some cases, the energy produced actually helps power cleanup efforts such as filtering contaminated groundwater."
Spill response head Thad Allen enumerates the administration's successes in the Gulf.
Thomas Homer-Dixon outlines the effects of continued Arctic warming: "The limited slack in the world’s food system, particularly its grain production, can amplify the effects of disruptions. Remember that two years ago, when higher oil prices encouraged farmers to shift enormous tracts of cropland from grain to biofuel production, grain prices quickly doubled or tripled. Violence erupted in dozens of countries. Should climate change cause crop failures in major food-producing regions of Europe, North America and East Asia, the consequences would likely be far more severe."
Energy innovation interlude: A device that turns plastic goods into oil.
The OMB is considering overhauling 26 tech spending programs as a part of budget cut efforts, reports Amy Schatz: "A $7.6 billion Interior Department project to consolidate technology systems is also on the list, after Obama administration officials found that despite spending $3.25 billion so far on 200 data centers and 9,000 servers, employees aren't even on the same email system. ... Technology companies and federal contractors have privately raised concerns about the Obama administration's broader review of technology spending, arguing that delays and cost overruns often occur because federal officials change their requirements for the projects."
Critics are pillorying a $1.5 billion farm aid provision as reelection aid to Sen. Blanche Lincoln.
Salmonella outbreaks could have been prevented by a recent change in the federal food regulatory structure, reports Timothy Martin: "The new rules, had they been in place before July 9, "could have prevented" the outbreak, Sherri McGarry, emergency coordinator for the FDA's Center for Food Safety and Applied Nutrition, said in a conference call last week. Ms. McGarry said the FDA had not investigated Wright County Egg, the producer at the center of the FDA's investigation, because it didn't have authority to inspect farms until July 9. Attempts to reach the USDA for comment Sunday were unsuccessful."
Cities are privatizing zoos, airports and parking to meet budget needs.
Obama's weekly address renewed a push for the DISCLOSE Act, reports Abby Phillip: "'They can buy millions of dollars worth of TV ads -- and worst of all, they don’t even have to reveal who is actually paying for them,' the president said. 'A group can hide behind a phony name like Citizens for a Better Future, even if a more accurate name would be Corporations for Weaker Oversight.'"
States are aggravated by federal cost-sharing requirements for high speed rail projects.
Dylan Matthews is a student at Harvard and a researcher at The Washington Post.
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