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Wonkbook: State aid passes Senate; static kill succeeds; no more secret holds?

happycongress.JPG

It's a day of progress in Washington: The Senate has broken a filibuster of the state budget aid package, setting up the House to come back in session to past the final version. Harry Reid has put legislation ending secret holds on the legislative docket for this Congress, and has set a schedule for dealing with the Bush tax cuts. BP's "static kill" has succeeded in closing off the leaking Gulf oil well once and for all. But these days are rare: Just read David Broder today, who joins George Packer is arguing that the Senate's dysfunction has become one of the nation's more pressing issues, if only because it keeps the nation from addressing its other pressing issues.

It's Thursday, and I have a huge iced coffee. Welcome to Wonkbook.

Top Stories

The state aid package broke a filibuster and is headed to the House again, report Lori Montgomery and Jenna Johnson: "House members left town last week, and many rank-and-file Democrats looked forward to the break as a chance to defend dozens of seats at risk in the November elections. But aides said many lawmakers will welcome the interruption, viewing it as a chance to score a fresh legislative victory for teachers and public-service unions, an important Democratic constituency. The House had earlier approved the state aid, though in a different form."

Even David Broder thinks the Senate is broken:http://bit.ly/9IRmpu

The "static kill" procedure has finally ended the Gulf oil spill, report Joel Achenbach and Steven Mufson: "About three-quarters of the nearly 5 million barrels of oil that escaped Macondo has evaporated, dissolved or been dispersed by chemicals, skimmed by boats, burned, weathered and, most important, devoured by the Gulf of Mexico's permanent oil-eating microbial workforce, according to a study released Wednesday by the National Oceanic and Atmospheric Administration and Interior Department."

A bill banning secret holds will be on the September agenda for the Senate, reports Giovanni Russonello: "McCaskill wrote a petition against secret holds in April and has collected signatures from more than the requisite 60 senators needed for cloture. But Wyden and Grassley had attempted to expedite the legislation’s passage by proposing the bill as an amendment to other legislation measures in the spring. When DeMint tripped them up, they came to Reid to request that he put the bill up as a freestanding vote. Wyden, Grassley and McCaskill said this would be a difficult measure for their colleagues to vote against, which is why they plan to bring the bill forward for a cloture vote and defuse the threat of a filibuster."

The Senate fate of a tax credit extension meant to spur R&D is looking dimmer: http://bit.ly/cvfAaB

Tim Geithner doubled down on the administration's opposition to extending the Bush tax cuts for top earners, reports Brady Dennis: "He also suggested that Republicans are using a misleading definition of 'small business.' According to the GOP's definition, Geithner said, a small business could include partners in a major law firm and directors of a large financial company. 'If you actually want to help small businesses get needed tax relief as opposed to using them as a cover for supporting tax cuts for the most well-off,' he said, 'those people should be supporting Senate passage of the Small Business Jobs Act this week.' The bill is stalled, and aides said it may not pass until after the August break."

Late night indie interlude: Spoon play "Nobody Gets Me But You" with Questlove on Late Night with Jimmy Fallon.

Still to come: Reid sets a schedule for addressing the Bush tax cuts; green groups are pushing for smaller Congressional measures in lieu of cap and trade; 14th amendment opposition spreads; and adorable baby owls.

Economy/FinReg


Harry Reid has scheduled a showdown on the Bush tax cuts for September, reports Alexander Bolton: "Midwestern centrists such as Sens. Kent Conrad (D-N.D.) and Evan Bayh (D-Ind.) have called for an extension of all of Bush’s tax cuts, including those benefiting individuals earning more than $200,000 and families earning over $250,000 annually...Some liberals balk at the notion that families earning $250,000 or more belong in the middle class. 'Two hundred and fifty thousand dollars? Is that the top 1 percent of Americans, or half a percent? Come on!' said Sen. Tom Harkin (D-Iowa)."

Employers' labor costs are rising even though employee pay is shrinking, reports Sara Murray: "The latest Employment Cost Index showed the cost of wages and benefits was rising slowly. And, seemingly in contrast, BEA’s consumer spending report showed declining wages and salaries. 'For employers, labor costs are going up, while many employees are seeing flat or even falling wages and salaries,' Kevin Hallock, director of the Cornell institute, said in a release, '.. while salaries are being squeezed, the cost to employers of providing benefits is rising.' There you have it: employers pay more, employees make less, everyone loses."

Industry groups say the administration's policies will meet their export goals: http://bit.ly/ahXzok

Glenn Hubbard and Hal S. Scott argue FinReg will cause widespread regulatory uncertainty: "Mr. Geithner's 'obligation of speed' ignores the international process for setting capital requirements for financial institutions. These requirements have a major impact on the activities in which financial institutions engage. They operate like a tax, and if they reduce the profitability of a financial product or service, then institutions will gravitate to other businesses. Without knowing what such 'taxes' will be, businesses are naturally reluctant to invest. But capital requirements are not set by the Treasury; they are instead effectively set by the Basel Committee on Banking Supervision, a group of regulators from 27 countries."

Daniel Gross highlights companies who dropped their 401(k) contributions in 2008 only to never bring them back: http://bit.ly/bDXRMB

Howard Gleckman explains what "small business owners" will be hit by the expiration of Bush tax cuts for high earners: "A half million top-bracket filers will report net positive business income averaging more than $700,000. These are the people--not the mom-and-pop business owners-- who would be hit by the expiration of the top bracket tax cuts. Who are they? Many are doctors, lawyers, and investors. Others are very successful entrepreneurs who may own a chain of grocery stores or dry cleaners, or a lot of real estate. Do they fit your image of a small business owner? That, I suppose, is in the eye of the beholders."

Reconstruction interlude: Photos of the same European streets, during World War II and now.

Energy

Greens are turning to small-scale issues after cap and trade's failure, reports Coral Davenport: "In the coming year, environmentalists and their friends in Congress are likely to focus on smaller, more bang-for-your-buck environmental bad guys: discrete pollutants produced by only one sector or industry that have an immediate impact on human health -- and are more accessible in the minds of voters...[Sen. Tom] Carper and Sen. Lamar Alexander (R-Tenn.) are teaming up on a bill to crack down on the power plant pollutants sulfur dioxide and nitrogen oxide, which cause acid rain and mercury, which causes asthma and damage to the nervous system."

Michael Bromwich is declining to give a timeline for ending the drilling ban: http://bit.ly/8XxZZG

EPA greenhouse gas regulations are beginning their roll-out soon, report David Fahrenthold and Juliet Eilperin: "Starting in January, under EPA rules new permits will require the largest factories and power plants to show they have installed the "best available" technology to curb emissions. Smaller sources of greenhouse gases like shops, apartment buildings and bakeries are exempt. That might mean upgrades to make plants burn fuel more efficiently or perhaps to switch from coal to cleaner-burning natural gas."

Little is expected from this year's UN climate conference: http://bit.ly/9ImSpA

Environmentalists are raising doubts about a new study suggesting that much of the oil in the Gulf has already broken up, report Leslie Eaton and Elizabeth Williamson: "In Mississippi, Robert Wiygul, a lawyer involved in several environmental lawsuits against both BP and the government, said that he hope the report's optimistic tone was justified. But, he added, 'any pronouncement that things are okay smacks more of political science than hard science.'...Stan Senner, director of conservation science for the Ocean Conservancy, an environmental group, said he was concerned that the administration's report could mislead Americans into thinking that the fallout from the oil spill was over."

Noah Millman argues that energy innovation is the only way to stop global warming: "Technologies to capture or remove carbon from the atmosphere are going to be an essential part of the any effort to stop global warming. No matter what the United States does - no matter what the entire developed world does - the amount of carbon dioxide in the atmosphere is going to go up for the next few decades. In fact, no matter what China and India do, it’s going to go up, because the laudable efforts they are going to make to improve the energy efficiency of their economies are going to be swamped by the rate of increase of energy use."

Daniel Gross sees a growing developing country dependence on coal that will be tough to dislodge: http://bit.ly/9dK3wZ

Adorable birds being adorable: Pictures of baby owls.

Domestic Policy

Five GOP senators now back Senate considering of rolling back the 14th amendment's guarantee of birthright citizenship, report Manu Raju and Scott Wong: "Sens. John McCain (R-Ariz.) and Jeff Sessions (R-Ala.) on Tuesday added their voices to GOP calls for congressional hearings into altering the Constitution's 14th Amendment, which grants citizenship to U.S.-born children of illegal immigrants...McCain and Sessions join Senate Minority Leader Mitch McConnell (R-Ky.) and Minority Whip Jon Kyl (R-Ariz.) in calling for Congress to examine the issue. Sen. Lindsey Graham (R-S.C.) announced last week that he may propose an amendment to change the Constitution on the matter."

Bobby Jindal -- who may not be a US citizen without birthright citizenship -- expressed support for abolishing it: http://politi.co/9uagDP

EJ Dionne defends birthright citizenship: http://bit.ly/d0ympz

Obama reiterated his support for the Employee Free Choice Act, reports Kendra Marr: "He passed the Fair Pay Act to end wage disparities between men and women doing the same jobs, extended unemployment benefits and reversed Bush-era executive orders designed to bust up organized labor. 'And we are going to keep on fighting to pass the Employee Free Choice Act,' said Obama, as union leaders gave him a standing ovation for his commitment to a controversial 'card check' bill that would make it easier to create unions in non-union workplaces.

Elena Kagan faced the least controversial confirmation process in over a decade: http://politi.co/9MFMwr

Health care reform proponents are rallying around Missouri's vote against the individual mandate, reports Alec MacGillis: "About two-thirds of the voters participated in the Republican Senate primary, and turnout in Democratic strongholds such as St. Louis and Kansas City was among the lowest in the state. And Missouri in general is conservative on health-care policy -- its Medicaid eligibility policy is among the most stringent in the country. The overhaul's backers also pointed to national polls that show an uptick in support for the new law."

Matt Miller makes the deficit hawk's case for lowering the voting age to 10: "Imagine a phalanx of fresh-faced yet fierce 13-year-olds (like those on my daughter's middle school debate team) shaming the adults with the following, for starters: Is it really a national priority to borrow billions more from us to keep taxes for the best-off 2 percent of Americans lower than they were during the Clinton boom, when we're in the midst of two wars and already piling up trillions in fresh debt?"

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: AP Photo/Pablo Martinez Monsivais.

By Ezra Klein  |  August 5, 2010; 7:57 AM ET
Categories:  Wonkbook  
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Next: By their votes, you shall know them

Comments

"Just read David Broder today, who joins George Packer is arguing that the Senate's dysfunction has become one of the nation's more pressing issues, if only because it keeps the nation from addressing its other pressing issues."

I'm not sure that's necessarily a bad thing. Some pressing issues can be addressed in places other than the senate, for one thing, august body that it is. And I'm sort of a fan of Thomas Jefferson, who said the government that governs least is the one that governs best.

However, I don't have any problem with getting rid of secret holds--that's a stupid rule. Or lowering the threshold for cloture. Just don't expect the senate to suddenly produce brilliant legislation where everybody agrees it's totally awesome, with rainbows and unicorns. Because senate dysfunction seems like a much bigger problem inside the DC beltway than it does to most other folks.

Posted by: Kevin_Willis | August 5, 2010 8:28 AM | Report abuse

Gleckman of the Urban Institute lobby group gives a sophist--icated answer (cited above) in an effort to obsure attempts by Democrats to raise middle-class taxes. Gleckman writes "The average positive business income REPORTED ON 1040s is less than $40,000. IF THIS WAS THEIR ONLY INCOME, an average business filer would be miles from the top two tax brackets."

So, what about income reported via 1120S's? That is, what about the small businesses which pay taxes via company funds before sending the K1's to the various "shareholders" (usually Mom, Pop, kids, and friends)?

Posted by: rmgregory | August 5, 2010 9:20 AM | Report abuse

i'd like to remind Senator Harkin that the cost of living in NYC and its surrounding suburbs is just a tad greater than the cost of living in rural parts of Iowa.

Posted by: visionbrkr | August 5, 2010 9:33 AM | Report abuse

"House members left town last week, and many rank-and-file Democrats looked forward to the break as a chance to defend dozens of seats at risk in the November elections. But aides said many lawmakers will welcome the interruption, viewing it as a chance to score a fresh legislative victory for teachers and public-service unions, an important Democratic constituency."

Of course this is all state aid ever was - vote buying.

"Obama reiterated his support for the Employee Free Choice Act, reports Kendra Marr: "He passed the Fair Pay Act to end wage disparities between men and women doing the same jobs, extended unemployment benefits and reversed Bush-era executive orders designed to bust up organized labor. 'And we are going to keep on fighting to pass the Employee Free Choice Act,' said Obama, as union leaders gave him a standing ovation for his commitment to a controversial 'card check' bill that would make it easier to create unions in non-union workplaces."

And yet he's upset that employers aren't creating more jobs, and that employers outsource jobs.

Why are jobs outsourced? The relative labor cost to productivity of U.S. workers is uncompetitive. Why aren't employers creating more jobs? The benefits of the extra job aren't worth the costs.

What do unions do? Lower productivity and increase labor costs.

Posted by: justin84 | August 5, 2010 11:13 AM | Report abuse

Regarding the comment about Bobby Jindal: Not is the statement grammatically incorrect, it it factually untrue and that's unworthy of you Ezra.

You have made it clear that you are opposed to the idea of even discussing the birthright policy but that is hardly a reason to descend to the right's methods of distorting the truth when the revision suits its narrative.

Posted by: Athena_news | August 5, 2010 1:22 PM | Report abuse

Shorter justin84:

Grow the economy by reducing the living standards and the purchasing power of working families.

Posted by: Patrick_M | August 5, 2010 1:30 PM | Report abuse

Hey Patrick welcome back!

Actually while I won't speak for Justin (he does much better than me) I would say that I'd be fine if we found some way to unionize countries like China, India et al so that we're all on a level playing field.

Unfortunately there's no chance in that happening to any meaningful degree anytime soon.

Its not about hurting people like many liberals assume. Its about competition. The same lack of competition that killed the auto industry before it was bailed out.

Posted by: visionbrkr | August 5, 2010 2:45 PM | Report abuse

Patrick,

You cannot get more of something by increasing its price and reducing its quality. Businesses do not become more competitive when their control over operations is reduced.

Appealing to emotion by invoking the pain of working families won't change either of those facts.

Posted by: justin84 | August 5, 2010 2:55 PM | Report abuse

visionbrkr,

This disagreement is not only about unions.

justin84 has previously advocated cutting the minimum wage to $4/hr, on a general theory that American wages are too "sticky," etc. justin84 will be delighted to see workers stuggling to get by on $7.65 per hour learn tomorrow than their pay is being slashed to $4. To me that is simply unconscionable.

I don't think the pathway to recovery lies in giving the vast majority of Americans less income to further pad the profits of shareholders and owners, or by widening the already-too-wide income inequality in America. On the contrary.

We have had recessions before, and we have managed to recover without plunging the working poor into poverty. My definition of "recovery" is not leaving the vast majority of Americans worse off, and by turning back the clock and having America ape the wages and working conditions of the third world.

Even with unionized workers, there are already plenty of examples across America where we have seen trade-offs and give-backs. Yes, of course I know we can use some reform of compensation for public employees in some jurisdictions, but that is a different argument than justin84 makes about private sector unionization in the USA and economic recovery.

Thanks for the welcome back. Actually, I have been around, and I have made a few comments in the past few weeks; I am just trying my best not occupy too much space in the comment threads, and to stay out of arguments that "ping pong" back and forth endlessly.

Posted by: Patrick_M | August 5, 2010 3:35 PM | Report abuse

"justin84 has previously advocated cutting the minimum wage to $4/hr, on a general theory that American wages are too "sticky," etc. justin84 will be delighted to see workers stuggling to get by on $7.65 per hour learn tomorrow than their pay is being slashed to $4. To me that is simply unconscionable."

But somehow 25%+ unemployment for unskilled workers is just dandy. I find having one's wage cut from $4 to $0 more unconscionable that from $7.65 to $4. Especially for the 99ers out there.

Actually, I don't think there should be a minimum wage. To the extent there are any income guarantees, it should be a guaranteed minimum income as I have advocated plenty of times on Ezra's blog and which you conveniently leave out.

My example was $12,000 and a flat tax of 28% on all income (including the hedge fund and private equity managers). A family of four with two workers making $4/hr full-time would net $35,520 under my plan. Not rich, but you can live on that.

While there will in law be no minimum wage, the existence of a guaranteed minimum income keep reservation wages high and reduce the ability of employers to "exploit" workers. In any case, there are efficiency wage reasons already which will probably keep wages from cratering quite that much in the vast majority of cases.

More importantly, being able to work at low levels of pay gets you in the door at a company and lets you gain experience and raises. To the degree anyone is making $4/hr, very few will after too long. The same family of four will be netting over $47,000 if they can increase their income to $8/hr each.

Posted by: justin84 | August 5, 2010 5:37 PM | Report abuse

"I don't think the pathway to recovery lies in giving the vast majority of Americans less income to further pad the profits of shareholders and owners, or by widening the already-too-wide income inequality in America."

What level of income inequality is "too wide"? What else other than generating profits will convince businesses to expand?

"Yes, of course I know we can use some reform of compensation for public employees in some jurisdictions, but that is a different argument than justin84 makes about private sector unionization in the USA and economic recovery. My definition of "recovery" is not leaving the vast majority of Americans worse off, and by turning back the clock and having America ape the wages and working conditions of the third world."

Is your definition of recovery 9.5% unemployment? Let's see how the recovery is doing after tomorrow's jobs report. This recovery has allegedly been in place since June 2009, and yet unemployment in June 2010 was unchanged.

I define recovery by rapidly declining unemployment. Making the economic environment worse for business is not going to create jobs.

As my support for a guaranteed income might suggest, I hardly am in favor of third world economic conditions.

Posted by: justin84 | August 5, 2010 5:46 PM | Report abuse

"Actually, I don't think there should be a minimum wage."

...yawn...like I said...

Shorter justin84:

Grow the economy by reducing the living standards and the purchasing power of working families.

Posted by: Patrick_M | August 6, 2010 1:32 PM | Report abuse

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