Wonkbook: GOP doubles down on Bush tax cuts; possible recess appointment for Warren; EPA vote
Republicans spent much of yesterday walking back John Boehner's conciliatory comments on the Bush tax cuts. Mitch McConnell and the Senate GOP, in particular, made it clear that either everyone -- including the rich -- get their tax cuts, or no one does. It's good to see American politicians so deeply concerned with inequality, though rare to see that concern focus mainly on the treatment of the very rich. Either way, this sets up a possible fight in which Republicans don't budge and, buoyed by poll numbers showing extension of the cuts for the wealthy is unpopular, neither does the White House. But unlike a normal legislative battle, no agreement doesn't mean no change. Absent a compromise, we could see all the cuts simply expire.
There's also talk that the White House is considering a recess appointment for Elizabeth Warren, though it would be over Chris Dodd's strong objections. The White House is now denying the reports. And keep an eye on the upcoming vote to strip the EPA of its power to regulate carbon. There's little chance that even a successful effort could overcome the president's veto, but Republicans' increasing insistence on this could make it a major issue if they capture one or both houses of Congress in November's election.
Welcome to Wonkbook.
House and Senate Republicans are rejecting John Boehner's offer to vote for Obama's tax proposal, report Shailagh Murray and Lori Montgomery: "McConnell's bill would permanently reduce the estate tax, as well as codify Bush-era reductions in income tax rates and the alternative-minimum tax - an addition that would push the total cost of the package to well more than $4 trillion by 2020. House Minority Whip Eric Cantor (R-Va.) echoed that view, vowing in a statement to 'do everything in my power to stop President Obama and Speaker Pelosi from raising taxes on working families, small-business people and investors.'"
There's buzz that Elizabeth Warren may receive a recess appointment, reports Brady Dennis: "The Treasury secretary has interim authority, under the far-reaching financial overhaul bill recently signed into law, to set up the new regulator. Putting Warren in charge of that effort would, at least temporarily, avoid the uncertainty of trying to force her nomination through a divided Senate. People familiar with the deliberations caution that President Obama has yet to make a final decision on the matter, and it is still plausible that Obama could nominate Warren outright for the job or that he could settle on another candidate. "
But the White House firmly denies it: http://politi.co/aDHSUI
An amendment stripping the EPA's authority on greenhouse gasses will likely receive a vote Thursday, reports Darren Samuelsohn: "Such an amendment has a serious chance of passing given widespread backing on the issue from Republicans and moderate Democrats -- so much so that environmentalists were asking committee leaders to punt on the markup entirely...Obama officials have spoken out previously against efforts to block the EPA regulations. A White House official told POLITICO in July that the president would likely veto a bill stopping the agency."
AIG wants to speed up an end to its government assistance, report Serena Ng and Deborah Solomon: http://bit.ly/auEYv6
David Brooks reminds Republicans that their party has a long and decent tradition of economic interventionism: "The story Republicans are telling each other, which Ryan and Brooks have reinforced, is an oversimplified version of American history, with dangerous implications. The fact is, the American story is not just the story of limited governments; it is the story of limited but energetic governments that used aggressive federal power to promote growth and social mobility...Abraham Lincoln supported state-sponsored banks to encourage development, lavish infrastructure projects, increased spending on public education. Franklin Roosevelt provided basic security so people were freer to move and dare. The Republican sponsors of welfare reform increased regulations and government spending — demanding work in exchange for dollars."
"Throughout American history, in other words, there have been leaders who regarded government like fire — a useful tool when used judiciously and a dangerous menace when it gets out of control. They didn’t build their political philosophy on whether government was big or not. Government is a means, not an end. They built their philosophy on making America virtuous, dynamic and great. They supported government action when it furthered those ends and opposed it when it didn’t."
Live music interlude: The Walkmen play a set in Paris.
Still to come: More banks are missing their payments for TARP; a proposal to strip the EPA of its power over greenhouse gas emissions is up for a vote; the White House is backing a change to health care reform; and how the Soviet Union played video games.
Smaller banks are still not paying back their TARP receipts, reports Brady Dennis: "The latest report from the agency shows that more than 120 institutions - nearly all of them small banks - have missed their scheduled quarterly dividend payments, which is more than a sixth of the banks that received federal aid during the financial crisis. In addition, five banks that received capital injections from the controversial $700 billion Troubled Assets Relief Program have failed altogether, making it highly unlikely that taxpayers will recover the nearly $3 billion poured into those institutions."
Business groups are joining forces to oppose Obama's jobs agenda: http://bit.ly/cqoYPC
The transition to Basel III's requirements will likely be slow-going, reports Howard Schneider: "Each country, for example, is being left to decide whether to force its banks to set aside even more capital in good times as a way to restrain lending and avoid the type of run-up in asset prices that can lead to a crash. Also, it has not been decided whether large firms that are heavily intertwined with the global financial system should set aside yet more money because of the broader risks they pose if they run into trouble...U.S. officials said the tenets of the Basel proposal could be met through new regulations from banking oversight agencies and would not require new legislation."
Republicans want to force a vote on a complete Bush tax cut extension: http://politi.co/cFgtIy
Neil Irwin explains what the current economic situation means for homebuyers: "Lesson: If you expect inflation to be high in the coming years, buying a house is a more attractive proposition. That's bad news, actually. Economists are now expecting many years of very low inflation. And some analysts worry that inflation could fall even further, perhaps into negative territory -- a dangerous, self-reinforcing cycle called deflation. That would be a very bad situation for homeowners, making debt more onerous and putting downward pressure on the value of the homes."
The budget deficit shrunk last month: http://bit.ly/dlWFzV
Applications for Social Security disability benefits are soaring, reports Michael Fletcher: "About half of all applicants eventually make it onto the disability rolls - a percentage that has not changed appreciably with the recent spike in applications, Social Security officials say. The average age of new recipients is 49 - and less than 1 percent of them return to work, according to the Congressional Budget Office. Social Security officials say they are confident that their vetting process screens out most people who might try to get benefits without being qualified. But, they acknowledge, when jobs are scarce, more workers who might otherwise struggle through with their ailments try to secure disability benefits."
Joe Stiglitz criticizes Basel III's implementation delay: http://bit.ly/dfPRl8
Bob Herbert blames the slow recovery on economic inequality: "A male worker earning the median wage in 2007 earned less than the median wage, adjusted for inflation, of a male worker 30 years earlier. A typical son, in other words, is earning less than his dad did at the same age. This is what has happened with ordinary workers as the wealth at the top has soared into the stratosphere. With so much of the middle class and the rest of working America tapped out, there is not enough consumer demand for the goods and services that the U.S. economy is capable of producing. Without that demand, there are precious few prospects for a robust recovery."
Soviet kitsch interlude: Arcade games from the USSR.
Political disputes are hampering research into the Gulf spill: http://nyti.ms/ceTdWA
Emissions reductions could reduce health spending, reports James Kanter: "The study found that as greenhouse gases fall, so do other pollutants that set off respiratory diseases and other illnesses, which reduce in health care costs. Savings could also be achieved on health care costs associated with heat waves, floods, reduced food production and infectious diseases, the study said."
Drilling regulator Michael Bromwich is standing by his rules on shallow water drilling: http://bit.ly/bXfeOd
The Justice Department will likely file a civil suit over the Deepwater Horizon spill, reports Thomas Catan: "In a court filing, the department said the U.S. government had 'potential civil claims arising from the spill,' citing several statutes under which the federal government could bring suits and claim damages, including the Clean Water Act and the Oil Pollution Act. 'At this juncture, the United States expects that it may file a civil complaint related to the Deepwater Horizon disaster under these provisions and possibly others,' the Justice Department said in its filing. BP declined to comment. The Justice Department has parallel civil and criminal investigations into the Gulf oil spill."
Federal prosecutors are scrutinizing BP's spill reports: http://bit.ly/aYjpWM
George Shultz makes the conservative case for climate change action: "There is a long history here of the pessimists underestimating what American ingenuity can do. In the congressional debate over the 1990 Clean Air Act, auto industry executives claimed that reducing auto emissions would have a devastating impact. Congress passed laws that called for a 39 percent reduction in hydrocarbons and a 60 percent reduction in nitrogen oxides in auto emissions. The auto industry met its emissions reductions targets and enjoyed record profits for the next decade. The lesson of history is very clear: Every time we challenge American industries with higher standards, they meet them earlier, for less money and invent new products for export along the way."
TED interlude: Rachel Sussman photographs the world's oldest living things.
Obama wants Congress to ease a tax reporting requirement in health care reform, reports Jennifer Haberkorn: "The law requires businesses to track all cumulative purchases from vendors that total $600 or more in one year. The provision was designed to raise revenue for the health care law but has been universally panned by the business community, which anticipates a mountain of new paperwork to comply. The amendment, from Sen. Bill Nelson (D-Fla.), would scale back the reporting requirements to cumulative purchases of more than $5,000 per year and exclude companies with fewer than 25 employees. So far, no Republicans have voiced support for the amendment."
Charter schools are having a hard time getting space: http://bit.ly/9m1ic2
Medicare chief Donald Berwick is countering claims he supports rationing care, reports Ricardo Alonso-Zaldivar: "Berwick broke his silence Monday, telling an audience of health insurance industry representatives that pushing back against unsustainable costs cannot and should not involve 'withholding from us, or our neighbors, any care that helps' or 'harming one hair on anyone's head.' He also said he does not think federal bureaucrats have all the answers when it comes to remaking the system. "A massive top-down national project is not the way to do this," he told a conference held by America's Health Insurance Plans, the industry lobbying group."
Conservative activists want the GOP to commit to defunding health care reform: http://politi.co/a9EWdb
A Senate proposal being voted on today threatens the individual mandate in health care reform: http://bit.ly/aBWFWE
Work-based visas should be the primary path to immigration, write Pia Orrenius and Madeline Zavodny: "The visas would be 'portable' -- that is, the holder wouldn’t be tied to one employer -- to ensure that workers are treated fairly. But because these visas would be tied to employment, immigrants would have to leave the country if the economy deteriorated and they couldn’t find work. In place of our current system’s lotteries and 'first-come, first-served' policies, the government should hold regular auctions where companies can bid for permits to bring in foreign workers. Employers would bid highest for the most-valued workers, creating a selection mechanism that wouldn’t rely on the judgment of bureaucrats or the paperwork skills of immigration lawyers."
Closing credit: Wonkbook is compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: White House.
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