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Wonkbook: Warren as temp; China bill; Why your lightbulb is not made in America

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The Obama administration will appoint Elizabeth Warren to oversee the creation of the Bureau of Consumer Financial Protection in a temporary capacity. Confused? So, frankly is everyone else. The upside for the administration is that Warren dodges a Senate confirmation battle -- and the endless waiting associated with it. This is a Senate after all, that just can't be bothered to vote on nominees to the Federal Reserve. The downside is that piqued Republicans are even less likely to support her in a future Senate battle, meaning this temporary appointment might come at the cost of a permanent position. And won't potential employees be reticent to join the agency when they don't really know who their actual boss will be?

Just so you know, there are no Top Chef spoilers in today's Wonkbook. There is, however, the most amazing food slideshow I've ever seen.

Top Stories

Elizabeth Warren will build the Consumer Financial Protection Bureau without going through Senate confirmation, reports Brady Dennis: "The official said Obama plans to name Warren as an advisor to him and Treasury Secretary Timothy F. Geithner - giving her responsibility for shaping the consumer bureau in coming months...Under the law, the Treasury maintains responsibility for setting up the new regulator until the president nominates a director, subject to approval by the Senate..Scores of Obama nominations far less polarizing than Warren's have languished in the divided Senate for months. Warren herself has told allies on Capitol Hill that she would prefer to be assigned on a temporary basis, rather than enduring a prolonged confirmation process."

Sen. Bob Corker is not pleased: http://bit.ly/c2rYvo

We need Elizabeth Warren, writes Matt Miller: http://bit.ly/aHxXQL

A bill targeting China's currency devaluation could pass Congress, report Kathy Chen and Kris Maher: "The bipartisan bill, which has 143 co-sponsors, would allow the U.S. to impose tariffs and other penalties on countries that undervalue their currency--with China a main target. Many U.S. businesses, policy makers and economists argue that the country keeps its currency artificially low against the U.S. dollar, giving its exports an unfair price advantage on the global market...Several bills addressing China's currency policy have emerged in Congress in recent years but have made little headway. But both supporters and detractors of the Ryan-Murphy bill say it could have a real shot at passage this year."

Neil Irwin previews the Fed's preliminary policy meeting next week: "Top Fed officials will be preparing formal forecasts for the economy over the coming weeks in advance of their meeting Nov. 2 and 3. If their consensus is that growth will be too slow next year to bring down the unemployment rate significantly, they will be more inclined to take action, even if the exact economic impact is modest and hard to predict, according to analysts who study the Fed...As the debate over further bond purchases has ripened within the central bank and among outside economists, many Fed watchers expect action before the end of the year unless economic data improve significantly."

Rafael Nadal is poised to pass Roger Federer as tennis's top earner: http://bit.ly/dDp8i3

Innovations are often made in America, but the associated manufacturing jobs are lured by other countries, reports Peter Whoriskey: "Now, as Lighting Science rapidly expands its production of what is considered the next-generation technology, the company is being courted by China and Mexico. Aside from the enticement of lower-wage workers, those countries offer significant cash incentives for capital equipment and labor, amounting to as much as $4 million, company officials said. The United States, by contrast, has offered financing under the stimulus program, but the process has proved too cumbersome for the small company. Lighting Science is largely owned by Pegasus Capital, a private equity group."

"The incentives are 'a game that the foreign governments are playing, but the U.S. isn't,' chief executive Zach Gibler said. 'Like any manufacturer, we have to look at our options.'"

The most amazing food pictures I've ever seen: http://bit.ly/9Cbi7W

Still to come: Geithner gets tougher on China; Greenspan attacks the stimulus; Menendez introduces a comprehensive immigration bill; and the charming taps of Irish hand dancing.


Economy/FinReg

Tim Geithner is taking a tougher tone with China, reports Howard Schneider: "Geithner's remarks did not detail possible steps being considered. The United States would potentially have a variety of tools at hand, such as complaints with the World Trade Organization, a more aggressive application of U.S. law or even the crafting of punitive legislation, a step favored by some in Congress. But the change in tone is significant, highlighting frustration with the resurgence of China's trade surplus with the United States, as well as the increasing sensitivity of economic issues before the midterm elections."

Public workers earn less on average than those in the private sector: http://bit.ly/bgmYZl

House Rules chair Louise Slaughter signaled she will not allow open amendments on a Bush tax cuts extension, reports Jonathan Allen: "Replying to the GOP's request for a more open amendment process on upcoming legislation extending lower income tax rates that would otherwise go up at the end of the year, the New York Democrat noted Minority Leader John Boehner's concession on Sunday that he would -- if forced into an up-or-down vote -- choose to support a bill cutting taxes for most, but not all, taxpayers. 'Mr. Boehner's statement suggests that it may be possible to find bipartisan common ground -- I hope that more of your colleagues in the Republican Conference will join Mr. Boehner in expressing support for these middle class tax cuts,' Slaughter wrote."

John Boehner has repeatedly retracted his offer to vote for Obama's tax plan: http://politi.co/aIKI0V

Greenspan attacked the stimulus in a recent speech, reports Michael Derby: "At this point, 'we’d probably be better off doing less than more' because 'you’d be far better off to allow the normal market forces to operate here,' Greenspan said. That’s largely because stimulus spending is not proving as effective as many had hoped. 'To the extent the evidence suggests very large deficits concurrently crowd out capital investment, there is a debit to the stimulus program that is somewhere between a third and a half of what the gross stimulus is,' he said."

Bruce Bartlett argues Baby Boomers should leave some of their inheritance to the government: "Perhaps in the days when revenues were flush and the public's willingness to tolerate taxation was greater, governments could afford to reject such opportunities to obtain private funds for public purposes. And of course there will always be a legitimate concern that those making private contributions are buying more than the praise and good will of the citizenry. But in times like these, when resistance to taxation and spending are intense even for programs with broad public support, we must be open to new methods of building and maintaining society's critical infrastructure."

New OMB chair Jack Lew should put a premium on management skills, write Jitinder Kohli and John Griffith: http://bit.ly/aB11ev

Richard Riordan and Alexander Rubalcava propose a "Race to the Top" for state pensions: "Here’s how it would work. A city, county or state facing insurmountable pension costs would appeal to the Department of Treasury for relief...the applicant would have to take action to assure it can meet the debt service on its bonds, including placing a permanent cap on its pension liabilities...In exchange, the Treasury would authorize the fund to issue tax-free “pension protection” bonds which, for a fee, would be guaranteed by the federal government. Proceeds from the bond sales would cover its liabilities, providing a quick resolution to the underfunding crisis."

Stationary dancing interlude: Irish hand dancing.

Energy

Unions and environmental groups are still pushing for a renewable energy standard: http://bit.ly/9I37aq

The US is ordering oil companies to plug idle wells, reports Siobhan Hughes: "The U.S. Interior Department and its offshore-drilling oversight agency said almost 3,500 wells that aren't producing oil or gas must be plugged. Another 650 oil and gas platforms must be dismantled if they are no longer being used for exploration or production, the government said...The mandate becomes effective on Oct. 15. Companies will have 120 days to submit plans to decommission production facilities and wells. Under the regulation, any well that has not been used during the past five years for exploration or production must be plugged. Production platforms and pipelines must be decommissioned if no longer in use."

Climate activists want to woo back John McCain: http://politi.co/9CxIez

John Perlin debunks myths about solar cells: "Myth: Photovoltaic cells require much more area to generate power than do power plants run on fossil fuels or nuclear Fact: If the extraction and transportation of fossil fuels and nuclear is accounted for as well, then the area required for the production and generation of the three energy sources is about the same."

Mashup interlude: Everything's a Remix.

Domestic Policy

Robert Menendez will introduce a comprehensive immigration bill in the Senate, reports Scott Wong: "Sources familiar with the Menendez bill said it would include border security provisions, employment verification, a temporary-worker program and a path to citizenship for the 11 million illegal immigrants now living in the U.S...Menendez and two vocal reform backers in the House -- Reps. Luis Gutierrez (D-Ill.) and Nydia Velazquez (D-N.Y.) -- said they would meet with President Barack Obama Thursday afternoon to request his support for the new legislation and the immigrant-student bill, known as the DREAM Act."

Tom Coburn is still holding up a food safety bill on deficit grounds: http://bit.ly/9eQw6n

A federal agency is weighing railroad price controls, reports Josh Mitchell: "Daniel R. Elliott III, appointed last year by President Barack Obama to chair the Surface Transportation Board, pointed to concerns that railroads are using market dominance to charge 'excessive' rates for the shipment of goods. Mr. Elliott also suggested that the Staggers Act, signed by President Jimmy Carter, was outmoded and may have given railroads too much pricing power over farmers, grain merchants and other shippers."

The House will vote on a bill giving lawmakers the right to swear in new citizens: http://bit.ly/aDXNow

Obama is readying a new defense of health care reform, report Jennifer Haberkorn and Sarah Kliff: "The Obama administration and its allies hope tough new insurance restrictions due to go into effect Sept. 23 and an accompanying public relations push will help turn the tide and give Democrats campaign-ready ammunition six weeks ahead of the midterm elections. This month’s new restrictions include some of the health care overhaul’s most consumer-friendly and popular changes, such as no co-pays for preventive care in new insurance plans and bans on denying coverage to children and taking away coverage from anyone when they get sick."

Guitar heroics interlude: Marnie Stern's "For Ash".

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Andrew Harrer/Bloomberg News Photo.

By Ezra Klein  |  September 16, 2010; 5:46 AM ET
Categories:  Wonkbook  
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Next: Time bombing the Senate

Comments

Ezra, does Elizabeth Warren have any power or not? Is this another weak capitulation from Obama?

If Obama has effed this one up he doesn't deserve to be President come 2012. I sure know I'm not voting for this fraud anymore. Obama could care less about average Americans out here, he's out for himself and his buddies over at Wall Street. I hope he's counting on their votes tiding him over in 2012 because given the choice between Republican and Republican lite I'm not even bothering?

I don't know why these Democrats turn into Republicans the moment AFTER they're elected. Do they think Republican voters are magically going to start voting for them just because they became Republican-lite? The only thing that does is turn your voters away like in this upcoming 2010 midterms. While Obama was running around for two years begging for Republican votes he lost his base and the people, like me, who believed he wasn't the same opportunistic politician who plays the same games no matter the party. If Mitt Romney runs in 2012 he will easily win. Obama has continued Bush policies from the economy, to the wars, to civil liberties, to education. I don't see any difference between him and Mitt Romney. He basically signed the Mitt Romney health-insurance bill so why not have the real Romney.

I don't see any difference in the laws and the policies these two parties enact. No matter if we throw them all out and give control of the entire law making branches to the Democrats the same exact things keep coming out. More corporate approved bills, more bailouts for the rich while the poor and the middle suffer, and more funneling of our tax dollars to useless wars and their profiteers.

I'm just fed up with this ridiculous system. If we put Obama in there and he's either become this easily co-opted or was in on it the whole time, it's no use.

I'm done with the Democratic Party, they don't serve my interests and they don't want people like me voting for them. I'll leave them to what they do best--running around scavenging for the votes of any Wall Street fat-cat that falls off the Republican bandwagon.

Posted by: magnus_terra | September 16, 2010 9:10 AM | Report abuse

Why, yes, the 23rd of September is the day the "; however, your plan must change and you must pay more for it" clause of the PPACA kicks in: the full statement is then "If you like your plan, you can keep your plan; however, your plan must change and you must pay more for it."

It fun to look back at history: a year ago (20 Sep 2009), the President was stressing that the PPACA -- which ultimately had to originate in the House as a tax bill -- was, in fact, not a tax (see, for example, the video at http://www.verumserum.com/?p=8546).

Looking back is certainly less depressing than looking forward: the troubles with SSDI (insolvent in 8 years) and Medicare (insolvent sooner than expected, due to the PPACA) aren't bright spots, as the Post noted in its report Tuesday (ttp://www.washingtonpost.com/wp-dyn/content/article/2010/09/13/AR2010091306493.html).

Posted by: rmgregory | September 16, 2010 9:10 AM | Report abuse

as usual the statistics used to contrive belief that public sector workers earn less than private continue to not include key things like benefits and pensions which far and away push them past the compensation given private employees. Then the fact that they don't include federal employees makes the cherry picking complete. Bravo!

Posted by: visionbrkr | September 16, 2010 9:23 AM | Report abuse

"Myth: Photovoltaic cells require much more area to generate power than do power plants run on fossil fuels or nuclear"

This isn't the problem. The problem is when we begin to approach a point where solar energy supplies a significant portion of our power, the environmentalists and other activists will oppose solar energy with the same vigor with which they now oppose coal, natural gas, and nuclear energy.

Posted by: Kevin_Willis | September 16, 2010 9:34 AM | Report abuse

also from the healthcare article from Politico:

"“As you return to campus this semester, I want to take a moment to make sure you know about some important new changes that will help ensure you have access to affordable, quality health care,” Obama wrote in the brochure, created in partnership with Families USA. “Under the new law, you can remain on your parents’ health insurance plan until you turn 26 or find a job that offers insurance. Graduating from college will not mean losing your health insurance.”


Uh, Mr President, not exactly. It actually becomes law when the parents employer renews their policies with their insurer unless they've enacted it early which many did not do. So most will be until January 1st 2011 before that new provision kicks in and you could theoretically wait until Sept 1st 2011 before everyone is eligible for this benefit that btw will cost about 1-1.5% to enact for most employers. Oh wait, you thought this was free?

Same goes for the free preventative care. Its like taking $20 out of one pocket and putting it in the other. That's assuming you had $20 in the first place.

Posted by: visionbrkr | September 16, 2010 9:37 AM | Report abuse

@visionbrkr: "as usual the statistics used to contrive belief that public sector workers earn less than private continue to not include key things like benefits and pensions which far and away push them past the compensation given private employees."

Also doesn't include benefits like certainty. Now I'm working for the government, I have a reasonable expectation that my paycheck won't suddenly be cut 20%, or 50%, or 70%--which happened to me at my previous private sector job. Like many in government (and certainly in education-related jobs), mine is stepped, so I know that not only will my paycheck not get cut, but will go up in small increments every year. Additionally, we can usually (not always) expect a small incremental raise on top of that.

I have noticed that people who have been in that kind of system for years and years just consider it the natural order of things, and don't realize quite how fortunate they are. But most of them do, and thus work hard. As a system, I don't think it discourages hard work at all. I certainly see no sign of it. But there's no doubt that, as an employee, I'm much better off working in the government than I ever was working in the private sector. Any argument that government workers are somehow worse off is flawed.

I know a guy who does maintenance work for the city of Memphis. And it's a murderously hard job. But, before that, he worked for Pizza Hut for a long time (doing maintenance) and a private air conditiong/heater company, and he would never go back. Why? Pay and benefits. The work is just as hard, if not harder in many cases, but (in his case) pay and benefits are both almost orders-of-magnitude better. When he talks about his gig for the city, he smiles and nods his head. "It's a sweet deal."

Which is not an argument that we need to cut government workers or pay (although I think it would be appropriate to do a little audit on position in federal and state government of positions making in excess of $100k, as there are increasingly more of them, and some are like the guy here who was supposed to change tires on city vehicles. He got paid well over $100k to change tires, and he almost never changed the tires. But I don't think those folks are the rule. I work with a large group of county employees, and everyone is hard working and dedicated. Most of the "typical government" problems are simply due to scale, and those are hard to avoid.

I'm rambling. Have a good day, everybody!

Posted by: Kevin_Willis | September 16, 2010 9:48 AM | Report abuse

As with any discussion of this type, simply talking about "government workers" as a monolithic group is problematic. Attorneys working for the government may get the stability that Kevin mentions, but government attorneys make much, much less than most of them could in the private sector. There are even easier examples: Larry Summers can and did make much more in the private sector than he does as a government employee, and the same goes for most members of Congress, the judicial branch, and much of the executive branch.

Before we determine whether government employees are overpaid we should also look at their equivalents out in the private sector. There's a rather large range in pay for, say, secretaries in the private sector. Maybe some government-employed secretaries make more than the average, but maybe government jobs attract better than average employees. The question shouldn't be, "Does this person make more than average", but "Could we hire and keep this person for less in the private sector?"

And ultimately, I'm ok with government jobs being better than the average private sector job. I'm not saying that government employees should be the highest paid people around, but I also think that making government positions attractive to highly skilled candidates is a good thing.

Posted by: MosBen | September 16, 2010 10:14 AM | Report abuse

Just to put it in perspective, no attorney working for the State of New Jersey can earn more than the Attorney General of New Jersey. Last I checked she made something like $125k/year, or thereabouts, which is less than some large firms pay kids right out of law school.

Posted by: MosBen | September 16, 2010 10:17 AM | Report abuse

--"Elizabeth Warren"--

//cite
By focusing on the "controversial" pick of Warren, the government and its media accomplices subtly shift the fulcrum of the debate. People aren't questioning whether the government should be seizing vast new powers to regulate the financial markets, even though its last expansion — in the wake of the Enron and other accounting scandals — did nothing to prevent the shady practices of the housing bubble years.

Instead of that substantive and crucial debate, Americans are led to fret about which person will head the new agency. American children learn in civics classes that this country is a land of laws, not men. Yet the financial press disproves that myth daily.
//end cite

http://mises.org/daily/4716

Posted by: msoja | September 16, 2010 10:31 AM | Report abuse

"We need Elizabeth Warren, writes Matt Miller"

"This is a column about why we need Elizabeth Warren, but it starts with a story about our car. Bear with me. Two months ago I returned a car we had leased for four years. As anyone who's leased a car knows, there's always a chance you'll get hit with some end-of-lease charges ... In the past I've paid a few dollars for this. Once, when my wife had dented one of the doors mildly, we had to pay $200. I was ready for something like that. But when the post-lease settlement statement came, I was shocked to see that we'd been charged more than $500! And for what? For two new tires! That's outrageous, I thought... Furious, I immediately put aside the pile of consequential public policy research that columnists devour all day and called the customer service number to raise hell. I told the lady this was a total rip-off... She explained what the charge was for, and I went through what I've noted above. Then, after we'd said all there was to say on the matter, she said she was removing the charge in its entirety."

Why, again, do we need Elizabeth Warren? You took care of this problem yourself. Couldn't you at least find an example where some faceless company charged you $500 and you couldn't get the money back?

"When twice a year I see some phantom, unjustified $3.95 "finance charge" on my Visa bill -- the Visa I pay in full and on time every month -- I stop and think of how many millions of people are being hit with this, what fraction of those find it worth their time and energy to fight it, and how much money flows to these firms' bottom line as a result."

And yet you continue to maintain an account with that company? I've had at least one credit card for seven years now, and I've yet to see an unjustified charge. If I was seeing multiple errors each year, I'd fight the errors and then move my business elsewhere. If all banks and credit unions were doing this (and they aren't), I'd only use a debit card. Or you could say, in the context of $200 in rewards over a year, the $8 in fees was a rounding error and maybe it just really isn't worth your time. There's always a solution to this type of thing.

If these charges aren't worth other people's time and energy to fight it, why should I have to pay for regulators to do it for them? It's not as if the regulators will be perfectly sucessful either. Can't adults look after themselves anymore, as Matt Miller has shown by his own example?

What a joke.

Posted by: justin84 | September 16, 2010 10:59 AM | Report abuse

Oh, and can you clarify your comment about "environmentalists and other activits", Kevin? Surely you don't believe that significant numbers of people are arguing that we should transition off of fossil fuels simply because it's currently the most used energy source? I mean, maybe if we transitioned to solar we would discovery problems which we didn't predict, but that's different than what you're implying.

Posted by: MosBen | September 16, 2010 11:03 AM | Report abuse

Isn't it long past time for Greenspan to go Galt already? Clearly the man doesn't have the courage of his convictions.

Posted by: slag | September 16, 2010 11:05 AM | Report abuse

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