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Wonkbook: Health-care challenge boosted; helping homeowners; House looks at Social Security supplement

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In Florida, Judge Roger Vinson has decided to let the case against health-care reform go forward. His ruling was only about whether the states have the "standing" to bring the case to court, but he also admonished the Obama administration for calling the individual mandate a "tax," rather than a "penalty." Since that was core to their argument, they'll now need to come back with a different constitutional justification.

Last week, of course, a federal judge in Michigan ruled on the case and said the bill was perfectly constitutional. And so the polarization of the judiciary moves forward: The Clinton appointee sees a constitutional tax, the Reagan appointee may or may not see something constitutional, but he definitely does not see a tax. But as has been true since the day these suits were filed, the question is not the bill's abstract constitutionality. If Democrats had appointed five Supreme Court justices whether than four, there would be no question. It is whether the five Republican appointees on the Court are interested in chipping away at it, or whether they'd prefer to avoid that confrontation with the administration and the Democrats.

It's Friday. Welcome to Wonkbook.

Top Stories

A legal challenge to health care reform will move forward, reports N.C. Aizenman: "The decision by Judge Roger Vinson of the U.S. District Court for the Northern District of Florida to reject the Obama administration's request to throw out the case was expected. During oral arguments over the government's motion to dismiss last month, Vinson had indicated that he was likely to rule at least partly in the states' favor. His ruling is limited to the plaintiffs' standing to mount the case, as opposed to its merits - which will be discussed at a summary judgment hearing scheduled for Dec. 16."

"While dismissing most of the states' other complaints, Vinson ruled that they can contest whether the law's 'individual mandate' requiring virtually all Americans to buy health insurance exceeds Congress's constitutional authority to regulate commerce and make laws 'necessary and proper' for carrying out its powers. Last week, in a suit brought by private parties, a federal judge in Michigan unequivocally upheld Congress's authority on that point... Vinson ruled that the fee imposed on people who fail to comply with the individual mandate amounts to a 'penalty' rather than a 'tax.' This would mean that Congress's ability to impose it cannot derive from its constitutional powers of taxation."

The White House's response to the foreclosure mess is too timid, writes Paul Krugman: "True to form, the Obama administration’s response has been to oppose any action that might upset the banks, like a temporary moratorium on foreclosures while some of the issues are resolved. Instead, it is asking the banks, very nicely, to behave better and clean up their act. I mean, that’s worked so well in the past, right?... The Center for American Progress has proposed giving mortgage counselors and other public entities the power to modify troubled loans directly, with their judgment standing unless appealed by the mortgage servicer. This would do a lot to clarify matters and help extract us from the morass."

Here are four ideas that could help homeowners facing foreclisure, as opposed to just helping banks: http://wapo.st/dgVnwl

Bank stocks are plummeting due to the foreclosure mess: http://wapo.st/9Kjvpa

The House will hold a vote on supplemental Social Security payments, reports Stephen Ohlemacher: "The Social Security Administration is expected to announce Friday that more than 58 million retirees and disabled Americans will go a second consecutive year without an increase in benefits. Pelosi said she will schedule a vote on a bill to provide the $250 payments when Congress returns for a lame duck session after the Nov. 2 congressional elections. The payments would be similar to those provided by the government's massive economic recovery package last year. But even if Pelosi can get the House to approve a second payment, the proposal faces opposition in the Senate."

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States are pushing higher gas taxes to pay for infrastructure, reports Josh Mitchell: "The gas-tax proposal, being pitched by the American Association of State Highway and Transportation Officials, would have drivers at the pump pay an 8.4% tax on a gallon of gas instead of the current 18.4-cent tax. The tax on a gallon of diesel would be 10.6% instead of the current 24.4 cents. AASHTO estimates the changes would potentially raise an additional $43 billion over six years, assuming the price of gasoline rises as the government projects."

Got tips, additions, or comments? E-mail me.

Icelandic electronica interlude: Bjork plays "Joga" on Later with Jools Holland.

Still to come: The US trade deficit has grown due to Chinese imports; BP apologizer Rep. Joe Barton may yet helm the Energy Committee; the schools of the much-touted Harlem Children's Zone are coming up short; and a ukelele orchestra covers Talking Heads.

Economy/FinReg

Chinese imports are driving up the US trade deficit, reports Howard Schneider: "By selling renminbi and buying dollars and other currencies, the People's Bank of China lowers the price of its currency. The bank's ability to keep up those purchases is closely tied to the country's large trade surplus with the rest of the world, most notably the United States. The monthly imbalance between the two countries widened in August to a record $28 billion, compared with just less than $26 billion the month before. The gap shows that there's been meager progress in evening out a trade relationship that is both central to the global economy and a potential source of instability."

The foreclosure mess blew up because of a single case in Maine: http://nyti.ms/bkPJW7

Judges are facing enormous pressure to resolve foreclosure cases quickly, reports Brady Dennis: "The recent reports about flawed and fraudulent filings - and a series of announcements by large lenders that they are freezing foreclosures - have given pause to some judges in Florida. While judges agree that speed remains important, some are warning that churning through cases so quickly could mean overlooking fraudulent documents and prematurely seizing homes, perhaps depriving borrowers of due process. How judges in Florida, at the epicenter of the foreclosure crisis, strike a balance could presage how courts elsewhere in the country will grapple with the mortgage meltdown's latest challenge for homeowners, financial firms and the broader economy."

Bank of America is stepping up its loans to small businesses: http://wapo.st/bVQ7NY

Local governments are moving against agreement that help unions, reports Steven Greenhouse: "Here in California, the fight over the agreements has become so heated in part because the volume of nonresidential construction in the state has fallen 33 percent from its peak in 2006, while 400,000 construction jobs have been lost. Government budget crises have helped fuel the campaign against the agreements, with many critics saying they unnecessarily raise the cost of public projects. Many nonunion contractors in the San Diego area are particularly incensed because they helped win voter approval of a $2.1 billion school bond last year, only to see unions persuade the school board to vote 3 to 2 to embrace project labor agreements for all the construction."

The Financial Crisis Inquiry Commission report will reveal the extent to which banks deceived their clients, writes William Cohan: http://nyti.ms/al7H54

A new study shows the costs of a VAT, writes Pete Davis: "Today, the National Retail Federation released a study by Ernst & Young and Tax Policy Advisers that analyzes a 10.3% narrowly based 'add-on' value added tax to reduce the deficit by 2% of GDP. It estimated a $2.5 trillion reduction in retail spending over the next decade and an initial loss of 850,000 of which 700,000 would be lost permanently. That's the kind of scary analysis you want if you want to kill a proposal. I would note that any federal tax increase of 2% of GDP would have similar results, although with less impact on the retail sector."

Short film interlude: A film about technology made from all analog parts.

Energy

The EPA can't stop catastrophic climate change, writes David Leonhardt, but that's not to say it's powerless: "The institute estimates federal regulations alone could reduce 2020 emissions to somewhere between 5 and 12 percent below the 2005 level, depending how rigorously they were enforced. Add in state regulations, and the reduction could be 6 to 14 percent....But if it’s not enough, it’s also a lot more than nothing — especially when you consider that 2020 emissions are now in pace to be 4 to 5 percent higher than they were in 2005."

Most Americans don't know basic climate data, reports Felicity Berringer: http://bit.ly/aJIiQ0

Rep. Joe Barton of BP apology fame is making a play for the Energy Committee chairmanship, report Jake Sherman and Robin Bravender: "The energy panel, under a Republican majority, could become the launching pad for ideological battles that would define a GOP House digging in on global warming, cap and trade, energy bills, health care repeals and a wide range of business regulations...Barton is still in the doghouse with some Republicans for his now-infamous apology to BP during this summer’s oil spill disaster -- a rhetorical flap that nearly cost him his top seat on the Energy and Commerce Committee. What’s more, Barton seems to be signaling that there won’t be any long-lasting fallout from the incident, although several members called for his resignation."

OPEC has no plans to lower the price of oil: http://nyti.ms/bRzezX

The EPA is unsure of how to grade plug-in hybrides, report Nick Bunkley and Bill Vlasic: "Providing the customary city and highway miles-per-gallon information would make little sense for the Volt, which can drive 25 to 50 miles on battery power before its gas engine kicks on, and even less so for the Leaf, which is powered by only a rechargeable battery. Cathy Milbourn, a spokeswoman for the E.P.A., declined to specify a date when the new ratings might be released, saying only that they would come 'shortly.' The Volt and Leaf must be rated by the E.P.A. and have those ratings shown on window labels before they are sold. Both Nissan and G.M. are in discussions with the agency about what the fuel economy information on the window stickers of new vehicles will state, company officials said.."

Green investment isn't politically easier than cap and trade, writes David Roberts: http://bit.ly/cAC3fh

Nuclear companies' behavior shows the erosion of standards in business, writes Steven Pearlstein: "I realize we're a long way from those days when business was done on a handshake and a businessman was only as good as his word, but even by today's diminished standards, this is remarkably shoddy conduct. It's a glaring example of the triumph of Wall Street culture over Main Street culture, of short-termism over long-term value creation, of a corporate ethic that amounts to: 'It's just business. Nothing personal.' It should tell you all you need to know that Wall Street analysts cheered Constellation's decision to blow up its partnership with its largest shareholder to book a one-time, $1.4 billion after-tax gain."

Ukelele interlude: The Ukelele Orchestra of Great Britain covers "Psycho Killer".

Domestic Policy

The Harlem Children's Zone is coming up short, reports Sharon Otterman: "Just 15 percent passed the 2010 state English test, a number that Mr. Canada said was 'unacceptably low' but not out of line with the school’s experience in lifting student performance over time. Several teachers have been fired as a result of the low scores, and others were reassigned, he said...Mr. Whitehurst’s 2010 Brookings analysis went further, noting that test performance at the two charter schools was only middling among charter schools in Manhattan and the Bronx, even though higher-performing schools, like those in the lauded KIPP network, had no comparable network of cradle-to-college services."

A study suggests computerized medical records can help track drug side effects: http://bit.ly/9DtlmV

With Congress not acting, the FCC could move ahead solo on net neutrality, report Kim Hart and Jennifer Martinez: "FCC Chairman Julius Genachowski will be getting a lot of heat from liberals and consumer advocates to enact some sort of Net neutrality rules in the next two months. Last month, Genachowski asked for additional feedback on whether Net neutrality rules should apply to wireless devices and if Internet providers should be allowed to charge Web companies for special services. That public-comment period ends early next month, freeing up the FCC to make a move. It’s still unclear when -- or if -- the agency is actually going to move forward on reclassification. FCC spokeswoman Jen Howard declined to comment on a specific timetable. Genachowski has said the agency is waiting to develop the right policies before taking any action."

The FCC's "bill shock" rule doesn't go far enough, writes Timothy Noah: http://slate.me/cDnnIE

Obama should call the Senate's bluff on recess appointments, write Steven Bradbury and John Elwood: "The Senate, of course, does not meet as a body during a pro forma session. By the terms of the recess order, no business can be conducted, and the Senate is not capable of acting on the president's nominations. That means the Senate remains in "recess" for purposes of the recess appointment power, despite the empty formalities of the individual senators who wield the gavel in pro forma sessions. The president should consider calling the Senate's bluff by exercising his recess appointment power to challenge the use of pro forma sessions. If the Senate persists, then the federal courts may need to resolve the validity of the Senate's gambit."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House

By Ezra Klein  | October 15, 2010; 6:40 AM ET
Categories:  Wonkbook  
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Next: Why clean-energy funding is politically easier than cap-and-trade

Comments

The foreclosure crisis is a myth.

It was intentionally created by greedy politicians and bankers months ago.

I read articles months ago where Florida hired bunches of judges to expedite 100,000s of foreclosures and lawyers were publicly warning that the banks were intentionally stealing properties. Judges were ignoring proof of fraudulent foreclosures as lawyers waved the proof in their faces.

Now these thieves want more bailouts as well.

Well, I'd like just ONE journalist or blogger to outline in grim detail what would happen if we don't bail the banks out. Ezra?

If there are more bailouts of these thieves, I am walking away from my mortgage and joining the tea party,

Posted by: lauren2010 | October 15, 2010 8:25 AM | Report abuse

Do you all realize the timely news of don't ask is intended to influence the elections?

Do you realize this latest ruling was made possible by log cabin republicans?

Do you realize that 100s of real law cases by ordinary gay Americans languish with inaction during non-election years, and then just before an election a few choice cases are allowed to proceed so as to inspire the GOP base?

Posted by: lauren2010 | October 15, 2010 8:31 AM | Report abuse

Just a matter of time now. SCotUS is going to shut down the illegal HC Ins mandate for individual citizens.

lauren2010, yes there is something very odd about this whole foreclosure mess. Considering that banks can basically print money via the frac banking system (and thus are using powers reserved for congress) the Gov has a right to step in...

Posted by: illogicbuster | October 15, 2010 8:44 AM | Report abuse

lauren,

did you see this article?

http://www.time.com/time/politics/article/0,8599,2025368,00.html

I guess that's how Dems have to rev you guys up by outright lies about the COC.


Oh and illogicbuster enjoy your government run single payer because mark my words if the individual mandate dies that's where we're headed sooner than any progessive could have hoped possible.

Posted by: visionbrkr | October 15, 2010 9:17 AM | Report abuse

Yes Secretary Sebelius I'm SURE that the $3 million you're spending is not political at all. Just crazy timing I guess. hmmmm.

http://www.politico.com/news/stories/1010/43655.html

Posted by: visionbrkr | October 15, 2010 9:22 AM | Report abuse

I would like Ezra...or any progressive...to answer one problem (of many) in the health care law.

Progressives believe it's constitutional for the FEDERAL government to have the power to force you to buy a product (health insurance) under the guise that it's for the 'betterment of society'. So, if this law stands, a progressive needs to tell us why the government couldn't also:
- force you to attend monthly weigh-ins at a local government office, and pay fines according to how overweight you are.
- force you to buy gym memberships, and fine you if you don't exercise at least 3 times a week.
- inspect your grocery cart before checkout to make sure you are buying more healthy foods than unhealthy foods.

Some progressive needs to explain how, if the FEDERAL government can require you to buy health insurace, how is that any different than giving the government the power to regulate your health lifestyle...you know, to keep health costs down and for 'the betterment of society'.

Funny how progressive logic crumbles under even modest scrutiny.

Posted by: dbw1 | October 15, 2010 9:42 AM | Report abuse

Vision

Both parties are lying.

I wish they'd both go away and we found a different way of electing indie minded people. And no, the tea party is just more of the same.

Posted by: lauren2010 | October 15, 2010 10:34 AM | Report abuse

Vision

Both parties are lying.

I wish they'd both go away and we found a different way of electing indie minded people. And no, the tea party is just more of the same.

Posted by: lauren2010 | October 15, 2010 10:37 AM | Report abuse

"The foreclosure crisis is a myth.

It was intentionally created by greedy politicians and bankers months ago."

Read the Post article about the foreclosure mess shutting down short sales and foreclosure sales in Florida. It is happening in California and other areas too. When the vultures are having trouble surviving, you know things are really bad.

Posted by: tuber | October 18, 2010 1:57 PM | Report abuse

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