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Posted at 6:45 AM ET, 12/ 2/2010

Wonkbook: For Bush tax cuts, three more years? And FCC releases network neutrality proposal

By Ezra Klein


We're fast approaching the midnight hour for the Bush tax cuts, and Congress still hasn't reached a deal. In fact, it increasingly looks like they won't really reach a deal. Instead, they'll punt: We'll see a short extension of the tax cuts, coupled with the hope that some future Congress will do a better job. If that's what we end up getting, however, it'll be an open question why we had to wait till the last moment, and go through so much drama and acrimony, to get to it. The Bush tax cuts have been set to expire this month for the last 10 years. A long legislative process over what to do next makes sense if you're making the tough choices and building the unlikely coalitions necessary to, well, do something next. But not if you aren't.

There's something slightly perfect, however, about watching the tax cuts barrel towards extension at the same moment that the fiscal commission releases its final report and takes its final vote. Some of the commission's legislative members have begun making positive noises about the body's proposal, and the final vote may not be as disastrous for Simpson and Bowles as many expected. At the same time, whatever the Simpson-Bowles Commission ends up doing, part of Congress's role is to be the country's fiscal commission. And watching their ability to plan for the expiration of the Bush tax cuts and chart a thoughtful path forward, it's difficult to say that they seem up to the task.

Top Stories

Democrats will likely accede to a temporary extension of all Bush tax cuts, report John McKinnon and Janet Hook: "Separate from the formal negotiations, congressional aides from both parties have begun discussing a temporary extension of the expiring tax cuts...They have considered short-term extensions of a number of business and individual tax provisions that are expired or expiring, such as a popular research credit and middle-class protection from the alternative minimum tax. A likely outcome includes a one- to three-year extension of the Bush-era income tax rates and a two-year extension of the business provisions, according to aides. The package could include Democratic priorities such as extension of tax breaks that benefit the working poor, as well as further extension of unemployment benefits for the long-term jobless."

Republicans are blocking all action in the Senate until a deal is reached on the Bush tax cuts, reports David Herszenhorn: "Not even 24 hours after President Obama met with senior Republican Congressional leaders and expressed hopes for a “new dialogue,” renewed partisan fury engulfed the Senate on Wednesday, as Republicans threatened to block any legislation until a deal is reached to extend the expiring Bush-era tax cuts, potentially derailing the Democrats’ busy end-of-year agenda. The blunt threat was made in a letter to the majority leader, Harry Reid of Nevada, and signed by all 42 Senate Republicans."

Real talk: This is less about the Bush tax cuts -- which are currently being negotiated, and will not move faster if people get angrier -- than about stopping Democrats from passing other priorities, like the DREAM Act.

It's also strengthening filibuster-reform advocates like Sen. Jeff Merkley: And you know what? His new reform proposal makes a lot of sense.

The debt commission's members expressed cautious support for its chairmen's final proposal, report Lori Montgomery and Brady Dennis: "While only seven of the 18 members endorsed the package outright, others staked out positions that could change the terms of the well-worn Washington debate over taxes and spending. Sen. Richard J. Durbin (D-Ill.), one of the panel's most influential liberals, embraced a proposal to raise the retirement age to 69 in 2075, calling it 'not radical' and 'acceptable to me'...Rep. Jeb Hensarling (Tex.), a leader of the GOP's conservative wing, said he could live with a proposal to cut military spending and increase overall federal tax collections as long as income tax rates were lowered, spending cuts were enforced and Democrats agreed to reexamine the growth of spending envisioned under the recent health-care law."

FCC chairman Julius Genachowski has gave a speech laying out his network neutrality proposal: "Consumers and innovators have a right to a level playing field. No central authority, public or private, should have the power to pick which ideas or companies win or lose on the Internet; that’s the role of the market and the marketplace of ideas. And so the proposed framework includes a bar on unreasonable discrimination in transmitting lawful network traffic."

Early reaction: Telecom companies like it, network neutrality advocates and content providers like Google and Facebook do not.

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

Supergroup interlude: Gayngs play "The Last Prom on Earth".

Still to come: The Fed's aid programs went to businesses like Caterpillar and GE; a Senate hearing assails "mini-med" health plans; the food safety bill may not pass after all; the GOP majority is disbanding the House climate change committee; and a salsa-dancing dog.


Fed aid in 2008 helped non-bank businesses, report Jia Lynn Yang, Neil Irwin, and David Hilzenrath: "The Fed's efforts to prop up the financial sector reached across a broad spectrum of the economy, benefiting stalwarts of American industry including General Electric and Caterpillar and household-name companies such as Verizon, Harley-Davidson and Toyota. The central bank's aid programs also supported U.S. subsidiaries of banks based in East Asia, Europe and Canada while rescuing money-market mutual funds held by millions of Americans. The biggest users of the Fed lending programs were some of the world's largest banks, including Citigroup, Bank of America, Goldman Sachs, Swiss-based UBS and Britain's Barclays, according to more than 21,000 loan records released Wednesday under new financial regulatory legislation."

Fed chair Ben Bernanke and Vice Chair Janet Yellen are campaign for more fiscal stimulus:

Meanwhile, Senate Republicans killed a Democratic job creation proposal:

Fannie Mae and Freddie Mac insist that mortgage servicers spurred the foreclosure crisis, reports Zachary Goldfarb: "Fannie Mae and Freddie Mac defended their role in the foreclosure crisis in prepared testimony to Congress on Wednesday, while at least one federal regulator said the mortgage giants had contributed to the problem. Speaking to the Senate Banking Committee at a hearing on the national foreclosure debacle, Fannie and Freddie executives emphasized that they are not responsible for managing payments by borrowers on home loans or foreclosing on homeowners when they default. These tasks, executives say, are the responsibility of mortgage servicers and law firms with which the companies contract."

Default may be European countries' best option, writes John Cochrane:

Obama's federal pay freeze is dangerous, writes E.J. Dionne: "The idea of freezing the pay of federal workers could be a sensible part of a larger, long-term deal that would combine spending reductions with tax increases. It's an obvious element in any negotiation. But Obama simply threw in the federal workers in exchange for - well, as best I can tell, nothing. And in the short term, shouldn't jobs and rising incomes be a higher priority than austerity? Worse, every signal out of the White House is that it is prepared to cave to Republican demands for a temporary extension of all the Bush tax cuts, including those for millionaires who are in rather less need of additional income than security workers at Logan or nurses at government hospitals."

Adorable animals set to music interlude: A salsa-dancing dog.

Health Care

Sen. Jay Rockefeller held a hearing attacking "mini-med" health plans, reports Reed Abelson: "More than a million Americans enrolled in these plans think they have health insurance to protect them from financial catastrophe if they become seriously ill or hurt, Mr. Rockefeller said. 'In fact, they don’t,' he said. 'It’s worse than nothing because of the false expectations and the false hope,' Mr. Rockefeller said. He and other proponents of the new health care law are voicing concerns about the Obama administration’s recent decision to allow these plans, known as limited benefit or mini-med policies, to escape some of the legislation’s early requirements."

GOP governors are lobbying Congress to ease health care reform's requirements for states:

Minimed plans should be banned, not shamed, writes Timothy Noah: "The hearing's unanswered question was whether HHS got snookered by granting mini-meds three more years of existence. If, as Rockefeller argued (and I'm inclined to agree) mini-med health insurance is not 'better than nothing,' then HHS had no reason to exempt it even temporarily from new requirements under health reform. It would have been useful to have the agency explain its actions at the hearing. But alas, no one from HHS was invited. When, after the hearing, I asked Rockefeller why, he said, 'It would have turned it into a hearing on waivers'...I asked Rockefeller: Was the mini-med waiver justified? 'I think it's just a fact of life,' he sighed. Then why hold a hearing at all? To embarrass McDonald's into giving its hourly workers a better deal on health care? Maybe. Me, I prefer regulation."

Avik Roy runs through the health-care proposals in the fiscal commission's final report:

Domestic Policy

A procedural problem could keep the food safety bill from passing, reports Lyndsey Layton: "After the Senate approved the measure, 73 to 25, staffers learned one section could violate a constitutional provision that calls for any new taxes to originate in the House rather than the Senate. The section in question would impose fees on importers, and on farmers and food processors whose food is recalled because of contamination. If it is determined that those fees amount to taxes, it would essentially nullify the vote by the Senate. The House Ways and Means Committee decides whether the fees are equivalent to taxes. House leaders met behind closed doors Wednesday seeking a way to save the bill."

The DREAM Act has been adjusted to be deficit-neutral:

Republicans have blocked Michelle Obama's child nutrition bill, reports Mary Clare Jalonick: "House Republicans have temporarily blocked legislation to feed school meals to thousands more hungry children. Republicans used a procedural maneuver Wednesday to try to amend the $4.5 billion bill, which would give more needy children the opportunity to eat free lunches at school and make those lunches healthier. First lady Michelle Obama has lobbied for the bill as part of her 'Let's Move' campaign to combat childhood obesity. House Democrats said the GOP amendment, which would have required background checks for child care workers, was an effort to kill the bill and delayed a final vote on the legislation rather than vote on the amendment."

The FCC's net neutrality proposal is running into GOP resistance:

House Republicans will consider spending bills for each department separately, report Jake Sherman and Jonathan Allen: "House Republicans are devising a plan to simplify spending decisions by considering government funding bills on a department-by-department basis in the new Congress, according to Republican insiders. The move would facilitate cutbacks in government programs and, GOP aides say, enhance oversight and accountability for individual agencies, fulfilling promises made by Republicans on the campaign trail and in their Pledge to America. But it would also threaten to complicate an already tattered appropriations process on the House floor and in negotiations with the Senate, which is why the mechanics of the transition are still under discussion."

The future is now interlude: A street-legal TRON light-cycle.


The GOP is abolishing the House climate change panel, reports Robin Bravender: "House Republicans will scrap the committee set up by Speaker Nancy Pelosi to investigate global warming, the panel’s top Republican announced Wednesday. Rep. Jim Sensenbrenner (R-Wis.) made official what many had already expected -- the GOP majority will axe the Select Committee on Energy Independence and Global Warming, which Pelosi created in 2007. 'This hearing will be the last of the select committee,' Sensenbrenner announced. Committee Chairman Ed Markey (D-Mass.) called Wednesday’s hearing to give witnesses a chance to warn of the perils of climate change before the GOP launches efforts next year to roll back the Obama administration’s climate policies."

The Post maps the current state of offshore drilling:

EPA administrator Lisa Jackson is gearing up for a fight with the GOP House, reports Juliet Eilperin: "Jackson's ability to focus on her intellectual priorities have earned plaudits from environmentalists, who see her as one of their most effective champions of public health measures. But it could also put her very mission at risk. As the EPA celebrates its 40th anniversary Thursday, her pursuit of sweeping rules to curb the nation's output of carbon dioxide and other pollutants could trigger a backlash from the newly empowered Republicans in Congress...The White House is being lobbied hard to rein in the EPA when it comes to several proposals, including those on boilers and smog-forming pollutants."

The GOP wants to use the Congressional Review Act to nullify EPA regulations:

Joe Barton could keep fighting for the House Energy and Commerce Committee chairmanship, report Darren Samuelsohn and Jake Sherman: "Joe Barton's quest to lead the House Energy and Commerce Committee might not be over quite yet. While the Texas Republican is expected to lose his chairman’s bid before the influential Steering Committee, he could still appeal to the entire House GOP Conference, seeking the support of rank-and-file Republicans while testing Speaker-in-waiting John Boehner's leadership. Barton on Wednesday told POLITICO that he's not ready to discuss his next steps if the Steering Committee doesn't pick him. Instead, he insisted he will prevail early next week when the secretive Republican steering panel packed with Boehner loyalists makes its decision."

Midterm voters didn't vote for dirty air and water, writes Lisa Jackson:

A climate agreement at Cancun should focus on low-hanging fruit, write Timothy Wirth and John Podesta: "A particularly attractive near-term focus would be on emissions of black carbon -- soot from forest burning, household cooking with wood or coal, and diesel engines. These emissions are the second largest contributor to global warming after carbon dioxide and have a much shorter lifetime in the atmosphere -- weeks, not years. Immediate action with known technologies -- preventing deforestation, using more efficient stoves and cleaner engines -- could slow the effects of climate change for a decade or more."

The White House is banning new offshore drilling on the Atlantic coast or parts of the Gulf of Mexico, report Juliet Eilperin and Steven Mufson: "The Obama administration announced Wednesday that it will not allow offshore oil drilling in the eastern Gulf of Mexico or off the Atlantic coast through 2017, reversing two key policy changes the president embraced in late March. The revised Interior Department drilling plan, which took industry officials and many environmentalists by surprise, will also delay the next two lease sales in the central and western Gulf of Mexico. It marks a sharp political shift by the White House - yanking concessions to conservatives and oil companies - in the wake of the massive BP oil spill and the collapse of comprehensive climate legislation."

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

By Ezra Klein  | December 2, 2010; 6:45 AM ET
Categories:  Wonkbook  
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Next: Andy Stern takes on America's second deficit


FCC Chairman Mr Ruth Marcus is failing...

His proposal is "More bipartisanship", i.e. wholesale adoption of Republican policies (of 2005) by the Obama administration. And just like the federal pay freeze, it is unilateral abdication of a principled rule to accommodate an imaginary (in 2010) concept of bipartisanship. The GOP won't accept a return to Bush policies of 2005.

"These rules of the road are rooted in ideas first articulated by Republican Chairmen Michael Powell and Kevin Martin, and endorsed in a unanimous FCC policy statement in 2005. Similar proposals have been supported in Congress on a bipartisan basis."

Failure to assert Title 2 regulatory rights is horrible but in line with inability to count to 5, which is the number of Supreme Court Justices who will vote to kill the regulations when they finally get to to the Supreme Court.

Posted by: grooft | December 2, 2010 8:07 AM | Report abuse


two stories in healthcare about the minimed plans and Senator Rockefeller foaming at the mouth but NOTHING on a section of SEIU 1199 dropping coverage for children and blaming PPACA (and then backtracking)? I'd like to say I'm surprised.

Maybe if they didn't spend millions pushing reform they could afford to cover their member's children.

Posted by: visionbrkr | December 2, 2010 8:53 AM | Report abuse

"House Democrats said the GOP amendment, which would have required background checks for child care workers, was an effort to kill the bill and delayed a final vote on the legislation rather than vote on the amendment."

HUH? Never heard of this particular legislation, but what am I missing? What is bad about calling for background checks on child-care workers?

Posted by: 54465446 | December 2, 2010 11:47 AM | Report abuse

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