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Posted at 6:42 AM ET, 12/13/2010

Wonkbook: Senate to move on tax deal today; bill might keep 2 million out of poverty; Senate still dysfunctional

By Ezra Klein

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The tax deal is expected to pass its first test in the Senate today, reports Shailagh Murray: "The Senate will hold a key test vote Monday on the tax package President Obama negotiated with Republicans to prevent rate increases from hitting most American workers starting Jan. 1...Reid spokesman Jim Manley said Reid and Senate Minority Leader Mitch McConnell (R-Ky.) will discuss on Monday whether to allow any amendments to the legislation, a decision that will determine how quickly a final vote can be held. The bill is co-sponsored by Reid and McConnell, a first for two leaders who are typically adversaries, Manley said...The Senate is hoping to complete work on the tax bill on Tuesday, sending it to the House, where Democrats have proved less receptive to the Obama-GOP compromise."

And to keep 2 million people out of poverty, writes Arloc Sherman: "The three provisions are a temporary payroll tax cut and temporary extensions of the 2009 Recovery Act improvements in the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC). In 2011, they would keep the family incomes (after subtracting federal income and payroll taxes) of 2.4 million Americans, including 1.2 million children, above the official poverty line, and
lessen the severity of poverty for 19.4 million poor Americans, including 7.2 million children, by lifting their incomes closer to the poverty line."

The Senate is failing to pass basic legislation, reports Philip Rucker and David Fahrenthold: "Last week, the U.S. Senate failed for the first time in 48 years to pass an annual bill authorizing money for national defense - not over disagreement about the part of the bill that would repeal a ban against gays serving openly in the military but on procedural grounds. Moderate lawmakers inclined to support the bill balked Thursday when a vote was called what they considered to be too soon... An institution designed to chew over legislation slowly, refining and moderating bills passed by the House, now routinely chokes on them...Says Julian Zelizer, a professor of history at Princeton University: 'Partisanship, combined with the rules of the Senate, make for an institution that doesn't like...to act at all.'"

Harry Reid is brokering a deal to confirm judicial nominees, reports Abby Philip: "Senate Majority Leader Harry Reid is negotiating a deal with Republican leaders to confirm a long list of President Barack Obama's judicial nominations that have idled on the Senate calendar for months, sources say. The deal could involve as many as 19 of President Barack Obama’s judicial nominees who the GOP consider non-controversial, but would leave out a shorter list of more liberal nominees Republicans consider objectionable -- setting up another potential disappointment for liberal activists, who have spent months pushing for their confirmation. Senate Republicans have flagged four nominations they want blocked: Goodwin Liu, who was nominated to the 9th Circuit Court of Appeals, and federal district judicial nominees Edward Chen, Louis Butler, and John McConnell."

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

Scot-Rock interlude: Frightened Rabbit's "Skip the Youth".

Still to come: Lenders are taking on more risky borrowers; a federal judge will rule on the constitutionality of health care reform today; the small group of big-bank derivatives traders who dominate the market; the Cancun climate conference ended in a deal; and a man in a pigeon suit prevents pigeon feeding.

Economy

Lenders are extending credit to risky borrowers again, reports Eric Dash: "Credit card offers are surging again after a three-year slowdown, as banks seek to revive a business that brought them huge profits before the financial crisis wrecked the credit scores of so many Americans. The rise is striking because it includes offers to riskier borrowers who were shunned as recently as six months ago. But this time, in contrast to the boom years, when banks 'preapproved' seemingly everyone, lenders are choosing their prospects more carefully and setting stricter terms to guard against another wave of losses. For consumers, the resurgence of card offers, however cautious, provides an opportunity to repair damaged credit and regain the convenience of paying with plastic."

The middle and upper middle classes benefit the most from the tax deal: http://nyti.ms/f7QSNQ

The White House is continuing to express interest in tax reform, reports James Politi: "In a radio interview on Friday, Mr Obama said the 'conversation' on tax reform needed to start next year. He said his aim would be to lower rates for companies and individuals from their current top level of 35 per cent, while curbing a wide range of deductions and subsidies that make the system inefficient...While Mr Obama has asked his economic team to come up with options for discussion, there has not been a policy meeting between the president and other officials on the topic of tax reform. There was also no near-term deadline for officials to make their presentation, one administration official said. But making tax reform a big legislative priority could have significant benefits for the White House, achieving several competing objectives at the same time."

A small group of traders dominate the derivatives market, reports Louise Story: "On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan. The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable -- and controversial -- fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential. Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk. In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks."

The tax deal won't help the US deleverage, writes Paul Krugman: "It’s true that we’re making progress on deleveraging. Household debt is down to 118 percent of income, and a strong recovery would bring that number down further. But we’re still at least several years from the point at which households will be in good enough shape that the economy no longer needs government support. But wouldn’t it be expensive to have the government support the economy for years to come? Yes, it would -- which is why the stimulus should be done well, getting as much bang for the buck as possible...The point is that while the deal will cost a lot -- adding more to federal debt than the original Obama stimulus -- it’s likely to get very little bang for the buck."

Adorable animals chasing themselves interlude: A Boston terrier chases his own shirt.

Health Care

A district court judge will rule on the constitutionality of health care reform today, report Janet Adamy and Evan Perez: "A Virginia federal judge is expected to rule Monday on whether the Obama administration's health law violates the Constitution, opening a new stage in the administration's defense of its biggest legislative achievement. The ruling by District Judge Henry E. Hudson is perhaps the most significant so far among a slew of state-based legal challenges to the law, which also faces attack by newly resurgent Republicans in Congress. More than 20 federal lawsuits have been filed against the health overhaul since President Barack Obama signed it in March."

The government's dependence on the American Medical Association drives up health costs, writes Uwe Reinhardt: "The RUC is a group of 29 physicians drawn from a variety of medical specialties. It was established by the A.M.A. in 1991 to advise the C.M.S. on recalibrations of the relative value scale underlying the Medicare fee schedule...As it happens, however, the C.M.S. tends to accept the RUC’s recommendations on RVU changes more than 90 percent of the time, which effectively makes the RUC the final arbiter in these matters. I do not believe that slavish acceptance of the RUC’s recommendations is a good thing, if only because the physicians on the RUC do labor under at least the appearance of a conflict of interest."

Domestic Policy

The GOP House is set to block most of Obama's education agenda: http://nyti.ms/f0bEpA

Regulatory reform would spur economic growth, writes Senator Mark Warner: "Now, no one is seriously questioning the need for common-sense rules of the road to protect American consumers, public health and our environment, especially in the wake of the BP oil-rig blowout in the Gulf of Mexico and the 2008 near-meltdown of several of our nation's leading financial firms. But our current regulatory framework actually favors those federal agencies that consistently churn out new red tape. In this town, expanded regulatory authority typically is rewarded with additional resources and a higher bureaucratic profile, and there is no process or incentive for an agency to eliminate or clean up old regulations."

Great moments in law enforcement interlude: A man in a pigeon costume prevents pigeon feeding.

Energy

The Cancun conference ended with a series of agreements, reports Fiona Harvey: " global agreement on climate change moved a step closer over the weekend as governments ended the UN Cancún talks with a series of accords on key elements of an overarching deal. A 'green fund' that will distribute money to help poor countries cope with climate change, a mechanism for international co-operation on low-carbon technology, and a way to help developing nations preserve their forests all emerged from the two weeks of negotiations in the Mexican resort of Cancún. Countries will now continue to work towards agreement on other elements, such as the legal form a new deal could take, and the future of the Kyoto protocol - the current provisions of which expire in 2012."

The EPA is defending its rule delays: http://bit.ly/hf7cZW

The US may not live up to its international climate commitments, reports Darren Samuelsohn: "Obama administration officials insist they are full-steam ahead with their pledge to help create a $30 billion short-term fund to help developing countries keep their forests standing, gain access to low-carbon energy technologies and adapt to rising seas, extreme weather and new crop patterns...Republican Sens. Jim Inhofe (Okla.), David Vitter (La.), John Barrasso (Wyo.) and George Voinovich (Ohio) urged Clinton last week to freeze all future spending requests related to international climate change finance programs and make no new commitments."

A federal court rejected an attempt to block EPA climate rules: http://bit.ly/h355ys

The Los Angeles-San Francisco high speed rail project is starting slow, reports Josh Mitchell: "California's plan for high-speed rail service envisions bullet trains zooming from Sacramento to San Diego. To start off, the state intends to spend $4.3 billion to build a 65-mile stretch of track and stations linking two small towns in rural Central Valley. Proponents of high speed rail say building this portion of track is a good way to launch a multiyear building program. Critics call the project the 'train to nowhere' and are using it to fuel a broader attack on the Obama administration's rail strategy...Congress is signaling it could cut spending for high-speed rail across the board."

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

By Ezra Klein  | December 13, 2010; 6:42 AM ET
Categories:  Wonkbook  
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Next: What the Filibernie showed about filibusters

Comments

"The government's dependence on the American Medical Association drives up health costs, writes Uwe Reinhardt:"

Reinhardt didn't say that at all. Physician reimbursement under Medicare is a zero-sum game. All the AMA can do, through its delegates on the RUC, is to increase payments for some services at the expense of others. Since the RUC is dominated by specialists obviously that contributes to specialists being paid much more than primary care doctors.

Posted by: bmull | December 13, 2010 7:38 AM | Report abuse

Scot-Rock interlude? How about them Trashcan Sinatras?

http://www.youtube.com/watch?v=aXBsZxyPgws

Or We Were Promised Jetpacks:

http://www.youtube.com/watch?v=G5ZhBAylbN4

Posted by: franklynch2 | December 13, 2010 8:01 AM | Report abuse

bmull,


but while the per unit cost by rule remains constant that doesn't obviously reflect the overall total cost which has exploded (hence the need for long term budget planning to try to rein in healthcare costs in Medicare).

If nothing else Mr. Reinhardt is right that we need to balance out the conflict of interest with third parties with no specific stake in the game.

Its like giving the banks a pile of money and saying how they want to divy it up with no strings attached. We wouldn't or shouldn't do that would we?

Posted by: visionbrkr | December 13, 2010 8:28 AM | Report abuse

"Regulatory reform would spur economic growth, writes Senator Mark Warner."

I'm with Atrios on this one: if Sen. Warner can't name a single example of the problem he identifies, why should we believe it's a problem?

He refers to "executives' belief that Washington regulators are stifling fresh investment and discouraging innovation through new rules and requirements."

Why should I give a good goddamn what executives BELIEVE? How about some mf'ing FOR-INSTANCES?

Warner says, "According to the U.S. Small Business Administration, the estimated annual cost of federal regulations in 2008 exceeded $1.75 trillion. The Office of Management and Budget says that the federal government has issued more than 132,000 final rules since 1981, and over 1,200 of those rules have an estimated economic impact of greater than $100 million each."

OK, then: wouldn't it have been a cinch to have a few staffers go through those 1,200 most costly regulations, and pick out a few of the worst offenders?

Or maybe, after 30 years of Reagan, and Veep Dan Quayle's Council on Competitiveness, and the Gingrich Congress, and the Dubya Presidency, the vast majority of the regulations that didn't make sense and had a real cost to them have been deep-sixed - along with too many that were really needed to protect the citizenry from corporate malfeasance.

What Warner is providing in his op-ed is an *opinion* and nothing more. It's not worth the electrons it was printed on.

Posted by: rt42 | December 13, 2010 9:35 AM | Report abuse

"Senate still dysfunctional" and Generalissimo Francisco Franco is still dead.

Posted by: mikijourdan | December 13, 2010 9:44 AM | Report abuse

I agree with Krugman on his last statement, and I haven't even spent the weekend in rehab. Just trying to be honest with the facts, no matter my opinion of the bearer of the message!

Posted by: 54465446 | December 13, 2010 10:12 AM | Report abuse

I was expecting HSR to become the greatest boondoggle in America with the terminal illness of ethanol. However, I greatly underestimated the ability of the Senate to revive a dead man. For now, high-speed rail will have to remain in a strong second place.

Posted by: 54465446 | December 13, 2010 10:16 AM | Report abuse

"The GOP House is set to block most of Obama's education agenda"

This would be good, if only the GOP didn't have their own stupid agenda to flush (at best a slightly smaller amount of) taxpayer dollars down the toliet.

The feds have been flushing billions of dollars down the drain for nearly half a century under the guise of improving education. The results are predictable:

http://www.cato-at-liberty.org/chart-of-the-day-federal-ed-spending/

"But with Republican deficit hawks taking control of the House next month, Education Secretary Arne Duncan will no longer have billions of dollars to use at his discretion."

"Republicans deficit hawks"? Really?

While it is good that one man no longer has billions worth of other people's money to blow at his discretion, it's not like the money will be going back to taxpayers. There is a bridge in Minnesota that Bachmann needs to fund - but please, don't call it an earmark.

http://washingtonindependent.com/104616/bachmann-uncomfortable-over-earmarks-ban

Posted by: justin84 | December 13, 2010 10:39 AM | Report abuse

At no cost to taxpayers, the AMA is proud to convene the RUC, an expert panel of volunteer physicians who make recommendations on how to value the work and resources involved in patient care. The RUC’s recommendations to Medicare help divide up the payment pie, but don’t increase or decrease the amount of government spending on physician services. The RUC makes recommendations, and CMS makes payment decisions. Because the RUC applies its considerable clinical expertise to the issues and follows Medicare payment policy and guidelines, the vast majority of its recommendations are accepted by CMS. The reality is that no other group exists to undertake this difficult work, and when the government was unable to review overvalued services the RUC added this to its workload.

The RUC often recommends increases for primary care services. The fact is that RUC recommendations have resulted in $4 billion in annual increased payments for office and hospital visits – the most common services performed by a primary care physician. In fact, the American Association of Family Physicians recently shared with their members information on improvements stemming from the work of the RUC to increase values for primary care services: http://www.aafp.org/online/en/home/publications/news/news-now/practice-management/20101201cptcodesrise.html.

Posted by: AmericanMedicalAssn | December 13, 2010 3:33 PM | Report abuse

At no cost to taxpayers, the AMA is proud to convene the RUC, an expert panel of volunteer physicians who make recommendations on how to value the work and resources involved in patient care. The RUC’s recommendations to Medicare help divide up the payment pie, but don’t increase or decrease the amount of government spending on physician services. The RUC makes recommendations, and CMS makes payment decisions. Because the RUC applies its considerable clinical expertise to the issues and follows Medicare payment policy and guidelines, the vast majority of its recommendations are accepted by CMS. The reality is that no other group exists to undertake this difficult work, and when the government was unable to review overvalued services the RUC added this to its workload.

The RUC often recommends increases for primary care services. The fact is that RUC recommendations have resulted in $4 billion in annual increased payments for office and hospital visits – the most common services performed by a primary care physician. In fact, the American Association of Family Physicians recently shared with their members information on improvements stemming from the work of the RUC to increase values for primary care services: http://www.aafp.org/online/en/home/publications/news/news-now/practice-management/20101201cptcodesrise.html.

Posted by: AmericanMedicalAssn | December 13, 2010 3:46 PM | Report abuse

Thou doth protest too much, AmericanMedicalAssn. It's a huge privilege for an organization which doesn't even represent the majority of physicians to be allowed input into how they are paid. The AMA uses this power shrewdly, wielding primary care doctors as "human shields" to protect specialists from cuts. Ask anyone why it would not be sensible to have a separate RUC for primary care services and he or she will agree that sounds like a sensible idea. Ask the AMA and you will get your head bitten off.

Posted by: bmull | December 13, 2010 8:23 PM | Report abuse

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