Wonkbook: Senate will vote on tax deal today; House looks to change estate provisions; Admin's housing plans criticized
If you're a deficit hawk, today's Wonkbook won't be easy reading for you. We lead with the tax vote, of course. The $858 billion package does more damage to the deficit than anything other piece of legislation passed during the Obama presidency. It's also expected to receive the largest bipartisan majority of any major piece of legislation the Senate has considered in the last two years.
The lame-duck Congress is also likely to pass an omnibus spending bill that's chockfull of earmarks -- and plenty of them are going to Republican senators like Mitch McConnell, who've now come out against the practice, and many of them were requested by Democratic senators even after the White House begged them to give up on the earmarks this year. It's not exactly a great sign if you were hoping an earmark moratorium would stick. And nor is it a great sign if you're looking for divided government to be more fiscally responsible. The only thing Democrats and Republicans really seem able to agree on is spending money.
Senate Democrats have delayed their vote on the tax deal till this afternoon, reports Lori Montgomery: "Senate leaders...postponed a vote on the $858 billion package until Wednesday afternoon. Despite the delay, the measure was expected to sail through the Senate with even stronger support than it received in a test vote this week, when 83 senators voted to advance the package in the strongest bipartisan vote on a major initiative since President Obama took office."
But House Democrats want to change the estate tax portion of the deal before passing it. "After meeting for two hours with rank-and-file lawmakers late Tuesday, senior Democrats said the House is likely to stage votes to change the terms of a revived estate tax that many Democrats view as overly generous to the wealthy. Outraged by the agreement to exempt individual estates worth as much as $5 million from taxation, senior Democrats said they would press to lower the threshold to $3.5 million. They also want to impose a stiffer tax on larger estates, by setting the rate at 45 percent rather than the 35 percent demanded by Republicans and agreed to by Obama. Those are the same terms that were in effect in 2009."
House leadership member Rep. Chris van Hollen makes the case against the deal's estate tax provisions: "The Kyl estate tax provision will not help economic growth or jobs, and it was not even necessary to the core deal. It was added in exchange for extending certain tax credits that were included in the 2009 Recovery and Reinvestment Act, but it was fundamentally not a fair trade. The cost of the tax credits and the cost of what would have been the common-sense estate tax compromise are essentially the same - a fair and equal trade. But instead of striking that deal, the administration acceded to Kyl's long-standing quest to give a huge break to the top three-tenths of 1 percent of the nation's wealthiest estates."
A Congressional watchdog is condemning the administration's mortgage modification plan, reports Brady Dennis: "The Treasury Department's primary foreclosure-prevention program has failed to live up to expectations and has suffered from a lack of 'meaningful goals,' according to a report from a congressional watchdog panel due out Tuesday. The government's Home Affordable Modification Program, or HAMP, is on pace to prevent 700,000 to 800,000 foreclosures - a significant figure, but far fewer than the 3 million to 4 million struggling homeowners Treasury officials originally hoped to help, according to the bipartisan Congressional Oversight Panel."
Got tips, additions, or comments? E-mail me.
Want Wonkbook delivered to your inbox or mobile device? Subscribe!
Swedish pop interlude: jj's "Voi Parlate, Io Gioco".
Still to come: The Fed is staying the course on quantitative easing; the Obama administration is appealing a district court's ruling against health care reform; judicial nominations are being blocked at a historic rate; renewable energy is losing a lot of federal support; and a mashup of movies from 2010.
The Fed is staying the course on quantitative easing, reports Neil Irwin: "Interest rates are marching upward, making it more expensive to take out a mortgage or get a loan to expand a business, and diluting efforts by Congress and the Federal Reserve to strengthen the economy. The rise is partly because of good news: The outlook for growth has improved, putting less pressure on investors to keep their money in ultra-safe bonds. When there's less demand for bonds, their interest rates - or yield - go up to attract more investors...The climb in interest rates is confounding the Fed's efforts as it tries to bring down rates by buying $600 billion in Treasury bonds. The central bank affirmed that it would stay on course with those plans Tuesday after a policy meeting."
Obama will caucus with CEOs today: http://wapo.st/eNB6g1
The Senate's omnibus spending bill contains millions in earmarks, report Philip Rucker and Paul Kane: "The $1.2 trillion bill, released on Tuesday, includes more than 6,000 earmarks totaling $8 billion, an amount that many lawmakers decried as an irresponsible binge following a midterm election in which many voters demanded that the government cut spending...Senate Minority Leader Mitch McConnell (R-Ky.) epitomizes the conflicted nature of the debate. Formerly a member of the committee that doles out earmarks, McConnell reluctantly embraced a moratorium on the practice last month to send a signal that Republicans are serious about curbing spending. Yet the legislation includes provisions requested this year by McConnell, including $650,000 for a genetic technology center at the University of Kentucky."
The SEC is in a budget battle with Congress, report Jean Eaglesham and Victoria McGrane: "The Securities and Exchange Commission is slowing the pace of some investigations and routine inspections as part of a belt-tightening caused by the budget impasse in Congress. Agency officials recently postponed gathering testimony from witnesses in a number of probes into potential wrongdoing, according to people familiar with the situation. And some previously scheduled audits of financial firms outside Washington have been put on hold because the SEC won't pay travel costs for investigators until an agreement is reached on the agency's funding for the current fiscal year...Republican gains in both houses of Congress have increased speculation that the 12% budget increase proposed for the SEC by President Barack Obama won't be approved."
Gene Sperling, Robert Altman, and Yale president Richard Levin are in the running to replace Larry Summers: http://bit.ly/flqlOC
The financial industry is fueling inequality, writes Tyler Cowen: "Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500... In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society."
Economic inequality didn't cause the financial crisis, writes Edward Glaeser: http://nyti.ms/gR7xap
Inheritance is a form of income and should be taxed as such, writes Ray Madoff: "Americans seem little inclined to resist wealth concentration. Efforts to impose taxes geared to the wealthy are lambasted as promoting class warfare...Missing from the debate has been any discussion of what level of tax is appropriate for heirs. Few Americans may realize that money received by gift, inheritance or life insurance is entirely free from income taxes. Of course, this made sense when there was a strong estate tax. But there is no other reason inherited wealth should not be taxed the same as wages, lottery winnings and all other forms of income."
Stupid college student tricks interlude: Emerson College students lipdub Lady Gaga.
The US will appeal the anti-health care reform court ruling, reports Jess Bravin: "The Justice Department said it would appeal a decision invalidating a core provision of the federal health-care overhaul, the next skirmish in a constitutional struggle likely to reach the Supreme Court before the 2012 presidential election. On Monday, a federal district judge in Richmond, Va., ruled that Congress lacked authority to compel individuals to carry health coverage. If ultimately upheld, the decision would undercut a core feature of the national insurance market envisioned by the Patient Protection and Affordable Care Act. The Obama administration is bracing for another possible setback in Pensacola, Fla."
GRAPHIC - The status of all 24 legal challenges to health care reform: http://wapo.st/h8YibJ
Conservatives always cast increased government protection as a threat to freedom, writes David Leonhardt: "The federal income tax, a senator from New York said a century ago, might mean the end of 'our distinctively American experiment of individual freedom.' Social Security was actually a plan 'to Sovietize America,' a previous head of the Chamber of Commerce said in 1935. The minimum wage and mandated overtime pay were steps 'in the direction of Communism, Bolshevism, fascism and Nazism,' the National Association of Manufacturers charged in 1938...This year’s health care overhaul has now joined the list."
40 percent of those eligible for Medicaid do not sign up. Here's why: http://slate.me/dZbkGj
Obama's judges are being blocked at a historic rate, reports Ryan Grim: "The Senate has overseen the slowest pace of judicial staffing in at least a generation, with a paltry 39.8 percent of Obama's judges having been confirmed, according to numbers compiled by Senate Democrats. Of the 103 district and circuit court nominees, only 41 have been confirmed. By this time in George W. Bush's presidency, the Senate had confirmed 76 percent of his nominees. President Clinton was working at a rate of 89 percent at this point in his tenure. While the confirmation process is slower now (a function of a packed legislative calendar and Republican obstruction), Obama's nominating pace also lags behind his predecessors."
High speed rail is viable, writes Ryan Avent: http://bit.ly/gv8UCf
Google is behaving monopolistically, writes Steven Pearlstein: "Since Google generally has little existing presence in the market segments of the companies it buys, regulators fear that they will be unable to prove to skeptical judges that any one transaction will substantially lessen competition. One at a time, these deals might appear to be relatively benign. But taken together, they allow Google to increase the scale and scope of its activities and to further enhance its controlling position across a range of sectors. Moreover, by swooping in and buying these promising firms, Google forecloses on the possibility that they might be purchased by companies such as Microsoft or Facebook, which could use them to mount a serious challenge to Google's dominant position."
Supercut interlude: 2010 in film, in mashup form.
Federal money for renewable energy is drying up, reports Heidi Moore: "Congress seems to have dispensed with one major program that has been a boon to solar and wind companies: a grant program that provides 30 percent of the cost of developing alternative energy projects through tax breaks. That has disappeared from the Congressional agenda twice, including in the tax-cut bill that Congress is working on. The end of the tax breaks are likely to result in the loss of about 15,000 jobs, according to industry estimates...The tax bill also does not provide any more money for an advanced manufacturing tax credit -- a $2.3 billion program that gave tax breaks to companies that manufacture solar energies."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House.
Posted by: lauren2010 | December 15, 2010 7:32 AM | Report abuse
Posted by: lauren2010 | December 15, 2010 7:35 AM | Report abuse
Posted by: Islewood | December 15, 2010 7:36 AM | Report abuse
Posted by: visionbrkr | December 15, 2010 7:37 AM | Report abuse
Posted by: lauren2010 | December 15, 2010 7:39 AM | Report abuse
Posted by: lauren2010 | December 15, 2010 8:15 AM | Report abuse
Posted by: visionbrkr | December 15, 2010 8:33 AM | Report abuse
Posted by: visionbrkr | December 15, 2010 8:52 AM | Report abuse
Posted by: MosBen | December 15, 2010 9:04 AM | Report abuse
Posted by: eggnogfool | December 15, 2010 9:41 AM | Report abuse
Posted by: willows1 | December 15, 2010 9:51 AM | Report abuse
Posted by: willows1 | December 15, 2010 9:57 AM | Report abuse
Posted by: willows1 | December 15, 2010 10:00 AM | Report abuse
Posted by: lauren2010 | December 15, 2010 10:04 AM | Report abuse
Posted by: 54465446 | December 15, 2010 10:23 AM | Report abuse
Posted by: 54465446 | December 15, 2010 10:31 AM | Report abuse
Posted by: willows1 | December 15, 2010 11:01 AM | Report abuse
Posted by: 54465446 | December 15, 2010 11:25 AM | Report abuse
Posted by: lauren2010 | December 15, 2010 1:03 PM | Report abuse
Posted by: lauren2010 | December 15, 2010 1:04 PM | Report abuse
Posted by: 54465446 | December 15, 2010 3:29 PM | Report abuse
Posted by: eggnogfool | December 15, 2010 3:48 PM | Report abuse
Posted by: 54465446 | December 15, 2010 4:00 PM | Report abuse
Posted by: visionbrkr | December 15, 2010 4:27 PM | Report abuse
Posted by: visionbrkr | December 15, 2010 5:00 PM | Report abuse
Posted by: 24279lbva | December 16, 2010 1:04 AM | Report abuse
Posted by: lauren2010 | December 16, 2010 1:16 AM | Report abuse
Posted by: robertaviles | December 16, 2010 3:50 AM | Report abuse
Posted by: visionbrkr | December 16, 2010 7:56 AM | Report abuse