Wonkbook: RSC details $100B in spending cuts; Obama admin appoints GE CEO
You should be watching for three different fights over the budget this year. The two that people are mostly expecting is the fight between Democrats and Republicans on cuts and the fight between Democrats and Republicans on funding the implementation of the health-care law. The one that hasn't gotten as much attention -- but that's actually likely to come first -- is the battle between the Tea Party wing of the Republican Party, which wants to cut the budget by $100 billion this year, and the more establishment-oriented members, who've set their sights substantially lower.
That fight kicked off yesterday when the Republican Study Committee -- which represents two-thirds of House Republicans, including almost 75 freshman -- brought out a package of cuts that'd slash $100 billion from non-defense discretionary spending and bring spending back to 2006 levels in the years after that. But reading their legislation, you can see why more experienced members of their party might balk: $30 billion in savings omes from immediately selling off Fannie Mae and Freddie Mac, which would potentially throw a weak housing market into total chaos. Another $16 billion comes from repealing the help the federal government is giving states to handle Medicaid costs, which would potentially send a couple of states that are already teetering on the edge of bankruptcy right over the cliff. Amtrak would lose pretty much its entire federal subsidy, as would the Corporation for Public Broadcasting and the National Endowment for the Arts. Funding for high-speed rail is eliminated, and so too is more than $40 billion in stimulus funds, most of which are obligated to projects that have already begun.
For all that, this is a healthy document: It shows what very deep cuts in spending would actually look like. Democrats, I imagine, will be quite interested in debating it. Whether or not Republican leadership will be as enthusiastic remains to be seen.
Conservative House Members have proposed an alternative set of budget cuts, reports Lori Montgomery: "Congressional conservatives on Thursday demanded far more dramatic reductions in government spending than House GOP leaders have recently proposed, in the first sign of a fissure between old-guard Republicans and tea-party-backed newcomers. Members of the conservative Republican Study Committee said the GOP must keep its campaign pledge to immediately slice at least $100 billion from non-defense programs, an effort that would require lawmakers to reduce funding for most federal agencies by a third over the next seven months. And the group called for even deeper cuts over the next decade to return non-defense spending to 2006 levels... With 165 members - including 73 freshmen, many of them elected with tea party support - the study committee represents more than two-thirds of House Republicans."
Download the legislation itself: http://bit.ly/dGKdCL
Both sides can claim gains from the US-China summit, reports John Pomfret: "Chinese President Hu Jintao's just-concluded summit with President Obama was a win both for the Communist Party and for Hu himself, demonstrating once again the Chinese government's reliance on ceremony to bolster its standing among its people. China's state-run newspapers ran enormous photographs of Hu with Obama, a not-so-subtle message that China is now the United States' equal on the world stage...The Chinese side, as it often does during summits, brought its checkbook, inking deals for aircraft and other heavy machinery, agricultural products and software that could be worth $45 billion for U.S. firms. China also indicated that it would give U.S. companies better treatment and do more to protect their intellectual property."
GE CEO Jeffrey Immelt will replace Paul Volcker as leader of Obama's economic advisory panel, reports Perry Bacon: "President Obama will restructure one of his economic advisory councils, shifting its focus to job creation and competitiveness and naming General Electric chief executive Jeffrey Immelt as its head, the administration announced early Friday morning. Immelt will lead the newly created President's Council on Jobs and Competitiveness. It will replace the Economic Recovery Advisory Board, which has been chaired by former Federal Reserve Chairman Paul Volcker. In a statement, Obama announced that Volcker will step down next month from his role advising the administration. The council's new leadership and mission reflects the administration's shift from trying to halt the recession to broader efforts to improve the U.S. economy and create jobs."
Boosting manufacturing is key to the recovery, writes Jeffrey Immelt: "The assumption made by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong. But there is nothing inevitable about America's declining manufacturing competitiveness if we work together to reverse it...America cannot expand its manufacturing base without greatly increasing the volume of goods it sells overseas. That is why I applaud the free-trade agreement recently concluded between the United States and South Korea, which will eliminate barriers to U.S. exports and support export-oriented jobs."
Swedish dance-pop interlude: Lykke Li plays "I Follow Rivers" live.
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Still to come: The Fed is heading into its first policy meeting of the year; House Republicans have committed to look into health care reform alternatives; Verizon is suing the FCC over net neutrality; GOP staff is holding private meetings with energy lobbyists; and a British member of parliament forgets to turn off his musical tie while making a speech on the floor.
The Fed faces uneven economic indicators ahead of its latest meeting, report Neil Irwin and Dina ElBoghdady: "As the Federal Reserve gears up for its first policy meeting of 2011, its leaders face the challenge of making sense of an economic picture that is encouraging - including upbeat reports Thursday on housing and unemployment - yet still unnerving. Private economists are generally expecting U.S. economic growth to accelerate a bit in 2011, perhaps to 3.5 percent or so from a pace last year below 3 percent. At their meeting Tuesday and Wednesday, Fed officials will present their own forecasts, which will be made public in mid-February, and discuss the prospects for growth in 2011. The Fed is almost certain to maintain the policy it announced late last year of trying to encourage growth by buying about $75 billion in Treasury bonds each month through June."
Policymakers want to let states declare bankruptcy to avoid a bailout, reports Mary Williams Walsh: "Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers. Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign. But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid...Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout."
Chinese president Hu Jintao held private meetings with member of Congress on economic and other issues: http://wapo.st/f6PMVr
Big banks want to replace Fannie and Freddie with themselves, reports Louise Story: "As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation’s largest banks are offering a few suggestions. Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities -- that would be stamped with a government guarantee...Housing industry consultants and people familiar with recent meetings at the Treasury Department say these banks view the government’s overhaul of the mortgage market as a potential profit opportunity. Treasury officials have met with executives from several institutions, including Wells Fargo, Morgan Stanley, Goldman Sachs and Credit Suisse, according to a public listing of the meetings."
House Republicans might demand a vote on a balanced budget constitutional amendment in return for an increase in the debt limit, report Molly Hooper and Shane D'Aprile: http://bit.ly/fFuf2A
China is mired in a monetary mess, writes Paul Krugman: "The root cause of China’s muddle is its weak-currency policy, which is feeding an artificially large trade surplus. As I’ve emphasized in the past, this policy hurts the rest of the world, increasing unemployment in many other countries, America included. But a policy can be bad for us without being good for China. In fact, Chinese currency policy is a lose-lose proposition, simultaneously depressing employment here and producing an overheated, inflation-prone economy in China itself. One way to think about what’s happening is that inflation is the market’s way of undoing currency manipulation. China has been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage."
Republicans have no clue what they want to cut, writes Brad Plumer: http://bit.ly/g4QIRj
Horrors of war interlude: The avian toll of Angry Birds.
House Republicans say they will begin the "replace" stage of their health care strategy, reports Jennifer Haberkorn: "Fourteen Democrats joined all House Republicans to pass the first step in the 'replace' part of the GOP’s 'repeal and replace' plan for health care reform. The House on Thursday approved a resolution directing four committees to work on alternatives to the health-care reform law Democrats passed last year. It passed 253-175. Republicans say the resolution is just the start of the effort to reshape the Obama administration’s signature legislation. The House voted yesterday to repeal the entire law, but Senate Democrats have pledged to block that effort.
The House leadership is backing bills meant to block health care reform from funding abortions: http://politi.co/gSj7Bq
The continuing Republican attack on the bill's CBO score will have consequences, writes Ezra Klein: "beneath it is something more insidious: an effort to discredit the last truly neutral, truly respected scorekeeper in Washington. The facts don't support the particular case the Republicans want to make, so they're trying to take down the people who supply the facts. But once that's done, it can't easily be undone. And the true loser will be the very thing Republicans claim to care most about: the deficit. If getting the CBO's seal of approval ceases to matter, then political parties will cease to try. That's when the "smoke and mirrors" will really begin: when bills just have to sound good rather than pencil out. When there are no skeptical budget experts sending legislation back to the authors with a note that says, "Sorry, not there yet." When policy debates are decided by who can yell the loudest rather than who can write the best bill."
Replace has to follow repeal, writes Charles Krauthammer: "This does not absolve the Republicans from producing a health-care replacement. They will and should be judged by how well their alternative addresses the needs of the uninsured and the anxieties of the currently insured. But amending an insanely complicated, contradictory, incoherent and arbitrary 2,000-page bill that will generate tens of thousands of pages of regulations is a complete non-starter. Everything begins with repeal."
States are making deep cuts to mental health programs, report Marc Lacey, Kevin Sack, and A.G. Sulzberger: "Unlike many of her fellow governors, Jan Brewer of Arizona knows well the inner workings of her state’s mental health system: her son has schizophrenia and was committed to a state hospital more than 20 years ago after being found not guilty by reason of insanity of sexual assault and kidnapping. Although she rarely speaks of her son’s crisis, Ms. Brewer has long been an advocate for the mental health system, pushing for state money for drugs and community programs. But with Arizona and other states across the country facing huge budget holes, Ms. Brewer and many of her fellow governors in both parties are presiding over what is being described as a dismantling of the safety net for the mentally ill."
Three Senate Democrats are urging the House to reform health care reform's tax reporting requirements: http://wapo.st/fJZIwA
Verizon is suing the FCC over its new net neutrality rules, reports Cecilia Kang: "Just weeks after the Federal Communications Commission adopted its first-ever rules aimed at regulating Internet access, Verizon Communications on Thursday filed a federal lawsuit to overturn the controversial order. Verizon argues that the FCC does not have the legal authority to mandate how Internet service providers treat content on their networks...The FCC's rules are supported by consumer groups and Web giants such as Google and Facebook. Verizon filed its case in the same federal court - the U.S. Court of Appeals for the District of Columbia - that ruled last April that the FCC overstepped its authority in trying to sanction Comcast for blocking Web traffic."
Michelle Obama is partnering with Wal-Mart on a healthy foods program: http://wapo.st/f0QFcE
The Republican Study Committee's budget cuts plan heavily targets federal workers, reports Lisa Rein: "The Republican Study Committee, who unveiled the plan, called their proposal the 'Spending Reduction Act of 2011,' and they said it delivers on campaign promises to cut non-defense spending from the federal budget. It would extend President Obama's pay freeze on federal employees from two years to five, cut the civil service by 15 percent through attrition over a decade, and prohibit federal workers from serving as union officials on government time. The lawmakers claimed these and other changes they proposed would help eliminate $2.5 trillion in spending over that 10-year period. Republicans have already moved this month to reduce congressional salaries by 10 percent and force federal workers to take two-week furloughs."
The public is wary of entitlement cuts: http://nyti.ms/hZ42cC
Great moments in legislating interlude: A musical tie goes off during a speech in the House of Commons.
The GOP is holding closed-door talks with energy lobbyists, report Darren Good and Robin Bravender: "With the backing of GOP caucus leaders, aides for House Energy and Commerce Chairman Fred Upton (R-Mich.) and Senate Environment and Public Works Committee ranking member Jim Inhofe (R-Okla.) are seeking unwavering support from a host of industries for an all-out push to block federal and state climate rules...The roster of those attending the invitation-only gathering is being kept under lock and key, though it is believed to include the American Petroleum Institute, National Mining Association, National Rural Electric Cooperative Association, U.S. Chamber of Commerce, and others."
A key GOP subcommittee chair opposes blocking the EPA's authority to regulate cliamte change: http://bit.ly/gr21ct
Sen. Joe Manchin (D-WV) wants to limit the EPA's ability to regulate mining: http://bit.ly/dNwsim
The EPA is hiring another former Hill staffer to help defend its climate regulations, reports Darren Samuelsohn: "Michael Goo, most recently the staff director of the now-defunct House Select Committee on Energy Independence and Global Warming, will join EPA’s Office of Policy as associate administrator, a job that answers directly to Administrator Lisa Jackson, E&E News reported. Goo spent the past two years working for Select Committee Chairman Ed Markey (D-Mass.), playing a key role in promoting the cap-and-trade bill that passed the House in June 2009...Goo is the latest former Democratic staffer to land in the Obama EPA as it prepares for battle with Republicans over global warming and air pollution regulations. Joel Beauvais, a Markey staffer since 2007, is leaving later this month to be a special counsel in Jackson’s office."
Nancy Pelosi pressed Hu Jintao on climate change: http://bit.ly/gSJHUt
Courts won't let the EPA delay a new regulation, reports Stephen Power: "A federal judge on Thursday rejected the Obama administration's request to delay by more than a year controversial new regulations targeting emissions of mercury and other hazardous air pollutants from industrial boilers. The ruling by U.S. District Judge Paul Friedman is a setback for the White House, which is trying to demonstrate to business leaders that it is prepared to moderate the pace of new regulation. The Environmental Protection Agency, which sought the delay, said it was disappointed by the ruling giving it just an additional 30 days to issue the rules. The EPA in a statement that it would move to issue rules 'significantly different' than the ones the agency proposed in April 2010."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: House GOP Flickr.
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