We're 16 days away from infrastructuregeddon. Actually, that doesn't sound so good. Highwaygeddon? No. Surface transportationgotterdammerung? Sorry, this issue doesn't really lend itself to "armageddon" portmanteaus. At any rate, we're 16 days away from the last surface transportation bill -- the primary vehicle by which we fund infrastructure in this country.
In recent years, however, the easiest bill has become a lot more difficult to pass. The last long-term highway bill was signed in 2005. It expired in 2009. Since then, Congress has passed eight short-term stopgaps. It hasn't been able to agree on a longer-term solution.
On Wednesday, the Senate managed to pass a two-year highway bill with 74 votes. The legislation was cosponsored by Sens. Barbara Boxer (D-CA) and Jim Inhofe (R-OK). At $109 billion, it's approximately two-thirds as large as the infrastructure request President Obama made in his budget. It also leaves some systemic problems in the infrastructure space -- including that the gas tax is no longer sufficient to fund the needed transportation investments and so it either needs to be raised or supplemented -- unsolved. But it at least gives states a bit of predictability in making infrastructure investments for the next few years.
The next stop is the House, which has been having serious problems passing a transportation bill. Speaker John Boehner put a lot of muscle behind a five-year proposal from Rep. John Mica (R-FL). That legislation would have used the transportation bill as a vehicle to pass a number of provisions related to domestic energy production. It also made significant changes to the way funding for mass transit was allocated. Transportation Secretary Ray LaHood -- a former Republican Congressman from Illinois -- called it "‘the worst transportation bill I’ve ever seen." It failed.
Now Boehner looks likely to take up the Senate bill. And if he fails, and nothing passes by March 31, and, all at once, state access to infrastructure funding dries up, and tens of thousands of construction workers are fired, and it becomes even more difficult for states to trust that they can plan long-term infrastructure investments that rely on Congress not doing an incredibly terrible job? Well, as you saw at the top, I don't have a great word for what will happen. But it'll be bad.
1) Senate leaders struck a deal on judicial nominees. "Senate leaders on Wednesday reached an agreement on a group of President Obama’s judicial nominees, avoiding a showdown that could have brought the chamber to standstill. Majority Leader Harry Reid (D-Nev.) cancelled cloture votes on 17 of Obama's nominees set to begin on Wednesday afternoon after reaching the deal with Senate Minority Leader Mitch McConnell (R-Ky.). Under the agreement, the Senate will put 14 of the 17 judicial nominees up for a vote by May 7th at a pace of two per week, according to a Senate Democratic aide...McConnell claimed some victory, noting that as part of the agreement, the Senate would turn next to the JOBS Act that was passed by the House last week. Senate Republicans have been pushing for action on the bill, but Reid said the judicial nominees needed to be dealt with first." Josiah Ryan in The Hill.
2) The Senate passed a two-year transportation spending bill. "The bipartisan bill was approved 17 days before current transportation funding and authority to collect the federal gas tax that support it are due to expire. After efforts to move a House transportation bill stalled last week, the Senate bill might hold the only chance that legislation reaches the White House before the deadline. It won broad support, passing on a vote of 74 to 22...The $109 billion Senate bill bridges a funding gap by raising almost $10 billion with several moves that critics have denounced as gimmicks. One would transfer $3.7 billion from a trust fund established to pay for damage caused by leaking underground storage tanks. An additional almost $2.8 billion would be raised by ending a tax credit for paper manufacturers, and hundreds of millions more are projected to roll in by pursuing delinquent taxpayers." Ashley Halsey III in The Washington Post.
Brad Plumer runs through the Senate bill's features: http://wapo.st/xZrCLn
3) The GOP is set to unveil a plan for deeper budget cuts. "Republicans are likely to unveil a budget plan next week that will cut 2013 federal spending below the level the two parties negotiated last August, prompting Democrats to complain that they are reneging on the agreement. GOP leaders respond that the figure, reached after tough talks and sacrifices by both sides, always was intended as an upper limit, not an ironclad amount. The two parties set a level of $1.047 trillion in discretionary spending for the fiscal year that begins in October after bitter fighting over whether and how to raise the nation's debt ceiling...Now, some House conservatives are pushing to spend less than that, and GOP leaders appear ready to agree...Some Republicans want to cut the 2013 discretionary spending figure to $1.028 trillion, an amount set out in an earlier GOP budget. Others want to go further and cut spending to $931 billion; they say that would put the government on the path to a balanced budget." Naftali Bendavid in The Wall Street Journal.
4) A Republican House member is set to propose a surtax on millionaires. "Freshman Republican Rep. Rick Crawford will propose a surtax on millionaires Thursday morning, a crack in the steadfast GOP opposition to extracting more money from the nation’s top earners. The Arkansas Republican will unveil the plan during a local television interview Thursday morning, and plans to introduce legislation when the House returns next week, according to sources familiar with his thinking. Crawford will propose the additional tax-- expected to be north of 2.5 percent -- on individual income over $1 million as part of a broader fiscal responsibility package...'He’s watched the Gangs of Six and 100 and deficit commissions, as well as leadership’s budget and tax plan, and he feels there will never be a deal that will pass the Senate without a revenue component,' a Crawford aide said, describing the legislation without attribution because it has not yet been officially announced." Jake Sherman in Politico.
5) Goldman Sachs is under fire. "Goldman Sachs Group Inc. said it will examine claims by an employee who quit Wednesday that executives 'callously' talk about 'ripping their clients off' in order to make more money for the securities firm. The pledge was part of a daylong scramble by the New York company to contain potential damage from the public attack. The employee, 33-year-old Greg Smith, wrote in the New York Times that he had decided to walk away from his 12-year career at Goldman because of the firm's 'toxic and destructive' culture--a 1,270-word denunciation that ricocheted around the world in sharply divided tweets, Facebook comments and blog posts. At Goldman, the op-ed prompted anger toward Mr. Smith and new introspection among executives stung by persistent outside criticism of the company since the financial crisis began." David Enrich and Liz Rappaport in The Wall Street Journal.
@noamscheiber: The fact that there was ever this bygone era at Goldman where making money wasn't the most important thing is highly implausible.
@Atrios: am i wrong that the narrative seems to be converging on "of course goldman exists to rip off their clients." is that supposed to help?
@morningmoneyben: I think it's too easy and flip to say of COURSE Goldman exists to make money. That's certainly true. But how you do it matters.
1) WESSEL: It's too early to claim victory on the recovery. "The Fed said this week it sees 'moderate' growth ahead, which in Fedspeak is a smidgen more upbeat than the 'modest' growth it previously anticipated. But there are storm clouds ahead...The single biggest economic cloud on the horizon is the rising price of oil and gasoline, which is increasing inflation and depressing growth. Even if oil prices don't climb further, the increase to date will shave 0.2 percentage point off first-quarter growth and 0.5 off the second, Laurence Meyer of Macroeconomic Advisers estimates. That's a big deal. And as long as the confrontation with Iran persists, oil prices are likelier to keep climbing than to fall. The U.S. economy feels better than it did a few months ago. Signs of strength are proliferating. That's undeniable, and encouraging. But there are too many warning lights blinking in the cockpit for Capt. Bernanke to turn off the seat-belt sign and say it's safe to walk around the cabin." David Wessel in The Wall Street Journal.
2) KLEIN: Americans Elect won't work as a third party, but they may work as an alternative primary process. "Although Americans Elect is often marketed as a third party, its founders point out that it’s no such thing. 'It’s not about dropping your ideological framework,' says Elliot Ackerman, the chief operating officer of Americans Elect and son of Peter Ackerman, the group’s main funder. 'That’s unnecessary. What is truly the innovation here is the second nominating process.' Here’s what he means: The group’s real accomplishment is having secured ballot lines in all 50 states. That’s not easily done. Different states have different rules for getting on the ballot, and the rules can be both complicated and costly to follow. (Consider Virginia, where Mitt Romney and Ron Paul were the only two Republican presidential candidates to make their party’s primary ballot.) Kahlil Byrd, the chief executive officer of Americans Elect, estimates that the organization has spent about $15 million clearing ballot hurdles in the states...Americans Elect plans to throw the independent-minded a ballot line. Candidates can run on the Americans Elect line, but still caucus with the Democrats, the Republicans or no party at all. In effect, the goal isn’t to create a new party, but to provide a new path for moderate members of the two reigning parties." Ezra Klein in Bloomberg View.
3) WILL: Union contracts in some cities are absurd. "Sal DiCiccio says he’s sorry. It is, he says, no excuse that the complex labor contracts that he, as a member of the city council, voted to ratify for city employees were presented to the council less than a week before the vote. He says he should have seen that the contracts contain some indefensible, not to mention unconstitutional, provisions, such as those pertaining to 'release time.' Read on, and then find out if similar things are occurring in your community. They probably are." George Will in the Washington Post .
4) RATTNER: Washington deserves kudos for the stress tests. "Tuesday’s release by the Federal Reserve of the results of its annual round of 'stress tests' of the 19 largest American banks was yet another confirmation of the deftness with which the US government has handled the financial crisis. In stark contrast to the feeling of ennui that has often accompanied Europe’s initiatives to shore up its own financial system, the latest news from Washington was greeted with enthusiasm, with share prices jumping 1.8 per cent by the end of the day and the S&P financials index up by 3.9 per cent...Pernickety commentators will no doubt continue to find fault with the handling of the financial crisis. But as we say in America, anyone can call plays from the grandstand. As someone who was on the field for a bit of the game, I offer only commendations to both the Bush and Obama administrations for their post-Lehman Brothers handling of a daunting set of challenges." Steven Rattner in The Financial Times.
5) POLLOCK: Sovereign debt crises are inevitable. "As European banks and other investors today gaze sadly on government promises to pay, it is essential to ask: Who promotes loans to governments? The answer is that governments promote loans to governments. They have an obvious self-interest in promoting loans to themselves and to other governments they wish to help or influence. Banks are extremely vulnerable to pressure from governments--the more regulated they are, the more vulnerable. Employees of government bureaucracies have an incentive to encourage loans to their political employers--an inherent conflict of interest...Because governments always promote government debt and can induce or pressure banks into buying it, future sovereign debt crises are inevitable." Alex Pollock in The Wall Street Journal.
Jonathan Alter profiles Mayor Rahm: "Rahm does seem much happier than he did a couple years ago, when I interviewed him at the White House. After he took office last spring, he joked to his predecessor: “Rich, you lied to me. You said this is a good job. It’s actually a great job. If I’d known how great, I would have primaried you.” These are the kinds of stories that generate affection. Bruce Reed, currently Vice President Biden’s chief of staff and a co-author with Emanuel of the 2006 book The Plan: Big Ideas for America, likes to say that those who don’t hate Rahm love him a lot. Even his intensity can be endearing. “Lunch with Rahm is like speed dating,” Dick Durbin, the senior senator from Illinois, told me. “He’ll bring up 30 items in an hour, and if you’re late, he’ll squeeze the 30 into 30 minutes.”
Annie Lowrey searches for a missing programmer: "But just a few months after launching it, to the astonishment of the community of Ruby programmers who treated him with something approaching messianic worship, _why vanished. On Aug. 19, 2009, his personal site stopped loading. He stopped answering email. A public repository of his code disappeared. His Twitter account—gone. Hackety Hack—gone. Dozens of other projects—gone. The popular Ruby message boards, listservs, and blogs descended into a state of panic. Had he been hacked? Who had heard from him? Was he in physical danger? And there was one especially pressing question, the irony of which hardly went unnoticed by passionate Rubyists: Why?"
Instrumental hip hop interlude: Nujabes "Reflection Eternal."
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Still to come: Import prices jump; a new push to stop smoking; broadcasters don't want to put campaign ad spending online; coal is on the decline; and a baby meets bubbles for the first time.
The euro zone's newly signed treaty is facing complications. "After an initial burst of enthusiasm from Europe’s leaders that a just-signed fiscal discipline treaty would be the first step towards a eurozone economic union, the pact has hit political headwinds, raising concerns that support is thin and ratification could fail in several countries. The most recent complication came on Wednesday in the Netherlands, where both frontrunners for the pro-European Labour party said they would vote against the pact if the government capitulated to a Brussels-mandated deficit target of 3 per cent of economic output in 2012, which would require new cuts. Labour is the swing vote in the Dutch parliament on eurozone issues. The potential Dutch rejection follows Ireland’s decision to put the treaty to an uncertain referendum, Germany’s difficulty in getting a requisite two-thirds majority for the pact in the Bundestag, and French presidential frontrunner Francois Hollande insisting he will force a rewrite if elected in May." Peter Spiegel and Matt Steinglass in The Finacial Times.
Disagreement over the Export-Import Bank is holding up a jobs bill. "A fight over a small export credit agency is dividing Congress and holding up a popular bipartisan jobs bill. The Export-Import Bank -- a self-financing agency that helps to facilitate the sale of American goods overseas -- needs Congressional reauthorization by the end of May. It is also close to hitting its $100 billion lending cap, hobbling its ability to offer new loans, and has asked Congress to raise its financing limit. With those two issues at hand, Congress is arguing over the bank’s future, with some Republicans floating a proposal that might end up abolishing the bank, and Senate Democrats hoping to force its expansion and reauthorization by attaching it to jobs legislation. On Wednesday, Senator Maria Cantwell, Democrat of Washington, introduced an amendment to keep the bank running through 2015 and to increase its loan limit to $140 billion. Senator Lindsey Graham, Republican of South Carolina, is cosponsoring the amendment." Annie Lowrey in The New York Times.
Rising energy costs caused import prices to jump. "Rising petroleum costs pushed U.S. import prices up in February for the first time in three months, hinting at new inflation pressures. Separately, the U.S. current account deficit widened in the fourth quarter of last year to its highest level in three years, as exports slumped and foreigners slowed investments in dollar-based assets. The price of goods imported to the U.S. grew by 0.4% from the month before, Labor Department said Wednesday. Economists surveyed by Dow Jones Newswires had forecast a 0.7% monthly increase...Import prices ran up in the early part of 2011 as oil, grains and other commodities posted sharp increases. But with the global economy slowing, that run up largely eased. February's 5.5% annual increase for imports was the smallest since December 2010, and well below 13.7% yearly change recorded in July." Eric Morath and Andrew Ackerman in The Wall Street Journal.
@ModeledBehavior: As market realizes that economy is booming and "There Will Be Inflation" a solid 2014 re-commitment from Fed will constitute dramatic easing
A top regulator is warning that a jobs bill would weaken investor protections. "A bill the House passed last week to make it easier for companies to raise money could also make it easier for companies to cheat investors, the chairman of the Securities and Exchange Commission says. It’s called the Jobs Act -- an acronym for 'Jumpstart Our Business Startups' -- and lawmakers of both parties have promoted it as a way to boost a weak economy. But regulators and investor advocates have argued that it could expose investors to fraud...Currently, companies seeking to go public must make elaborate disclosures about their finances and operations. The SEC vets those filings before authorizing an initial public offering. Major technology companies have chafed at the requirements and have sought to postpone the day when they must file regulated disclosures. Under the bill, investment banks that underwrite stock offerings could publish research reports before the IPOs." David Hilzenrath in The Washington Post.
@goldfarb: It's mildly disconcerting that folks are popping the champagne on the economy when 12.8 million people remain out of work.
Longform interlude: Roger Lowenstein profiles Ben Bernanke.
The U.S. is launching a new anti-smoking campaign. "Uncle Sam wants you to quit smoking. Federal health officials are unveiling a hard-hitting national antismoking ad campaign Thursday, hoping that graphic spots portraying people with stomas, limb amputations and other gruesome effects of smoking-related illnesses will persuade more adults to quit. The $54 million, 12-week campaign, called 'Tips From Former Smokers,' is the first paid national antismoking media effort by the government, which normally leaves such campaigns to state and local entities--whose budgets have been sharply cut in the past few years. It's part of a larger war on tobacco by the administration of President Barack Obama that includes Food and Drug Administration regulation of manufacturing, marketing and distribution of tobacco products, more money for tobacco cessation programs and proposed large graphic warning labels on cigarette packages." Betsy McKay in The Wall Street Journal.
Small medical practices are struggling to modernize. "It is a dilemma facing practices around the country as the U.S. begins a transition toward new ways of paying for health care. Insurers are increasingly targeting the traditional system that has paid hospitals and doctors for each service provided (rewarding them for more care but not better results). In the past few months, UnitedHealth, WellPoint and Aetna, the three biggest American health insurers, have announced plans to pay practices more if they make efforts like those at Westminster. The new reimbursement designs also can offer doctors significant financial rewards if they hit quality goals and reduce costs. But to effect these changes, doctors often must make a major financial commitment. That means upgrading their information-technology systems, adding support staff and getting special training to do the kind of outreach and coordination that make a practice a 'medical home.'" Anna Wilde Mathews in The Wall Street Journal.
The Senate is split over domestic violence legislation. "With emotions still raw from the fight over President Obama’s contraception mandate, Senate Democrats are beginning a push to renew the Violence Against Women Act, the once broadly bipartisan 1994 legislation that now faces fierce opposition from conservatives. The fight over the law, which would expand financing for and broaden the reach of domestic violence programs, will be joined Thursday when Senate Democratic women plan to march to the Senate floor to demand quick action on its extension. Senator Harry Reid of Nevada, the majority leader, has suggested he will push for a vote by the end of March. Democrats, confident they have the political upper hand with women, insist that Republican opposition falls into a larger picture of insensitivity toward women that has progressed from abortion fights to contraception to preventive health care coverage -- and now to domestic violence." Jonathan Weisman in The New York Times.
A growing movement seeks to measure learning in higher education. "The Collegiate Learning Assessment, launched in 2000, has brought rare scrutiny to higher education. Until now, colleges have been largely exempt from the accountability movement sweeping through public elementary and secondary schools, yielding the No Child Left Behind law and other initiatives. In a landmark study published last year, sociologists Richard Arum and Josipa Roksa used the test to measure collegiate learning in the nation. Using data drawn from a sampling of colleges, they shook the academic world with a finding that 36 percent of students made no significant learning gains from freshman to senior year...From time to time, accountability advocates have proposed requiring colleges to show the value they add to the quest for knowledge as a condition of receiving federal aid. But higher education lobbyists and their allies in Congress have 'vigorously opposed' attempts to impose a No Child-style system on academia." Daniel de Vise in The Washington Post.
The FCC's proposal to put campaign ad spending online is facing pushback. "Congress decreed in 1971 that candidates must get the lowest price for ads in the weeks before an election. The Federal Communications Commission followed up by requiring that stations make political-ad information public so candidates can be assured they're all getting the same deal. The information goes into folders at station headquarters that also contain various government-mandated reports on indecency complaints, signal reach and the like. Broadcasters bear this paperwork burden because they have free use of broadcast spectrum, an FCC-regulated public resource. In October, the FCC proposed that all public disclosures by broadcast stations, including the political ad rates, should be put online instead of kept at station offices in paper form. The FCC suggested stations could put the information on their own websites or submit it to the agency for posting in a single master database." Amy Schatz in The Wall Street Journal.
Reid will push ahead on postal reform. "Senate Majority Leader Harry Reid (D-Nev.) sounded a bit impatient on Tuesday about the pace of postal reform negotiations, and pledged to move legislation on the matter in the coming weeks. Supporters of a bipartisan postal bill -- from Sens. Joe Lieberman (I-Conn.), Susan Collins (R-Maine), Tom Carper (D-Del.) and Scott Brown (R-Mass.) - had hoped their measure would hit the floor weeks ago. But a group of Democratic senators, led by Sen. Bernie Sanders (I-Vt.), has expressed some concern with that bill from the Senate Homeland Security Committee, and Sanders has said he is working on his own plan to reform postal operations with a group of senators. Sanders and the postal reform bill’s sponsors have been working together to bridge their differences. But Reid signaled Tuesday that it was time to move forward, even if senators hadn’t come to an agreement yet." Bernie Becker in The Hill.
Adorable babies being adorable interlude: A baby sees bubbles for the first time.
Coal is on its way out. "After a brief golden period, coal-fired power has faced a perfect storm since 2008. Looming environmental rules, sharply lower gas prices and a collapse in electricity prices have made dozens of mostly older coal plants uneconomical or not worth upgrading. Coal's share of power generation is at its lowest since 1979. Another 14% of coal-fired capacity might be switched off in favor of natural-gas turbines this year, according to Barclays Capital. These woes are specific to the U.S. In the next five years, Peabody Energy expects global coal demand to grow by more than a billion tons, mostly from China and India. That is more than the U.S., the largest holder of reserves, produces in total. But U.S. coal producers can't easily tap into that vein. Most extra demand will be satisfied by shipments from places like Australia and Indonesia, even if some excess U.S. thermal coal supply is now entering the global market." Spencer Jakab in The Wall Street Journal.
@ModeledBehavior: There's always stories about how some new miracle invention is the cure for our energy woes, but months go by and the world is unchanged.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.