Wonkbook: Disaster relief in the time of austerity

at 06:24 AM ET, 08/31/2011


North Main Street in Waterbury, Vt., is underwater in the wake of tropical storm Irene on Monday, August 29, 2011. (GLENN RUSSELL - AP)

Dylan Matthews is writing Wonkbook while Ezra is traveling.

Five in the morning

1) The presumption in favor of disaster relief is changing, reports Carl Hulse: "The new push for federal austerity is threatening to change the traditional dynamic when it comes to government relief in the aftermath of a storm, an earthquake or other calamity...Holding fast to their push for lower federal spending, top Congressional Republicans have argued that any federal aid in the aftermath of the double whammy of an earthquake followed by a hurricane should be offset, if possible, by spending less on other programs...That view and the idea of offsetting the cost of relief is unsettling to those of both parties who see disaster aid as a chief responsibility of the federal government. They note that past efforts were financed through deficit spending by both parties -- a fact pointedly made on Tuesday by the White House spokesman, Jay Carney, when he was asked about paying for relief efforts with corresponding cuts."

2) Some on the Fed wish it was doing more, reports Neil Irwin: "Some Federal Reserve officials were inclined to move more aggressively than the central bank did at its meeting three weeks ago to try to address the weakening economy, according to new minutes of the meeting that show a committee deeply worried about the outlook...The Fed decided to announce that it envisions keeping interest rates very low through the middle of 2013, viewing this as 'a measured response to the deterioration in the outlook' and 'a possible way to reduce interest rates and provide greater support to the economic expansion,' the minutes said. Some wanted to go further: 'A few members' of the Fed policy committee argued that the deterioration in the economy 'justified a more substantial move at this meeting,' though they were willing to go along because the policy shift was in the direction they preferred."

3) Liberals are pressing Obama to propose a big jobs plan, reports Benie Becker: Progressive activists are urging President Obama to go big and go daring when he releases his new jobs proposals next week. Whether they get what they want is a different story entirely. MoveOn and around 70 other liberal groups sent a letter Tuesday to the president, pleading with him to roll out a jobs plan that matches the scope of the unemployment problem - and signaling that Obama should not unveil a plan whose major selling point was that it could appeal to some Republicans...But, with the unemployment rate still hovering around 9 percent more than two and a half years into the Obama presidency, the White House has said repeatedly in recent days that it plans on unveiling a set of proposals that could garner widespread support."

4) A GOP tax wonk will be staff director for the supercommittee, reports Lori Montgomery: "A veteran Senate GOP tax expert with long experience working across the aisle was tapped Tuesday to help run a powerful new congressional debt-reduction committee, buoying hopes that the panel would produce a plan to tame borrowing. Mark Prater, 52, has served as chief tax counsel for Republicans on the Senate Finance Committee for nearly two decades, playing a key role in forging consensus on numerous major tax and deficit-reduction bills. His appointment as staff director was announced in a joint statement by the committee co-chairs, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.)...The choice of Prater fueled speculation that Republicans may also be ready to discuss new revenue...Prater had a hand in landmark budget deals in 1990 and 1997, which both included tax increases."

Both parties like the pick: http://politi.co/pTMAMT

5) Edward DeMarco is the most important and least-known man in housing policy, report Brad Plumer and Ezra Klein: "The most powerful man in housing policy today isn’t President Obama. It’s not Treasury Secretary Timothy F. Geithner or House Financial Services Chairman Spencer Bachus (R-Ala.). It’s a little-known bureaucrat named Edward DeMarco. DeMarco is the acting director of the Federal Housing Finance Agency. Which means that, under the terms of the 2008 Housing and Economic Recovery Act, DeMarco is in charge of supervising mortgage giants Fannie Mae and Freddie Mac. As such, any attempts the Obama administration might make to use Fannie and Freddie to stabilize the housing market run directly through DeMarco’s office. And in many of the attempts it has made, the Obama administration has not exactly found DeMarco to be a willing partner."

Francophone interlude: Joseph Gordon-Levitt covers "Cargo Culte" by Serge Gainsbourg.

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

Still to come: Why the White House could get what it wanted out of the debt deal; 98 percent of funds for people with pre-existing conditions haven't been spent; Obama's challenging John Boehner's anti-regulation push; Exxon is going to Russia to avoid US drilling restrictions; and the world's youngest and cutest weather reporter.

Economy

The White House could be achieving one of its main goals for the debt deal, reports Sam Stein: "The White House appears to have achieved one of its primary goals following the debt ceiling deal, with congressional Republicans showing little interest in extending budget fights through the fall. In meeting after meeting with liberal and labor constituency groups following the protracted debt debate, Obama administration officials offered three specific reasons as to why the resulting deal was not the cataclysm that progressives believed it to be. For starters, it protected the Democratic Party's sacred cows: there were no cuts to Medicaid or Social Security or to Medicare benefits. Secondly, by averting default, the White House had escaped a hostage-taking situation bruised but intact...As for the third arm of the administration's pushback against critics, however, the president and his team do appear to be on a path to vindication."

States are split on what a foreclosure settlement should look like, reports Brady Dennis: "A recent and acrimonious dispute among state officials over a possible legal settlement to address nationwide mortgage abuses is underscoring basic questions about what the effort should accomplish...Despite the intricate issues and numerous parties, officials say they are on the brink of securing a settlement that would revamp the way banks service millions of mortgages, lead to more loan modifications for troubled homeowners and extract roughly $20 billion in penalties that quickly could go toward foreclosure prevention efforts. But New York Attorney General Eric Schneiderman has been arguing in favor of investigating an even wider range of mortgage-related practices, leading to 'comprehensive resolution' that places homeowners and large investors in mortgage securities at the same table."

Chicago Fed president Charles Evans is publicly calling for more monetary stimulus, reports Michael Derby: "The Federal Reserve needs to do more to help an economy that is moving 'sideways,' a top central bank official said in a television interview Tuesday. 'I definitely favor strong accommodation at this point' and 'I would favor more accommodation,' Federal Reserve Bank of Chicago President Charles Evans said. The recent economic data have been 'soft,' and 'we haven’t achieved escape velocity,' Evans said. He added the unemployment rate is “consistent with being in a recession,” and 'inflation pressures are not nearly as strong as people think.' Taken together, Evans said 'maybe the dual mandate tells us we should be more accommodative than we’ve been,' citing the central bank’s legal goal of boosting employment and keeping prices stable."

Job training isn't a surefire bet to reduce unemployment, writes Suzy Khimm: "Details haven’t been released, but Obama recently praised GeorgiaWorks, which gives unemployed workers eight weeks of training at a workplace. The GeorgiaWorks program, which began in 2003, has shown some tentatively positive results...But experts say it’s too early to tell whether the Georgia program is truly effective. They say the initiatives most likely to produce lasting results often take longer to ramp up--and cost more. Though there’s been some federal support for job training--mostly through the Workforce Investment Act, which is up for reauthorization this year--the most innovative public training programs have been on the state level, often targeting specific industries with a growing demand for jobs."

Public works spending would be more effective than another payroll tax cut, writes Bruce Bartlett: "There is no evidence that the lower payroll tax has done much of anything to stimulate either spending or hiring. There are a number of reasons for this. First, the tax cut only helps those with jobs. While many have low wages and undoubtedly are spending all their additional cash flow, those with the greatest need and most likely to spend any additional income are the unemployed...Economic theory and the experience with tax rebates in 2001 and 2008 tell us that people are strongly inclined to save temporary increases in income...In my view, the $110 billion cost of the one-year Social Security tax cut would have been far better spent on measures that would actively raise spending in the economy. Public works would be the best way of doing."

Bernanke's diagnosis of the economy is too sunny, writes Brad DeLong: "Bernanke claimed that 'the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years.' Frankly, I do not understand how Bernanke can say any of these things right now. If he and the rest of the Federal Open Market Committee thought that the projected growth of nominal spending in the US was on an appropriate recovery path two months ago, they cannot believe that today. Two months of bad economic news, coupled with asset markets’ severe revaluations of the future - which also cause slower future growth, as falling asset prices lead firms to scale back investment - mean that a policy that was appropriate just 60 days ago is much too austere today."

Obama needs to make Fed recess appointments, writes Jonathan Bernstein: "The Fed seems to be sending every possible signal that the upcoming meeting in September is going to be an important one. Wouldn’t it be a good idea for Barack Obama to fill those empty chairs right now, using recess appointments (and, yes, he almost certainly can), before the Senate returns?..The Fed’s decisions at their next meeting are probably more important for the economy, and more important for Barack Obama’s political health, than whatever he winds up saying in his big jobs speech next week - and there’s every possibility that monetary policy is going to be more important than whatever actions come out of Obama’s jobs initiatives, putting aside the rhetoric...Anyone who believes that economic growth should be the priority should be focused on pushing Obama to fill those empty seats."

Adorable children doing meteorology interlude: 5 year old Jane Haubrich reports on the weather.

Health Care

98 percent of health reform spending earmarked for people with preexisting conditions hasn't been spent, reports Arthur Delaney: "Though as many as 25 million uninsured Americans have pre-existing medical conditions like heart disease and diabetes, a year-old program to insure them has only 21,000 enrollees, according to an audit released Friday by congressional investigators. The Government Accountability Office reported that the government has so far spent just 2 percent of the $5 billion allocated by the health care reform law for the program, which launched last summer as the Pre-Existing Condition Insurance Plan. Administration officials initially said as many as 375,000 people would sign up in 2010 alone. The PCIP offers market-rate monthly premiums and caps out-of-pocket costs for any U.S. citizen who has a pre-existing condition and has been without 'creditable' health insurance for at least six months."

Rick Perry sent a letter to the White House in 1993 calling Hillary Clinton's health reform efforts "commendable": http://politi.co/pkvSTf

Republican governors want to cut Medicaid costs by denying it to illegal immigrants -- who already don't get it, reports Janet Adamy: Republican governors have a new target in their quest to cut Medicaid costs: illegal immigrants. In a report released Tuesday, the Republican Governors Association outlined 31 solutions that it says would bring down the cost. Medicaid is a top budget item for states, and governors from both parties have complained it’s busting their purse as more people lose jobs and qualify for the federal-state insurance program for the poor. The RGA has floated most of the ideas before, but one jumped out as new. Solution No. 5 would 'require the federal government to take full responsibility for the uncompensated care costs of treating illegal aliens.' Keep in mind that federal law already prohibits illegal immigrants from enrolling in Medicaid."

State insurance commissioners are resisting a Medicare change in health care reform, reports Susan Jaffe: "A provision of the 2010 federal health law seeking to increase Medicare beneficiaries’ share of health care costs is meeting resistance from an unlikely group of 33 state insurance regulators, health insurers and consumer advocates charged with revising Medigap insurance policies that cover most out-of-pocket expenses. The National Association of Insurance Commissioners assembled the group to come up with ways to raise the beneficiaries’ cost for the most popular and generous Medigap policies, a task Congress assigned to the association in the health law. Since then, the idea of shifting some costs to beneficiaries in Medigap policies has emerged as one of several proposals to reduce the federal deficit."

Kansas isn't setting up a health exchange, reports Scott Rothschild: "Gov. Sam Brownback's administration on Tuesday said Kansas would not implement a health insurance exchange until the U.S. Supreme Court decides whether the federal health reform law is constitutional. The statement was made by Lt. Gov. Jeff Colyer...Kansas had won a $31.5 million federal grant to implement the exchange. Brownback had initially supported the grant but then reversed field and rejected the funding. He said there were too many strings attached, but critics said he bowed to pressure within the Republican Party to fight the federal health reform law at every opportunity. Kansas Insurance Commissioner Sandy Praeger, also a Republican, has vowed to continue working on the exchange issues. Colyer said she can continue working on it, but that Kansas will not implement it until a court challenge to the law has been settled."

Domestic Policy

Obama defended regulations in a letter to John Boehner, reports Felicia Sonmez: "President Obama on Tuesday wrote a letter to House Speaker John Boehner defending his administration’s regulatory agenda, though he acknowledged that only seven proposed regulations have a projected annual cost of more than $1 billion. The missive comes four days after Boehner (R-Ohio) sent a letter to Obama requesting information on costly federal rules. It also comes as the White Househas begun rolling out a new effort to overhaul government regulations with an eye toward saving as much as $10 billion over the next five years...Obama responded to Boehner’s criticism of the cost of government regulations by noting that 'the costs of final, economically significant rules reviewed by the Office of Information and Regulatory Affairs were actually higher in 2007 and 2008 than in the first 2 years of my Administration.'"

The National Labor Relations Board is making it easier for nursing homes to unionize, reports Steven Greenhouse: "The National Labor Relations Board on Tuesday released a decision that would make it easier to unionize nursing home workers. It is the latest in a flurry of moves favorable to unions that the board completed before the term of its chairwoman, Wilma B. Liebman, expired on Sunday. The board released two other pro-union decisions on Tuesday, both reversing decisions issued under President George W. Bush. In the nursing home decision, the board ruled that the union, the United Steelworkers, could organize just the 53 certified nursing assistants at a nursing home in Mobile, Ala., as part of one bargaining unit, without including the home’s 33 other nonprofessional workers, including janitors, cooks and file clerks."

A Congressional fight over airline unionization is heating up, reports Brian Beutler: "A powerful union will escalate a fight with Republicans over the party's push to make it harder for rail and airline workers to unionize. This week, the Communications Workers of America will launch direct mail and robocall campaigns against the GOP's top transportation policy maker, and about two dozen other GOP members of the House of Representatives, according to officials. The campaign stems from a months-long fight over legislation to permanently reauthorize Federal Aviation Administration programs. House Republicans want to use that bill to fiddle with mediation rules, so that airline workers who abstain from voting on whether to form a union would be tallied as having voted 'no.'"

The arguments against standardized testing are weak, writes Patrick Mattimore: "Teachers should be teaching to the test. Students are in class to learn. Presumably they should know certain discrete things when they finish a class lesson, an academic year and eventually graduate. The best way to facilitate that is for students and teachers to have clear expectations, goals and measurements. The best way to check whether students are meeting the goals is to test them...The corollary to the teaching-to-the-test gripe is the idea that teaching students to take tests only teaches them to become good test-takers. But tests are content-specific...As it stands now, after a teacher becomes tenured -- normally after two or three years -- the teacher has lifetime classroom security, barring serious foul-ups. Teachers are no longer evaluated and their pay is not dependent upon how well they do their job."

Adorable animals being adorable interlude: Cheetah cubs, frolicking.

Energy

Exxon is going to Russian waters to evade US arctic drilling restrictions, reports Andrew Kramer: "Exxon Mobil won a coveted prize in the global petroleum industry Tuesday with an agreement to explore for oil in a Russian portion of the Arctic Ocean that is being opened for drilling even as Alaskan waters remain mostly off limits...For Exxon, which is America’s largest company and is a spinoff of the original Standard Oil, the deal means wading deeper into Russia’s risky business environment. As a result of the agreement, which is almost certain to require a review in Washington, more of the company’s investments and future earnings will partly hinge on policies set in the Kremlin...The Kremlin opened discussions last year with Western oil companies whose prospects on the other side of the Arctic Ocean -- above Alaska and Canada -- had at least temporarily dimmed with the moratorium on offshore drilling."

Closing credits: Dylan Matthews is a student at Harvard and a researcher at The Washington Post. Wonkbook is compiled and produced with help from Sarah Halzack.

 
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