Wonkbook: GOP looks ready to make a deal

at 07:36 AM ET, 05/06/2011


(Joshua Roberts - BLOOMBERG)
House Republican Leadership is admitting what was already widely known: Paul Ryan’s Medicare proposal cannot pass through a Senate and White House controlled by Democrats, and to insist otherwise is to set the negotiations up for failure. Similarly, Democrats are not beginning the debt-ceiling negotiations by demanding an across-the-board tax hike: there’s no way the Republican House will go for it, and so there’s no use in wasting time with it. As is customary in Washington, this has led to a lot of who-is-up-and-who-is-downism. But I think it’s worth taking a moment to say, simply, “whew.”

These negotiations have to end in an increase to the debt ceiling, and quickly. If they don’t end in agreement, they end in disaster. Those are the only two options. And the House Republican Leadership appears to be preparing their members for agreement rather committing them to a hardline negotiation position that will lead to federal default. Perhaps beyond even that, they’ve decided to emphasize rhetoric that’ll make the market think a deal is likely rather than, as is more traditional in Washington, rhetoric that makes a deal look unlikely until the last minute. Again, “whew.”

It’s evidence of how far Ryan’s plan moved the goalposts, of course, that the moderate middle ground is now a deal including hundreds of billions in cuts to non-entitlement spending, a hard look at tax expenditures, and a debt failsafe that takes deep, automatic chunks out of both spending and tax breaks if we’ve not made further big moves towards a balanced budget by 2015. Consider, by way of comparison, that Democrats were still talking about the need for further stimulus as recently as the December tax deal. But since it’s hard to imagine anything worse for the labor market than a federal default, a quick deal on the debt ceiling would still be something to celebrate. That might be the soft bigotry of low expectations talking, but I prefer to think of it as a healthy aversion to unimaginable consequences.

Five in the morning

1) The debt negotiations are focusing on possible deals, not impossible ones, report Philip Rucker and Lori Montgomery: “Lawmakers from both parties opened budget talks with the White House on Thursday with a tacit agreement to focus on areas where they might find common ground that could produce significant savings and to postpone consideration of divisive issues such as higher tax rates and a dramatic overhaul of Medicare. Democratic and Republican negotiators plan to broadly scrutinize the budget -- targeting spending, tax breaks and other areas where they could save money -- as they work toward a deal to rein in the spiraling national debt and smooth passage of a bill to raise the legal limit on government borrowing. Congressional leaders emerged from the talks sounding optimistic that they would reach an accord.”

2) The Senate GOP has promised to filibuster any nominee to head the Consumer Financial Protection Bureau, reports Ylan Mui: “Republican senators vowed Thursday to block any nominee to lead the fledgling Consumer Financial Protection Bureau unless stronger limits are put on its power, in the latest blow in a long-running battle to rein in the watchdog agency before it officially launches this summer. In a letter to President Obama, 44 lawmakers called for a board of directors to run the agency, rather than a single leader...The proposals mirror three bills passed by the House Financial Services Committee a day earlier...Consumer advocacy groups lashed out at the proposals, arguing that they would give banks undue influence over the CFPB and jeopardize its independence.”

3) Today’s unemployment report will signal whether the recovery’s on track, reports Neil Irwin: “With the U.S. economic recovery starting to show cracks, Friday’s monthly unemployment report will be a key test of whether the slowed growth is causing companies to pull back on hiring -- a sign that it could be time to hit the panic button. The number of Americans filing new claims for unemployment insurance benefits spiked to 474,000 last week, the Labor Department said Thursday, the highest total since August and up from 431,000 the previous week. The Labor Department has attributed the rise to temporary factors, such as layoffs in New York state tied to spring break, a new benefit program in Oregon, and temporary shutdowns at auto plants. Still, the increase in the number of new claims in the past few weeks has interrupted a steady downward trend since the start of the year.”

4) The House Ways and Means chair is throwing in the towel on health care repeal, reports Sam Stein: “Rep. Dave Camp (R-Mich.), chairman of the powerful House Ways and Means Committee, acknowledged Thursday that Republican plans to repeal President Barack Obama’s signature health care law were ‘dead.’ Instead, Camp predicted, the GOP would turn its focus to overturning the most controversial portion of that legislation: the mandate requiring individuals to buy insurance. ‘Obviously, I voted to repeal the bill and you pretty much know where I am on replacement because I put out a bill last year on that,’ Camp said. ‘Is the repeal dead? I don’t think the Senate is going to do it, so I guess, yes.’ Camp added, ‘In terms of the House, I put out a bill [to replace the law]. We know where I stand.’”

5) Treasury’s rhetoric and policies on the dollar don’t match up, reports Neil Irwin: “’Our policy has been and always will be, as long as at least I’m in this job, that a strong dollar is in our interest as a country,’ Geithner said in a forum at the Council on Foreign Relations... Geithner will meet Monday with Chinese officials in Washington and try to persuade them to let the value of their currency rise relative to the dollar in part as a way of lifting U.S. trade. That would, by the simple math of foreign exchange markets, weaken the dollar -- in pursuit of economic advantage. This contrast reflects a fundamental contradiction in the U.S. approach toward the dollar. The government has put in place a range of policies that make the dollar likely to decline in value over time. But no one in a position of authority can really admit it, because of politics and the possibility of a bad reaction in financial markets.”

Live French rock interlude: Phoenix play “Too Young”.

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Still to come: Nutrition labels for health-care plans; why Medicaid is in more danger than Medicare; a top House Republican is throwing in the towel on health care repeal; the Senate GOP is split on judicial nominees; Americans blame basically everyone for high gas prices; and a cat has fun with his Cinco de Mayo pinata.

Economy

Federal regulators are split on which firms are “systemically important”, reports Victoria McGrane: “Federal regulators appeared divided Thursday over what to reveal about how they would decide which nonbank financial firms should get the ‘systemically important’ label for being big enough to threaten the financial system. Firms with such a designation would be subject to stricter capital standards and regulations. Federal Deposit Insurance Corp. Chairman Sheila Bair said in a speech at a conference here that regulators needed to “move forward and develop some hard metrics to guide” the designation process. She told reporters that ‘the more public information we can provide on this, the better.’ However, Mark Van Der Weide, a senior associate director at the Federal Reserve, stressed the need for regulators to retain discretion in the process.”

Policymakers should stop fiddling while high unemployment persists, writes Paul Krugman: “The longer this goes on, the more workers will find it impossible ever to return to employment, the more young people will find their prospects destroyed because they can’t find a decent starting job. It may not create excited chatter on cable TV, but the unemployment crisis is real, and it’s eating away at our society. Yet any action to help the unemployed is vetoed by the fear-mongers. Should we spend modest sums on job creation? No way, say the deficit hawks, who threaten us with the purely hypothetical wrath of financial markets, and, in fact, demand that we slash spending now now now -- which might well send us back into recession. Should the Federal Reserve do more to promote expansion? No, say the inflation and dollar hawks, who have been wrong again and again.”

Revamping the corporate income tax comes with some political pitfalls, reports Jia Lynn Yang: “Even among Democrats, there is disagreement over whether to squeeze more taxes out of corporations as a way of closing the budget deficit. Polling shows that Americans want taxes raised on corporations before they are raised on individuals. ‘It’s the low-hanging fruit. To throw it away is weird,’ said Bob McIntyre, director of the left-leaning Citizens for Tax Justice. Levin and Geithner want to keep the the overall amount corporations pay at the same level. But Rep. Jim McDermott (D-Wash.) said it would be unfair for individuals to bear the burden of paying more taxes to close the nation’s deficit...Republicans and business lobbyists want the country to adopt a ‘territorial’ system that would tax only domestic profits. Many Democrats have resisted this idea, saying it would encourage companies to move jobs overseas.”

Adorable animals that are just like us interlude: A cat opens his Cinco de Mayo pinata.

Health Care

Kathleen Sebelius says Ryancare could make seniors die sooner, reports Lester Feder: “HHS Secretary Kathleen Sebelius said that the Ryan Medicare proposal will lead to early deaths among seniors. During testimony before the House Education and the Workforce Committee, she said seniors ‘will run out of money very quickly.’ She continued, ‘If you run out of the government voucher and then you run out of your own money, you’re left to scrape together charity care, go without care, die sooner. There really aren’t a lot of options.’ The committee’s Democrats began the hearing by firing a shot at the Ryan plan, releasing a report by the Center for Economic and Policy Research that found seniors will need to save an additional $182,000 in order to cover increased health costs if it were to become law.”

Medicaid is in more danger than Medicare, writes, well, me: “There are two reasons Medicaid is more vulnerable than Medicare. The first is who it serves. Medicaid goes to two groups of people: the poor and the disabled. Most of the program’s enrollees are kids from poor families, though most of the program’s money is spent on the small fraction of beneficiaries who are disabled and/or elderly. These groups have one thing in common, however: They’re politically powerless. The second is who pays. Medicare is a federal program. Medicaid is a state-federal match, and it kills states during recessions, as unlike the federal government, states can’t run deficits, and so they find themselves with increased costs because they have more people in need but decreased revenues. So there are a lot of governors — particularly GOP governors — straining under overstretched state budgets who’d like a way out of their fiscal crisis that doesn’t include raising taxes, and there are a lot of federal legislators who’d like to save money without having seniors mounting protest marches outside their office, and Medicaid begins to look like an answer to everyone’s problem. “

Health reform is leading to new health plan labels, reports Susan Jaffe: “Cars have sticker prices, ketchup bottles have nutrition facts labels and soon health plans will get coverage labels, too. For the first time, consumers shopping for a health policy will be able to get a good idea of how much of the costs different plans will cover for three medical conditions: maternity care, treatment for diabetes and breast cancer. And because buying insurance is more complicated than buying a can of soup, the proposed insurance labels are two pages long. However, the labels will provide pricing based on national averages and not exact numbers that consumers can expect to pay. And to begin with, only the three medical scenarios will be listed.”

Domestic Policy

The Senate GOP is split on judicial nominations, reports Manu Raju: “Sens. Lamar Alexander of Tennessee and John Cornyn of Texas are clashing over a controversial judicial nominee, underscoring how their sharply divergent styles could profoundly shape Republican politics as they angle for a high-profile Senate leadership job. In their first major dispute since both men said they’d run for Republican whip, Alexander publicly voiced his opposition Wednesday to Cornyn’s attempt to filibuster the nomination of Jack McConnell for a seat on a Rhode Island district court. Alexander brought along 10 GOP colleagues to help Democrats defeat Cornyn and 32 other Republicans who tried to filibuster the nominee, who is vigorously opposed by the business lobby.”

The Senate GOP will block Obama’s labor nominees, reports Scott Wong: “A group of 19 Republican senators is vowing to defeat two of President Barack Obama’s nominations for the National Labor Relations Board after the panel sued Boeing, accusing the aerospace giant of retaliating against union workers. In a letter sent to Obama, the senators said they would ‘vigorously oppose’ and use all procedural tools to block the confirmations of the board’s Acting General Counsel Lafe Solomon and board member Craig Becker, a former union attorney whom Obama granted a recess appointment last year...The letter is the latest salvo in a national fight over so-called right-to-work states, which prohibit employers from requiring workers to join a union or pay union dues as a condition of employment.”

Republicans should want publicly funded campaigns, writes Alan Simpson: “As I observed in my testimony before the Senate, the Fair Elections Now Act is not your granddaddy’s campaign reform. For decades, reform has meant limits and restrictions on private campaign spending, which the Supreme Court has now all but taken off the table. In its Citizens United decision, the court ruled last year that unions and corporations are free to spend unlimited sums to influence elections, asserting a remarkable right of corporate personhood that I have yet to find in the Constitution. But Citizens United need not end the debate on reform. To the contrary, it can help us focus on the root of the problem: changing not so much the amounts but, rather, the source of private money that funds campaigns.”

Cutting the Pentagon budget should including scaling back our wars, writes Gordon Adams: “The first step is to set priorities for military missions, something the 2010 defense review did not do. That review gave every mission equal priority and sought to reduce risk to zero for all of them. It was an open door for endless budget growth, but it’s not a strategic plan. Given the approaching exit from Iraq and the coming decline in our deployment in Afghanistan, the counterinsurgency/nation-building mission for which the Army is being tailored today needs to be de-emphasized. We do not do that job well, particularly when we invade to topple a regime and stay around while insurgencies begin, and we are unlikely to repeat the Iraq and Afghan experiences anytime soon.”

Campaign parody interlude: This is not Jane Corwin’s real congressional campaign site.

Energy

Americans blame just about everything for high gas prices, report Steven Mufson and Jon Cohen: “With the overall economy continuing to falter, Americans are blaming an array of culprits for the increases at the pump, according to new data from a Washington Post-Pew Research Center poll. Nearly one in three point the finger at a combination of greed, speculation and oil companies. About one in five say prices are up because of wars and the spreading unrest in the Middle East and North Africa. Around one in eight say it’s something political or policy-related that has gas prices spiking higher; a similar proportion says it’s an economic factor, like the time of year. There are few differences across party lines, although Democrats are the most apt to say it’s war and unrest in the Muslim world that’s causing the price jump.”

The House passed a bill to expand offshore drilling, reports Felicia Sonmez: “As gas prices nationally approach $4 a gallon, the House passed Thursday a measure that would require the Interior Department to conduct four offshore oil and gas lease sales in the Gulf of Mexico and off the coast of Virginia. The bill, H.R. 1230, passed on a 266-to-149 vote, with 33 Democrats joining all but two Republicans present in voting yes. Republicans have cast the measure as a step toward easing the country’s rising gas prices by speeding up oil and gas exploration in the gulf. The administration, Republicans have argued, has not acted quickly enough to approve lease sales after last year’s Deepwater Horizon disaster, which killed 11 people and leaked an estimated 200 million gallons of oil into the Gulf.”

A GOP Senator wants to merge the Energy Department and the EPA, reports Robin Bravender: “Senate Republicans are pushing a plan to morph the Energy Department and the EPA into one giant agency. A bill introduced Thursday by Sen. Richard Burr (R-N.C) would combine the DOE and the EPA into a new agency called the Department of Energy and Environment. Burr’s effort has the backing of 15 GOP co-sponsors. Consolidating the agencies could result in more than $3 billion in savings in 2012 alone, according to a statement from Burr’s office. The super-agency would retain the core functions of the DOE and the EPA but would cut ineffective or redundant programs, the statement said. The new department would include an undersecretary for nuclear security to oversee the weapons and nonproliferation programs that now fall under the DOE, according to the bill.”

The White House wrote a draft proposal for a driving tax, reports Pete Kasperowicz: “The Obama administration has floated a transportation authorization bill that would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive. The plan is a part of the administration’s Transportation Opportunities Act, an undated draft of which was obtained this week by Transportation Weekly. The White House, however, said the bill is only an early draft that was not formally circulated within the administration...News of the draft follows a March Congressional Budget Office report that supported the idea of taxing drivers based on miles driven.”

A Senate vote on cutting oil subsidies is set for next week, reports Josiah Ryan: “The Senate will take up a controversial bill next week that would end billions of dollars in tax breaks for large oil producers and increase breaks for clean-energy producers, aides close to Democratic leadership told The Hill on Thursday. Sen. Max Baucus (D-Mont.), the author of the bill and chairman of the Senate Finance Committee, said the measure will help address high gas prices, which are now averaging almost $4-per-gallon nationwide, and are well above that level in many areas. ‘High gas and energy prices are hitting folks hard in Montana and across the country,’ Baucus said in a statement. ‘Now is not the time to stand idly by while large oil and gas companies get billions of dollars in tax breaks -- now is the time to take concrete steps toward cleaner, more affordable, domestically produced energy.’”

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

 
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