Wonkbook: The jobs bill is dead
It's not much of a surprise, I guess. The American Jobs Act never had a particularly good chance of passing the House. But as of yesterday, it's officially dead. Majority Leader Eric Cantor isn't even pretending the two sides will work something out. "The $447 billion jobs package as a package: dead?" A reporter asked him. "Yes," Cantor replied.
The question is which elements of the bill will live separately. As my colleague Brad Plumer reported yesterday, Congress hasn't adopted the administration's infrastructure package, but they're moving closer to it. And as we reach the end of the year, are Republicans really going to refuse to extend and expand the payroll tax and unemployment benefits?
The other question is whether, in the absence of clear Republican cooperation on the major elements of their jobs package, the administration will let their jobs program die with a whimper. They can still refuse to sign anything the supercommittee produces if it doesn't include a job agenda of similar size, and thus effectively use the trigger as leverage for a jobs plan. But as of yet, they have shown little interest in doing so. They have given a speech, but unlike the Republicans on the debt ceiling and the government shutdown, they have refused to use their procedural leverage.
Perhaps they have something else up their sleeve. But if there's no plan B, that's no one's falt but their own. For all that the administration's liberal base wanted a fighting speech from President Obama, it was always clear that that wouldn't be enough -- and stood a good chance of even proving counterproductive -- in passing a bill. The follow-up package of offsets, which focused on tax cuts for the rich, was, similarly, encouraging to liberals, but DOA in the House.
It's possible, of course, that the administration decided that this is all a moot point, and there is no political strategy right now that wil lead to a serious agreement on jobs spending with Cantor and his members. It's possible that everything is going exactly according to the administration's plan and they're putting the finishing touches on a Truman-like campaign against a do-nothing, block-everything Congress. But if so, that's quite a statement about how much help the American people can expect from the federal government in the face of a weakening economy and a possible double-dip recession. More evidence, I guess, for the thesis that the politicians who will decide America's presidential election all reside in Europe, if only because they're the politicians who are actually making decisions that will affect the global economy.
1) The full White House jobs package is DOA, reports Brian Beutler: "Hours after President Obama insisted both the House and Senate vote on his entire jobs bill, a top Republican says that's not gonna happen. Asked by a reporter for a yes or no answer, House Majority Leader Eric Cantor (R-VA) says the jobs bill, taken as a whole, is kaput. 'The $447 billion jobs package as a package: dead?' the reporter asked. 'Yes,' Cantor replied. This will come as little surprise to close observers of Capitol Hill, but it will likely sharpen Obama's attacks on Congress. Monday, before a cabinet meeting, Obama said he'll demand up or down votes on the package...Cantor listed a very small number of measures Republicans and Democrats agree on -- some part of Obama's jobs bill, some separate. But he says there's no point in fighting any longer over getting something big done."
2) The Senate's anti-China trade bill easy broke a filibuster, reports Steven Mufson: "Every six months, the Treasury issues a report declaring that China’s currency is undervalued, draining dollars and jobs out of the U.S. economy. And every six months, the Treasury defers action, saying the Beijing government is not manipulating its currency...The Senate voted 79 to 19 on Monday to bring to the floor a currency measure that would make it more difficult for the Treasury and Commerce departments to sidestep the need to retaliate against countries such as China. A similar bill passed the House by a large margin last year, and congressional leaders give the new measure a strong chance of passage, potentially putting both China and the Obama administration in an awkward position."
3) Occupy Wall Street is picking up labor support, report Andrew Grossman and Alison Fox: "The anti-Wall Street protesters camped out in a Lower Manhattan park are beginning to attract backing from some of New York's most powerful labor unions. On Monday, health-care workers union 1199SEIU issued a statement of support for the protests and said it would help feed those camped out in the park, send nurses to train those providing first aid and set up a task force to figure out what else it could do. The union represents 200,000 health-care workers in New York and Long Island and 100,000 more elsewhere on the East Coast. The health-care workers joined Transport Workers Union Local 100, which represents 38,000 Metropolitan Transportation Authority employees, and several smaller labor groups in supporting the nascent protests. While the unions are playing a background role, they potentially bring deep pockets, manpower and more mainstream credibility to what began as a rag-tag group of mostly young activists."
4) Lobbyists have plenty of access to the supercommittee, reports Anna Palmer: "K Streeters with deep ties to supercommittee members and congressional leadership say senior staffers have given them readouts from closed-door committee meetings...Democratic and Republican lobbyists say they continue to get corporate clients with interests before the committee face time with members and staff. In this type of high-stakes environment, the K Street power set is at its best -- offering clients in the pharmaceutical, defense and other industries, with potentially hundreds of millions of dollars on the line, a shot at staying out of the committee’s line of fire...Lobbyists say dealing with the supercommittee has been tougher than their usual work. Lawmakers and staff are skittish about publicly revealing what is going on during the closed-door sessions, and no one wants to be caught leaking confidential information to special interests."
1) A financial transactions tax won't solve Europe's problems, writes Kenneth Rogoff: "The emotional appeal of a tax on all financial transactions is undeniable...Both theoretical and simulation results suggest no obvious decline in volatility. And, while raising so much revenue with so low a tax rate sounds grand, the declining volume of trades would shrink the tax base precipitously. As a result, the ultimate revenue gains are likely to prove disappointing, as Sweden discovered when it attempted to tax financial transactions two decades ago. Worse still, over the long run, the tax burden would shift. Higher transactions taxes increase the cost of capital, ultimately lowering investment. With a lower capital stock, output would trend downward, reducing government revenues and substantially offsetting the direct gain from the tax. In the long run, wages would fall, and ordinary workers would end up bearing a significant share of the cost."
2) Europe's crisis could swing next year's elections, writes Ezra Klein: "If you’re worried about the 2012 election -- or, more quaintly, just worried about the economy -- the politician to watch is Germany’s Angela Merkel. Merkel isn’t entering the Republican primary, or mounting a challenge to President Obama. But what she and a handful of European leaders do over the next few weeks could well decide whether the American economy tips back into recession this year, and thus, quite inadvertently, decide who wins the U.S. presidency in 2012. Elections are driven by the state of the economy. When the economy is flying, as it was for Bill Clinton in 1996, Ronald Reagan in 1984, Richard Nixon in 1972 and Lyndon Johnson in 1964, the incumbent almost never loses. When the economy is sinking, as it was for George H.W. Bush in 1992 and Jimmy Carter in 1980, the incumbent almost never wins."
3) Rick Perry's attacks on the New Deal are based on bad history, writes Michael Hiltzik: "Perry’s book draws heavily from several libertarian denunciations of the Roosevelt administration -- chief among them Burton Folsom’s book 'New Deal or Raw Deal?' and Jim Powell’s 'FDR’s Folly' -- to paint the New Deal as the foundation stone of an 'abuse of federal power' by Democratic administrations and Congresses, abetted by the Supreme Court, that has persisted for generations. All this from a Depression-era program that 'failed.' Although Perry repeatedly pins that label on the New Deal, he never quite specifies what he means. That’s unsurprising, given that the U.S. economy grew at a blistering 8 percent a year through most of the New Deal period and that its most important component, Social Security, today provides benefits to 54 million Americans, at rock-bottom administrative cost and without a whiff of scandal."
4) Cronyism is paving the way for the Keystone pipeline, writes Bill McKibben: "When the State Department picked a consulting firm to help carry out the environmental impact statement on the Keystone pipeline, it chose a company called Cardno Entrix that listed among its chief clients ...TransCanada. The final report, which came out in late August, decided the pipeline would have 'no significant impact' on the nearby land and water resources. This is laughable -- we’re talking about connecting a pipe to one of the largest pools of carbon on earth. Twenty of the nation’s top scientists sent the administration a letter this summer explaining what a disaster it would be. According to NASA’s chief climate scientist, James Hansen, if we tapped the tar sands heavily, it would be 'essentially game over' for the climate."
5) The government needs to focus on aiding an overdue transformation of the economy, writes Joseph Stiglitz: "The structural transformation of the advanced economies, implied by the need to move labor out of traditional manufacturing branches, is occurring very slowly. Government plays a central role in financing the services that people want, like education and health care. And government-financed education and training, in particular, will be critical in restoring competitiveness in Europe and the US. But both have chosen fiscal austerity, all but ensuring that their economies’ transitions will be slow. The prescription for what ails the global economy follows directly from the diagnosis: strong government expenditures, aimed at facilitating restructuring, promoting energy conservation, and reducing inequality, and a reform of the global financial system that creates an alternative to the buildup of reserves."
Garage rock interlude: Wavves play "I Wanna Meet Dave Grohl" live.
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Still to come: Greece isn't hitting its austerity targets; the Supreme Court's first case deals with Medicaid; the House is targeting social spending; administration officials charged with deciding on the Keystone pipeline are pretty cozy with industry lobbyists; and a marching band version of "Party Rock Anthem".
Greece isn't meeting its austerity targets, report Michael Birnbaum and Jia Lynn Yang: "World markets were down again Monday after Greek officials said their austerity measures weren’t meeting targets to rein in the country’s deficit and European leaders continued discussing how to resolve the continent’s growing debt crisis...In an effort to win a second round of international financial aid, Greek Prime Minister George Papandreou proposed late Sunday $8.8 billion of austerity measures, including a plan to create a 'labor reserve' that would push 30,000 public employees out of their jobs. The steps would reduce the country’s 2011 deficit to roughly 8.5 percent of its gross domestic product, which is still higher than the 7.6 percent target set by the European Union and the International Monetary Fund as part of Greece’s bailout agreement."
Obama has officially submitted three trade deals for approval, report Jake Sherman and Jennifer Epstein: "President Barack Obama sent three long-stalled trade agreements to Congress Monday afternoon, just as House Republicans greenlighted the deals to move to the floor. 'The series of trade agreements I am submitting to Congress today will make it easier for American companies to sell their products in South Korea, Colombia, and Panama and provide a major boost to our exports,' Obama said in an afternoon statement...Obama’s statement, legislative language and messages on the bill were transmitted to Congress soon after the House Rules Committee announced Monday afternoon it would set the procedures for a floor debate to extend the Trade Adjustment Assistance program, which offers money to American workers who lose their jobs due to foreign trade. That action, the administration officials said, prompted the White House to release the agreements."
Peer effects are driving executive pay ever higher, reports Peter Whoriskey: "At the vast majority of large U.S. companies, boards aim to pay their executives at levels equal to or above the median for executives at similar companies. The idea behind setting executive pay this way, known as 'peer benchmarking,' is to keep talented bosses from leaving. But the practice has long been controversial because, as critics have pointed out, if every company tries to keep up with or exceed the median pay for executives, executive compensation will spiral upward, regardless of performance...In late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay. Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group."
Political insiders are a key part of hedge funds' business strategy, write Brody Mullins and Susan Pulliam: "Hedge funds have been drilling ever deeper into the government. Thousands of political insiders are being paid by hedge funds, private-equity firms and other big investors. Former Federal Reserve Chairman Alan Greenspan, for example, is an adviser to Paulson & Co., and former Treasury Secretary John Snow works for Cerberus Capital Management. SAC Capital Advisors and Eton Park Capital Management have hired former congressional staffers...Securities laws generally prohibit trading on the basis of material nonpublic information about public companies, if the person with access to the information has a duty to keep it secret...Securities laws don't, however, bar most political insiders from sharing nonpublic information about government affairs."
How Obama's tax changes would affect the rich, in one chart, from Greg Sargent: http://wapo.st/r3kY7W
Reunion interlude: The cast of "Arrested Development" does the chicken dance together.
The Supreme Court opened the term by considering a Medicaid case, reports Robert Barnes: "The Supreme Court began its new term Monday with a complicated case about whether those who provide care and receive benefits under the Medicaid program for the poor can go to court when a state tries to cut spending on the program. California, which for budget reasons reduced its reimbursement rate for the program by 10 percent, and the Obama administration say individuals do not have a right to go to court. They say only the federal government may determine whether the rates paid to doctors and other providers are proper under the federal Medicaid law. But Washington lawyer Carter Phillips, representing the private plaintiffs, said they must have some access to the courts when a conflict arises. 'My people have a life-and-death problem,' Phillips told the court."
Ryancare offers a way out of employer-based health care, writes Ramesh Ponnuru: "The federal government encourages companies to offer coverage...Under Ryan’s proposal, the tax break would become a credit available equally to those who get coverage from their employers and those who buy it themselves...The expectation is that people would buy less expensive coverage and more often pay for routine expenses out-of-pocket. The new cost pressures thus created would, together with competition, drive prices down. Individuals would have more control because they would be more likely to own their insurance policies rather than rely on their employers. Over time, the problem of people who can’t get insurance because of pre-existing conditions would diminish, because people would have to change insurance less often."
A social program battles looms in the House, reports Robert Pear: "House Republicans are laying the groundwork for another battle with President Obama over spending and domestic policy with a bill that would cut some of his favorite health and education programs, tie the hands of the National Labor Relations Board and eliminate federal grants for Planned Parenthood clinics. The bill, which finances the Departments of Labor, Education, and Health and Human Services, would prohibit Mr. Obama from spending more money to carry out the new health care law until all legal challenges to it were resolved. The bill stipulates that no more federal money could be spent on the government’s main family planning program, Title X of the Public Health Service Act, established more than 40 years ago. The program provides services to more than five million people a year at more than 4,500 clinics."
Reforms promoting small donors could fix politics, writes Lawrence Lessig: "Start by converting the initial $50 -- the bill picturing Ulysses S. Grant -- that each of us contributes to the federal Treasury into a voucher. Call it a Democracy Voucher. All voters are free to allocate their vouchers as they wish. Some may target $50 to a single candidate; others may direct $25 each to two candidates. The only requirement is that the candidate receiving the voucher must opt into the system...Any viable candidate for Congress could receive these voucher contributions if he or she agrees to one important condition: that the only money that candidate accepted to fund his or her campaign would be Democracy Vouchers and contributions from individuals of up to $100 per citizen...If a substantial number of candidates opted into it, and putting aside here the issue of independent expenditures, then no one could believe that money was buying results."
No Child Left Behind would be a better law if it were what its critics say it is, writes Kevin Carey: "NCLB did very little to improve the quality of the teachers in America’s classrooms, and researchers agree that teacher quality is the most important within-school factor affecting student learning. Union contracts often prevent school districts from using student test scores and expert observations to evaluate teachers, or to deny them tenure if their performance falls short. Hiring, firing, and salary decisions are made by seniority, not quality. Without the ability to know which teachers are best, pay them more, and put them in classrooms with children who need the most help, schools are hamstrung in their ability to meet performance standards. So NCLB has ended up in the worst of all possible worlds--it has the reputation of being a punitive, anti-teacher law without any of the benefits of being so. The danger is not that NCLB will destroy public education if left unchecked until 2014. The danger is that it will be rendered absurd."
Every day I'm shufflin' interlude: The Ohio University marching band plays "Party Rock Anthem".
Emails show that officials deciding on the Keystone pipeline are cozy with lobbyists, report Juliet Eilperin and Steven Mufson: "The State Department has released a new series of e-mails about the controversial Keystone pipeline proposal that show a friendly relationship between a U.S. Embassy official in Ottawa and TransCanada’s Washington lobbyist. At times, State Department official Marja D. Verloop -- who oversees energy, science and environmental issues at the U.S. Embassy in Ottawa -- appears to be cheering on TransCanada’s Washington lobbyist, Paul Elliott, in his efforts to enlist congressional support for the pipeline extension...Pipeline opponents, who have demonstrated in front of the White House and elsewhere, say the project will promote the use of tar sands, for which the extraction process contributes to relatively high greenhouse gas emissions. They also fear the impact from any possible leaks."
Obama was warned not to visit Solyndra, report Carol Leonnig and Joe Stephens: "Administration officials and outside advisers warned that President Obama should consider dropping plans to visit a solar startup company in 2010 because its mounting financial problems might ultimately embarrass the White House. 'A number of us are concerned that the president is visiting Solyndra,' California investor and Obama fundraiser Steve Westly wrote to Obama senior adviser Valerie Jarrett in May 2010. 'Many of us believe the company’s cost structure will make it difficult for them to survive long term...I just want to help protect the president from anything that could result in negative or unfair press.' The warning, which did not convince the White House to drop the Obama factory visit, was detailed in e-mails released Monday by the Democratic minority on the House Energy and Commerce Committee. The panel is investigating a $535 million government-backed loan to the now-shuttered company."
The Solyndra case wasn't an example of the government playing venture capitalist, writes Joe Nocera: "If you spend any time actually looking into how the Department of Energy doles out the loan guarantees, you quickly realize that it’s not acting like a venture capitalist. Rather, it is funding projects that have already attracted private capital -- lots of it. The private sector, in other words, is still the one picking winners and losers. What the program is essentially doing is moving alternative energy innovations to full-scale development. Why is the government doing this? Because this is precisely where the private sector fails...In this country, it is relatively easy to get venture capital for a good idea -- and alternative energy has attracted billions in the past few years. What is hard to come by is money to fund the far more expensive process of commercializing the innovation."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.