Wonkbook: The radical Republican tactic behind Obama’s controversial nominations
By Ezra Klein,
Joshua Roberts BLOOMBERG
The less obvious, but perhaps more true, interpretation is that Wednesday's appointments are a salvo in an ongoing war over a controversial tactic that's Thomas Mann has dubbed "a modern-day form of nullification.”
Obama made four recess appointments on Wednesday. One of them lifted Richard Cordray to head of the Consumer Financial protection Bureau. Another added three members to the National Labor Relations Board. But despite having hundreds of nominees outstanding -- including for important positions like the Federal Reserve's Board of Governors and the FDIC -- Obama didn't pull a Teddy Roosevelt and make 160 appointments on the same day. Why? What makes these four nominees different from all other nominees?
The answer is that, without them, the institutions they're intended to lead will fail. Obama's maneuver was about the agencies, not the appointees. In the absence of a director, the CFPB can't exercise its powers. The expiration of Craig Becker's term on the NLRB, meanwhile, means the board is about to fall from three members to two members -- a number that the Supreme Court has ruled is less than a legal quorum, and so a number that means the NLRB cannot make binding rulings.
This is not an accident: Republicans have straightforwardly argued that they would obstruct the confirmation of any and all nominees to the CFPB until the Obama administration agreed to radically reform the agency. They were, in other words, using their power to block nominations to hold kill or change agencies that they didn't have the votes to reform through the normal legislative order. Much the same has been happening at the NLRB. A That's what Mann means when he invokes "nullification": just as the original nullification crisis was about states refusing to implement federal laws that their representatives did not have the votes to overturn, the modern-day incarnation features Republicans refusing to implement laws they don't have the votes to overturn. And this is what Obama is fighting.
As Brian Beutler puts it, Obama's maneuver "does more than fill vacancies. It actually restores the power the agency was given under the law — power Republicans were hoping to strip without passing new legislation. That’s the key thread connecting these recess appointments — and why other languishing nominees haven’t been recess appointed." So though Obama is setting a new precedent with this move, it's not clear that the precedent he intends to set is related to the obstruction of nominees. Rather, it seems related to Republican attempts to use the nomination process to undermine agencies they dislike.
1) Obama appointed Richard Cordray to head the CFPB report David Nakamura and Felicia Sonmez: "In a bold act of political defiance, President Obama installed Richard Cordray as head of a new consumer watchdog agency Wednesday, bypassing Republican opposition in the Senate that derailed his nomination last month...Senate Republicans had successfully filibustered Cordray’s nomination to head the Consumer Financial Protection Bureau (CFPB) in December, and Obama said he would use a recess appointment to overcome their objections and put Cordray, a former Ohio attorney general, in the job. Cordray, 52, has been leading the day-to-day functions of the bureau as an employee of the Treasury Department...The appointment marks both the escalation and the denouement of one of the most contentious fights in Washington since Obama, in July 2010, signed into law the legislation establishing the watchdog agency.”
Who is Richard Cordray? Suzy Khimm makes the introduction.
2) He also appointed three members to the NLRB reports Melanie Trottman: "President Barack Obama on Wednesday said he will use a recess appointment to put two Democrats and one Republican on the National Labor Relations Board. The move sidesteps Senate approvals to prevent the board from all but ceasing to function this year. It came hours after the president said he would use the same process to install Richard Cordray as head of the new Consumer Financial Protection Bureau. The appointees include Democratic union lawyer Richard Griffin, Democratic Labor Department official Sharon Block and Republican NLRB lawyer Terence Flynn. The board lost its quorum and much of its decision-making ability on Tuesday when the term of Democrat Craig Becker--an earlier recess appointee--expired. These appointments allow it to fully function again. The moves return the board to its full slate of five members for the first time since August 2010.”
@ObsoleteDogma: I'll ask again: if Obama will recess appoint CFPB and NLRB positions, why not also Federal Reserve seats?
3) America lags in economic mobility reports Jason DeParle: "Many researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage...At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) -- a country famous for its class constraints...By emphasizing the influence of family background, the studies not only challenge American identity but speak to the debate about inequality. While liberals often complain that the United States has unusually large income gaps, many conservatives have argued that the system is fair because mobility is especially high, too: everyone can climb the ladder. Now the evidence suggests that America is not only less equal, but also less mobile.”
@chrislhayes: I'm starting to think we're going to see an actual economic recovery in 2012.
4) Obama to unveil details of an austere military strategy report Craig Whitlock and Peter Whoriskey: "President Obama is scheduled to make a rare visit to the Pentagon on Thursday to unveil details of a strategic review for the U.S. military that will consolidate missions and downsize the ambitions of the armed forces as they adjust to a new era of austerity, officials said. Obama, who will be joined by Defense Secretary Leon E. Panetta and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, will place his personal imprint on a new military strategy that Pentagon officials have been preparing for months in anticipation of the largest cuts to the defense budget since the end of the Cold War...The strategy review will not spell out potential $480 billion to $1 trillion in spending cuts that the Pentagon is facing over the next decade. Details of those reductions will begin to trickle out next month, when the Obama administration releases its proposed federal budget for 2013.”
5) The Fed is urging action on housing report Nick Timiraos and Alan Zibel: "The Federal Reserve, in an unusual foray into housing policy, expressed alarm over the battered home market and called for more aggressive action from Congress and other policy makers. Housing policy is outside the traditional purview of the central bank, but Fed Chairman Ben Bernanke and others are clearly worried that housing has stymied the effect of the bank's low-interest-rate policies. In a 26-page paper sent to top lawmakers on congressional banking committees, the Fed warned that tight mortgage-lending standards threaten to hold back the economy. The Fed also signaled support for more aggressive use of Fannie Mae and Freddie Mac to support a housing recovery. The firms, which don't make loans but purchase them from lenders, were taken over by the government three years ago and are overseen by a separate regulator, the Federal Housing Finance Agency, which has strictly interpreted its charge to limit the firms' losses.’”
@BCAppelbaum: Fed says housing market can be improved only through "persistent and careful efforts." Sounds like a job for Congress.
1) Obama was right to appoint Richard Cordray writes James Warren: "If our politics weren't quite so polarized, and folks stuck a bit more to the facts in public debate, maybe far more people would know what Cordray symbolizes. They would know that they should be happy that a frustrated White House has circumvented a Senate filibuster last month and will try to actually protect consumers...So why should regular folks care about Cordray? For one, we really do need some coordinated oversight of lending practices and financial products involving consumers. Creating the agency was quite a feat, especially given decades of bureaucratic drift that left multiple agencies feeling empowered to monitor bits and pieces of our consumer lives, albeit in often half-hearted and unfocused ways.”
2) Rick Santorum's strategy to help workers by cutting taxes on manufacturers is misguided writes David Frum: "Santorum's concern for the American middle class has been one of the most attractive features of his candidacy for the Republican nomination. Alone among the Republican candidates, he took note of the freezing of upward mobility and the stagnation of middle-class wages even before the financial crisis of 2008. So what's his plan? Santorum has proposed a special lowered rate of federal tax for manufacturing. A minute's thought will suggest why this is a poor idea. What is manufacturing anyway? Building a car is manufacturing, obviously. What about building a mobile home? What about building a non-mobile home? Assembling a computer out of parts is likewise obviously manufacturing. What about assembling a taco? Clearly, talking on the phone is not manufacturing. What about operating a computer help center? No? But what if the center is operated by the computer assembler? Yes? Okay, now suppose the computer assembler has 80 percent of its staff on the phones, and only 20 percent on the shop floor.”
3) These procedural arms races are ultimately bad for both sides, writes Ezra Klein: "Is President Obama setting a worrying precedent by overruling Congress’s intention to remain in pro forma session to recess appoint consumer-finance chief Richard Cordray? Absolutely. Liberals would be hitting the roof if George W. Bush did this. Has Congress been creating a worrying precedent by blocking record numbers of appointments and holding continuous pro forma sessions in order to deny the president his traditional power to make recess appointments? Without doubt. You can get the gory procedural details from Brad Plumer, but I would observe that this is a further descent into government by loophole: One side figures out how to twist the rules to their advantage, the other side twists a different rule in response, and soon enough, you have a war of procedural interpretations rather than a vote on the floor of both chambers of Congress."
@MattYglesias: "POTUS had no choice to respond in kind to GOP constitutional hardball, but don't fool yourself -- this is a spiral of shadiness."
4) Speculators drove the housing bubble writes Matthew Yglesias: "An old pearl of wisdom from the Great Depression held that investors should have known it was time to sell when shoeshine boys started handing out stock tips. The day traders of the late-1990s were a recent version of the same phenomenon. When the dumb money is rushing into the market, it’s probably a smart time for you to bail. Until this past week, I thought of the house-flipping craze of the mid-aughts in the same light. The fact that there were enough speculative, small-time investors in house prices that A&E turned it into a reality show was surely a sign of a market out of control. But what I didn’t realize was that, unlike the shoe-shine tipsters of the ’20s, house-flippers were actually driving the price explosion. New research from the Federal Reserve Bank of New York indicates that flippers were in fact sufficiently numerous and active to make a major impact on prices, and that these facts have interesting implications for both monetary policy and bank regulation in the future.”
Brit-pop interlude: Kate Nash plays “I Hate Seagulls” live in Amsterdam.
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Still to come: The Fed urges action on housing; HHS rejects waiver requests; drama in Indiana over “right to work”; debate over natural gas exports; and turtles high five each other.
Republicans may hold up Fed confirmations over recess appointments report Corey Boles and Alan Zibel: "President Barack Obama‘s contentious decision to use a recess appointment to install the first director of a new consumer financial agency could result in delays to Senate confirmations of two recently announced appointees to the Federal Reserve Board, two Senate Republican leadership aides said...Last week, Obama nominated a Democrat and Republican to fill the two vacant spots on the Federal Reserve’s Board of Governors. The administration hoped that by putting forward a Democrat in Harvard University finance professor Jeremy Stein and the Republican Jerome Powell, who was undersecretary of the Treasury for domestic finance under President George H.W. Bush, the political process to both men being confirmed by the Senate could be expedited. But the senior GOP aides said that the president’s decision to circumvent the Senate by using a recess appointment to name former Ohio Attorney General Richard Cordray to head the Consumer Financial Protection Bureau could evaporate any goodwill he generated by splitting the Fed nominees between the parties.”
@drgrist: If the Founding Fathers had deemed a supermajority requirement necessary to avoid tyranny, they would have put one in the Constitution.
Republicans are again arguing about process, not policy reports Felicia Sonmez: "With the news that President Obama plans to install Richard Cordray as head of the Consumer Financial Protection Bureau through a recess appointment, congressional Republicans for the second time in a month find themselves in something of an uphill battle: The GOP is making an argument based largely on procedure while the White House and Democrats are the ones arguing policy. The problem for Republicans is that while they’re in the right when it comes to Democrats’ about-face on recess appointments, they face two big roadblocks: the intricacies of procedural arguments often fail to resonate with the public, and Congress’s approval rating remains mired in the single digits. The White House, meanwhile, can make the argument that it is installing Cordray to make good on a promise of financial regulatory reform.”
Detroit automakers had a good 2011 reports Michael Fletcher: "The three Detroit-area automakers reported strong sales gains in 2011, as low interest rates and slowly rising consumer confidence combined for the domestic auto industry’s best year since 2008. Chrysler posted a 26 percent sales increase in 2011, General Motors sales were up 13 percent for the year, and Ford sales increased 11 percent in 2011. Analysts noted that all three companies gained market share in 2011. The increases built on a turnaround that began after General Motors and Chrysler were put into bankruptcy in 2009, leading the federal government to take a large ownership stake in the two companies. Despite some severe bumps in the overall economy, the nation’s auto showrooms were buzzing last year, analysts said. Automakers sold about 12.8 million cars and trucks last year in the United States, up 10 percent over the 11.6 million vehicles sold in 2010. Despite the increase, that was far below the record 17.4 million vehicles sold in 2000.’”
The apartment-vacancy rate is at its lowest level since 2001 reports Dawn Wotapka: "The nation's apartment-vacancy rate in the fourth quarter fell to its lowest level since late 2001 as Americans continued to favor renting homes instead of buying them...In the fourth quarter, the vacancy rate fell to 5.2% from 6.6% a year earlier and 5.6% at the end of the third quarter, according to Reis. The vacancy rate rose as high as 8% in 2009...One concern for landlords is that the housing market will bottom or improve in 2012, which could curb rental demand. ‘Most any person or industry would be happy to see the single-family market stabilize, except for the apartment sector,’ said Richard Anderson, an analyst who covers apartment companies for BMO Capital Markets. ‘You're either an owner or a renter. There's no middle ground.’”
Housing is not the key to recovery writes Edward Glaeser: "It is a popular mantra, even among some economists, that the economy cannot recover until the housing market does, but I can’t imagine how either economic theory or history justifies that connection. Housing prices remained at 1991-crash levels through most of the good years of the mid-1990s. There is a tendency to spend some housing wealth, but that wealth isn’t the only driver of consumer demand. The current drop in the unemployment rate wasn’t produced by rising housing prices, and a sustained recovery depends far more on the fate of banks in Frankfurt than on home values in Atlanta. The biggest gift of the housing bust, however, should be wisdom. We should learn the folly of bribing Americans, through the home-mortgage interest deduction and the implicit subsidies offered by Freddie Mac and Fannie Mae, to borrow as much as possible to bet on the vagaries of housing prices. We should recognize that big leveraged bets on housing carry big risks. We also should recognize the folly of believing real-estate professionals, and other interested parties, who tell us that investing in housing is a sure path to wealth.”
Tumblr interlude: Ron [Paul] Swanson.
Health reform opponents ask court to add plaintiffs report Jess Bravin and Emily Maltby: "A small-business group fighting President Barack Obama's health-care law asked the Supreme Court on Wednesday to add two plaintiffs to its lawsuit after possible problems arose with an initial plaintiff. The case moved through the lower courts based in part on an assertion by Mary Brown, the owner of an auto-repair shop in Florida. Ms. Brown said her business planning was jeopardized by the need to set aside funds to pay for her health insurance beginning in 2014, when a provision requiring most Americans to carry such coverage or pay a penalty takes effect...The Wall Street Journal reported last month that Ms. Brown closed her shop in August and filed for personal bankruptcy the following month. Without owning a business, it could be harder for her to argue that the law harms her, and her financial woes suggest she could be exempt from penalties for not having health insurance. The Supreme Court will hear the case in March, with a decision expected before July. The most significant issue is the one raised by Ms. Brown--whether Congress can impose the insurance mandate on Americans. In addition, 26 states are challenging a provision of the law that expands Medicaid coverage for lower-income Americans.”
HHS rejected weakening MLR requirements in two states reports Sam Baker: "The Health and Human Services Department on Wednesday denied two more states' requests to soften new rules that govern insurers' spending. HHS denied Kansas's and Oklahoma's requests for adjustment to the healthcare law's medical loss ratio (MLR) provisions. The law requires insurers selling policies to individuals to spend 80 percent of their premiums on medical costs, with the remaining 20 percent for profit and administrative costs. HHS has rejected MLR adjustments in eight states and approved them in six...Oklahoma had asked for a 70 percent standard in 2012, which would increase to 75 percent in 2013. All plans in all states must meet an 80 percent MLR by 2014. Kansas wanted a 73 percent MLR this year and 76 percent in 2013.”
Indiana Democrats blocked consideration of a "right to work" bill reports Monica Davey: "On what was to be the first day of a new lawmaking session in Indiana, most Democratic state representatives stayed away from the House floor on Wednesday, preventing the Republican majority, which has made ‘right to work’ legislation a top priority, from doing business. House Democrats, who hold 40 of the 100 seats, argued that citizens needed more time to consider the effects of the proposed measure. Republicans, who need 67 lawmakers to be present to meet quorum requirements, said the issue had already been studied in depth and would help Indiana attract new, needed businesses and jobs...In place in 22 states, right-to-work laws prohibit union contracts at private sector workplaces from requiring workers to pay dues or other fees to a union. In states without the laws, employees at unionized workplaces generally have to pay such fees.”
Santorum’s fiscal policy is more conservative than Romney’s report Craig Whitlock and Peter Whoriskey: "Rick Santorum has a 32-point plan for ‘building economic freedom.’ Mitt Romney has a 59-point plan to ‘get America back to work.’ At first glance, there aren’t huge differences between the two on proposed budget and economic reforms. But Santorum is slightly to Romney’s right when it comes to many of the specific campaign promises. Upon taking office, Santorum vows to cut non-defense discretionary spending to 2008 levels -- about a 28 percent reduction from fiscal 2012 levels. Romney, by contrast, would cut the same category of spending by 5 percent. Both vow to pass a balanced budget amendment that would cap spending, but Santorum would set the cap at 18 percent of GDP while Romney sets it at 20 percent, with promises to lower the cap further ‘as spending comes under control.’ Santorum also takes a slightly harder line when it comes to regulatory policy, vowing to ‘eliminate all other Obama era regulations with economic impact over $100 million.’ Romney is more vague, promising to ‘initiate review and elimination’ of regulations that ‘unduly burden the economy.’”
@mattyglesias: Conservatives praising Santorum's social mobility agenda appear not to have read his tax plan.
Santorum used to back education reform writes Dana Goldstein: "Once upon a time, Rick Santorum was a major supporter of federally mandated, standards and accountability-driven education reform. As a senator, he was a high-profile backer of the 2001 No Child Left Behind Act, even after his amendment mandating the teaching of intelligent design was stripped from the law. Fast forward to 2011, and Santorum--like Mitt Romney--can't seem to run away fast enough from his centrist education record. Santorum's new tax plan calls not for protecting education funding, but for cutting all social spending, including spending on schools, by $5 trillion over five years. In a CNN interview last week, Santorum said, ‘I talk all the time about having voted for No Child Left Behind. And, you know, it was a mistake. You know, it was a ... a dumb thing to vote for because it gave more federal control over education, which was something that, you know, I didn’t advocate for, but I voted for.’”
A debate is flaring over natural gas exports reports Brad Plumer: "Last year, fuel was America’s #1 export. But not everyone’s so keen on watching the United States ship out all that energy to the rest of the world. Case in point: On Wednesday, Rep. Edward Markey (D-Mass.) fired off a letter to Energy Secretary Steven Chu asking him whether it was really such a swell idea for the United States to be exporting its newly abundant natural gas resources all over the globe. Some experts, after all, have raised concerns that such exports could have unexpected downsides. On the surface, there’s an alluring logic in exporting natural gas. The United States has been flooded with cheap gas thanks to its newly exploitable (and potentially large) shale resources. And gas prices are higher in many other countries. So why not ramp up exports, turn a profit, and reap the gains from trade?...In his letter, however, Markey notes that such plans could lead to unintended consequences. For starters, natural gas isn’t as fungible as oil -- partly because it’s harder to store and ship -- which means the price isn’t the same everywhere in the world. If the United States ships natural gas abroad, then U.S. consumers could face higher energy prices at home. One consultant report, for instance, estimates that the Sabine project could hike U.S. natural gas prices by 11.6 percent by 2015.”
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.