Monday, May 24, 2010; 8:02 AM
Some Congressional Democrats are opposing key spending bills that they say drive the country deeper in debt. Meanwhile, Barney Frank is pushing for the financial reform conference committee to be televised on C-SPAN; would public opinion toughen the bill even further? And all evidence suggests the EPA was unprepared for an oil spill of the scale of the BP incident.
It's Monday. Welcome to Wonkbook.
More and more Congressional Democrats are resisting spending bills on deficit grounds, report Lori Montgomery and Shailagh Murray: "'It's time to start paying for things,' said Rep. Kathy Dahlkemper (D-Pa.), a freshman who voted for last year's economic stimulus bill but said she is likely to oppose the next spending package, scheduled to hit the House floor Tuesday. 'We've done some good things, but one of the best things we could do right now is get control of our fiscal house.'
With the national debt at its highest level in nearly 60 years, the question of whether to cut spending -- and if so, how -- is pitting liberals against conservatives, and Congress against the president. The White House has proposed a three-year freeze in programs unrelated to national security and warned House leaders Friday that it might go further, targeting the Defense Department for cuts. Meanwhile, House leaders unable to agree on a long-term budget blueprint are considering other ways to signal fiscal toughness, including a one-year budget plan that would cut 2011 spending even more deeply than Obama's freeze."
Barney Frank wants conference committee negotiations televised, reports Carrie Budoff Brown: "House Financial Services Committee Chairman Barney Frank (D-Mass.) even wants C-SPAN there, he said, to capture their decision making ¿ and expose members who vote with Wall Street. 'Money is influential, but votes will kick money's ass any time they come up against each other,' Frank said. 'In the Senate, once public opinion got engaged, it blew away the lobbyists, the money, campaign contributions. Public opinion drove that bill.' Proponents of this approach say it could be a 180-degree shift from the endgame negotiations on health care reform, which took place entirely behind closed doors and involved only Democrats." However, private negotiations would still take place, where lobbyists could have an impact.
The EPA was not prepared for a spill of this magnitude, report Jeffrey Ball, Stephen Power, and Neil King: "Signs that the spill is overwhelming the U.S. environmental infrastructure can be seen in the dispute between BP and the EPA over the chemicals BP is using to break up the oil slick. BP has been spraying unprecedented quantities of Corexit 9500, which the EPA approved for use on oil spills although EPA tests show it is more toxic to certain sea life than some other dispersants the agency has also approved. BP has been spraying the chemicals on the Gulf's surface and in smaller amounts directly at the well on the sea floor, a tactic never before tried at these depths and approved on May 15.
Then, last Thursday, amid mounting questions in the media and on Capitol Hill, the EPA changed course. It told BP to switch to less-toxic dispersants by Sunday night. But, according to a letter from BP that the EPA released over the weekend, the oil company wants to keep using Corexit. BP says alternatives raise other environmental questions and are not available in sufficient volume for this spill." Scientists say the agency should have investigated dispersants before the spill.
Soft rock interlude: Kisses' "Bermuda". Table of Contents: Wall Street is relieved by the mildness of financial reform (and other FinReg news); the House Natural Resources Committee chairman is demanding answers from the White House on the oil spill (and other energy news); a crash in Europe could set off a chain reaction that takes the US with it (and other economic news); and health insurers are wondering how their current plans will be affected by health care reform (and other domestic policy news).
Some on Wall Street are relieved that financial reform will be as mild as it is, report Eric Dash and Nelson Schwartz: "'If you talk to anyone privately, there's a sigh of relief,' said one veteran investment banker who insisted on anonymity because of the delicacy of the issue. 'It'll crimp the profit pool initially by 15 or 20 percent and increase oversight and compliance costs, but there's no breakup of any institution or onerous new taxes.' The reaction of the market to the legislation echoed that view. Stocks of financial institutions performed well on Friday, with shares of JPMorgan Chase and Morgan Stanley each up 5 percent.
Richard Ramsden, an analyst for Goldman Sachs, estimated that the bill passed by the Senate on Thursday would initially cut profits by as much as 20 percent, a sizable bite, but hardly catastrophic given the sharp rebound in earnings since the depth of the financial crisis. Big banks and brokerage firms, experts said, will adjust to the changes, creating new revenue streams to make up for reduced profits, and find ways to work around the new regulations." (Emphasis Wonkbook's)
Even so, the derivatives language is souring many financiers on the bill, reports Ben White: "The derivatives push was supposed to die in the Senate Agriculture Committee. It didn't. Assurances were then whispered from Washington to Wall Street that it would be quickly excised by Senate Banking Committee Chairman Chris Dodd (D-Conn.). It wasn't. Then, it was just a matter of Sen. Blanche Lincoln (D-Ark.), author of the measure, winning her primary outright and tacking back to the middle. She didn't. Now, Wall Street officials have been told that conference committee members who will begin trying to meld the Senate and House versions of financial reform this week will finally administer last rites, probably just after Lincoln's June 8 runoff. But given the track record thus far, bank officials are not so sure."
Fannie and Freddie reform raises uncomfortable questions about whether the government should promote home loans, reports Nick Timiraos: "Among the weighty questions awaiting policy makers: Should the government continue to promote long-term, fixed-rate loans? Higher employment volatility and divorce rates have contributed to a 'rate of homeownership that is more volatile,' and less compatible with long-term mortgages, says Raj Date, executive director of the Cambridge Winter Center for Financial Institutions Policy, a think tank that researches financial-institution policy. Moving to a fully private market would raise housing costs, he says, but it would better protect taxpayers. But that approach would likely be unpopular. Americans have come to regard fixed-rate loans 'as part of their civil rights,' says Susan Woodward, a former chief economist for the Department of Housing and Urban Development and the Securities and Exchange Commission. It would not only limit homeownership, she says, but would also transfer risks to the biggest banks, which would grow more dominant still in the market."
Wall Street executives still get copious fringe benefits, reports Tomoeh Murakami Tse: "Some of the nation's biggest financial firms have increased the perks and benefits they pay their chief executives, despite the glaring spotlight from a public fed up with handsome bonuses at bailed-out Wall Street banks. The lavish fringe benefits included country club dues, chauffeured drivers, personal financial planning services, home security systems and parking. Some increases were in perks that Obama administration officials consider among the most egregious, such as corporate aircrafts for personal travel. J.P. Morgan Chase awarded its chairman and chief executive, Jamie Dimon, $91,000 in personal travel on the company jet in 2009, up from about $54,000 the previous year. His total perks increased 19 percent, to $266,000. Dimon, along with Goldman Sachs chief executive Lloyd Blankfein and McLean-based Capital One chief executive Richard Fairbank, also received sharply higher perks related to personal and home security."
Financial reform leaves the structure of the financial industry roughly intact, writes Binyamin Appelbaum: "The bill does not, as some liberal Democrats and populist Republicans had advocated, require the breakup of conglomerated behemoths. It does not prohibit some of the most speculative genres of Wall Street trading. It does not reduce the vast menagerie of financial companies that compete with banks. The few exceptions were late additions: the administration waited until January to embrace the Volcker Rule, prohibiting banks from engaging in proprietary trading or investing on the side. And in April, Senator Blanche Lincoln of Arkansas added language that would curb the trading of derivatives, though the administration opposes that.
The approach embraced by President Obama largely reflected the judgments of Treasury Secretary Timothy F. Geithner and Lawrence H. Summers, the director of the National Economic Council. They argued that the financial system was fundamentally sound, and that the problem was a lack of government."
Paul Krugman argues that grassroots opposition to financial reform is corporate-driven: "Many Obama supporters have been disappointed by what they see as the administration's mildness on regulatory issues ¿ its embrace of limited financial reform that doesn't break up the biggest banks, its support for offshore drilling, and so on. Yet corporate interests are balking at even modest changes from the permissiveness of the Bush era. From the outside, this rage against regulation seems bizarre. I mean, what did they expect? The financial industry, in particular, ran wild under deregulation, eventually bringing on a crisis that has left 15 million Americans unemployed, and required large-scale taxpayer-financed bailouts to avoid an even worse outcome. Did Wall Street expect to emerge from all that without facing some new restrictions? Apparently it did."
Wall Street will likely find ways around regulations, writes Peter Goodman: "'The financial industry always finds ways to stay ahead of the regulators,' says Kenneth S. Rogoff, a former chief economist at the International Monetary Fund and now a professor at Harvard. 'Whatever law they design today, if it's not updated in 15 or so years, it will be completely ineffective, completely irrelevant.' Not that regulatory efforts are futile. The history of finance is full of crises that spawn regulatory steps, snuffing out trouble before a new variant pops up. The wildcat banking era of the 19th century, when banks in multiple states issued their own (sometimes worthless) currency, spurred the creation of a national bank supervisor. When opportunists and charlatans sold stocks to the public without disclosing the extent of their debts, culminating in the stock market crash of 1929, the federal government created the Securities and Exchange Commission.
The New Deal reforms imbued traditional banking with a sense of safety, but also encouraged financiers to seek out greater profits by taking risks in areas beyond regulatory purview. The resulting shadow banking system that emerged over the last quarter-century -- the murky world of unregulated corporate insurance contracts and other flavors of so-called derivatives ¿ nurtured the recklessness that ultimately metastasized into today's global crisis. The government had effectively tamed the traditional banking business. Wall Street expanded to more adventurous terrain, erecting frontier-style casinos beyond the edges of regulation."
Long-form interlude: David Cho, Brady Dennis, and Michael Shear explain how financial reform finally got through the Senate.
House Natural Resources Chair Nick Rahall wants the White House to cough up documents related to the spill, reports Jake Sherman: "Rep. Nick Rahall (D-W.Va.), the committee's chairman, last week sent a top National Oceanic and Atmospheric Administration official a letter asking her to release unredacted copies of any official documents that discussed how animals and wildlife would be affected by offshore drilling in the Gulf of Mexico. He is seeking documents that cover the last five years, putting the Obama administration's regulation of the industry square in his cross hairs.
Rahall's committee has hearings scheduled this week for Wednesday and Thursday, where he'll hear testimony from several Obama administration officials ¿-- most notably the first Capitol Hill appearance since the disaster for Elizabeth Birnbaum, the head of the much maligned Minerals Management Service. The panel will also hear from Interior Secretary Ken Salazar, who has publicly expressed frustration in recent days about the lack of progress BP is making in stopping the leak.
The spill is endangering ties between BP and environmental groups, reports Joe Stephens: "The crude emanating from BP's well threatens to befoul a number of alliances between energy conglomerates and environmental nonprofits. At least one group, Conservation International, acknowledges that it is reassessing its ties to the oil company, with an eye toward protecting its reputation. This is going to be a real test for charities such as the Nature Conservancy,' said Dean Zerbe, a lawyer who investigated the Conservancy's relations with its donors when he worked for the Senate Finance Committee. 'This not only stains BP, but, if they don't respond properly, it also stains those who have been benefiting from their money and their support.'
Some purists believe environmental groups should keep a healthy distance from certain kinds of corporations, particularly those whose core mission poses risks to the environment. They argue that the BP spill shows the downside to what they view as deals with the devil."
BP isn't sure the latest attempt to cap the leak will work, report Benoit Faucon and Jason Womack: "In an email to staff late Friday, Tony Hayward said, 'Like all of you, and the outside world, I have shared a huge sense of frustration that we have not yet been able to stop the leak' that started a month ago when a rig leased by BP exploded and sank in the Gulf of Mexico. Mr. Hayward said that an effort by BP to cap the well using heavy drilling fluids, a process known as 'top kill' that's due to be implemented early next week, 'would be another first for this technology at these water depths and so, we cannot take its success for granted.' BP said it would be at least Tuesday before engineers could start attempting the top kill, Associated Press reported. Should the effort misfire, scientists told AP, it could lead to new problems. Ed Overton, a Louisiana State University professor of environmental studies, said the crippled piece of equipment called a blowout preventer could spring a new leak that could spew untold gallons of oil if there's a weak spot that is vulnerable to pressure from the heavy mud.
Louisiana Governor Bobby Jindal is criticizing both BP's and the feds' response to the spill, reports Campbell Robertson: "At a news conference at a marina here, Gov. Bobby Jindal recited a timeline of his requests to BP and the Coast Guard for containment boom, skimmers and other supplies, saying that the resources were still far from adequate weeks later. Around 65 miles of Louisiana coastline had been 'oiled,' he said, as local officials held aloft pictures of oil-coated pelicans and a porpoise. Saying that promises of more supplies frequently fell through, Mr. Jindal said he was going to send members of the Louisiana National Guard and Wildlife and Fisheries agents to monitor the oil and even to locate boom and other response supplies, which he and other officials said were available but sitting unused.
Mr. Jindal also urged the Army Corps of Engineers to immediately approve a plan to build artificial barrier islands out of sand to hold back the oil, a plan widely praised by local parish officials but questioned by some experts. He said he would raise the issue with President Obama in a conference call on Monday."
Obama created a commission to investigate the oil spill, reports Mary Jackson Randall: "The president has called on former Sen. Bob Graham and former Environmental Protection Agency Administrator William Reilly to lead the National Commission on the BP Deepwater Horizon Oil Spill. Mr. Graham is a former two-term governor of Florida and served for 18 years in the U.S. Senate. Mr. Reilly is a founding partner of Aqua International Partners LP, a private equity fund that invests in water and renewable energy companies. He's also a senior adviser to TPG Capital LP, an international investment partnership. 'I can't think of two people who will bring greater experience or better judgment to the task at hand,' Mr. Obama said.
The president plans to appoint five other people to the bipartisan commission--but no sitting government employees or elected officials. The panel will focus on environmental and safety precautions needed to prevent future accidents."
Oil will remain a key part of the administration's energy strategy, reports John Broder: "Even as the oil has continued to gush beneath the gulf, the administration has not been shy about acknowledging the reality that a third of domestically produced crude oil comes from offshore and that undersea reserves will continue to be an important source of American energy for decades. On March 31, Mr. Obama announced a significant expansion of offshore oil development, just three weeks before the Deepwater Horizon drilling rig exploded, a policy shift long in the making and unfortunate in the timing. Interior Secretary Ken Salazar, charged with both leasing the Outer Continental Shelf for drilling and protecting it from the ravages of oil development, reminded Congress this week that the administration was pursuing what he called a 'balanced' energy strategy for the future that included substantial and expanded offshore exploration.
'Offshore development is a necessary part of that future,' Mr. Salazar told the Senate Energy and Natural Resources Committee this week. But he emphasized that new safety and environmental safeguards would have to be put in place before extensive new drilling was permitted."
Accurate measurements of the Gulf spill are possible, write Ian MacDonald, John Amos, Timothy Crone, and Steve Wereley: "It is our view that accurate, continuously updated measurements are not only possible, but absolutely essential if we are to respond effectively to this and future disasters. That is why we are conducting satellite image analysis and image-based fluid-flow analysis to provide an independent assessment of the oil spill. For example, the siphon tube inserted into the damaged pipe on Monday is reported to be recovering 5,000 barrels per day, but large and unknown quantities of oil are still escaping. BP is also planning to try a procedure called a "top kill," in which heavy fluids and drilling cements are to be injected into the valve, but that move would likely provide only partial relief. Without knowing the flow's true magnitude, how can anyone judge the success of any approach? Without determining how much oil is beneath the ocean's surface and how much is floating toward land, how can we best direct response efforts?"
Animated hip-hop interlude: Wu Tang Clan's "Da Mystery of Chessboxin'". With Legos.
A wrong turn in Europe could take the US down with it, report Howard Schneider and Neil Irwin: "U.S. banks are not heavily exposed to the weaker European countries, Fed governor Daniel K. Tarullo said in testimony on Capitol Hill last week. Banks are in better shape overall, after fresh infusions of capital. Meanwhile, the U.S. economic recovery has been strengthening through the year, with jobs added in five of the last six months, and recent consumer spending and industrial output stronger than most forecasts.
But the fallout from Europe could still be widely felt. U.S. trade officials, hoping the country can dramatically boost its exports, are dismayed at the steep drop in the value of the euro -- which is around $1.25, down from more than $1.50 in November. The decline makes American goods more expensive compared with those produced in Europe. The slide in the common European currency could also change the way China and a host of Asian countries approach their currency policies, possibly making them less likely to agree with U.S. demands to raise the value of their money. If they raised it, Asian goods would become more expensive in world markets, making it easier for U.S. products to compete."
Hillary Clinton is pushing China to expand access to its markets, reports Jay Solomon: "'For trade to work in any economy, for it to produce the benefits we know it can, there must be a level playing field where domestic and international companies can compete freely,' Mrs. Clinton said Sunday morning, without mentioning China specifically. 'That's what drives innovation, benefits consumers and ultimately stimulates broad-based and sustainable growth,' she said. Mrs. Clinton spoke at a Shanghai facility of Boeing Co., which she said serves as a model for how U.S. companies can cooperate with Chinese firms to create jobs for both countries. Boeing has a joint-venture with China Eastern Airlines, and China is Boeing's largest market outside the U.S. 'American companies want to compete in China. They want to sell goods made by American workers to Chinese consumers with rising incomes and increasing demand,' Mrs. Clinton said. 'This is a win-win for our two countries.'"
Hu Jintao insists he wants gradual currency reform, report Arshad Mohammed and Glenn Somerville: "China will stick to gradual reform of its yuan currency, President Hu Jintao told the United States at the start of high-level talks on Monday in which North Korea emerged as a point of potential contention. Hu, speaking at the opening session of the U.S.-China Strategic and Economic Dialogue (S&ED), said the two global powers needed to enhance economic policy coordination and work together to promote 'full economic recovery.' The world's biggest and third biggest economies are seeking to steady relations after a burst of tensions early this year, and while Hu broke no new ground on the currency dispute that has divided them, he set a generally conciliatory tone for the two days of talks. 'China will continue to steadily advance reform of the renminbi exchange rate formation mechanism following the principles of being independent, controllable and gradual,' he said. The renminbi is another name for the yuan."
The US is mirroring European-style unemployment, and in a bad way, writes Clive Crook: "In a new study for the Brookings Institution, Michael Elsby and collaborators look at 'The Labour Market in the Great Recession'. They confirm the deterioration of the US jobs market during this recession has been the worst for more than 60 years. In some ways, earlier patterns have been replicated, but scaled up. You can still see characteristic differences between the US and European labour markets. But these patterns have shifted recently, and not to the US's advantage. The US labour market (like the UK's to a smaller extent) has always had high turnover. A lot of the labour force either quit or get laid-off each year, but these workers are rapidly rehired. Turnover in Europe is typically much slower, with higher unemployment on balance, especially of long duration. A secondary theme is that the reason that recessions raise joblessness in the US is usually more to do with a slow-down in hiring than any surge in lay-offs and people quitting.
This time, as in previous recessions, US unemployment inflows rose somewhat at the start of the recession ¿ though with an unusually pronounced shift from people quitting to layoffs. More important, though, subsequent rates of hiring have not just declined, they have crashed. This is new. This is why long-term unemployment has soared, and why the US is looking more European -- in a bad way."
A double-dip recession is looking likelier, writes Christopher Wood:"Meanwhile, in America bank lending continues to decline as does the velocity of money in circulation. If this persists, markets will face worryingly low GDP growth in the U.S. going into 2011. It's this prospect that's begun to be discounted in the recent stock-market correction, which has already seen the S&P 500 give up all its gains for the year. This will sooner or later pave the way for another round of fiscal easing in Washington when both the Obama administration and Congress give up on their current hopes of a normal U.S. recovery.
That political mood swing will again raise the protectionist risk in Washington, with the lightning rod being the Chinese exchange rate. Beijing has been signaling that it will resume incremental appreciation of the renminbi by the middle of this year. But with the renminbi having appreciated by 24% against the euro since late November, China's leaders may be having second thoughts. A trade row between China and the U.S. on top of the growing concerns about a "double dip" in the West is the last thing markets will want to contend with. But they may have to."
America is not yet Greece, writes Fareed Zakaria: "Perhaps the largest difference is that the United States has solid growth prospects, based on economics, technological productivity and demography. That may be why the country seems to have little problem financing its debt. Demand for U.S. Treasury bills remains robust, and foreign governments, including China, have increased their purchases recently. The truth is, if you are a foreign central bank and you want to invest large sums of cash -- tens of billions -- and you need an investment that is reasonably safe and liquid (that is, you can sell it off quickly), there is no better place to put it than American government bonds. It is striking that today America spends less to service its debt, as a percentage of GDP, than it did in 1999 when Bill Clinton's administration was posting budget surpluses. (The reason, of course, is that interest rates are much lower today than they were in 1999.)
But all this good news could turn bad quite easily. The current benign conditions are a short-term phenomenon. In the long run, health-care costs will destroy the federal budget and with it the American economy. Interest rates will surely rise, which will force up the cost of servicing debt. New competitors emerge every year in every industry from other countries that are working hard to make themselves attractive to business."
Seinfeld interlude: Newman's finest moment.
Health care reform lets you keep the health care you have, but could also let your health plan escape regulation, reports David Hilzenrath: "Say you get coverage through your job: Would something as small as an increase in your co-payments forfeit your health plan's exemption? Or would your employer have to do something more dramatic, such as switching from UnitedHealth to WellPoint? The answer could test more than Obama's promise. It could determine how many Americans are affected by key elements of the new law, including provisions meant to improve coverage and protect consumers. Some consumer advocates say that grandfathering could become a giant loophole through which many health plans escape aspects of the overhaul."
About a third of employers could be subject to fines under health care reform, reports Robert Pear: "About one-third of employers subject to major requirements of the new health care law may face tax penalties because they offer health insurance that could be considered unaffordable to some employees, a new study says. The study, by Mercer, one of the nation's largest employee benefit consulting concerns, is based on a survey of nearly 3,000 employers. It suggests that a little-noticed provision of the law could affect far more employers than Congress had assumed. In the raucous debate over health care, Democrats and Republicans focused on a provision under which employers would generally have to offer coverage to employees or pay penalties, starting in 2014. As they study the law, employers are discovering another provision that got much less attention. If a company offers coverage but requires any full-time employees to pay premiums that amount to more than 9.5 percent of their household income, the coverage is deemed unaffordable, and the employer may have to pay a penalty."
Cuts to child care funding are forcing mothers into welfare, reports Peter Goodman: "Despite a substantial increase in federal support for subsidized child care, which has enabled some states to stave off cuts, others have trimmed support, and most have failed to keep pace with rising demand, according to poverty experts and federal officials. That has left swelling numbers of low-income families struggling to reconcile the demands of work and parenting, just as they confront one of the toughest job markets in decades.
The cuts to subsidized child care challenge the central tenet of the welfare overhaul adopted in 1996, which imposed a five-year lifetime limit on cash assistance. Under the change, low-income parents were forced to give up welfare checks and instead seek paychecks, while being promised support ¿ not least, subsidized child care -- that would enable them to work. Now, in this moment of painful budget cuts, with Arizona and more than a dozen other states placing children eligible for subsidized child care on waiting lists, only two kinds of families are reliably securing aid: those under the supervision of child protective services -- which looks after abuse and neglect cases -- and those receiving cash assistance."
The word "retarded" is being removed from all federal laws, reports Julian Pecquet: "Rosa's Law, which will be marked up on Wednesday, would replace those terms with 'intellectual disability' and 'individual with an intellectual disability.' Sen. Barbara Mikulski (D-Md.) introduced the bill last November after promising a constituent she would act if the Maryland legislature passed a similar law. The Maryland law passed unanimously, and Gov. Martin O'Malley (D) signed it into law last year. The bill is named after Rosa Marcellino, who has an intellectual disability and whose family was instrumental in passing the Maryland law. It will be marked up in the Senate Health, Education and Pensions (HELP) Committee this week and is considered non-controversial legislation."
The Baucus-Levin carried interest tax proposal would hurt investment, writes John Rutledge: "Carried interest refers to the share of the capital gains (typically 20%) earned on long-term investments in real estate, venture capital, private equity and other investments organized as partnerships that is allocated to the general (managing) partner. Limited partners (i.e., passive investors) pay this share to align their interests with those of the general partner and to provide incentives for him to increase capital gains. Both general partners and limited partners pay taxes based on the character of the income earned by the partnership: ordinary income rates on dividends and short-term capital gains, and the long-term capital gains rate on the long-term capital gains. Some partnerships, such as hedge funds, earn mostly short-term gains, and pay ordinary income tax rates. Other partnerships, such as real estate, venture capital and private equity, make long-term investments. Their profits are mostly made up of long-term capital gains and are taxed at lower long-term capital gains tax rates as a way to encourage long-term investment.
The economic impact of the proposed tax rate hike is unequivocally negative for long-term investment. It will lead to changes in the terms of investment partnerships that will reduce after-tax returns for all investors, including the limited partners."
We should take a stand against economic discrimination based on looks, writes Deborah Rhode: "Although the government is no longer in the business of enforcing such discrimination, it still allows businesses, schools and other organizations to indulge their own prejudices. Over the past half-century, the United States has expanded protections against discrimination to include race, religion, sex, age, disability and, in a growing number of jurisdictions, sexual orientation. Yet bias based on appearance remains perfectly permissible in all but one state and six cities and counties. Across the rest of the country, looks are the last bastion of acceptable bigotry.
We all know that appearance matters, but the price of prejudice can be steeper than we often assume. In Texas in 1994, an obese woman was rejected for a job as a bus driver when a company doctor assumed she was not up to the task after watching her, in his words, 'waddling down the hall.' He did not perform any agility tests to determine whether she was, as the company would later claim, unfit to evacuate the bus in the event of an accident."