Wonkbook: Murkowski defeated; BP to White House; Deflation concerns
Senator Lisa Murkowski's resolution seeking to strip the EPA of its power to regulate carbon failed 47-53 in the Senate, with six Democrats defecting to back the proposal. But though Murkowski might have lost the vote, it looks like she won the war: It's hard to see a strong climate bill getting 60 votes in a Senate where her bill got 47. And iReid had to make a lot of tough promises in order to beat the Murkowski bill back -- including giving a vote to Jay Rockefeller's bill to delay EPA action for two years.
Meanwhile, the Obama administration has asked that BP executives meet with them in DC, the European debt crisis is sparking deflation worries in the US., and FinReg's first day of conference committee got off to a rocky start.
Happy Friday. Welcome to Wonkbook.
Sen. Lisa Murkowski's effort to strip the EPA of power over greenhouse gas emissions failed: http:/
But at what cost, asks Brad Plumer: According to Greenwire, Harry Reid had to cut a few deals to prevent even more conservative Dems from voting for the resolution. One thing he promised was a vote (sometime down the road) on a bill by Jay Rockefeller that would delay all EPA regulations on industrial polluters for at least two years.
Obama and Coast Guard commandant Thad Allen have called BP executives to DC, reports Anne Kornblut: "In a letter to Carl-Henric Svanberg, the chairman of BP's board, Coast Guard Adm. Thad W. Allen requested the presence of 'you and any appropriate officials' from the company at the White House on Wednesday. Allen is overseeing the Obama administration's response to the oil spill in the Gulf of Mexico. He added that Obama would attend 'a portion of this meeting.'"
The crisis in Europe is causing concerns about deflation in the US, reports John Hilsenrath: "Officials fret about deflation because it is hard to stop. Interest rates are already near zero in the U.S. and elsewhere, so policy makers can't use the traditional tool of rate cuts to spur growth and stop deflation.--In one sign of rising alertness to the threat, yields on 10-year Treasury bonds-which fall when inflation worries recede and rise when inflation worries increase-have dropped from nearly 4% in early April to about 3.3%. Though yields firmed a bit Thursday, big bond houses like Pacific Investment Management Co. have been moving into the safe-haven instrument."
New Wave interlude: The Shins cover "Goodbye Girl" by Squeeze.
Table of Contents: There's no consensus among Senate Democrats on the shape of an energy bill (and other energy news); Harry Reid wants to extend the first-time homeowners' tax credit (and other economic news); portions of the stimulus package may be cut to pay for an emergency education funding bill (and other domestic policy news); a Congressional Oversight Panel report slams the AIG bailout (and other FinReg news).
Scientific estimates of the size of the oil spill range from 12,500 barrels a day to 50,000: http:/
BP says it will speed up payments to those harmed by the oil spill, report Joe Stephens and Mary Pat Flaherty: "In a news conference at the Department of Homeland Security on Thursday, federal officials said BP acknowledged that its system of waiting until company books are closed for each month before paying claims 'will not work.' Officials said the firm promised a 'more expedited claims process' that takes into account the ability of businesses to pay expenses for an upcoming month and that shrimpers earn much of their income in May and June. There is no way to verify BP's announcement that it has paid more than 19,000 claims, totaling more than $53 million."
A Marine Corps technologist wants to use the military's most powerful non-nuclear bomb to plug the oil leak: http:/
Kate Sheppard reports on Kevin Costner's testimony to Congress on oil spill cleanup: "Costner seems to have developed somewhat of an obsession with oil spill clean up. He got interested in the subject in 1995, and although he says he was inspired by the Exxon Valdez spill, some have pointed out that the interest also arose right around the time he released the post-apocalypse epic Waterworld. Since then, he's spent $24 million funding Ocean Therapy Solutions, a company that has created a centrifuge device that separates oil from water."
Sen. Lamar Alexander lists 10 energy policies he could accept: http:/
"Trying to secure support for a clean-energy agenda by playing to anti-Iran sentiment, for example, practically invites the counterargument that we should be drilling more oil and mining more coal at home. The Gulf disaster reminds us that homegrown dirty energy is no better than dirty energy imported from abroad. Indeed, in many ways it's worse."
Neo-cabaret interlude: Amanda Palmer does "Leeds United".
Businesses are hoarding cash at record levels, reports Justin Lahart: "U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery. The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963."
We're facing a long-term unemployment crisis, reports Annie Lowrey: "The joblessness crisis -- in the average duration of unemployment, if not the absolute unemployment rate -- is unprecedented in the postwar United States. Of the 15 million unemployed in America, over 7 million have been out of work for more than six months, nearly 5 million for a year and over 1 million for two years -- the worst statistics since the government started keeping count in 1948. The proportion of the unemployed out of work for more than six months has doubled in the past year, to more than 46 percent. The jobseekers-to-jobs ratio, which tells how hard positions are to get, remains around 5.6 to 1."
Harry Reid wants to extend the first-time homeowners' tax credit that expired at the end of April, reports Dina ElBoghdady: "Senate Majority Leader Harry M. Reid (D-Nev.) co-authored a proposal that would allow those eligible for the tax credit to close on a home by Sept. 30 to give lenders more time to process a crush of applications."
The May deficit is $135.93 billion: http:/
The US trade deficit is expanding, including the deficit with China, report Ian Talley and Tom Barkley: "The Commerce Department said the U.S. deficit in international trade of goods and services increased 0.6% to $40.29 billion from a revised $40.05 billion the month before. Exports fell by $813 million, while higher oil prices helped to drive imports up by $1.61 billion.--The U.S. trade deficit with China expanded to $19.31 billion in April from $16.90 billion in March, adding to a trend that some economists worry could revive the international trade imbalances that many see as a major contributor to the recent financial crisis."
Tim Geithner says negotiations with China have produced no promises on currency policy: http:/
Foreign governments are turning away from fiscal stimulus, reports Neil Irwin: "The specifics -- and extent -- of the pullback vary around the world. In Germany, Chancellor Angela Merkel this week proposed 80 billion euros in spending cuts and new fees meant to reduce the budget deficit. Top British officials began laying out plans for massive budget cuts of their own this week. Japan's new prime minister, Naoto Kan, said this week that one of his top priorities will be reducing a budget shortfall; he appointed a deficit hawk as finance minister."
Steve Pearlstein argues the US is finally paying for years of living beyond its means: "Now the bill for that is finally coming due -- all the clever and seemingly painless ways for postponing that day of reckoning have pretty much been played out. The only question now is what form that payment is going to take. Will it be an extended period of subpar growth and high unemployment, inflation that erodes the purchasing power of our income and the value of our assets, a deflationary spiral that grinds down wages and salaries and increases our debt burden -- or, as I suspect, some combination of all three?"
David Brooks argues large budget cuts can lead to an economic recovery: "Alberto Alesina of Harvard has surveyed the history of debt reduction. He's found that, in many cases, large and decisive deficit reduction policies were followed by increases in growth, not recessions. Countries that reduced debt viewed the future with more confidence. The political leaders who ordered the painful cuts were often returned to office. As Alesina put it in a recent paper, 'in several episodes, spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.'"
Great moments in political interviews interlude: SC Senate candidate Alvin Greene talks to the press.
House appropriations chair David Obey wants to take funds from the stimulus package to pay for an emergency education funding bill, reports David Rogers: "Crossing a line they had hoped to avoid, Democrats are actively discussing cuts from White House priorities in last year's Recovery Act in order to come up with $10 billion to avert threatened layoffs of public school teachers next fall."
More and more federal money is going to for-profit colleges and universities: http:/
The NRA and AFL-CIO will likely get changes made to a campaign finance disclosure bill, reports Dan Eggen: "House Majority Leader Steny H. Hoyer (Md.) told reporters Wednesday that "there are a number of very legitimate concerns" raised by nonprofit groups about the legislation but said that he was confident Van Hollen would be able to work out the differences and that the House could consider the legislation as soon as next week."
Jon Kyl and Jeff Sessions are attacking Elena Kagan's memos as a Supreme Court clerk, reports Taylor Rushing: "Sessions said the memos demonstrate that Kagan is 'a developing lawyer who has a political bent to their legal work, pretty significantly so. -- Her background is heavily in political legal advocacy more than the meat-and-potatoes discipline of serious legal work.'--'The problem with these bench memos is that they reveal, time and time again, an effort to reach a certain result in the case,' Kyl said."
At least one state government is seizing the federal money going to close the Medicare donut hole: http:/
Jersey punk interlude: Stream the new Gaslight Anthem album.
The Congressional Oversight Panel has a report attacking the AIG bailout, reports Simmi Aujla: "Federal Reserve and Treasury officials should have tried much harder to save AIG without using taxpayer money, said Elizabeth Warren, a Harvard Law School bankruptcy professor and chairwoman of the panel."
FinReg conference committee started yesterday; here's where the House and Senate bills diverge: http:/
Richard Shelby says FinReg conference committee is off to a "rocky star", reports Carrie Budoff Brown: "Shelby and his Republican colleagues criticized Democrats for releasing a revised version of the base bill only hours before the conference committee was set to meet. They said the last-minute changes belied Democratic pledges to make the committee's work fully transparent."
Wall Street and Louisville: http:/
The SEC has approved new restrictions meant to prevent another "flash crash", reports Zachary Goldfarb: "The nation's financial markets on Friday will start pausing trading in any stock in the Standard and Poor's 500-stock index if it declines more than 10 percent in any five-minute period.¿The SEC is also looking at banning "stub" quotes that allow market-makers -- firms that agree to buy and sell shares to ensure that investors can make trades -- to technically stay active in the market as is required by some exchanges."
Breakdowns in coordination plague SEC regional offices: http:/
FinReg will include mortgage restrictions, reports Damian Paletta: "The mortgage section would require lenders to make sure borrowers have the ability to repay home loans. It puts limits on lenders' ability to offer loans without documentation from borrowers, and has rules regarding the way loans can be refinanced."
Simon Johnson argues it's up to Obama to fight for the Merkley-Levin amendment: "The president announced the Volcker rule to great acclaim in late January, but unfortunately the detailed follow-up by his own team was lackluster at best. Senators Merkley and Levin stepped into the political and legislative gap, pushing hard for at least some version of the Volcker principles to be adopted in Senator Christopher Dodd's bill. They were turned back at every stage but have remained doggedly on message. Ultimately, this comes down to President Obama. Is he willing to put his political capital seriously into play?"
When-men-were-men interlude: Vintage men's magazine covers.
Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard.