Tuesday, July 6, 2010;
In the Gulf, documents show that BP is collecting less than 1/500th the amount of oil it initially told regulators it could collect each day. Back in Washington, FinReg is threatening Democratic prospects by causing a dramatic dropoff in Wall Street fundraising, the two main teachers' unions are not happy with Obama's education agenda, and the White House's economic team is arguing for further stimulus but the political team is arguing for deficit reduction.
It's Monday? Tuesday? One of them. Welcome to Wonkbook.
BP's oil recovery efforts have amounted to less than 1/500th what they promised, reports Kimberly Kindy: "In a March report that was not questioned by federal officials, BP said it had the capacity to skim and remove 491,721 barrels of oil each day in the event of a major spill. As of Monday, with about 2 million barrels released into the gulf, the skimming operations that were touted as key to preventing environmental disaster have averaged less than 900 barrels a day."
Wall Street donors are turning away from Democratic candidates due to FinReg, report T.W. Farnam and Paul Kane: "The two congressional committees have raised $49.5 million this election cycle from people giving $1,000 or more at a time, compared with $81.3 million at this point in the last election. Almost half of that decline in large-dollar fundraising can be attributed to New York, according to a Washington Post analysis of records filed with the Federal Election Commission. Donors from that area have given $8.7 million this year, compared with $23.9 million at this point in the 2008 cycle, with most of those contributions coming from big contributors in the financial sector."
The economists in the Obama administration want more stimulus, but the political hands are resistant, reports Jackie Calmes: "Those pressing for more stimulus measures include Christina Romer, the chairwoman of the Council of Economic Advisers; Jared Bernstein, economic adviser to Vice President Joseph R. Biden Jr.; and the Treasury secretary, Timothy F. Geithner...More focused on deficits...are his chief strategist, David Axelrod, other political advisers and Rahm Emanuel, the White House chief of staff, according to Democrats. Their lone supporter among the top economic aides is Peter R. Orszag, the budget director, who will leave the administration this month."
The President should never side with his political team over his economic team, writes Matthew Yglesias: "The single most important factor determining a president's political fortunes is the fate of the economy. Tradeoffs can exist in the form of things that are short-term economic pain for long-term economic pain. But there's no real tradeoff between 'unpopular but growth-boosting measures that ultimately make you more popular' and 'popular but growth-strangling measures that ultimately make you less popular.' When it comes to macroeconomic management, it's results that matter most."
The National Education Association and the American Federation of Teachers' conferences showed strong opposition to Obama's education record, reports Sam Dillon: "The largest union's meeting opened here on Saturday to a drumbeat of heated rhetoric, with several speakers calling for Mr. Duncan's resignation, hooting delegates voting for a resolution criticizing federal programs for 'undermining public education,' and the union's president summing up 18 months of Obama education policies by saying, 'This is not the change I hoped for.'"
Anti-optimism and cartoons interlude: Barbara Ehrenreich on the downsides of positive thinking - with animated illustration!
Still to come: The best debate you'll read on global warming -- and what to do about it; how the auto-dealers escaped FinReg; Brooks and Krugman both want to extend unemployment benefits; corporations are finding the earmark ban easy to bypass; and an orangutan goes swimming.
David Brooks has a few ideas for stimulus: "First, extend unemployment insurance; that's a foolish place to begin budget-balancing. Second, you need to mitigate the pain caused by the state governments that are slashing spending. You need a program modeled on Race to the Top. You will provide federal money now to states that pass responsible long-term budget plans that will reduce spending and pension commitments. That would save public-sector jobs and ease contractionary pressures without throwing the country into a fiscal-debt spiral."
Jared Bernstein is concerned the recovery is not being felt by most Americans, reports Michael Fletcher: "Bernstein, 54, has pondered that challenge for nearly two decades, and as executive director of the administration's Middle Class Task Force, his job is to address it. He said the reasons the middle class has not fared well in the modern economy are complicated. Increased globalization, technology, diminishing bargaining power for many workers, reduced unionization and slack in the labor market all share responsibility, he said."
It's looking hard for the SEC to prove that Goldman Sachs committed fraud: http://bit.ly/dDsyh0
Paul Krugman tries to explain why unemployment benefits are now expiring for people: "The Senate went home for the holiday weekend without extending benefits. How was that possible? The answer is that we're facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe it's possible to clear up some of the confusion."
Unemployment fraud hovering at about 2 percent: http://bit.ly/cJz2FO
James Suroweicki explainshow the auto dealers cut themselves out of FinReg: "Lobbying isn't just about money. The companies that lobbied most successfully around the financial-reform bill didn't necessarily pay the most. Instead, they were able to bring grassroots pressure to bear on individual congressmen and to present themselves as remote from Wall Street. The auto dealers were perfectly placed to make this pitch: there are some eighteen thousand auto dealerships around the country, employing close to a million people, which means that every congressman has lots of constituents whose livelihood depends on a dealership."
Gerald Seib argues Obama should focus not on jobs or the deficit but on economic growth: http://bit.ly/dtJ9FB
Yves Smith and Rob Parenteau argue that profit-seeking is hurting economic growth: "The reason for all this saving in the United States is that public companies have become obsessed with quarterly earnings. To show short-term profits, they avoid investing in future growth....Rather than incur such expenses, companies increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in purely financial speculation. But this means they also short-circuit a major driver of economic growth."
Indie video interlude: The Pains of Being Pure at Heart's "Say No to Love".
BP is still profiting from sales to the Defense Department: http://bit.ly/aaswHd
Kenneth Rogoff argues the political moment is right for a carbon tax: "Why might a carbon tax be viable now, when it never has been before? The point is that, when people can visualize a problem, they are far less able to discount or ignore it. Gradual global warming is hard enough to notice, much less get worked up about. But, as high-definition images of oil spewing from the bottom of the ocean are matched up with those of blackened coastline and devastated wildlife, a very different story could emerge."
China is worried about the effects of growth on its emissions footprint, reports Keith Bradsher: "Until recently, projections by both the International Energy Agency and the Energy Information Administration in Washington had assumed that, even without an international energy agreement to reduce greenhouse-gas emissions, China would achieve rapid improvements in energy efficiency through 2020. But now China is struggling to limit emissions even to the 'business as usual' levels that climate models assume if the world does little to address global warming."
Oil companies receive billions in tax subsidies from the federal government: http://nyti.ms/bP0V8A
Obama ignored a district court's warning on offshore drilling, report Neil King and Keith Johnson: "The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea, relying on an 'irrational' environmental analysis of the risks of offshore drilling. The April 2009 ruling stunned both the administration and the oil industry, and threatened to delay or cancel dozens of offshore projects in Alaska and the Gulf of Mexico. Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision."
Adorable animals being adorable interlude: A swimming orangutan.
The period of congressional reform is ending, and the period of regulator reform is beginning, writes Ezra Klein: "The Wall Street bill, for instance, has more than 30 studies in it and does not prescribe things like the level of capital a bank has to hold or the precise way the Volcker rule is implemented or what is to be done about the ratings agencies. It leaves those decisions to regulators. Both bills require the creation of institutions, such as the Consumer Financial Protection Bureau and the state health insurance exchanges. And both require existing agencies, like the Federal Reserve and the Centers for Medicare and Medicaid Services, to take on much larger roles."
Corporations are finding ways around the House's ban on earmarks to profit-making companies, report Eric Lipton and Ron Nixon: "Companies have shown remarkable ingenuity in skirting the rule or veiling their requests through nonprofit organizations, the Times review found. Among the examples: The Virtual Reality Medical Center, a California-based company that sells visual simulation headgear as an experimental form of medical therapy, had sought nearly $6 million in earmarks before the ban. Soon after, company officials instead proposed that the money go to the Interactive Media Institute, a nonprofit group controlled by the center's top executives, which had been set up to sponsor educational conferences."
Fareed Zakaria argues Obama should be worried about losing CEOs' support: "Most of the business leaders I spoke to had voted for Barack Obama. They still admire him. Those who had met him thought he was unusually smart. But all think he is, at his core, anti-business. When I asked for specifics, they pointed to the fact that Obama has no business executives in his Cabinet, that he rarely consults with CEOs (except for photo ops), that he has almost no private-sector experience, that he's made clear he thinks government and nonprofit work are superior to the private sector. It all added up to a profound sense of distrust."
Uwe Reinhardt argues that lower medical technology costs will drive down long-term health care expenses: http://nyti.ms/aigGZx
Obama offers little support for organic farmers, writes Heather Rogers: "Obama is making some changes at the USDA, but they're the type of improvements that appear larger than they really are. Sustainable agriculture proponents don't want to complain because finally they're getting something. But these incremental changes won't be enough to ensure farmers can stay on their land and sell their produce at reasonable rates. Neither will they clear the path for a new generation of farmers to participate in remaking the food system."
Monica Potts explains what such support would look like: http://bit.ly/a69gDO
Closing credits: Wonkbook compiled with the help of Dylan Matthews.