Dylan Matthews is writing Wonkbook while Ezra is traveling.
1) The Senate moved fast to overhaul the body's rules, report Manu Raju and Scott Wong: "The Senate descended into procedural chaos Thursday night as Democrats forced a change in Senate rules and shut down a GOP effort to bog down a Chinese currency bill with a series of unrelated amendments. Senate Majority Leader Harry Reid’s move to suddenly overhaul a key Senate rule without warning infuriated Republicans and put an already bitterly divided chamber on edge as senators from both sides of the aisle traded angry accusations over whether the fight would fundamentally limit the rights of the minority party...Democrats said the move was needed to limit dilatory tactics that essentially amounted to a 'filibuster by amendment' even after the chamber votes to end debate on a bill...'We are fundamentally turning the Senate into the House,' said Senate Minority Leader Mitch McConnell (R-Ky)."
3) Slovakia could block a Eurozone bailout, reports Anthony Faiola: "As European leaders scramble to stop Europe’s debt woes from triggering another global financial crisis, this sleepy little country known more for its medieval castles and fermented sheep’s milk is holding their grand rescue plan hostage. Under the rules governing the 17 nations that share the euro, an expanded rescue fund for Europe’s ailing nations and troubled big banks must be approved by the parliaments of every country in the currency union. A yes vote by the Netherlands on Thursday left small, stubborn Slovakia as the biggest holdout, giving it outsize power to upend the plan largely shaped by the major European nations of Germany and France. Uncertainty over the fund’s approval in this former Eastern Bloc nation that adopted the euro only in 2009 is laying bare the political crisis within the economic crisis that is rocking Europe and threatening global markets."
4) Europe is currently at odds with its own central bank, reports Neil Irwin: "The European Central Bank, the Frankfurt-based equivalent of the Federal Reserve in the United States, has the authority to print euros, can make cash available to banks and is led by a small board of highly trained financial experts who can make decisions on a moment’s notice. In other words, the ECB has the tools and ability to take the kind of dramatic actions that could address the crisis. But doing so could undermine its position as an independent central bank, risk inflation in the future, work against democratic principles and remove pressures on national governments to make needed economic changes. On the other side are the governments of Europe -- 17 of them that use the euro currency alone, each with its own unique political structure, national interests and idiosyncratic government officials."
5) Obama would accept an income surtax, reports Jackie Calmes: "To allay the concerns of Senate Democrats, Mr. Obama said that he could support their proposal to pay for the jobs plan by imposing a 5.6 percent surtax on individual taxpayers’ income above $1 million. A number of Senate Democrats had objected to Mr. Obama’s proposals to offset the cost of his plan by limiting tax deductions, including for charitable contributions, that could be taken by individuals making more than $200,000 and couples making more than $250,000. And oil-state Democrats opposed his plans to increase oil companies’ taxes...In prodding Republicans, Mr. Obama plainly had in mind the small number of moderates in the party who might join with the 53 Senate Democrats and independents to get to 60 voters and overcome a filibuster."
1) What happened in the Senate last night was hardly a "nuclear option", writes David Waldman: "Republicans moved to suspend the rules and allow the vote anyway. That would require a 2/3 vote, as it does in the House, but is a maneuver that almost never succeeds in the Senate...Now, that's something that they're entitled to try to do, but like I said, it's pretty much guaranteed to go down in flames. Which really means it's a giant waste of time. So a point of order was made the motion and the amendment were dilatory, and therefore out of order. Here's where the similarity to the 'nuclear option' comes in. The ruling from the chair--on the advice of the Parliamentarian, apparently--was that the amendment was not in fact out of order. At this, Reid moved to appeal the ruling of the chair, and a majority voting to overturn it (and note, we are talking about a bare majority of 51 here), the end result is that the amendment is considered out of order, and cannot be considered. So a simple majority has changed the outcome of the ruling here."
2) We need the USA Tax, writes John Endean: "There remains the difficult job of identifying a specific reform proposal with bipartisan appeal that meets what Americans want in a tax regime: namely, a tax code that is fair, clear and efficient, and that encourages growth and job creation...Such a proposal exists; in fact, it has been around for about 15 years. It’s called the Unlimited Savings Allowance Tax System, or USA Tax. It deserves a new look today. The USA Tax Act was introduced in the Senate in 1995 by two of the finest legislators of their generation, Democrat Sam Nunn and Republican Pete Domenici. Its supporters included then-Sens. Robert Bennett, Bob Kerrey, Joseph Lieberman and, yes, businessman Warren Buffett. The proposal was that this tax would replace, not supplement, current business and personal income taxes...At the center of the proposal are the unlimited deductions for personal savings and business investment. Saving and investment are the keys to long-term growth and job creation."
3) Grover Norquist's approach to tax expenditures is dangerous, writes Michael Gerson: "In Wolf’s view, one of the main obstacles to fiscal seriousness is Norquist’s anti-tax pledge, signed by nearly all Republican members of the House (though not by Wolf himself). The document forbids support not only for tax increases but also for the closing of tax loopholes that aren’t offset by spending cuts. So tax expenditures -- specific tax benefits to favored interests and causes -- are protected. 'NASCAR, dog and horse tracks, tackle-box makers, railroads, mohair producers, hedge-fund managers, ethanol producers, automakers and video-game developers -- all receive tax breaks which subsidize their businesses,' explains Wolf...Not all tax expenditures are bad policy -- the deduction for charitable giving comes to mind -- but many are. Making them effectively sacrosanct undermines the possibility of political agreement."
4) There are plenty of goals for Occupy Wall Street to adopt, writes Paul Krugman: "A better critique of the protests is the absence of specific policy demands. It would probably be helpful if protesters could agree on at least a few main policy changes they would like to see enacted. But we shouldn’t make too much of the lack of specifics. It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details. Rich Yeselson, a veteran organizer and historian of social movements, has suggested that debt relief for working Americans become a central plank of the protests. I’ll second that, because such relief, in addition to serving economic justice, could do a lot to help the economy recover. I’d suggest that protesters also demand infrastructure investment -- not more tax cuts -- to help create jobs. Neither proposal is going to become law in the current political climate, but the whole point of the protests is to change that political climate."
5) Debit card fees are indefensible, writes Lloyd Constantine: "Debit cards were developed by banks as a replacement for paper checks. When a consumer pays with a debit card instead of a check, the bank saves money. In the 1980s, Visa calculated the savings at 55 cents to $1.60 per check. The savings is much higher today. For decades, Bank of America, the founding owner and member of Visa (originally called BankAmericard) and all of the Visa and MasterCard banks, including Chase, hid the identity of their debit cards from stores by designing them to look and function like their signature authorized credit cards and by charging stores the same price for debit and credit transactions...The interchange fees that banks now charge stores for debit transactions are economically and functionally identical to the check interchange fees prohibited by the Fed almost a century ago."
Trip hop interlude: Portishead play "Mysterons" on Late Night with Jimmy Fallon.
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Still to come: Today's job report day; a new report outlines what "essential benefits" could mean in health reform; House Democrats want to boot Fannie and Freddie's main housing regulator; the head of the Energy Department's loan program has resigned; and a six-year-old gets a surprise trip to Disneyland, freaks out.
The new jobs report drops this morning, reports Neil Irwin: "There has been a curious contradiction in the past couple of months between the dour financial markets and the more promising economic indicators. A report on the job market due out Friday morning should give a better sense of which perception is right and whether the U.S. economy is truly recovering. The markets are clearly indicating that a recession -- or something very close to one -- is either imminent or underway. The high prices that investors are willing to pay for safe assets such as Treasury bonds and the steep declines in the stock market since the spring make sense only if the U.S. economy is at risk of dipping into an outright contraction. Yet economic data paint a more benign picture of growth that is limping along slowly but consistently. Consumer spending is rising gradually despite a weak job market, according to August data released last week."
Tim Geithner is invoking Europe to make the case for the jobs act, reports Binyamin Appelbaum: "Treasury Secretary Timothy F. Geithner told Congress on Thursday that legislative action was required to buttress the American economy, particularly as economic conditions in Europe continued to deteriorate. Mr. Geithner urged passage of the Obama administration’s jobs plan, warning that the economy remains weak and that a failure to act would raise taxes for families and businesses, as existing tax breaks lapse at the end of the year. 'In the face of the situation in Europe, and the general slowdown across the world, the most important thing we can do is take strong steps to strengthen our economy at home,' Mr. Geithner told a Senate committee. In addition to stimulating domestic growth, Mr. Geithner said the Obama administration was responding in two ways to the problems in Europe: by encouraging European leaders to move more quickly and forcefully and by monitoring the health of the financial system."
A Senate committee approved Richard Cordray's CFPB nomination, reports Ylan Mui: "In a largely symbolic vote along party lines, the Senate banking committee on Thursday approved former Ohio attorney general Richard Cordray to lead the new federal consumer watchdog agency even as Republicans reiterated their pledge to block him on the floor. Cordray’s nomination has become a flash point in the larger political battle over how the Consumer Financial Protection Bureau should be structured. The agency was the centerpiece of President Obama’s plan to overhaul the nation’s financial system, but it cannot employ many of its powers until a Senate Republicans have vowed to block any candidate unless the CFPB is revamped. They are seeking to replace the director with a five-member commission and require tighter oversight of the bureau by other agencies. They are also seeking to fund the CFPB through the congressional appropriations process, rather than through the Federal Reserve."
A "Euro TARP" should learn from the US TARP, writes Gillian Tett: "Size matters. When Hank Paulson, then Treasury secretary, unveiled Tarp back in 2008, he told colleagues he was looking for a 'bazooka' to stun the markets and turn sentiment around. At the time, $700bn seemed big enough to work, since this number - crucially - outpaced market expectations...Co-ordination is crucial. One reason why Mr Paulson’s bazooka “stunned” the markets was that it was wielded by a single team - policy was being set by a close-knit group of Treasury and Fed officials...Excessive democracy does not always help. In the first stage of Tarp, politicians were involved; Congress, after all, initially vetoed Mr Paulson’s plan before approving it after a market crash. But later a tight team of bureaucrats took control and were able to fire the Tarp bazooka with speed, in a straight(ish) line."
Occupy Wall Street is not dissimilar to the Arab Spring, writes Anne-Marie Slaughter: "From the very beginning the movement has attracted extensive coverage from Al Jazeera and other Middle Eastern news outlets and Twitter users -- probably because they recognize the forces that are reshaping politics across their region. Indeed, the twin drivers of America’s nascent protest movement against the financial sector are injustice and invisibility, the very grievances that drove the Arab Spring...If we have learned anything from watching the Arab Spring over the past nine months, it should be that efforts to ridicule, ignore and block these kinds of protests only fuel them further. The only effective response is a political response, of a nature and magnitude that convinces protesters on the streets that they can in fact secure the change they seek within, rather than outside, the system."
Innovation always arises out of a particular historical moment, writes David Brooks: "If you buy the innovation stagnation thesis, three explanations seem most compelling. First, the double hump nature of the learning curve. When researchers are climbing the first hillside of any problem, they think they can see the top. But once they get there, they realize things are more complicated than they thought. They have to return to fundamentals and climb an even steeper hill ahead. We have hit the trough phase in all sorts of problems -- genetics, energy, research into cancer and Alzheimer’s. Breakthroughs will come, just not as soon as we thought. Second, there has been a loss of utopian élan. If you go back and think about America’s big World’s Fairs or if you read about Bell Labs in its heyday or Silicon Valley in the 1980s or 1990s, you see people in the grip of utopian visions..These were delusions, but inspiring delusions. This utopianism is almost nowhere to be found today."
Vintage cartoon interlude: A montage of Judy Jetson being boy-crazy.
A new report suggests the "essential benefits" standard in health reform could be less stringent, report Phil Galewitz and Julie Appleby: "The government moved a step closer Friday toward defining what 'essential benefits' would be offered by companies selling coverage to millions of Americans in new insurance exchanges. In a 297-page report, the Institute of Medicine, a federal advisory panel, laid out criteria and methods the Department of Health and Human Services should use in developing the package. But, as expected, the report left to HHS the job of deciding specific benefits. The panel said HHS must consider both cost and effectiveness of the package - including what the average cost of health insurance will be for small employers in 2014, when the federal health law fully takes effect and exchanges launch. But one of the outside experts asked by the panel to review the report said in an interview that its emphasis on affordability could mean less robust benefits."
A panel is recommending against PSA prostate cancer screenings, reports Rob Stein: "Most men should not routinely get a widely used blood test to check for prostate cancer because the exam does not save lives and leads to too much unnecessary anxiety, surgery and complications, a federal task force has concluded. The U.S. Preventive Services Task Force, which triggered a firestorm of controversy in 2009 when it raised questions about routine mammography for breast cancer, will propose downgrading its recommendations for prostate-specific antigen (PSA) for prostate cancer onTuesday, wading into what is perhaps the most controversial and important issue in men’s health. Task force chairwoman Virginia Moyer said the group based its draft recommendations on an exhaustive review of the latest scientific evidence, which concluded that even for younger men, the risks appeared to outweigh the benefits for those who are showing no signs of the disease."
House Democrats want to oust the head housing regulator, reports Alan Zibel: "House Democrats called on President Barack Obama to replace a key housing regulator, saying the official isn't taking bold enough steps to turn around the real-estate crisis. The regulator, Edward DeMarco, acting director of the Federal Housing Finance Agency, met with 17 House lawmakers Thursday, in what was described as a tense meeting about a coming expansion of the mortgage-refinancing program. After the closed-door talks, Democrats said they were frustrated that the regulator and the Obama administration aren't moving faster and that the changes won't do enough to stem the fallout from the housing bust...The FHFA is considering changes that Democrats said could help between 600,000 and 1 million homeowners. But Democrats say this won't do enough for millions of Americans facing foreclosure or owing more on their properties than their homes are worth."
A random court assignment is a loss for net neutrality advocates, reports Eliza Krigman: "In a victory for net neutrality opponents, a judicial panel chose the D.C. Circuit Court of Appeals in a random lottery Thursday to decide where the net neutrality case will be heard. The D.C. Circuit is considered the most likely to overturn the controversial net neutrality rules of the courts that were in play to review them. The lottery outcome therefore gives an early advantage to Verizon, which sued to overturn the FCC regulations passed in December. 'As we made clear in our filing, we felt this was the appropriate venue,' said Verizon spokesman Ed McFadden. Verizon argued in its legal challenge that that D.C. has exclusive jurisdiction over the net neutrality issue because the FCC rules modify wireless licenses. The FCC filed a motion to dismiss that suit, but now it won’t matter because the D.C. circuit has been chosen at random."
Adorable children getting gifts interlude: A six-year-old gets a surprise trip to Disneyland.
The head of DOE's loan program has resigned, report Carol Leonnig and Juliet Eilperin: "The head of the Energy Department’s embattled loan program announced Thursday that he was stepping down amid an expanding probe of the agency’s $535 million loan to a now-shuttered solar company. The departure of Jonathan Silver comes as the Obama administration faces intense pressure from Capitol Hill about whether it properly vetted the solar start-up Solyndra before providing it with taxpayer backing. President Obama used a Thursday news conference to credit agency officials with using their 'best judgment' in approving the loan, part of a $35.9 billion federal effort to invest in breakthrough technologies that could create jobs and spur economic growth. Silver had been criticized by Republicans during a House subcommittee hearing three weeks ago, and White House e-mails released this week showed that officials were anxious about the loan program and whether the agency was properly monitoring it."
The EPA is applying laxer power plant rules to some states, report Deborah Solomon and Ryan Tracy: "The Environmental Protection Agency proposed Thursday to give 10 states more flexibility in applying a new rule on power-plant emissions, but some state and industry officials who had criticized the rule said the loosening didn't go far enough. The EPA made the Cross-State Air Pollution Rule final just three months ago. It is intended to reduce smog-forming chemicals emitted from power plants that often drift into other states. States, industry and lawmakers have attacked the rule, saying it will cost jobs and compromise the reliability of electric power. Under the EPA proposal, 10 of the 27 states affected by the rule will be allowed to emit more pollution than previously allowed. Also, all of the states would have until 2014, rather than 2012, before any associated penalties kick in."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.