...at a time when we are going to ask folks across the board to make such difficult sacrifices, I don’t see how we can afford to borrow an additional $700 billion from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2 percent of Americans. We’d be digging ourselves into an even deeper fiscal hole and passing the burden on to our children.
I recognize that both parties are going to have to work together and compromise to get something done here. But I want to make my priorities clear from the start. One: middle class families need permanent tax relief. And two: I believe we can’t afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires.
President Obama knocked it out of the ballpark this morning in his first weekly address after a discouraging election for Democrats, advocating tax cuts for the middle class and pointing out that we'd have to borrow to extend the same tax cuts to the rich.
The entire address is short, sweet and to the point: He heard the message of frustration with inaction from voters, he intends to heed it, and the burden for holding up the process will clearly be passed to Republicans who will be pushing for more borrowing to reward their rich friends. It doesn't get any better than this.
His closing is a perfect grace note, acknowledging the election's results while warning that there are the same old problems awaiting solution:
There are new public servants in Washington, but we still face the same challenges. And you made it clear that it’s time for results. This a great opportunity to show everyone that we got the message and that we’re willing, in this post-election season, to come together and do what’s best for the country we all love.
Ball's in your court, Republicans. Do you cooperate and start problem solving? Or do you hold the country's problems hostage to serving millionaires and billionaires?
The full transcript can be found at the White House website and beneath the fold.
The New York Times has the report:
The Obama administration is retreating on long-delayed environmental regulations — new rules governing smog and toxic emissions from industrial boilers — as it adjusts to a changed political dynamic in Washington with a more muscular Republican opposition.
Nice word, that: retreating.
The move to delay the rules, announced this week by the Environmental Protection Agency, will leave in place policies set by President George W. Bush. President Obama ran for office promising tougher standards, and the new rules were set to take effect over the next several weeks.
Nice framing, that: leaving in place policies set by Bush.
The EPA says it needs more time to make its decision. Again. Environmentalists are angry, but the administration seems to have made some people happy.
But in a striking turnabout, the National Association of Manufacturers and the American Petroleum Institute — which have been anything but friendly to Mr. Obama — are praising his administration.
Joshua Freed of the Third Way says this is a good thing, because "environmental zealots"-- some might even say purists-- forget the importance of business interests. Someone perhaps should ask Freed how well business interests will do with a 5-20% loss of global GDP, which is the estimated cost of failing to address the climate crisis.
The Associated Press:
"It is hard to avoid the impression that EPA is running scared from the incoming Congress," said Frank O'Donnell, president of the advocacy group Clean Air Watch.
Nice phrasing, that: running scared.
Democratic Senator Tom Carper of Delaware, who chairs the Senate clean air subcommittee, explains the impact:
The delay leaves millions of Americans "unprotected from harmful ozone air pollution under an outdated, ineffective ozone standard," Carper said. "This decision also keeps states in limbo about what standards they need to meet, forcing them to continue to postpone significant decisions today to clean our air tomorrow."
But the EPA certainly will get it right, next time, right? The administration's budding new fan base at the American Petroleum Institute hopes not.
"We also hope EPA will now reconsider other costly and unworkable proposals," such as a planned rule to regulate greenhouse gas emissions, said Howard Feldman, API's director of regulatory and scientific affairs.
We will see. Whatever the EPA does is going to upset someone. It would be nice if the EPA bases its decisions on the opinions of the scientists. Who might also be called the realists. Stay tuned.
THOSE desperate to decipher the baffling Obama presidency could do worse than consult an article titled “Understanding Stockholm Syndrome” in the online archive of The F.B.I. Law Enforcement Bulletin. It explains that hostage takers are most successful at winning a victim’s loyalty if they temper their brutality with a bogus show of kindness. Soon enough, the hostage will start concentrating on his captors’ “good side” and develop psychological characteristics to please them — “dependency; lack of initiative; and an inability to act, decide or think.”
This dynamic was acted out — yet again — in President Obama’s latest and perhaps most humiliating attempt to placate his Republican captors in Washington. No sooner did he invite the G.O.P.’s Congressional leaders to a post-election White House summit meeting than they countered his hospitality with a slap — postponing the date for two weeks because of “scheduling conflicts.” But they were kind enough to reschedule, and that was enough to get Obama to concentrate once more on his captors’ “good side.”
And so, as the big bipartisan event finally arrived last week, he handed them an unexpected gift, a freeze on federal salaries. Then he made a hostage video hailing the White House meeting as “a sincere effort on the part of everybody involved to actually commit to work together.” Hardly had this staged effusion of happy talk been disseminated than we learned of Mitch McConnell’s letter vowing to hold not just the president but the entire government hostage by blocking all legislation until the Bush-era tax cuts were extended for the top 2 percent of American households.
The captors will win this battle, if they haven’t already by the time you read this, because Obama has seemingly surrendered his once-considerable abilities to act, decide or think.
Read Rich’s full column here.
The point is so obvious, and so clearly being consciously exploited by the Republican Congressional leadership (and who can blame them? What professional card player wouldn't enjoy playing poker for money with a putz?), that one wonders what can possibly be going on.
I see only two main explanations, which could be complements rather than rivals. The first is that there's something fundamentally awry (or at least unsuited for present circumstances) in Obama's psychological make-up, so that he is desperate above all for even, and perhaps above all, his sworn enemies to like him. Never mind that they might be largely motivated (at least at the leadership level) by rational self-interest, not just emotion or gut feelings. The second is that he has an extremely naive view of politics, based on a simplistic application of the old Anthony Downs model in which you beat the other guys by going to the center. Hence, by being the more "reasonable" and conciliatory one, you pick up the swing voters and get the majority.
We are all prisoners of the degree of fit between our psychological make-ups, with their strengths and weaknesses, and the environments in which we happen to find ourselves operating. A case in point is the number one political patron saint of the twentieth century, Winston Churchill. Though a brilliant, charming, and eloquent man, Churchill failed repeatedly in politics and government until he ran smack into the one situation that he was absolutely born to get right: understanding and opposing Hitler. Put him anywhere else (as indeed the rest of his career, both before and after, made clear), and you'd simply have a brilliant, charming, and eloquent failure. Lucky Churchill, as well as lucky us.
Obama has not been so fortunate. Indeed, he may even be a reverse Churchill, in that he was put into the one political environment in modern U.S. history where his skills (beyond winning the initial election) would matter the least and his defects the most. Perhaps he could have done great in the political environment of, say, 1964 or even 1976 (obviously, leaving aside the impossibility at those times of electing an individual whom U.S. voters would racially code as black).
Likewise, the Downs theory of working for the middle works sometimes. I see it as a key supporting explanation of why people such as Reagan and Tip O'Neill found it reasonable to cooperate on short-term and long-term deficit reduction in the 1980s. But at other times it doesn't work well - viz, the 2010 elections, in which it was overwhelmed by what I called "differential turnout elasticity" in my recent book on the approaching U.S. fiscal collapse.
Plus, in circumstances like the present, voters are looking for someone who they believe can be effective and strong. And rightly or wrongly (I'd say mainly the latter), voters are giving the Democrats the blame for policy failures that are in significant part due to the Republicans' adoption (again, rationally) of a policy of complete obstructionism. And there's also the "Reagan factor" at work: voters often like someone whom they view as having firm, confident, and consistent principles even if they don't entirely share the principles. So bleating about a federal pay freeze rightly impresses no one.
The sum total is beginning to look pathological, although in fairness to Obama he might have been a great success if plunked into a different political environment. But this is where his reputed intellgence ought to kick in. Can't he see any of this? And doesn't he have enough advisors who can see it and view themselves as having the incentive to tell him?
We will see.
William M. Daley, President Barack Obama's new chief of staff, is a major Wall Street player who sought to loosen corporate reform laws and protect big accounting firms from investor lawsuits and criminal prosecution.
by Marian Wang
Proponents of financial deregulation may have a strong ally within the White House, now that President Obama has named Bill Daley his new chief of staff.
The prospect of Daley taking the key White House position had earned praise from Wall Street insiders who cited his ability to “bring people together” and “success in getting things done,” according to Fortune.
As the brother of Chicago’s outgoing mayor Richard Daley, a former Commerce Secretary and a current JPMorgan Chase executive, Daley shared certain commonalities with his predecessor: Rahm Emanuel also came to the White House by way of a Chicago connection, worked under Bill Clinton, and—as a former investment banker—brought his own ties to Wall Street.
In addition to those things, Daley has strong ties to the Chamber of Commerce, which opposed the financial reform bill that was a cornerstone of the administration’s agenda last year. From Kevin Connor, co-director the Public Accountability Initiative, a nonprofit research organization:
From 2005 to 2007, he co-chaired a Chamber of Commerce committee on financial (de)regulation. The “Commission on the Regulation of Capital Markets in the 21st Century” eventually became the Chamber’s Center for Capital Markets Competitiveness, which played a prominent role in attacking derivatives regulation and consumer protections last year. The Hill called the group one of the “loudest voices on financial legislation”—and they weren’t exactly singing the praises of reform efforts.
Daley also signed on to a March 2009 Chamber manifesto on “Restoring Confidence in US Capital Markets,” the Chamber’s opening PR move in the financial reform debate.
The new chief of staff has publicly opposed the concept of an independent consumer financial protection agency—a key part of Dodd-Frank. In 2009, he criticized a pro-business Illinois Democrat for her position on financial reform, telling the Chicago Tribune that “she did not have a knee-jerk aversion to the concept of a federal consumer protection agency, in spite of all our brilliant arguments.”
News of Daley's selection broke this morning. The president had told the New York Times yesterday that the announcement would come in “due course,” after White House lawyers finished vetting the candidate.
Advocate groups working to strengthen and protect Social Security are sounding the alarm about a potential back-room deal between Obama and Republicans on Social Security with the debt-ceiling and government funding fights looming. At least one Republican Senator, Lindsey Graham, has threatened to take Social Security hostage, the beginning step in a potentially disastrous deal.
Maria Freese of the National Committee to Preserve Social Security and Medicare said she thinks Social Security is "more at risk than it was in 2005,” when President George W. Bush proposed far-reaching changes to the program, including personal accounts. The plan was vigorously opposed by Democrats and liberal groups and never came up for a vote in Congress.
Now, with Social Security coming to the forefront once again, liberal groups are preparing a campaign to oppose any “backroom” deals on retirement benefits.
“What I am really afraid of is another deal behind closed doors,” said Nancy Altman, the co-director of Social Security Works. “At least with President Bush, he went around the country on a tour and presented his plan, and people didn’t like it.”
Both Altman and Freese said that it is unlikely there will be changes to Medicare and Medicaid this year, given the lingering polarization from last year's healthcare debate. They said Social Security is easier to tamper with and more likely to be targeted.
Freese and Altman’s groups already feel betrayed by Obama for backing a cut to the Social Security payroll tax that was approved during the lame-duck session. They worry that the cut will be extended indefinitely and erode Social Security's solvency.
There's precedent for this fear. The health insurance reform deals with for-profit hospitals and with pharmaceutical companies, the tax-cut deal that actually does jeopardize Social Security provide good reason to fear back-room dealmaking with this President. There's no question that Social Security is on the table, the President's deficit commission, the tax-cut deal, and too many public statements about it confirm that. The only "reform" the administration has been willing to rule out is privatization. Never mind that any cut to Social Security--from raising the retirement age to reducing benefits is a backdoor attempt at privatization. Those who can afford to invest retirement savings will have no other option. Those who can't will just have to suffer when they're old.
Given Social Security's foundational importance to the economic security of most of America, any changes to it have to be done in the open, with accountability from our President and our members of Congress.
The Low Income Home Energy Assistance Program, or LIHEAP, would see funding drop by about $3 billion from an authorized 2009 total of $5.1 billion. The proposed cut will not touch the program's emergency reserve fund, about $590 million, which can be used during particularly harsh cold snaps or extended heat spells, three officials told National Journal.
In 2010, Obama signed into law an omnibus budget resolution that released a total of about $5 billion in LIHEAP grants for 2011. Pointing to the increasing number of Americans who made use of the grants last year, advocates say that LIHEAP is already underfunded. The American Gas Association predicts that 3 million Americans eligible for the program won't be able to receive it unless LIHEAP funding stays at its current level.
How many people, if any, might actually lose the assistance is difficult to determine. Officials were quick to point out that LIHEAP spending has grown significantly over the past several years as the government tried to keep up with rising gas prices. In 2008, the government spent $2.8 billion on LIHEAP. In 2009, thanks to the Recovery Act, better known as the stimulus bill, the figure jumped to $8.1 billion. So the cut from that high level restores LIHEAP to something close to where it was before Obama took office. Other circumstances, such as the weather and fuel prices, could affect the distribution of benefits.
Although the move could have very real impacts on program beneficiaries, it will obviously have absolutely no material impact on the budget deficit. $3 billion is two-tenths of one percent of the overall budget deficit, so as a matter of fiscal policy it's essentially a non-event.
Not a word about the 25 million Americans still without jobs. Nothing about how to help the more than 7 million homeowners who have faced, or the additional 4 million who will soon face, foreclosures and evictions. Absolute silence about the dozens of states and hundreds of local governments in deepening fiscal crisis and approaching bankruptcy—and the hundreds of thousands of public employees who will pay for that bankruptcy with their jobs, wages, pensions, and health benefits.
OK, some vague references to infrastructure and alternative energy jobs—over the next 25 years. Paid for by Obam’s explicit reference to cut Medicare and Medicaid benefits by tens of millions of dollars.
But the most disturbing element of Obama’s State of the Union address last night was his firm commitment to cut corporate taxes even further, and thereafter to move on to ‘simplify’ the U.S. tax code in general—i.e. a code word in policy circles for further reducing top tax brackets which always results in tax cuts for the wealthiest households.
What Obama proposed in his address on Tuesday was a classic continuation of a supply side, ideological program focusing on business tax reduction, supplemented by various other measures to reduce business costs at the expense of consumers, workers, and others.
Ezra Klein argues today that Barack Obama is, historically speaking, a moderate Republican. On three big issues, he says, Obama has championed approaches that Republicans themselves supported only a couple of decades ago:
Take health-care reform. The individual mandate was developed by a group of conservative economists in the early ’90s. Mark Pauly, an economist at the Wharton School of the University of Pennsylvania, was one of them. “We were concerned about the specter of single-payer insurance,” he told me recently.
....The story on cap and trade — which conservatives now like to call “cap and tax” — is much the same. Back then, the concern was sulfur dioxide, the culprit behind acid rain. President George H.W. Bush wanted a solution that relied on the market rather than on government regulation. So in the Clean Air Act of 1990, he proposed a plan that would cap sulfur-dioxide emissions but let the market decide how to allocate the permits. That was “more compatible with economic growth than using only the command and control approaches of the past,” he said.
....As for the 1990 budget deal, Bush initially resisted tax increases, but eventually realized they were necessary to get the job done....That deal, incidentally, was roughly half tax increases and half spending cuts. Obama’s budget has far fewer tax increases.
This is a fairly common argument on the left, but I really think it's mistaken. What conservatives want hasn't changed all that much. They want government out of the healthcare business; they want minimal environmental regulation; and they want to keep taxes low. What has changed has been purely tactical. In the early 90s it seemed likely that Democrats could push through single-payer healthcare and a command-and-control solution to acid rain. Republicans felt like they had to have competing solutions, so they offered something a step to the right. Likewise, the 1990 tax bill was merely a compromise that Bush felt pushed into, not conservative dogma of the era. Far from it, in fact: conservatives were opposed to the deal from the start, and Bush himself repudiated it shortly after it was signed into law.
The individual mandate and cap-and-trade may have originally been "Republican" ideas in some technical sense, but they were adopted under duress. They never truly represented things that Republicans supported. The same was true of the Bush tax hike, which even at the time conservatives viewed as the work of an apostate. So it's only natural that they haven't supported any of these things under the Obama adminstration. They never really did, after all, and this time around they felt that flat-out opposition was politically feasible. So that's what we got.
That said, it's true that the GOP has moved considerably to the right over the past couple of decades. Today's crowd wouldn't vote for these things even as a disagreeable but unavoidable compromise. As Joe Klein says:
The Republican party has [...] gone off the deep end on taxes. It has denied the long-term economic and societal benefits of universal health insurance. It has gone into climate change denial...it is hard for any card-carrying Republican to say: I believe that Darwinian evolution is God’s plan.
....A hundred years from now, historians will be having a field day: How did the Republicans go so far astray? Why did it work, from time to time, electorally? Why weren’t the Democrats more effective in stopping them? Why didn’t the society’s major conservative economic stakeholders (outside the uber-reactionary Oil Patch) renounce the sideshow and demand a more reasonable brand of conservatism?
Two words immediately come to mind: Fox News. And two more words: Rush Limbaugh. And two more words: Newt Gingrich. And two more: Frank Luntz.
This is unquestionably true, and it's obviously worth trying to figure out why this rightward shift happened and how it's retained so much public support. But I still don't think it's fair to say that government-mandated health insurance, cap-and-trade, or tax hikes were truly Republican policies 20 years ago. They were merely things they felt compelled to offer as compromises to stave off even worse liberal ideas — the same way that I compromised by supporting Obama's healthcare plan last year. If I get the chance, I'll support full-fledged single-payer healthcare 20 years from now, and it won't be because I've gotten more politically radical. It'll be because I think it's politically feasible.
As nationwide budget protests continue this week, Treasury Secretary Timothy Geithner is prepared to unveil the Obama administration’s plan to lower the top corporate tax rate from the current 35 percent to less than 30 percent, and as low as 26 percent.
In order to pay for the cuts, the proposal calls for closing loopholes and slashing exemptions. Politico reports that Geithner has already begun meeting privately with CEOs, academics, labor unions, and liberal and conservative think tanks, and his aides say he is “encouraged by the response.”
Part of that optimism stems from the fact that Democrats and Republicans are both allies of the business world.
Allison Kilkenny co-hosts Citizen Radio, the alternative political radio show called "important" and "vital" by Noam Chomsky. She is a contributing writer to Huffington Post, Alternet, The Nation and she blogs daily here. Her essay "Youth Surviving Subprime" appears in The Nation's book, "Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover." G. Gordon Liddy once said Allison's writing makes him want to vomit, which, to this day, is the greatest compliment she has been paid, ever.