Wonkbook: Against grand theories; Graham bolts from climate bill; FinReg schedule

So, something happened last night? Some sort of election? Chris Cilizza has the full results, but most of the interpretive energy is focused on Blanche Lincoln's close victory over Bill Halter. As Marc Ambinder says, however, 3,000 votes is not a very good base upon which to decide what the electorate "really" thinks.

Back in policyland, Lindsey Graham now opposes the climate bill he helped write, which probably kills off a serious climate bill for this Congress (and it's not as if it gets easier next Congress); we've got a schedule for FinReg's conference and final votes; Ben Bernanke is testifying before the House Budget Committee; and the Senate's Environment and Public Works Committee is looking at raising the liability cap for oil spills.

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Small margins don't support grand theories, writes Marc Ambinder: "It's a funny habit we political pundits have. If, say, 3000 votes separate a winner from a loser, we forget that a small shift in some part of a state could have swung those votes the other way, and we tend to massively over-interpret the meaning of the tiniest of margins. So let's say that the results in Arkansas were flipped -- that Lincoln won by a point, the interpretation ought to be nearly the same, logically." And that's really all Wonkbook has to say about that!

Citing changes to the offshore drilling provisions, Lindsey Graham says he'll vote against the climate bill he helped write: http://bit.ly/bj4U7J

Brad Plumer doesn't buy Graham's excuses: "Honestly, Graham's complaints here are ridiculous. The differences between the bill he wrote and the bill as it exists now are relatively trivial. His main complaint seems to be that Congress isn't embarking on an offshore drilling free-for-all. Well, sure. That's what happens when an oil company poisons large swathes of the Gulf of Mexico. It's going to be hard to get any major new drilling incentives passed right now. That's not some inherent flaw in the climate bill—it's just an indication that some of his colleagues actually seem to be learning or thing or two from the BP fiasco."

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The FinReg passage schedule is out, reports Michael Crittenden: "The schedule laid out by the two lawmakers calls for conference members to meet Thursday for opening statements. Lawmakers will then meet June 15-17 in day-long sessions to resolve various sections of the legislation, which runs more than a thousand pages in both the House and Senate versions of the measure. Debate will continue June 22-24, though Mr. Frank said the conference could remain working until Saturday, June 26, to complete its work. That schedule would allow the House and Senate to take final votes on the measure in the closing days of June, or the first two days of July."

Car alarm interlude: Rep. Darrell Issa does the "Viper voice".

Table of Contents: The Fed isn't doing everything it can to curb unemployment (and other economic news); The oil leak siphoning effort is getting more effective, but it's also showing that we vastly underestimated the size of the leak (and other energy news); child poverty has reached a new high (and other domestic policy news); and Geithner wants regulators to agree on capital requirements before he sets out on international negotiations (and other FinReg news).Economy

David Leonhardt explains why the Fed should be doing more to stimulate job growth: "By law, the Fed’s mission is to maintain low inflation and maximum employment. Over the last three months, inflation has been zero. Over the last two years, it has risen at the slowest pace in more than 50 years. Meanwhile, 15 million people remain unemployed. Yet the Fed has taken no recent action to spur the economy - like buying bonds to reduce long-term borrowing costs for households and businesses, as Joseph Gagnon, a former Fed economist, has urged.

Wondering why the Fed and Obama administration aren't moving faster on stimulus? Hint: It's because they don't want to move faster on stimulus: http://nyti.ms/cKOKJ8

The Senate hedge fund manager tax differs from the House version, reports Martin Vaughan: "Senate Democrats unveiled a proposal to raise taxes on investment fund-manager profits, suggesting a 33% effective rate on income now taxed at 15%.…The Senate's proposal comes after the House in May approved a 35% effective tax on fund managers' carried interest.But unlike the House proposal, Senate Democrats are proposing a lower, 31% rate for carried interest profits from investments held seven years or longer. That was done to placate Democratic senators worried about the effect of the tax increase on venture capitalists and real-estate partnerships."

Martin Wolf http://www.ft.com/cms/s/0/6bc012d6-733c-11df-ae73-00144feabdc0.html that deflation is still a real danger: http://bit.ly/aalsNU

The European crisis could hit Americans through the banking sector, report Jeannine Aversa and Stevenson Jacobs: "For all of Europe, U.S. banks have $1.1 trillion at stake. That's roughly 38 percent of the $3.1 trillion in loans and derivatives U.S. banks have with all foreign banks. Derivatives are investments whose value depends on the price of underlying assets, such as stocks or mortgages. Substantial losses from investments tied to Europe would cause U.S. banks to reduce lending. A deep credit crisis could reduce U.S. growth by 1.5 percent and possibly cause another recession, Goldman Sachs said in a recent note."

Steve Pearlstein looks at why bandwidth providers are abandoning 'Fogo-de-Chao economics': http://bit.ly/b4r3NH

The jobs bill is ready for its final push, reports David Rogers: "Revenue deals at the expense of the oil industry now unite most Democrats, and the restoration of $24 billion in state aid is a calculated gamble to bring governors off the sidelines and ask senators to support the bill and forestall deeper budget cuts and layoffs at home."

Conspiracy theory interlude: The omnibus Obama theory.

Energy

The oil-leak cap is siphoning more oil, report David Fahrenthold and Dan Zak: "Officials said that a "cap" placed over the leak on the gulf floor collected about 14,800 barrels (or 620,000 gallons) in the 24-hour period ending midnight Monday. But that good news was also bad news. Since oil was still flowing out around the cap, it showed that the government's latest estimate of the leak's total size, 12,000 to 19,000 barrels a day, was probably too low. Scientists were told to try again."

West Virginia's Jay Rockefeller will vote to strip EPA's authority over greenhouse gasses, reports Siobhan Hughes. http://bit.ly/dokwkJ

However, the motion is unlikely to win, reports Meredith Shiner: "Though Murkowski's resolution has 40 additional co-sponsors-including at least one Democrat: Blanche Lincoln of Arkansas - it likely will fall short of the support necessary to pass when she asks for a vote Thursday.…The White House meanwhile issued a statement of administration policy saying President Barack Obama would veto the measure if it came to his desk."

Nancy Pelosi is putting together a bill responding to the oil spill, reports Jake Sherman: "The bill could provide monetary compensation for the residents of the Gulf Coast, as well as an overhaul of the Minerals Management Service, the agency that oversees offshore oil drilling. She also wants legislation to ensure that the federal government has its own expertise for dealing with drilling disasters, rather than relying on oil companies themselves."

Jeremy Leggett thinks an oil crisis will follow the financial one: http://bit.ly/aO86F7

Thomas Frank argues that Obama's response to the spill shows his liberal technocrat streak: "Barack Obama is not the first Democrat to offer 'competence' as an answer to a period of deeply ideological governance; that was Michael Dukakis back in 1988. And Mr. Obama seems like Demosthenes when his remarks on health care are compared to the town-hall disasters presided over by his tongue-tied, detail-dazzled fellow Democrats last summer. Meanwhile, the Democratic Party itself is shifting away from its blue-collar roots toward professionals and well-educated voters."

Jaws interlude: Haley Barbour assures the public that Mississippi beaches are free of oil, sharks.

Domestic Policy

Over one in five children are in poverty, reports Liz Szabo: "The rate of children living in poverty this year will climb to nearly 22%, the highest rate in two decades, according to an analysis by the non-profit Foundation for Child Development. Nearly 17% of children were living in poverty in 2006, before the recession began."

A Texas billionaire with a fondness for big-game hunting is the first to die estate tax-free this year: http://nyti.ms/9Za9Uj

The Supreme Court is blocking Arizona's public financing system, reports Adam Liptak: "The Supreme Court’s own stay will probably remain in effect through both the primary in August and the general election in November. The court instructed the candidates challenging the matching fund law to file a prompt appeal. If the court agrees to hear the case, as is likely, it is unlikely to be argued and decided before the November election. The Arizona law matches money spent by candidates for state office who do not accept public financing - and therefore can raise and spend without limits - by providing equivalent public money for those who take the public money and face limits."

Rep. Jan Schakowsky says the Republicans on the deficit panel aren't willing to consider tax cuts, quotes Pat Garofalo: "[Conservatives] give some lip service to ‘everything should be on the table,’ then, when it actually comes to what kind of revenue can we raise, are closing that door and taking it off the table, and saying that they’re not really willing to consider those things."

Meanwhile, the liberal groups are resisting the possibility of Social Security cuts, reports Lori Montgomery.

The federal government needs to reform its approach to private pensions, writes Charles Millard: "The Pension Benefit Guaranty Corporation (PBGC) insures the private-sector pensions of 40 million Americans. However, it has inherent structural flaws as well as a large and growing long-term deficit.…While Congress does not back its deficits, everyone in Washington assumes that it will. This puts the PBGC in the same moral hazard position as Fannie Mae and Freddie Mac: avoiding the discipline of the marketplace by relying on an assumed governmental bailout."

Does the US actually does spend less on social services than Europe? http://bit.ly/atZ2rt

Harp interlude: Joanna Newsom plays "Emily" live.

FinReg

Geithner wants US regulators united on bank capital requirements during international talks, report David Cho and Brady Dennis: "Regulators have been divided over how much money banks should hold in reserve to protect themselves against unexpected losses.Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., has thrown her support behind a measure offered by Sen. Susan Collins (R-Maine) that could force banks to raise tens of billions of dollars to replace a less stable form of capital in their reserves.…Treasury and the Fed oppose the proposal because encoding such requirements into U.S. law "eliminates a negotiating chip" that could be used to obtain concessions from European nations."

The Fed has found the economic crisis has not changed bank compensation, reports Eric Dash: "The Federal Reserve, six months into a compensation review of the country’s 28 largest financial companies, has found that many of the bonus and incentive programs that economists say contributed to the worst financial crisis since the Great Depression remain in place, according to people briefed on the examinations."

Douglas Shackleford, Daniel Shaviro, and Joel Slemford explain the different types of bank taxes, and whether they'll work or not.

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Danny Johnston-AP.

Lindsey Graham - Gulf of Mexico - Blanche Lincoln - Oil spill - Darrell Issa