Wonkbook: Reid wants cap-and-trade by July; BP caps well (again); Kagan the boss
Democrats are trying to take control of public anger over the BP spill, and that means moving the debate to energy legislation. Harry Reid is now urging chairmen to pass cap and trade out of committee by July, and to include a strong section regulation offshore drilling and associated liabilities. Remember when the compromise to get the bill passed was going to be moreoffshore drilling?
Meanwhile, BP has placed a containment dome over the well (file that one under hope springs eternal), the Department of Labor will release the May employment numbers, Neera Tanden remembers what it was like to work for Elena Kagan, and did you know you can get college credit for working at Wal-Mart?
Happy Friday. Welcome to Wonkbook.
Reid wants the Senate to look at a cap and trade bill by July, reports Alexander Bolton: "Senate Majority Leader Harry Reid (D-Nev.) alerted Senate committee chairmen Thursday that he plans to move comprehensive energy legislation in July. Reid asked the chairmen to recommend legislation to deal with the Gulf oil spill before July 4 so that leaders can include those ideas in the comprehensive energy package. 'I think it is extremely important that you each examine what could be included in a comprehensive energy bill that would address the unfolding disaster in the Gulf of Mexico,' Reid wrote in the letter."
BP has placed a containment dome on the leaking oil well, reports Joel Achenbach: "The well has been capped, more or less. BP engineers Thursday night guided a containment dome onto the hydrocarbon geyser shooting from the Gulf of Mexico oil well -- a desperate and iffy attempt to capture the leaking oil and funnel it to a ship on the surface. It was not an elegant operation. Furious clouds of oil escaped the 'top hat.' Late in the evening, officials with BP and the federal government had not yet announced whether the dome would be any more successful than other efforts in recent weeks."
Elena Kagan was my boss, writes Neera Tanden. "Back in the Clinton White House, I was a middling staffer on the Domestic Policy Council, working on issues ranging from the adoption tax credit to media violence and its effect on children. One of my bosses, as it happens, was Elena Kagan. And I had pretty good vantage for watching her as she crafted policy that could survive those political times."
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Obama met with Arizona Governor Jan Brewer about immigration, reports Louise Radnofsky: "Arizona Gov. Jan Brewer said the president told her he planned to send federal officials to her state this month to engage in 'direct dialogue' on Arizona's controversial new immigration law.…According to a White House statement on the meeting, the president 'reiterated his concern' about the law, and listened to Ms. Brewer's concerns. He told her that his administration had reduced border crime and illegal immigration, according to the statement, which didn't mention the plan to send officials to Arizona."
World Cup interlude: The New Republic relaunches its excellent World Cup blog. http://bit.ly/98pes9
Table of Contents: BP is intimidating journalists (and other energy news); new hiring isn't improving the jobless rate (and other economic news); Obama is promoting health care reform's Medicare rebate (and other domestic policy news); and Dan Tarullo is remaking the Fed (and other FinReg news).Energy
BP tried to silence journalists covering the spill, reports Dan Mak: "Last week a Mother Jones reporter was told she couldn't see Elmer's Island without being accompanied by a BP representative, because it's 'BP's oil.' Two weeks ago Coast Guard officials cited "BP's rules" when demanding that a CBS News crew leave a beach area. (Representatives from CNN, ABC and local CBS affiliate WWL-TV in New Orleans said last week that their journalists had not encountered significant obstacles while covering the oil story.)"
The EPA has tightened sulfur dioxide regulations, reports John Broder: "The Environmental Protection Agency issued a new health standard on Thursday for sulfur dioxide emissions, the first such revision in nearly 40 years. The agency said the new standard, adopted under the Clean Air Act, would prevent 2,300 to 5,900 premature deaths and 54,000 asthma attacks a year. The agency estimates the cost to industry of adopting the new rule at $1.5 billion over the next 10 years, and the value of the health benefits at $13 billion to $33 billion a year."
House natural resources chair Nick Rahall wants BP to pay royalties to the federal government, reports Jake Sherman: "West Virginia Democrat Nick Rahall, in a letter to Holder this week, asked that the Justice department take 'legal action to recover damages owed to the United States for lost royalties.' The issue of royalties has largely been left aside in the flurry of congressional action since the spill. When a company drills in U.S. waters, it signs a lease with the government and pays royalties for the oil it draws from the ground. Rahall says that the government’s lease with BP stipulates an 18.75% royalty."
The Interior Department hasn't banned drilling in shallow waters in the Gulf of Mexico, reports Steven Mufson: "The Interior Department denied Thursday that it has extended a drilling freeze to shallow waters of the Gulf of Mexico, contradicting an e-mail written earlier in the day by the Minerals Management Service's supervisor of field operations for the Gulf of Mexico. The confusion started when MMS rescinded five shallow water permits, including two issued only the day before. Michael J. Saucier, regional supervisor of field operations for the MMS Gulf of Mexico region, sent identical emails to at least two companies whose drilling permits were rescinded, saying that 'until further notice we have been informed not to approve or allow any drilling not [sic] matter the water depth.'"
BP exec Tony Hayward lists lessons learned from the oil spill: "First, we need better safety technology. We in the industry have long had great confidence in the blow-out preventer as the ultimate failsafe piece of safety equipment. Yet on this occasion it failed, with disastrous consequences.…Second, we need to be better prepared for a subsea disaster. It is clear that our industry should be better prepared to address deep sea accidents of this type and magnitude.…Third, the industry should carefully evaluate its business model. For decades, exploration and production companies have relied on outsourcing work to specialized contractors."
Eugene Robinson explains why Tony Hayward should be fired: "Hayward's statements about the effort to plug the well have been consistently unreliable, and it hardly matters whether he's being deliberately misleading or just overly optimistic. The giant containment dome was going to work; it didn't. The second, much smaller containment dome would do the job; it was never even deployed. The 'top kill' procedure was surely going to stop the flow, and early indications, according to Hayward, showed that it was succeeding. Yet oil industry veterans such as T. Boone Pickens said the top kill was a long shot at best, and they were right."
Mashup interlude: Daft Punk versus Fleetwood Mac.
The G-20 is warning of a fragile recovery, reports Dow Jones: "The Group of 20 industrial and developing powers warned of risks to the global economic recovery while urging quick efforts to cut budget deficits, in a draft statement seen by Dow Jones Newswires Thursday."
New hiring hasn't driven down joblessness, reports Motoko Rich: "Heidi Shierholz, an economist at the Economic Policy Institute in Washington, estimates about 2.4 million 'missing workers' either left the labor force or did not enter it in the last 28 months. That is on top of the 15.3 million people who are officially counted as unemployed. Although economists expect the jobs report scheduled for release on Friday to show that employers added perhaps half a million jobs in May, that kind of growth would have to be sustained for some time to absorb the backlog."
Ben Bernanke is urging new lending to small businesses, reports Nick Bunkley: "Ben S. Bernanke, the Federal Reserve chairman, said Thursday that banks needed to increase lending to small businesses to reduce unemployment and help the economic recovery. Outstanding loans to small businesses declined to $660 billion in the first quarter of 2010, from almost $700 billion two years ago, Mr. Bernanke said, adding that it was difficult to tell whether the decrease was a result of reduced demand or tightened credit standards. In any case, he said, increasing the flow of capital to small companies was crucial to the recovery."
There won't be a double-dip recession, writes Daniel Gross. "The concern about a double dip is largely a function of what I'd call residual bearishness. Stung by excessive optimism in 2007, the econo-pundit community remains in a reflexive, dour crouch. Since this recovery began in the spring of 2009, it has been widely disbelieved and dismissed. Fretting about the double dip is as much about where we've been as where we are."
Wal-Mart will offer college credit to workers, reports Ylan Mui: "Under a program announced Thursday, employees of Wal-Mart and Sam's Club will be able to receive college credit for performing their jobs, including such tasks as loading trucks and ringing up purchases. Workers could earn as much as 45 percent of the credits needed for an associate or bachelor's degree while on the job. The credits are earned through the Internet-based American Public University, with headquarters in Charles Town, W.Va., and administrative offices in Manassas."
May retail numbers show weakness, reports Anne D'Innocenzio: "Retailers' May sales reports, released Thursday, underscore how fragile the consumer spending recovery remains. The International Council of Shopping Center index for revenue at stores open at least a year rose 2.6 percent in May, in line with a reduced growth forecast that ranged anywhere from 2 percent to 2.5 percent. Michael P. Niemira, ICSC's chief economist, had originally expected a 3.5 percent gain. May's results follow a 0.8 percent gain in April, and a 9.0 percent increase in March."
Private firms added 55,000 jobs in May, report Sarah Lynch and Kathleen Madigan: "Private-sector jobs in the U.S. increased by 55,000 last month, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. Separately, the number of U.S. workers filing new claims for unemployment benefits fell last week by more than expected, but the latest figures show the job market still remains weak. Economists had expected ADP to report a job gain of 75,000 in May. The estimated change in employment for April was revised from an increase of 32,000 to an increase of 65,000."
Long-term investments deserve lower tax rates, writes Scott Davis: "As the president and Congress consider the appropriate capital gains tax rate in connection with tax reform or efforts to reduce the deficit, they have a golden opportunity to assist small businesses and keep America competitive in global markets. How? By applying truly long-term holding periods to the application of capital gains taxes, allowing those who maintain their investments for five years or more to avoid the highest rate. Under this approach, any individual willing to make long-term investments in public or private businesses for five or 10 years (rather than the current one year) would not face the top capital gains rate when they retired, sold their company or sold their investment."
Long-form interlude: Jeff Madrick reviews "The Big Short".
Obama will start promoting health care reform's Medicare rebate next week, reports Sheryl Gay Stolberg: "With the first batch of checks scheduled to be sent next week, the White House announced Thursday that Mr. Obama will travel to a senior citizens center in the Washington suburb of Wheaton, Md., to take questions about the health bill. An estimated 80,000 checks are scheduled to be sent in June, with others to follow on a rolling basis, to Medicare beneficiaries who enter the so-called 'doughnut hole' – a gap in prescription drug coverage that requires them to pay out of pocket."
Kathleen Sebelius is defending Medicare nominee Donald Berwick, reports Janet Adamy: "Health secretary Kathleen Sebelius Thursday rejected criticism of the Obama administration's nominee to run Medicare and Medicaid, saying Republicans were being unfair to Donald Berwick and she was confident he would be confirmed. Dr. Berwick, a Harvard pediatrician and health-quality advocate, has come under sharp attack from Republicans over his ties to Britain's national health system and past writings about how to make health care more efficient."
Health care regulators are working overtime, reports N.C. Aizenman: "Most Mondays and Thursdays, Nancy-Ann DeParle, director of the White House Office of Health Reform, meets with several dozen top officials to weigh in on the myriad sensitive decisions required to translate the law's mandates into fine print covering one-sixth of the economy. According to administration sources, key participants include Jeanne Lambrew, director of the Office of Health Reform at HHS, and Mark Childress, the agency's acting general counsel. Also present are officials from Treasury and Labor, where Borzi oversees implementation as head of the Employee Benefits Security Administration."
Memos from her Supreme Court clerkship show Elena Kagan's early views, reports Charlie Savage: "A three-page memorandum from September 1987, for example, discussed a case in which welfare authorities had failed to protect a child from violent parental abuse. It raised the question of whether the government had an unwritten constitutional duty to help such children. Ms. Kagan expressed 'worry' that a majority on the court would use the case to reject a broad view of substantive due process under which the doctrine can not only be used to restrict official actions, but also to require the government to affirmatively do things."
Elena Kagan's major White House battle involved tobacco legislation, reports Alec MacGillis: "In Kagan's trajectory through the legal and political establishment to become President Obama's Supreme Court nominee, the tobacco battle of the 1990s proved formative for someone who had little exposure to the messy realities of policymaking. In forging a deal that could satisfy Congress, public health advocates, states and tobacco companies, Kagan was for the first time in a high-profile role where she would hone the characteristics she has become known for: finding compromise in pursuit of a daunting goal and using her command of complex issues to win over powerful people with outsize egos."
Senate candidate Kendrick Meek explains why he supports filibuster reform: "The filibuster should be used as a last resort to protect the interests of the American people against the tyranny of the majority; it shouldn't be used as a way to obstruct the will of the people. If Republicans are going to exploit the current rules to do that, then it's time to change the rules on behalf of the American people.…There are a lot of proposals out there for reform of the filibuster and in January 2011, the new Senate should take the best parts of those proposals and institute changes that will improve the Senate and make its actions more reflective of the will of the people."
David Brooks praises Obama's education policy: "Reformers in at least 23 states have passed reform laws in hopes of getting some of the dough. Some of the state laws represent incremental progress and some represent substantial change. The administration has hung tough, demanding real reform in exchange for dollars. Over all, there’s been a tremendous amount of movement in a brief time. This is not heavy-handed Washington command-and-control. This is Washington energizing diverse communities of reformers, locality by locality, and giving them more leverage in their struggles against the defenders of the status quo."
Electronica interlude: Boards of Canada's "Roygbiv".
Fed Governor Dan Turello is establishing himself as a major power, reports Sewell Chan: "Mr. Tarullo, who blends an expertise in economic regulation with a passion for Faulkner and Eliot, took office eight days after Mr. Obama did, as the economy was reeling from the aftershocks of the crisis. He quickly won the confidence of Mr. Bernanke. He helped oversee stress tests of the 19 largest bank holding companies, which helped them to raise capital and regain investor confidence. And then he set out to tighten the way the Fed’s 2,800 bank regulators and supervisors around the country oversee 5,800 financial institutions, large and small."
Tim Geithner is calling for quick global agreement around banking regulations, reports Howard Schneider: "World leaders need to press more quickly for an overhaul of global banking regulations to help shore up the economic recovery and clarify the 'rules of the game' going forward, Treasury Secretary Timothy F. Geithner said in advance of meetings this weekend among key finance ministers and central bankers. 'We want to accelerate progress on reaching and putting in place global agreement on the core reforms,' Geithner said as he prepared for talks in South Korea with his counterparts from the Group of 20. 'We all have an interest in bringing clarity to what the rules of the game are going to be.'"
South Korea is seeking support for a bank tax at the G-20 conference, reports Evan Ramstad: "South Korea will use this weekend's meeting of Group of 20 finance ministers to enlist support for an international levy on bank transactions, an idea Korean officials like because they think it can limit volatile currency flows that beat up smaller economies like their own. Since late last year, leaders in the U.S. and Europe have batted around global bank-tax ideas, chiefly with an eye on raising revenue and penalizing excess profits, particularly on the institutions that got government help in the 2008 financial crisis."
Wall Street has hired over 1,400 lobbyists on FinReg, reports Dan Eggen: "More than 1,400 former members of Congress, Capitol Hill staffers or federal employees registered as lobbyists on behalf of the financial services sector since the start of 2009, according to an exhaustive new study issued Thursday. The analysis by two nonpartisan groups, Public Citizen and the Center for Responsive Politics, found that the 'small army' of financial lobbyists included at least 73 former lawmakers and 148 ex-staffers connected to the House or Senate banking committees. More than 40 former Treasury Department employees also ply their trade as lobbyists for Wall Street firms, the study found."
AIG has failed to sell its Asian division to Prudential, reports Howard Schneider: "Treasury Secretary Timothy F. Geithner said the collapse of a deal to sell American International Group's Asia life insurance division won't undercut chances for taxpayers to be repaid the $180 billion set aside to bail out the insurance conglomerate. The planned $35 billion sale of AIG's American International Assurance subsidiary to Prudential had been heralded as a boon to the federal government and a sign that AIG might repay the proceeds of the 2008 federal rescue."
The latest economic data led Wall Street to falter yesterday, report Jack Healy and David Jolly: "Wall Street stocks were narrowly mixed Thursday as investors’ hopes for a turnaround in the job market were tempered by a report on factory orders that fell short of expectations. After starting the session solidly higher, echoing an upturn in Asian and European markets, stocks lost some of their momentum after the Commerce Department reported that factory orders rose 1.2 percent in April, the eighth consecutive month of gains, but one that fell short of economists’ predictions of a 1.8 percent rise."
The specifics of a bank liabilities tax need to be worked out, writes Howard Gleckman: "The original Obama bill would have raised about $90 billion over 10 years to repay the cost of the recent bailouts. Once enough was collected to do the job, the tax would expire. The Senate version was intended to finance a new bank bailout fund. But a tax whose major purpose is to finance a designated program has a big problem. If the levy also is enacted in part to discourage banks from taking inappropriate risk, wouldn’t they resume their bad behavior after the tax ended? This design raises other questions as well. Should the tax be levied on only uninsured funds or on all deposits?"
Classic Onion Interlude: Should the government stop dumping money into a giant hole?
Closing credits: Wonkbook compiled with Dylan Matthews and Mike Shepard. Photo: Shannon Stapleton-Reuters.