The Briefing

Opinion: Is it appropriate for the United States to apologize?

2010-10-01T12:13:00.001-06:00

One meme in American foreign policy circles since the start of the Obama administration has been to label efforts by the president to reach out to members of the international community in a way that acknowledges what can sometimes only be called discomfiting history as an "Apology Tour." According to this group, it is inappropriate for the United States to apologize and such history should largely be ignored in attempts to craft a relevant foreign policy.

Parents teach their kids that when they do something wrong, especially when it results in harm to another person or their property, lying to cover it up, pretending you know nothing about it, or blaming someone else is generally unacceptable. It is a mark of maturity to learn to accept responsibility for our own actions.

Today, Secretary of State Hillary Clinton and Secretary of Health & Human Services Kathleen Sebelius offered the first official apology for the United States government's intentional infection of hundreds of Guatemalans with STDs without their knowledge and consent from 1946-48. It's a horrendous episode in our history of which most Americans have little knowledge.

As members of a global community, I'd assert that we're seeing an increasing shift away from states interacting purely through their regimes, a paradigm which established each country's rulers as the gateway of information to its people. In today's world, thanks to the spread of technology, information travels at the speed of light. At the same time, transnational organizations and corporations are now important non-state actors on the global stage.

The Obama administration isn't just speaking to governments, it's speaking to people. It strikes me that this is an essential and important shift in international outlook.

Given that fact, I'd imagine trying to influence people's hearts and minds is a bit more difficult when you ignore the fact that men and women bearing the same seals of government infected your grandfather with gonorrhea or provided weapons to the group that blew up your family home or backed more than one coup in your nation to remove a democratically elected leader.

Sometimes apologizing is the right thing to do.

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Middle East/N. Africa: Shiites choose Maliki; Iraqi parliament stalemate may end

2010-10-01T10:13:00.001-06:00

After more than six months since inconclusive parliamentary elections, an alliance of Iraq's Shiite parties has chosen incumbent Nuri al-Maliki as their nominee for prime minister.

Maliki is now expected to form a government in the near future.

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Asia/Pacific: Pakistani military pushing for shake-up of civilian government

2010-09-29T09:04:00.002-06:00

There is an oft repeated line about Pakistan: Most countries have a military; Pakistan's military has a country.

Said to be frustrated with President Asif Ali Zardari's poor handling of the recent flooding of the Indus, the country's military leaders are becoming increasingly likely to pressure Zardari (pictured right) to shake-up his cabinet in the short term and to remove the administration itself in the medium term. At this stage, the generals have hinted at wanting to see the installation of a new civilian regime rather than a military dictatorship, a path they have taken at least four times in the 63 years since independence from India.

Zardari, who is now deeply unpopular with many Pakistanis, was elected two years ago after the assassination of his wife, former Prime Minister Benazir Bhutto. Despite supporting civilian and democratically-elected governments in Pakistan, Western countries have tended to maintain a strong relationship with the military as well as a safeguard against further instability within the nuclear-powered state and the Central Asian region as a whole.

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The Americas: Meet the (likely) next president of Brazil

2010-09-25T15:03:00.000-06:00

I highly recommend this fascinating feature on Dilma Rousseff, the woman who will likely be elected the next president of Brazil, succeeding popular outgoing President Luiz Inacio Lula da Silva.

"Not every president has a police mugshot, but it's not so surprising in Latin America.

"A special report out of Brazil today sheds new light on Dilma Rousseff, a former guerrilla leader who is likely to be elected the booming country's next president. She spent nearly three years in jail in the early 1970s and was tortured by her military captors. She's come a long way since then.

"The product of more than a dozen interviews with Rousseff and her top advisers, the story gives a glimpse of how Rousseff could govern at the helm of a country that, with India, Russia and China, is among the worlds few economic bright spots."

Despite an ethics scandal involving a member of her party, Rousseff maintains a commanding lead ahead of the October 3 election.

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Global: Russian wheat shortage fuels fear of potential food crisis

2010-09-23T19:09:00.003-06:00

The effects of wildfires and drought that devastated wheat fields throughout much of rural Russia earlier this year threaten to spiral into a global food crisis as the UN Food & Agriculture Organisation today announced an emergency meeting in Rome on Friday.

Russia, a major world producer, reacted by temporarily banning all wheat exports in an attempt to instill market stability and ensure adequate food stuffs for the nation's 142 million people.

Despite high wheat yield in the U.S. this year, there is no sign that prices will fall anytime soon, an effect which could further exacerbate food shortages in much of the developing world.

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UNGA: Ahmadinejad addresses the UN General Assembly, blames capitalism for global economic disparities

2010-09-21T15:32:00.000-06:00

Iranian President Mahmoud Ahmadinejad addressed the United Nations General Assembly this morning and took the opportunity to lay the failures of the global economic system at the feet of capitalism and "big business."

The Assembly is being attended by more than 140 heads-of-state and has been convened to focus on the global community's progress toward the Millennium Development Goals, which aim to halve global poverty by 2015 as well as meeting several quality of life reflective international development goals.

More from the Associated Press:

"[Ahmadinejad] took aim at capitalism and called for the overhaul of 'undemocratic and unjust' global decision-making bodies, which are dominated by the United States and other Western powers. While Ahmadinejad didn't single out any country, he said world leaders, thinkers and global reformers should 'spare no effort' to make practical plans for a new world order - reform of international economic and political institutions.

'It is my firm belief that in the new millennium, we need to revert to the divine mindset...based on the justice-seeking nature of mankind, and on the monotheistic world view...,' the Iranian leader said in a brief speech intertwining philosophy and religion with the current state of the world. 'Now that the discriminatory order of capitalism and the hegemonic approaches are facing defeat.'"

The Assembly today also featured addresses from Liberian President Ellen Johnson Sirleaf, the foreign ministers of Russia and Pakistan, and German Chancellor Angela Merkel, who espoused a neoliberal argument for more open markets in the developing world.

Merkel's speech was strongly challenged by Oxfam, a leading aid organization, which slammed the Germans for not living up to expectations and "sidestepping their responsibility to make aid work by laying this at the door of the poorest countries."

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Asia/Pacific: Major elections in Afghanistan tomorrow

2010-09-17T18:40:00.001-06:00

Afghanistan is to hold lower parliamentary elections Saturday, only the second Afghan-led poll in the nation's history. Given the state of conflict in many areas, success will be perceived as the conduct of reasonably peaceful and fair voting for the general populace.

The last few days have seen significant insurgent-launched attacks, including the kidnapping of 20 individuals, including 2 parliamentary candidates. Additionally, a 6.3 magnitude earthquake struck the Hindu Kush in Afghanistan's northeast region earlier today.

Despite the obstacles and threats, 76 percent of Afghans recently polled by a U.S. firm said they intend to go to the polls this weekend.

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Asia/Pacific: China to intro stronger regulations to reduce pollution, import more from U.S.

2010-09-13T21:27:00.008-06:00

Aileen Wang and Ben Lim have the details:

"China will introduce stricter rules to reduce industrial pollution, a senior economic planning official said on Tuesday.

"Zhang Xiaoqiang, a vice-chairman of the National Development and Reform Commission, also told a meeting of the World Economic Forum in this northern port city that China was willing to import more from the United States."

The most important financial reform news of the year

2010-09-13T07:28:00.001-06:00

Almost certainly, the most important and most underreported story of the day is the clenching of a deal at Basel III, the international conference of regulators tasked with establishing financial oversight standards for much of the world.

The quick and dirty is this: Basel has adopted surprisingly strong capital requirements (the amount of money financial institutions need to keep on hand). That's a major victory for U.S. Treasury Secretary Timothy Geithner who faced opposition from many European countries. Given that the financial regulation bill passed by Congress earlier this year contained no hard capital requirements, this iteration of Basel is arguably a bigger achievement for supporters of stricter standards.

Felix Salmon from Reuters explains the emerging deal:

"Possibly the most important thing here is the existence of the first column, setting minimum standards for common equity -- which is also known as core Tier 1 capital. Such standards did exist in the past, but they were set extremely low, at just 2%, and so were generally ignored. As of now, common equity is the main thing that matters. No more throwing any old garbage into the Tier 1 bucket and calling it capital: the new standards for common equity are significantly tougher than the old standards for Tier 1 capital in total. The absolute bare minimum for core Tier 1 capital is 4.5%, and the new minimum for Tier 1 capital in general has now been raised to 6%. The minimum for Tier 2 remains at 8%. But that’s just the beginning."

If you understood that and want more, see Salmon's complete rundown here.

Federal judge rules DADT unconstitutional

2010-09-09T20:35:00.002-06:00

U.S. District Judge Virginia Phillips has ruled the military's ban on openly gay service violates the first amendment rights of gays and lesbians and is therefore unconstitutional.

Phillips also issued an injunction stopping the military from enforcing the policy. Phillips may lack authority to impose a nation-wide injunction, however, and attorneys for the federal government are arguing the policy is better addressed by an act of Congress.

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Economy: Obama proposes $50 bn in infrastructure spending, $100 bn R&D tax credit extension for businesses

2010-09-07T08:05:00.000-06:00

Obama wants $50 billion for infrastructure investment, reports Peter Slevin: "White House officials said the $50 billion in new government spending would be the first installment of a six-year transportation strategy that would include investments in high-speed rail and air traffic control. To pay for it, the administration would raise taxes on oil and gas companies...If approved by Congress, the infrastructure money would be used to build or repair 150,000 miles of road, 4,000 miles of railroad track and 150 miles of runways, the officials said. The proposal includes creating an 'infrastructure bank' to prioritize projects and attract private funds."

Obama will also propose a $100 billion business tax credit this week -- but no payroll-tax holiday. Anne Kornblut and Lori Montgomery report : "The business proposal - what one aide called a key part of a limited economic package - would increase and permanently extend research and development tax credits for businesses, rewarding companies that develop new technologies domestically and preserve American jobs. It would be paid for by closing other corporate tax loopholes, said the official, speaking on condition of anonymity because the policy has not yet been unveiled."

"The White House has decided to forgo a broad-based payroll-tax holiday at this point, officials have said. That proposal, which had been part of earlier discussions with key congressional officials, would have been an expensive measure, potentially costing hundreds of billions of dollars. It also could have deprived Social Security of needed cash even as Democrats are accusing the GOP of plotting the program's demise on the campaign trail."

And tax write-off for capital investments, reports Jackie Calmes: "It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case....A draft paper on the proposal permitting businesses to write off the full costs of capital spending in 2010 and 2011 said it 'would be the largest temporary investment incentive in American history.'"

Sub-Saharan Africa: South African mine workers go on strike

2010-09-06T01:25:00.000-06:00

Eight-thousand workers at the Northam Platinum company are on strike in pursuit of a 15 percent pay raise after turning down management's 8 percent offer.

The miners are members of South Africa's National Union of Mine Workers. Their decision to strike follows a series of other high-visibility walk-outs in South Africa this year.

Americas: Chilean workers begin drilling shaft to free trapped miners

2010-08-31T08:12:00.000-06:00

The Associated Press' Bradley Brooks reports:

An enormous drill began preliminary work Monday on carving a half-mile chimney through solid rock to free the 33 men trapped in a Chilean mine, their ordeal now having equaled the longest known survival in an underground disaster.

The 31-ton drill bored 50 feet into the rock, the first step in the weeklong digging of a "pilot hole" to guide the way for the rescue. Later the drill will be outfitted with larger bits to expand the hole and pull the men through - a process that could take four months.

The men were trapped Aug. 5 in the San Jose mine in Chile's northern Atacama Desert. Before rescuers dug bore holes to reach them, they survived 17 days without contact with the outside world by rationing a 48-hour supply of food and digging for water in the ground.

The miners are now being funneled food and chlorine to disinfect the underground water through an "umbilical cord" connecting them to the surface. They've also received vaccinations and rubber boots to help prevent diphtheria and tetanus and a video camera, which they're using to film their injuries so a doctor on the surface can provide advice for spot treatment.

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Opinion: On mosque near 'Ground Zero', a distinction without a difference

2010-08-30T18:00:00.000-06:00

Last week, The Daily Beast's Peter Beinart proposed the idea that "you can't divorce the right to do something from the ability to exercise that right."

He was referring to the debate over whether Imam Feisal Abdul Rauf should go ahead with plans to build a mosque on private property a short distance from the former site of the World Trade Center.

Among those opposed to such action, a distinction has emerged. Some argue either that Muslims do not have a right to build a place of worship in the United States or that other citizens have a right which supersedes that freedom of religious expression. Another, ostensibly more reasonable, group acknowledges the right certainly exists but argues that the spiritual leader should scrap the plans anyway. Their assertion is that having the right to do something does not necessarily mean one should exercise that right.

Although it is certainly an inexact analogy, this reminds me a bit of women's rights in Iran. The law of the Islamic Republic does allow women to run for and hold elected offices. Somehow, despite hundreds of attempts and an apparent lack of legal obstacles though, no woman has ever been certified by the Guardian Council to run for President. A contradiction seems to exist between what is legally permissible and what is socially allowable.

There are times when the liberties enshrined in our Constitution afford rights to people that make us uncomfortable. Standing up for those rights anyway is a true expression of patriotism. Legally allowing an action while using popular opinion to effectively forbid it is a specious way to honor a fundamental American value.

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Sub-Saharan African: Kenya adopts a new constitution after two decades of struggle

2010-08-30T16:56:00.000-06:00

Prime Minister Raila Odinga accepts the new oath of office.

The new Kenyan constitution was promulgated on Friday in Uhuru park in Nairobi. The east African country has been working to adopt a new governing document since 1990, when opposition groups began protesting across the country in support of a multi-party political system.

In the two decades that followed, Kenyans have ridden a roller coaster of false starts and ethnic tension, a relatively uncommon occurrence in Kenya, which prides itself on being a bulwark of stability in a region prone to conflict.

After the 2007 presidential elections, riddled with allegations of vote-rigging and aggression between communities, a peace deal was signed which led to a determination and resolve to finally institute change. It was for this reason that millions of Kenyans stood in line for hours to vote for the new constitution earlier this month. Sixty of the nation's two-hundred ten constituencies had turnout numbers greater than eighty percent.

The constitution itself seems worthy of high hopes. It could ensure the nation's survival long-term by reforming a political establishment prone to corrupt and abusive governance and the skewed distribution of resources and land.

The challenge now facing Kenyans is to continue to hold their leaders accountable, ensuring a faithful implementation of the document they so deserve.

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Middle East/N. Africa: Vice-President Biden in Iraq

2010-08-30T10:59:00.000-06:00

U.S. Vice-President Joe Biden arrived in Baghdad on an unannounced visit this morning, a day before the formal end of combat operations in Iraq.

President Obama is to address the nation on Tuesday on Iraq and Afghanistan.

There are now fewer than 50,000 troops on the ground in Iraq, down from 160,000 at the end of President George W. Bush's administration. The remaining troops will focus on providing assistance and training to the Iraqi military.

Biden will also meet with Iraqi officials who have been struggling to form a government after elections in March resulted in a hung parliament, including Iraqi President Jalal Talabani, Vice President Tariq Hashimi, Vice President Adil Abd Mahdi and Prime Minister Nouri Maliki.

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Economy: Paul Volcker-headed advisory board releases report on tax code

2010-08-30T10:24:00.000-06:00

WaPo's Lori Montgomery has details:

"In an exhaustive 18-month review, the President's Economic Recovery Advisory Board found that the complexity of the nation's tax laws has increased dramatically in recent years. Lawmakers have changed the code more than 15,000 times since the last major overhaul in 1986. Meanwhile, instruction booklets for the standard Form 1040 have swelled from 14 pages to 44 pages last year.

The board also found that the profusion of credits, deductions, phaseouts and conflicting eligibility requirements frays the sanity of ordinary taxpayers just as surely as it complicates the calculations of wealthy families and business owners. Tax provisions affecting families and children were among the most frequently cited sources of confusion."

Read the full report here.

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Americas-Europe/Russia: U.S. and Europe fighting over capital requirements in international banking regulations

2010-08-30T03:17:00.000-06:00

Negotiators have made significant progress as the unofficial September deadline for the Basel III Accord nears. The accord consists of international recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision in Switzerland. The third of the Basel Accords is being written in response to the recent global financial crisis.

The current sticking point is over the amount of "safety capital" financial institutions should be required to maintain as a buffer for risk. Basel officials have recommended the level be set at 5% of assets, i.e., loans and investments, with an additional 2.5% buffer accessible to banks during periods of difficulty.

A deal seems likely to conclude with the level set at 7 or 8% including the additional buffer. Since most U.S. firms already keep a larger percentage of safety capital on hand than most European banks, the new requirements are likely to be more onerous for the latter.

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'Global Affairs' coverage to begin, website revamped

2010-08-29T18:28:00.000-06:00

The Briefing is pleased to announce some major changes to our mission and design.

The most aesthetically obvious of these changes is our reworked website and new logo. This shift reflects our new commitment to expanding our coverage and analysis to international issues.

If you've been following us for the breaking political news and policy information, don't worry. That content isn't going anywhere. We're just adding a larger world perspective to encourage each of us to be productive and informed global citizens. We hope this new focus will lead to many conversations about the nature of the issues we face in the world today and a constructive dialogue about how we can work together as an international community to address those issues.

As a helpful reference, you'll notice all posts now have a policy area (Immigration, National Intelligence, etc.) or world region (The Middle East & Northern Africa, Europe/Russia, etc.) tags before the headline.

Additionally, you'll see a larger percentage of our news updates on Facebook containing links to a quick write-up with a few additional details and some brief analysis. You can often expect a headline and three to five sentences of detail here on The Briefing site.

As always, we hope these new features are helpful and interesting to you. Please know that we always appreciate comments and questions.

Asia/Pacific: Australia gets first indigenous MP

2010-08-29T10:18:00.001-06:00

Ken Wyatt was elected to a seat representing a Western Australian district as a member of the center-right Liberal Party.

Ethnic tension continues to exist in the country, as evidenced by Wyatt's receipt of racist hate mail, but the election of an indigenous person is a welcome and historic step forward for Australia.

Last week's parliamentary elections resulted in both major parties falling three to four votes short of a majority, forcing the Liberals and Labor to reach out to the Independents who now hold the balance of power.

One-Third of Pakistan Is Under Water, Have You Heard?

2010-08-19T11:49:00.000-06:00

Imagine the entire population of our largest metropolitan area, New York City, were made homeless over night and a third of them were starving. Now double that.

For most in the United States, the country of Pakistan holds a checkered reputation.

First, there's the evidence of past duplicitous relations with our nation's military and collusion with the Taliban in neighboring Afghanistan. Then there's the less-than-predictable politico-military power balance in a nation with a stockpile of roughly 150 nuclear warheads. Add to that volatile relations stemming from three separate wars with India which have seemed to distract the nation's foreign policy establishment to the near-total exclusion of threats in the north and it's generally true that those in the States who know much of anything about Pakistani current affairs tend to not like what they've heard.

It's possible that it's for this reason that so few of us have been moved to help a nation that's been devastated in the last three weeks by widespread floods; in truth, I'm guessing few have even heard of the crisis.

But, a crisis it most surely is, already having afflicted disaster on more human beings than the 2005 earthquake in Kashmir and that which struck Haiti earlier this year. The flooding of the Indus River, which stretches across the entire length of Pakistan, has killed more than 2,000, left over 700,000 families homeless, and affected more than 20 million people, reducing entire towns to muddy rubble. Some 17 million acres of agricultural land have been submerged, and more than 100,000 animals have perished. Six million people are in need of food aid.

In some areas, the waters have begun to recede, leaving unusable farm land and pools of stagnant water which threaten to cause widespread outbreaks of disease. The UN Office for the Coordination of Humanitarian Affairs warns of a "second wave of death" unless aid comes quickly, with the World Health Organization declaring six million people, including 3.5 million children, at risk from diseases like cholera, typhoid, hepatitis A and E, and dysentery.

In other areas, most notably the southern Sindh province, rain fall continues to exacerbate the Indus, threatening even further breaches of the river banks.

The United Nations estimates $460 million is needed to deal with immediate humanitarian needs and the Pakistani government estimates the total reconstruction cost at nearly $15 billion. So far the world has pledged or donated just $125 million.

It should be pointed out that the U.S. Department of State has mobilized more emergency aid than any other country, including tons of food aid and the dispatching of Navy helicopters to assist with search and rescue missions. It's also true that the Pakistani army has reacted swiftly and competently. But neither of those truths has multiplied the aid actually available to make a difference.

Some worry the money could fall into the hands of the Taliban, but while international aid agencies and non-governmental organizations have taken steps to prevent such a possibility, that reticence to help the militants has unintentionally opened a dangerous door. While the U.N., Red Cross, Care, and others have pleaded for more aid, the Taliban hasn't focused on siphoning it off, but rather on actually assisting the victims themselves. Especially in strategic areas like the Swat valley, this has left many rural Pakistanis with the impression that the international community and their own government have abandoned them while the Taliban come to their aid.

Make no mistake, the victims of this disaster are farmers and shopkeepers and schoolteachers, men and woman and children.

They say that Americans, blessed with so much, are some of the most giving people on the planet and that economic hard times actually lead to an increase in charitable giving as we come closer to what really matters and reconnect with the empathy that defines our humanity.

On Monday, several hundred people blocked the main highway linking Punjab province with the city of Karachi in protest. "We have no food and no shelter," they cried. "We need immediate help."

As a human being, I implore you to help in any way you can. Please, give generously.

---

To help, text 'SWAT' to 50555 on your mobile phone to donate $10 directly to the UNHCR or give to one of these organizations working to mobilize relief workers and supplies and combat disease on the ground:

American Red Cross

1.800.RED.CROSS

redcross.org

Doctors Without Borders

1.888.392.0392

doctorswithoutborders.org

A Note on Census Hiring

2010-07-02T11:10:00.000-06:00

I'll be back later with some more analysis of this morning's rather dismal jobs report, but wanted to share a quick though on the temporary census positions that accounted for most of this morning's reported job losses.

You'll remember that in May the U.S. Census Bureau added 411,000 temporary positions to execute the decennial counting of Americans for representation and apportionment. A number of sources, most notably many conservatives, cried foul, saying these positions, because they were temporary and public sector, did not count. Only private sector jobs, of which there was a net gain of 41,000 in May, should be accepted as actual progress.

In June, we lost 225,000 of those temporary, public sector positions as the census presumably went forward fairly smoothly and more than half the work was finished in less than a month. The private sector added 83,000 jobs. Surprisingly, the same individuals who cried foul at counting the addition of census jobs last month are those advocating most loudly for this morning's numbers reflecting the loss of those jobs to be the most important story of the month.

To me, this smacks of hypocrisy. You can't have it both ways. Either the positions should be completely discounted or they should be viewed as what they are: jobs held by real people that offered a brief, limited reprieve from joblessness.

Either way you slice it, two things are clear: those workers are now back in the ranks of the unemployed, which is bad news, and we should expect more of these losses in the coming months as the nearly 200,000 remaining census workers also wrap up their work.

Why Are Brown, Collins, and Snowe Threatening to Jump Ship on Financial Reform?

2010-06-29T15:15:00.001-06:00

Inside the beltway, panic started to set in this morning as the prospects for passing financial regulatory reform legislation before July 4th hit a patch of turbulence with Senators Olympia Snowe (R-ME), Susan Collins (R-ME), and Scott Brown (R-MA) all threatening to vote against the conference report merging the House and Senate bills.

The offending language for all three Republicans is a $19 billion tax on large banks and hedge funds added at the last minute to keep the legislation from adding to the deficit. Brown wants that gap to be paid for through spending cuts instead, believing the tax would be harmful to the financial institutions.

After an afternoon of trying to convince the three to change their minds, Senator Chris Dodd (D-CT) and Congressman Barney Frank (D-MA) announced the conference committee would reconvene this evening to make the changes necessary to win enough votes in the Senate.

Obviously, this is a headache (reopening conference almost guarantees the bill won't be sent to the president before the July 4th break), but it could have been a lot worse. Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) were smart to keep the report from the floor of the House and Senate until both chambers were sure they had the votes. If the House had already accepted the report, the conference couldn't be reopened.

Back-tracking at this stage to make some sort of deal which will likely include cuts to other government programs is certainly less than desirable, but it could be much worse. Without Pelosi and Reid's smart management, this would be a much larger setback.

As it is, financial reform is still almost certain to pass with relatively minor changes, it'll just be a week later than expected.

Frankly, the 24-hour widespread hysteria of pundits sounding the death knell of a major Obama policy objective seem a bit silly now. Actually, they seemed silly at the time too.

Adaptability: one. Conventional wisdom: zero.

UPDATE: The House-Senate conference has added an $8 billion increase in FDIC premiums paid by commercial banks and $11 billion of rerouted TARP funds to the report to replace the $19 billion tax on large commercial banks and hedge funds opposed by Senators Brown, Collins, and Snowe.

Senator John Ensign Denies Benefits to Nevadans Facing Highest Unemployment Rate in Nation, Chuckles

2010-06-29T11:46:00.001-06:00

As a fourth vote to extend unemployment benefits seems likely to come up before the week is out, Senator John Ensign (R-NV) notified his constituents that even though his state leads in unemployment, home foreclosures, and bankruptcies, he will not be supporting legislation to ensure the continued income of brow-beaten Nevadans.

"I recognize," said the senator in a press conference Monday, "that folks in Nevada have been crushed under the weight of a recession they didn't cause. Homelessness, dire poverty, and the worst education system in America have all conspired to leave the people of my state hopeless and broken. Our fragile economy is on the brink of disaster and many families are living on credit and payday loans just to stay in their homes and keep food on their tables. The people of Nevada are working class folks, the sort that have paid into the unemployment system for years and now, when they need help the most, I am pleased to announce that I will be voting against the extension of that support."

Bewildered members of the press asked the senator to clarify, noting that it seemed preposterous to deny Nevadans the benefits they need to survive in the wake of such crippling circumstances. Ensign acknowledged the confusion and was happy to explain.

"A few years back I sold my soul to Satan and consequently owe my allegiance to the Dark Lord. As it turns out, it serves his purposes to stabilize the national debt at the expense of American families, especially Nevadans who will soon be homeless in the 110 degree inferno that surrounds their under-valued houses outlying our vacuous, job-deprived city centers." Ensign added, with a wink and a nod, "I'm just remembering who sent me to Washington in the first place."

Administration officials in the netherworld were unavailable for comment, but Mr. Satan took to his Twitter account just after the announcement.

"H8 2 C Sen. Ensign blaming me 4 block on benefits vote; I do not assoC8 w him, and he has no soul to my knwldge. #JohnEnsighIsADouche"

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Jimi Jobin is a spiritual wanderer and teaches Religion and Philosophy in a private school. He, his wife and son live in Las Vegas, Nevada.

Of Pundits and Pastors: An Open Letter to Pastor H. Wayne Williams

2010-06-20T16:51:00.001-06:00

What follows is a response to the actions of Rev. H. Wayne Williams who, in defiance of the IRS Law denying churches the ability to publicly support political candidates, has chosen to endorse Gordon Howie for Governor of South Dakota from the pulpit. Howie has asked for pastoral support and in return has promised to assist those pastors in taking their inevitable IRS trials to the supreme court in an effort to end separation of church and state in America.

Of Pastors and Pundits

An Open Letter to Pastor H. Wayne Williams

Pastor, I recognize your frustration, and I see how things have come to this. For years America has only shrugged at religion, and recently Christianity has been caught in a violent tug of war between Republicans and Democrats. We feel, as leaders, entitled to make political endorsements. Why shouldn't we, especially in a democracy where endorsements translate directly to power, take up our biblically informed opinion, get behind a pulpit, and urge our people to support a candidate? Why shouldn't we support the rulers we stand to benefit the most from, and give them a divine leg up?

For the historically minded among us, the reasons for not bringing our spiritual authority into political campaigns are blood red. For nearly 2,000 years our faith fore-fathers were persecuted and oppressed, not always by the irreligious, but more often by competing tribes in Christianity. Clerics would jockey for favor in the kingdoms of men, then use any clout gained to suppress the views of their theological enemies. Over and again we stamped out those who did not fit into our au currant idea of orthodoxy and we entrenched ourselves into division, using the steel of our ruler's swords to proclaim our theological certainty. Christians have killed and tortured more of their own than any other group in history, and this was possible solely because of the unholy union of church and state. Pastors gave rulers their blessing, and rulers returned the favor by silencing the pastor's critics, a fantastic deal for the pastor who courts the powers, but a dangerous and painful reality for any others who do not.

There isn't a Christian denomination in existence who has not been slaughtered by their theological opponents. The Pope used his political power in Spain to warrant the inquisition. Bloody Mary earned her moniker by burning 300 dissenters of Catholicism at the stake. The Calvinists and Lutherans used their influence over the German Princes to commit near genocide of Catholics all over Europe during the 30 years war. Catholics in the 3rd Crusade almost exterminated the Orthodox Church in Constantinople. Anabaptists have been drowned, burned, and exiled under each of the other major sects. For almost 1500 years Christians wielded political power to slay one another, until the founding of America. America was the first country without a designated faith, here was the only place in the world where Catholics and Protestants, Radical Reformationists and Orthodox could live as neighbors. An accomplishment not won by better theology nor a love of peace, but because each lacked the ability to oppress one another by controlling the government.

We have created a land where church and state are separated to protect them from one another, not to diminish the role of either. The integrity of the church is jeopardized when politicians can appeal to spiritual leaders and gain their endorsement because the opportunities for abuse and ambition are too rampant. The same quid pro quo corruption that taints those tempted by lobbyists will await pastors when their support can yield inexhaustible American power. This is why America has passed laws to preserve the dignity and purity of the pastoral office, exchanging tax exemption (a unique phenomenon in the world) with the trust that the nation's charitable goodwill can't be used as a political force. Christianity has flourished in America, due in large part to the inability of any one religious sect to silence the others by electing one of their own. Consider how different things would be if all along pastors had the ability to endorse candidates, if the elected then changed the social landscape to keep the favor of the pastors -like Mr. Howie is promising to do today. What if JFK had been endorsed by the Pope, what might he have done to protestants? What if Billy Graham had used his crusades to call for the reelection of his close friend, Richard Nixon?

Pastors needn't remain neutral when it comes to social change. Rev. Martin Luther King, Jr., championed civil rights, Rev. Charles Finney fought to abolish slavery, and many more contributed to all the progressive reforms of the 19th century, from Women's Suffrage to Child Labor Laws. But we stir change by stinging the national conscience, by being a prophetic witness for biblical values and obedience to Christ from the pulpit, not by taking the dangerous short cut of merely electing somebody to make a sweeping change in our favor. Pastors are here to bring the optimism of a better world, a Kingdom of God where it can be on Earth as it is in Heaven. We aren't here to arbitrate the national discussion, or be some sort of referee who awards polling points to one side while punishing the other using our immense spiritual clout. Are we willing to compromise our ability to provide hope for the chance to pronounce judgment? Will we use the cross as Caesar did- to dominate political foes- or as Jesus' did, to liberate the unseen?

It desecrates our pulpit to yield it to politics. We are called to something higher than to meddle in the affairs of ambitious men. We are not so Holy that we can merely baptize a candidate, and never drink the poison of his words. We do not stump for Senators, we do not campaign for Congressman, we do not preach for Presidents, because the name of Christ is too precious to risk on a common election, no matter how important the issues at stake may seem. We cannot allow Jesus to become a political puppet, a sock on the arm of the statesman. Our role is to translate the values of scripture into the hearts and minds of every American, not to rule those Americans or force our values on them by manipulating the vote. The humble witness of Jesus is weakened when it is communicated through the edicts of rulers rather than the powerful persuasion of changed lives, hearts, and minds. The Kingdom of God cannot be voted into existence.

Pastor H. Wayne Williams, I beg you to take your opinion to the poll and not the pulpit. Encourage your church to lobby their convictions, but don't let a lobbyist lead your church. Your vote belongs to a Candidate, but your pulpit belongs to Christ, so “give unto Caesar what is Caesar's, and give unto God what is God's.”

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Jimi Jobin is a spiritual wanderer and teaches Religion and Philosophy in a private school. He, his wife and son live in Las Vegas, Nevada.

Separating Energy and Climate Legislation

2010-06-07T07:16:00.000-06:00

Wondering what it means to go with an energy-only bill? You can expect the Bingaman proposal (from Democratic Sen. Jeff Bingaman of New Mexico) to focus mostly on providing for alternative energy sources, new nuclear power plants, and some research and development funding. As iterated by Majority Leader Reid (D-NV), it will also include some new language to address the oil leak in the Gulf like a lifting of the oil company liability cap and some reforms of the oversight and regulatory process.

What it won't have is a pricing collar on carbon, which is really desperately needed to address our country's contributions to global climate change. The conventional thinking is that we absolutely must reduce our emissions by about 20 percent from 2005 levels by 2020. That's not far away, and it doesn't take into consideration the likelihood that developing countries, like China and India, won't move until after we have.

It's certainly possible that the Kerry-Lieberman cap-and-trade proposal could meet the 60-vote threshold needed to be attached as an amendment if we could keep most Dems onboard (around ten are seen as possible or likely no votes) and count on environmentally-friendly Republicans to stick their necks out for a system their own party has decried as "cap-and-tax" during an election year, but somehow I imagine leadership would just include it in the bill if that were seen as a likelihood.

Assuming for a moment that Kerry-Lieberman fails, it's obviously preferable for the Senate to get the ball rolling on alternative energy sources than to do nothing right now, but it is certainly less than we need them to do.

It's Summertime in an Election Year, Do You Know Where Your Senators Are?

2010-06-03T21:00:00.001-06:00

The answer, apparently, is doing their jobs.*

After close to two months of doubt at whether the White House and Congressional Dems were up to tackling yet another major progressive policy priority, some serious rumblings are being heard inside the beltway as President Obama and Majority Leader Reid begin sounding the clarion call for Senate passage of a comprehensive energy and climate bill.

Just days ago, President Obama told reporters at a news conference on the Gulf oil leak, "If nothing else this disaster should serve as a wake-up call that it's time to move forward with this legislation."

Yesterday, during a speech in Pittsburgh, the president laid out the case more fully. "The time has come to aggressively accelerate that transition," he said. "The time has come, once and for all, for this nation to fully embrace a clean energy future."

Specifically calling for a new carbon pricing system, Obama praised the House for the action they took last year and called on the Senate to do the same, declaring that, "the votes may not be there right now, but I intend to find them in the coming months."

Read the President's full remarks here.

Many were quick to criticize the White House for not seizing the moment sooner, but I've long argued that the Obama administration's legislative strategy often involves small, behind-the-scenes actions methodically done in preparation of the right time for major action. I think that time is upon us.

We've known for weeks that Senate Majority Leader Harry Reid (D-NV) has been meeting with remaining climate bill authors John Kerry (D-MA) and Joe Lieberman (I-CT), and that he had promised to meet with relevant committee chairs after returning from break, but Reid and Obama seem to be moving in lock-step now on the impetus of the crisis in the Gulf.

Earlier today, POLITICO reported on a letter Reid sent to eight committee chairs asking them to report any language they wanted considered as part of the energy and climate bill out before July 4th, setting the Senate up for floor debate in July. Reid also asked them to attach language dealing swiftly with "the existing situation [in the Gulf] and to reduce the risks of such a catastrophe happening again.” The bill is likely to include a lifting of the liability cap for oil companies, stricter oversight, and major reforms of the Mineral Management Service.

Kerry and Lieberman were quick to praise the move, but it should be mentioned that it is unclear whether their American Power Act would provide the framework for the bill or if Reid is looking to move in another direction.

That said, it seems clearer that the Senate will try to address our nation's energy crisis and global climate change this year. Now if we could just get that leak under control.

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*I say this with tongue in cheek as this Congress has already set itself apart as one of the most productive in U.S. history.

For background on this issue, see our earlier post here.

Space Aliens make contact, apologize for spill of dark-matter that will soon destroy Earth

2010-05-18T22:02:00.004-06:00

NASA confirmed Tuesday what scientists have been saying for decades, we are not alone. Aliens made contact with the international space station early this week and then spoke directly to the assembly of world leaders in the U.N.

Utilizing advanced translation software, the glowing, tentacled humanoids delivered a memorable first address: “Greetings people of Earth. You have not been aware of our existence, but we have known of you for generations and considered your primitive lives our responsibility. Unfortunately, one of our energy-producing inter-stellar drilling ships has pierced a hole in the space-time continuum which is now unstoppably leaking crude dark-matter, our civilization's major energy source, into your part of the galaxy. Your entire habitat will soon be destroyed and all life on Earth along with it.”

Amidst screams of horror from world leaders, the aliens were kind enough to explain that it was in their economic self interest to mine for the destructive energy source, and while they were taking the responsibility of the clean up very seriously, their best efforts would not be enough to prevent the forth-coming Armageddon.

“But, we are deeply sorry for this quite preventable tragedy,” added the alien's spokeperson, “we just needed to get that dark-matter to refinement mills so we could power our society. You wouldn't expect us to stall our progress, even for your sake. We have to mill, baby, mill.”

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Jimi Jobin is a spiritual wanderer and teaches Religion and Philosophy in a private school. He, his wife and son live in Las Vegas, Nevada.

Oil Spill in the Gulf and the Prospects for Senate Action on Energy & Climate Legislation

2010-05-06T21:59:00.000-06:00

By now we're all aware of the massive oil leak into the waters of the Gulf. In the past few days, pundits have been spending a fair amount of time trying to predict what this crisis will do to the already-strained prospects for legislative energy and climate action this year.

In the days before the explosion even took place, a rivalry had developed involving the possible moving up of immigration reform on the legislative calendar at the expense of the Kerry-Graham-Lieberman bill. That led to Senator Lindsey Graham (R-SC) threatening to bail as the sole Republican attached to the bill he'd been helping to write for months and the indefinite delaying of the bill's scheduled introduction.

After a rocky week, environmentalists saw the horrible events in the Gulf as further evidence of the desperate need for major legislative action. The leak might even have been seen as a potential catalyst, allowing a seamless transition from financial regulatory reform to the energy and climate bill. Despite that, most talking heads have concluded that the leak has done the opposite: making legislative success even less likely. It's easy to see the rationale for this pessimism. In recent days, Democratic Senators Bill Nelson (FL), Bob Menendez (NJ), and Frank Lautenberg (NJ) announced their complete opposition to any further offshore drilling. Nelson even went as far as to suggest he would filibuster any bill expanding the controversial practice, saying, "Any proposal for offshore drilling is dead on arrival."

Given the consensus approach Graham, Kerry (D-MA), and Lieberman (I-CT) had taken and had hoped would pave the way to passage, a bloc of needed Democratic members opposing one of the provisions most likely to attract GOP votes is a major problem. On top of that, many have pointed out the crisis could be used by the president to advocate for the legislation and see President Obama's relative silence on the issue politically as evidence of his reticence to call for bold action. Though that analysis may end up being correct, we can't know that this soon. It is very possible President Obama is trying to take the classy road by not hijacking a national tragedy that saw eleven lives lost and a likely devastation of already-struggling coastal communities for political purposes before there's even time to mourn. It's also arguable that Americans want to see their government addressing the immediate problem first, by trying to collect and disperse the leaked oil, cap and stanch the leak itself, and offset the damage to the affected communities, which is what they've been doing. Such action does not preclude future use of the crisis as a "teachable moment" once the immediate disaster has subsided somewhat.

Matt Ygelsias also offers a better source onto which enviro-anger can be focused:

"In some ways the larger issue here is the continued loyalty to Big Oil of Gulf Coast politicians like Mary Landrieu who’s trying to leverage this disaster into bolstering support for more drilling. The point of the Obama administration going soft on drilling in the first place was that the iron math of the Senate makes it impossible to do anything without the support of the Landrieus (”Landrieux”?) of the world. And if the politicians’ whose states are going to be devastated by this are responding by hewing even more tightly to the Big Oil line, then the situation is just hopeless."

All that said, as the consummate optimist, I am not yet willing to write the obituary for Kerry-Graham-Lieberman. Giving me cause for continued hope are statements from some key members of the upper chamber. In the same breath as his statement of opposition to offshore drilling, Menendez took the opportunity to say the leak “should be an impetus for the Senate to act on climate and energy, rather than a barrier.” Senate Majority Leader Harry Reid (NV) added, "I think it should spur us on. Alternative energy is what we need to do as rapidly as we can, so I think rather than slow us up, I think it should expedite our doing energy legislation.”

Even more than that, experience tells me two things: that members of Congress are suprisingly fickle and often change their minds rather quickly, and that few things will stand in the way of Barack Obama when he's committed to getting something done. Accordingly to his last statements, President Obama is dedicated to tackling the energy and climate crisis this year. Until he changes that tune, I will remain cautiously optimistic.

As of today, Senator John Kerry has committed to moving forward on the bill and confirmed that it will be rolled out early next week.

"I know what the conventional wisdom is out there," Kerry said, "that with all the election-year jitters, a looming Supreme Court confirmation and a difficult legislative schedule, that Congress is going to avoid tough choices as November nears. But I believe this is the year – perhaps our last, best chance – to pass comprehensive climate and energy legislation."

Let's get to work.

The Dodd/Shelby TBTF Deal

2010-05-06T18:46:00.003-06:00

Details from the Washington Post:

"The heart of the agreement was Dodd's willingness to drop a proposed $50 billion fund, which would be filled upfront by the financial industry, that would cover the cost of closing down failing firms. Under the Dodd-Shelby deal, the Federal Deposit Insurance Corp. would liquidate faltering firms by borrowing money from Treasury to cover initial costs. The government would recover the costs by selling off the firm's assets, with creditors and shareholders incurring losses. Other large banks could be assessed to pay for additional costs as a last resort."

"Also, creditors of a failing firm would be forced to pay back the government any money they received above what they would have gotten under a bankruptcy proceeding. Any seizure of a large, failing firm would require court approval to ensure that the government not shut down a company inappropriately. In addition, Congress would have to approve the use of federal debt guarantees, and regulators also would be able to ban management and directors of failed firms from working in the financial sector for a minimum of two years."

Financial Reform 101: The Process

2010-04-29T13:06:00.000-06:00

By: Jordan Young

Welcome to our third and final piece in the Financial Reform 101 series. If you've actually taken the time to read the first two pieces (on the crisis and the Senate bills), you probably deserve some sort of medal as they were quite long. As a reward, I'm going to try to explain the process for passing financial regulatory reform legislation through Congress as concisely as possible.

To recap our progress so far, let's take a look at the work already completed in the House and in committee.

Rep. Barney Frank (D-MA), chair of the House Committee on Financial Services passed a piece of legislation fairly similar to the Dodd bill on a party-line vote in December of last year. And as the political world focused its attention on the Senate's health care reform floor debate, the full House passed the Frank bill on December 11.

In the Senate, the two committees with jurisdiction, Chris Dodd's Banking Committee and Blanche Lincoln's Agriculture Committee, both passed their legislation earlier this year. Banking worked on their language for months, with Dodd splitting the committee members into bipartisan teams of two to tackle sections of the bill. At the end of the day, none of the committee's Republicans were willing to support the bill, but Ranking Member Richard Shelby (R-AL) and Senator Bob Corker (R-TN) emerged as point people who expressed willingness to continue to work toward a bipartisan deal. On March 22, Banking passed the Dodd bill without any Republican amendments being offered. Ag passed its derivatives regulations language just last week with a single Republican supporter, Senator Chuck Grassley of Iowa.

As of last night, the standoff between the parties has finally broken and the Senate unanimously agreed to begin debating the Dodd bill.

So where do we go from here?

From this point, debate is likely to last about two weeks, followed by a final vote. While a full floor schedule hasn't been circulated yet, we do know that Majority Leader Harry Reid (D-NV) intends to keep the amendment process open, which means anyone can offer amendments to the legislation. Unlike health care reform, where Republicans used the floor process largely to offer unrealistic and 'gotcha' amendments, financial regulatory reform seems far more likely to attract numerous GOP votes.

Many of the Senators likely to support the final legislation, on both sides of the aisle, are legitimately desirous of an opportunity to amend the bill. In fact, Majority Whip Dick Durbin (D-IL) and six of the chamber's more liberal members have already expressed an intention to mount an aggressive offense to try to strengthen some of the bill's key provisions. Last night on MSNBC's The Rachel Maddow Show, Senator Barbara Boxer (D-CA) committed to offering amendments addressing future bailouts and ratings agencies and revealed that Senators Bernie Sanders (I-VT) and Jeff Merkley (D-OR) will offer amendments to audit the Federal Reserve and fully implement the Volcker Rule, respectively.

Once the Senate has finished debate, the bill will likely have to overcome another filibuster and will then see final passage. Once this has been accomplished, the House and Senate will convene a Conference Committee to iron out the differences between their respective bills. Rep. Frank had promised this exercise would be "spirited" at a time when many were unsure how strong the Senate's language would be. It now seems clearer that Senate Democrats are willing to play hardball to keep their bill strong, so Conference may be a smoother process than was originally assumed.

The final combined legislation, known as the conference report, will be sent back to both houses for final passage and then submitted to President Obama for signature. At this point, it is entirely possible, though admittedly optimistic, that financial regulatory reform may be the law of the land sometime near the end of May.

There, that was relatively short and painless, right?

Mother of Exiles

2010-04-25T06:10:00.018-06:00

By: Jimi Jobin

"Not like the brazen giant of Greek fame, With conquering limbs astride from land to land; Here at our sea-washed, sunset gates shall stand A mighty woman with a torch, whose flame Is the imprisoned lightning, and her name Mother of Exiles. From her beacon-hand Glows world-wide welcome; her mild eyes command The air-bridged harbor that twin cities frame. "Keep, ancient lands, your storied pomp!" cries she ' With silent lips. "Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!"

So reads the full inscription on our Statue of Liberty, which has waved its welcoming torch to countless immigrants for over 100 years. She declares that America is unique among the world's nations. That we eagerly greet those who are unwanted, homeless, and downtrodden. That we refuse the mentality of an ancient homeland where we belong and others do not. She declares that we, unlike other countries, see the value in a human being.

Recently Arizona's state legislature passed an immigration bill that rejects this noble past. Through the eyes of this new law police officers are required to pursue illegal immigrants as never before. To hunt them down at any cost, even racial discrimination and illegal profiling, whatever it takes to rid the state of their presence. Casting out the tired, poor, huddled masses of wretched refuse into the cold uncaring world, Arizona's new law shines a light on a national truth that has gone unaddressed for far too long: that we are no longer the Mother of Exiles as our statue commemorates. Her torch takes on new meaning, a warning. We should tear down our historic inscription and replace it instead with another: "Abandon all hope, all ye who enter here".

Hell as it turns out is not so distant a destination in these times. In the Christian New Testament Jesus warns the world that failing to care for those in need was the same as failing to care for him personally, something that came with the most dire of costs. "Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me. For I tell you the truth, whatever you did not do for one of the least of these, you did not do for me." In Jesus' teaching, a follower was duty bound to serve whoever was the "least" in a society, failing to do so was a damning gesture.

While Hell may seem a heavy cost for the Christian who fails to "welcome the stranger", even the Jewish Old Testament warns the faithful of the folly when Moses' God tells the Hebrews "You shall not oppress a stranger, since you yourselves know the feelings of a stranger, for you also were strangers in the land of Egypt." It seems that welcoming a foreigner into one's midst and giving them a home is a consistent thread in the Holy Writ that claims to shape most American's morality. Yet these lessons are abandoned when we are presented the opportunity to put them into action.

Pragmatically, logically, and politically it makes sense to push immigration reform. But Americans embrace another paradigm that is seldom focused on: virtue. It is virtuous to have compassion on the strangers in our land. It is noble to welcome the homeless and make room for our neighbors and fellow citizens of the world. And while most American's cannot internalize the calculus that proves immigration reform's value, they can empathize with the morality of never abandoning the lonely, or the desperate.

This is why our iconic Statue of Liberty is emblazoned with poetry, sculpted in symbolism, and stands proudly as an emotional reminder to each generation. It does not summon our enlightened senses, but rather our hearts. We imagine how such an edifice must have greeted the oppressed, the hopeless, the bankrupt, as they drifted to this new land, desperate for a better life. Their tears streaming down dirty faces, as they read the words, and as they thanked God Almighty for such a place; a land where the poor and the broken are made whole, where the unskilled and ignorant are empowered, where the least of these is valued as if they were the very Son of God.

Drawing on these reasons of the heart, and the conscious of our predominant faiths, we must call ourselves to return to this past. To welcome the sun worn face of the immigrant, to embrace his children into our schools and their illnesses in our hospitals, to invest in him dignity, wholeness, and value. Only then can we rightly claim the meaning of the Statue that was built to honor us, only then can we proclaim that we are a nation unlike any other, only then can we stare off into the distant twilight, a torch held high beckoning the hopeless to find strength, searching for those we might heal, that we might welcome, that we might restore. Only then can we become as we began, the Mother of Exiles.
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Jimi Jobin is a spiritual wanderer and teaches Religion and Philosophy in a private school. He, his wife and son live in Las Vegas, Nevada.

Financial Reform 101: The Senate Bills

2010-04-24T06:02:00.020-06:00

A Summary of the Restoring American Financial Stability Act and the Wall Street Transparency and Accountability Act of 2010.

By: Jordan Young

In part two of our three-part Financial Reform 101 series, we'll be summarizing the actual language of the Senate financial regulatory reform legislation. These two bills have been proposed by the Senate Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry, respectively.

For simplicity's sake, we'll refer to the Restoring American Financial Stability Act as the Dodd bill, after primary author Senator Chris Dodd, and the Wall Street Transparency and Accountability Act as the Lincoln bill, after Senator Blanche Lincoln. The Dodd bill is comprehensive, containing sections designed to address a variety of different areas needing reform, whereas the Lincoln bill contains only language pertaining to derivatives regulation. Because Ag (Senate Committee on Agriculture) has primary jurisdiction over derivatives, Dodd only wrote place-holder language in his bill's derivative section so we'll just focus on Lincoln's language during the corresponding section below. All other section will be summaries of the Dodd bill.

Consumer Financial Protection

The Dodd bill creates a new Consumer Financial Protection Bureau (CFPB) charged with protecting consumers from unfair, deceptive, and abusive financial products and practices. It also aims to provide Americans with clear, easy-to-understand information on loans, credit card contracts, mortgages, and other financial products.

The need for such a watchdog existed long before the recent crisis, but advocates argue the bureau could have drawn attention to the initial catalyst for the crisis, the selling of subprime mortgages, by both providing individuals with clearer information on what they're being sold and monitoring the system-wide trends that can lead to major destruction. One of the many problems with our current system of regulation is the conflicting interests of many regulators. There is no agency primarily charged with looking out for the consumer right now, in fact those responsibilities are currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission. With so many agencies sharing authority it is difficult to hold anyone accountable for a failure.

Additionally, when a new unfair or abusive product or service is discovered, it often takes months or years for Congress to act. The CFPB would be able to act quickly without the drawn-out and politically-charged legislative process of Congress.

The original proposal for consumer financial protection would have created a new stand-alone agency much like the Environmental Protection Agency. After some strong statements of opposition from Republicans and centrist Democrats, Dodd decided to shift the agency into a bureau of the Federal Reserve. The change created some backlash from the left, but I would argue that there are really a list of four specific qualifications for a worthwhile consumer financial protection effort. Whether housed in another entity or on its own, these qualification are the criteria we should use to judge the effectiveness of a proposal.

Elizabeth Warren, the Harvard economist who has become the chief advocate for consumer financial protection, has listed the following as the criteria for an effective regulator: 1) an independent director appointed by the President and confirmed by the Senate; 2) independent budget authority so it is not prone to the whims of the appropriation process; 3) independent rule-making authority; and 4) independent enforcement powers. A close reading of the Dodd bill shows that the proposed bureau largely meets these tests and Elizabeth Warren has cautiously praised the language.

However, one area of concern with the language as currently proposed is the veto power given to the Financial Stability Oversight Council, which could overrule the CFPB if two-thirds of its members find that the Bureau's actions increase systemic risk.

Here's a point-by-point summary of the Consumer Financial Protection Bureau:

- Headed by an independent director appointed by the President and confirmed by the Senate;
- Has a dedicated budget paid by the Federal Reserve Board;
- Has autonomous rule-writing authority for consumer protections;
- Has oversight authority over banks, credit unions, mortgage-related businesses, payday lenders, debt collectors, etc; and,
- Takes over and consolidates consumer protection responsibilities currently held by seven separate agencies.

The section also:

- Creates a new Office of Financial Literacy to educate consumers; and,
- Creates a national consumer complaint hotline.

Derivatives

The Lincoln bill creates a strong new system of derivatives regulations. In the current market, derivatives are often traded over-the-counter (OTC) with almost no regulation or transparency. In most cases the only individuals who know of the derivative's existence are the buyer and the seller. Many policy analysts agree that a two-pronged approach to the derivatives market is necessary.

First, to address systemic risk, clearinghouses are needed to provide an additional, uninvolved participant in the trade. A clearinghouse is an institution that acts as the opposite legal party for all derivative contracts, sort of like a middle man. This new middle man is structured to regulate, monitor, and guarantee the trades it facilitates, insuring that both participants post the necessary collateral for their trade and that both parties can pay in the event they lose the bet.

Second, to address the lack of transparency, exchanges are needed. It is said that sunshine is the ultimate disinfectant, and the exchange shines light on both an individual trade and the market as a whole by creating price transparency. Any interested party can see the price being offered. The high-resolution audit trail created gives managers and regulators something to monitor and investigate, allowing them to see problematic trends in the market.

The Lincoln bill creates well-regulated versions of both.

It also:

- Charges regulators with closing any and all loopholes they find in the system as they develop;
- Requires banks to spin off swaps desks if they are protected by federal deposit insurance or access the Federal Reserve discount window;
- Exempts commercial end users from mandatory clearing while prohibiting financial entities from opting out;
- Bans federal assistance, including federal deposit insurance and access to the Federal Reserve discount window, to swaps entities in connection with their trading in swaps or securities-based swaps; and,
- Allows the Commodity Futures Trading Commission, which overseas the futures markets, to impose position limits on swaps that perform or affect a significant price discovery function in the market.

Systemic Risk

The Dodd bill creates a new Financial Stability Oversight Council (FSOC). The FSOC is charged with identifying systemic risks posed by large, complex institutions as well as practices within those firms that pose risk to the firm. It will "make recommendations to the Federal Reserve for increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity, with significant requirements on companies that pose risks to the financial system."

This Resolution Authority is extremely necessary to detect systemic risks and deter companies from risky endeavors, but many analysts would prefer the bill set hard limits on leverage and capitol requirements.

The FSOC will be chaired by the Secretary of the Treasury with nine members representing the Consumer Financial Protection Bureau, Federal Reserve, Securities & Exchange Commission, Office of the Comptroller of the Currency, Commodity Futures Trading Commission, Federal Housing Finance Agency, Federal Deposit Insurance Corporation, and an independent member. The Council is designed to encourage communication and information-sharing among regulators who proved too internalized in the recent crisis.

The FSOC also:

- Has authority to require regulation of nonbank financial institutions by the Federal Reserve if its complexity or size threatens systemic stability;
- Has approval authority to require a large financial institutions to divest some of its holding if it poses a risk;
- Creates a new Office of Financial Research within Treasury to be staffed with economists, accountants, lawyers, former supervisors, and other specialists to support the council’s work by collecting financial data and conducting economic analysis; and,
- Submits annual reports to Congress on the collection and analysis of data to monitor emerging risks.

Too Big to Fail

The Dodd bill responds to the Too Big to Fail problem created by the repeal of Glass-Steagall through the following provisions:

- Charges the FSOC with possible implementation of the Volcker Rule, which requires regulators to implement regulations for banks, their affiliates and holding companies, to prohibit proprietary trading, investment in and sponsorship of hedge funds and private equity funds, and to limit relationships with hedge funds and private equity funds;
- Requires large institutions to periodically submit Funeral Plans, which are plans for how to conduct a quick and orderly shutdown should the institution fail; the plans will also provide regulators with an understanding of the structure of the organization;
- Creates a new liquidation procedure to unwind significant financial institutions; and,
- Creates a $50 billion pool funded by the largest institutions to be used to liquidate the institutions if needed. This pool reduces the likelihood that taxpayers will have to provide a future bailout.

Other regulations from Glass-Steagall are also reinstituted including language to discourage the excessive growth and complexity of the system, regulation towards liquidity provisioning, and reforms of the credit ratings agencies to bring new transparency and competition.

Improved Regulation and General System Reforms

- Requires large hedge funds to register with the SEC and disclose financial data. No regulator currently has jurisdiction or authority over hedge funds.
- Institutes efforts to strengthen and improve the competence of the SEC, including annual assessments and independent funding so the SEC isn't subject to the Congressional appropriations process.
- Draws clear lines of responsibility among regulators by streamlining the responsibilities of the FDIC, OCC, and Federal Reserve.
- Requires companies that create securities to retain a portion of the risk to discourage the sale of garbage and to disclose information about the reference asset.
- Strengthens the Federal Reserve while providing new transparency, such as audits of emergency lending facilities.
- Disallows any entity supervised by the Federal Reserve Board from voting for directors of the Federal Reserve Bank, and their past or present officers, directors, and employees cannot serve as directors. Currently the member banks elect directors, who choose the Federal Reserve Board president.
- Requires the president of the New York Federal Reserve Bank be appointed by the President with the approval of the Senate rather than election by the member banks the NY Fed is charged with overseeing.
- Establishes an Office of Credit Rating Agencies at the SEC and requires it to examine the agencies rating methodology and track record, and publicly disclose the findings annually.
- Gives all corporations' shareholders the right to a non-binding vote on executive compensation.

Conclusion

The Dodd and Lincoln bills are strong in many areas and provide a reasonable and comprehensive system of regulations and reforms to prevent future crises and abusive practices. From a policy perspective, I'm generally pleased with the language, but as the process is ongoing and there are further opportunities for amendment, I would submit the following as a list of ways to improve the language further:

- Set hard limits on leverage ratios within the bill to act as a floor for the FSOC's decisions.
- Institute the Volcker Rule outright, rather than leaving the decision up to the FSOC.
- Provide the CFPB with rule-writing authority over auto-lenders.

We hope this summary has been helpful. Please join us for the final installment of this series on the political process for passing financial regulatory reform. As always, questions and discussion are welcomed in the comments section.

Financial Reform 101: The Crisis

2010-04-16T05:55:00.003-06:00

Inside the Meltdown That Woke Us Up to How Necessary Reform Is.

By: Jordan Young

In part one of our Financial Reform 101 series, we'll be looking at what actually happened on Wall Street and how this crisis was caused. I've made every effort to make this understandable, but realize that many people believe Wall Street insiders intentionally embrace complicated definitions and endless lingo foreign to outsiders precisely so normal Americans can't understand the system. I encourage you to ask questions in the comments section if any of the following confuses you.

I would also point out at the outset that this is not an exhaustive explanation and there were certainly other contributing factors to the crisis. I would argue, however, that the circumstances detailed below were the main causes and provide the general picture of the problem we need to fix.

I also apologize for the length of these posts. I hope they're worth the time I put into writing them.

Abusive Lending Practices

For nearly thirty years leading up to the crisis, Wall Street had been embracing riskier and more speculative practices to make more and more money in shorter and shorter periods of time. This mindset led some of our smartest financial insiders to become more and more entrepreneurial in their schemes, and, as we'll see below, to suspend their intellect in favor of more and more ridiculous get-rich schemes.

The heart of the crisis was really born from a wave of abusive lending practices. At the beginning of the 2000s, lenders began approving more and more loans to lower-income Americans. Seeking out the poor and minorities in huge numbers, they offered them mortgages on homes they couldn't afford. These lenders originally claimed altruism as their motivator, asserting they were simply helping more people achieve the American dream. No matter that these people were living entirely on credit and couldn't possibly afford the mortgage they were being offered after the initial teaser-rate wore off. From the lenders perspective, this simply meant they'd be able to keep people in debt in perpetuity, encouraging a cycle of refinancing: endlessly paying interest, and never fully paying off their mortgages. Even more troubling, if the lenders could make the original loan and then sell it to someone else, they didn't even need to care whether the loan was repaid. They could simply pass the risk off to someone else.

The next step on the road to crisis was to allow Wall Street to get in on the game. Lenders would proceed to sell these mortgages to institutions, which would bundle them together into bonds and sell them to Wall Street firms.

Gramm-Leach-Bliley and the Beginnings of the Speculation Craze

In 1932, Congress approved the Glass-Steagall Act as part of FDR's response to the Great Depression. Glass-Steagall had separated depository banks (which took your money and kept it for you) and investment banks (which used money to invest in different efforts in hopes of making money). The idea had been simple: it was too risky to allow a bank to use the money its depositors had entrusted to it to invest in risky schemes where that money might be lost. And since Congress had created the Federal Deposit Insurance Corporation (FDIC) in the same piece of legislation, which pledged to protect depositors money with funds from the U.S. Treasury, such a concept didn't seem like too much for which to ask.

After more than six decades though, Wall Street saw Glass-Steagall as an unnecessary and annoying stumbling block to making a lot more money. So, they successfully lobbied Congress to repeal much of it in 1999, in a piece of legislation known as the Gramm-Leach-Bliley Act. Wall Street exploded with action, creating new institutions like Citigroup to put their depository and investments arms under the same roof.

In the 80's and 90's, Wall Street had discovered they could basically speculate, or place bets, on just about anything. You simply needed a person or institution with money on both sides. One guy bets Microsoft stocks will increase by at least 30% within two years, and another bets they will not. At the end of the two years, whichever guy was right pays the other. In order to do this, Wall Street had a concept called a security.

A security is a negotiable financial instrument representing some value. For the purposes of this crisis, the type we care most about is equity securitization. Examples of these include common stocks and derivatives contracts, such as futures and options. A futures contract requires the purchaser to buy or sell some item at a fixed price at some future date. An option gives the purchaser the right to do so if they so choose. For example, if I think the value of something is going to increase from $20 (where it is now) to $50 in six months, I might buy a futures contract on this item that requires me to buy fifty more of this item in seven months at the price of $25. This would allow me to buy more of these items, which would then cost $50, at half the price. If I'm wrong, and the price stays at $20, then I'm forced to buy more at a price of $25 each.

These derivatives contracts will be the main focus of the rest of this piece, since they provided the vehicle for the crisis.

Derivatives Trading and Sub-Prime Speculation

The name derivative is taken from the concept that the value of the item is derived from some underlying or "reference" security or commodity. For example, you could have a derivative in the form of a futures contract on the new iPad. The value of my contract to me is dependent on the underlying commodity, in this case the iPad.

Most derivatives are traded with almost no regulation and in private transactions which keep them from being seen by others. These derivatives are classified as Over the Counter (OTC), meaning there are no parties involved but the buyer and the seller. This means the person or institution selling the derivative can charge whatever they like without the buyer knowing for how much some other seller might offer it to them.

So a major new market began for derivatives based on sub-prime mortgage bonds, which acted as securities.

Now, Wall Street relies heavily on confidence. A giant firm like Goldman Sachs depends on the fact that other firms and individuals are confident it's a strong and solid firm. Without this, people stop trusting Goldman Sachs with their money, which causes more people to lose confidence, and on and on.

Inherent in every attempt to make money on Wall Street is the concept of risk. There is always some risk that my speculation will not work out the way I want it to. So a firm like Goldman Sachs, theoretically, needs to make sure it isn't exposed to so much risk that it causes people to lose confidence. To determine the risk of a particular deal, Wall Street employs ratings agencies like Moody's and Standard & Poor's. For the sake of avoiding confusion, we'll operate on S&P's rating system. The best possible rating something can receive is AAA. A commodity, security, or firm rated as AAA is considered highly reliable and stable, in fact, holding a security rated AAA is considered so safe, a firm doesn't even have to declare it as risk. There's little to no risk here. The system goes down gradually from AAA to AA, A, and BBB. Anything below BBB is considered "junk." BBB is sort of medium class risk.

The vast majority of major firms hold a AAA rating, meaning you should be able to trust them and they desperately want to keep that rating. Every transaction a firm does is rated based on its quality and risk. If you're trading U.S. Treasury bonds, those are rated at AAA. If Goldman Sachs were to take on $50 billion in BBB-rated bonds, their exposure to risk would shoot up dramatically. They would stand a reasonable chance of losing hundreds of billions of dollars.

The problem in the system is that the ratings agencies aren't omniscient. They're basically just guessing at the risk related to something. So when they were shown these sub-prime mortgage bonds the firms had taken on, they judged them to only be as risky as the recent housing market might suggest they were. Housing prices had been going up for a while and there was no reason to assume they wouldn't continue to go up forever (yes, this sounds ridiculous, but it's what they thought). So these bonds got tacked with fairly random ratings, many at AAA.

Sub-Prime Mortgage Bonds

The problem with using mortgages as securities is that at least some individuals will default on their mortgages, no matter how secure the original loan seemed to be. People lose jobs, they have catastrophic medical problems, they have unforeseeable life circumstances interrupt their plans, and so, they default. And sub-prime mortgages ran an even higher likelihood of that happening, whether or not the firms knew that at the time. In order to make these mortgages more stable, they were packaged together as bonds containing hundreds, sometimes thousands of different mortgages.

These mortgages were then piled up in a bond, which is sort of similar in this case to a tower. Each floor of this tower, known as a tranche, represented an individual loan. The tranches at the top were those that repaid the fastest. These received AAA ratings, but because they were thought to be low risk, they also paid the lowest rate of interest. This was for people looking for small amounts of sure money. The lower the tranche, the less likely the loan would ever be repaid and the higher the risk, all the way down to BBB-rated loans which carried a very high level of interest. These were for those willing to take a chance at making more money.

Individuals or institutions wanting to purchase these securities would get to choose in which tranche they were interested. People would make money every time a person made their mortgage payment. By the second quarter of 2005, the mortgage bond market was huge, larger than the market for U.S. Treasury notes and bonds. Largely because the repeal of Glass-Steagall meant firms which held billions of dollars of average Americans money were also engaging in these speculative practices and because the shadowy nature of the market itself meant that almost no one was even aware which firms were exposed to risk, the sub-prime mortgage market had silently placed footholds in almost every corner of the financial sector. The entire economy was now dependent on its stability, which was in turn dependent on the continued rise of housing prices. If housing prices fell, large numbers of people who were already teetering on the edge of the cliff and living on credit would fall off. They would suddenly be under water on their mortgages, owing more than their home was worth. It was already a recipe for disaster.

Collateralized Debt Obligations

Incredibly, Wall Street wasn't done. At this point it was decided that more money could be made if it weren't for the seemingly more risky BBB-rated tranches of the bonds (eventually it would become clear that almost all sub-prime mortgages carried an extreme level of risk, regardless of the rating awarded them; AAA and BBB would both default in near equal numbers). Thus was born the Collateralized Debt Obligation (CDO).

A CDO basically allowed a firm to take bottom tranches of a bond, the most risky, and repackage them together with the bottom tranches of other bonds as CDOs. Now CDOs were made up entirely of BBB-rated mortgages, but when they were submitted to the ratings agencies with a new sheen they were declared AAA simply because they had been packaged together. The firms then proceeded to sell off these new "risk-less" instruments just as they had done for the bonds themselves.

Now, this didn't mean that the bonds were pulled from their original home at the bottom of the bond. The firms basically copied the loans and made a new security out of thin air for people to trade. This meant that one person owned the original tranche and carried its risk, while another had an exact duplicate of that risk.

Credit Default Swaps

Now, a small number of individuals by this time had predicted the forthcoming crisis and had sought a means to bet against the market. While most of Wall Street was betting the bonds would continue to increase in value, a few bet the entire thing would collapse. To do this, they used a complicated type of insurance called a Credit Default Swap (CDS). The buyer would essentially short an entire bond, by buying insurance against its failing. And as each tranche of the bond defaulted, they would slowly get paid. At first, few took this bet; in fact, it wasn't until 2007 that major firms started to use CDSs to limit their risk by hedging their own bonds.

Like the market for mortgage-backed securities trading, the CDS market was shockingly secretive and was marked by a total lack of regulation or oversight. This allowed firms like AIG, Lehman Brothers, and Bear Sterns to take on billions and billions of dollars in risk. They were not only exposed to the initial risk that individuals wouldn't be able to pay back their loans, but they would owe an additional amount of insurance to a completely unrelated third party as well. Eventually, the type of derivative known as a CDS became much more dominated by those purchasing insurance on the failure of the firms themselves. A company like Merrill Lynch would take one look at a AAA-rated firm like AIG and offer extremely cheap insurance to just about anyone foolish enough to bet on its failure. Through this practice, the risk was spread even wider. The incredible interconnectedness of these firms would prove to be a major problem.

All Hell Breaks Loose

Eventually, all good things must come to an end, and so it was with the sub-prime mortgage craze. As we know, eventually the housing market stopped going up as waves of individuals defaulted on their loans. As more and more people defaulted, they brought the market down, causing further individuals to default, created a death-spiral that sent the entire market plummeting.

As this happened, firms scrambled to figure out exactly how much risk they had taken on. Remember that many of the derivatives and assets had been rated as AAA, which meant the firms didn't even have to declare them as risk on their balance sheets. As it became clear that these firms were exposed to massive amounts of risk, confidence fell dramatically. Major firms weren't just on the hook for the money they owed, they now found people scrambling to pull their money out and sell their stocks, causing a similar death-spiral in confidence. This run on the firms led to the possibility of company failures throughout the system. And as this happened, firms realized they had exposed themselves to each others risk as well by selling Credit Default Swaps insuring each others stability.

The rest, as they say, is history. Major firms now exposed to massive amounts of risk were on the brink of failure and economist were nearly unanimous in their belief that a domino effect was inevitable. A total system collapse of the entire financial market was inevitable unless someone stepped in to guarantee the firms. The lack of a wall between depository and investment banks meant that such risk also now threatened the money regular Americans had entrusted to the banks. If the banks were allowed to fail, one after another, the financial sector would collapse and the federal government, through the FDIC which insured individuals deposits, would be on the hook to pay out.

So drastic measures were adopted. The Federal Reserve injected nearly a trillion dollars in capital into the system. Congress approved an emergency bailout through a program known as the Troubled Asset Relief Program (TARP) which loaned billions of dollars to stabilize the firms. Treasury adopted the Term Asset-Backed Security Loan Facility (TALF) to purchase the bad assets from the firms and take the risk off their books. All of this was done to prevent a financial armageddon caused by the actions of a few wealthy individuals trying to become more wealthy. Through actions that can only be described as risky, greedy, stupid, and staggeringly ridiculous, these individual brought the entire global economy to its knees. More than a year and a half later, we are still recovering, and although the economy has improved significantly too many Americans are still out of work. At the same time, Wall Street seems to have learned nothing from the crisis.

Conclusion

In the coming weeks, Congress will attempt to put into place a system of basic regulations to prevent such a crisis from happening again. In our next Financial Reform 101 piece we'll explore the actual reforms being discussed and how they address each individual piece of the crisis detailed above, from a consumer financial protection system to look out for consumers and prevent abusive loan practices to new public trading systems and oversight for derivatives trading to a simple and safe plan for breaking up banks that would otherwise pose a risk to the entire system.

There is certainly room for debate about how best to fix the egregious problems detailed above, but it's my hope that this piece gives everyone a clear picture of the problem itself and that that understanding better equips us to have the necessary discussion about a way forward.

Endless Taypayer Bailouts

2010-04-15T05:50:00.003-06:00

Mitch McConnell's Attack on Financial Reform, and Why We Shouldn't Outlaw Future Bailouts.

By: Jordan Young

Senate Minority Leader Mitch McConnell has been attacking the Dodd financial regulatory reform (FinReg) bill in the last few days, claiming it "guarantees endless taxpayer bailouts." Several Republican senators have already showed some willingness to break with McConnell on this issue, with Senator Judd Gregg (R-NH) calling the comments "a bit over the top," and Senator Bob Corker (R-TN) calling on senators to "act like grown-ups."

There's obviously a large levels of rhetoric here somewhat divorced from the facts. The bill certainly doesn't codify future bailouts and puts into place a series of requirements that large financial institutions have funeral plans and that they put capitol in place to bail themselves out if need be.

That said, I'm starting to think McConnell is trying to make an argument for which many people on the left and the right might express support. While the legislation doesn't codify future bailouts, it also doesn't ban them. Many are so understandably upset that taxpayers had to bailout the banks that they want to make sure it never happens again. That's certainly a goal we can all get behind, but it's important to make sure we are treating the cause and not the symptom here. The bailout was and is unpopular, but the risky behavior of banks should be more so.

I continue to believe, and I think most economist would back me up, that as upsetting as the bailout was, it was incredibly necessary and saved our economy from a total melt down. If we get distracted by our anger at the bailout, we may miss the opportunity we have here to address the real problem. If that happens, we could find ourselves in another crisis, but this time without the ability to save ourselves.

Banning future bailouts is not the answer. Addressing the reason the last one was necessary is.

Harry Reid, Immigration Reform, and the Senate Schedule

2010-04-14T05:43:00.005-06:00

By: Jordan Young

Senate Majority Leader Harry Reid made waves today after laying out the Senate's schedule for the next seven weeks. His statement that comprehensive immigration reform (CIR) would not be a top floor priority for this work period was pounced on by many in the media, who portrayed it as a flip-flop from his declarative statements over the weekend to a crowd of reform supporters. "We're going to come back, we're going to have comprehensive immigration reform now," Reid said. "We need to do this this year. We cannot wait."

Media outlets seemed taken aback today when Reid said, "We won't get to immigration reform this work period." The New York Times called it a retreat. Talking Points Memo said Reid had "dashed [reformers] hopes."

This meme seems a bit dramatic to me. Reid's first statement was certainly breaking news. He endorsed tackling CIR this year, which was far from a certainty before. He promised to be working on it as soon as Congress returned from break, which they are. Chuck Schumer is still working on drafting the legislation, so, realistically, "working on" here means moving the bill forward toward the goal of passage later this year. It certainly didn't mean that Reid had a pre-written bill in his back pocket the Senate was going to vote on this week. And I don't really think CIR supporters thought it did mean that, so to say their hopes have been dashed seems a bit insulting to serious reformers' intelligence.

Reid's statement today was specifically about the Senate's legislative calendar for the next work period, meaning the period between now and the next recess in about seven weeks. The idea that CIR wasn't going to make it to the floor inside of seven weeks isn't really shocking news. It doesn't mean CIR is off the table. Reid's spokesman also said today, "Once a bill is drafted, we hope to get it on the floor as quickly as possible.”

Now, all of that said, the bigger news here is the calendar itself. Reid made clear that the priorities for this work period are financial regulatory reform, food safety regulations, energy and climate legislation, and post-Citizens United corporate-campaign reform. You can also tack onto the schedule for this year an overhaul on No Child Left Behind, which is up for consideration this summer, a repeal of Don't Ask, Don't Tell, the Medicare SGR Fix, a long-term extenders bill, ratification of the new START treaty, the confirmation of a new Supreme Court justice, and, oh yeah, an ELECTION.

Reid's commitment to passing CIR during this Congress may or may not be realistic given this long list of priorities. Truthfully, it is difficult, though not impossible, to see the Senate getting all of these things done, even a fraction would be impressive. The number of check marks we could place on the progressive agenda would be staggering.

At any rate, this is shaping up to be a very interesting year to be in politics.

UPDATE -- The Immigration Policy Center has spoken to Reid's office and insists that there was no backsliding. His "staff has assured us that he intends to take on CIR in 2010.”

The Senate has four days to save the world

2010-04-12T05:38:00.005-06:00

The importance of timely Congressional action on the extenders bill and a brief history of the Doc Fix.

By: Jordan Young

This afternoon, the Senate invoked cloture on a motion to begin debate on the Continuing Extension Act (H.R. 4851), the legislation to extend by a month Unemployment Insurance, COBRA subsidies, and federal flood insurance senators had left unfinished before skipping town for a two week recess at the end of March. Much has been written on the left and right about Senator Tom Coburn's (R-OK) effort to hold up the legislation unless it was offset by Recovery Act funds. To be frank, I don't think those who are counting on UI benefits or COBRA benefits give a damn about the political points being scored in that debate.

And neither will doctors who treat Medicare patients on Thursday, when this starts to affect them. The legislation also includes a one month extension of the Medicare SGR Fix. Commonly referred to as the "Doc Fix," this is essentially a case of Congress needing to clean up its own mess.

In 1997, Congress passed the Medicare Sustainable Growth Rate which attempted to hold down Medicare costs by automatically cutting reimbursements to doctors when costs rose by too much. The problem was the SGR formula was based on an unrealistically low base cost, so for the last decade Congress has been passing temporary legislation every year or so to prevent those cuts from going into effect.

Come Thursday, without Congressional action, the CMS (Center for Medicare & Medicaid Services) will be forced to begin releasing reimbursements to doctors at a staggering 21.2 percent cut.

So, Congress now has just a few days to debate and pass this legislation. Once they've done that, they really should think about passing a permanent fix to the SGR formula so Medicare recipients and the physicians who provide them care aren't held hostage to our broken legislative system on an annual basis.