(J Pat Carter - AP)On Friday evening, the Republican primary took a turn I hadn't expected. Michele Bachmann, speaking at the Republican Leadership Conference, accused the president of being insufficiently committed to socialism -- or at least to single-payer health care. “The president’s plan for senior citizens is Obamacare,” Bachmann said. “I think very likely – and I’m speculating – I think very likely what the president intends is that Medicare will go broke, and ultimately that answer will be Obamacare for senior citizens.”
Even more puzzling, Bachmann had already cast a vote for the House GOP budget, which Speaker John Boehner said "transforms Medicare into a plan that's very similar to the President's own healthcare bill." That's not quite true, as the key feature of the GOP's budget isn’t the Medicare exchanges, which do mirror a core feature of the Affordable Care Act, but the vouchers that grow much more slowly than the cost of health care. Nevertheless, by Boehner's logic, Bachmann is accusing Obama of abandoning single-payer health care in favor of the Medicare reforms that Republicans support. Wouldn't this make Obama essentially the greatest Republican ever?
Ironically, bringing ObamaCare to Medicare is an obvious long-term compromise on health care. If Republicans can make their peace with the Affordable Care Act and help figure out how to make the Affordable Care Act's exchanges work to control costs and improve quality, it'd be natural to eventually migrate Medicaid and Medicare into the system. Liberals would like that because it'd mean better care for Medicaid beneficiaries and less fragmentation in the health-care system. Conservatives would like it because it'd break the two largest single-payer health-care systems in America and turn their beneficiaries into consumers. But the implementation and success of the Affordable Care Act is a necessary precondition to any compromise of this sort. You can't transform Medicaid and Medicare until you've proven that what you're transforming them into is better. Only the Affordable Care Act has the potential to do that.
So Bachmann is perhaps right to say that the president is moving us towards a day when ObamaCare -- or, to put it more neutrally, "premium support" -- might come to Medicare. He's seeing whether it works in the private health-care market first and, if it does, there's little doubt that the political pressure to extend it to other groups will be intense. The question is why Bachmann and her party are doing so much to stand in his way? The corollary to Bachmann's accusation that the president has a realistic plan to privatize Medicare is that the Republicans, for all their sound and fury over the Ryan budget, don't.
Five in the morning
1) Mitch McConnell would consider a short-term debt limit increase if talks break down, reports Felicia Sonmez: "Senate Minority Leader Mitch McConnell (R-Ky.) said Sunday that if congressional negotiators and the White House don’t work out a comprehensive deficit-reduction plan this summer, Congress could vote to raise the debt ceiling for only a few months...'Everybody knows you have to tackle entitlement reform,' McConnell said...'If we can’t do that, then we’ll probably end up with a very short-term proposal over, you know, a few months, and we’ll be back having the same discussion again in the fall.' Leaders of both parties have said throughout the debt-limit debate that they would prefer a measure to raise the $14.3 trillion borrowing limit through at least the end of 2012 so as to spare members the politically unpopular move of voting to raise the country’s borrowing limit multiple times."
2) The administration is ending health care waivers, reportsJanet Adamy: "The Obama administration on Friday said it would stop granting new waivers to the health-care overhaul in September following sharp opposition from Republicans who cited the waivers in their bid to undermine the law. As of the end of May, the administration had granted 1,433 waivers to a part of the 2010 law that prevents employers and other health-plan providers from capping annual benefit payouts below $750,000 a year. Those entities, and any others that secure a waiver by Sept. 22, will be able to keep their one-year waivers, and apply for extensions through 2013. But the Department of Health and Human Services said it would stop accepting new applications for the program after Sept. 22. The waivers largely went to low-wage employers who offer 'mini-med' plans with limited benefits."
How the administration got itself into the health-care waiver mess in the first place: http://wapo.st/iEeF0o
3) Executive pay is driving income inequality, reports Peter Whoriskey: "Now a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap. The largest single chunk of the highest-income earners, it turns out, are executives and other managers in firms, according to a landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim...The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms. An additional 18 percent were managers at financial firms or financial professionals at any sort of firm."
4) Recent history suggests a corporate tax holiday would fail,reports David Kocieniewski: "Apple has $12 billion waiting offshore, Google has $17 billion and Microsoft, $29 billion. Under the proposal, known as a repatriation holiday, the federal income tax owed on such profits returned to the United States would fall to 5.25 percent for one year, from 35 percent...Corporations and their lobbyists say the tax break could resuscitate the gasping recovery by inducing multinational corporations to inject $1 trillion or more into the economy...But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005...Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research."
5) Senate Democrats are planning to roll out a jobs plan, reportsManu Raju: "Senate Democrats are beginning to fear that the country’s increasingly dim economic outlook will cost them their seats in 2012 and are trying to craft a new agenda aimed at spurring job creation. While there is no shortage of ideas of what a plan could include -- from a payroll tax holiday to increased infrastructure spending -- Democrats haven’t settled on the details or whether to craft one large package or push through a series of narrow measures...Fearing the economy may be getting worse, Democrats plan to soon unveil what they’ll call a 'Jobs First' agenda -- and the stakes are high. A bleak economic outlook, like the May jobs report, could cost Democrats their thin Senate majority and even the White House if they can’t make a strong case to an anxious electorate that their policies will create jobs."
Band name/song title synergy interlude: Friends plays "Friend Crush" live.
Got tips, additions, or comments? E-mail me.
Still to come: A backlog of foreclosures in courts could give homeowners a reprieve; the parties' surprising commonalities on health care; the administration is easing up a deportation program; Senators are working on an ethanol compromise; and Stephen Colbert gives Northwestern's commencement speech.
Economy
The foreclosure backlog could keep people in their homes,reports David Streitfeld: "Millions of homeowners in distress are getting some unexpected breathing room -- lots of it in some places. In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure...Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade. In the 27 states where the courts play no role in foreclosures, the pace is much more brisk...but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books."
Many cities won't recover their lost jobs for another decade,reports Motoko Rich: "Two years into a fitful recovery, unemployed Americans are getting painfully accustomed to the notion that it will take years to bring back the jobs eviscerated by the financial crisis. In some regions, those years are in danger of turning into a decade. According to a report to be released Monday, nearly 50 metropolitan regions -- or more than one out of seven -- are unlikely to bring back all the jobs lost in the recession until after 2020. Among those areas are Cleveland and Dayton, Ohio; Detroit; Reno, Nev.; and Atlantic City, according to the report commissioned by the United States Conference of Mayors...The forecasts do not account for the number of jobs that need to be created just to account for normal population growth."
Regulators are "embedding" at financial firms, reports Aaron Lucchetti: "Memo to employees at big Wall Street banks and securities firms: Be careful what you say on the elevator. You might be surrounded by regulators. As part of a push to prevent another financial crisis, the Federal Reserve Bank of New York and the Office of the Comptroller of the Currency are increasing the number of examiners who go to work every day at the companies they regulate. Much like reporters assigned to a military unit during war, these regulatory 'embeds' get unprecedented access to financial firms such as Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley. They file through the same security turnstiles, eat lunch at the company cafeteria and press top executives for answers to questions about mortgage-documentation procedures and exposure to European debt and municipal bonds."
Bill Clinton has some job creation ideas: "Harry Hopkins had nowhere near the rules and regulations we have now. (In 1933, Hopkins’s Civil Works Administration put 4 million to work in a month.) I don’t blame the people in the White House for problems in getting shovel-ready projects off the ground; sometimes it takes three years or more for the approval process. We should try to change this: keep the full review process when there are real environmental concerns, but when there aren’t, the federal government should be able to give a waiver to the states to speed up start times on construction projects...Banks still have more than $2 trillion in cash uncommitted to loans. So I suggested that the federal government set aside--not spend--$15 billion of the TARP money and create a loan-guarantee program that would work exactly the way the Small Business Administration does."
A bill as good as Glass-Steagall isn't possible these days, writesJoe Nocera: "From my vantage point here in 2011, Glass-Steagall seems miraculous. It was amazingly radical, not just for its time, but for any time; it didn’t so much reform banking as upend it. Most notably, it ordered banks to get out of the securities business. As Sisson complained: 'The effect of the proposed banking reform is to renounce investment banking rather than regulate it.' Because investment banking was then the chief activity of the big banks, this was a very big deal. Glass-Steagall also created the Federal Deposit Insurance Corporation, which insured customer deposits for the first time, and outlawed branch banking by national banks, among other things. It is impossible to imagine anything like it passing today; although the modern reform bill, Dodd-Frank, surely does some good, it’s not even comparable."
The Manhattan US Attorney, Preet Bharara, is getting serious about corporate crime, writes George Packer: "He started in the position in August, 2009, and his short tenure has been crowded with aggressive prosecutions of terrorism, Medicare fraud, illegal tax shelters, and public corruption. But the arrest of Rajaratnam, on October 16, 2009, gave Bharara his highest-profile case. From the start, Bharara made it clear that he would go after Wall Street crime. 'Greed, sometimes, is not good,' he said in announcing the arrests. A month after Rajaratnam’s arrest, Bharara gave an unusually dark speech at N.Y.U.’s law school, speaking of 'epic frauds surfacing with increasing frequency.' He noted, 'There is a lack of faith in the economic system; a lack of belief in the markets; and a lack of trust that the playing field is level.'"
Educational interlude: A video explaining how the Stuxnet virus operates.
Health Care
The parties have surprising commonalities on health care,writes Greg Mankiw: "Democrats want to increase taxes on the rich to fund the looming fiscal gap, which is driven largely by soaring health costs. Republicans object...Last month, John A. Boehner, the House speaker, said that we should instead consider means-testing Medicare. But what does that mean? Here is how means-testing might work. We could start by choosing some income threshold -- say, $250,000 -- and then require people over 65 with higher annual income to pay more in Medicare premiums than they do now. For example, for every $1,000 of income beyond the threshold, they might have to pay an extra $10 in annual premiums. Sounds good, right? But notice that the economic effects of means-testing are much the same as a tax increase."
Domestic Policy
The administration is easing up a deportation program, reportsMiriam Jordan: "The Department of Homeland Security said Friday it was adjusting a program designed to deport illegal immigrants who commit crimes, in response to sharp criticism that the initiative is upending the lives of many innocent people. The program, dubbed Secure Communities, checks the fingerprints of individuals booked into jails against both Federal Bureau of Investigation and DHS databases for criminal and immigration history. Among those ensnared by the system have been people stopped because of broken tail lights on their cars and victims of domestic abuse who called 911...The revisions were faulted by a coalition of immigrant and civil-rights advocates, who said the agency was making 'cosmetic changes' instead of thoroughly reviewing the program or taking steps to dismantle it."
Charitable giving is up, reports Annie Gowen: "An annual report released Monday shows that charitable giving in the United States grew nearly 4 percent last year after two years of steep declines, which some experts say is a sign the economy is slowly rebounding. Individuals and corporations donated an estimated $290 billion last year, an increase of $10 billion from the previous year, according to the Giving USA Foundation, which has tracked charitable giving in the country since 1956. Donations to education, health institutions, and arts and humanities organizations were up, while overall corporate donations rose nearly 11 percent, the study found. Amid other more glum economic news in recent days, such as slowing job growth, many found the upward trend encouraging."
We should raise, not cut, Social Security, writes Thomas Geoghegan: "AS a labor lawyer I cringe when Democrats talk of “saving” Social Security. We should not “save” it but raise it. Right now Social Security pays out 39 percent of the average worker’s preretirement earnings. While jaws may drop inside the Beltway, we could raise that to 50 percent. We’d still be near the bottom of the league of the world’s richest countries -- but at least it would be a basement with some food and air. We have elderly people living on less than $10,000 a year. Is that what Democrats want to 'save'? 'But we can’t afford it!' Oh, come on: We have a federal tax rate equal to nearly 15 percent of our G.D.P. -- far below the take in most wealthy countries. Let’s wake up: the biggest crisis we face is that most of us have nothing meaningful saved for retirement."
Commencement address interlude: Stephen Colbert delivers the graduation speech at Northwestern.
Energy
Senators are negotiating a compromise on ethanol subsidies,reports Ryan Tracy: "After a broad display of support for repealing ethanol subsidies in the U.S. Senate, lawmakers are in talks about a compromise that could preserve some form of an ethanol tax credit while providing a boost to companies that produce the fuel from sources other than corn...All eyes are focused on a group of senators who have floated ethanol-related proposals in recent weeks, including Sens. Dianne Feinstein (D., Calif.) and Tom Coburn (R., Okla.), who have put forward amendments that would immediately repeal the tariff as well as a tax break for blending ethanol with motor fuel. The Senate voted 73-to-27 Thursday in favor of that plan, but the measure appeared to have little chance of becoming law, not least because it may violate a constitutional requirement that bills for raising revenue originate in the House."
Budget cuts are forcing changes to energy saving programs,report Darren Goode and Darren Samuelsohn: "The budget-slashing mentality permeating the halls of Congress is forcing lawmakers and lobbyists to get creative when it comes to financing energy projects. The political viability of any one particular idea notwithstanding, the wheels are desperately turning, and members are throwing out a myriad of ideas -- new and old -- to see what might stick...Popular programs offering cash grants and loan guarantees to renewable and other advanced energy projects are set to expire this year, and other production and investment tax incentives for wind and solar may run out as well in the near term. These industries are going to need some type of continued assistance to help President Barack Obama keep his pledge to create and sustain hundreds of thousands of green jobs."
The EPA is cracking down on coal plant haze, reports Matthew Brown: "Aging coal-fired power plants across the West could be forced to install costly pollution-control equipment under an agreement between federal regulators and environmentalists aimed at jump-starting a delayed clean-air initiative...The reductions are required under the Clean Air Act. First announced more than a decade ago, they have yet to be widely enacted. Now, a deal reached between the Environmental Protection Agency and three groups would require the agency to adopt plans by 2012 to reduce haze-causing pollution from plants in Colorado, Montana, North Dakota and Wyoming...Putting the plans into action nationwide could cost up to $1.5 billion a year, according to the EPA. Spinoff benefits from reduced health-care spending on pollution-related illnesses were estimated at $8.4 billion or more annually."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.
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