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Sunday, July 18, 2010

the First's Fourth

just a couple cute pics of the first couple on the 4th of July:


Thursday, July 15, 2010

it's not all bad news

So Financial Regulation passed and they stopped the oil leak... not a bad day!

I've got more of this and that for you....

NYT profiles Paul Volcker, a key architect of "Reaganomics" who in recent years has become a staunch advocate for financial reform. He gives the Financial bill a "B." He doesn't think it goes far enough, but acknowledges it's probably the best thing that could get through the Senate.

Matt Yglesias:

We’ve tended to focus much more on what’s not in the bill than on what is in the bill. What is in the bill is a consumer protection setup that would be considered a major progressive win as a standalone item. What is in the bill is a “resolution authority” that will let future regulators avoid the bailout-or-crisis dynamic that plagued us in 2008. What is in the bill are regulatory tools that even Simon Johnson likes. The bill clarifies lines of regulatory authority and responsibility and should cut down on abusive “competitive regulation.” I don’t think the bill means we’ll never see an asset price bubble or a banking crisis again, but I also don’t think it’s possible to achieve that goal. It should, however, make crises less likely and make cleaning them up easier.

My hope is that we won’t just leave things alone here. There are a lot of loose threads left hanging here regarding, on the one hand, America’s housing policy and on the other hand hand the role of Wall Street in American society. What’s more, this regulatory setup, like all regulatory setups, only works if the regulators want it to work and that only happens if politicians want the regulators to want it to work. So nothing is over.

More reactions to the FinReg bill

Greg Sargent:

The financial regulatory reform bill that will pass into law is, paradoxically enough, tougher than most expected. But it does not fundamentally transform Wall Street or our economy into something unrecognizable.

Once Obama signs financial reform into law next week, he will have not only passed a stimulus package that helped pull the economy back from the brink; he will have also begun reshaping two major chunks of our economy: Health care and Wall Street. As many have noted already, he's probably done more than any president since FDR to transform our country.

And the sky will continue to remain in place.

The White House is deeply frustrated that this larger narrative arc has not sunk in with the public. Fair or not, the awful state of the economy -- and the Federal government's failure to act on unemployment -- have effectively blotted out this larger story.

The economy, and the wrangling in Congress over jobs-related measures, have left the public deeply skeptical about the Federal government's ability to solve our most pressing problems. That skepticism, it's fair to assume, colors the public's views of just about everything about Obama -- including his accomplishments.

As a result, for all their achievements, Obama and Dems may well lose the larger argument in the short term.

Public skepticism about government's efficacy in the face of our economic doldrums has made the public receptive to the Republican case that Dems are overreaching and overspending, with nothing to show for it. The oil spill, by continuing to gush, buttresses this case, undermining faith in the competence of Obama and the Federal government. Dems may sustain large losses in the midterms, and perhaps their travails will continue beyond then.

But more broadly, it's fair to imagine that that the more accomplishments Dems rack up -- energy reform is next, though its prospects are in doubt -- the easier it will be for them to tell the larger story they're trying to tell. The picture of Dems succeeding at what they've set out to do will make it easier for Dems to argue: We're getting things done, and none of the worst case scenarios foreseen by critics are coming to pass.

Success could build upon success, reinforcing a picture of Dem effectiveness that drowns out the Beltway white noise and begins to persuade the public that Dems are on the right side of the larger argument. That's a very tall order, and it may take awhile -- far beyond 2010 or even 2012. But that's how the larger story could end up playing out.


The imminent passage of financial reform, just a couple months after the passage of comprehensive health care, should decisively end the narrative that President Obama represents a Jimmy Carter-style case of naïve hope crushed by the inability to master Washington.

Yet the mystery remains: Having moved swiftly toward achieving the very policy objectives he promised voters as a candidate, Obama is still widely perceived as flirting with a failed presidency.

Eric Alterman, in a column that drew wide notice, wrote in The Nation that most liberals think the president is a “big disappointment.” House Democrats are in near-insurrection after White House press secretary Robert Gibbs stated the obvious — that the party has a chance of losing the House under Obama’s watch. And independent voters have turned decisively against the man they helped elect 21 months ago — a trend unlikely to be reversed before November.

This is an odd reversal of expectations. When he came into office, the assumption even among some Democrats was that he was a dazzling politician and communicator who might prove too unseasoned at governance to win substantive achievements.

The reality is the opposite. You can argue over whether Obama’s achievements are good or bad on the merits. But especially after Thursday’s vote you can’t argue that Obama is not getting things done. To the contrary, he has, as promised, covered the uninsured, tightened regulations, started to wind down the war in Iraq and shifted focus and resources to Afghanistan, injected more competition into the education system and edged closer to a big energy bill.

The problem is that he and his West Wing turn out to be not especially good at politics, or communications — in other words, largely ineffective at the very things on which their campaign reputation was built.

Obama is swimming up Niagara until joblessness improves. But, even while Obama doesn’t directly control the economy, he has not been a disciplined or effective communicator about the state of the economy and his prescriptions for it. People will tolerate a weak economy if they feel there is an upward trajectory. But Obama has not managed to instill that confidence.

“The economy is off the charts on what people care about — nothing is a close second,” one of the advisers said.

The unemployment rate is expected to remain near 9.5 percent through the election, which is a big reason that some White House officials are even more pessimistic than Gibbs about the chances of keeping control of the House.

It doesn’t matter that Republicans such as Sen. Judd Gregg (R-N.H.) say Obama’s policies helped avert a worse economic calamity than most Americans will ever realize — or that the federal government is turning a profit on some of the investments it made in bailing out companies in 2009.

No politician can escape the gravitational pull of bad employment numbers and economic figures in real-time.

Obama is spending his time these days earnestly paddling up Niagara:

President Barack Obama travels to Western Michigan on Thursday to promote his stimulus plan in a community awash in stimulus dollars but where many residents, like a majority of U.S. voters, are skeptical his economic program is working.

The trip, part of a campaign dubbed "Recovery Summer" by the White House, is intended to reassure Americans the U.S. economy is returning to a sound footing in advance of the fall elections.

Doubt among voters in more conservative parts of Michigan reflects a wider concern over the president's plans.

Holland, Mich., where Mr. Obama visits Thursday, has seen a big infusion of cash from the president's economic stimulus plan: hundreds of millions of dollars for new automotive battery plants, tens of millions for schools, as well as millions more for housing, small businesses, university research and transportation.

Yet many in the region of 260,000 people, struggling with 12% unemployment, are skeptical the federal spending has made an impact.

"I wish he'd save his money and not come to Western Michigan," said Becky DeWind, co-owner of a company that received nearly $95,000 in stimulus money to neutralize radioactive contamination in groundwater—her only U.S. business in a year. "They were just swiping a Chinese charge card for it anyway, and my kid's got to pick up the tab."

Holland's congressman, Republican Pete Hoekstra, is running for governor against the president's stimulus program, saying the city wants Washington off its back and not in its job market.

The superintendent of Holland schools, Brian Davis, said skepticism among parents was deep, even though stimulus money has saved 14 teaching positions—5% of the total—and bankrolled a $700,000 laptop program. "The unpopular piece is, we've created all this debt, and somebody's got to pay for it," Mr. Davis said.

The White House is trying to change those opinions by building the case for Mr. Obama's economic policies.

Eighteen months after passage of the $862 billion Recovery Act, money is now flowing: $116 billion from April to June, compared to $108 billion in the first three months of the year and $80 billion in the last quarter of 2009.

Government outlays for infrastructure projects, clean energy and communications technology jumped by about 50% between the first and second quarters of this year.

On Wednesday, the White House released new data saying a surge in Recovery Act funding had raised economic growth in the second quarter of 2010 by as much as 3.2% and boosted employment by as many as 3.6 million jobs, compared to estimated levels in the absence of the stimulus.

On Thursday, Mr. Obama will attend a groundbreaking ceremony at Compact Power Inc., the last of nine new advanced battery factories under construction nationwide with $2.4 billion in stimulus money, and the second in the city of Holland, population 34,076.

"This is one instance where you can see job creating coming from it, but what cost?" said Republican Jay Riemersma, a former pro-football player who is running for Mr. Hoekstra's House seat. "People don't want government stimulus and government spending...In their mind we're mortgaging their future and their grandchildren's future."

Faced with such opinions, the White House and Democrats say they must keep pressing their points—one town and one project at a time.

"Sometimes you go into a conversation knowing someone's going to come out with a certain perspective, no matter what you put before them," Gov. Granholm said, expressing frustration. "You're not going to be able to resolve that in one session."

Corporate America has money, but isn't hiring:

Corporate America is hoarding a massive pile of cash. It just doesn't want to spend it hiring anyone.

Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms' coffers.

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The answer to that question has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.

The White House countered that companies are wary of hiring not because of new regulations but because they're still waiting for consumer demand to return.

The Obama admin says the stimulus "saved or created about three million jobs and is on track to save an additional 500,000 by the end of the year," but Greg Mankiw is skeptical. Basically there's no way to really know how many jobs were created/saved, so they had to rely on mathematical models based on past stimulus efforts. Their results conform to other estimates, which means their model is similar to other economists, but still these models are just best-guess attempts.

Raghuram Rajan argues income inequality is partly to blame for the current economic crisis. He says that as lower/middle class wages stalled it became popular to give them more credit so they would continue to spend money, but all that debt caught up with us.

Harry Reid plans another unemployment extension vote for Tuesday, by when Sen. Byrd's successor should be appointed.

Ezra Klein argues that, judging them by their past actions and not their rhetoric, Conservatives don't care about the deficit, but Democrats do.

David Wessel tries to think of ways to stimulate the economy that might have a chance of getting through Congress:

The fundamental problem is clear. After a borrowing binge, the U.S., particularly consumers and financial firms, are trying to reduce their debts. The question is how fast to let that happen. The cold-turkey approach, a rapid deleveraging, means a very weak economy. Government policy has been aimed at slowing the pace of deleveraging by increasing government borrowing to offset shrinking private borrowing. Now that is no longer politically feasible.

"At a time when many people are trying to cut back in their personal lives, it is difficult to persuade the public that driving up the deficit is a good idea—even though it actually is a good idea, especially if combined with a clearer plan for long-term consolidation," Goldman Sachs economist Jan Hatzius wrote recently.

If more deficit-widening stimulus is a non-starter, then what? Look for more politically palatable alternatives to gain favor if the economy deteriorates. The weaker the economy, for instance, the more likely Congress will be to renew the Bush tax cuts for a year despite the deficit talk, to avoid the braking effect of letting taxes rise in 2011.

There's talk in Washington about a federal highway and surface transportation bill, the one form of spending about which some deficit-phobes are enthusiastic. Or perhaps a public-private infrastructure fund of some sort that would leverage taxpayer money and draw some cash out of corporate coffers, and might help beleaguered state governments at the same time. Or, with BP replacing Goldman Sachs as the corporate villain of the month, perhaps there will be a move to raise taxes on oil companies (which might become a stealth gasoline tax) and use that money to cut other taxes to encourage hiring or business investment—a "deficit-neutral" way to spur growth.

Or perhaps there will be quiet talks with bank regulators about not moving too rapidly to implement new rules for banks being negotiated at Basel. Or perhaps there will be talk—never advertised, of course—of the administration backing away from tightening some regulations that, though popular with Democratic voters, may be more economically costly than proponents admit.

Dani Rodrik on "the market confidence bugaboo:"

If you want to keep borrowing money, you need to convince your lender that you can repay. That much is clear. But in times of crisis, market confidence takes on a life of its own. It becomes an ethereal concept devoid of much real economic content. It turns into what philosophers call a “social construction” – something that is real only because we believe it to be.
Today, markets seem to think that large fiscal deficits are the greatest threat to government solvency. Tomorrow they may think the real problem is low growth, and rue the tight fiscal policies that helped produce it.

Today, they worry about spineless governments unable to take the tough actions needed to deal with the crisis. Perhaps tomorrow they will lose sleep over the mass demonstrations and social conflicts that tough economic policies have spawned.

Few can predict which way market sentiment will move, least of all market participants themselves. Even with hindsight, it is sometimes not clear why markets go one way and not the other. Similar policies will produce different market reactions depending on the prevailing story, or fad of the moment. That is why steering the economy by the dictates of market confidence is a fool’s errand.

The silver lining in all this is that, unlike economists and politicians, markets have no ideology. As long as they make money they do not care if they have to eat their words. They simply want whatever “works”—whatever will produce a stable, healthy economic environment conducive to debt repayment. When circumstances become dire enough, they will even condone debt restructuring—if the alternative is chaos and the prospect of a greater loss.

This opens up some room for governments to maneuver. It permits self-confident political leaders to take charge of their own future. It allows them to shape the narrative that underpins market confidence, rather than play catch-up.

But to make good use of this maneuvering room, policymakers need to articulate a coherent, consistent, and credible account of what they are doing, based on both good economics and good politics. They have to say: “we are doing this not because the markets demand it, but because it is good for us and here is why.”

Their storyline needs to convince their electorates as well as the markets. If they succeed, they can pursue their own priorities and maintain market confidence at the same time.

Politico reports on the negotiations behind the climate bill. More here.

David Roberts warns about a bad trade-off:

A deal to exempt utilities from new Clean Air Act rules in exchange for their support for a utility-only cap-and-trade system would be a terrible deal. Terrible. I've resisted the repeated tendency of greens to say this or that compromise renders the climate bill "worse than nothing," but this deal really would do that: it would make the bill worse than nothing. It would be a step backward, on both climate and health grounds. Any environmental group that supports such a deal should be scorned by progressives and cut off by progressive funders. (I'm extremely gratified to hear Samuelsohn report that green groups are, so far, holding firm on this.)

Why would it be so bad? Because the new Clean Air Act regulations are going to have bigger, faster, and more substantial effects on the power sector than any watered-down utility-only cap-and-trade system. Those regulations will eliminate more pollution, shut down more dirty coal plants, and avoid more greenhouse gases than a utility-only cap-and-trade system.

The power sector is terrified. After putting off needed investments in new, cleaner generation for years and years -- aided and abetted by simpatico regulators in D.C. -- all the sudden they're going to have to start making those investments. And quickly! They might have to scramble, and innovate, and maybe even change their business models! Some of them might even have to ... gasp ... raise rates (which have been artificially suppressed for years)!

Utilities are extremely accustomed to their moldy old business models and practically allergic to innovation, so they're reacting to the coming regulations with the same strategy they've always used: whining to politicians. They're telling politicians that the regulations will force coal plant shutdowns faster than replacement generation can be found. There will be reliability issues. Brownouts! Puppies will freeze! Grandma will bake!

It's bull -- the same bull they've been peddling for years. If they get away with it, it will mark the true devolution of the climate bill into farce.

Well, dear readers, this blog sure has been a good way to avoid doing work that I actually need to do, but I'm heading back to Florida, where there are even better ways to waste time, so you might not hear from me for a bit. Thanks for reading!

Wednesday, July 14, 2010

it's all in your mind


Paul Krugman:

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination

Yes, America has long-run budget problems, but what we do on stimulus over the next couple of years has almost no bearing on our ability to deal with these long-run problems. As Douglas Elmendorf, the director of the Congressional Budget Office, recently put it, “There is no intrinsic contradiction between providing additional fiscal stimulus today, while the unemployment rate is high and many factories and offices are underused, and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential.”

The argument isn't merely academic. People vote on this. Chris Bowers:

Real disposable income is the dominant ideology among swing voters. This should not come as a shock, or even a mild surprise. The mushy middle is not full of political junkies, but it is full of people who worry about their pocketbooks. As such, whether things get better or worse for their pocketbooks, those voters will blame the governing party, and vote accordingly.

Blocking unemployment benefits will result in less money in the hands of voters who are unemployed. Blocking the Medicare "doc fix" will result in less money in the hands of doctors who vote. Blocking an extension of COBRA and a public option will result in voters who have to purchase individual insurance having less money in their hands. Cutting aid to states to prevent layoffs will result in state workers who vote having less money in their hands. Blocking a cap on ATM fees means less money in the hands of voters. Blocking $100 billion in the first stimulus resulted in voters of all sorts having less money in their hands.

The dominant ideology of swing voters is disposable income. As such, enact public policies that increase real disposable income, or else face defeat at the ballot box. It really is that simple.

And, indeed, Brian Beutler's report for TPM suggests this is really about Republicans playing politics with the economy:

It was a Democrat -- James Carville -- who coined the phrase "it's the economy, stupid." And to this day, leading Democrats understand that Carville was correct. They get it all the way down to their trembling bones. They'd love to take dramatic steps to improve the economy, but Republicans are using every tool at their disposal to prevent that. It's led Democrats to blame Republicans explicitly for causing Americans economic pain for short-term political gain, but it also means we're not going to see much in the way of economy-improving legislation in the months ahead.

"They think the worse the economy is come November, the better they're going to do election wise," said Senate Majority Leader Harry Reid at a press conference this morning.

Sen. Debbie Stabenow (D-MI) echoed that analysis last month on a conference call with reporters.

"If [the GOP] can stop the recovery from occurring, if they can create as much pain as possible, people will be angry and will not vote at all or will vote against those in the majority," she implored.

With Republicans pushing for tax cuts for the rich and blocking unemployment benefits, you can see where they're coming from. And yet, with unemployment hovering near 10 percent, and a midterm election threatening to sweep them out of power on Capitol Hill, Democrats are trapped and running out of time.

They can't pass anything other than modest stimulative measures without running into obstruction, mostly from Republicans -- but they face similar obstacles within their own party. Compounding matters is the fact that the Senate schedule is packed to the brim with other must-pass initiatives and that the White House is divided over whether the President should press Congress to spend more money (stimulus) or to retreat into deficit reduction mode (anti-stimulus).

With leadership like that nobody (particularly at the White House) is picking up a megaphone and demanding Congress (particularly Republicans) do something significant to reduce unemployment. And they're not gonna.

"Look at what we had to go through for the last eight weeks," said Reid's spokesman Jim Manley. "The fact is that we have a Republican party that's betting on this President to fail. We'll continue to look at additional efforts to provide help for the economy but the fact is in this heavily polarized Senate, it's very difficult to get stuff done."

Checkmate. Suddenly, a picture has emerged of Democrats stumbling toward November with nothing to show the unemployed, only to feel the full wrath of a disenchanted electorate.


Americans worship winners and they don't really care about unfair process. This is the nation that reveres the quote "winning isn't everything, it's the only thing." I think the best example is the stolen election in 2000, in which most people seemed to believe that the partisan manipulation of the system in Florida and the biased Supreme Court decision were actually a fairly decent way to figure out who should be president in what was essentially a sudden death playoff --- the one who did whatever was necessary to make it happen was the one who was most qualified, simply by dint of his ability to come out on top at the end of the "game." (We see that same ethos on Wall Street and among those who think it's perfectly fine to torture and hold innocent people in jail indefinitely.) In America, the operating principle is that the ends justify the means.

Paul Krugman rebuts arguments against extending unemployment benifits:

Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits aren’t quite as desperate as workers without benefits, and are likely to be slightly more choosy about accepting new jobs. The operative word here is “slightly”: recent economic research suggests that the effect of unemployment benefits on worker behavior is much weaker than was previously believed. Still, it’s a real effect when the economy is doing well.

But it’s an effect that is completely irrelevant to our current situation. When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn’t booming — again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work — but they can’t take jobs that aren’t there.

Wait: there’s more. One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That’s why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly — while allowing that aid to lapse, which is what is happening right now, is a recipe for even weaker job growth, not in the distant future but over the next few months.

But won’t extending unemployment benefits worsen the budget deficit? Yes, slightly — but as I and others have been arguing at length, penny-pinching in the midst of a severely depressed economy is no way to deal with our long-run budget problems. And penny-pinching at the expense of the unemployed is cruel as well as misguided.

So, is there any chance that these arguments will get through? Not, I fear, to Republicans: “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, in this case, his hope of retaking Congress — “depends upon his not understanding it.” But there are also centrist Democrats who have bought into the arguments against helping the unemployed. It’s up to them to step back, realize that they have been misled — and do the right thing by passing extended benefits.

People like Ben Nelson (HuffPo):

For the past several weeks, Nelson has joined the Republican party in filibustering a measure to restore unemployment benefits for the long-term jobless, which lapsed at the beginning of June. The upshot: a legislative debacle that has made the entire Democratic party look ineffectual while 2.1 million people who've been out of work for longer than six months have missed checks. Economists no less mainstream than Mark Zandi, former advisor to Sen. John McCain (R-Ariz.), have said that the failure to reauthorize the benefits could jeopardize the economic recovery.

Deficit reduction is more important, Nelson and Republicans say. The Congressional Budget Office estimated that the original bill to reauthorize long-term unemployment benefits, a broad domestic aid package that also included business tax breaks and state Medicaid money, would have added $134 billion to the deficit over 10 years. When Senate Majority Leader Harry Reid (D-Nev.) first brought it to the floor in June, it failed with a whopping dozen Democrats voting nay. Over the next several weeks, Reid and Senate Finance Committee Chairman Max Baucus (D-Mont.) reduced the bill's deficit impact by adding revenue raisers and doing things like cutting $25 per week from every unemployment check. They got closer and closer in a series of votes, but Nelson joined moderate Republicans in saying the bill was moving in the "right direction" while still voting no. Democrats (except for Nelson) rejected Republican proposals to reauthorize the benefits and offset the cost by cutting spending elsewhere -- something that is generally not done when enacting federally-funded extended benefits during recessions.

Eventually, Reid brought forward a bill just to reauthorize the extended benefits through November at a cost of $33 billion in "emergency spending." Maine Republicans Olympia Snowe and Susan Collins voted for the bill; Nelson didn't, and, with the late Sen. Robert Byrd's seat unfilled, the bill failed by one vote.

Greg Sargent on why House Dems are particularly pissed off right now:

What's really driving the anger is that House Dem leaders feel like they've done a whole bunch of heavy lifting to pass jobs-related measures -- while the Senate and the White House have effectively dithered. And, crucially, it's House Democrats who are likely to pay the price at the polls this fall over this failure.

The House passed an extension to unemployment benefits weeks ago, and have passed a host of other jobs-creation measures, too. But the Senate is stymied on jobs and unemployment. It's true that Republicans are blocking the unemployment extension. It's true that it's easier to pass legislation in the House, where the Dem majority is larger and the procedural obstacles are fewer.

But fairly or not, House leaders feel that the White House and Senate leaders could be doing more to force the issue -- and that Obama could be showing more urgency about jobs and unemployment and driving the Senate harder to take action.

Ultimately, the real irony is it's House Dems who will likely suffer the biggest losses this fall over the ongoing failure to act on this front.

I seriously hope the Dems have a plan for filibuster reform at the start of the next session. If they allow Republicans to continue blocking everything they won't get anywhere. If they survive the midterms priority one needs to be making the Senate a "majority rules" institution.

odds and ends

Looks like Financial Regulation is set to pass tomorrow, which is good news. My impression is that it won't prevent future crises, but it will make them somewhat less likely, and, more importantly, make us much better at dealing with them when they happen. Here's Ezra Klein's take.

On the other hand, here's Matt Davies' impression:

Reid wants to press forward on environmental legislation next, which is also good news, although it will require some wizardry to pass something substantive given Republican obstruction, which is unlikely (to put it mildly) to abate in an election year. He has smartly decided to include offshore drilling reform in the larger bill, though, so Republicans will have to decide if they really want to vote against that. Marc Ambinder has more.

Speaking of offshore drilling, here's a good op-ed on Congress's role in allowing the spill to happen.

Ezra Klein comments on recent deficit talk:

The unexpected outbreak of fiscal honesty on the Republican side of the aisle is changing the terms of the deficit conversation, and quick. First, Sen. Jon Kyl told Fox News Sunday that "you should never have to offset cost of a deliberate decision to reduce tax rates on Americans." Then, Senate minority leader Mitch McConnell doubled down: "There's no evidence whatsoever that the Bush tax cuts actually diminished revenue," he told Brian Beutler of TPMDC. "They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

In recent weeks, Republicans have gained a lot of traction -- and hung a lot of tough votes -- on their concerns for deficits. Now they're stuck between two untenable positions: That tax cuts needn't be offset as a matter of principle, or that they needn't be offset as a matter of policy. The first suggests they don't really care about deficits. The second suggests they don't understand deficits. Meanwhile, they're filibustering an extension in unemployment insurance based on concerns about deficits. Democrats are ecstatic: Tax cuts for the wealthy versus insurance for the unemployed is, for them, the first hint of solid ground in some time.

This isn't a slam dunk for Democrats. Tax cuts remain popular, and not paying for them has been, in the past, a popular position. But where Democrats were on the defensive on deficits last week, Republicans are going to spend the next week trying to sync positions that will radically increase the deficit with a political message that emphasizes the need for deficit reduction. It'll be quite a trick.

Matthew Yglesias points out that Conservatives do not actually care about the deficit. At all.

Here's a helpful graph:

The most egregious example of Republican ridiculousness on this issue is their blocking extension of unemployment benefits, even though there are clearly no jobs out there, in the overall budget it's not a lot of money, and it's probably the most effective form of stimulus in terms of bang for your buck (the money will be spent immediately). It's heartless, but more importantly it's just stupid not to extend unemployment. You're just going to further depress the economy by reducing consumer spending, which will result in more unemployment. Here's another helpful graph:

There are no jobs.

Matt Davies again:

This glimpse into the State Department's Operations Center is very interesting. It's an intense work environment, to say the least.

Finally, I wanted to highlight a couple threads in this profile of Nancy Pelosi by the CS Monitor that I found interesting.

The first is that her success is tied to her experiences in, and talent for, fundraising. That's how she got her start in politics and her talent for networking and for collecting and doling out favors in many ways defines her leadership style:

In a town that typically sorts people as insiders or outsiders, Pelosi is an unusual mixture of both. Most speakers historically excelled at the insider game: building up favors and relationships with colleagues, while plotting ways to move up the party ranks. Once established as speaker, they had a base to expand national contacts and outreach. By contrast, Pelosi – a lifelong Democratic fundraiser – began her freshman year in the House with her own network of national donors. Over time, she tapped these contacts to move votes on the floor.

The key to Pelosi's success is her drive and mastery of detail – the working knowledge she has of who her members are, what their districts need, and who on the outside can be mobilized to affect their votes. In short, she knows the critical "back door" to members.

It's a skill set that no previous speaker had to the same extent, because none spent the time that she has working contacts on the outside. Since entering leadership in 2002, Pelosi has raised $162 million for Democratic candidates. It's an unthinkable sum for previous speakers and shows the increasing importance of vast war chests to win and hold majorities in bitterly partisan times. With a few calls or a well-timed fundraiser, she can sweeten a tough vote or pressure a member considering an unhelpful one.

Call it the art of political cover. In an era of pure partisan gridlock, no one is doing it better.

PELOSI LEARNED THE FINE ART of sustaining political support from her earliest years in a leading political family in Baltimore. Her father, Thomas D'Alesandro Jr., was serving in the US House of Representatives when she was born. He was the mayor of Baltimore from when she entered first grade until she went away to Trinity College in Washington, D.C. Her brother, Thomas D'Alesandro III, was mayor of Baltimore from 1967 to 1971.

"The arts of politics are bred in her bones: the ability to get people to like you, to build coalitions, to reach agreements," says Jack Pitney, a political scientist at Claremont McKenna College in Claremont, Calif. "It's what she grew up with, with her father and her brother. And those are the things that don't come easily to a lot of people."

In the D'Alesandro household, Democratic Party politics and family were inseparable. Pelosi and her five older brothers took turns manning the table near the front door, where constituents came for help or something to eat. "It was an unusual situation, as I look back on it, but it was the life we led," she says. "People would come and they would ask how they could get a bed in the city hospital, a place to live in housing projects, food, a job, and our family was always there to help."

Her mother, Annunciata or Nancy, kept records of all the favors asked and granted on slips of paper to use as a contact list for others needing help.

The favor trading she learned as a child was something she continued as an adult:

From the start, Pelosi built her own political career on finding resources to support others. With all five children in school, Pelosi began volunteering for Mr. McCarthy and raising funds for local candidates out of her San Francisco home near the Presidio. She told the kids: "Proper preparation prevents poor performance," a motto that covered her approach to fundraising and political organizing.

In 1976, Pelosi wrote a memo to California Gov. Jerry Brown (D), a former classmate of her husband's, urging him to get into the Maryland presidential primary. She volunteered her help and family connections. He accepted. In a surprise move, Mr. Brown won Maryland and in return backed Pelosi to chair the Northern California Democratic Party and, later, the state party.

What impressed the Democratic political establishment was her energy, organizational and fundraising skills, and network of personal connections. She set up the first permanent party headquarters and moved a paper-and-pencil operation into the computer era. In 1984, she helped bring the Democratic National Convention to San Francisco. Perhaps most important, she developed a reputation for delivering what she promised.

"When I first met Nancy Pelosi, she was just a worker bee in the Democratic Party, doing fundraising, but she always supported the farmworkers and you could trust her," says Dolores Huerta, a cofounder with César Chávez of the United Farm Workers of America.

In an era of hard-talking party bosses, it was easy to dismiss the charming Pacific Heights mother of five as a lightweight. "Everyone underestimates her from Day 1," says Roz Wyman, a close friend who chaired the 1984 Convention. "Nancy is quite remarkable, and it's only now, since the health-care vote came up, that people realize what she does."

For Pelosi, fundraising wasn't just a process, loathed by most politicians, of getting cash to candidates. It was also a path to vital political information: what donors care about, what motivates them, and how to convert those motivations into a check for Democrats. Over time her California contacts helped fund campaigns across the nation.

But when Pelosi attempted a run for chairman of the Democratic National Committee in 1984-85, she was dismissed by some in the East Coast old guard as "an airhead" – a rich San Francisco liberal who could give parties, but what else? After setting up an office in Washington to campaign for the job, Pelosi dropped out a day before the vote, convinced that she couldn't win. But the experience marked her. "I always said that if I hadn't run for chair of the DNC I might not have realized how rough the intramural game can be on the Democratic side," she says.

Undaunted, she helped Democrats take back the Senate in 1986, as chair of the Finance Committee of the Democratic Senatorial Campaign Committee. The effort earned her not just favors but an encyclopedic grasp of key outside players in politics and what their needs were, which would become an essential resource as speaker. "People talk about her enormous fundraising prowess, but it's because she understood the value of relationships," says Cecile Richards, president of Planned Parenthood and a former Pelosi deputy chief of staff. "She has built loyal relationships across this country, and people would walk across hot coals for her."

At the age of 47, Pelosi had raised five children, moved in the top echelons of party politics, and turned receptions in her San Francisco home into an ATM for Democrats. What she had not done was be elected to public office. That was about to change.

She moved her talents for influencing politics from the outside to the inside, winning her seat in Congress in 1987. She moved up the ranks quickly:

In a body of 435 members, most House freshmen take years to be heard. But with her network of favors both to the California delegation and Democrats nationwide, Pelosi was not the average apprentice. She used her network to begin to conquer the House Democratic caucus, one relationship at a time.

She landed a seat on the powerful House Appropriations Committee. In Washington, she began to host a weekly dinner group for liberal Democrats. At home in San Francisco, she expanded fundraisers to help both Democratic incumbents and challengers. The loss of control of the House in the 1994 elections stunned Democrats, none of whom had experienced life in the minority, and gave Pelosi a shot at leadership.

"I only decided to run when we lost the House. We lost it and then we lost again, and then we lost it again," she says. "Around 2000 I said: 'You know what? I know how to win. I can do this.' "

It helped that Pelosi had two growing power bases on which to build her ascent to power. One was the California delegation, the largest in the House; the other, women. When Pelosi first came to the House, 23 women served in the chamber. When she defeated Mr. Hoyer for whip in October 2001, there were 62. Today, there are 76.

Rep. Rush Holt (D) of New Jersey recalls giving Pelosi an early commitment to vote for her in the whip race against Hoyer. Soon after, he got calls from key constituents making sure he was going to keep his pledge. "She knew just who to have call me from back home – people I would listen to," he says.

This was an aspect of her I had never considered before, but it does seem to be central to her life's work.

The other thing was stuck out for me was that her relationship with Catholic organizations played a crucial role in passing health care reform. She identifies strongly as a Catholic:

Her mother wanted her to become a nun. "[T]hat was not going to happen," she wrote in her 2008 autobiography, "Know Your Power: A Message to America's Daughters." Pelosi typically still attends mass at least once a week and maintains strong ties with Catholic communities. She describes church teachings as central to her life and the inspiration for "our responsibility to each other," but she also sees a role for public policy to make such promises practical.

"How many times can we answer the door or the phone and send somebody here or there?" she says. "There has to be a different way. We have to have different public policy to meet the needs of people."

Pelosi came of age in a prefeminist era. Her politics did not grow out of anger or struggle but culture and conviction. As a student at Trinity College (now Trinity Washington University), she was inspired by President Kennedy's call for service. "Because we were in Washington, daughters of Catholic politicians came here in large numbers," says Pat McGuire, president of Trinity. "The Kennedy era was a time of great political fervor and change, a point not lost on students at the nation's leading Catholic college for women."

And her Catholic ties proved valuable:

Even before she took over as Speaker, Pelosi had maintained close relations with Catholic women's religious organizations. They shared not only the same faith but often also the same politics. Catholic activists would meet at least weekly with members of her office. They worked together on issues such as support for the uninsured, child nutrition, immigration, and expanding health coverage for poor children. Those ties were about to become pivotal.

After a year of intense White House negotiations and legislative wrangling, health-care reform was foundering. House and Senate versions of the bill were far apart, and an upset by Republican Scott Brown in the Jan. 19 Massachusetts special election dropped Democrats below the 60 votes they needed to block a GOP filibuster in the Senate.

At the White House, the mood had turned to scaling back expectations. White House Chief of Staff Rahm Emanuel urged an incremental approach to break up the health-care bill and pass only those elements that could clear the Senate. But Pelosi, alone among top congressional leaders, balked. She would not accept health-care lite, she told the White House. "It's like the teensy-weensy spider," she said.

The plan subsequently worked out with the White House and Democratic leaders was this: Pass the Senate version of health-care reform in the House, along with a package of "fixes" that the Senate would commit to passing, under procedures requiring only a majority vote. With most of her caucus opposed to the Senate bill in its current form, Pelosi insisted on getting a commitment from the Senate on passing the fixes in writing. But first, Pelosi had to win a tough vote in her chamber.

She settled in for weeks of earlier mornings and later nights spent meeting with elements of her caucus: New Democrats, Blue Dogs, progressives, the Congressional Black Caucus, the Hispanic Caucus, vulnerable freshman and sophomores, as well as regional interests. She didn't expect GOP votes and invested no time looking for them. Step by step, she fielded the leading concerns members had with the Senate bill and what "fixes" could resolve them.

A week before the vote, it had all come down to a fierce, intraparty dispute over language limiting federal funding of abortion. Rep. Bart Stupak, an anti-abortion Democrat from Michigan, publicly backed by the US Conference of Catholic Bishops, said he and at least 40 of his supporters would vote down a Senate bill that did not contain the stronger House language blocking public abortion funding.

In response, 40 abortion-rights Democrats, led by Rep. Diana DeGette of Colorado, signed a letter pledging to vote down any legislation that further restricted a woman's right to choose. For the speaker, it appeared to be a cul-de-sac.

Enter the nuns. In a decisive move, Sister Carol Keehan, president and CEO of the Catholic Health Association, and Sister Simone Campbell, representing NETWORK, a social-justice lobby for Catholic churchwomen, said publicly that the Senate language did not, in fact, expand federal funding for abortion and announced their support of the Senate bill – a rare public break with the bishops. "Our contacts there [in Pelosi's office] helped us know the rhythm and concerns of the speaker's office," Sister Campbell says. "We knew where the votes were or weren't. It's not rocket science. Key Catholic votes were needed – and [these members] needed assurance that this new abortion mechanism would work."

Mr. Stupak was stunned. "We had never heard of these nuns before," he says.

At the climactic hour, Pelosi offered Stupak and other holdouts a sweetener: The White House would issue an executive order clarifying that public funds would not be used to fund abortion. This agreement, as well as the public backing of the Catholic churchwomen, gave anti-abortion Democrats cover for backing the Senate bill – and gave Pelosi her last critical votes for passing the Senate health-care bill. "Three or four in the Stupak coalition went over to the other side explicitly saying they [were] moved by the nuns...," says Deal Hudson, president of the Catholic Advocate, an anti-abortion advocacy group. "So it was a very powerful move at that moment in time."

On the other side, abortion-rights groups swallowed an executive order they found repellent because they trusted her assurances that this course was the only way to get a bill. "Without Pelosi, this bill would not have passed," says Congresswoman DeGette.

Also something I had never considered. I certainly didn't know Pelosi was behind those nuns speaking out.

It's also worth noting that, as you can see that last paragraph I quoted, Pelosi has become to the House what Ted Kennedy was to the Senate: someone progressives can trust to get the best deal possible. If she says "we've got to bite the bullet" on some issue, her liberal allies believe her. That's crucial to actually getting things done, because if there's a feeling that "we could do better" then it makes sense to demand more, but if the votes just aren't there, that can result in getting nothing at all. So it's important for the success of the coalition to have someone like that.

One recurrent theme in the article I did not find particularly interesting is that Pelosi is very partisan and very polarizing. She considers outreach to Republicans to be a waste of time, and I think she's right. It's fair to put it in the article, but anyone who thinks the current hyper-partisanship is Pelosi's fault clearly hasn't been paying attention.

Thursday, July 1, 2010

watch this

credit to Gilbs for the sending me the link. Thanks!

I don't necessarily agree with all the speaker's conclusions, but it's definitely a conversation worth having. Great stuff.