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The co-chairmen of the president's National Commission on Fiscal Responsibility and Reform released their policy recommendations yesterday.
A breakdown of the plan's proposed spending changes.
The plan attacks many popular benefits and is finding a lukewarm reception in Congress, reports Lori Montgomery: "The blueprint drafted by former Clinton White House chief of staff Erskine Bowles and former senator Alan K. Simpson (R-Wyo.) would slice more than $3.8 trillion from deficits over the next decade, reversing a rapid run-up in the national debt that many fear has the country headed for crisis. Bowles and Simpson are proposing to slay a herd of sacred cows, including the tax deduction for mortgage interest claimed by many homeowners, the tax-free treatment of employer-provided health insurance and the practice of letting retirees claim Social Security benefits starting at age 62. The blueprint would raise the early retirement age to 64 and the standard retirement age to 69 for today's toddlers. ...
"The reaction was harsh in some quarters, particularly among liberals who have vowed to protect retirees from any reduction in benefits. House Speaker Nancy Pelosi (D-Calif.) called the plan 'simply unacceptable.' Speaker-in-waiting John A. Boehner (R-Ohio) declined to comment, saying he would discuss the plan with his three representatives on the panel. But Republican anti-tax activist Grover Norquist was not happy and warned that Republicans who support the proposal would be breaking their pledge not to raise taxes. The White House, meanwhile, was noncommital, calling the plan 'only a step in the process toward coming up with a set of recommendations.'"
The commission also backs a public option for health insurance.
The recommendations have no legal force, explains Annie Lowrey.
The plan is bold and credible, writes Howard Gleckman: "My favorite idea is zero-based tax reform. Start by eliminating all tax expenditures and sharply lowering rates to 8, 14, and 23 percent. Then, force Congress to raise rates should it choose to restore specific targeted tax subsidies. This strategy, in some respects, echoes the experience of the 1986 tax reform. To be candid, this proposal is so provocative it almost seems as if Bowles and Simpson realize they have no chance of building consensus on their own commission. As a result, they may have decided to take their best shot now rather than watch their plan get nibbled to death. If so, it may not have been a bad idea. The fiscal panel may fade away in shame, but I have a feeling this plan may live on."
But it doesn't break the political deadlock the commission was created to solve, writes Ezra Klein.
Busking interlude: Tapes 'n Tapes play "Insistor" in the streets of Paris.
Still to come: The White House will back an extension of all Bush tax cuts; the EPA has issues its first guidelines on reducing greenhouse gas emissions; the National Labor Relations Board has started tilting toward unions; and a 3-year-old conducts Beethoven.
Economy/FinReg
David Axelrod says the White House will support a full Bush tax cut extension, report Howard Fineman and Sam Stein: "'We have to deal with the world as we find it,' Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. 'The world of what it takes to get this done.' 'There are concerns,' he added, that Congress will continue to kick the can down the road in the future by passing temporary extensions for the wealthy time and time again. 'But I don't want to trade away security for the middle class in order to make that point.'"
Congressional Republicans are targeting the Volcker rule.
The G-20 has reached a tentative agreement, report Howard Schneider and Scott Wilson: "The accord is not expected to go as far as U.S. officials had hoped in defining the specific commitments countries will make to keep their surpluses or deficits with the rest of the world from getting out of line. That technical work will be deferred -- a make-or-break discussion that will determine how meaningful the broader agreement becomes in practice. But U.S. officials say they will regard it as a success if they leave the Group of 20 summit with an endorsement of the principles and will consider it a victory if China signs on."
The Senate GOP caucus is evenly split on an earmark ban.
U.S.-South Korea trade negotiations have hit a snag, report Howard Schneider and Scott Wilson: "South Korean President Lee Myung-bak and President Obama began their scheduled meeting around noon Thursday in Seoul without a deal in hand. A White House official familiar with the talks said the discussions foundered over long-standing disagreements over U.S. access to the Korean auto and beef markets. The meeting between the two heads of state ended without an accord. ... The failure to produce a signed agreement at the summit is significant. Obama had set a personal goal of completing the Korea deal during the meeting of the Group of 20 world leaders, and Lee had cast the agreement as way to deepen the strategic and political ties between the two nations, as well as the economic ones."
Reps. Barney Frank and Sander Levin are pushing for additional fiscal stimulus:
Treasury Secretary Tim Geithner, Singapore finance minister Tharman Shanmugaratnam and Australian treasurer Wayne Swan outline their G-20 proposal: "Currency issues were once left to the United States, Europe and Japan, but that will no longer work in the new world economy. The currencies of the major advanced economies are roughly in alignment with each other today. However, just as they must continue working together to promote stability among reserve currencies, so too do the emerging economies need to allow their exchange rates to reflect the substantial growth they have achieved in their economies over the last decade and to respond more flexibly to underlying market forces."
Roger Altman and Gene Sperling are the top candidates to replace Larry Summers as National Economic Council head, writes Brad DeLong.
The G-20 should stop currency manipulation to prevent a protectionist backlash, writes Alan Greenspan: "We should not wish to inhibit those market-determined capital flows that reflect the cross-border shifting of resources that enhances global productivity. These flows are the big determinants of desirable realignments of exchange rates over time. But we should discourage reserve accumulation whose sole purpose is to suppress exchange rates for competitive export advantage. ... If the G20 is serious in pledging to sustain open multilateral trade and the international financial system that fosters it, it should be willing to forgo an element of sovereignty to achieve net gains for all."
Adorable animals getting stuck in things interlude: A cat squirms his way into a flower pot.
Energy
The EPA has released its first guidelines for reducing greenhouse gas emissions, reports Jason Dearen: "Among the suggestions: replacing dirty fuels used to power oil refineries with cleaner sources and requiring more efficient electricity and energy use with existing power plants to reduce emissions - while not requiring expensive technology upgrades. EPA's new guidance is meant to help states understand how to implement new greenhouse gas reduction requirements while mitigating costs for industry in a bad economy. Most states will use EPA's new guidelines when processing new air pollution permits for power plants, cement factories and other big pollution sources under the federal Clean Air Act. The new rules go into effect Jan. 2."
Rep. Ed Markey, of Waxman-Markey fame, and Raul Grijalva are running for House Natural Resources Committee ranking member.
The EPA guidelines are already generating criticism, reports John Broder: "Senator James Inhofe, Republican of Oklahoma, also blasted the new guidance requiring companies to adopt the 'best available control technology,' or BACT. 'Employers were looking for a clear path forward that would inspire confidence that permits would be granted, and in a timely manner. They won?t find it here,' said Senator Inhofe, the most outspoken climate change skeptic in Congress. ... Senator Jay Rockefeller, Democrat of West Virginia, also criticized the E.P.A. move, saying that it gave companies too little time to comply and too little certainty about how to obtain permits."
Rep. John Shimkus, a candidate for House Energy and Commerce Committee chairman, denies manmade global warming for Biblical reasons:
Campaigning for the House Energy and Commerce Committee chairmanship is already turning negative, report Darren Samuelsohn and Jake Sherman: "Rep. Joe Barton is using campaign-style tactics and opposition research dumps in his long-shot quest for a key House committee perch. The Texas Republican and his staff have been digging into the voting record of Barton?s lead rival, Rep. Fred Upton, to show he's not conservative enough to chair the powerful Energy and Commerce Committee, according to three House GOP aides and one high-ranking conservative Republican who serves on the panel. Barton needs a term-limit waiver to return for another two years atop the committee."
Adorable children leading orchestras interlude: A 3-year-old conducts a recording of the fourth movement of Beethoven's Fifth Symphony.
Domestic Policy
The National Labor Relations Board is tilting more toward unions, report Melanie Trottman and Kris Maher: "The NLRB can't overhaul labor law, but it can make rulings on a case-by-case basis and set broader policies through administrative rules that could give unions more leverage with employers. In one recent decision, the board's three Democrats backed a union practice of holding large stationary banners at a secondary employer's business to protest contractor work being done. The board ruled that because the banners weren't part of a marching picket line, they weren't 'coercive,' and therefore didn't violate labor laws. ... Board member Mark Pearce, a Democrat, said the board was simply carrying out the law, in part by trying to ensure that workers have an 'unencumbered choice' to unionize."
The pharmaceutical lobby spent millions to defend Democrats in the midterms.
The FDA is planning more graphic cigarette warnings, reports Rob Stein: "Armed with new powers approved by Congress last year, the Food and Drug Administration is proposing warnings that include one containing an image of a man smoking through a tracheotomy hole in his throat; another depicting a body with a large scar running down the chest; and another showing a man who appears to be suffering a heart attack. Others have images of a corpse in a coffin and one with a toe tag in a morgue, diseased lungs and mouths and a mother blowing smoke into a baby's face. The new warnings will cover half the front and back of each pack and 20 percent of each large ad."
The FCC is investigating Google Street View for potential privacy violations.
Waivers from health-care reform rules are increasing, reports Reed Abelson: "Last month, federal officials granted dozens of one-year waivers that were aimed at sparing certain employers, including McDonald?s, insurers and unions who offer plans that sharply limit the coverage they provide. These limited-benefit plans, also known as 'minimeds,' fail to comply with new rules phasing out limits on how much policies will provide in medical care each year. Concerned about the potential disruption that would be created by enforcing the new rules, the administration has granted dozens of additional waivers and also made clear that it would modify other rules affecting these policies."
Nancy Pelosi wants a vote on the DREAM Act in the lame duck session.
Passing legislation in the lame duck session is legitimate, writes David Broder: "You could argue that their credentials have been rejected by the voters. But I think it is also proper to think of them as relatively disinterested and informed observers, well equipped to pass judgment on the work of others. A Russ Feingold of Wisconsin, voted out in the massive upheaval that took place in his state, would lean over backward not to be or appear vindictive in his votes in this last session in which he will participate. Similarly, Mike Castle of Delaware was ambushed in the Republican Senate primary and won't be back. But I would certainly trust him to be the same independent, thoughtful legislator he has always been."
Dylan Matthews is a student at Harvard and a researcher at The Washington Post.
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