Washington Watch

Washington Watch

January 2010

 

Obama Reportedly Favors National Health Insurance Exchange

 

The Wall Street Journal reported that President Obama and his advisers support the establishment of a single national health insurance exchange instead of creating 50 statewide exchanges. The Journal said White House Communications Director Dan Pfeiffer refused to confirm any reports on the negotiations involving the White House and Congressional Democrats.

 

Bloomberg News noted that "during his 2008 presidential campaign, Obama endorsed the concept of a nationwide insurance exchange. The Senate bill calls for each state to set up its own exchange, which House lawmakers say wouldn't be as effective." The Washington Times added that House Democrats "said Tuesday that they plan to fight for the national plan. 'We want to make sure it's the same all over the country,' said Representative Louise M. Slaughter, New York Democrat."

 

Meanwhile, Roll Call reported that House Ways and Means Committee chair Representative Charles Rangel said [Tuesday] that "negotiators are facing 'a serious problem' in resolving their differences and are not likely to have a final bill until February." Rangel is quoted as saying, "We've got a problem on both sides of the Capitol. A serious problem." Roll Call added, "Another senior House Democrat familiar with negotiations on the bill said no progress has been made this week on any of the key sticking points in the House and Senate bills, despite steady meetings with union leaders and the White House. 'There's no agreement. No deal on anything. Nothing,' the lawmaker said."

 

However, the AP reported, "House and Senate negotiators working on President Barack Obama's health overhaul bill appear likely to drop a proposed income tax increase on high-wage earners and possibly jettison a requirement for large businesses to offer coverage to their employees. ... Negotiators are considering extending the Medicare payroll tax, which now applies only to income from wages, to cover some of the investment earnings of couples making more than $250,000 a year, and individuals earning above $200,000." According to the AP, the expansion of the Medicare payroll tax "could make up lost revenue from dropping the high-wage income tax and scaling back a proposed tax on high-value insurance plans, which is strongly opposed by organized labor and House Democrats."

 

The Los Angeles Times reported, "Labor leaders...met Tuesday with senior House Democrats to press their desire to strip out a tax on 'Cadillac' health plans proposed by the Senate. Unions argue that the tax would penalize members who negotiated generous medical benefits in lieu of higher pay. Lawmakers involved in the talks said that one alternative being considered was lifting the threshold at which the tax would be implemented to ensure that middle-class Americans would not be affected."

 

Top labor leaders met with President Obama on Monday regarding the Senate's proposed tax on "Cadillac" health benefits, among other issues related to healthcare reform. Few details on the meeting were available. Only the New York Times had quotes from an anonymous Administration official hinting that the President intends to offer a comprise to his union supporters, though even the Times' report lacked specifics on what form such a deal might take. The Times reported Obama "told union leaders at a private White House meeting...that he remained committed to taxing high-cost insurance policies as a way to drive down health costs," but "he also signaled that he was willing to amend the proposal to 'make this work for working families,' a senior administration official said." According to the Times, Obama "and the union officials used Monday's session to search for a sort of compromise."

 

Fox News' Special Report reported that "organized labor is strongly opposed to a new tax on some healthcare plans, a tax the President needs to pay the cost of reform. ... The issue, the Senate plans to slap a 40 percent tax on health benefits, valued at $8,000 for individuals and $23,000 for families. A top union official said this scheme punishes working families." AFL-CIO president Richard Trumka: "The Senate bill taxes the middle class by taxing workers' health plans, not just union members' healthcare plans. The Senate bill pits working Americans who need healthcare for their families, against working Americans struggling to keep healthcare for their families." Fox added that "opponents of the Senate plan also say the tax on benefits undermines President Obama's repeated promise that if you like your existing healthcare plan, you can keep it and not worry about big changes. Taxing benefits, critics say, will result in higher premiums or lower benefits."

 

The Washington Post said that "while Obama has pleased unions on several fronts, he has done little to push labor's biggest priority, the Employee Free Choice Act, which would make it easier for workers to organize," and during the 2008 campaign, Obama "rallied union members' support by repeatedly attacking a proposal by Sen. John McCain to lift the tax exemption for employer-provided health benefits."

-back to top-

 

EPA Proposes Stricter Smog Regulations

 

The Washington Times reported, "The Obama administration [last] Thursday proposed tighter regulations on smog to replace those imposed by President George W. Bush and, if approved, would be the most stringent in U.S. history." The proposed "new standards were immediately attacked by leading business groups." The EPA said "the changes, if enacted, will save the country $13 billion to $100 billion in health care costs. However, implementing the plan will cost $19 billion to $90 billion."

 

EPA Administrator Lisa P. Jackson "called the regulations long overdue." Critics said "the tougher standards were poorly timed as U.S. industry struggles to rebound from a deep recession." Bryan Brendle, director of energy and resources policy at the National Association of Manufacturers (NAM) said, "It's completely unnecessary to pile on the industry sector in today's economy." Brendle "predicted that U.S. industry will bear most of the multi-billion dollar implementation cost estimated by the EPA." He said "the proposal is also poorly timed considering the government records show that air quality has improved 25 percent from 1980 to 2008."

 

The Sacramento Business Journal reported, "Many business groups...contend the tighter standards won't have that much impact on public health." The NAM "contends more than 1,200 counties around the nation could be in noncompliance with the new smog standard." The NAM 's Brendle commented, "Such a classification means new controls on everything ranging from construction activity (stimulus, anyone?) to transportation fuel blends and emissions from increasingly smaller stationary sources." The "proposed smog standards, combined with pending regulation of greenhouse gas emissions, 'pose a serious threat to the country's attempt to climb out of the deepest economic downturn since the 1930s,' Brendle contends."

 

The AP noted, "Hundreds of communities far from congested highways and belching smokestacks could soon join big cities and industrial corridors in violation of stricter limits on lung-damaging smog proposed [last] Thursday by the Obama administration." The "new limits being considered by the EPA could more than double the number of counties in violation and reach places like California's wine country in Napa Valley and rural Trego County, Kansas, and its 3,000 residents." The proposal "presents a range for the allowable concentration of ground-level ozone, the main ingredient in smog, from 60 parts per billion to 70 parts, as recommended by scientists during the Bush administration. That's equivalent to a single tennis ball in an Olympic-sized swimming pool full of tennis balls." Areas of the U.S. "that have already spent decades and millions of dollars fighting smog and are still struggling to meet existing thresholds questioned what more they could do."

 

The New York Times reported, "Regions with the worst smog pollution, including much of the Northeast, Southern and Central California and the Chicago and Houston areas, would have more time than other areas to come into compliance." The agency "estimated that complying with the new standard would cost $19 billion to $90 billion a year by 2020, to be largely borne by manufacturers, oil refiners and utilities. But the agency said that those costs would be offset by the benefits to human health, which it valued at $13 billion to $100 billion a year in the same period." Agency analysts "project that if the stricter standard is adopted, as many as 12,000 premature deaths per year from heart or lung diseases could be avoided, along with thousands of cases of bronchitis, asthma and nonfatal heart attacks." The American Petroleum Institute "criticized the proposal as costly and likely to be ineffective."

 

The Washington Post reported, "Ozone standards have been the center of a political and legal battle since the spring of 2008, when the EPA set a looser limit than what its own scientific advisers had suggested." The new proposal "mirrors what EPA's Clean Air Scientific Advisory Committee unanimously recommended in 2007." The EPA also "announced that as part of its new smog proposal it will also set a secondary, seasonal limit to protect plants and trees from prolonged exposure to ozone." The plan "could spark resistance among industries that will face new regulatory requirements, including utilities that have already cut their nitrogen oxide emissions in recent years." An Edison Electric Institute spokesman, "whose group represents the majority of electricity generators in the United States, said 'there's huge uncertainty about what this and other regulatory requirements will entail for utilities and other sectors.'"

 

More details on the proposal can be found by clicking here.

 

-back to top-

 

Dollar Loses Ground in Wake of U.S. Jobs Data; 2010 Outlook

 

The AP reported, "The dollar lost more ground on Monday following last week's disappointing U.S. jobs data." On Friday, the Labor Department said "employers cut a bigger-than-expected 85,000 jobs in December, while the unemployment rate held steady at 10 percent." The U.S. Federal Reserve "has said that continuing high unemployment and slack in the economy, alongside subdued inflation, would allow it to leave interest rates very low for an 'extended period.'" On Monday, "comments from Fed official James Bullard during a speech in Shanghai bolstered the view that the central bank would keep rates low for a long time, said Dan Cook, senior market analyst at IG Markets." Bullard previously said "that if the Fed follows historical precedent, it could wait until 2012 before raising interest rates." The dollar "enjoyed a December rally as investors priced in a higher chance that the Fed could raise rates in the first half of 2010 thanks to better-than-expected data on jobs and retail sales."

 

Meanwhile, ABC World News on January 3 reported on the prospects for the economy in 2010, noting the "Federal Reserve says the unemployment rate in 2010 will average between 9.3 and 9.7 percent, which is clearly not much improvement over where it stands now at 10 percent. The basic problem is, while the economy is expected to improve, it's not expected to improve enough to put a serious dent in joblessness. And ironically, of the things that may keep unemployment high is that discouraged workers may feel encouraged enough to rejoin the hunt increasing the competition for the jobs out there." Forecasters do not expect "the kind of spectacular returns" from the stock markets in 2010 that they saw in the previous year, "not because corporate profits aren't expected to be good, they are actually expected to be pretty good, but analyst think those better profits have already been accounted for in stock prices."

 

The AP reported a "whopping 82 percent" of Americans "are optimistic about what the new year will bring for their families, according to the latest AP-GfK poll. That sunny outlook seems at odds with other findings. Nearly two-thirds think their family finances will worsen or stay about the same next year. And fewer than half think the nation's economy will improve in 2010, even though Americans rated 2009 as a huge downer."

-back to top-

 

Analysts See Positive Outlook for U.S. Auto Industry

 

The AP reported, "The vital signs are improving for American automakers," as there are "signs of increased confidence that the U.S. auto market bottomed out last year and will improve in 2010." High demand has General Motors considering reopening some closed factories, and Chrysler is planning to hire more engineers and product development workers.

 

The Wall Street Journal reported that Ford, GM, and Chrysler are considering hiring new employees, anticipating a recovery in vehicle demand.

 

McClatchy reported that that General Motors has shown signs it "could be on the verge of a new dawn." With its product lineup containing "many new, appealing and high-quality products," GM officials, industry analysts, and GM dealers says that this is an "opportunity to reverse decades of mismanagement and decline." In an upbeat article, the Detroit Free Press reported, "The start of the Detroit auto show was a day for looking ahead with hope," where "automakers talked about the production they're adding back for hot-selling models" and "General Motors and Ford vowed a blitz of competitive vehicles.

-back to top-

 

EPA Greenhouse Gas Regulation Plans under Fire

 

The Small Business Administration has criticized the proposed EPA rules to limit GHG emissions for requiring more than a thousand small firms to obtain Clean Air Act permits because of their CO2 emissions, Greenwire reported. Although the rules would apply only to companies with more than 25,000 tons of annual CO2 emissions, the agency said many small firms crossed that threshold. The agency petitioned EPA to reconsider its endangerment finding and the proposed rules as they might impact small businesses. The SBA said EPA's failure to form a panel on the impacts meant it "lost its best opportunity to learn how" the rules would affect small firms and other organizations.

State and local regulators also were asking for a delay to avoid conflicts with the 25,000-ton tailoring rule, which would impose a much larger threshold than current Clean Air Act rules developed by states. National Association of Clean Air Agencies head Bill Becker was quoted as saying: "The issue isn't whether EPA can proceed with its regulation. The issue is the extent to which going forward with the regulation is going to be done in a smooth transition or will wreak some havoc amongst the states."

 

Additionally, The Hill reported the Environmental Protection Agency's "plans to regulate greenhouse gas emissions under its existing authority are facing new attacks – both legally and politically." In a letter to EPA Administrator Lisa Jackson, Louisiana Governor Bobby Jindal (R) "urges the agency to back off a proposal that would require large emissions sources like power plants and refineries to eventually minimize their greenhouse gas output." Meanwhile, as EPA moves ahead "based on its recent 'endangerment finding' that greenhouse gases threaten human health and welfare," an industry coalition "that includes cattle producers and mining companies challenged the endangerment finding in federal court [last month]."

 

-back to top-

 

Obama Crafts Climate Accord Between Five Nations, But Critics Call It Inadequate

 

President Obama forged a Copenhagen Accord between the US , Brazil , China , India and South Africa on combating climate change. While the President hailed the agreement as a breakthrough, he conceded it was just a first step. Critics of the agreement said it was far less than they had hoped would emerge from the UN Climate Change Conference.

 

The AP reported, "Two years of laborious negotiations on a climate agreement ended [December 18] with a political deal brokered" by Obama "with China and other emerging powers but denounced by poor countries because it was nonbinding and set no overall target for curbing greenhouse gas emissions." German Chancellor Angela Merkel, "a leading proponent of strong action to confront global warming, gave the Copenhagen Accord grudging acceptance but said she had 'mixed feelings' about the outcome and called it only a first step." The President's "day of frenetic diplomacy produced a three-page document promising $30 billion in emergency aid in the next three years and a goal of channeling $100 billion a year by 2020 to developing countries with no guarantees." The agreement between the US, Brazil, China, India and South Africa "includes a method for verifying reductions of heat-trapping gases" and "requires industrial countries to list their individual targets and developing countries to list the actions they will take to cut global warming pollution by specific amounts. Obama called that an 'unprecedented breakthrough.'"

 

The New York Times also noted that Obama "called it 'an unprecedented breakthrough' but acknowledged that it still fell short of what was required to combat global warming." The agreement "addresses many of the issues that leaders came here to settle. But it has left many of the participants in the climate talks unhappy, from the Europeans, who now have the only binding carbon control regime in the world, to the delegates from the poorest nations," who objected to being left out of negotiations. The Wall Street Journal similarly said leaders conceded the agreement was not as aggressive as they had hoped.

 

-back to top-

 

Opinion: Copenhagen Accord May Affect Chances for Cap-And-Trade Legislation

 

In an Investor's Business Daily opinion piece, Margo Thorning wrote, "President Barack Obama's weak Copenhagen accord may make it harder for Congress to pass punitive cap-and-trade legislation that requires greenhouse-gas emission cuts." The "very nature of this plan makes energy more expensive for everyone in the economy, including manufacturers and consumers." According to "recently published economic research from the American Council for Capital Formation and the NAM , the burden of the House of Representatives' Waxman-Markey bill (passed in the House in June of this year) will fall heavily on Midwest states dependent on coal and natural gas electric generation capacity." The research suggests "the nation's manufacturing sectors will suffer economic output losses of approximately 6 percent by 2030" and "these continued losses in output and rises in energy prices will have a serious, lasting, negative effect on the state's economic base."

 

Meanwhile, Politico reported, "Bruised by the health care debate and worried about what 2010 will bring, moderate Senate Democrats are urging the White House to give up now on any effort to pass a cap-and-trade bill [this] year." Senator Mary Landrieu (D-La.), "one of at least half a dozen Democrats who've told the White House or their own leaders that it's time to jettison the centerpiece of their party's plan to curb global warming," said, "I am communicating that in every way I know how." Politico added that while a climate change bill passed the House, "with the health care fight still raging and the economy still hurting, moderate Democrats have little appetite for another sweeping initiative - especially another one likely to pass with little or no Republican support."

-back to top-

 

Federal Estate Tax Repealed on January 1

 

The Senate did not have the votes to take up estate tax legislation at the end of 2009. Without congressional action, the tax was repealed beginning January 1, 2010. However, the Washington Post reported Senate Democrats "have promised to pass a temporary measure early [this] year that would apply retroactively" to the first of the year, and the tax is already "slated to go back into force in 2011, with higher tax rates and lower exemptions than are in the law now."

 

The Hill reported, "The Senate's tax-writing committee will move to extend expiring tax legislation early [this] year, but it's unclear if that will include the estate tax." Senate Finance Committee Chairman Max Baucus and ranking Republican Chuck Grassley "on [December 22] sent a letter to Senate leaders announcing their intention to move a tax bill as soon as possible in 2010." The Hill added that "the package of extenders would include the research and development tax credit as well as a biodiesel tax credit supported by Grassley that provides an incentive for the production of the alternative fuel."

-back to top-

 

Immigration Reform Bill Introduced in House

 

The Los Angeles Times reported the introduction of a comprehensive immigration reform bill in the House [December 15] that would, among other things, provide "a path to legalization for the country's estimated 12 million illegal immigrants," has lifted "the curtain on a new round of debate." The bill, pushed by Representative Luis Gutierrez, was immediately "derided" by groups opposing legalization "as a form of amnesty," while being seen as overly focused on enforcement by "more-liberal factions," though the Times added that it drew praise from immigration activists in Los Angeles. Still, "any serious consideration seems months away," as a spokesman for Representative Nancy Pelosi has said the Speaker would like to see the Senate take up the issue first.

-back to top-


U.S. Announces Funding for Fuel Efficiency Research

 

The AP reported, "The Obama administration announced on Monday funding for nine projects designed to significantly increase fuel efficiency in heavy trucks and passenger vehicles, with more than half the money coming from the $787 billion stimulus package." Energy Secretary Steven Chu said "the nine projects will receive $187 million from the federal government, with more than $100 million coming from stimulus funds and the remainder from DOE appropriations. Recipients are expected to match government funding, creating a total investment of $375 million in the projects." The "nine recipients are expected to create more than 500 research, engineering and management jobs, with 6,000 more positions anticipated when the technologies go into production and assembly."

-back to top-