Today, Council of Economic Advisers (CEA) Chair Christina Romer appeared at the Center for American Progress to discuss how health care reform is essential if we want to get the nation’s budget deficits under control. During her speech, Romer explained how rising premiums have contributed to the current three-decade long stagnation in wages for American workers, and said that if premiums are not controlled, wages will actually be pushed into a decline. This not only lowers the standard of living for workers, but also contributes to a loss in revenue (and thus less ability to address deficits), as taxable income disappears.

During an interview with The Wonk Room, Romer said she believes that if premiums come down, workers will actually see an increase in wages, as employers redirect savings:

We do know that what’s been happening to median income, to wages for workers in this country, is we have seen them stagnate…We do know that a bigger and bigger fraction of people’s compensation is taking the form of that health insurance benefit, as health insurance has been getting more and more expensive…Our projections, actually very reasonable projections for what might happen to the growth rate of health insurance costs, does say that take home wages — or that part of compensation net of insurance costs — would start to go down in the not so distant future. So that is a genuine worry. [...]

I do think that competition is a really important part of making sure that workers get their fair share and I think the fact that firms have to compete for workers is the main thing that helps to make sure that, if firms are spending less for health insurance, it does show up in people’s take home wages.

Watch it:

Here’s a chart from the CEA showing how wages will be affected if health care reform doesn’t occur. The top line is total compensation (in 2008 dollars) inclusive of insurance premiums, while the bottom line takes the premiums out. As you can see, even as compensation goes up and up, take home wages actually begin to decline in the next few decades.

But it’s not as if companies are just going to cough up savings in the form of higher wages instantly. In the short-term, it’s more likely that companies will just pocket the difference, particularly given the weakness of today’s labor market, which removes bargaining power from the worker. I’m not as optimistic as Romer that competition will be enough to boost wages in the short-term (though that would likely occur over the much longer-term).

Of course, simply getting back to a 1990′s style strong labor market, in which workers have more leverage, would help in this regard, but so would better collective bargaining abilities for workers — possibly in the form of a higher rate of unionization — which is what helped workers earn their fair share of productivity gains pre-1980.

Rep. Barney Frank (D-MA), after consulting with the Treasury Department, plans to introduce legislation this week that would create a resolution authority for liquidating large, complex financial firms. It’s widely acknowledged (though not universally) that one of the problems facing the government during the economic crisis was that it had no authority to unwind the likes of AIG or Citigroup. Thus, propping them up was the only alternative to the widespread economic pain that would have been caused by their collapse.

As federal Reserve Chairman Ben Bernanke said, taking AIG into some sort of receivership “would have been far preferable” to the recurring AIG bailout. To that end, resolution authority will legalize a systematic process “for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.”

According to the New York Times, the bill will also require corporations to set up “the equivalent of living wills” — their own procedure for being disentangled — which the administration says “ought to be made public in advance.” But like so many of the recent regulatory reform efforts, the banking industry is coming out hard against resolution authority, this time without even seeing the bill:

Even before Mr. Frank unveils his latest proposals, industry executives and lawyers say its approach could make it unnecessarily more expensive for them to do business during less turbulent times. “Of course you want to set up a system where an institution dreads the day it happens because management gets whacked, shareholders get whacked and the board gets whacked,” said Edward L. Yingling, president of the American Bankers Association. “But you don’t want to create a system that raises great uncertainty and changes what institutions, risk management executives and lawyers are used to.”

For the record, as Shahien Nasiripour pointed out, Yingling has been spectacularly wrong about, well, everything, when it comes to the effects of regulations. And it’s really not surprising that the banking industry wants to enshrine “too big to fail,” as the alternative is unappealing from a business point of view.

But resolution authority is arguably the most important part of regulatory reform, as it should seriously mitigate the “too big to fail” problem. If there is a mechanism for taking apart a firm, no matter how large, an implicit government guarantee goes by the wayside. Bernanke is even advocating some sort of assessment on financial institutions, to build up a fund that will be used when resolution authority is invoked, moving the taxpayer a step further away from funding an institution’s failure.

Of course, problems could still occur if regulators — for whatever reason — are hesitant to pull the trigger and take a firm into receivership. That’s why even the most robust resolution authority needs to be pared with much stronger capital requirements and leverage limits for the banks, which will disincentivize and discourage excessive size or risk-taking. That way, a bank failure will really constitute a management failure, as it occurred despite all the safeguards.

And as for “unnecessary” expenditures, I’d like to ask Yingling what he thinks of the $700 billion spent to pull the banking system back from the brink. I bet he thinks that was a very necessary expense.

The U.S. Chamber of Commerce has launched a PR offensive after a series of high-profile member defections due to the Chamber’s denial of climate science and its aggressive lobbying against clean energy legislation. Earlier this year, Chamber officials pledged to put climate change science on trial in a “Scopes monkey trial of the 21st century.” Not only has the Chamber spent millions trying to derail the clean energy bill in Congress, but a leaked memo also revealed that the Chamber has been assisting the oil industry in orchestrating astroturf “EnergyCitizen” rallies.

The PR strategy has been focused on lashing back at critics, while assuring the public that the Chamber actually does view climate change as a serious problem that must be addressed somehow. Chamber officials and representatives have been on a media blitz, seeking to rebuke the Scopes monkey trial comment and trying to strike a very different tone on the science of climate change:

Chamber Chief Lobbyist Bruce Josten called the Scopes monkey trial comment “unfortunate, regrettable, stupid.” “We have not, are not and will not” challenge the science behind climate change, added Josten. [Politico, 10/20/09]

Chamber spokesman Eric Wohlschlegel: “We’ve never questioned the science behind global warming.” [NYT, 9/28/09]

David Chavern, Executive Vice President: “We want a climate change bill.” [NPR, 10/22/09]

However, in a 75-minute, profanity-laced interview with Politico today, Chamber president Tom Donohue continued to deny the science underpinning climate change:

Donohue refused to say if he believes the science behind global warming. “Is the science right? Is science not right? I don’t know,” he said.

Of course, Donohue is being consistent. Donohue, who also sits on the board of a company that ships coal, has forced the Chamber into a denier position on climate change for years. He has run ads mocking cap and trade, touted books questioning climate change, and promoted a myth of a global “cooling trend.”

Despite the spin by more disciplined officials, the Chamber continues to spend unprecedented amounts of money lobbying against clean energy legislation. With climate change deniers like Bill Kovacs and Tom Donohue at the helm, it seems unlikely that there will be much of a change in position — even with local Chambers of Commerce joining the slew of businesses repudiating the national organization’s backwards stance on climate.