This week, the National Mediation Board (NMB) announced a rule change making union elections under the Railway Labor Act (RLA) more democratic. Previously, under the RLA, workers who did not cast votes in an election were counted as having voted against unionization. Now, though, they will simply not be counted at all, like non-voters in any election for political office.

This change has upset airlines governed by the RLA — particularly Delta Airlines, which is largely non-union — prompting them to launch a lawsuit in an attempt to block the rule change. And these corporations have some allies in Congress, who have launched a concurrent attempt to legislatively prevent the change.

The charge is being led by Sen. Johnny Isakson (R-GA), whose number one campaign contributor this election cycle is Atlanta-based Delta. He is circling a “resolution of disapproval,” which, if adopted by both the Senate and the House and signed by the President within 60 days of a rule being published, negates that rule’s effect. “I will use all available tools at my disposal…to see that this assault on employee rights does not stand,” Isakson said.

So far, Isakson has managed to drum up 27 co-sponsors for his resolution. It’s quite remarkable that these lawmakers are willing to sign their names to a document rendering disapproval of the democratic process. After all, they are explicitly endorsing the idea that uncast votes should be counted one way or the other.

Plus, as United Steelworkers International President Leo Gerard wrote, the process which the NMB overturned provided huge incentives for corporations to inflate their workforce numbers, in order to increase the number of votes necessary to approve the union:

Compounding that supermajority obstacle was the NMB practice of permitting employers to determine who was eligible to vote, then excusing them from providing that list to workers seeking collective bargaining. This created an incentive for employers to “accidently” include the names of workers who’d quit or retired — ineligible voters whose inability to cast ballots created automatic “no” votes. Writing about losing an election in 2008, Delta flight attendant Linda Sorenson said airline officials released its list after the balloting. Among other problems, it included the name of a deceased worker.

These sorts of shenanigans have no place in a fair election process, and the system which the Republicans are trying to preserve obviously incentivizes them. But Isakson is pressing on, undeterred. “We will have the signatures necessary to discharge my resolution of disapproval, to bring about a vote on the floor of the Senate,” Isakson said yesterday. Fortunately, the odds of President Obama signing such a resolution, even if Isakson found 51 votes in favor of it in the Senate, are, I think, effectively nil.

The Senate is slowly but surely chugging its way through the huge stack of amendments to Sen. Chris Dodd’s (D-CT) financial regulatory reform bill. Yesterday, it voted down Sen. Saxby Chambliss’ (R-GA) weak alternative to the derivatives title, while approving amendments that preserve Federal Reserve oversight of small banks and crack down on deceptive lending in the mortgage business.

So far, every major amendment that would weaken the bill has been defeated. Aside from Chambliss’, Sen. John McCain’s (R-AZ) plan to abolish Fannie Mae and Freddie Mac and Sen. Richard Shelby’s (R-AL) consumer protection substitute were both rejected. But there are still a slew of amendments worth watching out for. For instance, Sen. Tom Carper’s (D-DE) amendment giving national banks immunity from state consumer protection laws would be incredibly detrimental to the bill.

An amendment put forth by Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR), meanwhile, has the potential to strengthen it. It has to do with the Volcker rule, named after the former Federal Reserve Chairman, which would ban banks from engaging in proprietary trading (trading for their own benefit) with federally insured dollars.

Right now, Dodd’s bill gives regulators some discretion in implementing the rule, but Levin-Merkley would tighten the language, allowing proprietary trading “only in limited circumstances and if [the banks] set aside additional capital to cover potential losses.” Dodd has given the Levin-Merkley amendment his support.

Removing regulatory discretion when it comes to the Volcker rule is a good move. As Volcker himself said, “it’s very unlikely that the regulators and supervisors would evoke a strict prohibition until a crisis came and then it’s too late.” “Look, I’ve been a regulator for 20 years. So I know how they are,” he added.

New data released this week shows just how much of a roaring comeback proprietary trading has made. Three banks — Goldman Sachs, JP Morgan Chase, and Bank of America — made money on trading every single day of the first quarter this year. Goldman made at least $25 million each day, and pulled in more than $100 million on 35 separate days. “It’s statistically improbable to have three firms batting 1,000 and also pitching a perfect game. You wonder why the rest of America has some suspicion about proprietary trading,” said Matthew McCormick, a banking analyst.

At the same time, the latest report from the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) shows that big bank lending to small businesses fell by more than 9 percent from 2008 to 2009, even though overall bank lending only fell by 4 percent. The panel’s chair, Elizabeth Warren, called the data “infuriating.”

Banks that benefit from a federal backstop should be engaged in core banking practices — taking deposits and lending — while those that want to trade for their own benefit should shed their federal protection. But right now we’re stuck with the worst of both worlds, where lending dries up but the government is backing the banks while they trade for no benefit but their own. Levin-Merkley would rightly force the banks to go one way or the other.

BP does not know how fast its oil disaster is growing, a top executive testified on Tuesday. Although its claim that the spill is growing at 210,000 gallons a day is widely accepted, BP America chairman and president Lamar McKay said that is just a guess based on the size of the surface slick from the destroyed Deepwater Horizon well. After Sen. John Barrasso (R-WY) questioned why BP’s estimate changed a week after the fatal explosion from 1000 barrels (42,000 gallons) to 5000 barrels (210,000 gallons) a day, McKay said “there’s no certainty around that number” because “you can’t measure what’s coming out at the seabed”:

The volume estimates are based effectively on surface expression, because you can’t measure what’s coming out at the seabed. So this is based on NOAA models and Coast Guard — NOAA, Coast Guard, and BP estimates effectively from surface information, overflights and things like that, and then backed into in terms of the volume. So, there’s no certainty around that number. There’s a large uncertainty bound around 1000, there’s uncertainty around 5000. It’s the best estimate currently.

Watch it:

It’s extremely questionable whether 210,000 gallons a day is, in fact, “the best estimate.” Independent satellite analysis experts Dr. John Amos and Dr. Ian McDonald have estimated from surface imagery that the BP disaster is increasing at a rate of over one million gallons a day:

The last “official” estimate of 210,000 gallons a day was made by the National Oceanic and Atmospheric Administration (NOAA) and accepted by the Coast Guard back on April 29. However, 372,000 gallons of dispersants have been sprayed on the slick, making surface imagery useless for judging the ever-expanding cloud of oil coming from a mile below the ocean. On May 1, the Coast Guard and NOAA stopped trying to estimate the spill rate, with Admiral Thad Allen saying:

Any exact estimation of what’s flowing out of those pipes down there is probably impossible at this time.

Despite this uncertainty, the New York Times, Washington Post, CNN, and other media organizations credulously report that the BP disaster has spilled less than five million gallons of oil into the Gulf of Mexico so far, instead of 25 million gallons. The Wall Street Journal and Associated Press have challenged the official undercount, and PBS Newshour has published a running counter which allows users to adjust the estimated leak rate.

It is troubling that BP’s McKay — who likes to describe the efforts to contain the gushers as “open-heart surgery at 5000 feet” — says his company can’t measure the flow rate of the leaks directly, even with multiple undersea robots filming them 24 hours a day. As of today, BP has released approximately 45 seconds of footage of the gushing leaks, including a clip of oil spewing out of the failed containment dome.

Cross-posted on the Wonk Room.

Last year, the House of Representatives adopted a change (included in the Obama administration’s budget) that ends an inequity in the tax code enabling hedge fund and private equity managers to pay lower taxes on their income. Right now, the percentage of a fund’s proceeds that investors pay to the manager — called the “carried interest” — gets taxed as if it’s capital gains (at a 15 percent rate, instead of 35 percent), even though the manager doesn’t have any money at risk. It’s as if we treated movie proceeds given to a film’s lead actor as investment income.

This long overdue change has yet to be taken up by the Senate, as Senate Republicans have been adamantly opposed to it. “I think it will be difficult [to find 60 votes for the change],” said Sen. Chuck Grassley (R-IA). “A lot of hedge funds have gone belly up,” claimed Sen. Orrin Hatch (R-UT). “Frankly, this administration will raise any tax it can.”

However, Congress has a bunch of very popular business tax credits that it would like to extend, but the extensions need to be paid for, so the carried interest break is looking more likely to disappear. Senate Finance Committee Chairman Max Baucus (D-MT) said this week that there’s “a growing sense of inevitability” about the tax hike occurring, despite heavy lobbying from the financial services industry.

Office of Management and Budget Director Peter Orszag agreed yesterday, predicting that “you’re going to see a change in the taxation of carried interest pass the Senate within the next few weeks.” Orszag then took on the common conservative canard that the tax increase would stifle investment:

Mr. Orszag argued that Wall Street would adjust to a higher tax rate on carried interest, saying he was “unaware of any credible evidence that there would be any significant adverse effect from the increase in taxes”…Mr. Orszag asserted that past tax increases — from those on dividends, capital gains and the marginal income tax rates — did not lead to a big dip in investment and that changes in the tax treatment of carried interest would most likely have a negligible impact on investing.

Hedge fund managers make hundreds of millions of dollars (and often billions) annually. Does anyone really think they will suddenly slam on the brakes if they have to pay the same tax rate as the janitors who clean their offices?

The preferential treatment of carried interest is a bizarre fault in the tax code that only persists because of the power of the financial services industry and Republican resistance to any tax hike at any time. But sooner or later, Congress is going to have to start raising money somewhere, and treating carried interest for what it is — normal income — is a good place to start.