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Economy

Senate Republicans Who Voted To Create CFPB Now Refuse To Confirm Its Director Without Changes

House Republicans this week passed a trio of bills aimed at reducing the independence of the Consumer Financial Protection Bureau (CFPB) that was created by the Dodd-Frank financial reform law. These changes — including replacing the Bureau’s Director with a five-person commission — would strike at the heart of the Bureau’s independence.

Not to be outdone, Senate Republicans sent a letter to President Obama this week saying that they will not vote to confirm a Director for the Bureau — who is supposed to be in place by July 21 — unless several changes are made to the Bureau’s structure:

As presently organized, far too much power will be vested in the CFPB director without any effective checks and balances. Accordingly, we will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed.

For starters, the notion that the CFPB has some unprecedented amount of power is absurd. Plenty of agencies are run by a single director, and the CFPB’s rules can already be vetoed by a two-thirds vote of the Financial Stability Oversight Council, which is tasked with policing systemic risk in the financial system.

Interestingly enough, two of the letter’s signatories — Sens. Susan Collins (R-ME) and Olympia Snowe (R-ME) — voted for the Dodd-Frank law, complete with the CFPB in its current form. In fact, during the Dodd-Frank debate, Snowe helped Democrats defeat a Republican proposal that would have scrapped the CFPB in favor of a consumer protection council.

Both Snowe and Collins have been running to their right recently, with Snowe in particular tacking that way in anticipation of a 2012 primary challenger. Yesterday, in fact, Snowe blocked a small business bill that she authored, throwing a fit over not receiving a vote on an amendment she authored with Sen. Tom Coburn (R-OK) that would block federal agencies from implementing regulations. She had previously called for a “clean” version of the small business bill to be passed.

The practical upshot of Senate Republicans refusing to confirm a nominee is that President Obama will have no choice but to make a recess appointment. But not every Senate Republican appears to be on-board with the GOP push to kneecap the CFPB, as both Sens. Scott Brown (R-MA) and Lisa Murkowski (R-AK) did not sign the letter to Obama.

Pawlenty Calls NLRB Attempt To Stop Boeing’s Union-Busting ‘Preposterous,’ ‘Outrageous’

Late last month, the National Labor Relations Board announced that it was launching a complaint against the airline manufacturer Boeing, alleging that the company decided to move a planned production line from Washington state to South Carolina as retribution against workers in Washington who had engaged in a strike. Republicans have gone into a fit of rage over seeing an administration that is actually interested in enforcing labor law, with Sen. Jim DeMint (R-SC) calling NLRB officials “thugs” from a “third-world country.”

Last night, the first Republican presidential primary debate took place in Greenville, South Carolina, where former Gov. Tim Pawlenty (R-SC) played to the local crowd by calling the NLRB’s decision “preposterous” and “outrageous”:

You have this administration, through the National Labor Relations Board, telling a private company that they can not relocate to South Carolina and provide jobs in this state, and they’re good-paying jobs, and they’re needed jobs. It’s a preposterous decision and position of this administrationI just want to make it clear: the idea that the federal government can tell a private business where they can be and not be in the United States of America is a whole new line that this administration has crossed and its outrageous.

Watch it:

Pawlenty conveniently leaves out that the basis for the case is the very public statements from Boeing officials, who said that their justification for moving was workers in Washington having the audacity to strike. One said that “the overriding factor [in moving to South Carolina] was not the business climate. And it was not the wages we’re paying today. It was that we cannot afford to have a work stoppage, you know, every three years.” Another said that the company decided to move its production line due to “strikes happening every three to four years in Puget Sound.”

Under labor law, it is simply illegal to move production as retribution against workers striking. And Boeing must know that these statements are incriminating, as it is now claiming that it was misquoted by the NLRB. If it felt the legal argument would swing its way, trying to hide from its statements wouldn’t be necessary. In fact, one lawyer quoted by the Seattle Times said, “If my sympathies are anywhere, they are with management. But I am also a realist. If I’m their labor lawyer, I’m cringing when they are saying that.”

Gov. Daniels: ‘We Need A Lot More Revenues,’ Federal Debt ‘Began With A Recession And Two Wars’

A new analysis in USA Today shows that Americans, despite the hue and cry from Congressional Republicans and Tea Partiers, are paying the lowest level in taxes since 1958, due to the Great Recession and a decade of tax cuts. In fact, simply getting total personal tax payments back to where they were in the 1970′s, 80′s and 90′s would eliminate “one-third of the estimated $1.5 trillion federal deficit this year.”

Republicans, however, have been adamantly opposed to any attempt to raise additional revenue, with the House Republican budget calling for deficit-neutral tax reform (alongside a tax cut for the rich), as well as deficit neutral corporate tax reform. And the Republican mantra for months in reply to record low revenues has been “Washington does not have a revenue problem. Washington has a spending problem.”

But during an interview on Bloomberg’s Political Capital with Al Hunt (which will air this weekend, but has already been transcribed and circulated by Bloomberg), Gov. Mitch Daniels (R-IN) — a potential 2012 GOP presidential contender — broke with this Republican talking point and admitted “we need a lot more revenues”:

We need a lot more revenues. The question is, how do you get them? And if you take what I believe is a very flawed tax system, way too complicated, too many preferences and gimmicks in it, maybe of them, by the way, tilted toward upper-income people and what’s more, a system which is trying to squeeze more and more dollars out of fewer and fewer people, the question is, how do you get the revenues?…Let’s agree that we ought to have more tax revenues, and the way economists really of both sides seem to agree is, fewer preferences, lower and flatter rates.

Daniels also broke with GOP orthodoxy by admitting that the federal debt “began with a recession and two wars” (though he failed to mention the other major player, the Bush tax cuts).

Daniels did not endorse any actual rate increases, but said that the tax code should be reformed in such a way that it brings more revenue into the federal government through the closing of loopholes and the removal of deductions. But he’s at least willing to admit that there are two sides to the budget — revenue and spending — and that looking at one in isolation is never going to lead to a sustainable solution.

Education

After Subprime Schools Fundraised For Chairman Kline, They Gave Him Another $21,200 Before Crucial Vote

The for-profit higher education industry, known as subprime schools for their rampant abuses and systematic fraud, is fighting back aggressively against proposed regulations from the Department of Education. The rules call for schools to show that a higher percentage of their students actually gain employment after graduation in order for for-profit school companies to qualify for taxpayer money. As we have reported extensively, subprime colleges have hired an army of lobbyists and have declared “war” against reform advocates.

House Education Committee Chairman Rep. John Kline (R-MN) has been the industry’s best friend. Kline repeatedly slipped provisions into House spending bills to restrict the Department of Education from implementing more oversight over subprime schools. Kline pushed the effort, essentially a bailout to a multi-billion dollar industry that receives ninety percent of its money from the government, while industry lobbyists astroturfed support on Capitol Hill.

With the release of first quarter campaign donations, an examination of Federal Elections Commission disclosures by the Wonk Room has found that Kline received nearly $50,000 from for-profit colleges so far this year. Notably, on March 15, 2011, two days before the House passed his amendment against the Department of Education, Kline received $21,200 from the same companies:

Mark Perry, President of San Joaquin Valley College: $2,500 on 03/15/2011.
Rex D Spaulding is President of North American Trade Schools Inc: $1,000 of 03/15/2011.
Alva R Sullivan is President And CEO of Sullivan University: $2,400 on 03/15/2011.
Robert F Herzog is VP at IN Business College: $1,000 on 03/15/2011.
Daniel M Hamburger is CEO at DeVry Inc: $1,000 on 03/15/2011.
Lawrence D Earle is CEO of Carrer Point College: $1,000 on 03/15/2011.
Corinthian Colleges Inc. PAC: $4,000 donation to Kline for Congress on 3/15/2011.
Education Management Corp PAC: $2,500 on 03/15/2011.
NELNET Higher Education Access PAC: $2,400 on 03/15/2011.
Westwood College Fund: $1,000 on 03/15/2011
Duncan M Anderson, CEO of Education Affiliates Inc: $2,400 on 03/15/2011.

Kline, who received another $100,000 from the industry last year, also hosted a brazen fundraiser with subprime college lobbyists on March 8th. That means for two straight weeks, industry lobbyists funneled cash to Kline so he could help them drain more taxpayer money without properly educating their students.

This morning, the Justice Department announced that it is joining a whistle-blower lawsuit against Kline donor Education Management Corporation (EDMC), a for-profit college company owned partially by Goldman Sachs. The company, which owns the Art Institutes and other private colleges, has been accused of defrauding students in several states.

Former ThinkProgress intern Paul Breer contributed valuable research for this post.

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