Today is tax day, when about $1 trillion is due from American taxpayers to fund their national government. Income taxes make up the largest slice of the revenue pie, though payroll taxes, whose burden fall heaviest on working families, are close behind. The combination of President Bush’s tax cuts for the rich and President Obama’s tax cuts for the rest of us means that Americans paid a lower share of their national income in taxes in 2009 than at any time since 1950. Yet the sheer size of our country and our economy means that the federal government still collects an awful lot of money in tax revenues. Total federal revenues exceeded $2.1 trillion in 2009, and 2010 collections will be up slightly with the economy recovering. So it seems very reasonable to ask, “What does the government do with all that money?”

To help us understand, the Center for American Progress has prepared this remarkable interactive chart of the federal budget, from the 20.3% that goes to Social Security down to the 0.01% that goes to the Mine Safety and Health Administration:

Getting a better sense for where our dollars go can help take some of the sting out of tax day. Did you know, for example, that more than 60 percent of all federal spending goes to just four areas: Social Security, Medicare, Medicaid, and defense? These are all programs that enjoy broad public support. The next largest category of federal spending is unemployment compensation (5.5 percent). And fewer than 20 percent of people want to cut back there. Another sizable chunk of our tax dollars go to pay for veterans’ benefits (3.5 percent), which is the absolute least popular thing to cut according to a recent Economist/YouGov poll.

Take a look for yourself at CAP’s new interactive tool to explore the federal budget and see exactly where the tax dollars actually go. It might make mailing in that tax return just a little bit easier.

Yesterday, Senate Minority Leader Mitch McConnell (R-KY) took to the Senate floor to declare his opposition to the financial reform bill before the Senate, claiming that it “institutionalizes” bailouts of Wall Street. In a press conference, he said the financial reform bill proposed by Sen. Chris Dodd (D-CT) means “a permanent taxpayer bailout of Wall Street banks,” “an endless taxpayer bailout of Wall Street banks,” and “a perpetual taxpayer bailout of Wall Street banks.” McConnell’s line of argument was echoed by many of his fellow Republicans.

But in an interview on CNN yesterday, Sen. Judd Gregg (R-NH) admitted that the “open-ended bailouts” claim was “a touch over the top.” Watch it:

Time’s Adam Sorenson noted yesterday that McConnell’s false charge against financial reform “is the exact argument pollster Frank Luntz urged Republicans to make earlier this year in a widely publicized memo” that argued that “the single best way to kill any legislation is to link it to the Big Bank Bailout.” On the Senate floor today, Sen. Chris Dodd (D-CT) ripped into McConnell’s cynical use of Luntz talking points to protect Wall Street from reform:

DODD: To hear members of this body repeat the utter falsehoods concocted by special interests whose jobs and pensions are plenty secure, thank you very much, that this bill would lead to more bailouts. Frank Luntz suggested that allies of the big banks say, and I quote him, “if there’s one thing we can all agree on.” This is Frank Luntz talking. “If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated.” End of quote. The minority leader, speaking yesterday, let me quote him. “If there’s one thing Americans agree on when it comes to the financial reform, it’s this. Never again should taxpayers be expected to bailout Wall Street from its own mistakes. We cannot allow endless taxpayer bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor.” End of quote. Remember what Frank Luntz said. Quote, “the single best way to kill any legislation is to link it to the big bank bailout.” End of quote. Mr. President, it’s straight from Wall Street special interest talking points!

Watch it:

Pat Garofalo explains that “neither the financial reform bill passed by the House of Representatives last year nor the one moving through the Senate makes bailouts ‘permanent.’ In fact, both include a resolution authority, aimed at unwinding systemically risky financial firms, and funded by assessments on the biggest firms themselves.” Sen. Mark Warner (D-VA) told Ezra Klein today that McConnell “either doesn’t understand or chooses not to understand” the actual policy of financial reform.

Cross-posted on ThinkProgress.

Yesterday, Senate Minority Leader Mitch McConnell (R-KY) took to the Senate floor to declare his opposition to the financial reform bill before the Senate, claiming that it “institutionalizes” bailouts of Wall Street. In a press conference, he said the financial reform bill proposed by Sen. Chris Dodd (D-CT) means “a permanent taxpayer bailout of Wall Street banks,” “an endless taxpayer bailout of Wall Street banks,” and “a perpetual taxpayer bailout of Wall Street banks.” McConnell’s line of argument was echoed by many of his fellow Republicans.

But in an interview on CNN yesterday, Sen. Judd Gregg (R-NH) admitted that the “open-ended bailouts” claim was “a touch over the top.” Watch it:

Time’s Adam Sorenson noted yesterday that McConnell’s false charge against financial reform “is the exact argument pollster Frank Luntz urged Republicans to make earlier this year in a widely publicized memo” that argued that “the single best way to kill any legislation is to link it to the Big Bank Bailout.” On the Senate floor today, Sen. Chris Dodd (D-CT) ripped into McConnell’s cynical use of Luntz talking points to protect Wall Street from reform:

DODD: To hear members of this body repeat the utter falsehoods concocted by special interests whose jobs and pensions are plenty secure, thank you very much, that this bill would lead to more bailouts. Frank Luntz suggested that allies of the big banks say, and I quote him, “if there’s one thing we can all agree on.” This is Frank Luntz talking. “If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated.” End of quote. The minority leader, speaking yesterday, let me quote him. “If there’s one thing Americans agree on when it comes to the financial reform, it’s this. Never again should taxpayers be expected to bailout Wall Street from its own mistakes. We cannot allow endless taxpayer bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor.” End of quote. Remember what Frank Luntz said. Quote, “the single best way to kill any legislation is to link it to the big bank bailout.” End of quote. Mr. President, it’s straight from Wall Street special interest talking points!

Watch it:

The Wonk Room’s Pat Garofalo explains that “neither the financial reform bill passed by the House of Representatives last year nor the one moving through the Senate makes bailouts ‘permanent.’ In fact, both include a resolution authority, aimed at unwinding systemically risky financial firms, and funded by assessments on the biggest firms themselves.” Sen. Mark Warner (D-VA) told Ezra Klein today that McConnell “either doesn’t understand or chooses not to understand” the actual policy of financial reform.

Senate Democrats, in order to raise revenues “for a variety of must-do tax break extensions,” are reportedly looking, once again, at ending a senseless tax break for hedge fund managers. Both the Obama administration and the House of Representatives have embraced the change, but it has yet to make its way through the Senate, in part due to the intense lobbying of the hedge funds’ lobbyists.

Today, Sen. Chuck Grassley (R-IA), the ranking member of the Senate Finance Committee, dared Senate Democrats to follow through and actually adopt the change, essentially asserting that they don’t have the stomach:

Senate Finance ranking member Chuck Grassley said he didn’t think Democrats would let things get that far. “The House first voted to change the taxation of carried interest almost two-and-a-half years ago, and has passed legislation three times,” Grassley said. “Senate Democrats must have concerns, since the Senate hasn’t adopted the change in that timeframe. So the policy appears to be controversial with Senate Democrats.”

Senate Democrats should do their best to prove Grassley wrong, as this tax break is nothing more than a gift to the super-rich.

At stake is a provision of the tax code pertaining to “carried interest.” Hedge fund managers are typically paid in a couple of ways: a set fee and then a percentage of the fund’s profits. Currently, the second part — the carried interest — is subject to the capital gains tax rate of 15 percent, which is far below the top income tax rate of 35 percent.

We have a lower tax rate on capital gains because people earn capital gains from investing their own money. To encourage some risk taking, and thus more investing, we’ve decided that profits from such investments are subject to a lower tax rate. But hedge fund managers are not investing their own money. They’re managing other people’s money. Yet, for tax purposes, we treat their income as if it was their own money at risk.

Of course, making the change means overcoming a heavy dose of spending and lobbying. As Politico noted today, “the nation’s 10 richest hedge fund managers have dumped nearly $1 million into campaign accounts over the past several years — with much of it going to senators who’ve given them a friendly reception on Capitol Hill.” This is a drop in the bucket for this industry, as the top 25 hedge fund managers last year made a combined $25.3 billion (yes, billion with a b). The smallest payout amongst those was $350 million.

Last week, Forbes reported that many big corporations, including General Electric and Exxon Mobil, will pay no income taxes to the U.S. Treasury for 2009. (Exxon disputes this report, but refused to tell Forbes how much it will owe, and Forbes did not retract the statement.) At the same time, oil companies like Exxon are fighting to preserve billions of dollars in senseless corporate subsidies that they receive from the federal government, which the Obama administration has proposed abolishing.

These subsidies are part of a much wider problem with tax expenditures, or government spending that is administered through the tax code. Over the decades, a number of expenditures have cropped up in the tax code that senselessly subsidize corporations, huge farms, and the vacation homes for the wealthy. And anytime anyone tries to remove them, the interest involved throws a hissy fit and goes all out to protect the subsidy. Just look at the reaction of big corporations that, thanks to the recently passed health care reform bill, no longer get to both receive subsidies and write the subsidies off on their taxes.

Today, I spoke with Rep. Lloyd Doggett (D-TX), a leading proponent of cracking down on tax havens and cleaning up the tax code. He called wasteful tax expenditures “barnacles on the code” and criticized tax dodging multinationals for paying less in taxes than a local pharmacist:

I’m trying to provide some balance, by having a thorough analysis, an objective report coming out of the Joint Tax Committee and the Government Accountability Office, so that we have data to review the claims of those lobbyists. Not all of these provisions are bad, but many of are like barnacles on the code, and just as hard to scrape off as they are on the bottom of a ship…Whether it’s Exxon Mobil or many of the Wall Street institutions we were asked to bail out, I think [tax havens are] a real problem. I think we’ve had a proliferation of offshore tax havens, of corporate tax dodging. I always find it impossible to explain why a pharmacist in Bastrop, Texas, or a small retail store in San Marcos is having to pay higher rates on the income that their hard-working small business owners are earning than some multinational that can duck and dodge taxes in Bermuda or the Cayman Islands.

Watch it:

Last year, spending on tax expenditures totaled more than $1 trillion. This year, they amount to 25 percent of all government spending. But cutting them, even when they go to subsidize companies in well established industries like oil, is derided by lobbyists as raising “new” taxes. And the same goes for cracking down on tax havens: an effort to simply have corporations pay what they rightfully owe, under the statutory tax rate, is condemned as an end to American competitiveness.

Today, the House Financial Services Committee is holding a hearing to examine what is holding back banks from reducing mortgage principal (the outstanding mortgage amount) for homeowners who are underwater (owe more on their mortgage than their house is worth). Last month, after months of inaction, the Obama administration finally released the outline of a plan to encourage banks to voluntarily reduce principals.

Representatives of the banks themselves are appearing before the committee to explain their views on the new program. While the Wall Street Journal gave its article on their testimonies an inflammatory headline about rebellion, most of them are, for the moment, saying that principal reductions are indeed appropriate for a limited number of borrowers, and that they plan to follow through with Treasury’s design:

Bank of America: We are waiting for Treasury to finalize the details on this program and are very supportive of targeted principal reduction performed in a way that addresses the significant moral and financial hazards but also recognizes the reality regarding the diminished future prospects for home appreciation.

Citigroup: We expect these changes will result in more principal reductions going forward. We believe principal reductions are one of many options that must be used responsibly. We will continue to be thoughtful in how we implement these programs in scale.

Wells Fargo: In 2010, we have used and expect to continue to use principal forgiveness…In addition, absent any unexpected legal, regulatory or accounting issues that could arise from the Treasury’s detailed description of its new principal forgiveness enhancements, we also plan to implement the enhancements for first- and second-lien modifications as rapidly as possible.

But then, there is JP Morgan Chase:

We do think that large scale, broad–based principal reduction programs raise serious policy concerns, for both first and second lien mortgage loans, and particularly for current borrowers with an ability to repay their obligations. In Chase’s view, such programs could be potentially very harmful to consumers, investors and future mortgage market conditions – and should not be undertaken without first attempting other solutions, including more targeted modification efforts.

Of course, there have already been plenty of modification efforts, like the Home Affordable Modification Program (HAMP). They’ve just falling flat thanks to poor design and bank intransigence. According to the latest data, just 170,000 permanent modifications have occurred under HAMP. So are the other banks in JP Morgan’s corner, but just afraid to be seen as standing against homeowners again, or is JP Morgan the outlier here?

My main concern with Treasury’s principal reduction program is that, like HAMP, it relies too much on banks voluntarily making cuts, in return for financial incentives. As John Taylor, the head of the National Community Reinvestment Coalition, said, “I’m not optimistic that the incentives will be enough to entice servicers and investors to reduce loan principals. Will they help seven million people who are at risk of foreclosure? I will be pleasantly shocked if investors step up for half a million borrowers.”

If this is going to work, Treasury needs to step up and issue its guidance, and the program’s progress will have to be very closely monitored. Then we’ll see if the big banks are merely paying lip service to helping homeowners or if they have a genuine interest in preventing any more of a housing calamity.

As Congress returns from its April recess, one of the big items on its agenda is financial regulatory reform. The White House has said that it would like to see a bill signed into law by the end of May, so Senate Banking Committee Chairman Chris Dodd (D-CT) is working to bring his legislation to the Senate floor by the end of the month.

Republicans, following a strategy outlined by pollster Frank Luntz, have taken to consistently characterizing the Democrats’ reform effort as linked to “the Big Bank Bailout,” even though the two aren’t remotely connected. In a letter to the Washington Post today, Rep. Spencer Bachus (R-AL), the ranking member of the House Financial Services Committee, embraced this tactic, saying that Democratic legislation would lead to more bailouts like that of American International Group (AIG):

Instead of real reform, the Democrats’ proposals would write into law the ad hoc government response to the economic crisis that put taxpayers on the hook for bailouts, rewarded Wall Street’s failures and froze capital needed to create jobs. Remember the bailout of American International Group? This bill would make AIG-style bailouts permanent. The government would decide which politically connected creditors of failed non-banks to bail out, and details would be hidden from the public.

Bachus is no stranger to this sort of rhetoric. Back in October, he said that Rep. Barney Frank’s (D-MA) financial reform bill was simply “permanent bailout authority.”

But let’s unpack this a little bit. For starters, neither the financial reform bill passed by the House of Representatives last year nor the one moving through the Senate makes bailouts “permanent.” In fact, both include a resolution authority, aimed at unwinding systemically risky financial firms, and funded by assessments on the biggest firms themselves. It lays out a process for identifying whether a firm is too systemically entangled for traditional bankruptcy and, if so, putting it into an FDIC-style receivership. It is the opposite of the ad hoc approach to which the government was limited in 2008.

And when you look at the regulatory reform legislation that Bachus himself proposed last year, his critiques hold even less water. For instance, his plan for unwinding failing financial firms is to simply let them file for bankruptcy, even if they pose systemic risk. But as David Min pointed out, the “let them fail” crowd, as he calls it, “by refusing to acknowledge or remedy the problems that result in bailouts, would guarantee that future bailouts are the rule, rather than the exception.”

And Republicans have no interest, it seems, in remedying the problems that result in bailouts, particularly for unregulated non-banks like AIG. Dodd’s bill extends the full regulatory regimen to systemically risky non-banks, treating them for regulatory purposes as if they were a large bank. Bachus’ proposed legislation does no such thing.

And Bachus’ Senate counterpart, Sen. Richard Shelby (R-AL), the ranking member of the Banking Committee, crafted an amendment to Dodd’s bill explicitly preventing non-banks from being regulated. Under Shelby’s plan, even if the regulators felt that a big non-bank was threatening the financial system, they could do nothing.

There are legitimate questions about how effective the resolution authority in Dodd’s bill will be, but Bachus’ letter signals that he’s only interested in scoring political points, not in engaging with the bill on a substantive basis.

This week, Senate Democrats will try once again to pass the extension of unemployment benefits that was repeatedly blocked by Sen. Tom Coburn (R-OK) and the Senate Republicans last month. In addition to the more than 200,000 people who lose out on extended jobless benefits every week because of the GOP’s obstruction, the National Flood Insurance Program (NFIP) also expired when the Senate failed to act, just as devastating floods hit large swaths of the Northeast.

And the NFIP’s expiration also had other consequences, as thousands of home closings have been delayed because buyers cannot obtain flood insurance:

As a result, thousands of home sale closings have been canceled or postponed in the past two weeks as cagey homebuyers feared buying homes without the insurance policy…The impact on the already fragile housing market is too early to be understood but experts say it is unlikely to be positive. The National Association of Realtors, at the request of Fox News, estimated that each day the program is dormant, 1,400 closings are adversely hit.

“When Congress returns we will be waiting on the steps for them,” said Lucien Savant, spokesman for the National Association of Realtors. Joe Ory, President of the New Orleans Metropolitan Association of Realtors, meanwhile, called the delay “an absolute catastrophe.”

Real estate closings across the country have been disrupted by the delay, which results in much more than a loss of time. As Ory pointed out, one homebuyer moving from Houston to New Orleans has to continue paying fees on the property she is purchasing, costing thousands of dollars, but can’t move. “It makes me crazy,” said Rep. Jim Himes (D-CT). “The House acted on an extension and the Senate failed. It’s very serious. I’ve gotten all kinds of calls from realtors.”

Democrats plan to hold a cloture vote on an extension package today, but will need at least one Republican to support the effort if it’s going to move forward. However, the GOP doesn’t seem to be moved by the very real effects its obstruction is having. For instance, last week Coburn said that his blocking benefits was okay, because it only affects a “relatively small amount of people.”

This week, Upper Big Branch mine in Montcoal, WV, was the site of the deadliest mining disaster since 1984, with at least 25 miners killed and others still missing. The disaster was caused by an explosion of contained methane gas, which caused a similar incident at the Sago Mine — also in West Virginia — in 2006.

As Brad Johnson has pointed out, the Upper Big Branch Mine, which is owned by Massey Energy, has been cited for thousands of safety violations, including 638 since 2009. More than $2 million in fines have been assessed against the mine. Massey is run by CEO Don Blankenship, who just last year complained about “nonsensical” safety rules set by the federal government to protect miners. Not only that, Blankenship has said that “unions, communities, people, everybody’s going to have to learn to accept” that “capitalism from a business viewpoint is survival of the most productive.”

To that end, Blankenship has made a concerted effort to not only flagrantly flaunt a safety code that might have cut into his profits, but also to prevent unionization at his company’s mines. In a 1986 film documenting his role in crushing striking miners at Massey operations in Appalachia, Blankenship was frank about his goals to destroy unionization, in order to “sell coal cheaper”:

What that means is that non-union competitors have a tremendous advantage and therefore they sell coal cheaper and drive union coal operations out of business.

Watch it:

To date, Blankenship has largely succeeded in purging union members from his company’s ranks. Only 1.8 percent of Massey’s workforce is unionized. One miner who was employed by Massey for 25 years said that working for Blankenship was “like living under a hammer. It’s all about the bottom line, we all know that.” In 2007, the National Labor Relations Board determined that Massey’s refusal to hire union workers was illegal.

But if the Upper Big Branch miners were unionized, there’s a greater likelihood that the mine would have been safer. Since 2002, less than than one-fifth of the total mine worker fatalities have occurred at unionized mines. And the reason is simple: workers at a unionized mine are not afraid to report unsafe working conditions. “I can absolutely say that if these miners were members of a union, they would have been able to refuse unsafe work…and would not have been subjected to that kind of atrocious conditions,” said United Steelworkers President Leo Gerard.

Also, unions have the right to accompany mine inspectors on their rounds, providing accompanying documentation and testimony, so it’s not simply the inspector’s word against the company’s. But Blankenship has made it clear that he considers the safety and health of his workers as secondary to squeezing every penny out of his mines that he can.

Our guest blogger is Michael Linden, the Associate Director for Tax and Budget Policy at the Center for American Progress Action Fund.

Federal Reserve Chairman Ben Bernanke is causing a bit of a media tizzy today with his latest speech, in which he warns that, “unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth.”

The Chairman is not wrong. Consistently running huge budget deficits with no prospect of ever closing the gap between spending and revenue can have enormous economic consequences. Interest rates would eventually rise, painful inflation would eventually take hold, and an ever larger share of the federal budget would be spent just in the service of paying interest on a bulging debt. This is definitely a situation that we want to avoid.

But don’t confuse a warning about potential future problems with an alarm bell signaling imminent danger. The Chairman is correct when he says that we need to solve our long-term deficit problem, be he made a bunch of other points that are much more relevant right now, and also happen to be right on the money:

1. “[A] sharp near-term reduction in our fiscal deficit is probably neither practical nor advisable.”

Right on, Mr. Chairman. Don’t let anyone tell you that this year’s deficit is an economic problem. It isn’t. In fact, this year’s deficit, and last year’s, is a big reason why the economy is now slowly recovering.

2. “[F]or the near term, inflation appears to be well controlled [and]… [i]nflation expectations, as measured in the financial markets or in surveys, appear stable.”

Correct. Inflation scare-mongers want us to believe that we are on the verge of becoming Zimbabwe, but the reality belies their dire predictions.

3. “To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”

Bull’s-eye. Our long term deficit is the product of an aging population, rising health care costs and a persistent, pernicious campaign to cut taxes (especially for the wealthy) without paying for it. Getting the budget back into balance is going to mean reducing some spending, but it’s also going to mean higher revenues. Anyone who says we can balance the budget entirely by cutting spending isn’t actually interested in solving the problem. They’re just trying to score political points.

Finally…

4. “History has demonstrated time and again the inherent resilience and recuperative powers of the American economy. Our country…has surmounted difficult challenges in the past. I do not doubt that we can do so once again.”

Amen. The challenge of bringing our budget back onto a sustainable path is not insurmountable, even after eight years of remarkable fiscal mismanagement. And Bernanke is also right that meeting this challenge is going to mean making some “difficult choices.” But making difficult choices doesn’t mean economic ruin. The federal government could certainly stand to cut some fat, just as the very richest Americans could certainly stand to pay a little more in taxes.

Yesterday, I highlighted this report from the Pew Fiscal Analysis Initiative, which shows that 44 percent of the unemployed workers in America have been jobless for six months or longer. This is the highest percentage since World War II. But the plight of the long-term unemployed is not the only problem with the labor market (which is still in dire straits, even with last month’s encouraging addition of 162,000 jobs).

As this new report from the Economic Policy Institute (EPI) reveals, the jobless rate for young adults has also been at unprecedented levels. EPI found that “since the start of the recession in December 2007, young adults have attained the highest unemployment rate on record (since 1948)…Between December 2007 and January 2010, the unemployment rate for young workers increased 7.1 percentage points.”

And the picture gets even uglier for young minority workers. Here’s the unemployment rate for 16-19 year old workers, broken down by race:

And here’s the rate for 20-24 year olds:

Being unemployed at a young age has an impact that will last the rest of a worker’s life. Research has shown that each missed year of work translates into “2 percent to 3 percent less earnings each year thereafter.” In fact, college students who graduated during the 1982 recession were still earning less than students who graduated into a strong economy ten years later. As the Washington Post reported, the current generation of young workers “might be the first generation that does not keep up with its parents’ standard of living.”

Fortunately, this is not a problem of which people are unaware. Today, the White House threw its support to a House-passed bill that aims to create summer jobs, building on the economic stimulus package passed last year. “We have to do more,” said Rep. Barbara Lee (D-CA). “It’s really important that we get the resources to the communities as soon as possible.”

Of course, efforts to address this problem could have been underway already, if Senate Republicans hadn’t scuttled a summer jobs bill with a budget technicality last month.

Last week, it was the Office of the Comptroller of the Currency and Sen. Richard Shelby (R-AL). This week, it is evidently Bank of America’s turn to break with the rest of the financial services industry and lend its support to the creation of an independent Consumer Financial Protection Agency (CFPA). American Banker reported:

Bank of America Corp. is breaking ranks with other large banks and agreeing to support beefed up consumer-protection provisions in regulatory reform legislation, several sources said Wednesday…Until now, B of A has officially stayed neutral on a consumer protection unit but it has been fiercely opposed by the banking industry, which argues it could write rules that conflict with safety and soundness standards. But at a meeting with several community groups on Wednesday, top B of A executives said they were ready to give a consumer protection agency their support under certain conditions.

And therein lies the catch. While it is helpful to have a high-profile bank break with the rest of the industry and deliver one more blow to the false claim that consumer protection necessarily undermines bank safety and soundness, BofA, like Shelby and the OCC, seems to be positioning itself to make demands on other fronts in exchange for concessions on consumer protection.

So what does BofA want? Well, according to one of its spokesman, “we support the idea of a consumer protection entity, consistent with the principles of federal preemption.” The “principles of federal preemption” would seriously blunt the push for strong consumer protection.

Complete federal preemption would mean that nationally chartered banks, like BofA, would be immune from state consumer protection laws that go further than those set at the national level. As envisioned by the Obama administration, federal regulations would be a floor, and not a ceiling, for regulation, and if the states see a particular problem on the ground, they would be able to react. Treasury Secretary Tim Geithner reiterated this last week, saying that states will have a “crucial role” in policing predatory lending going forward.

During the housing bubble’s buildup, many states tried to enforce tougher rules against subprime lenders, only to be preempted by federal regulators under the Bush administration. BofA’s stated policy outcome would set preemption in stone, so that banks wouldn’t even have to seek out a case-by-case exemption (as they would under both the House and Senate regulatory reform bills). Incidentally, full federal preemption is the same thing that Comptroller of the Currency John Dugan said he would push for, in announcing the OCC’s support for a CFPA.

All of this support suddenly appearing for the CFPA seems to confirm that these groups see the writing on the wall, know that some sort of consumer protection entity will come into being, and want to throw their support to it in return for weakening its powers. Senate Banking Committee Chairman Chris Dodd (D-CT) would do well to not bow to these demands.

A few weeks ago, for the second time in two months, Senate Republicans objected to an extension of unemployment benefits. While the last dispute was resolved in time to keep benefits from expiring, as of Monday, hundreds of thousands of unemployed workers are seeing their benefits come to an end.

Sen. Jim Bunning (R-KY) led the GOP obstruction last time (telling the Democrats “tough sh*t” when they asked for unanimous consent to move the extension forward), but this time Sen. Tom “Dr. No” Coburn (R-OK) has stepped up to the plate. And he evidently has no remorse about his actions, as he feels they affect a “relatively small amount of people”:

The easiest thing in the world is to pass this bill unpaid for, but consider the millions of Americans whose financial futures would be damaged, versus the relatively small amount of people who will be affected by this delay. Now you tell me which vote takes the most courage.

First, Coburn is wrong on the economics. Providing unemployment benefits is one of the most effective steps that a government can take in terms of economic stimulus, and unless the economy starts moving again, long-term deficits (“financial futures”) will never be brought under control. As the National Employment Law Project’s Judy Conti explained, “every economist from every side of the political spectrum will tell you that unemployment benefits are most stimulative when they are not offset. In the history of the unemployment program, we have never offset these programs.”

And then there’s the human angle. Because of Coburn and the GOP’s obstruction, more than 200,000 people per week will lose their benefits. About one million are slated to lose their benefits this month. And this is taking place while 44 percent of unemployed Americans (about 6.5 million people) have been unemployed for six months or more. Plus, the same package that Coburn blocked included a renewal of the National Flood Insurance Program (NFIP), while the Northeast United States has been hard-hit by flooding.

If you thought this whole sordid episode would prompt some soul-searching among the GOP, you’d be mistaken. They are, instead, circling the wagons around Coburn and trying to blame House Democrats (who objected to their proposed offset) for preventing the extension. In fact, Sen. Jon Kyl’s (R-AZ) takeaway is that the GOP should have lent more support to Bunning when he blocked the extension. “We didn’t give [Bunning] as much help as we probably should have,” Kyl said. “It took an act of courage like Sen. Bunning’s to perhaps jolt people into the awareness of how bad it had really gotten.”

After the worst coal mining disaster in at least 25 years, Massey Energy CEO Don Blankenship is facing long-overdue scrutiny for his record of putting coal profits over fundamental safety and health concerns. Blankenship, a right-wing activist millionaire who sits on the boards of the U.S. Chamber of Commerce and the National Mining Association, used his company’s ties to the industry-dominated Bush administration to paper over Massey’s egregious environmental and health violations. Massey rewarded Republicans with massive donations after the company avoided paying billions in fines for a 2000 coal slurry disaster in Martin County, three times bigger than the Exxon Valdez. After both mine inspectors and Massey employees got the same message that it was more important to “run coal” than to follow safety rules, a deadly fire broke out in the Aracoma Alma mine in 2006, burning two men alive.

Blankenship was abetted by former employees placed at the highest levels of the federal mine safety system. Massey COO Stanley Suboleski was named a commissioner of the Federal Mine Safety and Health Review Commission in 2003 and was nominated in December 2007 to run the Energy Department’s Office of Fossil Energy. Suboleski is now back on the Massey board. After being rejected twice by the Senate, one-time Massey executive Dick Stickler was put in charge of the MSHA in a recess appointment in October 2006. In the 1990s, Stickler oversaw Massey subsidiary Performance Coal, the operator of the deadly Upper Big Branch Mine, after managing Beth Energy mines, which “incurred injury rates double the national average.” Bush named Stickler acting secretary when the recess appointment expired in January 2008.

Below are further details of these two past incidents that foretold Blankenship’s latest disaster:

THE FATAL ARACOMA MINE FIRE

Blankenship Branded Deadly Fire At Dangerous Aracoma Mine “Statistically Insignificant.” In the most egregious case of preventable death before the Upper Big Branch explosion, Massey’s Aracoma Coal Co. agreed to “plead guilty to 10 criminal charges, including one felony, and pay $2.5 million in criminal fines” after two workers died in a fire at the Aracoma Alma No. 1 Mine in Melville, West Virginia. Massey also paid $1.7 million in civil fines. The mine “had 25 violations of mandatory health and safety laws” before the fire on January 19, 2006, but Massey CEO Don Blankenship passed the deaths off as “statistically insignificant.” [Logan Banner, 9/1/06; Charleston Gazette, 12/24/08]

Federal Mine Inspector Who Wanted To Shut Down Mine Told To “Back Off.” Days before fire broke out in the Aracoma mine, a federal mine inspector tried to close down that section of the mine, but “was told by his superior to back off and let them run coal, that there was too much demand for coal.” Massey failed to notify authorities of the fire until two hours after the disaster. [Pittsburgh Post-Gazette, 4/23/06]

Blankenship Memo: “Coal Pays the Bills.” Three months before the Aracoma mine fire, Massey CEO Don Blankenship sent managers a memo saying, “If any of you have been asked by your group presidents, your supervisors, engineers or anyone else to do anything other than run coal . . . you need to ignore them and run coal. This memo is necessary only because we seem not to understand that the coal pays the bills.” [Logan Banner, 9/1/06]

THE MARTIN COUNTY COAL-SLURRY DISASTER

Three Times the Volume of the Exxon Valdez Spill. Massey Energy is the parent of Martin County Coal, responsible for the “nation’s largest man-made environmental disaster east of the Mississippi” until the 2008 Tennesee coal-ash spill In October 2000, a coal slurry impoundment broke through an underground mine shaft and spilled over 300 million gallons of black, toxic sludge into the headwaters of Coldwater Creek and Wolf Creek,” in Martin County, KY. [Lost Mountain, p. 128]

Site Denied Superfund Status. Bush’s Environmental Protection Agency “determined that the slurry spill was not a release of a hazardous substance” and thus ineligible for Superfund status. [KY EQC]

Sen. McConnell and Wife Stopped MSHA Investigation. U.S. Secretary of Labor Elaine Chao, wife of Sen. Mitch McConnell (R-KY), oversaw the Mine Safety and Health Administration. Chao “put on the brakes” on the MSHA investigation into the spill by placing a McConnell staffer in charge. In 2002 a $5,600 fine was levied. That September Massey gave $100,000 to the National Republican Senatorial Committee, chaired by McConnell. [Lexington Herald-Leader, 10/2/06, OpenSecrets]

$2.4 Billion Becomes $20 Million. In May 2007 the EPA filed suit for $2.4 billion against Massey for violating “Clean Water Act more than 4,500 times from the beginning of 2000 to the end of 2006″ in West Virginia and Kentucky, including the Martin County spill. In January 2008 Massey agreed to pay $20 million to settle the case. [Lexington Herald-Leader, 1/18/08]

Photo credit: Bill Rhodes

Cross-posted on The Wonk Room.

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The New Republic’s Noam Scheiber noted last week that the Senate Banking Committee’s ranking member, Sen. Richard Shelby (R-AL), was floating a compromise regarding an independent Consumer Financial Protection Agency (CFPA), which is one of the major sticking points in the financial regulatory reform effort. The Washington Post added today that Shelby’s proposal “includes limits on the consumer agency’s authority, including a commission of regulators that could serve as a check on rules put forth by the agency.”

Obviously the details here matter a lot, but on the surface, this is a reversal for Shelby, who has said that creating an independent consumer protection agency would be “folly and dangerous” and lead to a “nanny state.” In fact, it was Shelby’s stark opposition to a CFPA that led Dodd to end negotiations with him in the first place.

Just last month, Shelby appeared before the American Bankers Association and said that “safety and soundness [of banks] trumps everything. It trumps the consumer finance whatever.” So for the moment, I am skeptical that Shelby really favors a consumer agency with enough teeth to make it truly independent and effective. The fact that he wants to give a commission of regulators veto authority seems to confirm this, particularly since the regulatory reform legislation that passed out of the Banking Committee already gives the proposed Financial Stability Oversight Council (FSOC) the ability to overrule the consumer agency with a two-thirds vote.

It’s also interesting that, at least so far as it’s been reported so far, Shelby’s proposal seems to forego placing the new consumer division inside of the Federal Reserve, which was a compromise Senate Banking Committee Chairman Chris Dodd (D-CT) made in order to try and garner some conservative support for his legislation. So Shelby may be trying to tap into some of the anti-Fed fervor out there by proposing an agency outside of the Fed, but still one that is toothless and has limited reach.

As the Atlantic’s Derek Thompson pointed out, Shelby’s move raises two questions: “First, will Dodd agree to a CFPA that fudges the meaning of the word independent and essentially recasts Shelby’s previous counter-offers to give the CFPA glorified recommendation status? Second, will the White House — which has gone from lukewarm to crusading on the consumer protection issue — respond to Shelby’s offer with clear approval or disapproval?”

Dodd’s Consumer Protection Bureau represents the bare minimum in terms of independence that an effective regulator needs (which is why it earned the cautious endorsement of consumer advocate Elizabeth Warren). Any more infringements on that independence and we’ll be right back with the status quo: consumers relegated to secondary status, behind the bottom lines of financial firms. I hope Dodd fights the urge to accept Shelby’s offer in the name of bipartisanship if it weakens Dodd’s proposal even more and leads to the GOP demanding concessions on other parts of the bill.

Last month, the U.S. economy gained 162,000 jobs, which was the largest gain in three years and a far cry from the 700,000 jobs a month that were being lost in the beginning of 2009. But still, the unemployment rate remained steady at 9.7 percent and the underemployment rate actually ticked up to 16.9 percent. And as this new report from the Pew Fiscal Analysis Initiative shows, long-term unemployment is reaching scary new levels:

The federal government defines “long-term unemployment” as a jobless period of six months or longer. In March 2010, over 44 percent of unemployed Americans met or exceeded that standard — the highest rate since World War II. In contrast, during the severe recession of the early 1980s, the percentage of workers unemployed for six months or longer peaked at 26 percent in 1983. The high long-term unemployment rate represents the continuation of a decades long trend, one that has worsened after downturns but has persisted even during periods of growth.

6.5 million Americans have been out of work for 27 weeks or more, according to the Bureau of Labor Statistics. And this is a problem facing particularly older workers, with the rate for workers 55 and older almost double that of workers younger than 24.

Sadly, this epidemic of long-term unemployment coincides with the expiration of some tiers of extended unemployment benefits, courtesy of Sen. Tom Coburn (R-OK) and Republican obstructionism. So, if nothing else, these numbers make the case for a more robust system of “triggers” for fiscal stabilizers like unemployment benefits, so the unemployed don’t get hurt by political gamesmanship.

“Relying on Congress to extend benefits episodically to the long-term unemployed is not a good policy solution. The United States is a large nation with a variety of different local labor markets, and Congress may not have the political will to act when only a few states are in dire straits,” wrote Jeffrey Wenger and Heather Boushey. “In contrast, an automatic system that works would help states over multiple ups and downs over time—and really help the country by not having lagging states dragging down the national economy.”

Then, of course, there’s the matter of getting the long-term unemployed back to work, particularly for workers who lost their jobs in industries that may be permanently resetting at a lower level. But there doesn’t seem to be the widespread will in Congress for taking the major steps necessary.

As Boushey noted, “the private sector employs fewer people today than it did at the end of 1998, but our economy has an additional 32 million people over the age of 16. This means that the recovery we are in now must be a strong one, since we have a lot to make up for.” In terms of both the current and future strength of the economy, Congress needs to step up, or we’ll be stuck in this slow job-creation slog for a long time.

Over at ThinkProgress, Ben Armbruster highlighted a Forbes report on the taxes paid by top corporations last year. According to Forbes, General Electric managed to make $10.3 billion in pretax income, but paid nothing into the U.S. Treasury, as it counted its losses in the U.S., while registering its profits overseas. As Forbes put it, “GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain).”

And then there’s Exxon-Mobil, which paid more in income taxes than any other U.S. company last year, just none of it to the U.S.:

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Instead, the $15 billion was divided among the countries where Exxon has set up one of its hundreds of foreign subsidiaries. In total, Exxon 122 foreign subsidiaries, including 32 in countries that are officially labeled tax havens by the U.S. government. It has 18 subsidiaries in the Bahamas, and 3 each in the Cayman Islands, Hong Kong, and Singapore.

In each of the last two years, the Obama administration has proposed eliminating the loopholes and incentives in the tax code that allow companies to set up subsidiaries in these low- or no-tax countries, which help them lower their effective tax rate by 20 points or more. Both times, the administration saw its efforts rebuffed by Congress and the Big Business lobby, which means that a $100 billion annual tax burden will continue to be shifted onto U.S. taxpayers (including corporations) that don’t engage in this sort of tax evasion.

But Exxon is not only avoiding U.S. taxes. As Mother Jones’ Adam Weinstein pointed out, the company also has the chutzpah to complain about high taxation, as its website claims that “energy innovation is already on the ropes because of excessive taxes, and it will be forever consigned to the dustbin by any new taxes on windfall profits.” Plus, the Big Oil lobby is currently running ads against what it calls “new energy taxes,” which is actually an effort by the Obama administration to cut $36 billion in senseless tax loopholes and subsidies for the oil industry.

So, to sum up, oil companies complain about high taxation, while paying no taxes and receiving corporate welfare from the federal government. I understand why they’d want to go to great lengths to protect such a sweetheart deal, but there’s no reason for the rest of us to buy it.

Massey Energy is actively contesting millions of dollars of fines for safety violations at its West Virginia coal mine where disaster struck yesterday afternoon. Twenty-five miners were killed and another four are missing after a explosion took place at 3 pm Monday at Massey subsidiary Performance Coal Co.’s Upper Big Branch Mine-South between the towns of Montcoal and Naoma. It is “the most people killed in a U.S. mine since 1984, when 27 died in a fire at Emery Mining Corp.’s mine in Orangeville, Utah.” This deadly mine has been cited for over 3,000 violations by the Mine Safety and Health Administration (MSHA), 638 since 2009:

Since 1995, Massey’s Upper Big Branch-South Mine has been cited for 3,007 safety violations. Massey is contesting 353 violations, and 127 are delinquent. [MSHA]

Massey is contesting over a third (34.7%) of the 516 safety citations the Upper Big Branch-South Mine received in 2009, its greatest count in the last 15 years. [MSHA]

In March 2010, 53 new safety citations were issued for Massey’s Upper Big Branch-South Mine, including violations of its mine ventilation plan. [MSHA]

Massey is now contesting $1,128,833 in fines for safety violations at the deadly Upper Big Branch-South Mine, with a further $246,320 in delinquent fines:

Over $2.2 million in fines have been assessed against Massey’s Upper Big Branch-South Mine since 1995, with $791,327 paid. Massey is contesting $1,128,833 in fines. Massey’s delinquent fines total $246,320. [MSHA]

Massey is contesting $251,613 in fines for citations for Upper Big Branch-South Mine’s ventilation plan. [MSHA]

Before yesterday’s tragic explosion, there have been three fatalities at Massey’s Upper Big Branch-South Mine in the last twelve years — one each in 1998, 2001, and 2003. Massey’s corrupt CEO, U.S. Chamber of Commerce board member Don Blankenship, has previously told employees that it was more important to “run coal” than follow safety regulations.

In 2002, President George W. Bush “named former Massey Energy official Stanley Suboleski to the MSHA review commission that decides all legal matters under the Federal Mine Act,” and cut 170 positions from MSHA. Bush’s MSHA chief, Dick Stickler, was a former manager of Beth Energy mines, which “incurred injury rates double the national average.” On October 21, 2009, the Senate confirmed President Barack Obama’s choice to replace Stickler, Joe Main, a “career union official and mine safety expert.” Massey’s Suboleski is still an active review commissioner.

With the White House signaling that it wants financial regulatory reform to be signed into law by the end of May (a timetable that even some Democrats find a tad optimistic), misleading rhetoric from the right is proliferating. Last week, for instance, Sen. Jim DeMint (R-SC) falsely claimed that the bill passed by the Senate Banking Committee creates a “slush fund” for banks that are “too important to close.”

Today, it was Rep. Tom Price’s (R-GA) turn. He claimed on Fox News that the Senate bill “would continue the bailout mentality…and increases the regulatory oppression.” But Price gave some key insight into what the GOP would rather do, which is evidently “unleash the wonder and the beauty and the awe” of Wall Street by making regulation “more flexible and nimble”:

The bill that’s on the table, and the one that the President evidently supports, would continue the bailout mentality, does nothing to rein in Fannie and Freddie, which really were a lot of the problem in the housing market especially, and increases the regulatory oppression, as opposed to making it more flexible and nimble and allowing the economy to work. We believe that there ought to be appropriate reform, but we believe it ought to unleash the wonder and the beauty and the awe of the American economy.

Watch it:

It might be worth asking the residents of Jefferson County, Alabama — who are buried under a mountain of debt thanks to financial instruments peddled by Wall Street — just what all that wonder, beauty, and awe is good for. This comes back to Paul Volcker’s pronouncement that the greatest financial innovation of the last 25 years is the ATM, while the rest has just gone to boost bank profits without adding any societal benefit.

Predictably, Fox News Bill Hemmer didn’t push back on Price’s Frank Luntz-approved talking point about the Senate bill preserving bailouts. But as Federal Deposit Insurance Corp. Chairman Sheila Bair pointed out in today’s Wall Street Journal, bailouts are not a part of the bill:

Both the already passed House bill, as well as the bill approved by the Senate Banking Committee, draw on the FDIC model to create a resolution authority that specifically applies to large, complex nonbank financial firms. Under both bills, bankruptcy would be the normal process. But under extraordinary procedures, the government would have the option to put the very largest firms into an FDIC-style liquidation process if necessary to avert a broader systemic collapse…Some have tried to label the FDIC model as a “bailout” because it is not bankruptcy. Yet the FDIC process is anything but a bailout, as any small bank can attest.

New data reveals that more than half of the assets in the financial system are held by just 16 banks, making the creation of a credible resolution authority for closing them down even more important. Since Price seems to be so enamored with the activities of the biggest banks, maybe he thinks it’s a bad thing that they’ll be closed down when they fail, but I doubt many others would agree.

Roll Call noted today that Senate Republicans “are girding for battle on financial regulatory reform and using the recess to develop a legislative and political strategy capable of uniting the minority.” However, they have evidently not decided whether or not complete opposition to the entire effort is the tactic that they will use. The failure of that strategy in the health care fight means some attempt to cut deals might be in the cards.

On that note, the New Republic’s Noam Scheiber reported that the Republican strategy may be to mostly let the Democrats have their way on creating a consumer protection division within the Federal Reserve, in return for weakening other provisions of the bill. As Scheiber put it, “if the bet pans out, the [financial services] industry and its GOP allies would, in effect, be trading a robust consumer agency for a chance to scale back a number of highly consequential but below-the-radar reforms.”

One of these “below-the-radar” areas is derivatives reform, and while the bill that Senate Banking Committee Chairman Chris Dodd (D-CT) moved out of committee is tighter than that passed by the House of Representatives last year, “most continue to regard the derivatives provision in Dodd’s bill as a placeholder, which will almost certainly be nudged aside by a compromise negotiated by Democrat Blanche Lincoln and Republican Saxby Chambliss”:

As one lawyer involved in the derivatives industry told me last week, “If they try to push the Dodd bill as currently written on derivatives—it can’t fly.”…The bottom line, this person concluded, is that voters just aren’t very invested in the details of derivatives reform, and so it’s hard to believe the Democrats will be, too.

The prospect of derivatives reform being watered-down was already very real, since Lincoln made some remarks at the U.S. Chamber of Commerce last month that seemed to indicate her willingness to exempt significant amounts of derivative trading from exchanges and clearinghouses. I don’t think swallowing these exemptions in exchange for a consumer protection entity that already deviates from the administration and House’s fully independent Consumer Financial Protection Agency (CFPA) is a deal worth making.

For one thing, I’m skeptical that compromising will really deliver a large number of Republican votes. Sen. Richard Shelby’s (R-AL) on again-off again attitude toward negotiations with Dodd makes it seem like he’s more interested in buying time than genuinely crafting a bill. Also, as more numbers come out showing that the public is still angry at Wall Street, I think the odds that Dodd can pick up enough Republican votes on the floor to pass a decent bill improve. Down the line, no one’s going to remember if regulatory reform passes with 61 or 81 votes, but they will remember who was in charge if reform fails to rein in the banks and prevent another financial meltdown.