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Yglesias

Not Paying as You Go

Cutting taxes exclusively on rich people is unpopular:

Views on the Tax Cuts Enacted During the Bush Administration, August 2010 1

Normally you see “moderates” flocking to popular positions, especially when—as in this case—the popular position is also a genuine bit of difference-splitting middle ground. But that’s not the case here. Jon Chait speculates as to why:

One possibility is that vulnerable red state Democrats are trying to signal their moderation by breaking with the party leadership on a high-profile issue, even one in which the party has a popular stance. But the defections include retiring Democrats like Bayh and Conrad, and a blue state Senator like Lieberman whose main political danger comes from the left.

So my explanation is that Senators are both among, and surrounded by, the small minority of Americans who earn more than $250,000 a year. They hear from them disproportionately, they live among them, and they are them. So their conception of what is popular and what is reasonable on this issue is warped.

There’s something to that. But I think larger issue here is the perverse framing of deficit issues. If Mitch McConnell were sponsoring a bill to cut taxes on rich people and cut spending by an equal amount, I bet no moderate Democrats would find that tempting. And if Mitch McConnell were sponsoring a bill to cut taxes on rich people and raise taxes on the middle class by an equal amount, I bet no moderate Democrats would find that tempting either. But of course a permanent reduction in rich people’s taxes implies reductions in spending or higher taxes on the middle class. And the media never—never—frames a division within the Democratic caucus as pitting spendthrift moderates like Evan Bayh and Ben Nelson against deficit hawk liberals like Bernie Sanders and Barbara Boxer even though this is the precise divide that opens up whenever Bush-era tax policies are on the table.

Climate Progress

Smoggy Senators Protest EPA Plan To Save Thousands Of Children’s Lives

In a startling act of fealty to polluter interests, several senators are fighting scientifically guided smog limits that would save thousands of lives a year. Under the guidance of administrator Lisa Jackson, the U.S. Environmental Protection Agency is working to clean up one of George W. Bush’s most blatant acts of ignoring science and disregarding the law, when he personally overruled the unanimous recommendations of EPA’s Clean Air Scientific Advisory Committee for an ozone limit no higher than 70 ppb, setting instead an arbitrary and capricious standard of 75 ppb. Jackson intends to instead follow the law by setting a 60-70 ppb standard. However, a group of Democratic and Republican senators led by retiring Sen. Evan Bayh (D-IN) and Sen. George Voinovich (R-OH) are trying to preserve Bush’s toxic legacy on behalf of the coal and oil industries in their states, complaining to Jackson that her plan “will have a significant negative impact on our states’ workers and families”:

We believe that changing the rules at this time will have a significant negative impact on our states’ workers and families and will compound the hardship that many are now facing in these difficult economic times.

The pro-smog letter was also signed by Sens. Mary Landrieu (D-LA), Claire McCaskill (D-MO), Richard Lugar (R-IN), Kit Bond (R-MO) and David Vitter (R-LA).

Remarkably, the senators do not seem cognizant of Bush’s well-reported act of malfeasance, complaining that “the Agency has not presented new data or evidence to justify its course of action”:

Instead, outside of the regular five-year review process, EPA is choosing to interpret the same basic body of information that existed in 2008 and reach a different conclusion. . .

Given the absence of new or different scientific data, EPA should maintain the current ozone standards, which EPA finalized only two years ago and concluded were adequately protective of public health and welfare with an adequate of safety [sic].

Actually the conclusion EPA staff and scientists drew in 2008, based on the scientific evidence that “ozone has a direct impact on rates of heart and respiratory disease and resulting premature deaths,” was that a standard no higher than 70 ppb was needed. The agency calculated that a standard of 65 ppb “would avoid 3,000 to 9,200 deaths annually,” two to three times more than a 75 ppb standard. The difference is that George W. Bush is no longer the decider.

The senators also claim that the previous smog standards harmed the economy:

We note that many states are only recently coming into attainment with the 1997, 0.084 ppm ozone standard. Attaining that standard required costly mandates on businesses, which greatly restricted the ability of local communities to grow their economies. . .

While we believe we can and should continue to improve our environment, we have become increasingly concerned that the Agency’s environmental policies are being advanced to the detriment of the people they are intended to protect. That is, these policies are impacting our standard of living by drastically increasing energy costs and decreasing the ability of our states to create jobs, foster entrepreneurship, and give manufacturers the ability to compete in the global marketplace.

The claim that attainment with the 1997 standard “greatly restricted the ability of local communities to grow their economies” is without evidence. In fact, the only noticeable effect of the 1997 standards on the economy was to dramatically cut the regulated pollution, making millions of children healthier, even as the economy steadily grew, as this EPA chart shows:

GDP vs emissions

Finally, the senators claim — again without evidence — that “non-attainment” penalties under the Clean Air Act “undermine the economic viability of communities within our states.” In fact, “there is no clear evidence that non-attainment designations or progress in addressing air quality prevent areas from growing,” EPA officials informed the Wonk Room. Areas such as Atlanta, Dallas-Fort Worth and many others have been non-attainment for years and have had very strong growth rates. The EPA tells the Wonk Room:

We see no significant differences in the trend of employment, wages and number of establishments between attainment and non-attainment areas.

There is clear evidence, however, that this effort to ensure that more children have asthma attacks comes on behalf of coal and oil corporations in the senators’ states. Peabody Energy, the “world’s leading coal company,” is based in Missouri and has mines in Indiana, and is a top campaign contributor to McCaskill, Bond, Lugar and Bayh. Murray Energy, the “largest privately owned coal company in America,” is based in Voinovich‘s state. Landrieu and Vitter have collected a combined $1.5 million from the pollution industry, whose refineries and power plants keep killing children and keep sending these senators back to Washington.

Economy

Bayh: Eric Cantor Is ‘Exactly Right’ That Bush Tax Cuts For The Wealthy Should Be Extended

Even before taking office, President Obama made it clear that he intended to extend the Bush tax cuts for the lower- and middle-class, while allowing them to expire on schedule for the richest Americans in 2011. Conservatives, however, have been apoplectic about this decision, arguing for making all the tax cuts permanent “right now,” and fearmongering about the effect the expiration will have on small businesses.

Today, Rep. Eric Cantor (R-VA) appeared on CNBC to make his case for extending all the tax cuts. “We’re all about trying to keep the current law as it is and not allow this administration to raise these taxes,” because of a desire to “commit ourselves to help small business,” Cantor said.

Most Democrats are on board with the President’s plan to allow the cuts to expire for the richest Americans. “President Obama has indicated that he wants to extend those tax cuts for those with $250,000 in income and below,” said Sen. Byron Dorgan (D-ND). “So I think Congress will work very hard to get that done.” Sen. Evan Bayh (D-IN), however, said that Cantor’s position is “exactly right”:

We don’t need to raise taxes now. Eric is exactly right. If we’re going to deal with those things, we ought to wait until the economy has a full head of steam going, jobs are being created, several hundred thousand a month, then you can deal with some of the long-term issues. That ought to start with spending restraint, then we can deal with some of the long-term issues. We don’t need added uncertainty, added burdens on business right now.

Watch it:

Sen. Judd Gregg (R-NH), not surprisingly, jumped on board, saying “if you want to do something to stimulate the economy, you could make it clear that tax rates aren’t going to go up at the end of the year.”

First, this trio is hiding behind small businesses to argue for extending tax cuts for the richest segment of the population. Fewer than 2 percent of the small businesses in the country face either of the top two tax brackets, while 34 percent are in the lowest tax bracket and 14 percent actually qualify for the Earned Income Tax Credit, which is available to low-income working people.

So Bayh is joining Cantor and Gregg in going to bat for the richest two percent of the country at a time when income inequality is the worst its been since the 1920′s. According to the latest data, “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007.” The top 1 percent of families now receive nearly 25 percent of the country’s income, after earning less than 10 percent in the 1970s.

This year alone, the Bush tax cuts will give millionaire’s more in tax breaks than 90 percent of American households make in total income. That’s the conservative agenda to which Bayh is giving his explicit approval.

Economy

Why Would Democrats Water Down Investor Protections In The Financial Reform Bill?

As I’ve pointed out before, one of the lower-profile issues included in the financial reform legislation that is currently being reconciled in conference committee is corporate governance reform, which is an attempt to rein in some of the perverse corporate incentives that contributed to the financial meltdown. This is an important thing to do, as just this week the Federal Reserve announced findings that the structure of pay packages on Wall Street still incentivizes too much risk.

One of the key problems in our current corporate governance system is shareholders (who are the owners of a company) can’t get their own candidates onto the ballot for election to a company’s board of directors. Currently, during an board election, a company sends out a “proxy” (ballot) with its preferred slate of candidates and bills the cost to the company, while “dissenting shareholders [must] pay up for mailing and publicity costs, sometimes in the millions of dollars,” to send out their own, separate ballot.

A provision that would have guaranteed investors “proxy access” was included in the House version of financial reform. The Senate, however, changed the provision to limit proxy access to investors holding 5 percent of a company’s shares. The Street’s Eric Jackson has a theory as to what happened:

Why did the Senate — unprovoked by the House — decide to insert this change into its own legislation? Sources have told me that both Senators Bayh and Mark Warner insisted on this new language after strong lobbying from the Business Roundtable. Apparently, both men threatened Sen. Dodd that they would vote against the financial reform bill without this new language, which would block cloture on the bill and slow down its passing.

According to the Huffington Post, the White House also lobbied for the higher threshold.

The problem, though, is that most investors don’t come anywhere close to owning 5 percent of a company. “We’re just horrified that the Senate would try to weaken language that was similar in both bills. To set such a high threshold makes the reform totally unworkable,” said Ann Yerger of the Council of Institutional Investors. As Ryan Grim pointed out, “the biggest pension funds are more likely to hit the half-percent threshold in rare cases.”

Former SEC chairman Arthur Levitt penned an op-ed in the Wall Street Journal today calling the Senate’s version of the provision “comically useless.” “The bill, already weakened by deal-making as it emerged from the Senate, has been bled dry of nearly every meaningful protection of investors,” he wrote.

Studies have shown that both total returns and share performance are better for companies with an investor presence on their board, which makes sense, as investors have a vested interest in the entire company’s performance, not just lining the pockets of executives. It doesn’t make sense for the Senate to water down what the House has done.

Politics

Bayh tries to walk back inaccurate claim about Congress not creating jobs, but still gets it wrong.

bayhAfter announcing his retirement last week, Sen. Evan Bayh (D-IN) mused about his future employment to CBS News, saying “if I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months.” Bayh’s comment about job creation has irked some of his Democratic colleagues. “I’ve got material on my desk that shows the jobs that have been created in Louisiana,” Sen. Mary Landrieu (D-LA) told Politico. “I don’t think that’s true; in fact, I know it’s not true.” In an interview with Politico, Bayh attempted to backtrack a little bit, though he maintained that his statement was “probably largely true” if limited to the past six months:

Bayh walked back his statement in an interview with POLITICO Tuesday, saying it was “hyperbole” and he “wouldn’t say it again.” Still, he said, the statement was “probably largely true” if limited to the past six months — even if what he really meant was “that we’re not doing enough.”

But Bayh’s new claim is discordant with the fact that the stimulus passed by Congress in Feb. 2009 has been creating jobs in the past six months. Yesterday, the Congressional Budget Office reported that the Recovery Act “added between 1.0 million and 2.1 million to the number of workers employed in the United States” in the fourth quarter of last year, which ranges from Oct. 2009 to Dec. 2009.

Yglesias

Bayh’s Filibuster Reform Proposals

Evan Bayh

Evan Bayh, on his way out the door, has a variety of ideas for making the Senate work better. Most interesting are his filibuster proposals:

[F]ilibusters should require 35 senators to sign a public petition and make a commitment to continually debate an issue in reality, not just in theory. Those who obstruct the Senate should pay a price in public notoriety and physical exhaustion. That would lead to a significant decline in frivolous filibusters.

Filibusters should also be limited to no more than one for any piece of legislation. Currently, the decision to begin debate on a bill can be filibustered, followed by another filibuster on each amendment, followed by yet another filibuster before a final vote. This leads to multiple legislative delays and effectively grinds the Senate to a halt.

What’s more, the number of votes needed to overcome a filibuster should be reduced to 55 from 60.

The middle paragraph highlights a point that I think doesn’t get enough attention—the amount of time-consuming delay that a minority smaller than 40 can create under the current rules. As for the rest, these are good ideas but I would prefer instead an alternative in use in the Maryland State Senate, the Assemblé National of France, the Virginia House of Delegates, the United Nations General Assembly, and the US House of Representatives where you count the “yes” votes and you count the “no” votes and the side with more votes wins. It’s a pretty good decision-procedure! Especially for a system that has a number of other veto points.

But it’s good to see Bayh taking these issues up. I wish he would stay in the Senate and fight for his ideas as tenaciously as he’s fought for lower taxes on the children of multi-millionaires.

Politics

Bayh: ‘I Think The Filibuster Absolutely Needs To Be Changed’

A major reason for the frustrating gridlock in the Senate is that it now takes a supermajority — 60 votes — to pass just about anything. In this session of Congress alone, Republicans threatened to filibuster at least 100 pieces of legislation, “far more than any other since the procedural tactic was invented.” Sen. Tom Harkin (D-IA) has proposed legislation that would gradually lower the number of votes the Senate majority would need to block filibusters, and Rep. Alan Grayson (D-FL) also has a petition to reduce the Senate’s cloture threshold to 55 senators.

This morning, Sen. Chris Dodd (D-CT) told MSNBC that he is “totally opposed to the idea of changing the filibuster rules.” “I think that’s foolish in my view,” he added. Senate Majority Leader Harry Reid (D-NV) has also been lukewarm on the idea, saying that he doesn’t think there are enough votes to change the rules.

However, this afternoon on MSNBC, departing Sen. Evan Bayh (D-IN) disagreed with his two colleagues, saying that filibuster reform is absolutely necessary:

MITCHELL: Do you think the filibuster can be changed? Could that happen now while you are still in the Senate?

BAYH: I think it can happen, Andrea. … I think this is something we need to do. Perhaps looking at changing the threshold once again down to 55. Perhaps saying things like administration appointees other than the various highest ones should not be subject to the filibuster, because it just brought the process to a halt and the public is suffering. … The public has a right to see its business done and not routinely allow a small minority to keep us from addressing the great issues that face this country. I think the filibuster absolutely needs to be changed.

Watch it:

As Bayh also pointed out, changing the filibuster is not without precedent. During the civil rights debates that his father, senator Birch Bayh, participated in, the filibuster “was being used to frustrate some basic fundamental equities in this country.” In 1975, the threshold then “reduced the number of votes required for cloture from two-thirds to three-fifths.”

Senate Majority Whip Dick Durbin (D-IL) is “actively” supporting filibuster reform and is reportedly “in talks with a number of other Democratic senators regarding possible changes to Senate rules.” Vice President Biden, formerly a veteran senator, also expressed frustration with the current situation in a recent interview with CBS News, saying, “I don’t ever recall a time in my career where to get anything done, you needed a supermajority, 60 out of 100 senators. You can block anything with 60 (votes). I’ve never seen it this dysfunctional.”

Update

David Dayen talks about why Bayh’s statement is significant.

Yglesias

Lane on Bayh

I have several more months in which to kick him around.

I have several more months in which to kick him around.

Here’s an obviously admiring Charles Lane on Evan Bayh’s decision:

Quitting the Senate was a no-lose move for the presidentially ambitious Bayh, since he can now crawl away from the political wreckage for a couple of years, plausibly alleging that he tried to steer the party in a different direction — and then be perfectly positioned to mount a centrist primary challenge to Obama in 2012, depending on circumstances.

There will be those Democrats who bid good riddance to Bayh and his coal-burning-state apostasy about cap and trade, etc. If so, they won’t need a very big tent to contain the celebration. On a more pragmatic view, Bayh’s dramatic vote of no-confidence in his own party’s leadership looks like another Massachusetts-sized political earthquake for the Democrats. Not only does it imperil the president’s short-term hopes of passing health care and other major legislation this year. It also makes it much more likely that the Republicans can pick up Bayh’s Senate seat in normally red Indiana and, with it, control of the Senate itself. If present trends continue, November could turn into a Republican rout.

The noteworthy thing here is that Lane, who seems to like Bayh and not see him as a selfish, immoral grandstander basically sees Bayh as a selfish, immoral grandstander. This is a move that, according to Lane, was undertaken not because Bayh believed it would improve the welfare of the people of the United States or of the world, but because it was “no-lose” from the selfish point of view of Evan Bayh. I think that kind of cynicism about the motivates of politicians is often warranted, but I don’t think it’s something that should be so blithely accepted in our public discourse. If a politician admitted on television “I’m running for office out of a lust for fame and power” that politician would be in big political trouble. When politicians undertake major actions for what appear to be selfish reasons, political observers should dwell a bit on the morally troubling nature of the conduct and not just congratulate the politicians on their savvy.

Politics

Sen. Evan Bayh (D-IN) to retire.

Evan Bayh Media outlets are reporting that conservative Sen. Evan Bayh (D-IN) has decided against running for a third term this year, a move that comes “as a surprise to Democrats in his state who had already started working on his campaign.” In prepared remarks that he will give at a 2 p.m. press conference today, Bayh cites his frustration with the stalemate in Congress:

“Two weeks ago, the Senate voted down a bipartisan commission to deal with one of the greatest threats facing our nation: our exploding deficits and debt. The measure would have passed, but seven members who had endorsed the idea instead voted ‘no’ for short-term political reasons,” he said. “Just last week, a major piece of legislation to create jobs — the public’s top priority — fell apart amid complaints from both the left and right. All of this and much more has led me to believe that there are better ways to serve my fellow citizens, my beloved state and our nation than continued service in Congress.

Sam Stein notes that Bayh’s replacement will have to “move remarkably fast in order to get his name on the ballot. The deadline to file is this Friday but candidates have to have 500 valid signatures from citizens in Indiana’s nine Congressional Districts to properly certify his or her candidacy.”

Update

Bayh reportedly didn’t call Senate Majority Leader Harry Reid (D-NV) about his retirement until after the media broke the news.


Update

,Obama’s statement on Bayh’s retirement: “For more than two decades, Evan Bayh has devoted his career and his life to serving his fellow Hoosiers. During that time, he has fought tirelessly for Indiana’s working families, reaching across the aisle on issues ranging from job creation and economic growth to fiscal responsibility and national security. I look forward to continuing to work with him on these critical challenges throughout the rest of the year. Michelle and I thank Senator Bayh for his leadership and service and wish him and his family all the best in their future endeavors.”


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Politics

Deficit Peacock Evan Bayh Hits ‘Far Left-Wing Blogs’ For Criticizing Obama’s Spending Freeze As Too ‘Austere’

Sen. Evan Bayh (D-IN), appearing on Fox News Sunday, attacked “far left-wing blogs” for criticizing President Obama’s proposed non-security discretionary spending freeze. Bayh burnished his anti-spending credentials by noting his opposition to recent omnibus spending bills, although he supported the much larger American Reinvestment and Recovery Act, and has repeatedly promoted the federal spending for creating thousands of jobs in his state. Speaking to Fox’s Chris Wallace, Bayh sided with Rep. Paul Ryan (R-WI), the ranking Republican on the House Budget Committee, and an advocate of draconian spending cuts during the recession:

If you look, I suspect Paul does not, but if you look at the far left-wing blogs and that kind of thing they’re severely criticizing the president for being too fiscally austere. My own take on this, Paul is right. Domestic discretionary spending increased last year. I voted against the omnibus, I voted against the “minibus” and that’s last year. the question is where do we go now? The freeze is important. He identified $20 billion if you aggregate over the next ten years is $250 billion less spending. Does it solve all our problems? No. But it’s a step in the right direction.

Watch it:

Bayh is a “deficit peacock” — someone who likes to harp on deficits, while at the same time voting for budget-busting expenditures like a $250 billion tax cut for the heirs of wealthy families. Despite Bayh’s preening, “far left-wing” blogs haven’t been the only critics of Obama’s freeze. Additionally, part of why progressives are criticizing Obama about is not that the spending freeze is too “austere,” but that it doesn’t go after defense spending. As Center for American Progress Senior Fellow Lawrence Korb has argued, “If President Obama is serious about controlling spending, he can’t exempt the Pentagon.” And House Speaker Nancy Pelosi (D-CA) concurs, telling reporters that the entire defense budget “should not be exempted” from the freeze.

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