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“Return Of The Do-Nothing Republican Congress”: The Lunatic Caucus Will Still Run The Show In 2016

Matt Yglesias has written an article that probably won’t be embraced by the partisans on the far left or the far right. It’s titled: 2015 Was the Year Congress Started Working Again. He begins by listing their accomplishments and adds some commentary.

Among some of the things Congress accomplished: The main federal statute governing K-12 education got an overhaul. So did the federal disability insurance system. A long-running dispute about federal highway funding got resolved, as did a long-running dispute about Medicare payments. Last but by no means least, December saw a whole bunch of tax changes featuring good news for low-wage workers and a broad set of business interests. Congress even passed a law to ban microbeads in bath products to help protect the nation’s fisheries.

These aren’t all good bills, and almost none of them are what anyone would consider a great bill, but in a way that’s the point. Legislation passed in 2015 because congressional leaders went back to doing what congressional leaders are supposed to do in times of divided government: compromise to pass bills that don’t thrill anyone but do make both sides happier than they would be in the absence of a bill.

We all know that people like Sen. Ted Cruz aren’t happy about any of this. There are plenty of people on the left who aren’t thrilled either. But as Yglesias points out – it is a clear improvement over the government-by-crisis dynamic we saw previously.

Unlike Yglesias though, I don’t see the productivity resulting from the fact that President Obama is now a lame duck or that Congressional leaders don’t have much of a stake in any of the Republican presidential contenders.

What those explanations miss is that in 2015, Republicans took control of both Houses of Congress. Simply obstructing Democrats was no longer a viable strategy. Initially they eschewed government-by-crisis in favor of passing bills that would force President Obama to use his veto pen. That strategy started to fall apart almost immediately when the lunatic caucus wanted to shut down the Department of Homeland Security over the President’s immigration executive orders.

All of the compromises Yglesias listed happened when the Republican leadership abandoned the lunatic caucus and sought ways to work with the Democrats. And that, my friends, is precisely why John Boehner is no longer Speaker of the House. The lunatic caucus rebelled.

So what is the new Speaker to do? Here’s what Siobhan Hughes reports:

House Speaker Paul Ryan starting this month will push to turn the chamber into a platform for ambitious Republican policy ideas, in a bid to help shape his unsettled party’s priorities and inject substance into a presidential race heavy on personality politics.

Right out of the gate for the new year comes this:

It looks to me like Speaker Ryan is going to once again try to herd the cats of the lunatic caucus in an attempt to rack up symbolic votes that will be stopped by a presidential veto (if not in the Senate first). One has to wonder how that will fly with the angry/fearful right. Meanwhile, the rest of us will be stuck with a do-nothing Congress once again.

 

By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, January 4, 2015

January 5, 2016 Posted by | Do Nothing Congress, GOP Presidential Candidates, Omnibus Spending Bill | , , , , , , , , | 1 Comment

“Republicans’ Little Act’s Of Vandalism”: The Secret Swipe At Obamacare — And You

Underscoring how much mischief can result when Congress acts in haste and in secret, hidden away in the year-end omnibus spending bill being acted on this week is an attack on a key provision of the Affordable Care Act long targeted by the GOP.

The provision involves risk corridors, which are designed to stabilize insurance premiums in the first few years of the law. The year-end spending bill quietly erodes funding for the provision.

Republicans have chosen to label the provision a “bailout” for insurance companies. I’ve labeled that position the most cynical attack on Obamacare, because those who advance it — notably Sen. Marco Rubio (R-FL) — obviously know it’s a lie. They know it’s actually a consumer protection feature, so calling it “corporate welfare,” as Timothy P. Carney did this week in the Washington Examiner, is a neat bit of disinformation. Adding to the cynicism, the same provision is an essential part of Medicare Part D, which the GOP enacted in 2003.

Here’s another sick irony: One of the raps on the risk corridor provision is that it was “buried deep” in administration explanations of the bill, as Rubio put it. But in fact, the ACA was extensively debated and available for scrutiny by any legislator who chose. The attack on the provision, however, actually is “buried deep” in the year-end spending bill: it’s on page 892 of the 1,603-page bill, which has barely been debated at all.

Let’s see how risk corridors work, and how they’re undermined by the spending bill.

It was well understood that health insurers would have difficulty pricing their plans in the individual market in the first years of the ACA, starting in 2014. Not only would some insurers be entering that market in volume for the first time, but the market itself would be dramatically altered by the flood of new customers and such ACA rules as the prohibition on exclusions for pre-existing conditions. Some insurers will end up setting their premiums too low, and therefore will have to pay out benefits higher than they expected; others will set their rates too high, and will capture a windfall.

Without a safety valve, these miscalculations could have an impact on premiums the following year, as insurers tried to adjust. So insurers that set prices more than 3 percent below a set target get a reimbursement from the government, and those that overprice by the same margin have to pay some of the windfall to the government. Importantly, the arrangement is temporary: it expires after 2016, by which time it’s assumed that insurers will know what they’re doing.

Obviously, this isn’t a “bailout,” since it protects underpricing insurers only on the margins, while also providing a check on profiteering. The Congressional Budget Office, moreover, has projected that over time, the risk-corridor program will produce an $8-billion profit for the government, because overpricing insurers will be paying back more than underpricing insurers collect.

Some smart conservatives acknowledge that risk corridors are a good idea. As Yevgeniy Feyman of the Manhattan Institute informed Forbes readers in January, “Any conservative reform plan for universal coverage will have to use similar methods of risk adjustment. … If you want insurers to participate more broadly in the individual market, you’ll need to offer a carrot to offset the unavoidable uncertainties.”

Nevertheless, Congressional Republicans couldn’t resist taking a swipe at this little-understood provision in the ACA, and Democrats weren’t sufficiently attentive, or caring, to call them out on it. The year-end spending bill forbids the Dept. of Health and Human Services to use any outside government funds to pay out adjustments to insurers. On the face of it, the government can only use surplus coming in from overcharging insurers for that purpose. (That’s the interpretation healthcare expert Tim Jost gives to Dylan Scott of Talking Points Memo.)

For the moment, that makes the provision little more than a symbolic swipe at Obamacare. But that could change, and the CBO projections could be wrong. In that event, the Republicans’ little act of vandalism could end up costing ordinary citizens money. Nice work, GOP. Extra points for pulling it off in the dark.

 

By: Michael Hiltzik, The Los Angeles Times (TNS); The National Memo, December 16, 2014

December 17, 2014 Posted by | Affordable Care Act, Obamacare, Omnibus Spending Bill | , , , , , , , | Leave a comment

“A Crash Course In Congressional Mischief”: Voters Have An Entirely New Reason To Scorn Congress

After years of excoriating Congress for not legislating, Americans got a crash course Tuesday night about the mischief that can transpire when Congress actually fulfills its duties.

With both parties (for a change) committed to passing a spending bill by Thursday to avoid a government shutdown, the comprehensive legislation became a lobbyist’s delight. These omnibus last-minute bills traditionally pass Congress with virtually no debate. And since Barack Obama would never veto legislation to fund the government over minor provisions, anything small snuck into the bill is as good as inscribed into law.

Which brings us to the gem that Matea Gold of the Washington Post discovered on Page 1,599 of the 1,603-page bill. The provision — inserted in the legislation by persons unknown — would suddenly allow a married couple to give as much as $1.56 million to their political party and its committees in a two-year election cycle.

No, that isn’t a typo. Without resorting to Super PACs or taking advantage of a new loophole from the Supreme Court, couples or individuals could give roughly eight times more to their party in 2015 than they could in 2014. As election law expert Kenneth Gross told the Washington Post, “The cost of an ambassadorship just went up.”

Technically, this new giving can only go to three designated areas — convention costs, recount expenses and building funds. But while nothing is certain until regulations are written, it is a safe bet that these categories are likely to be porous. Hypothetically, funds for a new addition to the Democratic National Committee that houses the computers that contain the party’s voter files might also be used to update these registration lists. If nothing else, the parties would no longer have to take money from their general operating funds to pay for these activities.

A case can be made for strengthening the political parties in a Super PAC era. If the parties were too financially powerful in the 1990s when they were the only conduits for unregulated “soft money” contributions, now they are suffering from, in effect, being mere millionaires in a billionaire age. This is especially true as Super PACs are beginning to take on many of the traditional functions of parties like candidate recruitment, voter contact and polling.

It is worth recalling that parties are a force for responsibility and moderation in politics — since their ultimate goal is winning elections rather than enforcing an ideological agenda. Also, as ongoing organizations, the Republican and Democratic National Committees will still be around when the enthusiasms of the current generation of Super PAC donors wane or turn to art collecting and buying sports teams.

As a result, there could have been a robust public debate over the best way to fund political parties in this new electoral environment. Both Republican and Democratic party leaders — as well as the candidates themselves — should come to realize that they are the big losers when the mega-rich dominate campaigns through Super PACs.

It would have been possible to imagine bipartisan legislation in the next few years that would have traded increased legal contribution limits for enhanced disclosure of Super PAC and “dark money” spending. Or even swapped more generous giving for a functioning Federal Election Commission.

Instead Congress in its infinite wisdom decided that “dark money” legislating was a wiser solution. And blaming this one exclusively on the Republicans is probably not true, especially since the Democratic Senate Campaign Committee is currently $20 million in debt.

The result is that the McCain-Feingold legislation, signed with such high hopes 12 years ago, is now as outmoded as Morse Code. And voters (or, at least, that small remnant who still care) have an entirely new reason to scorn Congress. Quite an accomplishment for a group of stealth middle-of-the-night legislators.

 

By: Walter Shapiro, Brennan Center For Justice, December 10, 2014

December 15, 2014 Posted by | Campaign Financing, Congress, Omnibus Spending Bill | , , , , , , , , | Leave a comment

“Risky Business”: Brinksmanship And The Return Of Financial Crisis

A government shutdown once again loomed, and familiar deadlines and ultimatums flew around Washington. And Congress just used the threat to loosen the rules created in the wake of the financial crisis, a victory for Wall Street banks in their constant and well-funded campaign against reform.

The rules they have targeted are designed to reduce the risk of another financial meltdown, like the one that drove us into the Great Recession and could have been much worse. Though the repeal has been styled by some as a technical amendment, nothing could be farther from the truth.

Think about the best way to decide legislative policy in the devilishly complex and risk-laden area of derivatives. These are the financial contracts that brought down AIG, the event that triggered the crisis. You might imagine careful deliberation and debate, leading to a thoughtful vote in Congress in which elected representatives must stand up and be counted so that they could be held responsible for a difficult decision.

Of course, that is not how the House of Representatives works, especially not the current lame duck version. A 1,600 page Omnibus Spending Bill appeared Tuesday night and passed the House late on Thursday night. We have become familiar with these spending bills that have replaced reasoned budgeting and serially risk shutdowns just so the administration can be bullied every few months.

This time around, House sponsors attached a provision amending the Dodd-Frank financial reform law. They did this in the dead of night and at the last minute. Lobbyists, who are paid to make certain that the banks can continue to do as much risky business as possible despite the new regulatory regime, pushed to have a provision repealing the “swaps push-out” section of Dodd-Frank slipped into the spending bill so that any resistance to the repeal would risk another shutdown. Citigroup lobbyists wrote 70 out of 85 lines of the original bill.

That’s Washington style representative democracy for you.

The swaps push-out provision requires banks to transact their swaps business in separate subsidiaries. The concept is that any bank swaps business should be done outside the bank itself, which is backed by FDIC deposit insurance and the many supports provided by the Federal Reserve.

Swaps are complex derivatives contracts requiring payments in the future that change as markets prices for stocks, bonds, oil and many other traded assets change. Thus, they create large and volatile financial obligations going back and forth between a bank and its contract “counterparty,” either a company (like AIG), a government or another bank.

Counterparties to the banks who rely on the banks’ performance of its obligations can rely on these federal supports and can assume that the government will step in if a problem occurs. This can embroil the government in any bank default making a bailout more likely, good news for bank creditors like the swap counterparties. To avoid this, the swaps push-out requires a separate corporation, not entitled to the federal supports, to create a firewall, insulating taxpayers from the riskiest trading.

Though swaps were regulated in Dodd-Frank, there were plenty of loopholes, so a great deal of that business will go forward just as before. The swaps push-out section now under threat was already watered down in the original Dodd-Frank deliberations. Nonetheless, it still provides important protection. With swaps push-out, there’s some possibility that the federal government wouldn’t be dragged into a bank default because of the bank safety net.

But members of Congress, urged on by big money from Wall Street, decided that this sensible buffer between casino-like derivatives trading and the American taxpayer was such a bad idea that it had to be discarded through surreptitious and disguised means.

The banks have been out to kill the swaps push-out from the beginning. That makes sense for them since the capital needed to back a subsidiary would cost them more than their basic capital. Banks can raise general capital cheaply since investors have learned that failure is not a concern for banks that are too-big-to-fail. Capital funding for a subsidiary that is separated from this safety net is more costly because a bail out is less likely.

The banks also got some of their customers who often enter into swaps with the banks to urge repeal. The customers complained that their swaps would cost more. Of course they would, since the bank subsidiary’s capital backing the swaps would cost more. But the customers, as contract counterparties, have been relying on the too-big-to-fail safety net. Like investors in the banks, these customers simply should not benefit from a pipeline to the American taxpayers. Any additional cost is an element of elimination of that benefit, nothing more.

In Washington, banks have been allowed to set the terms of the regulatory debate. The financial crisis provides many lessons, but one of its central was that allowing banks free reign leads to disastrous results for all Americans. Six years after the onset of the financial crisis, it’s too soon to forget that lesson and revive too-big-to-fail.

 

By: Wallace Turbeville, The American Prospect, December 12, 2014

December 14, 2014 Posted by | Big Banks, Congress, Omnibus Spending Bill | , , , , , , , | Leave a comment

“The ‘Cromnibus’ Isn’t Without An Upside”: Funding Certainty And A Better Deal Than Could Be Extracted In Next Congress

The so-called Cromnibus is an ugly piece of work. On balance, I’m glad — no, make that relieved — it passed the House.

The Cromnibus is the giant $1.1 trillion spending bill that will keep the government functioning — no, make that open — through the end of the fiscal year in September.

The nickname stems from its dual function as “continuing resolution” and “omnibus” spending bill, but I like the term for its echoes of cronut, the calorie-laden combination of croissant and doughnut. Like the cronut, the Cromnibus is stuffed with some things that aren’t necessarily good for you.

Such as a toxic change in the campaign finance laws that helps usher back the bad old days of multimillion-dollar “soft money” donations to national political parties from wealthy individuals.

Without notice, without the legislative fig leaf of debate, the Cromnibus raised the limit tenfold for individual donations to the national party committees.

With the change, an individual could contribute $1.5 million during a two-year election cycle. A married couple — call them Mr. and Mrs. Plutocrat — could contribute $3 million. That’s enough money to get the Republicans’, or Democrats’, attention. This is bipartisanship in the service of self-interest.

There is a reasonable argument against tight caps on giving to political parties in the aftermath of the Citizens United decision and other developments that enhanced the power of super PACs and even less-transparent outside groups. With the cacophony of outside voices, the parties lose control of their message and their candidates, and the voters lose the ability to know what interests are financing the elections. The playing field could use some leveling.

Yes, but there remains a difference between the corrupting influence of money that flows straight to political parties and money that goes to outside groups. There was a reason Congress, just a dozen years ago, banned unlimited soft money donations from wealthy individuals, corporations and labor unions.

With this move, what comes next? And by what undemocratic, last-minute sleight of hand?

A similar case could be made against the stealth dismantling of part of the Dodd-Frank financial reform law, passed in the aftermath of the 2008 economic collapse. As the White House said in not threatening to veto the spending bill, the Citigroup-authored change would “weaken a critical component of financial system reform aimed at reducing taxpayer risk.”

That provision, known as Section 716, required banks and other institutions to move certain risky financial instruments into separate entities in order to limit the exposure of the Federal Deposit Insurance Corp. and Federal Reserve — i.e., taxpayers — from having to bail the financial institutions out if the deals should go south. Banks remained able to trade in nearly all derivatives, just not the more exotic ones.

Again, there are some reasonable arguments for undoing the remaining restriction. The change doesn’t unravel Dodd-Frank’s regulation of derivative instruments. Section 716 was controversial from the start, with some bank regulators arguing it would increase systemic risk, not reduce it. The impact of the change is debatable; after all, according to FDIC Vice Chairman Tom Hoenig, who opposes undoing the provision, it would not affect 95 percent of derivatives.

Of course, changes like these should be made in the ordinary course of legislative business, not stuffed into a Cromnibus. So why would I express relief about the Cromnibus’s passage?

Because, to some extent, my reference to the ordinary course of legislative business is civics textbook hooey. In practice, it has long been true that special-interest goodies are tucked into must-pass bills. Real-world legislating requires a horrific amount of nose-holding.

The reason is simple: The imperative for horse-trading and compromising is an immutable fact of political life. And so the question, for lawmakers and the Obama administration, is not whether the measure is perfect — it’s whether the trade-offs are acceptable. This is a judgment call; reasonable people, even reasonable Democrats, can differ.

In the case of the Cromnibus, the upside is a year of funding certainty and a better deal than could be extracted in the next Congress. Democrats avoid being blamed for causing a shutdown but, post-floor fight, reap the benefit of having fired a shot across the bow of Republicans and the White House as their caucus revolted.

House Minority Leader Nancy Pelosi had a legitimate point in contending that House Democrats were being “blackmailed” to vote for the spending bill. Still, there is something worse than legislative sausage-making in Washington. That is the inability to produce any sausage at all.

 

By: Ruth Marcus, Columnist, The Washington Post, December 12, 2014

December 13, 2014 Posted by | Bipartisanship, Campaign Financing, Omnibus Spending Bill | , , , , , , , | Leave a comment

   

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