George Zornick | The Nation

George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

GOP Begins Throwing Up Roadblocks to the EPA Nominee

Gina McCarthy, Barack Obama’s nominee to head the EPA. (AP Photo/Alex Brandon)

Well, that didn’t take long: A Republican Senator has already placed a “hold” on the nomination of Gina McCarthy to head the Environmental Protection Agency. Senator Roy Blunt of Missouri announced the move Monday, and cited delays in EPA approval of the St. John’s Bayou and New Madrid Floodway Project in the southeast part of his state.

This is more bluster than anything else—holds are simply a notice of intent to filibuster, and Majority Leader Harry Reid is free to ignore them. McCarthy hasn’t even had a hearing before the Environment and Public Works Committee in the Senate, much less received a committee vote, so Blunt is really jumping the gun here.

But his is the opening salvo in what’s sure to be a long war. Republicans detest the EPA—remember, in the 2011 primary debates six Republican presidential candidates called for either a moratorium on all EPA regulations or an outright elimination of the agency—and Blunt’s hold is a variant on their standard attack. In right-wing mythology, the EPA is an out-of-control bureaucracy that’s either wildly incompetent or specifically designed to suffocate private enterprise in order to please radical environmental groups.

The thinness of these attacks is evident when one examines the record of Obama’s EPA. From yanking planned smog rules to repeatedly delaying greenhouse gas emission rules, the agency has been if anything too sluggish and cautious. This, of course, is the Republican game: By painting a relatively moribund federal agency as out-of-control, they help redefine the Beltway debate.

Blunt’s objection here is a good case study. The St. John’s Bayou–New Madrid floodway project is so objectionable that if the EPA didn’t stop it, it would stop nothing. It’s a project that is so bad that in 2007 a federal judge not only ordered it stopped, but ordered the Army Corps of Engineers to dismantle the $7 million of work it had already done.

Michaela Grunwald of Time magazine is the guru of myth-busting this particular project, having wrote about it extensively in 2000 and 2007 as an poster child for wasteful Army Corps of Engineers projects designed more to please Congressional big-shots than to actually improve infrastructure. “In the pantheon of dumb Army Corps of Engineers boondoggles, a $112 million flood-control scheme in Missouri’s southeast boot heel ranks among the dumbest,” Grunwald wrote.

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In short, there is a vast flood plain in this region of Missouri, where the Mississippi River stops and creates wetlands larger than the District of Columbia. The proposed project would wall off the Mississippi from this flood plain—the last surviving one if it’s kind—ostensibly to protect the downstream community of East Prairie.

There are just a few problems: one, as Grunwald reported, a Corps official has admitted under oath that building a levy around East Prairie would be more effective and cost one-tenth as much. Two, there would be huge environmental consequences: the wetlands are a haven for millions of fish, birds, and other animals that would be devastated if the area was drained.

Even the Army Corp’s top lobbyist, in private e-mails, called the project “an economic dud with huge environmental consequences,” and was angered he was being tasked to push for such “swine.” The reason members of the Missouri Congressional delegation are pushing so hard for it, Grunwald surmises, is that a small number of very wealthy and powerful farmers would benefit from having the land drained so they could use it for crops.

A federal judge halted a previous iteration of the project, and ordered that all the work done on it to that point be demolished. But the project persists, with some tweaking, and the EPA is supposed to be evaluating the new plan. The agency missed a deadline on March 15 to produce another Environmental Impact Statement, thus invoking Blunt’s anger. (Senator Claire McCaskill is also strongly supportive of this project, though she has not placed any holds.)

The EPA should naturally strive to meet deadlines, but taking a project that even its proponents admit privately has “huge environmental consequences” and making it the poster-child for regulatory overreach is audacious, to put it generously. This almost certainly won’t be the primary cudgel the GOP uses against McCarthy, it’s more just Blunt fluffing those farmers back in Missouri—but it channels the basic GOP complaint with the EPA. They would just prefer it not exist.

Read George Zornick on the Congressional Progressive Caucas’s budget proposal, which would increase spending on jobs while decreasing the public deficit.

A Truly Progressive Budget Vision

Keith Ellison, the co-chair of the Congressional Progressive Caucus. (AP Photo/Haraz N. Ghanbari.)

Paul Ryan’s recently released budget will not become law—at least not any time soon. The Democratic Senate would never pass it, President Obama would never sign it. Ryan surely knows this, and his proposal is a fantasy budget: more an ideological argument than genuine attempt at legislating.

That hasn’t stopped widespread media coverage of Ryan’s proposal, and that’s fine: he’s a leading thinker of the conservative movement, with real power. But corresponding attention should also be paid to the opposite ideological vision sketched out by the Congressional Progressive Caucus in the “Back to Work” budget proposal, released on Wednesday.

As the name suggests, the CPC budget puts a priority on job creation—something no current proposal currently does. Ryan’s doesn’t even make an attempt at immediate job creation, but just posits that a decade from now, a smaller national debt will nudge Gross National Product Forward. The Senate Democratic budget has a relatively weak $100 billion infrastructure proposal tucked in amidst $960 billion in budget cuts; that’s nice, but clearly not a priority of their plan.

The “Back to Work” Budget contains a $544 billion increase over current spending on public investments and job creation in the first year, including $75 billion for an infrastructure program, $155 billion for a public works program and aid to distressed communities, $80 billion for hiring teachers and $92 billion for reinstating the Making Work Pay tax credit. It also expands unemployment insurance, sends more money to the states and undoes the sequester cuts.

The CPC estimates this will create $7 million jobs in the first year—and over the next ten years, the budget would spend over $4 trillion more on job creation and public investments.

But this massive spending is offset by a number of crucial revenue measures: The “Back to Work” budget increases taxes on millionaires and billionaires, taxes investments at the same level as wages, closes corporate tax loopholes, enacts both a financial transactions tax and a carbon tax, and introduces both a public option and government negotiating for drug prices to Medicare. In addition, the budget finds savings by cutting Pentagon spending back to 2006 levels.

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In short, they sketch out the opposite vision of Paul Ryan: reduced military spending, robust public investment and a strong safety net.

Moreover, the budget actually reduces public debt over the next ten years compared to both current law and current policy, as this table from the Economic Policy Institute Policy Center Shows:

You can find the full EPI analysis of the budget here and the CPC executive summary of their budget here. It’s certainly a vision that merits broad public discussion. And since it’s the only budget with a sincere focus on getting people back to work, instead of obtuse debates about the long-term federal deficit, it ought to attract some real attention.

Although Barack Obama is ready to negotiate over Chained CPI, senate democrats haver tested him on the benefit-cutting measure, George Zornick writes.

Senate Democrats Press Obama on Chained CPI

Senate Majority Leader Harry Reid. (AP Photo/Susan Walsh.)

President Obama visited Capitol Hill on Tuesday afternoon in an effort to get Senate Democrats on board with his sequester replacement plan, which contains some tough sells for the caucus—particularly on Chained CPI, a new and less generous way to calculate government benefits.

When Senate Democrats proposed their sequester replacement last month, it didn’t have Chained CPI, and many members have openly spoken out against it. Accordingly, Obama was repeatedly pressed on the issue—and appeared to hold firm in his position.

Senator Bernie Sanders described the exchange to The Nation on Tuesday afternoon. “The issue came up. The president raised his concerns about the long-term sustainability of programs like Social Security, and indicated that he believed something like Chained CPI is an effective way—what he considers to be [an effective way], to protect the program,” said Sanders.

On that, Obama got pushback from multiple senators. “Some of us suggested there are other ways to address the problem in terms of the long-term solvency of Social Security, such as doing what he proposed in 2008, which is to lift the cap of taxable income,” said Sanders.

Indeed, Obama’s preferred approach in 2008 was to move the ceiling on FICA taxes, which fund Social Security, to $250,000. (It is currently around $113,000.) He briefly raised this on the campaign trail in 2012 in an appearance before AARP members, but also embraced the general goals of the Simpson-Bowles deficit reduction plan during his acceptance speech at the DNC, and is now calling for Chained CPI.

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After getting pushback, Obama mainly stuck to his position, according to Sanders, though he sense a little bit of daylight. “I think the president, while he continues to voice his support for the Chained CPI, I think he does understand that there are other ways to tackle this problem, and I think he left the door open a little bit to hear other points of view.”

Other press reports indicate that another Senator pressing Obama on Chained CPI was Tom Harkin, who told reporters outside the meeting that Obama was warned “We don’t want to start whacking away at Social Security … or Medicare or things like that, which we have pathways to get out of this one without putting it in some kind of a grand bargain that pulls the rug out from our elderly or our sick, our needy.”

Beyond Social Security, Sanders said he specifically highlighted to the president what Chained CPI would do to veterans. According to the Congressional Budget Office, the new formula would cost a veteran who began receiving benefits at 30 $1,425 at age 45 and $3,231 at age 65.

“I just don’t think that this president should develop a legacy to be the guy who cuts back on benefits for people who lost their arms and legs in Iraq and Afghanistan, or widows who lost their husbands,” said Sanders. “So there was a discussion.”

Meanwhile, Democrats have indicated they'd be willing to lower top tax rates—for something in return, George Zornick writes.

Victory on Bush Tax Cuts Might Not Last Long

Paul Ryan’s budget proposal leaves room for negotiation on tax rates for high earners. (AP Photo/J. Scott Applewhite.)

President Obama started off his second term with a major victory: getting Congress to pass a bill eliminating the Bush tax breaks for individual earners making over $400,000 per year.

This was a progressive goal nearly from the moment the Bush tax plan was passed; John Kerry railed against Bush taxes in 2004, and ending the high-earner tax breaks was a central part of Obama’s 2008 and 2012 presidential campaign. (For obviously good reasons: the Bush rates eased taxes paid on the rich at the expense of middle-class taxpayers, and studies show that when top marginal tax rates are higher, American economic growth tends to be higher.)

But will that victory survive the end of this Congress? It’s quite possible it won’t. The administration, though not eager to make a big public show of it, made it known from the beginning that it would be willing to lower the top rates again during comprehensive tax reform that closed loopholes for the wealthy elsewhere. Treasury Secretary Jack Lew made this explicit before the Senate Finance Committee last month.

Now, the budget plan released today by Senate Democrats indicates for certain that they, too, are on board. As Sam Stein reports:

The budget, unlike Ryan’s, doesn’t close the door on going beyond the fiscal cliff deal either; it calls for the continuation of current tax rates for middle and lower class Americans but does not specify whether current rates should be protected for high-end earners.

A top Senate Democratic aide said that the specifics—including where rates should be set, which loopholes should be closed, and which expenditures should be ended—would be left to the Senate Finance Committee.

This is a clear roadmap to a scenario in which the top marginal rates are once again lowered in exchange for new revenue from closed loopholes and exemptions elsewhere.

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Paul Ryan’s budget map, also released today, might actually complement this approach. Ryan’s budget has two tax brackets, at 10 and 25 percent, but importantly only the 10 percent rate is locked in—the 25 percent bracket is just a “goal.” The cynical reason Ryan did this is that it makes his tax plan impossible to score, but what if it’s also because he’s playing footsie with Democrats on the top marginal rate? In other words, what if Ryan is willing to negotiate the 25 percent bracket upwards?

This is a situation progressives inside and outside Congress will no doubt watch closely. There’s certainly a case to be made that lowering the top rates again is acceptable if, at the same time, many other wealthy tax breaks are ended. Say, for example, if the Buffet Rule is enacted, which limits the deductions the wealthy can take; capital gains and dividends are taxed at an even higher rate than they were under the fiscal cliff deal; the S-corporation loophole is closed; the estate tax is raised and broadened to more wealthy families, and so on.

But Republicans are deeply averse to many of these things, and the congressional sausage factory might grind out a bill that either doesn’t end many of these loopholes or does so in an easily avoidable way—yet, the top rates would still be lowered. This is the danger of rate-lowering tax reform. Progressives can’t bank a victory on tax equity just yet.

Big business has jammed up the fight for paid sick leave at the federal level, but local governments are making progress, George Zornick writes.

The Paid Sick Leave Battle Widens in the States

Sangita Nayak of 9to5 speaks at a petition hand-in, Milwaukee City Hall, June 2008. (Flickr/Dave Moore)

In recent months, more and more cities and states are requiring that employers give paid sick leave to their workers. It’s a broadly popular policy, and a necessary one—one in three American workers has no guarantee of being paid during an illness, including only 25 percent of part-time workers. Aside from creating even more economic vulnerability for workers, this can greatly increase the spread of seasonal flus, which costs businesses $10.4 billion every year, according to the CDC.

Like so many other issues, mandatory paid sick leave has been jammed up in Washington by big-business interests: Obama supported a 2009 Democratic bill in Congress that would have guaranteed workers at least seven paid sick days per year at companies with 15 or more employees. That measure was suffocated by Republicans, and opposed by groups like the National Federation of Independent Business.

So local governments have turned to just passing laws on their own, and made an impressive amount of progress. But a rising tide of conservative pushback legislation might turn the tables on one of the too-rare areas of progressive progress at the state level.

There is already some ground to build on: In 2007, San Francisco began mandating paid sick leave and the District of Columbia adopted a paid sick leave policy in 2008. Seattle began a paid sick leave policy in 2011, and later that year Connecticut passed a measure requiring up to five sick days per year depending on how many hours were worked, making it the first state in the nation to adopt such a policy. Non-union hotel workers in Long Beach, California, won similar benefits via referendum last fall.

Now, the 2013 legislative year has brought the battle to many more major cities. Paid sick leave has become a central issue on the New York City Council, and by extension the looming mayoral race—many liberals see it as a litmus test for council president Christine Quinn. (Gloria Steinem, for example, is withholding her endorsement until she sees what Quinn does.)

Thursday night in Portland, Oregon, the city council scheduled a vote on a paid sick leave policy, and Philadelphia’s city council is holding hearings this week as well. (Philadelphia is trying to expand an existing law paid sick leave law.)

At the state level, Maryland and Massachusetts are both considering bills, as is Vermont (which would also guarantee paid sick leave if a relative or loved one is ill), and Washington State.

As proponents of paid sick leave make headway at the local level, business interests are pushing back—using an interesting strategy of pushing legislation through statehouses that pre-empts any local sick-leave ordinances. In other words, the state-level bills would make it illegal for cities or towns to pass sick-leave bills, and would negate any on the books. (This is a tactic also used by gun-rights legislators; for example, in Colorado, the state legislature barred cities from passing any gun-control measures stricter than existing state law.)

Earlier this month, a Democratic member of the state legislature in Washington and five of his Republican colleagues proposed a bill that would negate Seattle’s paid sick leave law, which passed the city council 8-1. The proposed legislation says:

The state of Washington hereby occupies and pre-empts the entire field regarding paid sick leave and paid safe leave regulation for private employers within the boundaries of the state. Local laws and ordinances that require or regulate paid sick leave or paid safe leave in excess of standards adopted by the state shall not be enacted and are pre-empted and unenforceable, regardless of the nature of the code, charter, or home rule status of such city, code city, town, or county.

In Florida, where there was a battle to get paid sick leave on the ballot in Orlando this past fall, a state senator has introduced a similar bill that “preemp[s] regulation of family or 7 medical leave benefits to the state.”

The state House in Mississippi already passed a pre-emption bill this year, which reads:

An act to prohibit a county, board of supervisors of a county, municipality or governing authority of a municipality from establishing a mandatory, minimum living wage rate, minimum number of vacation or sick days, that would regulate how a private employer pays its employees; to provide that the legislature finds that these prohibitions are necessary to ensure an economic climate conducive to new business development and job growth in the state of Mississippi;

A “statewide uniformity” bill has also been introduced in the Michigan legislature.

The proponents of such legislation make basic arguments about normalizing economic policy across the state, but it’s a little hard to argue. If a city wants to mandate paid sick leave, why not? If one accepts the argument it will chase business from the city, they would be likely to go to a neighboring municipality so it can serve the same customer base. So what’s the difference to the state?

Local organizers see it rather as a coordinated business campaign. Stephanie Porta, director of Organize Now in Florida, has been battling to get paid sick leave on the ballot in Orlando, where pushback from major corporations like Disney, Universal Studios and many major hotel chains has been immense. “All of their top priority legislative issues this year…is to pre-empt sick time,” Porta said. “It seems like it’s very much organized from a national level.”

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It’s hard to say whether the legislation is nationally coordinated. It is certain, as Pat Caldwell reported in great detail this week in The American Prospect, that at the state level, conservative and often business-friendly think tanks are far outpacing progressive counterparts. It could just be that “good” ideas to block paid sick leave are circulating in conservative circles.

If the pre-emption legislation is coordinated nationally, one would immediately think of the American Legislative Exchange Council (ALEC). But it’s hard to pinpoint if they’re actually involved at all—and they deny it entirely.

ALEC has focused on this issue in the past, that much we know. The Center for Media and Democracy obtained ALEC meeting minutes in 2011 that showed members were quite interested in blocking municipal paid sick leave, after Scott Walker backed a pre-emption bill in Wisconsin that year:

Paid family medical leave” was the only topic of discussion by the Labor and Business Regulation Subcommittee of the Commerce, Insurance and Economic Development Task Force, according to the meeting minutes.

Meeting attendees were given complete copies of Wisconsin’s 2011 Senate Bill 23 (now Wisconsin Act 16), as a model for state override. They were also handed a target list and map of state and local paid sick leave policies prepared by ALEC member, the National Restaurant Association. In Wisconsin, the Wisconsin Restaurant Association lobbied for SB 23 to repeal the sick leave ordinance, as did the the Metropolitan Milwaukee Association of Commerce (MMAC), the local branch of the the U.S. Chamber of Commerce, an ALEC member. The effect of the repeal will be more sick workers at work, making others ill, in order to save or increase profits by corporations.

Indeed, a review of the state-level legislation in Florida, Washington, Mississippi and Michigan that appeared in 2013 shows that at least one sponsor—and in many cases, multiple sponsors—are members of ALEC.

But several sponsors of pre-emption bills, including the lead sponsor of the Washington legislation, are not members. It stands to reason that conservative lawmakers who oppose paid sick leave laws would incidentally be members of ALEC. In addition, the legislative language is not the same across states, as has often been the case with ALEC-led efforts. And ALEC explicitly denied involvement to The Nation.

“The American Legislative Exchange Council has no model policy on paid or unpaid sick leave, and we are not engaged in any educational activities around sick leave in any state,” said Bill Meierling, senior director of ALEC’s public affairs. “I understand that at some point a member offered an academic presentation about sick leave standards, but that was the extent of Council engagement.”

In any case, watch state legislatures this year. There are sure to be intense battles over paid sick leave—both enacting it for the entire state, and preventing everyone in the state from enjoying that privilege, even if their city has passed it.

As the fight for paid sick leave rolls on, employers are pushing for shady “wellness” schemes. Read Steve Early’s analysis.

Beware Obama's Dealmaking

Barack Obama and House Speaker John Boehner. (AP Photo/Pablo Martinez Monsivais.)

As sequestration churns on, President Obama is reaching out to moderate Republican members of the Senate to see if he can still put a deal together. He is coming to the Hill next week for a Republican luncheon, and hosting other members for dinner tonight. The president is also picking up the phone. “He just called me,” Senator Lindsey Graham told reporters yesterday. “What I see from the president is probably the most encouraging engagement on a big issue that I’ve seen since the early years of his presidency. He wants to do the big deal.”

This should, and does, worry progressives inside and outside of Congress. The default position among center-left pundits is that if Obama gets Republicans to agree on a grand deficit reduction package that includes new revenue, he’s “won.” But that assumption really needs to be interrogated, and each concession examined.

Sequestration is a terrible policy; the cuts will touch a number of vital government functions and inflict unnecessary pain on many Americans. But here’s what Obama is proposing: an unbalanced package of $930 billion in cuts and $580 billion in revenue, with an additional $100 billion in deficit reduction through Chained CPI. This is the formula that would cut Social Security benefits $1,000 per year for some seniors and take $1,400 per year from disabled veterans.

Is that truly better? The sequestration cuts are damaging, but money taken away can always be restored later. (In this case it would involve scrapping the Budget Control Act, which is no doubt more difficult.) Chained CPI, however, permanently cuts the safety net, and that’s much harder to ever undo—and the fact that a Democratic president did it opens the door to even more cuts down the road.

It also presents serious political risks for the Democratic Party. Obama is currently being blamed by Republicans and many in the media for the idea of sequestration, as he was blamed relentlessly during the 2012 campaign for the $700 billion Medicare cuts—both things he ostensibly proposed to appease Republicans. He will almost certainly be blamed for cutting Social Security as well if his plan is enacted.

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A very telling phone call came in to CSPAN’s Washington Journal this morning, during conservative GOP Representative Lynn Westmoreland’s appearance. A Republican caller from West Virginia begged Westmoreland to hold firm on the spending cuts, criticized the idea of government handouts, but then specifically blasted “the chained CPI that the president wants”:

I hope Republicans do the right thing, take care of the people—you know who we are. And I don’t want anything from the government, I’ve been working all my life and so has my entire family, so I hope that you guys stick to your guns, no matter what the cost, and please bring us back from the brink of disaster. And don’t set up that CPI, that chained CPI that the president wants. And would you explain the Chained CPI a little bit?

There’s a reason Republicans haven’t actually staked out and named entitlement cuts they want in this debate. Cutting Social Security is not popular, even among Republicans. You can bet your last dollar they’ll blame Obama for cutting Social Security during the 2014 midterms if his plan passes.

There is, of course, a great deal of doubt that it would ever pass. Even if Republicans agree to a grand deficit reduction package, which at least in the House seems unlikely, Obama still has to deal with Democrats. Note that the Democratic sequester replacement bill in the Senate contained an even split between new revenue and cuts, and no Chained CPI. The AFL-CIO supported it for this reason: “Although it would not repeal sequestration, it would minimize harm to the economy and would not cut Social Security, Medicaid or Medicare benefits.”

In the House, where significant Democrats might be needed to pass any sort of deal with Obama, resistance is strong to benefit cuts as well. The Congressional Progressive Caucus has long opposed them, and today Representatives Alan Grayson and Mark Tanako are asking colleagues to sign a letter pledging to vote against any cuts to the safety net. They are also holding a call with activists via the Progressive Change Campaign Committee.

Grayson predicted this week that “if they go through with cuts, you’ll see people pouring into the streets. Pouring into the streets of Washington, DC, and every other capital, state capital and major city in the country.” That’s probably a bit hyperbolic, but there is significant reason to be worried about Obama’s dealmaking on the sequester.

Barack Obama may be wrong on the sequester deal, but he’s right on his nomination for EPA director, George Zornick writes.

Obama Makes a Strong Choice to Head the EPA

Gina McCarthy speaks at a climate workshop sponsored by The Climate Center at Georgetown University, Thursday, February 21, 2013, in Washington. (AP Photo/Alex Brandon)

There are three basic things one would hope to see in the White House’s nominee for the Environmental Protection Agency. He or she should possess a big, ambitious vision for combating climate change; he or she should have federal rule-making experience, since that’s the administration’s only real hope for getting things accomplished in that area; and he or she should be able to get confirmed by the US Senate.

At first blush, Obama’s selection of Gina McCarthy seems to clearly check each box. (That she contributes to the cabinet’s gender diversity is even better.) Here’s why:

She constructed or played a role in several pioneering cap-and-trade initiatives.

McCarthy spent most of her early career in Massachusetts, eventually becoming a top environmental official for none other than Mitt Romney. She commanded the development of Romney’s “Climate Action Plan” for the state, which aimed to reduce greenhouse gas emissions to ambitiously low levels: Enacted in Spring 2004, it aimed to reduce the state’s GHG emissions 10 percent below 1990 levels by 2020. The plan called for creating an “emissions banking and trading program,” as well as using regulations to limit emissions from older, dirty power plants.

The plan also called for Massachusetts to participate in a regional cap-and-trade plan with other states, something Romney pulled out of just before implementation in response to pressure from the industry and his political aides, who were eyeing a presidential run. But McCarthy quickly found a job in neighboring Connecticut, and oversaw that state’s participation in the regional cap-and-trade exchange and continued to help the multi-state initiative reach fruition.

At Obama’s EPA, McCarthy oversaw the clean-air rulemaking process.

Though Lisa Jackson headed the EPA and took a lot of heat from Republicans over new regulations, it was McCarthy who was doing much of the “heavy lifting,” according to the National Journal in 2011, “playing a key role in the march of environmental regulations to fight climate change and slash pollution from coal-fired power plants.”

Federal rulemaking is a complicated, grueling process, and so this experience is no doubt helpful—especially since the chance of Congress passing any climate legislation is vanishingly small. The EPA will be the nexus of the Obama administration’s climate efforts, and rulemaking will have to be the tool. From big things like EPA regulation of greenhouse gases to a variety of smaller but still very important matters like emissions from industrial boilers, sulfur in gasoline, coal ash disposal, soot, and water pollution, the EPA will have its hands full.

McCarthy already passed Senate confirmation once.

Republicans are well aware that the EPA will take the lead in the administration’s climate initiatives, and are certain to battle the EPA nominee regardless of who it is. McCarthy will no doubt face stiff opposition. But insofar as a nominee can be resistant to GOP opposition (and still be a strong pro-environmental choice), McCarthy fits the bill.

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Aside from having worked under the GOP’s last nominee for president, McCarthy already passed Senate confirmation for her current post in 2009, which raises the bar for Republicans that want to find a reason to filibuster her. (To be sure, they’ll find one; David Vitter, the ranking Republican on the Senate Environment and Public Works Committee, has already been targeting McCarthy for allegedly not fully disclosing the scientific data behind recent EPA decisions.)

But still, if McCarthy was acceptable in 2009, why not now? Even Senator James Inhofe, a climate-denier extraordinaire, supported her nomination, and as Rebecca Leber at ThinkProgress catalogues, an impressive number of industry groups have positive things to say about McCarthy.

Ultimately, this is a very strong nomination from the White House. McCarthy isn’t perfect—to the extent one wants to credit her with EPA rulemaking success over the past four years, she must also be blamed for its shortcomings—but she satisfies a number of crucial requirements and has the strong support of environmentalists in Washington. Senator Barbara Boxer made it clear long before the McCarthy’s nomination that she was the senator’s preferred candidate. Major environmental groups have offered unqualified support. A tough confirmation fight and far, far tougher rulemaking battles await, but this is a good first step.

In worse news on climate change, the State Department's falseheaded review of the Keystone pipeline's environmental impact is another step toward its approval, George Zornick writes.

State Department Report Paves the Way for Keystone Approval

The State Department released its initial reassessment of the environmental impact of constructing the Keystone XL pipeline late Friday—and the document quickly enraged environmentalists and seemed to buttress the arguments of pipeline proponents.

Since it’s a draft, the report made no recommendation one way or the other on building the pipeline. But it raised no major environmental concerns with doing so. This is the key paragraph:

Based on information and analysis about the North American crude transport infrastructure (particularly the proven ability of rail to transport substantial quantities of crude oil profitably under current market conditions, and to add capacity relatively rapidly) and the global crude oil market, the draft Supplemental EIS concludes that approval or denial of the proposed Project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.

In other words, the State Department believes the Keystone pipeline won’t have any real effect on how much tar sands oil is ultimately refined and brought to market, and thus, that it will have no substantial impact on climate change. Specifically, the report says blocking the pipeline would only lessen emissions by 0.07 to 5.3 million metric tons of carbon dioxide by 2030. For context, in 2010 the United States emitted 6,821.8 million metric tons of carbon dioxide in 2010.

Environmentalists hotly contest this claim, with a considerable amount of data on their side.

There are an estimated 240 gigatons of carbon stored in the tar sands, which is half of what scientists estimate is needed to avert more than 2 degrees of global warming. Releasing it is the equivalent of adding 4 million cars to the road. If you read the State Department report closely they are not really debating that, but rather contending that the oil will be extracted one way or another, so building the pipeline makes no real difference in the end.

This just isn’t true: for one, the industry itself has repeatedly said that building the pipeline would indeed expand tar sand drilling. The State Department asserted in the report that railways could be used to transport the tar sands oil absent any pipelines, but that’s quite debatable: only 0.69 percent of western Canada’s oil moved by rail in 2011 and there’s a continent-wide shortage of rail cars.

Activists blasted this line of reasoning as soon as the draft was released. “The State Department’s environmental assessment is a vehicle for the White House to test the waters to see if the public will buy its false and cynical argument that the Canadian Tar Sands are going to get burned anyway, and so the government’s chief climate scientist’s assertion that Keystone XL will spell ‘game over’ for the climate may be true but is essentially irrelevant,” said Becky Bond, political director at CREDO. “This is a coward’s logic—that we should let the bankers and the oil companies profit while the planet inevitably burns.”

The country’s largest environmental groups also strongly criticized the report. “We’re mystified as to how the State Department can acknowledge the negative effects of the Earth’s dirtiest oil on our climate, but at the same time claim that the proposed pipeline will ‘not likely result in significant adverse environmental effects,’ ” said the Sierra Club’s Michael Brune.

Environmentalists in Congress were up in arms as well. “The draft impact statement appears to be seriously flawed,” said Representative Henry Waxman, ranking member of the House Committee on Energy & Commerce. “We don’t need this dirty oil. To stop climate change and the destructive storms, droughts, floods, and wildfires that we are already experiencing, we should be investing in clean energy, not building a pipeline that will speed the exploitation of Canada’s highly polluting tar sands.”

And just as environmentalists bashed the State Department report, the industry and its backers in Congress cheered it. “No matter how many times KXL is reviewed, the result is the same: no significant environmental impact,” said Marty Durbin, executive vice president for the American Petroleum Institute.

“Today’s report again makes clear there is no reason for this critical pipeline to be blocked one more day,” said House Speaker John Boehner.

The battle is far from over—there is now a forty-five-day public comment period (activists wanted 120 days) and then a final review by Secretary of State John Kerry, followed by a determination of national interest from the White House. But by not flagging any major environmental problems, the State Department is removing a powerful argument from the conversation.

There is one final procedural beef that environmentalists and some reporters have voiced, and that I share: the late-Friday release of a heavily technical and very lengthy report, which Brune likened during a conference call to the actions of the Bush administration.

Literally twenty minutes after the report was posted, State Department officials held a conference call, and literally every reporter on the call had to resort to simply asking the officials what the report said. Each one protested that he or she hadn’t had time to digest the findings. This does not inspire much confidence in the federal process on Keystone going forward—something that could have used bolstering after the repeated conflict-of-interest scandals that have already emerged.

Sequestration Is Here: The Danger That Lies Ahead

John Boehner and Republicans are balking at Barack Obama's replacement plan, which still includes far more cuts than new revenues. (AP Photo/Pablo Martinez Monsivais.) 

At midnight, $85 billion in federal budget funds will be sequestered (that is, held back) by the Treasury Department, with the potential to cause real pain for the economy and many Americans if Republicans and Democrats can’t agree to some sort of solution. (For an explainer about how this all came about, see here.)

The two sides are, naturally, quite far apart. The White House has offered a sequester replacement plan that it touts as “balanced” and thus ostensibly palatable to Republicans, though the administration is actually selling itself short: the plan should be quite appealing to the GOP exactly because it is unbalanced. The plan offers $930 billion in budget cuts with only $680 billion in revenue ($100 billion of which comes from Chained CPI, anathema to most progressives).

Republicans, meanwhile, want a sequester solution with no new revenue whatsoever—“The revenue issue is now closed,” House Speaker John Boehner said on Thursday—and many Republicans would like the sequester cuts rejiggered to spare defense spending and hit domestic and entitlement programs even harder.

So both sides are now playing the blame game, hoping that the public will get seriously angry about the disruptions caused by the sequester and blame the other side, thus bringing them to the table ready to give concessions.

There is substantial reason to be optimistic that Obama has the upper hand and will “win” this battle. The public appears to be on his side, and serious fractures within the GOP may soon emerge—defense hawks who cannot abide the Pentagon cuts much longer, and rationalists within the party who think the brand is being irreparably damaged.

But for progressives, is it really a win for Obama’s preferred approach to prevail? The emerging consensus is ‘no.’ Some of the cuts Obama offers are plain bad, like his offer to “reform” federal retirement programs and save $35 billion, which means in essence to take $35 billion from the pensions of public workers. Many cuts are inoffensive, and some are good cuts: like reducing certain agricultural subsidies and reducing Medicare payments to big drug companies.

The revenue would mainly be taken from the wealthy via capping deductions and closing loopholes that benefit top earners. But there’s that Chained CPI bit (or “superlative CPI,” as the White House refers to it) that really troubles progressives—and should. It represents a tangible cut to the safety net: seniors already living on $1,200 per month would see $1,000 less per year under the new formula. Disabled veterans would lose $1,400 per year, and middle-class taxes would be hiked on top of it. (The increased tax revenue is, I suppose, why the White House has classified Chained CPI as new revenue, but on the benefit side of Social Security and other programs, this is clearly a cut.)

Cutting entitlements for any reason is a no-go for many Democrats in Congress, especially when coupled with nearly a trillion dollars in budget cuts. That’s what would happen if Obama’s plan wins, and it’s what worries liberals. “There’s a broader concern about the fact that entitlements may get ensnared when we go to an alternative fix, [that] they won’t escape,” Representative Jerry Nadler told BuzzFeed.

The AFL-CIO issued a statement this week that didn’t back Obama’s “balanced” approach, but called for the sequester to be straight-up repealed. “There’s no need to replace the sequester in full or in part. We don’t need it. Republicans are saying we need to address the source of the problem as leverage to get entitlement cuts,” it read. The Congressional Progressive Caucus has also called for sequestration to be completely repealed.

That’s the best-case solution for progressives. (Realistically speaking, of course. The actual best-case solution is the comprehensive plan released by the Congressional Progressive Caucus.) But Boehner probably won’t be able to sell a full repeal of spending cuts in exchange for exactly nothing to his rambunctious hard-core caucus in the House. There might not be any deal to be had here.

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In that case, sequestration stays in place. That’s definitely worse than repealing it, but is it really worse than Obama’s grand bargain? Under sequestration half of the cuts come from defense spending; Medicare is protected except for a 2 percent cut to doctor reimbursements, and Social Security, Medicaid, the Children’s Health Insurance Program and food stamp programs are protected entirely.

The other domestic cuts are no doubt painful and bad policy, but progressives have a tough choice in weighing that against what Obama’s proposing. And this of course assumes Obama gets everything he wants, which will not happen. Whatever bargain Congress and Obama strike out, if they manage to get something done, will almost certainly be worse.

There are real dangers to enacting some kind of bargain with Republicans to end the sequester—clearly on policy, but also on the politics, even though the administration seems to think otherwise. If White House aides truly believe that achieving a “grand bargain” that includes chained CPI will yield some sort of political victory, they ought to pay closer attention to the blame game now happening around the sequester.

One of Bob Woodward’s central claims, and the one that spurred the now-infamous pushback from the White House, is that Obama’s team came up with the sequester. This has been relentlessly pushed by Republicans (who invented a corny #Obamaquester hashtag) and by far too many mainstream media journalists.

This is plainly ridiculous—Obama wanted a clean debt-ceiling hike in 2011, and Republicans denied it and forced a showdown. Republicans were not enticed by what the White House offered to end the standoff and demanded some kind of guarantee of budget reductions, and at that point an administration official proposed sequestration as a tool. To strip that final piece of the timeline of all preceding context, and say that somehow Obama wanted the sequester, is exactly backwards—but it’s what is happening.

This is identical to what would likely happen to Chained CPI. Sure, this whole showdown was created by Republicans. And everyone understands the GOP to be the party that wants to cut “entitlement” programs. But Republicans have very deftly avoided proposing specific cuts to Social Security or Medicare in this debate; only Obama has with his Chained CPI proposal. Does anybody really think that two years from now, Republicans wouldn’t pull the exact same parsing of history as they did with the sequester, and blame Obama for cutting Social Security, which an overwhelming amount of Americans oppose? (Remember too that this is exactly what the Romney-Ryan ticket did with the $700 million in Medicare cuts included in the Affordable Care Act.)

In short, the sequester is a disaster, but a potentially worse disaster may lie ahead. There are no good choices here, only less-bad ones, and progressives should be wary about confusing political victory with a policy victory.

In better news from Capitol Hill, Democrats think they may be able to push through a financial transactions tax this time, George Zornick writes.

Financial Transactions Tax Introduced Again—Can It Pass This Time?

Representative Peter DeFazio and Senators Tom Harkin and Sheldon Whitehouse (left to right) announce a bill to create a financial transactions tax on February 28, 2013, in the US Capitol. Photo by George Zornick.

Just like the Congress before this, and the one before that, the 113th Congress will have a financial transactions tax to consider—and its backers are confident that, this time, they can make it law.

Thursday morning in the US Capitol, Senators Tom Harkin and Sheldon Whitehouse, along with Representative Peter DeFazio, announced the latest version of a tax on Wall Street trading: it would place a small tax of three basis points (that is, three pennies for every hundred dollars) on most non-consumer trades. Senator Bernie Sanders is also a co-sponsor of the legislation, as are nineteen members of the House.

If enacted, the tax would generate $352 billion in revenue over the next ten years, according to the Joint Committee on Taxation. It would apply to traded stocks and bonds, derivative contracts, options, puts, forward contracts, swaps and other complex Wall Street instruments. It would not cover the initial issuance of any stocks or bonds, nor covers or loans in the form of stock. 

Three pennies per one hundred dollars would not be noticeable to most retail operations and average Americans—someone with a 401(k) balance of $60,000 (the median in the United States) would pay $18 per year in financial transactions taxes under this bill, and it contains a tax credit to cover the cost of the tax for contributions to tax-benefitted pension, health and education plans.

This transactions tax would most notably impact high-frequency traders—and this is a feature, not a bug. High-speed trading presents a real threat to the economic system and would theoretically be slowed if the bill is passed. DeFazio said the measure would “bring more stability to the financial markets, favoring long-term value investors—those who want to build an economy.”

Why might this bill succeed, where others have failed? For one, the international landscape is changing—eleven Eurozone countries are planning to implement a financial transactions tax at the beginning of next year, and are urging the United States to join the effort. (The European version calls for ten basis points.)

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The sequestration and continuing resolution fights present another opportunity to wedge a Wall Street tax into the discussion. If Republicans eventually come off their intransigence against raising any new revenue, they will be looking for ways to do it while lowering rates, and the transaction tax presents a great opportunity to achieve that. “I have to ask, what other options are there for raising $350 billion with such a negligible impact on middle-class Americans and Main Street businesses?” said Harkin.

A staff turnover at the White House has also encouraged the bill’s sponsors. At Thursday‘s press event they shared some of their experiences with past administration officials, including some details that were not public until now. 

DeFazio noted that in 2009 Obama was “very interested” in a financial transactions tax, but said “unfortunately it was assigned to Larry Summers and Timmy Geithner, who were both absolutely opposed to it, and they deep-sixed it and never brought anything back to him.” (This was reported in Ron Suskind’s book Confidence Men.) “Well, they’re both gone, thankfully,” said DeFazio.

Harkin, too, pointed a finger at the now-departed Geithner and recalled a caucus meeting last September. “I brought it up to him, that it looked like the Europeans were moving ahead with this [tax]. And you know what he told me?,” said Harkin. “He said ‘I hope not.’ That was Mr. Geithner.”

The new Treasury secretary, Jack Lew, said in written answers to the Senate this month that the administration still opposes such a tax—but Harkin said that in private discussions, Lew was much more open.  “I can’t put words in his mouth but he didn’t say no—he wasn’t saying no like Mr. Geithner was,” said Harkin. “He was saying that he was basically open to looking at it and engaging on further discussions on it. That’s just the difference in two secretaries of the Treasury.”

The odds are still long for a financial transactions tax in the United States, given Wall Street’s enormous power in Washington, but there’s little doubt that at least the landscape is shifting in a favorable way. And if Congress does enact it, it won’t be the first time—there was a financial transaction tax on all stock transactions until 1966. Congress actually doubled it in the 1930s.

“Congress had the guts back then to double the tax at the height of the Great Depression, and use that money to rebuild the real economy, to put people back to work. That’s the same situation we’re in today,” said DeFazio. “While we’re doing that, and making those investments, we have to figure out how to deal with our growing burden of debt. So I believe that this tax is a tax who’s time has come for many, many reasons.”

A major corporation helped pay for Obama's Inaugural Ball—and bought itself a nice favor down the road, George Zornick writes

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