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Demonstrators protest the Keystone XL Pipeline in 2011. (AP Photo/Evan Vucci.)
When the Exxon Pegasus pipeline ruptured Friday in Mayflower, Arkansas, tens of thousands of gallons of diluted bitumen were sent forth into a residential neighborhood, and 22 homes had to be evacuated. Since this is the same sort of oil that would be carried by the Keystone XL pipeline, were it to be built, the Arkansas spill is appropriately spurring a conversation about safety. Is Keystone also going to lead to more spills? (There have been twelve on the completed portions of the pipeline already.) And how dangerous is this stuff spilling all over the ground?
But this conversation must start with a simple fact: There are too many known unknowns about diluted bitumen. We don't know exactly what's in it, and the government hasn't fully studied how safe it is to transport.
Bitumen is a form of petroleum that occurs in a solid, or semi-solid, state: It can be sludgy or even be brittle, like rocks. That’s what is buried deep in the Canadian oil sands. In order to transport this bitumen through thousands of miles of pipelines so that it can be refined, it has to first be diluted, so it flows like a liquid.
That diluent is usually a natural gas liquid—but we don’t know for certain what it is. The industry considers its diluent formulas proprietary information and won’t share it with regulators.
When the State Department released its first Environmental Impact Statement on Keystone XL, the EPA gave it an “inadequate” rating in part because it didn’t have any specific information on diluents. “We believe an analysis of potential diluents is important to establish the potential health and environmental impacts of any spilled oil, and responder/worker safety, and to develop response strategies,” the EPA said at the time.
Yet, the second and final Enviromental Impact Statement of Keystone XL released recently by the State Department still had no specific information on dilbit diluents, and evaded the question with some generalities:
The exact composition of the dilbit is not publicly available because the particular type of bitumen and diluents blend produced is variable and is typically a trade secret. The bitumen diluent mixture with bitumen from the oil sands is generally similar to heavy sour crude. […]
Although reported information on dilbit releases is scarce in the literature, once diluents and bitumen are mixed together to form dilbit, they behave as a conventional crude oil. Therefore, this assessment has focused on the impact of crude oil in general, but when applicable, evaluated the specific characteristics (i.e. viscosity) of dilbit. The degree of impact can vary depending on the cause, size, type, volume, location, season, environmental conditions, and the timing and degree of response actions.
Researchers and regulators know roughly what’s in dilbit—just not enough. “I think what they don’t know are what the specific chemicals are in any pipeline or any batch, because companies could use different chemicals at different times, depending on what’s cheapest at hand at any one moment,” Carl Weimer, the executive director of the Pipeline Safety Trust, told The Nation.
The composition of those chemicals could greatly influence how the dilbit behaves once spilled—whether it sinks or floats in water, for example. In an emergency clean-up situation, that’s really good information to have.
And what we do know about the danger of tar sands oil is already disturbing. The State Department’s report does focus on the damaging properties of benzene, and notes that “[b]ecause the diluted bitumen crude oils have a significant amount of lighter hydrocarbons added, they tend to have higher benzene concentrations than many other heavy oils.” Benzene, the report states, “was determined to dominate toxicity associated with potential crude oil spills.” Benzene is an unusually toxic chemical that was found in the air after the Enbridge tar sands spill of 2011, and can cause a wide range of severe physical damage to animals, plants and humans.
So the government doesn’t really know what’s in the dilbit once it spills—but it also knows shockingly little about how to prevent these accidents to begin with. Many conservation groups contend, with ample evidence, that tar sands oil leads to more spills because it is “highly corrosive, acidic and potentially unstable."
The chief regulator of pipelines is the Pipeline and Hazardous Materials Safety Administration. In 2011 Cynthia Quarterman, the agency’s director, appeared before Congress and admitted under questioning from Representative Henry Waxman that her agency had no idea whether dilbit is more dangerous to transport than normal crudes, and had not even studied the question:
REP. WAXMAN: Ms. Quarterman, when PHMSA adopted its basic safety requirements such as establishing maximum operating pressures or setting integrity management requirements, were many US pipelines transporting diluted bitumen? And were any of your regulations developed with the properties of diluted bitumen in mind?
MS. QUARTERMAN: When the integrity management program requirements were first put in place on the hazardous liquid side, I think it was 2000, 2002, there were pipelines in existence that transport diluted bitumen. I don't believe any study was done at that time of the characteristics of the crude.
REP. WAXMAN: Were your regulations developed with the properties of diluted bitumen in mind?
MS. QUARTERMAN: I don't believe it was a part of the equation, no.
REP. WAXMAN: Have you received [sic] your regulations to assess whether they adequately address any risks specific to diluted bitumen?
MS. QUARTERMAN: We have not done so.
Since that exchange, Congress passed the Pipeline Safety Act, which was panned by many environmentalists as too weak. The bill didn’t update any regulations to include dilbit transportation, but did mandate that PHMSA study the problem and act, if needed.
The National Academy of Sciences is currently working on that study, and will release its findings this summer. If they find that diluted bitumen is abnormally dangerous to transport, as many other independent researchers have, they will recommend new regulations.
But for now—and for the next several months, and probably years—the government is flying blind about how to transport diluted bitumen. It also doesn’t even know what’s in the stuff once it spills.
That’s crucial context when considering whether to build Keystone XL, which would carry millions of barrels of dilbit across the entire country.
Read George Zornick on new details from the Newtown and Tucson shootings showing how assault weapons and high-capacity magazines increase body counts.
Law enforcement agents respond to the shooting in Newtown. (AP Photo/Jessica Hill.)
As Washington gears up for the big Senate floor debate on gun control, two disturbing reports about the mass shootings in Tucson and Newtown have underscored the urgent need for a ban on assault weapons and semi-automatic magazines.
True, it seems unlikely that the Senate will pass a ban on either: Dianne Feinstein’s bill, which would ban at minimum 157 semiautomatic weapons and magazines that carry more than ten bullets, will not be included in the big gun control package the body will take up next week. Senate Majority Leader Harry Reid says there are not even forty votes to pass Feinstein’s bill, though it will come up for a vote as an amendment.
That means tragedies like Tucson are all to likely to be repeated. Thousands of new police documents concerning the shooting were released on Wednesday, and for the first time we know how quickly Loughner was able to carry out his attack:
About two hours later, he had apparently used some of that ammunition, emptying a 33-round magazine in about 19 seconds, and killing, among others, a federal judge and a 9-year-old girl and seriously wounding Ms. Giffords, who was shot in the head at close range.
That’s an astounding amount of carnage for nineteen seconds. The documents indicate police officers arrived only “moments” after the shooting, and bystanders already had Loughner pinned down—yet, he was able to shoot nineteen people.
Loughner was using a Glock 19 semi-automatic pistol. Feinstein’s office told The Nation that gun wouldn’t be banned, though many other semiautomatic pistols would be. But there’s no question Loughner’s 33-round magazines would have been illegal. (Note that the documents also confirm Loughner bought those magazines at Walmart, the country’s largest gun seller.)
On Thursday, extended police reports from the Newtown shooting were released, and contained similarly shocking numbers: Adam Lanza fired 154 rounds in the 300 seconds before police arrived, killing twenty children and six adults. That’s one shot for every two seconds, but they no doubt came faster: that 300 seconds includes the time it took Lanza to move around throughout the building.
Both the Bushmaster rifle and the high-capacity magazines would be banned under Feinstein’s bill. Recall, too, that in Aurora, James Holmes shot seventy-one people in ninety seconds—even though his gun jammed.
The grim shots-to-seconds ratio underscores some basic facts: police officers respond remarkably quickly to mass shootings, and the more quickly the gunman can fire bullets, the more people die. Even a brief pause for reloading—which would also enable bystanders to attempt to restrain the shooter—means some lives are likely spared.
Some well-meaning arguments against the assault weapons and high-capacity magazine bans assert that they aren’t responsible for a very large percentage of gun crime, but that’s a misdirection: The issue is that, when they are used in a crime, the carnage is disproportionately bad.
And bans do work: A Washington Post analysis earlier this year found that during the last assault weapons ban, “the percentage of firearms equipped with high-capacity magazines seized by police agencies in Virginia dropped, only to rise sharply once the restrictions were lifted in 2004.” They’re now double what they were in 2004. Also, researchers at the University of Pennsylvania found that the use of assault weapons in crime dropped by about two-thirds nine years after the ban was enacted.
Sadly, it’s probably certain that there will be another mass shooting in America. If the shooter is using high-capacity magazines, it’s just as certain that more people will die than otherwise would even with a normal gun. Senators should keep that in mind next week.
Read George Zornick on a new government study that calls for the military to crack down on sexual assaults within its ranks.
A woman Marine recruit. A new report has concluded that officials need to do more to prevent sexual assaults in the military. (Flickr/Expert Infantry.)
Female veterans who suffered a sexual assault in the military are nine times more likely to develop post-traumatic stress disorder compared to other female veterans, and military officials must do more to prevent these assaults—these are the conclusions of a gripping new government report on the hardships faced by troops returning from Iraq and Afghanistan.
Mandated by the 2008 National Defense Authorization Act, the 794-page study from the Institute of Medicine is a product of over four years of intense research into what troops face as they return from Iraq and Afghanistan. It’s a gripping portrait of post-traumatic stress disorders among some troops, along with traumatic brain injuries, barriers to healthcare, and problems re-adjusting to family and society.
We will be diving into many aspects of this report in the coming days and weeks, but conclusions about military sexual assault were remarkable.
The study found extremely high rates of military sexual trauma, both in men and women. About 48,100 women and 43,700 men reported suffering military sexual trauma, the authors note.
These relatively even numbers are a useful reminder that sexual assault in the military happens not only to women, but men—as was demonstrated at a powerful Senate hearing last week. But women comprise only 14 percent of active-duty military, so even raw numbers don’t reflect the fact that women, in much greater proportions, are the victims of military sexual assault. Over 21 percent of female troops reported military sexual trauma, compared to under 2 percent of men.
And many more assaults no doubt go unreported. The study points to research suggesting as much as 45 percent of female troops experience military sexual trauma. Elsewhere, the Department of Defense estimates that 86.5 percent of violent sexual assaults go unreported.
The study focuses on what these traumas mean for female veteran’s health: as noted, it concludes that women who have suffered a sexual assault in the military are nine times more likely to develop PTSD than female veterans with no history of sexual abuse. Female victims are also at much greater risk for a wide variety of other problems upon return: anxiety, depression, substance abuse and family troubles.
These results explicitly control for other factors that lead to PTSD. Contrary to many conservative talking points when Obama lifted the restriction on women in combat, the research cited in this study found that women handle combat-related stress just as well as men—military sexual trauma is a singular factor bumping up the prevalence of PTSD among women:
Controlling for prior-life trauma and sexual harassment, the authors found only one statistically significant difference that suggested that men may be more likely to suffer substance abuse after exposure to combat. However, the effect was small and considered clinically insignificant. They concluded that the effects of combat-related stressors “may be more similar than different for female and male US service members” and that female OEF and OIF “service members may be as resilient to combat-related stress as men.” A study of UK military men and women (Woodhead et al., 2012) concluded similarly that their investigation showed “little evidence of gender differences in the impact of exposure to combat on mental health.”
PTSD then leads to a whole host of other problems, the study found. Veterans with PTSD are four times more likely to have suicidal thoughts, for example, and suffer disproportionate amounts of depression, anxiety, and difficulty readjusting to family and society. (Interestingly, the study found that women with PTSD are more likely to report health problems and feel depressed, where men are more likely to report feeling more anger.)
So what should the military do? The report recommends instituting a zero-tolerance attitude towards military sexual assault by developing new policies, more strongly enforcing current policies and making effective handling of sexual assault complaints a mandatory part of all performance reviews and promotion systems.
The report comes amidst increasing Congressional focus on military sexual trauma. Senator Jon Tester (D-MT) and Representative Chellie Pingree (D-ME) introduced a bill last month that would make it easier for victims to receive treatment—the law would force the Veteran’s Affairs Department to accept a soldier’s word that his or her disability is related to a sexual assault or rape in the military, barring evidence clearly pointing to the contrary. Titled the Ruth Moore Act, it’s named after a Navy veteran who struggled for twenty-three years to receive full disability benefits for trauma suffered after two military rapes—one of which was allegedly in retaliation for Moore’s reporting of the first assault.
Pingree told The Nation that she welcomed the study, but that it was past time for military leaders to act. “I’m glad we are getting some hard data from this report, but honestly the evidence that sexual assault in the military has been a huge and pervasive problem has been ignored for a long time. This report identified many stressors that come with being deployed in a war zone, but only one—sexual assault—is completely avoidable and has nothing to do with fighting a war,” she said.
“We will probably never be able to completely eliminate the trauma of going to war, but we cannot and should not tolerate any sexual assault within the military,” Pingree continued. “I do not think that commanders will be able to prevent every case of sexual assault, but I do agree that we should examine how they address this issue within their units.”
Senator Kristen Gillibrand (D-NY), meanwhile, explored the idea of independent prosecutors for military sexual assault claims during a Senate hearing last month, and Senator Claire McCaskill (D-MO) will soon introduce a bill that would change the Uniform Code of Military Justice to make it impossible for military commanders to overturn military jury verdicts—as they sometimes do in cases of sexual assault.
Read George Zornick on how Democrats and Republicans worked together … to repeal a sensible tax on medical devices that would have raised $30 billion for healthcare reform over ten years.
A 2.3 percent tax on medical devices, such as MRI machines, has senators of both parties up in arms. Photo credit pennstate via Flickr.
It’s not often one finds bipartisan agreement in the Senate, but Thursday night seventy-nine senators joined to symbolically repeal the medical device tax provision of healthcare reform—a 2.3 percent levy on medical device companies that is projected to raise $30 billion over ten years to help finance the new law.
The vote brought together every Republican in the upper chamber plus thirty-three Democrats, including liberal stalwarts like Senators Elizabeth Warren, Al Franken and Ron Wyden. The vote was symbolic because it was a non-binding amendment to a budget resolution that also isn’t binding, but it does represent a serious bipartisan desire to get rid of the tax.
Opponents claim the tax will push medical device manufacturers overseas, costing a substantial amount of jobs, and will also stifle innovation, hurt small businesses, and cause increased costs for healthcare consumers.
The problem, however, is that virtually none of this is true. And the bipartisan push to repeal the tax—driven in large part by fealty to medical device companies in senators’ home states, which can be generous campaign contributors—underscores the many landmines that await if Congress takes up comprehensive tax reform at some point this year.
Closing loopholes in the tax code is easily said, but much harder to do when big-money special interests are involved, and the public isn’t really watching.
* * *
The chief attack on the medical device tax, which applies to everything from bedpans to MRI machines, is that it will cost jobs—a potent claim given the country’s high unemployment. “A 2011 study by the Hudson Institute found that the device tax threatens nearly 43,000 jobs nationwide, and will cost 3.5 billion in wages,” Senator Kelly Ayotte said during floor debate Thursday night. Members of Congress who oppose the tax frequently cite those numbers.
But that’s not really a Hudson Institute study—it was conducted by a senior Hudson fellow and a senior Manhattan Institute fellow, but financed by Advamed, a medical technology industry group.
The job loss claims fall apart upon even brief inspection. The tax applies on medical devices sold in the United States, not manufactured here—so moving a plant to Mexico doesn’t change anything. Medical device companies would have stop selling their products in the United States to escape the levy, which is simply unbelievable. The American healthcare market is by far the most lucrative in the world, as the country spends more on healthcare than any other by many orders of magnitude. No company is likely to leave the American market or even to reduce sales in order to avoid a 2.3 percent tax.
An analysis by Bloomberg Government found that the Advamed study’s job-loss figures—which were not supported by empirical evidence but simply industry claims—“conflict(s) with economic research, overstate companies’ incentives to move jobs offshore, and ignore(s) the positive effect of new demand.”
Indeed, demand is an important part of this equation. Medical device makers are likely to come out ahead as a result of healthcare reform. The law is projected to expand coverage to 33 million more Americans, so that’s a lot of extra medical devices. That was the original rationale for taxing the industry: the law is a huge boon to medical device manufacturers, so they should kick in a rather small tax to help fund the law. Now the industry is trying to wiggle out of the tax to come out even more ahead.
Other claims about the tax are fairly easily refutable, too. The industry claims it will “hurt innovation,” but it’s hard to see how. Analysts at PricewaterhouseCooper have concluded the Affordable Care Act will increase innovation by mandating more cost-effective ways to deliver care. And innovation is the bread-and-butter of any industry: if a medical device company for some reasons sinks less money into research and development because of a 2.3 percent tax, it would likely find itself outpaced by companies that don’t take the same route.
On the score of “hurting small businesses,” there isn’t much evidence there either. Bloomberg Government notes that the largest ten medical device makers in this $116 billion industry account for 86 percent of sales, and thus would be responsible for about 86 percent of the taxes.
The industry also claims costs would be passed onto customers, which would cause demand for medical devices to fall. But this isn’t how the healthcare markets work. They are very inelastic, meaning that when prices go up demand falls by only a fraction. (Few people, if any, would not get a prosthesis or not use a bedpan because of a small marginal increase in cost.) Health care economists estimate that a 10 percent increase in healthcare costs results in only a 2 percent drop in demand. The Advamed study assumes a much stronger relationship and “is off by as much as a factor of 10,” says Bloomberg Government.
So why do so many Senators want the medical device tax gone, especially Democrats who strongly support Obamacare? The answer is simple: in most cases, they have large medical device companies in their state that are often are generous campaign contributors.
Medical supply company contributions skyrocketed in 2012, the highest year ever, as Congress focused its attention on repealing the tax (via OpenSecrets):
Many of the large donors to this cause are located in states of Senators pushing for repeal (via OpenSecrets):
Number two on the list, Boston Scientific Corp., is located in Elizabeth Warren’s state, and she voted for repeal of the tax, as did Senator Mo Cowan, the placeholder in John Kerry’s former seat. Direct Supply Inc. is located in Wisconsin, and Republican Ron Johnson and Democrat Tammy Baldwin both voted for repeal. (Number one, Masimo Corp., is located in California—though Senators Barbara Boxer and Dianne Feinstein both laudably voted against repeal.)
In 2012, Senator Scott Brown was the top recipient of medical supply funds, followed by Republican Senator Orrin Hatch and Democratic Senator Amy Klobuchar. Not incidentally, the amendment passed yesterday was the Hatch-Klobuchar amendment. (via OpenSecrets)
Of the top ten recipients of medical supply money, a healthy bipartisan group indeed, every single one except Senator Max Baucus voted for repeal. (Baucus was one of the chief legislative architects of Obamacare and strongly opposes repeal of the medical device tax.)
* * *
Though Thursday’s resolution was non-binding, the medical device industry is hoping to make it official during any upcoming tax reform, where analysts say the $30 billion would barely be noticed. “The industry has a fighting chance of getting the tax moderated or eliminated as part of a much larger tax reform bill, where the device levy becomes a rounding error,” Paul Heldman, a policy analyst at Potomac Research Group, told Reuters.
So this week’s vote is then a disturbing, cautionary tale. In the supposedly ideal scenario that ends the sequester, Republicans and Democrats join together to slash safety net programs in exchange for revenue raised through tax reform—closing loopholes and such.
But as the medical device tax saga shows, cutting loopholes is really hard to do in practice. They were likely put there to benefit specific industries, which can often be quite powerful and influence even stalwart liberal Senators who claim to want new revenue sources. Many progressives thus fear that the loopholes most likely to be closed are the ones that benefit people without lobbyists—middle-class wage earners and homeowners, students, and the very poor.
And even if the loopholes are removed—in exchange for safety net cuts that likely remain permanent—they can be added back to the tax code very quickly thereafter, as demonstrated by Senators who enthusiastically voted to create the medical device tax three years ago by approving Obamacare and now are voting to remove it.
Republicans are already fighting Barack Obama’s EPA head nominee Gina McCarthy, but the issue is mostly that they just hate the EPA, George Zornick writes.
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.
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.
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.
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 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.
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.
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.
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.
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.)
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.”
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.
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.
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.