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George Zornick | The Nation

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George Zornick

George Zornick

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

Job Numbers Are Up, but Veterans Are Left Behind

This morning, the Bureau of Labor Statistics released some encouraging jobs numbers—the private sector added 212,000 jobs in December, and the unemployment rate fell to 8.5 percent. These numbers are seasonally adjusted to control for extra holiday hiring, and the drop in the unemployment level was not caused primarily by people dropping out of the labor force. So this acceleration is a promising sign, though of course a strong jobs recovery remains elusive.

But one group has been left out of this slight rise—and in fact, has seen its employment numbers decelerate at a scary pace. What the Bureau of Labor Statistics calls “Gulf War–era II veterans”—those who served from September 2001 to the present—had an unemployment rate of 13.1 percent in December. In December 2010, that number was 11.7.

That means there are 248,000 unemployed veterans from the wars in Iraq and Afghanistan—and much worse, there’s an additional 442,000 recent veterans who are no longer in the labor force. The New York Times estimated last month that about 30 percent of veterans aged 20 to 24 are unemployed, a steep rise from the rate of 21 percent in mid-2010.

These numbers are also bound to increase in the coming years, since 1 million veterans are expected to join the workforce by 2016 as the wars wind down and soldiers finish their enlistments.

Fortunately, Washington has actually taken some action in recent months to address the unemployment crisis for veterans. In fact, the first part of Obama’s jobs bill to pass (and really the only part, unless you count the recent two-month payroll tax extension) is a provision to give employers tax credits for hiring veterans who have been out of work for more than six months, and to provide additional education and jobs retraining programs. (Though unfortunately, the program was paid for by higher mortgage rates guaranteed by the Department of Veterans Affairs.)

That’s a good start—but additional measures may be needed to address the metastasizing unemployment crisis among those who sacrificed quite a bit for the government already in the past decade.

Cordray Expands CFPB Oversight and Promises A Tough Approach

Richard Cordray addresses a crowd at the Brookings Institution on January 5, 2012. Photo credit: George Zornick/The Nation.

Richard Cordray took control of the Consumer Financial Protection Bureau under controversial circumstances, but on his first full day on the job, he sought to assure people that it won’t affect the bureau’s vigorous agenda. “The appointment is valid. I’m now director of the CFPB,” he told a packed house at the Brookings Institution this morning. “The consumer bureau will make clear that there are real consequences to breaking the law.”

Cordray also announced the bureau’s program to supervise non-bank financial institutions like payday lenders, check-cashing operations, debt collectors, and other outfits that don’t have FDIC backing—something the bureau wasn’t able to do without a director.

That marketplace collects $7.4 billion in fees every year, and has not been subject to direct federal regulation until today. “Our new supervision program may be a challenge for them,” Cordray noted dryly. “But we must establish clear standards of conduct so that all financial providers play by the rules.”

Cordray devoted some of his remarks to telling the stories of Americans who reached out to the bureau for help: there was a woman in Louisiana who had a payday lender attempt to force her into bankruptcy, and another in North Carolina who missed one mortgage payment when her husband died and then saw years of penalty increases.

“In just a short time, we have heard thousands of these kinds of stories. Some are outrageous. The problems are welling up everywhere, from small towns to big cities, from coast to coast. These nightmares are happening to people from all walks of life—from people who have fallen on hard times to people who still consider themselves financially secure,” Cordray said. “They do not expect any special favors. They just want a fair shake. They want a consumer financial system that actually works for consumers. That is exactly what the consumer bureau is here to do.”

The bureau’s website prominently features opportunities for Americans to report difficulties with financial institutions, and Cordray said he views this outreach and response as the central template for the CFPB’s mission. He also recorded a plea for more stories yesterday and released it on YouTube.

Asked specifically about the danger of regulatory capture when soliciting input from the financial industry—something Cordray pledged to do in his speech—he said that the antidote is this communication with consumers.

“The thing that helps us avoid regulatory capture, or any kind of capture, is having that direct pipeline to the individual who feels free to talk to us about the problems they face, the individual problem they experienced,” he said. “I think as long as we can maintain a direct link, that we’re building now—all the other links are important, but it also provides a corrective, so we don’t end up with a skewed view of how we’re actually doing.”

The financial industry has of course spent the past seventeen months trying to capture the bureau, through deep-pocketed lobbying efforts and political gamesmanship to deny the CFPB a director. Though that effort was unsuccessful, the industry isn’t likely to give up. The American Bankers Association blasted Cordray’s appointment as evidence of a “lack of accountability,” and Cordray has already been summoned to testify before one House subcommittee. Extensive legal challenges are also likely.

Cordray was asked if such opposition and challenges will lead to a more cautious agenda at the CFPB—and he replied with a direct “no.” He added: “The law of the land gives us certain responsibilities.”

Obama Bucks GOP, Nominates CFPB Chief

President Barack Obama, accompanied by Richard Cordray, speaks as he visits with William and Endia Eason Wednesday, January 4, 2012, at their home in Cleveland, Ohio. (AP Photo/Haraz N. Ghanbari)

Yesterday, the Washington Post reported that President Obama’s 2012 election strategy would feature a White House battle against an unpopular and intransigent Congress.

Today, the administration fired the first shot. Obama announced this morning his intention to use a recess appointment to nominate Richard Cordray to head the Consumer Financial Protection Bureau, the new regulatory agency that was created by the Dodd-Frank legislation but has been leaderless since the summer because of Republican obstruction in the Senate. “Today, I am appointing Richard as America’s consumer watchdog,” Obama said at a raucous event in Shaker Heights, Ohio, with Cordray at his side.

Recess appointments are common ways for presidents to install nominees the Senate won’t confirm. So common, in fact, that Republicans took pre-emptive measures and wouldn’t allow Congress to actually go on recess during this break—they held meaningless “pro forma” sessions at least every three days, where the session would be gaveled in and then gaveled out just as quickly.

But Obama went ahead and nominated Cordray anyhow. While the Justice Department under Bill Clinton said that Congress must be out of session for three days in order for a recess appointment to be valid, the White House rationale is that the entire pro-forma maneuvering is a “gimmick,” in the words of White House communications director Dan Pfieffer, and no such three-day timeframe exists.

As Ian Millhiser of the Center for American Progress explains, there is indeed legal precedent for this approach:

There was…a showdown during the Bush Administration over President Bush’s decision to recess appoint Judge William Pryor to the United States Court of Appeals for the Eleventh Circuit. In Evans v. Stephens, that court considered whether Pryor’s appointment was invalid because it occurred during a very short legislative break. This court is the highest legal authority ever to weigh in on the question of whether a break in the Senate’s calendar must last a certain number of days before a recess occurs, and it answered that question with an unambiguous “no.”

“The Constitution, on its face, does not establish a minimum time that an authorized break in the Senate must last to give legal force to the President’s appointment power under the Recess Appointments Clause. And we do not set the limit today,” [the decision said].

Beyond the legal technicalities, Obama is gambling that people won’t care much about inside-the-Beltway procedurals and will favor his aggressive move to make the CFPB fully operational. The agency enjoys approval ratings of 74 percent, and when Cordray takes office it will allow the agency to go after non-bank institutions, like predatory payday lenders.

Obama hammered at this message in this afternoon’s appearance in Ohio with Cordray:

We know what would happen if Republicans in Congress were allowed to keep holding Richard’s nomination hostage. More of our loved ones could be tricked into making bad financial decisions. More dishonest lenders could take advantage of the most vulnerable among us. And the vast majority of financial firms who do the right thing could be undercut by those who don’t. […]

Cleveland, I know you’re hearing a lot of promises from a lot of politicians lately. But today, you’re only going to hear one from me. As long as I have the privilege of serving as your president, I promise to do everything I can, every day, to make this country a place where hard work and responsibility mean something—where everyone can get ahead, not just those at the very top or those who know how to work the system. That’s what America has always been about. That’s what today is all about. And with the help of people like Richard, that’s the country I believe we can be once again.

For years now, progressives have been urging Obama to play hardball with the Republicans in Congress who love that game so much. Republicans have escalated use of the filibuster to historic levels, blocking nearly 20 percent of Obama nominees—and have paid little, if any, political price for using complicated Congressional maneuvers. Now the White House is engaging on that same battlefield of arcana—with a much stronger core message.   

As you might expect, Republicans are crying foul. Senate minority leader Mitch McConnell said Obama had “arrogantly circumvented” the Congress, while House Speaker John Boehner called the appointment an “extraordinary and entirely unprecedented power grab.”

But Representative Barney Frank, a longtime proponent of the CFPB, dismissed those comments earlier today. “Republicans’ complaints about the President’s decision to make this recess appointment are equivalent to objections leveled by arsonists at people who use the fire door to escape a burning building,” he said in a statement. This is an argument Democrats clearly feel poised to win. 

UPDATE:Obama doubled down on his battle with Republican obstructionists in the Senate by recess-appointing three members to the National Labor Relations Board this afternoon under the same reasoning used to justify Cordray's appointment. Sharon Block, Terence Flynn, and Richard Griffin are now poised to take seats on the NLRB this week.

Conservatives may fairly argue that since these appointments were only made in December, the Senate hasn't had a fair chance to even take them up, and so the recess appointment is a particularly daring "bull-rush," in the words of the National Review. But the GOP blocked Obama's last appointment to the NLRB and these three would absolutely have faced the same fate--and if no action was taken, the NLRB would actually shut down due to failure to reach quorom, since Obama's last recess appointment to the board expired at the end of 2011. That would have left only two NLRB members, which is not enough to perform its duties. 

The Winner Tonight: Iowa's 1 Percent

Iowa may be much more socially conservative than most states—behold the recent rise of Rick Santorum—but on economic measures, Iowa more closely resembles the rest of the country. The median income in 2010 was $48,031, just off the national average of $50,046. Increased demand for agricultural products has kept the unemployment relatively low, at 5.7 percent, but over 400,000 Iowans still live below the poverty line—that’s 13 percent of the state.

So how do the Republican candidates traversing the state today and asking for support plan to address income inequality, if it all? The answer—brace yourself—is to shift even more income to the top one percent.

Citizens for Tax Justice performed an analysis of three candidates’ plans: Mitt Romney, Rick Perry and Newt Gingrich. The others didn’t provide enough detail for analysis, but the numbers we do have suggest that no matter which candidate delivers a victory speech this evening, the interests of the state’s wealthiest members will surely triumph.

The worst among the plans examined belongs to Newt Gingrich—if enacted, his proposed tax structure would award the wealthiest one percent of Iowans a $228,050 tax cut in 2014. Comparatively, the middle fifth of Iowans in the income scale would get a cut of only $2,140. (Yes, that’s 100 times less). Rick Perry would hand $164,560 to the richest Iowans, while cutting taxes for the middle fifth by only $1,190—130 times less than top one percent would receive. And Mitt Romney would award $75,650 in tax cuts to each member of Iowa’s top one percent, and $1,320 to the middle fifth.

Here is CTJ's chart:

CTJ may not have had enough data to perform similar analyses for the rest of the candidates, but we can still safely assume the top one percent would come out fine under their plans. Ron Paul, for example, supports repealing the Sixteenth Amendment, which allows Congress to enact income taxes. He favors a national flat tax in its place, which is of course deeply regressive. Santorum’s plan isn’t detailed enough to analyze, but he said recently that “I’m for income inequality”—so you can draw your own conclusions about whom his tax policy might help.

The Tea Party in 2011: From Lions to Lambs

One year ago, Tea Party legislators were making final preparations for their glorious arrival in Washington after trouncing Democrats in the November elections. And it was a good time to be a member of the “Don’t Tread on Me” crowd. In December 2010, CNN announced it would hold a Tea Party–branded Republican presidential debate, House Speaker-to-be John Boehner defiantly told 60 Minutes that “I reject the word” compromise and Supreme Court Justice Antonin Scalia agreed to appear before the nascent, Michele Bachmann–led Tea Party House caucus. Moreover, Tea Party legislators who weren’t even in office yet pressured Republicans who were to scuttle a large spending bill, setting up a showdown that led to the extension of the Bush tax cuts.

Sure, there were a few bumps along the way—like when one incoming Florida representative had to fire a talk-radio host he had (inexplicably) hired as chief of staff, after it was revealed the radio talker thought illegal immigrants should be hanged and that if ballots didn’t work, “bullets would”—but largely, it was a triumphant time.

In the ensuing months, the Tea Party was able to force the government to come within hours of shutting down, extracting many demands in the process, and then bullied President Obama all summer on the debt ceiling—and that standoff resulted in mandatory cuts of over $2 trillion to the federal budget and a “supercommittee” on the federal deficit, not to mention endless news coverage focused on debt and austerity.

Now, recalcitrant members of the House of Representatives, led once again by the compromise-averse Tea Party crowd, are refusing to approve a year-end bill to extend a payroll tax cut and unemployment benefits for almost 3 million Americans.

You can read our coverage of this debate over the past several weeks here, here, here and here. But in short, after President Obama and Congressional Democrats requested a one-year extension of these provisions, the Senate hammered out a compromise: a two-month extension, with a poison pill on the Keystone XL pipeline inserted.

This compromise got eighty-nine votes in the Senate—a near-unheard-of level of agreement there—including thirty-nine Republicans. Boehner said he thought the deal was “good,” only to be quickly rebuffed by the Tea Party. It thinks of the deal as “liberal Democrat incrementalism,” in the words of one Representative, and insists that every last one of its radical policy riders be attached to the final bill—from drug-testing unemployed Americans to repealing environmental regulations.

This time, the Tea Party suddenly finds itself alone: no longer controlling the media narrative nor even enjoying the support of many fellow Republicans. They came into 2012 like lions, but are poised to leave like lambs.

Here’s a brief list of all the people and outlets now publicly telling the Tea Party to end its obstruction:

§ The Republican leader of the Senate, Mitch McConnell, released a statement today calling on Boehner to accept the two-month compromise. (“It’s pretty enormous,” one Senate aide said. “When was the last time McConnell broke with Boehner?”)

§ Five other GOP Senators: Scott Brown, Dean Heller, Olympia Snowe, Richard Lugar and John McCain. That’s four senators up for re-election in 2012 in purple states—a dangerous barometer for the Tea Party of its potential pull in next year’s elections—and the most recent GOP presidential nominee.

§ The architect of two Republican presidential victories, Karl Rove, who said the House GOP has “already lost the optics on it.”

§ The Wall Street Journal editorial page wrote this week that “at this stage, Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly.”

There are some who believe the Tea Party is still playing the smart and tough game, and will ultimately succeed in getting more bad stuff into the bill. “The cynic’s bet is that the story of GOP dysfunction won’t matter, so long as there’s eventually some compromise. Eyes on the prize: If the other side blinks, and it always does, what can Republicans get out of them?” writes Dave Weigel in Slate.

He’s right—time and time again this past year, Democrats have relented to Republican pressure. In the Congressional game of chicken, Democrats always jumped out of the way first—making the next surrender even more likely, as the Tea Party became more emboldened.

But this time, there’s no sign that the Democrats will blink. Reid is steadfast in refusing to appoint conferees, and is demanding the House pass the Senate compromise. Boehner called President Obama this morning, asking him to force Democrats to come to conference, and the president said no dice—and reiterated that position later in the day at a White House appearance with middle-class Americans who would lose money if the payroll tax cut isn’t extended.  

For policy reasons, it’s important that the Democrats don’t give in. The Republican riders have no place in this bill and would damage the environment and shame the unemployed. But there’s a very strong political reason as well: if the House is forced to blink, as I happen to think it will, the Tea Party stranglehold on governance will finally have been rebuked, and its political capital depleted. This matters now, and for the next standoff.

Once that’s done, Democrats can embark on the much more valuable task of actually helping the middle class, instead of blaming the Republicans for hurting them, as Ilyse Hogue writes here. But first, it’s time to send the Tea Party a message: it’s had a heck of a year, but it doesn't run Washington anymore.

The Payroll Tax Cut Gets the Fox News Treatment

A now-familiar theme is playing out today in Washington. A grand bargain worked out between leaders from both parties gains significant steam and heads for passage, only to careen off the rails at the last minute when far-right members of the House of Representatives lay down on the tracks. So why does this keep happening?

On Saturday morning, the Senate passed a bill that would extend a payroll tax cut and federal unemployment insurance for two more months, while preventing doctors from losing over a quarter of their annual Medicare payments. It also contained a Republican provision to force President Obama to issue a decision on the Keystone XL pipeline within sixty days.

Democrats wanted more—they originally asked for a year-long payroll tax cut, at a lower rate, and paid for with a surtax on incomes over $1 million. And even if the Keystone provision could kill the project, as the Obama administration is now signaling, Democrats didn’t want that in there, either.

But the deal was made, and eighty-nine Senators–including thirty-nine Republicans and Tea Party stalwarts like Senator Marco Rubio–voted for it. Senate Majority Leader Mitch McConnell was seen high-fiving fellow Republicans after the vote, and House Speaker John Boehner, who had been a party to the compromise bill all the way, called the bill a “good deal” and a “victory” on Saturday morning. The payroll tax cut would save families an average of $1,000 next year, and every dollar spent on unemployment insurance increases the annual GDP by $1.61.

Later that day, Boehner took it to his members, urging them on a conference call to pass it. It wasn’t pretty.

“I never heard words like 'sucks' and 'crap' in a GOP Conference,” one member told Fox News’s Chad Pergram afterwards. “Everyone sounded angry.”

A leader of the Tea Party in the House, Florida Representative Allen West (seen earlier in the week comparing Democrats to Joseph Goebbels), blasted the deal as “liberal Democrat incrementalism.” Twenty-four hours and 180 degrees later, Boehner was on Meet the Press saying the bill wouldn’t pass the House.

Already, four Republican Senators (each of them up for re-election in 2012, I would note) have blasted House Republicans for not passing the bill. But the rank-and-file there—which contains sixty members elected in the Tea Party wave of 2010—isn’t listening. They will probably defeat the Senate bill late today.

There have been a series of nonsensical arguments put forth by GOP leadership in the House as to why they oppose this deal. Some say the two-month extension creates “uncertainty,” but Republicans wouldn’t sign off on a clean year-long extension in the first place, which is why the deal is for two months. And the charges of “liberal Democrat incrementalism” would be news to the thirty-nine Republicans in the Senate who voted for it—and who succeeded in junking the millionaires surtax and adding the Keystone provision.

So really, why the vehement opposition? A compelling argument lies in a recent op-ed for the Guardian by Jonathan Freedland, titled “How Fox News is helping Barack Obama’s re-election bid.” He is speaking about the Republican nominating process, but I think the central argument applies to these rebellious House members as well:

Fox, serving up constant outrage and fury, favours bluster over policy coherence. Its ideal contributor is a motormouth not a wonk, someone who makes good TV rather than good policy. Little wonder it fell for Cain and is swooning now for Gingrich—one of whom has never held elected office while the other messed up when he did, but who can talk and talk—while it has little interest in Romney and even less in Jon Huntsman, even though both have impressive records as state governors. The self-described conservative journalist Andrew Sullivan says that the dominant public figures on the right are no longer serving politicians, but “provocative, polarising media stars” who serve up enough controversy and conflict to keep the ratings high. “In that atmosphere, you need talk-show hosts as president, not governors or legislators….

So far, so bad for the Republicans. Why should anyone else care? Because the Fox insistence on unbending ideological correctness turns every compromise—a necessary staple of governance—into an act of treachery. The Republican refusal, cheered on by a Fox News chorus, to raise the US debt ceiling this summer, thereby prompting the downgrading of America’s credit rating, is only the most vivid example. The larger pattern is one of stubborn, forced gridlock, paralysing the republic even now, at a moment of global economic crisis.

Notably, many of the House Republicans up in arms right now are frequent Fox News guests. Allen West, who has appeared on the network dozens and dozens of times, is the prototypical example of “a motormouth, not a wonk.” (See here, here, here and here just for starters). Representative Jim Jordan, leader of the powerful, ultra-conservative Republican Study Conference in the House, made his motivations clear recently, when talking about a House version of this same bill: “The fact that the president doesn’t like it makes me like it even more,” he said.

And, yes—Fox News has been similarly combative and polarizing on the payroll tax cut in recent weeks, sounding, like Jordan, much more eager to hand President Obama a defeat on payroll tax cuts than anything else.

For example, Fox & Friends co-host Gretchen Carlson was interviewing White House Press Secretary Jay Carney earlier this month and blasted the idea of a payroll tax cut. “We’ve already had that,” she said, and “I see dismal [job] numbers.” Lest viewers think the situation might be more complex than that, don’t worry—Carlson said she spoke to “tons” of economists. (Media Matters has a good roundup of Fox News attacking the payroll tax cut over the past several weeks here).

The situation is in full meltdown mode for the GOP now, of course—thirty-nine Republican Senators were just embarrassed and made to look insufficiently strident by their House colleagues. Boehner must now try to get the House to pass the Senate bill with nearly all of the Democratic votes and as many Republican moderates as he can wrangle, which would solve the immediate problem but carries with it the not-insignificant chance the rank and file would rebel against him and possibly even take his speakership. If he chooses not to go that road, as it appears he won’t, the “Tea Party Tax Hike” will likely take effect on January 1—and the White House won’t let voters forget it.

Much belatedly, and with no recognition of their prior opposition, Fox News is now calling for the passage of the payroll tax cuts. (Rogers Ailes is no dummy). But the virulent forces unleashed by the network can’t simply be turned off. Right after he was elected, Allen West pledged to work until “this liberal, progressive, socialist agenda, this left-wing, vile, vicious, despicable machine that’s out there is soundly brought to its knees.” He’s not going to just say “never mind.”

Keystone XL Is Back on the Table—for Now

Early Saturday morning, the Senate passed the Temporary Payroll Tax Cut Continuation Act of 2011, which extends a payroll tax cut and unemployment benefits for two more months—while requiring that the Obama administration make a decision on the Keystone XL pipeline within the same time period.

In November, President Obama delayed the Keystone decision until at least January 2013, while alternate routes around Nebraska were considered. But this bill requires a decision with sixty days. Here’s a summary of the provision:

Sec. 501 Keystone XL Pipeline Permitting Process (no cost)

Within 60 days, the President, acting through the Secretary of State, is required to grant a permit for the Keystone XL pipeline project application unless he determines the pipeline would not serve the national interest. Any permit issued shall require the reconsideration of routing the pipeline within the State of Nebraska. Any permit granted is deemed to satisfy all the requirements of the National Environmental Policy Act and any modification required by the Secretary to the construction mitigation and reclamation plan shall not require supplementation of the final environmental impact statement.

So this will require Obama to make a final permitting decision by mid-February, while still allowing for a potential reroute around Nebraska, where the Republican governor there has opposed the project.

Obama said at a press conference this month that “Any effort to try to tie Keystone to the payroll tax cut, I will reject.” That clearly was an empty threat, since he plans to sign this bill on Monday when the House will presumably approve it. In brief remarks at the White House this morning, Obama lauded passage of the tax relief and did not mention the Keystone provision at all.

So how likely is it that Keystone XL is ultimately approved? It’s hard to tell, since the White House hasn’t said a word, but many environmentalists inside and outside Congress believe this makes a rejection more likely.

“The deal passed by the Senate rushes the pipeline review process, making a credible, science-based review impossible. Because of this, and the great harm we already know the pipeline would cause, President Obama has no choice but to reject the pipeline,” said a statement this morning from Friends of the Earth.

Representatives Henry Waxman and Ed Markey, both stalwart environmentalists, told Politico yesterday before the bill was passed that they weren’t overly concerned.

 “I think it’s shortsighted for the Republicans to force a decision without giving the president enough time to fully consider it,” said Waxman, the ranking member of the Energy and Commerce Committee. “And if they force him to do that, it’d seem to me, the only logical thing for him to do is to say no to it.”

Markey agreed. “We expect the president to still reject the commencement of the construction of the pipeline until there is a full completion of an environmental review,” he said. “The sixty-day deadline should not lead to the White House approving the actual construction to begin.”

In that interview, Waxman revealed the only signal from the White House about its intentions that I’m aware of—Waxman held up his BlackBerry and said “The White House has just sent me an e-mail saying, ‘Don’t worry.’ ”

Pipeline opponents surely do have more to worry about today than they did last week—but Keystone XL approval is far from certain.

Keystone XL Is Back on the Table—for Now

Early Saturday morning, the Senate passed the “Temporary Payroll Tax Cut Continuation Act of 2011,” which extends a payroll tax cut and unemployment benefits for two more months—while requiring that the Obama administration make a decision on the Keystone XL pipeline within the same time period.  

In November, President Obama delayed the Keystone decision until at least January 2013, while alternate routes around Nebraska were considered. But this bill requires a decision with sixty days. Here’s a summary of the provision:

Sec. 501 Keystone XL Pipeline Permitting Process (no cost)
Within 60 days, the President, acting through the Secretary of State, is required to grant a permit for the Keystone XL pipeline project application unless he determines the pipeline would not serve the national interest. Any permit issued shall require the reconsideration of routing the pipeline within the State of Nebraska. Any permit granted is deemed to satisfy all the requirements of the National Environmental Policy Act and any modification required by the Secretary to the construction mitigation and reclamation plan shall not require supplementation of the final environmental impact statement.

So this will require Obama to make a final permitting decision by mid-February, while still allowing for a potential reroute around Nebraska, where the Republican governor there has opposed the project.

Obama said at a press conference this month that “any effort to try to tie Keystone to the payroll tax cut, I will reject.” That clearly was an empty threat, since he plans to sign this bill on Monday when the House will presumably approve it. In brief remarks at the White House this morning, Obama lauded passage of the tax relief and did not mention the Keystone provision at all.

So how likely is it that Keystone XL is ultimately approved? It’s hard to tell, since the White House hasn’t said a word, but many environmentalists inside and outside Congress believe this makes a rejection more likely.

“The deal passed by the Senate rushes the pipeline review process, making a credible, science-based review impossible. Because of this, and the great harm we already know the pipeline would cause, President Obama has no choice but to reject the pipeline,” said a statement this morning from Friends of the Earth.

Representatives Henry Waxman and Ed Markey, both stalwart environmentalists, told Politico yesterday before the bill was passed that they weren’t overly concerned.

 “I think it’s shortsighted for the Republicans to force a decision without giving the president enough time to fully consider it,” said Waxman, the ranking member of the Energy and Commerce Committee. “And if they force him to do that, it’d seem to me, the only logical thing for him to do is to say no to it.”

Markey agreed. “We expect the president to still reject the commencement of the construction of the pipeline until there is a full completion of an environmental review,” he said. “The 60-day deadline should not lead to the White House approving the actual construction to begin.”

In that interview, Waxman revealed the only signal from the White House about its intentions that I’m aware of—Waxman held up his BlackBerry and said “The White House has just sent me an e-mail saying, ‘Don’t worry.’ ”

Pipeline opponents surely do have more to worry about today than they did last week—but Keystone XL approval is far from certain.

Republicans Intensify Attacks on the Nuclear Safety Chief

If there was any doubt that an imbroglio around the leadership of Gregory Jaczko, chairman of the Nuclear Regulatory Commission, would be used to try to force his ouster from that agency, a Wednesday hearing before a House panel removed it.

All five members of the NRC appeared before the House Committee on Oversight and Government Reform, which is chaired by Representative Darrell Issa. Four commissioners publicly aired their grievances about Jaczko’s leadership, which include charges of bullying and intimidation of staff, along with refusing to share information with fellow commissioners.

Jaczko said he did nothing wrong, and cited a report from the NRC inspector general clearing him of legal wrongdoing when it came to sharing information among his colleagues. But Republicans went directly for the jugular.

“I think you should resign,” Representative Jason Chaffetz, a Tea Party favorite from Utah, told Jaczko after a rapid-fire series of questions during which he repeatedly cut off Jaczko mid-reply. “If you’re going to do the right thing for this country and this commission, you should step down.” After similarly berating Jaczko during his questioning, Representative Raul Labrador told him that “I’ve never seen such self-deluded behavior by any individual probably in my whole life.”

Already this week, two Republican members of Congress—Representatives Ed Whitfield and John Shimkus—have called for Jaczko’s resignation. Others have suggested that Jaczko step down as chairman but remain on the commission. During the hearing Jaczko said he has “no plans to resign.”

The four commissioners—two of whom are Democrats, while two are Republicans—were unanimous in saying that Jaczko’s temper was out of control, and cited detailed examples of NRC staffers who were reduced to tears or similarly humiliated with a “loss of composure”  after a confrontation with Jaczko.

There may be something to these allegations—but it’s also clear that the nuclear industry is using the conflict to attempt to neutralize or remove Jaczko from the NRC, where he has been a consistent advocate for tighter safety controls, particularly after the catastrophe at the Fukushima Daiichi plant in Japan. As we detailed Monday, on several key votes Jaczko has been the lone voice for tougher regulations, in opposition to the other four members.

On Monday, the Nuclear Energy Institute, the industry’s main lobby in Washington, issued a statement echoing the concerns of the four commissioners and urged the White House and Congress to take “necessary steps” to correct the problem. And Ryan Grim at the Huffington Post reported this week that after the controversy erupted on Friday night, by Saturday morning industry officials were calling key Democrats and urging them not to back Jaczko.

Moreover, Grim noted that Commissioner William Magwood, who is leading the charge against Jaczko, has deep industry ties. His appointment was opposed by over 100 watchdog groups for that reason. Notably, Magwood did consulting work for Tepco—the company that runs the Fukushima plant.

Democrats on the panel repeatedly attempted to highlight Jaczko’s strong regulatory stand, despite a warning from Issa that the hearing wasn’t supposed to be about nuclear safety but rather effective personnel management.

“The Republican narrative for this hearing is superficial, political, and ultimately counterproductive for the health of the nuclear industry in America,” said Representative Gerry Connolly in written opening remarks. “By focusing on interpersonal bureaucratic disagreements within the [NRC], the frame of this hearing presented by the majority distracts from the more important issue at hand—the need for a robust, transparent NRC which is necessary to protect the public.”

The entire commission will again be before Congress tomorrow, this time before the Senate Environment and Public Works Committee.

 

Meltdown at the Nuclear Regulatory Commission

Tensions at the Nuclear Regulatory Commission, the nation’s chief overseer of civilian nuclear materials, finally boiled over into public finger-pointing and accusations of malfeasance late Friday—creating what one lawmaker called “a regulatory meltdown.” It’s a messy conflict, but one thing is clear: the nuclear industry has many friends on the NRC.

On Friday, Representative Darrell Issa released a letter written in October by four of the commission’s five members. It accused the fifth member, Gregory Jaczko—who is also the NRC Chairman—of “causing serious damage” to the agency with “increasingly problematic and erratic behavior.” The commissioners feel Jaczko limited their role and bullied them in an emergency review of the nation’s nuclear facilities following the Fukushima meltdown in March.

The four commissioners’ complaints stem from when Jaczko invoked some emergency powers right after the Fukushima catastrophe. These powers transfer more authority to the chairman, in the name of streamlining NRC function when something crucial is happening. Jaczko created of a task force to study the Fukushima meltdown and issue recommendations about how to protect civilian nuclear facilities here from a similar fate, and the four commissioners claim not to have been notified of the new emergency powers and not to have been adequately consulted on the task force’s recommendations, which were released this summer.

But also on Friday, Representative Ed Markey of Massachusetts released a detailed report directly challenging those four commissioners. His report concludes that they “have attempted a coup on the Chairman” and have “caused a regulatory meltdown that has left America's nuclear fleet and the general public at risk.”

Markey’s report paints a different picture than what the four commissioners claim—and reveals them to be primarily interested in protecting the nuclear industry.

His staff obtained thousands of pages of e-mails, correspondence, meeting minutes and other materials, and uncovered clear evidence that the four commissioners were largely kept in the loop about the new emergency mode. And in several e-mails, the commissioners pettily gripe amongst each other about Jaczko’s leadership; after one conference call with Jaczko, they e-mail back and forth with comments such as “what a bunch of shit,” “I detected a significant amount of ass-kissing” and “that was a bunch of Barbra Streisand.”

But this isn’t about bureaucratic backbiting. The Markey report demonstrates that at many different decision points the four commissioners were opposed not just to Jaczko’s leadership but what he was doing—namely, trying to toughen regulations on the nuclear industry. At several key points, the rebellious commissioners try to slow down or halt post-Fukushima disaster measures.

Key among Markey’s findings:

1. Four NRC commissioners attempted to delay and otherwise impede the creation of the NRC Near-Term Task Force on Fukushima.

2. Four NRC commissioners conspired, with each other and with senior NRC staff, to delay the release of and alter the NRC Near-Term Task Force report on Fukushima.

3. The other NRC Commissioners attempted to slow down or otherwise impede the adoption of the safety recommendations made by the NRC Near-Term Task Force on Fukushima.

4. NRC Chairman Greg Jaczko kept the other four NRC Commissioners fully informed regarding the Japanese emergency, despite claims to the contrary made by these commissioners.

5. A review of e-mails and other documents indicates high levels of suspicion and hostility directed at the chairman.

When President Obama was campaigning in 2008, he called the NRC “a moribund agency…captive of the industry that it regulates.” The Nation’s Christian Parenti has also detailed the influence the nuclear lobby has on the NRC. What’s happening now seems to be another symptom of that problem.

In the e-mails, the four commissioners mount an attempt “review” the Fukushima’s Task Force findings before they were released to the public. Jaczko is quoted second-hand as being concerned this review process “may create the impression the commission will sanitize the reports,” which appears to be exactly what was happening.

To give one example: as the Task Force report was being finalized, and the four commissioners had been unable to delay it, they had a senior NRC staff member attach a memo to the report. This memo basically tried to put the brakes on the reforms the Task Force was advocating: specifically, it said “before deciding on the path forward and the specific recommendations in the Task Force’s report, the Commission may wish to solicit external stakeholder input” and that there would be a benefit “to developing alignment on the objectives, approaches and schedules [with that of external stakeholders] for implementing safety improvements.”

To those not familiar with Washington speak, when regulators talk aligning objectives to those of “external stakeholders,” they mean: make sure the industry approves these regulations. Jaczko had this memo removed from the report before it was released.

Markey’s report takes pains to detail the times when the four commissioners voted against safety regulations, and where the only holdout was Jaczko. Some examples:

In June 2010, the commission voted 4-1, with Jaczko the lone “no” vote, to reduce limitations on the number of work hours for employees who perform quality control at nuclear facilities.

In December 2010, the commission voted 4-1, with Jaczko again the lone opposition vote, not to require specific NRC licenses for radioactive materials that could be used to create small nuclear devices, also known as “dirty bombs.”

In March 2011, the commission voted 4-1, with Jaczko again the lone opposition vote, to ignore a recommendation from the NRC’s own Advisory Committee on Reactor Safeguards about increased safety measures to prevent meltdowns in the event of fire or earthquake. This happened only four days after an earthquake struck the Fukushima Daiichi plant in Japan.

The four commissioners are now enjoying support from many Republicans on Capitol Hill, who not incidentally also oppose tougher regulation. Issa has been hitting the airwaves today in support of the four commissioners, and bashing Jaczko. Senator Lisa Murkowski, the top Republican on the Senate Energy Committee, basically called for Obama to remove Jaczko on Saturday—she said Jaczko’s alleged supposed actions are “a serious breach of the public’s trust” and that “such behavior is unacceptable at every level of government and a response from the president is long overdue.”

Democrats, meanwhile, are defending the chairman. “It is sad to see those who would place the interests of a single industry over the safety of the American people to wage a politically-motivated witch hunt against a man with a proven track record,” said Senate majority leader Harry Reid in a statement. (Jaczko used to work for Reid’s Senate office as a policy adviser).

All of this is a backdrop for what will surely be combative hearings on Capitol Hill this week. All five commissioners will testify before Issa’s House Committee on Government Oversight on Wednesday, and then before the Senate Environment and Public Works Committee on Thursday. I’ll be at both hearings and will continue to provide updates.

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