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The White House has offered $6.5 billion in additional spending cuts, report Lori Montgomery and Paul Kane: "The White House proposed Thursday to trim an additional $6.5 billion from federal programs this year as Vice President Biden opened talks with congressional leaders aimed at funding the government through Sept. 30 and averting a shutdown. With another deadline looming in two weeks, Biden carried the offer to Capitol Hill...The White House proposal falls far short of the $61 billion the House voted last month to slash from current funding levels. But senior administration officials characterized it as an opening bid in a process that is likely to stretch on for days."

The House GOP will demand $2 billion in additional cuts for each stopgap spending bill, reports Felicia Sonmez: "Ahead of a meeting between congressional leaders and the White House on keeping the federal government funded, House Majority Leader Eric Cantor (R-Va.) announced Thursday that the House will continue to pass short-term measures that cut spending at the rate of $2 billion per week until Democrats release their own long-term spending proposal...His comment marked House Republicans' first statement on their strategy going forward since President Obama signed into law on Wednesday a stopgap funding measure that will keep the government running through March 18."

House Speaker John Boehner promises to hold fire if Obama proposes entitlement reform, reports Alexander Bolton: "Speaker John Boehner (R-Ohio) has privately assured President Obama that House Republicans will not attack him if he makes a proposal to reform entitlement spending, according to sources familiar with the offer. Moreover, Boehner has personally promised Obama that he will stand side-by-side with him to weather the strong political backlash expected from any proposal to cut entitlement costs... Social Security reform has been prominent in behind-the-scenes talks about entitlement spending because it is relatively easy to reduce its cost projections."

Acoustic live version interlude: Ted Leo plays "One Polaroid a Day".

Still to come: A deal on foreclosures is near; a judge who struck down health care reform has stayed his own ruling; cuts to state block grants could endanger antipoverty programs; the administration is open to tapping oil reserves should prices spike; and a member of British parliament plays air guitar during a debate.

Economy

The administration and state attorneys general are nearing a deal on foreclosures, report Zachary Goldfarb and Dina ElBoghdady: "Senior Obama administration officials, newly joined by state attorneys general, were on the brink Thursday of finalizing major elements of a possible settlement with large U.S. banks accused of flawed and fraudulent foreclosure practices, sources familiar with the discussions said. But absent from this otherwise united government front, which is preparing to submit a proposed settlement to financial firms within days, is the regulator of the nation's largest banks, the Office of the Comptroller of the Currency. The OCC has raised concerns that the firms might be required to pay too large a fine - $20 billion or more."

A group of Senators wants the administration to provide more mortgage adjustment assistance: http://politi.co/gwtVr8

A balanced budget amendment test vote fell short in the Senate, reports Felicia Sonmez: "An amendment offered by Sen. Mike Lee (R-Utah) that would have 'expressed the sense of the Senate' in support of a balanced budget amendment fell just short of passage Thursday, but it garnered the backing of almost a dozen members of the Senate Democratic caucus, many of whom are up for reelection in 2012. Fifty-eight senators voted 'yes' while 40 voted 'no' on the measure, which Lee had proposed as an amendment to a patent-reform bill making its way through the Senate. Among the 58 'yes' votes were 10 Democrats."

Even moderate Democrats are pledging to oppose Social Security cuts: http://bit.ly/ehciVl

Ending Fannie and Freddie could end the 30-year mortgage, reports Binyamin Appelbaum: "How might home buying change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac? The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say. Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs. Lenders could charge fees for popular features now taken for granted, like the ability to 'lock in' an interest rate weeks or months before taking out a loan."

Republican budget cuts could kill the recovery, writes Paul Krugman: "Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right...We have a lot of evidence from other countries about the prospects for 'expansionary austerity' -- and that evidence is all negative. Last October, a comprehensive study by the International Monetary Fund concluded that 'the idea that fiscal austerity stimulates economic activity in the short term finds little support in the data.'"

The federal govenrment needs a balanced budget amendment, writes Sen. Mike Lee: http://wapo.st/ibG0ub

Public workers didn't cause the state budget crises, writes AFL-CIO president Richard Trumka: "When adjusted for education, experience and training, the data show that public-sector workers are paid less than their private-sector counterparts. Right now, state and municipal budgets are in trouble primarily because of high unemployment, falling incomes, and losses in the stock market. Together, these lead to lower tax revenues and depleted pension funds. It wasn't teachers or firefighters or nurses who crashed the stock market and caused the recession that led to millions of layoffs and foreclosures. It was the so-called engine of our economy--Wall Street--which has suffered no consequence after nearly destroying the global financial system in 2008."

Great moments in legislating interlude: A member of parliament in the UK plays air guitar during debate.

Health Care

Judge Roger Vinson has stayed his own ruling striking down health care reform, reports N.C. Aizenman: " federal judge in Florida who earlier ruled the new health-care law unconstitutional said Thursday that implementation can proceed in the 26 states that mounted the legal challenge while the Obama administration pursues an appeal. However, U.S. District Court Judge Roger Vinson attached two conditions to the 'stay' of his ruling: The administration must file its appeal within seven days and it must request an expedited review from either the Court of Appeals or the Supreme Court... Justice Department spokeswoman Tracy Schmaler said the administration would seek fast-track consideration from the 11th Circuit."

HHS Secretary Kathleen Sebelius faced a tough crowd in a House hearing: http://bit.ly/i7bKU2

The House voted to repeal the small business tax reporting provision of health reform, reports Felicia Sonmez: "The House on Thursday approved a measure that would repeal the unpopular '1099' tax-reporting requirement for small businesses included in the national health-care law. It passed on a 314-to-112 vote, with all Republicans present as well as 76 Democrats voting in favor; 112 Democrats were opposed. Both Democrats and Republicans, as well as the White House, support repealing the provision, which requires businesses to report to the Internal Revenue Service all purchases of $600 or more. But there remain deep partisan divisions over how to pay for 1099 repeal, which would result in an estimated $22 billion loss in revenue over the next decade."

Pharmaceutical companies exaggerate their research costs to justify profits, writes Timothy Noah: http://slate.me/h2r0WR

Domestic Policy

Block grant cuts could endanger antipoverty programs, reports Henri Cauvin: "Community development block grants have been a vital source of federal anti-poverty money for decades, supporting affordable housing, job training and an array of other programs serving low-income communities. When President Obama, in his 2012 budget, proposed cutting funding for CDBGs, as they are known, by about $300 million, local officials across the country worried about their already-battered finances. Then House Republicans offered their take on the nearly $4 billion grant program. Not only did they urge cutting the program by more than half, to $1.5 billion, they also endorsed making the cuts in the middle of the current fiscal year."

State legislature walkouts are becoming more common: http://wapo.st/epQc4K

State and local pension funds are trillions more in debt than they think, reports Peter Whoriskey: "The pension funds for state and local workers in the United States are understating the amount they will owe workers by $1.5 trillion or more, according to some economists who have studied the issue, meaning that the benefits are much costlier than many governments and taxpayers thought. Doubts about government pension accounting have been voiced by analysts for years, but with shortfalls in state and local pension plans exacerbated by the recession, the push to refigure pension fund shortfalls has gained political momentum. The trillion-dollar gap arises from the government method of accounting."

Wisconsin is beginning layoffs today to lure back Democratic state senators: http://bit.ly/dHJgqk

The burden of local defaults shouldn't necessarily fall on residents, writes Roger Lowenstein: "If muni bonds were to default (causing investors permanent harm, as distinct from the temporary discomfort of price fluctuations), ordinary Americans would lose big...But what if the burden of municipal woes falls elsewhere than on bondholders? Yes, cities and states have creditors. They also have citizens who rely on their services and who pay the taxes, and they have public employees who are dependent on stable public-sector jobs and often-ample benefits...The question is, will it be articulated in terms of bond defaults or larger kindergarten classes -- or no kindergarten classes at all?"

Adorable animals rising from the dead interlude: A euthanized dog emerges alive.

Energy

The administration would consider opening oil reserves if need be, reports Vicki Needham: "Treasury Secretary Timothy Geithner told lawmakers Thursday that the United States and other nations can tap oil reserves if they're needed to restrain prices and keep the global economic recovery moving forward.  Geithner downplayed the risks that political unrest in the Middle East and North Africa was posing a major threat to the nation's economic recovery or could cause a long-term spike in inflation during testimony before the Senate Foreign Relations Committee. 'It's important to note that there is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil,' he said."

Two House Democrats are cosponsoring legislation stripping the EPA of its climate powers: http://politi.co/hhq2hs

The EPA is warning Congress that budget cuts would endanger public health, reports Daryl Fears: "Environmental Protection Agency Administrator Lisa P. Jackson told a Senate committee Wednesday that a proposal to cut a third of the agency's budget would gut a plan to reduce carbon pollution under the Clean Air Act and undermine efforts to limit water pollution in areas such as the Chesapeake Bay watershed. Jackson said the House Republicans' plan to cut more than $3 billion from the EPA would have a major impact. 'Big polluters would flout legal restrictions on dumping contaminants into the air, into rivers, and onto the ground,' she said."

Congressional pressure is limiting efforts to regulate gas drilling: http://nyti.ms/ewncQv

The GOP is actually opposing some EPA cuts, reports Robin Bravender: "For all their talk about the 'job-killing' EPA, Republicans have a dirty little secret: They actually like many of the agency’s efforts, particularly bread-and-butter programs aimed at cleaning up drinking water and air pollution in their districts. It’s in those areas where Obama has suggested the most budget pain, putting Republicans in the position of defending EPA and accusing the White House of playing politics. Sen. Jim Inhofe (R-Okla.), Washington’s top climate skeptic and most vocal opponent of EPA regulations, took issue with the proposal to slash nearly $1 billion from state revolving loan funds."

Dylan Matthews is a student at Harvard and a researcher at The Washington Post.

March 4, 2011

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