David Corn and Politico's Roger Simon joined Chris Matthews on MSNBC's Hardball to discuss Bill Clinton and Barack Obama's differing endorsements in the Colorado Senate race.

This morning's Washington Post reports on efforts in Congress to strengthen regulation of oil companies.

Two key Senate committees approved legislation Wednesday that would change the way the federal government regulates offshore oil drilling and penalizes companies for oil spills…Both measures passed on bipartisan voice votes. One approved by the Energy and Natural Resources Committee would raise the civil and criminal penalties for a spill, require more safety equipment redundancies, boost the number of federal safety inspectors and demand additional precautions for deep-water drilling. The other, passed by the Environment and Public Works Committee, would remove oil companies' $75 million liability limit and retroactively remove the liability cap for BP and the Deepwater Horizon explosion.

The Post says that these measures demonstrate "lawmakers' eagerness to respond to the disaster in the Gulf of Mexico." They might more accurately say that the measures demonstrate lawmakers' eagerness to look like they are responding to the disaster. In the real world, the proposed measures will serve mostly as election-year greenwashing, with little genuine impact.

Conservative economist Scott Sumner tries to divine Paul Krugman's secret to economic prognostication:

If you read Brad DeLong, you probably notice that he is a bit in awe of Krugman’s ability to be right about everything. Actually, Krugman isn’t right about everything....But to give the devil his due, he is right about an awful lot of things. Why is that?

....Think about all his recent posts mocking the conservative fear that big deficits will lead to higher interest rates. What evidence does Krugman use? He cites the low and falling 10 year bond yields. In other posts he has used TIPS spreads to explain why inflation is the last thing we should be worried about. Now flash back to March 2009, when Krugman warned that $780 billion in stimulus would not be enough to get the job done. Did he know this from his models, as he claimed? Or did he cheat, did he peek at the equity, commodity and bond markets, and notice that all were predicting a severe recession with lots of disinflation, if not outright deflation? I think he peeked.

My theory is there are two kinds of economists:

1. Those who look smarter than they really are, because they rely on the EMH to predict

Paul Krugman

Scott Sumner


2. Those who look dumber than they really are because they rely on their own models to predict

EMH is the Efficient Market Hypothesis, and in this context it basically means that current prices reflect the best information we have about the state of the market. There are no hidden secrets and there are no models that can provide better predictions. If the market, putting its money where its mouth is, thinks that interest rates and inflation are going to remain subdued, then your best bet — as Krugman and DeLong point out regularly — is that interest rates and inflation are going to remain subdued.

Of course, neither Krugman nor DeLong is a big fan of EMH, so Sumner is having a bit of fun at their expense in this post. Still, there's a point to the snark, and it's why I'm a smidge less sure about the market's view of interest rates and inflation than K&D are. The problem is that I'm on their side when it comes to EMH: it really isn't a very reliable theory, and it's especially unreliable in the middle of bubbles. Relying on market prices as a guarantee of safety during the credit bubble of the aughts would have led you wildly astray, and I suspect that it might be doing the same thing now: thanks to the global recession, the overall dearth of good investment opportunities, and a general fear of the future producing a sustained flight to safety, we may be in the middle of a treasury bubble that's pushing interest rates to artificially low levels. If we are, then that bubble may pop unexpectedly and we may learn that the market has been fooling us all along.

Now, DeLong in particular has been tireless in making a related but separate point: it doesn't really matter what you think about the future. If the market — whether or not it's being fooled by a bubble mentality — is willing to loan the government money for 10 or 30 years at low interest rates, then the government should take the money. Once the rate is locked in, it means we're getting cheap funding to stimulate the economy, and we might as well take advantage of it. This has nothing to do with either EMH or any attempt to predict the future.

And I basically agree. I'm not sanguine about the state of the economy, and I think the risk that either expansionary fiscal policy or expansionary monetary policy will touch off a serious inflation storm is small. In any case, small enough that I'm willing to take it. Still, there is a chance that expansionary policy will, at some point, spook the market enough that it wakes up from its bubble and decides to send interest rates skyrocketing. I don't think it's a very big chance, but it's a chance. And it's why I'm just a little bit waffly on the whole subject.

Tune in to Countdown with Keith Olbermann tonight at 8pm EST to watch MoJo's human rights reporter Mac McClelland discuss the mental health crisis the oil disaster has had on Louisiana residents. To get warmed up check out her recent piece on some of the hardships faced by fishermen's wives. A peek:

Young, fresh-faced Julie with the toddler on her lap doesn't want her husband doing cleanup anyhow. She tells him to stop doing it because it's dangerous. He says, "How do you want me to feed you?" She says, "How are we gonna eat when we're dead from chemical contamination you're bringing into the house?" He says, "We'll live on the check." At this point in Julie's re-creation of this daily fight, everyone yells, "But we're not getting the check!"

Mac continues to report on the spill and its ripple effects from Louisiana. If you want to support her efforts, and those of our other reporters covering the BP disaster, with a donation you can do so here. And you can catch up on all of MoJo's BP coverage here.

As if people in the Gulf coast didn't already have enough health concerns due to the BP disaster, now it appears the infamous formaldehyde trailers used in the region after Hurricane Katrina are making a reappearance.

After Katrina, the Federal Emergency Management Agency (FEMA) provided 120,000 trailers to people who lost their homes during the storm. The government banned them from use for long-term housing though, after they were found to have high levels of formaldehyde, which can cause cancer, respiratory problems, leukemia, and other health conditions. They were back in the news earlier this year when the federal government put some of the trailers up for auction, sparking concern among environmental and public health groups. Now the New York Times reports that they're making a comeback as living quarters for cleanup workers:

Ron Mason, owner of a disaster contracting firm, Alpha 1, said that in the past two weeks he had sold more than 20 of the trailers to cleanup workers and the companies that employ them in Venice and Grand Isle, La.
Even though federal regulators have said the trailers are not to be used for housing because of formaldehyde’s health risks, Mr. Mason said some of these workers had bought them so they could be together with their wives and children after work.
"These are perfectly good trailers," Mr. Mason said, adding that he has leased land in and around Venice for 40 more trailers that are being delivered from Texas in the coming weeks. "Look, you know that new car smell? Well, that’s formaldehyde, too. The stuff is in everything. It’s not a big deal."

Of course, many, many others would disagree. The tainted trailers are supposed to have placards on them noting thy are "not to be used for housing," but as the Times reports, these warning are not always in place. There's also a risk that the trailers, which are going for as little as $2,500, could be resold several times in the coming months and years, long after the warnings have disappeared (if they were ever posted in the first place).

The policy of selling the trailers off to likely unsuspecting and probably low-income people, is highly questionable by itself. But a piece on the auction in the Washington Post in March included this ominous passage, which made it clear that the government hasn’t made much of an effort to change its ways:

But the U.S. Centers for Disease Control and Prevention still have not issued a contract for a long-promised study of the health effects on children who lived in trailers; no binding safety standards for formaldehyde in housing have been set; and FEMA is still fleshing out how it would manage housing in a future Katrina-scale catastrophe.

Now we're in the midst of that next Katrina-scale catastrophe, and FEMA was no more prepared.

Just how screwed up is the Senate? Well, here's an example. Yesterday Republicans blocked a bill that would grant subpoena power to the oil spill commission President Obama formed to investigate the Deepwater Horizon disaster and make policy recommendations to prevent future drilling calamities.

The House approved its version of the bill almost unanimously last week, with just Rep. Ron Paul (R-Texas) voting against it. Granting the commission this authority is pretty vital; basically, it will allow the commission to obtain documents, compel testimony from witnesses, and otherwise get a hold of necessary information (i.e. do its job.). House sponsor Rep. Lois Capps (D-Calif.) says subpoena power is "absolutely critical to ensuring that BP and other private companies cannot stonewall" the commission. Sen. John Kerry (D-Mass.), one of the Senate sponsors, has argued that without subpoena power "a commission is just window dressing."

But when Sen. Jeanne Shaheen (D-NH) attempted to bring up the bill under unanimous consent yesterday, Jim DeMint (R-SC) blocked it. His spokesman told Politico that DeMint didn't object to it personally. On the floor, the senator said he was objecting "on behalf of other members of the Republican caucus." Who in particular? Well, obviously no one wanted to admit as much.

There you have it: the US Congress, where a bill can be approved 420-1 in the House and then get denied even consideration in the Senate.

This is yet another terrible sign for moving anything in the way of reforms on offshore drilling. Democrats are planning to debate an as-yet-undetermined package of energy, oil-spill, and possibly climate provisions after they return from the July 4 recess. But they will of course need the votes of at least a few Republicans to proceed on any of it. And so far, the Senate can't even move a bill as mundane as the subpoena legislation.

UPDATE: Ah, Greg Sargent just reported that Senate Republicans now say they will stop blocking the subpoena bill. Minority Leader Mitch McConnell's spokesman says they won't object when it is brought up again. They were just blocking it yesterday because they hadn't yet had time to read the bill, according to DeMint's spokesman. Maybe good things can happen in the Senate. But since senators have already gone home for the July 4 recess, we'll have to wait until July 12 for the bill to be offered again.

World on a String: Erik Bendl, 48, of Louisive, KY, is pushing this to-scale (maybe) model of the Earth from Washington, DC to Maine to raise awareness of Diabetes (Photo: Alex Gontar).World on a String: Athol, Massachusetts— "World Guy," aka Erik Bendl, 48, of Louisville, KY, is pushing this to-scale (maybe) model of the Earth from Washington, DC to Maine to raise awareness of Diabetes (Photo: Alex Gontar).

Deficit Poser Alert

Ryan McNeely isn't impressed with the deficit hawkery of Blue Dog Democrat Stephanie Herseth Sandlin (D–SD), who has been relentless in her efforts to reduce stimulus and jobs spending:

The problem is that Herseth Sandlin voted to permanently cut the estate tax, which “would have reduced government revenue by an estimated $268 billion over the next decade, according to the Center on Budget and Policy Priorities.” There were no corresponding spending cuts. She also voted for the Energy Policy Act of 2005, which contained billions in tax breaks for extremely profitable oil companies. She also voted against the deficit-reducing Affordable Care Act. Finally, she voted for a $100 billion emergency supplemental for the Iraq War without requiring a withdrawl timeline, against the wishes of Democratic leadership.

She's a deficit poser, not a deficit hawk. She doesn't care about the deficit, she just prefers that money be spent on rich people, big corporations, and foreign wars instead of the unemployed and those without healthcare. Which is fine, I guess. But tell me again why she's a Democrat and why anyone takes her alleged deficit hawkery seriously?

Millions of Americans are slated to lose their unemployment benefits next week, and millions more could lose their jobs due to state budget cuts—and it’s all the Senate’s fault. On Wednesday night, Democrats were unable to overcome a Republican-led filibuster of a bill that would extend unemployment benefits, which failed for the fourth time due to intransigent Senate moderates.

By the time members of Congress go home for July recess next week, nearly 2 million jobless Americans will be without assistance, threatening to put an even bigger damper on our economic recovery. And despite the claims from conservatives like Nevada Senate candidate Sharron Angle—who called jobless beneficiaries “spoiled” and insisted that “there are some jobs out there”—it’s clear that job growth, like the rest of the economy, has yet to recover from the recession.

Recent figures have shown that there are five jobseekers for every job available. And kicking those looking for work off the government dole won’t make more jobs magically appear. In fact, cutting back the stimulus is more likely to slow short-term growth than speed it up: Mark Zandi, chief economist at Moodys.com, has estimated that unemployment benefits generate $1.61 for every dollar spent. Economists from Goldman Sachs call the Senate’s inaction “an increasingly important risk to growth.” And the human cost of the cutbacks is quickly becoming clear. "I'm drowning," one unemployed 45-year-old woman told the Huffington Post, having recently discovered her benefits would be cut off. "I didn't get any warning...What do I do now?"

Compounding the problem is the massive budget cuts that states will be forced to enact if the Senate fails to take action. Last week, the Senate's earlier jobs’ bill—which included the unemployment benefit extension and Medicaid aid to state budgets—also failed, due to the same conservative fear-mongering about deficits. Most states are required to balance their budgets by law and were counting on the federal aid to help them after stimulus funds expire this year. Now nearly a million jobs could be chopped as a result of the state budget shortfalls, according to the Center for Budget and Policy Priorities.

Why are US lawmakers willing to wreak such havoc upon the economy and job-seeking Americans, who are largely unemployed through no fault of their own? The problem might be summed up as follows:

A recent Pew Research Center survey found that most Americans think that states should solve their budget crises without federal help. Paradoxically, however, most respondents also said they oppose reductions that would have to be made for states to balance their budgets.

So Americans don’t want state governments to lean on the feds to solve their fiscal woes. At the same time, they don’t want to suffer the consequences of the cutbacks that will result if the states do try to balance their budgets without federal help. (The New Republic’s Jonathan Chait points to the same schizophrenic dynamic among New Jersey voters.) But you can’t have it both ways in the current economy. And that’s a reality that both the American public and our dysfunctional Senate need to own up to.

While most commentators agree that the Senate will confirm Solicitor General Elena Kagan as our next Supreme Court justice, the high theater hasn't yet run its full course. On Thursday, both parties will call witnesses to testify on Kagan's fitness—or lack of it—for the high office, and judging from the GOP's slate of speakers (including these curious military vets), there may yet be some fireworks—or, at least, some red meat for both party bases to chew on. For a compilation of Kagan's best one-liners from earlier in the week, check out DC reporter Stephanie Mencimer's fantastic work here. And follow the action in real time on my Twitter feed: