Obama's Deal

I note for the record that every major paper — the LA Times, New York Times, Washington Post, Wall Street Journal, and McClatchy — has a front page story today mentioning Barack Obama's diplomatic coup in brokering a deal to "take note" of tax havens instead of directly recognizing them.  The White House must really be anxious to make sure everyone knows about this.

In January, I wrote about Dawn Johnsen, the strident critic of Bush torture memo author John Yoo who President Barack Obama selected to run Yoo's old office, the Justice Department's Office of Legal Counsel. The OLC is responsible for providing legal advice (and, in the case of the Bush administration, legal cover) to the President. Johnsen, as I wrote in January, is the anti-Yoo: an outspoken opponent of torture and an advocate for an OLC that challenges presidential power. But now Senate Republicans may be planning to block her confirmation.

According to a story in Tuesday's New York Times, Senate Republicans "will first gauge whether they can attract some support from conservative Democrats" to filibuster Johnsen. A spokeswoman for Mitch McConnell, the Senate Minority Leader, refused to say whether McConnell was plotting a filibuster. Reid and McConnell have not been able to reach an agreement on bringing Johnsen's nomination to the floor: "We are discussing how to proceed on the nomination; it is our hope that the Republicans will not obstruct her nomination through filibuster," Reid spokesman Jim Manley told me in an email.

Suppose Congress passed a bill that gave you a tax credit if you mixed in some alternative fuels — ethanol or biodiesel, say — with your ordinary gasoline.  That's actually a dumb idea, probably, but at least it's pretty understandable.  In theory, the alternative fuel is greener than the fossil stuff, so creating the mixture is good for the environment and the government should encourage its use.

But what if there were an industry that already used a 100% alternative biofuel?  Could they qualify for the tax credit by mixing in some fossil fuel?  Obviously that's not what Congress intended, but hey — a mixture is a mixture.  The law doesn't say how you have to get there because it never occurred to lawmakers that anyone would do it this way.

But this is America!  Of course there's someone who will do this.  The paper industry, it turns out, depends on an elegant process in which wood pulp is separated into cellulose fiber and a sludge called "black liquor," which is then used to generate energy for the process.  Neat.  Chris Hayes explains what happened next:

By adding diesel fuel to the black liquor, paper companies produce a mixture that qualifies for the mixed-fuel tax credit, allowing them to burn "black liquor into gold," as a JPMorgan report put it....In fact, the money to be gained from exploiting the tax credit so dwarfs the money to be made in making paper — IP lost $452 million in the fourth quarter of 2008 alone — that the ultimate result of the credit will likely be to push paper prices down as mills churn at full capacity in order to grab as much money from the IRS as it can.

If there's a cloud hanging over the elation in the industry, it's the sneaking suspicion that once Congress gets wind of this racket, it will shut it down. "The one comment I do get from people [in the paper industry]," says [Brian] McClay, "is whether it's going to be rescinded or redrawn before the end game.

....So far, though, to the surprise of McClay and others, there's been not a peep from Capitol Hill.

This is American ingenuity at work.  You'd only be making a mistake if you thought it was anything unusual.  In fact, this kind of tax engineering is so commonplace that the spokesperson for International Paper doesn't even see the need to defend it.  "It is what it is," she shrugged when Chris called for comment.  And indeed it is.

Imagine if George W. Bush were still president.

Don't gag. But ponder what might have happened at the G-20. Would Bush have arrived with the same-old agenda and urged other nations to cut taxes for individuals and corporations and to resist the calls for too much reregulation of high-flying financiers? Would he have also advocated, as his fellow Republicans in Congress are doing these days, spending cuts in order to restrain government deficits? And if so, would he have been laughed out of London?

The problem in years past was that Bush, no matter what any foreign leader thought of him, led the biggest economic and military power on the globe. So he could not be laughed off. (See Iraq). Barack Obama, on the other hand, is appreciated, not merely tolerated. And though Bush had entered office promising a certain amount of humility in foreign affairs (and then dumped that vow after 9/11), Obama actually demonstrated how such a pledge could be put into practice. During a Thursday press conference, he said:

We exercise our leadership best when we are listening, when we recognize that the world is a complicated place and that we are going to have to act in partnership with other countries, when we lead by example, when we show some element of humility and recognize that we may not always have the best answer, but we can always encourage the best answer and support the best answer.

Of course, Obama has an interest in lowering expectations. It will be tough enough for him to fix the economic problems of the United States; being responsible for the economic woes of the world would be an even heavier burden. But he's also acknowledging that in the changing world, the United States is no longer the be-all-and-end-all, that it has indeed lost some global clout. A sneeze from the United States can still turn into a cold in other parts of the planet. But America may not be able to function as the world's economic doctor. (Hey, look at our health care system.) Having tapped out all that credit created by the speculation-driven housing bubble, it no longer has the demand to fuel a global rally.

Obama also showed a measure of maturity when he conceded that the steps the United States and the G-20 nations are taking may not work. At that press conference, ABC News' Jake Tapper asked him, "Can you say with confidence that the steps the G-20 nations are taking today...will help the world, or will prevent the world to avoid a depression or a deeper recession?" And Obama replied:

In life there are no guarantees; in economics, there are no guarantees. The people who thought they could provide guarantees, many of them worked at AIG, and it didn't work out so well.

Shades of JFK.

In London, Obama worked cooperatively and collaboratively with 19 other nations to reach an agreement under which these countries will engage in more than $1 trillion in lending to spur growth and will develop tough new regulations for banks and financial firms. Sure, some of this was left vague. But this accord was better than bickering and no resolution. "We never thought we would have such an agreement," French President Nicolas Sarkozy said. Obama may not be solely to credit for the agreement. But it's clear that his presence at the meeting--did you see this picture?--juiced up the proceedings, as he led the G-20 gang to a good-as-can-be-expected (if not a little better than that) deal.

So what would Bush have done? The good news is, we can only guess.

This was first posted at CQPolitics.com. You can follow David Corn's postings and media appearances via Twitter by clicking here.

According to the grim new jobs report, the economy lost 663,000 jobs in March, pushing the nation's unemployment rate to 8.5 percent. We've lost an average of 684,000 jobs every month since November 2008. Dean Baker, head of the Center for Economic and Policy Research, fills in some details:

While the most disadvantaged groups are feeling the effects of the downturn the hardest – the unemployment rate for African Americans is now 13.3 percent, which is also the rate for people without high school degrees – this recession is hitting everyone. The unemployment rate for workers with college degrees rose by 0.2 percentage points to 4.3 percent in March, almost a full percentage point above the peak for college grads in the last two recessions. While this rate is still just half of the overall average, it is double the 2.1 percent unemployment rate faced by college grads just a year ago. In other words, a college graduate is more than twice as likely to face unemployment today than a year ago.

The Center for Budget and Policy Priorities notes a disturbing nugget of news that is slipping under the radar:

The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — stood at 15.6 percent in March, up 6.9 percentage points since the recession began and the highest level on record in data that go back to 1994.

CBPP also claims that the "pace of job losses is far worse than it was even in the deep 1981-82 recession." So while the overall unemployment rate is not yet as high as it was then, we're losing jobs faster. See the chart below.

You probably already knew this, but don't trust Fox News polls. The network's questions are as biased as its hosts are insane.

CEO Blues

The Wall Street Journal reports that CEO pay was down a whopping 3.4% last year.  But wait!

CEO compensation decreased more sharply at banks and brokerages, long the source of some of the biggest paychecks. Median annual cash compensation for CEOs in the financial industry fell 43%, to $976,000. Total direct compensation fell 14.2%, to a median $7.6 million.

So that's what happens when you destroy the global financial system: your pay goes down 14% to a mere $7.6 million per year.  I guess we showed them, didn't we?

The bloodbath in America's newsrooms has come to the funny pages. The latest victim of corporate short-sightedness and the death of print media: Brenda Starr, who in the course of her 69-year news career (take that, Helen Thomas) has become synonymous with hard-hitting reportage from exotic locales such as Kazookistan and a fabulous head of sparkly fire-red hair (nice try, Maureen Dowd). On Tuesday, Starr got furloughed by the publisher and CEO of the financially troubled Flash, Al Neuharth-lookalike B. Babbit Bottomline. It's not clear what Starr's next move will be; in typical cartoon soap opera style, this plot development is taking agonizingly long to unfold. There's been hints that she'll follow in the footsteps of her "scrappy intern" Pug, who headed to India, "where newspapers are still thriving." Or maybe she'll launch an exciting second career on the Internets, perhaps with the tech-savvy former colleague who recently told her to "E-mail me on Facebook!". Stay tuned!

A scary new under-the-radar CDC study has found that 15 infant formulas sold in the US are contaminated with the rocket fuel additive perchlorate—which is even worse than it sounds, because so is the tap water parents mix formula with.

From the Environmental Working Group:

Researchers from the U.S. Centers for Disease Control and Prevention (CDC) have reported that 15 brands of powdered infant formula are contaminated with perchlorate, a rocket fuel component detected in drinking water in 28 states and territories.
The two most contaminated brands, made from cow’s milk, accounted for 87 percent of the U.S. powdered formula market in 2000, the scientists said.
The CDC scientists did not identify the formula brands they tested.
The little-noticed CDC findings, published in the March 2009 edition of the Journal of Exposure Science and Environmental Epidemiology, raise new concerns about perchlorate pollution, a legacy of Cold War rocket and missile tests. Studies have established that the chemical is a potent thyroid toxin that may interfere with fetal and infant brain development (Kirk 2006).

Read the full EWG report, or learn more about perchlorate in this Mother Jones investigation by David Corn.

Update: Don't miss ProPublica's story on perc problems.

Richard Scott is rich, conservative, and hates universal healthcare.  He's all about "patients' rights," you see, and intends to spend a big chunk of his fortune making sure people know it.  But if he intends to play the role of shady financier to the anti-reform crowd — well, that's fine by me:

Once lauded for building Columbia/HCA into the largest health care company in the world, Mr. Scott was ousted by his own board of directors in 1997 amid the nation’s biggest health care fraud scandal.

....“He’s a great symbol from our point of view,” said Richard J. Kirsch, the national campaign manager for Health Care for America Now. “We cannot have a better first person to attack health care reform than someone who ran a company that ripped off the government of hundreds of millions of dollars.”

Conservative health care activists, while glad to have a potential ally willing to spend $5 million out of his own pocket, are not fully embracing Mr. Scott....“I just don’t understand why he would be a messenger people would listen to,” said Charles N. Kahn III, who was a senior executive with the insurance industry group that ran the “Harry & Louise” advertisements credited with helping to kill the Clinton plan 15 years ago but who is working for a deal now. “I don’t think people are waiting to hear from him.”

....Mr. Scott has said his sole policy interest is to see to it that whatever overhaul Mr. Obama and Congress consider does not move the country toward a socialized system and away from what he calls his four pillars of reform: “choice, competition, accountability and personal responsibility.”

Ah, yes: competition and accountability.  Let's talk about that, shall we?  Or, rather, let's outsource it to our very own Blue Girl, who just happens to have worked at HCA back when they were bilking the taxpayers out of millions of dollars.  If you want to know how they did it, she's got the story right here.  It was simple!  And it'll remind you of Enron, IndyMac, AIG, and all the other bright lights of competition and accountability in corporate America that we've come to know and hate.

And for a real zeitgeist blast, there's also this: Scott steadfastly maintains that he did nothing wrong, and for his current venture he's hired the same PR firm that represented Swift Boat Veterans for Truth in 2004.  Central casting could hardly do better.  The wingers really know how to pick 'em, don't they?