Capital Gains and Games

Blogging will be "a bit light" the next three days as the CG&G folks scatter around the globe.

Happy birthday America.

Friday's razor-thin 219-212 House passage of the Climate Change bill, H.R.2454, was a testament to the dogged persistance of President Barack Obama and House Speaker Nancy Pelosi.  As tough as that was, Senate passage will be a lot more difficult.

On April 1, 2009, 26 coal and manufacturing state Democrats joined all 41 Senate Republicans in favor of Senator Mike Johann's (R-NE) amendment to the Budget Resolution, S.Con.Res.13, disallowing the use of "reconciliation" to pass a Climate Change bill.  "Reconciliation" would allow passage by a majority vote instead of the 60 votes normally needed to pass major bills.  It would also prevent extraneous killer amendments.  Some of those 26 Democrats may feel secure enough of their reelection chances to vote in favor of a Climate Change bill this fall, but many won't.  That's why I'd be surprised if the Senate can pass a Climate Change bill this year.  I could be proven wrong if President Obama can mount enough public pressure on those 26 Senate Democrats to turn them around, but that would be a tall order.

Over at economistmom.com, Diane Rogers, does her usual good job reviewing the current bidding on PAYGO.  One of her conclusions is a reverse NIKE, that is, when it comes to tax cuts and spending increases, the best way to pay for them is to just not do it.

This is a good summary of the hearing held last Thursday by the House Budget Committee on PAYGO and, like almost everything Diane does, is well worth the few minutes it will take to read.  If you want to read the testimony itself, take a look here.

I still remember an interview with Liberace from what must be close to 30 years ago in which he explained how he had become so flamboyant.  It all started when he appeared on stage for a piano concert in a white dinner jacket instead of a black tuxedo.  From that moment on, he said, he felt the need to continue to outdo himself with his attire.  Eventually, both because he wanted to and because his audience expected it, Liberace ended up coming on stage wearing something like this:

So what does this have to do with Rush Limbaugh?

I had three reactions to yesterday's cap-and-trade vote, two of which came from The New York Times article that I read this morning and one of which came from Stan's very smart post.  Here they are:

1. From the article, "Only eight Republicans voted for the bill, which runs to more than 1,300 pages."
2. From the article, "The bill would grant a majority of the permits free in the early years of the program, to keep costs low."
3. From Stan, "But the bigger story is that the White House once again has demonstrated an excellent ability to get Congress to go along with the things it wants."

And now let me take each one in turn.

You don't have to like the climate bill that was approved last night by the House to be impressed by the White House's ability to get it passed. The bill 219-212, with eight Republican votes in favor.

The margin was narrow but isn't the big story.  The ultimate political value for the White House is that it was able to get the bill adopted at all but still allow 44 Democrats to vote against it.  Not asking Democrats to walk a political plank will pay huge dividends later this year and in the 2010 elections because those members who needed to vote against it were able to do so.  And, of course, the White House didn't have to use up huge favors in the process.

Having voted against the administration's climate change bill on the record means that at least some of theese House Democrats will be able to vote for what emerges from a House-Senate conference later in the year.  Therefore, the chances of a climate bill being enacted this year is now much greater than it was 24 hours ago.

Wall Street Journal columnist James B. Stewart can’t have it both ways.

In a column in yesterday’s WSJ, Stewart, says that the consumer lending process “…could use an overhaul…” and he applauds the Obama plan for doing that.

This afternoon, the Congressional Budget Office estimated the public debt will soar from 41% of GDP at the end of FY08 to 60% at the end of FY10 without any policy changes and that the federal government is on an "unsustainable" fiscal policy path.  Once the economy is on a firm path to recovery, a lot of deficit reduction will be required to put us on a sustainable fiscal policy path.  Federal Medicare and Medicaid expenditures currently equal 5% of GDP, and CBO projects that spending will double by 2035 if left unchecked.  By comparison, Social Security will rise from just under 5% of GDP to 6% of GDP by 2035.  CBO Director Doug Elmendorf's blog provides an excellent summary.

The White House yesterday did something that should truly warm the hearts of deficit hawks everywhere: it threated to veto the 2010 military authorization bill over two big spending issues -- the F22 and the alternate engine for the F35.

A little background.  Although both of these programs were questioned for years by the Bush White House, Congress kept insisting that the Pentagon spend the money anyway and the president always went along.  This year, the F22 was a target of Secretary of Defense Robert Gates when he held a press conference in April on his budget priorities.  Several weeks later, President Obama specifically used both programs as examples of government waste and then requested no funds for them in his budget.  In between those two events, Citizens Against Government Waste declared both to be prime examples of pork and listed them prominently in its Pig Book.

I'll leave it to the residents of the great state of South Carolina to decide whether their governor remains in office, and to the governor's wife to decide whether the marriage continues.

But, as a partner in a large public relations firm, I have no problem saying that the governor's communications team should be fired immediately.  Lying, which is clearly what they did over the past week when they said he was hiking on the Appalachian Trail, simply and unambiguously is not acceptable.

And if they were lied to, that is, if they were deliberately told incorrect information, they should all resign by noon today as a matter of principle.

Actually, they should have submitted their resignations yesterday.