O.K., Smart Guys: Fix the Energy Problem How should the U.S. solve its energy problems? The experts brainstorm

Norman Pearlstine, Thomas Kuhn, Bob Shapard, Carol Browner, Jigar Shah, and T. Boone Pickens Henry Leutwyler
This Week

August 1, 2011
Why the Debt Crisis Is Even Worse Than You Think

The U.S. first became a net importer of oil in 1948. The intervening decades have led Americans down a steady path of price spikes, shortages, and compromised foreign policy decisions. Imported fuel means expensive gasoline, lost jobs, and hobbled industries, while climate change poses risks as dramatic as they are difficult to assess. So how do we fix our fuel and energy problems? To answer that question—the first in a quarterly series called Fix This—Bloomberg Businessweek Chairman Norman Pearlstine gathered BP Capital Management’s T. Boone Pickens; Bob Shapard, chairman and chief executive officer of Oncor Electric Delivery and chairman of GridWise Alliance; Carol Browner, former director of the White House Office of Energy and Climate Change Policy for President Obama and EPA administrator for President Clinton; Jigar Shah, CEO of the Carbon War Room; and Thomas Kuhn, president of Edison Electric Institute. Their conversation has been condensed and edited.


What do we mean when we talk about an energy crisis? Is that an appropriate term for framing this discussion?

Shah: The word energy is very confusing. Energy includes both transportation fuel—which I think people are very concerned about—and coal, solar, wind, and other things that produce electricity. People confuse the two, and while we have fast-rising prices of electricity—5 percent rate increases per year since 2000—the fourfold increase in oil prices since 1999 is a much bigger problem in terms of economics than our electricity problem.

Shapard: People perceive there to be a crisis in this country environmentally with carbon and other emissions. I think transportation is the place you go for the biggest impact, and I think it’s a combination of natural gas and electricity that can solve our transportation problem. You can convert a significant portion of our fleet to natural gas and/or electricity. It addresses our dependence on foreign oil, but just as importantly it addresses the environmental issues. While coal plants and power plants are viewed as the villain when it comes to carbon, [giving off] 39 percent of the emissions, 31 percent of the emissions are [from] cars, and the important point is we know the solution on cars.

Kuhn: Never in the history of the world have we been so dependent upon one commodity as we are on oil right now, and every recession has been preceded by a spike in the price of oil. A $10 increase in oil causes $75 billion to come out of this economy. There are a lot of electric cars that are going on the road all over the world, in India, China, and elsewhere. I drive a Chevy Volt. I haven’t visited a gas station in three months. I plug in, I drive at 2¢ a mile compared with 10¢ to 12¢ a mile—that’s about $1 a gallon equivalent.

Browner: One of the first things we did when [President] Obama came to office was set the first fuel-efficiency standards in almost 20 years. We said we can make cars more efficient, and that’s been making our automotive industry stronger.

Pickens: If you remember, President Obama, when he got the nomination, said in 10 years we will not import any oil from the Mideast. I was impressed with that. It’s different than all the other people that ran for President. They said elect me, and we’ll be energy independent. So I thought he’s got a plan, and I hope that he does have a plan.

If there’s a consensus here that we don’t have to be reliant on imported oil, why are we?

Browner: Some of these changes will require congressional action, because what we need to do is give the private sector the certainty and the predictability so that they’ll make the large-scale investments in these changes. They don’t want to start making investments where they think I’m going to build something but I’m not able to sell it.

Shah: Just to be slightly argumentative, I think we were in exactly the same place for both electricity and transportation in the 1970s. For electricity, we opened up that market. I started one of the largest solar companies in the U.S. We had that opportunity because we had net metering, we had streamlined interconnection standards, we had all sorts of ways for us to connect to the grid and actually provide [a new service to] customers who were dissatisfied with the services they were already being provided. Today if you own a gas station, you’re most likely under a franchise agreement with a large oil company that doesn’t allow you to add an alternative fuel station without their permission.

You talk to people in Washington all the time, Boone. Does anybody understand the problem well enough to know how to address it?

Pickens: Get yourself a crisis, and then something will come out of Congress. But we’re sitting here with a bill ready to go in the house, HR1380. [Editor’s note: HR1380 would amend the tax code to encourage investment in alternative energy.] There are 250 million vehicles in America: All I’m trying to address is 8 million 18-wheelers. Go to the past 10 years, and look at our costs with OPEC—$1 trillion in 10 years. The largest transfer of wealth from one group to another. Now go forward 10 years and take [the price of] $100 a barrel forward, which I think is being extremely conservative. That’s $2.2 trillion. Just take the 18-wheelers, that’s 2.5 million barrels a day. Now the $2.2 trillion that we’re going to pay 10 years in the future. … You cut OPEC in half with 8 million vehicles.

Browner: Between what Mr. Pickens has been talking about in terms of the long-haul vehicles and the commitment on electric cars, it would be a huge change in our fleet in this country.

Pickens: Don’t call me Mr. Pickens, O.K.? It makes me feel old when you do that.

Browner: Well, it’s respectful.

Is technology a place that can give us clean or cleaner coal or allow us to do more aggressive fracking for natural gas?

Browner: I personally think the natural gas industry needs to be fully transparent. What scares people is what they don’t know. Right now [fracking] is regulated differently in different states, and I think if the industry would join together and say we’re going to disclose exactly what we’re doing, we’re going to take a giant step forward.

On energy, we certainly know a lot of things that we could do very, very quickly. Energy efficiency is not complicated. There’s a nice little company in Washington, Opower, that works with utilities to send the customer an explanation of how much electricity they’re using in comparison to their neighbors, and you know what the effect of that is? People stop using as much electricity. They don’t want to be less efficient than their neighbors are, and they’re able to achieve a 1 percent to 3.5 percent reduction.

Shapard: If we could reduce electricity consumption by 10 percent, you’d save $25 billion a year in energy costs, you’d reduce CO₂ by about what you get in 10 percent electric vehicle penetration. The problem is people don’t know how to do it. Think about the way you buy electricity today. It’s like going to the grocery store, throwing groceries in your bag, walking out the front door, and once a month the grocer sends you a bill for $800. You didn’t break down eggs from milk from bacon. That’s the way you get electricity, just a big lump bill. If we can give you real-time feedback, studies have shown you’ll use less, you’ll use it smarter.

Shah: I love Opower, but ultimately energy efficiency through individual action is just people spending money out of their own pocket. [It] hasn’t worked for 35 years. I really don’t believe it.

Browner: People make wise decisions when they have access to information. Do you know what percentage of people now use a seat belt? It’s over 90 percent.

Shah: But it’s mandated. There’s a law.

Browner: We got there by educating people.

When we talk about the automotive industry, is the change going to come out of Detroit?

Browner: It’s going to come through the regulators. What regulations do is they create market opportunities for the capital investments, because they create predictability and certainty. When the President said all cars are going to be 35 miles per gallon for the average fleet by 2017, the automotive industry knew what kind of investments they needed to make.

Shah: Here’s one thing that we don’t have in transportation, which I think is critical: There is almost no way in hell that you’re going to get an entrepreneur into transportation. There’s at least 15 different engine technologies that have been invented since the 1960s, but only someone with 50 full-time regulatory affairs people can actually get through the National Transportation Safety Board, through all the EPA regulations, and all of the other things to actually bring a new car to market. Like the group that won the X Prize, right? That’s an actual gasoline-powered vehicle that goes 120 miles to the gallon, and it’s an extraordinary engineering feat. I guarantee you that thing is never going to come to market.

What can we look to that can change the equation in terms of electric vehicles?

Kuhn: Battery technology is making major advancements. Lithium ion batteries [are] coming from a lot of government-supported research with the automobile companies and other companies around the world.

Pickens: Well, don’t end up on a Chinese battery.

Shapard: Even the auto companies are telling us that within five years the price of these batteries could drop in half and the functionality grow.

Shah: But the beauty of the electric vehicle is the business model innovation. There [are] 17 things that you can do that I’ve counted, and you might be able to do more, with an electric battery as an electric utility. The grid’s got to stay at 60 hertz to keep everything running well, and you can use batteries to do this instead of spending reserves with natural gas, which is far more expensive.

Browner: So what you’re saying is when I’m not driving, my car would become part of the electric utility system?

Shah: In California their peak demand for electricity is roughly 60,000 megawatts. If you have 250,000 electric cars, just 250,000 out of 30 million cars they probably have over there, at 20 kilowatts a piece, which is what a lot of these full electric cars are, that’s 5,000Mw. So you now have one-twelfth of the entire grid of storage.

The problem is people go to the dealership and will never buy an electric vehicle. So what you have to do, and entrepreneurs are doing this now, is convert these into vehicle services contracts. You say here’s a free car, just pay me $400 a month, which is what you would have paid for your lease payment, and I’ll get the $4,000 a year out of the utility because you don’t want to deal with the paperwork.

Youth Quarterback Camps Find a Profitable Seam

By Paul Wachter
This Week

August 1, 2011
Why the Debt Crisis Is Even Worse Than You Think
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 Happy Campers Clarkson: Mason Levinson/Bloomberg; Leinart: Alberto E. Rodriguez/Getty Images; Brees: Steve Clarkson—NFL washout and youth football eminence—was standing among 100 or so prepubescent boys as they ran between cones, avoided fake blitzes, and threw post and curl routes. Watching on the sidelines was a horde of eager parents, many of whom had plunked down $600 for Clarkson’s four-day Air 7 program. “It’s a big commitment,” says Jay Tuttle, who drove his 11-year-old two hours to the Los Angeles high school field. “But Steve really pushes my son’s skill set.”

For others, it’s a bargain. In the past two decades, Clarkson has become the country’s premier youth quarterback guru. His list of former pupils includes Super Bowl champion Ben Roethlisberger. Joe Montana hired him to tutor his sons. Last year, University of Southern California head coach Lane Kiffin offered a scholarship to David Sills, a Clarkson pupil who has yet to start high school. Youth quarterback coaching also happens to be an avocation Clarkson more or less created and then transformed into a miniature fiefdom. In addition to his Sunday Air 7 camps, he charges up to $10,000 per month for private lessons. “What you’re seeing at the quarterback position, at earlier ages, is specialization,” says Josh Heupel, the co-offensive coordinator at the University of Oklahoma. And there are plenty of takers. “This has been good for Miller,” says Eric Moss, watching his 9-year-old from the sidelines, “whether he plays football in the future—or invades China.”

Clarkson has given rise to one of football’s most profitable gimmicks, and one of its few economic gushers during the National Football League’s lockout that ended on July 25. There are now hundreds of camps run by an array of entrepreneurs ranging from NFL royalty to lesser quarterbacking profiteers. The Mannings—Peyton, Eli, and paterfamilias Archie—host the Manning Passing Academy every summer in Louisiana. The less famous Johnsons—Rob (who played for the Buffalo Bills and Tampa Bay Buccaneers), Bret (a brief stint with the Atlanta Falcons), and their dad, Bob—operate Camp Quarterback in California. And then there’s former high school offensive coordinator Terry Copacia. His brainchild, Terry Copacia’s All-State Quarterback School, holds two-day clinics throughout the country for $189 per student, grades seven and up. Darin Slack, who played for the Division-II University of Central Florida, charges $545 for his three-day Quarterback Academy, more than the four-day Manning affair.

The prices are justified, aspiring youth football moguls insist, by the fact that the position can be taught in a way a 7-foot frame or 95-mile-per-hour fastball cannot. And even if the NFL is out of reach for most kids, private coaches can help them earn a college scholarship—or at least make their high school’s first string. Quarterbacks also happen to be a good commodity to trade in since, private coaches note, they’re more likely to come from comfortable backgrounds. “It’s not a race thing,” says Clarkson, an African American. “It’s the demands of position. You have to be a stable person, and you’ll find most quarterbacks come from stable, two-parent homes.” Coincidentally, two-parent homes are more likely to be able to afford expensive quarterback coaches.

Clarkson discovered these truths with his first client, Perry Klein. After a season backing up John Elway in Denver—followed by two more seasons in Canada—Clarkson believed his career was over by 1986. That year, however, his great-aunt forwarded him an advertisement from a father looking for someone to help his 15-year-old son switch to football from gymnastics. “We threw the ball around on the lawn, and I remember thinking, the kid is O.K. but a little slender,” recalls Clarkson. “Then walking to the car, I turned around, and Perry was doing back flips. You could tell he was a great athlete. A light bulb went off in my head: If I could teach this kid to be a quarterback, he might be something special.” Clarkson took the job and devised a program targeting footwork, an efficient throwing motion, and reading defenses. Klein eventually won a Los Angeles high school title and spent two seasons with the Falcons. Soon other parents came calling, including Montana. “Just because you’re a Hall of Famer doesn’t mean you’re going to be a great coach,” Clarkson says.

Open thread: Senate to vote on debt bill at 1 p.m., or maybe not

posted at 12:09 pm on July 31, 2011 by Allahpundit
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They’re supposed to vote at 1 p.m., but according to Plouffe and another “Democrat familiar with the situation,” there’s still no bill. What’s the hold up? In all likelihood, they’re haggling over the “triggers” that’ll happen if the new Super Commission can’t agree on, or Congress won’t accept, new deficit reduction proposals later this year. Jen Rubin’s hearing the following from a Republican source on the Hill:

The second tranche works like this: If a new congressional commission introduces a plan totaling at least $1.5 trillion in cuts by Thanksgiving and it’s passed by Christmas there are no across-the-board cuts. Or, if a balanced budget amendment is passed and sent to the states, then across-the-board cuts are avoided. However, if there is no commission package passed AND the BBA is not passed and sent to the states, then across-the-board cuts of $1.2 trillion including Medicare and defense (the details of which aren’t final) go into effect. If the across-the board-cuts go into effect, the debt ceiling is only raised $1.2 trillion (likely insufficient to keep the government operating for long), meaning “we could do this all over again, depending on economic growth.” In other words, if we went to sequestration the total debt ceiling increase would be $2.1 trillion in two doses.

So there’s the BBA concession: Democrats can avoid new cuts in the second stage entirely if they pass the amendment. As for the automatic Medicare/Pentagon reductions, that’s obviously designed to make both sides in Congress think twice before rejecting the Super Commission’s recommendations. The precise formula for that is still being negotiated too. According to Jake Tapper, the White House wants fully 50 percent of the automatic cuts to affect the Pentagon and 50 percent to be spread across various other discretionary programs. GOP hawks won’t go for that, especially since the only alternative might be approving a Commission package that includes new revenues.

As I write this, the Senate has just begun its session and Reid is insisting that they’re “cautiously optimistic” about a deal but not there yet. Here’s your thread for tracking today’s drama. Exit question: How many Republican and Democratic votes will this bargain get in the House? Progressives are reportedly already murmuring about balking because of the lack of revenue in the deal, which means Boehner will need a majority of his previous Republican majority on yesterday’s vote to get this through. (Here’s one vote forecast.) I wonder if they’ll do it on the first try or, a la TARP, if it’ll take a market panic and subsequent re-vote to get it done. Stand by for updates.

Update: The post-deal spin starts before the deal is even struck:

“I don’t think we’ve been hurt at all,” McConnell said on CBS’ ‘Face the Nation’.

“The American people wanted us to do something about out-of-control spending and … the debt ceiling is going to produce what many people would believe is a complete change in the trajectory of the federal government beginning to get spending under control,” said McConnell, who is likely to be largely responsible for any package that wins muster with Congress.

Update: John Bolton sounds the alarm for hawks:

Every indication is that the debt-ceiling negotiations are leaving the defense budget in grave jeopardy. By exposing critical defense programs to disproportionate cuts as part of the “trigger mechanism,” there is a clear risk that key defense programs will be hollowed out.

While the trigger mechanism comes into play only if the Congressional negotiators fail to reach agreement on the second phase of spending cuts, it verges on catastrophe to take such a national security risk.

Defense has already taken hugely disproportionate cuts under President Obama, and there is simply no basis for expanding those cuts further. Republican negotiators must hold the line, since the Obama Administration plainly will no

Deal update: $2.4T in cuts and ceiling hikes — both in two parts

posted at 8:42 am on July 31, 2011 by Ed Morrissey
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ABC reports this morning that Congressional leaders have already begun briefing their caucuses on the eleventh-hour deal that emerged from the White House last night. Jonathan Karl notes that the deal is contingent on getting enough support from each House caucus to form a majority, and in the Senate to avoid a filibuster. We’ll come back to that in a moment, but Karl also updates the story on the deal. The topline numbers are apparently $2.4 trillion in matching spending cuts and debt-ceiling raises instead of $2.8 trillion, but now both are split into two parts:

The current framework would give the president the authority to raise the debt ceiling in two parts: roughly half of it now and the balance at the end of the year.

Each increase would be subject to a Congressional resolution of disapproval.

If Congress voted to disapprove that increase, however, the President could veto their disapproval.

The AP reported earlier on the $2.4 trillion number, too, although they say the cuts will be “slightly more” than the debt-ceiling boost. That’s still enough to get Barack Obama past the 2012 election, but not by much. It guarantees that the debt ceiling will be a 2012 election issue, although by now that was a given anyway.

However, the added McConnell wrinkle is interesting — and potentially a big win for Republicans. Essentially, Republicans get to claim credit for the cuts while laying blame for the debt increases on Obama. If they “disapprove,” Obama will veto the disapproval and end up owning all of the political baggage for the debt-ceiling increases. That’s a steep price to pay for Obama just to protect himself through the next election, although he could turn it on its ear and refuse to veto the second increase disapproval and force this fight all over again. That would, however, put the country back in “crisis” mode, and that would still be all on Obama.

This brings the deal closer to what I predicted yesterday; in fact, it almost matches it exactly. But can the leaders get the votes for it? If Obama endorses this deal, most Democrats will have no choice but to back it; after all, they have been doing the most Chicken Little screeching about the consequences of legislative failure. Boehner and McConnell will lose a significant number of Republicans, but both will probably hold a majority of their caucuses. I’d expect an agreement along these lines to pass quickly through Congress, maybe fast enough to avoid having to pass a $50 billion, two-week extension to gain time for the debate.

Update: Added “ceiling” to headline for more clarity.

Update II: McConnell tells CNN that they are “very close” to a deal. I’d interpret that to mean that they’re shopping the deal to the caucuses to make sure they can get the votes.

Sixth Quarter of Gains for Yuan

The Chinese yuan posted the sixth straight quarterly gain on the speculation that China will allow the currency to appreciate faster in order to slow growth of consumer prices.

The People’s Bank of China increased the reference rate for the yuan to 6.4716 per dollar today, allowing the currency to fluctuate 0.5 percent in either side of the target. Li Daokui, the adviser to the central bank, explained the rise of prices in June by higher costs of agricultural products and pork. China Securities Journal said today, citing the State Information Center, the inflation is estimated to be 5.3 percent in the first half of 2011 and about 4.9 percent for the whole year.

USD/CNY traded at 6.4648 today as of 11:22 GMT, fluctuating near its opening rate of 6.4644, after rising as high as 6.4680 and falling as low as 6.4625.

If you have any questions, comments or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

Earlier News About the Chinese Yuan:
» Yuan Appreciates Above 6.5 vs. USD for a Short Time (2011-04-29)
» Chinese Yuan Appreciates with Other Asian Currencies (2011-04-02)
» China Allows Yuan Appreciate, Can It Do So? (2011-01-12)
» Yuan Rises Beyond 6.6 per Dollar as China Battles Inflation (2010-12-31)
» Can Yuan's Gains Be Limited by Demands for Slower Appreciation? (2010-12-29)

Export & Import Prices Push Aussie Higher

The Australian dollar gained today versus the euro and the Japanese yen as the advance of import and export prices prompted the speculation that the central bank will raise interest rates.

Australian import prices rose 0.8 percent in the second quarter, while export prices increased by 6.0 percent. The MSCI Asia Pacific Index of regional shares climbed 1.1 percent. The positive economic data caused most market participants to bet that the next move of the Reserve Bank of Australia will be hike, not cut.

AUD/JPY climbed from 84.87 to 85.20, while EUR/AUD fell from 1.3302 to 1.3284 as of 8:35 GMT today.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:
» Aussie Goes Lower as China's Manufacturing Slows (2011-07-21)
» AUD/USD Trades Higher After RBA Minutes (2011-07-19)
» Aussies Goes Down as Europe Hurts Risk Appetite (2011-07-18)
» AUD Fall with Stocks & Commodities on Concerns for Global Growth (2011-07-15)
» Aussie Heads Down on Europe Woes & China's Growth (2011-07-11)

Open thread: Senate ready to table … everything? Update: McConnell not negotiating with Reid — yet; Update: Boehner’s bill defeated, 59-41; Update: Senate to vote on Reid’s bill?

posted at 8:00 pm on July 29, 2011 by Allahpundit
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Scotty B might be off the hook. Over at the Examiner, Philip Klein hears that the Senate’s not only about to table Boehner’s bill, they’re about to table Reid’s bill. How come? Apparently it has to do with the CBO score: Reid’s plan ended up coming in lower than expected, just as Boehner’s bill did, so presumably he thinks it’s D.O.A. as is. (In fact, if you toss out Reid’s gimmicks, Boehner’s bill would save more money than his would.) Whether that’s true or just an excuse because he realizes the GOP has enough votes to filibuster, I assume this means Reid won’t bother offering his own bill at all. What he’ll do instead is meet with McConnell and Boehner tonight and come up with something that can get seven Republican votes, then file for cloture late — very late — this evening so that they’re on track for a final vote on Monday. But who knows? Things are chaotic right now. Turn on CSPAN 2 and watch the fun.

There’s already been one surprise since the House vote, in fact. From Cantor’s spokesman:

    House to vote on @SenatorReid ‘s Debt Ceiling bill tomorrow – will show not capable of passing.

They’re pushing that out now, of course, to warn Reid not to waste time by pushing his own bill. Maybe that’s why he’s supposedly ready to table his own plan. Stand by for updates. Possible RINO sightings to come!

Update: A cryptic tweet from Claire McCaskill:

    McConnell told Senator Reid at around 6pm that he will not negotiate with him. Sigh. Very Disappointing.

I think that means he won’t negotiate until Boehner’s bill is voted on. As for Reid’s own bill being tabled, Mark Knoller illuminates: “McConnell offered to let Reid vote on his deficit bill tonight. Reid agreed IF McConnell agrees to simple majority passage. Offer withdrawn.” So the GOP held out. Reid didn’t have the votes.

Update: Boehner’s bill is dead — but not on a party-line vote. It was 59/41, presumably because Senate tea partiers like DeMint and Rand Paul voted no. I’ll post the roll as soon as I have it.

Update: Another surprise: It looks like Reid wants a vote on his bill after all and is “filling the amendment tree” to make sure the GOP doesn’t try to add anything to it. But he doesn’t have the votes. Supposedly, he’s called a presser at 8:45 p.m. to whine about a GOP filibuster.

Update: McConnell’s offering to vote on Reid’s bill now but Reid won’t agree unless it’s a simple majority. He can’t get to 60. Republicans are holding the line (or at least 41 are).

Update: The six Republicans who voted against Boehner’s bill: DeMint, Lee, Paul, Vitter, and Orrin Hatch and Lindsey Graham, both of whom are in robust reelection-pander mode.

Open thread: Boehnerpalooza; Update: U.S. will probably stay AAA, says Moody’s; Update: “Put something on the table!”; Update: Bill passes, 218-210; Update: First compromise proposals emerge

posted at 5:25 pm on July 29, 2011 by Allahpundit
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The vote’s set for 5:45 p.m. ET or shortly thereafter but the outcome’s a fait accompli. I agree with Ed that tacking on a balanced-budget amendment is mainly a face-saving gesture, but so what? The Senate was going to kill Boehner’s bill last night anyway. Adding a BBA and pushing it through preserves the “we passed two bills and you passed zip” talking point in case we hit the ceiling next week and a messaging war erupts. It’s basically Cut Cap and Balance lite (very lite!), and like Tina says, it may put Democrats on the defensive by forcing them to explain their entrenched resistance to the amendment. Although, if we really wanted to do that, the best way would be to borrow Jeff Flake’s fiendishly clever ploy to attach a BBA to Reid’s bill and have the House pass that. Let Obama explain why Reid’s plan in isolation is wonderful but Reid’s plan plus a balanced budget must be defeated at all costs.

For what it’s worth, I think Guy Benson’s spot on as to how this all shakes out:

    This is my best analysis, informed by a series of discussions with Capitol Hill staffers: Mitch McConnell will use any leverage he and Speaker Boehner have amassed (I’d argue that leverage has been slightly diminished, since Boehner had to resort to a gimmick to pass his own plan through the House) to strengthen and improve Reid’s bill as much as possible. In this final negotiation, Democrats’ top concern will be protecting the president by ensuring the final deal clears the debt ceiling decks until after 2012. For their part, Republicans will fight for the deepest cuts possible, and perhaps a guaranteed vote on a BBA in the Senate. The resulting deal will likely be unacceptable to some House Republicans — especially those who are, or were, “no’s” on the Boehner deal. It will still pass the House, however, because Pelosi will be instructed to release her caucus to give Boehner the votes he needs to cobble together a majority.

They’re almost certainly going to resolve the short-term/long-term sticking point with some version of McConnell’s old proposal to let Obama raise the ceiling unilaterally unless two-thirds of both chambers vote him down. (“Do House Republicans really want to do this again in six months?” wondered NBC this morning.) They also need to hash out some sort of trigger mechanism for the new debt commission so that the two sides stay at the table and produce an actual proposal. In exchange for that, presumably, Republicans will demand and receive more front-loaded cuts and some sort of protection for defense spending. Obama said just within the past hour that he’d accept a two-day raising of the debt ceiling to keep negotiations going, so if they can’t get all this hammered out this weekend, look for that bill to pass on Monday. The two sides are only $8 billion apart once you ignore Reid’s phony war “savings,” so there’s your starting point.

Here’s the CSPAN live feed in case you’re not near a TV. We may or may not have a separate open thread for tonight’s Senate votes depending upon how soon they happen. If not, stick with this post for updates. To whet your appetite, TPM reports that Senate Democrats are eyeing no fewer than 11 Republicans as possible yes votes on Reid’s bill:

    Right now, Democrats are looking to about 11 gettable GOP votes: Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Bob Corker (R-TN), Mark Kirk (R-IL), Scott Brown (R-MA), Lamar Alexander (R-TN), Lisa Murkowski (R-AK), Kay Bailey Hutchison (R-TX), Saxby Chambliss (R-GA), Mike Crapo (R-ID), and Tom Coburn (R-OK). The last three were the Republican members of the Gang of Six deficit reduction group.

I simply can’t believe they’d help him pass it after House Democrats made Boehner choke, but there’s your drama for the evening: Will the Senate GOP cave before a compromise is even reached? If it happens, it’ll be RINOgeddon.


Update: Now they tell us.

    Moody’s Investors Service said today it expects the U.S. will get to keep its Aaa credit rating, “albeit with a shift to a negative outlook,” provided Congress and the White House can work out a deal to avoid missing payments to U.S. bondholders.

    Moody’s launched a review of the U.S. credit rating on July 13, as the fight over how to raise the current $14.3 trillion federal borrowing limit was starting to heat up. Moody’s review will finish when the debt limit is extended “for more than a short period of time,” the company said. That line gives some ammunition to Democrats and President Barack Obama, who have said any debt deal should lift the borrowing cap through the end of 2012.

Advantage: Obama and Reid. The silver lining for Republicans is that Moody’s also said it only cares about payments related to the debt service when assessing “default.” Since Treasury will have plenty of revenue to cover that, default isn’t happening.

Update: Boehner’s unloading on President Present in his floor speech. “Put something on the table! Tell us where you are!”

Update: They’ve got until Monday to hammer out a deal, right? Wrong. According to The Hill, for procedural reasons the real deadline is … tomorrow.

Update: The deed is done, 218-210. Time to switch over to CSPAN 2 and watch Reid and the Democrats go to work. I’ll post the House roll as soon as it’s available.

Incidentally, this Hill article makes it sound like the Senate might not vote on Reid’s bill. The plan, apparently, is to hold a vote right away to table Boehner’s bill and then have Reid and McConnell huddle to produce a compromise bill. That bill will be presented for a cloture vote late tonight — if they can work out the details — so that things can move forward per proper procedure before we hit the ceiling.

Update: Via Fox reporter Chad Pergram, the 22 Republicans who voted no: Amash, Bachmann, Broun, Chaffetz, Cravaack, DesJarlais, Duncan (SC), Gowdy, Graves (GA), Huelskamp, Johnson (Ill), Jordan, King (IA), Latham, Mack (FL), McClintock, Mulvaney, Paul, Scott (SC), Southerland, Walsh, Wilson (SC).

Update: From Chuck Todd, nothing surprising here: “Reid is floating more cuts up front, a promise on a VOTE for a BBA and some stronger trigger to get Senate GOP xovers.”

Medical-device manufacturer to lay off 1400 …

posted at 2:05 pm on July 29, 2011 by Ed Morrissey
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In March 2010, Nancy Pelosi warned us that we had to pass ObamaCare to “find out what’s in it.”  What is in it is jobs for China.  What’s not in it is jobs for Americans, as the Boston Globe reports today (via NewsAlert):

    Boston Scientific Corp. said yesterday that it plans to eliminate 1,200 to 1,400 jobs worldwide during the next 2 1/2 years to free money for new investments, the Natick medical device maker’s second major round of cuts since last year.

    The company would not say how many jobs will be lost in Massachusetts, where fewer than 2,000 of its 25,000 employees are based. In February 2010, Boston Scientific said it would pare 1,300 jobs worldwide, but similarly did not say where.

    Yesterday’s move, a day after Boston Scientific disclosed it was investing $150 million and hiring 1,000 people in China, raised fears that the company will gradually shift more work to foreign sites with less government oversight and lower costs than the United States.

Massachusetts state Senator James Elridge (D-Acton) reacted … predictably:

    “My sense is, sadly, that like many other American companies, they are shedding jobs in Massachusetts and adding jobs overseas,’’ Eldridge said. “And this is a company making greater profits, so it’s even more outrageous.’’

Yes, that’s what happens when the American government makes it more expensive to do business in the US.  And that’s exactly what ObamaCare did, especially with medical-device manufacturers like Boston Scientific.  Fourteen months ago, those manufacturers warned that they would have to cut costs in the US as a consequence of the new taxes imposed on their sales:

    Massachusetts medical-device companies say they’ll cut back on operational costs – and jobs – after a planned 2.3 percent tax on their products is implemented in 2013, according to a new survey.

    The Massachusetts Medical Device Industry Council, which held its annual meeting yesterday in Boston, said about 90 percent of the 100 medical-device firms said they would reduce costs due to the new tax tucked into the recently passed health-care reform bill.

It’s not as if Boston Scientific didn’t try to warn people about the problem, either.  Less than two weeks ago, they joined hundreds of other medical-device manufacturers to plead for a repeal of the tax:

    More than 420 companies including Boston Scientific, St. Jude Medical and Stryker signed on to a letter asking the U.S. Congress to repeal a planned 2.3 percent excise tax on medical devices. The tax could cost $20 billion a year and is set to take effect in 2013 as part of broad health care reform package passed last year.

    “The tax is already having an adverse impact on R&D investment and job creation, jeopardizing the U.S. global leadership position in medical device innovation,” said the letter.

    “If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax,” it said. “It will also adversely impact patient access to new and innovative medical technologies,” it added.

    “The medical device excise tax is a serious burden for companies struggling to maintain America’s global leadership in the development of medical technology,” said Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed), a medtech lobbying group that drafted the letter.

The tax wasn’t the only problem in the bill, either, as I wrote at the time:

    Taxes on companies aren’t ultimately paid by business entities.  They get paid by the consumer in the long run.  In order to save costs, these device manufacturers will either have to lay off employees or cut back on innovative research — and likely both.  The end result will be higher prices, lower support, and less innovation to meet medical needs of consumers.

    That’s not the only problem facing the industry, either.  They now have to provide an accounting for their marketing efforts among physicians, thanks to a new “sunshine bill” that requires full disclosure of any marketing directed at physicians.  That will escalate internal costs, putting even more pressure on device makers to cut elsewhere or raise prices, or both.

The jobs will move overseas mainly to meet demand overseas.  But we could have kept the jobs and sales here, had it not been for the increasing regulatory and tax policies of the Obama administration, starting with — but hardly ending with — ObamaCare.

Update: I changed the headline, because as TNeloms points out in the comments, not all of the closed jobs are in the US.  However, given the reaction of Democrats in Massachusetts, it’s looking like a good chunk of them will be.

Allen West: Not going to get involved in Tea Party “schizophrenia”

posted at 1:25 pm on July 29, 2011 by Ed Morrissey
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Matt Lewis says, “When Laura Ingraham and Rep. Allen West are calling out the Tea Party, you know something’s up[.]” As it turns out, some of the Tea Party attack on Allen West turned out to be a misunderstanding, but West takes the opportunity to support John Boehner and remind people that Harry Reid’s plan cuts defense spending. Laura Ingraham pledges her support to West as she scolds some conservatives for attacking West for attempting the possible:



As I said on the air yesterday in an interview, any definition of “fiscal conservative” that doesn’t include Paul Ryan and Allen West is one that I can’t recognize. West defends himself and the Republican caucus well enough, so I don’t need to recap it, but West has a point when he asks what he’s voting for if people demand that he vote against Boehner 1.1.

Besides, the entire notion that the Tea Party Nation would push for a primary against West is based on a faulty media report. Judson Phillips, its founder and CEO, repudiated that notion entirely in a statement later in the morning:

    Setting the Record Straight

    There is a story in The Hill that a group of Tea Party organizations is threatening a primary challenge against a number of Freshmen Congressmen including Allen West. This story says a press release has been issued with Tea Party Nation supporting an effort to push a primary challenge against Allen West.

    Tea Party Nation has NEVER said we want to see a primary challenge against Allen West. West has been a staunch Tea Party supporter and though we strongly disagree with his support of the really terrible John Boehner plan, West has been an overwhelmingly good Congressman and we would be hard pressed to find someone better.

    The group that put this press release out used Tea Party Nation’s name without our permission. No one at TPN was shown this press release in advance. Had we been shown that press release, we would have vetoed the use of our name.

    We still call for a primary challenge to John Boehner and there maybe some Republicans who deserve a primary challenge, but Allen West is not one of those.

    To be absolutely clear, neither Tea Party Nation, nor Tea Party Nation founder Judson Phillips support this effort.

    We specifically repudiate it.

Not that there is anything wrong with primary challenges anyway, of course. That’s a perfectly legitimate way to push for policy goals, and the Tea Party in general made good use of them in 2010. However, targeting Allen West of all people for being insufficiently conservative would have been a fast track to irrelevancy, and Phillips certainly understands that.

Dollar Falls on US Growth Slowdown

The US dollar fell sharply against some of the major currencies today, following a report that showed that the economic growth in the second quarter of 2011 was worse than expected.
The greenback was trading at a rather high level against the other currencies earlier today, advancing significantly both against the euro and the Great Britain pound before 12:30 GMT today. Following the US GDP report, it slid to bearish against the euro and trades almost in the negative zone against the pound. The dollar is also down against the Japanese yen and the Swiss franc.

The gross domestic product increased at an annual rate of 1.3 percent in the Q2 2011 from the Q1 2011. The first quarter growth was revised down from 1.9 percent to 0.4 percent. The traders expected 1.8 percent gain in GDP on average. This news is very pessimistic in regards of the possible rate increases in the United States and thus is extremely negative for the US dollar.

EUR/USD went up from 1.4327 to 1.4333 as of 13:09 GMT, trading as low as 1.4229 earlier. GBP/USD is now trading near its opening level — 1.6369. USD/JPY fell from 77.69 to 77.14 today.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Earlier News About the US Dollar:

» Continued Debates over US Debt Push USD to New Lows vs. CHF (2011-07-25)
» Optimism for Europe Returns, Greenback Suffers (2011-07-20)
» Dollar Rises on Signs of Agreement Among US Lawmakers (2011-07-19)
» S&P Warn About Possible Downgrade of US Rating, USD Down (2011-07-15)
» Dollar Regains Strength as Bernanke Speaks (2011-07-14)

Crude Oil Tumbles, Heads for Weekly Decline, on U.S. GDP, Debt Stalemate

By Margot Habiby -

Oil fell, heading for its first weekly drop since June, as the U.S. economy grew less than estimated in the second quarter and a deadlock of U.S. lawmakers over raising the debt limit further threatened expansion.

Futures tumbled as much as 2.6 percent after the Commerce Department reported that gross domestic product climbed at a 1.3 percent annual rate, less than the 1.8 percent median estimate of economists surveyed by Bloomberg News. The Treasury Department has set an Aug. 2 deadline for increasing the U.S.’s $14.3 trillion debt limit to avert a default.

“The markets have been negative all week as we continue to watch the stalled debt ceiling talks,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “The GDP number missed expectations and that’s created more pressure on oil and equities.”

Crude for September delivery fell $1.83, or 1.9 percent, to $95.61 a barrel at 12:51 p.m. on the New York Mercantile Exchange. Earlier, it touched $94.95, the lowest price since July 18 on an intraday basis. Prices are down 4.3 percent this week and have risen 19 cents in July.

Brent for September settlement on the London-based ICE Futures Europe exchange dropped 97 cents, or 0.8 percent, to $116.39 a barrel. The European benchmark contract was at a premium of $20.78 a barrel to New York futures, compared with a record close of $22.63 on July 14.

The Standard & Poor’s 500 Index fell 0.4 percent to 1,295.58, and the Dow Jones Industrial Average dropped 68.04 points, or 0.6 percent, to 12,172.07.
Technical Support

Crude in New York is extending losses as prices slide below the 50-day moving average, according to data compiled by Bloomberg. Front-month futures have settled for more than a week above this indicator, at $97.33 today. A breach of technical support usually means prices will continue to fall.

U.S. GDP increased following a 0.4 percent gain in the prior quarter that was less than the 1.9 percent previously estimated, Commerce Department figures showed today in Washington. Household purchases, about 70 percent of the economy, rose 0.1 percent in the second quarter. The U.S. is the world’s largest oil-consuming country.

House Speaker John Boehner, a Republican, delayed a planned vote on debt-limit legislation late yesterday as Senate leaders stood ready to kill the measure should it get to their chamber. Boehner’s plan failed to gain enough backing from his own party members.
Debt Vote

Senate Majority Leader Harry Reid and other Democrats are working to break the impasse over raising the debt limit by devising a strict enforcement mechanism to guarantee future deficit savings, according to party officials. President Barack Obama said today that the two parties are in “rough agreement” on a debt measure and urged senators from both parties to work together to resolve the deadlock.

“The U.S. debt talk resembles a train wreck,” Thorbjoern Bak Jensen, an analyst at Global Risk Management, said by phone from Middelfart, Denmark. “Oil is still awaiting the debt ceiling outcome.”

Oil inventories in Cushing, Oklahoma, the physical delivery point for Nymex futures, rose by 583,000, or 1.6 percent, to 36.9 million barrels on July 26 from July 16, according to data compiled by DigitalGlobe Inc. (DGI) from satellite images.

The Energy Department said July 27 that Cushing stockpiles, including floating and fixed tanks, were 37.1 million. The hub has working storage capacity of 48 million barrels, the department said on May 31.
OPEC Production

Crude production from the 12 members of the Organization of Petroleum Exporting Countries jumped 245,000 barrels a day in July from June to 29.6 million barrels a day, according to a Bloomberg News survey of producers, oil companies and industry analysts. The 11 members with output quotas, all but Iraq, pumped 26.8 million barrels a day in July, up 230,000 barrels a day from June.

Tropical Storm Don, currently in the northwestern Gulf of Mexico and heading for the Texas coastline, has shut in about 6.8 percent of oil and 2.8 percent of gas production from the gulf, according to the Bureau of Ocean Energy Management, Regulation and Enforcement.

Outer rain bands from the storm were approaching the Texas coast, the National Hurricane Center in Miami said in a bulletin at 10 a.m. local time. It’s forecast to make landfall late today or early tomorrow. Don is about 190 miles (305 kilometers) southeast of Corpus Christi, Texas, with maximum winds of 50 miles per hour, the bulletin said.

Crude may drop next week, a Bloomberg News survey showed. Thirteen of 32 respondents, or 41 percent, forecast oil will decrease through Aug. 5. Analysts were split last week, with 41 percent looking for a gain and 41 percent projecting a fall.

Oil volume in electronic trading on the Nymex was 310,035 contracts as of 12:53 p.m. in New York. Volume totaled 426,749 contracts yesterday, 31 percent below the average of the past three months. Open interest was 1.51 million contracts.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Reid: Hey, who’s up for killing another debt-ceiling increase?

posted at 2:30 pm on July 28, 2011 by Ed Morrissey
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Must be nice to have a job that doesn’t actually require any work, except to refuse to work at all:

House Republicans are just wasting their time debating Speaker John Boehner’s debt reduction bill, Senate Majority Leader Harry Reid said today.

“Boehner’s bill dies tonight,” Reid communications director Adam Jentleson wrote on Twitter. “Forever.” …

“As soon as the House completes its vote, the Senate will move to take up that bill,” Reid said, “and it will be defeated tonight.”

“No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now,” he said.

To which the answer should be: “Where’s the Senate plan?” The Politico article has Harry Reid standing in front of a display that reads, “In the battle of budget scores, Senate plan is a clear winner over Boehner plan.” That was certainly true of the Boehner 1.0 plan, but it’s less clear that it’s true about Boehner 1.1. Either way, Reid’s bill only reduced actual spending by $750 billion rather than Boehner 1.0′s $710 billion over a ten-year period, so neither was exceptionally robust in scoring. It’s a bit like bragging about winning a football game when the only score comes off of a safety.

But that argument assumes the Senate will actually produce a plan. So far, even though Reid controls the majority and the floor, we haven’t even seen a hint of a vote. In fact, we haven’t seen the Senate originate any budget bill in over 800 days. Since Reid’s plan doesn’t include new taxes — or at least that’s his claim — it doesn’t have to originate in the House.

The proper legislative process should be for both chambers to work on their own versions of legislation and form a conference committee to produce a bill for up-or-down votes in each chamber. Reid could have done that with the CCB bill, had he chosen to do so, although there would have been very few commonalities between a Senate response and the CCB around which to compromise. That’s not true of the Boehner 1.1 bill; as National Journal noted yesterday, they have quite a bit in common, including the level of cuts. All that needs to happen is to get the Senate to pass its bill and let the conference committee hammer it out. That can even take place after a vote to kill Boehner 1.1.

If all Reid does is vote to kill the Boehner plan, however, then nothing can happen. Reid wants to bully the House into doing his work. The House should tell Reid to do his job rather than worry about doing theirs. If Democrats never plan to make a proposal, then they should just pass Boehner 1.1, and Republicans should call a halt to any further efforts until Democrats start taking their responsibilities seriously.

Update: A reminder, via Newsbusters‘ Lachlan Markay, that Harry Reid could have raised the debt ceiling last year.

Update II: Lachlan actually went to Heritage a few weeks ago.

Oh, by the way, the U.S. just accused Iran of working with Al Qaeda

posted at 8:19 pm on July 28, 2011 by Allahpundit
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A little something light to tide you over while we wait for the next chapter in the debt-ceiling saga. I’ve been around blogs long enough to remember when claiming that Shiite nuts might collaborate with Sunni nuts against America would draw derisive snickers from lefty blogs at the sheer wingnuttery of the idea. Isn’t it just like neocons to try to drum up war against Iran by claiming a connection as preposterous as that?

And now here we are. Over to you, Obama administration:

The Treasury Department slapped sanctions on six individuals operating in a network that they said “serves as the core pipeline through which al Qaeda moves money, facilitators and operatives from across the Middle East to South Asia, including to Atiyah Abd al-Rahman, a key al Qaeda leader based in Pakistan, also designated today.”

“Iran is the leading state sponsor of terrorism in the world today. By exposing Iran’s secret deal with al Qaeda allowing it to funnel funds and operatives through its territory, we are illuminating yet another aspect of Iran’s unmatched support for terrorism,” Under Secretary for Terrorism and Financial Intelligence David Cohen said in a statement announcing the sanctions…

Among the individuals sanctioned today is Ezedin Abdel Aziz Khalil, described by the Treasury Department as “an Iran-based senior al Qaeda facilitator currently living and operating in Iran under an agreement between al Qaeda and the Iranian government.”…

“As al Qaeda’s representative in Iran, Khalil works with the Iranian government to arrange releases of al Qaeda personnel from Iranian prisons. When al Qaeda operatives are released, the Iranian government transfers them to Khalil, who then facilitates their travel to Pakistan,” the Treasury Department said.

This isn’t the first time Treasury’s targeted Al Qaeda inside Iran, actually: Bill Roggio remembers that four AQ operatives, including Saad Bin Laden, were sanctioned in January 2009. If that doesn’t prove to you that Iran’s dealing with major players inside Al Qaeda, not just the rank-and-file, Roggio also points out that Atiyah Abd al-Rahman happens to be Al Qaeda’s operations chief and was working with Bin Laden himself on an attack timed to the 10th anniversary of 9/11 before the SEALs came knocking on Osama’s door. But then, none of this is the least bit surprising. Remember where Saif al-Adel, one of AQ’s highest capos, spent the better part of the last decade? Remember the AP’s exclusive just two months ago about how Iran might be preparing to release Al Qaeda prisoners in order to target American troops in Iraq and Afghanistan? Do I need to link this evergreen Tom Joscelyn piece about longstanding ties between Iran and Al Qaeda yet again? Go figure that a fundamentalist state that specializes in outsourcing terror against the west via proxies might broker a cold peace with America-hating Wahhabist terrorists.

Since we’re on the subject, I feel obliged to link this hopeful WaPo story from a few days ago about how U.S. intel increasingly believes Al Qaeda’s leadership in Pakistan is on its last legs. Daveed Gartenstein-Ross warns against declaring mission accomplished, which is fair enough, but if the best this degenerate can do right now is try to convince Syrian protesters that America’s their worst enemy and not the monster in Damascus who’s been killing them for months, well, maybe we’re closer to mission accomplished than we think.

Chaos: Gunmen kill Libyan rebels’ top military commander — while he’s in rebel custody

posted at 7:38 pm on July 28, 2011 by Allahpundit
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To fully appreciate how shady this is, take two minutes to read the Atlantic Wire’s excellent tick-tock of news accounts of how this guy was killed. Rumors that he was dead started turning up in Arab media four days ago, oddly enough. Then word came that he had been recalled from the front lines to Benghazi to be questioned about collaborating with Qaddafi loyalists. (Younis used to be the regime’s Interior Minister but defected to the rebels earlier this year and took charge of their army.) Then, suddenly, he was under arrest. And lo and behold, shortly thereafter he was dead — shot by a mysterious group of gunmen whose identities the rebels’ spokesman is being curiously tight-lipped about. The AP’s story simply reeks of suspicion that it was an inside job:

The head of the Libyan rebel armed forces was shot and killed Thursday just before arriving for questioning by rebel authorities, their political leader said in a carefully worded statement to reporters that gave few details on who was behind the killing.

Adding to the confusion, the rebels had said hours earlier they had already detained the commander, Abdel-Fattah Younis, on suspicion his family might still have ties to the regime of Moammar Gadhafi, raising questions about whether he might have been assassinated by his own side…

Announcing the killing at a press conference where he did not take questions, Mustafa Abdul-Jalil, head of the rebels’ National Transitional Council, called Younis “one of the heroes of the 17th of February revolution,” a name marking the date of early protests against Gadhafi’s regime.

He said two of the commander’s aides, both colonels, were also killed in the attack by gunmen and that rebels had arrested the head of the group behind the attack. He did not say what he thought motivated the killers.

The spokesman himself alternately blamed the killing on “efforts by the Gadhafi regime to break our unity” and, er, “armed criminal gangs” running wild. Supposedly the “gang” killed him before he arrived before the rebel council in Benghazi to be questioned about ties to Qaddafi, but a rumor being pushed to Al Jazeera by Qaddafi loyalists claims that Younis was executed by the gunmen before the committee itself. Yet another journalist flagged by the Atlantic is hearing that the killing happened after a “major general” from a rival rebel tribe started an argument with Younis at a Benghazi hotel. (Remember, Younis wasn’t supposed to be in Benghazi today; he was recalled from the front.) Any guesses who that general might be? Revisit this post by Ed from April for a possibility.

To sum up, then: The man who’s supposed to be leading rebel troops to final victory over Qaddafi, thereby vindicating NATO’s decision to join the war, is now dead in his own capital on the orders of his own side, in all probability. The best-case scenario is that he was a traitor to their/our side and had to be removed immediately. The worst-case scenario is that the rebel leadership is so dysfunctional and gangsterish that they’re risking their war effort on settling personal grievances. This comes, incidentally, after a week filled with stories about the failure of “diplomatic solutions” to the stalemate, the best of which is this Time piece marveling at the fact that NATO’s been so ineffective in dislodging Qaddafi that we’re now looking at peace treaties that would involve letting him stay in the country. Take a moment to read it. And remember: “Days, not weeks.”

Rick Perry: Abortion is a states’ rights issue

posted at 5:07 pm on July 28, 2011 by Allahpundit
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A smart middle-ground play for independents, but I thought he was supposed to be the great evangelical hope. Last week he said he was “fine” with New York legalizing gay marriage before clarifying today that he’s not fine with gay marriage itself. (In fact, he supports a Federal Marriage Amendment.) Now this. Why would a social-conservative voter looking for a champion who has traction in the polls prefer him to, say, Bachmann?

Maybe Perry’s willing to shed some votes in Iowa in exchange for picking some up in New Hampshire.

Despite holding personal pro-life beliefs, Texas Gov. Rick Perry categorized abortion as a states’ rights issue today, saying that if Roe v. Wade was overturned, it should be up to the states to decide the legality of the procedure.

“You either have to believe in the 10th Amendment or you don’t,” Perry told reporters after a bill signing in Houston. “You can’t believe in the 10th Amendment for a few issues and then [for] something that doesn’t suit you say, ‘We’d rather not have states decide that.’”…

The National Right to Life Committee responded to Perry’s categorization of abortion as a states’ rights issue in a statement, saying, “Our society has an obligation to enact laws that recognize and protect the smallest members of our human family. Prior to Roe, states had the ability to enact laws that extended full legal protection to unborn children. We look forward to the day when Roe v. Wade is changed, and the states will once again have the ability to pass legislation that fully protects mothers and their unborn children.”

I’m surprised the NRLC gave him cover on that. Granted, the immediate first step after Roe is overturned would be state laws restricting abortion, but I’ve never understood that to be the end point for pro-lifers, as Perry seems to suggest by invoking the Tenth Amendment. The goal is a Human Life Amendment or, at a minimum, a federal statute banning abortion coast-to-coast. If you believe abortion is murder, why on earth would you want to let any state choose to legalize it? Huckabee made that point succinctly during the 2008 campaign; watch the end of the clip below.

Maybe Perry’s position on this mirrors his position on gay marriage. His argument for the Federal Marriage Amendment is that it would require ratification by three-fourths of the states, so the process honors the federalist principle of the Tenth Amendment even though the FMA would trump it. He could make the same argument for the HLA, although (a) a hardcore believer in the Tenth Amendment presumably wouldn’t want to see the sovereignty of any state trumped, even if three-quarters of the other states agree, and (b) if he didn’t make the same argument for the HLA, he’d have to explain why he thinks gay marriage requires a national solution but abortion doesn’t.

But maybe none of this matters. Neither the HLA nor the FMA will ever pass, so all we’re doing is polishing credentials here — and his already have plenty of polish. The latest whispers from his advisors, incidentally, claim that he’ll be in by late August. In fact, he’s already nudging Fox about a spot in the August 11 debate.

Guess who’s gotten pretty quiet this week

posted at 4:28 pm on July 28, 2011 by Ed Morrissey
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Jim Geraghty notices that the man who has spent July all over our TV screens now seems strangely … shy:

This is not a complaint, but an observation: President Obama has made no public speeches, appearances, or remarks since Monday night.

According to CBS News’ Mark Knoller, he has no public or press appearances scheduled for today.

This seems more than just a coincidence. After all, this is crunch time on the debt ceiling. If the President wanted to pick a time for conspicuous leadership, this would be it. By tomorrow, there may not be enough time to get any solution through Congress, let alone one the White House likes.

Jim speculates that Obama’s advisers may have decided that Obama’s media blitz the last three weeks has just not moved the needle, but I think it goes farther than that. I’d guess that the White House is getting worried about Obama’s relentless scolding while pursuing the no-plan strategy. The White House press corps has begun insisting on seeing Obama’s plan in writing, and since it’s not forthcoming, Obama’s team may be afraid of putting him out in public.

This could also reflect some frustration from Senate Democrats. The Reid and Boehner plans share a similar structure, and Reid might want to get the Senate into position to pass his proposal so that a conference committee can quickly produce something that will pass both chambers. Having Obama out front demagoguing the issue doesn’t help move that process along, as Republicans could filibuster Reid’s efforts if they really dig in their heels.

But Jim has the bottom line right — Obama very obviously didn’t help matters over the last three weeks with his all-mouth, no-plan strategy. If one doesn’t want to offer a solution, then perhaps the One shouldn’t be spouting off about those who do — and have.

New numbers, no surprise: Affordable Care Act anything but affordable

posted at 9:50 am on July 28, 2011 by Tina Korbe
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We already knew this, but, today, the Centers for Medicare and Medicaid released a 10-year forecast that confirms it: National health spending will grow at a rate faster than it would have if Obamacare had not passed. The Washington Times reports:

    Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually. …

    The federal government is projected to spend 20 percent more onMedicaid, while spending on private health insurance is expected to rise by 9.4 percent. …

    “Simply put, this report states the obvious, that Americans have known for more than a year – the $2.6 trillion law only makes the fundamental problem of skyrocketing health care costs worse,” said Sen. Orrin G. Hatch, Utah Republican and ranking member of the Senate Finance Committee.

The White House responded to the report in a blog post, spinning the report to emphasize, “National Health Expenditures Reach Historic Low.” White House Deputy Chief of Staff Nancy deParle writes:

    But the report doesn’t tell the whole story.

    The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table. We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.

The report comes just as the legal challenges to the ACA reach the Supreme Court. At the same time, ads from RepealItNow.com report the drive for congressional signatures on a petition for repeal continues to be successful. In the ads, a congenial Mike Huckabee says the coalition needs the signatures of just four senators to make repeal possible. (Maybe those same four senators could revive Republican hopes of Cut, Cap and Balance!) That’s a stretch, of course — the best strategy for repeal remains to capture the Senate and White House in 2012 (and as much as I don’t want to admit it, that’s the best strategy for Cut, Cap and Balance, too). But the point is, grassroots organizations continue to bring the heat, even as health care reform seems to have fallen off the radar in debt and deficit discussions and in national news media, in general. This new report only provides more fodder for their efforts.

Obviously, that doesn’t mean the report is good news. Rising health costs affect us all and, frankly, seem especially daunting in light of our present economic outlook. So, as someone who has accepted that entitlement programs won’t carry me through retirement or future health problems, I find it helpful to remember that the best approach to health care to keep personal costs down, at least, is to attend to the basics — you know, right diet, regular exercise and ample sleep. Easier said than done, of course, but still worth attempting.

IBD: Boehner 1.1 beats nothing at all

posted at 9:10 am on July 28, 2011 by Ed Morrissey

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As John Boehner attempts to whip his caucus for a vote this morning on version 1.1 of his debt-ceiling bill, the Speaker gets some support from Investors Business Daily. It’s not enthusiastic support, mind you, but IBD’s editors seem to feel that the only thing worse than passion Boehner 1.1 is not passing Boehner 1.1:

President Obama may not have a plan for resolving the debt crisis, but he definitely has a goal — to shift blame for the lousy economy onto Republicans’ shoulders. Above all else, the GOP must not let that happen.

When House Speaker John Boehner released his latest plan to cut spending in exchange for raising the debt ceiling, attacks from Obama and his fellow Democrats were to be expected.

The attacks from the GOP side, however, are short-sighted at best. They risk giving Obama what he wants more than anything — a way to weasel out of responsibility for the economic mess his policies have produced.

As Charles Krauthammer did on Wednesday, the conservative IBD editorial board urges Republicans to take a long view:

As Obama’s poll numbers continue to sag, his hopes for re-election increasingly depend on his ability to convince voters that he had nothing to do with the lousy economy. And if the GOP blows the current debt standoff, Obama will be free to blame any bad economic news going forward on Republican intransigence.

Republicans can’t let themselves fall into this trap. Obama, and Obama alone, is responsible for the fact that two years after the recession ended, the unemployment rate is above 9%, growth is stagnant, inflation is rising, and federal spending and debt are exploding.

They conclude with the thought that it’s better to lose a skirmish than the entire war, but this isn’t even really losing the skirmish. It’s not a great victory either, but Republicans have changed the paradigm of deficit reduction in Washington in this debate. Tax hikes are off the table, and we’re now talking about spending reductions to address the long-term debt situation.

Passing Boehner 1.1 puts the onus back on the Democrats in the Senate to produce an alternative, which would be their very first vote on any plan in this crisis. If they pass a Reid plan, then the entire issue goes to a conference committee and we end up with a compromise on the principles of the GOP. If the Senate refuses to act at all, then it’s not the fault of Republicans when the deadline arrives.

IBD’s two-time Pulitzer Prize-winning editorial cartoonist Michael Ramirez puts the crises in spending, long-term debt, and leadership into single-frame perspective this morning:

Also, be sure to check out Ramirez’ terrific collection of his works: Everyone Has the Right to My Opinion, which covers the entire breadth of Ramirez’ career, and it gives fascinating look at political history. Read my review here, and watch my interviews with Ramirez here and here. And don’t forget to check out the entire Investors.com site, which has now incorporated all of the former IBD Editorials, while individual investors still exist.

All 53 Senate Dems sign letter to Boehner: Your bill will never pass

posted at 10:23 pm on July 27, 2011 by Allahpundit
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Awfully nice of them to give Boehner one more little boost on the eve of tomorrow’s vote by calling the House GOP’s bluff like this.

Default it is, then.

    Dear Speaker Boehner,

    With five days until our nation faces an unprecedented financial crisis, we need to work together to ensure that our nation does not default on our obligations for the first time in our history. We heard that in your caucus you said the Senate will support your bill. We are writing to tell you that we will not support it, and give you the reasons why.

    A short-term extension like the one in your bill would put America at risk, along with every family and business in it. Your approach would force us once again to face the threat of default in five or six short months. Every day, another expert warns us that your short-term approach could be nearly as disastrous as a default and would lead to a downgrade in our credit rating. If our credit is downgraded, it would cost us billions of dollars more in interest payments on our existing debt and drive up our deficit. Even more worrisome, a downgrade would spike interest rates, making everything from mortgages, car loans and credit cards more expensive for families and businesses nationwide.

    In addition to risking a downgrade and catastrophic default, we are concerned that in five or six months, the House will once again hold the economy captive and refuse to avoid another default unless we accept unbalanced, deep cuts to programs like Medicare and Social Security, without asking anything of the wealthiest Americans.

    We now have only five days left to act. The entire world is watching Congress. We need to do the right thing to solve this problem. We must work together to avoid a default the responsible way – not in a way that will do America more harm than good.

So that’s how this story ends. With the party of endless spending and entitlements unto death lecturing fiscal conservatives on how they’re leading the country into a credit downgrade. Perfecto.

Politico reports that Mitch McConnell is huddling with Biden to forge some sort of face-saving deus-ex-machina compromise. The story’s thin on details, but since McConnell’s involved and the only big remaining stumbling block is whether the final deal is short-term or long-term, I assume they’re trying to work out a way to combine McConnell’s original proposal about giving Obama more unilateral control over raising the ceiling with Boehner’s bill. E.g., instead of making next year’s debt-ceiling increase contingent upon Congress enacting the new commission’s debt-reduction recommendations, it might grant Obama the power to increase it himself in return for deeper, front-loaded cuts. But that’s just me speculating. We’ll know more tomorrow.

As a late evening dessert, here’s Chris Christie dumping on Obama for not producing his own plan. According to Rich Lowry, Boehner’s getting closer to 218 — but he’s not there yet.

ATF official: I told the White House about Fast & Furious

posted at 10:45 am on July 27, 2011 by Ed Morrissey
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What did Barack Obama know about Operation Fast and Furious, and when did he know it?  Rep. Darrell Issa’s committee uncovered an explosive nugget of information from the subpoena of ATF e-mail, which went public in yesterday’s hearings.  The ATF manager of the Phoenix office notified a White House official of Operation Fast and Furious as an update on the overall Project Gunrunner effort, connecting the controversial operation directly to the White House for the first time:

    At a lengthy hearing on ATF’s controversial gunwalking operation today, a key ATF manager told Congress he discussed the case with a White House National Security staffer as early as September 2010. The communications were between ATF Special Agent in Charge of the Phoenix office, Bill Newell, and White House National Security Director for North America Kevin O’Reilly. Newell said the two are longtime friends. The content of what Newell shared with O’Reilly is unclear and wasn’t fully explored at the hearing. …

    Congressional investigators obtained an email from Newell to O’Reilly in September of last year in which Newell began with the words: “you didn’t get this from me.”

    “What does that mean,” one member of Congress asked Newell, ” ‘you didn’t get this from me?’ ”

    “Obviously he was a friend of mine,” Newell replied, “and I shouldn’t have been sending that to him.”

Issa asked him why O’Reilly would have been asking about Project Gunrunner, the overall interdictment effort, but that’s fairly clear.  As a national-security advisor with responsibility for North America, the cartels in Mexico would be one of the primary threats O’Reilly would watch.  O’Reilly told Newell that he planned to travel to Mexico to work on the issue, which would explain the need for an update.

What’s less clear is why Newell informed him with the caveat “you didn’t get this from me”.  Why wouldn’t the ATF report on Fast and Furious results to the White House when asked?  Was Newell told to avoid linking the operation directly to the White House, or was the ATF worried about the implications of the operation even before it blew up in their faces?  Given the hostility towards Congressional oversight already demonstrated at the ATF and Department of Justice during this investigation, this looks like even more evidence that the Obama administration let the ATF run wild, perhaps on purpose.

The more important question will be who O’Reilly told at the White House about the operation.  Clearly, O’Reilly wanted the information to prepare for key meetings on a very sensitive subject.  It’s hard to believe that O’Reilly would have kept that information to himself.  Issa’s committee needs to get O’Reilly into the hearing and on the record, and it may be time to subpoena some White House records, too.

Perry pulls into statistical tie with Romney in Gallup poll

posted at 12:05 pm on July 27, 2011 by Ed Morrissey
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Of all the potential late entrants into the Republican nomination contest, the one who gives Mitt Romney the toughest fight is Rick Perry, according to the latest Gallup poll.  If Perry, Sarah Palin, and Rudy Giuliani all get into the race, Perry comes in just two points behind Romney and ahead of Palin and Giuliani, while Michele Bachmann falls to fifth place — well within the margin of error:

    Mitt Romney is the leader for the GOP nomination among the current field of official candidates, supported by 27% of Republicans, compared with 18% for Michele Bachmann. However, Rick Perry would essentially tie Romney, with Sarah Palin and Rudy Giuliani close behind, in a scenario in which all three of these undecided candidates entered the race.

    Gallup asked respondents to choose among all 11 current and potential candidates, and then asked for their second and third choices. The second and third choices are used to simulate preferences when certain combinations of unannounced candidates are excluded from the race. Three such scenarios include the eight announced candidates plus one of the unannounced candidates. Palin, Perry, and Giuliani finish in no worse than a statistical tie for second place when each is pitted against the eight firm candidates.

If only Perry gets in the race, he starts off five points behind Romney — and five points ahead of Bachmann, who loses four points in the transaction.  Palin comes in at 15 if alone, one point behind Bachmann in a statistical tie for second place, while Giuliani gets 14%, three behind Bachmann for third place, without Palin or Perry.  Romney holds 23% in each model.

The numbers between conservatives and moderates/liberals are also interesting.  Gallup didn’t run separate models for that breakdown as they did with the overall numbers, but if all three jump into the race, Perry ties Romney for the lead with conservatives at 18%.  His support drops off considerably with moderates/liberals, finishing tied for fifth place with Bachmann.  Giuliani wins that demographic at 16%, two points ahead of Romney and Palin.  Somewhat surprisingly, Palin only scores 11% among conservatives, a fourth-place finish behind Romney, Perry, and Bachmann.

Needless to say, the other candidates in the field barely change positions with or without the three late entrants.  All of them had better hope for lightning to strike in Ames in a couple of weeks, at the debate and then at the straw poll.  Without some sort of breakout performance, an entry of any of the three maybes will swamp out any hope of getting the kind of media attention that will build momentum in the fall

CBO: Reid bill a bigger reduction in spending … barely

posted at 11:25 am on July 27, 2011 by Ed Morrissey
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The Washington Times reports today that the duel of spending reduction bills may be won by Harry Reid.  The CBO scored Reid’s proposal better than John Boehner’s on actual reductions in spending, although neither takes a machete to the budget.  In fact, the difference is almost indistinguishable:

    The Congressional Budget Office said the plan by Senate Majority Leader Harry Reid would raise the government’s borrowing limit by $2.7 trillion, and cut $2.2 trillion from future spending, chiefly by limiting the amount of money spent on the wars in Iraq and Afghanistan. …

    The CBO analysis could give momentum to Mr. Reid’s plan, though the GOP says spending on the wars in Iraq and Afghanistan was going to drop anyway, and so shouldn’t be considered as future savings. …

    The CBO said the Senate bill’s discretionary spending cuts would result in $840 billion in lower authorized spending, and $750 billion in actual lower outlays over the next decade. The Senate bill also capped spending on the two wars at $450 billion over the next decade, which would mean spending authority is $1.2 trillion lower, and actual outlays would be $1 trillion lower.

Reid’s advertising his proposal as authorizing $2.2 trillion in cuts for a $2.7 trillion debt-ceiling increase, but most of those cuts would happen anyway.  Reid counts dollars spent on the war at current rates as part of the savings when the drawdowns occur, savings that are already in place.  Instead, his bill cuts in 10 years roughly half of the annual budget deficit, averaging $75 billion a year, which is roughly nineteen days of borrowing at current deficit rates.

That’s an improvement over Boehner’s bill, but not by much.  Boehner would save $710 billion over the next decade, averaging $71 billion a year, which accounts for 17.3 days of borrowing at the current rate of deficit spending.  That’s more of a distinction without a difference.  Boehner’s bill would only authorize a $900 billion hike in the debt limit, however, which would force a new round of cuts before next year’s election.  Unlike Reid’s proposal, Boehner assumes that the savings in war funding have already taken place.

Boehner promised to go back and rewrite the House bill to get more savings out of it.  Given these figures, that shouldn’t be a terribly difficult task.  However, at this point, it looks like the two chambers are close enough in figures and approaches to pass their bills and get a conference committee to deal with the differences, which is probably what will happen by the end of the week.

Battleground states looking grim for Obama?

posted at 10:05 am on July 27, 2011 by Ed Morrissey
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National polls put Barack Obama in the mid-40s and slightly underwater, which could indicate trouble for him in 2012 — if the Presidency was won on a national popular vote.  (Ask Al Gore how that works out.)  National Journal took a look at polling in battleground states and sees a much bigger problem than national polls indicate:

    In every reputable battleground state poll conducted over the past month, Obama’s support is weak. In most of them, he trails Republican front-runner Mitt Romney.  For all the talk of a closely fought 2012 election, if Obama can’t turn around his fortunes in states such as Michigan and New Hampshire, next year’s presidential election could end up being a GOP landslide.

    Take Ohio, a perennial battleground in which Obama has campaigned more than in any other state (outside of the D.C. metropolitan region). Fifty percent of Ohio voters now disapprove of his job performance, compared with 46 percent who approve, according to a Quinnipiac pollconducted from July 12-18.

    Among Buckeye State independents, only 40 percent believe that Obama should be reelected, and 42 percent approve of his job performance. Against Romney, Obama leads 45 percent to 41 percent—well below the 50 percent comfort zone for an incumbent.

    The news gets worse from there.  In Michigan, a reliably Democratic state that Obama carried with 57 percent of the vote, an EPIC-MRA pollconducted July 9-11 finds him trailing Romney, 46 percent to 42 percent. Only 39 percent of respondents grade his job performance as “excellent” or good,” with 60 percent saying it is “fair” or “poor.” The state has an unemployment rate well above the national average, and the president’s approval has suffered as a result.

Obama also trails Romney in New Hampshire, getting edged by two points.  More worrisome for the White House is Obama’s standing in these states, and others like them.  Regardless of who the nominee is, having re-elect numbers in the low 40s is a clear sign that the state is up for grabs. And it’s not just these states, either.

If Michigan is in play — and it almost certainly will be — then Pennsylvania and Wisconsin probably are as well, and Indiana may already be lost.  That Rust Belt band played heavily into Obama’s victory in 2008.  Hillary Clinton Democrats, primarily white working-class voters, turned out for Obama in 2008, but those are the voters Obama is losing fastest in this cycle.  National Journal wonders whether Obama can hold Colorado, Nevada, and Virginia, but they miss North Carolina, where Obama’s standing has already shown to be crumbling, too.

Most presidential re-election runs have some element of defense to hold territory won in the previous election, but that may be the only strategy Obama can put in play.  Obama won the Electoral College handily in 2008, 365-173.  By flipping Pennsylvania, Ohio, Florida, Indiana, Colorado, Virginia, Nevada, and Wisconsin, Republicans edge Obama 295-243.  Swapping Florida for North Carolina still produces a 281-257 win for Republicans.  Winning Michigan and conceding Colorado makes it 288-250 Republicans.

You can bet that the Obama campaign is studying the map very, very carefully in order to see where they want to spend money, and it’s mostly going to go in that Rust Belt area.  Republicans should plan accordingly.  That could be the key to the entire election