Ezra is is traveling, Dylan is writing Wonkbook.
Five in the morning
1) IMF chief Dominique Strauss-Kahn has resigned, report Howard Schneider and Zachary Goldfarb: Dominique Strauss-Kahn, the managing director of the International Monetary Fund, who is facing attempted rape charges in New York, announced his resignation late Wednesday night. In a statement, Strauss-Kahn said he is resigning 'with infinite sadness' in an effort 'to protect this institution.' The resignation, while providing clarity to an organization reeling from the accusations facing its managing director, immediately sets off a scramble about who will lead the powerful organization and what that will mean for the global economy...Without Strauss-Kahn at the helm, Europe is at risk of losing a key source of financial support in its efforts to contain the debt crisis buffeting the continent."
2) The Gang of Now-Five is meeting again, reports Felicia Sonmez: "One day after the departure of a key Republican senator threatened to derail the bipartisan Gang of Six talks aimed at producing a comprehensive deficit-reduction plan, the group?s remaining five members emerged from an hour-long huddle Wednesday sounding an optimistic note and pledging to meet again Thursday. 'We had a very constructive meeting today; we intend to meet again tomorrow, and we?re going to keep working,' Senate Budget Committee Chairman Kent Conrad (N.D.), one of three Democrats in the working group, told reporters after Wednesday?s meeting...In addition to Conrad, the group?s other four remaining members are Sens. Richard J. Durbin (D-Ill.), Mark R. Warner (D-Va.), Saxby Chambliss (R-Ga.) and Mike Crapo (R-Idaho)."
3) The Fed won't launch another round of stimulus, reports Neil Irwin: "QE3 is not to be. That?s the conclusion to be drawn from new minutes of the last Federal Reserve policy meeting released Wednesday afternoon. The central bank is on the verge of concluding its purchase of $600 billion in Treasury bonds. The program, known as QE2 because it is the Fed?s second round of ?quantitative easing,? has been the Fed?s tool for keeping short-term interest rates near zero to boost the nations? economy. The minutes from the late April meeting show there is little appetite among Fed policymakers to launch a new round of bond purchases...Inflation has risen in recent months, making some Fed officials wary that consumers could face rapid price increases."
4) The Senate will finally vote on court nominee Goodwin Liu today, reports Jess Bravin: "A Berkeley law professor's chance of joining a federal appeals court lay in the hands of seven Republican senators, as Democrats scheduled a Thursday vote to break the filibuster that has held up Goodwin Liu's appointment. More than either of President Barack Obama's Supreme Court nominees, Mr. Liu has emerged as the flashpoint of ideological warfare over the federal bench. Democrats describe Mr. Liu, a Rhodes Scholar and former law clerk to Supreme Court Justice Ruth Bader Ginsburg, as a brilliant legal mind with a particular expertise in education law. Republicans offer the opposite image, portraying Mr. Liu as a threat to 'the American tradition of neutral judges and limited, constitutional government.'"
5) No "Gang" can fix the debt problem, writes Tom Coburn: "It is not realistic to expect six members to pull the Senate out of its dysfunction and lethargy. Some will ask why we should have more hope in an open, deliberative process, in which all senators are engaged, when a dedicated few did not succeed. The America I know comes together when tough times call for us to do so. It?s time for the Senate to earn its reputation as the world?s greatest deliberative body and help lead that effort...In the coming weeks I?ll be putting forward my own proposal that puts everything on the table and cuts $9?trillion in spending over the next decade. I hope my colleagues present their ideas as well. I?m confident that in a free and open debate, the best solutions for America will prevail, but only if we have the debate."
Cover song interlude: Califone plays "The Orchids" by Psychic TV.
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Still to come: There's no Plan B if the debt ceiling isn't raised; the administration is upping its legal rhetoric on health care; college grads are getting less bang for their buck; Harry Reid and green activists are in a tiff; and a cat uses a human hand as a tool.
Economy
The administration doesn't have a Plan B if the debt ceiling isn't raised, reports Jared Favole: "The Obama administration has no plan B in place if Congress doesn't raise the debt ceiling, an administration official said Wednesday, suggesting that absent a vote to raise the limit there is little the U.S. can do to repair the damage of a possible default. 'There really is no alternative to raising the debt limit,' a senior Obama administration official said in a briefing with reporters. 'There is no plan that can preserve our creditworthiness' should the political system fail, said the official, who spoke on the condition that he would not be named...'There is not a secret plan that's available to make everything alright,' the senior administration official said."
Senate Democrats might propose a millionaire's surtax, reports Alexander Bolton: "Senate Democrats are using their proposal to raise taxes on millionaires as a stalking-horse to force Republicans to accept other tax increases. Democratic officials privately acknowledge that raising personal income tax rates on the wealthy has little chance of passing this Congress. However, the politically popular idea is a key part of the Democrats? strategy to attack the deficit and gain concessions from Republicans. Democrats are mulling two proposals to include in their budget plan: ending the George W. Bush-era tax cuts for families earning more than $1 million a year or imposing a surtax of 3 percent or 5.4 percent on millionaires and billionaires."
Retailers are fighting to keep swipe fee rules, reports Ylan Mui: "The retail industry launched a new campaign Wednesday to protect a federal law that reduces the fees retailers must pay to banks every time a debit card is swiped, a move the industry hopes will blunt the massive lobbying attack from banks. The campaign calls for hundreds of merchants to flood Capitol Hill in June for meetings with key lawmakers, the third 'fly-in' to be held this year on the issue. It also includes print and radio ads in Washington and six to 12 key states, along with viral video clips. Industry executives say they expect the campaign to generate several thousand comments to lawmakers before the regulations on swipe fees, also known as interchange, take effect this summer."
The DOJ's number three guy is trying to cut a mortgage deal, reports Brady Dennis: "The number of issues that cross Associate Attorney General Thomas J. Perrelli?s desk on any given day run the gamut from civil rights to the environment, from antitrust cases to questions about law on Native American lands. But recently, the man who oversees the civil side of the Justice Department -- an operation that includes thousands of federal lawyers -- has spent a sizeable chunk of his time trying to forge a deal that could affect homeowners throughout the country. Perrelli, the department?s No. 3 official and one of the Obama administration?s top negotiators, is the government?s point person in talks with the country?s largest banks over a massive settlement stemming from widespread problems within the mortgage-servicing industry."
Obama has picked a new SEC member, reports David Hilzenrath: "President Obama plans to nominate corporate lawyer and former SEC official Daniel M. Gallagher Jr. to become one of five commissioners at the agency, the White House said Wednesday. The president also plans to nominate current commissioner Luis A. Aguilar to another term, the White House said. Gallagher, a partner at the law firm Wilmer Cutler Pickering Hale and Dorr, held leadership roles in the Securities and Exchange Commission?s Division of Trading and Markets. He was deeply involved in the agency?s response to the financial crisis of 2008...Gallagher had been expected to fill a Republican seat now held by former Senate staffer Kathleen L. Casey, whose term expires in June."
The US won a WTO fight on plane subsidies, reports Howard Schneider: "Europe will have to trim its support for the Airbus conglomerate after a World Trade Organization panel upheld U.S. allegations that the company benefitted from improper government subsidies. The ruling by a WTO appeals board marks a final step in a protracted battle between the U.S. and Europe over government support for Boeing and Airbus, which make the bulk of the world?s passenger jets and are fierce competitors. A separate WTO panel ruled this year that Boeing had benefitted from about $5 billion in improper government help between 1989 and 2006, a finding that is on appeal."
A Swiss bank has been making friends in DC, reports T.W. Farnham: "This month, UBS settled with the Justice Department for $160 million over charges that it rigged bidding for municipal bond sales...The company?s political action committee was cutting checks to lawmakers on both sides of the aisle as that deal was reached, according to Federal Election Commission records. In March, it sent $15,000 to both the Democratic Senatorial Campaign Committee and the National Republican Congressional Committee. It also sent $5,000 to the campaign of House Speaker John A. Boehner (R-Ohio) and an account controlled by Rep. Debbie Wasserman Schultz (D-Fla.), the newly elected chairman of the Democratic National Committee."
Sen. Pat Toomey is the patron saint of the default deniers, writes Dana Milbank: "The leading purveyor of this new school of economic thought, dubbed the 'default deniers' by their opponents, is freshman Sen. Pat Toomey (R-Pa.)...His theory: The government won?t really go in to default on Aug. 2, and, even if it did, things wouldn?t necessarily be so bad... There?s only one problem: Without borrowing, we?d have to cut Obama?s budget for 2012 by $1.5 trillion. That means even if we shut down the military and stopped writing Social Security checks, the government would still come up about $200 billion short...Toomey wasn?t worried. 'I don?t think it?s going to have an adverse impact on the economy in the days, weeks or perhaps even months that this would continue,' he said."
The economic consequences would be disastrous even if the government stops short of default, writes Alan Blinder: "For openers, suppose the federal government actually does reduce its expenditures by 40% overnight. That translates to roughly $1.5 trillion at annual rates, or about 10% of GDP. That's an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9% unemployment. Even contemplating such a possibility is evidence of a dark, self-destructive impulse. Second, markets now assign essentially zero probability to the U.S. losing its fiscal mind. They'd be caught flat-footed if the threat of default suddenly started to look real, possibly triggering a world-wide financial panic. Remember how markets reacted to the Lehman Brothers surprise?"
Adorable animals making humans their servants interlude: A cat grabs a human hand, makes it do his bidding.
Health Care
The administration is amping up the legal rhetoric on health care, reports Jennifer Haberkorn: "The Obama administration argues that the states suing over the constitutionality of the health care reform law would risk leaving uninsured Americans ?on the street after a car accident? without the law?s requirement that nearly all Americans buy health insurance...Seizing on an alternative suggested in passing by the 26 states in their brief, they argue that under the states' plan, Americans would be denied access to medical care...Earlier this month, the states wrote in their own brief to the 11th Circuit that Congress cannot compel someone to buy insurance, but one legal way to ensure that people pay for medical services is imposing restrictions or penalties on people who attempt get health care without insurance."
Domestic Policy
College grads are getting less bang for their buck, reports Catherine Rampell: "Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What?s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is 'worth it' after all...The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account."
Five GOP Senators are questioning the IRS's 501(c)4 crackdown: http://politi.co/jtuVtR
Federal workers don't much care for a pension cut proposal, reports Lisa Rein: "Rep. Gerry E. Connolly (D) joined federal employee unions on Wednesday to denounce a plan to target federal pensions to balance the budget, calling it an assault on civil servants and a tax on 2.2 million 'middle-class' Americans...The White House and congressional leaders are considering asking civil servants to contribute more to their retirement plans, to about 6 percent from the current 0.8 percent.The change, first reported Sunday by The Washington Post, was recommended by President Obama?s bipartisan fiscal commission and the non-profit group Third Way. It would amount to a 5 percent pay cut."
Private prisons are running up state budgets, reports Richard Oppel: "Despite a state law stipulating that private prisons must create 'cost savings,' [Arizona's] own data indicate that inmates in private prisons can cost as much as $1,600 more per year, while many cost about the same as they do in state-run prisons...Nationally, the number of state inmates in private prisons grew by a third over the past decade to more than 90,000, but it has stagnated, and some states have reduced total prison populations -- shifting nonviolent offenders to treatment programs while bolstering probation. Now, Ohio lawmakers want to privatize prisons with 6,000 inmates, and Florida will transfer institutions with 15,000 inmates to private management. The Arizona plan would add 5,000 private prison beds."
High approval rates are driving up Social Security disability costs, reports Damian Paletta: "Americans seeking Social Security disability benefits will often appeal to one of 1,500 judges who help administer the program, where the odds of winning are slightly better than even. Unless, that is, they come in front of David B. Daugherty. In the fiscal year that ended in September, the administrative law judge, who sits in the impoverished intersection of West Virginia, Kentucky and Ohio, decided 1,284 cases and awarded benefits in all but four...This breakdown is one reason why Social Security Disability Insurance--one of the federal government's two disability programs--is under severe financial strain."
Goodwin Liu's nomination shouldn't be a partisan issue, writes Richard Painter: "I served as the chief White House ethics lawyer under President George W. Bush for two and a half years. There, I worked extensively on the selection and confirmation of Chief Justice Roberts and Justice Alito, as well as some of the president?s nominees for the courts of appeals. As the Senate prepares to vote Thursday on the long-postponed nomination of Goodwin Liu to the Ninth Circuit Court of Appeals, I am reminded of what it was like to be inside the White House, trying to help a nominee through this difficult process...Liu is well suited for the bench...His nomination is supported by Whitewater prosecutor Ken Starr, Goldwater Institute lawyer Clint Bolick and other leading conservatives -- as well as by moderates and liberals."
Animated standup interlude: Mike Birbiglia's "I'm a Bear, Etc".
Energy
Harry Reid and green activists are sparring, reports Darren Samuelsohn: "Senate Majority Leader Harry Reid and environmental groups are at odds over how far greens should go in spanking Democrats who don't vote their way on key issues like the EPA's climate change powers and oil industry tax breaks. Reid and several of his top lieutenants emerged from a meeting Wednesday night with top green group CEOs pledging to protect the Clean Air Act against further assaults from Republicans and even some moderate Democrats. But behind the scenes, the majority leader and the environmentalists don't all see eye to eye on whether in-cycle Democrats deserve to be the target of ad campaigns when they also help make up Reid's razor-thin majority."
A Republican drilling bill went down in the Senate, report Corey Boles and Kristina Peterson: "For the second time in as many days, the U.S. Senate defeated an energy plan that attempted to combat skyrocketing gasoline prices as Democrats and Republicans continue their fight over energy policy. This time it was a Republican plan that would have sought to expedite new offshore-drilling permits and opened new areas to be leased to drilling companies, in an effort to compel the administration to stop its de facto moratorium on an expansion of drilling activity. The federal government would have had 60 days to determine whether a new drilling permit was to be granted. If no action was taken within that time frame, drilling would automatically have been allowed."
The failed bill would have made winning lawsuits against oil companies much harder, reports Kate Sheppard: "In addition to expanding offshore drilling, the bill would potentially give BP and other oil companies an unfair advantage in all lawsuits related to the Gulf of Mexico. The measure would deem the U.S. Court of Appeals for the Fifth Circuit, located in New Orleans, the 'exclusive venue' for all civil suits dealing with energy projects in the Gulf. That's a problem because the court is stocked with judges who have financial holdings or other ties to the oil and gas industry. That means lawsuits would be relegated to a particularly sympathetic court, no matter what jurisdiction the company is based in or where the incident that prompted the suit occurred."
A state law change in California could reduce hybrid demand, reports Felicity Barringer: "Virtue may be its own reward, but incentives don?t hurt. In California in 2004, when the country?s first measure restricting vehicles? greenhouse gas emissions became law, 75,000 owners of the gas-stingiest hybrid cars were assured access to carpool lanes. Now the $8 yellow decal that served as a get-out-of-traffic-free card is about to become meaningless: the privilege, originally set to expire in 2008, was legislatively extended twice, and now ends July 1...Matthew Kahn, an economics professor at the University of California, Los Angeles, who has studied hybrid owners, said they were 'a mixture of people wanting to signal their virtuousness and people wanting to get to work quickly.'"
Closing credits: Dylan Matthews is a student at Harvard and a researcher at The Washington Post. Wonkbook is compiled and produced with help from Michelle Williams.
Source: http://feeds.washingtonpost.com/click.phdo?i=57ec9acb3fa1b18acd4046b351961512
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