Sunday, May 30, 2010

What a Mess in the Gulf, Kagan Hearings Set for July, At Long Last Some Action on Gay Rights, Another Incremental Jobs Bills

An Inept Response All Around
We are now over 40 days into the spill on a BP rig in the gulf that is spewing thousands of barrels of oil into the ocean every day and the sad reality is that we appear no closer to solving the issue than we were on day one.

The so called "top kill", an effort to pump heavy mud and solid material into the well to stem the flow of oil has failed and the next plan is a custom fitted cap to limit (but likely not eliminate) the flow of oil while a relief well is dug, which will take at least until August to complete.

Don't expect a full resolution to this spill, already the largest in United States history, until at least August or September, which means that this spill may wind up being 4 to 5 times larger than the horrific Exxon Valdez spill a generation ago. To make matters worse, while the Valdez was devastating to the Alaskan coast, the economic, social and ecological impact of a spill in the gulf is far worse. The entire gulf coasts economy will be impacted in huge ways: fishing will be badly damaged for at least a decade, tourism to the beaches will be destroyed and all of the dependent things in the local economy (fish processing, hotels, restaurants, you name it) will be devastated. The ecological damage will be immense, destroying scores of natural wildlife under suffocatingly thick oil. This is, to put it simply, quite possibly the worst ecological disaster in United States history.

And still the oil flows on. And I'm left with the question why?

I take a very simple view of this. There are only two possibilities. The first possibility is that regulations were utterly inadequate to prevent such a spill or to ensure that a contingency plan was in place to quickly solve it where it to occur. The second possibility is that the regulations existed but were not followed. In reality, it is probably a mix of those two categories, but the more information that I find out, the more it supports the first theory.

I'd never even heard of the Minerals Management Service prior to this spill, but the obvious coziness and outright corruption of that organization has now become clear. How is it possible that it did not require back-ups to a valve failing on oil rig designs? Can you imagine a nuclear power plant that wasn't required to build a back-up system if one part failed? How on Earth did inspections not reveal this kind of risk? The head of the MMS has been fired and that is a good start, but it is utterly insufficient. We basically have a complete failure of a regulatory scheme and a need to start over, with new people and with new authority. I'd start by replacing Ken Salazar, a nice guy who seems to care deeply about these issues, but not the kind of tough enforcer that you need to fix the broken system. Plus, what kind of message does it send if there is no accountability at the top in an instance like this?

The President has appeared weak-kneed and late to the game here. If BP didn't have a plan to quickly solve the issue, than the government should have. If it didn't, it should've been in their with all of its best resources, from day 1, running things. Where is the Army Core of Engineers? Where is the President's Science Advisor? Heck, where is the plan? Are we just going to try stuff and hope it works?

It has been speculated on the right that this is President Obama's Katrina. I'm not quite ready to go that far yet, but let's just say that I'm not at all satisfied with his handling of this crisis. It does not inspire confidence in how he would deal with a natural disaster like a hurricane. And my view of the supposedly smart people around him is heavily wounded.

Kagan Hearings to Begin in Late July
Elena Kagan's hearings to replace John Paul Stevens on the Supreme Court will begin in late July, according to the senior Democrats in charge in the Senate Judiciary Committee. Republicans are already complaining that this gives them insufficient time to prepare, which is of course, utter nonsense, since they fully vetted Kagan less than 2 years ago as solicitor general, but as I've pointed out several times over the past few months, is a complaint consistent with a strategy of running out the clock on the current Congress in the belief (almost certainly correct) that the GOP will control more seats in the next Congress. They will complain and the hearings will go ahead anyway. Kagan will be confirmed, barring some unlikely previously unknown damning fact. Her vote totals will look a lot like the vote totals to confirm her for solicitor general (that vote was 61-31.)

Rumors have swirled around Kagan's sexual orientation, given her middle age and the fact that she has never been married. I have no direct knowledge of whether Kagan is gay or not, but can only say that if she is, I would love for her to come out of the closet and be a role model for gay Americans. I think it would be fantastic to have an openly gay Supreme Court justice. However, I don't even know if she is, in fact gay and if she is, she seems to have shown a preference for keeping those matters private, as should be her right.

Americans Worst Case of Employment Discrimination May Soon End
The House has finally voted, as part of the large Defense Authorization Bill, to end the awful, discriminatory and bigoted policy of "don't ask, don't tell" in the United States Military, following a full military review and sign-off by both Secretary of Defense Robert Gates and the President. The House Amendment passed with only 5 GOP votes and 26 Democrats voting no, despite the fact that new polling shows 80% of Americans support allowing gays to serve openly (although, out of fairness, I'm sure that the numbers if you polled the enlisted military would be far lower.)

The same day, the Senate Defense Committee agreed to a similar amendment to the Defense Authorization, with all Democrats on the committee voting for it, joined by Republican Susan Collins of Maine (thank goodness for those last two remaining Republican moderates in the US Senate.)

The road is certainly not over. The House has passed its version of the Defense Authorization Bill, but the Senate must still pass it's version, then both houses pass a reconciled conference report on the bill before in can go to the President for signature. Following that, the military review must be completed and the sign-offs from Gates and Obama take place before the policy goes into effect.

Because of the delay above, I renew my call on President Obama to show some leadership and suspend prosecution of gay members of the military until this work is completed. It is a crime that we continue to discharge brave members of the armed services for no other reason than being gay. And it is a crime that 4 out of 5 Americans, including the majority in some very red states, now recognizes as wrong. The American people are progressing their thinking a lot faster than Washington is.

Another Do-Little "Jobs" Bill
There is little question that the American Recovery and Reinvestment Act (aka the Stimulus Bill) is the President's signature piece of economic policy in his first two years. A massive $787 billion collection of expenditures and tax cuts spread over the first three years of his term, is more or less defines his economic approach in his first term. The reality is that most of the spending associated with that bill, which has, in a lot of ways, faded from public attention, is yet to take place. Here are the latest stats on the spending associated with the bill:

Spending: $236B out of $499B (47% complete)
Tax Cuts: $163B out of $288B (56% complete)
Total: $399B out of $787B (51% complete)

That's right, the stimulus bill is just barely half executed. And it was designed that way, not just as a short-term shot in the arm (which is what people typically think about when they think stimulus), but as a multi-year, multi-tiered approach to driving economic growth. Big tax incentives on the front-end for things like Cash for Clunkers or the First-Time Homebuyer Tax Credit to spur sales of cars and homes. By the way, remember how everyone on the right said Cash for Clunkers simply pulled forward sales that would have otherwise occurred later an that the auto industry would be back in the doldrums after it expired? Checked the stats lately? Auto sales are now up 25% year over year WITHOUT the credit. So, it's hard to argue the effectiveness of the short-term incentives.

Tier two was infusions of entitlements and state cash to stave off massive state budget cuts that would drive unemployment and to put cash in the hands of the unemployed and needy that would immediately be reinserted into the economy driving growth. This stage has had mixed success, with states staving off cutbacks....until now that the money is running out. Perhaps the money served it's purpose by saving those cuts until the economy was on more solid footing, but there is no doubt that there are state budget crisis everywhere right now that have to be solved.

The third stage, which we are really now entering in earnest is about infrastructure spending. Road and bridge upgrades. Green energy programs. Things which create jobs but are also investments in the future of our economy. There is road work upgrading I-295 near me (a badly needed project.) Solar panels have gone up on light poles all around me, provided by private industry, but subsidized by stimulus funds. This is all good stuff, whether or not it is enough to immediately bring down the unemployment rate. In fact, my criticism at the time is that I wished far more of the bill were devoted to infrastructure spending (only $275B out of the $787B packaged was devoted to such items, scarcely over a third.)

So with a clear approach already laid out and in progress, why is congress passing silly little $48B (and yes, $48B is tiny in the scheme of our economy) jobs bills? Because they are trying to show that they are doing "something" about the persistent near 10% unemployment rate and the 8+ million jobs lost in the recession. The truth is that the latest bill, a collection of small tax cuts which is about 50% offset by some tax hikes, does little either way to impact the economy. But it looks like action. And as mad as people still are about unemployment, they want to show some action.

The latest "jobs bill" is a small aside that will be quickly forgotten. But, keep the faith, unemployment will come down. The fundamentals are returning to the economy, with economic growth taking place and good employment growth over the past two months, for the first time since the recession started. But it is now obvious to me that it will take a painfully long time to get down to an acceptable level of unemployment (I define "acceptable" as somewhere around 7%, "good" as somewhere around 5%.) We'll see if the American people have that kind of patience. I suspect not.

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