The Senate will start voting this week on a measure to revamp the nation's financial regulatory system, with liberals pushing populist amendments to tighten the screws on Wall Street banks while Republicans attempt to scale back the reach in consumer regulation and derivatives oversight.
Senate Banking Chairman Christopher Dodd wants to pass it by May 14, an ambitious deadline for an issue that has taken 16 months to reach the Senate floor with stop-and-start negotiations, a half-hearted filibuster and unanimity among members that Wall Street must pay for the 2008 banking crisis. The question is how much.
The first vote will come Tuesday on an uncontroversial amendment by Sen. Barbara Boxer, D-Calif., that would reinforce language that no taxpayer money would go to bail out companies whose collapse posed a threat to financial markets.
But after that vote, the debate will become more raucous on the underlying bill, which would create a resolution process to liquidate "too-big-to-fail" firms to prevent another bailout similar to the federal takeover of American International Group. Dodd and Banking ranking member Richard Shelby have agreed in principle on the issue and are crafting language, which would remove a $50 billion fund designed to pay for an orderly liquidation process carried out by the FDIC, and require creditors to pay back costs under the process beyond what they would have received through bankruptcy.
Republicans are pushing for greater changes, such as prohibiting state consumer laws from exceeding federal standards and banning state attorneys general from being able to file civil suits for enforcement actions. Dodd is under pressure from liberals to hold firm on the issue and so far he has.
"I am sure there will be a ton of amendments that will try to undermine the consumer protection bureau we have established here. But I would hope my colleagues, Democrats and Republicans, will join in an effort to write a good, strong consumer protection bill along with the other pieces of the legislation so we can provide at least a better sense of security," Dodd said Friday.
Meanwhile, progressives are proposing amendments they hope can ride the current populist tide in the chamber for adoption.
Sen. Sherrod Brown, D-Ohio, has sponsored an amendment that imposes strict size restrictions on banks, limiting them from holding no more than 10 percent of the country's deposits. Sen. Bernie Sanders, I-Vt., has language to establish a federal usury rate of 15 percent.
Majority Leader Reid so far has tightly controlled the debate, with no one outside of Boxer being allowed to call up their amendments.
As the House continues to await Senate action on financial regulatory reform, Speaker Pelosi says she absolutely agrees with Financial Services Chairman Barney Frank that a final bill must be devised through a conference committee.
The House's bill was passed in December, without a single Republican vote. Another option would be through back-and-forth negotiations with the Senate.
Pelosi, during her weekly news conference late last week, was asked also whether she was OK with the Senate's discarding of the $50 billion resolution fund that was a staple of the House bill. She responded only by assuring: "Whatever bill we end up with, the American taxpayer will be protected.
"So whatever the outcome is, wherever we can find the votes to pass the bill in both houses, be sure of one thing: that there will be no exposure to the U.S. taxpayer."
As the House awaits Senate action on another bill it has already pushed through -- climate and energy legislation -- there are plans to take to the House floor this week a smaller energy-related bill.
Majority Leader Hoyer said members will vote this week on the $6 billion Home Star Energy Retrofit Act of 2010. Also known as the "cash for caulkers" bill, the measure would provide rebates of up to $3,000 per household for improvements such as energy-efficient appliances. The legislation also is depicted as a way to create more than 100,000 jobs for contractors.
Pelosi said Thursday she continues to hope the Senate will act on a climate-energy bill.
"We look forward to going to conference," she said, whether it be on an energy and climate-change bill or regulatory reform.
There is no apparent end in sight to the rift between Reid and Sen. Lindsey Graham regarding the South Carolina Republican's withdrawal from climate and energy talks due to Democratic efforts to bring up immigration reform for debate this year.
When Senate Democratic leaders last week rolled out an outline for immigration reform that Graham derided as being merely politically motivated, Reid gave notice that he would still aim to debate climate even without Graham's involvement.
But Graham's partners in that effort -- Sens. John Kerry, D-Mass., and Joe Lieberman, D-Conn. -- have indicated they would wait to unveil and move a draft carbon pricing and energy production plan the three co-authored until after Graham and Reid have resolved their dispute.
On other immigration matters, Pelosi on Thursday dismissed the notion of a House resolution or some other action to condemn what some say is Arizona's too-harsh law to crack down on undocumented immigrants.
She said there are other initiatives to take, through the courts or through referendum to stay implementation of the law.
"My members from Arizona are divided on whether to [call for a] boycott," she added.
* The Senate meets today at 2 p.m. to resume consideration of the financial regulatory overhaul bill.
* The House meets today at 10 a.m. in pro forma session. On Tuesday, the House meets at 12:30 p.m. for morning hour and 2 p.m. to consider suspension bills. Votes will be postponed until 6:30 p.m. On Wednesday and Thursday, the House will meet at 10 a.m. for legislative business. On Friday, no votes are expected.
Negotiations on an FY11 budget resolution will continue this week as the Blue Dog Coalition pushes for cuts in nonsecurity discretionary spending to help bring down the deficit, while progressive Democrats seek to protect social programs from cuts.
House Budget Chairman John Spratt said late last week that House Democratic leaders will have to decide soon whether an agreement can be reached to break the impasse in order to be able to get the 12 annual appropriations bills through the House by the August recess.
He said without an agreement, House Democratic leadership would likely look to pass deeming resolution that would set the FY11 discretionary funding level. But it would be up to leaders to decide when to forgo a budget resolution and Hoyer last week said he has no hard deadline on the matter.
Hoyer was pressed about that again on the floor Thursday by Minority Whip Cantor. He said work is continuing on the budget -- as well as a supplemental spending bill for war operations in Afghanistan and Iraq.
"I know the Appropriations Committee is working on the supplemental. I know Mr. Spratt is working on the budget," said Hoyer. "So I tell my friend that I share his view of their importance, and that we hope to be able to move those to the floor within the near future. I cannot give him a date but within the near future."
Spratt declined to entertain questions on how Democratic leaders would pass a deeming resolution -- such as including it in the supplemental -- since differences among Democrats over discretionary funding that have held up action on the budget resolution would still apply to the deeming resolution.
"We are still in earnest trying to put together a compromise," Spratt said.
Spratt has been negotiating with the Blue Dogs, who have been advocating an overall cut to nonsecurity spending of 2 percent each of the next three fiscal years and freeze spending levels for two years after.
The Senate budget resolution, approved by the Senate Budget Committee earlier this month, did not go far enough for some Blue Dogs.
The Senate proposal would freeze nonsecurity spending for three years and reduce the deficit to 3 percent of the gross domestic product by FY15. The Senate resolution could be considered by the full Senate this month after work on legislation overhauling financial regulations is wrapped up.
The Blue Dogs are seeking a provision in the resolution that would trigger reconciliation instructions if a certain level of deficit reduction is not met, Spratt said.
Both Blue Dog proposals have been opposed by leaders of the Congressional Progressive Caucus and members of the Congressional Black Caucus. But leaders of the groups have said they hope a compromise can be negotiated to pass a budget resolution.
The House and Senate Armed Services committees will continue work behind the scenes this week in preparation for markups scheduled this month on the FY11 defense authorization bill.
The annual round of Armed Services committee hearings on the Pentagon's budget request are nearly complete, although a few more are scheduled before the markups -- including a Senate Armed Services Seapower Subcommittee hearing Thursday on Navy shipbuilding programs.
The House committee plans to hold its subcommittee markups of the authorization measure May 12 and 13, leading to a marathon markup of the massive bill scheduled for May 19.
House floor debate on the measure, which sets Pentagon policy and prescribes spending levels, is expected during the week of May 24 and should wrap up before the Memorial Day recess, according to the committee.
On Friday, Defense Secretary Gates wrote House Armed Services Chairman Ike Skelton advising against using the authorization bill as a vehicle to legislate on the 1993 "don't ask, don't tell" law that bars admitted homosexuals from serving in the military. Skelton wrote Gates last week, asking how he believes Congress should deal with the issue as the Pentagon conducts a yearlong review of how best to implement a repeal of the law.
"I believe in the strongest possible terms that the department must, prior to any legislative action, be allowed the opportunity to conduct a thorough, objective, and systematic assessment of the impact of such a policy change; develop an attentive comprehensive implementation plan, and provide the president and Congress with the results of this effort in order to ensure that this step is taken in the most informed and effective manner," Gates wrote.
Legislating on the issue before the review is complete "sends a very damaging message to our men and women in uniform that in essence their views, concerns, and perspectives do not matter on an issue with such direct impact and consequence for them and their families," he added.
The Senate Armed Services Committee announced last month it plans to mark up its version of the bill during a series of closed-door meetings leading up to the recess.
Subcommittee markups will begin May 25 and continue into May 26. The full committee markup will start May 26, in the hopes of wrapping up the bill by May 27.
The committee has kept Friday, May 28, open in the event the markup of the bill takes longer than expected.
A Senate Energy and Natural Resources Committee hearing Thursday will probe the April 20 oil rig explosion in the Gulf of Mexico and the subsequent leak that reached shore Friday. Interior Secretary Salazar -- who is part of a team of senior officials the president dispatched to observe the cleanup effort -- is scheduled to testify.
The hearing examining offshore oil and gas development was scheduled before the Deepwater Horizon oil rig exploded 50 miles off the Louisiana coast.
House Global Warming Chairman Edward Markey last week notified the heads of top oil companies that they will be asked to appear before the panel soon.
Some coastal lawmakers -- including from Florida and New Jersey -- have pointed to the explosion of the rig as evidence that the Obama administration should not go forward with a recently announced blueprint to expand offshore drilling along much of the East Coast, in the eastern Gulf of Mexico and parts of the Alaskan Arctic region and coast.
President Obama Friday defended the need to expand offshore oil and gas exploration even as his administration ceased new drilling while the Deepwater Horizon oil rig leak is being investigated.
Reid Friday said the rig leak "will, undoubtedly, require us to re-examine how we extract our nation's offshore energy resources and will have to be taken into consideration with any legislation that proposes to open new areas to development."
Salazar will report back to Obama in 30 days "on what, if any, additional precautions and technologies should be required to prevent accidents like this from happening again," Obama said. "And we're going to make sure that any leases going forward have those safeguards."
The Senate Homeland Security and Governmental Affairs Committee plans a hearing Tuesday on how the federal government can prevent suspected terrorists from obtaining illegal firearms.
The hearing will feature testimony from New York Mayor Michael Bloomberg and Daniel Roberts, assistant director of the FBI's Criminal Justice Information Services Division.
On Thursday, the House Transportation and Infrastructure Economic Development Subcommittee plans a hearing to review how the Obama administration's FY11 budget request for the Federal Emergency Management Agency will prepare the agency to deal with disasters and disruptions to the nation's economy.
Competitive Senate primaries are on tap Tuesday in Ohio, Indiana and North Carolina.
In Ohio, former Republican Rep. Rob Portman will be his party's choice for the seat held by retiring GOP Sen. George Voinovich.
Although polls show Lt. Gov. Lee Fisher comfortably ahead of Secretary of State Jennifer Brunner in the Democratic primary, Democratic activists are pushing Brunner's candidacy. Low turnout could favor Brunner and make the race tighter than Fisher aides would like.
Incumbent House members from both parties are not expected to break a sweat in their primary races.
In Indiana, Rep. Brad Ellsworth is the only Democrat in the race to replace retiring Democratic Sen. Evan Bayh. National Republicans are pulling for former Sen. Dan Coats, but state Sen. Marlin Stutzman and former Rep. John Hostettler are pushing Coats and hoping to deny the establishment pick.
In House races, Reps. Dan Burton and Mark Souder face difficult primaries.
In North Carolina, Democratic strategists are nervous that former state Sen. Cal Cunningham, the party's top recruit, will fall to Secretary of State Elaine Marshall. They view Cunningham as more likely to give Republican Sen. Richard Burr a serious challenge in November. Attorney Ken Lewis might provide a tough challenger for Cunningham.
Reps. Walter Jones and Howard Coble will face GOP primary challenges.
The Senate Finance Committee will hear from Treasury Secretary Geithner on Tuesday about the administration's proposed fee on the biggest banks, designed to raise $90 billion to recoup the cost of bailouts.
This would be the second in a series of Finance hearings on the subject, which is an increasingly likely source of revenue for the cash-strapped budget. Structuring the tax has been no easy task, and congressional tax-writers are likely to significantly alter it from Treasury's initial proposal to tax the liabilities of the largest financial institutions.
Some lawmakers want to carve out insurers and nonbank financial institutions that did not benefit from the 2008 bailout package, and others want to simply tax bank profits -- and bonuses.
Then there are the questions of how to use the revenue; Republicans want to pay down the deficit, Democrats want to spend it on offsetting job-creation measures and other initiatives. House Ways and Means Democrats have held a series of closed-door meetings on the topic, continuing this week.
Meanwhile tax-writers are still trying to come up with offsets to renew a package of highly sought tax breaks that expired last year and a handful of other provisions, including farm disaster aid, approved by the Senate.
The healthcare law siphoned away $36 billion in offsets that were part of the "extender" bill approved by the Senate in early March, leaving a gap that Ways and Means and Finance members have been struggling to fill.
The House approved in December -- for the third time -- as part of their $31 billion tax extender bill a provision raising nearly $25 billion by changing the tax treatment of private equity fund managers' "carried interest" profits, or the share of their funds' capital gains they are entitled to.
Many Democrats argue those earnings are simply compensation for services rendered and should be taxed as ordinary wages rather than the much-lower capital gains rate, particularly given the sometimes massive profits realized.
The Senate has balked at increasing fund managers' taxes since it was first broached by the House in 2007. But without a backup source of revenue, the Senate appears to have caved, but aides are working to mitigate the impact on some of the tax increase's unintended recipients, such as venture capital.
Other revenue offsets are likely to include $9.5 billion from preventing, in certain cases, the use of foreign tax credits to limit multinationals' overseas tax liability.
Another $2 billion will likely be obtained through a heavily lobbied measure enabling companies to spread out their required pension plan contributions, freeing up more taxable income.
Without the change, many firms will find themselves faced with massive scheduled contributions required by a formula passed into law in 2006, before the financial crisis wiped out plan assets.
But lawmakers are likely to extract a price ensuring that firms won't spend that cash on rewarding executives and shareholders rather than preserving jobs and keeping stores open.
The House is looking to take up a bill this week to allow nearly triple the current volume of duty-free Haitian garment exports to the United States, a measure intended to spur that country's economy -- which was devastated by the Jan. 12 earthquake.
The measure was the result of months of delicate negotiations among congressional aides mediating between the competing interests of retailers and the domestic textile industry.
All have wanted to be helpful, given Haiti's situation. But garment imports are always sensitive for domestic textile firms, especially given that the Haiti trade program opens the door to materials such as yarns and fabric being sourced from lower-cost regions such as Asia.
Retailers reluctantly agreed to keep existing exclusions of certain products like knit T-shirts and limits on others, as they ought to see a boost overall from the bill's increased tariff preference levels. And Haitian workers should benefit as well, as exports have been driven way down since the earthquake after a sharp increase in 2009.
This article appears in the May 8, 2010 edition of NJ Daily.
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