Daily Caller:

History will be made when Boehner becomes first orange-American Speaker of the House

“In January, America will pass another milestone on the road to full equality when Ohio Republican Rep. John Boehner becomes the first orange-American Speaker of the House.Boehner’s unique skin has made him a target of liberal mockery, and talk of his tan has often eclipsed discussion of what he actually says or does. Even President Obama has gotten in on the fun, joking at the 2009 White House Correspondence Dinner that he and Boehner “have a lot in common. He is a person of color—although not a color that appears in the natural world.”

Cartoonists, columnists, bloggers, pundits, and humorists get in on the fun, including Olivia Munn’s election report on the Daily Show (at the 4:00 minute mark):

I don’t want to fall into the trap flagged by the Daily Caller and lose sight of the content while caught up in the novelty of our first Orange Speaker of the House. In terms of the meaning of the election and the role John Boehner will play, I cannot say it any better than Jonathan Rauch on the pages of the New York Times:

Divided We Thrive – Jonathan Rauch

A GRAND victory for Republicans in the 2010 midterm election? Yes, of course. But also no. In all three of the most recent earthshaking midterm elections — 1994, 2006 and now 2010 — the same candidate won: divided government. That is not a coincidence. In the last two decades, a strong and persistent pattern has emerged, one that will dominate our politics for some time to come, because it is rooted in two important political realities. First, the public strongly prefers divided government. Second, it has every reason to…

But divided government, in today’s world of ideologically polarized parties, is the only way of attaining sustainable bipartisanship. And that is likely to remain the case for the foreseeable future. By promising to transcend partisanship in an all-Democratic government, President Obama, in 2008, promised something he had no prayer of delivering. Paradoxically, the three words that will do the most to help him deliver on his broken promise of bipartisanship — and, indeed, that offer him the best hope of governing from the center, broadening his support and stabilizing his presidency — are these: Speaker John Boehner.”

Two Speakers, one coming in, one going out, characterized differently in the press. MSM reporting on one focusing on a reputation for toughness, ideological inflexibility and hardball partisan politics. MSM reporting for the other focusing on appearance and a penchant for emotional outbursts. I cannot help but wonder how the public and media would perceive the two if these reported characteristics were reversed. Would Nancy Pelosi get the same media treatment if she had a reputation for weeping on camera?

It is interesting to speculate how John Boehner will be covered by the media during the midterms four years hence. Perhaps a hint can be seen by recalling how Speaker Pelosi was perceived when she won the gavel four years ago.

First, a tip of the hat to a couple of regular Donk commenters – Cranky Critter for introducing me to a field of study I had heretofore been unaware of – Comparative Political Demonology™ – a phrase coined and defined by Tully some years ago. This subject is bit too broad for me, so I will focus here on a more specialized subset – Applied Relative Demonology as it pertains to the Speaker of the House in 2006, 2010 and 2014 mid-term elections. There may be a PHD thesis in there somewhere.

A great deal of electrons and ink are being spilled over the role Nancy Pelosi played in the 2010 election outcome and the political wisdom of her continuing to lead the Democrats in the House of Representatives as minority leader. She was demonized by Republicans as a San Francisco liberal steamrolling a progressive agenda over the objections of our center-right country. Indeed, as it turns out, being a reliable vote in the House of Representatives for Nancy Pelosi was a career limiting move for many Democratic Representatives. Pundits on the right and left inform conventional wisdom that she is a political poison of such devastating toxicity that her leadership of the minority Democrats would virtually guarantee Republican victories in 2012 and 2014. Color me unconvinced.

It is not like Nancy Pelosi has changed her politics since 2006. She was hardly an unknown quantity after serving 19 years in the House as representative and minority leader, and was not perceived politically any differently in 2006 by the electorate than she is today. She was demonized by Republicans in 2006 as a San Francisco liberal, yet that did not stop voters from sweeping Republicans from the majority and installing her as the first woman Speaker of the House, complete with her “San Francisco Values” baggage:

There were some differences between then and now. There was a Republican President, and the Democrats had a much bigger target to demonize in 2006. A Liberal Speaker of the House steeped in San Francisco Values does not sound so bad when the alternative is a corrupt political hack that “would not meet the moral standards of one of the most corrupt 1906 political participants of the most corrupt political organization in the history of the United States.” Hence “Relative Demonology”. After serving as Speaker of the House for two years, voters increased the Democratic majority in the House in 2008, dealing Pelosi an even stronger hand as Speaker. She didn’t change, but in 2006 and 2008, the Republican demons were worse.

For many Americans, John Boehner is more of an unknown today than Nancy Pelosi was in 2006. They know he is politically conservative, cries on camera, and is orange. That’s about it. What we will learn about him in his role as Speaker, how he will be perceived by the electorate in 2012 and 2014, and who is elected President in 2012 will be bigger factors in those elections than whether or not Nancy Pelosi continues to lead the Democrats in the House. Today, Boehner gets the benefit of the doubt from the electorate. Under the more intense and extended media scrutiny in his new role, the weeping everyman shtick could wear thin and even raise doubts about his fitness to lead.

Pelosi was widely credited with Democrats winning the House in 2006. She was an effective Speaker in 2007-8 when acting to restore some balance with a Republican administration. She was an even more effective speaker in driving the Democratic agenda set by the Obama administration through the House of Representatives in 2008-10.

If Democrats want effective, competent leadership in Congress, they should stick with Pelosi. We won’t see her crying on the floor of the House, and by 2014, an orange hued basket case weeping over tax cuts may very well be perceived as the relatively greater demon.

Cross posted from “Divided We Stand United We Fall”

Divided Government occurs in the US federal government when the party that controls the executive does not command majorities in both branches of the legislature. To restore divided government in the mid-terms, Republicans would have to retake the majority in either the House of Representatives or the Senate. That means a shift of 40 seats in the House, or 10 seats in the Senate or both. A tall order.

A few weeks ago, Justin invited predictions for the 2010 midterms. With Labor Day around the corner signaling the official start of the fall political election campaign season, I thought I’d throw my entry over the transom. Of course, this is strictly my opinion, your mileage may vary, and mangement is not responsible for the content of this post. I am also predicting an outcome I’d like to see – so there may be some wishful thinking embedded in this analysis.

Last time I looked, the answer was “no” – divided government was out of reach in 2010. It was the same conclusion I arrived at shortly after the election in 2008. Conventional wisdom also said “no”, but conventional wisdom has taken some surprising turns in 2010.

Conventional Wisdom
In January, the expectation was that the GOP would make gains in both houses of Congress, but fall short of retaking a majority in either. It just looked like the GOP was buried too deep in the sand to dig themselves out in one cycle. The Scott Brown “Massachusetts Miracle” eclipsed that particular ray of conventional wisdom, and since then CW has cautiously settled on a partly cloudy forecast with a chance of heavy Republican rain. The current political weather report gives the GOP a good chance to retake the majority in the House of Representatives, but the Senate is still considered by most to be out of reach. Conventional wisdom is not unanimity, so you can find some grasping at straws, others fearing the worst, and a few wondering how bad it could get. To many on the right, it looks like a done deal. We’ll start our analysis by narrowing down the range of possibilities.

Every Possible Scenario
The entire universe of possibilities can be distilled to these four outcomes – listed in order of Current Conventional Wisdom:

1. Democrats retain Senate, Republicans win House
2. Democrats narrowly retain House and Senate
3. Republicans win House and Senate
4. Republicans win Senate, Democrats retain House

The best way to evaluate this would be a bottoms-up analysis looking at detailed polls and statistically correlating demographics and voting history on a district by district, state by state, and election by election basis. I’m not going to do any of that. For one thing, it is beyond my ken, for another, I can get all that from the usual suspects doing the polling and Nate Silver’s blog doing the quant work. Instead, I’m going to look at the election through the prism of two “rules of thumb” and look for similarities and differences to historically analogous elections. And steal from Nate.

Maxims and Thumbs
The first rule of thumb does not get much publicity, but is an interesting fact that I’ve dubbed “The 100 Year Rule”. In the almost 100 years since we have been been electing Senators directly (only since the 17th Amendment was ratified in 1913) the House of Representatives has never flipped majorities unless the Senate flipped first or at the same time. If conventional wisdom is correct and the Republicans take the House but not the Senate, it would be an historic first. So my first prediction is that this is not going to happen. Conventional wisdom is wrong, and the scenario where the GOP takes only the House is the least likely of the four.

The second rule of thumb is Tip O’Neil’s maxim “All politics is local.“ To the degree that O’Neills maxim is true, it is true about the House. This is just another way of saying (as is the first rule) that it is extremely difficult to flip majorities in the House of Representatives. House incumbents, (frequently aided by gerrymandered districts) enjoy extraordinarily high re-election rates. Even when voters tell pollsters they despise Congress in general, they’ll say they love their specific representative who is often the conduit by which federal services are delivered to individuals, municipalities, and businesses in the district. House elections are almost always “local.” Almost.

Looking Back
1994 and 2006 were two midterm election cycles where elections were decidedly not local. They turned on national issues and the House of Representatives flipped majorities simultaneously with a flip in the Senate. These two mid-term elections shared several characteristics: We were under One Party Rule (Democrats in ’94 – Republicans in ’06); There was widespread dissatisfaction with the party in power; The opposition party was energized; The base of the incumbent party was disillusioned with a palpable lack of enthusiasm; There was a widespread perception that the party in power was arrogantly pursuing policies opposed by a majority of Americans; Finally, major corruption scandals were in the headlines for the party in power throughout the election year (Rostenkowski in ’94, Abramoff and Foley in ’06).

Now, without a doubt, all of these elements are present in 2010. However, I don’t believe the 2010 corruption stars (Maxine Waters and Charlie Rangel) rise to the level of the corruption superstars we had in ’94 and ’06. In both of those elections, the corruption scandals were the last straw and triggered the “throw the bums out” gag reflex in the voters. Unless there is an October surprise and more corrupt Democratic pols make it into the headlines, I just don’t believe there is enough animus to overcome the huge House of Representatives incumbent advantage to get the massive 40 seat shift. Plus, one should never underestimate Nancy Pelosi. My conclusion on the House: Close, but no cigar. 2010 will not be quite like 1994 or even like 2006.

Miracles Happen
So if we are to see divided government restored in 2010, the best chance will be the Senate. In January this looked like an impossible hill to climb. The Democrats held a 60-40 super majority and the tie-breaker in the person of Joe Biden. To gain the majority the Republicans would have to win 11 seats. Nobody in either party considered that realistic. But – then something remarkable happened. Republican Scott Brown won Ted Kennedy’s Senate seat. You might not think that one seat would change the complexion dramatically, but it does.

Thanks Nate
Time to rip Nate Silver’s work. His chart on the left is remarkable. It shows Nate’s stack ranking of the Senate seats most likely to change parties. Of the top 12 seats most likely to switch parties, 11 of them are currently held by Democrats. All either have the Republicans leading in the polls or are within the margin of error. The one seat of the top 12 currently held by a Republican is the Florida Senate, and it is only there because Independent Crist is in a dead heat with Republican Rubio. The Democrat has no chance in Florida. And if Crist were to win, he would likely caucus Republican for reasons that I’ll outline shortly. Now – this still appears to be a very tough climb as the Republicans need 10 of the 11 Dem seats in play to secure an outright majority. But wait! – there is another scenario – they may need to win only 8 or 9 of the 11 seats to take control of the Senate. How? the answer can be discerned by looking to the 2012 election.

2012 effect on 2010
This year the structural playing field is even for the Senate races. There are 37 Senate seats yet to be decided, with 19 currently held by Democrats and 18 held be Republicans (it was 19 and 19 including Massachusetts). In 2012 the Republicans will have a huge structural advantage in the Senate elections. Of the 33 seats contested, 23 are held by Democrats and 10 by Republicans. The Democrats will be on defense with many more seats to defend, the Republicans will have a target rich environment. If they don’t already have the majority, it is a lock the GOP will take the majority in 2012.

Why is this important in 2010? Because Senators Ben Nelson and Joe Lieberman can count. If the GOP gets within 1 or 2 seats of an outright majority, Nelson and Lieberman will be in play. They’ll have one shot to cut a deal to guarantee their committee chairmanships for at least another 4-6 years (if re-elected), whereas they will be out as Committee chairs after two years if they continue to caucus Democratic. This also applies to Crist should he knock off Rubio in Florida. My take – these guys like the power and perks that come with committee chairmanships and will not be inclined to give them up too quickly. It just would not be as much fun for them, being in the Senate without that chair. And let’s be honest – its not like you liberals have been particularly nice to either of them over the last couple of years.

MW Prognosticates
My 2010 election prediction: The GOP wins 8 or 9 more Senate seats outright, then takes majority control by flipping Lieberman and/or Nelson. They fall a few seats short in the House and Nancy Pelosi continues as Speaker of the House.

Stack ranking of all possible election scenarios in order of likelihood:

1. Republicans win 8-9 seats flip Lieberman,/Nelson take Senate, Democrats narrowly retain House
2. Democrats narrowly retain House and Senate
3. Republicans win House and Senate
4. Republicans win House, Democrats retain Senate

We’ll be tracking this dirty dozen of Senate races in posts between now and the election to monitor our last best chance of restoring a perfect “10″ in ’10 and once again gaze upon a beautiful, desirable, smoking hot divided government in 2011.

Takeover Chances

Race
	Margin
N. Dakota	Hoeven v. Potter +40
Arkansas	Boozman v. Lincoln +32
Indiana	Coats v. Ellsweorth +14
Delaware	Castle v. Cook +9
Pa.	Toomey v. Sestak +8
Colorado	Buck v. Bennet +5
Nevada	Angle v. Reid +1
Florida	Rubio v. Crist +1
Illinois	Kirk v. Giannoulias +0
Wash.	Rossi v.Murray -1
Calif.	Fiorina v. Boxer -2
Wisconsin	Johnson v. Feingold -3
Kentucky	Paul v. Conway +4

(chart from Nate Silver’s 538)

Nevada is arguably the most interesting race among the dirty dozen. Given the weakness of Sharron Angle as a candidate, I am astonished that she remains in a virtual dead heat with the Majority Leader in the Senate. There are signs of panic on the left. The problem seems to be that Nevada voters really do not want either Reid or Angle to represent them in the Senate. Throw in the wild card that Nevada is one of the few states where “None of the Above” is a ballot choice, and this gets really hard to predict. Unfortunately for Nevadans, “None of the Above” cannot win. The closeness of the Nevada race may be the single clearest indicator that this may be a bigger GOP tsunami than Conventional Wisdom has yet to acknowledge.

^{Cross-posted from “Divided We Stand United We Fall“}

Of course you always want to be in power, right?

Well…not according to an editorial in the Wall Street Journal…and I have to say that the points are intriguing if the GOP wants to win the White House in 2011.

From WSJ:

If Republicans win control of the House, which is the big prize this year, they’d take on much more responsibility for what happens in Washington. Yet inevitably they would be in charge by such a slim margin they wouldn’t be able to really control much, particularly if Democrats keep control of the Senate, which seems likely.

Republicans’ own flaws and divisions, rather than those of the Democrats, would move to the forefront. President Obama actually would find it easier to move to the political center, which is where he’ll want to be for his own re-election campaign in 2012.

There are good reasons, in short, that some Republicans say privately that they hope they get close to taking control but don’t go over the top. That, they think, would set them up better to take back control of everything—presidency, House and Senate—in 2012.

So, it does make some bit of sense. But how’s that for a rallying cry, “Let’s win!!!…only so much!”

Still…it seems like Obama is in a good position to move more towards the center anyway. He’s already passed landmark health care legislation and now he can attempt to push immigration to the side and zero in on climate change with Lindsey Graham’s help. After that he has his deficit commission, which will inevitably advise him to raise the age on Social Security and Medicare, as well as cutting certain, outdated entitlements programs. The Republicans don’t want to be in power when that gets pushed through in early 2011? Hmmm…

Basically what I’m saying is that the “Obama becomes more centrist” narrative is already shaping up regardless of whether or not the Republicans win the House.

Also, voters already look at Republicans as merely obstructionists anyway, so if they get close to taking the majority or they do take it…without any discernible plan to make things better apart from tax cuts…do they really think that’s a recipe for electoral success?

What do you think?

Finally, bipartisan cooperation!

From CNN:

Washington (CNN) – With midterm elections on the horizon and the nation’s unemployment rate at 9.7 percent, the House of Representatives voted overwhelmingly Tuesday to block pay raises for members of Congress for the next fiscal year. The vote was 402-15.

Rules approved by Congress in 1989 provide for an automatic yearly cost of living adjustment, also known as a “COLA,” in order to avoid the awkward situation of lawmakers voting to approve their own raises each year.

The current base salary for rank and file House members is $174,000 a year, with leaders earning more. Lawmakers were scheduled to receive a 0.9 percent raise in fiscal year 2011, adding $1600 to the current base salary, according to the Congressional Research Service.

But some want to go even further…and I can’t think of a better piece of legislation to present (when Congressional approval ratings are in the cellar) than additional pay cuts.

From Wash Post:

Rep. Ann Kirkpatrick (D-Ariz.), joined by a bipartisan group of members who face tough reelection races this fall, has called for a 5 percent cut in congressional pay, reducing salaries by $8,700. She cites the example of 1933, when senators and representatives reduced their pay from $9,000 to $8,500 in the midst of the Great Depression. Sen. Russell Feingold (D-Wis.), who championed the pay freeze in the Senate, wants to dump the current system of automatic raises. And Sen. Tom Coburn (R-Okla.) has called for barring members of Congress from ever getting a raise until the budget is balanced.

Again, all good ideas. I can’t think of many Americans who would object to any of them.

So let’s get them going!

We’ve seen and heard President Obama at town halls, press conferences, interviews, Saturday radio chats, industry summit meetings and delivering the keynote speech at medical conferences. All focused on health care reform, all covered breathlessly by the new and traditional media. No one can accuse this president of being AWOL in the health care debate.

Some might suggest that yet another Obama presentation on health care reform is as welcome as watching another Sham-Wow! commercial. Exposure has its risks as well as rewards.

Yet, despite his popularity, despite his much vaunted communication skills, despite his persuasive logic, despite his ubiquitous presence in the media, when the needle of popular sentiment has moved at all, it has moved in the wrong direction for the President’s version of reform. The Salesman in Chief can’t seem to close the deal with the American people. Moreover, the pundit class across the political spectrum are assessing the President’s sales skills, and finding them wanting:

Presidential Sales Job on Health Care Falling Short
Doug Bandow – Cato

It’s not working. The president enjoys the use of the executive branch’s bountiful resources, control of Congress by his party, and aid of a sympathetic media. Yet support for expanding government control over health care is falling the more people learn about it.

Sell Me!
Kevin Drum – Mother Jones

Obama’s sales pitch still needs work
Concord Monitor

Sales Pitch…
Steve Benen – Washington Monthly

Obama is failing on health reform
Clive Crook – Financial Times

One More With Feeling
The New Republic

In many ways, this is puzzling. The President is justifiably known for his oratorical skills and power to persuade. What is going on here? Even the President seems confused. From a Time interview…

Ah… there it is. There’s the problem. He’s not selling. He’s making a case. I guess that should not be surprising. The President has never been in sales. He has never been in business. The president is trained as a lawyer. He is not selling health care reform, he is trying a case on health care reform. Now there are some superficial similarities between a lawyer trying a case and salesman closing a deal – both involve crafting and presenting a persuasive proposition. But there are big differences.

Case in point. If a lawyer overwhelms his opponent with a brilliant, persuasive and unassailable argument in front of a jury, he is going to win the argument, and likely win the case. On the other hand, if a salesman overwhelms a prospect with a brilliant, persuasive and unassailable argument, he is going to win the argument, but lose the sale.

Most people who have never been in sales, do not really understand sales. They think they do, but what they understand is a caricature of sales.

I can help. I was in sales and sales management for a lot of years, selling big complex and expensive enterprise software solutions to large organizations. I can’t help much with the policy specifics of the health care reform legislation, but I can help diagnose the sales problems of our president and offer a prescription.

First, by way of disclosure – my current take on the plan itself. I am still trying to get my arms around the various, sundry and generally bad policy permutations presented so far. If I had to put a stake in the ground, I’d lean toward the Wyden-Bennett bill, which is apparently not getting any serious consideration. E.D. Kain offers an effective pitch and the subsequent discussion at Ordinary Gentlemen has been persuasive. The president could learn something about presenting a complex sales from those boys.

I am dead-set against the H.R. 3200 hairball that is apparently the bill of choice being pitched by the President. Partially because I don’t understand it all (not for lack of trying), partially because I do understand it and don’t like it, and partially because it is clear the President does not fully understand it and is selling smoke. I am seeing a used car salesman pitching a Shelby Cobra Mustang, but when I ask for test drive, he puts me in a car seat mounted in a frame without an engine, tires or steering wheel. And it’s wildly expensive. And I think he is offering predatory financing. Guess what? I’m not buying.

Let’s get back to salesmanship.

This is a teachable moment Mr. President.

Welcome to Sales 101.

There are some other choices in the legislature besides H.R. 3200. You may want to reconsider which product will have the best chance of selling to the American people. As you found out, it is possible to be successful selling a lemon (like the stimulus porkfest), but it hurts your credibility and makes the next sale a lot tougher. If the prospect is not buying the Lincoln Town Car you are selling, you have two choices. You can keep pitching that Lincoln, convinced that you know better than the prospect what they really need. That always ends badly. They’ll just leave the showroom never to return. Alternatively, you can forget the Lincoln, start pitching the Fiesta, and you might have a sale by the end of the day.

A professional salesperson works to match a product pitch to a prospect’s requirements and budgets. A huckster only cares about the features of the product, and will pitch those features endlessly, regardless of whether the prospect has a need for the features or can afford them. When I look at Axelrod’s talking points, I can’t help but think of the penultimate huckster pitch, the Ginsu steak knife:

This approach works well with Ginsu knives on late night TV. For selling a comprehensive solution to Health Care reform? Not so much.

Enterprise software is a malleable product. It does a lot of stuff and can be customized to meet the specific needs of the client. Generally, it does much more than a client needs, with a large percentage of enterprise software features not needed at all. If a salesperson focuses on the small percentage of features that actually solves the client business problem, they can usually get the sale. If they spend their time extolling all the wonderful features of the software, whether relevant to the client or not… they don’t get the sale.

Mr. President, you and the Democratic party believe you have a mandate from the American people to reform health care. I believe you are correct, and said as much before the election. However, a mandate is not a blank check. Expressed in sales terminology, it is far more important to understand what the client wants to buy vs. hammering them with a pitch of what you want to sell them. The continuing erosion of support for H.R.H. 3200 (House of Representatives Hairball 3200), clearly shows that what you are selling, is not what the American people are buying.

I could be wrong, but if I were to guess what the American people are looking to buy, it would be something that can be articulated pretty simply and emerges from some basic American values of fairness and common sense. I’d say it is really about these three things:

1. Every American gets a baseline level of solid health care. No one is left behind.
2. No American need be at risk of financial ruin or bankruptcy because they get sick.
3. The program is manageable and fiscally responsible. Americans want to feel reasonably certain we won’t see mushrooming costs like with Medicare and the prescription drug plan.

That’s it, Mr. President. We don’t need “Free! Free! Free! Preventive Care!” or a set of Ginsu steak knives to sweeten the deal. Put together a package that does these three things, pitch them clearly and simply, and you’ll close the sale.

Interestingly, Wyden-Bennett S391 accomplishes all three. HRH 3200 at best accomplishes one of the three. Just sayin…

Class dismissed.

X-posted from “Divided We Stand United We Fall“

You have to feel for Rep. Mike Castle. Because dealing with loons like this has to make him question what’s going on with the Republican base. Especially when everybody starts clapping for the birther and booing Castle when he says Obama is a citizen.

And then she convinces everybody and pledge allegiance to the flag!

Seriously…watch it…

When I say “sort of” in the title, Castle tried not to alienate the woman, but if you don’t cut off folks like this immediately they’ll dominate the conversation…and she did.

I mean, do these people genuinely think that the presidency was stolen from a foreigner and they have to literally take it back? Because you add stuff like this with the revolutionary talk of the Tea Parties and you’ve got a very dangerous mix.

By the way, who were these people calling traitors again? You question a war and you’re a traitor, but you question the president’s citizenship and you’re a patriot?

The big story here is that the House put forward a single bill from three separate committees with competing interests. That’s significant since this was one of the biggest problems in 1994…each committee put forward their own bills and chaos ensued.

Also, the estimates says it’ll eventually cover 97% of folks who aren’t covered already, and the price tag will be $1 trillion over the next 10 years.

Oh, and it’s paid for. $500 billion in savings from Medicare and Medicaid and the other money will be found in tax increases on the wealthiest 1.5 percent. But when the Washington Post says, “by imposing a surtax of as much as 5.4 percent on income above $350,000 a year,” that’s a bit misleading.

Actually, the tax will be…

• 1 percent on income from $350K to $500K
• 1.5 percent on income from $500K to $1M
• 5.4 percent in income above $1M.

What do these taxes mean practically? NY Times runs the numbers…

Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000.

Also, concerning the costs to businesses…

While employers not providing coverage would generally have to pay a fee or penalty equal to 8 percent of wages, there would be some exceptions. For example, an employer with a payroll of less than $250,000 a year would not have to pay any fee or penalty.

The fee would be equal to 2 percent of wages for a company with an annual payroll of $250,000 to $300,000; 4 percent of wages for an employer with a payroll of $300,000 to $350,000; and 6 percent of wages for businesses with a payroll of $350,000 to $400,000.

Honestly, I really have yet to dig into this, but it appears as if it achieves a lot of what has been talked about with regards to reform, covering most folks and remaining budget neutral.

Still, it doesn’t cover EVERYBODY, although I think the estimate was that only 8 million legal citizens wouldn’t have coverage.

If you want to read the whole thing, click here.

Much, much, much more as it develops…

House Dems are bound and determined to make a public option their first priority, and I can understand why. This has been a long time coming and they’re convinced that only the federal government can compete with private industry.

But what she’s missing is the idea that Kent Conrad brought up…which is the public option may not have the votes. So if she pushes through a bill that can’t pass the Senate, could this spell the end of her tenure as the Speaker?

From CNN:

House Speaker Nancy Pelosi Thursday dismissed the idea of health-insurance cooperatives as an alternative to a government-sponsored health-care plan.

Asked at her weekly news conference whether she could support non-profit co-ops, Pelosi said, “No, not instead of a public option.” [...]

Despite the Senate talks, Pelosi said House Democrats were moving forward with a bill focused on creating a government insurance plan. “In our House, there is strong support for a public option,” she said.

The speaker described the model, saying, “It should be actuarially sound. It should be administratively self-sufficient. It should be a real competitor with the private sector and not have an unfair advantage. When you say the words public option — if that is the term we will be using — you have to say right next to it, level playing field.”

Still, House Republicans are signaling that they won’t accept any type of health care reform that involves the government…

“I’m opposed to a government option, period,” said Boehner. “Listen, if you like going to the DMV and you think they do a great job, or you like going to the post office and think it’s the most efficient thing you’ve run into, then you’ll love the government-run health-care system that they’re proposing, ’cause that’s basically what you’re gonna have.”

Ahh, the sweet sounds of demagoguery.

This is gonna get ugly.

Has the controversy surrounding Nancy Pelosi’s statements on torture made the Speaker vulnerable to a coup? John Feehery of Politico thinks so.

Feehery compares Pelosi to Newt Gingrich and Trent Lott, two former leaders in congress whose declining popularity intersected with controversial statements and resulted in political ouster. Pelosi is already a toxic name for Blue Dog Democrats who don’t want to be associated with the liberal Speaker. Worse for Pelosi, the support from her own liberal base is not as strong as it once was, primarily because she’s failed to deliver on such pledges as bringing the Iraq War to an end.

In my mind, the Democrats would be better off without Pelosi in charge. She’s proven unwilling to lead the House in the more inclusive direction President Obama promised and she’s become adept at playing politics as usual, standing behind corrupt representatives like John Murtha and allowing members to bloat any and every bill with excessive earmarks and questionable spending measures. A new Speaker might give Obama the chance to lead more pragmatically and stop having to kowtow to Congress’ lesser instincts just to get bills passed.

The question is, would the White House support a Pelosi ouster? In a way, her presence gives the administration an easy excuse as to why our government has been more politics-as-usual and less new-way-forward since Obama took office. It’s easy for Obama to shrug and claim he can only do as much as Congress will let him, and be content to let the ire of the public fall on Pelosi and her crew. A less divisive, more constructive Speaker might force the White House to take more responsibility for the details of the bills coming out of Congress. Would a moderate like Steny Hoyer be a more forward-looking Speaker or would he just end up removing a valuable buffer for Obama?

This is all conjecture, of course. No one is openly calling for Pelosi’s ouster as of yet. But she is vulnerable. We’ll see what the Democrats end up doing.

Given all the press the AIG bonuses have garnered, you’d think our only economic problem was a few nearsighted/greedy execs at one insurance firm. Today, the House took AIG backlash to the next level by passing a bill which would levy heavy taxes on such bonuses. Specifically:

The bill would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

Leaving aside whether or not his is an appropriate or necessary move, the whole situation has hit the farcical stage. Our Congress hands out billions of dollars with too few strings attached and then acts shocked — shocked! — when the money is misused. Their solution, of course, is to act punitively in a show of staged populism.

All this while many larger problems go unaddressed or ignored.

While I’d like to think this fiasco will once-and-for-all stop the kind of chicken-little attitude that allows poor bills to become law, I doubt that’s the lesson everyone will take away. In fact, I have a feeling many in Congress feel the bill passed today proves they are doing their job. Except, their job was getting the legislation right the first time.

I strongly support a massive fiscal stimulus to restore an atmosphere of confidence, avert a continued, severe downward spiral, and give the economy a big enough jolt to jump start a recovery.

But the $819 billion plan (really a $1.2 trillion plan including interest on the debt) adopted by the House of Representatives yesterday isn’t it. A large part of that plan dresses up a Christmas tree of programs sought by Congressional Democrats as “economic stimulus.” I like a lot of these programs and might well support them on their own merits; but many are not “stimulus.”

The problem with cramming everything you’d like to do into a single bill under the pretense that it’s “stimulus” is this: with a trillion dollar federal deficit already on the books, $700 billion almost out the door to shore up the financial system (and according to recent reports, much more dough still needed on that front), we may only have one shot at a really effective stimulus program. So we need to be as sure as we possibly can that it will work.

As we listen to pols, pundits, economists, and self-appointed analysts, we should keep in mind that no one has a very good idea of how to make a comprehensive counter-cyclical fiscal policy work. No one. We haven’t really done it before! Consequently, the arguments about it are largely theoretical debates between competing groups of academics or, as in the present instance, a confused jumble of claims in which all parties insist their favored programs are more stimulating than the other guy’s.

As a practical matter in recent decades, monetary policy won out as the principal tool of decision makers, Democrats and Republicans, because it could be wielded in a carefully calibrated and timed fashion. The knock against fiscal policy was that by the time we knew the economy was headed down, Congress got its act together and did something, and that something bore fruit, it would probably be too late. The economy would already be headed back up, and the fiscal stimulus would hit just in time to drive inflation.

Well, guess what? That appears to be exactly what’s happening today.

A new report by the Congressional Budget office projects that about 65% of the total funds in the House bill, spending and tax cuts, will be out the door by September 30, 2010, or within 19 months. The Obama Administration contends that 75% will be spent by that time. (See the graph above for the year-by-year projection of federal deficit spending.)

This is really a distinction without much of a difference. According to the National Bureau of Economic Research, the average length of recessions in the U.S. over the past 100 years has been 13 months, with recent recessions shorter. The last prolonged and deep recession was that of 1980-82, which lasted two years. The current recession is already in its 13th month. Most analysts expect it to continue through the first half of 2009, after which there are divergent views on the speed or length of the recovery.

Of course, anyone who actually knows how long or deep it will be is bound to get rich. Everyone is guessing, so it’s critical to assume it will be worse, not better, to ensure that we stimulate enough.

The House plan, as it stands, simply does not do that — not because it’s not big enough, but because it dribbles out too much of the money too slowly and fails to put enough money where it will have the greatest impact. In that bar graph, we should see the tallest bar for 2009, so we deliver a big jolt this spring, summer and fall, not next year. The 2010 bar should still be up there, with the larger share out during the first half. After 2010

There is just no excuse for planning to spend $200 billion in those out years and calling it “stimulus.” (If the programs are sound, given that the Democrats have the votes they need to approve anything, those expenditures can be taken up separately and passed anyway.)

There are many ways to ensure that the stimulus impact is felt in 2009 and, at the latest, 2010 — but accelerating the spending side of proposals in the House bill may not be one of them. The CBO has told Congress that speeding up outlays for infrastructure projects and the like would “not be easy” because such projects take time, often more time than thought at the outset.

That advice was contained in a letter to Senate Budget Committee Chairman Conrad (Dem-N.D.). Conrad and other Democrats in the Senate are looking closely at ways to make sure the stimulus is really stimulating. As Sen. Byron Dorgan (Dem-N.D.) put it, “We’re not interested in promoting employment five years from now. We’re interested in promoting employment five months from now.”

One proposal that I think has merit is to slash the roughly 13% payroll tax for employees and employers. As of the next paycheck, that would put money into the hands of workers who would spend it and businesses who would invest it. The program could be designed to sunset after 10 or 12 months or more, unless renewed by Congress.

Harvard economist Martin Feldstein has some interesting ideas for directing stimulus to sectors of the economy where a boost is most needed. For example, he suggests tax incentives for consumers to spend on big ticket items, such as a temporary tax credit to purchase a car or make home improvements. I’d go a step further with that concept and consider a tax credit — also temporary — against the purchase of a primary residence to stimulate home building and help stabilize housing prices.

Alas, there already may be too much water under the bridge to expect that the House-approved package can be fundamentally altered.

Hopefully, the Senate will make improvements and the final bill signed by President Obama will be more front-loaded and more on target.

I strongly suspect that Obama and his economic team clearly understand the importance of speed and targeting but had limited control of the bill developed by the House Majority. Obama is also keenly aware of the fact that the success of his Presidency will be closely tied to success in stimulating an economic recovery.

Let’s hope the Senate will give him a bill that comes closer to what he and the country need.

(Visit me at The Purple Center)