Some Unions Grow Wary of Health Law They Backed .

From The Wall Street Journal:

Labor unions enthusiastically backed the Obama administration's health-care overhaul when it was up for debate. Now that the law is rolling out, some are turning sour.

Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents' plans until they turn 26.

To offset that, the nation's largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance.

Yes!! - Office Working to Close Guantánamo Is Shuttered

From The New York Times:

The State Department on Monday reassigned Daniel Fried, the special envoy for closing the prison at Guantánamo Bay, Cuba, and will not replace him, according to an internal personnel announcement. Mr. Fried’s office is being closed, and his former responsibilities will be “assumed” by the office of the department’s legal adviser, the notice said.

The announcement that no senior official in President Obama’s second term will succeed Mr. Fried in working primarily on diplomatic issues pertaining to repatriating or resettling detainees appeared to signal that the administration does not currently see the closing of the prison as a realistic priority, despite repeated statements that it still intends to do so.

Room for Favors in 'Cliff' Deal - Company With Ties to Sen. Reid Saw Its Rival's Medicare Payments Slashed

From The Wall Street Journal:

The New Year's Day legislation that averted tax increases for millions of Americans brought an unwelcome surprise for Elekta AB, EKTA-B.SK +0.36%a Swedish maker of radiation tools designed to battle brain tumors.

A provision, inserted at the last minute, sharply cut Medicare payments for the company's product while leaving unchanged those of its direct competitor, Varian Medical Systems Inc., VAR -1.61%of Palo Alto, Calif.

Varian lobbyists pushed for the change, according to congressional staff and other lobbyists, which was put through by Senate Majority Leader Harry Reid (D., Nev.). Under the change, payments for hospital outpatient surgeries using Elekta's technology would drop by 58%, news that knocked the company's stock sharply through early January.

Organized Labor Loses Members

From The Wall Street Journal:

Federal figures released Wednesday show the percentage of workers who belong to unions dropped to the lowest level since World War II in 2012, largely reflecting public-sector job losses and labor's continuing struggle to organize workers.

Unions lost 400,000 members last year, or about 2.8% of their total, and more than half of them were from the public sector, the Labor Department's Bureau of Labor Statistics reported. The percentage of workers in unions fell to 11.3% last year, from 11.8% in 2011—the biggest decline in six years.

Unions were hard-hit last year by trouble in the public sector, which has long been a bright spot for labor amid private-sector membership losses. Public-sector workers are still about five times more likely to be in a union than those in the private sector. The public-sector membership rate in 2012 dropped to 35.9%, from 37% in 2011, a steeper decline than the private-sector drop to 6.6% from 6.9% during the same period.

Union officials attribute the membership decline to the overall economy, the state-level collective-bargaining battles and outdated federal labor laws that they say make organizing too difficult.

In the past two years, cash-strapped states have eliminated public-sector jobs. Republican lawmakers have also led state initiatives aimed at scaling back collective-bargaining rights.

Wisconsin Gov. Scott Walker, a Republican, backed a law in 2011 that eliminated many bargaining rights for public employees and gave workers the option to not pay dues or belong to unions. Wisconsin's union membership fell 13.5% in 2012, an early sign of how curbing collective-bargaining rights can weaken labor's muscle. Indiana showed a 18.5% drop in membership, which economists attributed in part to a 2012 right-to-work law.

Organizing activity has dwindled at most unions in recent years, while political efforts have used more of their resources. The Service Employees International Union, which has generally set the pace among unions for adding new members, said it organized 30,000 workers last year, fewer than in prior years.

In the public sector, education and public administration experienced big losses, in part a result of many teachers losing their jobs. In the private sector, manufacturing was a grim spot, with union membership and density declining despite a rise in employment. Construction, food manufacturing and steel plants also took hits, said the Center for Economic and Policy Research, a left-leaning research organization.

The drop "is very much related to the loss of public-sector employment overall" and highlights the impact of the recession, said William Spriggs, chief economist for the AFL-CIO labor federation. Mr. Spriggs said unions are succeeding in adding Hispanic members and workers in fast-growing sectors of the economy, such as parts of the private-sector health-care industry. The membership rate among Hispanics rose last year, while the rate for whites declined, the data showed.

Others said the numbers suggest unions aren't adding value to workers or employers and instead are inflating workplace costs. "The current business model isn't working," said James Sherk, a senior policy analyst in labor economics at the conservative Heritage Foundation. "The trend is going to continue," he added, citing aging members as one of many reasons.

The recent weakening of union rights in some states could begin to erode labor's political strength, some labor experts said. Public-sector unions are big backers of Democratic campaigns. "The decline in membership generates a weaker political position, and that leads to a situation where membership declines even more," said Nelson Lichtenstein, a labor historian at the University of California at Santa Barbara.

Labor officials on Wednesday called for stronger labor laws and an end to attacks on collective-bargaining rights, saying this would improve the economy and bolster the middle class.

"Union membership impacts every other economic outcome that matters to all workers," said AFL-CIO President Richard Trumka, adding that unions are seeking innovative ways to organize workers and will be reaching out to young people and immigrants. Labor is pushing for an overhaul of immigration laws, which could boost its membership longer-term.

The Wisconsin state arm of the National Education Association, which lost 30,000 members, or 30%, since 2011, is reevaluating how to use fewer resources to represent workers, said spokeswoman Christina Brey.

A White House Aware of Second-Term Perils

From The New York Times:

 

Franklin D. Roosevelt found the economy relapsing and lost a fight to pack the Supreme Court. Richard M. Nixon was forced to resign by the Watergate scandal. Ronald Reagan was caught up in the Iran-contra affair. Bill Clinton was impeached, though not convicted, for lying under oath about his affair with Monica Lewinsky. George W. Bush was damaged by the Iraq war, Hurricane Katrina and a financial crash.

At the same time, as the historians made clear to Mr. Obama at their dinner this month, there were still second-term opportunities. Reagan overhauled the tax code and signed a new arms control treaty with the Soviet Union. Mr. Clinton balanced the budget and successfully led the Kosovo war. Mr. Bush turned the Iraq war around with a surge of troops and a strategy change and forestalled a new depression in his final weeks in office.

Col. Muammar el-Qaddafi's warnings before his 2011 ouster and death sounded melodramatic, but proved prescient as the area has become easier for jihadists to operate in.

From The New York Times:

As the uprising closed in around him, the Libyan dictator Col. Muammar el-Qaddafi warned that if he fell, chaos and holy war would overtake North Africa. “Bin Laden’s people would come to impose ransoms by land and sea,” he told reporters. “We will go back to the time of Redbeard, of pirates, of Ottomans imposing ransoms on boats.”

In recent days, that unhinged prophecy has acquired a grim new currency. In Mali, French paratroopers arrived this month to battle an advancing force of jihadi fighters who already control an area twice the size of Germany. In Algeria, a one-eyed Islamist bandit organized the brazen takeover of an international gas facility, taking hostages that included more than 40 Americans and Europeans.

Coming just four months after an American ambassador was killed by jihadists in Libya, those assaults have contributed to a sense that North Africa — long a dormant backwater for Al Qaeda — is turning into another zone of dangerous instability, much like Syria, site of an increasingly bloody civil war. The mayhem in this vast desert region has many roots, but it is also a sobering reminder that the euphoric toppling of dictators in Libya, Tunisia and Egypt has come at a price.

“It’s one of the darker sides of the Arab uprisings,” said Robert Malley, the Middle East and North Africa director at the International Crisis Group. “Their peaceful nature may have damaged Al Qaeda and its allies ideologically, but logistically, in terms of the new porousness of borders, the expansion of ungoverned areas, the proliferation of weapons, the disorganization of police and security services in all these countries — it’s been a real boon to jihadists.”

Welcome to America and sausage in the making: Fiscal Footnote: Big Senate Gift to Drug Maker

From The New York Times:

Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world’s largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the “fiscal cliff” bill that did not mention the company by name but strongly favored one of its drugs.

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company’s chief executive quickly relayed it to investment analysts. But it is projected to cost Medicare up to $500 million over that period.

Amgen, which has a small army of 74 lobbyists in the capital, was the only company to argue aggressively for the delay, according to several Congressional aides of both parties.

Supporters of the delay, primarily leaders of the Senate Finance Committee who have long benefited from Amgen’s political largess, said it was necessary to allow regulators to prepare properly for the pricing change.

But critics, including several Congressional aides who were stunned to find the measure in the final bill, pointed out that Amgen had already won a previous two-year delay, and they depicted a second one as an unnecessary giveaway.

“That is why we are in the trouble we are in,” said Dennis J. Cotter, a health policy researcher who studies the cost and efficacy of dialysis drugs. “Everybody is carving out their own turf and getting it protected, and we pass the bill on to the taxpayer.”

Chris Christie condemns NRA ad

 

I was happy to see this story and YouTube clip in The Washington Post.  I had told my wife Sally when we saw it that this one is over the top; it will backfire and come back to haunt NRA.  Thanks Gov.

Morsi’s Slurs Against Jews Stir Concern - And they are worried about Hagel?

From The New York Times:

Nearly three years ago, a leader of the Muslim Brotherhood delivered a speech urging Egyptians to “nurse our children and our grandchildren on hatred” for Jews and Zionists. In a television interview around that time, the same leader described Zionists as “these bloodsuckers who attack the Palestinians, these warmongers, the descendants of apes and pigs.”

That leader, Mohamed Morsi, is now president of Egypt — and his comments may be coming back to haunt him.

Since beginning his campaign for president, Mr. Morsi has promised to uphold Egypt’s treaty with Israel and to seek peace in the region. In recent months, he has begun to forge a personal bond with President Obama around their successful efforts to broker a truce between Israel and Palestinian militants of the Gaza Strip.

But the exposure this month of his virulent comments from 2010, both documented on video, have revealed sharp anti-Semitic and anti-Western sentiments, raising questions about Mr. Morsi’s efforts to present himself as a force for moderation and stability. Instead, the disclosures have strengthened the position of those who say Israel’s Arab neighbors are unwilling to commit to peace with the Jewish state.

Lawmakers Fail To Fix Illinois Pension Gap .

From The Wall Street Journal:

Illinois lawmakers failed to address the deepest public-pension shortfall in the nation Tuesday, unable to come to an agreement before a new legislature is sworn in.

"All that happens is the problem gets bigger and the solutions get more challenging," said Elaine Nekritz, a Democratic state representative and co-author of a failed bill that called for a freeze in the annual cost-of-living increase for public-sector retirees.

Why Hagel Was Picked - As the federal government becomes a health care state, there will have to be a generation of defense cuts that overwhelm anything in recent history.

David Brooks writes in The New York Times:

Americans don’t particularly like government, but they do want government to subsidize their health care. They believe that health care spending improves their lives more than any other public good. In a Quinnipiac poll, typical of many others, Americans opposed any cuts to Medicare by a margin of 70 percent to 25 percent.

 

In a democracy, voters get what they want, so the line tracing federal health care spending looks like the slope of a jet taking off from LaGuardia. Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 percent of G.D.P. in 30 years.

There are no conceivable tax increases that can keep up with this spending rise. The Democrats had their best chance in a generation to raise revenue just now, and all they got was a measly $600 billion over 10 years. This is barely a wiggle on the revenue line and does nothing to change the overall fiscal picture.

As a result, health care spending, which people really appreciate, is squeezing out all other spending, which they value far less. Spending on domestic programs — for education, science, infrastructure and poverty relief — has already faced the squeeze and will take a huge hit in the years ahead. President Obama excoriated Paul Ryan for offering a budget that would cut spending on domestic programs from its historical norm of 3 or 4 percent of G.D.P. all the way back to 1.8 percent. But the Obama budget is the Ryan budget. According to the Office of Management and Budget, Obama will cut domestic discretionary spending back to 1.8 percent of G.D.P. in six years.

Advocates for children, education and the poor don’t even try to defend their programs by lobbying for cutbacks in Medicare. They know that given the choice, voters and politicians care more about middle-class seniors than about poor children.

So far, defense budgets have not been squeezed by the Medicare vice. But that is about to change. Oswald Spengler didn’t get much right, but he was certainly correct when he told European leaders that they could either be global military powers or pay for their welfare states, but they couldn’t do both.

Europeans, who are ahead of us in confronting that decision, have chosen welfare over global power. European nations can no longer perform many elemental tasks of moving troops and fighting. As late as the 1990s, Europeans were still spending 2.5 percent of G.D.P. on defense. Now that spending is closer to 1.5 percent, and, amid European malaise, it is bound to sink further.

The United States will undergo a similar process. The current budget calls for a steep but possibly appropriate decline in defense spending, from 4.3 percent of G.D.P. to 3 percent, according to the Congressional Budget Office.

But defense planners are notoriously bad at estimating how fast postwar military cuts actually come. After Vietnam, the cold war and the 1991 gulf war, they vastly underestimated the size of the cuts that eventually materialized. And those cuts weren’t forced by the Medicare vice. The coming cuts are.

As the federal government becomes a health care state, there will have to be a generation of defense cuts that overwhelm anything in recent history. Keep in mind how brutal the budget pressure is going to be. According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations. If we postpone action for another decade, then we have to cut all non-interest federal spending by 37 percent and raise all taxes by 54 percent.

As this sort of crunch gradually tightens, Medicare will be the last to go. Spending on things like Head Start, scientific research and defense will go quicker. These spending cuts will transform America’s stature in the world, making us look a lot more like Europe today. This is why Adm. Mike Mullen called the national debt the country’s biggest security threat.

Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.

All the charges about Hagel’s views on Israel or Iran are secondary. The real question is, how will he begin this long cutting process? How will he balance modernizing the military and paying current personnel? How will he recalibrate American defense strategy with, say, 455,000 fewer service members?

How, in short, will Hagel supervise the beginning of America’s military decline? If members of Congress don’t want America to decline militarily, well, they have no one to blame but the voters and themselves.

Health-Cost Pause Nears End - Americans Boost Spending on Doctors, Tests as More Regain Job-Based Insurance . Health spending accounts for one-sixth of the national economy and is the biggest long-term driver of federal spending growth.

From The Wall Street Journal:

U.S. health-care spending grew at a record low pace for a third consecutive year in 2011, according to federal figures released Monday, but signs are emerging that the slow growth may not last.

Growth in spending on doctors' visits and prescription drugs rose in 2011, while hospital spending continued to slow, the figures showed. Government actuaries said they believed those changes reflected people regaining health coverage through their jobs.

In 2014, Americans are expected to use more health services when millions gain health insurance and greater access to medical care as part of the federal health overhaul. The U.S. figures suggest there had been little impact on spending as a result of the law in 2011, when few of its provisions had taken effect.

Monday's figures give new insight into the drivers of health spending. Health expenditures totaled $2.7 trillion in 2011, up from $2.6 trillion in 2010. Health spending accounts for one-sixth of the national economy and is the biggest long-term driver of federal spending growth.

Medical providers say the impact of the recession was rapidly seen in their practices in 2009 and 2010. Surveys by the Centers for Disease Control and Prevention found around one in 10 respondents reported delaying needed medical care for cost reasons in that time.

Immigration Spending Grows

From The Wall Street Journal:

The Obama administration spent more on immigration enforcement in the most recent fiscal year than on all other federal criminal law enforcement combined, as it invested ever-larger sums at the border and inside the U.S. to curb illegal immigration, according to a new report.

In the year that ended Sept. 30, the government spent $18 billion on immigration-enforcement programs, dwarfing the combined budgets of the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration and the Secret Service by about $3.6 billion, according to the nonpartisan Migration Policy Institute.

In fiscal 2012, a record 409,849 people were removed from the U.S., compared with 188,467 in 2000, according to the Homeland Security Department. But border apprehensions fell to a 40-year low, 340,252 in 2011, the latest figure available.

A Homeland Security spokesman said the department had no comment on the study.

Washington Post Editorial Board: Repairs to Medicare - Medicare as we know it is not sustainable

From the Editorial Board of The Washington Post:
 
ON NEW YEAR’S DAY, President Obama looked ahead to the post-“fiscal cliff” deficit-reduction battles and declared: “I agree with Democrats and Republicans that the aging population and the rising cost of health care . . . [make] Medicare the biggest contributor to our deficit. I believe we’ve got to find ways to reform that program without hurting seniors who count on it to survive.” The question — a tricky one for a president who won reelection in part by defending “Medicare as we know it” — is how to accomplish this feat. Medicare as we know it is not sustainable.

Medicare cost $555 billion in 2012, according to the Congressional Budget Office. The CBO has projected that this number, already 15 percent of non-interest federal spending, will nearly double by 2022. Medicare’s trustees estimate that the hospital insurance fund supported by the payroll tax will run out of cash by 2024, but this is mainly a symbolic threat: The government will draw on general revenue to keep Medicare going. The real threat is that Medicare spending will crowd out other necessary federal endeavors, forcing undesirable cuts, substantially higher taxes, unsustainable borrowing — or some combination of the three.

There are two major reasons for Medicare’s rising costs. The first is the program’s design, often tweaked but left fundamentally intact since its creation in 1965, which basically pays doctors and hospitals fixed fees for whatever they do. At a time of rapid (and often beneficial) medical innovation, the dominant incentive has been to provide more, and more expensive, care. Hence the House Ways and Means Committee’s 1965 estimate that Medicare hospital insurance would cost $9 billion by 1990 fell short by $58 billion. The second reason costs keep going up, of course, is the rising number of elderly eligible for Medicare, which is inevitable; the 50 million beneficiaries today will be 78 million in 2030.

The ultimate solution is structural: to limit growth in expenditures per beneficiary. Easier said than done. Liberals would empower the Independent Payments Advisory Board (IPAB) to stop payment for treatments it deems not cost-effective. The idea hasn’t gotten very far, partly because Republicans denounce it as “rationing.” Conservatives favor “premium support,” which would subsidize seniors to shop among competing insurance plans, but Democrats, the president included, have tarred that idea as a skimpy “voucher.”

It’s unfortunate but not disastrous that no structural solution is, for the moment, politically possible. Not even their advocates can guarantee that a beefed-up IPAB or premium support would work as advertised. The impact of policy changes on health-care costs is notoriously difficult to project. Indeed, the past three years have seen an unexpected and so far unexplained slowing in Medicare spending’s rate of growth. This happy development doesn’t mean that there’s no problem — far from it. But it buys time to mitigate Medicare’s costs incrementally, while working out the partisan impasse over more fundamental reforms.

Fortunately, there is no shortage of money-saving ideas, including several that have enjoyed bipartisan support. Gradually raising the premiums that beneficiaries pay for physician and other outpatient services to cover 35 percent of the programs’ costs could generate $241.2 billion over 10 years, according to the CBO, while imposing no additional burden on the poorest 18 percent of seniors.

The current Medicare program includes a hodgepodge of cost-sharing requirements that neither give participants clear incentives to limit consumption of services nor shield them from catastrophic expenses. Therefore many buy “Medigap” coverage — which eliminates out-of-pocket costs, further reducing their skin in the game. The CBO has estimated that establishing uniform cost-sharing and restricting Medigap plans could save $92.5 billion over 10 years.

The Simpson-Bowles deficit-reduction commission found that Medicare could save $46 billion over 10 years by reducing reimbursements to providers for their patients’ unpaid deductibles and co-payments and by reducing the overcompensation of teaching hospitals for treating Medicare patients. Mr. Obama’s fiscal 2013 budget endorsed both ideas. Among the fastest-growing Medicare costs is home health care, projected by the CBO to double to $52 billion in 2021. Imposing a 10 percent co-pay — about $600 on average — for each 60-day episode would save $40 billion over a decade.

Now we’ve saved almost $420 billion — more than the $400 billion in unspecified savings for all federal health programs that Mr. Obama floated in his abortive talks with House Speaker John A. Boehner (R-Ohio) over a “grand bargain” to avoid the fiscal cliff. And we haven’t even mentioned replacing administered prices for such items as durable medical equipment and orthotics with competitive bidding. Mr. Obama’s health-reform law already does this to some extent, but accelerating the phasing in of reform and extending it to more items, such as lab tests, could save the government $38 billion over 10 years, according to the Center for American Progress.

We’re loath to let Washington off the hook for a more permanent, fundamental Medicare fix. But given the uncertainties, political and economic, of that endeavor, pursuing specific incremental reforms is a plausible second-best solution. It won’t be painless, but neither is inaction.

GOP dissension over debt-ceiling strategy - Erskine Bowles, chief of staff in the Clinton administration, who along with former senator Alan Simpson (R-Wyo.) co-chaired Obama’s 2010 debt commission, said he hoped “to high heaven that these guys don’t mess around with the full faith and credit of the U.S. government.”

From The Washington Post:

There are early signs of division within the Republican Party over how to approach the upcoming debate over raising the federal debt ceiling.

On Friday, a top Senate Republican signaled that members of his party should be prepared to play hardball and be willing to accept the kind of consequences in each previous fight they’ve threatened but managed to avoid.

House Speaker John A. Boehner (R-Ohio) likewise insisted that Republicans hold the line, telling his members they must demand that every dollar they raise the debt limit be paired with commensurate spending cuts.

But other Republicans counseled caution, warning that pressure from the business community and the public to raise the $16.4 trillion federal borrowing limit renders untenable any threats not to do so and will weaken the GOP’s hand if their stance is perceived to be a bluff.

In an appearance Friday on MSNBC’s “Morning Joe,” former House speaker Newt Gingrich (R-Ga.) came out against the strategy of waging a showdown over the debt ceiling, calling the move a “dead loser” for the GOP.

Some Republicans on Capitol Hill are similarly hesitant to entertain the possibility of using a government shutdown or the debt ceiling as bargaining chips.

Rep. Billy Long, a Missouri Republican who first won election in the 2010 tea party wave, voted in favor of the 2011 debt-limit deal in part because “no one knows the ramifications of not passing a debt ceiling increase and this plan prevents us from finding out,” according to a statement he released at the time.

In an interview Friday, Long lamented that the only way Congress seems to do business is in eleventh-hour deals and he balked at the notion of shutting down the government.

“When you’re fighting two wars, it’s just not very practical,” he said of a potential shutdown.

Their remarks came on the heels of an op-ed by Senate Minority Whip John Cornyn (R-Tex.) published Friday in the Houston Chronicle. In it, Cornyn argued that Republicans should be prepared to force a partial government shutdown to extract concessions from Democrats on significant spending cuts and entitlement reform.

“It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain,” Cornyn wrote. “President Obama needs to take note of this reality and put forward a plan to avoid it immediately.”

Two other prominent GOP conservatives, Sen. Pat Toomey (Pa.) and newly elected Sen. Ted Cruz (Tex.), have made similar arguments in recent days.

Toomey spokeswoman Nachama Soloveichik explained that Toomey’s argument is the same as the one he made in early 2011 — that failing to raise the debt ceiling would not lead to a U.S. default in the short term and that the Treasury Department would rather have to prioritize payments made by the federal government, which could lead to a partial shutdown.

It wasn’t immediately clear from the comments made by Cornyn and Cruz whether they back that argument, which Treasury Secretary Timothy F. Geithner has rejected in the past.

Top GOP leaders thus far appear to be stopping short of invoking the specter of a federal shutdown: At a meeting with Republican lawmakers before the House adjourned on Friday, Boehner renewed his May 2011 pledge to seek a deal that includes spending cuts greater than the amount of the debt-ceiling increase. He touted the results of a GOP poll showing that 72 percent of Americans back such a proposal; other polls show the public is less enthusiastic when asked about specific programs to cut.

“The debate is already underway,” Boehner told House Republicans, according to a person in the room who was not authorized to speak publicly about the closed meeting.

There is exceedingly little time for Republican Party members to get on the same page, complicating the strategy for a party emerging from the chaos of “fiscal cliff,” the politics of Hurricane Sandy relief and an attempted rebellion against Boehner in his bid for a second term as House speaker.

The House is out until Jan. 14 and back in session for just three days each of the following two weeks. The Senate returns to Washington on Jan. 22. That means both chambers will be in session for only a few days before Feb. 4, when the limit deadline will be weeks away.

Democrats are wagering that Republicans will realize they cannot fiddle with debt limit again. That’s why President Obama has thus far just refused to negotiate over it. In remarks to the Business Roundtable last month, Obama pledged that “if Congress in any way suggests they’re going to tie up negotiations over debt-ceiling votes and take us to the brink of default once again as part of a budget negotiation, I will not play that game.”

Some congressional Democrats have been calling on him to make that promise even more explicit by pledging to invoke the 14th Amendment to the Constitution and raise the federal debt limit without seeking the approval of Congress — a move backed by some liberal lawmakers and commentators during the previous debt-ceiling fight.

House Minority Leader Nancy Pelosi (D-Calif.) offered her most direct support to date for such an approach at a news conference on Friday, telling reporters, “I would do it in a second, but I’m not the president of the United States.”

White House press secretary Jay Carney last month ruled out a potential move by Obama to bypass Congress, telling reporters that “this administration does not believe that the 14th Amendment gives the president the power to ignore the debt ceiling — period.”

White House officials have, however, shown a willingness to negotiate over a separate issue — the automatic spending cuts, or “sequester,” set to go into effect in early March.

With the clock running out on the debt-ceiling battle even before it begins, some Democrats on Friday seized on Gingrich’s remarks as they made their case against waging a battle over the debt ceiling. Erskine Bowles, chief of staff in the Clinton administration, who along with former senator Alan Simpson (R-Wyo.) co-chaired Obama’s 2010 debt commission, said he hoped “to high heaven that these guys don’t mess around with the full faith and credit of the U.S. government.”

“I think Speaker Gingrich is right, that if they do draw the line in the sand there, they will end up at the end of the day just folding,” Bowles said in an interview on CNBC. “Let’s start negotiating today.”

G.O.P. Begins Soul-Searching After Tax Vote - “Republicans will get their mojo back when they define themselves as the party of economic growth and upward mobility,” said Gov. Mitch Daniels of Indiana, a Republican. But across the country, deeply conservative organizations angry about the concession on tax increases are pledging more, not fewer, primary challenges to Republicans they believe are straying too far from the party’s orthodoxy on taxes, guns, energy, immigration, spending and abortion.

From The New York Times:

When Republican leaders in Congress agreed to raise taxes on the wealthy last week, it left the increasingly fractured and feuding party unified on perhaps only one point: that it is at a major crossroads.

From Mitt Romney’s loss on Election Day through the recent tax fight that shattered party discipline in the House of Representatives, Republicans have seen the foundations of their political strategy called into question, stirring a newly urgent debate about how to reshape and redefine their party.

At issue immediately is whether that can be achieved through a shift in tactics and tone, or will instead require a deeper rethinking of the party’s longtime positions on bedrock issues like guns and immigration. President Obama intends to test the willingness of Republicans to bend on those issues in the first months of his new term, when he plans to push for stricter gun control and a comprehensive immigration overhaul.

The coming legislative battles are certain to expose even more division in the party. And with establishment Republicans and Tea Party activists at times speaking as if they are from different parties altogether, concern is spreading throughout the ranks that things could get worse before they get better.

 

“The Republican Party can’t stay exactly where it is and stick its head in the sand and ignore the fact that the country is changing,” said Ralph Reed, the founder of the Faith and Freedom Coalition and onetime leader of the Christian Coalition. “On the other hand, if the party were to retreat on core, pro-family stands and its positions on fiscal responsibility and taxes, it could very quickly find itself without a strong demographic support base.”
 

Having lost the popular vote in five of the last six presidential elections, Republicans now face a country that is increasingly younger, multiethnic and skeptical of Republican positions on some social issues. The party’s deficit-cutting agenda relies heavily on reducing taxes for the wealthy, which irks middle-class voters, and cutting spending on government programs, like Social Security and Medicare, that are popular with many voters.
 

Generational change is also robbing the party of some of its most effective political positions. Same-sex marriage, which less than a decade ago was an issue that reliably drove conservative voters to the polls in favor of Republicans, appears to be losing its potency with an electorate increasingly comfortable with gay unions.
 

None other than Newt Gingrich, a former House speaker who promised to fight for a constitutional ban against same-sex marriage during the Republican presidential primaries, now says his party must come to terms with the country’s rapidly shifting views on the subject.
 

“Walking around and pretending it doesn’t exist just means you’re going to become irrelevant,” Mr. Gingrich said in an interview.

Prominent Republicans insist that if the party’s disparate factions can come together around a set of economic, social and foreign policy principles in the coming years, they stand a good chance of retaking the presidency, making gains in Congress and repairing some of the damage done through several years of bitter primary battles and divisive legislative bickering.
 

“Republicans will get their mojo back when they define themselves as the party of economic growth and upward mobility,” said Gov. Mitch Daniels of Indiana, a Republican who will become the president of Purdue University next week. Mr. Daniels said new lawmakers and governors — many of whom are minorities and women — would reshape the Republican Party.
 

“The party, with all its problems — and I’m not disputing them — has a really large and interesting crop of new faces,” he said. “Ultimately, parties tend to be defined by their most visible personalities.”

Republicans have already demonstrated success in midterm elections, when fewer people vote, and in state elections for governorships and legislatures. In North Carolina, Pat McCrory, a Republican former mayor of Charlotte, was sworn in as governor on Saturday after waging a campaign that emphasized pragmatism over ideology.
 

“My message remained a Republican message,” Mr. McCrory said, suggesting that national Republicans could learn a lesson from state politicians. “But I did it with a tone of problem solving. I did it with a tone of cooperation. I didn’t run one negative ad.”
 

But a changed tone alone may not do enough to smooth over the very real disagreements in the Republican Party. And it is not clear how the intraparty combatants can meet in the middle. For example, while some Republicans argued that the tax vote last week enshrined almost all of the Bush-era tax cuts into permanent law and should be seen as a victory, harder-line fiscal conservatives called it a shameful departure from the party’s two decades of successful opposition to tax increases. 

 

Clashes between Tea Party supporters in the House and Speaker John A. Boehner during the budget battles last year led a dozen of them to withhold their votes for speaker last week.  

 

And across the country, deeply conservative organizations angry about the concession on tax increases are pledging more, not fewer, primary challenges to Republicans they believe are straying too far from the party’s orthodoxy on taxes, guns, energy, immigration, spending and abortion.
 

“The gloves are off,” said Everett Wilkinson, a founder of the Tea Party movement in Florida. “We’re going to challenge a lot of the G.O.P. going forward,” he added, both in primaries and general elections.
 

Moderate Republicans are bracing for the challenges. Steven C. LaTourette, who retired from his Ohio Congressional seat at the end of the year and will become the president of the Republican Main Street Partnership, said his group would raise money to defend middle-of-the-road Republicans against the more conservative groups.
 

“There has to be an acceptance within the party of people who have nonidentical views on every issue,” Mr. LaTourette said. “You can’t be a national party unless you invite in and are accepting of members with different visions. You can’t treat them as pariahs.”
 

As the new year begins, some of the party’s leaders in Washington are searching for ways to address the philosophical divide and the structural changes in the country that have caused such problems.
 

Some are talking about the need to find a positive vision and agenda that represents conservative values but still speaks more directly to the concerns of a broad section of voters — and manages to sell that vision through leaders who can convince voters that the party wants to move forward and not back.
 

Former Senator Kay Bailey Hutchison, a Texas Republican who retired this year, said Republicans must shift their focus away from issues like abortion, same-sex marriage, gun rights and immigration.
 

“The combination of our fiscal responsibility message and the social issue message did not bring together a majority” in the presidential election, she said. “It’s not so much coming to the middle. It’s letting people have various views on personal issues and not requiring complete fealty to all of those issues in a way that will drive people off.”
 

Other leaders have urgently ordered top-to-bottom reviews to determine how the party lost touch with the most important and fastest-growing voting blocs, including women and Hispanics, and how it can win them over by the 2014 midterm elections.  

 

It is now accepted in the party that it has failed to keep up with Democrats in the competition for ascendant voting blocs of Hispanics, African-Americans, Asians and young people. Although exit polls showed that Mr. Romney won nearly 60 percent of the white vote, Mr. Obama won more than 70 percent of Asians and Hispanics and more than 90 percent of black voters.
 

“If there’s one conclusion that’s going to come out of this process, it’s that we have to be much more granular in our approach to partners in the community like African-Americans, Hispanics and Asians,” said Reince Priebus, the Republican National Committee chairman, who is overseeing one of the most ambitious review efforts.

Health Insurers Raise Some Rates by Double Digits

From The New York Times:

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.

While employers may be able to raise deductibles or co-payments as a way of reducing the cost of premiums, the insurer typically does not have that flexibility. And because insurers now take into account someone’s health, age and sex in deciding how much to charge, and whether to offer coverage at all, people with existing medical conditions are frequently unable to shop for better policies.

In many of these cases, the costs are increasing significantly, and the rates therefore cannot be determined to be unreasonable. “When you’re allowed medical underwriting and to close blocks of business, rate review will not affect this,” said Lynn Quincy, senior health policy analyst for Consumers Union.

The practice of medical underwriting — being able to consider the health of a prospective policy holder before deciding whether to offer coverage and what rate to charge — will no longer be permitted after 2014 under the health care law.

Mark Shields and David Brooks discuss with Judy Woodruff the failure of the latest budget deal to address larger fiscal problems and Washington's inability to make tough choices.

From the PBS Newshour: on 1-4-12:

JUDY WOODRUFF: Well, if there was a fight over -- if there is a fight coming over Chuck Hagel, there has been an even bigger fight for the last weeks, months, David, over the fiscal cliff, and whatever it has been called since we first heard about it.

Is the country better off because of what this Congress passed finally at -- on New Year's Day, the day after New Year's?

DAVID BROOKS: Yes, no, I think we are immeasurably worse off. I think it was a complete failure.

Listen, what did we want out of this? The president wanted a balance deal with some tax increases and some spending cuts. We didn't get a balanced deal. There were no real spending cuts. Second, we could have -- we could have done something to address our long-term debt. That was the whole purpose behind this whole thing.

We did nothing to address our long-term debt and almost nothing to reduce deficits over the next 10 years. We could have had a stimulus package to have some short-term economic growth, which was talked about. We did nothing to do that. We did nothing to help reform entitlements.

We could have put these endless budget fights behind us, so we could get on to talk about immigration. We didn't do that either.

We're going to have a reconciliation -- or we're going to have a sequestration fight, a debt ceiling fight. We're going to spend the next months, at least, having these sorts of fights again and again and again.

So this deal, to me, fails on every single front and leaves us worse off.

JUDY WOODRUFF: Are you that negative about it?

MARK SHIELDS: No. I mean, I feel like, who, Holly Golightly, compared to David.

(LAUGHTER)

MARK SHIELDS: I mean, David -- David is -- you know, I'm just -- as I listen to him, I'm ready to slit my wrists, for goodness' sakes.

But, no, I don't think it was -- when both sides basically admit seemingly that they lost, it is probably not a great victory for anybody. The president insisted on going in there had to be $1.6 trillion in new revenues. John Boehner offered $800 billion. And they settled for $600 billion. That's not exactly a great triumph. At the same...

JUDY WOODRUFF: Well, who's responsible?

MARK SHIELDS: Who's responsible?

Judy, I mean, we have -- Bob Dole, who's a great man and a great Republican senator, said, on Capitol Hill, we love to make tough speeches. We don't like to make tough choices.

And the fact is that the American people, who want all the benefits and want the free lunch, and don't want a single gray hair on the beautiful head of Social Security or Medicare touched, and basically don't want to pay for it, I mean, the old line is, we elect Republicans because we don't want to pay for it and we elect Democrats because we want everything that government is going to give us.

And it's sort of a terrible, terrible conundrum and dilemma. So, we looked in the mirror to see whose fault there is. But I would say there has been lack of leadership as far as sacrifice across the board.

JUDY WOODRUFF: The White House.

MARK SHIELDS: The White House, to the Congress, to our national leadership, to us in the press as well, I guess, to spell out.

Look, we want people to be covered. We want people to have the coverage. There are some of us who can afford coverage, and we're still getting those benefits.

JUDY WOODRUFF: You're talking about Medicare, Social Security, retirement benefits.

MARK SHIELDS: Yes. Yes, exactly.

And we're not going to have enough money to provide that coverage for everybody. And we do want to provide it for those who need it most.

DAVID BROOKS: Yes, I completely agree.

We blame politics, always say Washington is all dysfunctional. They're responding reasonably efficiently to what the American people want, which is to take the future's money and spend it on ourselves.

And so what we are looking at, the next generation, according to the IMF, is going to have one-third fewer benefits and one-third higher taxes if we act now.

If we wait five years, it will be 50 percent more taxes, 50 percent fewer benefits. It is just terrible for the future generations. So I do think it starts with the American people. Nonetheless, I do blame everyone else, too, including us, I guess.

But I would blame the Republicans for saying they want to control spending, talking of beating their chests about it, but they don't have a strategy, because they don't actually have the guts to propose spending cuts. And so they talk about the debt, the debt, the debt for years and years. They finally have a chance to propose some actual reforms.

They can't do it, because they think it would be unpopular. And then to criticize the president, I think he could have given a speech laying out exactly where we are as a country, rally public opinion behind the need to do something.

And, for Democrats, I would say, you want to pretend you're -- you want to protect valuable programs, Head Start, early childhood, well, Medicare is basically eating away at all that.

And if you don't tackle Medicare, you are going to have less for all the stuff you want to do. So who do you care more about, the rich elderly or the poor young? And you have got to make that call.

JUDY WOODRUFF: It's interesting you both are saying this, because so much of the criticism this week has been directed at the speaker of the House, John Boehner, struggling with his Republican Caucus.

MARK SHIELDS: He did, yes.

JUDY WOODRUFF: So was that criticism deserved?

MARK SHIELDS: No, I mean, John Boehner -- John Boehner tried to do a political thing, which was to try to preempt the president and the Democrats with his plan B, which was to raise taxes on millionaires, and not on others.

And he couldn't get the votes out of his own caucus to do it. And so at that point, I mean, there are 50 people in that caucus, Judy, who basically will not go for anything. And they proved it when the final fiscal cliff bill came before the House and it had to be passed.

So, I mean, John Boehner then found himself rolled, went over to the Senate. He had no choice. And he's got a real restless, restive constituency in that Republican House caucus. He came within three votes of not being reelected as speaker. I mean, members sat on the floor and didn't vote. I mean, others -- you know, so he's in a very precarious position.

I don't know why he wants to be speaker at this point, I mean, given the difficulty of the job and the precariousness of his position. I mean, I think he's a very able legislator. I think he believes in the legislative process, but -- and I think he is a grownup. But, boy, he's got a tough row ahead of him.

White House sees promise in revisiting elements of ‘grand bargain’ on taxes, spending

From The Washington Post:

The White House is eyeing a return to elements of a “grand bargain” it tried to reach late last year with House Speaker John A. Boehner (R-Ohio) as perhaps the best hope of defusing a fresh threat to the U.S. economy in just two months, according to people familiar with the discussions.

As planning begins for the next phase of Washington’s fiscal wars, attention is turning to a strategy for avoiding deep automatic cuts to domestic and defense spending and averting a government default — which could all hit at the same moment.

Democratic and Republican officials say they could build on the grand bargain talks, which looked at raising new revenue through an overhaul of the tax code and reducing spending, including on Medicare, Social Security and other entitlement programs.

As in the earlier negotiations, however, there remain sticking points. How much new tax revenue would Republicans accept, especially now that tax rates on the wealthy are already climbing under the “fiscal cliff” agreement? And how far will President Obama go in meeting the GOP demand for deep spending cuts?

Obama and Boehner came tantalizingly close last month to a broad deal aimed at stabilizing the federal debt. But the speaker abandoned the talks, saying that the White House offer was too heavy on taxes and too light on spending cuts. Instead, Democrats and Republicans reached a far more modest agreement to avoid the fiscal cliff.

Republicans say they have a stronger hand in the new negotiations because of the federal government’s pressing need to increase its $16.4 trillion borrowing limit. The government hit the debt ceiling this week, and the Treasury Department warns it will be unable to pay its bills in about two months unless it can borrow more. Congressional Republicans say they will not vote to raise the debt ceiling unless there is a deal to make steep spending cuts.

White House officials insist that the government must meet its obligations, and thus raising the debt ceiling is nonnegotiable. Some Democrats, however, say that the bargaining advantage has shifted toward the GOP.

White House officials still believe that the framework previously discussed by Obama and Boehner offers ample scope for a deal to avoid the automatic spending cuts, known as a sequester, according to people familiar with the discussions. Such an agreement, they say, could yield legislation that would also raise the debt ceiling.

Privately, some Republicans are not opposed to the approach. The GOP is “generally open to the framework, but the devil is in the details,” said one Republican leadership aide. The aide noted that Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, already intends to seek tax-code reform this year.

Still, the GOP plans to press its case that the time to discuss increasing taxes is over and the focus now must be on cutting spending. At a closed meeting Friday, Boehner told House Republicans that any increase in the debt limit must be accompanied by spending cuts and reforms of a greater amount, according to a person in the room.

During the negotiations between Obama and Boehner, the president offered about $900 billion in spending cuts, including $600 billion to entitlement programs such as Medicare. Obama has also been willing to adopt a less-generous measure of inflation in calculating Social Security payments.

At the same time, Obama insists tax revenue must be further increased in exchange for spending cuts. The bill approved by Congress this week raised slightly more than $600 billion of revenue over 10 years by raising tax rates. Obama now wants to raise about $600 billion more by limiting tax breaks.

The discussion of a new grand bargain would center on replacing the sequester, which is set to slice domestic and military spending by $1.2 trillion over a decade. While a budget agreement could also include an increase in the debt ceiling, Obama had said he will not explicitly trade anything for that increase.

“He’s willing to have negotiations on further long-term deficit reduction and he’s willing to do that in a balanced way,” said Rep. Chris Van Hollen (D-Md.), a White House ally. “The context of the discussions will be in terms of replacing the sequester.”

Republicans, however, say they will put the debt limit at the center of negotiations and are willing to shut down the federal government in March, when a resolution funding it expires.

“The coming deadlines will be the next flash points in our ongoing fight to bring fiscal sanity to Washington,” Sen. John Cornyn (R-Tex.) said Friday. “It may be necessary to partially shut down the government in order to secure the long-term fiscal well-being of our country, rather than plod along the path of Greece, Italy and Spain.”

Some Democrats say they are worried that Obama may have relinquished the upper hand by failing to raise the debt ceiling as part of the fiscal cliff deal.

“By not insisting that the debt limit be tied that to the package, it’s entirely possible they’re going to win the week and lose the quarter,” former Obama budget director Peter R. Orszag said on CNBC on Thursday. “You don’t know yet until you see how February and March plays out, and I think there’s no doubt that they have somewhat less leverage than they did in the round just completed.”

White House officials said this week they expected to prevail on the debt limit issue in part because the sequester is noxious to GOP priorities, such as preserving defense spending. As a result, the thinking goes, Republicans would not demand dramatic cuts in exchange for raising the debt limit.At the same time, Democrats noted that some of their priorities, such as Medicaid, the health-care program for the poor, are exempt from the sequester.

And if Republicans do resist an increase in the debt ceiling, the White House plans to attack them for risking an economic calamity in an effort to slice the highly popular Medicare program, according to people familiar with the matter.

Some Republicans were mildly hopeful a second term might moderate those presidential attitudes that didn't quite work the first time, such as holding himself aloof from the position and predicaments of those who oppose him, while betraying an air of disdain for their arguments. - Not negotiating is the President's way of negotiating. And it kind of worked. This, however, is true: The great presidents are always in the end uniters, not dividers. They keep it together and keep it going. And people remember them fondly for that.

Peggy Noonan writes in The Wall Street Journal:

We're all talking about Republicans on the Hill and their manifold failures. So here are some things President Obama didn't do during the fiscal cliff impasse and some conjecture as to why.

He won but he did not triumph. His victory didn't resolve or ease anything, and it heralds nothing but more congressional war to come.

He did not unveil, argue for or put on the table the outlines of a grand bargain. That is, he put no force behind solutions to the actual crisis facing our country, which is the hemorrhagic spending that threatens our future. Progress there—even just a little—would have heartened almost everyone. The president won on tax hikes, but that was an emotional, symbolic and ideological victory, not a substantive one. The higher rates will do almost nothing to ease the debt or deficits.

He didn't try to exercise dominance over his party. This is a largely forgotten part of past presidential negotiations: You not only have to bring in the idiots on the other side, you have to corral and control your own idiots.

He didn't deepen any relationships or begin any potential alliances with Republicans, who still, actually, hold the House. The old animosity was aggravated. Some Republicans were mildly hopeful a second term might moderate those presidential attitudes that didn't quite work the first time, such as holding himself aloof from the position and predicaments of those who oppose him, while betraying an air of disdain for their arguments. He is not quick to assume good faith. Some thought his election victory might liberate him, make his approach more expansive. That didn't happen.

The president didn't allow his victory to go unsullied. Right up to the end he taunted the Republicans in Congress: They have a problem saying yes to him, normal folks try to sit down and work it out, not everyone gets everything they want. But he got what he wanted, as surely he knew he would, and Republicans got almost nothing they wanted, which was also in the cards. At Mr. Obama's campfire, he gets to sing "Kumbaya" solo while others nod to the beat.

Serious men don't taunt. And they don't farm the job of negotiating out to the vice president because no one can get anything done with the president. Some Republican said, "He couldn't negotiate his way out of a paper bag." But—isn't this clear by now?—not negotiating is his way of negotiating. And it kind of worked. So expect more.

Mr. Obama's supporters always give him an out by saying, "But the president can't work with them, they made it clear from the beginning their agenda was to do him in." That's true enough. But it's true with every American president now—the other side is always trying to do him in, or at least the other side's big mouths are always braying they'll take him down. They tried to capsize Clinton, they tried to do in Reagan, calling him an amiable dunce and vowing to defeat his wicked ideology.

We live in a polarized age. We have for a while. One of the odd things about the Obama White House is that they are traumatized by the normal.

A lot of the president's staffers were new to national politics when they came in, and they seem to have concluded that the partisan bitterness they faced was unique to him, and uniquely sinister. It's just politics, or the ugly way we do politics now.

After the past week it seems clear Mr. Obama doesn't really want to work well with the other side. He doesn't want big bipartisan victories that let everyone crow a little and move forward and make progress. He wants his opponents in disarray, fighting without and within. He wants them incapable. He wants them confused.

I worried the other day that amid all the rancor the president would poison his future relations with Congress, which in turn would poison the chances of progress in, say, immigration reform. But I doubt now he has any intention of working with them on big reforms, of battling out a compromise at a conference table, of having long walks and long talks and making offers that are serious, that won't be changed overnight to something else. The president intends to consistently beat his opponents and leave them looking bad, or, failing that, to lose to them sometimes and then make them look bad. That's how he does politics.

Why?

Here's my conjecture: In part it's because he seems to like the tension. He likes cliffs, which is why it's always a cliff with him and never a deal. He likes the high-stakes, tottering air of crisis. Maybe it makes him feel his mastery and reminds him how cool he is, unrattled while he rattles others. He can take it. Can they?

He is a uniquely polarizing figure. A moderate U.S. senator said the other day: "One thing not said enough is he is the most divisive president in modern history. He doesn't just divide the Congress, he divides the country." The senator thinks Mr. Obama has "two whisperers in his head." "The political whisperer says 'Don't compromise a bit, make Republicans look weak and bad.' Another whisperer is not political, it's, 'Let's do the right thing, work together and begin to right the ship.' " The president doesn't listen much to the second whisperer.

Maybe he thinks bipartisan progress raises the Republicans almost to his level, and he doesn't want to do that. They're partisan hacks, they're not big like him. Let them flail.

This, however, is true: The great presidents are always in the end uniters, not dividers. They keep it together and keep it going. And people remember them fondly for that.

In the short term, Mr. Obama has won. The Republicans look bad. John Boehner looks bad, though to many in Washington he's a sympathetic figure because they know how much he wanted a historic agreement on the great issue of his time. Some say he would have been happy to crown his career with it, and if that meant losing a job, well, a short-term loss is worth a long-term crown. Mr. Obama couldn't even make a deal with a man like that, even when it would have made the president look good.

PEP and Pease - phaseouts for personal exemptions and limitations on itemized deductions starting at $250,000 for individuals and $300,000 for joint filers - are back. They began in 1990, expired in 2010, and are now back.

From The Wall Street Journal:

PEP and Pease, which aficionados of stealth tax increases will recognize immediately as relics of the 1990 tax increase. Those measures, which limit deductions and exemptions for higher-income taxpayers, expired in 2010. The Obama tax bill revived them this week. It isn't going to be pretty.

Under the new law, some of the steepest tax increases may fall on upper-middle class earners with incomes just above $250,000. Here's why:

During the negotiations, the White House won a concession from Republicans to allow phaseouts for personal exemptions and limitations on itemized deductions, starting at an income of $250,000 for individuals and $300,000 for joint filers.

The Senate Finance Committee informs us that in effect the loss of the personal exemptions, currently $3,800 per family member, can mean a 4.4 percentage point rise in the marginal tax rate for a married couple with two kids and incomes above $250,000. A family with four kids in that income range faces about a six percentage point marginal rate hike. The restored limitations on itemized deductions can raise the tax rate by another one percentage point.
 
How did this happen? Recall that early in the fiscal-cliff negotiations House Speaker John Boehner offered to cap itemized deductions to raise $800 billion, in lieu of raising tax rates, if the President would agree to spending cuts. The White House rejected that.

Mr. Obama then insisted on reviving PEP and Pease, thereby recapturing much of the income he claimed to be "compromising" away by agreeing to a higher income threshold for the top bracket. But instead of using phaseouts to offset higher rates as Mitt Romney proposed, Mr. Obama insisted on raising tax rates too.

Industry Tax Breaks Survive in Deal - Those industry-specific tax breaks have drawn the ire of government watchdog groups. "These were intended to be temporary. Now, they get renewed mostly without discussion."

From The Wall Street Journal:

The package that Congress approved this week to avert the fiscal cliff has drawn new attention to a set of tax breaks approved for individual industries such as racetrack owners and makers of electric motorcycles.

The 11th-hour deal included the renewal of more than 50 expiring tax breaks for businesses and individuals that will cost the U.S. Treasury roughly $71 billion over the next decade.

The package of breaks, which was originally approved last summer by members of the Senate Finance Committee in a broadly bipartisan vote, includes a number of popular tax breaks, such as one allowing individuals to make deductions for state and local sales taxes, and one to help teachers who spend their own money on classroom supplies.

The legislation also included more narrowly targeted provisions, such as the tax credit for buying the motorcycles and the relatively new tax credit for biofuels derived from algae. The bill also gives tax rebates to Puerto Rico and the U.S. Virgin Islands for rum that is taxed when it is imported into the U.S.

Those industry-specific tax breaks have drawn the ire of government watchdog groups. "These were intended to be temporary. Now, they get renewed mostly without discussion," said Tom Schatz, president of Citizens Against Government Waste.

Every year, Congress renews a series of tax breaks for individuals and specific industries, making temporary features of the tax code into a seemingly permanent fixture. Known as "tax extenders,'' they started more than a decade ago. But the package grew as part of a 2004 jobs act during the George W. Bush administration and has since swollen.

The breaks are often slapped on a must-pass bill at the end of the year, before Congress wraps up its work. In 2008, Congress attached the tax breaks to legislation establishing the Troubled Asset Relief Program.

The tax breaks were added to the fiscal-cliff deal during talks between the White House and aides to Senate Minority Leader Mitch McConnell (R., Ky.). Initially, the White House asked for a permanent extension of these breaks, before accepting a two-year extension, some of it applied retroactively, in the face of resistance from the Senate GOP.

Lawmakers in both parties expected the Senate Finance measure to be included on one of the last bills to be approved before Congress was to adjourn. "It was an accepted assumption—and there was never any pushback—that the traditional extenders package was going to be included in a year-end deal," an administration official said.

Glenn Beck's producer: “The guy who was vice president of the United States and was 537 votes away from being president during 9/11 is ideologically aligned, by his own definition, with the network that Osama bin Laden went to every time he wanted to get a message out.”

From The New York Times:

Al Gore's Current TV was never popular with viewers, but it was a hit where it counted: with cable and satellite providers. When he co-founded the channel in 2005, Mr. Gore managed to get the channel piped into tens of millions of households - a huge number for an untested network - through a combination of personal lobbying and arm-twisting of industry giants.

He called on those skills again after deciding in December to sell Current TV to Al Jazeera for $500 million. To preserve the deal - and the estimated $100 million he would personally receive - he went to some of those same distributors, who were looking for an excuse to drop the low-rated channel, and reminded them that their contracts with Current TV called it a news channel. Were the distributors going to say that an American version of Al Jazeera didn't qualify, possibly invoking ugly stereotypes of the Middle Eastern news giant?

"The lawyers for the carriers couldn't find their way around it," said a person briefed on the negotiations who described them on condition of anonymity.

Mr. Gore, who lost his last big legal argument - the one in 2000 - succeeded. On Wednesday night, a deal was announced that will bring the Al Jazeera brand into at least 40 million homes in the United States. It will also make Mr. Gore, who is already estimated to be worth more than $100 million, an even richer man.

The deal completed an eight-year odyssey for Mr. Gore and for Current TV that confirmed one of the realities of show business: it can be a lot easier to profit from a channel than to come up with must-see TV for viewers.

Television executives and observers were surprised by both the big price tag and the decision by Mr. Gore, one of the best-known proponents for action to combat global warming, to sell to a Middle Eastern monarchy built with oil wealth.

The headline on a FoxNews.com op-ed on Thursday was "Global warming guru Al Gore becomes rich hypocrite with sale of Current TV to Qatar, Inc." Several analysts said that Al Jazeera overpaid for Current.

"The deep-pocketed Qatari royal family backing Al Jazeera handily outbid any other bidder's rational bid," the research firm PrivCo said in a note to clients.

Mr. Gore did not directly respond to those lines of criticism on Thursday. But in an e-mail message he wrote of his reason for divesting: "I am incredibly proud of what Current has been able to accomplish. But broadcast media is a business, and being an independent content producer in a time of increasing consolidation is a challenge."

Current was never a full-time job for Mr. Gore. He is a co-founder of Generation Investment Management, an investment partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, an adviser to Google and a board member at Apple. He also is the chairman of a nonprofit called the Climate Reality Project. He rarely appeared on camera on Current.

Still, as its chairman, he was seen as crucial to the business.

"When it came to distribution issues, he was always available to make that final call. He was always the closer," said a Current TV executive, who like others interviewed insisted on anonymity to protect business relationships.

Current was born out of Newsworld International, a niche channel that Mr. Gore and his business partners bought in 2004 for an undisclosed sum. Newsworld's biggest distributor at the time was DirecTV, which sold television service to 20 million homes, and the man about to become the controlling shareholder of DirecTV was none other than Rupert Murdoch, the chief executive of News Corporation.

In a meeting in New York, Mr. Gore leaned on Mr. Murdoch for an extended contract with a lucrative per-subscriber fee.

Mr. Gore asserted that DirecTV should carry a "diverse set of news sources."

The resulting contract guaranteed Current roughly 10 cents per subscriber per month and helped Mr. Gore secure the financing he needed to acquire Newsworld. It also laid the groundwork for similar extensions with smaller distributors.

That's why Current, despite having one of the puniest audiences of any widely distributed cable channel, was able to post annual revenue of about $100 million.

Mr. Gore took a role in running Current, handpicking some hosts for the channel, including Keith Olbermann and Jennifer Granholm in 2011 and Mr. Olbermann's replacement, Eliot Spitzer, in 2012. (Ms. Granholm recalled the day when "Al Gore called out of the blue and said, 'We've got this network, and this is a really important election. We want to do a political show about the election - would you be interested in helping?'")

But none of the hosts could attract an audience large enough to satisfy distributors, particularly Time Warner Cable, which had been warning for over a year that it might drop Current from its lineup. Mr. Gore, frustrated by the low ratings, told associates he felt he was having more impact through his AlGore.com blog and through volunteer training than through Current.

Last summer Mr. Gore started anchoring election coverage himself, but by then he and his co-founder Joel Hyatt were determined to cash out. In the fall, their bankers invited a phalanx of major media companies, including The New York Times Company, to look at Current's books and took calls from interested parties, including Glenn Beck's online network TheBlaze, which like Al Jazeera has been seeking to make deals with distributors.

The prospect of Mr. Gore's doing business with Mr. Beck, a staunch conservative, was even more unlikely than Mr. Gore and Al Jazeera. Mr. Beck said on his radio show Thursday that his company's interest was rebuffed "within 15 minutes."

"We were not allowed to the table," he said. "He didn't sell to the highest bidder. He looked for, Who do I ideologically align with?" Mr. Beck's producer Stu Burguiere added, "The guy who was vice president of the United States and was 537 votes away from being president during 9/11 is ideologically aligned, by his own definition, with the network that Osama bin Laden went to every time he wanted to get a message out."

Mr. Gore, who will have an unpaid seat on the board of the new Al Jazeera channel, does not see it that way. Al Jazeera, he said, is one of the most popular media companies in the world.

"Their global reach is unmatched and their coverage of major events like the Arab Spring is thorough, fair and informative," he said.

Liked but Not Feared, Boehner Keeps a Job Some Might Ask Why He Wants

From The New York Times:

“Public service was never meant to be an easy living,” Representative John A. Boehner lamented Thursday, moments after he overcame a Republican insurrection to win re-election as speaker of the House. For Mr. Boehner, it may only get tougher from here.

After a tumultuous two years in which he struggled to maintain a grip on his fractious caucus, Mr. Boehner — who won the unanimous backing of his party when he was first elected speaker in 2011 — suffered the indignity of 12 Republican defections on the opening day of the 113th Congress. Nine cast their ballots for other people; two remained silent rather than vote, and one simply declared, “Present.”

For Mr. Boehner, 63, of Ohio, it was a warning shot from conservatives, a sobering reminder that while he may hold one of the most powerful jobs in Washington, his power is greatly diminished. His Republican ranks are thinner in the new Congress, and many of those who retired or were defeated are moderates who ordinarily backed him.

 

Mr. Boehner will have to contend with the conservatives in his party, who remain furious over the recent tax legislation because it did not include spending cuts.

Among them are several freshmen whose first act on Thursday was to vote against Mr. Boehner.

 

Mr. Boehner is an unlikely person to have become speaker of the House. The son of a bar owner, Mr. Boehner grew up in a big Roman Catholic family — he was the second oldest of 12 children — that was not especially political. He put himself through college and went to work for a plastics distribution company, which he eventually wound up running.

His interest in politics blossomed after he became active in the local homeowners association; eventually, he ran for the Ohio legislature. His experience in business gave him a keen interest in regulatory issues and other business concerns, which have been his signature issues.

With his genial manner — and prodigious fund-raising efforts on behalf of fellow Republicans — Mr. Boehner has engendered considerable good will within his party. Though he lost the support of some of his fellow Republicans on Thursday, no one formally rose to challenge him.

“He’s personally well liked, and I think that’s important,” said Ross K. Baker, an expert in Congress at Rutgers University. “There haven’t been any coups mounted against Boehner, and I think that tells you something.”

But Mr. Boehner’s good-natured demeanor can sometimes work against him. As one House Democrat said, insisting on anonymity to avoid angering a leader, Republicans like him, but they do not fear him. The most difficult task for any speaker is to keep his party in line, a lesson that Mr. Boehner has learned the hard way.

After a ‘fiscal cliff’ deal, what next?

From The Washington Post:

The “fiscal cliff” was designed by Washington for Washington — it was intended to set up a scenario so severe that the president and Congress would, at last, have to take on the nation’s major tax and spending problems. Instead, lawmakers again found a way to sidestep many of the prickliest issues and in the process set up other, potentially more severe, showdowns in the new year.

The next big deadline is likely to come around the end of February, when the Treasury Department will exhaust the measures now in place to extend the nation’s $16.4 trillion debt ceiling. At that point, the government will not be able to pay its bills unless Congress votes to raise the nation’s legal borrowing limit.

Republicans hope to use that moment to force Obama and congressional Democrats to agree to major spending cuts in return for the increase — in what could be a sequel to the contentious face-off over the debt limit in the summer of 2011.

[I]n early March would come another deadline: the $110 billion cut in spending, half from the Pentagon, delayed as part of this deal.

A month or so later — on March 27 — a short-term measure that funds government agencies will lapse. Without a renewal, the government will shut down, setting up another possible showdown.

Many Republicans believe they’ll have more leverage then than they do now because the debate over tax rates on the wealthy will be settled.

In their view, Obama has been wielding a powerful rhetorical weapon: that Congressional Republicans were blocking a deficit-reduction deal and preventing tax cuts for the middle class because they refused to allow taxes to rise for the wealthy. But the deal reached late Monday, which allows rates to rise for individuals making more than $400,000 a year and couples earning more than $450,000, would remove the issue from discussion.

Republicans figure that will tilt the debate toward spending cuts.

This outcome was neither side’s first choice.

Obama wanted to take care of raising the debt ceiling as part of the fiscal-cliff solution.

“It should be part of the deal,” White House press secretary Jay Carney said on Dec 4. “It should be done, and it should be done without drama.”

But it wasn’t.

Similarly, Republicans wanted to take a significant whack at the entitlement programs whose growth will contribute most significantly to the nation’s debt.

In order to garner Republican support for new revenues, the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt,” House Speaker John A. Boehner (R-Ohio) said the day after the November election.

That didn’t happen either.

And there’s no guarantee a resolution becomes any easier in 2013.

On Thursday, 12 new senators and 67 new House members take office, many fresh off campaigns in which they made promises to their partisan supporters not to yield on fiscal issues.