Jmhconsult, LLC Blog

ROM KIRK STEUDLE (Michigan Department of Transportation Director):

Here’s what this means in real terms for Michigan.  FHWA is working today until noon to shut down their systems. All meetings are canceled including conference calls.  The phone will not be answered after 12:00 noon until something is passed. This means NO money is flowing.  As a reminder the federal program is a reimbursement program where states expend money and then submit for reimbursement.   So nothing coming in means we need to manage what goes out and when. It also means NO new projects can be obligated. This is usually when we advertise projects for lettings.  So nothing new is moving out. We were already contacted by Moody’s rating company inquiring about our bond payment due in two weeks and whether we can make the payment or will we default.  We told them we intend to make the monthly $18+ million payment on time.  These bonds are backed by federal gas tax revenue.  To make this payment will take a big chunk of cash from the check book. The only good thing is that this happened during a time of low construction activity when out payments are at their lowest. In the past we have been able to handle disruptions like this because we had significant state revenue and had a sizable state funded only program. Since this hits at a time of declining state revenue we have less options to mitigate the impact. We are engaged in the national debate as we speak.   I’m in DC today and will be participating in the national press conference calling for quick resolution and I will be meeting with Congressional members today as well.  Our DC and Lansing policy staff are connected and on top of developing issues.I’ll keep you all updated as we get new information and as we develop plans for specific action Michigan will have to take.

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This from Charles Yessaian. Government Affairs Director for Jamian McElroy & Hamlin LLC.,

The Jobs Bill that includes the short term extension of the Highway Trust Fund. DOT furloughed 2,000 employees w/out pay unless Congress restores funding, which provides $42 Billion a year, construction contracts will be delayed & loans may be jeopardy & projects can be suspended.

JMH will confirm and provide updates as this process evolves.

Fed Vice Chairman Kohn to leave in June; gives Obama opening

By Neil Irwin
Washington Post Staff Writer
Monday, March 1, 2010; 1:05 PM

The No. 2 official at the Federal Reserve announced he will step down in June, creating a key vacancy at the central bank and setting the stage for President Obama to reshape the leadership of the Fed.

Fed Vice Chairman Donald L. Kohn will retire June 23, according to a letter he submitted to Obama on Monday morning. His term as vice chairman ends that day, though Kohn, 67, could have elected to remain at the Fed as a governor through 2016.

The president’s authority to appoint senior officials at the Fed is one of the executive branch’s most important powers when it comes to economic policymaking. Obama now has three vacancies to fill: Two of seven Fed governor positions are also open, as they have been since before he took office.

The White House has taken preliminary steps to draw up lists of candidates for the Fed jobs, but no appointments are imminent, said sources who have been in contact with the White House. The president is seeking one or two strong macroeconomists, these sources said, and one person with a strong financial markets background.

Once the positions are filled, Obama will have appointed five of seven governors. (He named Ben S. Bernanke to a second term as chairman in August, and appointed Governor Daniel Tarullo, a banking expert, upon taking office).

Newly appointed governors probably would have even more power to influence economic policy than usual. When the Fed eventually scales back the measures it imposed during the financial crisis, the central bank’s leaders intend to use an unconventional tool, raising the interest rate paid on bank reserves, to pull money out of the economy. Decisions on that interest rate are made by the Board of Governors, not the Federal Open Market Committee, a bigger group that includes presidents of regional Fed banks and makes most monetary policy decisions.

“The stakes are now higher for new governors,” said Vincent Reinhart, a former senior Fed staffer who is now a resident scholar at the American Enterprise Institute.

For now, Fed officials are generally unified behind an ultra-low interest rate policy to try to support the economy. But as the economy improves, some officials, especially presidents of regional Fed banks, are likely to be more eager than Bernanke to raise interest rates and drain the money supply, even at the risk of slowing the recovery. There are already early signs of division. At the last Fed policymaking meeting, Kansas City Fed President Thomas Hoenig issued a dissent from the committee’s decision to leave rates low for an “extended period.”

Fed watchers generally expect the president to favor appointees who would be in line with Bernanke’s thinking or perhaps even more tilted toward worrying about unemployment (as opposed to inflation) than him.

“I have a hard time seeing hawkish board members being appointed for two reasons,” said Michael Feroli, a senior economist at J.P. Morgan Chase. “One, board members tend to go along with the chairman, and the chairman right now happens to be pretty growth friendly. And second I can’t see the administration given the current economic environment wanting to put in a Hoenig type.”

Indeed, some liberal economists have argued that the president should move quickly to appoint new Fed governors who would be inclined to leave rates low for longer, to try to get growth going again, even if it comes at the cost of mild inflation.

Kohn has been a crucial figure in the Fed’s response to the financial crisis and recession in the past two years. A 40-year veteran of the central bank, he worked closely with Bernanke to stabilize the economy following the financial crisis.

In particular, he took the lead in overseeing the stress tests of major banks last year that helped restore confidence in the banking system; he has also led internal efforts at the Fed to release more details about its operations. He was a chief aide to then-Fed Chairman Alan Greenspan, serving as director of the Fed’s division of monetary affairs from 1987 to 2001 before President George W. Bush named him a governor and then vice chairman.

With his departure, Bernanke will lose a colleague who commands significant respect across the Fed system.

“The Federal Reserve and the country owe a tremendous debt of gratitude to Don Kohn for his invaluable contributions over 40 years of public service,” Bernanke said in a statement. “Most recently, he brought his deep knowledge, experience, and wisdom to bear in helping to coordinate the Federal Reserve’s response to the economic and financial crisis.”

“On a personal note,” Bernanke added, “I would like to express my deep appreciation for Don’s friendship and counsel during some very difficult times.”

GOP aims to remove Rangel’s gavel
By: John Bresnahan
March 1, 2010 12:06 PM EST
POLITICO

House Republicans will move again on Tuesday to strip Rep. Charlie Rangel of his chairmanship of the powerful Ways and Means Committee — and after last week’s admonishment of the veteran New York lawmaker by the House ethics committee, Republicans are confident that they will be pick up more Democratic votes.

Rep. John Carter (R-Texas) will introduce a privileged resolution Tuesday on Rangel, according to John Stone, his spokesman.

Carter is hoping for a vote on the measure by Wednesday, Stone said.

A new wrinkle in the GOP resolution will be a call for Rangel to release his tax returns.

Carter came under criticism last year when it was revealed that he failed to report several hundred thousand dollars in profits from stock sales on his annual financial-disclosure forms filed with the House Clerk’s office.

But Stone said Carter remains a viable spokesman for Republicans on the Rangel issue despite his own lapses on disclosure.

Carter and other top Republicans attempted several times last year to strip Rangel of the Ways and Means gavel, but Democrats always stood united in defeating the GOP effort. Mississippi Reps. Gene Taylor and Travis Childers were the only House Democrats to support Carter’s last Rangel resolution.

But with Rangel now publicly admonished by the ethics committee for taking two corporate-funded trips to the Caribbean in 2007 and 2008, several other Democrats have now come out in favor of removing him, and GOP leaders are hoping to force more Democrats to come out against him.

Rangel remains under investigation by the ethics committee over a variety of issues related to his personal finances, including his failure to report hundreds of thousands of dollars on income and assets; his fundraising on behalf of the Charles B. Rangel Center for Public Service at City College in New York; his use of multiple, rent-stabilized apartments in Harlem; and his failure to pay taxes on a Dominican Republic.

That investigation is now entering its 18 month, but Speaker Nancy Pelosi (D-Calif.), who has refused to back efforts to remove Rangel’s gavel, said over the weekend that she hopes the broader probe wraps up soon.

Pelosi’s brutal reality check
By: John Bresnahan and Jonathan Allen
March 1, 2010 05:05 AM EST
POLITICO

Asked this weekend to grade her performance as speaker, Nancy Pelosi gave herself an “A for effort.”

But Pelosi knows that the real test is still to come.

Pelosi is inarguably one of the strongest speakers in modern history — an authoritarian figure in an era of centralized power in the House. But the coming months are a make-or-break period for her, a brutal reality check of her ability to manage all aspects of her job — consensus-building, agenda-setting, vote-counting, fundraising and campaigning.

Now in her fourth year as speaker and eighth overall as the top Democrat in the House, Pelosi has never faced such a daunting set of challenges:

Health care: Pelosi and other top House Democrats say publicly that they have the votes to push through a comprehensive package, but privately, they know they don’t. Pelosi must balance the diverging interests of her own members while simultaneously satisfying Senate Democrats and working with President Barack Obama and his chief of staff Rahm Emanuel, a former House colleague with whom she has an uneasy relationship.

The voters: The electoral winds that were at Pelosi’s back in the past two cycles thanks to having George W. Bush in the White House are blowing this year in Democrats’ faces. Prognosticators both inside and outside the party are laying odds on an outcome that seemed unthinkable just a few months ago: a GOP takeover of the House.

Democratic infighting: The factions that make up the House Democratic majority, from the conservative Blue Dog Coalition to the liberal Progressive Caucus, are increasingly willing to fight for their own priorities at the risk of party unity. That dynamic was evident last week when a simple $15 billion jobs bill was punted from the floor schedule over a series of Goldilocks-like objections about too little spending, too much spending and misdirected spending.

Brutal campaigning: Pelosi faces a tough year on the fundraising circuit, with a punishing travel schedule and hard environment in which to raise money. She’s collected $18.5 million for the Democratic Congressional Campaign Committee — with a goal of $25 million for the election cycle — and $3.6 million for vulnerable Democratic incumbents and challengers. But hints of GOP victory in the fall could to make it more difficult for her to raise money from Corporate America and K Street.

Loss of allies: Pelosi suffered a tremendous personal loss with the death of her friend and her most influential ally in the House, Defense Appropriations Subcommittee Chairman John Murtha. Another of Pelosi’s powerful colleagues, Ways and Means Chairman Charles Rangel, has seen his influence diminished by ethical problems — including an admonishment last week by theHouse ethics committee.

The “bullet in the head” factor: Pelosi insists she will fight for every Democratic seat this November. But as Election Day draws nearer, Pelosi will most likely have to make tough calls on which vulnerable Democratic candidates to help and which ones to cut loose. Those choices would cause conflict in her caucus and could threaten the Democratic majority if she picks poorly.

Internal polls look bad for the Democrats, and Charlie Cook has warned that the party may lose its majority in November.

But in an interview over the weekend, Pelosi said unequivocally that the Democrats will hold on to their majority in November.

“I’m not yielding one grain of sand; we’re fighting for every seat,” the speaker said on CNN’s “State of the Union.”

Pelosi’s supporters point to her past successes as a sign that she’ll succeed again this year, despite all the obstacles and the gloom and doom.

“It is fair to say that we are seeing a confluence of some of the most challenging issues in one of the most challenging times,” said California Rep. Xavier Becerra, vice chairman of the Democratic Caucus. “Is she up to it? Look at the record. She is.”

“Do I agree that she has a very tough job? Yes,” said Rep. Barney Frank (D-Mass.), chairman of the Financial Services Committee. “Sometimes the job is more fun than other times. This isn’t one of those times. But she’s tough, and I don’t see any signs of her wilting.”

Pelosi galvanized and energized a moribund Democratic Caucus to build the foundation for overturning the GOP majority in 2006 and followed it up with a freshman term as speaker that laid the groundwork for another big Election Day victory two years later.

And even as Obama, Emanuel and Reid have struggled to execute the Democratic agenda, she has delivered on her end of the bargain, winning House approval of a health care bill, a climate change bill and a jobs bill.

“[In] the House of Representatives, my mark is the mark of our members. We have passed every piece of legislation that is part of the Obama agenda. Whether it’s the creation of jobs, expanding access to health care, creating new green jobs for the future, regulatory reform, we have passed the full agenda,” Pelosi said over the weekend on ABC’s “This Week.”

Still, those victories have come at a cost — leaving Democrats in more conservative districts exposed and some others bristling over the “Pelosi style.”

“She doesn’t delegate,” said one House Democrat close to the speaker. “It’s her biggest flaw. She has to have her hand in every decision.”

That means there’s no one else to blame for Democratic setbacks other than Pelosi, and she will have to answer if the party suffers at the polls.

A corollary to that complaint is that Pelosi has dealt with House Republicans’ penchant for short-circuiting the legislative process by writing key bills in partisan fashion behind closed doors.

That, according to one senior lawmaker, hurts Democrats’ chances of enacting laws that are acceptable to the public — and it takes committee chairmen and rank-and-file members of both parties out of the legislative process.

“There are instances in which regular order is not being followed,” the Democratic lawmaker complained.

Pelosi, who can be as loyal as they come if you’re her friend, can also be ruthless as a political enemy — especially if someone threatens her party’s majority.

Pelosi “will put a bullet in the head of anyone she needs to,” said a Democratic insider. “Rangel, any incumbent that looks like he’s going to lose. She’ll do anything it takes to keep her majority, anything.”

While Democrats are concerned about their poll numbers, interviews with a broad swath of Democratic members reveal little sense of panic — and some confidence that Pelosi and the party will navigate a choppy stretch ahead and retain their majority in November.

“Pressure always comes with that job,” said Rep. Mike Capuano (D-Mass.), a Pelosi ally. “There are many of us who think she takes on too much on her own, because we don’t want her to burn out. I’m one of the hardest-working people I know, and she makes me look like a laggard. I tell you, I think she’ll be fine.”

Cantor: GOP will win majority if Dems use reconciliation rules
By Michael O’Brien – 03/01/10 09:59 AM ET
The Hill

Republicans will win back Congress if Democrats use a majority-vote tactic on healthcare reform, according to the House GOP whip.

Rep. Eric Cantor (R-Va.), the second-ranking Republican in the House, tied the use of budget reconciliation rules on the healthcare bill to Democrats’ electoral fortunes this fall.

“It is my belief that the Democrats will lose their majority in November if they ram this thing through without any bipartisan support,” Cantor said during an appearance on Fox News.

The GOP has been strutting with some confidence about their chances of taking back the House this fall, though Cantor’s words may be the most direct link to date by a Republican leader between procedure on the healthcare bill and this fall’s midterm elections.

At issue is the likely use of budget reconciliation rules to finish up work on a healthcare package that has consumed Congress for months. The plans under consideration would see the House pass the healthcare bill approved by the Senate in December, followed by a separate measure passed by the House to make changes to that first bill.

The package of fixes would be passed under reconciliation rules, meaning Democrats could pass the measure with a simple majority vote, instead of the 60 votes needed to head off a filibuster.

Republicans have railed against the measure as a partisan maneuver, and Cantor said Democrats would “unquestionably” lose as a result of the tactic.

Tort reform is a bipartisan must
By: Rep. Darrell Issa
February 25, 2010 05:17 AM EST
POLITICO

Now that his yearlong partisan push for government-run health care has so far failed to produce legislative results, President Barack Obama wants Republicans to join him for another White House summit to see if he can salvage his proposals. But unless the president and congressional Democrats address the need for tort reform as a critical component of cutting health care costs, a bipartisan solution seems unlikely.

The unsustainable path of rising costs is a serious national problem. Currently, health care spending exceeds $2.5 trillion per year. By 2019, it is expected to top $4.7 trillion per year. Any hope for cost containment would involve comprehensive medical malpractice reform to end the practice of defensive medicine, close the loopholes that allow frivolous lawsuits to clog up the system, and set reasonable limits on jury awards.

The president seems to think that eliminating wasteful spending alone would get Americans on track to more affordable coverage. But the government’s track record of recouping its losses from waste, fraud and abuse leaves something to be desired. In 2008, for example, the government recovered a meager $35 million from criminal prosecution of fraud once enforcement costs were factored in. Real savings would start when Congress tackles the billion-dollar problem of defensive medicine.

Defensive medicine — when doctors order unnecessary and usually expensive tests and procedures in order to avoid lawsuits — is a major contributor to skyrocketing health care costs. As much as $210 billion is spent on defensive medicine annually — equal to $700 for every U.S. man, woman and child. This helps drive up insurance premiums that are already too high for many Americans. And the excessive malpractice litigation inevitably leads to physician shortages — especially among obstetricians, neurosurgeons and emergency room physicians.

Fewer doctors mean reduced access to medical care for everybody. New Jersey, for example, will be short 2,800 family doctors and specialists by the year 2020, according to a recent report from the New Jersey Council of Teaching Hospitals. The reason for the shortage, council President Richard Goldstein says, is a “morale problem” because of the state’s “hostile” environment for doctors and the heightened threat of malpractice lawsuits.

As long as out-of-control malpractice premiums are built into medical costs, many will never be able to afford coverage. Shamefully, it is estimated that the cost of defensive medicine and the associated liability-based medical care costs account for at least 3.4 million uninsured Americans.

Moreover, the current system is studded with irresponsible lawyers’ fees associated with malpractice claims that do not involve injury or medical error. A large share of the awards goes to pad the pockets of plaintiffs’ attorneys. Recently, the Manhattan Institute concluded that approximately 10 cents of every dollar paid for health care services goes to cover malpractice premiums, defensive medicine and other costs associated with excessive litigation.

Tort reform that reduces frivolous lawsuits and caps outrageous jury awards is a critical component of any solution to bring the cost of health care within reach of every American. So far, however, the president has barely mentioned it.

If bipartisan support is what he’s after, the president needs to do more than host Republicans at the White House for a chat. He’s going to have to get serious about the damage being done to U.S. health care by frivolous lawsuits and the cost of defensive medicine, which real reforms could correct.

Rep. Darrell Issa (R-Calif.) is the ranking member of the Committee on Oversight and Government Reform.