Morning Must Reads

The plan out today includes a new Consumer Financial Protection Agency to keep people from taking stupid loans, new regulations that would prevent exotic financial instruments from being “marketed inappropriately to unsophisticated parties,” a centralized bank regulator, a new Treasury office to supervise insurance regulations, but most of all, new powers for the Federal Reserve.

The team of reporters that the Journal had crunching the plan Tuesday night didn’t mention it, but the Federal Reserve is already rather busy having lately gotten into the business of trying to stabilize the bond market and hold down inflation by printing hundreds of billions of dollars to buy up unwanted Treasury notes. That, in turn, has the central bank working hard at being terrified about stagflation.
“The Fed emerges from the plan with the power to oversee from top to bottom almost any financial company in the country, including the firms’ foreign affiliates. It would also hand the central bank another victory by allowing it to oversee any commercial company that owns a banking charter known as an industrial loan company.

To soothe lawmakers unhappy with the Fed’s growing power, the proposal also recommends capping it in some ways. The administration proposes the creation of a consumer-protection agency, which would have the ability to write rules related to mortgages, credit cards and other consumer products, takes away powers previously held by the central bank.

In addition, the plan would require the Fed to receive approval from the Treasury Department before it took dramatic action to stabilize the economy, which it did several times last year after it cited ‘unusual and exigent’ circumstances.”
 
New York Times — U.S. to Extend Its Job Benefits to Gay Partners
 
President Obama will sign an executive order today giving spousal rights to homosexual partners of federal employees.
He stopped short of full equality by denying the biggest benefit of all, health insurance coverage. Doing so would have hugely complicated his already swamped effort to get a health care bill through Congress aside from costing billions more in its own right.
Obama’s move will enlist new legions for the culture wars and likely prove to be a legal and regulatory challenge as gay and anti-gay groups test the limits of the new policy.

Will unmarried heterosexual couples get the goodies? What about platonic same-sex roommates? Does an unmarried gay partner have a claim on pension monies following a breakup? Will gay couples married in states that allow the practice be eligible for the full benefits package?

Obama’s hand was forced by a couple of things – Hillary Clinton getting ready to do the same for just State Department Employees and gay and lesbian groups running out of patience with the president’s go-slow approach. Writer Jeff Zeleny explains:
 “Joe Solmonese, the president of the Human Rights Campaign, wrote an angry letter to the White House on Monday about a decision by the administration to file a legal brief supporting the constitutionality of the Defense of Marriage Act… The brief, filed in federal court last week, was in response to a lawsuit arguing that the marriage act is unconstitutional…With the administration’s decision to stop short of extending full health insurance benefits or calling for legislation to do so, it remained an open question how significant the presidential announcement would be, [Richard Socarides, an adviser to the Clinton administration on gay issues] said.

But administration officials said the timing of the announcement was intended to help contain the growing furor among gay rights groups. Several gay donors withdrew their sponsorship of a Democratic National Committee fund-raising event next week, where Vice President Joseph R. Biden Jr. is scheduled to speak.”
 
Washington Post — Obama’s Health Plan Needs Spending Controls, CBO Says
 
For a second straight day, the Congressional Budget Office has thrown cold water on the notion that either of the major health plans being worked in Congress are revenue neutral.

On Monday, the CBO explained that to covering half of the uninsured folks in the country would cost $1 trillion over 10 years. Estimates working through committees now say that the number could double.

On Tuesday the head of the office sent a letter to Senate leaders disabusing them of the idea of using “future savings” as a way to paper over the nitro-charged impact on the deficit and debt.

President Obama’s goal has been to rack up enough theoretical future savings from things like electronic records, preventative care and limiting unnecessary procedures that the measure could move through Congress as a revenue-neutral budget measure, needing just 50 votes in the Senate.

Taking those future savings away means a 60-vote majority is needed under Senate rules, meaning that Red State Democrats worried about having already quadrupling the deficit in the first year of the Obama era might have to be mollified.

“This process is hard. . . . You submit something to CBO, you get a score back, and then you’ve got to go talk to everybody about what the changes are that you might want to make to get the cost down, and that’s really what’s going on,” said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee.

Senate aides said Baucus had been looking at options that could push the price past $1.6 trillion over 10 years, a figure that startled some Democrats on the Senate Finance Committee, who met yesterday to discuss their options.

“It is clear there have got to be changes made to make the whole package affordable,” Conrad said.
 
The Times of London — State Department undermines Obama reluctance over Iran with Twitter request

Writers Jenny Booth and Martin Fletcher explain how the tight spot on Iran is playing out for the president. While joining most of America in rooting for the reformers, the president’s “smart power” and engagement approach to foreign policy means not antagonizing the Mullahs that most experts suspect will remain in power no matter who is declared the winner of the presidential election.

But U.S. based Twitter was scheduled to do regular maintanance that would have temporarily taken the site offline for Iranians, but Hillary Clinton’s state department asked them to hold off.

“The Iranian authorities have tried hard to prevent images of the turmoil being portrayed at home and abroad. Foreign journalists have been banned from the streets, and ordered to compile their stories by telephone from the offices. Reporters’ visas have not been renewed.

Twitter has gained in importance since internet sites, mobile phone and SMS texting networks have all been intermittently blocked by the authorities in a cat-and-mouse game with the demonstrators who have used them to organise more protests.”
 
 
New York Times — House Approves War Spending Bill
 
The White House called in some chits in Congress Tuesday to get a $106 billion war-spending package through the House that will fund the conflicts in Iraq and Afghanistan through the end of September. 

The initial bill was sailing through with almost every Republican and most Democrats on board until the White House asked congressional leaders to tack on $5 billion for the International Monetary Fund and some other unrelated items. Republicans countered with an amendment that would have blocked the release of any photos of detainees. That measure, in turn, upset some Democrats who were already none too happy about having to vote for war funding they routinely assailed George W. Bush for seeking.
With heavy White House intervention, though, the measure got through on a mostly party-line vote with the detainee photo amendment stripped out.

Writer Bernie Becker explains that the fight moves to the Senate, where Republicans and conservative Democrats hold more sway.
“For their part, Democratic supporters in Congress argued that around 80 percent of the money in the measure will go toward the two wars. The House Majority Leader, Steny Hoyer, Democrat of Maryland, also took to the floor to point out that Republicans like Ronald Reagan had supported funding the I.M.F.

The bill allocates about $80 billion to finance the wars in Iraq and Afghanistan through Sept. 30, which is the end of the fiscal year. The measure also includes almost $8 billion to fight the flu pandemic and more than $10 billion in foreign aid.

Republicans had been broadcasting their opposition to the bill, causing some tense moments for a House Democratic leadership that also had to deal with progressive Democrats who oppose allocating additional money for the wars.”