Reconciling The Path To Health Care Reform

BooMan has a must read on why it appears that the reality of the Democrats' health care reform legislation will be through the harsh realities of budget reconciliation.

But, on the Finance Committee, only Olympia Snowe of Maine shows any trace of receptiveness to voting for the health care bill. And, I don't think she's likely to vote for a public option. Given these facts, it's very likely that even if Baucus can convince Snowe to vote for the Finance version of the bill, she will probably vote against the bill on the Senate floor and on the conference report vote of the bill once it has been reconciled with the House version.

Chasing after Snowe's vote is a fool's game. I don't think we will have 60 votes for a public option, so the Senate will have to pass the bill in the budget reconciliation process after October 15th. In that process, the bill will only require 50 votes to pass. That's a hurdle that we can clear, but it comes at a cost. Any provisions of legislation passed during budget reconciliation are subject to a point of order (the Byrd Rule) if "they do not produce a change in outlays or revenues, or they produce changes in outlays or revenue which are merely incidental to the non-budgetary components of the provision."

In other words, under the reconciliation proces, during the debate over the Health Care bill the Republicans can move to strike all sorts of peripheral elements of the bill if they cannot be shown to have some non-incidental impact on the budget. Depending on interpretation, this could apply to wellness programs (which are hard to score budgetarily), or any number of other important provisions.

The result could be a very pared down version of the bill. It might have less pork in it, but it could also lose vital (but theoretical) cost-savings provisions that will come back to haunt us later. Another feature of the reconciliation process is that legislation passed under the process faces an automatic five-year sunset (like Bush's tax cuts) and therefore can be killed off later if the makeup of Congress flips sides.

On the other hand, the Democrats could pass a bill under regular order that has the support of all 60 Democrats. The difficulty with that is in getting the most centrist members to support a bill that is acceptable to mainstream Democrats in the House and Senate. And, those centrists don't like to vote for anything that doesn't have at least a vote worth of bipartisan support. Voting with the Democrats on a party-line vote as well-publicized at the Health Care bill leaves them feeling alone and exposed.

Beyond that, a few of these folks are basically ideological-Republicans. They oppose the bill for many of the same reasons the Republicans do. They're corporate whores who deplore government action in the private sector. So, get ready for reconciliation. Baucus had his chance.

In other words, BooMan is saying that no matter what kind of arm twisting Obama does over August, there's just no way he can get 60 votes for the public option. The logical conclusion given that is to focus on what parts of Obama's health care agenda can be kept in a reconciliation situation, how to pay for it in the short term, and how to get it all past the Byrd Rule.

Is this surrender on the part of BooMan? I believe he's just being realistic. Let's face it: No Republican will vote themselves into a permanent minority by signaling yes on a robust public option, and even one Democrat saying no won't get this through the filibuster. Several Senate Dems have expressed reservations: Evan Bayh, Blanche Lincoln, Kent Conrad, Joe Liberman, the list goes on. It annoys me that Kent Conrad is blathering on about how reconciliation is just too horrible to use either.

In fact, there may be enough of the "corporate whores" that BooMan rightfully bemoans to even get the 50 votes needed for reconciliation, not to mention that if too much is dropped from the final bill, there will be progressives on the left who will want nothing to do with the legislation.

So what to do? Is there time enough for Obama to make a difference? Even if he put in all on the line and said that a public option was mandatory, would it be enough to motivate the Democrats in the Senate to go along?

Enough people are convinced that fixing health care for everyone will mean a decrease in quality and increase in price for their own existing plans. Unless and until that changes, health care reform probably won't even make it through reconciliation intact. The status quo has too much invested in being the status quo, and the lawmakers they have bought and paid for are wanting those fat lobbying gigs for their families and friends as well as their selves.

So what's a progressive to do? If BooMan's right, we're wasting our time trying to go through normal channels. We're going to have to start having the much more productive discussion of how to keep health care reform together when there's a very good chance that the GOP will be able to argue for the plan's sunset after five years, as getting the changes to make health care reform robust and substantial will incur a substantial cost.

In other words, we're down to "the good is the enemy of the perfect" time. I'm not convinced we're that far gone yet.

But I do agree with BooMan that it's time to start having the discussion now, and that being prepared to move down this road is prudent over the recess.

[UPDATE 2:53 PM] Steve Benen makes a good point however. Convincing Americans that their own individual plan is "fine" is one thing. But convincing Americans that the health care system as a whole needs no reform whatsoever right now is a different matter.

As a factual matter, when you ask the American people what's the most important issue to them, health care reform actually ranks very high. Last week, an NYT/CBS poll asked an open-ended question of respondents, asking what's the "most important problem facing the country today." While the economy and job creation were on top, health care was next on the list -- with a higher score than the deficit, education, immigration, Iraq, terrorism, and the environment combined.

But as a political matter, Republicans have been on the offensive for weeks, and feel like they're in a position to kill reform before the fall. The more they argue that the system is fine the way it is, and that reform isn't especially necessary, the easier it will be for Democrats to regain the rhetorical advantage.

That's something the Democrats need to exploit. The GOP is getting intellectually lazy (real shocker, there) and assumes it can now talk people into the status quo, now that they belive the battle is all but won for them. That's going to end up killing them.

A Stimulating Conversation

One interesting note coming out of those second quarter economic numbers: the "failed" stimulus package from February appears to be working. In fact, if it wasn't for the stimulus, state and local budgets would be far worse off than they are right now.

A huge influx of federal stimulus money to state and local governments more than offset a sharp drop in tax collections, helping to put the brakes on the nation's economic decline, new government data show.

The stimulus funds helped reverse six months of spending declines, pushing state and local government expenditures up 4.8% in the second quarter, reports the Bureau of Economic Analysis.

"The money has caused a very sharp change in the path of the economy, which had been in steep decline," said Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities in Washington, D.C.

Federal cash is now the No. 1 revenue source for state and local governments, surpassing sales and property taxes, the government data show.

The flood of federal money lifted total revenues by 7.5%, overcoming an 8% drop in tax collections.

Now of course the whole point of this is that the situation is temporary...federal money cannot be the #1 source of revenue for any state or local government for long. But it's good news that seems to indicate that the stimulus was not only necessary but useful as well.

State and local governments are adding new workers and raising pay:

•Employment. State and local governments added 12,000 workers, a 0.1% increase, in the quarter, reports the Bureau of Labor Statistics. The private sector cut 1.3 million jobs, a 1.2% reduction, during this time. Federal employment was flat.

•Compensation. Pay and benefits rose at a 4% annual rate in the second quarter for state and local workers, BLS reports.

For private workers, compensation was up at a 0.8% annual rate, the lowest since the government started keeping track in 1980.

The jump in government spending — federal, state and local — was the key reason that the nation's gross domestic product declined just 1% in the quarter, a sharp improvement from a 6.4% first-quarter drop.

In other words, the main reason the GDP was only -1% was due to the stimulus kicking in. It will continue to kick in hopefully and provide even more benefit to Americans. Lord knows we need it.

It'll be needed too, considering all the layoffs in state and local governments as the new fiscal year takes effect. Third quarter numbers will probably show a drop in state and local government employment...but the drop would be much steeper without the stimulus package.

Still, this stimulus has to translate into more private sector jobs too, not just government ones. We still have a long ways to go.

Blind Squirrel Still Unable To Locate Nuts

I'm convinced that Ross Douthat's job at the NY Times is to make us actually want Bill Kristol back. Today, ol' Ramblin Ross takes on the economics of America's state budgets and manages to trap himself in his own web of "logic" rather neatly.

The urban scholar Joel Kotkin has called this recession a blue-state “meltdown.” That overstates the case: The Deep South has been hit hard by unemployment, and some liberal regions are weathering the storm reasonably well. And clearly part of the blame for the current crisis rests with decisions made in George W. Bush’s Washington.

Which is actually correct. And then in the very next paragraphs, the conclusion that Ross draws?

But in state capital after state capital, the downturn has highlighted the weaknesses of liberal governance — the zeal for unsustainable social spending, the preference for regulation over job creation, the heavy reliance for tax revenue on the volatile incomes of the upper upper class.

And, inevitably, the tendency toward political corruption. The Republicans have their mistresses, but the Democrats are dealing with a more serious array of scandals: the Blagojevich-Burris embarrassment in Illinois, Senator Christopher Dodd’s dubious mortgage dealings in Connecticut, the expansive graft case in New Jersey, and a slew of corruption investigations featuring Democratic congressmen.

So, there is no such thing as a "blue state meltdown" (an oversimplification) but of course liberalism has wrecked the states and Democrats have destroyed economies through corruption (which apparently is fine to say).

You know, just like in heavily Democratic, liberal states like Alabama.

The possibility that conservative state governments spending money swiping revenue and using it on tax breaks, tax cuts and tax loopholes for the wealthy and then not having enough revenue for existing social programs hasn't occured to Ross, no doubt. The answer is to just cut the programs and block any tax increases to pay for them. It's government by posession: if you give the money away to the people that don't need it, just cut the programs for the people who do need them. Corporate welfare over voter welfare, that's the conservative way.

Only, that's failed badly too.

Buyer Of Last Resort

Yet another back-door bank bailout program dumping billions in the laps of the megabanks, this time it's the Fed buying securities and the banks are getting the best price they can for selling them to the Fed, not the taxpayer getting the best price for buying them from the banks.

Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.

The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.

However, the Fed is not a typical market player. In the interests of transparency, it often announces its intention to buy particular securities in advance. A former Fed official said this strategy enables banks to sell these securities to the Fed at an inflated price.

The resulting profits represent a relatively hidden form of support for banks, and Wall Street has geared up to take advantage. Barclays, for example, e-mails clients with news on the Fed’s balance sheet, detailing the share of the market in particular securities held by the Fed.

“You can make big money trading with the government,” said an executive at one leading investment management firm. “The government is a huge buyer and seller and Wall Street has all the pricing power.”

A former official of the US Treasury and the Fed said the situation had reached the point that “everyone games them. Their transparency hurts them. Everyone picks their pocket.”

So how did this happen? It is design, or incompetence? There are serious arguments here for both: the program wasn't thought through all the way, nobody seemed to realize that all of the Wall Street banks would collude on the Fed for the best prices they could get, of course the Fed was going to get ripped off when they announced ahead of time they were going to be buying ahead of time (causing the price to go up), nobody could have predicted, etc.

Of course, given the billions in cash and trillions in loan guarantees (latest price tag, $26 trillion) you'd probably have to go with "they did it on purpose". It's a near-perfect way to funnel cash to all the banks without Congressional oversight or angry voters noticing.

So, if you're looking for a way to understand how these banks that eight months ago needed hundreds of billions to stay alive and are now making record profits and giving out record bonuses, well there you are. It's miraculous how that works.

Yves Smith at nakedcap has more, it turns out that "paying back the TARP money" was just as much of a scam.

There is not a Wall Street derivatives trader on the planet that would have done the US Government deal on an arms-length basis. Nothing remotely close. Goldman's equity could have done a digital, dis-continuous move towards zero if it couldn't finance its balance sheet overnight. Remember Bear Stearns? Lehman Brothers? These things happened. Goldman, though clearly a stronger institution, was facing a crisis of confidence that pervaded the market. Lenders weren't discriminating back in November 2008. If you didn't have term credit, you certainly weren't getting any new lines or getting any rolls, either. So what is the cost of an option to insure a $1 trillion balance sheet and hundreds of billions in off-balance sheet liabilities teetering on the brink? Let's just say that it is a tad north of $1.1 billion in premium. And the $10 billion TARP figure? It's a joke. Take into account the AIG payments, the FDIC guarantees and the value of the markets knowing that the US Government won't let you go down under any circumstances. $1.1 billion in option premium? How about 20x that, perhaps more. But no, this is not the way it went down....

Of course we were played for fools. We were played for fools from the beginning. We've spent our entire economy saving the banks and pretending we're all fine.

We're not.

[UPDATE 11:49 AM] Think about the Fed's security buying scheme while the NY Times is complaining we haven't given out enough bailout cash to the "good banks" in an article ripe with Randian silliness. You're not being fair to the banks that didn't take TARP money! Why should they be punished? It's noooooot faaaaaaaair!

They're just getting money off of schemes like this instead, you see.

Zandar's Thought Of The Day

Which is more fake, the latest fake Obama Kenyan birth certificate, or the fake Sarah Palin divorce rumors?

The answer, of course, is who the f'ck cares. We've got bigger problems to deal with, thank you.

Moving. On.

Only The Centrists Can Save Us

Over at the Daily Beast, John Avlon argues that Obama should be listening to the Blue Dogs and the Sensible Senate Centrists, not attacking them. This makes much more sense when you realize John Avlon is Rudy Guiliani's former speechwriter (how hard can that job be, a noun, a verb and 9/11, repeat) and is the Centrist's Centrist. It's a useful article if only to demonstrate how pernicious and dishonest the middle-of-the-road argument is on health care.

Attacked as villains by liberals and accused of slowing down the legislation’s passage, they are the unsung heroes of health-care reform. They are not trying to kill Obama’s initiative; they are trying to save it.

Barack Obama’s 2008 victory was not a liberal ideological mandate but a vote against the Bush era’s polarizing play-to-the-base politics. Congressional centrists are trying to help the president follow through on his rhetoric about a new era of bipartisan consultation and cooperation. They are doing the heavy lifting of trying to forge the broadest possible coalition of support, while liberal leaders encourage a narrow play-to-the-base party-line vote. In the process, congressional centrists are pragmatically looking out for President Obama’s interests in the larger electorate.

No one should know this better than Obama’s chief of staff, Rahm Emanuel, who recruited many of these centrist Blue Dogs as congressional candidates in 2006. Their selection led directly to the Democrats’ recapture of Congress after the conservatives’ ideological over-reach.

The pendulum swing of politics has a funny way of self-perpetuating. Emanuel remembers the way that Bill Clinton’s unified-Democratric control of Congress evaporated after perceptions of a left-wing lurch amid the last Democratic attempt at health-care reform. The Blue Dogs are the emissaries of this received wisdom; they are Barack Obama’s best friends on Capitol Hill right now.

The Blue Dogs are 40 or so Democrats, largely from swing districts in the South and Midwest, led by Tennessee’s Jim Cooper and Arkansas’ Mike Ross. In the Senate, centrist efforts are being led by a bipartisan group chaired by Finance Committee Chairman Max Baucus and Republican ranking member Chuck Grassley. Together, across the divisions of Congress, these two groups are consistent in their commitment to fiscal responsibility at a time of unprecedented spending.

Do you notice something about this bipartisan argument? Specifically, how it's virtually identical to the Republican one? Let's count the conservative talking points in just that section:

• Obama and the Democrats do not have a mandate, despite the vote.
  
• Obama promised to bring a new era of bipartisanship, he must make all the compromises.
  
• Liberals are the only partisans, not conservatives.
• Centrists are the only wise people in Washington.
• Clinton tried the same thing and failed, always heed the lesson of Clinton.
  
• Fiscal conservatism is the only thing that matters.

Most of all, it's the same argument from 12 months ago: conservatism can never fail, only people who call themselves conservatives can. People didn't vote against Republicans, they voted against false conservatism...so they installed Democrats into office. (yeah, that makes perfect sense.)

In other words, this is the same mealy-mouthed centrist garbage spouted time after time. Democrats should strive to be more like Republicans, the argument goes. Republicans should strive to be more like Republicans too.

As I've said before, John Avlon's view of bipartisanship is "Democrats give Republicans 99% of what they want, then claim victory over the remaining 1%." Republicans on the other hand want that 1% just to prove a point.

Despite the will of the American people, Republicans should always be in charge. But here's the thrust of Avlon's article:

But perhaps the most significant contribution of this centrist coalition to the health-care debate might be the replacement of the controversial “public option” with a nonprofit private cooperative plan, based on American models that have existed at the community level for decades. This simple switch would single-handedly defang conservative fear-mongering about the national socialization of health care. It would likewise achieve many of the practical goals of the public option, without acquiescing to the larger ideological goal advanced by liberals. This should be considered a clear win-win proposition.

Really, this guy deserves an award for that paragraph alone. At the very least, I'm taking him with me should I need to trade in my clunker for cash and see what kind of deal I can get (maybe I can get a RV or a nuclear sub or a new pyramid out of the deal.) Check the proposition here on killing the public option: It makes conservatives happy, and liberals unhappy and to him that's a win-win deal.

This is almost boilerplate Broderism, with an extra helping of disdain for liberals and an almost fanatical devotion to bipartisanship for bipartisanship's sake, not to actually do anything like "fix health care."

Why is it that Sensible Centrism means "help out corporate America as much as possible" anyway? One of the Potomac's great mysteries, I suppose.

Trading Down All Around The Town

Barry Ritholtz takes a look at the housing market, and while there are signs of life at the low end, at the high end it's getting very ugly.

There is, however, little doubt that the upper end of the market has not seen improvement. Sales at the high end of the Real Estate market are soft. That is partially a function of limited availability of credit and buyer concern over employment.

In the typical housing sale, there is often a chain of transactions, from the starter home to the larger family house to the bigger move up, on and on to the larger luxury houses. When any part of the chain is dysfunctional, the problem works its way upstream. The upper end was going to feel these effects eventually, and that day of reckoning seems to be here now. (One assumes the giant mansions purchased for cash are less impacted by this).

The lower end of the market, with tax cuts, local incentives (i.e., California) and lots of distressed inventory driving prices down has seen an uptick in activity. But if we want to split real estate into two halves, I would suggest looking at the following pairs:

• Bubble States / Non-bubble states;

• Distressed/Non-Distressed Properties

• Underwater/Non-Underwater mortgages

I suspect this might provide a better read on the true state of local real estate markets.

I talked about this effect back at the end of May:

A 40-month supply of $750,000 homes on the market? That would be hysterical if it didn't mean these homes are going to continue to lose billions and billions in value. A bottom in the housing market? Please. The depression is raging.

As Barry says, the whole point of larger homes is that people trade up. They're no longer doing that, nor can they when they can't sell their old home and the price on their old home keeps falling, not to mention the price of the new home keeps falling. All that is delaying these trade ups, and breaking the chain that Barry described. As he said, people aren't trading up...they're trading down.

As long as that keeps happening, it's going to continue to depress the market. And it's going to be a damn long time before that part of the market stabilizes if there's a 3 year plus supply of McMansions on the market nationally.

We're not at the bottom yet. We still have a ways to go in housing and will for some time.

Cash For Clunkers Is Working, So Kill It

Republicans (and their Village enablers) are trying to convince you that the one part of the stimulus plan that is working beautifully has to die screaming.

Republicans say the problems with the program are another strike against the Obama administration as it pushes for a speedy overhaul of the health care system that would involve a government-run insurance program. They argue that government involvement in any industry is a recipe for disaster.

Senator Jim DeMint, Republican of South Carolina, said the “cash for clunkers” program was an example of the “stupidity coming out of Washington right now.”

“The federal government went bankrupt in one week in the used-car business, and now they want to run our health care system,” Mr. DeMint said in an interview on “Fox News Sunday.” “This is crazy to try to rush this thing through again while they’re trying to rush through health care, and they want to get on to cap-and-trade electricity tax. We’ve got to slow this thing down.”

They went "bankrupt" in one week because the program was overwhelmingly working, you idiot. It didn't have enough money in it. It was a stimulus program that stimulated the hell out of car sales. It was "targeted, timely and temporary." It actually worked. Of course the GOP wants to murder it. It proves that the Obama administration actually did something right for once.

We can't have that. With all the complaints that the stimulus money is not being spent fast enough, the Republican Party is now complaining that we need to slow the stimulus down. Wrap your head around that one.

Now try wrapping your head around Bill Kristol's reasoning why Cash For Clunkers must die:

Speaking on “Fox News Sunday,” William Kristol, the conservative editor of The Weekly Standard, said the rebates were going to middle-class people who would have eventually bought a new car anyhow.

Instead of helping the legions of unemployed, the money is going to a “bunch of upper-middle-class people who have some cars sitting around from 12 years ago,” Mr. Kristol said. “Now they’re just accelerating their purchase to get 4,500 bucks.”

Yep. Americans who used Cash For Clunkers are all "upper-middle class" and are now no longer "real" Americans. Make a note of that. They're just gaming the system, unlike Bill Kristol.

Why do Americans who buy cars trade in old cars to finance new ones hate America so much? Who would do such a thing?

And somehow, I'm thinking that a program to help people buy a big ticket item like a new car isn't exactly designed for the unemployed in the first place. Why would it be?

Or does Bill Kristol think you're that stupid?

Leon Panetta's Reality Problem

I didn't get a chance to discuss CIA Director Leon Panetta's op-ed piece in the WaPo on Sunday, so I'll lead off with it this morning.

The time has come for both Democrats and Republicans to take a deep breath and recognize the reality of what happened after Sept. 11, 2001. The question is not the sincerity or the patriotism of those who were dealing with the aftermath of Sept. 11. The country was frightened, and political leaders were trying to respond as best they could. Judgments were made. Some of them were wrong. But that should not taint those public servants who did their duty pursuant to the legal guidance provided. The last election made clear that the public wanted to move in a new direction.

Intelligence can be a valuable weapon, but it is not one we should use on each other. As the president has said, this is not a time for retribution. Debates over who knew what when -- or what happened seven years ago -- miss a larger, more important point: We are a nation at war in a dangerous world, and good intelligence is vital to us all. That is where our focus should be. The CIA has plenty of tools to fight al-Qaeda and its allies. Unlike the effort I canceled in June, our present tools are effective, we use them aggressively to go after our enemies, and Congress has been briefed on them.

In other words, we're seeing Panetta use the same argument that Bush officials and the Village used before him: 9/11! (So Shut Up Already.)

That would seem to me to be an argument for greater oversight, not less. But not in Panetta's world. He seems to think that electing a new President means we can't look at the last President's possible crimes, crimes aided and abetted by Panetta's CIA. Not only that, he's flat out warning Congress to back the hell off with the open threat "Intelligence can be a valuable weapon, but it is not one we should use on each other."

Instead of reforming the CIA as promised, Panetta has canceled a couple of egregiously illegal programs, and then said that Congress cannot investigate anything else...lest they want to have "intelligence used against" them. Panetta's been captured by his job and is now daring Congressional Democrats AND Republicans to try to keep going down this road.

BooMan has a definitive breakdown of Panetta's piece over at the Frog Pond:

The idea that these public servants limited themselves to ‘doing their duty pursuant to the legal guidance provided’ is a myth. Dozens of people are dead, and none of the ‘enhanced interrogations’ we’ve learned about were conducted within OLC guidelines. None. Even if they were, many of these interrogations still involved war crimes. But that is a distraction. People were murdered and tortured beyond any degree of ‘interpretation.’ They need to go to prison and so do their superiors.

Do read it, I'll add at this point that Panetta would only be able to say all this if he had tacit permission to do so from the President. That means this is the response to the Village warnings on last month's rumors of an Eric Holder DoJ investigation into torture. Obama seems to be saying through Panetta that he plans to drop Holder's investigations, but Congress needs to do the same.

The Village is more than happy to report this little tiff as well. Both sides get to save face here, no investigations go forward on Bush business, and all is well in the Washington swamps.

We'll see. Both the White House and Congress have a lot to lose it seems if too many more revelations come forth. Each side is afraid that they will be left holding the bag, that the DoJ investigation will finger Congress, and that Congress's investigation will finger Obama. It looks like Panetta is offering a truce.

Not like we Americans get a say in it however.

StupidiNews!

• Iran's Ahmadenijad has been endorsed by the country's Supreme Leader for his second term as President, despite protests.
• North Korea could be helping Myanmar's regime with nuclear technology.
• More states are considering taxing internet purchases, the latest is North Carolina.
• Israel's Foreign Minister will resign if he is indicted on corruption charges, a move that could break Israel's coalition government.
• The NYSE's new data center in New Jersey would significantly increase the amount of computer trading on the market.

Last Call

With all the crazy stuff going on in the world, at least it's good to know that Michael Phelps is still the man.

Michael Phelps and the U.S. 400-meter medley relay team closed the fastest meet in swimming history with an appropriate finish Sunday night - the 43rd world record.

Phelps earned his fifth gold medal of a world championships that showed he's still got plenty of motivation, even after winning a record eight times at the Beijing Olympics.

Swimming the butterfly leg, Phelps helped the U.S. pull away from Germany and Australia to win in 3 minutes, 27.28 seconds. That easily broke the mark set by the Americans at last summer's Olympics, 3:29.34.

Eric Shanteau, who overcame testicular cancer to swim his best times, picked up the first major gold medal of his career by taking the breaststroke leg, to go along with a silver and bronze in Rome. The other members of the winning team were backstroker Aaron Peirsol and David Walters, swimming the freestyle anchor.

Oh, and Tiger Woods won the Buick Open too.

It's almost like the universe is back to normal again. Almost.

New Gitmo, Same As The Old Gitmo

Via TalkLeft, the AP is reporting that the new improved replacement for Gitmo sounds...remarkably like Gitmo, only in Kansas or Michigan.

The Obama administration is looking at creating a courtroom-within-a-prison complex in the U.S. to house suspected terrorists, combining military and civilian detention facilities at a single maximum-security prison.

Several senior U.S. officials said the administration is eyeing a soon-to-be-shuttered state maximum security prison in Michigan and the 134-year-old military penitentiary at Fort Leavenworth, Kan., as possible locations for a heavily guarded site to hold the 229 suspected al-Qaida, Taliban and foreign fighters now jailed at the Guantanamo Bay detention camp in Cuba.

The officials outlined the plans — the latest effort to comply with President Barack Obama's order to close the prison camp by Jan. 22, 2010, and satisfy congressional and public fears about incarcerating terror suspects on American soil — on condition of anonymity because the options are under review.

The only problem is, as Jeralyn says:

So there are two classes of detainees the Administration plans to keep detained without charges or trial or after acquittal or a court-ordered release.

And closing Gitmo and reopening this place would be a completely useless gesture on President Obama's part, but hey, he'd be keeping that January 2010 promise.

None of the Gitmo detainees would have any rights still, but at least we won't have to fly detainees as far. Perhaps the guards could get Taco Bell or something, maybe that would keep them from going rogue with the battery cables. Needless to say, yet another President Odubya moment.

The Old Man Of The Village

Sen. John McCain has more helpful advice for the President. Some of it is actually worth listening to.

“I think they may have over-learned the lesson of the Clinton proposal in '93, where there were totally specific proposals.,” McCain said. “Now there's not enough. “At this point, I think the administration and the president has to be more specific."

Which, actually makes sense, and it's something I've been saying for a while now. Unfortunately, the rest of McCain's interview is filled with the usual GOP projectionist blather.

In an interview taped Friday on Capitol Hill, McCain said his general-election opponent is “not changing the climate in Washington” as promised.

McCain said he has “not seen” a “public option,” or government plan, he could support.

“The co-ops remind us all of Fannie Mae and Freddie Mac,” he told anchor John King. “And so I have not seen a public option that, in my view, meets the test of what would really not eventually lead to a government take over.”

King asked McCain if Obama has “failed the test he laid out at [an inaugural] dinner, to be truly bipartisan.”

“I'm afraid they have,” McCain replied. “And, look, they've got the votes. We understand that. They had the votes in the stimulus package, in the budget, in the omnibus, in the SCHIP [children’s health insurance], all this legislation. And they have picked off, sometimes, two or three Republicans.

“But that's not changing the climate in Washington. What that is, is exercising a significant majority. And so I respect their successes, but please don't call it changing the climate in Washington.”

Because 95% to 100% of the GOP voting against the President's agenda is all the President's fault, you see. Republicans taking responsibility for their own actions when there's an Obama to blame? Not going to happen. So the vicious attacks the GOP are launching are Obama's fault. They just have to call him a racist, you see.

In that way, I guess the GOP really has changed the climate in Washington. It's a poor excuse.

It's A Psycho-Birther Freakout

Frank Rich analyzes the Birther movement and comes up with a diagnosis that readers of ZVTS will be familiar with: there's a healthy chunk of the American population (particularly in the South) that is simply not capable of accepting minorities in positions of power, influence, and authority, and that some in the Village are going along with it as well.

Ground zero for this hysteria is Fox News, where Brit Hume last Sunday lamented how insulting it is “to be labeled a racist” in “contemporary” America. “That fact has placed into the hands of certain people a weapon,” he said, as he condemned Gates for hurling that weapon at a police officer. Gates may well have been unjust — we don’t know that Crowley is a racist — but the professor was provoked by being confronted like a suspect in the privacy of his own home.

What about those far more famous leaders in Hume’s own camp who insistently cry “racist” — and in public forums — without any credible justification whatsoever? These are the “certain people” Hume conspicuously didn’t mention. They include Rush Limbaugh and Newt Gingrich, both of whom labeled Sonia Sotomayor a racist. Their ranks were joined last week by Glenn Beck, who on Fox News inexplicably labeled Obama a racist with “a deep-seated hatred for white people,” presumably including his own mother.

What provokes their angry and nonsensical cries of racism is sheer desperation: an entire country is changing faster than these white guys bargained for. We’ve been reminded repeatedly during Gatesgate that Cambridge’s mayor is a black lesbian. But a more representative window into the country’s transition might be that Dallas County, Tex., elected a Latina lesbian sheriff in 2004 (and re-elected her last year) and that the three serious candidates for mayor of Houston this fall include a black man and a white lesbian.

Even Texas may be tinting blue, and as goes Texas, so will all but the dwindling rural minority of the Electoral College. Last month the Census Bureau released a new analysis of the 2008 presidential election results finding that increases among minority voters accounted for virtually all the five million additional votes cast in comparison to 2004. Black women had a higher turnout rate than any other group, and young blacks turned out at a higher rate than young whites.

It’s against this backdrop that 11 Republican congressmen have now signed on to a bill requiring that presidential candidates produce their birth certificates. This bizarre “birther” movement, out to prove that Obama is not a naturally born citizen, first gained notice in the summer of 2008 when it was being advanced by the author Jerome Corsi, a leader of the Swift boat assault on Kerry. That it revved up again as Gatesgate boiled over and Sotomayor sped toward Senate confirmation is not a coincidence.

Obama’s election, far from alleviating paranoia in the white fringe, has only compounded it. There is no purer expression of this animus than to claim that Obama is literally not an American — or, as Sarah Palin would have it, not a “real American.” The birth-certificate canard is just the latest version of those campaign-year attempts to strip Obama of his American identity with faux controversies over flag pins, the Pledge of Allegiance and his middle name. Last summer, Cokie Roberts of ABC News even faulted him for taking a vacation in his home state of Hawaii, which she described as a “foreign, exotic place,” in contrast to her proposed choice of Myrtle Beach, S.C., in the real America of Dixie.

And Rich is absolutely right. There really are Two Americas (to borrow a phrase), one where the reality is a black man is President, and the other where the reality is he's not, where his authority, power, and influence is simply not recognized as valid.

If you're capable of deluding yourself to that point in order to invalidate Barack Obama's legitimacy as President, then you're capable of a great many acts of reducing minorities as a whole to the status of invalid: invalid as authority figures, invalid as having rights, even invalid as being human.

And once you reach that level of delusion, you're then capable of a great many acts of hatred and anger...even of violence. This of course is my real fear, that as these idiots on FOX and other media outlets continue to stoke this hysteria that it will reach some sort of critical mass, and explode into something much darker and much more violent. The more it is fed, the larger it becomes, and the more likely it is to spiral out of control.

Eventually America is going to have to confront this head on and deal with it. But if anything, the last month or so has shown us that there are millions of Americans who aren't even close to being able to deal with this happening in their lifetimes yet.

We have a long, painful road ahead of us all. Pray it is not a road soaked in blood, as way too often this path has been in the past.

[UPDATE 11:41 AM] Via Steve Benen, the mathematical breakdown of last week's Daily Kos poll shows that white Southerners overwhelmingly have doubts about Obama's origins.

So what proportion of Southern whites doubt that Obama is an American citizen? While Ali did not release the racial breakdowns for the the South, and cautioned that the margin of error in the smaller sample of 720 people would be larger than the national margin of error (2 percent), the proportion of white Southern voters with doubts about their president’s citizenship may be higher than 70 percent. More than 30 percent of the people polled in the South were non-white, and very few of them told pollsters that they had questions about Obama’s citizenship. In order for white voters to drive the South’s “don’t know” number to 30 percent and it’s “born outside the United States” number to 23 percent, as many as three-quarters of Southern whites told pollsters that they didn’t know where Obama was born.

One thing to keep in mind, if only a quarter or a fifth of white Southerners believe Obama was born in the United States, that’s more than voted for him last year in some states. Obama won 14 percent of the white vote in Louisiana, 14 percent in Mississippi, and 10 percent in Alabama.

Food for thought.

Obamacare's Nuclear Option

Honestly, I'd like to know what game Carl Hulse of the NY Times is playing here with his article implying that The Legislative Procedure That Dare Not Speak Its Name, taking health care reform through the budget reconciliation process, is such a huge, dark secret. It's not.

With bipartisan health care negotiations teetering, Democrats are talking reluctantly — and very, very quietly — about exploiting a procedural loophole they planted in this year’s budget to skirt Republican filibusters against a health care overhaul.

They are talking reluctantly because using the tactic, officially known as reconciliation, would present a variety of serious procedural and substantive obstacles that could result in a piecemeal health bill. And they are whispering because the mere mention of reconciliation touches partisan nerves and could be viewed as a threat by the three Republicans still engaged in the delicate talks, causing them to collapse.

Yet with the discussions so far failing to produce an agreement, Democrats are exploring whether they could use the tactic as a last resort to secure a health care victory if they have to go it alone. The answer: It would not be pretty and it would not be preferable, but it could be doable.

No, reconciliation is not preferable. But it's something the Democrats have signaled they would be willing to use all the way back in April:

The deal was hatched late afternoon and last night, in a five-hour negotiating session at the office of Senate Majoriy Leader Harry Reid. A trio of White House officials were there: Rahm Emanuel, Peter Orszag, and Phil Schiliro. Also present, along with Reid, were House Budget Chairman John Spratt and Senate Budget Chairman Kent Conrad.

The reonciliation instruction specifies a date. That date, according to one congressional staffer, is October 15. (The original House reconciliation instruction had a late September deadline.)

In other words, the House and Senate each have until that day to pass health care legislation.

So the Republicans and the Democrats have both been working under this particular deadline since the process started.

But here's what really bothers me about the Times article: listening to Sen. Kent Conrad complain about reconciliation...a deal he signed on to back in April.

Mr. Conrad, who is one of the Democrats bargaining with Republicans, has been advising that fashioning a health care plan under byzantine reconciliation rules is a bad idea. From his perspective, a major impediment is the fact that the plans devised by the Senate finance and health panels would have to produce $2 billion in savings over five years and not add to the deficit after that.

Considering the upfront costs of trying to bring all Americans under the health insurance umbrella, and the fact that some of the structural health care changes that lawmakers are eyeing might not produce immediate savings, the deficit rules could severely limit the scope of a bill.

“You would have a very difficult time getting universal coverage in reconciliation,” Mr. Conrad said.

Here's a question I have for the Senator: Why do we even need reconciliation in the first place when Democrats have a huge margin in the house and 60 votes in the Senate? There should be no need for reconciliation: none whatsoever.

That is unless Democrats like Kent Conrad aren't committed to getting the President's goals into legislation and passing them in the bill. If that's the case, then Democrats have a bit of an issue.

Not to tell Rahmbo, Orszag and the Axe how to do their job, but any Democratic senator yammering on about the evils of reconciliation in the Village Press should have a big ol' target on them for some serious arm-twisting action over August. You want to know where to put those ad blitzes proclaiming ordinary Americans need health care reform?

Try North Dakota, for starters.

Just saying. Kent Conrad just might be a problem.