Economic Daily Outlook




‘Buffett Rule’ Tax Plan Fails in a Senate Test Vote

The Senate on Monday blocked the so-called Buffett Rule, a measure designed to ensure that high earners pay at least 30% in federal income tax, on a near-party-line vote highlighting the split over a key element of President Barack Obama’s election-year message.

The measure drew 51 votes, with 45 opposed, short of the 60 votes needed to advance.

Sen. Mark Pryor of Arkansas was the only Democrat to oppose the measure; Sen. Susan Collins of Maine was the only Republican to support it.

The vote came three days before the House is due to vote on a Republican proposal to cut small-business taxes by 20%.

Together, the moves show that both parties are eager to use tax policy to advance their arguments ahead of the fall election, with both shaping easy-to-understand proposals that the other side derides as simplistic and ineffective.



SEC, CFTC to finalize swap dealer definitions Wed

U.S. securities regulators announced late Monday they will vote on Wednesday to finalize rules that will define which companies will be dubbed swap dealers and face strict new regulations.

The announcement by the Securities and Exchange Commission ends a long-running delay prompted by disagreements with the Commodity Futures Trading Commission over how to craft the rule. The rule must be jointly approved by both regulators.

The CFTC is also planning to vote on the rule on Wednesday morning.

The 2010 Dodd-Frank Wall Street overhaul law requires the SEC and CFTC to impose a series of stringent new regulatory requirements on companies such as Goldman Sachs and Morgan Stanley, which deal heavily in derivatives products.

Any company dubbed a dealer or major trader of swaps will be required to set aside more capital and margin. Dealers will also be subject to new business conduct standards.



Medical malpractice redux in the House

The House Judiciary Committee will mark up medical malpractice legislation on Tuesday, even though the full House passed identical legislation just last month.

Huh, you ask?

That’s right. After passing legislation capping non-economic damages at $250,000 as part of their effort to repeal the healthcare reform law’s cost-cutting Independent Payment Advisory Board, House Republicans are at it again — this time without the IPAB.

The reason: money. Marking up the tort reform bill would allow the committee to claim $41 billion in savings to the deficit over the next 10 years — more than enough to meet the the committee’s $39 billion savings requirement under the House Republican budget.

The move is raising some hackles, even on the right.



Obama to announce crackdown on oil market manipulation

President Barack Obama will announce a plan on Tuesday to increase oversight and “crack down” on oil market manipulation, the White House said.

Obama will make a statement in the White House Rose Garden about the issue at 11:10 a.m. EDT (1510 GMT).

The move is the latest attempt by Obama to address the issue of high gasoline prices, which are hurting Americans and could threaten his re-election in November.

“At a time when American consumers are feeling pain at the pump, it is critically important to ensure that illegal manipulation, fraud and market rigging are not contributing to gas price increases,” the White House said in a statement.



Sluggish Pace for Race to Top Spending

Almost two years into the federal Race to the Top program, states are spending their shares of the $4 billion prize at a snail’s pace—a reflection of the challenges the 12 winners face as they try to get ambitious education improvement plans off the ground.

Through the end of March, the 11 states and the District of Columbia had spent just 14 percent of their Race to the Top money, with New York, Rhode Island, and Hawaii spending the least as the midpoint of the four-year grants approaches, an Education Week analysis of federal spending reports shows.

And so far, the reports show, the bulk of the early money that states have spent outside their own education departments—which are still reeling from severe budget cuts prompted by the recession—has gone to consultants.



EDITORIAL: Afghanistan’s Bloody Spring The Taliban unleashed a splashy attack on the weekend, and it was rebuffed with few allied casualties. The attack’s real target wasn’t so much Kabul as Washington, however, and on that front it gathered the usual overwrought headlines. This would be a good moment for the Commander in Chief to speak up for his own military surge.

The American people tell pollsters they’re souring on the Afghan war, and no wonder. It’s hard to tell if President Obama still supports it. He rarely mentions a conflict in which 90,000 Americans are risking their lives. His last major speech on Afghanistan was a June 2011 announcement that he was pulling back early on his surge of 30,000 troops, withdrawing them this year.

When he is asked about Afghanistan, Mr. Obama repeats his commitment to steady U.S. withdrawals ahead of the 2014 handover to the Afghans, rather than to American military success. He seems trapped by one of his signature re-election campaign lines: “The tide of war is receding.”