Alan Blinder, a former Federal Reserve vice chairman who is an economics professor at Princeton University, talks with Bloomberg’s Mark Crumpton and Julie Hyman about the outlook for an overhaul of financial regulation in the U.S. Blinder also discusses the Financial Crisis Inquiry Commission.

Watch it all (8 minutes in all).

Sen. Bob Corker (R-Tenn.) ”” a member of the Senate Banking Committee ”” sent a letter to Treasury Secretary Tim Geithner Monday with a list of questions regarding what the Republican called a “blank check” to Fannie Mae and Freddie Mac.

In the letter, Corker criticized the Treasury’s removal of a cap on credit available to the two government-backed firms that were in at the nexus of the mortgage crisis.

“On Dec. 24, 2009, the United States Department of the Treasury announced amendments to the Preferred Stock Purchase Agreements it has with the government-sponsored enterprises Fannie Mae and Freddie Mac. Those amendments removed the $200 billion per enterprise cap ($400 billion total) and, in effect, wrote a blank check for the amount of ‘credit’ that will be made available to the two mortgage giants,” the letter reads.

Read it all.

Passage of the health-care bill will be, for the administration, a catastrophic victory. If it is voted through in time for the State of the Union Address, as President Obama hopes, half the chamber will rise to their feet and cheer. They will be cheering their own demise.

If health care does not pass, it will also be a disaster, but only for the administration, not the country. Critics will say, “You didn’t even waste our time successfully.”

What a blunder this thing has been, win or lose, what a miscalculation on the part of the president. The administration misjudged the mood and the moment. Mr. Obama ran, won, was sworn in and began his work under the spirit of 2008””expansive, part dreamy and part hubristic. But as soon as he was inaugurated ,the president ran into the spirit of 2009””more dug in, more anxious, more bottom-line””and didn’t notice. At the exact moment the public was announcing it worried about jobs first and debt and deficits second, the administration decided to devote its first year to health care, which no one was talking about. The great recession changed everything, but not right away.

In a way Mr. Obama made the same mistake President Bush did on immigration, producing a big, mammoth, comprehensive bill when the public mood was for small, discrete steps in what might reasonably seem the right direction.

Read it all from today’s Wall Street Journal.

This is the culmination of an unprecedented policy disaster, inflicted on the American taxpayer by congressional supporters of Fannie and Freddie who refused over many years to approve new and tougher regulations for the two GSEs. Now that many of these folks are in charge of the House and Senate committees that deal with financial reform, they have suddenly found new respect for regulation and are trying to apply it to the entire financial system. Perhaps the American taxpayers, acting as voters in 2010, will decide that one disaster per career is all they should be allowed.

Read it all.

In the nation’s capital, where $12.1 trillion of national debt looms and Democratic President Barack Obama’s projected 2010 budget shortfall is expected to hit $1.26 trillion, a bill is pending to establish up to $3,500 in annual tax deductions for the family pet.

The legislation is known as the HAPPY Act – Humanity and Pets Partnered Through the Years – and it has some support.

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American presidents, it is often said, have about a year to make their mark ”“ enact a major piece of legislation that then shapes and defines the rest of their term in office. Failure to choose the right weapons, or the right turf, can be fatal.

Barack Obama has at times struggled to find a cause he can truly make his own. He seemed to take on too many issues at once, from Middle Eastern peace to climate change, without demonstrating that he had a clear strategy to carry them through. With the Senate’s passage of his bitterly contested healthcare bill, the clouds have lifted a little. Just in time for the Christmas break, the President can afford to wipe the sweat from his brow and contemplate his holiday with some satisfaction.

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The final vote was 60-39 and came along party lines (as did each of the first five procedural votes that took place earlier this week).

Senator Jim Bunning (R-KY) was the lone Senator not to vote.

Thursday’s vote — which comes on the first Senate session on Dec. 24 in more than five decades — will bring Democrats closer than ever to realizing their 70-year-old goal of universal health coverage.

For the first time, most Americans would be required to obtain health insurance, either through their employer or via new, government-regulated exchanges. Those who can’t afford insurance plans would receive federal subsidies. And Medicaid would be vastly expanded to reach millions of low-income children and adults.

Difficult issues must be still resolved in final negotiations with the House, which has passed more liberal health-care reform legislation, and those talks could stretch through January and perhaps into February, Democratic leaders said. But Democrats are increasingly confident that President Obama would sign a bill into law in early 2010.

“Health care reform is not a matter of ‘if,’ ” White House spokesman Robert Gibbs told reporters Wednesday. “Health care reform now is a matter of ‘when.’ ”

Senate Majority Leader Harry Reid declared after Wednesday’s vote that: “We stand on the doorstep of history.” But he declined to speculate about negotiations with the House.

Read it all.

[Robert] SIEGEL: Mr. President, some people have faulted this whole process for not focusing enough on how medicine is practiced in the U.S. and our appetite for lots of tests and the like. I want to ask about a recent, coincidental event, which would be the new guidelines on mammography. They suggested that we’ve been testing too much and it would be better to get tested less. There was an outcry. Your own secretary of HHS backed away from the new recommendations. What does that say to you about how best practices can actually be instituted in the country?

{President] OBAMA: Well, I think what it says, No. 1, is that we still have a tendency to think that more medicine is often ”” is automatically better medicine. And that’s just not the case. Inside this reform bill that I’m pushing is a provision that has a panel of experts ”” doctors, medical experts ”” who are going to look at all these practices to start changing how we think about medicine.

SIEGEL: Will politicians defer to their judgments ”” to their scientific judgments?

OBAMA: Well, one of my goals is to make sure that doctors and scientists are giving the best information possible to other doctors who are seeing patients. Look, if you talk to most health care economists right now, they will tell you that every good idea out there, when it comes to improving quality of care and reducing costs of care, are embedded in this bill. It’s not going to happen overnight because we’re going to have to change both how doctors think about health care and how patients think about health care.

And there are going to be millions of small decisions all across the country and interactions between doctors and patients that, over time, change the trajectory of our health care system. The important point is that we’re getting started in this process. And I’m actually very confident that the average person is going to say to themselves, if, right now, I’m taking and paying for five tests and my doctor tells me that I only need one, that person’s going to want to take one ”” save some money and save some time. But they need some validation. They need somebody who’s giving them the better information. And we have set up a system where, year after year, best practices are going to get disseminated across the country.

Read or listen to it all.

The Senate’s healthcare bill is fatally flawed, a senior Democrat atop a powerful committee said on Wednesday.

Rep. Louise Slaughter (D-N.Y.), the chairwoman of the House Rules Committee and co-chairwoman of the Congressional Pro-Choice Caucus, said that the Senate’s bill is so flawed that it’s unlikely to be resolved in conference with the bill to have passed the House.

“The Senate health care bill is not worthy of the historic vote that the House took a month ago,” Slaughter wrote in an opinion piece for CNN’s website.

Read it all.

Rep. Bart Stupak (D-Mich.) said the White House and the Democratic leadership in the House of Representatives have been pressuring him not to speak out on the “compromise” abortion language in the Senate version of the health care bill.

“They think I shouldn’t be expressing my views on this bill until they get a chance to try to sell me the language,” Stupak told CNSNews.com in an interview on Tuesday. “Well, I don’t need anyone to sell me the language. I can read it. I’ve seen it. I’ve worked with it. I know what it says. I don’t need to have a conference with the White House. I have the legislation in front of me here.”

The Michigan Democrat succeeded last month in getting 64 House Democrats to join him in attaching his pro-life amendment to the House version of the health-care bill. The “Stupak amendment,” as the provision is known, would prohibit the federal government from allocating taxpayer money to pay for any part of any health insurance plan that covers abortion except in cases of rape, incest, or when the life of the mother is in danger.

Read it all.

Americans will feel the pain before the gain from the health care overhaul Democrats are close to pushing through Congress.

Proposed taxes and fees on upper-income earners, insurers, even tanning parlors, take effect quickly. So would Medicare cuts.

Benefits, such as subsidies for lower middle-income households, consumer protections for all and eliminating the prescription coverage gap for seniors, come gradually.

“There’s going to be an expectations gap, no question about that,” said Drew Altman, president of the nonpartisan Kaiser Family Foundation. “People are going to see their premiums and out-of-pocket costs go up before the tangible benefits kick in.”

Read it all.

[U.S. House Majority Whip Jim] Clyburn said the high-profile deal that Nebraska Sen. Ben Nelson reached to have the federal government pay 100 percent for Medicaid expansion in his state will help land South Carolina a better deal during the conference negotiations.

Nelson was given the perk in return for agreeing to vote for the bill. Nelson’s vote all but assures the bill’s final passage later this week.

Other states would receive reimbursements worth 91 percent. Clyburn said he will be a party to the conference negotiations and he will push for states to receive a 95 percent return for the life of the bill, but he cannot guarantee he will get it.

“Rather than carping on this, I think it opens the door for other states to demonstrate need for similar treatment when you get to the conference,” Clyburn said.

Read it all.

The State of the Union typically takes place on the third Tuesday of January, which would be Jan. 19.

But it’s unclear whether negotiators will be able to smooth out significant disagreements in such a short time.

Congress traditionally does not reconvene until the week of the president’s address but leaders may bring their colleagues back to work early to get a jumpstart on remaining legislative work before election-year politics begins to intervene….

[Max] Baucus said differences over how to pay for new federal health insurance subsidies and limits on abortion coverage are two of the biggest obstacles.

The House legislation would pay for a large portion of its benefits by imposing a tax surcharge on individuals who earn more than $500,000 and families earning over $1 million.

The Senate bill would instead tax high-cost insurance plans and raise the Medicare payroll tax on individuals earning over $200,000 and families earning more than $250,000.

Read it all.

The manager’s amendment is light years removed from the Stupak-Pitts Amendment that was approved by the House of Representatives on November 8 by a bipartisan vote of 240-194. The new abortion language solves none of the fundamental abortion-related problems with the Senate bill, and it actually creates some new abortion-related problems.

NRLC will score the upcoming roll call votes on cloture on the Reid manager’s amendment, and on the underlying bill, as votes in favor of legislation to allow the federal government to subsidize private insurance plans that cover abortion on demand, to oversee multi-state plans that cover elective abortions, and to empower federal officials to mandate that private health plans cover abortions even if they do not accept subsidized enrollees, among other problems.

Read it all.

Bishops William F. Murphy of Rockville Centre, N.Y., and John C. Wester of Salt Lake City, who chair the committees on Domestic Justice and Human Development and on Migration, respectively, joined Cardinal DiNardo in the Dec. 19 statement.

Although praising the manager’s amendment for including Casey’s expansion of adoption tax credits and assistance for pregnant women, the statement cited two remaining problems:

— “It does not seem to allow purchasers who exercise freedom of choice or of conscience to ‘opt out’ of abortion coverage in federally subsidized health plans that include such coverage. Instead it will require purchasers of such plans to pay a distinct fee or surcharge which is extracted solely to help pay for other people’s abortions.

— “The government agency that currently manages health coverage for federal employees will promote and help subsidize multi-state health plans that include elective abortions, contrary to longstanding law governing this agency.”

Read it all.

The healthcare reform bill that will go to the vote on the US Senate floor this week falls well short of Barack Obama’s original vision.

As the president took office at the beginning of this year, he laid out a plan for reform including a robust “public option” for a nationwide government-backed scheme that would inject a bolt of competition into the inefficient medical insurance market.

Instead, he is set next month to sign into law a bill that, while dramatically expanding healthcare insurance coverage, will largely leave insurance in the hands of private companies.

Read it all.

The American Medical Association today endorsed the $871 billion, 10-year Senate health care bill.

“This bill advances many of our priority issues for achieving the vision of a health system that works for patients and physicians,” Cecil Wilson, the association’s president-elect, said in a statement he read at a news conference attended by several Democratic senators.

Sen. Chris Dodd, D-Conn., who attended the news conference, called the endorsement “the most important,” because of the “fundamental relationship between a patient and his doctor.”

Read it all.

Despite last-minute efforts to improve the language on abortion and conscience rights in the Senate’s proposed health care reform bill, the U.S. bishops oppose its passage.

This was affirmed in a statement released Saturday by Cardinal Daniel DiNardo of Galveston-Houston, chairman of the conference’s Committee on Pro-Life Activities; Bishop John Wester of Salt Lake City, chair of the bishops’ Committee on Migration; and Bishop William Murphy of Rockville Centre, New York, chair of the Domestic Policy Committee.

The prelates acknowledge the “good faith” efforts of several Senators in proposing changes to the bill, as well as several positive points of the Manager’s Amendment that was proposed Saturday.

Read the whole article.

The health-care debate in the Senate has, thankfully, returned to the paramount issue of cost. Unfortunately, the most obvious, time-tested and feasible approach to providing high-quality care at reasonable cost remains excluded from consideration.

The irony is that President Obama and a number of legislators have lauded the work of approximately 30 health-care organizations, caring for about 6 percent of the population, that for decades have provided care reliably better than average at lower cost. These are the “group employed models,” or GEMs, such as Geisinger Health System, the Marshfield Clinic, Kaiser Permanente, the Mayo Clinic and the Cleveland Clinic. Two of these GEMs — the Cleveland Clinic and the Mayo Clinic — have been ranked among U.S. News and World Report’s top five hospitals in the country. And shouldn’t all Americans have access to such better and cheaper care?

Most health-care organizations are run on a “fee-for-service” model. GEM organizations are different in that their physicians are employed, they are physician-led, and they work closely together and share information.

Read it all.

Obama’s overhaul would also change how private firms insure workers. Perhaps 18 million workers could lose coverage and 16 million gain it, as companies adapt to new regulations and subsidies, estimates The Lewin Group, a consulting firm. Private insurers argue that premiums in the individual and small group markets, where many workers would end up, might rise an extra 25% to 50% over a decade.

The administration and the CBO disagree. The dispute underlines the bills’ immense uncertainties. As for cost control, even generous estimates have health spending growing faster than the economy. Changing that is the first imperative of sensible policy.

So Obama’s plan amounts to this: partial coverage of the uninsured; modest improvements (possibly) in their health; sizable budgetary costs worsening a bleak outlook; significant, unpredictable changes in insurance markets; weak spending control. This is a bad bargain. Benefits are overstated, costs understated.

This legislation is a monstrosity; the country would be worse for its passage. What it’s become is an exercise in political symbolism: Obama’s self-indulgent crusade to seize the liberal holy grail of “universal coverage.” What it’s not is leadership.

Read it all.

While welcoming a “good-faith effort” by Sen. Robert Casey to improve the treatment of abortion in the Senate’s health reform legislation, the chairman of the U.S. bishops’ Committee on Pro-Life Activities said a “fundamental problem” remains that makes the bill morally unacceptable.

Cardinal Daniel N. DiNardo of Galveston-Houston said the U.S. Conference of Catholic Bishops would continue to oppose the Senate legislation “unless and until” it is amended to “comply with long-standing Hyde restrictions on federal funding of elective abortions and health plans that include them.”

Casey, a Catholic Democrat from Pennsylvania, has proposed language that he says would permit individuals to opt out of abortion coverage in any policy offered in a health-care exchange and would require segregation of funds in the exchange so that federal subsidies are not used to pay for abortions.

Read it all.

David Axelrod, an adviser to President Barack Obama, predicted health-care legislation would pass “soon,” after Senate Democrats on Saturday secured the 60 votes needed to clear a path for quick Senate passage of the measure.

“We’re right on the one-yard line” with Senate Democrats reaching a deal, Mr. Axelrod said on CNN’s “State of the Union” which aired Sunday. “I believe this is going to happen soon”¦. People understand we’re on the doorstep of doing something really historic that will help the American people and strengthen our country for the long run.”

Senate Majority leader Harry Reid secured the pivotal 60th vote after a late-night deal on abortion coverage locked in the support of Nebraska Sen. Ben Nelson. The agreement capped weeks of negotiations aimed at building consensus on the White House-backed initiative.

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Thirty million people without health insurance stand to gain coverage under a deal announced on Saturday by Senate Democrats.

To get the 60 votes needed to pass their bill, Democrats scrapped the idea of a government-run public insurance plan, cherished by liberals, and replaced it with a proposal for nationwide health plans, which would be offered by private insurers under contract with the government.

The legislation also includes a proposal that would limit insurance coverage of abortion. The provision, which was the last piece of the puzzle to fall into place, was negotiated by the Senate majority leader, Harry Reid, Democrat of Nevada, to win the support of Senator Ben Nelson, Democrat of Nebraska, who is an opponent of abortion.

Under the agreement, states could choose to prohibit abortion coverage in the insurance markets, or exchanges, where most health plans would be sold.

Read it all.

The U.S. Senate’s health-care overhaul plan would almost double a proposed increase in Medicare payroll taxes for high-earners and impose a new tax on indoor tanning, replacing an earlier levy on plastic surgery.

The new version of the bill announced today by Senate Majority Leader Harry Reid contains a 0.9 percentage-point increase in the Medicare tax for individuals who earn more than $200,000 and couples earning more than $250,000, according to an estimate by the nonpartisan Joint Committee on Taxation. The increase would start in 2013.

That would generate $86.8 billion over six years, up from about $50 billion that would have been generated by an earlier proposed increase of 0.5 percentage point. Those affected would pay a Medicare tax rate of 2.35 percent, while their employers would continue to pay 1.45 percent.

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Sen. Ben Nelson (Neb.), the final Democratic holdout on health care, announced to his caucus Saturday morning that he would support the Senate reform bill, clearing the way for final passage by Christmas.

“We’re there,” said Sen. Kent Conrad (D-N.D.), as he headed into a special meeting to outline the deal.

Democratic leaders spent days trying to hammer out a deal with Nelson, and worked late Friday night with him on abortion coverage language that had proved the major stumbling block. Nelson also secured other favors for his home state.

Under the new abortion provisions, states can opt out of allowing plans to cover abortion in insurance exchanges the bill would set up to serve individuals who don’t have employer coverage. Plus, enrollees in plans that do cover abortion procedures would pay for the coverage with separate checks – one for abortion, one for rest of health-care services.

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When Senate Democratic leaders agreed this week to remove a public insurance plan from their massive healthcare bill, they did more than quash a liberal dream of expanding the government safety net. They effectively pinned their hopes of guaranteeing coverage to all Americans on a far more conventional prescription: government regulation.

The change sprang from a compromise made to placate conservative Democrats wary of a new government program. But shorn of a “public option,” the Senate healthcare bill has reverted to a long-established practice of leveraging government power to police the private sector, rather than compete with it.

Despite the resistance among Republicans and conservatives to more government regulation, even the insurance industry has agreed to broad new oversight of their business in exchange for the prospect of gaining millions of new customers.

Read the whole article.

A moderate Democrat whose vote could be crucial said Thursday an attempted Senate compromise on abortion is unsatisfactory, raising doubts about whether the chamber can pass President Barack Obama’s health care overhaul by Christmas.

“As it is, without modifications, the language concerning abortion is not sufficient,” Nebraska Sen. Ben Nelson, a key holdout on the health care bill, said in a statement after first making his concerns known to Majority Leader Harry Reid, D-Nev.

Nelson said there were positive improvements dealing with teen pregnancy and adoption, and that he was open to further negotiations. But in a radio interview earlier in the day with KLIN in Lincoln, Nebraska, Nelson also said that abortion wasn’t his only concern and he didn’t see how the Christmas deadline was achievable.

Read it alll.

Major procedural reforms will be needed as well. One essential step is the implementation of “pay-as-you-go” rules, which require that all increases in spending or tax cuts be financed by savings elsewhere in the budget. The statutory creation of a “fiscal future commission”””modeled on the Defense Base Closure and Realignment Commission, a federal body whose recommendations are subject to an up-or-down vote in Congress””could represent a major breakthrough. It might even be time to reconsider passing a balanced-budget amendment to the US Constitution, a provision that exists in nearly all US states and is now being pursued in a somewhat analogous form by the European Union. Whatever the specific policy approach, the underlying objective should be to create a system that will achieve a balanced budget over the course of the economic cycle.

A responsible fiscal policy would permit the Federal Reserve to run a relatively easy monetary policy, which would hold down interest rates and prevent overvaluation of the dollar. If the Obama administration is looking for a historical model, it should aim to replicate the Clinton-Greenspan policy of the late 1990s (a mix of budget surpluses and low interest rates) rather than the Reagan-Volcker policy of the early 1980s (a mix of large deficits and high interest rates).

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The latest calculation of the National Debt as posted by the Treasury Department has – at least numerically – exceeded the statutory Debt Limit approved by Congress last February as part of the Recovery Act stimulus bill.

The ceiling was set at $12.104 trillion dollars. The latest posting by Treasury shows the National Debt at nearly $12.135 trillion.

A senior Treasury official told CBS News that the department has some “extraordinary accounting tools” it can use to give the government breathing room in the range of $150-billion when the Debt exceeds the Debt Ceiling.

Read it all.