USA > History > 2010 > Politics > Congress

House of Representatives (I)

Eye on China,

House Votes

for Greater Tariff Powers

September 29, 2010
The New York Times
By DAVID E. SANGER
and SEWELL CHAN

WASHINGTON — The House of Representatives sent an unusually confrontational signal to the Chinese leadership on Wednesday, voting overwhelmingly to give the Obama administration expanded authority to impose tariffs on virtually all Chinese imports to the United States.

The move, which could affect more than $300 billion in goods this year, was made in retaliation for the country’s refusal to revalue its currency.

The bill passed 348 to 79 and included the support of 99 Republicans, a highly unusual bipartisan vote at a time when large numbers of House Republicans have rarely joined Democrats on an economic issue. House Speaker Nancy Pelosi, who has long pressed China trade issues, personally gaveled the vote closed. Nonetheless, prospects for Senate approval are unclear.

The action was intended to hand President Obama new leverage in what has become a major flashpoint between the world’s two largest economies. While tariffs have been placed on specific products, like steel and tires, because of evidence of unfair export subsidies, the threat of putting sizable tariffs on a country’s entire line of exports to the United States is highly unusual — and, some argue, of dubious legality under international trade law.

It reflects both election-year politics over a loss of American jobs and great frustration over unfulfilled promises by China to allow its currency to rise in value, which would make Chinese goods less competitive in the United States.

The Obama administration never took an emphatic position on the legislation and some officials say that, if passed, signed into law and challenged at the World Trade Organization, it might well be struck down. But this is a case where the symbolism may be more important than the legal niceties, and for that reason, the White House has been of two minds about the bill.

Mr. Obama has tried to use the rising public anger over China’s trade advantage to argue to Chinese leaders that the United States would no longer tolerate deliberate currency manipulation, a point Mr. Obama made repeatedly in a meeting last week with Wen Jiabao, China’s prime minister. He did so again on Wednesday in Des Moines, where one businessman asked the president about the issue.

“The reason that I’m pushing China about their currency is because their currency is undervalued,” he said, adding: “People generally think that they are managing their currency in ways that make our goods more expensive to sell and their goods cheaper to sell here. And that contributes — that’s not the main reason for our trade imbalance — but it’s a contributing factor to our trade imbalance.”

But in conversations with Congress, the Treasury secretary, Timothy F. Geithner, and other officials have warned of the danger of touching off a trade war, in which China blocks American goods in retaliation, that could hurt both economies.

The risks go beyond trade. Mr. Obama is pressing China for help on cutting exports to Iran, managing a dangerous leadership transition in North Korea and some kind of accord on curbing carbon outputs that contribute to global warming. He is also coming up with what one senior administration official called on Tuesday “new rules of the road” over disputed maritime territory.

But in Beijing, and on Capitol Hill, all that pales in comparison to the currency dispute, which is often portrayed in the Chinese news media as an effort to curb China’s growth, and thus its power.

Eswar S. Prasad, a professor of trade policy at Cornell, called the legislation “a shot across the bow that indicates a clear escalation from overheated rhetoric about Chinese currency policy to more substantive action.”

While it is unlikely there will be a trade war, he said, “there is now a real risk that a cycle of tit-for-tat trade sanctions could spin out of control and cause some real, if not lasting, damage.”

Under the bill, Mr. Obama would not have personal control to turn sanctions on or off. The legislation would make it easier for the Commerce Department to place duties on imports from countries that have “fundamentally undervalued” currencies — defined as “protracted, large-scale intervention” in foreign exchange markets; an undervaluation of at least 5 percent; persistent global current account surpluses; and “excessive” foreign asset reserves.

Traditionally, only direct subsidies to an industry, rather than the indirect help that comes from an undervalued currency, have been considered a reason for retaliatory tariffs. Because so many countries have managed their currency rates for so long, it is unclear that the W.T.O. would uphold any American efforts to make the manipulation of a currency a justification for action.

While the bill did not mention China by name, the criteria were clearly written with China, the largest creditor of the United States, in mind.

In response, the official Xinhua news agency quoted China’s commerce ministry spokesman, Yao Jian, as saying: “Starting a countervailing investigation in the name of exchange rates does not conform with relevant W.T.O. rules.”

So far the administration has been reluctant to pursue retaliation against China. The Treasury Department has repeatedly declined to formally declare China a currency manipulator. And last month, the Commerce Department decided not to investigate allegations that China’s currency practices amounted to an improper export subsidy.

“The United States does not gain leverage in these negotiations by doing things China doesn’t find credible,” said Marc L. Busch, a political scientist at Georgetown. “The Chinese are aware that this is just not going to fly.”

But the Obama administration may have few other options and few allies. Europeans are largely uninterested in the problem: the euro has weakened because of the sovereign debt crisis, limiting European incentives to get involved. Japan is intensely interested, and this month intervened in the currency markets for the first time since 2004, moving to devalue the yen unilaterally.

But in the House, the politics of the moment seemed more important than the long-run economic strategy of managing economic relations with China.

Representative Sander M. Levin, Democrat of Michigan and chairman of the House Ways and Means Committee, said that “China’s persistent manipulation of its currency” had resulted in a “tilted field of competition” and the loss of as many as 1.5 million American jobs.

“This manipulation is one of the causes of outsourcing of our jobs — manufacturing and other good jobs,” he said. “Talk hasn’t worked.”

The top Republican on the committee, Representative Dave Camp of Michigan, said that the Obama administration had been insufficiently engaged in securing international pressure on the Chinese; that the bill would not promote Mr. Obama’s goal of doubling American exports over five years; and that other issues — like China’s tolerance for violations of intellectual property rights — were as significant as the currency undervaluation. Even so, Mr. Camp said, “I will vote for this bill because it signals to China that Congress’s patience is running out.”

    Eye on China, House Votes for Greater Tariff Powers, NYT, 29.9.2010, http://www.nytimes.com/2010/09/30/business/30currency.html

Bush Aide Calls Some C.I.A. Methods Unauthorized

July 15, 2010
The New York Times
By CHARLIE SAVAGE and SCOTT SHANE

WASHINGTON — A former Bush Justice Department official who approved brutal interrogation methods by the C.I.A. has told Congress that he never authorized several other rough tactics reportedly inflicted on terrorism suspects — including prolonged shackling to a ceiling and repeated beatings.

In closed-door testimony before the House Judiciary Committee on May 26, the former official, Judge Jay S. Bybee, said the Central Intelligence Agency never sought approval for some practices detainees later said had been used on them, including dousing them with cold water to keep them awake and forcing them to wear diapers or soil themselves.

“Those techniques were not authorized,” he said, according to a transcript released Thursday by the committee.

But Judge Bybee strongly defended the legal advice he did provide to the C.I.A. in 2002 that waterboarding, wall slamming and other methods used by C.I.A. were lawful.

“We took a muscular view of presidential authority,” Judge Bybee said, “We were offering a bottom line to a client who wanted to know what he could do and what he couldn’t do. I wasn’t running a debating society, and I wasn’t running a law school.”

Judge Bybee’s views, described in a daylong sworn interview, represented his most expansive public comments to date about his role in one of the most controversial episodes of the Bush administration.

In his newly disclosed testimony, Judge Bybee made clear that he had no first-hand knowledge of what actually had occurred in interrogations. But he was asked about treatment of detainees described in a 2004 C.I.A. inspector general report and accounts that several prisoners provided to the International Committee for the Red Cross.

The question of which interrogation techniques were approved by the Justice Department and which were not is at the core of a criminal investigation of the C.I.A.’s interrogation program.

In August 2009, when Attorney General Eric H. Holder Jr. announced the inquiry, he said the Justice Department would not prosecute anyone for following the legal guidance given by the department’s Office of Legal Counsel, as a C.I.A. spokesman, George Little, pointed out.

Mr. Holder assigned the investigation to John H. Durham, a veteran federal prosecutor in Connecticut who since 2008 had been reviewing the destruction by the C.I.A. of interrogation videotapes to see if any laws were broken. Mr. Durham has yet to produce any conclusions about either matter and his spokesman declined to comment on Thursday.

Judge Bybee ran the Office of Legal Counsel from late 2001 to 2003 — a time when it provided crucial advice about the treatment of detainees taken in the war against Al Qaeda and the Taliban. Much of that advice was written by a deputy, John Yoo, but Judge Bybee signed off on it.

Their legal memorandums were still secret when President George W. Bush appointed Judge Bybee to the federal appeals court in San Francisco. But in 2004, after the Abu Ghraib torture scandal, several of the memorandums were leaked to the news media.

The memorandums sparked intense controversy, and Judge Bybee’s successors in the Bush administration withdrew several of them. They were also heavily criticized by legal scholars, and some critics have called for Mr. Yoo to be fired from the University of California, Berkeley, where he is a tenured law professor, and for Judge Bybee to be impeached.

A five-year investigation by the Justice Department’s ethics office sharply criticized the memorandums and found, in a report disclosed this year, that the two men had committed “professional misconduct.” But that finding was rejected by David Margolis, a career lawyer at the Justice Department who made a final ruling on the ethics review. Mr. Margolis said the work of Judge Bybee and Mr. Yoo had “significant flaws,” but said that any assessment should consider the climate of fear and urgency after the Sept. 11, 2001, attacks.

Judge Bybee provided few new details about the construction of those memorandums in his testimony, and frequently said he could not recall conversations and meetings about them. He did say that when he briefed Attorney General John Ashcroft about the memorandums, “the attorney general said something to the effect that he was sorry that this was necessary.”

Much of the day consisted of Judge Bybee defending his legal conclusions.

Read quotations criticizing the memorandums from his successor at the Office of Legal Counsel — Jack Goldsmith, a Bush appointee who is now a Harvard law professor — Judge Bybee said that Mr. Goldsmith and other such critics had “misinterpreted and misread” the documents and noted that lawyers frequently disagreed.

He emphasized that his Republican successors did not reject the specific list of interrogation techniques — including waterboarding — that he had concluded could be lawfully inflicted on prisoners. In retrospect, Judge Bybee said he wished that a section in one memorandum — concluding that the president, as commander in chief, had the constitutional authority to override statutes regulating interrogations — had been written in a more “complete” manner, but he did not think it was wrong.

Judge Bybee also challenged news accounts of a dinner in May 2007 with former clerks at which he said he was proud of his work as a judge but then added, according to several witnesses, “I wish I could say that of the prior job I had.”

In his testimony, Judge Bybee said that remark was meant as “a jocular comment.” He said he was “proud of our opinions” at the Office of Legal Counsel, too, calling them “well researched” and “very carefully written.”

Still, he said the controversy surrounding his tenure there had been difficult.

“I have regrets because of the notoriety that this has brought me,” he said. “It has imposed enormous pressures on me both professionally and personally. It has had an impact on my family. And I regret that, as a result of my government service, that that kind of attention has been visited on me and on my family.”

    Bush Aide Calls Some C.I.A. Methods Unauthorized, 15.7.2010, http://www.nytimes.com/2010/07/16/us/politics/16interrogation.html

Companies Find Ways to Bypass Ban on Earmarks

July 4, 2010
The New York Times
By ERIC LIPTON and RON NIXON

TOLEDO, Ohio — Just one day after leaders of the House of Representatives announced a ban on earmarks to profit-making companies, Victoria Kurtz, the vice president for marketing of a small Ohio defense contracting firm, hit on a creative way around it.

To keep the taxpayer money flowing, Ms. Kurtz incorporated what she called the Great Lakes Research Center, a nonprofit organization that just happened to specialize in the same kind of work performed by her own company — and at the same address.

Now, the center — which intends to sell the Pentagon small hollow metal spheres for body armor that the Defense Department has so far declined to buy in large quantities and may never use — has $10.4 million in new earmark requests from Representative Marcy Kaptur, Democrat of Ohio.

The congresswoman, who has received tens of thousands of dollars in campaign contributions from Ms. Kurtz’s family and her business’s lobbyists, thought the quickly hatched nonprofit organization was a convenient solution.

“They met the requirements of the reform,” Ms. Kaptur said in an interview. “Yes, they did.”

The proposed earmarks are among dozens — totaling more than $150 million — from around the country that would indirectly benefit profit-making companies, according to an examination by The New York Times of House appropriation requests submitted after the new rule was imposed in March.

Adopted because of repeated scandals over wasteful spending — the bridges to nowhere and expensive pet projects like a water-taxi service — the ban was intended to help eliminate earmark abuses. Critics say spending on earmarks, which added $16 billion to the federal budget last year, diverts money from higher priorities, typically does not require competitive bids and is often directed to experimental research that will never be used.

But given the appeal of free government money, the fees that lobbyists can earn by helping businesses grab a handful of it and the persistence of lawmakers in trying to satisfy constituents or donors, the pay-to-play culture in Washington has once again proved hard to suppress.

“It reminds me of the line from “Jurassic Park” — ‘Life will find a way,’ ” said Representative Jeff Flake, Republican of Arizona, who has pushed for nearly a decade to curtail earmarks. “When you have easy money like this, it finds a way, and members find a way to enable. And that is happening again.”

In ignoring the spirit of the ban, some lawmakers are leaving it up to Congressional committees to block them, a prospect that both Democrats and Republicans on Capitol Hill concede will be near impossible.

“No matter what they tell you, there is just no way they can police all that,” Mr. Flake said. “They just don’t have the time or resources.”

Creative Approaches

Companies have shown remarkable ingenuity in skirting the rule or veiling their requests through nonprofit organizations, the Times review found. Among the examples:

¶The Virtual Reality Medical Center, a California-based company that sells visual simulation headgear as an experimental form of medical therapy, had sought nearly $6 million in earmarks before the ban. Soon after, company officials instead proposed that the money go to the Interactive Media Institute, a nonprofit group controlled by the center’s top executives, which had been set up to sponsor educational conferences.

An aide to Representative Corrine Brown, the Florida Democrat who submitted the request, acknowledged consulting with Virtual Reality executives and then jointly deciding to redirect the earmark. “The rules were that nonprofits can apply, so a nonprofit did,” said Lee Footer, a senior legislative assistant.

¶In Pennsylvania, General Electric is likely to get as much as 80 percent of a $2 million earmark proposed by Pennsylvania State University for research on clean-burning GE locomotives. At the suggestion of the company and the university’s lobbyist, according to a Penn State professor, the university is listed as the lead player in the collaboration instead of GE, as was done previously. GE executives made a series of political contributions to Representative Kathy Dahlkemper, Democrat of Pennsylvania, days after she submitted the earmark request.

¶In New York, the Copper Development Association, a nonprofit group controlled by copper manufacturers, is pursuing a $4.1 million earmark to hire suppliers to install its members’ copper products in New York City subway cars, asserting that the metal has qualities that inhibit the spread of infectious diseases.

¶And a group called the Solar Energy Consortium in Kingston, N.Y., is pursuing nearly $30 million in earmarks, with the help of Representative Maurice D. Hinchey, Democrat of New York. The group, working out of a tiny office above a machine shop, does not perform its own research. Instead, it plans to pass on most of the earmark money to local businesses, some of which directly collected federal earmarks for solar projects this year but would no longer qualify.

Profit-making companies were singled out for the earmark ban because their requests, routinely submerged in giant budget bills by their allies in Congress, tended to be more questionable than those sought by nonprofit groups, which include charities, local governments and educational institutions.

House Republicans, trying to show their resolve to clean up Congress, pledged not to propose any earmarks this year, though at least three Republicans declined to go along. Democrats have submitted billions of dollars in requests; the exact total is unknown because there is no comprehensive listing of them.

Representative David R. Obey, a Wisconsin Democrat and Appropriations Committee chairman who announced the ban, declined to comment on the new earmark rule. But his spokesman, Ellis Brachman, said he was unaware of any cases in which profit-making companies had tried to circumvent it or in which House Democrats had assisted them. He added that the panel was committed to finding such cases, if they exist.

A Quick Response

At 9:33 a.m. on the day after Mr. Obey announced the earmark ban, Ms. Kurtz filed the necessary papers with the Ohio secretary of state for her nonprofit organization. She named herself the executive director, and that afternoon, her brother, Daniel K. Wedding, set up a Web site for the organization, even though it had not received the required federal approval to operate as a tax-free entity. With that, they considered the problem of the earmark ban solved.

“It’s not illegal — so what?” said Carol Ann Wedding, who is Ms. Kurtz’s sister and the president of Imaging Systems Technology, their family-owned business. She and other family members defend the charity as legitimate, though they offered varying explanations for its purpose.

Over the last four years, Imaging Systems had failed to interest the Pentagon in buying more than a few samples of its hollow metal spheres.

Undeterred, Ms. Kaptur helped the company arrange a total of $8.4 million in earmarks, part of it essentially to force the Defense Department to buy a large order of the metal spheres, which is pending.

In March, Ms. Kaptur, a 14-term congresswoman, a member of the House Appropriations Committee and a top earmark sponsor, publicly praised the new ban, telling an Ohio newspaper that it “struck the proper balance between retaining a role for the legislative branch in funding worthy projects and eliminating any potential for abuse.”

But privately, Ms. Kaptur’s office encouraged Ohio companies whose earmark requests were in peril to quickly line up deals with nonprofit organizations. Members of her staff even called University of Toledo administrators to ask about forming partnerships with local defense contractors, said Frank J. Calzonetti, the university’s vice president for research.

As a result, Ms. Kaptur is seeking at least $12 million for the university for programs that this budget year were allocated directly to profit-making companies, with the understanding that the university will pass on most of the money to the companies previously involved.

Details of how these collaborations would work were left unresolved, Mr. Calzonetti said, though the university agreed to participate only if it could make a substantive academic contribution. And, he said, the university would get a portion — at least $70,000 on a $1 million appropriation — to cover the cost of a faculty member and a researcher to work with the partners.

One of the deals involved Nokomis, a Pennsylvania-based defense contractor for which Ms. Kaptur secured a $1.2 million earmark last year. (The company had opened a small office in her district — a standard courtesy, as were the company-affiliated campaign contributions.) Now, the university would accept the earmark and then funnel most of the money back to Nokomis for that same project — designing a new type of roadside bomb detector, Mr. Calzonetti confirmed.

Each of the companies has a lobbyist to smooth negotiations with officials in Washington. Nokomis, for example, retains Scott Harshman, a former aide to the late Representative John P. Murtha, the Pennsylvania Democrat and longtime Appropriations Committee chairman legendary for securing earmarks.

Ms. Kurtz’s business has a contract with Joseph F. Boessen, a former Armed Services Committee staff member and lobbyist at the PMA Group, a now-defunct firm under investigation over accusations that it traded campaign contributions for earmarks.

Happy to Oblige

Ms. Kaptur said she was pleased that the Ohio defense contractors could form alliances that allowed her office to resubmit the earmark requests. Her first commitment, she said, is to help the Pentagon defend the nation. But if she can deliver government money to local businesses, that is a bonus, she said.

“I am a member who does fight for my region and my state,” she said, then adding, “I don’t fight mindlessly.”

Some House members have backed away from the type of requests Ms. Kaptur has championed. Representative Jared Polis, Democrat of Colorado, for example, refused to request money for a similar collaboration between his state university and a defense contractor.

Representative Louise M. Slaughter, Democrat of New York, also withdrew a requested $2 million earmark to the Rochester Institute of Technology, which also had a corporate partner. But she did so only after being contacted by The Times last week. She said that she had misunderstood the new rules.

Many other members said through spokesmen that they were standing by their requests and leaving it up to the House Appropriations Committee to decide if they are acceptable.

Some of the earmark requests come from major corporations like General Atomics, perhaps best known for its Predator drones. Over the last several years, the company has approached state university officials in Kentucky, Mississippi and Texas about jointly pursuing federal money to accelerate research on its patented technology to convert algae into jet fuel.

Under these agreements, about half of the earmark money goes to General Atomics, officials involved in the deals said, an arrangement that would continue next year, despite the ban. But in at least one state, Texas, the company’s name has been stripped this year from the publicly listed sponsors of the project.

A General Atomics spokesman, Jim Elliott, declined to comment on the project, which is also supported through competitively awarded grants. “I don’t want to talk about how we get money,” he said. “There are a lot of competitors out there.”

Federal records show that the company has made a series of contributions to the sponsors of the requests, including Representatives Ben Chandler of Kentucky and Solomon P. Ortiz and Ciro D. Rodriguez of Texas, all Democrats.

General Atomic’s university partners defend the projects and their research contributions. But they concede that there is no mystery why General Atomics would seek local partners.

“You think our congressman is going to write an appropriation request for some San Diego company?” said Bruce R. Pratt, chairman of the Eastern Kentucky University Department of Agriculture, a partner with General Atomics on algae research. “Why would he do that?”

    Companies Find Ways to Bypass Ban on Earmarks, NYT, 4.7.2010, http://www.nytimes.com/2010/07/05/us/politics/05earmarks.html

On Finance Reform Bill, Lobbying Shifts to Regulations

June 26, 2010
The New York Times
By BINYAMIN APPELBAUM

WASHINGTON — Well before Congress reached agreement on the details of its financial overhaul legislation, industry lobbyists and consumer advocates started preparing for the next battle: influencing the creation of several hundred new rules and regulations.

The bill, completed early Friday and expected to come up for a final vote this week, is basically a 2,000-page missive to federal agencies, instructing regulators to address subjects ranging from derivatives trading to document retention. But it is notably short on specifics, giving regulators significant power to determine its impact — and giving partisans on both sides a second chance to influence the outcome.

The much-debated prohibition on banks investing their own money, for example, leaves it up to regulators to set the exact boundaries. Lobbyists for Goldman Sachs, Citigroup and other large banks already are pressing to exclude some kinds of lucrative trading from that definition.

Regulators are charged with deciding how much money banks have to set aside against unexpected losses, so the Financial Services Roundtable, which represents large financial companies, and other banking groups have been making a case to the regulators that squeezing too hard would hurt the economy.

Consumer groups, meanwhile, are mobilizing to make sure that regulators deliver on promised protections for borrowers and investors. They worry that the shift from Capitol Hill to the offices of regulators could put the groups at a disadvantage.

“It’s out of the public eye, so a natural advantage that we benefit from — public outrage — we lose that a little,” said Cristina Martin Firvida, a lobbyist for AARP, which advocates for older Americans. “We know there’s still a lot here left to do.”

The legislation is intended to expand federal oversight of the financial industry to police risks to the broader economy and to protect consumers of financial products. It would also impose federal regulations for the first time on the trading of derivatives, the complex financial instruments that can be used to make large bets. But Brett P. Barragate, a partner in the financial institutions practice at the law firm Jones Day, estimated that Congress had fixed in place no more than 25 percent of the details of that vast expansion.

“Congress is doing this in broad strokes,” said Scott Talbott, a lobbyist for the Financial Services Roundtable. “Where the rubber meets the road is the regulatory process.”

President Obama hopes to sign the bill into law by the Fourth of July. In his weekly address on Saturday, Mr. Obama said, “I urge Congress to take us over the finish line, and send me a reform bill I can sign into law, so we can empower our people with consumer protections, and help prevent a financial crisis like this from ever happening again.”

His signature will start the clock on dozens of deadlines embedded in the legislation for regulators from a host of agencies, including the Federal Reserve, the Securities and Exchange Commission and the Federal Deposit Insurance Corporation, to make those decisions.

Interest groups have been preparing for months. When the Consumer Bankers Association convened its annual meeting in early June, there was still plenty of time to lobby Congress. But the group’s president, Richard Hunt, told his board that the group should shift its focus to the rule-making process. The board voted to increase the group’s budget and staff.

“Now we hope to have a good give and take with the regulators on the best interests of the consumer and the industry,” said Mr. Hunt.

Shaping regulations is a different game than shaping legislation. Political considerations carry less weight. Instead, regulators crave data that can be used to justify decisions.

Consider the new restrictions on the fees that merchants must pay to banks when customers swipe debit cards. The Nilson Report, a trade publication, estimated that last year, those fees averaged 1.63 percent of the transaction amount.

The legislation directs the Federal Reserve to cap those fees at a level that is “reasonable and proportional” to the cost of processing transactions. It gives the Fed nine months to gather data and decide.

Trade groups for retailers, which want a lower cap, and banks, which want a higher one, are standing by to weigh in.

“We have the data ready and we have the right people ready to go to the Fed, and we’ve had an ongoing dialogue with the Fed,” said John Emling, a lobbyist for the Retail Industry Leaders Association.

The debit card regulations are unusual, however, in pitting the interests of two industries against each other. Many more of the new regulations pit the interests of consumer groups against financial companies.

Historically, industry groups have dominated these information wars, plying regulators with exhaustive studies and detailed analyses of the options at hand. Trade groups have more money and more people, and they often produce and control the relevant information about their business and customers.

Seeking an equalizer, the AARP decided several months ago to begin preparing research that could be presented to regulators on several parts of the bill that it favored. The group was gambling that the provisions — like a requirement that investment brokers act in the interest of their clients — would end up in the final bill.

“We took a risk,” said Ms. Firvida, the group’s government affairs director for financial issues. “Success will depend on how much quality information is in front of the rule makers.”

The legislation would hand consumer groups a series of important victories, most notably the creation of a consumer protection bureau inside the Federal Reserve. But Ms. Firvida and others said there could be a sharp distinction between the authorities granted by the legislation and the results.

Affected companies are nervous as well and are banding together. In the immediate aftermath of the financial crisis, trade groups lost members as banks cut back on spending. That trend has now reversed. The Consumer Bankers Association has added seven members in recent months, bringing its total to 60.

Mr. Hunt, the group’s president, said its role was expanding in direct response to the plan to create the consumer protection bureau, which would focus on regulating his membership.

“The entire financial services industry understands that what happens in Washington affects them,” he said. “It’s something other industries found out many years ago, and we’re finding it out now.”

In a recent letter to the Treasury secretary, Timothy F. Geithner, the American Bankers Association estimated that banks had been hit with 50 new or expanded federal regulations in the last two years. A single example, the credit card bill that passed Congress last year, landed on the desks of bankers as 252 pages of new regulations.

And that count does not include the impact of the new legislation. “It’s a massive compliance burden,” said Edward L. Yingling, the group’s president. “And there is going to be massive uncertainty in the financial industry about how all of this will play out.”

One clear consequence is a surge in the demand for lawyers with expertise in financial regulation, particularly those who have worked for regulatory agencies. Most of the major trade groups are hiring lawyers. The major banks say they are employing more, too.

“I don’t know that there has been a bill that has touched as many different substantive areas as this one,” said A. Patrick Doyle, a partner at Arnold & Porter who has worked on financial issues for three decades. “Clearly there’s going to be a lot of work.”

The surge in hiring has sent a joke bouncing around Washington: Congress finally passed a jobs bill — full employment for lawyers.

    On Finance Reform Bill, Lobbying Shifts to Regulations, NYT, 26.6.2010, http://www.nytimes.com/2010/06/27/business/27regulate.html

Candidate Shrugs Off History’s Lure

June 25, 2010
The New York Times
By KATHARINE Q. SEELYE

MYRTLE BEACH, S.C. — Tim Scott seemed unburdened by history.

He is poised to become the first black Republican elected to Congress from the Deep South in more than a century, having trounced former Senator Strom Thurmond’s son in Tuesday’s Republican primary for South Carolina’s First Congressional District.

And yet when a voter, Carol Kinsman, a retired nurse who is white, greeted him here the other day, saying, “We’re going to make history,” Mr. Scott gently suggested that the color of his skin was not important.

“Our people are more concerned about the issues than anything else,” he told her. Then he quickly turned the subject to economic development and the need to expand the local Interstate.

Mr. Scott, 44, spent 13 years in county government and is in his second year in the South Carolina Legislature. But the national spotlight seemed to find him only Tuesday night. If elected in November — which is likely, given that his Democratic opponent, Ben Frasier, who is also black, is a perennial who has yet to bloom — he will become the only black Republican on Capitol Hill and the first since Representative J. C. Watts of Oklahoma retired in 2003.

“The historic part of this is nice to have — maybe,” he said of winning the Republican nomination, but he said it was also “a distraction.”

It is not hard to see what he means. This heavily Republican district stretches along the seacoast from here to Charleston, taking in many former plantations and including what was the main port of entry for tens of thousands of African slaves. The district is three-fourths white, and voted overwhelmingly for John McCain over Barack Obama in 2008.

But Mr. Scott, a staunch conservative, is a true reflection of its politics.

He believes that President Obama is driving the country toward bankruptcy and socialism. And he has some regard for Mr. Thurmond, at one time a leading segregationist and warrior against civil rights. When Mr. Scott was first elected to the Charleston County Council in 1995, Mr. Thurmond sent him a handwritten note welcoming him to the party. A year later, Mr. Scott became the statewide co-chairman of Mr. Thurmond’s Senate campaign, his last before he retired in 2003 and died the same year at 100.

How could a black man support someone with such a racist past?

“The Strom Thurmond I knew had nothing to do with that,” Mr. Scott said. “I don’t spend much time on history,” he added, noting that Mr. Thurmond had “evolved” by the time Mr. Scott was born, and had become better known, locally anyway, for his extraordinary level of constituent service. Mr. Scott said he hoped to emulate Mr. Thurmond’s attention to constituents, though not his longevity in Washington.

His goals are to shrink government, repeal the new federal health care law and eliminate earmarks, even those that would help his state. In the state legislature, he has co-sponsored an Arizona-style immigration bill, earning him the endorsement of the Minutemen.

In the primary runoff, Paul Thurmond, his opponent, branded him a career politician and an ineffective one at that.

“My opponent has run for four offices in three years,” Mr. Thurmond said during a debate. “He’s the epitome of politics as usual.” He added: “You wonder why he hasn’t gotten anything done in the House. He’s introduced five bills and hasn’t passed a single one. Within six months of moving into the House, he was running for a different race — that is not commitment.”

Mr. Scott was embraced by some leaders of the Republican establishment, including Representative Eric Cantor of Virginia, and some Republicans with Tea Party backing, including former Gov. Sarah Palin of Alaska (on Facebook), leading some to refer to a “black tea” movement, which is eager to shed any racial overtones.

He also received big donations from the Club for Growth, bringing his total amount raised to an impressive $600,000. Mr. Scott said that if elected, he would limit himself to four terms in Congress, in part because he is a man with a plan — a rather detailed one — that grew out of his troubled youth.

Mr. Scott’s parents were divorced when he was 7. His mother, a nurse at a hospital in Charleston, raised him and his older brother, who is now in the Army in Germany, by herself, often working 16-hour days to keep them off welfare.

Now a business executive, Mr. Scott said he never used drugs and worked since he was 13, wiping windshields at a gas station and serving popcorn at a movie theater. But he acted up in class to seek attention, he said, and by ninth grade, he was failing several courses, including civics, English and Spanish.

He was rescued by a man named John Moniz, who ran the Chick-fil-A next to the movie theater. Mr. Moniz became his mentor, imbuing him with his conservative, Christian philosophy and, as a graduate of the Citadel, teaching him the importance of structure and discipline. He also introduced him to the self-help views of the motivational Christian author Zig Ziglar.

“To know my story is to understand that there were people who had no reason to step up to the plate and help me, but who did,” Mr. Scott said. “I want to serve the community because the community helped me.”

Mr. Moniz died of a heart attack at 38, when Mr. Scott was 17. That prompted Mr. Scott to write down a “mission statement” for his life: to have a positive effect on the lives of one billion people before he dies.

From there he developed what he calls a “life matrix,” a script for living, which is a blueprint for his future, blocked out in five-year segments. Getting elected to Congress, he said, is “helpful” to his life plan, but his goals are laid out in terms of how much he can help other people.

“I have financial goals, the number of lives I want to impact, the number of speeches to give to nonprofits and to faith community organizations, the number of dollars to invest back into the community, the number of speeches to kids like me in high school who are dropping out,” he said.

He has already helped develop a “healthy heart” program at the hospital where his mother still works. (He has lost 30 pounds in the last two years.)

“If you really believe in something and that the government shouldn’t do it, you better be busy,” he said.

Government, he said, allows too many people to be unaccountable, while individuals can achieve great things.

“That’s why I need to invest my time, my talent and my treasure in getting things done,” like helping people develop self-discipline and financial security, he said. “That’s my ambition.”

    Candidate Shrugs Off History’s Lure, NYT, 25.6.2010, http://www.nytimes.com/2010/06/26/us/politics/26scott.html

In Deal, New Authority Over Wall Street

June 25, 2010
The New York Times
By EDWARD WYATT and DAVID M. HERSZENHORN

WASHINGTON — An overhaul of the nation’s financial regulatory system, reached after an all-night Congressional horse-trading session, will vastly expand the authority of the federal government over Wall Street in a bid to curb the free-wheeling culture that led to the near collapse of the world economy in 2008.

The deal between House and Senate negotiators, sealed just before sunrise on Friday, imposes new rules on some of the riskiest business practices and exotic investment instruments. It also levies hefty fees on the financial services industry, essentially forcing big banks and hedge funds to pay the projected $20 billion, five-year cost of the new oversight that they will face. And it empowers regulators to liquidate failing financial companies, fundamentally altering the balance between government and industry.

But after weeks of intense lobbying and months of debate, Congress in the end stopped short of prohibiting some of the practices that led to the crisis two years ago, betting instead that a newly empowered regulatory regime can rein in the big financial players without shackling the markets and drying up the flow of credit to businesses.

“We are poised to pass the toughest financial reform since the ones we created in the aftermath of the Great Depression,” President Obama said on the South Lawn of the White House, before leaving for the Group of 20 meeting in Toronto, where he was expected to press other nations to tighten their financial rules.

Democrats predicted that the full Congress would approve the legislation next week and that they would meet their goal of sending the bill to Mr. Obama for his signature by the Fourth of July.

The financial industry won some important victories, even if they face significantly heightened regulation. They fought off some of the toughest restrictions on their ability to invest their own funds. Most significantly, they thwarted an attempt to make them give up their highly profitable derivatives trading desks. And big lobbying fights remain in the future, when regulators begin the nitty-gritty task of turning complex, sometimes vague laws into real-world rules for these businesses to follow.

Industry analysts predicted that banks would most likely adapt easily to the new regulatory framework and thrive. As a result, bank stocks were mostly higher Friday, prompting some skeptics to question if the legislation, in fact, would be tough enough to rein in the industry and prevent future shocks to the economy as a result of bad gambling.

Even architects of the bill acknowledged that it might take the next financial crisis to truly determine the effectiveness of the changes.

On Friday morning, after a 20-hour final negotiating session, lawmakers, Congressional aides, lobbyists and the banking industry were still sorting through the legislative rubble of a frantic night of deal-making, edits and adjustments that left even some of those who worked most closely on the bill confused about exactly how some of the final details turned out. At points in the debates, lawmakers seemed to have trouble following their own deliberations.

“Can somebody explain to me what’s in Tier 1 capital?” Representative Melvin L. Watt, Democrat of North Carolina, pleaded, referring to the core measure of a bank’s financial strength. “I just don’t have enough knowledge in this area.”

The White House’s desire to get a bill before the Fourth of July break drove the day. At 11 p.m. Thursday, Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee who presided over the conference proceedings, began to show signs of impatience. When the senior Republican on the committee, Representative Spencer Bachus of Alabama, asked for another minute to finish a statement, Mr. Frank cut him off. “I would object to that,” he snapped. “Not at 11 o’clock at night.”

As midnight turned to early morning, lawmakers cast rapid-fire votes on amendments hastily scrawled in the margins of rejected proposals. With C-Span carrying the proceedings live, the last half-hour of the session featured sometimes confused lawmakers repeatedly asking about what happened to various proposed amendments.

While the televised proceedings at times provided a remarkable window into the minutiae of legislating, many of the deals to complete the bill were cut outside the conference room, in private discussions between Democratic lawmakers and the Obama administration, with some of Washington’s most influential lobbyists trying to weigh in as best they could.

One major bank on Friday scrambled to figure out what happened to six words that to its surprise and dismay were apparently cut from an amendment on proprietary trading, potentially posing a threat to its business.

The final bill vastly expands the regulatory powers of the Federal Reserve and establishes a systemic risk council of high-ranking officials, led by the Treasury secretary, to detect potential threats to the overall financial system. It creates a new consumer financial protection bureau, and widens the purview of the Securities and Exchange Commission to broaden regulation of hedge funds and credit rating agencies.

The measure restricts the ability of banks to invest and trade for their own accounts — a provision known as the Volcker Rule, for its chief proponent, Paul A. Volcker, the former Federal Reserve chairman — and creates a tight new regulatory framework for derivatives, the complex financial instruments that were at the heart of the 2008 crisis.

But in a late-hour compromise, the bill does not include the tough restrictions on derivatives trading championed by Senator Blanche L. Lincoln, Democrat of Arkansas, which would have forced banks to jettison their most lucrative dealings in this area.

Instead, in a deal negotiated between Mrs. Lincoln and a bloc of House members called the New Democrat Coalition, banks will be required to segregate their dealings only in the riskiest categories of derivatives, including the highly structured products like credit-default swaps based on bundles of mortgage loans, and in certain types of derivatives that are based on commodities that banks are already prohibited from investing in, like precious metals, agricultural products and energy.

But derivatives that have clear business purposes like helping manufacturing companies to hedge against the cost of raw materials or swings in foreign exchange rates would continue to be allowed. And nonfinancial corporations would be allowed to set up their own financial affiliates to create and trade derivatives related to their businesses.

The derivatives deal also headed off a last-minute rebellion by some New York lawmakers concerned about the effect of Mrs. Lincoln’s proposal on Wall Street businesses.

“We wanted to make sure we didn’t drive all the derivative business out of New York,” said Representative Gregory W. Meeks, a Democrat from Queens, who served on the conference committee.

The bill also does not include some of the more draconian proposals debated in recent months, including re-establishing a firewall between commercial and investment banking. And the nation’s auto dealers won exemption from oversight by the new consumer protection bureau, which will regulate most consumer lending.

Some business groups angrily denounced the final product, saying it was ill-conceived and would have unintended consequences harmful to the economy.

“Far from effective reform, this legislation includes provisions totally unrelated to the financial crisis which may disrupt America’s fragile economic recovery and increase instability and risk,” said John J. Castellani, president of the Business Roundtable, which represents chief executives of top American companies.

The conference report approved Friday is subject to approval by both chambers of Congress, a process that is expected to begin on Tuesday with action by the House and then by the Senate — where 60 votes will be required to end debate.

The vote in the conference committee was on party lines, with Democrats in favor and Republicans opposed. House conferees voted 20 to 11 to approve the bill and Senate conferees voted 7 to 5.

Republicans repeatedly complained that the bill would do nothing to tighten regulation of the government-sponsored mortgage companies, Fannie Mae and Freddie Mac, which were at the heart of much of the housing crisis.

Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee who with Mr. Frank led the negotiations, said the bill would prevent the corporate bailouts required in 2008 and allow the United States to become a global leader in financial regulation, potentially providing decades of stability.

“Never again will we face the kind of bailout situation as we did in the fall of 2008 where a $700 billion check will have to be written,” Mr. Dodd said in an interview. But he acknowledged that the effectiveness of the legislation would be learned only over time.

“I don’t have the kind of ego that would tell you we have absolutely solved these problems,” he said. “We won’t know until we face the next economic crisis.”

Republicans, however, warned that the bill would extend the reach of government too far.

At one point during debate over whether banks should be allowed to trade for their own profit, Representative Jeb Hensarling, Republican of Texas, asked what the issue had to do with the financial crisis. “How much riskier is proprietary trading than investment in certain forms of residential real estate?” Mr. Hensarling asked.

“If we’re not going to bail them out with taxpayer money, what they do with their money is their business.”

He said, adding: “This is one more occasion where we see something in the bill that did not have a causal role in the crisis.”

While regulatory bills often get watered down as they grind through the legislative process and interest groups and industry press for changes, the financial bill mostly gained strength as the debate lengthened and lawmakers seized on public frustration that rich financial institutions, recently bailed out by taxpayers, showed no signs of curtailing their risky practices or their outsize pay packages.


Raymond Hernandez and Binyamin Appelbaum contributed reporting.

    In Deal, New Authority Over Wall Street, NYT, 25.6.2010, http://www.nytimes.com/2010/06/26/us/politics/26regulate.html

Legislative Hurdles in an Era of Conflict, Not Compromise

June 19, 2010
The New York Times
By CARL HULSE

WASHINGTON — It was a little-noted vote on an unremarkable bill, but it spoke volumes about the current state of Congress.

The House was considering a measure to give tax advantages to small businesses, debating the sort of imperfect but well-intentioned legislation that would have previously breezed through since it was aimed at a favored constituency of both parties and provided tangible benefits in a rocky economy. And it was paid for.

But the final vote of 247 to 170 broke almost strictly along party lines, with only five Republicans voting for the measure even though a senior Republican responsible for tax issues acknowledged that there were positive aspects to the bill. Instead, Republicans offered an alternative that would have repealed a central element of the new health care law, a proposal that had zero chance of passing but made for a good political attack.

The outcome left Representative Sander M. Levin, the Michigan Democrat who is the chairman of the Ways and Means Committee, scolding his colleagues across the aisle. “You say you agree with these provisions, but then you’re going to vote no,” he said as the floor fight wrapped up. “You just don’t apparently want to be caught being bipartisan. It’s going to blur the political message.”

The approach of the midterm elections, the angry state of the electorate and intense political positioning have deepened partisan divisions in Congress to the point where it is becoming nearly impossible to lure lawmakers across the aisle.

The phenomenon has shown itself in the Senate as well in the current impasse over a package of tax breaks and safety-net spending. Extending unemployment benefits in times of economic duress used to be a popular vote, but not one Republican was willing to join Democrats on Thursday to break a filibuster holding up added jobless pay.

In his weekly address on Saturday, President Obama made note of the impasse, saying he was “disappointed this week to see a dreary and familiar politics get in the way of our ability to move forward on a series of critical issues that have a direct impact on people’s lives.”

Addressing the unwillingness of Republicans to allow a vote on extending jobless benefits, Mr. Obama said that “if this obstruction continues, unemployed Americans will see their benefits stop.

“Teachers and firefighters will lose their jobs. Families will pay more for their first home.”

He added: “I know the political season is upon us in Washington. But gridlock as a political strategy is destructive to the country.”

Senate Republicans say they want to keep the $40 billion cost of extending jobless benefits from being added to the deficit. But the deficit was not the issue on the small-business measure in the House. Republicans said it came up short despite what they conceded were worthwhile features.

“While the tax relief in here is welcome, it’s not enough,” said Representative Dave Camp of Michigan, the senior Republican on the Ways and Means Committee.

Representative Michael N. Castle of Delaware, one of the five Republicans to back the tax plan and one of just three to vote for a small-business loan program a few days later, said the gulf between the parties had grown so wide that most Republicans simply refused to vote for any Democratic legislation.

“It is just the politics of the time,” said Mr. Castle, who is running for the Senate. “We are just into a mode where there is a lot Republican resistance to voting for anything the Democrats are for or the White House is for. I think part of it is where the polling is and how things seem to be going from a political point of view. It is an election year.”

Mr. Castle said that the hardening divisions were not good for the nation’s future, and that it was not just Republicans who needed to give some thought to their approach, but Democrats as well.

Other Republicans say they are not dismissing Democratic initiatives out of hand; they say that the Democratic view of how to govern is simply wrongheaded and that they will not be a part of it.

“I realize my colleagues on the other side of the aisle sometimes can’t understand why Republicans vote against their ill-conceived legislation,” said Representative Virginia Foxx, Republican of North Carolina. “It is really because we have a very different philosophy about what makes this country successful.”

She said that philosophy was not “taking money from hardworking taxpayers,” funneling it through the bureaucracy and returning some to small businesses.

But as Mr. Castle conceded, politics are at work as well. If Republicans were to vote for Democratic legislation, it would represent a tacit acknowledgment that some Democratic ideas merit support — not the message Republicans want to send right now. They are working hard to portray Democrats as inept and themselves as a worthy alternative.

At the same time, the Republican base has moved into an agitated, anti-Democratic posture. So any Republican who backs Democratic legislation runs the risk of being accused of consorting with the enemy and facing a challenge from the right or falling out of favor with conservatives like those allied with the Tea Party.

The deep unwillingness to cross party lines also reflects some fundamental changes in the nature of Congress in an increasingly polarized era. The ranks of veteran lawmakers experienced in working together and cutting deals are diminishing at the same time the political and media environment is providing greater rewards to those engaged in conflict rather than compromise.

Whether the deep reluctance to consider opposition legislation will persist after November is an open question, and perhaps outside events will again force the parties to work together. But as the split on the small-business measure showed, the chances for much legislative cooperation between now and Election Day appear remote.

    Legislative Hurdles in an Era of Conflict, Not Compromise, NYT, 19.6.2010, http://www.nytimes.com/2010/06/20/us/politics/20cong.html

BP Chief Expresses Contrition to House Panel

June 17, 2010
The New York Times
By JOHN M. BRODER and LIZ ROBBINS

WASHINGTON — BP’s embattled chief executive, Tony Hayward, told Congress on Thursday that the oil disaster in the Gulf of Mexico “never should have happened, and I am deeply sorry that it did,” as he tried to demonstrate that he and the oil giant understood the enormity of the spill’s environmental, economic and human toll.

Just as Mr. Hayward, who has faced weeks of withering criticism for his response to the spill, was opening his mouth to begin his opening statement, he was interrupted by one of several protestors in the room, a woman with dark paint under her eyes and smothered over her hands to look like oil. After about two minutes, she was subdued by police officers, taken from the room and Mr. Hayward began his prepared remarks.

He offered deep contrition, but few answers to the pressing questions stemming from the explosion aboard the Deepwater Horizon offshore rig, and the two-month oil spill.

“How could this happen?” Mr. Hayward read. “How damaging is the spill to the environment? Why is it taking so long to stop the flow of oil and gas into the Gulf?”

He went on to say: “We don’t yet have answers to all these important questions.”

He called the spill a tragedy, and said that when he learned that 11 workers died in the explosion and fire on the Deepwater Horizon, “I was personally devastated.”

Mr. Hayward’s remarks came after he sat through more than an hour of statements from committee members committee.

Representative Henry A. Waxman, chairman of the full Energy and Commerce Committee, whose investigations and oversight subcommittee is holding the hearing, assailed BP’s “corporate complacency.” He said the committee searched 30,000 BP documents in vain looking for evidence of attention to the risks of the Macondo well.

“There is not a single e-mail or document that shows you paid even the slightest attention to the dangers at the well," Mr. Waxman said.

"BP’s corporate complacency is astonishing," he added. "BP cut corner after corner to save a million dollars here and a few hours or days there. And now the whole Gulf Coast is paying the price."

Rep. Joe Barton of Texas, the senior Republican on the committee, criticized the White House’s brokering the $20 billion fund as a “shakedown,” and apologized to Mr. Hayward for what he called the politicization of the crisis.

Mr. Barton said he was “ashamed” of the meeting at the White House on Wednesday, at which top BP officials pledged to set aside $20 billion to pay future economic and environmental claims.

Representative Ed Markey, who chairs the House Committee for Energy Independence and Global Warming, said he disagreed strongly with Mr. Barton’s characterization of a “shakedown,” adding that it was the government’s right to protect its “most vulnerable citizens.”

Later, Robert Gibbs, the White House press secretary, responded to Rep. Barton’s remarks.

“What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction,” Mr. Gibbs said in a statement. “Congressman Barton may think that a fund to compensate these Americans is a ‘tragedy’, but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now. Members from both parties should repudiate his comments.”

At the hearing, Mr. Hayward sat mostly expressionless, writing notes as committee members took turns delivering their statements and political salvos.

He later told the committee that BP’s efforts to stop the leak and contain the oil were continuing on two fronts: drilling of two relief wells should be completed by August, he said, and the two containment devices were successfully capturing some of the oil erupting from the well.

A spokesman for BP, Brian Ferguson, said that according to Adm. Thad W. Allen, the national incident commander, the relief wells were “weeks ahead of schedule.” On Thursday, BP had been able to capture 14, 750 barrels of crude oil.

Mr. Hayward’s appearance before the Congressional panel comes one day after President Obama announced that BP would create a $20 billion fund to pay damage claims to thousands of fishermen and others along the Gulf Coast. BP also said it would suspend dividend payments to shareholders.

The $20 billion fund announced on Wednesday will be administered by Kenneth R. Feinberg, the lawyer and mediator who ran the fund for victims of the Sept. 11 attacks and has emerged as a troubleshooter on issues like executive compensation and resolving claims for asbestos and Agent Orange victims.

While acknowledging that oil is likely to continue spewing from the well for perhaps months to come, Mr. Obama was able to throw something of a lifeline to desperate coastal residents worried about meeting payrolls, mortgages and shrimp boat payments.

Under the famous portrait of a charging Theodore Roosevelt on horseback, administration and company officials haggled over last details in an extraordinary White House meeting that went more than four hours, double the time scheduled, and was punctuated by breaks as each side huddled separately. Finally, participants said, Mr. Obama sealed the deal in a private, 25-minute session with BP’s chairman, Carl-Henric Svanberg.

“This is not just a matter of dollars and cents” for a region upended by the spill, Mr. Obama, who returned Tuesday from a fourth tour of the coast, said he had told Mr. Svanberg.

“I emphasized to the chairman,” he said, “that when he’s talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals — that they are desperate, that some of them, if they don’t get relief quickly, may lose businesses that have been in their families for two or three generations. And the chairman assured me that he would keep them in mind.”

Mr. Svanberg, looking somber as he left the White House, confirmed to waiting reporters that the president seemed “frustrated because he cares about the small people.” But he added: “People say that large oil companies don’t care about the small people. But we care. We care about the small people.”

The “small people” comment set off an immediate uproar in the blogosphere and elsewhere from people who said it showed BP’s indifference to those harmed by the spill. A BP spokesman called the remark a “slip in translation” by Mr. Svanberg, who is Swedish. Later Wednesday Mr. Svanberg apologized, saying he was “very sorry” he had spoken “clumsily.”

“What I was trying to say — that BP understands how deeply this affects the lives of people who live along the gulf and depend on it for their livelihood — will best be conveyed not by any words but by the work we do to put things right for the families and businesses who’ve been hurt,” he said in a statement.

Mr. Svanberg said the BP board, which met in emergency session on Monday in advance of the White House meeting, had agreed not to pay further dividends to shareholders this year. Faced with mounting criticism of his company, including from within the oil industry, he denied reports that BP had taken safety shortcuts on the Deepwater Horizon rig, where an April 20 explosion killed 11 workers and set in motion the leak that Mr. Obama has called the worst environmental disaster in American history.

Still, Mr. Svanberg said he wanted to “apologize to the American people on behalf of all the employees of BP.”

On Friday, Mr. Hayward was trying to do the same.


Jackie Calmes contributed reporting from Washington. Robbie Brown contributed reporting from New Orleans and Julia Werdigier from London. Helene Cooper contributed from Washington.

    BP Chief Expresses Contrition to House Panel, NYT, 17.10.2010, http://www.nytimes.com/2010/06/18/us/politics/18spill.html

House Vote Advances End to Ban on Gays in Military

May 29, 2010
Filed at 2:09 a.m. ET
The New York Times
By THE ASSOCIATED PRESS

WASHINGTON (AP) -- The House on Friday passed a defense bill that paves the way for gays to serve openly in the military for the first time, but advocates on both sides geared up for a fight in the Senate.

Normally, defense bills pass by wider margins than Friday's 229-186 vote, but many Republicans and a few conservative Democrats said they would vote against it because of the gay ban, which was added to the $700 billion bill in a 234-194 vote late Thursday.

House approval of the ''don't ask, don't tell'' repeal was a victory for President Barack Obama, who has pledged to change the policy, and for gay rights groups, who have made it their top priority this year. The bill would give the Pentagon the rest of the year to study the issue before the repeal would take effect.

Defense Secretary Robert Gates appealed to the military Friday not to be distracted by the political debate over gays in uniform. In an unusual direct address to troops, Gates said he wanted to assure them that their views on the divisive question still matter.

The Senate is expected to take up the defense bill this summer. Supporters likely will need the votes of 60 of the 100 senators to prevent opponents from blocking it.

And while supportive overall, the White House on Thursday issued a veto threat because the House version includes $485 million for an alternative engine for the new F-35 Joint Strike Fighter.

Gates has sought to eliminate the second engine program, saying it is wasteful. Supporters, in addition to protecting jobs in their districts, say that the competition will save money over the life cycle of the $100 billion project.

The second engine would be built by General Electric Co. and Rolls-Royce in Ohio, Indiana and other states. The main F-35 engine is built in Connecticut by Pratt & Whitney, a division of United Technologies Corp.

Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee and a chief backer of changing the law, said at a news conference Friday most senators support ending the gay ban.

''I believe a majority of the Senate, just like a majority of the country ... favor changing this policy,'' he said. ''It is a discriminatory policy.''

He predicted that it would be hard for opponents to filibuster the defense bill over the gay rights issue because ''there's so much in here for our troops.'' That includes money for security projects in Afghanistan and Pakistan, anti-terrorism programs, billions for new ships, planes and mine-resistant ambush protected vehicles and money for ballistic missile defense. The House bill has a 1.9 percent pay raise for military personnel; the Senate bill 1.4 percent.

Levin's committee on Thursday approved an amendment repealing ''don't ask, don't tell'' on a 16-12 vote. One Republican, Susan Collins of Maine, voted for it while one Democrat, Jim Webb of Virginia, opposed it.

Webb said he agreed with Gates and the chiefs of the four military services, who have urged Congress to put off votes until after the military review is completed in December.

The House and Senate amendments stipulate that the repeal would not become law until after the study is completed and until the president, the defense secretary and the Joint Chiefs of Staff certify that it will not have negative effects on the military's fighting ability. The military would also have to first change its rules to comply with the law.

    House Vote Advances End to Ban on Gays in Military, NYT, 29.5.2010, http://www.nytimes.com/aponline/2010/05/29/us/politics/AP-US-Gays-Military.html

Currently in Vogue: Ringing the Deficit Alarm

May 28, 2010
The New York Times
By CARL HULSE

WASHINGTON — Deficits finally matter.

After years of citing national security, social necessity and economic crisis as sufficient justification to pass costly legislation without paying for it, members of Congress are getting cold feet about continually adding to the national vat of red ink.

In the House, the leadership was forced this week to jettison popular health insurance subsidies and cut a major tax-and-spending measure in half in a desperate effort to round up votes from moderate and conservative Democrats. In the Senate, 26 Republican senators balked at an emergency war funding bill — an almost unthinkable position for them in the past — complaining that it was bloated and irresponsible.

Both measures ultimately passed as Congress made a messy pre-Memorial Day exit. But lawmakers say they appear to have reached a turning point when it comes to routine deficit spending. The new attitude could reshape the way Congress does its fiscal business the rest of this year and into the future, and potentially constrain President Obama and Democrats as they pursue their agenda.

Democrats are already ducking demands that they produce a budget for 2011, well aware that it would be very difficult to balance the conflicting interests of liberal lawmakers pushing for more spending and the centrists and fiscal conservatives who want cuts.

It is likely that Democrats will also punt on most of the major spending bills for the year, preferring to hold federal agencies at their current levels rather than get into a pre-election fiscal fight. There is mounting resistance to reflexively extending jobless pay for the long-term unemployed, and other initiatives, like a $23 billion plan to prevent public school teacher layoffs, face serious challenges.

The reasons for the new deficit sensibilities are both substantive and politically driven. A growing number of House and Senate members see both the annual deficits and the accumulated federal debt — hovering now at the $13 trillion threshold — as time bombs for future generations, the unexploded remnants of a lavish spending spree engaged in by both parties over the past decade.

At the same time, Republicans have stirred up their core voters and made inroads with independents by accusing Democrats of profligacy since they took charge. The success of the attacks has not been lost on Democrats, who are hearing it regularly from their constituents back home. Republicans, who share blame for the deficits the government ran when they were in power and in particular for the increase in the national debt from the tax cuts and spending increases they passed under former President George W. Bush, are also under pressure to show they have changed their ways as well if they hope to win over the Tea Party set.

It adds up to serious new reluctance to be free with federal dollars.

The House fight over the package of safety-net spending, tax breaks for businesses and individuals and tax increases on corporations and wealthy investors was illustrative. A major Democratic priority, it began the week as a nearly $200 billion catchall measure that would have added about $134 billion to the deficit.

Facing a rank-and-file revolt, Democratic leaders began trimming the measure, first by limiting the length of coverage for some of the more costly programs and saving more than $40 billion. It was not enough. Lacking the necessary votes entering Thursday evening, Democrats sliced the bill again, eliminating health insurance subsidies for the unemployed and health care aid to states — saving $30 billion or so and getting the deficit impact down to $54 billion.

The measure then passed 215 to 204, with 34 mainly moderate and conservative Democrats joining 170 Republicans in opposing the bill.

“We have to stop spending money we don’t have,” said Representative Jim Cooper, a Tennessee Democrat who voted against the bill. “I hope deficit reduction fever is catching.”

While the struggle in rounding up the votes resulted in a cut in the bill’s price tag, the House delay was costly in another sense. With the bill stalled in the House, the Senate packed up and left for recess without considering it. As a result, the extension of unemployment benefits will have to wait at least a week, and some Americans relying on jobless pay could see their checks delayed.

The Senate found itself in a deficit fight of its own, though the outcome was never in doubt. The $60 billion war funding measure the Senate passed late Thursday was certain to be approved given its importance to the Pentagon and military operations in Afghanistan and Iraq.

But Senator Tom Coburn, Republican of Oklahoma, criticized his colleagues for pushing it through without finding spending cuts elsewhere to pay for it, and he was joined by 25 colleagues in opposing it.

“Are we in denial in this body?” asked Senator Jeff Sessions, Republican of Alabama and another opponent. “Do we think it’s just business as usual, that we can just continue to spend, spend, spend and borrow, borrow, borrow?”

Republicans are eager to blame Democrats. But Democrats note that it was Republicans who initially chose not to pay for wars in Iraq and Afghanistan, initiated a series of major tax cuts and started a new Medicare drug benefit that ran up the deficit before Democrats ever took the wheel.

“The people who set the fire are now the ones calling the fire department,” said Representative Richard E. Neal, Democrat of Massachusetts.

In any event, the deficit alarm has been sounded and lawmakers are responding. Whether it is too late for them remains to be seen.

This article has been revised to reflect the following correction:

Correction: May 28, 2010

Due to an editing error, an earlier version of this article misstated vote totals in the House. A measure to extend unemployment benefits passed by a vote of 215 to 204, not 245 to 171. A measure to prevent a cut in Medicare payments passed with a vote of 245 to 171, not 245 to 177.

        Currently in Vogue: Ringing the Deficit Alarm, NYT, 28.5.2010, http://www.nytimes.com/2010/05/29/us/politics/29deficit.html

House Votes to Eliminate Hedge Fund Tax Break

May 28, 2010
The New York Times
By DAVID KOCIENIEWSKI

The House passed a bill on Friday that would end a tax break for executives of investment funds, leaving hedge funds, private equity firms and venture capitalists scrambling to ease the effects of the bill before it is taken up by the Senate next month.

The measure was part of a broader tax bill, passed by a vote of 215 to 204, that would extend benefits for unemployed people. It seeks to change the tax treatment of “carried interest,” which is the portion of a fund’s investment gains taken by fund managers as compensation.

Under current rules, carried interest is taxed federally at a rate of 15 percent because it is treated as a capital gain. That contrasts with the tax rate on ordinary income, which can be as high as 35 percent.

The plan approved by the House, which overcame strong lobbying pressure from Wall Street, amounted to a compromise that would tax 75 percent of carried interest as ordinary income and 25 percent as capital gains. It is expected to raise more than $17 billion in tax revenue over the next decade.

Although similar attempts to increase taxes on carried interest have died in the Senate for three consecutive years, concerns about the nation’s billowing debt are so great that Senate leaders say they expect to pass a measure resembling the one approved by the House.

That has left lobbyists for fund managers searching for ways to mitigate the tax increase. In fact, in the hours before the House vote, opponents of the measure managed to postpone the date it took effect until Jan. 1, 2011. In the coming weeks, they hope to persuade lawmakers to have the tax increase phased in over several years and have a lower percentage of carried interest considered as ordinary income.

Douglas Lowenstein, president of the Private Equity Council, said he and other lobbyists were also trying to scale back a provision in the bill affecting what they call the “enterprise tax.” That provision would require the founders of hedge funds to pay ordinary income tax rates on proceeds they received from selling their firms.

“If you sell a building, a bond, or a business, you are taxed for capital gains in this country,” said Pam Olson, a former Treasury official who now represents the private equity industry. “This would make us the only business in America denied capital gains treatment, which is discriminatory and unfair.”

The protracted fight over carried interest underscores the difficulty Congress faces in trying to close tax loopholes for businesses, even at a time of sprawling budget deficits and widespread public dismay about Wall Street’s influence in Washington.

Fund mangers are typically paid a 2 percent management fee plus 20 percent of any profit they generate, the portion known as carried interest. Because their compensation is based on investment performance, they have argued that that money should be taxed at the lower capital gains rate.

But Victor Fleischer, the University of Colorado professor whose paper on the subject helped prompt Congress to act, said that carried interest should not qualify as capital gains because fund managers risk mostly other people’s money rather than their own. “They’re being paid a fee for a service, so it’s fair that they would pay the same rates as others who perform services,” Mr. Fleischer said.

As recently as January, the prospect of any change in taxes on carried interest appeared remote. Senate leaders had privately assured fund managers that if they needed revenue to pay for a package of tax breaks for certain industries, including wool production and publishing, they would close a loophole that lumber companies had used to claim billions of dollars in clean energy credits.

But in March, two factors changed. First, Representative Sander M. Levin, Democrat of Michigan, who had long championed the tax change for carried interest, became chairman of the Ways and Means committee, which writes tax policy.

Then Congress closed the lumber industry loophole in an effort to provide financial support for President Obama’s health care bill.

As the Senate Democrats sent signs that they were open to a tax increase, investors and their lobbyists mobilized quickly, warning that the proposal could stifle investments that create jobs.

A group of 80 venture capitalists traveled to Boston to urge Senator John Kerry and Representative Barney Frank, Democrats of Massachusetts, to exclude their business from the tax change, according to Jeffrey Bussgang, a partner at the Boston venture capital firm Flybridge Capital Partners.

The Real Estate Roundtable also tried to negotiate an exemption for real estate investment trusts, arguing that the higher tax rates would hurt the recovery of the real estate market.

Robert L. Johnson, founder of the Black Entertainment Television, said the tax change would inadvertently squeeze out minority entrepreneurs because, he contends, they rely heavily on start-up financing from venture capital and private equity firms.

“This legislation would cause a rapid decline in minority private equity firms and possibly eliminate minority participation in this important financial sector of the American economy,” he said.

By early this week, Congressional leaders had agreed to reject exemptions for any type of investment fund.

“This is an issue of fundamental fairness,” Mr. Levin said in a conference call on Tuesday.

During floor debate Friday, carried interest received little mention, except from several Republicans who warned that a tax increase for fund managers would slow the economic recovery.

“This is not a time to raise taxes on investments in business. That’s a sure way to kill jobs,” said Representative Lee Terry, Republican of Nebraska.

As the bill moves to the Senate, lobbyists say they are focusing on a handful of Democrats — including Robert Menendez of New Jersey, Maria Cantwell of Washington and the chairman of the budget committee, Kent Conrad of North Dakota — to reach a further compromise that would lessen the sting of the change. One proposal would lower the amount subject to ordinary rates to 60 percent, from 75 percent.

Mr. Lowenstein of the Private Equity Council said he was encouraged by some of the last-minute changes made this week, before Congress breaks for a weeklong recess, and hoped to further lessen the impact.

“We will press our case during the recess and hope to build support for an outcome that is pro growth and advances the recovery,” he said.

    House Votes to Eliminate Hedge Fund Tax Break, NYT, 28.5.2010, http://www.nytimes.com/2010/05/29/business/29carried.html

Another Long March in the Name of Change

March 21, 2010
The New York Times
By CARL HULSE

WASHINGTON — Forty-five years ago, John Lewis began the third of what became society-shifting civil rights marches from Selma to Montgomery, Ala. On Sunday, the anniversary of that famous trek, he joined hands with fellow House Democrats and marched past jeering protesters into the Capitol to remake the nation’s health care system.

“Today we are walking again, and we will be walking into history,” Mr. Lewis, a Georgian, said as the House neared the climax of a marathon health care debate that has stirred partisan passions across the nation and allowed Democrats to claim an achievement that has eluded them for decades. “This is our time.”

Several hours later, Mr. Lewis and 223 other Democrats strode onto the House floor to formally record their yes votes to lift the bill past its main procedural hurdle, brushing aside Republican warnings of political doom and epithets aimed at them over the weekend from a few of the more strident opponents.

When the decisive 216th vote went up on the electronic tally board in the House chamber, Democrats erupted in cheers and reprised the “Yes, we can!” chant from the Obama presidential campaign. Outside, a different cry was heard as the 219-to-212 final vote was announced: Protesters against the bill sang the lyrics “nah, nah, nah, nah, hey, hey, hey, goodbye,” suggesting Democrats would be voted out of Congress because of the health care bill.

It was a celebratory, tense, angry, confrontational, momentous Sunday on Capitol Hill as House Democrats, led determinedly by Speaker Nancy Pelosi, finally nailed down the votes for legislation that they said would make it possible for virtually every American to obtain health insurance and medical care. The debate continued into the night, with President Obama and his party confident they had secured victory on the final votes to come.

Love it or hate it, there was no dispute that the health care overhaul was the most significant and far-reaching piece of domestic policy legislation to come before Congress in years.

Republicans clearly hated it.

“Freedom dies a little a bit today,” Representative Marsha Blackburn of Tennessee said in one of the many harsh Republican condemnations of the measure, which they excoriated for its cost, its deep reach into American lives and what they said was its potential to bankrupt the country and damage its health care system.

Their sentiments were shared by hundreds of Americans hostile to the measure who gathered outside the Capitol. They vented their opposition with chants of “Kill the bill,” booing Democrats and cheering Republicans as they ran the gantlet of protesters on their way to the floor to vote throughout the day.

Representative Barney Frank, the openly gay Massachusetts Democrat who had anti-gay slurs hurled at him by protesters, said the opposition had spiraled badly out of control.

“It is almost like the Salem witch trials,” Mr. Frank said. “The health bill has become their witch. It is a supernatural force, and you get hysteria. There is an anger obviously that goes beyond anything connected to the bill.”

Despite the protests, despite the months of cable television denunciations, despite their warnings that Democrats would be massacred at the polls in November, despite their concerted effort to attack the measure from nearly every conceivable angle, Republicans ultimately found themselves powerless to stop it.

Democrats crossed the threshold for passage just after 4 p.m. Sunday, when Representative Bart Stupak and six other anti-abortion Democrats trooped into a crowded television studio on the third floor of the Capitol to announce they had struck a deal with Mr. Obama on abortion financing restrictions and would back the measure.

At that point, approval of the landmark legislation was simply a matter of time. Later, as Mr. Stupak spoke about the legislation on the House floor, someone shouted “baby killer,” although it was not clear who had made the remark.

The moods of the two parties could not have been more different. Democrats were jubilant; they saw the bill as the culmination of a four-decade fight to expand health coverage, coming as many Americans find themselves with rising insurance costs and declining access to care.

“It is time to put American families back in control of their health care,” Representative Allyson Y. Schwartz, Democrat of Pennsylvania, said as the debate began.

But Republicans were outraged, characterizing the legislation as a major step toward socialism and an aggressive government takeover of the health care system. They said Democrats would rue the day they pushed health legislation through without any Republican support.

“Let’s see who is still here after the American people speak loud and clear in November,” Representative Connie Mack, Republican of Florida, said in a barb aimed at Democrats seated across the aisle.

Outside the Capitol, protesters sought to make their presence known to those inside as they rang bells, blew horns and amplified their angry voices raised against the legislation.

“Nancy Pelosi, you will burn in hell for this,” one woman intoned repeatedly through a bullhorn.

Egging on the crowd, Republicans appeared frequently on a second-floor balcony of the Capitol to give the protesters the thumbs-up and display their own “Kill the bill” signs. Republicans even borrowed a “Don’t Tread on Me” flag from the group to wave above the crowd.

One protester was ejected from the House chamber for shouting against the legislation. He was cheered by some Republicans, a gesture condemned by Democrats, who said Republicans were encouraging disruptions.

Republicans said the protests were simply a reflection of public disgust with both the measure and the procedural hoops Democrats were jumping through to get it to the president’s desk. “The public is on our side,” said Representative Mike Pence of Indiana, the No. 3 House Republican, standing outside the Capitol as the chants rang around him. “The American people are rising up with one voice and saying enough is enough.”

Mr. Lewis said he was not intimidated as he walked to the Capitol with his colleagues, including Ms. Pelosi. In 1965, Mr. Lewis was bloodied and beaten by the police as he marched for civil rights.

“What was so different more than anything else,” he said of Sunday’s walk, “was we had the protection of the Capitol police.”

    Another Long March in the Name of Change, NYT, 22.3.2010, http://www.nytimes.com/2010/03/22/health/policy/22scene.html

House Approves Health Overhaul, Sending Landmark Bill to Obama

March 21, 2010
The New York Times
By ROBERT PEAR and DAVID M. HERSZENHORN

WASHINGTON — House Democrats approved a far-reaching overhaul of the nation’s health system on Sunday, voting over unanimous Republican opposition to provide medical coverage to tens of millions of uninsured Americans after an epic political battle that could define the differences between the parties for years.

With the 219-to-212 vote, the House gave final approval to legislation passed by the Senate on Christmas Eve. Thirty-four Democrats joined Republicans in voting against the bill. The vote sent the measure to President Obama, whose yearlong push for the legislation has been the centerpiece of his agenda and a test of his political power.

After approving the bill, the House adopted a package of changes to it by a vote of 220 to 211. That package — agreed to in negotiations among House and Senate Democrats and the White House — now goes to the Senate for action as soon as this week. It would be the final step in a bitter legislative fight that has highlighted the nation’s deep partisan and ideological divisions.

On a sun-splashed day outside the Capitol, protesters, urged on by House Republicans, chanted “Kill the bill” and waved yellow flags declaring “Don’t Tread on Me.” They carried signs saying “Doctors, Not Dictators.”

Inside, Democrats hailed the votes as a historic advance in social justice, comparable to the establishment of Medicare and Social Security. They said the bill would also put pressure on rising health care costs and rein in federal budget deficits.

“This is the Civil Rights Act of the 21st century,” said Representative James E. Clyburn of South Carolina, the No. 3 Democrat in the House.

Mr. Obama celebrated the House action in remarks at the White House.

“We pushed back on the undue influence of special interests,” Mr. Obama said. “We didn’t give in to mistrust or to cynicism or to fear. Instead, we proved that we are still a people capable of doing big things.”

“This isn’t radical reform,” he added, “but it is major reform.”

After a year of combat and weeks of legislative brinksmanship, House Democrats and the White House clinched their victory only hours before the voting started on Sunday. They agreed to a deal with opponents of abortion rights within their party to reiterate in an executive order that federal money provided by the bill could not be used for abortions, securing for Democrats the final handful of votes they needed to assure passage.

Winding up the debate, Speaker Nancy Pelosi said: “After a year of debate and hearing the calls of millions of Americans, we have come to this historic moment. Today we have the opportunity to complete the great unfinished business of our society and pass health insurance reform for all Americans that is a right and not a privilege.”

The House Republican leader, Representative John A. Boehner of Ohio, said lawmakers were defying the wishes of their constituents. “The American people are angry,” Mr. Boehner said. “This body moves forward against their will. Shame on us.”

Republicans said the plan would saddle the nation with unaffordable levels of debt, leave states with expensive new obligations, weaken Medicare and give the government a huge new role in the health care system.

The debate on the legislation set up a bitter midterm campaign season, with Republicans promising an effort to repeal the legislation, challenge its constitutionality or block its provisions in the states.

Representative Paul D. Ryan, Republican of Wisconsin, denounced the bill as “a fiscal Frankenstein.” Representative Lincoln Diaz-Balart, Republican of Florida, called it “a decisive step in the weakening of the United States.” Representative Virginia Foxx, Republican of North Carolina, said it was “one of the most offensive pieces of social engineering legislation in the history of the United States.”

But Representative Marcy Kaptur, Democrat of Ohio, said the bill heralded “a new day in America.” Representative Doris Matsui, Democrat of California, said it would “improve the quality of life for millions of American families.”

The health care bill would require most Americans to have health insurance, would add 16 million people to the Medicaid rolls and would subsidize private coverage for low- and middle-income people, at a cost to the government of $938 billion over 10 years, the Congressional Budget Office said.

The bill would require many employers to offer coverage to employees or pay a penalty. Each state would set up a marketplace, or exchange, where consumers without such coverage could shop for insurance meeting federal standards.

The budget office estimates that the bill would provide coverage to 32 million uninsured people, but still leave 23 million uninsured in 2019. One-third of those remaining uninsured would be illegal immigrants.

The new costs, according to the budget office, would be more than offset by savings in Medicare and by new taxes and fees, including a tax on high-cost employer-sponsored health plans and a tax on the investment income of the most affluent Americans.

Cost estimates by the budget office, showing that the bill would reduce federal budget deficits by $143 billion in the next 10 years, persuaded some fiscally conservative Democrats to vote for the bill.

Democrats said Americans would embrace the bill when they saw its benefits, including some provisions that take effect later this year.

Health insurers, for example, could not deny coverage to children with medical problems or suddenly drop coverage for people who become ill. Insurers must allow children to stay on their parents’ policies until they turn 26. Small businesses could obtain tax credits to help them buy insurance.

The Democratic effort to secure the 216 votes needed for passage of the legislation came together only after last-minute negotiations involving the White House, the House leadership and a group of Democratic opponents of abortion rights, led by Representative Bart Stupak of Michigan. On Sunday afternoon, members of the group announced that they would support the legislation after Mr. Obama promised to issue an executive order to “ensure that federal funds are not used for abortion services.”

Mr. Stupak described the order as a significant guarantee that would “protect the sanctity of life in health care reform.” But supporters of abortion rights — and some opponents — said the order merely reaffirmed what was in the bill.

The vote to pass the Senate version of the bill means that it will become the law of the land as soon as Mr. Obama signs it, regardless of when — or even whether — the Senate acts on the package of changes the House also passed.

In his remarks, shortly before midnight in the East Room, Mr. Obama urged the Senate to complete the final pieces of the legislation. “Some have predicted another siege of parliamentary maneuvering in order to delay it,” he said. “I hope that’s not the case.”

He continued, “It’s time to bring this debate to a close and begin the hard work of implementing this reform properly on behalf of the American people.”

Mr. Obama watched the roll call with Vice President Joseph R. Biden Jr. in the Roosevelt Room in the White House.

The House galleries were full, and the floor was unusually crowded, for the historic debate on health care.

Working together, Mr. Obama and Ms. Pelosi revived the legislation when it appeared dead after Democrats lost their 60th vote in the Senate and with it their ability to shut off Republican filibusters.

Republicans said they would use the outcome to bludgeon Democrats in this year’s Congressional elections. The White House is planning an intensive effort to convince people of the bill’s benefits. But if Democrats suffer substantial losses in November, Mr. Obama could be stymied on other issues.

The campaign for a health care overhaul began as a way to help the uninsured. But it gained momentum when middle-class families with health insurance flooded Congress with their grievances. They complained of soaring premiums. They said their insurance had been canceled when they got sick.

“It’s not just the uninsured,” said Representative Jim McGovern, Democrat of Massachusetts. “We also have to worry about people with insurance who find, for crazy reasons, that they are somehow going to be denied coverage.”

In the end, groups like the United States Chamber of Commerce and the National Federation of Independent Business tried to stop the bill, saying it would increase the cost of doing business. But other groups, including the American Medical Association and AARP, backed it, as did the pharmaceutical industry.

Lawmakers agreed that Sunday’s debate was historic, but they were poles apart in assessing the legislation.

Representative Rodney Alexander, Republican of Louisiana, said, “You cannot expect to expand coverage to millions of individuals and to curb costs at the same time.”

Republicans said the picture painted by the budget office was too rosy, because the new taxes and fees would start immediately, while the major costs would not show up for four years.

Moreover, Republicans said Democrats would pay a price for defying public opinion on the bill.

“Are you so arrogant that you know what’s best for the American people?” Representative Paul Broun, Republican of Georgia, asked the Democrats. “Are you so ignorant to be oblivious to the wishes of the American people?”

Lawmakers spoke with deep conviction in explaining their votes.

“Health care is not only a civil right, it’s a moral issue,” said Representative Patrick J. Kennedy, Democrat of Rhode Island, who invoked the memory of his father, Senator Edward M. Kennedy, a Massachusetts Democrat and a lifelong champion of health care for all.

After the legislation passed, Mr. Obama sought to place the day in perspective.

“In the end what this day represents is another stone firmly laid in the foundation of the American dream,” the president said. “Tonight, we answered the call of history as so many generations of Americans have before us. When faced with crisis, we did not shrink from our challenges. We overcame them. We did not avoid our responsibilities, we embraced it. We did not fear our future, we shaped it.”


Carl Hulse contributed reporting.

    House Approves Health Overhaul, Sending Landmark Bill to Obama, NYT, 22.3.2010, http://www.nytimes.com/2010/03/22/health/policy/22health.html