After weeks of delay, Senate Democrats were finally able to defeat GOP roadblocks and pass the bill to reign in Wall Street, and hopefully, prevent the 2008 crises from happening again. As the House already passed the final version, the bill now goes to President Obama for signature. The Senate’s next big legislative item will be an energy/climate bill that Senate Majority Leader Harry Reid will try to bring to the floor in two weeks. The House passed its version last year, but the Senate will scale back the “cap and trade” provision to only limit carbon pollution to power plans.

A Senate vote on extended unemployment benefits has been put off until next week, when Bob Byrd’s replacement (to be announced by Gov. Manchin tomorrow) will be sworn in, giving the Democrats enough votes. Republicans also delayed a commitee vote on Elena Kagan until next week.

With the sad passing of Sen. Robert Byrd, the longest serving member of Congress in U.S. history, the Democrats for now number 58 in the Senate (the Democratic governor of West Virginia will appoint someone in the near future, with a special election taking place in 2012, the same time as the next election was going to be held anyway). As it is tradition that the President pro temp of the Senate goes to the most senior member of the majority party, Sen. Daniel Inouye of Hawaii was sworn in.

Since the Democrats lost a member, they had to reconvene conference negotiations on the Wall Street reform bill, removing a bank tax (meaning costs of the bill will now fall back on the taxpayers) to appease Sen. Scott Brown who is still uncommital on his vote, which will now not take place until next week.  The House of Representatives passed the final version, with Speaker Pelosi personally gavelling the vote to a close, as it represents the biggest financial reforms since the Great Depression.

And extension of jobless benefits passed in the House but died once again in the Senate (thanks to Republicans and Sen. Ben Nelson), meaning that the unemployed will continue to suffer through the 4th of July congressional recess. The House also passed a bill that broadens BP’s legal liability for the 11 workers who died in the oil rig explosion.

Gen. David Petraeus was quickly confirmed 99-0 to command the war effort in Afghanistan, replacing Gen. Stanley McChrystal whom was removed by Pres. Obama after controversial remarks to Rolling Stone but will be retiring with four stars. Supreme Court nominee Elena Kagan’s confirmation hearings this week were decidedly uncontroversial and she is expected to be confirmed.

After weeks of debate on amendments and typical GOP obstruction, the Senate has finally passed its version of regulatory reforms designed to avert another financial crises and more bailouts. Some progressives don’t think it goes far enough, but like with health care reform, ultimately most voted in favor. The House of Representatives passed its version last year and now they will work out the differences in conference. The White House is hoping to sign a final bill into law by the July 4th recess.

The Senate continued to work on the financial reform bill, passing several notable amendments including  one limiting the ability of Wall Street firms to shop around for favorable ratings from now-discredited credit rating agencies, one to audit the actions of the Federal Reserve, and one that would force credit card companies to charge businesses less for debit card transactions than for credit card payments., among others. Senate Majority Leader Harry Reid wants to call for a cloture vote to end debate on Monday, but Republicans will try to thwart – as always.

Also, Republican Senator Murkowski of Alaska blocked a bill that would raise the liability caps for oil companies from $75 million to $10 billion in response to the damage caused by BP’s oil spill in the Gulf. And Sens. John Kerry and Joe Lieberman also finally unveiled their delayed climate change/energy bill, but its prospects of passing may be only slightly better than that of immigration reform…

Meanwhile, Republicans in the House of Representatives derailed a technology bill by attaching an amendment that effectively eliminated some of the key initiatives in the technology bill while inserting language supporting the firing of government workers who view or download pornography on the job to make those opposed to the cuts vulnerale to attack ads claiming they supported pornography on the government’s dime. Democrats scuttled the measure for now.

The Senate worked through several amendments to the financial reform legislation this week. Passing were amendments to ban the use of taxpayer dollars for bailouts and an elimination of the $50 billion liquidation fund included in the original legislation. Failing were amendments to break up the six largest banks and a Republican-lead effort to considerably weaken the powers of a proposed consumer protection agency. An amendment to audit the Fed is expected to pass next week an effort to reimpose the Glass-Steagal wall may see the light of day. An effort is also underway to attach an amendment to address the “secret holds” problem that has crippled Senate action on Obama nominees at a record level.

Several Senators also looked to respond the oil spill and Times Square bomb scare. Sen. Bill Nelson is saying that an offshore drilling  expansion is “dead on arrival” in Congress. And Sens. Joe Lieberman and Scott Brown has introduced obviously unconstitutional legislation (even Rep. John Boehner questioned it) that would strip citizenship of American citizens simply accused of terrorism, even as others showed opposition to a bill that would keep people on the F.B.I. terrorist watch list from buying guns and explosives.

The House of Representatives passed a bill dubbed “cash for caulkers” that will make homeowners elgible for thousands of dollars in rebates for renovating their homes to be more energy efficient.

Lastly, the “will they, won’t they” debate on whether or not Congress will take up immigration reform continues as President Obama now says he’d like to see work begin this year.

UPDATE: With White House support, Sens. John Kerry and Joe Lieberman are pressing forward with their climate change/energy bill despite Sen. Graham’s bellyaching. They will introduce the legislation on Wednesday.

Wow. Matt Taibbi has done it again, unleashing another furious and righteous broadside regarding Wall Street and the financial industry…only this time it’s aimed at an Obama administration that appears to be home-away-from-home for a legion of Wall Street expatriates and Clinton-era New Democrat-ish advisors who are determined to destroy any effort to enact fundamental reform. Taibbi’s article is dense and fact-heavy, so it doesn’t really do justice to excerpt any of it; you really should read the whole thing, and carefully at that. But here’s a taste:

The significance of all of these appointments isn’t that the Wall Street types are now in a position to provide direct favors to their former employers. It’s that, with one or two exceptions, they collectively offer a microcosm of what the Democratic Party has come to stand for in the 21st century. Virtually all of the Rubinites brought in to manage the economy under Obama share the same fundamental political philosophy carefully articulated for years by the Hamilton Project: Expand the safety net to protect the poor, but let Wall Street do whatever it wants. “Bob Rubin, these guys, they’re classic limousine liberals,” says David Sirota, a former Democratic strategist. “These are basically people who have made shitloads of money in the speculative economy, but they want to call themselves good Democrats because they’re willing to give a little more to the poor. That’s the model for this Democratic Party: Let the rich do their thing, but give a fraction more to everyone else.”

And:

“The investment community feels very put-upon,” [Daniel] Fass explained. “They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.”

Which makes sense. Shit, who could blame the investment community for the meltdown? What kind of assholes are we to put any of this on them?

This is the kind of person who is working for the Obama administration, which makes it unsurprising that we’re getting no real reform of the finance industry. There’s no other way to say it: Barack Obama, a once-in-a-generation political talent whose graceful conquest of America’s racial dragons en route to the White House inspired the entire world, has for some reason allowed his presidency to be hijacked by sniveling, low-rent shitheads. Instead of reining in Wall Street, Obama has allowed himself to be seduced by it, leaving even his erstwhile campaign adviser, ex-Fed chief Paul Volcker, concerned about a “moral hazard” creeping over his administration.

“The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted,” Volcker told Congress in September, expressing concerns about all the regulatory loopholes in Frank’s bill. “Ultimately, the possibility of further crises — even greater crises — will increase.”

I haven’t followed the financial reform efforts nearly as closely as someone like Taibbi, but every time I read about one of these clowns I’m amazed to the extent at which they all seem to be proponents of the New Democrat “free markets/low regulation” approach. But it’s obvious why they support it; they all made millions in this system. Why in God’s name would the Obama administration make them the top economic advisors, when they were largely behind (or connected to, or getting paid by, people behind) the anti-regulatory approach of the Clinton administration? Maybe somebody can ask Obama that question when they get a moment free from asking Sarah Palin her opinion of global warming.

One more excerpt:

These teabaggers don’t know that, however. All they know is that a big government program might end up using tax dollars to pay the medical bills of rapidly breeding Dominican immigrants. So they hate it. They’re also in a groove, knowing that at the polls a few days earlier, people like themselves had a big hand in ousting several Obama-allied Democrats, including a governor of New Jersey who just happened to be the former CEO of Goldman Sachs. A sign held up by New Jersey protesters bears the warning, “If You Vote For Obamacare, We Will Corzine You.”

I approach a woman named Pat Defillipis from Toms River, New Jersey, and ask her why she’s here. “To protest health care,” she answers. “And then amnesty. You know, immigration amnesty.”

I ask her if she’s aware that there’s a big hearing going on in the House today, where Barney Frank’s committee is marking up a bill to reform the financial regulatory system. She recognizes Frank’s name, wincing, but the rest of my question leaves her staring at me like I’m an alien.

“Do you care at all about economic regulation?” I ask. “There was sort of a big economic collapse last year. Do you have any ideas about how that whole deal should be fixed?”

“We got to slow down on spending,” she says. “We can’t afford it.”

“But what do we do about the rules governing Wall Street . . .”

She walks away. She doesn’t give a fuck. People like Pat aren’t aware of it, but they’re the best friends Obama has. They hate him, sure, but they don’t hate him for any reasons that make sense. When it comes down to it, most of them hate the president for all the usual reasons they hate “liberals” — because he uses big words, doesn’t believe in hell and doesn’t flip out at the sight of gay people holding hands. Additionally, of course, he’s black, and wasn’t born in America, and is married to a woman who secretly hates our country.

These are the kinds of voters whom Obama’s gang of Wall Street advisers is counting on: idiots.

The idiots aren’t all on that side either. On our side we have people like Gary Willis who are abandoning Obama because he’s sending more troops to Afghanistan, a move that had roughly a 75% or better chance of happening upon his election, and then we have people who have decided they can’t be liberal because other people are being mean to Obama about this decision. So while we’re busy fighting about things that liberals have legitimate differences of opinion on, Wall Street executives are becoming the best buddies of the Obama administration (when they aren’t one and the same, that is.)

As has become typical, Taibbi takes fire from people who mistake his style for his substance. Because Taibbi acts like a blogger instead of a mainstream journalist, he takes the time to carefully demolish his critic’s arguments. But even someone like Fernholz, who mistakes hyperbole with a purpose for fact, can see as clearly as any of us how men and women with ties to Wall Street have come to dominate this administration, and what that’s doing to the reform efforts in Congress. People ought to be angry about this but they aren’t, because they don’t understand what’s happening and so don’t know why they should be angry in the first place except that some bankers are getting big bonuses. But Taibbi explains it in detail, and his righteous indignation becomes are rage at a system that appears to be rigged against people losing their homes, their life-savings, and their dignity. I am not at all exaggerating when I say that we need Taibbi right now, because he’s the only one who’ll make us angry enough to pay attention.

Sam Pizzigati regales us with the sad result of the decades-long conservative “tax revolt” that has gutted social welfare programs and let wealthy taxpayers off the hook while left middle and lower class taxpayers are left holding the bag (via Adam.) He’s worth excerpting at length:

Tax relief had become, in the wink of an eye, America’s most potent political creed. Tax cutting and capping would go on to dominate the nation’s political discourse for the next three decades, an entire generation.

And what do we have to show for all this cutting and capping? Last week, researchers offered up two new studies that offer up a useful assessment.

The first, funded by the Social Security Administration, looks at the wealth of American families. That wealth, the Tax Revolters assured us,would start amassing again once taxpayers yanked “big government” out of our pockets.

The second new study zeroes in on state and local taxes. After years of tax revolting, this Institute on Taxation and Economic Policy report asks, who exactly is paying taxes at the state and local level? Who has benefited the most, in tax terms, from the Tax Revolt the Tea Party zealots are now so fervently seeking to extend?

The answer: The rich have benefited the most. The Tax Revolt that began back in the late 1970s has, in state after state, let the affluent off the tax hook.

In fact, notes the new Institute on Taxation and Economic Policy analysis, “nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy.”
In the entire United States, the analysis adds, “only two states require their best-off citizens to pay as much of their incomes in taxes as their very poorest taxpayers must pay, and only one state taxes its wealthiest individuals at a higher effective rate than middle-income families have to pay.”

America’s most affluent 1 percent now pay, on average, just 6.4 percent of their incomes in state and local taxes. But they actually pay even less than that, since they can deduct their state and local taxes from their federal tax bill. The state and local tax burden on America’s rich, after taking this offset into account, drops to 5.2 percent.

Middle-income families — to be precise, those families who make up the middle fifth of America’s income distribution — pay, after the federal offset, 9.4 percent of their incomes in total state and local taxes.
America’s poorest families pay even more. Tax collectors take 10.9 percent of the incomes of households in the nation’s bottom 20 percent, more than double the share they take from the incomes of the nation’s top 1 percent.

Now you’ll frequently hear anti-tax zealots pointing to the higher rates of taxes that the wealthy generally pay, but that’s not the argument here (and that’s irrelevant in states like Texas, where much of the tax revenue is collected in the form of regressive sales taxes.) But as Nat-Wu aptly demonstrated in what I regard as one of his best and most informative posts, the wealthy are left with vastly more disposable income than you and I even if they are taxed at substantially higher rates. All it really comes down to is a matter of what you’ve got left to eat with at the end of the day, and while the wealthy are dining on caviar the middle and lower-classes are hoofing it to the pizza buffet. But that will always be the case. Never will the rich be taxed to a degree that would leave them with as much disposable income as a guy making $45,000 a year (nor would anyone other than a communist argue for such a thing.) No, the real travesty is the direction that the tax burden has taken; the only thing that’s trickled down as a result of the conservative obsession with tax cuts is the burden of paying for functioning governments.

Friends, this is the country we live in: the wealthy horde more of their money than ever before, investing it foolishly in things like securitized home mortgages. When those investment crash, their businesses are rescued by the federal government with the money you and I made doing what some of us might call “real” work, which is in turn converted into billions of dollars in profits and bonuses, much of which is in turn funneled to other wealthy and successful men and women in the form of campaign contributions so as to stave off anything approaching reform for this travesty. Would it be hyperbole to call the United States the largest and richest banana republic in the history of mankind? Well, what do you think?

I reluctantly supported last year’s various bailouts of the financial industry because I accepted the idea that, as distasteful as they may have been, they were necessary to prop up the troubled economy. I’m beginning to think that I was, ahem, naive:

A RAY of sunlight broke through the Washington fog last week when Neil M. Barofsky, special inspector general for the Troubled Asset Relief Program, published his office’s report on the government bailout last year of the American International Group.

It’s must reading for any taxpayer hoping to understand why the $182 billion “rescue” of what was once the world’s largest insurer still ranks as the most troubling episode of the financial disaster. And it couldn’t have come at a more pivotal moment.

[...]

The report takes the Fed to task as refusing to use its power and prestige to wrestle concessions from A.I.G.’s big, sophisticated and well-heeled trading partners when the government itself had to pay off the contracts.

The Fed, under Mr. Geithner’s direction, caved in to A.I.G.’s counterparties, giving them 100 cents on the dollar for positions that would have been worth far less if A.I.G. had defaulted. Goldman Sachs, Merrill Lynch, Société Générale and other banks were in the group that got full value for their contracts when many others were accepting fire-sale prices.

On the question of whether this payout was what the report describes as a “backdoor bailout” of A.I.G.’s counterparties, Mr. Barofsky concluded: “The very design of the federal assistance to A.I.G. was that tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.’s counterparties.” The report noted that this was money the banks might not otherwise have received had A.I.G. gone belly-up.

The report said that while bailing out Goldman and other investment banks might not have been the intent behind the Fed’s A.I.G. rescue, it certainly was its effect. “By providing A.I.G. with the capital to make these payments, Federal Reserve officials provided A.I.G.’s counterparties with tens of billions of dollars they likely would have not otherwise received had A.I.G. gone into bankruptcy,” the report stated.

As Goldman prepares to pay out nearly $17 billion in bonuses to its employees in one of its most profitable years ever, it is important that an authoritative, independent voice like Mr. Barofsky’s reminds us how the taxpayer bailout of A.I.G. benefited Goldman.

And in the meantime:

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

Did you catch that? Hundreds of billions of dollars in interest payments on debt for us, billions of dollars of bonuses for executives at Goldman Sachs as a result of one of its most profitable years ever. Matt Taibbi was right; we’ve been robbed blind and as our nation sinks under a mountain of debt and rising unemployment, Goldman Sachs executives will be buying their own islands.