Poll: Terror Defines the Decade

Americans have evaluated the last decade and the results can be found in one word: Terror, according to a new Zogby Interactive poll.

When asked to pick one word/phrase to define the past decade, 21 percent of Americans chose "terror" followed by "decline" (15 percent) and then "loss of personal freedom/civil liberties" (13 percent). Republicans (33 percent) were more likely than Democrats (12%) to say "terror" defines the decade, according to poll results. Instead, Democrats chose "decline" (20 percent) and "greed" (17 percent) as the top words to define the decade. Conservatives also chose "terror" to define the decade while liberals chose "greed" (20 percent) and "decline" (19 percent), the pollsters say. Only 11 percent of liberals chose "terror."

Similarly, the Sept. 11, 2001, terrorist attacks characterize the past 10 years for most Americans, according to the poll. Seventy-six percent of American adults name the Sept. 11 attacks as the decade's most significant story, dwarfing the 5% of adults selecting Hurricane Katrina as the top story.

Even smaller percentages said the Indian Ocean tsunami (2 percent), the elections of 2000 (4 percent), 2004 (less than 1 percent), and 2008 (4 percent), or the Iraq and Afghanistan wars (4 percent together) were the most significant story of the decade.

Almost all Republicans (91 percent) said 9/11 was the most significant story compared to 63 percent of Democrats. Some Democrats voted Hurricane Katrina (10 percent) and not surprisingly, the 2008 presidential election (9 percent), as the most significant story of the decade.

Interestingly, adults who live in large cities (70 percent) were a little less likely than those who live in small cities (77 percent), the suburbs (also 77 percent), or rural areas (83 percent) to rate the Sept. 11 terrorist attacks as the most significant story of the decade, the pollsters say.

The rise in general terrorism (from Sept. 11 to attacks in London, Madrid, and Mumbai) was voted the most significant issue of the decade. Trailing terrorism was the increase in U.S. debt, with 16 percent selecting this as the most significant issue of the decade. Americans chose the wars in the Middle East, Afghanistan, and Iraq as the third most significant issue of the decade, with 10 percent of Americans saying it was the most significant issue of the decade.

This interactive survey of 2,841 adults was conducted Dec. 28-30, 2009. A sampling of Zogby International's online panel, which is representative of the adult U.S. population, was invited to participate, the pollsters say. Slight weights were added region, party, age, race, religion, gender, education to more accurately reflect the population, they add. The margin of error is +/- 1.9 percentage points.

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Federal Declassification Center: A 'New Day' In Government Accountability

The federal government next month will launch a new center designed to streamline the review and declassification of secret documents to open up many more records to public scrutiny, officials say. The goal is to create a higher level of government accountability, they say.

Created by an executive order that President Obama signed Tuesday, the National Declassification Center (NDC) will begin operations next month.

Specifically, the NDC is charged with streamlining declassification processes, facilitating quality assurance measures, and implementing standard training for declassification reviewers, according an announcement from the National Archives and Records Administration.

"The federal government has reached a watershed moment in records declassification," says Archivist of the United States David Ferriero. "The current backlog is so huge that Americans are being denied the ability to hold government officials accountable for their actions. By streamlining the declassification process, the NDC will usher in a new day in the world of access, allowing the National Archives to make more records available for public scrutiny much more quickly."

NDC will begin operations in early January under the direction of Michael Kurtz, assistant archivist for records services, pending the selection of a permanent director.

"The establishment of the NDC provides a unique opportunity for the National Archives and its agency colleagues to create new strategies to protect essential national security and release hundreds of millions of pages to researchers and the public," says Kurtz.

Initially, the NDC will be located at the National Archives facility in College Park, Md., and focus on clearing the backlog of referrals in reviewed documents both in federal records and in presidential materials, according to the announcement.

Obama's executive order takes steps to address the problem of over-classification, according to a statement on the White House website.

"It greatly strengthens the requirements for training and oversight of all original classification authorities and the much larger number of derivative classifiers," the site says, referring to a term for those whose job it is to determine whether information that is to be included in a document or material has been classified. "It also directs that information not be classified (or be classified at a lower level) when 'significant doubt' exists about the need to classify it. The new [executive order] also tightens the standards for keeping information classified for more than 25 years."

In anticipation of the establishment of the NDC, an inter-agency program management team that has begun examining current declassification review processes throughout the government, the announcement from the National Archives says. The National Archives is working to conduct a study to determine how processes can be improved by reducing process declassification cycle time, defects and costs. The recommendations from this effort will be incorporated into the new NDC processes.

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The Public Option Is Dead Or Is It?

When Senate Democrats removed a public option from their final healthcare reform package, supporters of such a provision complained bitterly, as it was widely assumed such a move would permanently kill chances a federally run coverage option would become law.

And while the public option may indeed have met its final end, the concept has been declared dead before -- only to have risen again.

To send a final healthcare bill to President Obama to sign into law, congressional Democrats must now reconcile separate House and Senate legislation into a single package each chamber can agreed to. Since the version passed by the House includes a public option provision, it's still at least possible for it to be pushed into that ultimate bill sent to the White House.

Increasingly vocal House Democrats are demanding it. And the potential for a public option to come through is real enough that just days after the Senate was throught to have nailed the public option coffin shut with its Christmas Eve vote, business interests opposed to the idea are still keeping up their fight.

Both chambers of Congress are now officially in recess through much of January, so negotiations over what shape a final health reform bill likely will not begin in earnest until after New Year's. But in a sign of how delicately those talks may eventually be -- and particularly in recognition of how sensitive the public issue might be in that process -- neither House Speaker Nancy Pelosi, nor Majority Leader Steny Hoyer (D-Md.) have even mentioned the words "public option" in public statements since the Senate vote last week.

Pelosi particularly, who has been a vocal public option supporter throughout the reform process, has not indicated whether she would be willing to fight to keep the provision, or jettison it in order to get a bill to Obama's desk.

Her most recent statement, from Dec. 24 following the final Senate vote, praised the Senate for its work but Pelosi also says she is "proud of the House bill."

“We are proud of the House bill, which provides more affordable coverage for the middle class, covers 36 million currently uninsured Americans, begins health insurance reform in 2013, fully closes the prescription drug donut hole for seniors, mandates strong reforms of the insurance industry, and is fiscally responsible, cutting the deficit by $138 billion over 10 years," the California Democrat says. "As we move forward through the legislative process, we will soon produce a final bill that is founded on the core principles of health insurance reform: affordability for the middle class, security for our seniors, responsibility to our children by reducing the deficit, and accountability for the insurance industry."

While Pelosi keeping her cards close to the chest on trying to fight for a public option, many in her caucus are proving much more vocal.

Rep. Louise Slaughter (D-N.Y.), a senior Democrat and a member of Pelosi's leadership team as the chairwoman of the House Rules Committee, has perhaps been most high profile having published an opinion piece at CNN.com in which she insists on including a public option.

"I do not want to subsidize the private insurance market; the whole point of creating a government option is to bring prices down. Insisting on a government mandate to have insurance without a better alternative to the status quo is not true reform," she says.

Other influential Democrats also have spoken out, such as Reps. John Conyers (D-Mich.), a longtime member of the House and the chairman of the House Judiciary Committee, Barbara Lee (D-Calif.), and Lynn Woolsey (D-Calif.).

Lee and Woolsey, leading progressive voices as the former and current chairwomen of the House Progressive Caucus respectively, issued a joint statement in which they too, say, establishing a public option is non-negotiable.

"If the bill requires people to buy health insurance, there must be a public option to bring down costs by providing lower-cost competition to private insurers and choice to consumers," they say.

Apparently sensing the power progressives may still wield in favor of a public option, opponents continue to put time and effort into knocking it down. Specifically, the Michigan Business and Professional Association and the Michigan Food and Beverage Association this week released a poll slamming the House-approved public option. The business groups say that 83 percent of the owners of small businesses surveyed across Michigan do not support a public option.

The associations' effort may be aimed at Conyers, who hails from Michigan, although their joint statement does not specifically mention the 22-term lawmaker.

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TSA’s Top Post Sits Vacant Because of Sen. DeMint’s Union Beef

by Alexandra Andrews, ProPublica

This is one of our editors’ picks from our ongoing roundup of Investigations Elsewhere.

Last week’s thwarted terror attack left all eyes trained on the Transportation Security Administration, but there was no chief of the agency to offer an explanation. The top post is sitting empty because Sen. Jim DeMint, R-S.C., is blocking President Barack Obama’s nominee, who has already secured the bipartisan support of two Senate committees, reports McClatchy Newspapers. The reason? DeMint objects to giving baggage screeners full union rights. Obama has promised to give screeners such rights, and DeMint thinks the nominee, Erroll Southers, will carry out that promise.

DeMint says that collective bargaining rights for TSA screeners would undermine the agency’s "flexibility to make real-time decisions that allowed it to quickly improve security measures in response to this attempted attack." And he says that union bosses would have the power to “veto or delay future security improvements at our airports.”

John Gage, the president of the American Federation of Government Employees, told CNN earlier this month, “People who insinuate that being a union member has a nation security implication are just totally wrong." In the meantime, an acting administrator is in charge at the TSA.

Write to Alexandra Andrews at alexandra.andrews@propublica.org.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Rep. Dennis Kucinich Endorses Credit Cards That Don’t Cost You Your Legal Rights

Amid a flurry of congressional activity to give Americans new protection related to credit cards and the wider financial services industry, a well-known progressive Democratic congressman is touting cards issued by specific firms for the safeguards they offer to consumers.

Rep. Dennis Kucinich of Ohio announced credit cards issued by six issuers "that don’t take away [consumers'] legal rights."

"Until now, all major banks have required their customers -– through provisions hidden in the fine print of credit card agreements -- to give up their constitutional right to their day in court," says Kucinich, a two-time presidential candidate. "Those agreements have required customers to settle their disputes through a process called arbitration. In July, the House Domestic Policy Subcommittee, of which I am the Chairman, held a hearing in which we showed that mandatory arbitration is arbitrary, and that results depend more on the arbitrator to whom the case is assigned than on the facts or the law that applies.

“Since that hearing, my staff has been communicating with all the major banks, and today I can announce that six of those banks will not have arbitration clauses in their new credit card agreements," Kucinich adds. "Those banks are JPMorganChase, CapitalOne, PNC Bank, TD Bank, Bank of America and Regions Bank. I want to congratulate those banks for their decisions."

In particular, Kucinich singles out JPMorganChase and CapitalOne for praise.

"Those two banks will be issuing new credit card agreements that also allow their customers the right to a jury trial and the right to participate in a class action. I strongly encourage the other banks to follow their lead," he says. "For the first time in years, you can choose what credit card to use by considering all its terms—interest rate, minimum payment, fees, rewards, and whether it requires you to give up your right to use the courts that our state and federal Constitutions have created for you.”

Democratic staff of the Domestic Policy panel, which falls under the House Oversight and Government Reform Committee, filed a report for that July hearing that they say was based on
review of hundreds of individual case files from the largest provider of arbitration for debt collection, the National Arbitration Forum (NAF), also known as Forthright LLC.

Among the findings of that report, staffers say that "Virtually all NAF 'consumer arbitrations' are in fact debt collection actions brought by creditors or assignees of creditors, not by the consumers themselves, and almost all consumer arbitrations are decided in the creditor's favor."
Also decisions in "identical cases differed depending on the identity of the arbitrator to whom the claim was assigned" and "Arbitrators in most of claims ignored the absence of evidence of whether or not the claims were brought within the statute of limitations."

Further, the report charges that NAF violated Califomia law by refusing to publish the results of many of its Califomia arbitrations.

At that July hearing, Kucinich himself says that an arbitration "hearing consists of nothing more than the arbitrator looking at a statement written by the creditor and awarding the amount that the creditor requests."

The shift among some card issuers on the arbitration issue comes more than six months after President Obama signed new legislation imposing new regulation on credit card issuers. It also comes amid a broader overhaul of financial regulations that Obama seeks to protect consumers. Legislation to enact those regulations has passed the House and now awaits action in the Senate.

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Schools Have Trouble Tapping Stimulus Funds

by Christopher Flavelle, ProPublica

JONES COUNTY, N.C. – Jones Senior High School has one of the best boys’ basketball teams in eastern North Carolina, but its gymnasium is on the verge of collapse.

In March, engineers found that the walls and roof don’t meet the state’s building code and that “moderate- to high-wind velocities could threaten the stability of the structures.”

“I wouldn’t want to be in here in a bad storm,” said physical education teacher Debbie Philyaw.

After the federal stimulus passed in February, North Carolina school officials thought they had found a way to repair the 58-year-old gym and other crumbling school structures. The stimulus provided money for Qualified School Construction Bonds, which is intended to let school districts raise capital through interest-free bonds to fund construction.

The program also was expected to boost North Carolina’s construction industry. Ben Matthews, director of school support for North Carolina’s Department of Public Instruction, estimated it would create 11,000 jobs.

But the bond program has become entangled in financial and bureaucratic red tape. Only $2.3 billion of the $11 billion in bonds available this year have been sold as of last week, data compiled by Bloomberg show.

“States are missing a once-in-a-lifetime opportunity,” said Judy Marks of the National Clearinghouse for Educational Facilities.

In North Carolina, one of the 69 districts chosen by the state to benefit from the program has found a buyer for its bonds. “The idea is to stimulate the economy,” Matthews said. “Then it comes to a screeching halt because our people can’t find lenders.”

Not seen as profitable

North Carolina’s experience highlights why it’s been so hard to get the program started. For one, North Carolina law prevents the state from issuing bonds directly, so they must be sold by individual counties. But some counties have low credit ratings, and some have been allotted such small amounts of money under the program that lenders aren’t interested.

Matthews said even North Carolina-based Bank of America, one of the nation’s largest banks, hasn’t bought any of the bonds in the state. Bank spokeswoman Nicole Nastacie said the company has invested in the bonds, but would not say where. She said the bank “will continue to consider them, subject to our ability to structure and price appropriately.”

Some potential lenders are also reluctant to buy bonds because it’s hard to make money from them.

Lenders are paid through tax credits from the U.S. Treasury worth an estimated $8 billion over 10 years. But banks battered by the financial crisis can’t use the tax credits if they have no profits and no tax liability. And Treasury has yet to issue regulations allowing banks to strip off the tax credits and sell them to third parties.

Some lenders have asked for interest. Branch Banking & Trust, which is headquartered in Winston-Salem, N.C., offered to buy Jones County’s bonds – if the county paid 2.9% interest, in addition to the tax credits, according to Michael Bracy, the Jones County schools superintendent.

BB&T spokeswoman A.C. McGraw refused to comment on the Jones County bid. She said rates are “based on a thorough analysis of each individual transaction and the terms of the loans.”
Jones County’s manager, Franky Howard, said the county won’t act until next year, when he hopes Treasury will have issued new regulations.

Doesn’t just hurt education

Rep. Bob Etheridge, D-N.C., met with Treasury Secretary Timothy Geithner to ask him to issue rules allowing investors to strip and sell the tax credits. Etheridge said Geithner promised his staff was working on it. That was six months ago.

“It’s complicated. I can appreciate that,” Etheridge said. “But that’s only a reason, not an excuse. Get it done.”

Nayyera Haq, a Treasury spokeswoman, said in an e-mail: “We remain committed to making the Recovery Act bond programs as effective as possible and are in the process of developing additional regulations.”

Etheridge successfully added a provision to a jobs-creation bill passed by the House last week that would allow state or local governments to choose to get a direct payment from Washington equal to the value of the tax credit. The bill heads to the Senate, which will take it up next month.

Students and teachers in Weldon City are among those waiting for the money. The school district hopes to use part of its $894,000 allotment to replace the science labs at Weldon Science and Technology High School, where rusted gas pipes have forced students to do their experiments on computers instead of Bunsen burners.

“As far as any hands-on experiments, we can’t do it,” said Elie Bracy, the superintendent.

The impact of the delay has been economic as well as educational. The city planned to use a local company, Freeman Roofing, for the repairs. On Dec. 2, Freeman went out of business and 18 workers lost their jobs.

“If we had gotten those projects,” said Bill Freeman, the company’s owner, “we’d be in business today.”

Write to Christopher Flavelle at Christopher.Flavelle@propublica.org.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Federal Reserve Board Urged to Ban Mortgage Kickbacks that Cost Homeowners Billions

As the year ends with a spotlight on pending health and financial reforms in Congress, the Federal Reserve closed its comment period for mortgage rules that could save families billions of dollars. In a detailed comment letter, a Washington organization dedicated to eliminating abusive financial practices recommends that the Federal Reserve Board strengthen a proposal to ban routine kickbacks for steering borrowers into unnecessarily risky or expensive home loans.

If finalized as proposed, the ban on kickbacks (often called "yield-spread premiums") would apply to mortgage brokers, loan officers, and any party that originates mortgages for lenders who fund the loans.

"The Federal Reserve has proposed to correct a direct conflict of interest between consumers and lenders, one that fueled the dangerous lending that triggered the housing crisis," says Kathleen Keest, senior policy counsel for the Center for Responsible Lending (CRL). "Many people are still wondering why so many bad loans were made. A big part of the answer is yield-spread premiums. These kickbacks are easy to hide from consumers, and they encourage brokers to aggressively market the worst kinds of loans -- even when their customers qualify for better."

The Federal Reserve's pending action comes amid of flurry of activity to enact stronger consumer protections against predatory and harmful financial practices such as those that contributed to the financial meltdown crisis of the fall of 2008.

In research released in 2008, CRL analyzed nearly 2 million mortgages and says that it found that people with weaker credit paid significantly more for mortgages originated by brokers rather than directly by lenders. On mortgages made between 2004 and 2006, the organization says that it estimates that borrowers paid almost $20 billion in extra interest on loans they received from brokers. Much of that excessive cost is likely attributable to yield-spread premiums, CRL says in a statement.

The Federal Reserve Board's current proposal related to yield-spread premiums includes broader amendments to the Truth in Lending Act (Regulation Z). With some strengthening provisions, CRL says that it strongly supports the amendment that would prohibit lenders from tying bonuses to the terms and conditions of the loan. The deadline for submitting comments was Dec. 24 at 5:00.

CRL's comment letter notes that nothing in the proposed rule would prevent lenders from offering appropriate compensation to brokers and other loan originators. The letter says, "There will still be room for creditors to offer incentives to originations to deliver quality loans. And originators can still be fairly compensated for their work."

Among the recommendations included in CRL's comments to strengthen the proposal:

Do not permit lenders and brokers to split origination costs between up-front fees and higher interest rates.

If a yield-spread premium is paid, the lender who pays it should accept legal accountability for any lending misconduct by the broker.

The proposal on compensation should apply to the entire mortgage market, including home equity lines of credit.

The final rule should encourage lenders to provide monetary incentives for loan originators to deliver high quality, sustainable loans.

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Web Enabled Protest: Senate Wants IT Deployed To Shield Iranian Opposition

Senators are urging the Obama administration to begin implementing a new law designed to use software and Internet technology to aid members of the embattled opposition in Iran and shield the protesters against an ongoing crackdown.

Prior to leaving Washington for its holiday recess, the Senate unanimously approved a resolution condemning the government in Tehran for continuing human rights abuses that began in the aftermath of Iran's contested June 12 presidential election.

Little noticed in the noisy run-up to the awaited Christmas Eve vote on the Senate healthcare reform package, the Senate resolution also urged the implementation of the VOICE Act. Included as a provision of the the Fiscal Year 2010 National Defense Authorization Act signed by President Obama in October, the Victims of Iranian Censorship (VOICE) Act is designed to use technology to help the Iranian people get access to news and information and overcome the electronic censorship and monitoring efforts of the Iranian regime.

"The government of Iran continues to violate the internationally-recognized human rights of its people, including a brutal crackdown on peaceful protesters, prolonged detention, torture, and executions," says Sen. Chris Dodd (D-Conn.), of last week's Senate resolution. "With this resolution — and recently-enacted laws designed to pressure Iran to respect the rights of its citizens and to hold accountable those who would deny them — Congress stands firmly behind the people of Iran and their right to express their views and exercise their freedoms without retribution by their government."

The move by the Senate comes amid fresh reports that the Iranian government continues to round up protesters and brutally repress an opposition that has remained remarkably resolute since widespread evidence that the June election was rigged against the opposition candidate.

Since the summer, much of Iran's opposition has been fueled by use of Internet media tools like Twitter while the regime has increasingly been working to suppress such Web access within Iran.

The VOICE Act further bolsters the technology available to the Iran opposition to counter such suppression, according to descriptions of the legislation. It authorizes U.S. funds to develop additional transmission capability to counter Iranian government efforts to jam radio, satellite, and Internet-based transmissions; establish additional proxy Web server capability and anti-censorship software to counter efforts to block access to websites in Iran; and develop technologies to counter efforts to block text message exchange over cellular phone networks.

Also, the legislation authorizes the U.S. government to fund a new "Iranian Electronic Education, Exchange, and Media Fund," which will support the development of technologies, including websites, that will aid the ability of the Iranian people to gain access to and share information; counter efforts to block, censor, or monitor the Internet in Iran; and engage in Internet-based education programs and other exchanges with Americans online.

The VOICE Act further requires the president to report on non-Iranian companies, including corporations with U.S. subsidiaries, that have aided the Iranian government's Internet censorship efforts, including by providing deep packet inspection technology.

"While the people of Iran enthusiastically participated in the June 12 elections, it is painfully clear that the long road to democracy does not end there, as the government has infringed on the universal principles of freedom of expression and press," Sen. Ted Kaufman (D-Del.), says in a statement released last summer when the Senate first approved the VOICE Act. Kaufman was an orginal sponsor of the legislation. "Our bill supports the Iranian people as they take steps to peacefully express their opinions and aspirations and seek access to news and means of communication, especially over the Internet."

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New Gas Wells Leave More Chemicals in Ground

by Abrahm Lustgarten, ProPublica

For more than a decade the energy industry has steadfastly argued before courts, Congress and the public that the federal law protecting drinking water should not be applied to hydraulic fracturing, the industrial process that is essential to extracting the nation’s vast natural gas reserves. In 2005 Congress, persuaded, passed a law prohibiting such regulation.

Now an important part of that argument — that most of the millions of gallons of toxic chemicals that drillers inject underground are removed for safe disposal, and are not permanently discarded inside the earth — does not apply to drilling in many of the nation’s booming new gas fields.

Three company spokesmen and a regulatory official said in separate interviews with ProPublica that as much as 85 percent of the fluids used during hydraulic fracturing is being left underground after wells are drilled in the Marcellus Shale, the massive gas deposit that stretches from New York to Tennessee.

That means that for each modern gas well drilled in the Marcellus and places like it, more than three million gallons of chemically tainted wastewater could be left in the ground forever. Drilling companies say that chemicals make up less than 1 percent of that fluid. But by volume, those chemicals alone still amount to 34,000 gallons in a typical well.

These disclosures raise new questions about why the Safe Drinking Water Act, the federal law that regulates fluids injected underground so they don’t contaminate drinking water aquifers, should not apply to hydraulic fracturing, and whether the thinking behind Congress’ 2005 vote to shield drilling from regulation is still valid.

When lawmakers approved that exemption it was generally accepted that only about 30 percent of the fluids stayed in the ground. At the time, fracturing was also used in far fewer wells than it is today and required far less fluid. Ninety percent of the nation’s wells now rely on the process, which is widely credited for making it financially feasible to tap into the Marcellus Shale and other new gas deposits.

Congress is considering a bill that would repeal the exemption, and has directed the Environmental Protection Agency to undertake a fresh study of how hydraulic fracturing may affect drinking water supplies. But the government faces stiff pressure from the energy industry to maintain the status quo — in which gas drilling is regulated state by state — as companies race to exploit the nation’s vast shale deposits and meet the growing demand for cleaner fuel. Just this month, Exxon announced it would spend some $31 billion to buy XTO Energy, a company that controls substantial gas reserves in the Marcellus — but only on the condition that Congress doesn’t enact laws on fracturing that make drilling “commercially impracticable.”

The realization that most of the chemicals and fluids injected underground remain there could stoke the debate further, especially since it contradicts the industry’s long-standing message that only a small proportion of the fluids is left behind at most wells.

But while the message has not changed, the drilling has.

Fractured oversight

In the nation’s largest and most important natural gas fields, far more chemicals are being used today than when Congress and the EPA last visited the fracturing issue, and far more of those fluids are remaining underground. Drilling companies say that as they’ve drilled in the Marcellus they’ve discovered that the shale rock — which is similar to many of the nation’s largest natural gas projects in Louisiana, Texas and several other states — holds more fluids than they expected.

During hydraulic fracturing, drillers use combinations of some of the 260 chemical additives associated with the process, plus large amounts of water and sand, to break rock and release gas. Benzene and formaldehyde, both known carcinogens, are among the substances that are commonly found.

If another industry proposed injecting chemicals — or even salt water — underground for disposal, the EPA would require it to conduct a geological study to make sure the ground can hold those fluids without leaking and to follow construction standards when building the well. In some cases the EPA would also establish a monitoring system to track what happens as the well ages.

But because hydraulic fracturing is exempt from the Safe Drinking Water Act, it doesn’t necessarily have to conform to these federal standards. Instead, oversight of the drilling chemicals and the injection process has been left solely to the states, some of which regulate parts of the process while others do not.

As the industry was lobbying Congress for that exemption — and ever since — the notion that most fluids would not be left underground continued to emerge as a recurring theme put forth by everyone from attorneys for Halliburton, which developed the fracturing process and is one of the leading drilling service companies, to government researchers and regulators.

“Hydraulic fracturing is fundamentally different,” wrote Mike Paque, director of the Ground Water Protection Council, an association of state oil and gas regulators, to Senate staff in a 2002 letter advocating for the exemption, “because it is part of the well completion process, does not ‘dispose of fluids’ and is of short duration, with most of the fluids being immediately recovered.”

The Ground Water Protection Council did not respond to a request for further comment.

Special exemption

EPA officials maintained in 2005, and say now, that the volume of fluids left underground had little to do with its opinion that hydraulic fracturing for gas wells is not the same as underground injection. They say that distinction is because the primary function of the two types of wells is different: Gas wells are for production processes, while most EPA-regulated underground injection wells are intended for storage.

But Stephen Heare, director of the EPA’s Drinking Water Protection Division in Washington, said that both the circumstances and the drilling technology have evolved. When asked to explain how hydraulic fracturing today is different from other forms of underground injection, he said the bottom line was simple:

“If you are emplacing fluid, it does not matter whether you are recovering 30 percent or 65 percent of it, if you are emplacing fluids that is underground injection,” Heare said. “The simple explanation for why hydraulic fracturing is different from other injection activities,” he added, is that hydraulic fracturing “is exempt from regulation under the Safe Drinking Water Act.”

The argument that fracturing should not be regulated by the EPA became prominent in the 1990s, after the EPA said that fracturing lay outside the scope of the Safe Drinking Water Act, because the primary purpose of gas wells was energy production, not fluid disposal.

A 1997 Alabama lawsuit challenged that position, and the 11th Circuit Court of Appeals ruled against the EPA.

In that decision, the judges wrote that "According to the state agency, hydraulic fracturing is not underground injection because it does not result in permanent subsurface ‘emplacement’ of the fluids, as these fluids are pumped out of the ground before methane gas is extracted out of the well." But the judges called that assertion “untenable” and ordered the EPA to regulate fracturing in Alabama under the Safe Drinking Water Act. They also ordered the EPA to more clearly define fracturing as a type of underground injection, a move that could have paved the way for regulation in other states as well.

But in 2005, before such regulation could happen, Congress stepped in and gave hydraulic fracturing its special exemption from the Safe Drinking Water Act.

When Congress voted for the exemption it referred to a 2004 EPA report, which concluded that fracturing did not pose a threat to drinking water. That report, which has since been criticized as incomplete, said that while some of the fracturing fluids remained underground, “Most of the fracturing fluids injected into the formation are pumped back out of the well along with groundwater and methane gas."

Lee Fuller, vice president of government affairs for the Independent Petroleum Association of America, said that the emphasis on wastewater removal was made to help legislators understand how fracturing was different from underground injection, but that those legislators also knew that much of the water stayed underground when they voted for the exemption.

“The EPA study said there was a certain amount of the water that does stay in the fractured formation. That information was known,” he said, adding that more of the water may seep out over the lifespan of the well. “So I think there was an understanding of it on the part of the proponents of the proposal.”

In the 2004 report, the EPA said as much as 59 percent of fracturing fluids can remain underground. A 2009 Department of Energy report titled Modern Shale Gas put that figure at 30 to 70 percent, but emphasized that most wells fall into the lower end of that range, explaining that "The majority of fracturing fluid is recovered in a matter of several hours to a couple of weeks."

Just six months ago that point was reiterated in testimony before the House Committee on Natural Resources, when the Interstate Oil and Gas Compact Commission repeated a statement that former Alabama state geologist Donald Oltz made in the 1997 Alabama court case: "Almost all hydraulic fracturing fluid is recovered to the surface after a hydraulic fracturing operation."

That statement contrasts sharply with the latest reports from regions where gas drilling is on the upswing.

Spokesmen for Cabot Oil and Gas, Range Resources and Fortuna Energy — three of the most active companies developing gas resources in the Marcellus Shale — say that more water is trapped underground in newer drilling areas because the “tight shale” that is loath to give up the gas is likely to hold onto the fluids too.

“It’s not like you pump a volume of water into the frack and then it gives you that volume back,” said Ken Komoroski, a spokesman for Cabot Oil and Gas, who says only 15 to 20 percent of the fluid comes back out. “Most of the water and sand stays in the formation compared to in other geologic formations.”

Managing the risk

Gas industry officials say the amount of fluids they leave behind in their wells should have no bearing on whether hydraulic fracturing is or is not regulated by the federal government. What’s important is managing the risk, says the Independent Petroleum Associations’ Lee Fuller, a job he says the industry is doing very well without additional oversight.

“You are wrapping yourself around a distinction of whether something should or should not be regulated under the Safe Drinking Water Act as opposed to whether something does or does not pose an environmental risk,” said Fuller, who asserts that despite numerous reports of contamination in drilling areas, the fracturing process has never been conclusively proven to be the cause.

Regulation, Fuller said, “may shut down natural gas drilling for a long time, but it is not going to make the environment any better.”

It will fall to Congress — and then to the EPA — to decide whether that is truly the case. Sponsors of the Frack Act hope for a vote this spring. If it passes, and if the EPA finds reason to change the conclusions it reached in 2004, the agency would then have to decide exactly how fracturing will be addressed by the Safe Drinking Water Act.

“The thinking we did then, the study that we did then, we were really looking at a different set of circumstances,” said Heare, the EPA’s Drinking Water Protection Division director. “The agency has not investigated the impacts of hydraulic fracturing in other settings such as shale gas production and at this time is unable to quantify the potential threat.”

Write to Abrahm Lustgarten at Abrahm.Lustgarten@propublica.org.

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With Vote, Senate Marks Uneasy Health Reform Milestone As Tension Mounts In House

Even before they won the Christmas Eve vote that gave final approval for their sweeping healthcare reform package, Senate Democrats defended the unpopular legislation that finds itself under attack from right and left.

Democratic senators voted 60-39 against unified GOP opposition to acheive final passage of their heavily compromised version of health reform.

In remarks just before the voting began, Senate Majority Leader Harry Reid (D-Nev.) acknowledged the legislation's imperfection even as he defended it as a major step forward.

“We will trade a system that demands you pay more and get less for one in which you will pay less and get more," he says. “And as we do all this, we will slash our children’s deficit in dramatic measure. We may not completely cure this crisis today or tomorrow, but we must start toward that end. We must strive for progress, and not surrender for want of purity. Our charge is to move forward."

A recent CNN/Opinion Research poll found 56 percent of Americans oppose the Senate health bill.

Now that the legislation has left the Senate, it must be reconciled with a very different version passed earlier by the House in order to draft a single, final piece of legislation which both chambers can approve and send to President Obama for signature into law.

The House version contains provisions more favored by progressives, including a federally run public option health plan, while the Senate bill does not.

Unrest among House progressives who believe the Senate bill is not acceptable grew louder as a senior Democrat, Rep. Louise Slaughter of New York, slammed it in an opinion piece on CNN.com.

"The Senate health care bill is not worthy of the historic vote that the House took a month ago," writes Slaughter, who is the chairwoman of the House Rules Committee.

Compromising away the public option has just gone too far, Slaughter says.

"Although the art of legislating involves compromise, I believe the Senate went off the rails when it agreed with the Obama administration to water down the reform bill and no longer include the public option," she writes.

Meanwhile, Senate Democrats are touting the aspects of their bill that will take effect soonest after it would be signed by Obama.

In a statement issued Thursday, within the first year of enactment of the Senate legislation, it provides fixes to the U.S. healthcare system by:

· Providing affordable coverage to the uninsured with pre-existing conditions
· Improving care to seniors
· Lowering prescription drug costs
· Reducing costs for small businesses through tax credits on premiums
· Extending coverage for young adults
· Providing preventative care free of charge
· Prohibiting discrimination on the basis of salary, gender or existing illness
· Eliminating lifetime limits on the amount of coverage a person may receive
· Making health insurance plans more transparent and competitive

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The Clock Ticks Slowest at Gitmo: Why It’s Taking so Long to Close the Prison

by Dafna Linzer, ProPublica

As we have reported throughout the year, the Obama administration has been serially hampered in its efforts to shutter the prison at Guantanamo Bay, Cuba. It underestimated the time needed to close the facility and was unprepared for Congressional opposition.

Finding countries to adopt detainees has proven difficult, and only this month did the administration locate a prison to move detainees into once Guantanamo closes.

Meanwhile, a front-page piece in yesterday’s New York Times suggested that Guantanamo won’t be closed “until 2011 at the earliest.” As the Times notes, the administration has had trouble getting the necessary Congressional funding to purchase and upgrade a prison in Illinois where as many as 100 detainees may be moved.

This is not where the Obama administration imagined it would be 11 months ago, when the president signed an executive order to close the prison at Guantanamo Bay by January 2010.

That day, the president set in motion an interagency task force to determine which detainees could be released and whether any could be prosecuted. Obama suspended the Bush-era military commissions on Guantanamo Bay and administration officials emphasized a preference for prosecutions in federal court.

But in nearly a year, only one detainee has been charged in federal court and the military commissions have been revived.

In November — 10 months after Obama signed the executive order — Attorney-General Eric Holder announced that another five detainees would face federal charges in the Southern District of New York for their alleged roles in the Sept. 11, 2001, terrorist attacks.

Only now is a federal grand jury considering charges for the five. And with no trial yet under way, it could be years before the Justice Department secures the conviction of a single detainee.

Even after Guantanamo is closed, some detainees will be held indefinitely, without charge or trial, as they were under former President Bush. Like the Bush administration, Obama administration officials have cited the same legal authority — the 2001 Congressional Authorization for Use of Military Force — as the legal basis for prolonged detention.

A look at where we are now:

Since Obama’s inauguration, the Guantanamo prison population has fallen from 241 to 198. One of those prisoners died in custody and one was transferred to New York to face charges for his alleged role in the 1998 U.S. embassy bombings in East Africa.

Justice Department officials have said as many as 90 detainees have been cleared for release in the past year. Of those, 20 have already been turned over to third countries for release or trial and 21 others have been sent back to their home countries. The administration has not revealed any details regarding the legal agreements that governed transfers to third countries or said under what conditions other detainees were released.

Ten detainees who are under court order to be released from Guantanamo remain at the prison. Seven of those ordered freed are Chinese Muslims who are part of the Uighurs community. The administration had hoped to resettle the Uighurs quickly, but it has proven difficult to find countries who will accept them and where in turn the Uighurs are willing to go.

Last month, two top administration officials who were working to close Guantanamo announced they were leaving the administration. Greg Craig was forced out of his job as White House Counsel in November and is returning to his Washington law firm. Phillip Carter, who was a principal assistant secretary of defense for detainee issues, resigned last month, citing personal issues. Before joining the Obama administration, Carter had been a vocal opponent of the previous administration’s detainee policies.

Thirty-two detainees have won their habeas corpus cases and were ordered released by courts. Nine have lost their suits. The government has so far decided to appeal two cases.

Write to Dafna Linzer at dafna.linzer@propublica.org.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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The Health Reform Battle Yet To Come: Pelosi Must Face Off With Displeased House Left

The endgame for healthcare reform likely soon will be in Nancy Pelosi's hands, and the battle it may bring could make Harry Reid's fight in the Senate look mild by comparison -- and may well define the strength of her speakership.

With final passage of the Senate health reform package looking probable this week, action will move quickly to reconciliation of differing House and Senate reform bills. There, Pelosi could well face an uprising from House progressives, a number of whom publicly aren't satisfied with the compromises made in the Senate.

To corral all 60 Democrats to move a Senate bill in the face of united GOP opposition, Majority Leader Reid had to accept a number of fundamental compromises, including dropping a federally run healthcare public option.

Pelosi herself has been a devout backer of keeping a public option as part of reform, but her latest public statement on the Senate bill drew no lines in the sand -- in fact, did not mention "public option" at all. Indeed, in a joint statement with House Majority Leader Steny Hoyer (D-Md.), she praises the most recent version of the Senate bill for having been "strengthened during the course of the past few weeks," but does not elaborate as to how that is.

"The Democratic Caucus is committed to middle class affordability, security for our seniors, responsibility to our children, and accountability for the insurance industry," the joint statement says. "On that basis, we look forward to working with the Obama Administration, the Senate, and our Caucus to reconcile our bills and send final legislation to the President's desk as soon as possible."

Other House Democrats are not so sanguine, several of whom have sharply criticized the reform bill coming out of the Senate. The most senior among the House Democratic leadership to come out thus far swinging against the Senate bill has been Rep. John Conyers of Michigan, chairman of the Judiciary Committee.

"As this legislation moves towards its constitutionally mandated reconciliation with the House of Representatives, I want to make it clear that this legislation does not adequately address the problems that plague our current system. It needs more improvement," says Conyers. "I can only support legislation that provides quality health care that will remain affordable for working class Americans and does not exclude those who need it most. I believe it is immoral to continue to allow the private health insurance industry to remove or deny citizens coverage when they are battling a long term illness. It is important that the repeal of the industry’s antitrust exemption is a component of the Senate Bill to prevent the continued development of monopolies throughout the country."

Conyers also says that he won't support a final bill that includes a provision contained in the Senate bill that would apply a tax on so-called "Cadillac" health plans.

"For years, many workers chose to forgo wage increases in exchange for helping their employers offer comprehensive health care plans. The Senate’s efforts to tax these plans will hurt working families and directly contradict the President’s pledge that individuals who like the health coverage they have will be able to keep it," he says.

Conyers makes it clear he will not support allowing the Senate bill to pass as is to become the final reform package. "I am committed to ensuring that the purpose of the health care conference is not to adopt and confirm the Senate legislation in its present form but to combine and retain the better parts of both Bills," he says.

Other high-profile House progressives, such as Reps. Dennis Kucinich (D-Ohio) and Anthony Weiner (D-N.Y.) have also labeled Senate compromises as unacceptable. Kucinich, particularly, is unhappy that the shares of major insurance companies like Aetna, Wellpoint and United Health all rose on news of the shape of the Senate bill.

While reports indicate the White House and top congressional Democrats want to avoid a formal conference committee to wrangle over the legislation, it will take seven to 10 days for the Congressional Budget Office (CBO) to analyze the final bill. Democrats who are shepherding the health reform effort are now eager to get a final bill as soon as possible onto President Obama's desk for him to sign into law.

It will be up to Pelosi to deal with those on the left who will not swallow the Senate bill whole, and how she responds if the CBO-driven delay gives progressives time to try to influence the process.

How she either cajoles lawmakers -- or comes down hard on them to enforce discipline -- may determine not only the future of health reform, but the rest of her speakership plays out.

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Stimulus Money Paid Out Now Exceeds Money In the Pipeline

For the first time since ProPublica began tracking stimulus spending, more money has been paid out than is left in the pipeline. (Check out the details in our Stimulus Progress Bar.)

According to figures posted on Recovery.gov, the official site for tracking stimulus spending, federal agencies have now spent a total of $153 billion, excluding tax cuts. By comparison, the amount of money that has been committed to particular projects but not yet spent—what the government calls “obligated,” and what you might call the pipeline—now stands at $152 billion. Meanwhile, there’s still $276 billion in stimulus money (again, excluding tax cuts) that has yet to be obligated at all.

In mid-October, $172 billion in stimulus money had been obligated but not spent. By mid-November, that number had fallen to $163 billion, before falling to $155 billion by early December.

There are already rumblings about the decreasing amount of money moving through the system. Three weeks ago, a construction executive in Texas told ($) the Wall Street Journal that the pipeline of new stimulus projects was starting to dry up. “Having something to bid on is the lifeblood of the industry, and it’s running out,” said the executive, Tim Word. Transportation Secretary Ray LaHood responded on his blog that his department was “still funding road projects at an unheard-of pace,” and accused the Journal of presenting a “doom-and-gloom scenario.”

Ray LaHood is right, strictly speaking: The Department of Transportation has over $24 billion in stimulus money in its pipeline, more than three times the $7 billion it’s already paid out. But the latest numbers on stimulus spending suggest that the Journal might have been right about the broader trend across the federal government. Of course, the government could just increase the rate at which it puts money into the pipeline. There’s still that $276 billion in stimulus money that has yet to be obligated, and the federal government said last week that it’s gearing up for infrastructure projects in the next six months, including broadband spending.

But these latest numbers serve as a reminder that the stimulus won’t last forever. The dry pipeline phenomenon described by the construction executive in Texas will eventually extend to other sectors, from funding for clean energy and teachers’ salaries to weatherization and broadband subsidies. Officials are already concerned: On Monday, for instance, New York State Comptroller Thomas DiNapoli released a report (PDF) looking at the funding cliff facing education.

For more details on spending, see our Stimulus Progress Bar.

Write to Christopher Flavelle at Christopher.Flavelle@propublica.org.

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Capitol Idea: 'Cash For Cloture'? That's Just Senators Doing Their Job

By Scott Nance

So just how would a U.S. senator's job description read?

Watch them at any given moment on television or the Internet. You will find members of the world's greatest deliberative body holding forth at a Capitol Hill press conference to introduce some new piece of legislation. You'll find them chattering about election-year politics on the cable news shows. Or you might even catch them on C-SPAN as they meander with colleagues on the Senate floor casting votes as the clerk calls the roll, or perhaps even solo as the camera captures them as they deliver a speech on some weighty issue of the day. (And, of course, as it is so often said, in private each time a senator looks into a mirror, he or she sees a potential president of the United States staring back.)

Observe them like this — particularly in our time of Internet-fast communication and chain-store-sameness that brings us all ever closer together and diminishes once-unmistakable local and regional differences that create a more connected and cohesive national community — and it would be easy to intermingle these 100 as a shifting set of partisans and national figures.

And perhaps from this vantage point, it would be easy to castigate the Democrats who sought, and received, some special perk or payoff for their state back home in exchange for a "yea" vote on the healthcare bill as some kind of corrupt, backroom dealing.

Except that this sort of Web and cable TV-driven view of the members of this most exclusive club is incomplete.

When a senator is recognized in chamber, they are not identified as "the senator of the Democratic Party," or as the "senior senator of healthcare reform legislation."

No, they're designated as what they are: the senator of whichever of the 50 states they hail from.

And while these 100 men and women are in Washington to work upon a national stage to solve national problems and to craft legislation for a federal government, the successful ones also remember that Congress is like a dance: At the end of the day, remember the ones who brung ya.

That means that if they can help meet the particular and specific needs of constituents back home even as they put together a national healthcare reform plan, then all the better.

Senate Majority Leader Harry Reid was absolutely right when he said, "There are 100 senators here and I don't know that there's a senator that doesn't have something in this bill that isn't important to them. If they don't have something in it important to them then it doesn't speak well of them."

The Republicans denouncing the deals are just sore that they decided not to play.

"This will not stand the test of the Constitution, I hope, because the deals that have been made to get votes from specific states' senators cannot be considered equal protection under the law," declaims Sen. Kay Bailey Hutichson.

Oh, yeah? What about that combined $3.4 million that Sen. Hutchison personally secured for eight Texas projects? Or the initiative last year to provide resources to Mexican anti-narcotics efforts that Hutchison herself admits she wouldn't support unless she received $100 million more in federal funding for domestic law enforcement along the border. Did we mention Hutchison hails from the great state of Texas? Or that Texas also happens sit along aforementioned border?

When she squeals about "equal protection under the law," I think she doth protest too much.

If Chris Dodd can steer a new medical center back to Connecticut, and Tom Harkin can win more Medicare funds for Iowa because they think these things will help the folks back home, I say, "More power to them." Perhaps it's just a case of doing well for the voters at home while doing good for the nation as a whole.

Heck, if anything, maybe we should be faulting these guys for not asking for more.

You see, Sen. Bernie Sanders got more than some random plum for signing onto health reform. Apparently, he had something more strategic in mind. What Sanders asked for, and received, was $10 billion to increase the number of community health care centers nationwide, including at least two more for his state of Vermont.

These centers provide care regardless of an individual's ability to pay, and with this expansion, Sanders single-handedly is now providing universal healthcare for his constituents.

Now, that really is taking care of the folks who brung ya.

Scott Nance has covered government and Washington for more than a decade. He's the editor and publisher of the political blog, On The Hill.

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Washington to Reduce Funding for U.S. Contractors in Pakistan

by Christopher Flavelle, ProPublica

The U.S. government will reduce the amount of money it spends on American contractors and nongovernmental organizations working in Pakistan this year, even as Washington begins to spend the first tranche of a new $7.5 billion aid package in that country, according to a report from the State Department. Instead, more of the money will go to Pakistani NGOs and contractors, a move that has raised concerns among U.S. development workers.

The document, the "Pakistan Assistance Strategy Report," was sent to Congress last week and outlines how the State Department plans to spend and oversee the aid package. It calls for spending $3.5 billion on what it calls high-impact, high-visibility infrastructure programs, particularly in energy and agriculture; $2 billion on humanitarian and social services; and $2 billion on governance, security and legal institutions. The report also said the United States will rely more on Pakistani public accounting firms to monitor that money.

"U.S. assistance will be directed increasingly through a broad range of Government of Pakistan institutions, as well as local nongovernmental organizations (including the private sector) with the capacity to implement programs effectively and accountably," reads the report, which adds that the approach is intended to increase Pakistani ownership over the aid. "The absolute level of funding through U.S.-based implementing partners is expected to decline slowly in FY 2009-FY2010."

That strategy, which had been hinted at for months by Richard Holbrooke, the Obama administration's senior diplomat in the region, has generated pushback from the development community, as well as from within the U.S. Agency for International Development. In October, USA Today obtained a copy of a memo (PDF) from a USAID economist warning that directing more money to Pakistani organizations and government ministries would increase the risk of corruption, and could compromise the goals of USAID programs. Those concerns were supported by a report (PDF) in October from the agency's internal watchdog, the Office of the Inspector General, which cited "the risks associated with high reliance on indigenous organizations and management."

Last week's report also outlines how the government hopes to prevent the money from being lost to fraud and corruption, especially in light of what the report calls "Pakistan’s limited capacity to absorb and effectively use external resources," and the country's "public sector corruption." The measures include "significantly" increasing the number of U.S. government staff in Pakistan, particularly those working for USAID. The report doesn't indicate how many new staff USAID will add to its operations in Pakistan, or how long it will take the agency to hire, train and deploy those staff.

The State Department also plans to expand its use of Pakistani public accounting firms, which will be used to audit money spent on Pakistani NGOs. The Inspector General's office will train and oversee those accounting firms, and approve their audits, according to the report. The office's Pakistan team is currently based in the Philippines; an official at the agency said the team will move to Pakistan, where it will have nine staff members.

Pakistan's accounting sector has been criticized for failing to comply with international standards. A 2007 report (PDF) by the World Bank found that the education and training of accountants in Pakistan fell short of international standards, and that the auditors who work for the Supreme Audit Institution, Pakistan's highest audit authority, needed "more professional training."

A former manager with an international development nonprofit, who has experience working with Pakistani accounting firms on aid projects in Afghanistan, told ProPublica that the oversight of Pakistani firms was less robust than oversight of their international counterparts. The former manager said his project had been audited multiple times by Pakistani accounting firms, and that each audit ended with a positive report. But when the project was audited by accountants from within his own organization, "we had no end of difficulties."

With the Pakistani accounting firms, "it was incredibly easy to get the audit results that we needed," said the former manager, who wouldn't be named because he still works in the development field. "They want to keep getting business with certain companies. If you continue to give people clean audits, people will continue to select you as their audit vendor."

Stephen P. Cohen, a South Asia expert at the Brookings Institution and a former member of the Policy Planning Staff at the State Department, praised the new report, but questioned the ability of Pakistani NGOs to handle the increase in American funding, as well as USAID's ability to monitor those projects.

"We should have been addressing Pakistan's problems more effectively earlier," Cohen said. "This is a good report. They say all the right things. The question is, is it too much, too late?"

Are you involved in the development field in Pakistan or Afghanistan? ProPublica is tracking aid efforts in both countries, and we'd like to hear from you. Please contact us at pakistan@propublica.org or (917) 512-0212.

Write to Christopher Flavelle at Christopher.Flavelle@propublica.org.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Lost In The Debate: Senate Health Reform Bill Would Strictly Limit Insurer Profits

Although largely unheralded amid rancor on other issues, the Senate healthcare reform package includes a provision that would directly cut the profit currently collected by insurers.

The Senate legislation contains a measure that would require health insurance companies to put up to 85 percent of premiums (85 percent in the large group market, 80 percent in the small and individual group markets) toward actual health services, not administrative costs, marketing campaigns, or profits, according to a statement by Sen. Al Franken (D-Minn.), one of the key champions of the proposal.

The provision is a permanent requirement modeled on the Ensuring Value for Premiums Act introduced by Franken and fellow Democrat, Sen. Jay Rockefeller of West Virginia. It has received little attention as the debate over the Senate reform package has been dominated over such matters as abortion language, and the decision to jettison the federally run public option health plan, as well as the Medicare buy-in provision.

“Advocates have been trying to get these profit restrictions in place in many states, often with limited success. While I remain deeply disappointed that the public option is not part of this bill, this potent measure Senator Rockefeller and I have been fighting for will limit insurers' profits and put the brakes on skyrocketing insurance premiums,” says Franken.

Right now, on average, in the small group market -- businesses with fewer than 50 employees -- health insurers only spend 79 cents out of every dollar on health care, according to Franken's statement. In the individual market, it’s even less: 74 cents per dollar, so the health insurer keeps more than a quarter of every individual premium dollar for overhead and profits, the statement says.

Currently, Minnesota’s non-profit plans lead the nation in keeping administrative costs low, spending 91 cents of every premium dollar on actual health services, Franken says. However, West Virginia's insurance commissioner reported that in 2007, insurers in the small group market spent only 75 cents of every premium dollar on medical care, and insurers in the individual market spent on 65 cents of every premium dollar on actual medical care. These wide differences are indicative of the need for a uniform policy, Franken's statement says.

“Senator Franken and I have been fighting to make sure health insurance companies spend more of their premium dollars on actual health care—not excessive corporate salaries,” says Rockefeller, who chairs the Senate Commerce Committee and has spearheaded investigations into health insurance company spending. “Gone are the days of health insurance companies running rampant without oversight and accountability -– now they must be accountable to consumers and spend more of their hard-earned dollars on actual health care and not on filling their coffers. Even though we were not able to secure a public option, this legislation achieves significant private health insurance industry reform.”

The language in the current Senate legislation sets an 85 percent standard on insurance companies nationwide, allowing only the remaining portion to be spent on administrative costs, marketing campaigns, and profits. The original Franken-Rockefeller Ensuring Value for Premiums Act was co-sponsored by Sens. Blanche Lincoln (D-Ark.), Sheldon Whitehouse (D- R.I.), Patrick Leahy (D-Vt.), Bernie Sanders (I-Vt.), Sherrod Brown (D-Ohio), and Mark Begich (D-Alaska).

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Capitol Idea: Know The Senate Health Reform Bill By Its Opponents

The Senate's health reform package has become an ugly perversion in the eyes of many on the left. And, certainly, there are so many reasons why the legislation deserves to be unloved.

And, yet, as the bill moves this week toward final passage, progressives could take some small measure of comfort from the beating it is taking from its opponents elsewhere on the political spectrum.

While the devil is more in the details in this legislation than in even most others, progressives generally have two overarching arguments against the Senate bill.

One is that the abortion provisions within the bill further erode a woman's right to terminate a pregnancy.

The other is that without a public option, federally run healthcare plan, the coverage mandates amount to a big payoff to the insurance industry.

I'm not going to pretend to be a technical expert on the actual legislative language of either of those two aspects of the reform package.

What I can do is offer some political calculus that may offer some perspective that may have gotten lost in the forest for for the trees.

First, on the abortion question, I've been unable to find a single anti-abortion group that is even a bit cheered by the Senate bill.

Charmaine Yoest, president of Americans United for Life Action, is fairly typical in calling it "a first-ever mandatory abortion tax on the American people."

"A 'yes' vote is a solid 'yes' to the expansion of federal funding for abortion," Yoest adds.

Meanwhile, on the matter of the insurance mandate, the insurance industry sure doesn't sound like it's looking for a big haul.

The president of Anthem Blue Cross and Blue Shield in Missouri released an open letter to the Show Me State's senators —- one Democrat, the other Republican -— urging them not to support the bill.

Dennis Matheis complains about the tax to be levied on the health insurance industry, and he claims that tax will hurt the 3 million Missourians who have health insurance provided by for-profit companies.

Even more broadly, the Washington trade group AHIP continues to fight the Senate bill tooth-and-nail. The head of the organization, Karen Ignagni, claims that the Senate package "will create significant disruption and instability for individuals, small businesses, and seniors."

Admittedly, these attacks on the Senate bill don't answer progressive's concerns most directly.

Also, as it relates to abortion, advocates on that issue do tend to paint everything in fairly absolutist terms such that anything in the Senate bill short of an explicit repeal of Roe v. Wade would likely result in condemnation.

What is most telling, though, is the strong language used by the insurance industry in their attack.

While certainly inclined to be more conservative and Republican-leaning, business interests tend to be more pragmatic in dealing with Washington.

Recall, for instance, the stream of major corporations that bailed out on the U.S. Chamber of Commerce earlier this year for a position taken by the chamber on the climate issue that was broadly seen as too ideological and doctrinaire to help business actually resolve the issue and make money.

Likewise, if the insurance companies are smart enough to know that they were truly getting a sweetheart deal out of this bill. They would be keeping their collective mouths shut and let it come to them.

That they continue to object so strongly indicates just on a "smell test" that maybe the Senate bill isn't so business-friendly as we might fear.

Finally, of course, the ultimate "smell test" is in the fact that Majority Leader Harry Reid did succeed in holding together all 60 Democrats.

That includes a number of highly progressive senators who fought quite strongly for the public option, including, most to the point, Sen. Bernie Sanders of Vermont.

You could argue that ultimately Russ Feingold, Patrick Leahy, Jay Rockefeller and other progressives fell into line with Reid out of some larger party loyalty.

But not Sanders. Although he caucuses with the Democrats, Sanders is strictly a left-leaning independent who owes no higher alleigance to the Democratic Party in order to get re-elected.

His progressive bona fides are not to be doubted as he introduced the first attempt in the Senate to move the nation to a single-payer health system.

So in the end, perhaps it's a case of: If it's good enough for Bernie Sanders, it's good enough for me.

None of this is to say that you should suddenly love this Senate bill; only that perhaps you might come to hate it a little less and that it might not be as bad as we fear.

The publisher of On The Hill, Scott Nance has covered government and Washington for more than a decade. Capitol Idea is his regular column from Washington.

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Perks for Former Speaker, Despite Lobbying Job

by Christopher Flavelle, ProPublica

Former House Speaker Dennis Hastert is getting more than $40,000 a month in taxpayer money while working as a lobbyist, Politico's Jake Sherman and John Bresnahan report.

Under a federal statute enacted in 1975, Hastert -- a Republican who was speaker from 1999 to 2007 -- is entitled to a public allowance for five years to set up and run an office. That includes money for office space in Yorkville, Ill., three assistants each of whom make more than $100,000 a year, lease payments on a 2008 GMC Yukon and a satellite TV subscription.

But Hastert is also a lobbyist with Dickstein Shapiro and federal law prohibits him from using government-funded perks for his work as a lobbyist. Sherman and Bresnahan quote Kenneth Gross, a former general counsel for the Federal Election Commission, who says Hastert "has to be meticulous in his schedule to make sure there is no bleed from his publicly subsidized office into his private practice."

According to Steve Ellis, vice president of Taxpayers for Common Sense, it's hard to tell whether Hastert is abiding by that rule, because his spending isn't clear and transparent.

Brad Hahn, a spokesman for Hastert, told Politico that Hastert's lobbying work "is completely separate" from the office of the former speaker, "and he keeps them completely separate."

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.

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Powerful Interests Line Up To Back Senate Health Reform Bill, Dems Who Voted For It

Two powerful voices in Washington are blessing the Senate's healthcare reform bill. The endorsement of the influential organizations could aid the Democrats who are advancing the legislation without a single Republican vote.

The American Medical Association (AMA) and the retirement lobby AARP Monday announced its support for passage of the amended Senate health system reform bill (H.R. 3590), the Patient Protection and Affordable Care Act. Their statements come less than a day after all 60 Democratic senators came together to overcome a GOP filibuster to move the legislation toward final passage later this week.

"All Americans deserve affordable, high-quality health coverage so they can get the medical care they need -- and this bill advances many of our priority issues for achieving the vision of a health system that works for patients and physicians," says AMA President-elect Dr. Cecil Wilson, M.D.
The Senate bill includes a number of key benefits for meaningful reform, according to the AMA. It will improve choice and access to affordable health insurance coverage and eliminate denials based on pre-existing conditions. The bill will increase coverage for preventive and wellness care that can lead to better disease prevention and management, and further the development of comparative effectiveness research that can help patients and physicians make informed treatment decisions.

"Lifetime limits on health coverage will be a thing of the past -- as will higher premiums based on medical conditions or gender," says Wilson. "These are important benefits for those who have insurance now -- and those who want it but have been unable to get it."

The AMA says in a statement, however, that it will seek further changes to the reform legislation as it goes to a House-Senate conference committee, including the creation of a Medicare payment board, quality improvement and Medicare data-release initiatives. The physicians' lobby also wants separate action early next year to permanently repeal the current Medicare physician payment formula to provide "a stable payment system to preserve access to care for America's seniors, baby boomers and military families."

AARP went even further in getting behind the Senate bill, issuing a series of statements either praising or criticizing individual senators on whether they supported Monday's vote or not.

AARP says that it sent a letter to each Senate office informing them that the association designated Monday's cloture vote on the manager's amendment to the Patient Protection and Affordable Care Act an "AARP Key Vote." Such status portends the association using it to either back or oppose lawmakers in the 2010 elections.

"The legislation is needed to lower drug costs, provide relief by beginning to limit age discrimination by health insurance companies and strengthen our system of long-term services and supports," says Dick Chevrefils, state director of AARP Pennsylvania, which praised the yes votes of Sens. Arlen Specter and Bob Casey. "We believe this legislation can be improved even further in conference and will be working with our state delegation to make meaningful health care reform a reality."

AARP notified the 111th Congress that it was tracking roll call votes on key legislation important to its nearly 40 million members and reporting the outcomes of these votes back to its members and all older Americans. "When Americans understand the issues and where their lawmakers stand, they can make smart decisions," Chevrefils says. "AARP will be there to give our members, as well as all Americans, the most accurate information we can."

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Invoking LBJ, Reid Declares That Passing Health Reform 'About People, Not Politics'

Facing dissent from both his left and right in advance of an important vote to advance healthcare reform early Monday, the Senate's top Democrat declared that advancing the legislation will mean "rejecting a system in which one class of people can afford to stay healthy while another cannot."

“This country – the greatest and richest the world has ever seen -– is the only advanced nation on earth where dying for lack of health insurance is even possible," says Senate Majority Leader Harry Reid (D-Nev.). “And to make matters worse, we are paying for that privilege. The price of staying healthy in America goes up and up and up -– and not surprisingly, so does the number of Americans who can’t afford it. In fact, medical bills are the leading cause of bankruptcy in America.

“That is why we are here. Just as we have the ability to prevent diseases from killing us too soon, we have before us the ability to provide quality health care to every American," Reid adds. "And we have the ability to treat our unhealthy health care system."

Reid delivered his remarks in the early morning hours just before Democrats overcame a procedural hurdle to set the Senate on course to approve health reform this week, likely on Christmas Eve. All 60 Democrats voted to advance the reform measure, as all 40 Republicans voted to block it.

The Democrats' unity on the vote masks deeper divisions, where high-profile progressives such as former Democratic National Chairman Howard Dean is looking to scrap the current Senate bill as it was stripped of a federally run public healthcare option, as well as a provision to allow Americans to begin buying into the Medicare program.

Despite such acrimony from members of his own party, Reid stood steadfast behind the current reform bill, invoking the memory of President Johnson as he first signed the Medicare program into law in 1965.

“President Johnson, a former Majority Leader of this Senate, signed Medicare into law with the advice that we, ‘see beyond the words to the people that they touch.’ That is just as true today as it was 44 years ago," Reid says.

Reid also insisted that the reform package will acknowledge for the first time that health care is a fundamental right, "a human right –- and not just a privilege for the most fortunate."

“This isn’t about partisanship or procedure. It’s not about politics, and it’s not about polling," Reid says. “It is about people. It’s about life and death in America. It’s about human suffering. And given the chance to relieve this suffering, we must.

“Citizens in each of our states have written to tell us they are broke because of our broken health system. Some send letters with even worse news -– news of grave illness and preventable death.

“For weeks we have heard opponents complain about the number of pages in this bill. But I prefer to think of this bill in terms of the number of people it will help," Reid adds.

As his been his habit in remarks on health reform, Reid mentions several of his home-state constituents who have written him seeking help with health coverage. Among those Reid cites is Ken Hansen from Mesquite, Nevada. Hansen, Reid says, has chronic heart problems and parts of his feet have been amputated.

“But Ken can’t go to a doctor because he makes too much to qualify for Medicaid and too little to afford private insurance," Reid says. “I want to share with the Senate exactly what Ken wrote me: ‘I am very frustrated because it seems that my only hope is that I die very soon, because I cannot afford to stay alive.’

“That’s why this bill will expand Medicaid to cover people like Ken, who are caught in the middle," Reid says. "I am voting ‘yes’ because when someone tells me his only hope is to die, I cannot look away. We cannot possibly do nothing."

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Getting To 60 On Health Reform, Reid Got Ben Nelson But Held Onto Bernie Sanders, Too

In reaching the magic number of 60 Democrats to support his healthcare reform legislation, Senate Majority Leader Harry Reid picked up crucial support from conservative holdout Sen. Ben Nelson of Nebraska. But on his left, Reid also apparently held onto independent Sen. Bernie Sanders of Vermont, as well.

As Reid has spent much time and energy in recent days offering compromise after compromise to win over the wavering moderates and conservatives of his caucus, the process threatened to unravel as Sanders, a key Senate progressive, threatened to withhold his support.

A strong voice for inclusion of a public option that was stripped away, Sanders also this week was foiled in even getting a vote on his amendment to introduce a single payer healthcare system that has been a Holy Grail among progressives.

Despite his protest, Sanders apparently remains in the fold of senators who will vote to approve healthcare reform legislation, which could come as early as Monday. With Senate Republicans united in opposition, Reid needed all Senate Democrats, and the two independents who caucus with the Democrats, to support the reform bill. Those independents are Sanders and Sen. Joe Lieberman of Connecticut.

Sanders issued no statement directly addressing his intention to support the legislation, but his office did release an announcement on his Senate website that may provide clues as how Reid held onto Sanders' vote.

The announcement says that Sanders is working with Sen. Ron Wyden (D-Ore.) to improve language in the reform bill to provide waivers for states "that want to provide comprehensive, affordable health care and curb rapidly-rising costs for money-making private health insurance companies."

"The waivers could clear the way for a state-run, single-payer system," Sanders' announcement says.

The announcement also highlights an expected investment of $14 billion in community health centers, included in the reform package as part of a final series of changes to the Senate bill unveiled Saturday.

Sanders' announcement says he specifically requested inclusion of the provision which would "provide primary care for 25 million more Americans."

The $14 billion would increase the number of centers from 20 million to 45 million over the next five years, the announcement says.

Sanders says that the additional resources will help "bring about a revolution in primary health care in America and create new or expanded health centers in an additional 10,000 communities."

"The provision would also provide loan repayments and scholarships through the National Health Service Corps to create an additional 20,000 primary care doctors, dentists, nurse practitioners, physician assistants and mental health professionals," the announcement says.

Community health centers provide primary health care, dental care, mental health counseling and low-cost prescription drugs for about 20 million Americans, according to Sanders. The centers offer basic services like prenatal care, childhood immunizations and cancer screenings. Open to everyone, the centers care for patients covered by Medicaid, Medicare and private insurance as well as those who have no insurance, the announcement on Sanders' website adds.

Sanders also says that his provision would save Medicaid tens of billions of dollars "by keeping patients out of emergency rooms and hospitals by providing primary care when then needed it."

The announcement says that Sanders has worked with House Majority Whip James Clyburn (D-S.C.) to include $14 billion in the House version of the legislation.

Community health centers are important to healthcare in Vermont, where Sanders says eight health centers and 40 satellite offices provide primary health care to more than 100,000 patients regardless of their ability to pay.

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