CBO applies brakes on health reform talks; JPMorgan reports huge earnings.

A summary of what's in the major U.S. newspapers.
July 17 2009 6:48 AM

The New Titans of Wall Street

The Washington Postand Wall Street Journal's world-wide newsbox lead with the director of the nonpartisan Congressional Budget Office creating a huge uproar among lawmakers yesterday when he declared that none of the health care plans being discussed in Congress would slow down the growth of government spending on medical care. In fact, Douglas Elmendorf suggested that the bills could make the problem worse. Republicans and fiscally conservative Democrats, who had been pushing for more savings, immediately seized on the comments to explain why they're not ready to support the plans that are emerging from congressional committees. The New York Timesleads with a look at how JPMorgan Chase's quarterly earnings of $2.7 billion, coming days after Goldman Sachs also reported huge numbers, reveals how new titans of Wall Street are emerging after the financial crisis. The government's efforts to prevent a financial meltdown have "also set the stage for a narrowing concentration of financial power," declares the paper.

USA Todaygoes high with a look at the uncertain future of NASA as it nears the 40th anniversary of Neil Amstrong's "giant leap for makind" but devotes its top news story to the tax increases currently being proposed in Washington that could lead to the highest tax rates for the richest Americans "in a quarter-century." Some analysts worry that relying on the richest Americans for such important priorities could mean that the money might disappear if Republicans return to power. The Los Angeles Timesleads locally but goes high with an overview of the confirmation hearings for Supreme Court nominee Sonia Sotomayor. After three days of questioning, her confirmation seems almost assured, but Americans don't really know anything more about her legal views than before the whole process got started, and that has angered plenty of legal experts, who were quick to call the hearings nothing short of useless. One Yale Law School professor said Sotomayor's testimony "drained the life out of the law" and made judging seem like a "witless, mechanical exercise."

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The comments by the head of the Congressional Budget Office were seen as particularly important because it's his office that would ultimately calculate the official cost of any legislative proposal. And, as the WSJ points out, one of his predecessors was instrumental in defeating health care reform in 1994, when he testified that it would cost more than what the White House was predicting. Democratic leaders weren't happy. "Maybe what he should do is run for Congress," said Senate Majority Leader Harry Reid. Meanwhile, many lawmakers who had started to feel skittish about the proposals that have been emerging in the House and the Senate seized on the comments to once again highlight the importance of savings. Republicans said this showed how Democratic lawmakers need to stop worrying about meeting Obama's August deadline so negotiators can come up with a better plan. "I think it would be prudent for the president to be patient," said Sen. Olympia Snowe of Maine.

To no one's surprise, throughout the bill-writing process, lawmakers have found it easier to expand health coverage than to cut existing expenses to make the plan affordable. So, what could lawmakers do to increase savings? One of the ways to increase revenue that has been making the rounds, and that the CBO director mentioned specifically, would be to tax some employer-provided health benefits. Several Democrats have been trying to push for an end to the era of completely tax-free benefits, regardless of how generous. But the White House sees it as a no-go, as do some Democratic leaders. Coincidentally, labor unions are also opposed to the plan.

In a front-page piece, the NYT takes a look at how members of both parties think that this whole health care debate would be much easier if Sen. Edward Kennedy were still around. Kennedy, who is battling brain cancer, would have been a leading voice on the issue but hasn't been around Capitol Hill since April. Although lawmakers used to surround their talk about Kennedy with lots of optimism, there has been a subtle change lately as more have begun to take a more realistic outlook and hint that it would be great to pass health care reform while Kennedy is still in the Senate since he spent a good chunk of his legislative career advocating on the very issue.

JPMorgan's "surprisingly strong" ( WSJ) quarterly earnings show how, just like Goldman, the bank has been able to take advantage of weaknesses in competitors. This marks an astounding turnaround for JPMorgan, which was struggling only a few years ago. Analysts warn it's still too early to declare that its fortunes won't turn around again, but, for now, JPMorgan looks like one of the lucky few that could come out stronger after the financial crisis. "The stronger players are positioned to take advantage of the crisis and they will dominate clearly in the near term," said one expert.

The WSJ and LAT front large pictures of the explosions that ripped through two luxury hotels in Jakarta, Indonesia, today, killing nine people and injuring 50. It seems the blasts were caused by suicide bombers who were guests at the Marriott, one of the two hotels that were hit. The Marriott had also been the target of a bombing in 2003. This is the first major terrorist attack in Indonesia since 2005, and experts immediately pinned the blame on Jemaah Islamiyah, an Islamic extremist group that is affiliated with al-Qaida.

The NYT and WP front Obama's speech at the centennial celebrations of the NAACP, where he talked about the challenges facing black Americans. The organization's president said it was the president's "most forthright speech on the racial disparities still plaguing our nation" since moving into the White House. The NYT characterizes the speech as a "fiery sermon," where Obama acted as "one part politician and one part black preacher" as he spoke "in unusually personal terms." Obama, who has often tried to avoid directly discussing his race, talked about the enduring "pain of discrimination" that is "still felt in America" by African-Americans, Latinos, Muslim Americans, and "our gay brothers and sisters." He also spoke directly to black Americans, urging parents to meet their responsibilities to impose discipline on their kids and telling kids that "no one has written your destiny for you."

The NYT fronts a dispatch from the West Bank, where, for the first time since 2000, there seems to be a real sense of optimism about the future. Security has improved, the economy is growing, and life has returned to its streets. The Obama administration hopes this positive development will help the Palestinian Authority, which is dominated by Fatah, consolidate power. Whether that will actually happen is still an open question, but there are hints that residents of the West Bank and Gaza are starting to see Fatah as more trustworthy than Hamas, a significant shift from earlier this year.

The NYT takes an interesting look at how some cancer experts think we've gone too far in promoting routine screenings for cancer even though, in most cases, there's little benefit for the general public. There's a general belief that early detection can help save lives, but that really hasn't proven to be true except for a few types of cancer and people with specific symptoms or risk factors. Meanwhile, many are being pushed into undergoing unnecessary tests that not only cost a lot of money, but could also lead to complications.

The LAT fronts the nominations for the Emmy Awards, in which Family Guy became the first animated show to be nominated in the best comedy series category since The Flintstones in 1961. For its part, 30 Rock received 22 nominations, the most ever for a comedy series. The LAT notes that the prominence of Family Guy and other "quirky shows" like Weeds and Flight of the Conchords "offers as compelling a sign as any of the near-total retreat of the more conventional sitcoms like Seinfeld and Friends that not so long ago dominated network lineups."

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