Dec. 30, 2011

The next four days in the news cycle will be all Iowa, all the time. And with good reason. Iowa might well decide our next president. The momentum coming out of the caucus can cement Romney as the nominee or vault another contender to the nomination. But let's all take a deep breath and agree that that is completely insane.

In 2008, the Iowa Republican Caucus got record turnout: 120,000 people. That is to say, four percent of all the residents of Iowa. And those 120,000 people represent four hundredths of one percent of the total population of America.

And it's not a representative four hundredths of one percent of the American people. It's not a representative four percent of Iowans. It's not even a representative four percent of Iowa Republicans. The likely caucusgoers are further to the right than the average Iowa Republican.

Gail Collins put it well in Thursday's New York Times. Imagine, she wrote, that the caucus gets incredible, record-shattering turnout: 150,000 Iowans attend! "That is about the same number of people in Pomona, Calif. Imagine your reaction to seeing a story saying that a plurality of people in Pomona, Calif., thought Newt Gingrich would be the best G.O.P. presidential candidate. Would you say, 'Wow! I guess Newt is now the de facto front-runner?'"

Probably not. For the record, this isn't really Iowa's fault. They're insistent on going first, but their caucus only matters so much because we in the media nationalize it -- and the importance of its results -- so aggressively. Which is why it's worth remembering Jon Bernstein's advice on how to read the media coverage out of Iowa.

"Remember that what matters out of Iowa is the spin," he writes. "Remember that the spin will be influenced by two main things: press biases, and party actors." And as for those press biases, "one is that 'news' trumps 'not news', which means that surprises get more coverage than whatever is expected to happen -- which is where the expectations game really does matter. The second is that the press has limited capacity, and can only really handle one big and one minor story line. The third is that there's a press bias in favor of portraying the nomination contest as close and uncertain." So that's worth keeping in mind as well.

On a more personal note, this will be the last Wonkbook that Dylan Matthews helps produce. I met Dylan four years ago, when, as a high school senior, he was the smartest and most scarily competent intern to ever walk through the American Prospect's doors. A few years later, I called him up and asked if he would like to do a bit of part-time work gathering news clippings to help me add more aggregation to the blog.

It was supposed to be a behind-the-scenes job, but the packages of clippings he sent were so comprehensive and so useful that it was instantly clear I needed to find a way to share them with readers. Thus, the ongoing experiment in sleep deprivation that we call Wonkbook was born. And Dylan, despite being in college throughout it, has never missed a single day. He's never even turned Wonkbook in late. And the success of Wonkbook led directly to Wonkblog. Without Dylan, neither would have happened.

I know that the way this relationship is supposed to work is you change the career of your interns. But in this case, my intern completely transformed my career. So thanks, Dylan, for everything.

Top Stories

 

1) Republican presidential contenders take a broad view of executive power, reports Charlie Savage: "Even as they advocate for limited government, many of the Republican presidential candidates hold expansive views about the scope of the executive powers they would wield if elected -- including the ability to authorize the targeted killing of United States citizens they deem threats and to launch military attacks without Congressional permission. As Republicans prepare to select their party’s 2012 presidential nominee, Newt Gingrich, Jon M. Huntsman Jr., Ron Paul, Rick Perry and Mitt Romney have provided detailed answers about their views on executive power in response to questions on the topic posed by The New York Times, which is publishing the full text of their responses online. The answers show that most of them see the commander in chief as having the authority to lawfully take extraordinary actions."

2) Jobless claims are still falling, reports Ben Casselman: "Fewer Americans are filing new claims for jobless benefits than at any time since the end of the recession, the latest signal that the U.S. economy is ending a year of uncertainty on a positive note. The Department of Labor said Thursday that a seasonally adjusted 381,000 people filed for unemployment benefits for the first time last week. That figure was up slightly from the prior week, but the four-week average, which is more closely watched by economists because it smooths out weekly volatility, fell to its lowest level since June 2008, when the economy was still mired in recession. The unemployment data, along with other positive figures from the housing and manufacturing sectors, suggest that the economic recovery is once again gaining momentum after nearly stalling out earlier this year...Statistics have consistently shown the economy keeps growing, albeit slowly."

3) Angela Markel helped force a change in government in Italy, report Marcus Walker, Charles Forelle, and Stacy Meichtry: "On a chilly October evening in her austere chancellery, Angela Merkel placed a confidential call to Rome to help save the euro. Two years after the European debt crisis erupted in little Greece, the unthinkable had happened: Investors were fleeing the government debt of Italy--one of the world's biggest economies. If the selloff couldn't be stopped, Italy would go down, taking with it Europe's shared currency. Her phone call that night to the 16th-century Quirinale Palace, once a residence of popes, now home to Italy's octogenarian head of state, President Giorgio Napolitano, trod on delicate ground for a German chancellor. Europe's leaders have an unwritten rule not to intervene in one another's domestic politics. But Ms. Merkel was gently prodding Italy to change its prime minister, if the incumbent--Silvio Berlusconi--couldn't change Italy."

4) The Fed is getting more dovish next year, reports Kelly Evans: "With the president having just nominated a new bipartisan pair of economists--Jeremy Stein and Jerome Powell--to help appease Congress, it is possible the Fed board could be filled next year. That may have less impact on the Fed's monetary-policy actions, however, than the rotation of regional bank presidents. Among the four losing their vote are the FOMC's three most hawkish members--Narayana Kocherlakota of the Minneapolis Fed, Richard Fisher of Dallas and Charles Plosser of Philadelphia--all of whom spoke against the Fed's latest bond-buying program and voted against it. Those gaining a vote, meanwhile, are John Williams of the San Francisco Fed, Cleveland's Sandra Pianalto and Atlanta's Dennis Lockhart, all considered more dovish than the outgoing group. That leaves the final incoming member--Richmond's Jeffrey Lacker--as perhaps the lone uber-hawk in 2012."

Top Op-eds

 

1) Politics is the only reason any of us are alive, writes Charles Krauthammer: "As the romance of manned space exploration has waned, the drive today is to find our living, thinking counterparts in the universe. For all the excitement, however, the search betrays a profound melancholy -- a lonely species in a merciless universe anxiously awaits an answering voice amid utter silence...So why the silence? Carl Sagan (among others) thought that the answer is to be found, tragically, in the final variable: the high probability that advanced civilizations destroy themselves...Intelligence is a capacity so godlike, so protean that it must be contained and disciplined. This is the work of politics -- understood as the ordering of society and the regulation of power to permit human flourishing while simultaneously restraining the most Hobbesian human instincts."

2) Keynes was and remains right about austerity, writes Paul Krugman: "'The boom, not the slump, is the right time for austerity at the Treasury.' So declared John Maynard Keynes in 1937...The real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans -- and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits. This wasn’t supposed to happen, according to the ideology that dominates much of our political discourse .In March 2011, the Republican staff of Congress’s Joint Economic Committee released a report titled 'Spend Less, Owe Less, Grow the Economy.'...They should have known better even at the time."

3) Tea Partiers don't hate government as much as they profess to, write Theda Skocpol and Vanessa Williamson: "In our interviews and group discussions, however, we found Tea Party members to be quite inconsistent about government...Tea Partiers aren’t opposed to all kinds of regulation or big tax-supported spending. Rank-and-file Tea Party participants evaluate regulations and spending very differently, depending on who or what is regulated, and whether those who benefit from various kinds of public spending are considered hard workers or freeloaders...Tea Party resistance to giving more to people deemed undeserving is more than just an argument about taxes and spending. It’s a heartfelt cry about where they fear their country may be headed. Tea Party worries about racial and ethnic minorities and overly entitled young people signal fear about generational social change in America."

4) The people should have a veto over the judiciary, writes Thomas Donnelly: "Each term, the Supreme Court decides a handful of controversial cases by a bare majority. These decisions are all but impossible to reverse in the short term -- even as they bitterly divide the justices. Furthermore, the court imperfectly reflects the constitutional views of governing coalitions over time, as the justices often maintain their positions for as long as possible to ensure that a sympathetic president can appoint their successors. Roosevelt’s proposed remedy -- what might be called a 'People’s Veto' -- could be tailored to address these widely recognized problems. For instance, such a veto could be reserved for 5 to 4 decisions of the Supreme Court on constitutional issues -- in other words, decisions in which the majority is often attempting to push constitutional doctrine in a new direction. A People’s Veto would permit the public to weigh in, perhaps following a national petition drive or congressional authorization."

Synth pop interlude: The Blow play "Fists Up".

Got tips, additions, or comments? E-mail me.

Still to come: The SEC's battle over its bank settlement is heating up; a judge blocked California's Medicaid; the payroll tax is stoking worries about Social Security's solvency; a judge blocked California's climate rules; and a slide whistle cover of Dr. Dre's "Nuthin' but a 'G' Thang".

Economy

 

Italy's borrowing costs are still high, report Emese Bartha and Stacy Meichtry: "The cost of funding Italy's long-term debt remained stubbornly high on Thursday, exacerbating Italian Prime Minister Mario Monti's efforts to fend off criticism of a government austerity program aimed at pulling the country out of the euro-zone crisis. Rome paid a sharply lower yield of 5.62% for borrowings that come due in 2014, compared with 7.89% at the previous auction on Nov. 29. But the yield investors demanded for 10-year bonds was 6.98%--barely down from the euro-era highs of recent months and nearly touching the 7% threshold that economists consider financially unsustainable. Investors' hopes for signs of a recovery in Italy's bond market had been running high after Mr. Monti passed a multibillion-euro austerity package in December and the European Central Bank allocated nearly half a trillion euros in three-year loans to banks last week."

Detroit is an unlikely housing bright spot, reports Brady Dennis: "An unlikely name has been popping up lately as a rare bright spot in the nation’s still-abysmal housing market: Detroit. Among the nation’s top 20 metropolitan regions, only the Detroit and Washington areas posted annual home price increases, according to S&P/Case-Shiller home price data for October released this week. At 2.5 percent, Detroit’s gain was almost double the increase reported for the District, where unemployment and foreclosures have remained relatively low despite the financial crisis. Improbable as it might seem, the Detroit area is seeing an increase in building permits. Construction firms are dusting off their equipment and returning to work, and bidding wars are breaking out over desirable homes."

The Treasury issued a new bank fees rule, reports Tom Barkley: "The U.S. Treasury issued a proposed rule Thursday for determining fees to be paid by large financial institutions to cover the cost of the recently established financial-stability watchdog and other expenses related to the Dodd-Frank regulatory overhaul. The Treasury plans to start collecting the semiannual fees in July 2012 from U.S. bank holding companies with at least $50 billion in total consolidated assets, foreign banks with at least that amount of assets in U.S. operations, as well as nonbank institutions that fall under the supervision of the Federal Reserve, according to the proposal. The Treasury expects the total amount of fees to top $100 million a year, though the actual amount of the initial assessment will depend on the amount of expenses included in the administration's fiscal 2013 budget proposal, as well as the amount of assets each firm holds on Dec. 31, 2011."

Stock options are benefiting from a huge tax break, reports David Kocieniewski: "The stock market’s rebound from the financial crisis three years ago has created a potential windfall for hundreds of executives who were granted unusually large packages of stock options shortly after the market collapsed. Now, the corporations that gave those generous awards are beginning to benefit, too, in the form of tax savings. Thanks to a quirk in tax law, companies can claim a tax deduction in future years that is much bigger than the value of the stock options when they were granted to executives. This tax break will deprive the federal government of tens of billions of dollars in revenue over the next decade. And it is one of the many obscure provisions buried in the tax code that together enable most American companies to pay far less than the top corporate tax rate of 35 percent -- in some cases, virtually nothing even in very profitable years"

Online retail is doing better than its brick-and-mortar counterpart, reports Ylan Mui: "In the annual race for holiday sales, a clear winner has emerged: online retail. The sector has enjoyed steady double-digit growth over the past two months compared with last year, providing a stable counterpoint to the broader industry’s more volatile season. Cyber Monday alone raked in a record $1 billion, according to analytics firm comScore. This week, the company said online spending during the holidays reached more than $35 billion, a 15 percent spike from a year ago...Online spending is a rare bright spot in what has been an uneven Christmas season for the retail industry...Bricks-and-mortar retailers reported that the throngs of shoppers who crowded their stores for blockbuster deals during extended hours Thanksgiving weekend were largely absent the rest of the month and in early December."

That just happened interlude: A slide whistle rendition of "Nuthin' But a 'G' Thang".

Health Care

 

A federal judge blocked California's Medicaid cuts, reports Edvard Pettersson: "California can’t cut reimbursements hospitals receive for the skilled-nursing services they provide to low-income people, a federal judge ruled. U.S. District Judge Christina Snyder in Los Angeles yesterday granted the request from the California Hospital Association for an order to stop California from imposing the reductions, saying the hospitals had shown there would be irreparable harm if she didn’t halt the cuts temporarily... The hospital group said in a Nov. 1 complaint that the cuts of more than 20 percent would resurrect previous reductions that the courts have found to be in violation of the federal Medicaid Act. The cuts would threaten the ability of many hospitals to operate skilled nursing units, the group said. The California Department of Health Care Services said Oct. 27."

Domestic Policy

 

The payroll tax cut is stoking worries about Social Security's future, reports Jia Lynn Yang: "For the first time in the program’s history, tens of billions of dollars from the government’s general pool of revenue are being funneled to the Social Security trust fund to make up for the revenue lost to the tax cut. Roughly $110 billion will be automatically shifted from the Treasury to the trust fund to cover this year’s cut, according to the Social Security Board of Trustees. An additional $19 billion, it is estimated, will be necessary to pay for the two-month extension...The prospect of policymakers continually turning to the payroll tax as a way of providing economic stimulus troubles experts, some lawmakers and both public trustees of the Social Security trust fund. Their concern: that Social Security will lose its status as a protected benefit owed to every working American and instead become politically vulnerable."

A report indicts the Justice Department for failing to serve disabled Americans, reports Julian Pecquet: "The Department of Justice is failing Americans with disabilities by not holding educational testing companies accountable for meeting their needs, according to a new report from the Government Accountability Office. The report found that only 2 percent of disabled people taking postsecondary exams received special accommodations in the most recent testing year. That’s a far smaller rate than the 12 percent of Americans who have disabilities. GAO also found that the DOJ is not properly enforcing provisions of the Americans with Disabilities Act that require testing companies to provide accommodations to make tests accessible for people with disabilities. The law also requires that test-takers’ achievement on the tests reflect their aptitudes rather than their disabilities, by giving people with dyslexia more time to answer for example."

Commercial interlude: Come on down to Skeleton Warehouse!

Energy

 

A judge is blocking California's fuel regulation, reports Felicia Barringer: "A federal judge on Thursday blocked enforcement of a California regulation favoring producers of gasoline, diesel fuel and biofuels whose methods generate fewer greenhouse gas emissions. The ruling by the judge, Lawrence J. O’Neill of United States District Court in Fresno, said the rule unconstitutionally discriminates against out-of-state producers and tries to regulate activities that take place entirely outside state boundaries, from producers’ choice of farming methods to refiners’ use of coal-fired electricity. By granting a preliminary injunction, which had been sought by ethanol producers, the judge dealt a blow to the state’s much-trumpeted effort to reduce its greenhouse gas emissions to 1990 levels by 2020. The low-carbon fuel rule had been expected to account for 10 percent of the overall reduction in emissions, or about 16 million metric tons."

US wind manufacturers are protesting China's steel subsidies, report Matthew Wald and Keith Bradsher: "Four domestic companies that make most of the steel towers for wind turbines in the United States filed a trade complaint against China and Vietnam on Thursday, seeking tariffs in the range of 60 percent. The action is a significant new skirmish in an emerging green energy trade war. The allegations are much like the ones that solar panel manufacturers made in a similar case filed against Chinese manufacturers in October, namely that government subsidies were allowing foreign manufacturers to sell below cost in the United States, damaging the domestic industry. The filing is likely to increase the already escalating trade frictions between the United States and China. Chinese officials were not immediately available for comment. The official Xinhua news agency had no immediate comment or reports on the issue."

New lightbulb rules take effect on January 1, reports Andrew Restuccia: "New light bulb efficiency standards will begin phasing in on Jan. 1 despite intense opposition from conservatives, who have blasted the rules as a textbook unnecessary federal regulation. While Republicans secured inclusion of a measure blocking funding for enforcement of the standards in a year-end spending bill, energy efficiency groups say the provision will have little practical impact. The Energy Department rules will nonetheless go into effect at the start of 2012...Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, said companies have been preparing for the new light bulb efficiency standards since Congress passed the 2007 energy law requiring traditional incandescent light bulbs to be 30 percent more efficient starting in 2012. "

Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

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