opponent while agreeing with the reasonable compromise measure they've offered, said, "We are encouraged to hear that Republicans are abandoning their demands for extreme measures like cuts to border security, cancer research and food safety inspectors and instead moving closer to Democrats' position that we should cut government spending in a smart, responsible way that targets waste and excess while keeping our economy growing."

As for what happens when this spending bill expires in a few weeks? That's tougher. The Republican proposal goes after some of the low-hanging fruit by using the cuts Obama identified in his budget. And it doesn't bridge the two essential arguments between the Republicans and the Democrats, which are how much spending to cut, and where it should come from. So we can't yet say that disaster is averted. But it is, at the least, delayed.

Top Stories

A short-term budget deal is near, report Lori Montgomery and Paul Kane: "The threat of a government shutdown receded Friday, as Senate Democrats tentatively embraced a Republican plan to immediately cut $4 billion in federal spending by targeting programs that President Obama has already marked for elimination. The GOP proposal, unveiled late Friday by House leaders, would keep the government running only until March 18 - two weeks past the current March 4 deadline - a shorter extension than Democrats are seeking. But by offering a stopgap measure that cuts only programs Obama has identified as unnecessary, Republicans appear to have broken an impasse over spending that has been brewing since they took control of the House this year."

Tens of thousands of protestors are swarming Madison, Wisconsin, report Michael Fletcher and Sandhya Somashekhar: "Tens of thousands of demonstrators swarmed the state Capitol building here Saturday in protest of Gov. Scott Walker's proposal to strip public employees of most of their collective bargaining rights. Protesters have crowded around the Capitol for more than a week, since unrest erupted over the Republican governor's plan. Local media quoted police as saying the crowds Saturday were on track to rival those last weekend, which were estimated at nearly 70,000. Walker threatened on Friday to trigger as many as 12,000 layoffs beginning next week unless lawmakers enact his plan. The demonstration is certain to be the largest of dozens taking place around the country against Walker and other Republican governors who have taken similar stands against their public employee unions."

The rumored crackdown on protesters in the state capitol never happened, reports Andy Kroll: "It was the eviction that never happened. Police inside the capitol were expected to remove protesters at 4 p.m. But 4 p.m. came and went, and nothing happened. Yes, the protesters have been mostly moved off of ground floor of the rotunda and up to the 1st floor. But apart from that, the party continues here inside the Wisconsin capitol."

Events in the Midwest and Middle East could affect the recovery, report Neil Irwin and Michael Fletcher: "Just when the economic recovery seemed to gain momentum, two new threats have emerged that could undermine it. One has flared in the Midwest, the other in the Middle East. The standoff over benefits for public employees in Wisconsin, pitting Gov. Scott Walker (R) against unions and their Democratic allies, presages battles in many state capitals that could lead to hundreds of thousands of public jobs being cut nationwide...Budget cutting is already taking a greater toll than analysts had expected, according to figures released Friday by the Commerce Department...Political turmoil in Libya and other Arab nations, meanwhile, has driven the price of oil up 14 percent this week and is already starting to mean higher prices for American consumers at the gasoline pump. The price spike could buffet global financial markets if the upheaval spreads further."

Debates over monetary policy reflect a split between theorists and empiricists, writes Christina Romer: "Empiricists, as the name suggests, put most weight on the evidence. Empirical analysis shows that the main determinants of inflation are past inflation and unemployment. Inflation rises when unemployment is below normal and falls when it is above normal. Though there is much debate about what level of unemployment is now normal, virtually no one doubts that at 9 percent, unemployment is well above it...Theorists, on the other hand, emphasize economic models that assume people are highly rational in forming expectations of future inflation. In these models, Fed actions that call its commitment to low inflation into question can cause inflation expectations to spike, leading to actual increases in prices and wages."

British soul interlude: Adele sings "Rolling in the Deep" on the Late Show with David Letterman.

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams. Still to come: Events in the Midwest and Middle East could have broader economic ramifications; governors disagree on how flexible to make health care reform; it is hard to say whether public workers are overpaid; the EPA emerges from the short-term spending bill unscathed; and the gritty, live-action Archie movie.

Economy

Obama has few options for helping cash-strapped states, reports Zachary Goldfarb: "The budget crisis facing many states is threatening to undermine key elements of President Obama's agenda, but with Republicans in control of the House and widespread concern over the federal deficit, he has few options to make a significant difference. Even those who say Obama needs to secure significant new federal spending to help states avoid cutting health care and education programs and laying off workers acknowledge the limits. 'We know there is not a great appetite for major new funding, but there is a real short-term crisis here,' said Charles Loveless, the legislative director of a powerful labor union, the American Federation of State, County and Municipal Employees."

The Senate is taking up patent reform -- and it's proving surprisingly controversial, reports Ed Wyatt: "The Senate on Monday will begin debating a bill that critics say will undermine American strength abroad, plunder the United States economy and exceed the government’s constitutional authority...Rarely has the Patent and Trademark Office elicited such passions. But included in the bill is a long-debated feature that would change the federal patent system to a 'first to file' protocol of determining patent priority — one used by nearly all of the rest of the world — from its current 'first to invent' system. 'This bill would be death to innovation in America,' said Phyllis Schlafly, the conservative writer and activist who has rallied opposition to the bill among conservative groups like the Gun Owners of America and the Christian Coalition. Those groups have joined in opposition with small-business advocates and groups of professional engineers, who say that the change would favor big corporations over small inventors and make it harder for start-ups to ward off people seeking to steal their ideas."

HAMP, set to be cut by Congress, has been largely ineffective, report Alan Zibel and Louise Radnofsky: "Just one in four of the 2.7 million homeowners who sought to participate in the Obama administration's signature mortgage assistance program have succeeded in getting their monthly payments reduced. The rest failed to qualify for the program or were disqualified after they were initially accepted into the program, according to an analysis by the Wall Street Journal of data on applicants to the program newly released by the Treasury Department... House Republicans have called the program a waste of money and are considering a bill this week to end the program."

China is aiming for lower growth: http://on.wsj.com/hdx1zz

Even Republicans like budget director Jack Lew, reports Lori Montgomery: "At 27, Jacob J. Lew helped save Social Security. At 41, he helped cut a deal to balance the federal budget. During the Clinton administration, he became the only White House budget director in a generation to banish deficit spending. In a city suddenly crawling with would-be deficit-busters, even some Republicans recognize Lew as the real deal. 'You guys did an absolutely magnificent job of managing the nation's fiscal affairs,' Rep. Tom McClintock (R-Calif.) gushed when Lew, in his second stint as White House budget director, appeared last week before the House Budget Committee. 'It's true it was a Republican Congress, but give credit where credit is due. You guys did a great job.' Now President Obama has asked Lew to work that magic again."

Regulator flip flops are unhealthy, writes Steven Pearlstein: http://wapo.st/g0NQui

Texas' education cuts show the cost of austerity, writes Paul Krugman: "In low-tax, low-spending Texas, the kids are not all right. The high school graduation rate, at just 61.3 percent, puts Texas 43rd out of 50 in state rankings. Nationally, the state ranks fifth in child poverty; it leads in the percentage of children without health insurance. And only 78 percent of Texas children are in excellent or very good health, significantly below the national average. But wait -- how can graduation rates be so low when Texas had that education miracle back when former President Bush was governor? Well, a couple of years into his presidency the truth about that miracle came out: Texas school administrators achieved low reported dropout rates the old-fashioned way -- they, ahem, got the numbers wrong."

Mary Meeker and Kleiner Perkins look at the US as if it were a business: http://bit.ly/e2wE0V

Felix Salmon is not amused: " Try asking a “corporate turnaround specialist” to turn around a corporation run as a democracy, where every employee gets an equal vote. Auditing business lines isn’t going to help you much there. Besides, Meeker’s 'spending problem' is in the future, and overwhelmingly in Medicare and Medicaid — her 'negative net worth' number of $44 trillion for the USA includes $58.1 trillion in future Medicare and Medicaid liabilities. And her solutions on that front are all but nonexistent: 'isolate and address the drivers of medical cost inflation' or 'improve efficiency / productivity of healthcare system; are not an answers so much as just ways of restating the question. There’s really no point in calling for “brutal decisions” while at the same point refusing to take any view on what those decisions should be. And it might come as a shock to Meeker, but you can’t really extrapolate from the rich and well-educated employees of technology and financial-services firms to Americans as a whole."

Parody trailer interlude: The gritty live-action Archie movie adaptation.

Health Care

Regulators are starting to debate what constitutes "essential care", reports Avery Johnson: "Maggie Haslam's five-year-old autistic son, Drew, has undergone intense behavioral, physical and speech therapy that helped him learn to dress himself and communicate such concepts as 'over' and 'under.' The therapy greatly helped Drew, said Ms. Haslam, a public-relations agent in Silver Spring, Md. But was it essential? The next big issue for the federal health law as it moves toward implementation is how regulators will define so-called essential benefits—the basic medical services that health plans must cover under the law. The legislation gives 10 categories of care that plans must provide for customers of the health-insurance exchanges that are launching in 2014. But the law leaves details up to regulators, who are now starting to develop the rules."

Democratic and Republican governors are split on how flexible to make health reform, report Amy Goldstein and Dan Balz: "Democratic and Republican governors, burdened by crushing budget pressures from Medicaid, said Sunday that federal officials should allow them more freedom to change eligibility rules and other aspects of the public health insurance program for the poor. But they displayed sharp ideological differences over how far such flexibility should go...Several conservative governors urged Congress and the Obama administration to convert Medicaid, a pillar of the nation's social safety net for nearly half a century, from an entitlement program to a block grant. The idea would be similar to the profound change that welfare underwent in the mid-1990s, when the government began to give states a fixed sum of money each year, along with latitude to spend it as they wanted."

More than half of all states want permission to cuts hundreds of thousands from their Medicaid rolls: http://on.wsj.com/hKZmBG

Budget cuts could threaten health spending everyone likes, writes Walter Shapiro: "A prime example is the $5-billion National Cancer Institute (NCI), part of the $31-billion National Institutes of Health (NIH). Aside from ideologically pure libertarians who probably think that Thomas Jefferson went too far with the Louisiana Purchase, no one believes that battling cancer should be left to the private sector and the vagaries of the profit motive. Since the Cancer Institute (like the NIH) spends nearly 80 percent of its money on grants, it is difficult to portray these medical research agencies as exemplars of bloated Big Government. The arbitrary nature of the budget battles means that NIH is on the chopping block along with the rest of discretionary domestic spending."

The individual mandate could be replaced if struck down in court, write Kevin Outterson and Austin Frakt: http://bit.ly/hAc7Yr

Domestic Policy

It is hard to say whether public workers are overpaid, report Michael Luo and Michael Cooper: "Are state workers overpaid? An analysis of recently released census data compiled for The New York Times by demographers at Queens College of the City University of New York yields a complicated picture, one that highlights the variation in pay from state to state and occupation to occupation, and one that does not fit neatly into a one-size-fits-all approach to cost cutting. The clearest pattern to emerge is an educational divide: workers without college degrees tend to do better on state payrolls, while workers with college degrees tend to do worse. That divide has grown more pronounced in recent decades. Since 1990, the median wage of state workers without college degrees has come to surpass that of workers in the private sector."

Arne Duncan is urging states to avoid education cuts; http://politi.co/eoR5OW

A product safety database could be killed in House cuts, reports Lyndsey Layton: "The first-ever government database of product safety complaints, which is scheduled to go public in two weeks, could be scrapped as a result of a budget amendment offered by a freshman member of the House. As part of the spending bill that passed the House on Feb. 19, Rep. Mike Pompeo (R-Kan.) won support for a measure to withhold money to implement the system, which is set to launch March 11. The database, which was welcomed by consumer advocates, would make public thousands of complaints received by the Consumer Product Safety Commission each year about safety problems with products, from table lamps to baby strollers."

Teacher development could transform our school system, writes Bill Gates: http://wapo.st/gZWULP

Collective bargaining can reduce deficits, writes Michael Bloomberg: "In New York City, we share the same goal as cities and states across the nation -- less spending and better services. We, too, are seeking to legislate changes to reduce pension and benefit costs and modernize our labor laws. But in some cases, we believe expanding collective bargaining would be more beneficial than trying to eliminate it. For example, in New York, state government -- not the city -- has the authority to set pension benefits for city workers, but city taxpayers get stuck with the bill...Our proposal to the state is simple: legislate lower costs this year and, going forward, give us the authority to negotiate fair pension savings ourselves."

Interlude making fun of past interludes: Al Qaeda Attacks Internet With Photo Of Adorable Piglet.

Energy

The GOP's short-term spending bill does not target the EPA, reports Andrew Restuccia: "The short-term spending bill released Friday by House Republicans does not include language to block funding for the Environmental Protection Agency’s climate rules or slash the agency’s budget. The continuing resolution (CR) would fund the government for two weeks while lawmakers work out a longer-term spending bill to keep the government running through the end of the fiscal year. The Republican proposal would cut current spending by $4 billion. Democrats said Friday they were 'encouraged' by the proposal. The House passed earlier this month a broad continuing resolution that would fund the government through the end of the fiscal year. The measure, which would cut current spending by $61 billion, includes a provision to block funding for EPA climate regulations."

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

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Sarah Halzack.

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Feb. 28, 2011