It's not about reducing the deficit. If it was, then the tax deal wouldn't have passed in December, entitlements would've been in the mix from the beginning, tax expenditures and defense spending would be on the table, etc. It's not about cutting spending. if it was, then the cuts wouldn't be limited to 12 percent of the budget. Rather, it's about cutting non-defense discretionary spending -- and only non-defense discretionary spending. Boehner frequently says that "the American people want us to cut spending," but he never says that "the American people want us to cut non-defense discretionary spending." And that's because they don't: poll after poll has found Americans resistant to the sort of cuts you find in the non-defense discretionary bucket, which include cuts to education, worker retraining, nutrition programs, heating-oil subsidies, etc. They'd much prefer tax increases on the rich, or cuts to defense spending.

But Republicans wouldn't prefer tax increases on the rich, or cuts to defense spending. And they know that if entitlements get opened up, tax increases will immediately be on the table -- one of the easiest and most popular ways to cut Social Security's shortfall is to lift the cap on payroll taxes. But for Republicans at this moment in time, that's unthinkable. The beauty of focusing on non-defense discretionary spending is that it's spending they don't really like and that's totally disconnected from any sort of tax -- the same can't be said for Medicare or Social Security. And that gets to what this debate is really about: not cutting spending or reducing the deficit, but cutting spending Republicans don't like while avoiding any and all tax increases -- even if that means the country has higher deficits and the middle- and working-class bear more of the burden. The difficulty for Republicans is they've not wanted to clearly explain that philosophy to the American people, and so now they're in the odd position of arguing against Democratic efforts to do more for the deficit and do more to cut spending but not really being able to say why they oppose those efforts.

Top Stories

Congress will likely pass another three-week funding extension, reports Carl Hulse: "With little hope of a budget deal being reached before the end of next week, House Republicans are preparing another short-term spending measure to give the House and Senate a chance to come to agreement over a broader plan to keep the government operating through Sept. 30. Lawmakers and top aides on Thursday said stopgap legislation to be considered next week would most likely cover three weeks and include an additional $6 billion in cuts, possibly drawn from spending reductions offered by Democrats and the White House in earlier budget talks. The current two-week law expires next Friday and carries $4 billion in cuts. Movement toward another short-term solution came after the Senate on Wednesday rejected competing Republican and Democratic budget measures."

House Speaker John Boehner doesn't want to debate entitlements just yet, reports Simmi Aujla: "House Speaker John Boehner accused Democrats on Thursday of trying to 'muddle' the budget debate with their calls for reforms to entitlement programs. Boehner told reporters that Democrats who want to include a debate about Social Security, Medicare and Medicaid and tax increases are getting way ahead of themselves. 'The American people want us to cut spending. Because they know that cutting spending will in fact create a better environment for job creation,' he said. 'To try to muddle the current issue with entitlement programs, tax increases -- that’s what the next budget process is for. We’ll have plenty of opportunity to talk about that,' he said."

Wisconsin's anti-union bill passed the legislature, reports Karen Tumulty: "Wisconsin Gov. Scott Walker won his drive to strip the state's government workers of nearly all of their collective-bargaining rights Thursday, after a three-week standoff that brought tens of thousands of protesters to the Capitol. The new legislation represents a major setback for organized labor, but the political battle over public employees and their rights to bargain is likely to continue - not only in Madison. The state Assembly passed Walker's proposal a day after Republican senators outmaneuvered the 14 Democratic senators who had fled Wisconsin to deny a quorum needed for passing a budget measure. By stripping the bill of its spending language, they were able to pass it with only Republicans present."

Guitar heroics interlude: Television plays "Marquee Moon" live.

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

Still to come: The House voted to cut a foreclosure prevention program; the CBO says repealing the individual mandate would increase the ranks of the uninsured, but cut the deficit; Obama is pushing for a government reorganization plan; Obama will address higher gas prices today; and the world's fastest popcorn popper.

Economy

The House voted to cut a foreclosure prevention program, reports Felicia Sonmez: "The House on Thursday voted to end the Federal Housing Administration Refinance Program, one of two federal foreclosure-assistance programs on the chopping block this week. The measure, H.R. 830, passed on a 256-to-171 vote, with 18 Democrats breaking ranks to join Republicans in backing it. One Republican, Rep. Joe Heck (Nev.), joined Democrats in opposing the proposal; Heck represents Nevada's third district, which was the district hardest-hit by foreclosure in 2010...The program has used only $50 million of the more than $8 billion that has been set aside for it, leading to criticism from Republicans that it ought to be terminated and the money used to pay down the federal deficit. The Senate is unlikely to take up the bill, however, and the White House earlier this week issued a veto threat."

Banks are saying that principal write-down will "slow the recovery," report Nick Timiraos and Dan Fitzpatrick: "Bankers are ratcheting up their rhetoric as they fight a mortgage-servicing settlement proposal, predicting lasting damage to the U.S. economy in an effort to force regulators to soften terms of any penalties. On Thursday, Wells Fargo & Co. Chief Executive John Stumpf said extensive loan principal reduction would increase the U.S. deficit if taxpayers are forced to pay for write-downs of loans held by government-controlled Fannie Mae and Freddie Mac. 'It's important to the country so that whatever happens does not slow down the recovery,' Mr. Stumpf said. Bank of America executives issued similar warnings on Tuesday, calling principal reductions 'no panacea' and questioning the fairness of the approach."

The Federal Housing Administration's head is leaving: http://wapo.st/fAq3wF

A study suggests the SEC needs a bigger budget, reports David Hilzenrath: "The Securities and Exchange Commission needs more money to meet its expanding responsibilities, but it hasn't made the most of the funds it already has, according to a study of the agency ordered by Congress last year. The consultant's report, a draft of which was obtained by The Washington Post, mentioned other issues that may be undermining the effectiveness of the agency responsible for policing Wall Street. Those include low morale, few staff members with experience working in financial markets, and a slowdown in reviews of money managers and brokerage firms. The study, performed by Boston Consulting Group, is due to be submitted to Congress by March 14."

February's deficit was the biggest in American history: http://on.wsj.com/hI50Lp

Obama is allowing Republicans to dumb down the deficit debate, writes Paul Krugman: "As the national debate over fiscal policy descends ever deeper into penny-pinching, future-killing absurdity, one voice is curiously muted -- that of President Obama. The president and his aides know that the G.O.P. approach to the budget is wrongheaded and destructive. But they’ve stopped making the case for an alternative approach; instead, they’ve positioned themselves as know-nothings lite, accepting the notion that spending must be slashed immediately -- just not as much as Republicans want. Mr. Obama’s political advisers clearly believe that this strategy of protective camouflage offers the president his best chance at re-election -- and they may be right. But that doesn’t change the fact that the White House is aiding and abetting the dumbing down of our deficit debate."

Businesses want smart investment from state governments, not lower taxes, writes Delaware Gov. Jack Markell: http://wapo.st/ehuDvW

John Boehner and Mitch McConnell are playing an effective game of "bad cop, worse cop", writes Keith Hennessey: "Rather than good cop, bad cop, Republican Leaders are playing bad cop, worse cop with their Members. Speaker Boehner and Leader McConnell are together the bad cop. On both substance and tone they have positioned themselves with the aggressive spending cutters in their party. At the same time, they can privately tell the Democratic negotiators, 'You think we’re bad? You should see our freshman. They’re nuts. We’re not sure we can deliver them for anything short of the House-passed bill.' While Boehner and McConnell are the bad cop, the freshman / Tea Party / conservative rank-and-file Republicans are the worse cop...The Republican Leaders’ weakness at delivering votes for a weak bill becomes negotiating strength."

Time lapse interlude: Grapes shriveling into raisins, sped up from 3 months to 30 seconds.

Health Care

The CBO found that repealing the individual mandate would increase the ranks of the uninsured, but cut the deficit, reports Derek Thompson: "The CBO finds that repealing the mandate would increase the number of people without health insurance by 16 million people in 2021. From the CBO: 'About 4 million fewer people would have employment-based coverage; about 6 million fewer people would obtain coverage in the individual market; and about 6 million fewer people would have coverage under Medicaid or CHIP.' CBO also estimates that striking the mandate would increase premiums for policies in the individual market by '15 percent to 20 percent.'...The upshot is that repealing the health insurance mandate would trim our deficit at the cost of more uninsured people and higher health care premiums."

The insured don't currently pay for the uninsured's health care, write John Cogan, Glenn Hubbard, and Daniel Kessler: http://on.wsj.com/dOPIj1

Two House Democrats want to undo Medicare's Independent Payment Advisory Board, reports Julian Pecquet: "Two House Democrats have signed onto a Republican bill to repeal a health reform provision that the Obama administration has touted as a central tool to keep health costs under control. Rep. Shelley Berkley (D-Nev.) became a co-sponsor of legislation to repeal the Medicare payment board on Wednesday, one week after Rep. Michael Capuano (D-Mass.). A spokesman for the congresswoman said she remains committed to the law's cost-cutting goals but wants Congress to be in charge...The Independent Payment Advisory Board fast-tracks cuts to Medicare payments when spending reaches a pre-determined target. The Congressional Budget Office estimated that it would save $28 billion through 2019."

Domestic Policy

Obama wants a government reorganization plan within 90 days, reports Ed O'Keefe: "President Obama is giving aides 90 days to find ways to overhaul federal trade and export agencies, according to senior administration officials familiar with his plans. The president is expected to sign a memorandum Friday formally launching a reorganization plan he announced during his State of the Union address that is set to focus first on revamping 12 trade and export agencies and may later shift to other government operations. The process will be led by Office of Management and Budget Deputy Director Jeffrey D. Zients and Obama's former staff secretary, Lisa Brown. Other top officials from across the government are expected to join the discussions, according to the aides, who were not authorized to speak on the record."

The just-passed Wisconsin bill allows the firing of striking workers: http://bit.ly/frE6KP

Republican budget plans include big cuts for Head Start, reports Jennifer Steinhauer: "The difficulty Senate Republicans faced voting this week for a bill full of spending cuts is best illustrated on the home page for the Alaska Head Start program’s Web site. On the bottom of the page is a picture of Senator Lisa Murkowski, Republican of Alaska, receiving an award for her long support for Head Start, the preschool program for poor children. At the top of the page is a note imploring Alaskans to call Ms. Murkowski’s office and beg her not to vote for a Republican bill that would cut the program’s budget by $2 billion, or nearly a quarter of President Obama’s 2011 budget request of $8.2 billion. The current level is $7.2 billion. On Wednesday afternoon, Ms. Murkowski did so anyway... Research on the program has shown that children who complete it do better socially and academically than children not enrolled in the program."

New York and other states should do away with "last in, first out" teacher layoffs, writes Michelle Rhee: "With looming budget cuts, New York's governor and legislature must act quickly to save our best teachers. It is abundantly clear from the research that the most important school factor in determining a child's success is the quality of the teacher at the front of the classroom. That's why it's absolutely imperative that state leaders completely eliminate the 'last in, first out' policy, which mandates that the last teachers hired must be the first fired, regardless of how good they are. This policy makes absolutely no sense. Why sacrifice our children's future when we can enact laws that save great teachers while ridding the system of those we know are less effective?"

Street vendor interlude: A vendor in Shanghai gives new meaning to "instant popcorn."

Energy

Obama will use a press conference to address higher gas prices today, reports Laura Meckler: "President Barack Obama will address rising energy prices at a news conference on Friday, but he is not expected to call for releasing oil from the Strategic Petroleum Reserve. Unrest in the Middle East and North Africa has driven up gasoline and heating oil prices in the United States. Republicans in Congress have raised the volume on their criticism of Mr. Obama's energy policies, and some Democrats have called for Mr. Obama to release oil from the strategic reserves in an attempt to moderate prices by increasing supply. White House officials would not say what steps Mr. Obama would put forward, if any, during his press conference. But an administration official said Thursday evening not to expect an announcement on drawing oil from the strategic reserve."

High gas prices are improving GOP environmental legislation's chances in the Senate: http://politi.co/fFQoH7

A House bill to strip the EPA of its climate-regulating power is moving forward, reports John Broder: "House subcommittee voted on Thursday to strip the Environmental Protection Agency of its power to regulate greenhouse gases, chipping away at a central pillar of the Obama administration’s evolving climate and energy strategy. The sharply partisan vote was preordained by the Republican takeover of the House. Republicans and their industry allies accuse the administration of levying taxes on traditional energy sources through costly environmental regulations, threatening the economic recovery and driving jobs overseas...A parallel bill has been introduced in the Senate, although passage remains uncertain. President Obama has vowed to veto such legislation."

GOP Rep. Joe Barton argues that cutting oil subsidies will lead Exxon Mobil to go out of business: http://bit.ly/hfPdc9

Some House Democrats have introduced a bill to tap the Strategic Petroleum Reserve, reports Andrew Restuccia: "A group of House Democrats introduced legislation Thursday to tap the country’s oil reserves in response to rising prices. 'This is the time to deploy a responsible amount of reserves before it is too late,' Rep. Edward Markey (D-Mass.), the author of the new bill, told reporters. Markey's bill represents the latest effort by Democrats to release oil from the Strategic Petroleum Reserve (SPR), a 727-million-barrel emergency stockpile of oil. But the proposal faces opposition from Republicans and at least one senior House Democrat. The legislation would require that over the next six months at least 30 million barrels of oil be released from the SPR. President Obama ultimately has the authority to release oil from the SPR."

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

newsletters@email.washingtonpost.com

March 1, 2011