Ezra is on vacation until November 7th.

Top Stories

1) John Boehner has rejected Democrats' supercommitte offer, report Paul Kane and Rosalind Helderman: "Amid a flurry of counter-proposals from the deficit-reduction committee, House Speaker John Boehner (R-Ohio) on Thursday rejected a Democratic offer to slash $3 trillion from future debts because it contained significant tax increases. While GOP negotiators offered a slimmer package of savings with virtually no tax hikes, Boehner said the Democratic request for $1.3 trillion in new tax revenue was a non-starter and gave his most pessimistic outlook to date that the so-called 'supercommittee' would achieve its deficit target by its Thanksgiving deadline. 'I don’t think it’s a reasonable number,' the speaker said of the tax proposal, suggesting it was time 'to get serious' in order to avoid an automatic trigger of $1.2 trillion in spending cuts if the panel does not reach an accord."

2) Economic growth is way up, reports Neil Irwin: "The U.S. economy grew at its fastest clip in a year during late summer as consumers and businesses shrugged off fears of a new recession, according to government data released Thursday that helped drive the stock market to its best day since August...Gross domestic product rose at a 2.5 percent annual pace in the July-through-September quarter, the Commerce Department said, considerably better than the 1.3 percent gain in the second quarter and the 0.9 percent rate of growth for the first half of 2011. If there is to be a dip back into recession, as some analysts have feared, it appears it did not start in the third quarter. But GDP was not strong enough to represent a 'catch-up' effect that could bring the unemployment rate down substantially over time."

3) Markets love Europe's new plan, but it could still fail, writes Howard Schneider: "The crisis plan approved by European leaders early Thursday set off celebrations on global stock markets and led officials to assert that they had turned a corner in the battle to rebuild confidence in the euro region. But many market analysts cautioned that the 15-page plan, hammered out over late-night brinkmanship in a government office building in Brussels, remains a work in progress. Key details are uncertain, they say, and a slowing European economy could throw the program off course. In the flush of their 3 a.m. announcement of a breakthrough in marathon negotiations, European officials made claims for the program that ranged from the grand to the unverifiable."

4) Repealing health reform will be tough, even if a Republican wins the White House, reports Louise Radnofsky:: "Every Republican presidential candidate has promised to repeal the Obama administration's health-care overhaul. But despite full-throated criticism, it's going to be hard for any of them to fulfill that pledge if elected. Standing in the way of that seemingly simple campaign promise--an article of faith among GOP voters--is a welter of practical and political obstacles. They include immovable limits on what elements the Senate can tackle, in the likely event Republicans don't have a 60-seat majority after the 2012 election, and the party's need to come up with spending cuts to replace savings promised by 'ObamaCare,' as it's dubbed by critics. These and other hurdles have sparked a lively debate among the candidates over whose approach is best."

Top Op-eds

1) The US can't fall victim to Europe's crisis, writes Barack Obama: "The crisis in Europe must be resolved as quickly as possible. This week, our European allies made important progress on a strategy to restore confidence in European financial markets, laying a critical foundation on which to build. Given the scope of the challenge and the threat to the global economy, it is important for all of us that this strategy be implemented successfully - including building a credible firewall that prevents the crisis from spreading, strengthening European banks, charting a sustainable path for Greece and tackling the structural issues at the heart of the current crisis...I am confident that Europe has the financial and economic capacity to meet this challenge, and the US will continue to support our European partners as they work to resolve this crisis."

2) Austerity doesn't work, writes Paul Krugman: "When David Cameron became Britain’s prime minster last year, he immediately embarked on a program of spending cuts in the belief that this would actually boost the economy -- a decision that was greeted with fawning praise by many American pundits. Now, however, the results are in, and the picture isn’t pretty. Greece has been pushed by its austerity measures into an ever-deepening slump -- and that slump, not lack of effort on the part of the Greek government, was the reason a classified report to European leaders concluded last week that the existing program there was unworkable. Britain’s economy has stalled under the impact of austerity, and confidence from both businesses and consumers has slumped, not soared."

3) Republican rhetoric on immigration is heartless, writes Michael Gerson: "A wall, at least, is a defensive measure. Building it would be wasteful instead of vicious. It is another matter to attack the provision of health and education benefits. This approach to immigration policy imposes penalties on the sick and injured, or on students who have often violated no law themselves. In most ethical systems, both groups would merit particular sympathy. At the very least, neither group deserves to be placed high on the enforcement target list. Apart from moral considerations, the denial of basic public benefits to undocumented immigrants and their children raises a number of practical questions: How does it benefit the United States to purposely limit the educational and life prospects of a whole category of students?"

4) Wall Street has lost sight of its purpose, writes Nicholas Brady: "When I came to Wall Street in 1954, investment banking was a profession, one that financed the building of this country’s industrial capacity and infrastructure...We financed the development of new drugs, which are now the mainstay of today’s health care...We financed the earliest personal computers, which ultimately led to the Internet Age. All of this fit within a framework of activities that didn’t threaten this country’s finances, much less the world’s. But year by year the industry’s emphasis moved away from this purpose and toward financial innovation for financial profit’s sake. According to the Federal Reserve’s Flow of Funds data, from 1980 to 1982, the financial sector accounted for an average 12.8 percent of U.S. total corporate profits. By 2005 to 2007, the three-year average was 23.8 percent."

5) Free trade raises living standards on its own, writes Layna Mosley: "As Colombia and Panama expand their trade relationships with the United States, workers stand to gain more than just the job creation and higher wages that often come with expanded trade. Research I conducted over the last several years with the political scientists Brian Greenhill and Aseem Prakash suggests that trade with developed nations helps developing countries expand labor rights themselves. Why? International trade gives producers incentives to meet the standards of their export markets. When developing nations export more to countries with better labor standards, their labor rights laws and practices tend to improve. Our findings...demonstrate a 'California effect' on workers’ rights, in which exporting nations are influenced by the labor rights conditions that prevail in their main trading partners."

'90s video interlude: Archers of Loaf's "Harnessed in Slums".

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

Still to come: Fannie and Freddie probably won't need another bailout; a Medicaid glitch fix passed the House; an immigration bill in the House actually stands a chance of passage; the Interior Department is expanding solar projects on public lands; and penguins play with bubbles.

Economy

Fannie and Freddie likely won't need more federal help, reports Zachary Goldfarb: "Mortgage finance giants Fannie Mae and Freddie Mac are unlikely to need any more taxpayer money and will soon start paying back their loans, bringing the total cost of the government bailout of the firms to $124 billion by the end of 2014, according to federal officials. To date, the companies, which play a central role in the Obama administration’s response to the housing crisis, have cost taxpayers $141 billion. But soon, Fannie and Freddie will begin to generate enough profit to begin to pay back taxpayers. Nonetheless, officials say the companies are unlikely to ever repay all the money, cementing their status as the financial crisis’s most expensive legacy. What’s more, if the economy worsens significantly, the companies might need $50 billion more in taxpayer aid."

A bipartisan group wants a $4 trillion debt deal, reports Andrew Ackerman: "At least 100 House lawmakers plan to urge the deficit-cutting congressional supercommittee to accomplish what the Obama administration and Congress failed to achieve this summer: a large agreement aimed at reducing the federal deficit by $4 trillion over 10 years. In a letter that the bipartisan group plans to send to the supercommittee next week, the lawmakers will argue a large deal is vital to the nation’s future. Economists generally believe that long-term deficit-reduction of about $4 trillion is needed to put the U.S. on sound fiscal footing. Importantly, the letter calls for the 12-member Joint Select Committee on Deficit Reduction to consider 'all options,' including both spending and revenue - suggesting that Democrats are open to entitlement reforms while Republicans would back tax increases if they were part a giant deal."

Rick Perry's tax plan projections are based on fishy economics, writes Matt Rognlie: "The Rick Perry presidential campaign has contracted with John Dunham and Associates to run a revenue analysis of Perry’s new tax plan. The impact of the plan depends on your choice of baseline policy: it raises $4.7 trillion less than the CBO baseline for 2014-2020 under conventional, static scoring, and $1.7 trillion less under 'dynamic scoring'. Relative to the CBO’s more arguably realistic alternate baseline, the plan does better. But regardless of your preferred baseline, it’s clear that the plausibility of Dunham’s 'dynamic scoring' model is key: it provides an additional $3 trillion over only 6 years! It’s troubling, then, to learn that the Perry campaign’s idea of 'dynamic scoring' bears absolutely no relation to what most economists mean by the term."

China should bail out Europe, writes Arvind Subramanian: "China has a choice. It can help Europe bilaterally by back-stopping the stability facility, as Europe has requested, or by guaranteeing to buy Italian and Spanish bonds at a rate that would keep these countries’ finances sustainable (much as the European Central Bank ought to be doing). Or it can help by providing the International Monetary Fund with additional money to, in turn, lend to Europe. From China’s perspective, the possible advantage would be to exert power to obtain direct and concrete benefits. For example, it could ask for market economy status in Europe, which would reduce the scope for protectionist action against Chinese goods entering the European market. It could also seek to buy companies in distressed countries on advantageous terms."

Halloween interlude: A montage of pumpkins being smashed in slow motion, set to the Smashing Pumpkins.

Health Care

A fix to a Medicaid glitch passed the House, reports Jason Millman: "The House easily passed a bill Thursday to strike out part of President Barack Obama’s health care law in a vote that had the White House’s strong support -- but much less from House Democrats. The bill, which passed 262-157, fixes a widely cited glitch in the law’s expansion of Medicaid that would have allowed up to 3 million middle-class couples earning as much as $64,000 onto the already struggling Medicaid rolls starting in 2014. Only 27 Democrats voted to fix the law’s Medicaid eligibility calculation, despite a statement of support from the White House earlier this week. Still, a proposed change to Obama’s signature legislative achievement hasn’t received this much bipartisan support since repeal of the 1099 reporting requirements earlier this year."

State Medicaid spending has increased, reports N.C. Aizenman: "The expiration of federal stimulus funding for Medicaid has dealt a blow to states still struggling to recover from the economic downturn, according to figures released Thursday. To compensate for the loss of extra federal Medicaid dollars this June, states have increased their spending on the program by an average of 29 percent in the current fiscal year. Nearly every state also has turned to tough measures to trim Medicaid costs, such as eliminating benefits, reducing payment rates to doctors and hospitals, and increasing the co-payments they charge the poor and disabled served by the program. Even so, more than half of state officials surveyed said there was a 50-50 chance their Medicaid programs -- which are financed with a combination of state and federal funds -- would face a budget shortfall as enrollment continues to rise."

Medicare B premiums aren't rising by as much as expected, reports Sarah Kliff: "Seniors will pay less than expected in Medicare Part B premiums next year, the Obama administration announced Thursday. Monthly premiums for Medicare Part B, which covers doctors’ visits and outpatient procedures, will increase by $3.50, to $99.90, in 2012. Initially, government forecasters had projected a $10.20 premium bump, to $106.60, in seniors’ monthly fees. The announcement was the third piece of good news about Medicare premiums this year. The White House said in August that premiums would drop 4 percent in Medicare Advantage, the privately run alternative to the traditional program. Premiums for Medicare’s prescription drug program, Part D, also will drop slightly in 2012."

Domestic Policy

A bill to increase high-skilled immigration could have a chance, reports Laura Meckler: "Momentum is building in Congress toward offering expedited green cards to people with advanced scientific degrees, addressing complaints from companies that say the U.S. is training highly skilled workers only to lose them to other countries. Rep. Lamar Smith (R., Texas), chairman of the House immigration subcommittee, said he plans to introduce legislation providing up to 10,000 visas a year to foreign students graduating from U.S. universities with doctorates in engineering, information technology and the natural sciences. Many Democrats, including President Barack Obama, support increasing the number of visas for workers with advanced training in those fields."

Republican candidates are raising a lot from lobbyists, report Dan Eggen and T.W. Farnham: "K Street is playing an increasingly central role in the 2012 presidential race, as hundreds of lobbyists representing some of the world’s largest corporations and trade groups pour money into Republican coffers. The main beneficiary so far is Mitt Romney...More than 100 registered lobbyists have contributed to Romney, giving nearly $200,000 in direct donations, according to a Washington Post analysis of donor and lobbying records. A team of lobbyist fundraisers has also bundled together nearly $1 million in contributions for Romney’s campaign...Texas Gov. Rick Perry...took in at least $72,000 in contributions from 42 lobbyists through September, plus $77,000 bundled by a bank executive....Obama has made a point of refusing to accept donations from lobbyists or corporate PACs."

And, sneakily, so's Obama, reports Eric Lichtblau: "Despite a pledge not to take money from lobbyists, President Obama has relied on prominent supporters who are active in the lobbying industry to raise millions of dollars for his re-election bid. At least 15 of Mr. Obama’s 'bundlers' -- supporters who contribute their own money to his campaign and solicit it from others -- are involved in lobbying for Washington consulting shops or private companies. They have raised more than $5 million so far for the campaign. Because the bundlers are not registered as lobbyists with the Senate, the Obama campaign has managed to avoid running afoul of its self-imposed ban on taking money from lobbyists. But registered or not, the bundlers are in many ways indistinguishable from people who fit the technical definition of a lobbyist."

The FCC approved a $4.5 billion rural broadband fund, reports Cecilia Kang: "The Federal Communications Commission approved a $4.5 billion broadband Internet fund Thursday aimed at giving money to private companies to bring access to rural households. In a unanimous vote, four sitting members touted the decision to divert those billions of dollars -- drawn from consumer fees -- that have for years been used to service plain old telephone lines in isolated parts of the nation. The FCC’s new rules will use those funds for landline and mobile broadband connections to the five percent of the nation that isn’t connected to the Internet today. Speaking after the vote, FCC Chairman Julius Genachowski promised that the creation of a broadband fund would further the agency’s goal of extending broadband Internet -- what he describes as 'infrastructure' for the economy."

They float, you can pop 'em, I mean I get it interlude: Penguins mess around with bubbles.

Energy

The Interior Department wants to speed up solar development on public land, reports Juliet Eilperin: "The Interior Department issued a new plan Thursday for promoting large-scale solar development on public lands in the West, identifying 285,000 acres -- 445 square miles -- in six states where it pledged to help speed up the permitting process. The proposal drew praise from environmentalists but a more tepid response from solar industry officials, who warned that the 'solar energy zone' approach outlined by the Obama administration might complicate efforts to erect large-scale projects on federal lands. Interior officials said they would accelerate permit approvals in 17 zones in Arizona, California, Colorado, New Mexico, Utah and Nevada. An earlier version of the proposal called for creating 24 zones across 667,000 acres in those states."

The Solyndra affair has hurt Energy Secretary Steven Chu's standing, reports Steven Mufson: "The president liked Chu’s wonkiness, intellectual authority and devotion to planting technological seeds for slowing climate change...But now Solyndra has become a financial and political blowout, and it has made Chu look naive, at best, for saying in March that with Solyndra’s sales rising and its equity investors kicking in more money, he was 'confident they can repay' the federal loan. Weeks earlier, in a Jan. 31 e-mail, an Office of Management and Budget staffer was alarmed. The staffer wrote that an upcoming senior staff meeting 'might present an opportunity to flag to DOE at the highest levels the stakes involved, for the [Energy] Secretary to do as he sees fit (and be fully informed and accountable for the decision).'"

Closing credits: Dylan Matthews is a student at Harvard and a researcher at The Washington Post. Wonkbook is compiled and produced with help from Michelle Williams.

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Oct. 28, 2011