March 8, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas’s morning policy news primer. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook’s Number of the Day: 11,300. There’s a new study out in the journal Science which finds that we’ve just lived through one of the hottest decades of the past 11,300 years. That’s right — 11,300 years, the full recorded history of civilized man. But the biggest finding is that it’s getting warmer several orders of magnitude faster than it ever has before. Gautam Naik of The Wall Street Journal has an introduction here.

Wonkblog’s Graph of the Day: The Beveridge Curve in the U.S. from 2000 to 2013.

Wonkbook’s Top 5 Stories: 1) Washington is surprisingly functional; 2) gun-trafficking bill makes it through committee; 3) austerity vs. the private sector; 4) HHS approves four exchanges; and 5) how Rand Paul’s filibuster reshuffles the politics and policy of civil liberties.

1) Top story: Is Washington suddenly working?

The Obama administration presses the “reset” button with Republicans. ”Obama is changing course to reset his relationships with Republican lawmakers, hoping for a last chance of breaking Washington's gridlock before becoming a lame-duck president. Obama wants to cement his legacy with a long-term deal to rein in the federal deficit and new immigration and gun laws, his advisers said. But his reelection victory, which brought a humiliating GOP defeat, has done little to break the logjam on taxes and entitlements.” Philip Rucker and Rosalind S. Helderman in The Washington Post.

…But just how effective can a charm offensive be? “For all they fail to agree on, Republicans in Congress and President Obama have come to see eye to eye on at least one thing: four years of relatively little contact is no way to run the country…[W]hat was described by all as a convivial dinner raised difficult questions about how effective the new White House campaign to woo Republicans will be and whether Mr. Obama, even at his most contrite and conciliatory, can bridge the gap between two parties that remain deeply divided over fundamental questions of policy and the role of government.” Jeremy W. Peters in The New York Times.

@mattyglesias: Political scientists are going to have a lot of egg on their faces when a single dinner party ends all this polarization.

Obama had lunch with Paul Ryan yesterday, too. “Obama had a "constructive discussion" with both Ryan and Rep. Chris Van Hollen (Md.), the Budget Committee's top Democrat…Topics included tackling the deficit and the president's proposal to replace the sequester with a deficit reduction package that includes tax increases.” Philip Rucker in The Washington Post.

@elwasson: Rep. Paul Ryan set to release his 2014 budget on Tuesday March 12, aides say

Boehner is playing along with the new bargain push. “Republican senators dined with President Barack Obama at the Jefferson Hotel on 16th Street Wednesday night. Rep. Paul Ryan is at the White House for lunch today. House Speaker John Boehner, the man Obama could never come to a deal with, says: bravo. The president, Boehner said, is not going around him.“ Jake Sherman in Politico.

Why Obama is courting Republicans. “A lot of congressional Republicans have an idea of who Obama is and what he's willing to do that's quite distant from who Obama thinks he is and what he's said he's willing to do. And the Obama they believe they're negotiating with and arguing with is a highly partisan, extremely unreasonable figure -- a figure whose actions and positions justify the GOP's radical intransigence. If the White House is going to be able to get anything done, it needs to close the gap between the Republican Party's imaginary Obama and the actual Obama. That's not to say that closing that gap will unlock a grand bargain. It likely won't. But it's a necessary precondition to unlocking a bargain.” Ezra Klein in The Washington Post.

@JohnJHarwood: In addition to skedded dinner w/a few GOP senators tonight, Obama will join Sen GOP “Thursday group” lunch next wk. Senators only, no staff

There’s a lot of room for communication: Bill O’Reilly thinks the president hasn’t proposed any “specific” spending cuts. “[T]he Fox News host stood by his statement that President Barack Obama has not made any "specific" proposals for spending cuts…O'Reilly on Tuesday night repeatedly shouted at Colmes "you are lying, you are lying" as Colmes said the president has indeed suggested cuts on entitlements and Medicare.” Mackenzie Weinger in Politico.

House and Senate working together to pass continuing resolution. “Mikulski and House Appropriations Committee Chairman Hal Rogers (R-Ky.) are working toward the goal of having an agreement in place by March 27, when that same CR runs out…Indeed, the chairwoman seems bent first on finding middle ground with a bill designed more to manage the sequestration crisis than try to end it…[S]he sees her task as first keeping the government operating and is relying on the White House to find some political solution to provide relief.” David Rogers in Politico.

Here are the Senate’s planned revisions. “Mikulski said the Senate measure also would reflect new spending priorities in a few other areas-agriculture, commerce, justice and science, as well as homeland security. Plus, she said the Senate would a embrace new mechanism to give agency heads the ability to transfer money between programs, with Congressional approval.” Rosalind S. Helderman in The Washington Post.

…But watch out for the next fight over the debt ceiling. ”House Speaker John Boehner (R., Ohio) on Thursday said he would continue to insist that the next debt-ceiling increase be accompanied by matching spending cuts, raising the prospect of a high-stakes showdown when the borrowing limit expires this spring.” Corey Boles in The Wall Street Journal.

Will O.M.B. come to stand for “Obama’s Missing Budget”? “After a year-end fiscal crisis and protracted deficit-cutting negotiations between the White House and Congress scrambled the government's accounting, the president was more than a month late in meeting a deadline set by law for getting his annual budget to Capitol Hill in the new year…As of Friday, Mr. Obama is 32 days late in delivering his budget for the 2014 fiscal year, which starts Oct. 1. Even now, White House officials will not say when it will surface, but some privately suggest early April.” Jackie Calmes in The New York Times.

The sequester has punctured the Washington-area economy like a party balloon. “[No other area has] relied as much on a single source for jobs and growth as the Washington region does on federal government spending today…This is the economic vulnerability exposed by the budget cuts brought on by sequestration. A decade of expanding federal largesse has shielded the metro area from the worst effects of the financial crisis and the slow recovery. It also left the region, in investment terms, with a precariously unbalanced portfolio -- heavily concentrated in a single stock, which is now falling.” Jim Tankersley in The Washington Post.

Explainer: How Paul Ryan can balance his budget in ten years. Ezra Klein in The Washington Post.

Budget pain boomerangs to OMB. “The Office of Management and Budget, which has been guiding agencies on furloughs and other fallout from sequestration, told its own employees that they are to be put on unpaid leave for 10 discontinuous days, starting the week of April 21 and continuing into early September.” Eric Yoder in The Washington Post.

Music recommendations interlude: Rural Alberta Advantage, ”Frank AB,” 2009.

Top op-eds

ELKINS, GINSBURG, AND MELTON: Americans, clinging to their right to bear arms. “Our study of constitutions going back to 1789 shows that only a minority has ever included gun rights. What's more, the number has dwindled, leaving a small and motley set of bedfellows. For some, this lonely position is enough to suggest that the U.S. should rethink the current interpretation of the Second Amendment. For others, it is a reason to celebrate American exceptionalism…[S]ince World War II, no country has written a constitution with such a right without first having done so in the 19th century.” Zachary Elkins, Tom Ginsburg, and James Melton in Bloomberg.

GREENLAW, HAMILTON, HOOPER, AND MISHKIN: How budget deficits will force the Fed to inflate. “Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders about fiscal sustainability lead to higher government bond rates, which in turn make debt problems more severe. Using statistical methods, case studies and a wealth of recent data on fiscal crises, we have found that countries with gross debt above 80% of GDP and persistent current-account deficits--as is currently the case in the United States--face sharply increasing risk of escalating interest payments on their debt. This means even higher budget deficits and debt levels and could lead to a fiscal crunch--a point where government bond rates shoot up and a funding crisis ensues. A fiscal crunch would force a central bank to pursue inflationary policies, a situation that’s called fiscal dominance.” David Greenlaw, James D. Hamilton, Peter Hooper, and Frederic Mishkin in The Wall Street Journal.

KRUGMAN: The market speaks. “What, then, are the markets actually telling us? I wish I could say that it's all good news, but it isn't. Those low interest rates are the sign of an economy that is nowhere near to a full recovery from the financial crisis of 2008, while the high level of stock prices shouldn't be cause for celebration; it is, in large part, a reflection of the growing disconnect between productivity and wages.” Paul Krugman in The New York Times.

ABRAMSON: A wait-and-see culture in medicine. “An increasing number of people are finding themselves in this "follow up in six months" mode, and experiencing the same attendant anxiety…Welcome to the "follow-up culture." The danger here is that we will always be living in the future: the scan was O.K., but what about in a year? No advances in medicine, as remarkable as they may be, will ever provide us solace for this predicament.” Robert J. Abramson in The New York Times.

CUKIER AND MAYER-SCHONBERGER: The financial bonanza of Big Data. “The value of information captured today is increasingly in the myriad secondary uses to which it is put--not just the primary purpose for which it was collected…Companies world-wide are starting to understand that no matter what industry they are in, data is among their most precious assets. Harnessed cleverly, the data can unleash new forms of economic value.” Kenneth Cukier and Viktor Mayer-Schonberger in The Wall Street Journal.

KLEIN: How to fix sequestration without raising taxes. “Inhofe-Toomey gives the president discretion over implementing the cuts. It could easily be modified to give the president discretion over the timing of the cuts. Obama would still need to hit the same spending target over the next 10 years, but he could opt for fewer cuts now and more later. If Congress doesn't like his choices, it can always overturn them; Inhofe-Toomey already provides for a vote of disapproval on the White House's recommendations.” Ezra Klein in The Washington Post.

COBURN: We can make smart budget cuts. “Another source of potential savings is duplication of federal services, which accounts for $364 billion spent every year, according to the Government Accountability Office. Washington spends $30 million for 15 financial-literacy programs run by 13 separate agencies. Taxpayers also spend $3.1 billion on 209 separate science, technology, engineering and mathematics education programs across 13 agencies. Why not fund one good program in these areas instead of dozens that don’t work and waste money?” Tom Coburn in The Wall Street Journal.

KRAUTHAMMER: Why we give foreign aid. “We give foreign aid for two reasons: (a) to support allies who share our values and our interests, and (b) to extract from less-than-friendly regimes concessions that either bring their policies more in line with ours or strengthen competing actors more favorably inclined toward American objectives.” Charles Krauthammer in The Washington Post.

Extraterrestrial interlude: The race to mine the moon.

2) Gun-trafficking bill makes it through committee

Senate panel approves gun-trafficking bill. “The Senate Judiciary Committee on Thursday approved a bill that would make it a federal crime to purchase firearms for someone else. The anti-gun-trafficking bill is one of the first pieces of legislation formally introduced in Congress to limit gun violence in the wake of the mass shooting in Newtown, Conn., last year…The bill would make it a felony to buy a firearm with the intent of selling it to someone who cannot pass a background check. The crime would be punishable with up to 25 years in prison.” Ed O’Keefe in The Washington Post.

Explainer: Everything you need to know about the Senate’s gun bills. Ed O’Keefe in The Washington Post.

The White House has muted pro-gun control groups. “President Barack Obama's gun control agenda is looking more doomed by the day, but gun control advocates still haven't said a word to complain…[T]he White House offered a simple arrangement: the groups could have access and involvement, but they'd have to offer silence and support in exchange. The implied rules, according to conversations with many of those involved: No infighting. No second-guessing in the press. Support whatever the president and Vice President Joe Biden propose. And most of all, don't make waves or get ahead of the White House.” Reid J. Epstein in Politico.

Cough, cough interlude: A real-time map of air pollution in Asia.

3) Checking the pulse of the economy

Is the consumer back? ”For the past four years, U.S. consumers have repaired their balance sheets from the damage of the housing crash and recession by paying down their debt or walking away from it--a process economists call “deleveraging.” Now fresh data suggest a growing number of Americans are reversing course and becoming more comfortable borrowing--a development that could fuel more spending and give the sluggish recovery a lift. U.S. households ramped up their borrowing at an annualized rate of 2.4% in the final three months of 2012, the biggest jump since the beginning of 2008, according to a Federal Reserve report released Thursday.” Neil Shah in The Wall Street Journal.

…But retailers are reporting slower sales growth. “[N]umbers reflect a drop in sales growth from January. Over all, 14 retailers reported that revenue at stores open at least a year -- an indicator of retail health -- rose an average of 4.1 percent, according to the International Council of Shopping Centers, an industry trade group. That compares with increases of 5.1 percent in January and 6.7 percent last February.” The Associated Press.

Blame weak aggregate demand for slow hiring. “[I]n an economy where demand is rising steadily, you wouldn't expect to see firms drag their feet on hiring workers to meet the demand. Time is money, so to speak. But the fact that firms are broadly, across the economy, still dragging their feet is probably a sign that they're not too worried about missing out on new sales. Because - for any number of reasons - they don't see those sales materializing right now.” Jim Tankersley in The Washington Post.

…But jobless claims are falling faster now. “A key measure of U.S. job layoffs fell to a five-year low last week, an encouraging sign for the strengthening labor market ahead of Friday’s broader employment report. The four-week moving average of jobless claims, which smooths out the often volatile weekly data, dropped by 7,000 to 348,750 for the week ended March 2--the lowest level since March 2008, the Labor Department said Thursday.” Sarah Portlock and Eric Morath in The Wall Street Journal.

…And dividends and buybacks are propelling the stock market’s rally. “U.S. companies are showering investors with a record windfall in the form of dividends and share buybacks, helping to propel the stock market’s rally. Companies in the S&P 500 index are expected to pay at least $300 billion in dividends in 2013, according to S&P Dow Jones Indices, which would top last year’s $282 billion. American corporations also announced plans to buy back $117.8 billion of their own shares in February, the highest monthly total in records dating back to 1985.” Telis Demos, Steven Russolillo, and Matt Jarzemsky in The Wall Street Journal.

Oil imports lead to 17-percent jump in trade deficit. “The U.S. deficit in international trade of goods and services grew almost 17% to $44.45 billion from a revised $38.14 billion the month before, the Commerce Department said Thursday. Economists surveyed by Dow Jones Newswires had expected the gap to increase to $43 billion.” Ian Talley and Eric Morath in The Wall Street Journal.

Austerity vs. the housing recovery: Which is a bigger deal for jobs? “Friday morning, when the Labor Department puts out its February jobs report, it will be the latest window into the fundamental clash that is key to understanding the United States economy in 2013. It pits on one hand the positive factors from the private sector driving the U.S. economy ahead…And on the other hand is a federal government that is tightening fiscal policy…In that sense, the February jobs report, and every other one in the coming months, is a referendum on this question of which force buffeting the economy is more powerful.” Neil Irwin in The Washington Post.

Manufacturing still gets a fatter paycheck. “All things being equal, you'd still rather be a factory worker in America today than a similarly skilled worker in another industry. That's the conclusion of Commerce Department economists, who have combed national statistics and say the "wage premium" in manufacturing is alive and well.” Jim Tankersley in The Washington Post.

Banks pass Fed stress tests, but critics say it wasn’t stressful enough. “The results of so-called stress tests, released on Thursday by the Federal Reserve, indicate that most large banks would survive a severe recession and a crash in the markets. The tests, which measured a bank's capital levels during adverse conditions, help validate the government's efforts to shore up the financial systems…The Fed's tests take banks through a series of adverse conditions, not unlike the last crisis. The tests estimated that 18 banks sustain combined losses of $462 billion, in a period of considerable financial and economic stress in which unemployment soars, stock prices halve and house prices plummet more than 20 percent.” Peter Eavis and Ben Protess in The New York Times.

Monetary policy alone can’t fix the economy, Fisher says. “Mr. Fisher, who isn’t a voting member of the Federal Open Market Committee, has been an outspoken opponent of the Fed’s easy-money stance, a fact he noted during his remarks Wednesday. He also reiterated his view that promotion of maximum sustainable job growth--one of the Federal Reserve’s legal mandates--isn’t possible using monetary stimulus alone.” Bob Sechler in The Wall Street Journal.

…So, could hiking the minimum wage help? “In one recent paper, Aaronson and French estimated that adult workers at the very bottom spend an extra $700 per quarter, on average, in response to a $1-per-hour hike in the minimum wage. For the most part, workers who receive a raise appear to take on more debt in the short term to buy durable goods like cars and trucks.” Brad Plumer in The Washington Post.

Zoological interlude: Baby elephant plays in ocean.

4) Four more insurance exchanges approved

HHS approves four more exchanges. “Four states won conditional approval from the Obama administration Thursday to implement the key piece of President Obama’s healthcare law in partnership with the federal government. The Health and Human Services Department conditionally approved insurance exchanges in Iowa, Michigan, New Hampshire and West Virginia. HHS conditionally approved the states for “partnership” exchanges, in which the state government and HHS will share responsibility for setting up the new marketplaces.” Sam Baker in The Hill.

My milkshake brings all the regulators to the yard. “It's one thing to declare large sugary drinks as contraband, which New York mayor Mike Bloomberg infamously did late last year. It's quite another to actually write the rules and regulations that determine what counts as a large sugary drink. That's where the regulators have to come in -- and, down to the teaspoon and calorie, determine how to define the word ‘sugary.’” Sarah Kliff in The Washington Post.

Explainer: Where all 50 states stand on abortion, in two charts. Sean Sullivan in The Washington Post.

WonkTalk: About Arkansas, now home to the country’s most restrictive abortion law. Sarah Kliff and Suzy Khimm in The Washington Post.

Nine in ten Americans say they’re in good health. Many are totally wrong. “This flies a bit in the face of what public health research tells us about how healthy Americans are. More than one-third are obese, according to the most recent Centers for Disease Control numbers. About 10 percent of Americans live with a chronic condition, like diabetes or high blood pressure. This data suggests there's some space between how healthy we think we are, and how healthy we actually are.” Sarah Kliff in The Washington Post.

NCPA study says perverse regulatory incentives are increasing drug costs. ”The expansion of prescription drug coverage under President Obama's sweeping healthcare law has led to a glut of "perverse" state and federal regulations that will increase the cost of medication, according to a new study. The National Center for Policy Analysis (NCPA), a conservative-leaning think tank, argues that Americans, who on average fill a dozen prescriptions a year, would benefit from free competition.” Ben Goad in The Hill.

PBS interlude: Meet the father of video games.

5) How Rand Paul’s filibuster reshuffled the politics and policy of civil liberties

Brennan confirmed to CIA director post. “The Senate on Thursday afternoon approved John O. Brennan's nomination to lead the Central Intelligence Agency by a vote of 63 to 34…The final confirmation vote, however, revealed some unusual coalitions…Indeed, defections by Senate Democrats reflected continuing unease on the left.” Sarah Wheaton in The New York Times.

Explainer: How they voted on John Brennan’s confirmation for CIA director. Aaron Blake in The Washington Post.

Paul filibuster brings new scrutiny to drone program. “Sen. Rand Paul (R-Ky.) forced Washington slightly off its axis Thursday after he filibustered President Obama's pick to head the CIA. The rare "talking filibuster" generated extraordinary scrutiny of the Obama administration's drone-strike program and revealed some surprising divisions and alliances on Capitol Hill over the president's anti-

terrorism tactics overseas…Brennan's nomination forced the administration to be more forthcoming about its secretive drone operations.” Peter Finn and Aaron Blake in The Washington Post.

Eric Holder answers Rand Paul’s filibuster question with a ‘no.’ “Attorney General Eric Holder has written a letter to Sen. Rand Paul (R-Ky.) saying that a drone could not be used against a noncombatant American. In response, Paul has said he the Senate should move ahead with John Brennan's nomination as director of the CIA. The vote is being held this afternoon.” Rachel Weiner, Aaron Blake, and Philip Rucker in The Washington Post.

Q&A: The rules on the use of drones. Evan Perez in The Wall Street Journal.

McCain, Graham isolated if GOP ‘stands with Rand.’ “While Republican senators flocked to the floor Wednesday night to support Sen. Rand Paul's nearly 13-hour filibuster, Sens. John McCain (R-Ariz.) and Lindsey Graham (R-S.C.) did exactly the opposite on Thursday…Graham also chided his fellow Republicans on the floor for joining Paul in his filibuster.” Kate Nocera in Politico.

Video: 7 great moments from Sen. Rand Paul’s filibuster. Sean Sullivan in The Washington Post.

And the CIA is about to come into a lot more scrutiny. ”The Central Intelligence Agency is disputing a highly critical congressional report on its now-closed detention and interrogation program, officials said, putting its new director on a collision course with Congress…The CIA disagrees with the central conclusion of the Senate Intelligence Committee’s report that no useful information came from the interrogations, which included the use of harsh methods on suspects it detained, officials said.” Siobhan Gorman in The Wall Street Journal.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

As the coal industry declines, what will happen to retired miners with pension plans? Brad Plumer.

The economic recovery hasn’t happened for women’s wages. Suzy Khimm.

How Paul Ryan can balance the budget. Ezra Klein.

Fixing sequestration is possible without a tax hike. Ezra Klein.

Is the minimum wage a tool for economic stimulus? Brad Plumer

Nine out of ten Americans have (largely mistaken) impressions of health. Sarah Kliff.

Austerity vs. the private-sector recovery is 2013′s economic tug-of-war. Neil Irwin

Why Obama dined with the Republicans. Ezra Klein.

WonkTalk: Arkansas outdoes other states in abortion restrictions. Sarah Kliff and Suzy Khimm.

Aggregate demand is weak, and it explains slow hiring. Jim Tankersley.

My milkshake brings all the regulators to the yard. Sarah Kliff.

Et Cetera

You can do some longreading this weekend. Start with Harold Meyerson in The American Prospect writing on Gov. Jerry Brown and turning around California.

Remarkable study finds we are living in one of the hottest decades in 11,300 years — and it’s becoming warmer faster than ever before. Gautam Naik in The Wall Street Journal.

The myriad languages of the United States, in one map. Chris Cillizza in The Washington Post.

Lawmakers are furious about weak prosecution of money-launderers. Danielle Douglas in The Washington Post.

Republican candidate selection for 2014 will emphasize electability. Neil King Jr. in The Wall Street Journal.

Oil production is falling on federal lands. Tennille Tracy in The Wall Street Journal.

Latino communities are gaining political power in the U.S. Sheryl Gay Stolberg in The New York Times.

Obama signs a strengthened Violence Against Women Act. Nia-Malika Henderson in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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