March 19, 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: 2.4 million. That’s the number of people who would gain health insurance coverage if four states considering the “Arkansas option” of using Medicaid dollars to buy private insurance all went through with their plans. It’s a major change to Obamacare. More below.

Wonkblog’s Graph of the Day: The Senate’s social network.

Wonkbook’s Top 5 Stories: 1) in House and Senate, budgets collide; 2) the RNC releases its “Growth and Opportunity Project” report; 3) conservatives soften on immigration reform; 4) for healthcare, all eyes on Arkansas; and 5) an econ wonk’s guide to Cyprus.

1) Top story: The clash of the budgets

Big votes this week on the budget and continuing resolution. “In the ultimate sign that "regular order" is back, both chambers plan to pass competing budget measures this week. The GOP-controlled House will approve the budget blueprint produced by Rep. Paul Ryan (D-Wis.), while the Democratic-controlled Senate is poised to sign off on the budget plan drafted by Sen. Patty Murray (D-Wash.). Budget proposals cannot be filibustered in the Senate, so they should be approved on party-line majority votes.” Ed O’Keefe in The Washington Post.

The parties are managing to minimize defections on budgets. “House and Senate leaders appear to have minimized defections on their budget plans in a show of strength ahead of fiscal fights this summer. The dueling blueprints from Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) tested party unity on both sides, but a whip count by The Hill indicates leaders have enough support to pass them.” Erik Wasson in The Hill.

@jonathanweisman: Senate bill to fund the gvt through the rest of the year just passed its highest hurdle, 63-35. Final passage tomorrow.

Ryan’s tax reforms cost more than all his spending cuts combined. “So how will he pay for his much, much lower rates? Well, he doesn't say. In fact, he doesn't even begin to say. His budget doesn't name even one tax deduction, exclusion, credit, or loophole that will be closed…Nowhere does it say the final bill needs to retain the current progressivity of the code. That's likely because it would be impossible to enact the kind of reform Ryan's previewing while retaining the progressivity of the tax code.” Ezra Klein in The Washington Post.

But just wait until you see the House conservatives’ budget. “The conservative Republican Study Committee (RSC) released its budget proposal on Monday, a document that calls for eliminating the federal deficit in four years and raising the retirement age to 70…The proposal would make deeper cuts to discretionary spending, capping it at $950 billion, a level not seen in more than five years. That level would be frozen until the budget balances in 2017. While defense spending would match the Ryan budget proposal, the RSC would lower non-defense spending in actual terms by $6 billion over the next decade.” Russell Berman in The Hill.

@ShaiAkabas: Just showed up in my INBOX and made my day: “House conservatives to offer four-year balanced budget plan”

Voters love spending cuts in theory, spending in practice. “In 1967, the political scientists Lloyd Free and Hadley Cantrill wrote that Americans were "ideological conservatives" but "operational liberals." What they meant was that when asked broad questions about how government should work and what it should do, voters responded like conservatives. But when asked operational questions about which programs should be cut and which services should be eliminated, they responded like liberals. Voters like big cuts and smaller government in theory, but they don't want to actually cut anything in practice.” Ezra Klein in The Washington Post.

Music recommendations interlude: The 100 most influential singles of the 1960s.

Top op-eds

SUNSTEIN: Proper and improper uses of the filibuster. “At various times in history, members of the U.S. Senate have adopted one of three positions with respect to presidential nominees for the federal judiciary: 1. The blank check…2. The competence and character test…3. The out-of-the-mainstream test…Under Barack Obama's administration, influential Senate Republicans seem to have adopted a fourth view: 4. The disagreement test: If a senator strongly disagrees with a view expressed by a nominee, at any point in that nominee's career, he should support a filibuster against the president's choice.” Cass R. Sunstein in Bloomberg.

MILBANK: Big tent, with asterisk. “Many of the ideas are good, such as the calls for fewer debates and primaries rather than caucuses. But Priebus, in the Q&A, took pains to avoid offending the conservative orthodoxy that is antagonizing segments of the electorate that Republicans need if they are to win…All are welcome in the Republican Party -- as long as they're conservative.” Dana Milbank in The Washington Post.

SEIB: Bill Bradley’s new blueprint. “Bradley says he would propose a two-stage tax-code revision. In the first stage, Congress would vote to close loopholes that most everybody agrees distort the system and decrease its fairness and efficiency…Then, he says, the plan would stipulate that tax rates would begin coming down if per-capita incomes began rising, which would please Republicans.” Gerald F. Seib in The Wall Street Journal.

SOLTAS: Have we found the cure for Baumol’s cost disease? “What we have begun to see, in fact, is the outbreak of war against Baumol's disease. And the fight is coming from business and government, both of which have large and growing incentives to find a cure. The question is whether these efforts will be strong enough to defeat one of the most accurate and significant economic predictions of the last century.” Evan Soltas in Bloomberg.

TAYLOR: How government spending cuts grow the economy. “According to our research, the spending restraint and balanced-budget parts of the House Budget Committee plan would boost the economy immediately…Our assessment is based on a modern macroeconomic model whose features include a recognition that the resources to finance government expenditures aren’t free--they withdraw resources from the private economy. The model provides for other essential attributes of the economy--that consumers, businesses and workers respond to incentives, and they are influenced by their expectation of future economic conditions when making decisions today.” John F. Cogan and John B. Taylor in The Wall Street Journal.

BROUN: The Ryan budget spends too much. “Just reducing growth in spending does almost nothing. We have to dig deeper and make profound cuts now…We ought to get rid of certain federal departments and agencies, stopping only to shift the role of governing back to the states, where it belongs. The Departments of Education and Energy, for example, are two bloated bureaucracies that we don't need…[W]e should also phase out the federal highway financing system and allow states to keep their own gas tax receipts.” Paul C. Broun Jr. in The New York Times.

PONNURU: Ryan’s budget is no help. “The choices that Ryan made have kept Republicans unified but also reinforced the impression that they are too attuned to the interests of the rich, and more concerned with their own obsessions than what the public wants. House Republicans are in danger of becoming like the House Democrats of the early 1980s: secure and comfortable in their power base, and not oriented toward achieving a governing majority.” Ramesh Ponnuru in Bloomberg.

BROOKS: The progressive shift. “Today, liberalism seems to have changed. Today, many progressives seem to believe that government is the horse, the source of growth, job creation and prosperity. Capitalism is just a feeding trough that government can use to fuel its expansion.” David Brooks in The New York Times.

Urban history interlude: The Cleveland Memory Project, a historical archive of all things Cleveland, OH.

2) The RNC releases Growth and Opportunity Project report

The Republican Party, struggling, releases ‘rethink’ plan. “The Republican Party ended months of self-criticism Monday with a wide-ranging plan to transform itself into a modern, welcoming home for a rapidly diversifying American electorate. Republican National Committee Chairman Reince Priebus -presented a 100-page blueprint aimed at rebuilding his struggling GOP after a four-month analysis, and he delivered a particularly blistering assessment of the party's problems appealing to women and minorities at the polls.The plan called for Republicans to embrace comprehensive immigration reform, overhaul the party's digital and research operations, and hold a shorter, more controlled presidential primary season.” Aaron Blake and Philip Rucker in The Washington Post.

Read: The full RNC “Growth and Opportunity Project” report. Aaron Blake in The Washington Post.

Explainer: 10 things you need to know from the report. Chris Cillizza in The Washington Post.

Conservatives discomfited by RNC report. “[F]or a party divided, the report doesn't look likely to quickly bridge the gap between the establishment and the more conservative elements of the party. And some conservatives are already balking over the plan's call for comprehensive immigration reform and its changes to the GOP presidential primary process.” Aaron Blake in The Washington Post.

The GOP, now with less crazy. “Alienate gays and nonwhites and you can't even start to play in those cities. How to get there? Make the national party, and its nominee, less vulnerable to eruptions from the base. The report calls for the primary debate schedule to be cut back to pre-2008 levels, with maybe a dozen televised forums, and more control over who moderates them…The states were always going to produce tricky, hard-right issues. That couldn't be helped. But the party could control how often its candidates were forced to respond…Do that, and maybe the party can be as conservative as it likes in the states without the national candidate having to sweat it.” David Weigel in Slate.

Primordial interlude: Harvard University builds brainless bots that exhibit swarming.

3) The right softens on immigration reform

Evangelical groups back immigration overhaul. “The group, the Evangelical Immigration Table, issued a statement of principles calling for an eventual path to citizenship for immigrants who would gain legal status under proposals that lawmakers in both houses of Congress are considering. "This call is rooted in our biblically informed commitment to human freedom and dignity," the group said.” Julia Preston in The New York Times.

Sen. Rand Paul to support a path to citizenship. “Paul's path to citizenship would come with conditions that could make it long and difficult for illegal immigrants. Chief among these, Congress would have to agree first that progress was being made on border security. Nonetheless, Paul's endorsement of allowing illegal immigrants an eventual way to become citizens puts him in line with a growing number of Republicans who are embracing action on immigration as a way to broaden the GOP's appeal to Latinos.” The Associated Press.

Photographic interlude: Charles Freger documents Europe’s pre-Christian ritual costumes.

4) All eyes on Arkansas

Care about Obamacare? Then you should really care about Arkansas. “It's hard to underscore how much Arkansas's simple suggestion -- that it be able to use Medicaid dollars to buy private insurance for the expansion population -- has the potential to change the face of the Affordable Care Act. If these four states signed onto the Medicaid expansion through the Arkansas option, the Urban Institute estimates that 2.4 million people would gain health insurance coverage.” Sarah Kliff in The Washington Post.

Few confident in Medicare security, survey finds. “Only six percent of U.S. workers are very confident that future Medicare benefits will be equal in value to what seniors receive today, according to a new survey…Twenty-nine percent cited retirement medical expenses as a concern for them, while 39 percent said they were nervous about paying for long-term care. Both figures have risen over the last year. Nearly seven in 10, meanwhile, expressed a lack of confidence that their future Medicare benefits would be equal in value to today’s.” Elise Viebeck in The Hill.

The ‘organized chaos’ of building D.C.’s health insurance exchange. “The D.C. Council established the District of Columbia Health Benefits Exchange Authority in December 2011. Nearly a year later, it received conditional approval from the federal government to launch in 2014…The worry Kofman expressed in that last clause is that, if even a few of the small businesses with really healthy employees buy outside the exchange, then the premiums in the marketplace will all of a sudden become the more expensive option.” Sarah Kliff in The Washington Post.

How Obamacare affects employment. “What [ADP] found is that companies with larger profit margins that already provide health coverage to most of its employees might not have much of a problem. But for businesses with slim margins and a low-wage, high turnover workforce - the fast food biz, for instance - there may well be an incentive to rely on more part-timers to keep costs down. When it comes to prices, in many cases, the higher cost of insurance will most likely make its way to the consumer in some form, the firm argues.” Sandhya Somashekhar in The Washington Post.

The link you’re going to send to everyone right now interlude: This Dutch TV show is called “Stupid & Dangerous” and films things at 2500 frames per second.

5) What economic wonks need to know about Cyprus

Cyprus scrambles to negotiate bailout. “The island's banks were ordered to stay closed for two more days to avoid a bank run, as the government delayed for the second day running a parliamentary vote on the deal struck with eurozone officials and the International Monetary Fund over the weekend. A senior EU official said international lenders were pushing the Cypriot government to exempt all deposit holders below EUR100,000. Instead, the IMF, the EU and the European Central Bank wanted a levy of 15.6 per cent on all deposits above that level, many of which are held by Russians.” Kerin Hope, Peter Spiegel, and Charles Clover in The Financial Times.

Explainer: Everything you need to know about the Cyprus bailout in one FAQ. Dylan Matthews in The Washington Post.

Wonktalk: How the Cyprus bailout would work. Neil Irwin and Ezra Klein in The Washington Post.

Financial markets haven’t freaked over Cyprus, but we’re not home free yet. “Financial markets have been relatively stable Monday, not really panicking over international authorities' decision to force losses on those with deposits in Cyprus's banks…But the bad news is this: We learned over the weekend that European authorities still haven't learned something fundamental, namely, that with every decision they make, economic actors across the world will extrapolate and draw conclusions about what they will do in the future and act accordingly.” Neil Irwin in The Washington Post.

Do-it-yourself: Build your own version of the Cyprus bailout. Dylan Matthews in The Washington Post.

Cyprus shows why Europe needs deposit insurance. “The Cypriot confiscation of insured deposits should teach the euro area a lesson: European Union-wide deposit insurance ultimately backed by the European Central Bank can’t come too soon…The main lesson here is that the responsibility for deposit insurance should lie with the currency issuer… If a central bank's capacity to provide emergency liquidity and reserves to banks is constrained — as it is for the national central banks in the ECB system — then so is the credibility of its deposit insurance. In the case of a severe banking panic, central banks need the power to create money to satisfy the surge in demand for currency.” Evan Soltas in Bloomberg.

…But does Cyprus contain the kernel of a good idea? “This admittedly important detail aside, the new principle of imposing bank losses on creditors, including depositors, seems sound and worthy. For years, Europe has been paralyzed by the fear that any losses to any bank creditors anywhere would lead to continent-wide meltdown. Bank runs are socially and economically costly, but excessive complacency about the safety of loans made to financial institutions can be as well. Banks rely far too much on debt to finance their investments, making them far too fragile and prone to failure. Regulators should tighten the screws and make banks recycle their profits into debt reduction rather than paying dividends to shareholders. Improved versions of Cyprus-style haircuts will also make banks behave more responsibly” Matthew Yglesias in Slate.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Why the EPA might delay its carbon rules for power plants. Brad Plumer.

Why Dallas Fed president Richard Fisher went to CPAC, and why, possibly, he shouldn’t have. Ylan Q. Mui.

Ryan’s tax reforms cost more than all his spending cuts combined. Ezra Klein.

Wonktalk: How the Cyprus bailout might work. Ezra Klein and Neil Irwin.

Build your own Cyprus bailout. Dylan Matthews.

Everything you need to know about the Cyprus bailout, in one FAQ. Dylan Matthews.

Care about Obamacare? Then you should really care about Arkansas. Sarah Kliff.

The Obamacare supporter’s diet. Sandhya Somashekhar.

Voters prefer cuts in theory, spending in practice. Nothing has changed. Ezra Klein.

Building the D.C. insurance exchange is “organized chaos.” Sarah Kliff.

Financial markets haven’t panicked yet over Cyprus. Neil Irwin.

Et Cetera

How about a longread? In Democracy, J. Bradford DeLong critiques Nicholas Eberstadt’s “theory of the moocher class.” Another? In Washington Monthly, Haley Sweetland Edwards breaks down the rule-making process.

Support for gay marriage reaching new highs, poll finds. David A. Fahrenthold and Jon Cohen in The Washington Post.

Workers just aren’t saving anywhere near enough for retirement. Kelly Greene and Vipal Monga in The Wall Street Journal.

Gun control groups ready fight against NRA “riders” on bills. Ed O’Keefe and Philip Rucker in The Washington Post.

Why the Obama administration is rushing headlong into major trade agreements. Daniel Altman in Foreign Policy.

Fannie Mae finds way to repay billions. Nick Timiraos in The Wall Street Journal.

Fewer homeowners are “underwater,” in encouraging sign for housing market. Conor Dougherty in The Wall Street Journal.

Winners and losers from CPAC 2013. James Hohmann in Politico.

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

Wonkbook is produced with help from Michelle Williams.

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