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This is what sequestration looks like

Ezra Klein's Wonkbook

April 4, 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: 3 million. That’s how far the current level of employment is away from its level before the recession. At 200,000 per month, the U.S. will need 15 more months before it surpasses the old high — and that’s before considering growth in the labor force. More below.

Wonkblog’s Graph of the Day: When people stopped caring about (and Googling for) the sequester.

Wonkbook’s Top 5 Stories: 1) the sequester is getting real; 2) immigration reform looks to accelerate; 3) should we let people buy into Medicare?; 4) financial regulators look beyond the banks; and 5) has gun control stalled out?

1) Top story: This is what sequestration looks like

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester. “Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially. Patients at these clinics would need to seek treatment elsewhere, such as at hospitals that might not have the capacity to accommodate them.” Sarah Kliff in The Washington Post.

List: 100 sequestration stories across the country. Sam Stein and Amanda Terkel in The Huffington Post.

@samsteinhp: Even after finding 100 sequestration stories from this past week, folks still insisting to me that it’s really having no impact

The first phase of EPA furloughs will begin on April 21. “The Environmental Protection Agency began notifying about 17,000 employees on Wednesday that the organization would implement its first phase of sequester furloughs starting April 21. In a notice to affected workers, the agency said it would impose four days of unpaid leave through June 15, whereupon it would assess whether more unpaid leave is necessary to achieve its cost-saving requirements under the government-wide spending cuts that took effect last month.” Josh Hicks in The Washington Post.

@samsteinhp: Palm Beach’s Head Start program is ending its bus service because of sequestration. Those kids can find their own way to the damn class.

Hagel warns of deep, new cuts to defense budget. “Defense Secretary Chuck Hagel told the Pentagon on Wednesday to brace for further cuts in defense spending and said the military needs to make fundamental changes in the way it operates to cope with new fiscal realities…The difference now, Hagel said in his first major policy address since taking office, is that the Pentagon is staring at the increased likelihood that it will be forced to slash nearly $1 trillion in projected spending over the next decade -- roughly double the level confronted by Gates and Panetta.” Craig Whitlock in The Washington Post.

Obama to take pay cut in solidarity with furloughed federal workers. “President Obama plans to give up 5 percent of his salary this year to draw attention to the financial sacrifice of more than 1 million federal employees who will be furloughed by automatic spending cuts starting in less than three weeks, the White House said Wednesday…Obama, who earns $400,000, wrote a check to the U.S. Treasury this week, the first installment of his donation of $20,000, retroactive to March 1.” Lisa Rein and Ed O’Keefe in The Washington Post.

YGLESIAS: Sequestration’s unkindest cut is to housing assistance. “Sequestration is largely designed to prevent cuts in targeted anti-poverty programs, but the Department of Housing and Urban Development’s various housing assistant programs are an exception. As Douglas Rice shows for the Center on Budget and Policy Priorities, sequestration means a large cut in these programs for low-income families and will push nominal spending down to roughly fiscal year 2010 levels.” Matthew Yglesias in Slate.

SOLTAS: Why has high unemployment become acceptable? ”It isn’t that voters aren’t complaining; it’s that they aren’t being heard. Bear in mind, the numbers would be even grimmer if we looked at a better indicator, such as the employment-population ratio of people of working age…’[H]igher levels of income inequality,” writes Frederick Solt, a professor at the University of Iowa, “powerfully depress political interest, the frequency of political discussion, and participation in elections among all but the most affluent citizens, providing compelling evidence that greater economic inequality yields greater political inequality.’” Evan Soltas in Bloomberg.

Music recommendations interlude: Coldplay, “We Never Change,” 2000.

Top op-eds

EMANUEL AND GUTIERREZ: Priced out of citizenship. “As Congress debates creating a path to citizenship for 11 million undocumented immigrants, it must at the same time remove one of the biggest obstacles on that path: the cost of applying for citizenship…At $680, an employee earning the federal minimum wage would have to work for more than two months to pay for an application for himself or herself, a spouse and two children.” Rahm Emanuel and Luis V. Gutierrez in The New York Times.

KLEIN: Big banks’ success could spell their doom… “[T]hose who dismiss efforts to break up the big banks as no more than a populist fantasy are missing the long game — and for opponents of a concentrated financial sector, the long game is going surprisingly well…The Capitol today is thick with financial wonks arguing that too-big-to-fail is too-big-to-exist and working to devise the policies that would break the banks into smaller pieces. Some say we need to dismantle the big banks totally. Others suggest levying a hefty tax on assets above a certain threshold so that size is penalized. Still others advocate onerous capital requirements that would make too-big-to-fail banks too cautious to implode.” Ezra Klein in Bloomberg.

KONCZAL: …And why a win in court may be a long-run loss. “Banks and their lawyers have found a surprisingly effective way to stymie financial reform: Kill new rules in the courts. It's a strategy that may cripple regulators, undermine the legitimacy of the judicial system and ultimately come back to haunt the banks…Ideally, the financial industry and the judiciary should recognize that killing Dodd-Frank in court isn't in their best interests in the long term. By politicizing the courts and subverting the will of Congress, they are undermining the rule of law. By striking down rules wholesale, they are subverting the process of compromise — an approach that could lead to even more draconian regulations on Wall Street.” Mike Konczal in Bloomberg.

PONNURU AND LEVIN: Repeal, replace, still. “In the first years after its passage, opponents had hoped that the Supreme Court would strike down the law or that a new president would sign its repeal before most of it took effect. But the Supreme Court decided to modify a few of its provisions instead of striking it down, and President Obama was reelected. Repeal is almost certainly off the table for four years. Obamacare will continue to be implemented. Its main provisions will begin to take effect in 2014, even if some deadlines will be missed.” Ramesh Ponnuru and Yuval Levin in National Review.

WESSEL: The economics of ‘leaning in’… “Per capita income has increased about 2.75 times [since 1960]. Economists at Stanford University and the University of Chicago wondered how much of that growth came from harnessing the talent of women and blacks who previously had been barred from schooling or excluded from choice jobs or entire professions. Their answer: a lot. They estimate that between 1960 and 2008, about 15% to 20% of the growth in productivity, or output per hour of work, came from removing the barriers that blocked many white women and blacks of both genders from realizing their potential.” David Wessel in The Wall Street Journal.

FAULHABER: …And how the IRS hurts mothers. “It's women in the middle class who are hit hardest by this treatment of child care. For these couples, increases in the earnings of the better-paid spouse -- usually, still, the husband -- directly discourage work by the lower-paid spouse. There are several reasons for this: the federal child and dependent-care credit, which is supposed to help with these expenses, decreases as household income increases; the lower-paid spouse's earnings are taxed at a higher marginal rate because of the other spouse's earnings; and child care is paid out of after-tax income.” Lilian V. Faulhaber in The New York Times.

COATES: He wears the mask. “The present darling of the right wing, Dr. Benjamin Carson, is a distinguished neurosurgeon who went from the depths of Detroit poverty to the heights of Johns Hopkins Hospital in Baltimore. But his current status among conservatives isn't so much rooted in Carson's redemptive rise from rags to respectability, as it is in the belief that he is, in the long winter of Obama, the one they've been waiting for.” Ta-Nehisi Coates in The New York Times.

Elderly interlude: Two 90-year-olds race the 100-meter dash.

2) Can we speed up immigration reform?

White House supports accelerated pace on immigration bill. “Carney was reacting to reports that Judiciary Committee Chairman Patrick Leahy (D-Vt.) has said he wants to speed up the amendment process, known as markup, for a bill being drafted by an eight-member group that is expected to include a path to citizenship for the nation's 11 million illegal immigrants…The working group has said it hopes to unveil the legislation next week, after the Senate returns from Easter break. Republicans, including Sen. Marco Rubio (R-Fla.), a member of the bipartisan working group, have balked at Leahy's push for an accelerated timetable.” David Nakamura in The Washington Post.

Labor, faith leaders oppose cuts to family immigration visas. “An eight-member bipartisan Senate group is apparently set to propose eliminating two categories of family visas - for brothers and sisters and married adult children of U.S. citizens - in a comprehensive legislative proposal to overhaul the nation's immigration laws…But some Democrats said such a proposal would run counter to the nation's long-standing practice of welcoming extended families.” David Nakamura in The Washington Post.

The immigration-reform opposition is baaack. “Forces on the right vow to replicate the 2007 effort that led to the demise of George W. Bush's immigration overhaul, arguing the plan would be too costly and that it would help foreigners and illegal immigrants at the expense of U.S. workers, not to mention eventually providing many with federal benefits. The goal is to stoke enough outrage on the right to dissuade wayward Republicans and moderate Democrats from endorsing the measure.” Manu Raju and Anna Palmer in Politico.

Alien interlude: NASA’s space food hall-of-fame.

3) Should we create a Medicare buy-in?

Should we let people buy in to Medicare? “[A] recent Urban Institute paper maps out one path to bridge the partisan divide over Republican demands that the eligibility age for Medicare be adjusted upward from 65 to 67 so as to conform with Social Security…The GOP would get the higher age it wants. But in turn, it must agree to allow 65- and 66-year-olds -- who would be left out in the cold -- to buy in to Medicare until they are 67.” David Rogers in Politico.

The Republican plan for replacing Obamacare doesn’t replace Obamacare. “The confusion here is the term "replace Obamacare." Obamacare is, at its heart, a policy to make sure most every legal resident of the United States has access to comprehensive, affordable health care. In order to achieve that goal, it helps poorer Americans pay for insurance and regulates the products offered by insurers to make sure they're worth paying for…It's not repeal-and-replace so much as repeal-and-do-something-else-entirely.” Ezra Klein in The Washington Post.

Wonktalk: What Obama’s brain-map proposal tells us about the state of American science. Brad Plumer and Suzy Khimm in The Washington Post.

Interview: Dylan Matthews talks with Partha Mitra, a scientist who’s studying brain circuitry. The Washington Post.

Why S.C. won’t follow Arkansas’s Medicaid lead? “Keck is a bit of a countervailing voice in the Republican party right now. Staunch opponents of the law, including Louisiana Gov. Bobby Jindal and Maine Gov. Paul LePage, have shown some interest in the Arkansas option. They like the idea of moving low-income people out of the public insurance program and into the individual marketplace, where they would shop for private plans like other, subsidized state residents.” Sarah Kliff in The Washington Post.

More alien interlude: How far is it to Mars? A visualizer.

4) Financial regulators look to supervise beyond banks

Financial regulators working on nonbank supervision plans. “The Federal Reserve approved a final rule Wednesday that brings the government closer to placing large nonbank companies that were at the heart of the financial crisis under stricter supervision. The rule leaves a strikingly wide swath of companies on the table as potentially falling under tougher oversight, including private-equity firms and hedge funds. Yet industry officials and others following the process say it's unlikely that officials will ultimately single out more than a handful of firms.” Danielle Douglas and Jia Lynn Yang in The Washington Post.

…But GAO just faulted the regulators for bad foreclosure oversight. “A federal watchdog is faulting U.S. bank regulators for a flawed review of foreclosure documents, saying the agencies didn’t establish consistent procedures or adequately monitor the consulting firms performing the work. The Government Accountability Office, in a draft of a report viewed by The Wall Street Journal, criticized the Office of the Comptroller of the Currency and Federal Reserve for not ensuring banks were using consistent methods to determine which foreclosure files to scrutinize for possible errors.” Alan Zibel and Dan Fitzpatrick in The Wall Street Journal.

Fed officials open up about timing, methods of monetary-policy exit strategy. “A top Federal Reserve official said Wednesday that the central bank could stop pumping more money into the economy by the end of the year if the recovery continues its current pace. In a speech in Los Angeles, San Francisco Fed President John Williams said he is hopeful that the economy has "shifted into higher gear." That momentum, he said, would allow the Fed to dial back its stimulus efforts this summer -- and eventually end them this year -- without short-circuiting the recovery.” Ylan Q. Mui in The Washington Post.

Economic data suggest cautious business climate. “The Institute for Supply Management said that its index of nonmanufacturing activity fell to 54.4 last month. That is down from 56 in February and the lowest in seven months. Any reading above 50 signals expansion…A separate report from the payroll processor ADP also pointed to slightly weaker hiring in March. ADP said private employers added 158,000 jobs in March, down from 237,000 the previous month. Construction companies did not add any jobs after three months of solid gains.” Reuters.

The job market remains a wild card. “[A] mediocre jobs report on Friday would mean that despite relatively strong growth in February, the economy is adding jobs more slowly to start 2013 than it did early in 2012, when payrolls grew by an average of 262,000 jobs over the first three months of the year. Indeed, while employers added 2.4 million jobs from February 2011 to February 2012, the full-year pace has slowed since then, dropping to a rate below 2 million jobs in February for the first time since late 2011. Any sign of a longer-term slowdown in hiring is troubling at a time when the unemployment rate remains elevated, at 7.7%, and total employment remains 3 million below its prerecession level.” Ben Casselman in The Wall Street Journal.

The link you’re going to send to everyone right now interlude: How a differential gear works in cars.

5) Has gun control stalled out?

Obama speaks in Denver to renew support for gun control measures. “President Obama stopped here Wednesday afternoon to try to regain public support for his stalled gun-control agenda, using a tour of a police academy to put new pressure on Congress amid waning political urgency for more restrictive laws…Noting that the state's legislators have passed stronger gun legislation regarding background checks, Obama made the case that such regulations do not infringe on Americans' Second Amendment rights.” David Nakamura in The Washington Post.

Pro-gun laws are actually gaining ground at the state level. “[S]tates have passed more measures expanding rather than restricting the right to carry firearms. Arkansas eliminated prohibitions on carrying firearms in churches and on college campuses. South Dakota authorized school boards to arm teachers. Tennessee passed a law allowing workers to bring guns to work and store them in their vehicles, even if their employer objects. Kentucky shortened the process for obtaining licenses to carry a concealed gun.” Jack Nicas and Joe Palazzolo in The Wall Street Journal.

Meet the upstart group that’s fighting against gun control harder than the NRA. “Once largely unknown, Gun Owners of America, with its war chest, membership and lobbying strength dwarfed by the National Rifle Association, is emerging as an influential force as a series of gun control measures heads to the Senate floor.The group has already been successful in both freezing senators, particularly Republicans, who have appeared to be on the fence about supporting bills to expand background checks and increase penalties for illegal gun purchases, and empowering those who have a strong gun rights background.“ Jennifer Steinhauer in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester. Sarah Kliff.

Here’s a simple, 60-second primer on Bitcoin. Brad Plumer.

The Republican plan for replacing Obamacare doesn't replace Obamacare. Ezra Klein.

Interview: Dylan Matthews talks with Partha Mitra, a scientist who’s studying brain circuitry.

Why South Carolina won't follow Arkansas's Medicaid lead. Sarah Kliff.

WonkTalk: What Obama's brain map tells us about the state of U.S. science. Brad Plumer and Suzy Khimm.

The case for expanding, not cutting, Social Security. Brad Plumer.

Has Tesla made electric cars affordable? Not exactly. Brad Plumer.

Et Cetera

Midterm elections in 2014 appear unlikely to alter party balance. John Harwood in The New York Times.