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The House's debt-ceiling bill is...wow

Ezra Klein's Wonkbook

Sept. 26, 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.

John Boehner isn't even trying to pretend his House of Representatives is a sane place anymore.

The House GOP's debt limit bill -- obtained by the National Review -- isn't a serious governing document. It's not even a plausible opening bid. It's a cry for help.

In return for a one-year suspension of the debt ceiling, House Republicans are demanding a yearlong delay of Obamacare, Rep. Paul Ryan's tax reform plan, the Keystone XL pipeline, more offshore oil drilling, more drilling on federally protected lands, rewriting of ash coal regulations, a suspension of the Environmental Protection Agency's efforts to regulate carbon emissions, more power over the regulatory process in general, reform of the federal employee retirement program, an overhaul of the Dodd-Frank financial regulations, more power over the Consumer Financial Protection Bureau's budget, repeal of the Social Services Block Grant, more means-testing in Medicare, repeal of the Public Health trust fund, and more.

It's tempting to think that this is Boehner teaching his conference a lesson. They told him what they wanted, and he's going to let them have it -- good and hard. House Republicans are walking into the debt-ceiling negotiations with an opening bid that makes them look ridiculous. This looks like an Onion parody of what the House's debt-ceiling demands might be. It's a wonder it's not written in comic sans.

But this is really the conference teaching Boehner a lesson. He had so little support to raise the debt ceiling at all -- and so little trust from his members that he had a strategy to maximize their leverage -- that this is the bill he had to present. At this point, Boehner either can't stop them, or he's too exhausted to try.

Wonkbook's Number of the Day: 76,427. That's how many words were in the transcript for Sen. Ted Cruz's marathon speech, counting questions from other U.S. senators. According to this converter, that would run about 200 pages of single-spaced, 12-point Times New Roman font.

Wonkbook's Graph of the Day: The real and nominal price of first-class postage per ounce.

Wonkbook's Top 5 Stories: 1) October 17 is the X-date; 2) Obamacare data, woohoo; 3) FHA headed for billion-dollar bailout; 4) climate change report coming; and 5) did HW just endorse same-sex marriage?

1) Top story: You're free on Thursday, October 17, right?

October 17: Mark your calendars, and hope we never have to go to that appointment. "The U.S. Treasury Department on Wednesday said it would exhaust emergency measures to avoid falling behind on government obligations no later than Oct. 17 and would be left with $30 billion in cash to run the government, a warning that could hasten fiscal discussions on Capitol Hill. Treasury Secretary Jacob Lew, in a letter to Congress, said the $30 billion in cash would "be far short of net expenditures on certain days, which can be as high as $60 billion." He called on Congress to raise the nation's borrowing limit immediately to prevent the country from falling behind on its bills." Damian Paletta in The Wall Street Journal.

...And that's a bit quicker than we had thought. "[T]he Congressional Budget Office predicted these funds would be used up between Oct. 22 and Oct. 31 if legislation isn't enacted to raise the ceiling on government borrowing. That little cash could make it difficult, if not impossible, for the government to pay the roughly $55 billion in Social Security, Medicare and military payments due Nov. 1." Damian Paletta and Kristina Peterson in The Wall Street Journal.

@markknoller: In new CBS/NYTimes poll: Americans closely split on whether we're headed to a Govt shutdown: Probably 48%; Probably not 47%.

Here's what happens next, after Oct. 17. "From that point on, the federal government will only bring in enough tax revenue to pay about 68 percent of its bills for the rest of the month, according to a recent analysis by the Bipartisan Policy Center -- and Treasury won't be able to borrow or scrounge up more money to make up the difference...The Bipartisan Policy Center report, written by Shai Akabas and Brian Collins, argued that prioritization is infeasible. "It would involve sorting and choosing from nearly 100 million monthly payments," they write. There's no good way to stop paying the Education Department while making sure soldiers get paid. It's not clear that the Treasury Department even has the technical capacity to do this, let alone the legal authority." Brad Plumer in The Washington Post.

Explainer: Here is every previous government shutdown, why they happened and how they ended. Dylan Matthews in The Washington Post.

Cruz's kinda-buster ended. "The Senate on Wednesday moved toward approving legislation to keep the government open without gutting the health care law after Senator Ted Cruz's 21-hour-and-19-minute verbal assault on it ended with a 100-to-0 vote that is likely to lead to an outcome that Mr. Cruz had tried to stop. The strange series of events started with Mr. Cruz's marathon speech -- which began Tuesday afternoon and went on until noon on Wednesday -- and ended with the unanimous vote to cut off debate and proceed to consideration of a bill passed by the House that would keep the government open past Monday." Jonathan Weisman in The New York Times.

Transcript: Yes, here's the whole darn thing. The Hill.

Graph: How Ted Cruz's 'filibuster' stacks up, in one graph. Dylan Matthews in The Washington Post.

Reid sets up Friday cloture vote on stopgap spending bill. "Senate Majority Leader Harry Reid (D-Nev.) set up a cloture vote for Friday on the House passed continued spending resolution that defunds ObamaCare. Reid passed the motion to proceed to the House-passed stopgap, which includes language to prioritize debt payments if Congress fails to raise the debt limit this fall, by voice-vote Wednesday night...Reid said the cloture vote on the spending bill would occur one hour after the Senate convenes on Friday morning, accelerating the process slightly." Ramsey Cox in The Hill.

Congress down to one-week CR. "Gridlocked over a months-long spending bill, the widely unpopular 113th Congress is trying to see if it is capable of passing a stopgap measure for just one week. Washington often kicks the can down the road on tough issues; but this time, down the road means not a year or even a few months, as it usually does, but just a handful of working days." Alexander Bolton in The Hill.

@robertcostaNRO: Breaking: multiple GOP senators tell me House GOP will likely pass short-term, approx one wk CR to avoid shutdown, keep up negotiations

House Republicans explore strategy to avoid federal government shutdown. "With federal agencies set to close their doors in five days, House Republicans began exploring a potential detour on the path to a shutdown: shifting the fight over President Obama's health-care law onto a separate bill that would raise the nation's debt limit. If it works, the strategy could clear the way for the House to approve a simple measure to keep the government open into the new fiscal year, which will begin Tuesday...However, it would set the stage for an even more nerve-wracking deadline on Oct. 17, with conservatives using the threat of the nation's first default on its debt to force the president to accept a one-year delay of the health-care law's mandates, taxes and benefits." Lori Montgomery and Juliet Eilperin in The Washington Post.

Revealed: The actual plan from the House GOP. "The document originated from the House Appropriations Committee staff and is dated yesterday. A GOP-leadership aide says there are some differences between this and their latest summary, so take that for what it's worth. As always with the House Republicans, it is subject to discussion from members, many of whom are quite vocal in providing their input on such plans." Jonathan Strong in National Review Online.

House Democrats meet with Denis McDonough, Harry Reid. "House Democrats huddled Wednesday night with White House Chief of Staff Denis McDonough and Senate Majority Leader Harry Reid to talk about the continuing resolution and Obamacare. The response out of the meeting was unchanged: Democrats are holding off on saying what they'll support when it comes time for them to vote on a CR sent back from the Senate. And they're opposed to a debt ceiling hike that includes any other measures." Ginger Gibson in Politico.

@morningmoneyben: In fact if you worry about a debt ceiling crisis you should almost HOPE for a gov't shutdown as preferable tension release.

...And they just want to hike the debt ceiling clean of any spending cuts. "House Democrats have a message: They want to see a clean debt ceiling bill come up for a vote. Still weeks away from hitting the ceiling but possibly days away from a House vote, the Democratic leadership had harsh words for Republicans, who are considering attaching a one-year delay of the individual mandate to the hike." Ginger Gibson in Politico.

Explainers: 8 ways a government shutdown will make D.C. residents' lives worse. And D.C.'s defying the shutdown. Here are 5 other ways they could make life better by ignoring the feds. Lydia DePillis in The Washington Post.

Wall Street and Washington are in a game of chicken. Will it end with a splat? "That is the Vix. It is a measure of how much volatility traders expect there to be over the 30 days to come. When the world looks scary -- when it looks like there will be a lot of wild ups and downs in the market over the coming weeks -- the Vix spikes. As the chart shows, though, there isn't even a hint of worry about U.S. fiscal policy showing up in the Vix right now. Indeed, it was way higher as recently as June, when the Federal Reserve said it would soon begin slowing down its bond purchases." Neil Irwin in The Washington Post.

Obama's approval rating falls back to two-year low. "Forty-nine percent of the public disapproves of Mr. Obama's job performance, and 43 percent approves, matching his worst measures in two years, the poll shows. Only 30 percent of Americans believe he cares "a lot" about their needs and problems, a figure that has fallen steadily from early in his first term. Across the board -- on foreign policy, including Syria and Iran; the economy; health care; and the federal budget deficit -- more Americans disapprove than approve of the president's performance." Jonathan Martin and Allison Kopicki in The New York Times.

@justinwolfers: Calculation by @macroadvisers that govt shutdown would cut Q4 GDP growth by 0.3%pts assumes no multiplier effects, confidence, or spillovers

...And another part of the problem here is that the Republican Party has lost its leverage over its right-wing fringe. "If one of the lessons of 2012 for the GOP leadership was to make peace with its rightward flank, so far, it's not getting a passing grade when it comes to establishing a real sense of teamwork...In part, leadership's struggle to woo so-called wingers to its side remains an uphill fight because there is often a basic disagreement within the new conservative base about the best path forward and many tea partiers aren't interested in the typical horse trading and compromise that typically have helped make deals on Capitol Hill." Anna Palmer in Politico.

FLAVELLE: The case for caving. "President Barack Obama says he won't negotiate with Republicans over the debt ceiling. That may be a good bargaining tactic, but if push comes to shove, is it good policy?...It seems hard to dispute that however bad it would be for Obama to cave, not caving would be worse. Republicans must know that, and Obama must know they know that. The only hope for the White House is that Republicans will be scared off by the possibility that Obama will still decide not to negotiate, in which case all hell would break loose, and they would be left to take the blame. But that would be an empty victory, as everybody would be worse off...[I]f the X-date comes and there's no deal, Democrats will have to choose between that and the even worse outcome of an international economic mess. That's a hard choice -- but not that hard." Chris Flavelle in Bloomberg.

SCHEIBER: Shut 'er down, John. "What the hell is John Boehner thinking? I don't mean that strictly in a rhetorical sense, though it's hard not to slap your head when you see the most powerful Republican in the country lurching from one cockamamie strategy to another. I mean it quite literally: What is Boehner's personal calculation when it comes to navigating the various challenges--potential government shutdown, potential debt default, lunatic Republican caucus--he faces over the next few weeks?...Because there are two things Boehner presumably cares about more than avoiding a shutdown: not being ousted as Speaker, and raising the debt ceiling by mid-to-late October so as to avoid a debt default. The latter would be far more damaging to the economy than a shutdown, and therefore more devastating to the Republican brand. Unfortunately for Boehner, the only plausible way to both keep his job and avoid a debt default is ... to shut down the government when the fiscal year ends next week." Noam Scheiber in The New Republic.

KLEIN: What Ted Cruz and Wendy Davis have in common. "[W]hat's interesting about the Davis and Cruz comparison is how much they have in common. Both of them got overwhelming amounts of media attention for their filibusters. They're both backbench legislators who made themselves the center of American politics for at least 24 hours...All of which is to say that the amount of media attention a politician can expect for a filibuster -- or at least a long speech -- is far beyond the amount of media attention they can expect for staying quiet. So why don't more of them filibuster?" Ezra Klein in The Washington Post.

THOMPSON: Why you should worry about the debt ceiling. "The truly scary thing about going over the debt cliff isn't what we think will happen--a scramble to prioritize payments, delayed checks to groups like veterans and senior citizens, and angry, confused investors. The truly scary thing is that we actually have no idea what will happen. We don't know if it's even possible for the government to prioritize payments to millions of different clients. Households, businesses, and investors don't know how long they'll have to wait for their money, whether it's a defense contract deal, a doctor's reimbursement, or a Social Security check. And nobody will know how long the nightmare will go on." Derek Thompson in The Atlantic.

HENNINGER: Let Obamacare collapse. Don't defund it. "ObamaCare is the biggest bet that American liberalism has made in 80 years on its foundational beliefs. This thing called "ObamaCare" carries on its back all the justifications, hopes and dreams of the entitlement state. The chance is at hand to let its political underpinnings collapse, perhaps permanently. If ObamaCare fails, or seriously falters, the entitlement state will suffer a historic loss of credibility with the American people. It will finally be vulnerable to challenge and fundamental change. But no mere congressional vote can achieve that. Only the American people can kill ObamaCare." Daniel Henninger in The Wall Street Journal.

MCARDLE: Tech, Obamacare's weakest link. "The architects fundamentally misunderstood the difficulty of what they were proposing...What the exchanges were supposed to do was actually very, very hard. Unfortunately, if you're not an IT project manager, it sounded very easy, because you could train a file clerk to do it in a few hours." Megan McArdle in Bloomberg.

Music recommendations interlude: Foreigner, "Urgent," 1981.

Top opinion

LOEAK: Climate change reaches our shores. "As the world barrels toward a climate crisis of its own making, my country stands at the precipice. In the Marshall Islands, like elsewhere in the Pacific, climate change is no longer a distant threat, nor at the doorstep. Climate change is here...As one of only four low-lying coral atoll nations in the world, we are increasingly panicked by recent scientific reports suggesting that the world is currently heading for a three- to six-foot rise in sea levels by the end of the century. If such predictions are accurate, my country will be lost forever." Christopher J. Loeak in The New York Times.

MULLER: A pause, not an end, to warming. "The global warming crowd has a problem. For all of its warnings, and despite a steady escalation of greenhouse gas emissions into the atmosphere, the planet's average surface temperature has remained pretty much the same for the last 15 years...The current pause is consistent with numerous prior pauses. When walking up stairs in a tall building, it is a mistake to interpret a landing as the end of the climb. The slow rate of warming of the recent past is consistent with the kind of variability that some of us predicted nearly a decade ago." Richard A. Miller in The New York Times.

PORTER: The cost of climate change. "William Nordhaus of Yale, to cite one estimate, wrote recently that allowing uncontrolled carbon emissions would raise the world's temperature 3.4 degrees Celsius (6.1 degrees Fahrenheit) above that of the preindustrial era by the end of the century and cost the world a fairly modest 2.8 percent of economic output. An influential group of scholars argue that the climate is too complex to be modeled so neatly. Assuming that growing concentrations of carbon in the air will gradually heat the atmosphere and produce a gradual accumulation of economic losses, they say, ignores all the ways in which the environment could suddenly go haywire. "The models create the illusion of sureness," said Martin Weitzman of Harvard, one of the first economists to look into low-probability "tail events" omitted by most forecasters." Eduardo Porter in The New York Times.

BALL: The fall of the Heritage Foundation and the death of Republican ideas. "The story of the conservative movement that has come to dominate the Republican Party over the last four decades is inextricably intertwined with the story of the Heritage Foundation. In that time, it became more than just another think tank. It came to occupy a place of special privilege -- a quasi-official arm of GOP administrations and Congresses; a sponsor of scholarship and supplier of legislation; a policy base for the party when out of power. ..Republicans who once worked out legislative language with the help of Heritage's distinguished Ph.D.s felt whiplash seeing the group cheerlead for collapse. Heritage was supposed to be above politics, they grumbled. Heritage was supposed to be about serious ideas, not tactical fights. White papers, not political campaigns." Molly Ball in The Atlantic.

Wonk humor interlude: Living with "first-person shooter disease."

2) Obamacare average price data released

How much will Obamacare cost you? "Across the country, the average premium for a 27-year-old nonsmoker, regardless of gender, will start at $163 a month for the lowest-cost "bronze" plan; $203 for the "silver" plan, which provides more benefits than bronze; and $240 for the more-comprehensive "gold" plan...The data, which the administration was set to release Wednesday, cover 36 states where the federal government is operating insurance exchanges because state officials have declined to do so themselves. Fourteen states are operating exchanges on their own." Louise Radnofsky in The Wall Street Journal.

...It also depends on where you live. "The report, released Wednesday by the Department of Health and Human Services, showed significant variation in the insurance premiums that Americans shopping on the individual market could pay under the president's health-care overhaul. Across the 48 states for which data were available, the unsubsidized monthly premiums could be as low as $70 for an individual and as high as $1,200 for a moderate plan for a family of four." Sarah Kliff and Sandhya Somashekhar in The Washington Post.

...But it is twice what men were paying previously. "Based on a Manhattan Institute analysis of the HHS numbers, Obamacare will increase underlying insurance rates for younger men by an average of 97 to 99 percent, and for younger women by an average of 55 to 62 percent...[W]e conducted two comparisons between pre-ACA data and post-ACA data, as reported by HHS. The first comparison is between the cheapest plan available to 27-year-olds pre- and post-Obamacare. The second is between the cheapeast plan available to the average exchange participant, and to the typical 40-year-old pre-Obamacare. We would have liked to have compared rates for older individuals, but HHS didn't report that data." Avik Roy in Forbes.

Q&A: You've got 42 Obamacare questions. Wonkblog has 42 answers! Sarah Kliff in The Washington Post.

D.C.'s Obamacare fail: Prices won't work until November. "Just days away from launch, the District of Columbia's health marketplace is announcing a pretty significant delay. While the D.C. Health Link will launch a Web site on October 1, shoppers will not have access to the their premium prices until mid-November. The delay comes after the District marketplace discovered "a high error rate" in calculating the tax credits that low- and middle-income people will use to purchase insurance on the marketplace." Sarah Kliff in The Washington Post.

Watch: Opening statements from the Wonkblog Obamacare debate. And more clips from the Wonkblog Obamacare debate. The Washington Post.

An Obamacare concession the GOP could actually get. "Here's an Obamacare concession Republicans really might be able to get Democrats to agree to: End the employer mandate forever...Unlike defunding or delaying Obamacare, or even delaying the individual mandate, this is a concession Republicans really might be able to get the Obama administration to agree to. They'd be on the right side of both the policy and the public. The question is whether they actually want to help these workers or just grandstand against the law." Ezra Klein in The Washington Post.

Chess interlude: Watch this famous game.

3) FHA heading for rescue

A bailout for the Federal Housing Administration in 3, 2, 1... "The Federal Housing Administration, which emerged as a major backstop of the U.S. residential-mortgage market throughout the housing downturn, is likely to require an infusion from the U.S. Treasury at the end of the month, according to people familiar with the matter. Officials haven't determined exactly how much money the FHA will need, these people said, but early projections have suggested the agency could require at least $1 billion." Nick Timiraos in The Wall Street Journal.

JPMorgan in talks to settle government cases for $11 billion, source says. "JPMorgan Chase is in talks to pay state and federal authorities $11 billion to resolve investigations into its sale of shoddy mortgage securities during the financial crisis, a person familiar with the talks said Wednesday. If the bank were to agree to such a settlement, it would represent a tremendous win for the government after years of public criticism over its struggle to hold Wall Street accountable for its crisis-era misdeeds." Danielle Douglas in The Washington Post.

How cruddy data have messed up everything we thought we knew about the recovery. "It turns out seasonal adjustments are really interesting! They explain why, ever since Lehmangeddon, the economy has looked like it's speeding up in the winter and slowing down in the summer. In other words, everything you've read about "Recovery Winter" the past few winters has just been a statistical artifact of naive seasonal adjustments. Oops." Matthew O'Brien in The Atlantic.

Household wealth hits new high. "Rebounding home prices and a rising stock market helped boost household wealth by more than $1.3 trillion in the second quarter of this year, Federal Reserve data showed Wednesday. The gain marked the seventh consecutive quarterly increase and pushed household net worth--the value of homes, stocks and other assets minus debts and other liabilities--to $74.8 trillion, an all-time high. Adjusting for inflation, net worth is about 4% below its peak, meaning households have made back about 80% of what they lost during the bust." Ben Casselman in The Wall Street Journal.

Durable-goods orders increase. "The Commerce Department reported that orders for durable goods, items expected to last at least three years, edged up 0.1 percent in August. Such orders plunged 8.1 percent in July, largely because of a steep drop in volatile commercial aircraft orders...And demand for so-called core capital goods rose 1.5 percent, after falling 3.3 percent the previous month. Core capital goods are a good measure of businesses' confidence in the economy and include items that point to expansion, like machinery." The Associated Press.

Sales of new homes rise nearly 8 percent in August. "Sales of new single-family homes rose nearly 8 percent in August and are 12.6 percent higher than a year ago, according to new data released Wednesday by the Census Bureau. The rise -- which comes just a month after new home sales plunged by more than 14 percent-- is the latest turn in what economists say will be a volatile ride for this segment of the housing market...The number of new homes sold in August was at a seasonally adjusted annual rate of 421,000, up from the revised rate of 390,000 homes in July. That figure is still below the rate of construction needed in a healthy market, according to analysts." Amrita Jayakumar in The Washington Post.

Walmart is having some strange inventory-management issues. ".S. inventory growth at Wal-Mart outstripped sales gains in the second quarter at a faster rate than at the retailer's biggest rivals. Merchandise has been piling up because consumers have been spending less freely than Wal-Mart projected, and the company has forfeited some sales because it doesn't have enough workers in stores to keep shelves adequately stocked...Even as Wal-Mart seeks to clear its inventory, holiday merchandise is showing up early at stores in states including Illinois, Texas, California and Colorado, according to workers at those locations. Some of them said there is already insufficient room for existing merchandise, forcing them to put the seasonal goods out as soon as they arrive -- about a month earlier than usual." Renee Dudley in Bloomberg.

Oh my god this is so great interlude: The collected poems of the Affordable Care Act.

4) Climate change report coming

IPCC's confidence in human contribution to climate change rises. "For a document that is likely to be attacked with a level of vitriol reserved for the highest-stakes political battles in Congress, it is noteworthy that every climate scientist weather.com spoke with about the upcoming Fifth Assessment Report from the Intergovernmental Panel on Climate Change described it with the same word: conservative. The report, written by a worldwide group of several hundred climate scientists and set to be released Friday, follows four previous reports released between 1990 and 2007, which together paint a picture of ever-increasing confidence on the basic facts of human-caused global warming." Terrell Johnson for The Weather Channel.

Primary source: The IPCC's report is coming out on September 30. Here's some more info.

What happens if you add lots of wind and solar power to the grid? "[A]s wind power (and its cousin, solar power) keeps expanding, it could pose some hassles and headaches for those in charge of the nation's electricity grid. What would happen if we tried to get, say, one-third of our electricity from wind and solar? How much would that cost? Would we need to build a ton of new transmission lines to remote areas? And what would we do for back-up electricity when the wind's not blowing or the sun's not shining?" Brad Plumer in The Washington Post.

Hippies are familiar with supply shocks interlude: The VW Bus is done.

5) Did HW just endorse same-sex marriage?

George H.W. Bush is witness at same-sex marriage in Maine. "Another prominent Republican has come out in support of same-sex marriage -- or at least, in support of one particular same-sex marriage. Former President George H.W. Bush and his wife Barbara served as an official witnesses Saturday at the Maine wedding of Bonnie Clement and Helen Thorgalsen, co-owners of a Kennebunk general store. Thorgalsen posted a photo on Facebook of the 41st commander-in-chief signing a set of documents for them at an outdoor celebration: "Getting our marriage license witnessed!"" The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

D.C.'s Obamacare fail: Prices won't work until November. Sarah Kliff.

What Ted Cruz and Wendy Davis have in common. Ezra Klein.

What happens if you add lots of wind and solar power to the grid? Brad Plumer.

D.C.'s defying the shutdown. Here are 5 other ways they could make life better by ignoring the feds. Lydia DePillis.

More clips from the Wonkblog Obamacare debate. Wonkblog.

You've got 42 Obamacare questions. Wonkblog has 42 answers! Sarah Kliff.

Last night's Wonkblog Debate on Obamacare. Wonkblog.

Wall Street and Washington are in a game of chicken. Will it end with a splat? Neil Irwin.

How Ted Cruz's 'filibuster' stacks up, in one graph. Dylan Matthews.

An Obamacare concession the GOP could actually get. Ezra Klein.