Oct. 7, 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.

Why you should be worried, in three quotes:

Rep. Ted Yoho on not raising the debt ceiling: "I think, personally, it would bring stability to the world markets."

Speaker John Boehner on raising the debt ceiling: "We are not going to pass a 'clean' debt-limit increase."

Treasury Secretary Jack Lew on ending the crisis: "[Republicans] need to open the government. They need to fund our ability to pay our bills. And then we're open to negotiation."

This, in three quotes, is why we might actually breach the debt limit. The White House and Boehner continue to have mutually exclusive positions. Boehner says he won't pass a clean debt-ceiling increase and the White House says they won't sign anything but a clean debt-ceiling increase.

Meanwhile, there's a chunk of the Republican Party -- and it's a powerful chunk of them in the House -- that thinks this is all great. Yoho doesn't believe the debt ceiling poses a threat to the economy. He thinks it's healthy for the economy. "We need to have that moment where we realize [we're] going broke," he told the Washington Post.

Analogies between the finances of families and government are typically pretty flawed. But there's one worth drawing here: That moment when a family realizes it's broke and stops paying their mortgage, credit card bill, etc? It's not a good moment for them. It's a moment that wrecks their credit score and makes it harder for them to be "not-broke" ever again. To try and improve the U.S.'s finances by sharply and permanently increasing its borrowing costs is like trying to prove to your sister that her house is a firetrap by actually setting it on fire.

But Yoho and friends are getting plaudits from the cramped, closed information loop they favor. Red State's Erick Erickson, for instance, is assuring them that "Republicans are winning the shutdown fight, and Democrats know it." In fact, that "the Democrats began to shift the conversation to the debt limit" is, to Erickson, proof that Republicans are winning on the shutdown -- as opposed to, say, proof that the debt limit is now only 10 days away.

Assuming Boehner isn't willing to cut a debt-ceiling deal that completely abandons the tea partiers in his conference, then these are the three positions a debt-ceiling deal must somehow encompass:

1) The debt ceiling is no big deal and even if it is a big deal better to have the crisis than do nothing;

2) The debt ceiling is a big deal but cleanly increasing it is absolutely not on the table;

3) The debt ceiling is a big deal and negotiating over it is absolutely off the table.

Perhaps Washington will figure this out in the next 10 days. But it won't be easy.

Wonkbook's Number of the Day: 450,000. That's how many federal-government workers remain furloughed, down from the initial 800,000 workers as the Pentagon calls back 350,000 civilian employees.

Wonkbook's Quote of the Day: "I think, personally, it would bring stability to the world markets," said Rep. Ted Yoho of allowing the U.S. federal government to default on the national debt.

Wonkbook's Graph of the Day: Here is the single best piece of evidence that, yes, the markets are getting nervous about the debt ceiling.

Wonkbook's Top 5 Stories: 1) it was the spring of hope, it was the winter of despair; 2) Obamacare in your state newspaper; 3) labor market still depressed; 4) the words of Justice(s); and 5) California's sweeping immigration reforms.

1) Top story: Is the shutdown getting better or worse?

Things are getting worse. "House Speaker John A. Boehner on Sunday defiantly rejected calls to reopen the government and raise the federal debt limit, warning that the nation is headed for a first-ever default unless President Obama starts negotiating with Republicans. "That's the path we're on," Boehner (R-Ohio) said on ABC's "This Week." Of Obama, he added: "He knows what my phone number is. All he has to do is call."..."We are not going to pass a 'clean' debt-limit increase" -- one without additional concessions from Democrats -- he said. "I told the president, there's no way we're going to pass one. The votes are not in the House to pass a clean debt limit," Boehner said...[T]the White House did the same, dispatching Treasury Secretary Jack Lew to appear on four of the six major Sunday talk shows. Repeatedly, Lew said Obama is willing to enter negotiations to address the nation's long-term budget problems but not until Republicans drop their campaign against Obama's health-care initiative, end the government shutdown and lift the $16.7 trillion debt limit." Lori Montgomery in The Washington Post.

Majority of House appears to support 'clean' continuing resolution bill. "All but five House Democrats have signed a letter urging House Speaker John A. Boehner (R-Ohio) to allow a vote on a "clean" continuing resolution bill, meaning the legislation appears to have the support of a majority of House members. House Minority Leader Nancy Pelosi (D-Calif.) released the letter, which bears the signatures of 195 of the chamber's 200 Democrats...Combine those 195 Democrats with the 22 House Republicans who have signaled support for a clean resolution, and you get 217 members, which is a bare majority of the chamber's 432 members." Aaron Blake in The Washington Post.

@jbplainblog: The reason this goes on is the 'fraidy cat group of House Republicans who oppose shutdown but won't say so or do anything about it.

...And for the case that things are getting better: Pentagon to order almost all furloughed civilian employees back to work. "The Pentagon announced Saturday that it would order almost all of its 350,000 furloughed civilian employees back to work this week, a surprise move that could substantially reduce the impact of the government shutdown. Pentagon officials said more than 90 percent of the employees who were told to stay home are expected to return to work, under a decision made by Defense Secretary Chuck Hagel that the workers are needed to support the readiness of the military. The action, supported by members of both parties, will leave about 450,000 of the federal government's 2.1 million civilian employees on furlough." Zachary A. Goldfarb, Craig Whitlock, and Jeff Simon in The Washington Post.

...And the House voted to approve back pay for furloughed workers. "As the fifth day of the federal government shutdown began, members of the House came together in a moment of rare bipartisanship to pass a bill, by a vote of 407 to 0, approving back pay for furloughed government workers. President Obama has expressed his support for the measure. Senate Majority Leader Harry M. Reid supports the measure, but said Saturday that if furloughed workers are guaranteed back pay, there's no reason to keep them out of work." Jeff Simon in The Washington Post.

...And some conservative Republicans are beginning to surrender. "The first cracks are appearing in the Tea Party's push to dismantle the nation's health law as three House lawmakers with ties to the movement said they'd back a U.S. spending bill that doesn't center on Obamacare. Republican Representatives Blake Farenthold of Texas, Doug Lamborn of Colorado and Dennis Ross of Florida, all of whom identify with the Tea Party, said they'd back an agreement to end the government shutdown and lift the debt ceiling if it included major revisions to U.S. tax law, significant changes to Medicare and Social Security and other policy shifts." Michael C. Bender in Bloomberg.

Shutdown's roots lie in deeply embedded divisions in America's politics. "[T]he ideological, cultural and political differences that led to this moment of extreme governmental dysfunction are almost certain to shape elections and legislative battles in the near term. That is the conclusion of politicians, political strategists and scholars who have been living with a deepening red-blue divide in America that they say has made this era of politics the most polarized in more than a century." Dan Balz in The Washington Post.

@BuzzFeedAndrew: Line that Leo McGarry said in West Wing shutdown episode that made me laugh "you see Newsweek?"

...More on how the crisis was made. "To many Americans, the shutdown came out of nowhere. But interviews with a wide array of conservatives show that the confrontation that precipitated the crisis was the outgrowth of a long-running effort to undo the law, the Affordable Care Act, since its passage in 2010 -- waged by a galaxy of conservative groups with more money, organized tactics and interconnections than is commonly known." Sheryl Gay Stolberg and Mike McIntire in The New York Times.

Interview: Advice from a former FBI hostage negotiator. John Avlon in The Daily Beast.

Justin Amash in the crosshairs. "[W]ithin Grand Rapids' powerful business establishment, patience is running low with Amash's ideological agenda and tactics. Some business leaders are recruiting a Republican primary challenger who they hope will serve the old-fashioned way -- by working the inside game and playing nice to gain influence and solve problems for the district. They are tired of tea party governance, as exemplified by the budget fight that led to the shutdown and threatens a first-ever U.S. credit default. Similar efforts are underway in at least three other districts -- one in the moneyed Detroit suburbs and the others in North Carolina and Tennessee -- where business leaders are backing primary campaigns against Republican congressmen who have alienated party leaders. The races mark a notable shift in a party in which most primary challenges in recent years have come from the right." Philip Rucker in The Washington Post.

...But not Ted Yoho. "Right now -- with national parks closed and workers furloughed and cancer studies shut down -- Yoho is supposed to be learning a hard lesson, about being careful what you wish for. He is not. Instead, Yoho has felt little pressure to change his mind, either from inside the Capitol or outside it. His leaders are still weak and uneasy. His constituents -- or at least the small slice that bothers to write or call him -- are mostly supportive. And his defiance has made him far more powerful than a freshman congressman has any right to expect..."I think we need to have that moment where we realize [we're] going broke," Yoho said. If the debt ceiling isn't raised, that will sure as heck be a moment. "I think, personally, it would bring stability to the world markets," since they would be assured that the United States had moved decisively to curb its debt." David A. Fahrenthold in The Washington Post.

Prospect of a long government shutdown stokes concern. "Nearly a week into the government shutdown, signs of economic damage are mostly limited to stalled contracts and lost tourism revenue. But the risk of a prolonged closure that morphs into a battle over the nation's borrowing limit is raising concerns among economists and executives...Economists say a quick resolution in coming days could spare the economy a serious blow, mimicking prior shutdowns. But the conflict dragging on for a couple more weeks--which some lawmakers have suggested could happen--risks restraining key parts of the economy that had been expected to accelerate in the coming months, they said." Sudeep Reddy and Brenda Cronin in The Wall Street Journal.

@brianbeutler: If Obama were really handling the shutdown in a "punishing way" he would've furloughed air traffic controllers.

...Maybe the government shutdown won't clobber the economy, after all. "It has been a good weekend for anyone worrying about the effect that the federal government shutdown will have on economic growth. Krishna Guha of the ISI Group notes that two developments mean that the hit to GDP from the shutdown should be smaller than analysts have been estimating. First, the Defense Department has brought all civilian personnel back to work immediately, deeming them all "essential employees." Second, the House passed legislation to give back-pay to federal workers who are furloughed when the shutdown ends" Neil Irwin in The Washington Post.

U.S. seeks to reassure trade partners as Obama cancels trip. "U.S. cabinet members sought to reassure trade partners over the weekend that the partial government shutdown won't affect America's long-term foreign engagements, after President Barack Obama backed out of a pair of summits in Asia to deal with the crisis back home...Mr. Kerry, who will stand in for Mr. Obama at the meeting of 21 countries that is focused mostly on trade issues, said Saturday that other leaders had expressed understanding of Mr. Obama's predicament...[T]he administration's lead trade negotiator canceled a round of talks in Brussels for what would be the largest-yet bilateral free-trade agreement, the Transatlantic Trade and Investment Partnership, or TTIP, between the U.S. and the European Union. U.S. Trade Representative Michael Froman said his team lacked the staffing and financial resources to make the trip." Ben Otto and Natasha Brereton-Fukui in The Wall Street Journal.

KLEIN: The shutdown is a Republican civil war. "We're used to brinkmanship in Washington resulting from conflict between Democrats and Republicans. But this shutdown is different. It's a fight between Republicans and Republicans -- or, more specifically, Republicans and the Tea Party...The question that's puzzling Washington is how a minority of the majority is managing to dominate the House of Representatives." Ezra Klein in The Washington Post.

KONCZAL: The 'non-essential' parts of government that shut down are actually quite essential. "It's hard to understand what the "non-essential state" actually is from current press coverage. The stories dominating the headlines are about national park closings and zoo cameras going offline, giving the sense that the "non-essential" parts of government are simply about facilitating leisure and vacations. And, like looking into the wrong end of a telescope, the stories of individual people and programs put on furlough doesn't communicate to the public what kind of overall functions are being abandoned by the state during the shutdown." Mike Konczal in The Washington Post.

YORK: Where's sense of crisis in a 17-percent government shutdown? "So the government shutdown, at least as measured by money spent, is really a 17 percent government shutdown. Perhaps that is why the effects of the shutdown, beyond some of the most visible problems, like at the monuments and memorials on the Washington Mall, don't seem to have the expected intensity. Seventeen percent of federal expenditures is still a huge amount of money, and the shutdown is affecting many people. But many more who are dependent on federal dollars are still receiving their money, either as salary, transfer payment, or in some other form. Viewed that way, it's no wonder both Republicans and Democrats appear to believe they can last the shutdown out, at least for a couple of weeks until they try to resolve the debt limit crisis due to arrive October 17." Byron York in The Washington Examiner.

@Goldfarb: This could have been another week of disastrous coverage of the ACA's rollout. Instead, it will be focused on shutdown/debt limit.

KRUGMAN: The Boehner bunglers. "Conservative leaders are indeed ideologically extreme, but they're also deeply incompetent. So much so, in fact, that the Dunning-Kruger effect -- the truly incompetent can't even recognize their own incompetence -- reigns supreme...[E]ven the shock of electoral defeat wasn't enough to burst the G.O.P. bubble; it's still a party dominated by wishful thinking, and all but impervious to inconvenient facts. And now that party's leaders have bungled themselves into a corner." Paul Krugman in The New York Times.

Music recommendations interlude: Fleet Foxes, "Helplessness Blues."

Top opinion

THALER: How to spread financial literacy. "Whether in taking out a student loan, buying a house or saving for retirement, people are being asked to make decisions that are difficult even if they have graduate training in finance and economics. Throwing the financially illiterate into that maelstrom is like taking students currently enrolled in driver's education and asking them to compete in the Indianapolis 500." Richard H. Thaler in The New York Times.

Nerdy interlude: Pokemon on the piano.

2) Obamacare's launch, seen through the eyes of state newspapers

How Texas is coping with Obamacare's launch. ""It's the beginning of a new day in America," Sharon Phillips of Parkland Memorial Hospital said last week. Except that she also works in Texas, and that can be, well, complicated. Phillips, an executive vice president, was celebrating a milestone in health reform, the launch of online marketplaces. They offer private insurance for those with no coverage and often include federal subsidies to make it affordable. Parkland was eager to help folks sign up, given that about 50,000 uninsured patients may qualify. The catch is that many other customers will be left out in the cold: About 180,000 earn too little money to get public help, Phillips said. If that sounds counterintuitive -- an income that's too small for aid -- how about Parkland buying health insurance for some of its sickest patients? Phillips floated that idea last week because buying coverage through the exchange could be cheaper than Parkland's eating the hospital bill itself. Whether the move would pass muster with regulators and political leaders is unclear, but Phillips said it's worth exploring." Mitchell Schnurman in The Dallas Morning News.

Florida is seeing high interest in health plans. "It's the strategy college students have used for generations to buy concert tickets. Daniel McNaughton of Orlando was in line at 6 a.m. Wednesday -- on the Internet -- to try to purchase health insurance from the still-new, still-balky federal health care exchange. Unlike anyone he knows, he got in. And he found and bought what he wanted. "I think it just had to do with the fact that a lot of people were asleep," said McNaughton, a 22-year-old Valencia College student who supports himself working two part-time jobs. He ultimately settled on a Florida Blue policy that -- after the federal subsidy he qualifies for -- will cost him $70 a month." Scott Powers, William E. Gibson and Nicole Brochu in the Orlando Sentinel.

In New Jersey, Obamacare is causing some changes to health insurance contracts. "Hundreds of thousands of New Jerseyans opened the mail last week to find their health insurance plan would no longer exist in 2014 because it does not cover all the essential benefits required by the Affordable Care Act...Horizon, Aetna and others have had to create new plans to meet the requirements mandated by the law." Dan Goldberg in The Star-Ledger.

And in North Carolina, there's frustration over the lack of a state exchange. "Many North Carolinians were frustrated by glitches at healthcare.gov last week as they tried to shop online for health insurance, but none was more miffed than North Carolina Insurance Commissioner Wayne Goodwin. The mission of Goodwin's department is to help people with insurance, but in this case it could do almost nothing. The General Assembly, in a fit of pique against the Affordable Care Act lawmakers deride as "Obamacare," barred the state from any participation in the rollout of the historic effort to insure the nation's 48 million uninsured. The Republican-led legislature and Republican Gov. Pat McCrory rejected billions of dollars in federal aid to expand Medicaid to about 500,000 low-income state residents. They also refused to set up a state-run marketplace to sell insurance to individuals. North Carolina left that job to the federal government." Ned Barnett in The Raleigh News and Observer.

Read: The full transcript of Obama's interview with The Associated Press.

Watch: Highlights of Obama's interview with the AP.

The business end of Obamacare. "[T]he likely benefits of Obamacare for small businesses are enormous. To begin with, it'll make it easier for people to start their own companies--which has always been a risky proposition in the U.S., because you couldn't be sure of finding affordable health insurance...The U.S. likes to think of itself as friendly to small businesses. But, as a 2009 study by the economists John Schmitt and Nathan Lane documented, our small-business sector is among the smallest in the developed world, and has one of the lowest rates of self-employment. One reason is that we've never had anything like national health insurance. In a saner world, changing this would be a reform that the "party of small business" would celebrate." James Suroweicki in The New Yorker.

HealthCare.Gov Web site goes down for some fixing. "The federal government will take down a critical part of HealthCare.gov, the Obamacare web portal, for a portion of the coming weekend as programmers feverishly work to fix major glitches that are impeding enrollment and marring the debut of the centerpiece of President Barack Obama's health care reform law...The administration will not allow users to fill out applications for coverage on HealthCare.gov between the hours of 1 a.m. and 5 a.m. EDT Saturday, Sunday and Monday mornings, allowing programmers to write fixes to the website, the Department of Health and Human Services announced late on Friday. This part of the website was down early Friday morning as well, Joanne Peters, a spokeswoman for the department, disclosed on Twitter after the announcement." Jeffrey Young in The Huffington Post.

Interview: A techie walks us through healthcare.gov's two big problems. Sarah Kliff in The Washington Post.

Explainer: A design critique of HealthCare.gov. Joey Marburger and Sarah Sampsel in The Washington Post.

A real-life encounter HealthCare.Gov's dysfunctional, useless live chat service. "I have been in regular conversation with a person in Pennsylvania trying to get information about coverage under the Affordable Care Act. She is optimistic about the coverage she might get, but also wonders why her existing plan, which is far from perfect, is being canceled on Jan. 1. (The president said if you like your plan you will be able to keep it.) She started trying at 8 a.m. on Oct. 1, the minute the website went live, and has tried about 10 times over the week. Mostly she has been shut out entirely. Recently she has been able to at least enter in some of her information, but the site doesn't record the information correctly and doesn't let her change it. She took her questions to the "Live Chat" to see if she could get some answers. This is what she got." John Dickerson in Slate.

Real politics interlude: Apathy, a game

3) The labor market is still really depressed

Labor markets aren't churning. "[F]ocusing on net growth masks what's going on beneath the surface--or rather, what isn't going on. Workers aren't quitting their jobs to pursue better opportunities. Companies aren't filling positions when they do open up. Economists refer to job turnover that doesn't change the overall number of employees at a company as "churn." In normal times, churn dwarfs job creation and destruction, as millions of workers resign or are fired and are replaced. By a wide array of measures, however, rates of churn remain far below normal." Ben Casselman in The Wall Street Journal.

Explainer: Economic data coming your way this week. Amrita Jayakumar in The Washington Post.

Government shutdown is pushing down lending. "The government's Small Business Administration, Federal Housing Administration and the Agriculture Department's Farm Service Agency are essentially out of reach for many people applying for funds. As government funding for these agencies has essentially been halted, these offices have been reduced to near ghost towns." Susanna Kim in ABC News.

The woman behind the app interlude: 'I am Siri.'

4) The words of Justice(s)

Political gridlock puts Supreme Court at center of controversial social issues. "The Supreme Court on Monday resumes its role as the uneasy arbiter of America's intractable social conflicts with a new docket that features battles over affirmative action, campaign finance and abortion, among other divisive issues...The court will again examine the use of race in university admissions and will almost certainly revisit the health-care law, called the Affordable Care Act, this time to rule on its requirement that insurance plans offered by private employers cover contraceptives. The court majority that decided the landmark Citizens United campaign finance case will also have a new opportunity to further loosen the restrictions on funding political campaigns." Robert Barnes in The Washington Post.

The question facing Ruth Bader Ginsburg: Stay or go? "There are no set rules for when a justice leaves her lifetime appointment, although for Ginsburg there is no shortage of advice. The first justice nominated by a Democratic president in 26 years when President Bill Clinton chose her, she has been nudged to leave ever since the election of another Democratic president who could choose her replacement. The court has four consistent liberals, including Ginsburg, and four consistent conservatives, and the justice in the middle, Anthony M. Kennedy, is a Ronald Reagan-nominee who more often than not sides with conservatives. If the court's membership does not change before the 2016 election, the new president would see a Supreme Court with four of its nine members older than 77, including half of the liberal bloc." Robert Barnes in The Washington Post.

Interview: Antonin Scalia. Jennifer Senior in New York Magazine.

Justice Anthony Kennedy: Supreme Court too often left to decide political issues. ""Any society that relies on nine unelected judges to resolve the most serious issues of the day is not a functioning democracy," Kennedy said Thursday at the University of Pennsylvania..."I just don't think that a democracy is responsible if it doesn't have a political, rational, respectful, decent discourse so it can solve these problems before they come to the court."" The Associated Press.

Science interlude: We now know the half-life of DNA.

5) Immigration reform comes to California

Thousands rally in support of an overhaul of immigration laws. "Thousands of supporters of an immigration overhaul held rallies on Saturday at more than 150 sites in 40 states, trying to pressure Congress, despite the partisan turmoil in Washington, to focus on passing a pathway to citizenship for millions of immigrants here illegally. Hoping to display the wide reach of their movement, advocates held larger rallies in immigrant strongholds like Los Angeles, San Diego and Boston, with smaller demonstrations in places where immigrant groups have grown recently, including Atlanta; Rogers, Ark.; and Yakima, Wash. Organizers described the events, and a large rally they have planned for Tuesday on the National Mall in Washington, as their major show of force this year." Julia Preston in The New York Times.

Brown signs California immigration bills, wins activists' kudos in pressing for reform. "On a day when immigrant-rights activists nationwide rallied for action from Washington, Gov. Jerry Brown put California at the vanguard of change, signing sweeping laws aimed at speeding the assimilation of those in the country illegally. Brown (D) signed eight bills Saturday, including one prohibiting local law enforcement officials from detaining immigrants longer than necessary for minor crimes so that federal immigration authorities can take custody of them...On Thursday, he approved a measure allowing immigrants in the country illegally to receive California driver's licenses...Other bills signed Saturday will allow people in the country illegally to be licensed as lawyers, impose restrictions on those who charge a fee to help immigrants gain legal status, and make it a crime for employers to "induce fear" by threatening to report someone's immigration status." Patrick McGreevy in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Government shutdowns are even worse for Washington's museums than you think. Katherine Boyle.

Maybe the government shutdown won't clobber the economy, after all. Neil Irwin.

A design critique of HealthCare.Gov. Joey Marburger and Sarah Sampsel.

The 'non-essential' parts of government that shut down are actually quite essential. Mike Konczal.

A techie walks us through healthcare.gov's two big problems. Sarah Kliff.

Richmond's rules: Why one California town is keeping Wall Street up at night. Lydia DePillis.

The shutdown is a Republican civil war. Ezra Klein.

Et Cetera

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

Wonkbook is produced with help from Michelle Williams.

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