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Five reasons Republicans lost -- and one reason they won

Ezra Klein's Wonkbook

Oct. 17, 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.

Our not-that-long national nightmare is finally over. Last night, the House and Senate passed, and President Obama signed, a bill ending the shutdown. And for Republicans, this has been an utter disaster -- although there's one bright spot.

1) Republicans got nothing. Typically, the law that passes at the end of these standoffs could never have passed at the beginning. The process exists to get one or both sides comfortable with concessions that, at the beginning, they wouldn't have accepted.

Not this time. The bill, which cleanly funds the government, suspends the debt ceiling, and creates a bicameral budget committee, passed with mostly Democratic votes. It's a bill that could have passed both the House and Senate with these same vote counts on September 30th -- and that would've meant no interruption in government services, no forced vacation for hundreds of thousands of workers, no needless hit to the economy, no tremors in the markets.

But it's not just that Republicans didn't win anything. It's that they lost so much.

2) The GOP's Obamacare boomerang. The shutdown was meant to stop Obamacare. Instead, it provided crucial aid to the struggling law. If not for the drama in Washington, HealthCare.gov's disastrous launch would've been the top news story in the country. Instead, it was knocked off the front pages. Many assumed, reasonably but wrongly, that the flaws were attributable to the GOP's shutdown. And Obamacare actually gained in the polls. Rarely has a strategy failed so completely.

3) The Republican Party is horribly unpopular. Multiple polls found that the Republican Party is less popular than it's been since pollsters began asking the question. Gallup found their favorability at 28 percent. The NBC/Wall Street Journal disagreed: The GOP's favorability was actually 24 percent, they reported.

4) The Republican Party devalued hostage taking. Republicans took the wrong lesson from 2011. They thought they won major policy concessions because they were willing to take the debt ceiling hostage. In fact, they won major policy concessions because they'd won the 2010 election. The hostage taking was perhaps a necessary strategy to effectuate their mandate, but it wasn't sufficient without the electoral win.

By unwisely deploying the same strategy this year, after they lost an election, they proved its weakness -- and they let Democrats establish a principle that they won't negotiate policy under these terms. Going forward, Republicans will be more afraid of this kind of brinksmanship and Democrats will be far less afraid of it.

5) They split their party. The shutdown began with a schism. Republican leaders thought Sen. Ted Cruz's defund-and-shutdown strategy was lunacy. They tried everything they could think of to get out of it. They failed. And so the shutdown began with top Republicans, and perhaps most Republicans, opposed to the strategy. It ended with a wide swath of Republicans furious at their more confrontational brethren for leading them into this disaster. The party is as split as it's been in memory.

But there's one silver lining for Republicans: They held their spending number. Even though Democrats won the 2012 election, Republicans have managed to keep sequestration's spending levels. The CR Democrats agreed to before the shutdown, and the CR they agreed to in order to end the shutdown, both keep spending far below what Democrats think is necessary.

By making this about Obamacare and the legitimacy of hostage taking as a routine political strategy, the GOP lost terribly. But in terms of what fights over bills to fund the government are supposed to be about -- spending -- Republicans didn't give an inch. Sequestration is still there, and it still gives Republicans real leverage in the coming budget negotiations with Democrats.

Wonkbook's Number of the Day: 17 million. That's how many people have been out of work for 12 months or longer across OECD countries. That figure is still rising. It was just 8.6 million at the end of 2007. Sorry to get you down.

Wonkbook's Quote of the Day: "If you look back in time and evaluate the last couple of weeks, it should be titled 'The Time of Great Lost Opportunity,' " said Senator Lindsey Graham of the failed Republican strategy.

Wonkbook's Graphs of the Day: The debt ceiling standoff in one chart. The United States isn't a top-tier creditor, in one map.

Wonkbook's Top 5 Stories: 1) just three months of headroom; 2) Obamacare's numbers; 3) while 17 million wait; 4) post-shutdown wishful thinking; and 5) the Supreme Court on surveillance.

1) Top story: Calm down. We have do to this all over again in February.

Signed, sealed, delivered. "After shutting down the U.S. government for 16 days and driving the nation toward the brink of default, a chastened Congress voted late Wednesday to reopen federal agencies, call hundreds of thousands of civil servants back to work and raise the $16.7 trillion debt limit. An agreement struck by Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) ended a stalemate created last month, when hard-line conservatives pushed GOP leaders to use the threat of shutdown to block a landmark expansion of federally funded health coverage." Lori Montgomery and Rosalind S. Helderman in The Washington Post.

Primary sources: Here's the bill that will end the government shutdown. And here's a transcript of President Obama's remarks on the Senate deal. The Washington Post.

Roll call: The vote went 285-144. The Washington Post.

House and Senate named the budget conferrees: A Senate aide e-mails the list, "From the House: Paul Ryan, Tom Cole, Tom Price, Diane Black, James Clyburn, Chris Van Hollen, and Nita Lowey.

From the Senate (the whole budget committee): Murray, Wyden, Nelson, Stabenow, Sanders, Whitehouse, Warner, Merkley, Coons, Baldwin, Kaine, King, Sessions, Grassley, Enzi, Crapo, Graham, Portman, Toomey, Johnson (WI), Ayotte, and Wicker."

How the shutdown ended. "As with the August 2011 debt-ceiling standoff and December 2012 "fiscal-cliff" debate, any chance that House Republicans had for winning meaningful concessions or playing an active role in the governing process was thrown out the window by the fact that they couldn't unify behind their leadership in the final stages of the negotiation (or any stage of the negotiation, frankly)." Neil Irwin in The Washington Post.

@markknoller: Pres Obama has signed Govt funding bill ending 16 day shutdown. Bill also suspends Debt Limit authorizing new federal borrowing.

...And how the GOP splintered in the vote. "Tonight, red state and Southern representatives voted overwhelmingly against the Senate compromise: 27-91 in the red states, 25-88 among Southern representatives. Republicans from the Northeast and Pacific voted "yes" by 30-16 margin; the blue states voted "yes," 32-17. But compared to the fiscal cliff vote, the GOP might be even more cleanly divided along lines of vulnerability and ideology. Republicans from more competitive districts, with a Cook PVI of R+2 or more Democratic, voted almost unanimously for the Senate compromise." Nate Cohn in The New Republic.

We wouldn't have actually defaulted on October 17. "Oct. 17 is simply the day that the Treasury Department runs out of room to maneuver under the statutory debt limit. It's not necessarily the day that the U.S. government starts missing payments if Congress fails to lift the ceiling. The real crises are likely to occur a little later, some time between Oct. 22 and Nov. 1, though it's hard to pinpoint an exact day. A crisis could come later than that -- or even sooner than expected." Brad Plumer in The Washington Post.

Explainers: The debt ceiling standoff in one chart. The United States isn't a top-tier creditor, in one map. Neil Irwin in The Washington Post.

Next up: the conference committee. "The group, known as a budget conference committee, would be led by Rep. Paul Ryan, the House Budget Committee chairman, and his Democratic counterpart in the Senate, Patty Murray. It would likely include at least a dozen lawmakers and is tasked with reaching an agreement in December, part of Wednesday's tentative deal to extend government funding to Jan. 15 and the nation's borrowing authority until Feb. 7. A central focus for both parties in the committee would be adjusting the across-the-board spending cuts known as the sequester, which began March 1 and are scheduled to reduce spending further in January. Mr. Ryan, of Wisconsin, and Ms. Murray, of Washington, also have suggested they are interested in reaching a broader deal overhauling taxes and, potentially, health-care spending, though those issues have proved divisive in recent years." Damian Paletta in The Wall Street Journal.

The U.S. default risk may be passing, but a downgrade could still lie ahead. "If the U.S. government's credit rating is the backbone of the public financial system, then the negative credit watch issued by Fitch Ratings on Tuesday is akin to a bulging disc. It may never cause a problem. But if it ruptures, the results could be painful. For the next few months, as the government approaches another debt limit and Fitch evaluates how the political system responds, the threat of a downgrade remains -- and with it the risk of a broad rise in borrowing costs, not just for the federal government but also for countless state, city and local agencies whose credit ratings could be at risk as well." Howard Schneider in The Washington Post.

Shutdown deal averts catastrophe but leaves economy in peril. "[W]hile the bipartisan deal ends a period of disruption that has slowed the economy -- the shutdown removed more than $20 billion in direct government spending and related economic activity -- it creates new perils, setting up other economy-shaking deadlines in just a few months...For now, the biggest failure of the agreement, analysts say, is that it keeps the government operating for only a few months, with a new need to fund agencies and raise the debt ceiling coming in the first five weeks of 2014. As a result, economists say, consumers and businesses are likely to hold back on spending and investment during the important holiday season, knowing that a similarly economy-shaking political showdown might be right around the corner." Zachary A. Goldfarb in The Washington Post.

@petersuderman: "There was no argument for the shutdown itself that a person unblindered by political fantasies should be obliged to respect."

Study: Congress's budget battles have cost the economy $700 billion so far. "Here's an eye-catching claim: A new report from Macroeconomic Advisers argues that Congress's budget battles, debt-ceiling stand-offs, and spending cuts have cost the U.S. economy nearly 3 percent of GDP since 2010. That's roughly $700 billion in lost economic activity and more than two million lost jobs-- all thanks to Congress. And that's before we even factor in the losses caused by the recent federal government shutdown." Brad Plumer in The Washington Post.

@Goldfarb: Now that we've reopened the government, how about we just shut down Congress?

Fiscal policy uncertainty chips away at U.S. prestige. "As the world's pre-eminent economic power, the U.S. has been the cornerstone of the global financial system since World War II. Now, observers say that prestige may have been badly dented by Washington's latest display of fiscal dysfunction, limiting the U.S.'s ability to get things done abroad...The debt-ceiling spat, along with a partial closure of the federal government, served as the backdrop as bemused world economic officials gathered in Washington last week for the annual meetings of the International Monetary Fund and the World Bank. Often, U.S. officials use the opportunity to build support for their vision of the world economy." Thomas Catan in The Wall Street Journal.

The Republicans blew it. "For the Republicans who despise President Obama's health care law, the last few weeks should have been a singular moment to turn its problem-plagued rollout into an argument against it. Instead, in a futile campaign to strip the law of federal money, the party focused harsh scrutiny on its own divisions, hurt its national standing and undermined its ability to win concessions from Democrats. Then they surrendered almost unconditionally. "If you look back in time and evaluate the last couple of weeks, it should be titled 'The Time of Great Lost Opportunity,' " said Senator Lindsey Graham." Jeremy W. Peters in The New York Times.

@kjhealy: What should House Republicans try to shut down next? The norm of reciprocity? The Gulf Stream current? Those kids playing tag? Vote now!

Now Boehner and his majority are in disarray. "House Speaker John A. Boehner lost the shutdown showdown in ignominious fashion, winning not a single concession of any value from Democrats and exposing his majority as powerless to advance conservative causes...The outcome left the speaker without any clear plan for governing or for unifying a wickedly fractured GOP caucus that has repeatedly divided when it needed to unite. The only slice of hope any Republican could muster Wednesday was that GOP lawmakers may have finally learned a lesson about banding together rather than undercutting their leaders." Paul Kane in The Washington Post.

Tea Party is bloodied but unbowed. "The bipartisan Senate deal to end the government's fiscal impasse was roundly condemned Wednesday by tea party leaders around the country, who accused Republican lawmakers of capitulating to President Obama and his Democratic allies in Congress...The deal struck Wednesday was a major setback for tea party groups such as FreedomWorks, Heritage Action for America and Tea Party Patriots, which backed a longshot attempt to use fiscal legislation to defund the Affordable Care Act, commonly known as Obamacare." Matea Gold in The Washington Post.

If Ted Cruz didn't exist, Democrats would have to invent him. "A true cynic about American politics would, at this point, be forced to one conclusion: Sen. Ted Cruz is a Democratic sleeper agent. It is tough to appreciate just how much good Ted Cruz has done the Democrats over these last few weeks." Ezra Klein in The Washington Post.

@damianpaletta: Hastert Rule upended on fiscal cliff, Hurricane Sandy, Violence Against Women Act, and now shutdown/Debtlimit.

See you in February. "Few expect the go-for-broke tea party forces to come away chastened -- or for the GOP's establishment, distressed by the party's rock-bottom standing in the polls, to be able to exert greater leverage over them. The White House was also lowering expectations. Officials there say they do not expect Republicans to take a more conciliatory approach on, for instance, immigration reform. And while the GOP has been defeated in its efforts to gut the Affordable Care Act, it is likely to focus its fire on the technical problems that have accompanied the launch of the law." Karen Tumulty in The Washington Post.

WEIGEL: The GOP is already rewriting the history of their own defeat. "Within hours, Gowdy and Issa would join their fellow House Republicans for a short meeting. House Speaker John Boehner would admit defeat. But some Republicans were declaring a victory of sorts--maybe not now, but down the road--for what the media had already judged to be a historic debacle. They had revealed President Obama to be a cynical political operator. They had proved to voters that they did everything they could to stop Obamacare. When the next spending fight comes around, they insisted that enduring this shutdown would strengthen their position." David Weigel in Slate.

DOUTHAT: A teachable moment. "[T]he decision to live with a government shutdown for an extended period of time -- inflicting modest-but-real harm on the economy, needlessly disrupting the lives and paychecks of many thousands of hardworking people, and further tarnishing the Republican Party's already not-exactly-shiny image -- in pursuit of obviously, obviously unattainable goals was not a normal political blunder by a normally-functioning political party. It was an irresponsible, dysfunctional and deeply pointless act, carried out by a party that on the evidence of the last few weeks shouldn't be trusted with the management of a banana stand, let alone the House of Representatives." Ross Douthat in The New York Times.

KLEIN: Democrats should surrender on taxes. "No matter which deal ultimately resolves the U.S. government shutdown, it's almost certain to include a new bicameral budget commission. This will be the eighth major budget commission since 2010. Until now, every single one of them has failed for the same reason: taxes. And if nothing changes, this one will fail too. But something should change: Democrats should admit the obvious. For the time being, they've lost on taxes. And you know what? That's OK. At least, it could be, if they were willing to admit it and smartly negotiate the terms of their surrender." Ezra Klein in Bloomberg View.

Music recommendations interlude: Ben Folds, "Gone."

This is the best thing ever interlude: Reddit has a subsection entirely dedicated to photoshopping out bicycles out from under their riders in photographs.

2) Obamacare's numbers

At least 185,000 people have applied for Obamacare. "The reason the data are so sparse at this point is that it's pretty much up to states and the federal government when they want to release the figures. The federal government has said it does not plan to release data for the 34 states participating in its marketplace until next month. The 16 other states and the District of Columbia are setting their own timetables for data releases. We'll be tracking them here, so stay tuned -- and if we miss any, let us know!" Sarah Kliff in The Washington Post.

Eight questions that will decide whether Obamacare is a success. "Is there a reduction in the total number of uninsured? Is there an increase or stabilization in the cost of premiums on the exchanges and in the private market? Is there an adequate number of plans in the exchange and does the number increase or decrease over time? Are plans exiting or entering the market over time? Does the number of people who pay the penalty for not having insurance increase or decrease over time? Is there a decline in employer coverage? Is there a decline in full time-work and an increase in part-time work? What is the extent of the conflict between federal and state oversight of health insurance and does it increase or decrease over time? Is there evidence of an increase or a decrease in out-of-pocket expenditures on health care?" Ezra Klein in The Washington Post.

Meet CGI Federal, the company behind the botched launch of HealthCare.gov. "CGI Federal is a wholly owned subsidiary of the Canadian firm CGI Group, which was founded in Quebec City in 1976 by a pair or 26-year-olds named Serge Godin and Andre Imbeau. (CGI stands for "Conseillers en Gestion et Informatique" in French, which roughly translates to "Information Systems and Management Consultants"). Growing through scores of acquisitions, and providing outsourced IT services to massive companies such as Bell Canada and Quebec's provincial pension plan, CGI's business model depends on embedding itself deeply within an institution." Lydia DePillis in The Washington Post.

Four things I learned about Obamacare from shopping on HealthCare.gov. "I tried filling out two applications, one that asked the federal government for financial help and a second one that did not. The first application took a lot longer to fill out; the federal government needed a significant amount of information about how much I earn, who is in my family and whether my employer offers coverage. I spent about 30 minutes working on those forms and, now that they're done, my application is labeled "in progress." No word on when it will be deemed complete, and allow the shopping process to begin." Sarah Kliff in The Washington Post.

Does this health exchange have a search button? "[M]ny people who are getting through the log-in process are encountering a different set of problems when they try to determine whether policies sold through the exchanges will provide the doctors, hospitals or drugs they need. Most of the 15 exchanges run by states and the District of Columbia do not have provider directories or search tools on their Web sites -- at least not yet -- so customers cannot easily check which doctors and hospitals are included in a particular plan's network. Most allow customers to search for providers by linking to the insurers' Web sites, but the information is not always accurate or easy to navigate, health care experts say." Abby Goodnough in The New York Times.

And you thought you had seen it all interlude: Germany from above.

3) While 17 million wait

Long-term joblessness still rising in the developed world. "Among developed countries, the proportion of the unemployed who have been without work for 12 months or longer continued to rise in the second quarter to reach the highest rate since the financial crisis began in 2008, according to figures provided Wednesday by the Organization for Economic Cooperation and Development...The OECD's figures show that the share of long-term unemployed in the total number of jobless rose to 35.3% in the second quarter of this year from 34.9% in the first quarter, and 27% in the final quarter of 2007. That is equivalent to a second-quarter total of 17 million, up from 8.6 million in the final three months of 2007." Paul Hannon in The Wall Street Journal.

Fed weighs surcharge on banks' commodity businesses. "Federal Reserve officials are considering imposing a new capital surcharge on Wall Street banks that own oil pipelines, metals warehouses and other lucrative physical-commodities assets, according to people familiar with the matter...The Fed has been considering scaling back the ability of banks to own such assets amid concerns that commodities ownership has expanded beyond what regulators originally envisioned. To avoid a regulatory situation where only some banks can own commodities, the Fed is considering a surcharge that would ensure all banks hold more capital to account for potential risks posed by the assets they own or lease. The Fed could structure such a surcharge in a number of ways, though one possibility would set the charge based on the size and riskiness of affected assets." Michael R. Crittenden and Justin Baer in The Wall Street Journal.

And the shutdown is likely to push off tapering. "If the numbers look good, Fed policy makers at their December meeting might feel justified in scaling back the central bank's bond-buying program. But that would ignore one crucial consideration: With the budget deal funding federal agencies only through Jan. 15, and raising the debt ceiling only through Feb. 7, another battle could be brewing. The Fed will probably want to avoid doing anything to discomfit markets until the risk of another showdown has passed. That pushes the likely timing for starting the tapering process to the Fed's March meeting--the first that Janet Yellen, if she is confirmed as Fed chief, will preside over." Justin Lahart in The Wall Street Journal.

Big banks close to satisfying obligations under mortgage settlement, report says. "On Wednesday, the court-appointed monitor of the settlement said Bank of America, JPMorgan Chase, Wells Fargo and Citigroup were more than halfway done with their requirements to offer borrowers aid in the form of loan forgiveness, short sales, forbearance or refinancing...According to the report, Bank of America surpassed other mortgage servicers by completing 97 percent of its required $7.6 billion in borrower relief. JPMorgan has met 76 percent of its $3.6 billion obligation, Wells Fargo has doled out 55 percent of its $3.4 billion in required aid, and Citigroup has provided 46 percent of the $1.4 billion it pledged." Danielle Douglas in The Washington Post.

Homebuilder confidence drops. "U.S. home builders are feeling less confident about the sector's rebound amid worsening housing affordability and the high-stakes fiscal standoff in Washington. The National Association of Home Builders, an industry trade group, said Wednesday that its housing-market index stood at 55 this month, two points lower than a downwardly revised 57 in September. Levels above 50 indicate expansion for the home-building industry." Jonathan House in The Wall Street Journal.

I'm just going to leave this here interlude: Rick Astley's "Never Gonna Give You Up" in Klingon.

4) After the victory, the wishful thinking

Obama plans to renew immigration, climate change efforts. "President Obama, fresh off a trouncing of congressional Republicans over the government shutdown, plans to renew his push for immigration legislation in the House while also pressing ahead with climate change policies and efforts to fix problems plaguing his signature health-care program...But the new fiscal deadlines, looming just months away, mean that much of Obama's energy in the near term is likely to be consumed by budget talks. Democrats worry that the agreement may set in motion a process that runs out the clock on Obama's ability to secure other policy gains before the 2014 midterm elections." Scott Wilson and Juliet Eilperin in The Washington Post.

Applications for asylum rise. "[T]he sharp rise in people who declare they have a credible fear of harm back home suggests that illegal crossers have found the process to be an effective tactic to remain in America, now that stronger border policing has made it harder to melt in north of the border...Making a credible-fear declaration soon after crossing stops a U.S. agent from putting an immigrant into deportation proceedings and is most often a prerequisite of starting the asylum process." Joel Millman in The Wall Street Journal.

OK, this is absolutely perfect interlude: Who's better at swinging on wrecking balls? Miley Cyrus, or MIT physics professor Walter Lewin.

5) We're barreling toward a Supreme Court clash over surveillance

Door may open for challenge to secret wiretaps. "Five years after Congress authorized a sweeping warrantless surveillance program, the Justice Department is setting up a potential Supreme Court test of whether it is constitutional by notifying a criminal defendant -- for the first time -- that evidence against him derived from the eavesdropping, according to officials. Prosecutors plan to inform the defendant about the monitoring in the next two weeks, a law enforcement official said. The move comes after an internal Justice Department debate in which Solicitor General Donald B. Verrilli Jr. argued that there was no legal basis for a previous practice of not disclosing links to such surveillance, several Obama administration officials familiar with the deliberations said." Charlie Savage in The New York Times.

Justices weigh whether government can freeze assets without hearing on indictment. "The government may ask courts to freeze assets that it says are "traceable" to the defendants' alleged wrongdoing, and most commonly do so in drug or organized crime cases. Even when courts allow defendants to challenge their indictments to free the money for their defense, Justice Elena Kagan noted, judges don't find the indictments so lacking in merit to make a difference...The case is Kaley v. United Staes." Robert Barnes in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

The debt ceiling standoff in one chart. Neil Irwin.

The United States isn't a top-tier creditor, in one map. Neil Irwin.

Oct. 17 is the debt-ceiling deadline. But it's not the day we default. Brad Plumer.

Eight questions that will decide whether Obamacare is a success. Ezra Klein.

At least 185,000 people have applied for Obamacare. Sarah Kliff.

Study: Congress's budget battles have cost the economy $700 billion so far. Brad Plumer.

Four things I learned about Obamacare from shopping on HealthCare.gov. Sarah Kliff.

Meet CGI Federal, the company behind the botched launch of HealthCare.gov. Lydia DePillis.

If Ted Cruz didn't exist, Democrats would have to invent him. Ezra Klein.

The shutdown is ending. Here's how. Neil Irwin.