Jan. 15, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. Send comments, criticism, or ideas to Wonkbook at Washpost dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook's Number of the Day: $6.4 billion. That's how much it would have cost the U.S. government to extend unemployment benefits by three months.

Wonkbook's Graph of the Day: The unemployment rate for working-age people, as it is and as it would be if their labor force participation rate were held constant.

Wonkbook's Top 5 Stories: (1) Congress doesn't extend help to long-term unemployed; (2) two more months for federal high-risk pool; (3) the audacity of indifference; (4) lots of big judicial decisions; and (5) they see you when you're sleeping, they know when you're awake.

1. Top story: End of the line for extended unemployment benefits

Two versions of bills to extend unemployment insurance were just defeated in the Senate. "After days of negotiations, Senator Harry Reid of Nevada, the majority leader, abruptly called a vote to end debate on two Democratic measures that would extend benefits for out-of-work Americans for at least three months, gambling that he could muster enough support from moderate Republicans to move on to final passage for at least one of the proposals. But both votes failed, and the possibility of a bipartisan deal collapsed during procedural arguments, with Democrats and Republicans accusing one another of negotiating in bad faith...The first vote failed, 52 to 48, on a measure proposed by the Democratic leadership that would have extended benefits for 11 months. The extension would have been largely financed by continuing a 2 percent cut to Medicare health providers for an additional year, through 2024. The second vote, on the original bill, which would have extended benefits for three months at a cost of $6.4 billion, failed 55 to 45." Ashley Parker in The New York Times.

Explainer: 7 reasons why Congress's failure to extend unemployment insurance matters. Brad Plumer in The Washington Post.

2.3 million children live with long-term unemployed parents. "Throughout 2013, an average of 2.3 million children -- or about 3.3% of all kids in the U.S. -- lived with a parent who had been seeking work for at least half a year, according to new figures from the Urban Institute, a Washington think tank. That's up from about 754,000 in 2007." Josh Mitchell in The Wall Street Journal.

Here's what support is left for the unemployed. "With last month's expiration of emergency federal jobless benefits, only regular state unemployment insurance (UI) benefits are available to qualifying workers who lose their jobs through no fault of their own. As a result, the maximum number of weeks of benefits fell to 26 in most states (seven states provide fewer weeks and two provide more)." Chad Stone for the Center on Budget and Policy Priorities' "Off the Charts" blog.

@davidfrum: Congressional GOP's refusal to extend unemployment benefits a mistake, a wrong, & a shame.

Reid's unemployment bet. "Faced with Democrats' first big defeat of 2014, Senate Majority Leader Harry Reid is betting that his party's message will trump growing Republican complaints about his leadership...Reid dismisses the idea that Americans are interested in wonky procedural debates, believing instead they will remember this as the week that Republicans blocked the restoration of aid to more than a million long-term unemployed Americans." Burgess Everett in Politico.

Fed's Plosser: Bad jobs data for December won't stop the taper. "Federal Reserve Bank of Philadelphia President Charles Plosser said Tuesday that weak December U.S. jobs data won't stop the central bank from pressing forward with plans to cut the pace of its bond-buying stimulus program. There is a "high bar" to deviating from the current course of cutting the monthly pace, Mr. Plosser told reporters after a speech in which he had welcomed the central bank's move to cut down the scope of its easy-money policies." Michael S. Derby in The Wall Street Journal.

Interview: Larry Summers on why the economy is broken -- and how to fix it. Ezra Klein in The Washington Post.

What Stanley Fischer did at the IMF. "[O]ne item on his resume is a potential cause for concern: his tenure as second-in-command of the International Monetary Fund from 1994 through much of 2001, a period when the IMF was aiding Russia's post-Soviet transition, as well as responding to crises in Asia and Latin America. Even with significant caveats, the record of the IMF during this period was undistinguished. During his confirmation hearings, senators should ask Fischer what role he played in the key decisions and whether he would have done anything differently with the benefit of hindsight and experience. Especially relevant to Fischer's potential role at the Fed is the question of whether it is appropriate to preemptively intervene to minimize the potential impact of financial imbalances -- an issue the IMF faced repeatedly during his tenure." Matthew C. Klein in Bloomberg.

@samsteinhp: eh. the unemployed were having too good a run anyway.

The World Bank's economic growth outlook for 2014. "After years of recession, financial crisis, fiscal wars and a patchwork recovery, there are relatively few dark clouds on the horizon for the global economy. That is the conclusion of the World Bank's latest global growth forecast, released on Tuesday. The bank's economists expect growth over all to increase from 2.4 percent last year to 3.2 percent in 2014, and to maintain that level for the next two years." Annie Lowrey in The New York Times.

Consumers open up their wallets and spend. "Americans kept shopping at a steady pace as the holiday season wrapped up, suggesting the U.S. economy was on firm footing heading into this year. Retail sales gained 0.2% in December and jumped 0.7% excluding auto sales, the Commerce Department said. Though overall sales in prior months were revised modestly lower, they indicated a pickup in demand from consumers during the fourth quarter alongside other signs of a strengthening economy." Jeffrey Sparshott and Paul Ziobro in The Wall Street Journal.

@grossdm: bizarre: stocks of Walmart and Dollar General both up on day that extension of unemployment benefits fails.

Democrats are blocking trade agreements. "Pushing free-trade deals, however, a top Obama administration priority, has exposed differences between the White House and Democrats on the Hill. The White House wants to see Congress pass "fast track" legislation that would make it easier for Mr. Obama to win approval for trade agreements. Some Democrats have balked at such proposals, leery of giving the White House what they call a "blank check" that could potentially reward countries that have poor records on human rights and the environment. Others worry that trade deals have eroded labor standards and reduced wages." Carol E. Lee and Peter Nicholas in The Wall Street Journal.

Big government fines drag down JPMorgan's profits in 4Q. "JPMorgan reported net income of $5.28 billion, or $1.30 a share, for the last three months of 2013, compared with $5.69 billion [down 7 percent] for the same period a year earlier. Revenue for the quarter, which penciled in at $24 billion, fell 1 percent over the prior year...Ending government investigations has cost the bank about $20 billion in the last 12 months." Danielle Douglas in The Washington Post.

@jeffzeleny: Unemployment insurance extension is dead -- at least for now. Sen. Jack Reed: "It is extremely urgent that we act. Today we failed to act."

COHN: Stiffing the unemployed. "Republicans determined to help the poor and the unemployed? That's so last week...The insistence on finding offsetting cuts or revenue is also new. Previously, lawmakers saw these benefits as a form of emergency spending--and reasoned, plausibly, that pure deficit spending during periods of higher unemployment make good economic sense. And while paying for benefits with cuts or revenue in the future is perfectly reasonable, Republican commitment to such fiscal conservatism seems less than genuine." Jonathan Cohn in The New Republic.

Music recommendations interlude: Billy Joel, "Allentown."

Top opinion

KLEIN: The death of Obamacare's death spiral. "The risk of a "death spiral" is over. The Kaiser Family Foundation estimates that if the market's age distribution freezes at its current level -- an extremely unlikely scenario -- "overall costs in individual market plans would be about 2.4% higher than premium revenues." So, in theory, premiums costs might rise by a few percentage points. That's a problem, but it's nothing even in the neighborhood of a death spiral." Ezra Klein in The Washington Post.

PORTER: How to help the childless poor. "To perform the investigation, proposed by the administration of Mayor Michael R. Bloomberg and supported by his successor, Bill de Blasio, New York City contracted with MDRC, a nonprofit social policy research organization, to track 6,000 low-income single adults who do not have direct responsibility over children -- from never-married childless women to divorced fathers who don't have custody of their children but are obligated to pay child support. Half of them will receive a bonus payment every year intended to replicate the main features of the earned-income tax credit. The other half will serve as a control group." Eduardo Porter in The New York Times.

GALSTON: Where the right and the left agree on inequality. "Today, we know that a fair chance means reaching kindergarten ready to read, graduating from high school and pursuing post-secondary education or training while developing the traits of character that enable young people to persevere in the face of inevitable difficulties. A fair chance also means a job market where people are hired and rewarded on the basis of talent and drive, not race, gender or family connections. Many conservatives understand that what Lincoln termed a fair chance--what we now call equality of opportunity--does not come about through the market and civil society alone." William A. Galston in The Wall Street Journal.

CAPEHART: Concentrate on economic insecurity. "[T]he phrase "income inequality" rings of wealth redistribution that allows Republicans and others to dismiss any attempt to deal with the gross inequities as a socialist plot to destroy the United States of America. The phrase also seems to ignore or not account for the cycle of economic insecurity that has ensnared working Americans for decades now." Jonathan Capehart in The Washington Post.

WOLF: Our elites are failing. "[T]he economic, financial, intellectual and political elites mostly misunderstood the consequences of headlong financial liberalisation. Lulled by fantasies of self-stabilising financial markets, they not only permitted but encouraged a huge and, for the financial sector, profitable bet on the expansion of debt. The policy making elite failed to appreciate the incentives at work and, above all, the risks of a systemic breakdown." Martin Wolf in The Financial Times.

LUCE: Libertarians rising. "Whether it is their enthusiasm for legalised marijuana and gay marriage - both spreading across the US at remarkable speed - or their scepticism of government, US millennials no longer follow President Barack Obama's cue. Most of America's youth revile the Tea Party, particularly its south-dominated nativist core. But they are not big-government activists either. If there is a new spirit in America's rising climate of anti-politics, it is libertarian...The Great Depression helped forge a generation of solid Democrats. The same does not appear to be true of the Great Recession." Edward Luce in The Financial Times.

Perks of working at CNN interlude: They let a reporter get stoned doing a story on Colorado marijuana use.

2. Two more months for federal high-risk pool

White House extends high-risk insurance program. "The Obama administration said Tuesday it was extending for an additional two months a federal insurance program for people with pre-existing medical conditions who were expecting to gain coverage through private health plans. The Department of Health and Human Services said it was postponing the closure of the program until March 31. The program had been covering around 85,000 people before health-insurance exchanges opened offering private coverage effective Jan. 1. Originally, the program was supposed to shut down at the end of 2013, but a few weeks before the deadline the administration issued its first postponement, pushing the closing date to Jan. 31." Louise Radnofsky in The Wall Street Journal

QSSI to stay on as HealthCare.gov's general contractor. "The Obama administration has decided to retain Quality Software Services Inc. as its general contractor for HealthCare.gov, even as it has hired a new contractor to do most of the work on the Web site. In a joint statement Tuesday, Optum/QSSI and the Centers for Medicare and Medicaid Services said they would keep working together to ensure the online federal health insurance marketplace works well for consumers. On Saturday, CMS signed a contract with the global consulting firm Accenture to serve as the site's primary contractor in the coming year. QSSI will receive $43 million for the contract, according to an administration official who asked not be identified in order to discuss the financial agreement, and is expected to run through October 31." Juliet Eilperin in The Washington Post.

New York looks to be doing well in enrollment, both in raw numbers and in the mix. "Nearly 300,000 people have enrolled in the state exchange since it opened on Oct. 1st, putting the state ahead of its own projections. About one third of those who have signed up are younger than 35 years old, the so called "young invincibles" - a percentage slightly below what many experts believe is the proper mix needed for a healthy risk pool...She also said that 16 percent of enrollees are between the ages of 35 and 44." Laura Nahmias and Dan Goldberg in Capital New York.

Longform interlude: The wilderness women.

3. Congress is back to appropriating

$1.1 trillion spending plan poised to pass with little debate or concern. "Congress is on the verge of adopting a federal budget this week without the threat of a government shutdown or any other form of economic or political crisis, a development so unusual that the institution suddenly does not resemble its most recent partisan self...The first votes are expected Wednesday on the $1.1 trillion spending plan, less than 48 hours after negotiators introduced the 1,582-page spending agreement to fund government operations for the rest of the fiscal year. The House is scheduled to vote on the measure Wednesday and the Senate could begin debating it Wednesday evening. After months of negotiations, Democrats and Republicans seemed eager Tuesday to quickly approve the plan -- even if they don't have enough time to read it." Ed O'Keefe in The Washington Post.

Explainer: Here's a breakdown of what's in Congress' $1.012 trillion spending bill. Brad Plumer in The Washington Post.

Democrats concede to curb funds for Wall Street regulators in spending bill. "Republican negotiators have reined in funding for Wall Street regulators as part of agreeing a $1.1tn federal budget, but dropped demands for further reductions in federal food stamp programmes that would have hit America's poorest families...Hal Rogers, the Republican chairman of the House appropriations committee, singled out the budget for the Securities and Exchange Commission in a press release, which received $324m less than it requested and $25m taken from reserves he called "a slush fund"." Dan Roberts in The Guardian.

House passes short-term funding extension. "The House swiftly passed a short-term extension of current government funding levels to give lawmakers a few more days to work through the omnibus spending package unveiled Monday night. The measure extends operations through Saturday. It passed unanimously by voice vote after about five minutes of debate early Tuesday afternoon. The Senate also is expected to approve the short extension, possibly later today. As for the new spending bill, the House is expected to approve it as early as Wednesday, with the Senate taking it up before funding expires Saturday." Ed O'Keefe in The Washington Post.

Inspiring interlude: How do you define yourself.

4. Judges let loose on the law

Judge rejects Oklahoma's ban on same-sex marriage. "In a decision that hands another victory to proponents of gay marriage, U.S. District Judge Terence C. Kern in Tulsa ruled that a provision of the Oklahoma constitution that restricts marriage to opposite-sex couples violates the equal-protection clause of the U.S. Constitution's 14th Amendment. "Equal protection is at the very heart of our legal system and central to our consent to be governed," wrote Judge Kern in a 68-page decision. The "majority view in Oklahoma must give way to individual constitutional rights," he added...The judge said, however, that same-sex marriage in Oklahoma will not start immediately and that the effect of the ruling will be stayed pending an appeal of his decision to a higher court." Ashby Jones in The Wall Street Journal.

Judge reinstates federal voting-rights oversight for a city in Alabama. "A federal judge in Alabama on Monday reinstated federal oversight over the voting practices of a city there, in what election law specialists said was the first such move since the Supreme Court struck down part of the Voting Rights Act in June. Judge Callie V. S. Granade, of Federal District Court in Mobile, used a mechanism in the law that the Supreme Court had left untouched, Section 3, which allows jurisdictions that have intentionally discriminated against minority voters to be "bailed in" to the oversight requirements...Evergreen, an enclave of 3,900 people between Mobile and Montgomery, has a troubled history and has in recent years been found to have improperly excluded minority voters from its rolls and redrawn its district lines to concentrate black voters, who are in the majority, into just two of the five districts, limiting black voting power." Adam Liptak in The New York Times.

Federal appeals court strikes down net neutrality rules. "A federal appeals court has struck down the Federal Communications Commission's net neutrality rules, which prohibited Internet providers from blocking or prioritizing Web traffic. The decision on Tuesday is the latest in a lengthy legal battle over whether the FCC can regulate the Internet. In an opinion written by Judge David Tatel, the U.S. Court of Appeals for the District of Columbia found that the network neutrality rules contradicted a previous FCC decision that put broadband companies beyond its regulatory reach." Brian Fung in The Washington Post.

Supreme Court extends protections for multinational companies. "The Supreme Court on Tuesday extended protection for foreign companies from lawsuits in the United States over conduct that took place in other countries. The justices threw out a case from California that sought damages from Germany-based Daimler AG for its alleged complicity in atrocities committed in Argentina's "Dirty War" against leftists from 1976 to 1983...Justice Ruth Bader Ginsburg, writing for the court, said those connections were too tenuous to mean the company could be sued in California over allegations that actions by employees in Argentina aided state security forces in killings, kidnappings and torture." Robert Barnes in The Washington Post.

Deep bro interlude: Is the universe made of math?

5. They see you when you're sleeping, they know when you're awake

NSA has designed a radio-wave pathway into your computer. "The National Security Agency has implanted software in nearly 100,000 computers around the world that allows the United States to conduct surveillance on those machines and can also create a digital highway for launching cyberattacks. While most of the software is inserted by gaining access to computer networks, the N.S.A. has increasingly made use of a secret technology that enables it to enter and alter data in computers even if they are not connected to the Internet, according to N.S.A. documents, computer experts and American officials. The technology, which has been used by the agency since at least 2008, relies on a covert channel of radio waves that can be transmitted from tiny circuit boards and USB cards inserted surreptitiously into the computers" David E. Sanger and Thom Shanker in The New York Times.

Border-patrol drones being borrowed by other agencies more often than previously known. "Federal, state and local law enforcement agencies are increasingly borrowing border-patrol drones for domestic surveillance operations, newly released records show, a harbinger of what is expected to become the commonplace use of unmanned aircraft by police. Customs and Border Protection, which has the largest U.S. drone fleet of its kind outside the Defense Department, flew nearly 700 such surveillance missions on behalf of other agencies from 2010 to 2012, according to flight logs released recently in response to a Freedom of Information Act lawsuit filed by the Electronic Frontier Foundation, a civil-liberties group." Craig Whitlock and Craig Timberg in The Washington Post.

Lawmakers debate NSA reform in Senate hearing. "Lawmakers split about whether to overhaul the National Security Agency's surveillance practices aggressively probed a presidential review panel that has called for an array of changes. The divide Tuesday on Capitol Hill--over just how far changes should go--raises the stakes for President Barack Obama as he prepares a Friday morning speech." Siobhan Gorman in The Wall Street Journal.

Judges warn against some NSA reform proposals. "Federal court judges cautioned against overhauling the current judicial oversight structures for National Security Agency surveillance activities in a letter released Tuesday, citing the potential for unintended consequences that could strain the courts. In a letter to lawmakers, Judge John D. Bates, who has served on the secret Foreign Intelligence Surveillance Court and wrote key opinions on NSA mass spying programs, took the unusual step of wading into a controversial political battle. The letter was released Tuesday by Senate intelligence committee chairman Sen. Dianne Feinstein (D., Calif.)." Siobhan Gorman in The Wall Street Journal.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

7 reasons why Congress's failure to extend unemployment insurance matters. Brad Plumer.

The death of Obamacare's death spiral. Ezra Klein.

Larry Summers on why the economy is broken -- and how to fix it. Ezra Klein.

Here's a breakdown of what's in Congress' $1.012 trillion spending bill. Brad Plumer.

Et Cetera

Debate: Should drug enforcement be left to the states? The New York Times.

Obama promises to use a 'pen and a phone' to push his agenda. Juliet Eilperin in The Washington Post.

Probes into West Virginia chemical spill mount. Jennifer Levitz in The Wall Street Journal.

Obama working to mobilize outside coalition of groups to promote White House agenda. Juliet Eilperin in The Washington Post.

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