Jan. 21, 2014

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: 3. That's how many times more expensive it is for Medicaid to pay for a nursing home rather than in-home care. The average month in a nursing home cost over $6,000 in 2010.

Wonkbook's Graph of the Day: How the "red states" are holding up Obamacare enrollment.

Wonkbook's Top 5 Stories: (1) America glares at the 1 percent; (2) Obama's speech turns up NSA reform; (3) Fed to reduce bond-buying again; (4) How Obamacare is changing long-term care; and (5) a Chris Christie primer.

1. Top story: Is America turning against the 1 percent?

Two thirds of Americans say they are dissatisfied with the distribution of income and wealth. "This includes three-fourths of Democrats and 54% of Republicans...Republicans, at 45% very or somewhat satisfied, express the highest satisfaction with the current wealth disparity in the U.S. Democrats are much less satisfied, at 24%, with independents closer in satisfaction to Democrats, at 28%. Furthermore, almost half (43%) of Democrats and independents express strong dissatisfaction with the current state of wealth and income distribution...54% of Americans are satisfied, and 45% dissatisfied, with the opportunity for an American "to get ahead by working hard." This measure has remained roughly constant over the past three years, but Americans are much less optimistic about economic opportunity now than before the recession and financial crisis of 2008 unfolded. Prior to that, at least two in three Americans were satisfied, including a high of 77% in 2002." Rebecca Riffkin for Gallup.

IMF warns that inequality is a big threat. "The International Monetary Fund has highlighted the threat posed to the global economy by growing income inequality as the world's business and political leaders prepare to head off to the World Economic Forum in Davos this week. Christine Lagarde, managing director of the IMF, is concerned that the fruits of economic activity in many countries are not being widely shared. The World Economic Forum has identified the gap between the rich and poor as an important theme for this year's gathering." Chris Giles in The Financial Times.

@JohnJHarwood: "Poor man wanna be rich, rich man wanna be king, and a king ain't satisfied 'til he rules everything..."

Oxfam: 85 richest people as wealthy as poorest half of the world. "The world's wealthiest people aren't known for travelling by bus, but if they fancied a change of scene then the richest 85 people on the globe - who between them control as much wealth as the poorest half of the global population put together - could squeeze onto a single double-decker. The extent to which so much global wealth has become corralled by a virtual handful of the so-called 'global elite' is exposed in a new report from Oxfam on Monday. It warned that those richest 85 people across the globe share a combined wealth of ?1tn, as much as the poorest 3.5 billion of the world's population." Graeme Wearden in The Guardian.

Explainer: 4 ways that Martin Luther King wanted to battle income inequality. Ned Resnikoff in MSNBC.

Will tech keep helping labor? Or could it start to hurt? " 2013 paper by Carl Benedikt Frey and Michael Osborne, of the University of Oxford, argued that jobs are at high risk of being automated in 47% of the occupational categories into which work is customarily sorted. That includes accountancy, legal work, technical writing and a lot of other white-collar occupations...The case for a highly disruptive period of economic growth is made by Erik Brynjolfsson and Andrew McAfee, professors at MIT, in "The Second Machine Age", a book to be published later this month. Like the first great era of industrialisation, they argue, it should deliver enormous benefits--but not without a period of disorienting and uncomfortable change." Ryan Avent in The Economist.

Marriage has its limits as a path out of poverty. "First, because changing the decades-long downward trend in marriage rates is not very realistic, and swims hard against a tide that exists for some good reasons. Second, because policy interventions to encourage marriage have been shown to be quite ineffective against that tide. Third, though this is not the intention of many marriage advocates, marriage advocacy can make it harder to deepen policies to support single parents. And fourth, because it fails to recognize some of the important gains made by single mothers that push against poverty." Jared Bernstein in The New York Times.

What happens when the poor receive a stipend? "n 1996, the Eastern Band of Cherokee Indians in North Carolina's Great Smoky Mountains opened a casino, Jane Costello, an epidemiologist at Duke University Medical School, saw an opportunity. The tribe elected to distribute a proportion of the profits equally among its 8,000 members. Professor Costello wondered whether the extra money would change psychiatric outcomes among poor Cherokee families...The frequency of behavioral problems declined by 40 percent, nearly reaching the risk of children who had never been poor." Moises Vasquez-Manoff in The New York Times.

POLK: For the love of money. "In my last year on Wall Street my bonus was $3.6 million -- and I was angry because it wasn't big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind. I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted. Eight years earlier, I'd walked onto the trading floor at Credit Suisse First Boston to begin my summer internship." Sam Polk in The New York Times.

@markknoller: Answering MLK's 'Where do we go from here?' VP Biden calls for immigration reform, raising minimum wage, and an end to income inequality.

KRUGMAN: The undeserving rich. "[T]he myth of the undeserving poor persists, and so does a counterpart myth, that of the deserving rich. The story goes like this: America's affluent are affluent because they made the right lifestyle choices. They got themselves good educations, they got and stayed married, and so on. Basically, affluence is a reward for adhering to the Victorian virtues...[T]he main thing about this myth is that it misidentifies the winners from growing inequality. White-collar professionals, even if married to each other, are only doing O.K. The big winners are a much smaller group...Mainly they're executives of some kind, especially, although not only, in finance. You can argue about whether these people deserve to be paid so well, but one thing is clear: They didn't get where they are simply by being prudent, clean and sober." Paul Krugman in The New York Times.

SUROWIECKI: The cult of overwork. "For decades, junior bankers and Wall Street firms had an unspoken pact: in exchange for reasonably high-paying jobs and a shot at obscene wealth, young analysts agreed to work fifteen hours a day, and forgo anything resembling a normal life...Thirty years ago, the best-paid workers in the U.S. were much less likely to work long days than low-paid workers were. By 2006, the best paid were twice as likely to work long hours as the poorly paid, and the trend seems to be accelerating." James Suroweicki in The New Yorker.

Music recommendations interlude: Bruce Springsteen, "Factory," 1977.

Top opinion

PONNURU: Stop Obamacare's outrageous bailouts. "The Patient Protection and Affordable Care Act has already achieved "preliminary sustainability," an official recently told the National Journal. And what's making the program sustainable? The prospect of a massive taxpayer bailout. The bailout would come from the law's "risk corridor" provisions. If insurers pay out more than 108 percent of the premiums they collect from customers in Obamacare's exchanges, taxpayers are on the hook for about 75 percent of the extra cost. If the insurers make profits that are more than 108 percent of their collections, they have to pay back a similar proportion." Ramesh Ponnuru in Bloomberg.

FRYE: We need to fix our disability court system. "As an administrative law judge responsible for hearing Social Security disability cases, I'm more familiar than most people with the system. But everyone has a right to be outraged by the recent charges. Officials estimate that the fraud cost the federal government $400 million. If true, it is the largest theft in the history of Social Security. According to court papers, the fraudsters claimed to be so ill that they could not leave their homes to work, but many posted photographs on Facebook of themselves on motorcycles and water scooters, fishing and playing sports." D. Randall Frye in The New York Times.

Interview: Mitt Romney at the Sundance premiere of "Mitt." Ashley Parker in The New York Times.

Longread: David Remnick on Barack Obama. The New Yorker.

PETHOKOUKIS: America, not economically free. "Down, down, down she goes. For the first time in the 20-year history of the annual Heritage Foundation-Wall Street Journal ranking of economic freedom, America hasn't a place among the top ten nations. A continuous, nearly decade-long slide leaves the U.S. economy at number twelve, just ahead of Bahrain and right behind Estonia. Blame "large losses in property rights, freedom from corruption, and control of government spending" for the steady erosion of America's free-enterprise system. Blame Obamanomics -- that, of course, is the unsubtle subtext here. Both that analysis and the ranking itself are far too charitable toward the current American economy. They're also too harsh toward the president." James Pethokoukis in National Review Online.

SKIDELSKY: Free trade and costly love. "[T]he more efficient you are at your work, the more time you will have for those other things. The trouble is that the more you start to think of your welfare in terms of money, the more likely you are to regard spending time with your friends or making love as an "opportunity cost" - the loss of money you would have made by working instead - rather than a benefit. The goal of squeezing as much money as possible out of time makes a great deal of sense in poor countries, where inefficient use of time can lead to starvation." Robert Skidelsky in Project Syndicate.

DOUTHAT: At last, conservative reform. "The first is Mike Lee, the junior Senator from Utah, who has pivoted from leading the defund-Obamacare movement to basically becoming a one-stop shop for provocative reform ideas: in the last six months, his office has proposed a new family-friendly tax reform, reached across the aisle to work on criminal justice issues and offered significant new proposals on transportation and higher education reform. The second is Marco Rubio, whose speech two weeks ago on the anniversary of the declaration of the war on poverty called for two major changes to the safety net." Ross Douthat in The New York Times.

LUCE: The rise of a new American federalism. "[T]he abiding lesson of most of US history is that when Washington fails to function, the action moves to the states, cities and municipalities. It is federalism, rather than the separation of powers at the federal level, that keeps the US moving...[I]t is in the cities where America's most significant 21st century trends - from deep inequality to cutting-edge innovation - are most vividly on display. They are also where the most interesting politics is taking place. Since Republicans control no US city of any significant size, the battles are largely intra-Democratic." Edward Luce in The Financial Times.

Over there, I bet that Road Runner actually runs fast interlude: Look how fast it is in South Korea.

2. NSA reform begins in earnest

NSA phone program led to 1,000 terror tips a year for FBI. "The National Security Agency's phone-surveillance program generated more than 1,000 tips a year to the Federal Bureau of Investigation, according to newly declassified documents. The court documents, released late Friday by the Office of the Director of National Intelligence, are frequently repetitive and contain a significant number of redacted sections, but also contain intriguing footnotes suggesting how frequently the NSA's phone program leads to or supplements domestic terrorism probes...The documents don't describe the quality of tips provided by the NSA, or how often the FBI launched domestic criminal investigations because of the NSA's information. They do suggest the agency has been active in forwarding investigative suggestions to the FBI." Devlin Barrett in The Wall Street Journal.

Primary source: Transcript of President Obama's Jan. 17 speech on NSA reforms. The Washington Post.

What Obama said on Friday about the NSA. "President Obama on Friday made a forceful call to narrow the government's access to millions of Americans' phone records as part of an overhaul of surveillance activities that have raised concerns about official overreach. The president said he no longer wants the National Security Agency to maintain a database of such records. But he left the creation of a new system to subordinates and lawmakers, many of whom are divided on the need for reform...Obama directed that from now on, the government must obtain a court order for each phone number it wants to query in its database of records. Analysts will be able to review phone calls that are two steps removed from a number associated with a terrorist organization instead of three. And he ordered a halt to eavesdropping on dozens of foreign leaders and governments that are friends or allies." Ellen Nakashima and Greg Miller in The Washington Post.

Obama confronts challenges of reforming collection of Americans' phone records. "President Obama's intention to end the government's controversial practice of amassing the phone records of millions of Americans faces a tangle of technical, logistical and political problems that defy ready solutions and are largely beyond the president's control. Among the challenges is stiff resistance from phone companies that do not want to be told how long to hold their customers' data if the government does not collect it, especially if that means longer than they do now." Ellen Nakashima and Greg Miller in The Washington Post.

Poll: Speech had little impact on public's view of NSA. "Half say they have heard nothing at all about his proposed changes to the NSA, and another 41% say they heard only a little bit...Today, 40% approve of the government's collection of telephone and internet data as part of anti-terrorism efforts, while 53% disapprove. In July, more Americans approved (50%) than disapproved (44%) of the program. In addition, nearly half (48%) say there are not adequate limits on what telephone and internet data the government can collect; fewer (41%) say there are adequate limits on the government's data collection. About four-in-ten Republicans (39%) and independents (38%) - and about half of Democrats (48%) - think there are adequate limits on the information that the government can collect." Pew Research.

NSA program defenders question Snowden's motives. "The chairman of the House Intelligence Committee on Sunday condemned former National Security Agency contractor Edward Snowden as a "thief" and said he may have had help from Russia. "I believe there's a reason he ended up in the hands, the loving arms, of an FSB agent in Moscow," said Rep. Mike Rogers (R-Mich.), referring to Russian President Vladi-mir Putin, a former head of the Russian security service. "I don't think that's a coincidence." He said that some the things Snowden did were "beyond his technical capabilities" and that it appeared that "he had some help and he stole things that had nothing to do with privacy." Rogers did not elaborate on when he thinks Russian officials and Snowden were first in contact." Hayley Tsukayama in The Washington Post.

Medical interlude: "Musical savant syndrome."

3. Fed about to cut bond-buying again

Taper Two has arrived. "The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks as a lackluster December jobs report failed to diminish the central bank's expectations for solid U.S. economic growth this year, according to interviews with officials and their public comments. A reduction in the program to $65 billion a month from the current $75 billion could be announced at the end of the Jan. 28-29 meeting, which would be the last meeting for outgoing Chairman Ben Bernanke." Jon Hilsenrath in The Wall Street Journal.

...Bernanke proved his doubters wrong. "As Mr. Bernanke completes his service, here's the picture: a financial system restored to health; an economy on the way back and doing better than those of Europe and elsoewhere; one of his top picks, Janet L. Yellen, on deck to succeed him as chief; and his professor and mentor Stanley Fischer stepping into the vice chairman's seat. And never again will anyone describe Ben Bernanke as soft or naive." Albert R. Hunt in The New York Times and Bloomberg.

Gap between U.S. and Chinese economies continues to shrink. "China's economic growth figures released Monday morning may show a slowdown, but they still indicate that China is growing almost four times as fast as the United States in dollar terms, rapidly closing the gap in the size of the two countries' economies. That is happening much faster than might be suggested by the headline figures: China said Monday that its economy grew 7.7 percent last year after adjusting for inflation, while the United States is expected to announce on Jan. 30 that its economy grew about 2 percent last year...Further fueling China's growth is the renminbi's creeping up another 3 percent against the dollar during the last year. Compile the various factors, including that the currency difference was a little smaller earlier in the year, and it works out that China's economy grew 12.4 percent last year in dollar terms. That is nearly four times the estimated 3.4 percent rate in the United States." Keith Bradsher in The New York Times.

Foreign interlude: Is American literature "massively overrated"?

4. How Obamacare is changing long-term care

Obamacare is spurring a shift in the way states do long-term healthcare. "States participating in the $3 billion program receive a higher federal match for all of their spending on home and community care through September 2015, provided they reduce the red tape and confusion that caretakers, elders and those with disabilities typically encounter when they attempt to find alternatives to nursing homes...A major impetus for the change was that Medicaid dollars can support nearly three older people or adults with physical disabilities in their homes for every one person in a nursing home, according to a study by AARP." Christine Vestal in Stateline.

Charts: How the "red states" are holding up Obamacare enrollment. Jonathan Cohn in The New Republic.

Less than one third of those insured on Obamacare exchanges were previously uninsured. "Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans. The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers...Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces. The result is based on a sampling of 4,563 consumers performed between November and January, of whom 389 had enrolled in new insurance." Christopher Weaver and Anna Wilde Mathews in The Wall Street Journal.

Peace of mind is first benefit for many getting Medicaid. "Sharon Mills, a disabled nurse, long depended on other people's kindness to manage her diabetes. She scrounged free samples from doctors' offices, signed up for drug company discounts and asked for money from her parents and friends. Her church often helped, but last month used its charitable funds to help repair other members' furnaces. Ms. Mills, 54, who suffered renal failure last year after having irregular access to medication, said her dependence on others left her feeling helpless and depressed. "I got to the point when I decided I just didn't want to be here anymore," she said. So when a blue slip of paper arrived in the mail this month with a new Medicaid number on it -- part of the expanded coverage offered under the Affordable Care Act -- Ms. Mills said she felt as if she could breathe again for the first time in years. "The heavy thing that was pressing on me is gone," she said." Sabrina Tavernese in The New York Times.

How qualified is your doctor? "The new requirements, called maintenance of certification, are controversial among some physicians. But they reflect growing evidence that doctors, who are now recertified every 10 years, need to be more regularly assessed for competence in a fast-changing medical world. While the 10-year retesting requirement still stands, the American Board of Medical Specialties has begun in recent years asking doctors to demonstrate more frequently that they are current in their medical knowledge. The group oversees 24 separate medical boards covering about 80% of licensed physicians." Laura Landro in The Wall Street Journal.

Animals interlude: Cat goes skateboarding. You go watch.

5. Wonkbook's primer on the latest Christie news

Christie camp held Sandy relief money hostage, mayor alleges. "Two senior members of Gov. Chris Christie's administration warned a New Jersey mayor earlier this year that her town would be starved of hurricane relief money unless she approved a lucrative redevelopment plan favored by the governor, according to the mayor and emails and personal notes she shared with msnbc. The mayor, Dawn Zimmer, hasn't approved the project, but she did request $127 million in hurricane relief for her city of Hoboken - 80% of which was underwater after Sandy hit in October 2012. What she got was $142,000 to defray the cost of a single back-up generator plus an additional $200,000 in recovery grants." Steve Kornacki in MSNBC.

Hoboken, N.J. mayor questioned by prosecutors. "Mayor Dawn Zimmer said that she was questioned for "several hours" Sunday by prosecutors working in the U.S. attorney's Newark office. Ms. Zimmer said she also gave investigators documents relating to her allegation that the administration of New Jersey Gov. Chris Christie held up federal superstorm Sandy funding for her city after she didn't back a Hoboken development supported by Mr. Christie's allies. "I will provide any requested information and testify under oath about the facts of what happened," Ms. Zimmer said in a statement Sunday." Heather Haddon in The Wall Street Journal.

N.J.'s lieutenant governor says the exchange never happened. "New Jersey Lt. Gov. Kim Guadagno is pushing back against allegations that she told Hoboken's mayor that Sandy relief funds would be withheld based on political conditions, calling the claims "illogical" and "offensive." "Mayor [Dawn] Zimmer's version of our conversation in May of 2013 is not only false, but is illogical and does not withstand scrutiny when all of the facts are examined," Guadagno told reporters at an event Monday in New Jersey." Lucy McCalmont in Politico.

The small Sandy grants to Hoboken aren't as suspicious as they look. "[W]hen Hoboken applied for over $100 million under the state-federal Hazard Mitigation Grant Program (HMGP) to protect the city against future flooding, it received just $142,000...That left a $25 million pool for which cities and towns could apply (along with other local governments, including counties and water/sewer authorities) specifically for expenses related to energy resilience. From that pool Hoboken got a $142,000 grant for backup generators. This is a lot less than the $1.3 million Hoboken sought for this purpose, but it's typical of the grants awarded to other municipalities. The largest grant was $735,000 to Newark, the largest city in the state." Josh Barro in Business Insider.

Chris Christie's 1994 ad was too tough (and inaccurate) for Jersey. "In Chris Christie's first successful campaign for public office, he sat down next to his wife and baby, looked into a camera and told voters something that wasn't true. It was 1994, and Christie was a 31-year-old lawyer running for the county board in suburban Morris County, N.J. He was making a television ad, saying to the camera that his opponents were "being investigated by the Morris County prosecutor." Actually, they weren't. But Christie's inaccurate ad ran more than 400 times on cable TV before the June GOP primary. He won." David A. Fahrenthold in The Washington Post.

GOP's advice to Christie: Pick a better team. "Party leaders are urging the governor to let go of a trademark Christie trait: his fierce loyalty to old friends and high school classmates who have risen with him in state government. It is time, they counsel, for him to recruit a more nationally savvy political team that can take him beyond Trenton to Washington. Fueling such concerns, new allegations arose on Saturday that top Christie aides had used Hurricane Sandy recovery money as a political weapon against the Democratic mayor of Hoboken, N.J." Michael Barbaro, Jonathan Martin and Nicholas Confessore in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

How toilet paper explains the world. Lydia DePillis.

Et Cetera

Record demand for EB-5 investor visas. Angus Loten in The Wall Street Journal.

A loophole that allows lawmakers to reel in trips and donations. Eric Lipton in The New York Times.

State funding for colleges rebounds. Douglas Belkin in The Wall Street Journal.

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

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