May 1, 2014

Welcome to Wonkbook, Wonkblog's morning policy news primer by Puneet Kollipara. Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here.

Wonkbook's Number of the Day: 0.1 percent. That's the annualized rate at which the economy grew in the first quarter of 2014.

Wonkbook's Chart of the Day: Amid the controversy over the botched Oklahoma execution, these charts show the evolution of the death penalty's and public opinion on it.

Wonkbook's Top 5 Stories: (1) Don't freak out about the slow growth; (2) how one botched execution is sparking one huge debate; (3) the Obamacare spending hike; (4) the minimum-wage battle won't go away yet; and (5) neither is Keystone XL.

1. Top story: Why you shouldn't freak out about the economy's deeper-than-expected freeze

Economy grew just 0.1 pct. in 1st quarter. "The U.S. economy hit the brakes again despite hopes that 2014 would be the breakout year for the recovery....That represents the slowest pace of growth since the nation was hanging off the 'fiscal cliff' at the end of 2012. With Washington's budget battles resolved for now and no major federal spending cuts on deck, economists believed that would clear the way for the recovery to kick into second gear. Many remain optimistic that growth will speed up....There are plenty of scapegoats for the disappointing data, chief among them this year's unusually harsh winter." Ylan Q. Mui in The Washington Post.

Primary source: The full GDP report.

Why the tiny GDP growth doesn't mean the economy has flatlined. "Here's the good news: It's likely that activity shut in by all the sleet and snow hasn't been destroyed, just delayed. While the handoff will certainly be weaker than it would have been had weather not been a factor--and the economy has clearly lost much of the momentum it had at the end of 2013--some economists are boosting their estimates for second quarter growth in anticipation that people will spend money this spring that they didn't spend over the winter." Matthew Philips in Bloomberg Businessweek.

Explainers:

5 highlights from the 1st quarter GDP report. Ben Leubsdorf in The Wall Street Journal.

Economists' reactions. Ben Leubsdorf in The Wall Street Journal.

Key components of GDP that were affected: "Aside from consumer spending on services, the rest of the economy sputtered. Business investment dropped at a 2.8 percent annualized rate, the weakest result since the fourth quarter of 2009. Part of that reflected a smaller gain in inventories that cut 0.6 percentage point from growth. Exports declined 7.6 percent, exceeding the decrease in imports and pushing the trade gap up to $414.4 billion from $382.8 billion in the fourth quarter. Trade subtracted another 0.8 percentage point from GDP." Jeanna Smialek in Bloomberg.

The Fed isn't freaking out. They're sticking to their plan. "The Federal Reserve announced Wednesday it will scale back its support for the U.S. economy by another $10 billion, reaffirming its confidence in the recovery despite stalled growth over the winter. In an official statement, the central bank said that economic activity 'slowed sharply' earlier in the year but noted it has 'picked up recently.'...The disappointing reading on economic growth earlier in the day underscored how bumpy the road back to normal can be. One of the main challenges facing the Fed is calibrating its response to sometimes conflicting or misleading data." Ylan Q. Mui in The Washington Post.

Primary source: The full text of the Federal Reserve's post-April meeting statement. The Wall Street Journal.

Explainer: The Fed's reaction was entirely expected. Ben Leubsdorf in The Wall Street Journal.

Analysis: Is the Fed failing to meet its duties? Binyamin Appelbaum in The New York Times.

Markets didn't freak out either. "The Dow closed at its first record high of 2014 on Wednesday after the Federal Reserve gave an upbeat view of the economy's prospects as it announced another cut to its massive bond-buying program. Investors brushed aside data showing weak first-quarter economic growth, which was tied to the severe winter that hampered exports and hit investment spending." Caroline Valetkevitch in Reuters.

Guess what's preventing growth from being worse: Obamacare. "A surge in health-care spending that helped keep the U.S. economy from shrinking in early 2014 is likely to continue fueling growth in coming months as more Americans gain coverage for medical services....The president's signature health-care law should provide another boost to growth in the second quarter as more people seek medical care. The GDP figures count what consumers, insurance companies and government programs such as Medicaid spend on services including doctor visits and surgery." Jeanna Smialek in Bloomberg.

What's with all the economic false-starts? "The weather does a good job of explaining why businesses held back on investment during the beginning of the year, but it doesn't explain stubborn weakness in housing or why companies aren't exporting more....The spring and summer should be revealing -- and are enormously important for the debate in Washington and the mid-term election campaign. Economic growth is an important factor in many models predicting the outcome of mid-term elections. If it continues to perform poorly, endangered Democrats could have even more reason to worry." Zachary A. Goldfarb in The Washington Post.

Poll: Americans are still cutting Obama some slack. "Nearly half of those surveyed, 47%, said Obama had inherited the situation, compared with 39% who blamed his policies. An additional 12% volunteered 'some of both.'... More than five years into the president's tenure in office, the share saying that he has inherited the nation's economic woes has declined significantly...But the continued willingness of a majority of Americans to say that Obama's predecessors at least share blame for the poor economy almost certainly has helped temper how the country views his economic record." David Lauter in the Los Angeles Times.

Relax, everyone. China's economy is not about to outpace ours. "Those headlines come from a new World Bank report that looks at the purchasing power parities (PPP) of world economies. It's a way of standardizing GDPs across different currencies and economies by 'the number of units of a country's currency required to buy the same amounts of goods and services in the domestic market as U.S. dollar would buy in the United States.'...On that measure, China is looking pretty good....But there's a reason that standard measures of GDP don't use the PPP conversion." Christopher Ingraham in The Washington Post.

Other economic reads:

Progress on TPP deal with U.S. but a gap remains. Jonathan Spicer in Reuters.

Stress test forecasts $190B loss for Fannie, Freddie in severe economic downturn. Nick Timiraos in The Wall Street Journal.

VINIK: We've been worrying about the wrong deficit. "The administration succeeded in narrowing the deficit slightly in 2013 thanks to increased domestic energy production, but the nearly $500 billion gap remains. This is a massive drag on growth....But reducing the gap isn't so simple. Protectionism, which has fallen out of favor among economists, is not the answer. The U.S widely benefits from the global economy and has had a deficit for decades now, experiencing periods of strong growth....But other countries take advantage of the system by manipulating their currencies....This boosts their exports, but it also makes American goods and services comparatively more expensive, reducing U.S. exports." Danny Vinik in The New Republic.

McARDLE: Recovery? What recovery? "There's really not much good to say about this morning's first-quarter gross domestic product numbers. An annualized growth rate of 0.1 percent is not so much a growth rate as a rounding error. There are, of course, the standard caveats: These are preliminary numbers, which are notoriously volatile; they may well get revised upward in the coming months. And the lousy winter weather probably depressed retail sales, housing starts and other things that generally contribute to economic growth. But these caveats aren't really all that cheering." Megan McArdle in Bloomberg View.

Top opinion

KRISTOF: Job-killing or life-saving? "Sometimes regulations do curb profits and undermine job creation. But, on the whole, we need regulations to guard against human nature. The truth is that bad things usually aren't done by evil people, but rather by essentially decent people who go to work and get so wrapped up in the 'business case' that they sometimes lose their moral compass. So the next time you hear people denouncing 'job-killing regulations,' remember that if there had been tighter regulations, smokers might not be dying every six seconds, and Amber Rose might still be alive. Wouldn't that be worth 57 cents?" Nicholas Kristof in The New York Times.

CHAIT: The latest anti-Obamacare talking point, debunked. "But today's GDP report shows that health-care costs spiked by almost 10 percent....Where's your messiah now, Obamacare? Sorry, but this is just confused. There was always going to be a spike in aggregate health-care spending in 2014, as millions of previously uninsured people suddenly gained access to medical care for the first time....If you think I'm simply making up some after-the-fact excuse, advocates of health-care reform were pointing this out at the time the bill was being debated." Jonathan Chait in New York Magazine.

DONNAN: Obama's fast-track hopes on trade remain stuck in the slow lane. "When US President Barack Obama set off for a long-delayed tour of Asia last week, he had one overwhelming economic priority. If nothing else, he needed to notch up progress and restore faith, both in Asia and at home, in the Trans-Pacific Partnership, the mooted 12-country Pacific Rim pact....But Mr Obama returned home this week with anything but a clear win. That ought to be of concern to anyone in business hoping for a new round of global trade liberalisation, or anyone from Geneva to Brussels to Beijing engaged in trade negotiations with Washington." Shawn Donnan in The Financial Times.

McARDLE: A single-payer plan wouldn't make care cheap. "The financing is impossible, in part because the politics is impossible. And the politics is impossible in part because the financial hit would be too big. Single-payer would have to be paid for at the extremely high prices that Americans pay, not the lower European prices that we'd rather have. And when you look at the taxes needed to finance a government takeover, you quickly realize that most people just aren't willing to pay the price." Megan McArdle in Bloomberg View.

DOURADO: How net neutrality actually hurts the poor. "You may think that walled-garden access to Facebook or Google is inferior to neutral Internet access--and you'd be right. But if the neutralistas got their way, people in developing countries wouldn't have better Internet access; many of them would have nothing....As if it weren't enough to connect the world's poorest for the first time, non-neutrality can also help to fund necessary network buildouts on an ongoing basis." Eli Dourado in The Umlaut.

Awww interlude: Watch this little girl's adorable reaction to hearing that her mom's having a baby.

2. The botched execution brought back the death penalty debate. Will it change anything?

Might states take a fresh look at lethal injection? "The impact of Oklahoma's botched execution of inmate Clayton Lockett on popular support for lethal injection or the death penalty overall is unclear. Many botched injections have occurred both before and after the 2007 AP poll, and while support for the death penalty has declined noticeably in recent years, it is still favored by a majority of Americans. But with two problematic executions in the first four months of 2014, states may take a fresh look at whether to continue the practice amid logistical challenges. If discontinued, Americans don't have much appetite for anything else." Scott Clement in The Washington Post.

Charts:

How the states choose to execute their inmates. Niraj Chokshi in The Washington Post.

Americans gradually falling out of love with capital punishment. The Economist.

Experts say botched execution is unlikely to bring big death-penalty changes. "The botched execution in Oklahoma that caused a prisoner to die in apparent agony triggered a review by the state's governor Wednesday but is unlikely to lead to major changes in the death penalty nationwide, experts on capital punishment said....People on both sides of the debate over capital punishment said the case would trigger a flurry of litigation over lethal injection, the primary method of execution in the United States....But while courts might order changes in how injections are administered and put safeguards in place, the procedure itself is unlikely to be overturned." Jerry Markon and Mark Berman in The Washington Post.

But the botched execution is mobilizing death penalty supporters. Martin Kaste in NPR.

At issue in the controversy: Difficulty in procuring necessary drugs. "The mishandling reflects the extraordinary and surreptitious lengths a handful of active death-penalty states are now willing to go to in order to continue their executions, capital-punishment opponents say, and represents just the latest episode in a string of disturbing events on Oklahoma's death row in recent months. Moreover, Oklahoma's ongoing morass is a symptom of a national death-penalty system in crisis, a system that is finding it increasingly difficult to procure the drugs necessary to carry out death sentences amid boycotts from European manufacturers and reticence from licensed physicians." Dustin Volz in National Journal.

The botched execution is prompting a legal assault against U.S. drug secrecy. "Lawyers representing the next death row prisoners to face scheduled executions in the US are calling for a moratorium on all judicial killings until the chaos surrounding the use of secretly guarded medical drugs in lethal injections can be resolved....Lawyers in several other states were gearing up to lodge a slew of new litigation designed to pressure the courts to intervene in the crisis. " Ed Pilkington in The Guardian.

Okla. governor wants inquiry into botched execution. "Oklahoma Gov. Mary Fallin has ordered an 'independent review' of the state's execution procedures and halted any further executions until the review is complete." Eyder Peralta in NPR.

There's still no evidence that executions deter criminals. "The question of whether executions discourage criminals from violent acts is not up to the conscience to decide. Despite extensive research on the question, criminologists have been unable to assemble a strong case that capital punishment deters crime." Max Ehrenfreund in The Washington Post.

Other legal reads:

Long explainer: The meteoric, costly and unprecedented rise of incarceration in America. Emily Badger in The Washington Post.

In the U.S., punishment comes before the crime. Eduardo Porter in The New York Times.

Celebrity interlude: Jimmy Fallon and Cameron Diaz photobomb tourists.

3. The long-awaited Obamacare health spending spike is here

Health spending spikes as patients start using new plans. "Higher consumer spending on health services, increased prescriptions for costly medications and more elective surgeries suggests Americans are using the insurance they gained under Obamacare. Consumer purchases of health services surged 9.9 percent at an annualized rate in the first quarter from the prior three months, the highest rate of growth since 1980, according to the Bureau of Economic Analysis....The growth is likely the result of increased utilization under the Patient Protection and Affordable Care Act because prices mostly have been little changed." Alex Wayne in Bloomberg.

@JeffYoung: Alternate headline: Predictable Thing Happens, People Predictably Try To Freak You Out http://huff.to/1fR1DFP pic.twitter.com/fmYK1VZJwL

Didn't the president pin slowdown in spending growth on Obamacare? "For several years, Obama and his allies had been crediting a slowdown in the rate of growth for health care to payment reforms imposed by the law. But other analysts predicted that spending would pick up as the economy improved and people started loosening the family purse strings." Philip Klein in the Washington Examiner.

But CBO, analysts had predicted a short-lived spike in spending as people gained coverage. "I can assure you it's not because I have supernatural fortune-telling abilities. It's because I can read government reports, like those from the Congressional Budget Office and the official Medicare actuary. They, along with other respected forecasters, predicted that health care spending would temporarily surge as so many new people got health insurance....The big unknown remains what happens next." Jonathan Cohn in The New Republic.

Spending up, but late influx of young people could soften at least one company's premium hikes. "Officials with Wellpoint, the biggest insurer in the new marketplaces, delivered an upbeat message about ObamaCare enrollment on a conference call with analysts Wednesday. Chief Financial Officer Wayne DeVeydt said the company met or exceeded expectations when it came to how many people signed up on the exchanges and their mix of ages." Elise Viebeck in The Hill.

Explainer: 3 reasons why Obamacare's outlook is rosy for insurers. Clara Ritger in National Journal.

Republicans say two-thirds paid their premiums through April 15.> "The GOP-led House Energy and Commerce Committee asked for payment data from 160 health plans selling policies in the Affordable Care Act's federal insurance exchange. The committee's leaders said that responses showed that across the 36 states served by the federal exchange, 67% of people who had finished the sign-up process had made the premium payment to insurers and had been enrolled in coverage as of April 15." Louise Radnofsky and Anna Wilde Mathews in The Wall Street Journal.

There's one key limitation to the report, though. " The committee staff got their information directly from insurers, but it's only valid up through April 15. As experts and industry officials quickly pointed out, that's too early to get an accurate sense of the payup rate." Jonathan Cohn in The New Republic.

@larry_levitt: Almost 1/2 of marketplace enrollees signed up after March 1. Many last minute enrollees may have just received their invoices by April 15.

HHS has an enrollment data pickle. "If they attack the Republican report as inaccurate, it will be an implicit acknowledgement that they have numbers that they aren't releasing. So their choice is either to stay silent and let the GOP-obtained data fill the news vacuum, or release detailed enrollment data. It's way past time for them to come clean." Philip Klein in the Washington Examiner.

Other health care reads:

Medicare's rules meant to help end hospices being paid for drugs, not for terminal illnesses. Susan Jaffe in The Washington Post and Kaiser Health News.

Explainer: Who really pays for health care? The answer may surprise you. Jay Hancock in NPR.

Dear Republicans and Democrats: Burn your Obamacare playbook. Sam Baker in National Journal.

The ACA change that's unpopular in blue states. Jason Millman in The Washington Post.

New Medicare coverage of long-term care off to rocky start. Mark Miller in Reuters.

Animals interlude: Watch as this hamster eats tiny burritos.

4. The minimum-wage debate isn't going away anytime soon

GOP blocks federal minimum wage hike bill in Senate. "A top election-year proposal from Democrats -- a bid to raise the federal minimum wage -- was rejected by Republicans in the Senate, who blocked legislation Wednesday to boost the rate to $10.10 an hour. President Obama has turned the plight of the nation's low-wage workers into a battle cry for Democrats as they try to appeal to voters while the economy continues its slow recovery. Several states have advanced their own wage hikes amid congressional inaction. Already in campaign mode, Obama revived one of his favorite stump lines...as he told supporters to pressure Republicans on the issue." Lisa Mascaro in the Los Angeles Times.

Do Democrats win by losing? "Why, a reasonable person might ask, are Democrats continually pushing bills that seem dead on arrival? Because passing the bills isn't the point. That's not to say that Senate Democrats don't truly believe that the minimum wage should be higher....Of course they do. But with a narrow majority in the Senate and a GOP-controlled House, the Democrats know that these measures stand next to no chance of being passed into law this year. Instead, they hope to force Republicans -- during a crucial midterm election year -- to vote against a series of bills that are otherwise popular with the electorate." Wesley Lowery in The Washington Post.

Case in point: Democrats say they'll try again. "U.S. Senate Democrats are pledging to hold more votes before November's election on raising the federal minimum wage, conceding they probably won't have enough support to move the measure forward today....Raising the federal wage is a central element of congressional Democrats' election-year focus on income inequality, an issue they say resonates with voters and will help them keep control of the chamber. Republicans must win a net six seats in November to gain a majority in the Senate." Kathleen Hunter in Bloomberg.

The minimum-wage debate will live on in campaigns and in the states. "Impatient with a federal wage that hasn't budged in nearly five years, some states are acting on their own. Lawmakers in Hawaii voted yesterday to gradually raise that state's minimum to $10.10 an hour, following the lead of Connecticut and Maryland. Similar measures are pending in Massachusetts, Vermont, and Illinois....And with the president's own approval rating sagging, Democrats are eager to latch on to an idea that polls suggest voters strongly support." Scott Horsley in NPR.

Pawlenty says GOP should back a minimum-wage increase. "Former Minnesota governor Tim Pawlenty, who was once a leading candidate for the 2012 GOP presidential nomination, on Wednesday became the rare Republican to call for his party to increase the minimum wage....Pawlenty said Republicans should support some kind of minimum wage increase if they want to appeal to working-class voters." Aaron Blake in The Washington Post.

Head-scratcher of the day: Battle pits small businesses against...small businesses? "Small business owners are vehemently opposed to raising the minimum wage. Meanwhile, in other news, small business owners overwhelmingly favor raising the minimum wage. Wait. What? Depending on who you ask and which polls you trust, you can come away with a very different perspective on how an increase in the federal minimum wage would affect small firms." J.D. Harrison in The Washington Post.

Chart: Economists back a minimum wage increase, but aren't sure about employment impact. Evan Soltas in Vox.

Other wage-related reads:

OECD calls for tax changes to stem income inequality. Josh Boak in the Associated Press.

House budget committee to look at the War on Poverty. Annie Lowrey in The New York Times.

China's income gap has widened beyond that of the U.S. Dexter Roberts in Bloomberg Businessweek.

Awkward interlude: Man asks out anchor during live wildfire coverage.

5. Another debate that won't go away -- Keystone XL

Democrats face tough calculation on Keystone vote. "Senate Majority Leader Harry Reid (D., Nev.) has indicated in the last couple of days that he's open to a vote. But in agreeing to one, he's in the difficult position of having to decide whether to make it a binding measure that would somehow force the Obama administration's hand, or just a resolution of support for the pipeline. The former would, in turn, put additional pressure on the Obama administration -- already caught between environmentalists who oppose the pipeline and some labor groups who back the project because of the jobs it would create. The latter wouldn't satisfy people like Landrieu." Siobhan Hughes and Amy Harder in The Wall Street Journal.

This may not be the Keystone XL vote the GOP is looking for. "Republicans may get their long-awaited vote on the Keystone XL pipeline as early as next week as part of the debate over an energy-efficiency bill. But will it be the vote they want?...A nonbinding Sense of the Senate solution -- which already gathered 62 votes on last year's budget -- does not seem acceptable to Republicans." Jason Plautz in National Journal.

Here's how one Republican's amendment could threaten a vote. Burgess Everett in Politico.

Keystone XL's future hinges on 19th-century railroad reforms. "The future of the Keystone XL oil pipeline may turn on a century-old measure to curb the influence of railroad barons. If Nebraska's Supreme Court decides Keystone has the same legal status as a rail line, it could trigger a review by the state's Public Service Commission. That would push a decision on a project first proposed in 2008 into the second half of 2015 at the earliest, and may force pipeline builder TransCanada Corp. (TRP) to alter the route for a second time." Jim Snyder in Bloomberg.

Video: The Keystone XL fight explained in under 2 minutes. Brad Plumer in Vox.

Other energy/environmental reads:

Putin says sanctions threaten U.S., EU energy deals. Olga Tanas, Jonathan Stearns and Terry Atlas in Bloomberg.

Doggone it interlude: Dog steals a girl's glove at a softball game.

Wonkblog roundup

The U.S. still spends way more on teen pregnancy than family planning. Lydia DePillis.

The Obamacare change that's unpopular in blue states. Jason Millman.

There's still no evidence that executions deter criminals. Max Ehrenfreund.

The meteoric, costly and unprecedented rise of incarceration in America. Emily Badger.

Fed to scale back bond purchases by another $10 billion. Ylan Q. Mui.

Everybody chill out: China's economy is still only half the size of ours. Christopher Ingraham.

Major Obamacare insurer backs away from double-digit rate hike prediction. Jason Millman.

More reasons why the U.S. is the best place to be rich. Christopher Ingraham.

U.S. economy stalls dramatically in first quarter. Ylan Q. Mui.

Why it's so hard to study racial profiling by police. Emily Badger.

Et Cetera

Washington's next cliff: The highway funding cliff. Jake Sherman and Adam Snider in Politico.

The FCC says it isn't afraid to use the nuclear option on net neutrality. Brian Fung in The Washington Post.

Campus reports of rape are up, and there might be some good in that. Joseph Shapiro in NPR.

Federal surveillance orders down in 2013. Josh Gerstein in Politico.

What's the NSA doing now? Training more cyberwarriors. David Welna in NPR.

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

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

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