May 5, 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: 806,000. That was April's reduction in the labor force.

Wonkbook's Chart of the Day: This chart shows that the labor force participation numbers tend to be weird.

Wonkbook's Top 5 Stories: (1) Keystone XL controversy; (2) the Piketty debate, explained; (3) the incredible disappearing labor force; (4) Obamacare's upcoming challenges; and (5) the botched execution could spark at least some change.

1. The Keystone XL controversy is back

Lawmakers are digging in on Keystone XL. "Democratic senators in vulnerable seats are joining forces with Republicans to back legislation to press President Barack Obama into authorising the controversial Keystone XL oil pipeline. The White House has spent more than five years considering whether to approve the pipeline and this month it delayed its ruling again, but November midterm elections are prompting lawmakers on both sides of the argument to harden their positions." Barney Jopson in The Financial Times (paywall).

One potential vehicle for Keystone XL: an energy bill. "The Senate is set to begin debate on a modest energy bill that has enough bipartisan support to pass on its own merits, but supporters of the pipeline, which is intended to transport oil from western Canada to the U.S. Gulf Coast, are trying to leverage the bill to force votes on Keystone. The issue has prompted a multimillion-dollar lobbying campaign on both sides; hardly a half-hour goes by on cable news outlets without one side or the other pushing its position on the matter. A handful of Democrats facing tough reelections are supportive of the new pipeline." Paul Kane in The Washington Post.

@PewResearch: Senate may vote soon on #Keystone pipeline (http://bit.ly/1iSyTMW ); See our March poll on public support http://pewrsr.ch/1cZLYId

For Obama, a renewed focus on climate. "After years of putting other policy priorities first...he is regularly briefed on scientific reports on the issue, including a national climate assessment that he will help showcase Tuesday. He is using his executive authority to cut greenhouse gas emissions from power plants and other sources, and is moving ahead with stricter fuel-efficiency standards....It's a notable transformation....Environmentalists also remain anxious about Obama's delay in making a decision on the Keystone XL pipeline." Juliet Eilperin in The Washington Post.

With Keystone XL delayed, TransCanada sees jobs cuts. "The company has pushed the timetable to start building the northern leg of the project, intended to transport crude from Alberta's oil sands to Gulf Coast refiners, to 2015 after the Obama administration delayed a decision because of a legal challenge in Nebraska. TransCanada is still targeting startup of the line in 2016, Chief Executive Officer Russ Girling said today." Rebecca Penty in Bloomberg.

Long read: Canada finds China option no easy answer to Keystone snub. Edward Greenspon, Andrew Mayeda, Jeremy van Loon and Rebecca Penty in Bloomberg.

Background reading: On climate impact, Keystone XL dwarfs in comparison to U.S. emissions rules. Coral Davenport in The New York Times.

About that climate assessment... "Climate change has moved from distant threat to present-day danger and no American will be left unscathed, according to a landmark report due to be unveiled on Tuesday. The National Climate Assessment, a 1,300-page report compiled by 300 leading scientists and experts, is meant to be the definitive account of the effects of climate change on the US....The findings are expected to guide Obama as he rolls out the next and most ambitious phase of his climate change plan in June -- a proposal to cut emissions from the current generation of power plants." Suzanne Goldenberg in The Guardian.

Business and conservative groups have other ideas in mind. "The central pillar of Barack Obama's climate change agenda has come under a new line of co-ordinated attack from influential lobbying networks involving Republican politicians and big business....The American Legislative Exchange Council (Alec), a free market group of state legislators funded in part by coal and oil companies such as Peabody Energy and Koch Industries, launched a much broader style of campaigning in 2014 to block the Environmental Protection Agency (EPA) from cutting greenhouse gas emissions from power plants." Suzanne Goldenberg in The Guardian.

Meanwhile, U.N. seeks more progress on climate talks. "The United Nations secretary-general on Sunday urged world policymakers to do more to address the threat of climate change as negotiators attempt to forge a new global warming pact next year....At the start of a climate gathering in Abu Dhabi, Ban Ki-moon warned that time is running out to reduce harmful emissions....No major breakthroughs are expected to emerge from the Abu Dhabi meeting, though organizers hope it will boost momentum for upcoming talks." Adam Schreck in the Associated Press.

Dam it: U.S. could double hydropower to combat climate change. "The Grand Canyon was once targeted as a major dam site by the federal government, a project eventually scuttled....Nobody is revisiting the idea of a dam there, but a new U.S. Department of Energy report shows that the Grand Canyon and other major gorges and rivers across the U.S. may be ideal for hydropower development...and developing many of them could help combat climate change by using renewable energy." Bobby Magill in Climate Central.

Other energy/environmental reads:

Mining industry asks court to review dust rules. Kris Maher in The Wall Street Journal.

Accident leads to scrutiny of oil-sands production. Clifford Krauss in The New York Times.

Smog-standard ruling stirs environmental debate. Amy Harder in The Wall Street Journal.

ALEXANDER: Think the climate change fight is tough? "As with climate change today, only a small number of professionals were truly qualified to evaluate the respective merits of the two approaches. But this did not prevent kings and cardinals, religious orders, social reformers and political theorists from charging into the fray to pronounce on the matter....It is perhaps unfortunate that complex scientific questions become entangled with politics. But as long as science retains its place in our culture as arbiter between competing beliefs, it is also unavoidable." Amir Alexander in the Los Angeles Times.

Top opinion

BRUNI: America the shrunken. "More and more I get the sense that we've lost it, and by 'it' I mean the optimism that was always the lifeblood of this luminous experiment, the ambition that has been its foundation, the swagger that made us so envied and emulated and reviled. We're walking small. And that shift in our gait and our gumption has been palpable for many years, during an unusually sustained period of frustration that has the feel of something more than a temporary dive: a turned corner, the downward arc of a diminished enterprise." Frank Bruni in The New York Times.

WEISSMANN: Jobless in Seattle -- city will suffer if it succeeds in $15 minimum wage push. "I generally support a higher pay floor. And I love a good experiment. But I can't help but wonder if Seattle is poised to take a step too far....While the fight for $15 has made for great politics -- in Seattle, both mayoral candidates only adopted the idea last year after it was popularized by a socialist city council candidate, Kshama Sawant, who ultimately won her race -- it's built on dubious economics. The truth is, nobody has any idea what would happen if the minimum wage jumped that high. But there are good reasons to worry that results would be ugly." Jordan Weissmann in Slate.

CURRIE: In Obamacare, what's the value of happiness? "The evidence, then, suggests that Obamacare will probably entail some trade-offs. There may well be increases, not decreases, in the utilization of care, and this additional care may not be delivered in the most cost-effective way. So costs are likely to rise, unless policy makers or insurers adopt such measures as higher co-pays, tougher constraints on services provided, or "narrow networks" that place limits on patients' choice of doctors and hospitals. At the same time, the newly covered will probably be happier and healthier. The ultimate question for policy makers: How much is this health and happiness worth?" Janet Currie in Bloomberg View.

SAMUELSON: Bursting an economic bubble isn't always bad. "Having ignored bubbles for decades, we now see them around every corner. For more than five years, the Federal Reserve has tried to revive the economy with low interest rates. One danger of this strategy is that the cheap credit will inflate financial bubbles rather than promote spending and production. This is the crux of today's worries about bubbles, whose existence and magnitude are -- at this point -- unclear. If there are bubbles out there, the sooner they pop the better." Robert J. Samuelson in The Washington Post.

PONNURU: Why we shouldn't be executioners. "The majority of Americans who support capital punishment don't do so because the possibility of an error has never crossed their minds. They know there's a risk. How much risk is tolerable, assuming that capital punishment is justified in the first place, obviously isn't a question with a precise and objective answer. But there's no reason in principle the answer should be zero....I don't think it is worth having. We shouldn't execute people. But not because we might hurt people in the process, and not even because we might on some very rare occasion kill innocent people. We shouldn't execute people who are unquestionably guilty because we don't have to do it." Ramesh Ponnuru in Bloomberg View.

ZUCKERMAN: Harsh sentencing, overstuffed prisons -- the case for reform. "The politics of all this are admittedly touchy. But we cannot remain in the mind-set created by the 1980s crime explosion that led to a narrowing of criminals rights and tougher penalties. Think of all the billions spent building prisons that could have been spent on roads, hospitals, schools and airports. If we do not support the initiatives of all three government branches to reform the system, the verdict could only be: Guilty of waste and injustice." Mortimer Zuckerman in The Wall Street Journal.

White House Correspondents Dinner interlude: The Joe Biden-Selina Meyer video that you missed.

2. The Piketty/income inequality debate explained

Inequality is a historical norm. But that doesn't make it inevitable. "One of the most ambitious (and best-reviewed) books on the subject in years -- Thomas Piketty's 'Capital in the Twenty-First Century' -- appeared this spring to argue that rising inequality wasn't merely a feature of our times. It has been the historical norm, writes Piketty....And inequality is likely to continue increasing for decades, he says. Ultimately, we could end up with a society in which the rich separate themselves from everyone else....That prospect sounds depressing, but it doesn't necessarily have to turn out that way. To say that something is likely, or even natural, is not to say that it is inevitable." David Leonhardt in The New York Times Magazine.

Why is Piketty's book taking the world by storm? "As is her wont, Alex Witt asked me a good question this AM on MSNBC (paraphrasing, you can watch here): why is this 600+ page book by a hitherto little-known French economist, laden with data and charts, taking the world by storm?...So, summing up, I think at least part of the reason for the book's big splash is the intersection of a) timing and a latent demand for an explanation of what's really going on, b) the weight of its scholarship and credibility of its evidence, and c) the unique attributes of the author." Jared Bernstein.

Explainer: 4 ways to stop the U.S. from becoming a Piketty-style oligarchy. "His monumental, best-selling new book...makes a startlingly simple argument: if the return on capital, r, is greater than the economy's growth rate, g, as it almost always has been, then inequality will tend to increase. That's because wealth grows faster than wages when r>g, and only the rich have much wealth to begin with. Now, this dynamic won't make inequality increase forever; it will stop once the ratio of capital to income is the same as the ratio of savings to growth. But in the meantime, the top 1 percent will gobble up more and more wealth -- and leave it to their kids." Matt O'Brien in The Washington Post.

The new Marxism? "Piketty, a left-wing Frenchman who teaches at the Paris School of Economics, is hardly the only economist arguing inequality is headed inexorably higher....Piketty is making a different and broader argument....Embedded within the very fabric of capitalism is a powerful force pushing in the direction of rising inequality. The income generated from owning capital...tends to exceed the rate of economic growth. And when wealth grows faster than output -- as it did in the 19th century when Marx was writing and as Piketty forecasts it will again in the 21st -- inequality moves toward extreme levels since income from capital is outpacing wages from labor." James Pethokoukis in National Review.

The right's Piketty problem. "To be sure, everyone disagrees with 10-20% of Piketty's argument, and everyone is unsure about perhaps another 10-20%. But, in both cases, everyone has a different 10-20%. In other words, there is majority agreement that each piece of the book is roughly correct, which means that there is near-consensus that the overall argument of the book is, broadly, right. Unless Piketty's right-wing critics step up their game and actually make some valid points, that will be the default judgment on his book. No amount of Red-baiting or French-bashing will change that." J. Bradford DeLong in Project Syndicate.

Even skeptics of Piketty have some kind words, though. "The book has unsurprisingly attracted plenty of criticism. Some wonder whether Mr Piketty is right to think the future will look like the past....Others argue that Mr Piketty's policy recommendations are more ideologically than economically driven and could do more harm than good. But many of the sceptics nonetheless have kind words for the book's contributions, in terms of data and analysis. Whether or not Mr Piketty succeeds in changing policy, he will have influenced the way thousands of readers and plenty of economists think about these issues." The Economist.

Piketty interlude: How to write a Piketty think piece in 10 easy steps.

3. The incredible shrinking U.S. labor force

U.S. economy adds 288,000 jobs in April, but workforce size is shrinking. "In this long slog of an economic recovery, even the best news comes with an asterisk. New government data released Friday showed that the U.S. job market sprang to life in April. Employers went on a hiring spree, and the jobless rate plunged to 6.3 percent -- the lowest level since the darkest days of the financial crisis in 2008. Now for the asterisk: The decline in unemployment was not from people finding jobs, but from a shrinking workforce....Many people who normally enter the job market at this time of year -- particularly high school and college students seeking summer jobs -- simply did not show up." Ylan Q. Mui in The Washington Post.

The jobs report looks good, but looks are deceiving. "A dynamic that seemed -- maybe, possibly -- to be taking shape for 2014 was that of some of the millions of people who had given up on even looking for a job during the recession and the slow recovery were finally returning. That trend might have acted as a floor underneath the overall unemployment rate. People returning to the work force might not find a job immediately, joining the rolls of the unemployed, but it would be good news for the long-term prosperity of the American economy. The details of the April job report, though, threw serious cold water on that proposition." Neil Irwin in The New York Times.

Why the drop in the labor force? "The details suggest it might not be for the most worrisome reasons....Once someone leaves the labor force, it's much harder for them to eventually find work. Many never return. That was at least part of the reason for the decline in April. The number of workers who said they weren't looking for work because they were discouraged over job prospects ticked higher. But the number remained below the average for all of last year, and doesn't come close to accounting for the big drop in the labor force." Phil Izzo in The Wall Street Journal.

The hidden weakness in this month's jobs report. "In April, the establishment survey showed the economy bouncing back from its winter of discontent. But the household survey showed discontented workers getting discouraged and dropping out of the labor force. Here's the bad news: The labor force fell by 806,000 in April, and most of that was because fewer people entered it to begin with. Reentrants...plummeted by 417,000. That's the largest monthly drop, in absolute terms, on record going back to 1967. It's confounding, because a stronger labor market tends to suck people in, not push them away." Matt O'Brien in The Washington Post.

@JWrightStuff: So much for wage inflation: 0% this month. Particularly striking given the strong headline and lower participation. pic.twitter.com/9praVXBaOp

Mind the uncertainty. "Every month, somewhere in my 'jobs day' writeup, I remind readers that these are noisy numbers, subject to big revisions and even bigger margins of error. Usually I put that reminder toward the bottom of my story. This month, it's going at the top. So why focus on the uncertainty? Because in many ways, this was a very strange jobs report." Ben Casselman in FiveThirtyEight.

Chart: Also mind the sampling error in the labor-force participation rate. "It's not unusual for large increases to be followed by large declines or vice versa. One reason is that this figure comes from the household report which has a larger amount of sampling error than the establishment report from which the headline jobs number comes." Matthew Yglesias in Vox.

A note to Fed skeptics. "The drop of the jobless rate to 6.3% is going to launch outcries of Fed inconsistency. From December 2012 until this past March, the Fed had been assuring the public it wouldn't consider raising interest rates as long as the jobless rate was 6.5% or above. It dropped that unemployment threshold in March. The skeptics will say the Fed had promised rate increases when joblessness dropped to 6.5% and now it is abandoning that promise. But this is simply not true. Officials all along said 6.5% wasn't a trigger for rate increases; it was a guidepost. The only thing it would trigger was discussion about when to move." Jon Hilsenrath in The Wall Street Journal.

Explainers:

5 takeaways from the jobs report. Kathleen Madigan in The Wall Street Journal.

5 other takeaways from the jobs report. Robin Harding in The Financial Times (paywall)

The jobs report's cautionary signs. Josh Boak in the Associated Press.

It's a trap! No joy from Democrats. "Finally, the Democrats got a jobs report that beat the expectations. So why aren't they celebrating it more in their re-election campaigns? Because they know it could also be a trap....Voters don't see a big turnaround no matter what the indicators say. And no matter how voters feel about other issues -- especially Obamacare -- polls show they still see the economy as the most important issue facing the country, as they do in most elections." David Nather in Politico.

Analysis: Can the Democrats leverage the jobs report? Dan Balz in The Washington Post.

Chart: The unemployment picture is even better in swing states. Aaron Blake in The Washington Post.

Other economic reads:

U.S. factory orders up, durable goods revised higher. Reuters.

A GOP congressman's lonely fight to revive jobless benefits. Lisa Mascaro in the Los Angeles Times.

Star Wars Day interlude: So, you've never seen "Star Wars"?

4. Obamacare's second-year challenges

Feds have major challenges to address. "The push to sign up people for Obamacare won't get any easier in Year 2. The Obama administration needs to improve everything from customer service to Spanish-language outreach if it's to parlay a functioning website and recent enrollment momentum into even more Americans with health coverage....The enrollment period for 2015 begins Nov. 15 and is just three months, half as long as this year. The federal government may not have as much money to spend on advertising or on groups that help people sign up. Negative ads and speeches about the law from Republicans leading up to Nov. 4 congressional elections may confuse uninsured Americans, deterring enrollment." Alex Wayne in Bloomberg.

Explainers:

As the first enrollment period ends, here are 7 things we now know about Obamacare. Sarah Kliff in Vox.

Interactive map: Obamacare's red-state surge in enrollment. Talking Points Memo.

The final Obamacare war ahead: Medicaid expansion. "The final battles of any war often are the bloodiest. They're waged by the last holdouts, dead-enders desperate to prove to themselves and their dwindling followers that their efforts were not in vain. The final battle of the war over the Affordable Care Act is being waged today over expanding Medicaid. As the act was originally conceived, Medicaid would provide healthcare for more than 10 million of the poorest uninsured Americans, most of them childless adults with earnings up to 138% of the federal poverty level. (This year, that income ceiling is about $16,000.)" Michael Hiltzik in the Los Angeles Times.

Democrats are more optimistic on the politics of Obamacare. "With enrollments in insurance plans under the Patient Protection and Affordable Care Act rising and polls showing that most Americans want to keep the law, Democrats are increasingly encouraged that they have defused some of the criticism over the botched rollout of Obamacare last year....In this year's congressional elections, Democrats in at least four states are cautiously embracing the new law by highlighting the negative consequences if Republicans were to follow through on their promise to repeal it." Lisa Lerer in Bloomberg.

Republicans have a challenge of their own: Proposing an alternative. "As Republicans discuss the policy alternative to replace Obamacare, the political benefits are clear and decisive....Almost two-thirds, 63 percent, favored a new plan to replace Obamacare. Only one in five voters, 21 percent, favored repeal alone....By a three-to-one margin, 48 percent to 17 percent, voters were more likely to vote for Republicans who would repeal and replace Obamacare if they also proposed a new plan of their own to improve health care." John McLaughlin and Jim McLaughlin in National Review.

Other health care reads:

HHS widens Obamacare penalty exemptions. Elise Viebeck in The Hill.

Long read: Terminal neglect? How some hospices decline to treat the dying. Peter Whoriskey and Dan Keating in The Washington Post.

Some states spent hundreds to sign up each Obamacare enrollee. Sophie Novack in National Journal.

Young whippersnappers interlude: Mr. Rogers, explained to today's kids.

5. The botched execution may spark some changes

The feds plan to review state-level executions. "The Justice Department has launched a review of state-run executions of death-row inmates, after President Barack Obama raised concerns about a botched execution earlier this week in Oklahoma. A department spokesman said the agency would begin a review of state-run death-penalty programs, similar to one it has been conducting on federal capital punishment." Devlin Barrett in The Wall Street Journal.

The U.N. says the execution may have violated international law. "The United Nations human rights office says U.S. death row inmate Clayton Lockett's suffering during his botched Oklahoma execution this week may amount to cruel, inhuman and degrading treatment under international human rights law." Associated Press.

Okla. lawmakers aren't abandoning the death penalty. "A bungled execution in Oklahoma in which the condemned prisoner writhed and moaned as he received a lethal injection outraged death-penalty opponents, invited court challenges and attracted worldwide attention. But the inmate's agony alone is highly unlikely to change minds about capital punishment in the nation's most active death-penalty states, where lawmakers say there is little political will to move against lethal injections -- and a single execution gone wrong won't change that." Nomaan Merchant in the Associated Press.

Death penalty opposition was huge political problem at one time. "It's almost hard to remember how dominant an issue the death penalty was a generation ago....Opposition to the death penalty once cost prominent politicians their jobs, from New York Democratic Gov. Mario Cuomo to California Supreme Court Chief Justice Rose Bird. The safest stance was clear: support for capital punishment. But all that has changed. Contemporary politicians appear to have paid very little price, if any, for supporting recent moratoriums on capital punishment, or for voting to abolish it altogether." Alan Greenblatt in NPR.

Polls: Public support for death penalty has been falling. Gallup.

Animals interlude: Pharrell's "Happy," featuring dogs and a cat.

Wonkblog roundup

Which groups do criminals target? Not who you might think. Christopher Ingraham.

Are mortgage lenders finally lowering their standards? Not so much. Dina ElBoghdady.

The last-minute Obamacare shoppers were bargain hunters. Jason Millman.

I'll take 'The end of men' for 800, Alex. Christopher Ingraham.

The hidden weakness in this month's jobs report. Matt O'Brien.

Study: With good jobs scarce, more twenty-somethings use the Army as a last resort. Lydia DePillis.

Here's how to stop wasting your credit card rewards. Danielle Douglas.

How suburbs change: More density means more Democrats. Emily Badger.

U.S. economy adds 288,000 jobs in April; jobless rate falls to 6.3 percent. Ylan Q. Mui.

Et Cetera

Sexual violence probes at colleges arise from Obama push on civil rights issues. Nick Anderson in The Washington Post.

Obama, Merkel still working out disagreements on NSA spying. Jennifer Epstein in Politico.

How Democrats could use a defense bill for immigration reform. Jeremy Herb and Seung Min Kim in Politico.

Long read: Many of the government's congressionally required reports only gather dust. David A. Fahrenthold in The Washington Post.

U.S. contractors scale up search for Heartbleed-like flaws. Jordan Robertson and Michael Riley in Bloomberg.

Banks get a break on new tax-evasion enforcement. John D. McKinnon and Eyk Henning in The Wall Street Journal.

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

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

 

http://view.ed4.net/v/0H2RO6/VLWO12/VL8WCOA/FX3UY2/