June 17, 2014

Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara. To subscribe by e-mail, click here. 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: Nearly 18 million. That's how many vehicles General Motors has had to recall this year.

Wonkbook’s Chart of the Day: These charts show how coal's share of global energy consumption is at the highest level since 1970.

Wonkbook's Top 5 Stories: (1) Fixing our inefficient health-care system; (2) the real news at the Fed; (3) Obama's last solo LGBT-rights push?; (4) a full court docket; and (5) explaining the House leadership race.

1. Top story: How will Obamacare affect our ineffective, expensive health-care system?

Are those health-care rankings as bleak as they initially seem? "According to the report, the United Kingdom, which has a single-payer healthcare system, ranks first. In second place is Switzerland, which like the U.S. has a compulsory health insurance system — though Swiss health insurers are not allowed to make a profit off their basic insurance plans. It's important to note that one reason for America's lag, as the authors explain, is our historic absence of universal health coverage. But the data for the report was collected before the full implementation of Obamacare, which dramatically expanded health insurance, so it's possible that the U.S. may rise in future rankings." Olga Khazan in The Atlantic.

Primary source: The full text of the report. Commonwealth Fund.

So, can Obamacare change things? Maybe a bit. "Researchers relied on data collected before Obamacare’s full implementation, making the overhaul a significant wild card for future evaluations. The law extends subsidized coverage to qualified consumers and Medicaid for many of the lowest-earning Americans. Proponents of the Affordable Care Act (ACA) say it is narrowing health care inequities and will allow more people to take care of themselves, reducing costs over time....But even if Obamacare closes the gap in some areas, observers say high deductible health plans and a lack of primary care doctors to treat patients remain concerns." Tom Howell Jr. in the Washington Times.

Background reading: How to fix our health care system. Philip K. Howard in The Atlantic.

Poll: Americans are mostly satisfied with our inefficient health-care system. Gallup.

Obamacare struggles, even where it’s succeeding. "One of the early ironies...is how much some of the states most enthusiastic about the law failed miserably. Washington state, which was one of the first to embrace a state-run exchange, isn't one of those states — but it's experienced its share of frustrations putting the Affordable Care Act into place....Thousands of people are having trouble with paying for their new coverage; there are concerns about access to care; and funding the exchange once the federal support goes away remains a huge question mark. Amid these challenges, no one in Washington is questioning the state's decision to run its own exchange or expand the Medicaid program." Jason Millman in The Washington Post.

Possible Obamacare side effect: Longer ER waits. "Kentucky has been notably successful in signing residents up for coverage under the new health care law. Residents with serious illnesses are getting treatment after years of putting off medical care because of the expense. They’re often receiving that care in a familiar venue, though: the hospital emergency room....Nearly half of ER doctors responding to an April poll by the American College of Emergency Physicians said they are already seeing an increase in patients because of the health care law, and 86 percent said they expect visits to increase over the next three years. But it’s way too soon to make claims about the impact of the health law, other observers say." John Reichard in Roll Call.

Other health care reads:

Maybe we don't need annual physicals after all? Sarah Kliff in Vox.

Calif. hit hard by whooping cough epidemic. Kevin Truong in NBC News.

Booming e-cigarette market largely unregulated. Brady Dennis in The Washington Post.

Top opinion

LACHMAN: The Fed's oil-price challenge. "Recent geopolitical developments in the Middle East and in Ukraine now threaten to complicate the Federal Reserve’s strategy of gradually exiting from quantitative easing. Since those geopolitical developments pose the real risk of a sustained increase in international oil prices, the Fed might be faced with the challenge of lower economic growth and higher inflation than it desired. This would present the Fed with a real dilemma as to what to do with monetary policy." Desmond Lachman in AEIdeas.

GEDDES AND WASSINK: How to bring highway funding up to speed. "Washington, D.C's lone Tesla showroom is on K Street....Demand for the gas-less vehicles is growing, and the company is now planning a $5 billion battery manufacturing plant to keep up. Transportation policy, however, has not kept pace with the innovative vehicles or the energy that fuels them. Federal highway policy has created a literal 'free rider' problem that the government can fix by updating how we pay for highways....There's been positive movement toward mileage-based user fees....This approach would be much more effective than raising the fuel tax or imposing a flat annual road use fee on electric vehicles." Rick Geddes and Brad Wassink in The Wall Street Journal.

EL-ERIAN: U.S. should heed IMF's advice. "The IMF's boldness and the astuteness of the U.S. serves to highlight the need for even more. Specifically, it would be really helpful if they spoke to the global consequences of certain U.S. policies with a view to enhancing desirable and durable outcomes. For example, how should the Fed reflect in its policy approach the extent to which its unprecedented stimulus efforts influence financial instability in other parts of the world? How could the U.S. and IMF do more to achieve the global policy coordination needed to build a better and more resilient financial system? The IMF and the U.S. have come a long way. They can use this momentum to make an even bigger difference." Mohamed A. El-Erian in Bloomberg View.

RAMPELL: The big freeze on hiring. "This hiring paralysis is peculiar. In theory, it should be easier than ever to find talent, thanks to networking and job board sites such as LinkedIn and Monster.com, and to the bevy of start-ups in the personnel analytics space that help screen candidates remotely. The usual explanation for companies’ interminably long hiring processes is 'skills mismatch'....Still, I’m skeptical of the skills mismatch story. If there were massive, country-wide skill shortages, you’d expect to see wages rising as employers bid up the pay of the few desirable workers out there. And generally speaking, you don’t....My bet is that lingering uncertainty is the real explanation." Catherine Rampell in The Washington Post.

World Cup interlude: Check out this World Cup commercial.

2. Why the Fed meeting is more about the long term than now

The Fed has an interest-rate conundrum. "Fed policy makers have traditionally believed their benchmark short-term interest rate, called the federal-funds rate, should be around 4% in a perfectly balanced economy, meaning one in which inflation is stable at 2% and unemployment is comfortably low around 5.5%. Officials are now debating whether interest rates will need to remain below that 4% threshold long after those markers are reached....This matters today because the answer partly reflects their view of how rapidly the economy can grow....Lowering their sights on interest rates for the long run would be in part an acknowledgment of diminished growth expectations for the economy." Jon Hilsenrath in The Wall Street Journal.

And an unemployment conundrum. "Since the recession ended, the Fed has been criticized for consistently predicting that stronger economic growth was just around the corner, only to have the recovery consistently disappoint. But there’s another forecast the central bank has repeatedly gotten wrong: the unemployment rate. And that miscalculation could throw a wrench into its carefully laid plans. While the Fed has been overly optimistic about America’s growth prospects, it has been too pessimistic about the unemployment rate." Ylan Q. Mui in The Washington Post.

Why the IMF downgrade of growth projections matters to the Fed. "The US will have to keep interest rates low for longer than markets expect, the International Monetary Fund has warned in a downbeat assessment of the American economy. The IMF, in its annual review of the world’s biggest economy, cut both its 2014 and long-run forecasts for US growth. Christine Lagarde, managing director, said the US would not reach full employment until 2017....Her comments highlight disappointing growth this year that will force the US Federal Reserve to downgrade its 2014 forecasts when it meets this week." Robin Harding in The Financial Times.

Explainers:

Yellen, future tightening in spotlight as U.S. Fed meets. Jonathan Spicer in Reuters.

Fed speak cheat sheet: What Fed policymakers are saying. Michael S. Derby in The Wall Street Journal.

The crises in Iraq, Ukraine are clouding the economic picture. "The speed with which extreme Sunni militia have thrown Iraq into chaos is one geopolitical event that raises questions about the U.S. and global outlooks, especially because of the resulting increase in oil prices. Add in the continued uncertainty about the Russia-Ukraine conflict, skirmishes between China and its neighbors, unrest in Thailand, and it’s not hard to see why economists surveyed earlier this month by the Wall Street Journal viewed a negative international event as the biggest downside risk to the U.S. economic outlook. Back in the fourth quarter of 2013, the fiscal situation was seen as the biggest risk to the U.S. economy." Kathleen Madigan in The Wall Street Journal.

New Fed members sworn in just in time. "President Barack Obama‘s three latest picks for the Federal Reserve Board, including Vice Chairman Stanley Fischer, have been sworn in just in time to participate in a two-day policy meeting this week. Former Treasury official Lael Brainard was also sworn in Monday, along with Jerome Powell, who has been reappointed for a second term at the board....The Fed’s influential Washington-based board, which directs the country’s interest rate policy, is now operating with five members out of the seven that would comprise a fully-staffed board of governors." Pedro Nicolaci da Costa in The Wall Street Journal.

Why the new Fed members matter. "Former Philadelphia Fed executive Loretta Mester recently replaced Sandra Pianalto as Cleveland Fed chief....While Mester is likely more concerned about inflation and eager to raise interest rates, Brainard and Fischer have a more pro-growth approach and are less likely to boost rates quickly....As a result, he says the Fed's interest rate forecasts could be unchanged." Paul Davidson in USA Today.

Will Yellen echo Carney's hawkish surprise? "Although the Governor is still talking about a very gradual rise in UK rates, he appeared to have changed the dovish tone of the forward guidance given by the BoE last year. This has made investors nervous, with many asking whether Fed Chair Janet Yellen may do the same in her press conference on Wednesday. This seems unlikely, because the US economic recovery is still lagging that in the UK. Nevertheless, the parameters within which investors view forward guidance, including the Fed’s 'dots' showing the future path for interest rates, may have been somewhat shaken." Gavyn Davies in The Financial Times.

Why we should count the employed, not the unemployed. "After most recessions, the numbers have moved in sync as the share of the population neither working nor looking has remained fairly constant. But after this recession, the middle ground has ballooned as fewer people try to find jobs. As a result, the employment rate has become the more accurate indicator of the nation’s sluggish and perhaps permanently incomplete economic recovery. It shows that the economy is improving....It also shows that the recovery has a long way to go....The slow progress hints at a bleak reality. Most economists do not expect employment rates to rebound completely." Binyamin Appelbaum in The New York Times.

One other thing to listen for: What Yellen says on financial markets. "I’ll be listening carefully to see what she says about the recent eerie tranquility in the financial markets — very little volatility, rising stock prices and shrinking spreads between the yields on risky bonds and safer ones. The possibility that markets are under-appreciating the risks is on the minds of Fed officials, as The Wall Street Journal’s Jon Hilsenrath has reported." David Wessel in Brookings.

Other economic/financial reads:

Factories boost output as builders gain optimism. Victoria Stilwell in Bloomberg.

Tony Gwynn interlude: Remembering the Hall of Fame hitter with a video of his 3,000th hit.

3. Obama's last executive step on LGBT rights?

Executive order coming. "President Obama will soon sign an executive order banning federal contractors from discriminating against gay men, lesbians and others on the basis of sexual orientation....The move is the last significant action Obama is likely to be able to take to advance gay rights without the cooperation of Congress, activists said. Once signed, the executive action will have an impact on some of the biggest companies that do business with the government, including Exxon Mobil and Tysons Corner-based SAIC. Obama made the decision to sign the executive order after years of pressure from gay-rights groups, which frequently complained that he had dawdled on the issue." Zachary A. Goldfarb and Juliet Eilperin in The Washington Post.

How do LGBT employeers fare in the federal workplace? "A report this year from the Merit Systems Protection Board...said relatively few government workers believe sexual-orientation discrimination has occurred in their workplaces. The analysis did not cover contractors, but it helps gauge the government’s posture toward the LGBT community....In a second report this year, the MSPB said the results represent 'encouraging signs that the history of sexual-orientation discrimination in federal employment is being overcome.'" Josh Hicks in The Washington Post.

Why it's a big deal. "It may surprise readers to know that, in 29 states, one can be fired simply for being gay....Federal legislation to make such a termination illegal — as it already is for race, gender, religion, and national origin — has died repeatedly in the Republican-controlled House of Representatives. This year’s version, the Employment Non-Discrimination Act (ENDA), is expected to fail as well....So, as Obama did with the minimum wage a few months ago, he has implemented his own private ENDA. Unlike the minimum wage hike...Tuesday’s executive order not only will protect an estimated 2 million LGBTs from losing their jobs, but also will normalize sexual orientation nondiscrimination among most of America’s largest corporations." Jay Michaelson in The Daily Beast.

Caffeine interlude: Finally, a decent cup of espresso on the International Space Station.

4. Here's what you need to know about the upcoming SCOTUS cases

The Supreme Court is about to decide on several major cases. "Over the coming weeks the Supreme Court will issue a series of opinions as it winds down its yearly term, with broad implications for the Affordable Care Act; for protesters near abortion clinics; for one’s right to smartphone privacy after being arrested; and the power of the president to make appointments when Congress is in recess....Perhaps the most prominent of the Court’s coming decisions is one that strikes at the heart of the Affordable Care Act’s effort to set a minimum level of insurance coverage for Americans." Tim Mak in The Daily Beast.

Explainer: Round-up of some of the key cases wonks should pay attention to. Mark Sherman in the Associated Press.

Long read: Hobby Lobby aims for Obamacare win, Christian nation. Stephanie Simon in Politico.

The court didn't uphold gun-trafficking protections. It nearly struck them down. "Sometimes what the Supreme Court almost does is more striking than what it says in its majority opinion. Such is the case with today’s 5-4 ruling that federal agents may go after a 'straw' purchaser who buys a gun for someone else, even if both people are legally eligible to own firearms. What’s amazing about this decision is that four dissenting members of the court — led by Justice Antonin Scalia — were...one vote away from judicially nullifying one of the most common tools U.S. law enforcers use to deter and punish criminals who send other people into gun stores to purchase firearms and circumvent the federal background-check system." Paul M. Barrett in Bloomberg Businessweek.

SCOTUS greenlights suit over campaign ads law. "The Supreme Court on Monday sided with an anti-abortion group in a political-speech case, opening the door for a broad challenge against the government’s right to police falsehoods in political advertising. A unanimous Supreme Court agreed that Susan B. Anthony List had standing to sue over the Ohio False Statement Law, reversing two lower court decisions that the group could not bring a lawsuit because it had not suffered any injury." Byron Tau, Josh Gerstein and Paige Winfield Cunningham in Politico.

As for whether you actually can lie in political speech, ask again later. "Here is the First Amendment nub of the case, summed up by Lord Bacon....'‘What is Truth?’ said jesting Pilate, and would not stay for an answer.' Does the ACA provide for 'taxpayer-funded abortions'? The law says not — its insurance subsidies must be 'segregated' from any private-insurance funds that cover policyholders for abortion services. But SBA (and its co-plaintiff...) insist that it does, since the insurance companies will have the money in the 'segregated funds' and can then set aside other money from premiums to cover abortion. Who’s right? You decide. And that—who decides—is the First Amendment issue behind this case." Garrett Epps in The Atlantic.

The court is also taking on a bunch of other cases, including another free-speech one. "The Supreme Court agreed Monday to consider a classic free speech conundrum for the 21st century: When do threatening comments made on social media sites such as Facebook cross the line into criminal activity? Two lower federal courts ruled that Anthony Elonis crossed that line in 2010 when he mused on his Facebook page about killing his wife and others, including an FBI agent who was investigating his actions....Elonis' attorneys contend he never intended actual violence. What the justices have to decide is whether that matters, as long as a 'reasonable person' would feel threatened." Richard Wolf in USA Today.

The filibuster weakened, the Senate backs more of Obama's judicial picks. "The Senate has confirmed 54 of Obama's judicial choices since Nov. 21, when majority Democrats made it harder for Republicans to use filibusters to derail nominations. Twenty-eight judges have been confirmed in just the past seven weeks, and senators voted Monday to overcome GOP delaying tactics against three others. By contrast, the Senate filled 36 judgeships in the first 11 months of 2013...and 49 in all of 2012....Obama has appointed 261 appeals and district court judges — all of them lifetime positions — filling nearly a third of the entire federal judiciary since entering the White House. At the same point in his sixth year, the second President Bush had filled 242 such vacancies." Alan Fram in the Associated Press.

Animals interlude: Internet cats are serious business.

5. What is this House leadership race all about?

Kevin McCarthy: Different in style, not on policy or ideology. "The expected elevation of Rep. Kevin McCarthy....sets up a new dynamic for a caucus that has been ravaged by infighting but is in a strong position to maintain and even expand its grip on power in this fall’s midterm elections. The McCarthy-Cantor swap is unlikely to represent any ideological shift...but it could signal a stylistic change that offers opportunities and pitfalls for House Republicans....This new framework will be tested fairly quickly in the months ahead, first on some domestic agency spending bills and then on efforts to reauthorize highway funding programs and the Export-Import Bank." Paul Kane in The Washington Post.

Could there be energy policy implications? "McCarthy has previously supported the wind production tax credit, but now opposes an extension. He has also said he is not ready to advocate for ending the decades-old ban on crude-oil exports, though he does support exporting natural gas. And if McCarthy wins the race of Majority leader that will also create an opening for Whip." Clare Foran in National Journal.

Oh, how the path to policymaking power in the House has changed. "What was once a long, gradual process of building trust through years of legislative work in House and Senate committees is now a much quicker march up the leadership ladder that builds more on political connections than legislative acumen....Mr. McCarthy...is in just his fourth term in the House and hasn’t even been chairman of a subcommittee. But he soon will likely be a political heartbeat away from serving as speaker." Janet Hook in The Wall Street Journal.

Explainer: 5 reasons the tech industry wants McCarthy. Tess VandenDolder in Streetwise.

How does the voting process work? "Before voting begins, each of the candidates will have an opportunity to make a final pitch to the 233-member caucus. Lawmakers will then vote to elect a new majority leader to replace Eric Cantor, who lost his primary race last Tuesday. Rep. Kevin McCarthy of California will face off against Rep. Raul Labrador of Idaho. The victor will need the support of more than half the caucus — or 117 votes — to win outright. McCarthy, the current majority whip, is the overwhelming favorite to become majority leader. With McCarthy likely to move up the leadership ranks, Republicans will have to fill his majority whip post. That race is wide open." Lauren French in Politico.

Explainer: So, what exactly do the speaker, majority leader and whip do, anyway? Ed O'Keefe in The Washington Post.

Interview: Why Paul Ryan took a pass on running for House majority leader. Robert Costa and Karen Tumulty in The Washington Post.

Up-close view interlude: What it's like seeing a fighter jet take off from an aircraft carrier.

Wonkblog roundup

Obamacare struggles, even where it’s succeeding. Jason Millman.

This might be the best World Cup commercial ever. Roberto A. Ferdman.

Predict when George R.R. Martin will finish "Game of Thrones", using the magic of geometry. Christopher Ingraham.

The Fed's unemployment conundrum. Ylan Q. Mui.

Et Cetera

Why 90,000 children flooding the border isn't simply an immigration story. Brian Resnick in National Journal.

Obama will propose vast expansion of Pacific Ocean marine sanctuary. Juliet Eilperin in The Washington Post.

Sorry, you can't really escape the NSA. Brendan Sasso in National Journal.

Study asserts large number of insider trading rogues. Andrew Ross Sorkin in The New York Times.

Headline goes here. David Welch and Manuel Baigorri in Bloomberg.

Common Core sparks flood of legislation. Adrienne Lu in Pew Stateline.

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

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy

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