Wonkbook: Choose your own (Greek) adventure

Let's say it was up to you. What would you do about Greece? Hand it more money? That won't work for very long. Get its economy growing again? If anyone knew how to do that, we wouldn't be in this mess. Kick it out of the Euro? Good luck protecting Portugal, Ireland, and Italy after that proves a possibility.

Tourists walk next to the ruins of the 5th century B.C. Temple of Poseidon on Jan. 11. (Petros Giannakouris - AP) I bring this up to make a recommendation. Stop what you're doing and try your hand at Daniel Davies's masterful 'Choose Your Own Troika Program!' Spending 10 minutes with Davies's puzzle will give you a healthier respect for the devilishly complex questions facing the euro zone than any number of analyses and reported dispatches. As much as it pains me to admit this, it will certainly do more to help you understand the situation than anything I'm likely to write. So go. Choose your own troika program. See why it probably wouldn't work. And get depressed about Europe all over again.

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Before we get to today's links, some terrible news: Anthony Shadid, who reported on the Middle East for the Boston Globe, who won two Pulitzer prizes while at the Washington Post, and who was in Syria on assignment for the New York Times, died on Thursday. Here is the NYT's obituary, which includes more detail on the circumstances of Shadid's death. Here is the Washington Post's obituary.

I've deleted this next sentence more than a dozen times now. But I have no words for Shadid's death. Nothing I could say would remotely capture his bravery, lyricism, or humanity. So I'll turn the mic over to him instead. Here are the articles that won Shadid his two Pulitzers. Here is a remarkable speech Shadid gave at the University of Wisconsin in November. You can order his books -- including the forthcoming 'House of Stone' -- here.

Top stories

1) Jobless claims fell to the lowest level since 2008, report Alan Zibel and Jeff Bater: "The number of workers filing new applications for unemployment benefits fell last week to the lowest level in nearly four years, one of a series of reports offering mostly positive signs about the U.S. economy. Initial unemployment claims dropped by 13,000 to 348,000 in the week ended Feb. 11, the Labor Department said Thursday. The decline in the weekly report was the third in a row and carried new jobless claims to their lowest level since early March 2008, before the financial crisis broke out that year. Separately, home building rose slightly in January, but not enough to signal that the housing industry is ready to recover from the worst downturn in decades. Meanwhile, wholesale prices rose only modestly in January, as energy and food costs declined, but underlying prices jumped by a larger amount."

@justinwolfers: Recent data erasing lingering doubts about the recovery. Initial claims 348k, nearly back to pre-recession levels. Housing starts up, too.

2) A package extending payroll tax cuts and unemployment benefits is heading towards passage, report Paul Kane and Ben Pershing: "Amid some dissent, House and Senate leaders prepared for final votes Friday on an economic package worth more than $150 billion that would extend a payroll tax holiday and unemployment benefits for the rest of the year. While Senate Republicans protested, the remaining members of a House-Senate committee tasked with forging a compromise pronounced themselves satisfied with the deal, signing the 270-page measure on Thursday afternoon in a bipartisan ceremony that stood in sharp contrast to the otherwise bitterly partisan tone of this Congress...The bill would extend a reduction of two percentage points in the 6.2 percent Social Security payroll tax through 2012 for about 160 million workers, saving the average family about $1,000 for the year and removing the issue from election-year campaigns."

3) Greece will face strict bailout terms, report Peter Spiegel, Gerrit Wiesmann and Matt Steinglass: "A €130bn bail-out of Greece will contain unprecedented controls on Athens’ ability to spend funds, officials said, as European leaders scrambled on Thursday to paper over their divisions on the rescue package. The agreement, which officials hope to finalise on Monday, is likely to include an escrow account that must always contain enough cash to pay Greece’s debt for nine to 12 months. If the account falls below that level, money will be taken from funds earmarked to run the Greek government, according to people briefed on the talks. In addition, the bail-out will include a permanent and beefed-up presence of international monitors who will attempt to keep real-time tabs on the Greek government’s spending decisions, officials said. If the deal is finalised by Monday, it will still include a list of 24 'prior actions' that Greece must complete by the end of the month, before aid is released."

4) The CFPB moved to bring two controversial industries under its watch, reports Ylan Mui: "The Consumer Financial Protection Bureau on Thursday sought to bring debt collectors and credit bureaus under its purview, marking the first time the often controversial industries would be subject to federal supervision. Under its proposed rule, the CFPB would oversee the nation’s largest debt collectors, the primary credit reporting agencies such as Experian, Equifax and TransUnion, and other lesser-known consumer reporting agencies. It is the first attempt by the watchdog agency to define which businesses in the vast swath of nontraditional financial institutions will be subject to the same examination process as banks...Consumer advocates have launched extensive education campaigns in recent years to make sure that consumers understand what goes into their Big Three credit reports and how that affects the cost of a loan. But little attention has been paid to the so-called 'Fourth Bureau' firms that target the 30 million consumers outside the mainstream financial system."

5) Lawmakers clashed over the contraceptive compromise, reports Sarah Kliff: "Tempers flared on Capitol Hill on Thursday as lawmakers waded into an increasingly heated debate over the mandated coverage of contraceptives under the nation’s new health-care law. Several Democrats walked out of a House hearing on the provision, accusing Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) of blocking testimony from a female witness who supports the mandate. The stormy hearing -- and a comment from a key supporter of Republican presidential candidate Rick Santorum that quickly drew fury -- provided further evidence of how the issue remains political dynamite despite the Obama administration’s efforts to reach a compromise."

@BetseyStevenson: Listening to this debate about contraceptives is causing me to keep checking the calendar. Did I somehow end up back in the 1970s?

@sarahkliff: Pretty sure the last three weeks have somehow managed to include about four months worth of reproductive health news.

Top op-eds

1) There's still good reason for economic pessimism, writes Nouriel Roubini: "Since late last year, a series of positive developments has boosted investor confidence and led to a sharp rally in risky assets, starting with global equities and commodities. Macroeconomic data from the United States improved; blue-chip companies in advanced economies remained highly profitable; China and emerging markets slowed only moderately; and the risk of a disorderly default and/or exit by some members of the eurozone declined...Central banks in both advanced and emerging economies have provided massive injections of liquidity. Volatility is down, confidence is up, and risk aversion is much lower--for now. But at least four downside risks are likely to materialize this year, undermining global growth and eventually negatively affecting investor confidence and market valuations of risky assets."

2) Growth in healthcare spending is exaggerated, writes J.D. Kleinke: "New data show that health spending over the past several years has been normalizing toward the rate of general inflation, rather than growing higher and higher, as had been the case almost continuously since the 1970s. This moderation in the growth rate of spending predates the national recession. And it puts the lie to the claim that we need government to put the brakes on an 'out-of-control' health-care system...If we really want to tame the health-care cost beast and make insurance 'affordable,' we would double down on all of the positive developments. We would liberate people with their own money from layer upon layer of arcane, localized insurance rules. We would fix the tax code to uncouple health insurance from employment and let people purchase their own mix of services and coverage. And we would let them do so in a competitive, national market just like with auto insurance--instead of holding them hostage in fragmented, local markets."

3) Americans would oppose deep cuts to entitlements, writes Paul Krugman: "Voters imagine that pledges to slash government spending mean cutting programs for the idle poor, not things they themselves count on. And this is a confusion politicians deliberately encourage. For example, when Mr. Romney responded to the new Obama budget, he condemned Mr. Obama for not taking on entitlement spending -- and, in the very next breath, attacked him for cutting Medicare. The truth, of course, is that the vast bulk of entitlement spending goes to the elderly, the disabled, and working families, so any significant cuts would have to fall largely on people who believe that they don’t use any government program. The message I take from all this is that pundits who describe America as a fundamentally conservative country are wrong. Yes, voters sent some severe conservatives to Washington. But those voters would be both shocked and angry if such politicians actually imposed their small-government agenda."

4) Investing in innovation can help solve the unemployment puzzle, write Javier Garcia Martinez and Sang Yup Lee: "There are no shortcuts on the path from emerging technologies to new industries. In most cases, the best recipe is to promote innovation and entrepreneurship to accelerate the time to failure and favor a Darwinian selection of the 'fittest' ideas. Today, the United States is the best ecosystem to start successful companies that commercialize new technologies. However, the world’s emerging economies are becoming well-aware of technology’s job-creating potential, and, as a result, they are investing heavily in education, world-class research and supporting their new high-tech companies. With large populations of highly-motivated young people, it is likely that many of these new industries will begin to flourish in emerging economies that invest in R&D, higher education and entrepreneurship."

5) The U.S. should let people pay to immigrate, writes Matthew Yglesias: "The potential fiscal gains from selling access to the U.S. labor market are not, in my view, even close to being the most important part of the case for more liberal immigration laws. But they might be a good place to start. Americans spend a lot of time feeling besieged these days. It’s worth noting that one of the problems weighing heavily on the national conscience--the overwhelming desire of foreigners to come live and work in our country--should be viewed as an asset. If everyone decided America was a terrible place to be, the illegal immigration problem would go away but we’d hardly be better off for it. We, the native born citizens of the United States, are sitting on a gold mine much more valuable than anything St. Kitts has to offer. We ought to put it to use."

@mattyglesias: Everyone knows human capital matters, but the closely related issue of population migration is tragically neglected.

Hip hop interlude: OutKast plays "ATLiens" live.

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Still to come: Mortgage delinquencies drop; Senators roll out a new Medicare plan; public airwaves will be auctioned soon; the House votes to expand drilling; and a look at Louis C.K. through the ages.

Economy

Mortgage delinquencies hit a three-year low, reports Nick Timiraos: "The share of homeowners behind on their mortgages fell to the lowest level in three years during the fourth quarter of 2011, offering the latest sign of how recent job-market gains could help heal the battered housing market, according to a report released Thursday. But the share of loans in foreclosure remained near the highest levels of the crisis, which means several housing markets could still face continued pressure as banks take back and resell homes. The survey, released by the Mortgage Bankers Association, showed that 7.6% of residential mortgages were at least 30 days past due on their payments at the end of 2011. That was down from 8.3% one year earlier and from a peak of 10% in early 2010, but it is still much higher than the historical level of around 5%."

New housing numbers are less encouraging than they seem, reports Kathleen Madigan: "Housing has been down so long that any gain is welcome. But the 1.5% rise in January starts was less positive than meets the eye. First, economists expected a bigger advance. After all, the mild weather should have allowed builders to break ground on many more projects than in a typical January. Economists at IHS Global Insight warn the building activity pulled forward into the tepid winter months could mean a payback in starts come the spring. Second, the mix of projects suggests demand for new homes is coming from renters, not buyers. All the increase was in multifamily buildings. Single-family housing starts actually fell 1.0% last month. For the last few years, housing’s problem has been insufficient demand to clear out the overhang of supply. For whatever reason-lack of downpayment, financing problems, the inability to sell a currently owned house-buyers are still largely missing from the housing equation."

The 'Buffett Rule' is nowhere to be found in the budget, reports Annie Lowrey: "President Obama has made the Buffett Rule, mandating that millionaires pay at least 30 percent of their incomes in taxes, the centerpiece of his campaign for 'fairness.' But look for it among the myriad tax changes the White House detailed in the 2013 budget proposal it released this week, and you will not find it. The Buffett Rule has become a signal piece of election-year political rhetoric. It featured heavily in Mr. Obama’s State of the Union address last month. It has become a favored talking point on the campaign trail. And Mr. Obama underscored his support of it in his budget proposal. But the White House says it is a 'guideline,' rather than a legislative initiative. And it says it prefers not to establish the Buffett Rule without a broader overhaul of the tax code, though it would support a Congressional effort to carry it out alone."

Taxpayers will subsidize banks' foreclosure settlement, reports Shahien Nasiripour: "The $40bn foreclosure-abuse settlement reached last week between regulators and big US banks gave President Barack Obama another shot at resuscitating his three-year-old initiative to help troubled homeowners. As details of the agreement dribble out, it appears the deal may also give big banks reason to celebrate and mortgage bond investors and taxpayers reason to pause. The agreement in principle between state prosecutors, federal agencies and five leading US banks - Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial - allows the lenders to take advantage of the federal home affordable modification programme when reducing distressed borrowers’ loan balances as part of the settlement, officials said."

Regulators are planning to ease a rule on derivatives, reports Gregory Meyer: "US regulators are poised to increase 20-fold the amount of derivatives a company can sell before it is subject to strict new rules for the biggest traders, softening a significant plank of financial market reform. The potential shift comes ahead of a vote at the Commodity Futures Trading Commission, the US regulator, set for February 23 on how to define dealers and other leading participants in swaps, the previously unregulated derivatives whose size and lack of transparency exacerbated the financial crisis...The CFTC which has proposed the definition along with the Securities and Exchange Commission, is set to approve $2bn as the maximum gross notional value of swaps a company may sell in a year before it is designated a dealer, three people familiar with the matter said. This is 20 times higher than the $100m threshold included when the rule was proposed."

@justinwolfers: Remaining doubt: How much of the #recoverywinter is due to unseasonably warm weather muting the usual seasonal dip?

How-to interlude: David Rees shows how to sharpen a pencil.

Health Care

Two GOP senators unveiled a plan for Medicare cuts, reports Alexander Bolton: "Sens. Richard Burr (R-N.C.) and Tom Coburn (R-Okla.) are pushing for major reductions in Medicare spending, even though they know the idea probably won’t be popular with GOP colleagues in an election year. Burr and Coburn announced their plan, which is expected to reduce Medicare spending by between $300 billion and $1 trillion in the next decade, at a news conference Thursday...Burr and Coburn are proposing keeping the current fee-for-service government program but requiring it to compete with private plans, introducing a premium-support plan in 2016. They would increase the Medicare eligibility age to 67 for people born after 1959 and raise Medicare premiums by 3 percent of the overall program’s costs each year until a 9 percent adjustment is reached by 2016. The plan would increase the cap on out-of-pocket costs for individuals earning more than $85,000 a year and couples earning more than $170,000."

It's a bad idea, writes Austin Frakt: "The Burr-Coburn proposal does not include any type of backstop to ensure that the Medicare cost (spending) curve is bent. Moreover, it says that premium support is 'tied to' average bids but doesn’t spell out what 'tied to' means. (Or did I miss it?) Taken together, this could provide beneficiaries with a lot of protection (no cost shifting), but it’s hard to tell. Other recent proposals (Domenici-Rivlin, Wyden-Ryan) cap growth at GDP+1%, as does current law. Since no such cap is in the proposal and it uses a rather weak form of bidding (among other vagueness), it is not at all clear the Burr-Coburn plan would save anything relative to current law. This may be a liability in terms of obtaining a CBO score that would be viewed favorably by a Congress fixated on deficit reduction."

INTERVIEW: Sen. Richard Burr explains his new Medicare proposal .

Domestic Policy

The need for revenue will lead to the auction of public airwaves, report Edward Wyatt and Jennifer Steinhauer: "The need for revenue to partly cover the extension of the payroll tax cut and long-term unemployment benefits has pushed Congress to embrace a generational shift in the country’s media landscape: the auction of public airwaves now used for television broadcasts to create more wireless Internet systems. If a compromise bill completed Thursday by Congress is approved as expected by this weekend, the result will eventually be faster connections for smartphones, iPads and other data-hungry mobile devices. Their explosive popularity has overwhelmed the ability, particularly in big cities, for systems to quickly download maps, video games and movies. The measure would be a rare instance of the government compensating private companies with the proceeds from an auction of public property -- broadcast licenses -- once given free."

The share of workers in science and engineering fields fell, report Conor Dougherty and Rob Barry: "The share of American workers in the science and engineering professions fell slightly in the past decade, ending what had been a steady upward trend in the proportion of workers in fields associated with technological innovation and economic growth. Workers in technical fields ranging from architecture to software design accounted for 4.9% of the labor force in 2010, according to a new analysis of Census data being released on Friday, down from a peak of 5.3% in 2000. Before 2000, the share of these knowledge workers had increased in every 10-year Census since 1950, according to the Population Reference Bureau, a nonprofit demographic research group in Washington that conducted the study. While the total number of workers in these fields continued to grow in the 2000s, along with the rise in total population, they now account for a relatively smaller slice of the work force."

Fanboy interlude: The evolution of Louis C.K.

Energy

The House voted to approve Keystone XL and expand drilling, reports Darren Goode: "House lawmakers on Thursday approved a plan to authorize the Keystone XL pipeline and expand drilling offshore and in the Arctic National Wildlife Refuge. The 237-187 victory for Republican leaders -- as part of one portion of a much larger energy and infrastructure strategy -- was a relatively painless start to what has become a difficult endeavor for the overall package. By voice vote, lawmakers on Thursday approved a bipartisan amendment from Gulf Coast representatives directing 80 percent of Clean Water Act fines tied to the BP oil spill to go toward Gulf restoration efforts. They also easily approved Republican amendments to quicken federal environmental reviews for renewable energy projects on federal lands and waters, and for a geothermal exploration test project."

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.