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Wonkbook: Another victory for Romney

By Karl Singer,

Karl Singer is writing Wonkbook while Ezra is off. Steven Senne AP Republican presidential candidate former Massachusetts Gov. Mitt Romney greets people during a campaign stop March 18 in Moline, Ill.

Top stories

1) Mitt Romney won the Puerto Rico primary. "Mitt Romney hailed his victory on Sunday in the Puerto Rico primary as another step in a slow march to the Republican presidential nomination, a winning streak he is aggressively working to repeat here in the Illinois primary on Tuesday. As the Republican race deepens into a fight for every delegate, the Romney campaign pointed to Puerto Rico as the latest sign of strength over Rick Santorum. Mr. Romney soundly defeated Mr. Santorum in the United States territory, which has 20 delegates, and all are likely to go to Mr. Romney...But the Republican rivals had their sights squarely set on Illinois, where 69 delegates are at stake on Tuesday. The race is far tighter here, party strategists said, and Mr. Romney scrapped a brief island respite to return to campaign across the state on Sunday...The outcome of Illinois will figure heavily in the next chapter of the race, with Mr. Romney outspending Mr. Santorum here to try to slow his momentum from a pair of Southern victories last week." Jeff Zeleny in The New York Times.

@mviser: Romney touting latest win in Puerto Rico: "It’s a territory of about 4m people. It’s not some little island. It’s 4m people!"

@fivethirtyeight: Intrade thinks there's a bigger chance the GOP nominee will be none-of-the-above than Santorum/Gingrich/Paul.

2) The Supreme Court's conservatives could save health reform. "The president...will need at least one Republican-appointed justice on the increasingly conservative court to uphold the signature domestic achievement of his presidency: health-care reform. The court’s four liberals, two appointed by Obama, are forecast as reliable votes in favor. But Obama needs at least five. In six hours of oral arguments over three days later this month -- the most time the court has spent on a case in 45 years -- the Obama administration will try to convince the justices that the Constitution grants Congress broad power to regulate interstate commerce and provide for the national interest...Roberts, who appears less dedicated to federalism than was his predecessor and mentor, William H. Rehnquist, may be 'gettable' on such a question. Justice Anthony M. Kennedy, the usual go-to conservative for liberals, is a realistic possibility. Even Justice Antonin Scalia, the court’s most irascible conservative, might be lured aboard." Robert Barnes in The Washington Post.

3) The Obama administration may delay smog rules. "The Obama administration, facing political heat over high gasoline prices, may delay new rules that would cut pollution from cars but also could bring higher prices at the pump, environmental and industry leaders said. The rules would require refiners to make cleaner-burning gasoline and auto makers to build cars that emit fewer smog-forming pollutants. The Environmental Protection Agency was scheduled to roll out the rules before April, but it hasn't yet submitted them for White House review...A delay could present a problem for automakers, which said they need cleaner-burning fuel to meet their own environmental goals. High sulfur content in gasoline limits the usefulness of auto technology aimed at reducing smog-forming emissions. Automakers said it will be even more problematic if the EPA decides to move forward with auto-technology standards without also imposing tighter fuel standards." Tennille Tracy in The Wall Street Journal.

4) Voters care about the price of gas, but it doesn't change votes. "There may be no number stamped more frequently on the American landscape than the price of gas. And as the average price has climbed toward $4 a gallon nationwide, it has generated abundant chatter about the threat to the economic recovery, and to incumbent politicians...But there is surprisingly little evidence that gas prices deserve an outsize reputation for economic and political influence. Studies suggest that most voters agree with Ms. Hawks: they are angry about gas prices, but other factors, like the economy and the personal qualities of candidates, ultimately determine their votes. Gas prices influence voters indirectly, because rising prices can slow the pace of growth. But the influence is modest, because spending on oil and its derivatives makes up only a small part of the nation’s economic activity. Gas purchases account for less than 4 percent of household spending." Binyamin Appelbaum in The New York Times.

5) The Obama administration released more details on its contraceptive mandate. "The Obama administration took another step on Friday to enforce a federal mandate for health insurance coverage of contraceptives, announcing how the new requirement would apply to the many Roman Catholic hospitals, universities and social service agencies that insure themselves. In such cases, the administration said, female employees and students will still have access to free coverage of contraceptives. The coverage will be provided by the companies that review and pay claims -- 'third-party administrators' -- or by 'some other independent entity,' it said...The new proposal virtually guarantees that birth control will remain an issue in the battle for the White House and Congress. Administration officials said that final rules for 'self-insured employers' would be issued after the November elections but before Aug. 1, 2013, when a transition period is scheduled to end." Robert Pear in The New York Times.

Top op-eds

1) BLINDER: The U.S. is headed towards massive fiscal contraction. "At some point, the spectacle America is now calling a presidential campaign will turn away from comedy and start focusing on things that really matter--such as the 'fiscal cliff' our federal government is rapidly approaching. The what? A cliff is something from which you don't want to fall. But as I'll explain shortly, a number of decisions to kick the budgetary can down the road have conspired to place a remarkably large fiscal contraction on the calendar for January 2013--unless Congress takes action to avoid it...The result of all this can kicking is that Congress must make all those decisions by January 2013--or defer them yet again. If the House and Senate don't act in time, a list of things will happen that are anathema either to Republicans or Democrats or both. The Bush tax cuts will expire. The temporary payroll tax cut will end. Unemployment benefits will be severely curtailed. And all on Jan. 1, 2013. Happy New Year!" Alan Blinder in The Wall Street Journal.

2) KRUGMAN: Health reform is working; don't let disinformation kill it. "Can such a system work? It’s already working! Massachusetts enacted a very similar reform six years ago -- yes, while Mitt Romney was governor. Jonathan Gruber of the Massachusetts Institute of Technology, who played a key role in developing both the local and the national reforms (and has published an illustrated guide to reform) has surveyed the results -- and finds that Romneycare is working pretty much as advertised. The number of people without insurance has dropped sharply, the quality of care hasn’t suffered, and the program’s cost has been very close to initial projections...The Affordable Care Act is the only thing protecting us from an imminent surge in the number of Americans who can’t afford essential care. So this reform had better survive -- because if it doesn’t, many Americans who need health care won’t." Paul Krugman in The New York Times.

3) PEARLSTEIN: Wall Street is in the midst of ethical decline. "Smith’s point is that even Goldman Sachs is no longer like Goldman Sachs now that it has given up the 'long term greed' in favor of the short-term variety necessary to produce industry-beating profits and bonuses. The predictable response from Wall Street was to dismiss Smith as hopelessly hypocritical and naïve -- hypocritical because he didn’t resign from Goldman until after he had been passed over for promotion and after he received his 2011 bonus check, naïve for thinking that trading financial instruments with customers has ever been anything but a zero-sum game. Such a dismissal would be more convincing, however, if it wasn’t merely the latest piece of evidence of the ethical deterioration at Goldman in particular, and on Wall Street more generally...There’s also recent evidence that this 'toxic' culture that Smith describes has infected the investment banking floors at Goldman." Steven Pearlstein in The Washington Post.

4) ROMER: Tax reform should be based on facts. "At least since Calvin Coolidge, politicians have trumpeted the supply-side benefits of cutting marginal income tax rates. Lower rates will unleash economic growth and the cuts will largely pay for themselves -- or so it’s often said. Yet careful studies find little evidence of such effects. Perhaps it’s time to reform tax policy based on facts, not worn-out assumptions...History shows that marginal federal income tax rates have varied widely...If you can find a consistent relationship between these fluctuations and sustained economic performance, you’re more creative than I am. Growth was indeed slower in the 1970s than in the ’60s, and tax rates were higher in the ’70s. But growth was stronger in the 1990s than in the 2000s, despite noticeably higher rates in the ’90s...If moderate increases in marginal rates wouldn’t much affect behavior, a mix of rate increases and cuts in tax expenditures might be a sensible path." Christina Romer in The New York Times.

5) MURRAY: Economics doesn't explain our cultural divide. "As these critics see it, the loss of our common culture is a result not of cultural changes but of shifts in policy and the economy. Over the past four decades, they argue, the U.S. has shipped high-paying manufacturing jobs overseas and undermined the labor unions that could protect workers' pay and benefits. Working-class earnings fell more than 20% from their high point in 1973, men were no longer able to support families, and marriage eroded accordingly. Demoralized workers fell out of the labor force. The problems of the new lower class would fade away, they suggest, if only we would use public policy to generate working-class jobs at good wages. There are two problems with this line of argument: The purported causes don't explain the effects, and whether they really were the causes doesn't make much difference anyway." Charles Murray in The Wall Street Journal.

@RameshPonnuru: My bumper sticker in every campaign is: "Compared to what?"

New music interlude: Nas' "The Don."

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Still to come: The lobbying dispute behind Congress' fight over the Export-Import Bank; insurers are making contingency plans; budget cuts threaten access to college placement tests; gas prices jump; and a porcupine celebrates St. Patrick's Day.

Economy

Inside the 'grand bargain' on the debt and Obama's evolution. "Obama was pursuing a compromise with his ideological opponents, a 'grand bargain' that would move into unmarked territory, beyond partisan divides, pushing both parties to places they did not want to go. Now might be the moment. Months later, that moment and the tense, ultimately unsuccessful ones that followed have become a critical issue in Obama’s reelection campaign as the president and his Republican critics lay out competing narratives about his stewardship of the economy and the United States’ fiscal health. Republicans say those days offer clear evidence that the president is fiscally reckless and determined to tax his way out of the nation’s mounting deficit and debt problems...From the White House point of view, those few days show a politically selfless president willing to rise above the partisan fray and make difficult choices for the good of the country." Peter Wallsten, Lori Montgomery, and Scott Wilson in The Washington Post.

A lobbying dispute is behind the clash over the Export-Import Bank. "A bitter lobbying battle between corporate titans Boeing Co. and Delta Air Lines Inc. has ensnared a small agency playing a big role in the Obama administration's drive to boost exports. The White House has tried unsuccessfully for months to get Congress to renew and expand the lending authority of the Export-Import Bank, which provides loan guarantees and other assistance to overseas customers of U.S. companies at below-market rates. The bank--overseen by a White House appointee and funded by customer fees and interest payments--has doubled its financial support in the past four years to $41 billion annually. But without congressional action, the bank may soon hit its limit. That's sparked alarm at Chicago-based Boeing, the bank's top beneficiary, which is leading the corporate charge in support of the administration's efforts to renew and expand lending." Josh Mitchell and Corey Boles in The Wall Street Journal.

Paul Ryan is preparing to release his latest budget plan. "Congress is preparing to renew its bitter fight over government spending, as both parties eagerly await the arrival Tuesday of a new budget plan authored by Republican Rep. Paul Ryan (Wis.)...Ryan may this year face a new headache: tea party conservatives in his party eager to slash spending more quickly than his proposal will advocate. To earn their support, Republican leaders have said that a consensus was emerging around a budget that sets spending at $1.028 trillion for the 2013 fiscal year -- the same level included in Ryan’s budget adopted a year ago. Even so, Ryan’s budget will face a key test with fiscal conservatives who pack the House Budget Committee, which he chairs. Republicans on the committee were briefed on the document last week, and the full committee will publicly dissect the plan Wednesday." Rosalind Helderman in The Washington Post.

The CBO unveiled its latest deficit projections. "The Congressional Budget Office said Friday that President Barack Obama’s tax and spending policies will yield $6.4 trillion in deficits over the next decade, more than double the shortfall in CBO’s own fiscal baseline -- even after taking credit for reduced war costs. House Republicans, slated to unveil their own plan next week, are sure to seize on the numbers, yet the mountain of data gives reason for both parties to pause going into what’s expected to be a major fiscal crisis after the November elections...Administration officials Friday took heart that CBO credited Obama’s plan with bringing future deficits down to 3 percent of GDP. In fact, the $6.4 trillion cumulative 10-year shortfall shown by CBO is under the $6.7 trillion forecast by the White House in its own documents in February. And measured against a rough proxy for current policy, the report lends at least partial support to the White House claim of up to $4 trillion in deficit reduction over 10 years." David Rogers in Politico.

PROFILE: Lori Montgomery on Kent Conrad and his efforts to cut deficits.

Philosophy interlude: Alfred Hitchcock's definition of happiness.

Health Care

Insurers are making plans on what to do if the mandate is struck down. "The insurance industry and advocates of the health-care overhaul are sketching out contingency plans in case the Supreme Court strikes down a central part of the law in the coming months. Their worst-case scenario: The court knocks out the law's mandate that most Americans carry insurance or pay a fee but leaves in place requirements that insurers sell policies to all applicants. The result, they say, would be spiraling insurance premiums, because sick people would buy insurance and nothing would stop healthy people from waiting to buy it until they needed it...Several officials from large health insurers said that if the mandate were struck down, their first priority would be persuading members of Congress to repeal two of the law's major insurance changes: a requirement to cover everyone regardless of his or her medical history, and limits on how much insurers can vary premiums based on age." Louise Radnofsky in The Wall Street Journal.

Lawmakers are targeting 'roll your own' cigarette shops. "A new generation of roll-your-own cigarette machines has been spreading like wildfire across the U.S. at upstart tobacco shops capitalizing on tax loopholes to deliver low-priced smokes. Now lawmakers, backed by Big Tobacco and convenience-store chains, want to declare such shops to be manufacturers. That would subject them to the same taxes and regulations as the broader cigarette industry, likely snuffing them out...Hundreds of such shops--mostly or entirely focused on the roll-your-own machines-- have opened since 2009, when Congress increased the federal excise tax on a carton of 200 cigarettes to $10.066 from $3.90...Under a Senate bill passed Wednesday, any retailers making roll-your-own machines available to customers would be treated like mainstream cigarette manufacturers. The provision was included in a rural school financing amendment tucked inside the federal surface transportation bill, which still needs House approval." Mike Esterl in The Wall Street Journal.

The Obama administration unveiled regulations for its Medicaid expansion. "The Obama administration on Friday told states how to enroll millions more low-income Americans into Medicaid under the health-care overhaul, 10 days before the Supreme Court begins considering a challenge to the law. The regulations, published by the Department of Health and Human Services, detail the scheduled expansion of Medicaid to cover a larger batch of low earners in 2014, when much of the health-care law is set to take effect. 'Medicaid will look and feel like a very different program by 2015,' said Cindy Mann, a top official at the agency charged with overseeing the changes. The Medicaid expansion is part of the broader case brought by opponents of Democrats' 2010 health-care law that the Supreme Court will begin hearing March 26. To reduce the number of uninsured Americans, the law calls for adding 17 million or more additional people to the Medicaid program in the next decade." Louise Radnofsky in The Wall Street Journal.

Regulators are trying to slow hospital mergers. "Government antitrust enforcers have tackled AT&T Inc. and Intel Corp. in recent years. Now the question is whether regulators can conquer an even tougher foe: the hospital industry. From Rockford, Ill., to Albany, Ga., hospitals are merging. A 10-year high of 86 deals, valued at $7.94 billion in total, were announced last year, according to research firm Irving Levin Associates Inc. The hospitals say they are trying to cut costs and deliver care more efficiently, a goal of the 2010 federal health-care overhaul. But Federal Trade Commission Chairman Jon Leibowitz says some mergers can lock up local markets, leading to higher prices for patients and insurance companies with few other places to turn. 'If you want to do something about controlling costs in health care, you have to challenge anticompetitive hospital mergers,' he says in an interview." Brent Kendall in The Wall Street Journal.

@FareedZakaria: The avg elderly patient on Medicare has more than 10 specialist physicians-who often dont talk-by their last year of life.

Domestic Policy

Budget cuts are threatening access to AP tests. "Because of a federal budget cut, thousands of low-income students across the nation may not be able to afford the fees for their Advanced Placement exams this spring -- exams that could save them thousands of dollars in college tuition. As part of the federal budget agreement last December, Congress cut federal financing for programs that offer advanced high school courses to slightly under $27 million, from $43 million the previous year, with only about $20 million to be used to subsidize low-income students’ exam fees. So, in recent weeks, state education officials have been notifying high schools that low-income students, who have for decades been eligible for fee waivers, will have to pay $15 for each of the first three exams they take, and $53 per exam for any beyond that. A.P. exams, given in May, cost $87 apiece, and many schools are now in the process of collecting registrations and fees." Tamar Lewin in The New York Times.

Adorable animals being adorable interlude: Teddy Bear the porcupine celebrates St. Patrick's Day by eating corn.

Energy

Gas prices jumped 6% in February. "U.S. gasoline prices jumped 6% in February, and market experts predict they will climb higher because critical refining operations in the Northeast are shutting down. From New York to Philadelphia, refineries that turn oil into gasoline have been idled or shut permanently because their owners are losing money on them. Sunoco Inc. is expected to close the region's largest refinery in July, taking another 335,000 barrels per day in production capacity off the market. The East Coast refineries are getting squeezed by the soaring cost of crude oil, the major component in gasoline. The cost of oil has jumped in the past year due to global economic growth and rising tensions between Western nations and Iran, a major producer. Refineries haven't been able to increase their own prices enough to compensate. The government said Friday that the increase in gas prices had contributed to a 0.4% overall increase in consumer prices in February." Jerry Dicolo in The Wall Street Journal.

Regulators may increase scrutiny of mortgages to people with drilling leases. "The Department of Agriculture is considering requiring an extensive environmental review before issuing mortgages to people who have leased their land for oil and gas drilling. Last year more than 140,000 families, many of them with low incomes and living in rural areas, received roughly $18 billion in loans or loan guarantees from the department under the Rural Housing Service program. Much of the money went to residents in states that have seen the biggest growth in drilling in recent years, including Pennsylvania, Texas and Louisiana...The decision, agriculture officials say, would also affect the department’s Rural Business and Cooperative program, which issued more than $1 billion in loans and grants last year to about 15,000 rural businesses. Home mortgages and rural business loans from the agency have been allowed to avoid such reviews, except under unusual circumstances." Ian Urbina in The New York Times.

@WestWingReport: Drill, baby drill? Latest rig counts: U.S. oil exploration up 57% in past year; of 3,886 rotary rigs in service worldwide, 51% are in U.S.

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

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