Wonkbook: Economy gets more good news
Karl Singer is writing Wonkbook while Ezra is traveling.
1) The economy got more good news, report Ben Casselman and Jon Hilsenrath: "After more than two years of frustrating fits and starts, the U.S. economy is showing signs of moving onto firmer ground. A host of reports Thursday underscored that point, as well as the perils that persist. The number of Americans filing initial claims for government unemployment benefits has fallen to levels last seen before Lehman Brothers collapsed, the Labor Department said. The stock market, a leading indicator of growth, is off to its best start this year since 1998 and notched more gains Thursday. Meantime, consumer confidence has reclaimed ground lost last year, and another report showed that income growth is firming. However the economy is far from robust. Government and company reports showed consumer spending has been mixed. And the manufacturing sector, though on the rebound, isn't booming, according to a survey of manufacturing purchasing managers by the Institute for Supply Management."
@Neil_Irwin: Quite a good jobless claims number. Down to 351,000, from revised 353k.
@BetseyStevenson: Isn't it lucky that jobless claims get systematically revised up from the past week--we get so many more "jobless claims fall" headlines
2) The 'Blunt amendment' failed in the Senate, report N. C. Aizenman and Rosalind Helderman: "The Senate Thursday rejected an effort to vastly expand conscience exemptions to the Obama administration’s new birth control coverage rule, even as Republican presidential contenders continued to tussle over the issue. The measure, an amendment proposed by Sen. Roy Blunt (R-Mo.) to a highway funding bill, would have allowed not only religious groups but any employer with moral objections to opt out of the coverage requirement. And it would have allowed such employers to do so in the case of not only contraception but any health service required by the 2010 health-care law. The 51 to 48 vote to kill the amendment was largely along party lines, although three Democrats -- Robert P. Casey Jr. (Pa.), Joe Manchin (W.Va.) and Ben Nelson (Neb.) -- broke ranks to support it, and Republican Olympia Snowe (Maine) opposed it."
@amaeryllis: How did it become controversial for employers to offer full healthcare, and then employees - as adults - make their own decisions?
@mattyglesias: EXCLUSIVE: The same ObamaCare that's prompted the contraception controversy will transition us out of employer-based insurance.
3) Greece's debt restructuring won a crucial ruling, reports Howard Schneider: "There will be no payouts to investors holding bond insurance contracts on Greek debt, a committee of bankers and investors ruled Thursday. The decision by a panel of the International Swaps and Derivatives Association keeps the country -- and the euro region -- clear so far of the stigma of a 'credit event' that would trigger billions of dollars in payments under the insurance contracts known as credit default swaps...Greece is in the midst of restructuring its privately held bonds, which will involve losses of more than 50 percent for investors while reducing the country’s debts by more than $130 billion. The restructuring is part of a larger international rescue plan for the country, and to achieve the needed savings, Greece may have to force some bondholders to participate. The aim has been to keep the program voluntary -- partly to avoid a negative ruling from ISDA."
4) Obama renewed his push to eliminate oil and gas subsidies, report Helene Cooper and Jonathan Weisman: "With his re-election fate increasingly tied to the price Americans are paying at the gas pump, President Obama asked Congress on Thursday to end $4 billion in subsidies for oil and gas companies and vowed to tackle the country’s long-term energy issues while shunning 'phony election-year promises about lower gas prices.' Mr. Obama, in an appearance at Nashua Community College here, took a page out of his jobs strategy of last year, calling on Americans to contact their Congressional representatives and demand a vote on the oil subsidies in the next few weeks...Mr. Obama’s decision to spotlight his proposal to end oil and gas subsidies immediately opened him up to criticism from Republicans, who noted that the proposal was unlikely to help lower the price of gas at the pump."
5) States have been divesting in higher education, reports Catherine Rampell: "As state funding has dwindled, public colleges have raised tuition and are now resorting to even more desperate measures -- cutting training for jobs the economy needs most...This squeeze is one result of the states’ 25-year withdrawal from higher education. During and immediately after the last few recessions, states slashed financing for colleges. Then when the economy recovered, most states never fully restored the money that had been cut. The recent recession has amplified the problem...It is this cumulative public divestment -- and not extravagances like climbing walls or recreational centers advertised on a few elite campuses -- that is primarily responsible for skyrocketing tuitions at state institutions, which enroll three out of every four college students."
1) Financial reform is worth preserving, writes Tim Geithner: "In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising--the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require...The failure to modernize the financial oversight system sooner is the most important reason why this crisis was more severe than any since the Great Depression, and why it was so hard to put out the fires of the crisis."
2) The GOP contenders' budgets would boost inequality, writes Paul Krugman: "The politicians shouting loudest about deficits are actually using deficit hysteria as a cover story for their real agenda, which is top-down class warfare. To put it in Romneyesque terms, it’s all about finding an excuse to slash programs that help people who like to watch Nascar events, even while lavishing tax cuts on people who like to own Nascar teams...So the Republicans screaming about the evils of deficits would not, in fact, reduce the deficit -- and, in fact, would do the opposite. What, then, would their policies accomplish? The answer is that they would achieve a major redistribution of income away from working-class Americans toward the very, very rich. Another nonpartisan group, the Tax Policy Center, has analyzed Mr. Romney’s tax proposal. It found that, compared with current policy, the proposal would actually raise taxes on the poorest 20 percent of Americans, while imposing drastic cuts in programs like Medicaid that provide a safety net for the less fortunate."
3) The rent is too damn high, writes Matthew Yglesias: "National average rents are way up from their recession lows. At the same time, prices for owner-occupied housing have been basically stagnant for years after plunging when the bubble popped...The country has been on a decades-long drought of large-apartment-building construction. We’re now facing a perfect storm of demand, thanks to a growing population of empty nesters with busted 401(k)s looking to downsize and the huge backlog of twentysomethings who still need their first place. How to relieve this shortage? One possible solution is the Federal Housing Finance Agency’s new initiative to try to bundle and resell foreclosed homes as rental properties...But even under optimal public policy, there’s no getting around the fact that apartment construction takes time. For the short term, that means rents are only going to go higher--inflicting serious pain on the poor, on young people, and on those whose credit history locks them out of the mortgage market."
4) Corruption is about more than money, writes Ezra Klein: "Which isn’t to say that it wouldn’t be worthwhile to get the money out of politics, or to publicly finance elections, or, as Abramoff suggests, to make it impossible for onetime public servants to lobby. But it’s not clear that any set of campaign finance reforms or anti-lobbyist regulations would restore trust in government or ratchet down partisan polarization. Such policies, if they worked, would likely have more modest effects: a bit more trust in government, maybe, and a bit less of a reliance on lobbyists, hopefully...While moneyed interests are decisive in passing laws and influencing provisions that few Americans care about, they’re much weaker on the issues where Americans are actually watching. But those issues are the ones that have convinced America that Washington is broken. Which suggests that as big a problem as money is in politics--and make no mistake, it is a big problem, as the rise of the Super PACs shows all too clearly--it is not the only one, and it is probably not even the worst one."
5) Alternative fuels should be part of the solution to rising gas prices, writes Robert McFarlane: "To outmaneuver OPEC we need to eliminate oil's monopoly as the only transportation fuel...A gas price almost double what we're paying now would constitute only a fraction of the impact on our economy. We will go back into recession and stay there for a long time. Let's open our market to good old American competition. Friedrich Hayek and Milton Friedman stressed that the foremost economic duty of government is to eliminate cartel pricing. Bills are now pending in both houses of the Congress (HR 1687 and S1603) that seek to do exactly that by requiring car makers to enable fuel competition in their own product lines--adding flex-fuel, all electric, hybrid electric, or any other way auto makers choose to implement the law. Thanks to the windfall discovery of incalculable quantities of unconventional gas in our country, we can do this. If Congress acts, we can finally establish energy independence through competition."
Australia pop interlude: Missy Higgins plays "Where I Stood" live at Borders.
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Still to come: Auto sales have hit pre-recession levels; e-cigarettes face a crackdown; postal cost-cutting runs into congressional resistance; Senators are giving a 'clean energy standard' another try; and a baby sloth gets a stylish onesie.
Auto sales are rising, reports Nick Bunkley: "Auto sales jumped 16 percent last month to the highest level since before the recession, helped by declining unemployment and improving consumer confidence even as gasoline prices topped $4 a gallon in parts of the country. The seasonally adjusted, annualized selling rate for new vehicles, a closely watched indication of the auto industry’s health, climbed to 15.1 million in February. It was the first time the rate reached that level since 2008. Analysts said it was too early to predict if the February rate was sustainable -- March is typically a much stronger month for auto sales and therefore more indicative of long-term trends -- but the outlook was bright enough that General Motors, Ford and Chrysler were seeking ways to increase production...Automakers sold 12.8 million cars and trucks last year, and the last time sales surpassed 14 million was 2007."
Warm weather boosted retailers, reports Karen Talley: "U.S. retailers turned in solid sales for February as warmer weather brought out shoppers for spring wear and clearance sales. Stores began displaying spring apparel during the month--in many cases with bright colors offering some freshness. Analysts said some shoppers used money they didn't spend on apparel for a frigid winter that didn't come...The 18 retailers that report same-store sales, or sales at stores open more than a year, showed 6.4% growth in February, when 4.8% was expected, according to Thomson Reuters. The figure compares with 4.7% a year ago. The three-day Presidents Day weekend and Valentine's Day drew some extra buying. The National Retail Federation said the average person celebrating Valentine's Day spent $126.03, up 8.5% from last year's $116.21, and the highest in the survey's 10-year history. Last year, shopping over these holidays was constrained by more severe weather. Total spending for Valentine's Day this year was expected to reach $17.6 billion compared with $15.7 billion last year."
Eurozone leaders delayed approval of the second half of Greece's bailout, report Peter Spiegel and Quentin Peel: "Eurozone members delayed approval of more than half of the €130bn bail-out for Greece after demanding that Athens show more proof that it would implement hastily agreed spending cuts and reforms. Finance ministers from the 17-country currency bloc meeting in Brussels signed off on funds to underpin a €206bn restructuring of privately held Greek debt. But they requested a 'detailed assessment' by European Union and International Monetary Fund officials by next week of implementation of 38 specific measures before handing over the remaining €71.5bn to Athens. By in effect splitting the bail-out into two parts, the eurozone has allowed hardliners in northern Europe to delay bail-out funds even longer. Once the bond swap is completed, the risk of a Greek default on a €14.5bn bond due on March 20 would disappear."
Ben Bernanke's Senate testimony was surprisingly uneventful, reports Binyamin Appelbaum: "One clear sign that the economy is improving: a Senate hearing featuring the Federal Reserve chairman, Ben S. Bernanke, ended ahead of schedule Thursday after the committee members ran out of questions. It was one of the shortest and least contentious appearances that Mr. Bernanke has made on Capitol Hill since the recession started five years ago. Mr. Bernanke repeated the Fed’s assessment, which he delivered most recently to a House committee on Wednesday, that the domestic economy would grow modestly this year despite higher oil prices and turbulence in Europe...He was in one respect more specific than he has been in the past, saying that Congress should aim to reduce the deficit over the next 10 to 15 years to reach a point where revenues cover all costs except interest payments."
@BCAppelbaum: Bernanke and Congress have fallen into happy symbiosis. They gather regularly to agree that someone should do something about the deficit.
The U.S. needs a real investigation into financial fraud, writes Phil Angelides: "Four years after the disintegration of the financial system, Americans have, rightfully, a gnawing feeling that justice has not been served. Claims of financial fraud against companies like Citigroup and Bank of America have been settled for pennies on the dollar, with no admission of wrongdoing. Executives who ran companies that made, packaged and sold trillions of dollars in toxic mortgages and mortgage-backed securities remain largely unscathed...The belated creation of a Residential Mortgage-Backed Securities Working Group, led by federal officials along with New York State’s aggressive attorney general, Eric T. Schneiderman, offers hope that the needed surge of investigation and enforcement may finally be initiated. But for it to succeed, the Obama administration must give the group the wherewithal to do so."
Movie trailer interlude: Tim Burton's "Frankenweenie."
Electronic cigarettes are facing a crackdown in the states, reports Mike Esterl:"A growing number of states are taking aim at electronic cigarettes in the absence of federal regulations, intensifying a public-health debate over the fast-growing alternative to traditional cigarettes. Lawmakers in more than half a dozen states from Arizona to New York have introduced legislation this year that would prohibit the sale of e-cigarettes to minors. Bills in Alabama, Kentucky, Mississippi and Utah would extend smoking bans in public areas to include e-cigarettes, and politicians in other states have proposed special taxes and halting Internet sales. The activity comes as more Americans turn to the battery-powered tubes, which turn nicotine-laced liquid into a vapor mist that is inhaled. Annual sales of e-cigarettes in the U.S. have grown to between $250 million and $500 million since arriving from China five years ago, according to industry estimates. That still represents a sliver of the roughly $100 billion U.S. tobacco market."
Some members of Congress are resisting USPS cost-cutting, report Jennifer Levitz and Eric Morath: "Congress says it is trying to find ways to get the U.S. Postal Service out of the red. But some lawmakers have also become an obstacle in this cost-cutting effort as they resist the agency's plan to close post offices and mail-sorting hubs...The agency doesn't need Congress's approval to close the plants and post offices, but lawmakers 'draw on a number of tactical tools' to delay or dissuade the postal service, including public protests, withholding support for major postal-related legislation, and adding language to committee reports instructing the agency to study the matter further, the U.S. Postal Service Office of Inspector General said in a June 2011 report. In addition, lawmakers can enact new rules that dictate how facilities close in the future. The Postal Service does need congressional approval to enact more sweeping changes."
A project passed the House despite earmark accusations, reports Ron Nixon: "The House overwhelmingly approved legislation Thursday to allow construction of a new $700 million bridge between Minnesota and Wisconsin, a project that has drawn comparisons to earmarks and required a Congressional exemption from a landmark environmental law. The vote comes after months of impasse between lawmakers supporting the project, who say a new bridge is needed to replace the current outdated structure, and critics like Representative Betty McCollum, Democrat of Minnesota, who called it a 'monument to government waste.' The vote was 339 to 80, with 16 Republicans and 64 Democrats voting against the measure...The bill did not authorize financing for the bridge, whose cost will be split by Minnesota and Wisconsin, drawing from general pools of state and federal transportation money. Minnesota’s governor, Mark Dayton, had said his state would lose $160 million in federal money if Congress did not act to exempt the project from the environmental regulations."
Onesie interlude: A baby sloth gets a homemade onesie.
'Clean energy standard' legislation was unveiled, reports Andrew Restuccia: "Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) floated highly anticipated legislation Thursday to reduce power plant pollution by mandating greater use of low-carbon energy sources. The legislation, known as the Clean Energy Standard Act of 2012, faces major hurdles in Congress, but will likely serve as a rallying cry for Democrats and renewable energy groups, which suffered a brutal defeat when climate legislation collapsed in the Senate in 2010. The bill, an energy policy priority for President Obama, requires that large power companies supply increasing amounts of electricity from low-carbon sources like wind, solar, nuclear and natural gas beginning in 2015. By 2035, 84 percent of power produced by large utilities will come from low-carbon sources, according to the legislation."
Oil jumped to a new high, report Gregory Meyer and Guy Chazan: "Oil leapt to the highest level since the market peak of mid-2008 in a frenzy of buying that followed a disputed report of a pipeline blast in Saudi Arabia. The report, swiftly denied by a Saudi official, was posted on web sites including PressTV, an English-language news channel based in Tehran. Iran is the Saudi kingdom’s main rival in the Middle East oil market, and stands to lose market share as western sanctions increase over its nuclear programme. Brent crude gained as much as $5.74 to reach $128.40 a barrel, jumping sharply after futures contracts settled late in London. The price was the highest since late July 2008, when crude was in retreat from its all-time high of $147.50. Crude has climbed 17 per cent from the start of the year as traders weigh the balance of growing global demand against the prospect of lower supplies from Iran. In euro terms, oil has broken records."
@Austan_Goolsbee: To the people saying we should attack Iran and also that high gas prices are killing us: you do know they are related, right?
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.