Wonkbook: Mulling a jobs plan
Dylan Matthews is writing Wonkbook while Ezra is traveling.
Welcome to Wonkbook.
Five in the morning
1) Obama hasn't settled on a jobs plan to announce next week, report Zachary Goldfarb and Peter Wallsten: "Obama...said he intended to reveal the much-anticipated new jobs agenda in a speech next week...And yet, behind the scenes Obama and top aides had yet to reach agreement on the major tenets of that plan, and it remained unclear whether the president was looking for narrower ideas with a realistic chance of passing the Republican-led House or more sweeping stimulus proposals that would excite his liberal base and draw contrasts with the GOP...According to administration officials and others familiar with the matter, Obama is considering a tax cut that would directly reward companies for hiring new workers, new spending for environmentally friendly construction and for rehabilitating schools, and clean energy tax cuts."
2) New CEA chair Alan Krueger will likely push for more stimulus, reports Sara Murray: "Alan Krueger, President Barack Obama's pick to head the White House Council of Economic Advisers, will likely serve as an administration advocate for more aggressive government intervention to revive job growth...Mr. Krueger, a Princeton University economics professor and former Obama administration official, has supported both tax cuts and spending programs to help stimulate growth in recent years, including incentives to encourage employers to hire jobless workers. He also backed Build America Bonds, a program that allowed states and localities to sell taxable municipal bonds and receive a federal subsidy. He served as assistant Treasury secretary for economic policy in the first two years of the Obama administration, where he helped design the 'cash for clunkers' program to boost auto purchases."
Brad Plumer reviews Krueger's academic work: http://wapo.st/oFX2jr
3) Republicans are demanding cuts in exchange for Irene relief, report Ed O'Keefe and Rosalind Helderman: "Republicans, who control the House and have driven hard bargains on spending cuts all year, have insisted that there will be enough money for disaster relief. But they also pledged that additional spending will mean cuts in other areas. 'Yes, we’re going to find the money,' House Majority Leader Eric Cantor (R-Va.) said Monday in a television interview. 'We’re just going to need to make sure that there are savings elsewhere to continue to do so.' That throws the disaster-relief effort into the heart of the spending wars that have dominated Washington for much of the past year, and recent history suggests that the battles will be acrimonious and protracted. Democrats immediately pounced on Cantor’s remarks, accusing the GOP of heartlessly withholding disaster-relief dollars."
4) The House GOP is getting specific on regulatory rollback, reports Jennifer Steinhauser: "On Monday, presaging the return of Congress next week, Representative Eric Cantor, the House majority leader, released some details of the 'regulatory relief agenda' that House Republicans will pursue over the coming months. Among the targets in their regulation-cutting cross hairs are environmental protection regulations -- they want to beat back impending readjustments of the current ozone standards and regulations on coal ash -- and some components of the Obama health care law, which the House voted earlier this year to repeal. Republicans are also preparing to take on the National Labor Relations Board for injecting itself into a labor dispute involving the Boeing Company in South Carolina."
5) Health care reform is already cutting premiums, reports Sam Baker: "A controversial piece of the healthcare reform law is beginning to save consumers money but could also give them fewer plans to choose from, the Government Accountability Office (GAO) said Monday. The GAO interviewed insurance companies and regulators about the early impact of a provision that governs how insurance companies spend their money. It requires plans to spend 80 or 85 percent of their premiums on medical costs -- a calculation known as the medical loss ratio (MLR). Companies that miss the minimum MLR will have to pay rebates to their customers. According to GAO, some insurers are decreasing premiums or leaving their rates unchanged in order to comply with the MLR requirements. Three companies told GAO that premiums will either fall next year or increase by a smaller amount than they would have without the MLR."
Live rap interlude: Jay-Z and Kanye West do "Otis" at the Video Music Awards.
Got tips, additions, or comments? E-mail me.
Still to come: European leaders are trying hard to maintain confidence in their banks; a rate hike review provision of health care reform is taking effect; a punitive immigration enforcement law in Alabama has been stayed; Alan Krueger's environmental record could mean trouble for his nomination; and introducing a handheld chainsaw.
European leaders are trying to shore up confidence in the continent's banking system, reports Howard Schneider: "Top European officials defended the health of the continent’s financial system Monday, trying to stem concerns that Europe’s slowing economy and high levels of government debt may cause some of its banks to fail. In separate statements European Central Bank President Jean-Claude Trichet and European Economic and Monetary Affairs Commissioner Olli Rehnsaid banks within the 17-nation euro currency zone have been steadily raising the amount of capital set aside as a cushion against losses and will not face the sort of cash crunch that helped trigger the recession in 2008...The remarks were also a rebuff to Christine Lagarde, head of the International Monetary Fund, who warned during the weekend that weakness in European banks posed a key risk to the economy."
The US needs to cut corporate tax rates, writes Ramesh Ponnuru: "It's fair to conclude that the corporate income tax lowers wages. And that’s not the only reason to reduce the tax. As Jonathan Berk explained on Bloomberg View last week, the corporate tax is highly inefficient. It raises little revenue. It encourages debt over equity, and some types of company organization over others, for no good reason. I would add that corporate taxes, like all taxes on investment, encourage consumption today over consumption tomorrow. And its costs are going up as other countries reduce their corporate taxes...The more realistic response to the mobility of capital is the one that other countries, blessed with politicians who are generally no more far-seeing or intelligent than ours, have made: reducing their corporate taxes. Eventually, we’ll get there too."
Mortgage refinancing won't fix the housing market, writes Edward Glaeser: "Refinancing makes little sense as stimulus, whose goal is to provide a temporary benefit that induces more spending today. Instead, state-supported refinancing is a benefit that pays off year after year for as long as three decades. As the loss to investors is experienced immediately, while the benefit to credit-constrained borrowers is spread over time, the net effect on the economy may well be negative. It’s also hard to see why housing markets would be significantly strengthened by lowering the interest payments for existing homeowners. My work suggests that the linkbetween interest rates and housing market is relatively modest, and this refinancing effort won’t do anything to reduce borrowing costs for new buyers...Empirical work typically finds weak evidence that lower mortgage payments reduce the likelihood of defaults."
Obama needs to go big on jobs, writes Eugene Robinson: "Obama and his advisers know very well that this is the wrong time to cut government spending. They know that using federal money to seed big new initiatives -- to upgrade the nation’s crumbling infrastructure, jump-start the “clean” energy industry, retrain the unemployed so they can compete in tomorrow’s job market -- would give the economy a much-needed boost. They know, too, that federal action to buoy the housing market would help revive consumer spending, thus giving corporations a reason to invest the estimated $1 trillion they’re sitting on. Such ambitious proposals would demonstrate that the president is willing to think big -- that he is not willing to accept the Republican narrative of massive retrenchment and, by implication, inevitable decline...Boldness from the president may or may not get the nation’s mojo working again. Timidity surely won’t."
Dangerous tool interlude: A handheld chainsaw.
A rate hike review provision of the Affordable Care Act is taking effect, reports Janet Adamy: "A new federal and state program on health-insurance rates will determine whether bad publicity alone is enough to stop insurers from levying steep increases. Starting Thursday, the Obama administration and states will automatically scrutinize any proposed health-premium increase of 10% or more as part of the 2010 health-overhaul law. The change applies to an estimated 34.8 million insurance policies that Americans buy on their own or get through a small employer--two markets where consumers have faced particularly hefty increases in recent years. America's Health Insurance Plans, the industry's main lobbying group, found that about half of all increases in the individual-insurance market exceeded 10% each year for the past three years."
Most uninsured people don't understand the Affordable Care Act, reports Jennifer Haberkorn: "About half of the uninsured Americans who stand to benefit the most from the health care reform law aren’t aware of how the legislation is designed to help them buy insurance, according to a new poll released Monday. The Kaiser Family Foundation’s monthly health tracking poll found that 47 percent of the uninsured said the law 'won’t make much difference' to them. Another 14 percent said the law would hurt them. Only 31 percent said they thought the law would help them. Nearly half of the uninsured don’t know about the law’s tax credits for low- and middle-income people. Another 53 percent don’t know about the law’s Medicaid expansion...[Drew Altman, president and CEO of the Kaiser Family Foundation] said the figures do not reflect a communications failure. He says busy people -- particularly those struggling to afford insurance now -- will only understand the law when it becomes tangible for them."
A Republican president could seriously weaken the Affordable Care Act on his own, reports Sahil Kapur: "The White House is up for grabs in 2012, and a potential Republican victor who lacks congressional support to repeal the health reform law would still possess a variety of executive tools to delay or weaken its implementation, several experts tell Inside Health Policy...Waivers are one key executive tool a president could use to undermine the law. The president could generously grant waivers to employers and other entities from having to abide by some of its regulations or taxes (such as the tax on so-called cadillac health plans). The law provides 'considerable flexibility' to grant waivers from aspects of the law, said Park, when they may arguably cause disruptions in the health care market. A GOP president could potentially issue waivers go beyond the intended scope of the statute, argued Park and Darling."
Alabama's immigration law is on hold, reports Mackenzie Weinger: "Alabama’s tough new immigration law was temporarily put on hold by a federal judge on Monday. Alabama’s toughest-in-the-nation crackdown had originally been set to take effect Sept. 1 but had come under fire from several groups that filed lawsuits against the measure. Last week, U.S. District Judge Sharon Blackburn heard motions to block the contentious legislation but did not issue a ruling. According to the court order, the temporary hold was issued to give Blackburn additional time to address the challenges to the law. The hold will remain in effect until Sept. 29 at the latest, or until the court issues a ruling on the motions to block the law. According to the temporary order, this move in no way addresses the merits of the motions or offers a reflection on a potential decision."
The administration is eliminating deadlines for street sign replacement, reports Michael Cooper: "The Obama administration is planning to yield to strapped states and local governments who urged them to slow or be prepared to stop federal safety requirements that they replace thousands of road signs with bigger, brighter, more legible signs by 2018, arguing it would be the wrong way to make them to spend their limited money. The administration plans to issue a proposal Tuesday to eliminate dozens of deadlines for replacing traffic signs to comply with safety standards initiated under the Bush administration, saying that communities should not be forced to install the new signs until the old ones wear out, officials said. 'A specific deadline for replacing street signs makes no sense and would have cost communities across America millions of dollars in unnecessary expenses,' Transportation Secretary Ray LaHood said in a statement."
We need to invest in research and education to rebuild manufacturing, writes Susan Hockfield: "Since World War II, federal investments in scientific research have set off waves of job-creating innovation in aviation, electronics, computing, the Internet and biotechnology...But the recent debt-ceiling compromise could compel some 10 percent in cuts to federal research and development money in 2013. That could lead to a decade of stagnation. We must recommit to innovation if we want to re-energize our economy. A new era of advanced manufacturing also requires more graduates with greater proficiency in science, technology, engineering and mathematics. The National Association of Manufacturers, together with community colleges, recently announced a program to certify a half-million skilled workers in five years and to connect them with manufacturing jobs. We need more initiatives like this."
Animation interlude: Economic progress since 1800, in four minutes.
Alan Krueger's environmental record could be a problem for his nomination, reports Andrew Restuccia: "The Republican National Committee is targeting President Obama’s nominee to lead the White House economics team for his past support of cap-and-trade. The White House announced Monday morning that Obama will nominate Princeton University economics Professor Alan Krueger as chairman of the White House's Council of Economic Advisers. Within minutes of the announcement, Republican National Committee Research Director Joe Pounder flagged 2009 remarks by Krueger during his tenure as an assistant secretary at the Treasury Department in which he touted the benefits of a cap-and-trade system for greenhouse gas emissions...Pounder’s comments shed light on Republicans’ plans to undercut Krueger’s nomination."
Closing credits: Dylan Matthews is a student at Harvard and a researcher at The Washington Post. Wonkbook is compiled and produced with help from Sarah Halzack.