Wonkbook: What matters -- and what doesn't -- in 2012

Last night, I was asked to give a speech on the 2012 election. It ended up being a useful exercise -- an opportunity to step back from the day-to-day crush of ministories and gaffes and think more broadly about what matters, and what doesn't really matter, in 2012.

Supporters of Republican presidential candidate and former Massachusetts Gov. Mitt Romney react to predictions that he has won the "first in the nation" primary during a watch party at Southern New Hampshire University Jan. 10. (Win McNamee - GETTY IMAGES) Let's start by talking a bit about what won't matter, or at least what won't matter as much as the coverage of it will imply.

- The South Carolina primary: One of two things will happen in South Carolina. Mitt Romney will win the primary and go on to capture the Republican nomination or Mitt Romney will lose the primary and go on to capture the Republican nomination. Barring the proverbial dead girl or live boy, those are the only realistic options.

- The campaign: President Barack Obama and Mitt Romney are both credible, seemingly decent men who will lead competent, professional campaigns. The differences in effectiveness between the two campaigns is likely to be marginal. Anyone who wants to vote for one of them, or against the other, will have more than enough excuse to do so. For all the coverage campaign strategies will receive, it is very unlikely that one campaign will absolutely stomp the other.

- Gaffes: During the course of the campaign, both men will say things that will be taken out of context and replayed endlessly on YouTube, cable news, etc. An example is Romney saying, in the context of a point about health care policy, that he likes being able to fire people who provide him with services. There will be plenty of comments like these on both sides. They are likely to be greeted with much glee by voters who already know who they're voting for. They will help give people excuses to vote the way they want to vote. They are not likely to change many votes.

- Money: Both Obama and Romney will have more than enough money to compete with each other. More than enough. Much more than enough.

- Early polls: Honestly, just ignore them.

- Mitt Romney's vice presidential pick: There's strong evidence suggesting that Sarah Palin exerted a substantial drag on John McCain's poll numbers in 2008. That makes Palin the rare vice-presidential candidate who mattered in the general election. I doubt Romney will make such a mistake. As such, his vice-presidential candidate is likely to be of somewhat less importance than the obsessive media coverage of the political ramifications of his choice would suggest. Which is not to say that the pick itself won't matter: that person may, of course, end up being second-in-line for the presidency.

But here are some things to watch that do matter:

- The economy: This is largely self-explanatory, but it's worth dwelling for a moment on what exactly matters about the economy. You'll occasionally hear people say that very few presidents have won reelection with unemployment at such-and-such level. That's because unemployment usually isn't very high, as we usually haven't just exited a massive recession. The thing to watch is not the level of unemployment, but the trend. If the economy is getting noticeably better, most political scientists would tell you Obama is likely to win, even if unemployment is high. If it's not getting better. Obama is likely to lose.

- The Europe factor: Europe is our biggest headwind. As such, what the chancellor of Germany and the chairman of the European Central Bank do over the next six months might matter more for the presidential election than anything either of the two candidates do.

- The fiscal drag factor: In 2011, we created 1.6 million jobs. If there hadn't been a payroll tax cut, we likely would have created something closer to 1 million jobs. Point being, fiscal policy matters. If the payroll tax cut expires, Obama's reelection becomes much, much harder. I don't think it will expire. But remember that all we got in December was a two-month extension, and the incentives of the situation are not set up to make a full year easy. I'm not among those who think Republicans are purposefully trying to tank the economy, but they're interests are not well aligned. It should worry us in a more general sense that our system of government is set up such that in times of divided government, one party has an electoral incentive to block good economic governance, even if we think they're too decent and patriotic to act on that incentive.

- Taxes: The easy line is that this election is going to be about jobs. I think it's going to be about taxes. Three reasons: First, because a big tax cut is at the core of Romney's policies for how to create jobs and a big tax increase on the top two percent is at the core of Obama's thinking on how to reduce inequality. Second, because the GOP's top priority is tax cuts and the top priority among liberals right now is raising taxes on the rich. Third, because Republicans think they have a winning issue in painting Obama as a tax hiker and Democrats think they have a winning issue in painting Romney as George W. Bush 2.0. In other words, the two (likely) candidates' platforms, parties, and polling all push in the direction of emphasizing taxes very heavily.

- Congress: Right now, InTrade gives Democrats a 30 percent chance to take back the House and only a 20 percent chance to keep the Senate. And I know people who think the Democrats are undervalued on the House side. So pay close attention to these elections. We could see one, or in very unlikely circumstances, both chambers of Congress flip. And the composition of Congress will matter more for what the next president is able to do than anything they say on the campaign trail, or arguably even than who the next president is.

The Supreme Court: In June, the Supreme Court is expected to rule on health-care reform. They could uphold the whole thing. They could reject the mandate, but uphold the rest of it. They could -- though most Court-watchers consider this unlikely -- overturn the whole law. They could delay a ruling until 2014. Any of the first three options in particular is likely to have very large, and perhaps very unpredictable, effects on the election. At the very least, any of them are likely to put health reform front and center for awhile -- a prospect that poses difficulties for both Obama and Romney.

- The lame-duck session: It is hard to imagine anything big happening until the election. But it is harder to imagine something big not happening in the month after the election. Because even if nothing happens, something big happens. On January 1, 2013, the Bush tax cuts expire and the spending trigger goes off. That means that if Congress doesn't do something, we will see $4 trillion in tax increases, $500 billion in defense cuts, and $500 billion in domestic spending cuts. And that, in turn, means Congress is likely to do something. Maybe even something big. Slate's Matt Yglesias wrote, perhaps even correctly, that "the stuff that gets done before Inauguration Day 2013 may be more important than anything else that happens as a result of the election."

- Unknown unknowns: A year ago, we killed Osama bin Laden. If it had happened six months from now, it likely would have won Obama the election. Which is why it's wise to keep in mind that we can't just draw a straight line from today until November. It's entirely possible that events will take an election we all expect to be about the economy and make it about Iran, or disaster relief, or the asteroid that's only 24 hours from hitting the earth and that only Bruce Willis and Joe Biden can stop.

Top stories

1) New documents reveal how the Fed missed the housing bubble, reports Binyamin Appelbaum: "As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers. The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was 'rising through the roof.' But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation -- the possibility that the economy would grow too fast."

@BCAppelbaum: Bernanke, March 2006: "Again, I think we are unlikely to see growth being derailed by the housing market."

@ryanavent: Also, we don't need transcripts to tell us the Fed underestimated the sitch in 2006. There was a MASSIVE RECESSION.

@mattyglesias: I don't understand why we think it's bad for the Fed to have been unconcerned in 2006. They didn't start screwing things up until 2008.

Economists are not funny interlude: A selection of comments from Federal Open Market Committee meetings which resulted in laughter.

2) The Justice Department says Obama's recess appointments were constitutional, reports Evan Perez: "The White House on Thursday released a Justice Department opinion buttressing its contention that President Barack Obama's recess appointments of several officials, including a financial watchdog for consumers, was constitutional. Mr. Obama last week installed Richard Cordray as director of the Consumer Financial Protection Bureau, an appointment that Republican lawmakers say is unconstitutional because the Senate has been holding pro forma sessions during the current recess. Republicans previously blocked Mr. Cordray's confirmation in a dispute over regulatory powers of the bureau. The 23-page opinion by the Justice Department's Office of Legal Counsel said the Senate's practice of holding pro-forma sessions, some lasting just seconds, can't be used as a way to block recess appointments, which presidents are allowed to make when the Senate isn't in session. The memo provides the most detailed legal analysis yet behind Mr. Obama's declaration that the Senate's brief sessions weren't legitimate."

@AdamSerwer: Realtalk: If Bush had done the recess appointments thing almost everyone's opinions on the subject would be entirely reversed.

3) New data dashed cold water on recovery hopes, reports Ylan Mui: "The nation’s economy got a reality check Thursday when new government data revealed an unexpected drop in consumer spending and a surge in weekly jobless claims to nearly 400,000. The results were particularly disappointing because several other key economic indicators had suggested brighter prospects for the recovery: The monthly unemployment rate has been falling, consumer confidence has rebounded and credit balances have spiked. But Thursday’s numbers dampened some economists’ enthusiasm, prompting cuts to gross domestic product forecasts and warnings of a slow start for 2012. 'There is no silver lining,' said Steve Blitz, chief economist for ITG Investment Research. 'Today’s data should put to rest the notion of some superstrong, fourth-quarter growth rate for the economy.' The Commerce Department’s tally of December retail sales showed a meager 0.1 percent rise from the previous month, primarily driven by auto purchases. But excluding motor vehicles, sales dropped by 0.2 percent -- the only monthly decline in 2011."

4) The Obama administration has asked Congress for an increase in the debt ceiling, reports Damian Paletta: "The White House notified Congress on Thursday that the government was near its $15.194 trillion borrowing limit, ushering in the debut of procedural theater in which the debt limit will ultimately be raised even if Congress votes against it. Formal notification by the administration gives Congress 15 days to disapprove of an increase, or the debt ceiling would automatically adjust up an additional $1.2 trillion. But under procedures resulting from last August's budget agreement that sought to avoid a government default, President Barack Obama could issue a veto, and the ceiling would rise even if Congress moves to block it."

5) President Obama’s chief economic adviser warned of inequality, reports John Cushman Jr.: "What Mitt Romney a few days ago called 'the bitter politics of envy,' President Obama’s chief economic adviser instead described Thursday as the basic economics of unequal opportunity. As long as the rich keep getting richer and the middle class languishes, he said, the economy as a whole will suffer. Alan B. Krueger, the chairman of the White House’s Council of Economic Advisers and an accomplished labor economist, presented chapter and verse of the administration’s understanding of income inequality, economic opportunity and the fortunes of the middle class in a speech to the Center for American Progress, a research group closely aligned with the administration’s viewpoint. His theme: 'Rising inequality has been bad for the U.S. economy.' It is a thought that Mr. Obama has incorporated into his core economic message, notably in his speech in Osawatomie, Kan., and it is an argument that will very likely echo again through the State of the Union address on Jan. 24."

We read so you don’t have to: CEA Chair Alan Krueger’s inequality speech.

Top op-eds

1) America is not a corporation, writes Paul Krugman: "There’s a deeper problem in the whole notion that what this nation needs is a successful businessman as president: America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen -- even great businessmen -- do not, in general, have any special insights into what it takes to achieve economic recovery. Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line. For another, the economy is vastly more complex than even the largest private company. Most relevant for our current situation, however, is the point that even giant corporations sell the great bulk of what they produce to other people, not to their own employees -- whereas even small countries sell most of what they produce to themselves, and big countries like America are overwhelmingly their own main customers...And the fact that we mostly sell to ourselves makes an enormous difference when you think about policy."

2) Romney's record at Bain is largely irrelevant, writes David Brooks: "There are two questions concerning Mitt Romney’s service at the private equity firm Bain Capital. The narrower question is: Did Bain help ailing companies and add value to the economy or did it plunder dying firms? The larger question is: Does Romney’s success in business tell us anything about whether he would be a successful president?...Today’s candidates have to invent bogus story lines to explain their qualifications to be president -- that they are innocent outsiders or business whizzes. In reality, Romney’s Bain success is largely irrelevant to the question of whether he could be a good president. The real question is whether he has picked up traits like emotional security, political judgment and an instrumental mind-set from his upbringing and the deeper experiences of life. We’ll learn more about that as he confronts brutal attacks that now besiege him."

@davidfrum: OK so Newt Gingrich doesnt like Mitt Romney's business methods. What exactly is he proposing to do for the US middle class instead?

@philipaklein: There is, in short, no strong data yet one way or another on whether Bain attacks are helping or hurting anyone in SC.

3) We're having the wrong discussion about Bain, writes Josh Barro: "Private equity firms like Bain often seek to fix firms that have failed to adjust to economic change. This can mean downsizing, increased automation, offshoring, and the like. These changes make enterprises more efficient, and in some cases save firms that would otherwise have gone bankrupt. These kinds of changes also produce broad-based gains that should not be discounted, particularly in the form of lower consumer prices. We could not, and should not, have stopped these changes in the economy. But it is also important to note that certain classes of workers have faced especially large negative effects from economic changes. Returns to capital have risen relative to returns to labor. Downsized workers are likely to have to take pay cuts to find new work (or, in the current economic slump, may face long-term unemployment). Workers in certain fields hold human capital that has declined sharply in value...Romney is fond of saying that we need a president who has business experience and understands how the economy works. But understanding how a private firm should interact with the economy is different from understanding how the government should interact with the economy. Bain provides a useful case study to ask Romney to discuss the difference--if the candidates can take a break from cheap point-scoring."

4) Interparty attacks on Romney's Bain record will harm him in November, writes Nate Silver: "There’s a theory making the rounds that attacks from Mitt Romney’s fellow Republicans on his tenure at Bain Capital could actually help him in the end...In fact, it is claimed, it is better for Mr. Romney to deal with the attacks sooner, since it may make the public and the news media fatigued about the issue by the general election, and since it will give Mr. Romney’s campaign more practice in developing strong lines of defense to them. Some proponents of the theory have compared the attacks on Mr. Romney’s days at Bain Capital to those on Barack Obama’s associations with the Rev. Jeremiah A. Wright Jr., which drew considerably more public attention in the spring of 2008 than during the home stretch of the presidential campaign in the fall. It’s a perfectly reasonable theory -- but I don’t think it pays enough attention to the substance of the attacks and the way they are likely to be interpreted by the public and the news media. There are reasons that the comparison to the Wright story may not be appropriate, and why the attacks could in fact damage Mr. Romney in a general-election environment. "

5) Every estimate you've heard of the distributional consequences of the tax cuts being proposed by the Republican candidates is wrong, writes Ezra Klein: "Every estimate you’ve heard of who is being helped and who is being hurt by the tax cuts proposed by the various Republican presidential campaign is telling you, at best, only half the story. And that’s because these estimates only look at one side of the ledger: who gets the tax cuts. But there’s another side to the ledger: Who pays for them, and how? That side is at least as important as who gets the tax cuts, but it’s almost always ignored. Most of the estimates so far have come from the nonpartisan Tax Policy Center. But Donald Marron, co-director of the TPC, is happy to admit the blind spot in their models. 'In a perfect world, you would do a distributional analysis of all federal policies, integrating the spending and tax side. If you do just the tax side, you’re missing a whole lot.'...The problem is that there’s no way to model the pay-fors. No Republican campaign has explained how they will fund their tax cuts. So there’s no plan to speak of, and thus no plan to analyze. But every Republican campaign has laid out its principles: No tax increases now or in the future. So that takes one pay-for off the table. They’ve also been clear that deficits need to come down. So that removes another. The only pay-for left is spending cuts. And that’s where things get regressive."

6) 2012 will be another bad year for the economy, writes Joseph Stiglitz: "The year 2011 will be remembered as the time when many ever-optimistic Americans began to give up hope. President John F. Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, Americans are beginning to see not only that those with taller masts had been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake...Indeed, middle-aged people who thought that they would be unemployed for a few months have now realized that they were, in fact, forcibly retired. Young people who graduated from college with tens of thousands of dollars of education debt cannot find any jobs at all. People who moved in with friends and relatives have become homeless. Houses bought during the property boom are still on the market or have been sold at a loss. More than seven million American families have lost their homes...This year is set to be even worse. It is possible, of course, that the United States will solve its political problems and finally adopt the stimulus measures that it needs to bring down unemployment to 6% or 7% (the pre-crisis level of 4% or 5% is too much to hope for). But this is as unlikely as it is that Europe will figure out that austerity alone will not solve its problems."

Bluegrass interlude: Trampled by Turtles plays "Wait So Long" live at the Minnesota State Fair.

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

Still to come: The ECB declined to take action; the Obama administration blocks a rate increase; Indiana's 'right to work' again looks set for passage; the U.S. regains its clean energy investment lead; and a child and an iguana eat breakfast.

Economy

The European Central Bank left its key interest rate unchanged, reports Brian Blackstone: "The European Central Bank left its key interest rate on hold at 1%, suggesting officials aren't overly concerned about the severity of the downturn gripping the euro-zone economy. ECB President Mario Draghi expressed a slightly more upbeat view of the currency bloc's economy than he had in recent months, suggesting business activity is stabilizing...The ECB's existing crisis measures--including nearly €500 billion ($635 billion) in new loans to banks at maturities of three years--are helping stabilize financial markets and avoid a credit crunch, Mr. Draghi said...Thursday's pause on interest rates and on other crisis measures ends a frantic start to Mr. Draghi's ECB presidency, which began in November. Mr. Draghi, who used to head Italy's central bank, reversed a pair of 2011 rate increases by his predecessor, Jean-Claude Trichet, with back-to-back cuts in November and December, bringing rates back to record lows. Last month the ECB also pumped €489 billion into European banks with three-year loans, its longest commitment of funds to the banking sector to date."

More older Americans than ever before are working, reports Peter Whoriskey: "Amid the wreckage of the economic downturn, something curious happened to older Americans. More of them are working. Though the recession has thinned the ranks of other generations in the workforce, more people older than 55 are employed than ever before, according to the latest figures from the Bureau of Labor Statistics. The reasons for the surge of older workers are complex, experts said, but one of the primary economic forces behind it is the growing fear among older Americans that they lack the means to support their retirement needs. The phenomenon is closely linked to the broad shift in the United States that began in the ’80s away from reliance on company pensions toward the adoption of 401(k) plans and other personal savings."

Richard Cordray's first target is the housing crisis, reports Suzy Khimm: "Despite the controversy surrounding his appointment, Richard Cordray is barreling ahead with his work as head of the new Consumer Financial Protection Bureau -- and he’s starting with the very event that led to the creation of his agency: the housing crisis. On Wednesday, the new bureau released its guidelines for regulating the practices of mortgage lenders across the country. Regulators are instructed to examine whether lenders offering subprime loans, for example, closely assess whether potential borrowers are actually able to repay the loans and factor in the risks accordingly. The CFPB will also determine whether lenders misrepresent the terms and conditions of their loans -- another practice that helped contribute to massive defaults -- warning them to 'avoid using fine print, separate statements, or inconspicuous disclosures to correct potentially misleading headlines.' The CFPB had already rolled out a public education campaign, 'Know Before You Owe,' to improve financial literacy on the consumer side as well before Cordray officially took office last week. But Obama’s recess appointment unleashed the watchdog’s full enforcement authority. Over the past few days, the CFPB also launched its first known investigation into a financial firm, probing kickbacks that were allegedly paid to PHH Corp., a private mortgage lender."

Romney once backed extensive government intervention in the housing market, reports Andrew Kaczynski: "Mitt Romney's view that the government should stay out of the housing crisis is one of the clearest, and most controversial, of his 2012 campaign. 'Let it run its course, and hit the bottom,' Romney told the Las Vegas Review-Journal editorial board in October. 'Allow investors to buy homes, put renters in them, fix the homes up and let [the market] turn around and come back up.' Democrats promptly posted the interview at RomneyHousingPlan.com. But Romney's record as Massachusetts Governor is far from the hands off approach he backs today. Official records from his time as Governor show Romney favored, and practiced, direct government intervention in the market place, in the service of his view that 'fair and affordable housing should be a right.' Romney's foray into housing started early into his term in 2003, when he named a 24-member task force to make housing more affordable."

Historical correspondence interlude: John Steinbeck writes his son a letter about love.

Health Care

The Obama administration is blocking a health insurer's 'excessive' rate increase, reports Robert Pear: "The Obama administration said Thursday that rate increases sought by a health insurance company were unreasonable, and it ordered the insurer to rescind them or justify its refusal to do so. Kathleen Sebelius, the secretary of health and human services, issued the finding against the carrier, Trustmark Life Insurance Company, a unit of Trustmark Mutual Holding Company...The action fits in with White House efforts to demonstrate the value of the new health care law and to portray President Obama as fighting for the economic interests of middle-class families in this election year...The law, signed by President Obama in March 2010, set detailed federal standards for health insurance, which had for decades been regulated mainly by the states. The law calls for the annual review of 'unreasonable increases in premiums.' Under rules issued last year by Ms. Sebelius, rate increases of 10 percent or more must be reviewed by state or federal officials."

Premiums could rise by a quarter without an individual mandate, reports Sam Baker: "Insurance premiums would rise by as much as 25 percent if the healthcare law is implemented without an individual mandate, according to a new analysis from the Robert Wood Johnson Foundation. The Supreme Court will decide this summer whether the coverage mandate is constitutional, and how much -- if any -- of the health law's other provisions can remain intact if the coverage requirement falls...The healthcare law establishes state-based exchanges for individuals and small businesses to buy coverage. In states where participation in the exchange is high, the loss of the mandate would raise premiums by about 10 percent, according to Thursday's analysis. Individual policies would get about 20 to 25 percent more expensive in states where fewer people use the exchange. Premiums would rise because young, healthy people would be less likely to buy insurance. The purpose of the mandate is, in large part, to force healthy people into the system, offsetting the cost of guaranteeing coverage to people with pre-existing conditions."

Five percent of patients account for half of health care spending, reports Kelly Kennedy: "Just 1% of Americans accounted for 22% of health care costs in 2009, according to a federal report released Wednesday...Five percent accounted for 50% of health care costs, about $36,000 each, the report said. The report's findings can be used to predict which consumers are most likely to drive up health care costs and determine the best ways to save money, said Steven Cohen, the report's lead author. While the report showed how a tiny segment of the population can drive health care spending, the findings included good news. In 1996, the top 1% of the population accounted for 28% of health care spending...About one in five health care consumers remained in the top 1% of spenders for at least two consecutive years, the report showed. They tended to be white, non-Hispanic women in poor health; the elderly; and users of publicly funded health care."

Domestic Policy

Republicans are proposing stripping immigrants of a tax credit, reports David Rogers: "As talks resume in Congress on paying for the payroll tax holiday, Republicans are proposing to find billions in savings by denying child tax credit refunds to working-class immigrant parents who lack a Social Security number proving they are authorized to work in the U.S...The tax credit itself, which Bush increased from $500 to $1000 per child, is immensely popular with middle-class households, reducing their tax burden and helping a working mother offset child-care costs, for example. For lower income families, the cash refunds -- technically called the Additional Child Tax Credit -- are also an income supplement and anti-poverty tool, much like the older, more established Earned Income Tax Credit. One big difference is that a 1996 law specifies that the EITC refunds can go only to households in which the wage earner has a Social Security number. The ACTC , enacted later and quite small when it started, was never subject to this restriction because its advocates argue that itis aimed at the child and the legal status of the parent should matter less."

Indiana will vote on 'right to work' next week, report Mary Beth Schneider and Chris Sikich: "The House will vote next week on 'right to work' legislation after the Republican leader negotiated a truce that keeps Democrats in their seats...Democrats, trying to stall the bill, have boycotted the House four of the six days it has been in session this year. They were especially riled by the way Republicans muscled the bill through a committee, refusing to let Democrats amend the bill. House Speaker Brian Bosma, R-Indianapolis, said he watched video of the hearing and concluded it 'did not reflect democracy's finest hour,' though no rules were broken. Still, Bosma said he reached out to House Minority Leader B. Patrick Bauer, D-South Bend, on Wednesday 'to see if we couldn't find something to calm people down.'"

The CFPB is increasing its scrutiny of nontraditional student loans, reports Edward Wyatt: "The Consumer Financial Protection Bureau is stepping up its scrutiny of nontraditional lenders to students at profit-making colleges and trade schools that have high rates of default, the newly appointed director of the bureau said Thursday. The director, Richard Cordray, compared the practices of some parts of the student loan business to those of the subprime mortgage lending machine that contributed to the financial crisis. 'We’re seeing some of the schools anticipating as much as a 50 percent default rate on their students, yet they’re making those loans anyway,' Mr. Cordray said at a news briefing...The consumer bureau indicated earlier that it was interested in the subject of predatory student loans. In November, the bureau and the Education Department issued a joint request for information from consumers on the private student loan market, a study that was mandated by the Dodd-Frank financial regulation law. The deadline for comments is Tuesday."

Interspecies friendship interlude: A child and an iguana eat breakfast together.

Energy

The U.S. is again the world leader in clean energy investment, reports Ed Crooks: "The US overtook China to regain top position as the world’s leading investor in 'clean' energy last year, thanks to the Obama administration’s subsidy programme, according to Bloomberg New Energy Finance, a research company. It was the first year since 2008 that the US has been ahead of China as the world’s largest market for investment in renewable energy, biofuels and energy efficiency. However, it may drop back again this year after the end of two key subsidy programmes introduced as part of the 2009 economic stimulus package: grants for renewable energy projects and government loan guarantees to encourage private sector investment...In spite of the turbulence in the world economy and the continuing failure to reach a global agreement to curb greenhouse gas emissions, worldwide investment in clean energy rose 5 per cent to a record at $260bn, according to Bloomberg NEF."

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