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Wonkbook's Number of the Day: $25 billion. That's the amount the White House wants in new economic stimulus in the form of tax cuts on small business, according to a story by Zachary A. Goldfarb in The Washington Post. The tax incentives would reward businesses which are hiring or raising salaries by refunding 10 percent of the cost of new payroll, up to $500,000. For more, see Wonkbook's regular "Economy" section below.
Today in Wonkbook: Senate Republicans put forward a bill on immigration reform; special coverage of the austerity crisis, tax policy, the filibuster, House chairmanships, and financial regulation; and our continuing coverage of the economy, health care, and energy.
Some Republican senators just put forth a DREAM Act alternative. "After an election that bared the GOP’s huge disadvantages on immigration, three influential Republican senators have introduced legislation that would grant legal residency to young people brought illegally to the United States, if they seek higher education or enlist in the military...The measure -- sponsored by Sen. John McCain (Ariz.), and retiring Sens. Kay Bailey Hutchison (Tex.) and Jon Kyl (Ariz.) -- would offer a Republican alternative to the so-called Dream Act, providing a pathway for young adults to apply for legal permanent residency -- but not citizenship -- if they have completed military service or higher education and have worked in the United States for at least four years. Leading advocacy groups that push for immigration reform characterized the proposal as a half measure that would provide few new opportunities for normalization for young adults." Rosalind S. Helderman in The Washington Post.
Read: The actual legislation.
More information on their proposal. "The Kyl-Hutchison bill, called the Achieve Act, sets up a three-step visa system to allow many of those brought into the U.S. at a young age to stay in the country. The first visa would allow those enrolled in college or the military to stay for six years. After they graduate or leave the military, they could apply for another four-year work visa. After that, they could apply for four-year visas to allow them to remain in the country legally...The senators’ move signals that Republicans might seek to push immigration reform in a piecemeal fashion rather than as a comprehensive overhaul of the system, as many Democrats want." Cameron Joseph in The Hill.
@sahilkapur: I love how the 2 Republican senators who intro'd this immigration bill are retiring
Will immigration reform rock the House, too? "November’s elections promised to supercharge efforts to revamp the nation’s immigration system. An early test will come this week when the House takes up a bill that would make it easier for more foreign students to remain in the U.S. after graduating with advanced college degrees...The measure, expected to come up for a vote Friday in the House, would expand from 120,000 to 170,000 the number of so-called STEM visas, which are designed for foreigners holding postgraduate or doctoral degrees from U.S. universities. It also would scrap a separate program that grants 50,000 visas to people from poorer nations with few other avenues for legal immigration to the U.S." Corey Boles in The Wall Street Journal.
@ModeledBehavior: As immigration reform starts to look more possible it's essential wonks begin throwing out numbers to help set the overton window
NORQUIST: Debt ceiling gives GOP leverage. "Should Republicans agree to raise taxes in exchange for spending cuts?...The debt ceiling that Obama’s plans bump into every month or so for the next four years provides plenty of 'leverage' for the GOP to trade for spending cuts -- as done in 2011 -- or continuing the lower rates. The debt ceiling and continuing resolutions to fund the government are more secure tools than a hope that Obama has become Bill Clinton." Grover Norquist in The Hill.
WYDEN AND RASIEJ: Why we need a voluntary tech corps. "When a disaster strikes, access to communications and high-tech infrastructure is critical for saving lives and mobilizing relief efforts...Just as the National Guard can be called upon to provide emergency relief, there are thousands of technology professionals ready, willing and able to volunteer their skills to rebuild crucial technology infrastructure in times exactly like these. These men and women could help build emergency cellphone towers and set up mesh Wi-Fi networks. They could assist government agencies to build and maintain the information systems that are needed to locate, manage and deploy food and water, tents and electric generators, and to help health workers keep track of drugs and other critical medical supplies." Ron Wyden and Andrew Rasiej in The Wall Street Journal.
SUNSTEIN: Santa shrugged. "If you’ve ever received a useless gadget, a horrendous tie or some kind of bowl, you’ll know that when people buy Christmas presents, they can blunder badly...University of Minnesota economist Joel Waldfogel, author of 'Scroogenomics,' finds that Americans spend about $65 billion on winter holiday presents every year -- and that many of those billions are simply wasted, because a lot of people don’t much like what they get. Typically the value of a gift, to the recipient, is about 20 percent lower than its cost. He describes the holiday season as 'an orgy of value destruction.'" Cass Sunstein in Bloomberg.
ORSZAG: Discard vague tax plans. Let's get fiscal. "As negotiations over the U.S. fiscal cliff get down to details, they will become more arduous -- something that financial markets seem to be ignoring. The superficial appeal of proposals to limit tax expenditures, for example, will fade as the details become clearer...On their face, proposals to raise revenue by limiting tax breaks enjoy unusual bipartisan support -- at least when they are described generically as 'broadening the tax base and eliminating loopholes.' Enacting legislation, though, requires much more than such platitudes, and therein lies the political difficulty." Peter Orszag in Bloomberg.
SOLTAS: College costs aren't soaring. "Conventional wisdom suggests that U.S. colleges and universities have become sharply more expensive in recent years...Real tuition and fees have increased, to be sure, but hardly as significantly as the media often report or the data suggest at face value. The inflation-adjusted net price of college has risen only modestly over the last two decades, according to data from the College Board's Annual Survey of Colleges...What has happened is a shift toward price discrimination -- offering multiple prices for the same product. Universities have offset the increase in sticker price for most families through an expansion of grant-based financial aid and scholarships...At four-year public universities, the average sticker price for tuition and fees has risen 127 percent in real terms, from $3,810 in 1992 to $8,660 in this academic year. But only $990 of this $4,850 increase in sticker price, or 20 percent, is due to increases in net cost. The remaining 80 percent is price discrimination." Evan Soltas in Bloomberg.
Top long reads
Neil Lake explains why the frequency of C-sections is rising, and why it matters to health care:"Obstetrics in modern America is a contentious subject in general. Birth and the actions surrounding it -- medical and otherwise -- evoke strong emotions. The discussion is often framed ideologically as a matter of nature versus technology and which side knows best, or in stark political and economic terms as a contest of power and money. The issue of C-sections, in particular, is much contested. It’s useful to see cesareans’ ascendance as a result of the ways doctors, patients, and hospitals perceive and react to risk—and of how medicine has developed in this context. Understanding such interactive reasons, and responding thoughtfully to them, experts say, could help reduce the procedure’s use."
Mistakes you've made before happening on the international stage interlude: Not recognizing an 'Onion' joke from reality.
Got tips, additions, or comments? E-mail me.
The austerity crisis
In case you wonder why Bowles and Simpson bother: they're getting paid $80k a speech. "Theirs is an improbable buddy act that is making for unlikely entertainment from campuses to corporations on a most serious subject: the federal debt. The proof of their appeal: some business groups pay them $40,000 each per appearance. Really. To discuss budgets and baselines. Ladies and gentlemen, coming soon to your city or town (if they have not been there already, and maybe even if they have) are the latest odd couple of politics: the 67-year-old Democratic straight man, Erskine B. Bowles of Charlotte, N.C., and his corny 81-year-old, 6-foot-7 Republican sidekick, Alan K. Simpson of Cody, Wyo." Jackie Calmes in The New York Times.
Democrats balk at entitlement push in cliff talks. "Congressional Democrats are starting to draw a much tougher line on entitlements in the increasingly messy fiscal cliff talks, warning Republicans to keep their hands off Social Security and Medicare benefits...For many Democrats, these entitlement programs are part of their core identity -- aggressively protecting the social safety net programs created by the New Deal and the Great Society is as much a part of the progressive worldview as tax cuts and smaller government are for conservatives. And if President Barack Obama reaches a bipartisan deal with GOP leaders that cuts entitlements, he can expect a rebellion from his allies on the Hill -- that is, unless he wins what they consider major concessions from Republicans on taxes." Manu Raju in Politico.
The Obama PR effort to avoid the austerity crisis. "The White House signaled Tuesday that it will attempt to marshal the momentum from President Obama’s reelection triumph into another victory at the negotiating table, launching a full-fledged public relations effort to avoid a 'fiscal cliff' that could jolt the nation back toward recession. Administration officials said Obama will hit the road for a campaign-style series of events this week with ordinary Americans, including a visit to a toy manufacturer in suburban Philadelphia on Friday. That trip and others will be aimed at increasing pressure on Congress to reach an agreement on heading off a series of automatic spending cuts and tax increases that are scheduled to begin in January." David Nakamura and Zachary A. Goldfarb in The Washington Post.
Plumbing the depths of austerity crisis doesn't appeal to the White House. "t’s the rallying cry for liberal Democrats in Congress: going off the fiscal cliff is a better option than reluctantly accepting a deal that goes too lightly on revenues or too hard on entitlements. That message doesn’t seem to be getting through on the other end of Pennsylvania Avenue...Even before releasing Monday’s report, the administration had been downplaying the idea that going off the cliff would be a win for Democrats." Steven Sloan in Politico.
Why the dangerous deadline isn't Dec. 31, but rather Feb. 2013. "The debt ceiling has largely taken a backseat to the looming fiscal changes that are scheduled to take effect on Dec. 31. But unless it’s dealt with in the lame duck Congress, we’re going to hit another debt limit come February 2013, according a new analysis by the Bipartisan Policy Center...By the BPC’s estimates, we’ll have to raise the debt limit by anywhere between $730 billion and $1.25 trillion to avoid the debt ceiling for all of 2013 (depending on whether the Dec. 31 fiscal changes measures are enacted or not) and between $1.3 billion and $2.2 billion in 2014." Suzy Khimm in The Washington Post.
73 percent: Does that sound like the right tax rate to you? "Most arguments about tax brackets in the United States are over a percentage point or two...But some tax experts think this is all much too timid. Two economists, Nobel laureate Peter Diamond at MIT and Emmanuel Saez at Berkeley, have argued that the optimal top bracket is 73 percent, higher than at any point in the United States since the 1960s." Dylan Matthews in The Washington Post.
Want to tax capital and labor income equally? Try the Buffett rule. "Enthusiasm is building for a 'minimum tax' for the wealthy, in which millionaires would have to pay, say, 30 percent of their income in taxes, no ifs or buts. Republicans in Congress have floated taxing the entire income of high-earners at 35 percent, while Warren Buffett has renewed his call for a minimum tax of 30 percent for millionaires. The appeal of these proposals is fairly evident, as they would deny high earners the chance to use deductions and other tax breaks to lower their effective tax rates to levels far below what middle-class people pay. But there’s one big problem. It’s tough to implement a minimum tax without sharply raising marginal rates on capital gains." Dylan Matthews in The Washington Post.
Artsy interlude: "Death of a Cyborg," by Shorra.
How the GOP could shut down the Senate. "Could Republicans shut the Senate down if they wanted to? All of the sudden, that’s not such an idle question...In response, some Republicans are threatening to bring the entire chamber to a halt if Democrats go forward with this...[T]he GOP could threaten to shut down the Senate entirely. This is technically doable...If a single senator started objecting to every little motion and maneuver, it would become impossible to conduct any legislative business at all." Brad Plumer in The Washington Post.
It's a fight between minority protection and majoritarian action. "If Mr. Reid and his caucus choose to do so, they can make these rule changes with a simple-majority vote at the beginning of the session. And that’s what infuriates Mr. McConnell, who knows he may not be able to stop it. In his debate with Mr. Reid this morning, he clearly attempted to appeal to nervous older Democrats who have lived under Republican majorities in the past, saying that if this rule change is made, Republicans could do anything they wanted if they ever achieve a majority again. But the threats may not work this time. Mr. McConnell has knitted the Democrats together by abusing the filibuster to an unprecedented degree, far more than any group of Republicans or Democrats in the past. He said today that the changes Mr. Reid wants would 'undermine the very purpose' of the Senate as a place where the minority’s rights are protected. That might be true if the filibuster were done away with, but Democrats are emphatically not proposing that." David Firestone in The New York Times.
...Or not. Is it just partisan? "Ending a post-election detente from heated rhetoric, Senate leaders shredded one another Tuesday in increasingly bitter terms over a Democratic proposal to dramatically overhaul the chamber’s long-standing rules for filibusters...The back and forth left the Senate in a partisan standoff that is ill suited for the bipartisan talks expected over the next four weeks...Tuesday’s debate ended with McConnell repeating his vow that a Democratic rewrite of the chamber rules planned for early next year, approved without any GOP votes, would prove toxic for the hoped-for compromise on the fiscal issues." Paul Kane in The Washington Post.
What Mitch McConnell fears. "Harry Reid’s proposed filibuster reforms are quite modest. If they pass wholesale, the 60-vote supermajority requirement will remain unchanged. So why’s he so steamed? I’ve asked Senate staff the same question, and I’ve gotten, in general, three answers. First, moving to a 'talking filibuster' is not seen as the minor tweak that some -- including me -- have made it out to be. True, it doesn’t change the fact that the Senate is now a 60-vote institution. But it does make the life of an obstructing minority much harder." Ezra Klein in The Washington Post.
Republicans pick new committee chiefs. (Yes, they're all guys.) "House Republican leaders picked six new committee chairmen on Tuesday, solidifying the team that will carry them forward in the new Congress. Speaker John Boehner’s (R-Ohio) office released the slate of chosen chairmen for ratification by the entire House GOP conference, which is expected to happen on Wednesday. Three of the races were competitive, with Rep. Michael McCaul (R-Texas) now set to become the new Homeland Security Committee chairman, Rep. Lamar Smith (R-Texas) the Science Committee chairman and Rep. Ed Royce (R-Calif.) the Foreign Affairs chairman...Filling out the ranks of new faces are Rep. Bob Goodlatte (R-Va.), who will be the new Judiciary Committee chairman; Rep. Bill Shuster (R-Pa.), the new Transportation Committee chairman; and Rep. Jeb Hensarling (R-Texas), who will be Financial Services Committee chairman." Ezra Klein in The Washington Post.
FDIC program extension gains support, but it's not there yet. "he top Democrat in the U.S. Senate is backing an extension to an FDIC program that provides unlimited guarantees for $1.4 trillion in bank deposits. Banks, particularly small ones, have been scrambling to get lawmakers to continue a Federal Deposit Insurance Corp. program that provides unlimited guarantees for certain zero-interest deposits used by companies for payroll and other routine transactions. The FDIC normally provides $250,000 in insurance. The program is set to expire at the end of the year. Many small banks, worrying the money is likely to flow out of their institutions to large banks or big money-market mutual funds, have been pressing Capitol Hill to extend the program." Alan Zibel in The Wall Street Journal.
How the SEC moved from lapdog to watchdog. "The difference, he said, is Mary Schapiro, who announced Monday that she will step down as SEC chairman after four tumultuous years on the job. It’s not a stretch to say she has saved the regulatory body from irrelevance, if not outright extinction, and she has rebuilt it into a powerful presence on Wall Street. When she took over the agency, there were voices inside and outside the administration calling for carving up the agency...The turnaround is more significant than one woman’s achievement. It shows that tough regulation can be good for everybody -- even the industries that reflexively complain about government rules." Dana Milbank in The Washington Post.
White House calls for new economic stimulus. "The White House on Tuesday repeated its desire for a new round of economic stimulus, highlighting a previous proposal to spend more than $25 billion to offer tax breaks to companies to hire workers or pay them higher salaries...The tax breaks would target small businesses and refund 10 percent of the cost of new payroll -- in the form of new hiring or new wages -- up to a total of $500,000 next year." Zachary A. Goldfarb in The Washington Post.
Americans continue to pay down debt. "Americans continued cutting back on household debt in the third quarter of the year as declining mortgage balances outpaced rising student and auto loans, the Federal Reserve Bank of New York said Tuesday...Household debt fell by $74 billion, to $11.3 trillion, in the three months ending in September. Mortgage debt, the largest component of household borrowing, shrank by $120 billion, to $8.03 trillion, the lowest level in six years. The decline reflects a reduction in home loan balances, foreclosures and home equity lines of credit." Danielle Douglas in The Washington Post.
...And consumer confidence continues to improve. "Despite stagnant incomes and the threat of fiscal contraction scheduled for the end of the year, consumer confidence rose again in November, reaching its highest level since February 2008. Consumer confidence has been rising for the last three months, and the latest pickup was driven by more buoyant expectations for the economy, as opposed to consumers’ assessment of current conditions." Catherine Rampell in The New York Times.
Durable goods orders also kept their pace. "Overall orders for durable goods, products designed to last at least three years, were almost unchanged last month from September at a seasonally adjusted $216.95 billion, the Commerce Department said Tuesday. But excluding transportation, October orders were up 1.5% after a 1.7% gain the previous month. The results beat expectations. Economists surveyed by Dow Jones Newswires had forecast a 1.2% decline in October new orders." Eric Morath and Sarah Portlock in The Wall Street Journal.
And home prices rose. "Home prices continued to rise throughout much of the country in September -- fresh evidence of a housing market recovery, according to a closely watched report released Tuesday. Home prices in 20 cities tracked by the Standard & Poor’s/Case-Shiller home price index rose 0.3 percent on a non-seasonally adjusted basis in September, compared with August. It was the sixth consecutive monthly increase. Prices were up 3 percent, compared with the corresponding period in 2011." Renae Merle and Kathy Orton in The Washington Post.
Wonkblog explains: What's holding back the U.S. economy, in ten charts.
...And why we should hope that one of those things is the austerity crisis "There are new signs that businesses are pulling back on their investment spending in advance of the looming austerity crisis. And that’s the good news...We’re better off if it is fiscal cliff fears dragging down investment spending, not something more fundamental. Because that would imply a nice bounce back early in 2013 amid pent-up demand once Congress and President Obama strike a deal. But there is reason to fear that there is more holding back business investment spending than simply austerity fears." Neil Irwin in The Washington Post.
It's time for the latest update from the euro zone. "In familiar after-midnight fashion, European leaders early Tuesday announced a plan to stabilize Greece’s spiraling debt and trumpeted a 'new paradigm' in the country’s struggle to stay in the euro zone. As analysts parsed the details, however, it seemed less a breakthrough than more of the same: a political compromise that will keep the country afloat for the time being but leave the ultimate success of its rescue program in doubt and threaten to cost the euro region and possibly the world even more in the long run." Howard Schneider in The Washington Post.
Does advertising help or harm the economy? "It’s impossible to escape advertising. Truck ads on billboards, beer ads on television, pop-up ads for credit cards on the Internet. It’s everywhere. Last year, U.S. companies spent about $144 billion on commercials and other forms of marketing—about 1 percent of the GDP. So what effect do all these ads have on the economy?...Ferdinand Rauch of the University of Oxford describes a fascinating natural experiment he studied to shed light on this question. It turns out that many camps are correct. Advertising does appear to make some products cheaper on the whole -- presumably because the ads are informative. But for other products like alcohol or restaurants, ads do seem to persuade people to buy more than they otherwise would." Brad Plumer in The Washington Post.
Music recommendations interlude: Ray Charles, "What'd I Say," 1959 (original footage). Also, check out "tubalr," a new music recommendation engine which builds playlists for you.
How hospitals are trying to reduce readmission rates. "[A]s Medicare cracks down on high readmission rates, hospitals are dispatching nurses, transportation, culturally specific diet tips, free medications and even bathroom scales to patients deemed at risk of relapsing...Many hospital officials say their efforts to keep patients healthy after discharge have been spurred by new financial penalties Medicare started imposing in October on places with too many readmissions. Increasingly, hospitals are no longer leaving to patients the responsibility for setting up follow-up appointments or filling new prescriptions." Jordan Rau in Kaiser Health News and The New York Times.
Benefits expansion for domestic partners would have small impact on costs, CBO says. "Extending federal employee health insurance and retirement survivor benefits to same-sex domestic partners would have a relatively small impact on the number of people covered and on the cost of those programs, according to an analysis done for Congress...[L]egislation would be required to make those partners eligible for two of the most valuable benefits, Federal Employees Health Benefits Program coverage and standard retirement survivor annuities." Eric Yoder in The Washington Post.
CDC: People don't know they have HIV. "Young Americans with HIV often don't know they have contracted the virus, according to new federal data. The Centers for Disease Control (CDC) found that six in 10 young people living with HIV are unaware they are infected...Agency officials said more must be done to encourage those likeliest to contract HIV to protect themselves and seek routine testing." Elise Viebeck in The Hill.
Save medical research from cuts? "An advocacy coalition launched a campaign to highlight cuts to medical research contained in the sequester, a set of automatic budget cuts set to hit unless Congress acts before Jan. 1. United for Medical Research (UMR), an alliance of research advocates, institutions and private industry, are publishing ads in Beltway publications that urge lawmakers to remember the looming 8.2 percent cut to funding at the National Institutes of Health (NIH)...In a separate report, UMR estimated that a roughly 8 percent cut to the NIH budget would result in 33,000 fewer jobs and a $4.5 billion decrease in economic activity." Elise Viebeck in The Hill.
...Or should we change the Medicare age? "The fiscal cliff has revived an old idea that long seemed unfeasible: gradually raising the Medicare eligibility age to 67 from 65. Proponents of the idea point out that the health-overhaul law makes it easier, beginning in 2014, for seniors to buy private insurance, by banning insurance denials based on pre-existing conditions. Opponents caution that the change could raise premiums for younger people who buy private plans alongside these seniors in the law's new marketplaces, and on large employers who would be required to cover seniors in company plans. President Barack Obama indicated in previous negotiations over spending cuts that he might be open to the notion." Louise Radnofsky in The Wall Street Journal.
Ex-senators propose interagency council for energy policy. "A group of former senators and senior administration officials on Tuesday called for the creation of a cross-agency energy council with periodic reviews to help presidents strengthen and implement national energy policies. Former Sen. Byron Dorgan (D-N.D.), former Senate Majority Leader Trent Lott (R-Miss.), former Environmental Protection Agency (EPA) Administrator William Reilly and former Obama National Security Adviser retired Gen. James L. Jones all serve as chairmen for the Bipartisan Policy Center’s Strategic Policy Initiative, which prepared the report...The report modeled its recommendations on the National Security Strategy, in which administrations outline national-security issues and ways to address them. The Defense Department reviews that document every four years. The report said the security strategy model suits energy because both policy issues span multiple agencies. Energy policy is made at 20 federal agencies, the report noted, muddling efforts to roll out a national energy strategy." Zack Colman in The Hill.
Obama quietly signs bill shielding airlines from carbon fees in Europe. "President Obama has signed into law a bill that requires U.S. airlines be excluded from European carbon emissions fees. Environmentalists had framed the bill as the first test of the president's commitment to fighting climate change in his second term and urged him to veto it. Obama quietly signed it Tuesday over their objections...Under the emissions trading system, airlines would have had to trade credits for pollution emitted by flights in a system that is similar to cap-and-trade proposals that environmentalists have pushed in the United States." Keith Laing in The Hill.
Energy officials see little hope for climate talks. "Top International Energy Agency (IEA) officials offered a bleak assessment Tuesday of the prospects for global progress on preventing big temperature increases...But the agency’s analysts also see a ray of light, noting that a more aggressive deployment of energy efficiency technologies could keep the door open to limiting the rise to 2 degrees for a few years longer." Ben German in The Hill.
Wonkbook is produced with help from Michelle Williams.