Wonkbook: The death of ‘Plan B’

December 21, 2012

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook's Number of the Day: $1 billion. That's the amount in payments Medicare will now tie to quality-of-care measures, according to a multimedia story by Jordan Rau in Kaiser Health News. The measures track process integrity and patient satisfaction and will begin in January as part of the Affordable Care Act. For more, see Wonkbook's special section on implementing the ACA.

Wonkblog's Graph of the Day: Floor chart usage over time.

Today in Wonkbook: "Plan B" dies; gun control lives; the economy; implementing the Affordable Care Act; and green policy.

Top story: The breakdown of 'Plan B'

Boehner abandons his 'Plan B.' "House Speaker John A. Boehner threw efforts to avoid the year-end 'fiscal cliff' into chaos late Thursday, as he abruptly shuttered the House for the holidays after failing to win support from his fellow Republicans for a plan to let tax rates rise for millionaires. The proposal -- Boehner’s alternative to negotiating a broader package with President Obama -- would have protected the vast majority of Americans from significant tax increases set to take effect next year. But because it also would have permitted tax rates to rise for about 400,000 extremely wealthy families, conservatives balked, leaving Boehner (Ohio) humiliated and his negotiating power immeasurably weakened." Lori Montgomery and Rosalind S. Helderman in The Washington Post.

@ezraklein: If Boehner loses his speakership, his successor would have to be even more hard line on a deal. Things could get very bad for the economy.

How it crumbled. "The failure of a grand bargain was the latest oh-so-close moment for Obama and Boehner, who have been dancing around a deal to cut the deficit for the better part of the past two years. And the collapse of Plan B set a new low in Boehner’s sometimes rocky relationship with a House Republican caucus that has long been uneasy about the speaker’s dealmaking with Obama." Paul Kane, Ed O’Keefe and Lori Montgomery in The Washington Post.

@sahilkapur: Genuinely feel bad for Boehner. He's probably the most pragmatic guy in the House GOP but faces near-impossible odds.

Obama hopeful of finding ‘bipartisan solution quickly’. "'The President’s main priority is to ensure that taxes don’t go up on 98 percent of Americans and 97 percent of small businesses in just a few short days. The President will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy.'" Scott Wilson in The Washington Post.

@RonBrownstein: No fun: John Boehner tonight impaled himself on a pointless exercise to begin with.

Is Boehner's speakership in jeopardy? "Has there been a House speaker in modern American history with less control over his members than John Boehner?…The failure of Plan B proved something important: Boehner doesn’t have enough Republican support to pass any bill that increases taxes -- even one meant to block a larger tax increase -- without a significant number of Democrats. The House has now adjourned until after Christmas, but it’s clear now what Plan C is going to have to be: Boehner is going to need to accept the simple reality that if he’s to be a successful speaker, he’s going to need to begin passing legislation with Democratic votes." Ezra Klein in The Washington Post.

Wonkblog explains: Choose your own fiscal cliff adventure!

What progressives are pushing for now in a fiscal cliff deal. "Even before House Speaker John Boehner unveiled his Plan B, a vocal contingent on the left, both inside and outside Congress, was already furious with the state of play on the fiscal cliff: They thought President Obama’s offer already gave away too much, too soon, on taxes, stimulus and entitlements, and Boehner’s latest move drove their fears home…[T]here are a few fronts that progressives are still pushing on in hopes of salvaging some of what they fear could be an awful deal." Suzy Khimm in The Washington Post.

@DouthatNYT: Somewhere in the Yucatan, an archaeologist has just translated the words "Boehner" and "Huelskamp" from Mayan glyphs.

The CEOs are panicking now. "A long line of America's top chief executives have rotated through Washington in recent weeks, loudly urging lawmakers and the White House to reach a broad deal to fix the budget. They once sounded optimistic. Now many of them aren't talking, and if they are, they're gloomy." Damian Paletta in The Wall Street Journal.

@TPCarney: Boehner shouldn't've pushed Plan B. Trying to create a favorable narrative requires media cooperation. For GOP, that's playing an away game.

Gauging the tax impact on small business. "The latest budget offers exchanged between the White House and Republican leaders would raise tax rates on a tiny fraction of small-business owners, but would still affect a sizeable portion of business activity, studies show…[R]aising tax rates for incomes over $500,000 could affect roughly 750,000 owners of businesses that are organized as small businesses, according to a 2011 study by the Treasury Department. That represents about 4% of small-business owners. These owners receive about 56% of all income of such businesses." John D. McKinnon and Angus Loten in The Wall Street Journal.

@RonBrownstein: Same as always: best chance to avoid cliff is for Boehner to ditch Hastert rule and accept deal that lacks majority among R's. Odds of that?

Administration says furloughs are possible, but not immediately. "They don’t want it to happen. They don’t necessarily think it is going to happen. But Obama administration officials want federal employees to be ready if it does happen. 'It' is sequestration, the process of across-the-board budget cuts that are scheduled to begin taking effect in January unless the White House and Congress come to an agreement to prevent 'it.' To get folks ready, federal agencies sent messages to their employees Thursday to explain what sequestration is and is not and how it would, and would not, affect operations, albeit in general terms." Joe Davidson in The Washington Post.

@ezraklein: And now all of Boehner's energy is going towards unembarrassing himself on plan b rather than negotiating towards a fiscal cliff solution.

Mortgage relief is also on the line. "Among the tax breaks at risk in the negotiations between the White House and Congress to avert the 'fiscal cliff' is a measure aimed at helping struggling homeowners…The mortgage relief is aimed at some of the hardest hit: those who are underwater on their mortgages, owing more than their homes are worth." Amrita Jayakumar in The Washington Post.

@jbarro: This is a bigger disaster for the GOP than for Boehner. If we go over the cliff, we are left with literally no Republican proposal.

CILLIZZA: The importance of a swing and a miss. "This was a gambit by Boehner designed to be a show of force to President Obama. This was Boehner putting himself out on a limb in hopes wavering members would follow him. This vote mattered to Boehner. And he lost it…Any bargaining power Boehner had with Obama -- or hoped to have -- is gone." Chris Cillizza in The Washington Post.

@ezraklein: Boehner could just decide this Speaker job is a hopeless trap, cut the deal with Obama, pass it with Dem votes, drop the mic and go lobby

BERNSTEIN: Don't overthink the 'Plan B' failure. "For tonight, it’s a debacle, and they look foolish. But I’d caution against reading too much into this episode. It’s not at all clear it changes anything moving forward." Jonathan Bernstein in The Washington Post.

@moorehn: Theory: John Boehner is Mayan.

KLEIN: Is Obama’s plan better than going off the fiscal cliff? "The White House says they’ve gone pretty much as far as they can go. It’s this offer, or something very close to this offer, or it’s over the cliff. And so the question is, is this a good deal?" Ezra Klein in The Washington Post.

@justinwolfers: If I understand what I'm hearing from political reporters, the US house is now a three-party system: Tea Party, Republicans & Democrats.

KRUGMAN: Taxes hold 'em. "A few years back, there was a boom in poker television — shows in which you got to watch the betting and bluffing of expert card players. Since then, however, viewers seem to have lost interest. But I have a suggestion: Instead of featuring poker experts, why not have a show featuring poker incompetents — people who fold when they have a strong hand or don’t know how to quit while they’re ahead? On second thought, that show already exists. It’s called budget negotiations, and it’s now in its second episode." Paul Krugman in The New York Times.

@JohnJHarwood: This is pretty much an unequivocal disaster for Boehner. McConnell's turn now.

BROOKS: Strangers in the night. "[Democrats] have no clue what Republicans are thinking at any moment. Republicans are equally in the dark. The White House is a black box to them. They have no clue what President Obama wants in his second term or how the fiscal-cliff negotiations fit in. Well, I’d like to help the Republicans understand what’s going on in the other camp. First, Republicans should understand the mood in the White House." David Brooks in The New York Times.

DEMUTH: The real cliff. "Substantial segments of the population become accustomed to levels of government benefits that cannot be sustained. With time, an inheritance of continuous stimulus can be withdrawn slowly, permitting private adjustments and, with luck, resumed economic growth. But the longer the stimulus continues, the greater the likelihood that personal expectations will be shattered by an emergency that an insolvent government is no longer in a position to respond to." Christopher DeMuth in The Weekly Standard.

CARLSON: How 'bout $550k for a magic number? "I try not to write anything with too many numbers in it, but I am making an exception for Cliffmas. Here is my prediction: The final cutoff for increased taxes will be $550,000, give or take $25,000…I have been listening to the musings of legislators and reporters, sober and not so sober, at holiday cocktail parties…If you average the Republicans' number and Obama's -- $1 million and $400,000 -- you get $700,000. So with a final number of $550,000, Boehner comes out $150,000 behind. The closer we get to nonrefundable tickets to warm climes for the holidays, the smaller that $150,000 is going to look. That's how we get to $550,000." Margaret Carlson in Bloomberg.

Music recommendations interlude: R.E.M., "It's the End of the World as We Know It (And I Feel Fine)," 1987.

The gun-control process begins

Biden kicks off guns commission. "Vice President Biden said Thursday that 'we have to take action' to curb gun violence, as he convened the first meeting of the Obama administration’s interagency working group established in the wake of last week’s massacre at a Connecticut elementary school…Attendees included Thomas Nee, president of the National Association of Police Organizations; Philadelphia Police Commissioner Charles Ramsey, president of Police Executive Research Forum & Major Cities Chiefs Association; and Jim Pasco, executive director of the Fraternal Order of Police…Attorney General Eric H. Holder Jr., Homeland Security Secretary Janet Napolitano, Education Secretary Arne Duncan and Health and Human Services Secretary Kathleen Sebelius were also in the meeting, as were senior White House officials, including presidential adviser Valerie Jarrett." Philip Rucker in The Washington Post.

Boehner: I’ll consider gun violence task force’s recommendations. "House Speaker John A. Boehner (R-Ohio) promised to 'take under advisement' any suggestions to curb gun violence put forward by a new administration task force led by Vice President Biden. While he did not commit to allowing votes on any new gun control measures, the Republican leader also did not reject out of hand a discussion of such ideas."Rosalind S. Helderman in The Washington Post.

They want input from police. "The White House recruited national law enforcement leaders on Thursday to help shape a response to last week’s school shootings in Connecticut, hoping to use the credibility of America’s police officers to build support for measures curbing the spread of assault weapons." Peter Baker in The New York Times.

Mental-health records missing from gun-dealer database. "Despite recent progress in some states, millions of mental-health records remain missing from the national database that gun dealers use to run background checks on potential buyers, according to a new analysis of federal data by a coalition of U.S. mayors…Contributions to the database have since been sparse, because of privacy laws, technological hurdles and the costs of reporting, according to a July report by the Government Accountability Office." Jack Nicas in The Wall Street Journal.

To get gun control policy, we need data. "There is no shortage of opinions about whether gun-control laws accomplish what they are designed to do -- reduce violent crime. What is lacking are data. As U.S. lawmakers prepare once again to take up the contested issue in the wake of the Newtown school massacre, they will find that all data on guns are surprisingly scarce. Federal data on gun ownership have dwindled and public funding for gun research has all but dried up. Private foundations, with few exceptions, have left the field. Underreported crime figures and inconsistent enforcement of gun laws further frustrate analysis. Researchers say they don't have access to enough data to draw firm conclusions. Still, some say they have found moderate evidence that certain interventions help to cut violent crime, though they don't agree on which ones. Others say there is no evidence of that at all." Joe Pallazzolo and Carl Bialik in The Wall Street Journal.

ALTER: Gun control, but please, by any other name. "The best thing Obama did in his news conference was his attempt to drive a wedge between NRA members, most of whom favor reasonable gun-safety laws, and their hard- line officers and board of directors…[S]uburban areas are full of moderate and compassionate people who have not been approached imaginatively on the gun issue. Doing so requires reframing the debate with new language, always an essential weapon in politics. That means retiring 'gun control' (the 'control' part is threatening to gun owners) and replacing it with 'gun safety,' 'anti-violence regulation,' 'military weapons for the military only' and -- on every occasion -- 'common sense.'" Jonathan Alter in Bloomberg.

NASA interlude: Another take on 'Gangnam Style'.

Economy

Third-quarter growth was revised to 3.1 percent. "The Commerce Department’s third and final estimate Thursday of growth for July through September was increased from its previous estimate of a 2.7 percent annual growth rate." Reuters.

…But things look pretty rotten for the fourth quarter. "Economists in the latest Wall Street Journal survey predict the nation's gross domestic product will grow just 1.3% on an annualized basis in the final three months of 2012 and 1.7% in the first quarter of 2013." Neil Shah in The Wall Street Journal.

More home buyers, slimmer pickings. "Sales of previously owned homes rose in November to the highest level in three years. At the same time, a sharp decline in the number of properties on the market is beginning to give some power to home sellers. Existing homes sold at a seasonally adjusted annual rate of 5.04 million units in November, the National Association of Realtors said Thursday. That marks a 5.9% gain from the previous month and a 14.5% increase from one year ago." Nick Timiraos in The Wall Street Journal.

The fed's tough forecasting job. "There are two reasons the Federal Reserve might raise interest rates sooner than it anticipates. The first is that inflation picks up by more than it has forecast. The second is that the unemployment rate falls more quickly than it thinks it will. The latter is the more likely…The obvious risk is that inflation might rise faster than the Fed forecasts, putting it in a situation where it must raise rates in a hurry." Justin Lahart in The Wall Street Journal.

Here come the risky corporate loans? "Regulators are concerned that banks are loosening their standards for one of the riskiest forms of corporate lending, a trend that harkens back to perilous practices common in the run-up to the financial crisis. In the past 18 months, banks have relaxed the criteria they use to determine whether to issue loans to highly indebted companies, a type of borrowing known as leveraged finance, according to a report on risk released Thursday by the U.S. Office of the Comptroller of the Currency." Danielle Douglas in The Washington Post.

Read: The report from the U.S. Office of the Comptroller of the Currency.

Should we force banks to take write-downs early? "An accounting rule that would often force banks to take loan write-downs well before loans actually go bad was preliminarily proposed on Thursday by the Financial Accounting Standards Board, which sets American accounting rules…The new rules, which are unlikely to actually take effect for several years, were initiated by complaints that banks were unable to write down the value of loans as soon as they should have as the financial crisis was growing. Under the exposure draft issued by the board, banks would frequently evaluate the expected cash flows from groups of loans and securities they owned, and take write-downs to the extent they expect the cash flow to be lower than called for in the loan documents." Floyd Norris in The New York Times.

IRWIN: Macroeconomics is not a morality play. "One of America’s greatest exports, then, is not any physical good, but offering the world a deep, liquid, secure bond market. We may have dysfunction in Congress and large deficits as far as the eye can see, but as long as investors are confident that the Treasury will honor its debt obligations and the Federal Reserve won’t allow out-of-control inflation, the United States looks like a terrific place to park money. There are three points to draw from that. One is that as the United States looks to reduce budget deficits, it should do so on its own terms." Neil Irwin in The Washington Post.

2012 interlude: The 50 worst columns of the year.

Implementing the Affordable Care Act

Medicare discloses details of carrot-and-stick hospital program. "Medicare on Thursday disclosed bonuses and penalties for nearly 3,000 hospitals as it ties almost $1 billion in payments to the quality of care provided to patients. The revised payments, which will begin in January, mark the federal government’s most extensive effort yet to hold hospitals financially accountable for what happens to patients. In what amounts to a nationwide competition, Medicare compared hospitals on how faithfully they followed rudimentary standards of care and how patients rated their experiences." Jordan Rau in Kaiser Health News.

How the bonuses and penalties are calculated. "The Value-Based Purchasing payments are determined by how hospitals scored on two sets of measures. The first are 12 'measures of timely and effective care' also known as 'process' measures. These rate how often hospitals adhered to these clinical guidelines…The second set of eight measures is culled from surveys of patients who had recently left the hospital. These are frequently called 'patient experience' or 'patient satisfaction' measures." Jordan Rau in Kaiser Health News.

Chart: Hospital bonuses and penalties.

HHS approves healthcare exchanges in 3 states. "Three more states won conditional approval Thursday to run their own insurance exchanges under President Obama's signature healthcare law. The Health and Human Services Department gave conditional approval to state-run exchanges in Delaware, Minnesota and Rhode Island." Sam Baker in The Hill.

1960s interlude: BBC sounds.

Green policy

Court won't revisit greenhouse gas ruling. "A federal appeals court on Thursday declined to revisit a decision that allowed the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions. The U.S. Court of Appeals for the District of Columbia voted 6-2 to reject a request for the full court to reconsider a June ruling that upheld EPA’s interpretation of the Clean Air Act. The court’s action could set up a Supreme Court challenge by industry, energy firms and the state of Alaska, which were pushing for the rehearing." Zack Colman in The Hill.

Air pollution now kills more people than high cholesterol. "In 2010, 3.2 million people died prematurely from outdoor air pollution, mainly in Asia, and mainly from soot and other pollutants from diesel cars and trucks. That means outdoor air pollution is now a bigger health risk than high cholesterol -- and, along with obesity, one of the fastest-growing health risks in the world." Brad Plumer in The Washington Post.

Census: Oil-and-gas heavy North Dakota is fastest-growing state. "The U.S. Census Bureau said Thursday that North Dakota experienced the nation’s greatest population growth this year, with the domestic oil-and-gas boom a likely reason for the gains. As of July 1, North Dakota’s population increased 2.17 percent compared with the previous year. As a whole, the U.S. population rose 0.75 percent during that period." Zack Colman in The Hill.

Wonkbookmarks interlude: youshouldhaveseenthis2012.com/.

Et Cetera

The death of the death sentence. Ethan Bronner in The New York Times.

Interview: Barak Orbach, professor of law and director of the Business Law Program at the University of Arizona, and Robert Bork expert. Dylan Matthews in The Washington Post.

Why is maple syrup controlled by a Quebec cartel anyway?. Brad Plumer in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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