Wonkbook: Fiscal cliff talks may restart tomorrow

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Wonkbook's Number of the Day: AB 32. That's the formal legislative name for California's climate-change legislation, which included a state-level "cap-and-trade" program. Passed in 2006, the law's rules on greenhouse gases and its market mechanism become legally binding as of January 1, 2013, according to a story by Felicity Barringer in The New York Times. For more on California's program and green policy from New York City to Oregon, see Wonkblog's special section.

Wonkblog's Graph of the Day: When which DC metro stations are busiest.

Top story: Fiscal cliff talks may restart tomorrow

Obama may be heading back to Washington to restart fiscal-cliff negotiations. "[B]oth chambers of Congress will come back from their holiday hiatus on Thursday and return to work. While there are growing signs that some members of both parties are prepared to accept a deal that raises taxes on people at the highest income levels, there is considerable distance between Republicans and Democrats and no guarantee that an agreement could pass." Jeremy W. Peters in The New York Times.

@Goldfarb: A White House official says Obama plans to leave Hawaii as soon as Wednesday -- to return to fiscal cliff negotiations.

From 'fiscal cliff' to 'fiscal horizon.' "Some hits -- like a two percentage point increase in payroll taxes and the end of unemployment benefits for more than two million jobless Americans -- would be felt right away. But other effects, like tens of billions in automatic spending cuts, to include both military and other programs, would be spread out between now and the end of the 2013 fiscal year in September. These could quickly be reversed if a compromise is found…In the meantime, more observers are contemplating what the impact will be if Washington ignores the year-end deadline and waits until January or February to act." Nelson D. Schwartz in The New York Times.

@mattyglesias: Remember the fiscal cliff? Those were good times.

Wall Street is in 'wait-and-see' mode. "[T]raders, big investors and strategists are paying close attention to their Bloomberg terminals and BlackBerrys this year, as anxiety rises over the budget impasse in Washington…Wall Street is watching to see what comes next. Some players are creating portfolio contingency plans if a deal doesn’t materialize and stocks plunge. Others are reducing their exposure to stocks that could be particularly vulnerable like financials or energy companies. A faction of opportunists are drawing up buy lists, figuring that bargains will emerge." Nathaniel Popper in The New York Times.

@jbarro: Merry Christmas, everyone! I hope you like the Fiscal Cliff I got you!

Overlooked in all this has been the Democratic shift on tax cuts. "Democrats seeking a deal to avert the year-end 'fiscal cliff' are trying to etch into stone the signature economic achievement of Republican President George W. Bush by permanently extending tax cuts enacted during his tenure. President Obama has put the extension of the tax cuts for most Americans at the top of his domestic agenda, a remarkable turnaround for Democrats, who had staunchly opposed the tax breaks when they were written into law about a decade ago." Zachary A. Goldfarb in The Washington Post.

@ReformedBroker: Obama unveils new Overstuffed Stocking Tax

From the fiscal cliff, the economy doesn't look so good. "Aides in both parties say they expect a potential solution to start taking shape by the end of the week. But with so little time, hopes are dimming for anything other than a partial agreement, which would prolong the uncertainty and leave in place some tax or spending measures that act as a serious drag on the weak recovery. This could even trigger another recession, exacerbating the global economic slowdown." Sudeep Reddy in The Wall Street Journal.

Music recommendations interlude: Paul Simon, "Kodachrome," 1973.

Top op-eds

BITTMAN: Stop government subsidies of obesity. "Seven times as many poor children are obese as those who are underweight, an indication that government aid in the form of food stamps, now officially called SNAP, does a good job of addressing hunger but encourages the consumption of unhealthy calories…The argument that soda and other junk masquerading as food should be made ineligible for purchase by food stamps, as are alcohol and tobacco, is one that’s been gaining momentum in the last few years. It’s also one that has led to a split in what might be called the nutrition advocacy community." Mark Bittman in The New York Times.

Read, to follow Bittman's piece: In the Journal of the American Medical Association, "Opportunities to Reduce Childhood Hunger and Obesity".

SLOAN: Could Democrats make the same mistake on Social Security that GOP made on tax cuts? "What’s happening to the tax-cut zealots today could happen down the road to the Democratic zealots who insist that Social Security doesn’t need to be fixed…Just as Bushies used ridiculous numbers to justify tax cuts, the official Democratic position uses ridiculous math to claim that Social Security doesn’t need fixing. The logic, such as it is: Social Security isn’t a problem because it shows a federal budget surplus." Allan Sloan in The Washington Post.

BARTLETT: A conservative case for the welfare state. "[T]here are sound reasons why a conservative would support a welfare state. Historically, it has been conservatives like the 19th century chancellor of Germany, Otto von Bismarck, who established the welfare state in Europe. They did so because masses of poor people create social instability and become breeding grounds for radical movements." Bruce Bartlett in The New York Times.

Videos interlude: Lord Richard Buckley. Groucho Marx. Jazz poetry. Enough said? Watch.

Greening the U.S.A.

California's "AB 32" cap-and-trade program begins in the new year. "Companies are trying to figure out how this will affect their bottom lines and have lobbied state regulators to minimize the costs. In the meantime they are weighing their options. Should they stay and adapt or move operations elsewhere? Should they retrofit and innovate to reduce emissions? Should they swallow the regulatory costs or pass them on to customers?…In recent months, as the start date of the new cap-and-trade program neared, California regulators have fine-tuned the rules, industry by industry, to avoid imposing severe economic hardship while trying to keep the rules stringent. It is a delicate balance. Regulators do not want California companies to lose their competitive edge, because that could make other state governments reluctant to adopt this approach." Felicity Barringer in The New York Times.

How New York City is tracking energy efficiency building-by-building. "The Bloomberg administration has zeroed in on energy use by the city’s largest buildings with the goal of reducing greenhouse gas emissions, which contribute to global warming and sea level rise…While the city’s biggest commercial structures have been required to report energy use since 2010, this is the first year public disclosure has been mandated under a 2009 law that is among the first in the country to follow how buildings use energy. Big residential buildings will face the same disclosure requirement next year." Mireya Navarro in The New York Times.

In 2013, will it be food versus fuel? "In coming days, the Environmental Protection Agency’s to-do list will include setting a standard for the amount of advanced biofuels that refiners will be required to blend into gasoline and diesel supplies in 2013. The question is tricky because production in one category, cellulosic fuel from nonfood sources like corn cobs, stalks, wood chips and garbage, has not met the target set by Congress. The E.P.A. has the authority to adjust the quotas as needed, but the issue is complicated." Matthew L. Wald in The New York Times.

Sen. Wyden is continuing his campaign against natural gas exports. "The Oregon Democrat, who will have a powerful perch in Congress to influence the debate, has been fielding substantial home-state opposition to such exports…Hours after the report came out, Mr. Wyden was sitting at Bistro Cacao, a French restaurant a few blocks from the Capitol, with Andrew Liveris, chief executive of Dow Chemical Co., one of the largest natural-gas-consuming companies in the U.S." Tennille Tracy in The Wall Street Journal.

Wonkbookmark interlude: The Twitter "shame eraser".

Et Cetera

The Boston Globe's Michael Kranish details how the Romney campaign failedin an interesting longread.

The Tea Party is sliding back towards the margins and away from relevance. Jennifer Corbett Dooren in The Wall Street Journal.

What measures of the Affordable Care Act start on Jan. 1, 2013. Trip Gabriel in The New York Times.

Obama administration considers refinance program expansion. Nick Timiraos in The Wall Street Journal.

How legal curbs may be holding up gun inquiries by the Bureau of Alcohol, Tobacco, and Firearms. Erica Goode and Sheryl Gay Stolberg in The New York Times.

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

Wonkbook is produced with help from Michelle Williams.

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Ezra Klein · December 25, 2012