Wonkbook: One last attempt at a fiscal-cliff deal

December 27, 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: 1.27 million. That's the increase in the number of Americans on federal disability insurance, according to a piece in Bloomberg by Edward Glaeser. There are now 8.8 million workers who receive disability payments, an increase which is likely due to the economy and to changing benefit rules, according to Glaeser. For more, see Wonkbook's opinion section.

Wonkblog's Graph of the Day: Guns kill people.

Today in Wonkbook: the fiscal cliff; implementing the Affordable Care Act; energy; and the economy.

Top story: One last attempt at a fiscal-cliff deal

On ‘fiscal cliff,’ Obama and senators returning to Washington for one last attempt at deal. "With historic tax increases set to hit virtually every American in five days, President Obama and members of the Senate are headed back to Washington on Thursday to take one last shot at a deal to protect taxpayers and the gathering economic recovery. If anything, hope for success appeared to have dimmed over the Christmas holiday. The Republican-controlled House last week abdicated responsibility for resolving the crisis, leaving all eyes on the Senate. But senior aides in both parties said Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have not met or even spoken since leaving town for the weekend." Lori Montgomery and Paul Kane in The Washington Post.

Barack Obama
(AP Photo/Charles Dharapak)

@davidfrum: Secret of the fiscal cliff drama: Americans love a count-down.

…But a deal is increasingly unlikely "Nearly all the major players in the fiscal cliff negotiations are starting to agree on one thing: A deal is virtually impossible before the New Year…With the country teetering on this fiscal cliff of deep spending cuts and sharp tax hikes, the philosophical differences, the shortened timetable and the political dynamics appear to be insurmountable hurdles for a bipartisan deal by New Year’s Day." Manu Raju and Jake Sherman in Politico.

@pourmecoffee: So we're going to hit the debt ceiling then go off the fiscal cliff. I assume an anvil lands on us after that.

U.S. will hit debt limit on Dec. 31, Treasury Department says. "The U.S. government will hit the $16.4 trillion federal debt limit Monday and turn to 'extraordinary measures' to continue borrowing, the Treasury Department said Wednesday, beginning a countdown until Congress either passes legislation to allow for more borrowing or the government defaults on its debt. In a letter to Congress, Treasury Secretary Timothy F. Geithner said that although the debt ceiling would be reached Dec. 31, the government could buy roughly two months’ more time before it would be unable to meet all its obligations." Zachary A. Goldfarb in The Washington Post.

@Goldfarb: Geithner sez extraordinary measures yield 2 more months before hitting debt limit. If we go over fiscal cliff, more time.

Poll: Fears of cliff dive mount. "Americans are rapidly becoming more pessimistic about reaching a deal to avert the fiscal cliff, according to a poll released Wednesday, with public opinion swinging 15 percentage points in less than a week. Only 50 percent of Americans think it’s likely a deal will be struck, while 48 percent think it’s unlikely, according to a Gallup Poll conducted Dec. 21-22. Americans still overwhelmingly want their leaders to compromise to avoid the cliff, with 68 percent asking for a deal and only 22 percent hoping leaders 'stick to their principles.'" Kevin Robillard in Politico.

@pourmecoffee: Fiscal cliff. Debt ceiling. We may not have a functioning democracy, but we've got the liveliest governmental incompetence metaphors going.

House GOP to wait on Senate action. "House Republican leaders Wednesday said the Senate needs to act first on legislation to avert the fiscal cliff, hinting they would not bring the House back into session until Senate Majority Leader Harry Reid (D-Nev.) moves something through his chamber." Jake Sherman in Politico.

@jbarro: Feeling pretty good about my decision to install a giant fiscal cliff countdown clock on the ceiling above my bed.

The White House’s Kent Conrad problem. "No major Republican is echoing Conrad’s willingness to compromise. There’s been no similar concession from Sen. Jeff Sessions (Ala.), the ranking Republican on the Senate Budget Committee. Rep. Paul Ryan (Wis.), the chair of the House Budget Committee, has been helping to kill compromise proposals. Sen. John Barrasso (Wyo.), who was on Fox News Sunday alongside Conrad, used his time to hammer the White House…Understanding the asymmetric interest in compromise is important both to understanding the White House’s interest in a deal and the GOP’s resistance to one." Ezra Klein in The Washington Post.

The "milk cliff." "Come Dec. 31, Washington’s inaction could push the country’s milk prices to as much as $6 to $8 per gallon unless Congress passes a farm bill renewing federal support for agriculture programs. Here’s how that would happen: Without legislative action in the next five days, the government will have to revert to a 1949 dairy price subsidy that requires the Agriculture Department to buy milk at inflated prices." Suzy Khimm in The Washington Post.

SOLTAS: The deficit problem we don't have. "If those so-called deficit hawks would stop moralizing long enough to look at the data, they might find something surprising: That data almost entirely undermine their argument…For this post, I have calculated estimates of the current structural fiscal deficit from 1949 to 2012 with data from the Office of Management and Budget.These estimates come from breaking down the deficit into its components -- spending by individual program and revenues from each tax -- and computing their sensitivity to the output gap over time through linear regression. My estimates of the output gap come from the Congressional Budget Office. For fiscal year 2012, the annual structural deficit was $325 billion, or 2.1 percent of GDP." Evan Soltas in Bloomberg.

HENNINGER: The biggest cliff of all. "Government, for the past 80 years or so, has seen its purpose as mainly to 'respond' to society's failures the moment they occur or whenever they are imagined. Adam Lanza killed with guns, so modern policy-making logic posits that government must pass a law. Whether that law will accomplish its goal is . . . irrelevant. Policy making has become an activity that supports the genetic and financial needs of policy makers and their follower tribes." Daniel Henninger in The Wall Street Journal.

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

Top op-eds

GLAESER: 2013 is the year to go to work, not to go on disability. "To me, the number that sums up the year’s doldrums is the 1.27 million increase in the number of disabled Americans without jobs from November 2011 to November 2012. This statistic reflects not only the sluggish recovery but also a drifting nation, badly in need of tough medicine. There are now 8.8 million workers receiving disability payments from Social Security. I find this number haunting…The two primary alternative hypotheses for the rise are that either work has become less attractive or that disability insurance has become more attractive and available. The disability-claims approval process and the wider society itself have become more accepting of people receiving the benefits even if they have no visible ailment." Edward Glaeser in Bloomberg.

DIONNE: How the GOP has rejected its own health care ideas. "It’s harder and harder for politicians on the right to think straight about health care. Conservatives once genuinely interested in finding market-based ways for the government to expand health insurance coverage have, since the rise of Obamacare, made choices that are dysfunctional, even from their own perspective." E.J. Dionne in The Washington Post.

WILL: Another conservative in favor of immigration. "Skeptics will say that the Homestead Act, which welcomed immigrants to a sparsely populated continent, is irrelevant to today. Skeptics should consider not only that immigration is still an entrepreneurial act but also that as the entitlement state buckles beneath the weight of an aging population, America’s workforce needs replenishing." George F. Will in The Washington Post.

PONNURU: Plan to limit Fed mandate is folly. "The Fed has done a much better job at fostering price stability since it got its dual mandate than it did before then…Nor would Brady’s bill do much to reduce the Fed’s discretion…The bill also has two political vulnerabilities, and each makes the other worse. Its supporters, mostly Republicans, will be on record as saying the unemployed are no concern of the Fed’s -- indeed, as saying that the Fed should be banned from doing anything to help them." Ramesh Ponnuru in Bloomberg.

Where do we find this stuff interlude: Vintage Christmas cards from Soviet Russia.

Implementing the Affordable Care Act

Supreme Court won't block Obama health law's contraception mandate. "The Supreme Court on Wednesday refused to block the Obama administration's contraception mandate from taking effect…The request was filed by Hobby Lobby, an arts-and-crafts chain. The company's Catholic owners say the contraception mandate violates their religious freedom. Hobby Lobby might eventually win on that point, Sotomayor said, but the company didn't meet the standard for an injunction blocking the mandate from taking effect. " Sam Baker in The Hill.

The Affordable Care Act's unknowns. "As California positions itself at the vanguard of the national healthcare overhaul, state officials are unable to say for sure how much their implementation of the federal Affordable Care Act will cost taxpayers…Officials don't know exactly how many Californians will sign up for Medi-Cal, the public health insurance program for the poor. Computing the cost of care for each of them is also guesswork. And California is waiting for key rulings from federal regulators that could have a major effect on the final price tag, perhaps in the hundreds of millions of dollars." Anthony York in The Los Angeles Times.

Five ways your health care will change in 2013. "The Affordable Care Act’s biggest year is, without a doubt, 2014: That’s when the federal subsidies to purchase health insurance roll out. It’s also when penalties for not buying coverage kick in. But many of the big changes will start gradually in 2013. They range from increasing payments to Medicaid doctors to upping Medicare taxes to the exchanges’ very first open-enrollment period. Here’s a quick guide to what will happen in health care in the next year." Sarah Kliff in The Washington Post.

Yes, more Christmas interlude: Cats and dogs opening presents.

Energy

Report finds US energy production growing, consumption down. "A new report shows U.S. energy consumption dropping, even as the industry experiences a boost in production. U.S. energy consumption declined 3 percent between January and September compared with that period last year, according to data the U.S. Energy Information Administration (EIA) released Wednesday…Energy production, however, rose 2 percent through the same time frame. Fossil fuel development increased 3.14 percent, while renewable energy production fell 2.8 percent." Zack Colman in The Hill.

Maine's goal for wind power. "Wind power generated in Maine is now producing nearly 500 megawatts, enough to supply the average needs of 175,000 households. However, it's still well short of the state's goal for wind generation by 2015. But new projects that are in conceptual stages, under regulatory review or approved but facing challenges could catapult the state to half of its wind-power goal of 2,000 megawatts by 2015. The Legislature has set that goal for installed wind power capacity, along with 3,000 megawatts by 2020." Glenn Adams in The Associated Press.

Photographic interlude: Christmas morning, seen from space.

Economy

Home prices rose over past year, another sign that market is recovering. "Nationally, home prices rose 4.3 percent in the 12 months ending in October, a rate that surpassed analysts’ expectations, according to Standard & Poor’s Case-Shiller home-price indexes…The price increases in much of the country build on other data showing a sharp rise in new construction, a decline in once-swollen inventories and a decrease in foreclosures. Taken together, the reports have led analysts to conclude that after years of being an economic drag, housing is now contributing to economic growth." Michael A. Fletcher in The Washington Post.

Why 2013 should be a good year for the U.S. economy. "There is good reason to think that 2013 will be the finally be the year that the U.S. economic recovery really feels like a recovery: The biggest forces that have been holding the economy back finally seem to be subsiding." Neil Irwin in The Washington Post.

Cool science interlude: Lighter-than-air material discovered.

Et Cetera

A history of the debt ceiling. David Gura in Marketplace.

What will we smuggle in the future? Coal, cyber currency, honeybees. Brad Plumer in The Washington Post.

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

Wonkbook is produced with help from Amrita Jayakumar.

 

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