Wonkbook: Today is the day for ‘fiscal cliff’ talks

December 28, 2012

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Wonkbook's Number of the Day: $208 billion. That's the total monetary vaue of the goods which passed through the port of New York-New Jersey in 2011, according to a story by Brad Plumer in The Washington Post.. With the International Longshoremen’s Association threatening a strike at 14 ports, it's worth reminding ourselves of the important role of ports in the United States' economic infrastructure.

Wonkblog's Graph of the Day: 2012, the year in graphs.

Today in Wonkbook: the fiscal cliff; the economy; gun control; and green policy.

Top story: Today is the day for 'fiscal cliff' talks

Obama summons congressional leaders for ‘fiscal cliff’ talks. "President Obama summoned congressional leaders to a Friday summit at the White House in a last-ditch effort to protect taxpayers, unemployed workers and the fragile U.S. recovery from severe austerity measures set to hit in just four days. Also Thursday, House Speaker John A. Boehner (R-Ohio) announced that he would call the House back into session this weekend. And in perhaps the most significant development, Senate Minority Leader Mitch McConnell (R-Ky.) for the first time was engaged directly in talks with the White House. He signaled an interest in cutting a deal." Lori Montgomery and Rosalind S. Helderman in The Washington Post.

Mitch McConnell, R-Ky., speaks at a news conference as House Speaker John Boehner of Ohio listens.
House Speaker John Boehner and Sen. Mitch McConnell (R-Ky.) (AP/Harry Hamburg)

@JohnJHarwood: WH official: Obama will host fiscal cliff meeting of bipartisan Congressional leaders tomorrow afternoon

Summoned back to Washington, Senators chafe at inaction. "Members of the Senate trudged back to the Capitol ostensibly to work out a deal with the White House to avoid large tax increases and spending cuts set to take effect in just a few days. With the possibility of New Year’s Eve floor festivities looming, Congress could find itself voting on the final day of the year for the first time in more than four decades." Jennifer Steinhauer in The New York Times.

@moorehn: I'd like to know what Congress would do if the media just refused to cover the fiscal cliff until something actually happens. Shrivel?

Behind Boehner’s fiscal cliff strategy. "House Speaker John Boehner told House Republicans that he’s “not interested” in passing a fiscal cliff deal with 'mostly Democrat votes,' his most direct comments about how he’ll manage the remaining negotiations over tax increases and spending cuts. Boehner’s comment is significant because it means he is going to push for an agreement that most of the 241 House Republican could support." Jake Sherman and John Bresnahan in Politico.

@mattyglesias: If Obama guides us over the fiscal “cliff” while plausibly sticking GOP intransigence with the “blame” it’ll be an amazing achievement.

On Wall Street, realization is sinking in over the elusiveness of ‘fiscal cliff’ deal. "Wall Street is finally waking up to the troubling prospect that lawmakers may not reach a deal to avert the 'fiscal cliff' before the new year, with stocks swinging dramatically Thursday in response to news from Capitol Hill…[W]ith the final days trickling away before the year-end deadline, the markets Thursday experienced their greatest volatility since the summer. It was also the fourth consecutive day of losses on Wall Street." Zachary A. Goldfarb in The Washington Post.

Consumer confidence is falling off the fiscal cliff. "American consumers are worrying more about the economic outlook, according to a new report suggesting they have begun focusing on possible tax increases and government spending cuts in the new year. The Conference Board said Thursday its consumer confidence index fell six percentage points in December from a month earlier to 65.1, its lowest level since August. That came just days after another gauge, the Thomson Reuters/University of Michigan consumer sentiment index, also declined significantly." Josh Mitchell in The Wall Street Journal.

@blakehounshell: There's so much BS in Washington right now. I think we have gone over the fecal cliff.

Longer the fiscal cliff dive, harder the economic hit. "If the U.S. dives off the fiscal cliff at the end of the month, as seems more likely by the moment, the markets and economic impact will depend on the depth of the plunge and the quality of the landing. If a deal is struck sometime in January to reinstate at least some of the Bush tax cuts and a patch is applied to ensure the alternative minimum tax does not slam the middle class, the damage should be limited, many economists say." Ben White in Politico.

@grossdm: I'm guessing a lot of the house GOP rank and file think they are winning the cliff debate and that country will blame dens if no deal

The Office of Personal Management is planning for furloughs. "With talks on averting the 'fiscal cliff' apparently stalled, the Office of Personnel Management posted new guidance to federal workers for administrative furloughs on its Web site Thursday afternoon…[A]fter months of the White House expressing confidence that the stand-off would be resolved before a crisis hit and furloughs would be unnecessary, the guidance reflects the reality that little time remains on the calendar to avert the automatic cuts that will be triggered by a failure to reach a deal by the year’s end." Steve Vogel in The Washington Post.

Read: U.S. Office of Personnel Management, "Guidance for Administrative Furloughs".

Starbucks’ grande confusion over the fiscal cliff. "Starbucks CEO Howard Schultz has become the latest corporate executive to take to a soapbox on the “fiscal cliff” as part of Maya MacGuineas’s Fix the Debt coalition. His open letter asking his baristas to write 'Come together' on their D.C. customers’ cups has launched a thousand quips on Twitter. But beneath Schultz’s anodyne message lies a central confusion as to what the fiscal cliff is about in the first place." Suzy Khimm in The Washington Post.

@Reddy: McConnell goes to the Senate floor to blame Democrats for inaction after Reid blamed Republicans for inaction. And around we go.

BURMAN AND SLEMROD: Closing loopholes isn't enough. "[E]ven those Republicans who acknowledge that additional tax dollars will be necessary say we can get what we need without increasing a single tax rate. All we have to do is close up some 'loopholes' and 'broaden the base'! We can keep in place the Bush-era tax cuts, they say, and make up any lost revenue simply by eliminating various deductions, exclusions and credits. At first glance, the idea seems great. Who wouldn’t want to root out the tax evaders and finaglers who are shirking the shared burden? And the idea of a broader base of taxpayers paying lower rates across the board sounds so much simpler and fairer for every citizen. But closing loopholes is neither sufficient to do the job nor as 'fair' to everyone as it might seem." Leonard E. Burman and Joel B. Slemrod in The New York Times.

@ezraklein: Fiscal cliff talks have literally devolved to "No, you go first." "No, YOU go first." "No, YOU GO FIRST!"

KLEIN: Republicans want to raise your taxes. "The big lie of the fiscal cliff is that the argument is between Democrats who want to raise your taxes and Republicans who want to cut your taxes. That’s wrong. Republicans want to raise taxes on more people than the White House does…A truthful way of phrasing the fight over taxes is that Republicans are fighting to stop a sharp tax increase on a small number of rich people and the White House is fighting to stop a tax increase on most everyone else. Or to put it still more bluntly, Democrats want to raise taxes on the rich, Republicans want to raise them on the poor and the middle class." Ezra Klein in The Washington Post.

@blakehounshell: Seems outsiders seem more pessimistic about a fiscal cliff deal than insiders, who think this is all kabuki. Who's right?

BAUM: We've already gone off the cliff. "The economics profession worships at the altar of rational expectations theory: the idea that our behavior is based on expectations about the future, so the future is now, so to speak. It's what drives the Federal Reserve's communication policy. Policy makers believe that pledging to hold the overnight rate at close to zero until a certain date (old testament) or specific unemployment threshold is reached (new testament) will accelerate the economic recovery. I have lots of issues with expectations theory. But if academics are correct, and the public expects the U.S. to go over the fiscal cliff, why is going over it such a big deal?" Caroline Baum in Bloomberg.

@justinwolfers: What is so dysfunctional about our Congress that it can't pass a fiscal cliff deal until they run down the clock, causing economic harm?

STRASSEL: Cliff-top lessons for the GOP. "[T]here are still two big lessons they can take away from this most recent round of failed debt talks -- lessons that might aid them in the immediate future. The first is that Mr. Obama is not, and will never be, a serious negotiating partner…Lesson two: A house divided is a losing house. Mr. Boehner and Senate Minority Leader Mitch McConnell attempted to rally their members around a common message that tax rates should not go up for anyone. But their party's freelancers, ever eager for a quick headline, ran for the exits." Kimberley A. Strassel in The Wall Street Journal.

@ObsoleteDogma: Actually, the Republicans should want to move the cliff forward. Congress gets more liberal in January. A deal now is better for them.

DELONG: Over the cliff we go. "There are two reasons why deficit hawks are not declaring victory. First, many who call themselves deficit hawks are really spending hawks: they believe that US social insurance is too generous to the unemployed, the disabled, the elderly, and the sick, and that by far the best policy is to cut back on such programs rather than raise taxes to pay for them. But, they fear that calling for spending cuts will be unpopular, unlike, they hope, demands to balance the budget. For them, the problem with the fiscal cliff is that it does not cut spending enough and raises taxes too much." J. Bradford DeLong in Project Syndicate.

Music recommendations interlude: U2, "New Year's Day," 1983.

Top op-eds

KRUGMAN: Is growth over? "The great bulk of the economic commentary you read in the papers is focused on the short run: the effects of the 'fiscal cliff' on U.S. recovery, the stresses on the euro, Japan’s latest attempt to break out of deflation. This focus is understandable, since one global depression can ruin your whole day. But our current travails will eventually end. What do we know about the prospects for long-run prosperity?" Paul Krugman in The New York Times.

GLOVER: Why the GOP ought to support federal funding for contraception. "Making the party more appealing to women, however, should not -- and need not -- involve undermining the most basic Republican values. In the case of childbirth, the Republicans’ primary commitment is to the pro-life cause — and hence to reducing the number of abortions in the country. But abortion opponents should be pro-contraception, since making contraception as affordable and available as possible reduces the number of unwanted pregnancies and thus abortions." Juleanna Glover in The New York Times.

Graphs, graphs, graphs interlude: 2012, the year in graphs.

Economy

Three ways Washington could mess up the recovery in 2013. "The pieces are in place for 2013 to be a year of solid economic gains. But the big, dark cloud on the horizon is located right in the middle of the District of Columbia. Look for the building with the giant dome. It is not simply that the federal government could mess up what should, by all rights, be a good year. It is that there are so many different ways that government policy could mess things up, a long menu of options for how things could go awry in Washington, with gloomy consequences across the United States." Neil Irwin in The Washington Post.

Possible strike at docks would cripple key U.S. ports, hurt economy. "Thousands of dockworkers from Baltimore to Houston are threatening to go on strike this Sunday over their pay, a move that could throttle an array of key ports and disrupt commerce at a critical juncture for the economy…A widespread strike by the International Longshoremen’s Association, the first in decades, could put the White House in a bind. Scores of businesses have urged President Obama to do whatever it takes to prevent the ports from closing -- including using emergency powers under a 1947 law to intervene. But such action by the president could alienate union allies." Brad Plumer and Michael A. Fletcher in The Washington Post.

Could a port strike really cripple the U.S. economy? "[H]ow much economic damage would a port strike cause? Estimates can vary widely. Business groups claim that a comparable 11-day lockout at ports on the West Coast in 2002 cost the economy $1 billion per day, or nearly 4 percent of the nation’s output during that period. Yet other economists have argued that these figures are often inflated and that the economy can handle temporary disruptions. There’s no question that the 14 threatened ports on the East Coast and Gulf Coast are critical -- nearly half of ocean-going shipping containers coming to and from the United States go through these points. The biggest port, New York-New Jersey, handled $208 billion worth of goods last year." Brad Plumer in The Washington Post.

The top stocks of 2012. "Last year’s profile of the best-performing stocks in the S&P 500 was a depressing read full of mining concerns, discount stores, and credit-card companies trading up on regulatory favors. This year’s list is a more optimistic, more diverse collection, not least because the market as a whole did much better." Matthew Yglesias in Slate.

Advice from social science interlude: Wonkblog’s guide to New Year’s resolutions.

Gun control after Newtown, Conn.

Record number of Americans oppose handgun ban. "An unprecedented number of Americans support the right to own a handgun, despite the recent mass killings at an elementary school in Newtown, Conn., that have renewed the push for gun control. Even with the killings in Newtown as a backdrop, a new Gallup poll shows 74 percent of Americans now support the right to possess a handgun, while just 24 percent would support a ban." Aaron Blake in The Washington Post.

Big data and American guns. "Big data might have stopped the massacres in Newtown, Aurora, and Oak Creek. But it didn't, because there is no national database of gun owners, and no national record-keeping of firearm and ammunition purchases. Most states don't even require a license to buy or keep a gun. That's a tragedy, because combining simple math and the power of crowds could give us the tools we need to red flag potential killers even without new restrictions on the guns anyone can buy. Privacy advocates may hate the idea, but an open national database of ammunition and gun purchases may be what America needs if we're ever going to get our mass shooting problem under control." Marc Parrish in The Atlantic.

Lists, lists, lists interlude: The hundred best lists of all time.

Green policy

EPA chief Lisa Jackson is stepping down. "Environmental Protection Agency chief Lisa Jackson said Thursday she will leave her post in early 2013, ending almost four years in which she was lauded by environmentalists for pursuing the first U.S. greenhouse-gas regulations while battling Republican efforts to limit her agency's powers." Ryan Tracy in The Wall Street Journal.

Acting EPA chief among most likely to succeed Jackson. "The White House said that Robert Perciasepe, the agency’s deputy administrator, will take the top job in an acting capacity if nobody has been confirmed when she departs, which appears likely. Perciasepe is also on a short list of names that EPA observers see as potential nominees for Senate confirmation to replace Jackson. He has already been Senate-confirmed to serve under two presidents. In addition to his work in the Obama administration, Perciasepe served in former President Clinton’s EPA as the top water quality regulator and later the top air quality official." Ben German in The Hill.

New Hawaii senator pledges to tackle climate change. "The replacement for the late Hawaii Sen. Daniel Inouye (D) said Wednesday that climate change is at the top of his legislative agenda. 'For me, personally, I believe global climate change is real and it is the most urgent challenge of our generation,' Lt. Gov. Brian Schatz (D), whom Hawaii Gov. Neil Abercrombie (D) tapped for the seat, said in brief comments Wednesday. Schatz is expected to be sworn in Thursday afternoon. He will serve until 2014, and plans to run for the special election to fill the remaining two years of Inouye’s term. Schatz also said he would run for a full term in 2016." Zack Colman in The Hill.

Capturing climate change digitally. "Carbon uptake by trees of nearly two dozen species dropped off weeks before leaves began to change color and to fall in the autumn, they found, suggesting that trees may sequester as much as 3 percent less carbon dioxide globally than previously thought." Josie Garthwaite in The New York Times.

Science is amazing interlude: Magnetically levitating graphite can be moved with laser.

Et Cetera

Census projects population of 315.1 million for January 1, 2013. Robert Bernstein in U.S. Census Public Information Office.

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