Wonkbook: Are we near another sequester deal?

February 7, 2013

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: $2 billion. That's the annual amount that ending Saturday mail delivery will save for the U.S. Postal Service. Facing staggering losses, the Post Office is acting unilaterally to cut costs. 


(Michael S. Williamson/The Washington Post )

Wonkblog's Graph of the Day: Without safety net, the poverty rate would be nearly twice as high -- 28.6 percent instead of 15.5 percent.

Wonkbook's Top 5 Stories: 1) The latest in sequester negotiations; 2) new polling data on immigration; 3) Postal Service ends Saturday mail delivery; 4) the next reform efforts for healthcare; and 5) a behind-the-scenes look at the Democratic Party retreat.

1) Top story: Are we near another sequester deal?

Nearing a deal to stave off the sequester yet again. "With at least one million jobs on the line, Senate Democrats on Wednesday said they were closing in on legislation to temporarily head off nearly $1 trillion in cuts that were already affecting Pentagon decision-making and could force significant reductions in staffing and services across the government." Jonathan Weisman and Elisabeth Bumiller in The New York Times.

@jonathanweisman: Domestic sequester: 10% of FAA's 40K workers furloughed. Meat inspectors kept home so food plants that need em will have to be shuttered.

Do Republicans want the sequester, or don't they? "The narrative gripping Washington this week is that House Republicans want the sequester to go into effect. But there’s at least one man in the House Republican Conference who seems to think that’s an epically bad idea: Speaker John Boehner (R-Ohio)." Jake Sherman in Politico.

Explainer: The 3 plans to stop the sequesterBrad Plumer in The Washington Post.

White House meets with defense contractors before Pentagon cuts. "Senior Obama administration officials met Wednesday morning with top defense contracting executives at the White House to discuss how deep spending cuts set to hit the Pentagon would impact their industry...Senior presidential adviser Valerie Jarrett, National Economic Council director Gene Sperling, Office of Management and Budget director Jeff Zients and Council of Economic Advisers Alan Krueger met with leaders of seven defense contracting organizations." Philip Rucker in The Washington Post.

Pentagon gets lawmakers' focus. "Democrats and Republicans are warning of the potential damage of looming cuts to the military, even as they remain deeply divided over how to avoid the reductions. Some of those cuts are coming into sharper focus, as the Pentagon Wednesday said it would delay sending the USS Harry S Truman, an aircraft carrier, to the Middle East because of the budget constraints. That would leave the U.S. with one carrier in the volatile region." Janet Hook and Dion Nissenbaum in The Wall Street Journal.

@damianpaletta: There will be lots of sequester noise in next month, but the impact is becoming tangible. Keeping a carrier out of Persian Gulf is major.

Debate: Are government layoffs the problem? The New York Times.

Need to trim the deficit? Try an oil tax. " Using economic modeling, Michael Levi and Citgroup’s Daniel Ahn suggest that a tax on oil consumption could be one of the least harmful ways to trim the budget deficit...After running their economic model, Levi and Ahn found that using the oil tax to fend off some of the spending cuts and income tax hikes could be beneficial to the U.S. economy." Brad Plumer in The Washington Post.

Ending the 'carried-interest' loophole is back. "Mitt Romney may have vanished from the political scene, but his former industry — the world of private equity and high finance — hasn’t. President Barack Obama and some Democratic tax writers are signaling that they want to renew their fight to raise taxes on the "carried interest" income paid to managers of private equity firms, hedge funds and many Wall Street powerhouses." Steven Sloan and Kelsey Snell in Politico.

...But all this may mean that the economy will continue to be weak. At least Americans expect it to be. "Americans remain deeply pessimistic about the nation’s economic future nearly four years into the recovery, and the vast majority think it will take 'many years' for things to return to the way they were before the downturn, according to a poll released Thursday." Michael A. Fletcher and Peyton M. Craighill in The Washington Post.

Explainer: The most depressing graph in the CBO reportNeil Irwin in The Washington Post.

SAMUELSON: Can we cut the deficit without killing the recovery? "The exit from this dilemma, Elmendorf suggested, is to time deficit reduction with a strengthening private-sector recovery. As private spending improves, cuts in government spending or tax increases would threaten the economy less. Elmendorf argued that the transition from government-generated to private demand is now occurring." Robert Samuelson in The Washington Post.

@noamscheiber: I'm still far from persuaded the GOP wants the sequester. If I were in charge of Dems, would be tempted to call their bluff on this.

KLEIN: Republicans finally have leverage to force spending cuts. They should use it. "Ideally, Republicans don’t want the military spending cuts, and they have voted in the House to replace them with other cuts. But they can live with them if nothing happens. His suggestion that Republicans agree to raise taxes again to delay the sequester is laughable — they have zero reason to do it. Either he agrees to spending cuts of an equal amount, or the sequester will kick in." Philip A. Klein in The Washington Examiner.

Music recommendations interlude: The Mamas & The Papas, "Dream a Little Dream of Me," 1968.

Top op-eds

DIONNE: A Republican rethink, or a rebranding? "The good news is that some Republicans have decided that the party moved too far to the right and are backing off long-standing positions on tax increases, guns and immigration. Their new flexibility, combined with President Obama’s new post-election aggressiveness, is producing a quiet revolution in Washington. The place is becoming less dysfunctional...A lot of the rebranding efforts are superficial yet nonetheless reflect an awareness that the party has been asking the wrong questions, talking about the wrong issues and limiting the range of voters it’s been addressing." E.J. Dionne in The Washington Post.

KLEIN: The Republican establishment is reasserting control. "The Republican Party isn’t reinventing itself so much as reverting to its previous form. There’s little evidence of a rethinking of core Republican policy ideas. There’s no obvious analogue to the Democratic Leadership Council of the late 1980s and early 1990s, which was a moderating influence on the Democrats, or even to the 'compassionate conservatism' that George W. Bush promoted to the nation in 2000." Ezra Klein in Bloomberg.

CILLIZZA: Rubio, the Republican leader. "The more intriguing narrative that unspools from the choice of Rubio is how Tuesday night’s speech likely kicks off a period in which the GOP puts the Florida senator forward as its de facto foil to President Obama.The simple truth is that the national Republican party lacks a leader at the moment, someone who can effectively articulate a counter-message to the one Obama is delivering to the country." Chris Cillizza in The Washington Post.

PIERREHUMBERT: The myth of 'Saudi America.' "Like swallows returning to San Juan Capistrano, every December some 20,000 geoscientists flock to San Francisco for the fall meeting of the American Geophysical Union...This session dealt, in a hard-headed, geological, show-me-the-numbers way, with the claim that we are at the brink of a new era of oil and natural gas abundance...The geological considerations expose a number of common threads of faulty reasoning that pervade the current crop of starry-eyed projections of endless oil abundance." Raymond T. Pierrehumbert in Slate.

MILLER: Raise the minimum wage. "Want more proof that the boundaries of debate in American politics are absurdly narrow and unequal to our challenges? Then ask yourself why an overdue, common-sense increase in the minimum wage is not on the agenda of either the president or the 'new and improved' Republican party." Matt Miller in The Washington Post.

HARSHAW: The postmaster's challenge. "Sometimes to get the attention of Congress, you need to hit it right in the constituents...Still, it's good to see Donahoe take on the postal-workers unions, which wrongly blame pension-funding requirements for all the service's ills, and Congress, whose efforts to micromanage change have ended up tying his hands. But the Saturday switch needs to be part of a much larger overhaul at Ben Franklin's old shop." Tobin Harshaw in Bloomberg.

TANNER: Research funds shouldn't be used for industrial policy. "[T]here is no reason that government medical research shouldn’t receive the same critical scrutiny as any other program...An industrial policy for medical research is still an industrial policy -- and likely to have the same inefficiencies and unintended consequences." Michael D. Tanner in Bloomberg.

KLEIN: Is American democracy working? "It’s not clear what that means. American democracy is, for all its flaws, winning. But the question is whether the American political system, which includes both democratic and non-democratic elements, is working." Ezra Klein in The Washington Post.

Adorable animals interlude: A dog riding a bike.

2) Immigration reformers are winning

New Post-ABC polling data on immigration: 55 percent support a path to citizenship; 83 percent want tighter border security; 49 percent approve of Obama's handling of the issueThe Washington Post.

Obama is gaining ground on immigration. "The president’s approval rating for his handling of immigration is up 11 points from six months ago and stands at 49 percent, with 43 percent disapproving, according to a new ABC News/Washington Post poll. It is Mr. Obama’s highest rating on the issue since his first 100 days in office." Megan Thee-Brenan in The New York Times.

Boehner says path to citizenship should be considered. "In a news conference Wednesday morning House Speaker John Boehner (R-Ohio) did not rule out support for the tenets of the Dream Act, saying a path to citizenship for undocumented immigrants who came to the United States as children is 'worthy of consideration.'" Rachel Weiner in The Washington Post.

...And others fight for more. "A national organization of young immigrants said Wednesday that it would press for a 'direct and straightforward' seven-year pathway to citizenship for all 11 million illegal immigrants in the country...Leaders of the organization, the United We Dream network, issued 20 principles they would push for in the debate over an overhaul of the immigration laws, which is rapidly gathering speed in Washington." Julia Preston in The New York Times.

FedEx vs. the Internet interlude: The bandwidth wars.

3) The Postal Service takes unilateral action

Postal Service to end Saturday mail delivery by August. "The financially struggling U.S. Postal Service announced Wednesday that it plans to stop delivering mail on Saturdays starting the week of Aug. 5 — but will continue delivering packages...The move will save about $2 billion a year for the Postal Service, which has suffered tens of billions of dollars in losses in recent years with the advent of the Internet and e-commerce, officials said...The postal service plans to continue Saturday delivery of packages, which remains a profitable and growing part of the delivery business. Post offices would remain open on Saturdays so that customers can drop off mail or packages, buy postage stamps or access their post office boxes, officials said. But hours likely would be reduced at thousands of smaller locations, they said." Ed O'Keefe in The Washington Post.

The postal union wants to get rid of the postmaster general. "In a quick response to the postmaster general’s plan to stop six-day mail delivery, the national board of the National Rural Letter Carriers Association (NRLCA) voted unanimously to call for his dismissal." Joe Davidson in The Washington Post.

Longread: Jesse Litchenstein in Esquire on the future of the U.S. Postal Service.

The Post Office is getting tough with Congress. "The big problem is simple, but huge: Congress isn’t playing along, and instead is just making matters worse, unhelpfully micromanaging everything from postage rates to delivery schedules to health-care contributions. That’s why I love the idea of the Post Office doing something that’s clearly illegal, putting the ball squarely in Congress’s court. The idea is both delicious and dangerous: go ahead an implement the plan whether Congress likes it or not. And then dare them to bring down the hammer, or simply capitulate to the inevitable." Felix Salmon in Reuters.

What does the polling say? "Polling in recent years has consistently shown that a majority of Americans support halting Saturday mail delivery to help the U.S. Postal Service deal with its financial problems. The Washington Post last conducted a poll on this issue in 2010, finding that 71 percent of Americans support such a move." Josh Hicks in The Washington Post.

By one measure, we have the world's best postal service. "The USPS, by one metric, is still the very best internationally at its most crucial task: Delivering mail. Researchers Alberto Chong, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer sent letters to 10 fake addresses in 159 countries. The whole idea was to test government efficiency, by seeing how long it took to return the letters to the senders...Among the countries that returned all 10 letters, the USPS was far and away the fastest to do so." Sarah Kliff in The Washington Post.

Neapolitan interlude: Epic traffic jams, Italian-style.

4) The next steps for healthcare reform

Congress looking to make a permanent 'doc fix' and replace fee-for-service medicine. "Reps. Allyson Schwartz (D-Pa.) and Joe Heck (R-Nev.) will take another stab at permanently repealing the Medicare payment rate that constantly threatens doctors with substantial payment cuts. The bipartisan duo introduced a bill Wednesday to repeal the Sustainable Growth Rate (SGR) formula. The bill aims to replace the SGR with a system that rewards doctors based on the health of their patients, rather than paying for each service a doctor performs." Sam Baker in The Hill.

 Next year, ACA provisions kick in for insurers. "Insurers will have to offer a policy to anyone who wants one, regardless of their health, and will not be allowed to charge more in premiums to people with expensive medical conditions. The plans the companies offer will be highly regulated through government-run exchanges that are still getting their final regulatory touches." Reed Abelson in The New York Times.

How Ohio's Republican governor sold the state on expanding Medicaid. "Hoping to bring billions in federal funding to his state while shielding himself from the political pain of complying with Obamacare, Ohio Gov. John Kasich has spent the past few months reaching out to some odd allies that would support the Medicaid expansion. The Republican administration worked shoulder to shoulder with Obamacare supporters and opponents, crafting a lobbying campaign aimed at making a key portion of the health overhaul more palatable to businesses and legislators." Sarah Kliff in The Washington Post.

Everything you believe about obesity is probably wrong. "The New England Journal of Medicine recently took a look through some of the most commonly held beliefs about preventing obesity, such as the importance of physical education or realistic weight-loss goals. It found, perhaps disappointingly, that many of the obesity-prevention strategies we believe in have either been disproved in research, or have no evidence base at all." Sarah Kliff in The Washington Post.

The link you're going to send to everyone right now interlude: Thisissand.com

5) Inside the Democratic Party retreat

At Democratic retreat, Obama is working on Congress. "President Obama launched a charm offensive on Senate Democrats at their retreat Wednesday in Annapolis, Md., seeking to shore up his allies as they push his agenda. Obama spent more than two hours with upper chamber Democrats and let them direct much of the day’s agenda, according to sources who attended the closed-door event." Alexander Bolton in The Hill.

..And Biden is talking gun control. "Vice President Joe Biden delivered an impassioned and at times emotional plea to House Democrats to rally around the Obama administration’s gun-control proposals, telling lawmakers they can’t rely on political excuses for inaction...His remarks appeared to be aimed most directly at conservative members and those who hail from districts with strong gun cultures. Time and again, Biden argued that the politics were not as difficult as the conventional wisdom suggests." Russell Berman in The Hill.

Retrospective perspective interlude: The 'kitchen of the future' of the 1960s.

Wonkblog Roundup

Tim Geithner will write a bookZachary A. Goldfarb.

Why is the Post Office defying Congress? Brad Plumer.

How Gov. Kasich is expanding Medicaid in OhioSarah Kliff.

Notes on the American democracyEzra Klein.

The case for an oil tax to offset austerityBrad Plumer.

Explainer: The 5 most incriminating exchanges in the LIBOR caseDanielle Douglas.

The 3 plans to stop the sequester. Brad Plumer.

By one measure, the U.S. has the best postal system in the worldSarah Kliff.

Et Cetera

Marco Rubio will give the Republican response to Obama's State of the Union addressEd O'Keefe in The Washington Post.

The U.S. Treasury Department will offer floating-rate notes within a yearJeffrey Sparshott and Cynthia Lin in The Wall Street Journal.

Meet Sally Jewell, the next Interior SecretaryConnor Simpson in The Atlantic.

Rating-agency overhaul bogged downJia Lynn Yang and Dina ElBoghdady in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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