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: 18 percent. That's the difference between the number of Americans who said they would blame President Obama (31 percent) versus Republicans (49 percent) for the sequester.
Wonkblog's Graph of the Day: Raising the Medicare eligibility age doesn't cut health spending. It raises it.
Wonkbook's Top 5 Stories: 1) Businesses calm on sequester; 2) a breakthrough on the guest worker program; 3) Republicans fold on Obamacare; 4) here comes the gun tax?; and 5) the economy is meh.
1) Top story: No exit on the sequester?
Sequestration poll: Republicans will be blamed. "Only 31 percent would blame President Barack Obama, according to the Pew Research Center/USA Today poll, while 49 percent would blame the congressional GOP. Eleven percent would blame both." Kevin Robillard in Politico.
...But U.S. businesses aren't all too worried. "US business groups and chief executives are lobbying less aggressively to avert the looming budget sequestration than they have during past fiscal stand-offs, judging the impact on the economy and financial markets to be less severe. John Engler, president of the Business Roundtable, which represents America’s largest companies, said the automatic spending cuts would do minimal harm, compared with the large tax hikes and possible default on US debt threatened during other big budgetary crises of the past two years." James Politi in The Financial Times.
Obama is reaching out to Boehner and McConnell. "President Obama on Thursday phoned Republican leaders in Congress to discuss the impasse...Obama made phone calls to Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) eight days before the cuts are implemented." Justin Sink in The Hill.
Q&A: Jonathan Weisman on the sequester. The New York Times.
Excuses, excuses on the sequester. "With across-the-board spending cuts about to start March 1 absent a last-minute breakthrough, the excuses are piling up for how the country is yet again on the brink of a new fiscal fiasco that has everything to do with the other guy." Darren Samuelsohn and Scott Wong in Politico.
Explainer: Just how draconian is the sequester? As seen in four graphs. Aaron Blake in The Washington Post
Former NIH Dir.: Sequester will set medical research back for a generation. "The most impacted are the young, new investigator scientists, who are coming into science, and will now abandon the field of science. There will be a generational gap created...[I]t’s going to come from new science, new people, young investigators; we are going to maim our innovation capabilities if you do these abrupt deep cuts at NIH. It will impact science for generations to come." Dylan Matthews in The Washington Post.
@BruceBartlett: Prediction: Republicans will scream the loudest about spending cuts when the sequester hits. Claim they are being singled out.
Cantor calls for increasing federal employee retirement contributions. "House Majority Leader Eric Cantor (R-Va.) on Thursday repeated his call to replace sequestration with changes including revisions to the federal employee retirement program...The House last spring passed a bill designed to offset part of the sequester that included a 5 percentage point increase in employee contributions to be phased in over five years. The Congressional Budget Office estimated that increase – along with several more minor retirement-related provisions — as costing employees $79 billion over 10 years." Eric Yoder in The Washington Post.
@ezraklein: Fascinated by the confusing politics of Republicans trying to convince themselves that Obama's horrible sequester isn't that bad.
KRUGMAN: Sequester of fools. "The question we should be asking is who has a better plan for dealing with the aftermath of that shared mistake. The right policy would be to forget about the whole thing. America doesn’t face a deficit crisis, nor will it face such a crisis anytime soon." Paul Krugman in The New York Times.
KLEIN: How Obama moved the tax debate to the right. "Obama won that election and with it, many thought, the argument over taxes. But a few short months later, the 'center' on taxes appears to have shifted to the right." Ezra Klein in The Washington Post.
BROOKS: The D.C. dubstep. "Sequestration may have seemed insane back then. But politicians in both parties are secretly discovering that they love sequestration now. It allows them to do the dance moves they enjoy the most." David Brooks in The New York Times.
NOONAN: Government by freakout. "It is always cliffs, ceilings and looming catastrophes with Barack Obama. It is always government by freakout...Obviously the potential budget cuts the administration is announcing—well, not announcing but warning of—are the kind that would cause maximum pain, inconvenience or alarm." Peggy Noonan in The Wall Street Journal.
Music recommendations interlude: The Foundations, "Build Me Up, Buttercup," 1969.
KARPLUS: The case for a higher gasoline tax. "[I]f our goal is to get Americans to drive less and use more fuel-efficient vehicles, and to reduce air pollution and the emission of greenhouse gases, gas prices need to be even higher. The current federal gasoline tax, 18.4 cents a gallon, has been essentially stable since 1993; in inflation-adjusted terms, it’s fallen by 40 percent since then...In a paper published online this week in the journal Energy Economics, I and other scientists at the Massachusetts Institute of Technology estimate that the new standards will cost the economy on the whole — for the same reduction in gas use — at least six times more than a federal gas tax of roughly 45 cents per dollar of gasoline." Valerie J. Karplus in The New York Times.
KLEIN: Obamacare is winning. "From March 23, 2010, the day it was signed into law, to November 6, 2012, the day President Obama won reelection, the law’s survival was continuously in doubt. House Republicans voted to repeal it more than 30 times. Conservative judges voted to invalidate it. Every Republican presidential candidate promised to get rid of it. But the law endured. It now seems certain to be fully implemented in 2014, as planned. And Republicans are making their peace with it." Ezra Klein in The Washington Post.
SOLTAS: Spend now! It'll save us money. "Here's something completely wrong in the argument that the U.S. government can't afford to keep spending: Spending now will actually save the taxpayer a whole lot of money. The logic is simple. Our government has a big list of projects that are deferrable but inevitable. Bridges must be repaired. Airports must be renovated. Electric grids require maintenance. Few of these are urgent. All of them, however, must receive funding sooner or later. And it's cheaper to do that now, with negative inflation-adjusted interest rates on federal debt and idle resources in construction, than it is later." Evan Soltas in Bloomberg.
AVENT: More inflation helps the Fed do its job. "A better option would be for the Fed to rethink how much inflation it’s willing to accept. Allowing a bit more would bring down the 'real,' or inflation-adjusted, interest rate -- a change that has the same stimulating effect as a lower target rate...Perhaps most important, by accepting a period of inflation comfortably above the miserly 2 percent level, the Fed would create room for rates to top out at a level that provides more of a safety cushion above the zero lower bound." Ryan Avent in Bloomberg.
TRUJILLO AND MELGOZA: The economic, and demographic, argument for immigration reform. "Latinos are now by far the country's biggest minority-market segment. Including unauthorized residents, the Latino population now exceeds 54 million (not counting nearly four million in Puerto Rico)...With growing numbers comes more spending: Latino purchasing power now exceeds $1.2 trillion and, according to the University of Georgia's Selig Center, will top $1.5 trillion by 2015. From a global perspective, that means America's Latino market would be the 11th-largest economy in the world." Sol Trujillo and Cesar M. Melgoza in The Wall Street Journal.
SULLIVAN: Why the tax revenue debate isn't over. "The debate over new tax revenue is dead. Long live the debate over new tax revenue. That more or less sums up the respective positions Republicans and Democrats have staked out in the related fiscal battles over the required spending cuts known as the sequester, the budget, and deficit reduction. When it comes to the American people, the debate is far from settled, with deep divides mirroring the ones that have seized Washington." Sean Sullivan in The Washington Post.
EHRLICH: Why I'm forecasting famine again. "[O]ur guess is that the most serious threat to global sustainability in the next few decades will be one on which there is widespread agreement: the growing difficulty of avoiding large-scale famines...More than a millennium of changing temperature and precipitation patterns, all vital to crop production, has put the planet on a path toward increasingly severe storms, droughts, and floods. Thus, maintaining – let alone expanding – food production will be increasingly difficult." Paul R. Ehrlich in Project Syndicate.
Extraterrestrial interlude: Solar activity, up-close and awesome.
2) An immigration-reform breakthrough
In major immigration-reform breakthrough, labor, business agree on guest worker program. "Labor and business leaders announced Thursday they have agreed in principle to terms that would establish a new guest worker program for foreigners, but they cautioned that details of the program are still being negotiated.In a joint statement, AFL-CIO President Richard Trumka and U.S. Chamber of Commerce President Thomas Donohue expressed optimism over talks on how to make it easier for companies to hire foreign nationals when Americans are not available." David Nakamura in The Washington Post.
But Bob Goodlatte won't sign off on a path to citizenship. "The chairman of the House Judiciary Committee, who will be deeply involved with House efforts on an immigration bill, said this week that he opposes a path to citizenship for undocumented immigrants currently in the United States." Katie Glueck in Politico.
Why Obama's immigration reform stance should incite Republican panic. "A new Pew Research Center/USA Today survey released Thursday shows that more than seven in 10 Hispanics approve of the job the president is doing overall, and more than six in 10 Hispanics approve of Obama’s handling of immigration. Both numbers represent sharp turnarounds from 2011, and both are problems for the Republican Party." Sean Sullivan in The Washington Post.
Adorable animals interlude: This border collie is a genius.
3) Republicans fold on Obamacare
Republican opposition is giving way on Obamacare. "The change of heart for some Republican governors has come after vigorous lobbying by health industry players, particularly hospitals. Hospital associations around the country signed off on Medicaid cuts under the health care law on the assumption that their losses would be more than offset by new paying customers, including many insured by Medicaid. Politics could also be a factor in states where Republican governors have decided to expand Medicaid. Mr. Obama won all of those states except Arizona and North Dakota in last year’s election, a fact that may have influenced several of the governors’ decisions." Abby Goodnough and Robert Pear in The New York Times.
Interview: Marilyn Tavenner, Obama's pick to head Medicare. Sarah Kliff in The Washington Post.
Here's why GOP governors are saying yes on Medicaid, but no on exchanges. "In the span of a month, some of Obamacare’s most ardent opponents have come to embrace one of the law’s most crucial programs: The Medicaid expansion...Republican-led states now account for nearly one-third of those expected to take the federal government’s money to expand Medicaid up to 133 percent of the federal poverty line...Why embrace one part of the health care law — a single-payer system that will stretch President Obama’s law to cover millions more Americans — while ditching the other more market-oriented aspect? It likely has to do with the big consequences for a governor who chooses not to expand Medicaid—versus the tiny reward with setting up a very complex insurance marketplace." Sarah Kliff in The Washington Post.
Drones interlude: The tech can do cool things too.
4) A tax on guns?
Biden spoke in Danbury, CT on gun control yesterday. "Vice President Biden journeyed Thursday to this New England town, 12 miles from where an elementary school became a scene of a slaughter in December, to make a fiery plea for Congress to toughen the nation’s gun laws...Biden sought to publicly shame lawmakers who are hesitant about voting for President Obama’s gun-control agenda." Philip Rucker in The Washington Post.
CT Gov. Dannel Malloy is also pushing for gun control. "Gov. Dannel Malloy called Thursday for more-expansive background checks on gun buyers and a ban on certain ammunition magazines and on semiautomatic firearms with military-style features. The proposals were the Democratic governor's first since December's deadly shooting at a Newtown, Conn., elementary school." Joseph De Avila in The Wall Street Journal.
One way or another, insurers poised to take on greater gun role. "Both sides in a nation sharply divided over guns seem to agree on at least one thing: a bigger role for the insurance industry in a heavily armed society. But just what that role should be, and whether insurers will choose to accept it, are much in dispute." Michael Cooper and Mary Williams Marsh in The New York Times.
Some Dems want a tax on guns. "Rep. Linda Sanchez (D-Calif.) and 18 other House Democrats have proposed legislation that would impose a 10 percent tax on concealable firearms and use this revenue to fund federal grants for gun buyback programs." Pete Kasperowicz in The Hill.
Links interlude: The best sentences Wonkblog read today.
5) The economy is meh
Data paint picture of still-mediocre economy. "A range of economic data on Thursday like claims for unemployment benefits, factory activity and consumer prices pointed to a still-tepid recovery...In the 12 months through January, consumer prices rose 1.6 percent, the smallest gain since July, suggesting there was little inflation pressure to worry the Fed. News on the manufacturing sector, which has supported the economy’s recovery from the 2007-9 recession, was downbeat." The Associated Press.
It's becoming clearer that the payroll tax hike hurts. "[Retailers] are lowering forecasts and adjusting sales and marketing strategies, expecting consumers with smaller paychecks to dine out less and trade down to less expensive purchases...Less take-home pay is causing 45.7% of consumers to curtail spending, according to a survey released on Thursday by the National Retail Federation, a trade group. A quarter of consumers are delaying big-ticket purchases, a third are reducing restaurant visits, and about a fifth of shoppers are spending less on groceries, it said." Shelly Banjo, Annie Gasparro, and Julie Jargon in The Wall Street Journal.
...And jobless claims are increasing. "[I]nitial jobless claims, a measure of layoffs, increased by 20,000 to a seasonally adjusted 362,000 in the week ended Feb. 16, the Labor Department said. Economists surveyed by Dow Jones Newswires expected 350,000 new applications for jobless benefits." Eric Morath and Jeffrey Sparshott in The Wall Street Journal.
Why bad news for Walmart could be good news for the economy. "There are four major possibilities for what is weakening consumer spending right now. In order from least worrisome to most: Shifts in when people received tax refunds due to the last-minute negotiations over tax rules at the end of 2012; a higher payroll tax that has reduced workers’ after-tax income; higher gasoline prices in February; and some mystery X factor, psychological or otherwise, that is leading Americans to pull back on spending." Neil Irwin in The Washington Post.
(Also, Walmart might be commenting on the minimum-wage debate soon.) Peter Whoriskey in The Washington Post.
Housing inventory keeps declining. "The number of homes for sale fell to a 13-year low in January, leaving would-be buyers chasing a shrinking supply of homes just before the spring selling season. The number of existing homes listed for sale in January totaled 1.74 million, down 4.9% from December and at the lowest level since December 1999, the National Association of Realtors said Thursday...At the current pace of sales, it would take just 4.2 months to sell the existing supply of homes available." Nick Timiraos in The Wall Street Journal.
Board games interlude: An interesting short film on NYC's chess subculture.
Nuclear power, another casualty of the shale gas boom. Brad Plumer.
How Obama moved the tax debate to the right. Ezra Klein.
Why Obamacare is winning. Ezra Klein.
Wonkbook has two recommendations for longreads this weekend. Both, we promise, are really worth it. First: "Bitter Pill" by Steven Brill, Time. Second: "Prison and the Poverty Trap," by John Tierney, The New York Times.
A financial-transactions tax? Why Europe is working on the idea. Floyd Norris in The New York Times.
Hey, America! You're consuming less fast food. Elise Viebeck in The Hill.
One third of Americans say they want immediate public-policy action on climate change. Zack Colman in The Hill.
Banks are making progress on mortgage settlements. Danielle Douglas in The Washington Post.
States will be ready to implement Obamacare in 2014, HHS affirms. Elise Viebeck in The Hill.
Wonkbook is produced with help from Michelle Williams.