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Seriously? Republicans' new debt-ceiling demand is...tax reform? And not even deficit-reducing tax reform?
Some caveats are in order here: This appears to be the demand Republican congressional leaders want to attach to the debt ceiling. It's possible that they won't be able to get their members to agree. And it's possible they see this as a deescalation on the debt ceiling. Democrats can agree to fast-track tax reform in a way they can't -- or at least won't -- agree to pass the Ryan budget.
But the precedent is noxious. The argument in 2011 was that the U.S. fiscal situation was so dire that raising the debt ceiling absent cuts and reforms was more irresponsible than default. This led to the Boehner rule: A dollar in cuts for every dollar in debt ceiling increase. Desperate times call for desperate measures.
This is the normalization of debt ceiling brinksmanship. After the election, Republicans threatened to breach the debt ceiling unless Senate Democrats released a budget -- a budget, by the way, that Republicans now refuse to go to conference and consider. Now, perhaps, Republicans will threaten to breach the debt ceiling unless Democrats agree to a particular framework for tax reform. The debt ceiling is becoming all-purpose leverage.
This isn't desperate times forcing desperate measures. These are normal times being punctuated by dangerous measures. Having repeatedly failed to win back control of the government, Republicans are trying to turn the debt ceiling into a continuous and flexible form of leverage for the minority. That's an immensely dangerous precedent to set even if the underlying demands and aims are reasonable.
Wonkbook's Number of the Day: 70 percent. That's the share of all homicides in the U.S. that were committed with a firearm. A majority of those firearms were handguns.
Wonkblog's Graph of the Day: Gun homicides are down 49 percent since 1993.
Wonkbook's Top 5 Stories: 1) Republicans prepare new face-off over debt ceiling; 2) immigration reform's amendments; 3) Dow breaks 15,000; 4) the gun-control thaw; and 5) health-care policy gets huge new dataset.
1) Top story: "Debt Ceiling Episode II: Attack of the Loans"?
McConnell: There will be no increase in the debt ceiling without concessions. "Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday that Republicans will not vote to increase the nation’s debt limit this summer if it is not attached to legislation to reduce the federal deficit...McConnell said he is in discussions with Speaker John Boehner (R-Ohio) and other House leaders about the possibility of adding tax reform or a deficit-reduction plan to the debt limit." Alexander Bolton in The Hill.
But he's just denied the third request for the formation of a budget conference committee. "Senate Budget Committee Chairwoman Patty Murray (D-Wash.) tried for a third time to get agreement from Republicans to form a conference committee on the House and Senate budget resolutions...Senate Minority Leader Mitch McConnell (R-Ky.) objected to Murray’s request. He said Republicans would agree only if the conference report would not be used to raise the debt ceiling or taxes." Ramsey Cox in The Hill.
@jonathanweisman: Obama unequivocally says he would veto House bill to "prioritize" incoming tax receipts for debt repayment in event of debt ceiling impasse
Lew: There will be no brinksmanship in increasing the debt ceiling. "U.S. Treasury Secretary Jack Lew said on Tuesday that he does not know of anyone in Congress who wants to have a 'showdown' over the nation's debt limit. 'On the debt limit, I can't find anyone (in Congress) who wants to have a showdown,' he told the City Club of Cleveland. 'They understand it can't be a bargaining chip, because the mere negotiation over default hurts the economy.'" Reuters.
As red ink recedes, so does pressure for a budget deal. "After four years of trillion-dollar deficits, the red ink is receding rapidly in Washington, easing pressure on policymakers but shattering hopes for a summertime budget deal...That might seem like good news, but it is unraveling GOP plans to force a budget deal before Congress takes its August break. Instead, the fiscal fight appears certain to bleed into the fall, when policymakers will face another multi-pronged crisis that pairs the need for a higher debt limit and the fresh risk of default with the threat of a full-scale government shutdown, which is also looming Oct. 1." Lori Montgomery and Zachary A. Goldfarb in The Washington Post.
But that isn't stopping Republicans from mulling their debt-limit wish list. "The GOP conference will meet May 15 to discuss the idea of linking tax reform to the debt limit, but early indications suggest that would be a tough sell with many in the party’s rank and file...Some Republicans say that framework is insufficient and that they’ll need spending cuts as well as tax reform to raise the debt ceiling. Others in the conference say that only the full enactment of tax reform will be enough to raise the nation’s borrowing limit and that incremental progress toward completing tax reform is not enough." Erik Wasson and Bernie Becker in The Hill.
@samsteinhp: Heritage Action urges lawmakers to opposed debt ceiling hike unless there is a budget passed that gets to balance w/in 10 yrs
The GOP stance has changed a little, though. "Republicans in the House ways and means and budget committees have been weighing a plan to tie a series of increases in the debt ceiling to progress on tax reform. This marks a change from the Republicans’ starting position in the 2011 stand-off, when the US came within hours of default. The Republican demand at the time was that any increase in borrowing authority needed to be coupled by an equal amount of spending cuts." James Politi in The Financial Times.
Obama will dine with House Dems tonight to talk budget. "Obama plans to head back to the Jefferson Hotel — the site of other recent congressional dinners — to break bread with House Minority Leader Nancy Pelosi (D-Calif.) and her leadership team, the White House announced late Tuesday. Obama has held three other dinners with lawmakers in recent weeks, but all of them thus far with senators." Ed O'Keefe in The Washington Post.
Music recommendations interlude: The Shins, "Saint Simon," 2003.
ORSZAG: How to weatherproof a city. "A recent brief published by the Natural Resources Defense Council, Eko Asset Management Partners and the Nature Conservancy proposes that cities aggregate retrofitting projects into bundles for financing, to bolster the attractiveness of the individual projects. It also proposes a trading system -- so that if I’m willing to reduce the runoff from your building, I can finance that improvement and get credit for it on my own stormwater charge." Peter Orszag in Bloomberg.
KLEIN: How we broke the Senate without breaking any rules. "The Senate runs on norms even more than it runs on rules. There’s much that senators simply didn’t used to do because, on the one hand, doing so would be crummy, and on the other, doing so would be destructive. Routinely filibuster everything, for instance. Routinely block the other side from offering amendments. Routinely offer endless non-germane amendments. Routinely use budget reconciliation for matters that really aren’t about the budget. Routinely use secret holds." Ezra Klein in The Washington Post.
MILBANK: Budget child's play. "House Republicans, after howling for years about Senate Democrats’ failure to pass a budget, are refusing to work out a compromise now that Senate Democrats have finally passed a budget. Democrats, after insisting for years that a budget resolution was unnecessary, are outraged that Republicans aren’t conferring with them to hammer out a resolution. Republicans, after berating Democrats for enacting Obamacare and other bills behind closed doors with extra-parliamentary procedures, are insisting that any talks with Democrats be behind closed doors with extra-parliamentary procedures. Democrats, meanwhile, have suddenly become allergic to closed-door meetings and are insisting on a public “conference committee” and the “regular order.”" Dana Milbank in The Washington Post.
Digital interlude: Syria turns off its Internet.
2) Can immigration reform survive the amendment process?
Immigration overhaul faces its first test. "A bipartisan plan to overhaul immigration laws faced its first test Tuesday as lawmakers began filing amendments that could unravel some carefully negotiated provisions in the bill on issues such as border security and the visa program for low-skill workers. Members of the Senate Judiciary Committee were required to file their amendments by Tuesday evening." Sara Murray and Corey Boles in The Wall Street Journal.
Here comes the flood of amendments. "About two-thirds of the 301 proposals came from Senate Republicans, including measures to grant Congress more authority over security along the border with Mexico, require illegal immigrants to provide DNA samples before gaining legal status and reduce the number of undocumented workers who would be eligible to pursue citizenship...The amendments reflected the desires of many GOP lawmakers, who say that they will support only a comprehensive overhaul that puts a higher priority on law enforcement along the border and in the workplace." David Nakamura and Ed O'Keefe in The Washington Post.
Sen. Rubio disputes Heritage estimate. "Senator Marco Rubio, Republican of Florida, aggressively pushed back Tuesday against a Heritage Foundation report that estimated new immigration legislation would cost taxpayers $6.3 trillion by using the foundation’s longstanding support for dynamic scoring — which takes into account projected economic growth when determining the cost of legislation — as a cudgel against it." Ashley Parker in The New York Times.
Ask the wonks interlude: What would happen if the blue states seceded?
3) Dow breaks 15,000
Dow closes above 15K for first time. "The Dow Jones industrial average punched through another milestone Tuesday, closing above 15,000 for the first time just two months after recovering the last of its losses from the 2008 financial crisis. Good economic reports, strong corporate earnings and fresh support from central banks helped ease investor concerns about another economic slowdown. Many had been on the lookout for signs that a spring swoon would derail the rally, as happened in each of the past three years." Steve Rothwell and Matt Craft in The Washington Post.
...And why it might matter. "Do care that the S&P is up 14 percent so far in 2013, and 19 percent over the last year, and that this has a range of consequences starting with the value of your 401(k). The Dow’s milestone is just an opportunity for noting it." Neil Irwin in The Washington Post.
Legislative package seeks to weaken protections in Dodd-Frank on derivatives. "Nearly three years after Congress passed the Dodd-Frank financial law to limit risky activities on Wall Street, a series of bills could weaken regulation of derivatives — the exotic securities that helped fuel the crisis. On Tuesday, the House Financial Services Committee passed six bills that limit reforms in the complex market of derivatives, including adding more flexibility for financial services companies that deal in them. A bipartisan group of lawmakers hailed the measures as necessary repairs to statutes that could hinder U.S. firms in doing business." Danielle Douglas in The Washington Post.
...But support is growing for higher capital ratios. "At the same time the banks’ argument that equity capital is expensive and that increasing equity capital would force them to pass up otherwise attractive lending opportunities has been systematically demolished, most notably by the academics Anat Admati and Martin Hellwig...In reality, the bankers’ argument was always self-serving. With high leverage bankers enjoy more of the upside when things go well, while the taxpayer stumps up when things fall apart. This the public understands, even if it does not grasp complex cost of capital arguments." John Plender in The Financial Times.
Why America needs more quitters. "That’s the lesson to draw from the latest Labor Department report, which shows the soft underbelly of the U.S. jobs picture. The unemployment rate may be falling and the number of jobs rising. But there isn’t enough “churn” going on, a hallmark of a healthy job market, in which people freely move between positions." Neil Irwin in The Washington Post.
Borrowing is expanding, but slowly. "America's credit crunch is easing. For the past six years, consumers and businesses have struggled to borrow money, but slowly, things are getting easier...In all, some $713 billion in credit flowed to U.S. households and nonfinancial businesses last year, double 2011's $336 billion, according to the Fed. That is still a fraction of the $2.2 trillion in credit that lifted American consumers and businesses in 2007." Neil Shah in The Wall Street Journal.
Which workers are seeing shorter hours? "One of the more disappointing data points in last Friday’s jobs report was the decline in average weekly hours worked, which fell to 34.4 hours in April from 34.6 hours in March. It’s not clear what was behind the decline, which occurred in multiple industries across the private sector. (The monthly jobs report does not include the length of the workweek for government workers.)" Catherine Rampell in The New York Times.
Study: U.S. taxpayers employ more low-wage workers than Wal-Mart, McDonald’s combined. "The report from the consulting firm Demos, set to be released Wednesday, estimates that taxpayer dollars fund nearly 2 million private-sector jobs that pay $24,000 a year — about $12 an hour — or less. Those workers owe their incomes to government contracts, Medicare and Medicaid spending, and federal infrastructure funds, among other public sources. In contrast, Demos estimates that about 1.4 million workers earn that amount or less at Wal-Mart and McDonald’s, which are two of the largest employers of low-wage workers." Jim Tankersley and Marjorie Censer in The Washington Post.
Study: High levels of homeownership can kill jobs. "Back in the 1990s, British economist Andrew Oswald first showed that higher levels of homeownership were correlated with higher levels of unemployment across European countries and within the United States...The idea that owning a home makes it harder to find a job because of higher moving costs is now known as “Oswald’s hypothesis.”...Now, however, Andrew Oswald and Dartmouth’s David G. Blanchflower have a brand new working paper (pdf) suggesting that homeownership has an even bigger and wider effect on unemployment than anyone has realized" Brad Plumer in The Washington Post.
Jeopardy interlude: Here's how to play "Double Jeopardy" like a boss.
4) Can gun control thaw?
Sen. Ayotte says she supports background checks. "Facing a wave of intense criticism and plunging poll numbers after opposing a bill to expand background checks on gun purchases, New Hampshire Sen. Kelly Ayotte tried some damage control in an op-ed published Monday. “Out of state special interests are running false ads attacking me and even lying about my efforts to prevent gun-related violence,” Ayotte, a Republican, wrote in the op-ed, published by Patch news sites in New Hampshire. “I want to set the record straight: I support effective background checks and in fact voted recently to improve the National Instant Criminal Background Check System (NICS).”" Kevin Robillard in Politico.
To reboot gun control, a major pressure campaign. "Ads from the Bloomberg-funded Mayors Against Illegal Guns are going up soon in Alaska, Arkansas and North Dakota — three states with Democratic senators who broke with the White House on last month’s background checks vote...It’s all got Democrats nervous about keeping their hold on the Senate, if they are under attack from not only Republicans but pro-gun control forces as well...Bloomberg’s group has made its choice: Its radio spots in Arkansas will target the state’s African-American community, “without which Mark Pryor doesn’t have a prayer of getting reelected,” said Mark Glaze, director of Mayors Against Illegal Guns." John Bresnahan and Reid J. Epstein in Politico.
New gun talks won't happen anytime soon. "“I don’t know exactly when it’s going to come back exactly on the Senate floor, but I’m very happy that we have some Republicans who are talking out loud that they’d like to take another look at this,” Senate Majority Leader Harry M. Reid (D-Nev.) told reporters Tuesday...On Tuesday, Manchin used a phrase he’s used often when asked about the gun issue: “We’re still working. We’re still talking.”" Ed O'Keefe in The Washington Post.
Chart: Gun homicides are down 49 percent since 1993. Brad Plumer in The Washington Post.
...But most killings still involve firearms. "Gun violence dropped dramatically nationwide over the past two decades, but nearly three-quarters of all homicides are still committed with a firearm, the Justice Department said in a report released Tuesday. The report, by the department’s Bureau of Justice Statistics, painted an encouraging picture of long-term trends at a time of divisive political debate over guns and legislation to regulate them...In 2011, as in the past two decades, about 70 percent of all homicides were committed with a firearm, and the majority of those firearms were handguns." Jerry Markon in The Washington Post.
John Hancock interlude: Jack Lew's incredible changing signature.
5) Major new health-care data release
How much does medical care actually cost? "For the first time, the federal government will release the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services." Sarah Kliff and Dan Keating in The Washington Post.
House may take second vote on high-risk pools. "Speaker John Boehner (R-Ohio) indicated Tuesday that GOP leadership could bring back a bill to strengthen part of ObamaCare. The measure to shore up the law's temporary high-risk insurance pools, lacking enough support for passage, was recently pulled from the House floor before its final vote. "Conversation underway," Boehner said of the legislation, which drew opposition from prominent Tea Party and conservative groups. "I think there's a lot more conversation about all of ObamaCare that needs to take place," Boehner added." Elise Viebeck and Sam Baker in The Hill.
Judge berates government move on Plan B. "A federal judge on Tuesday berated the U.S. government's plan to restrict sales of the Plan B emergency contraceptive to people age 15 and older, saying the requirement that buyers show identification was a barrier to lower-income persons and young women who want to access the drug. U.S. District Judge Edward Korman in Brooklyn, N.Y., last month ordered the Food and Drug Administration to lift, within 30 days, age limits and other point-of-sale restrictions on the drug, including a requirement to show identification. But he is considering whether to put his order on hold until the Obama administration makes an appeal of his decision." Chad Bray in The Wall Street Journal.
Reading material interlude: The best sentences Wonkblog read today.
How we broke the Senate without breaking any rules. Ezra Klein.
Study: Higher levels of homeownership can kill jobs. Brad Plumer.
The plot to oust Lindsey Graham. Ezra Klein.
A new study says politicians don’t favor the rich. That’s debatable. Dylan Matthews.
One hospital charges $8,000 — another, $38,000. Sarah Kliff and Dan Keating.
Delaware legalizes gay marriage. Rachel Weiner in The Washington Post.
Public-housing agencies push for time limits, work requirements. Jennifer Levitz in The Wall Street Journal.
Court bars notice on right to unionize for private-sector workers. Steven Greenhouse in The New York Times.
Lawmakers clash over nomination of Perez for Labor Secretary post. Josh Hicks in The Washington Post.
EPA: We won't regulate methane emissions from coal mines. Zack Colman in The Hill.
Gas industry accuses EPA of procedural rush. Julian Hattem in The Hill.
Wonkbook is produced with help from Michelle Williams.