Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. (Well, usually Ezra Klein and Evan Soltas’s. But Ezra is on vacation, so it’s just Evan.) 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: 5 to 6 percent. That's the approximate "leverage ratio" financial regulators are likely to choose in the coming week. The current ratio is 3 percent. The change would require banks to have more liquidity. It's a huge fin-reg question you should be following.
Wonkbook's Quotation of the Day: “Aye,” voted Sen. Jerry Moran, quickly seeing his own humorous error. “I’m sorry, no.”
Wonkblog's Graph of the Day: Marriage penalty or bonus? It depends on the couple's earnings and their division.
Wonkbook's Top 5 Stories: 1) immigration reform passes Senate; 2) benefits next step for same-sex marriage equality; 3) leverage ratio requirement coming; 4) evaluating Keystone; and 5) the agencies in disrepute.
1) Top story: As Senate passes immigration bill, battle moves to House
Senate approves comprehensive immigration bill. "The contentious bipartisan effort to overhaul the nation’s immigration laws achieved a decisive victory Thursday when the Senate approved legislation that would allow millions of illegal immigrants the chance to live legally in the United States and to eventually become U.S. citizens. The 1,200-page bill, which now faces a stern test in the Republican-controlled House, carries a $50 billion price tag...Senators approved the plan 68 to 32, capping more than six months of negotiations that began behind closed doors and concluded with almost a month of debate on the Senate floor. Fourteen Republicans voted with every member of the Senate Democratic caucus to approve the bill." Ed O'Keefe in The Washington Post.
Explainer: Immigration-reform roll call. Dan Berman in Politico.
Immigration reform has passed the Senate. Here’s how it passes the House. "[I]t’s a long slog from here. The House still has to pass a bill, and then a conference committee has to sort through the bills’ differences — which could be massive — and then each house has to pass it through again. The key is really the House. The Senate has shown it can pass a bill, so the real question is how the bill, or something like it, is making it through the lower house of Congress. Here are three paths that it could take." Dylan Matthews in The Washington Post.
@blakehounshell: So who thinks the House will be able to do immigration reform? Let’s see a show of hands.
...Boehner will require the Hastert rule. "Speaker John Boehner says he will not bring up any eventual House-Senate immigration compromise for a vote unless it has the support of the majority of House Republicans. “For any legislation — including the conference report — to pass the House it’s going to have to be a bill that has the support of the majority of our members,” Boehner told reporters Thursday." Jake Sherman in Politico.
...And the positions of some in the House GOP is shocking. (It keeps going and going, if you click the link.) “Just like all the senators, I haven’t read it yet,” quips Representative Tim Huelskamp of Kansas. The House should “fold it up into a paper airplane and throw it out the window. Oh, is that not the right answer?” jokes Representative Mick Mulvaney of South Carolina. “The Senate is, at this point, irrelevant,” observes Representative Ted Poe of Texas, the chairman of the House immigration caucus." Jonathan Strong in National Review Online.
@morningmoneyben: I don't want to be THAT GUY (ok yeah I do) but call me when immigration reform is close to passage in the House.
Obama isn't getting everything he wanted on immigration reform. "The Gang of Eight and the White House clashed repeatedly in the final week of the immigration reform debate, as a fundamental disagreement over running up the Senate vote led the administration to resist key changes. The White House grudgingly accepted the border security deal with Republicans, and pushed back at efforts this week to make additional concessions that might have secured more GOP support for the overall bill, according to senators and congressional aides involved in the talks." Carrie Budoff Brown and Manu Raju in Politico.
@Goldfarb: Now that immigration moves to the House, will POTUS continue to lean back publicly or get louder?
Sen. Moran's hilarious immigration-vote mishap. "As the Senate voted on its comprehensive immigration reform bill on Thursday afternoon, Sen. Jerry Moran (R-Kan.) slipped up a bit. “Aye,” he said first. Then, he quickly corrected himself: “I’m sorry, no.”" Jennifer Epstein in Politico.
For Indian engineers, H-1B visa is key to career growth. "In India, H-1B visas have become almost synonymous with the IT boom of the past two decades; for IT engineers here, they are seen as a key to career growth, social prestige and good salaries...While many Indians working in the United States are sent by Indian tech companies, some also take Kumar’s route to gain access to the U.S. job market — an American consulting firm helped place him with a U.S. company and applied for a visa on his behalf." Rama Lakshmi in The Washington Post.
@mattyglesias: Senate passage of immigration reform means America needs to learn how to pronounce Rep Bob Goodlatte’s last name.
COHN: This is the 2006 failure all over again. "Today, the Senate voted for immigration reform by a seemingly overwhelming margin: 68-32. That might seem like a “B.F.D.” It's not. We’ve been here before: In 2006, the Senate voted for immigration reform by a 62-32 margin. The House killed it." Nate Cohn in The New Republic.
BROOKS: A nation of mutts. "[W]e will no longer be an outpost of Europe, but a nation of mutts, a nation with hundreds of fluid ethnicities from around the world, intermarrying and intermingling. Americans of European descent are already a minority among 5-year-olds. European-Americans will be a minority over all in 30 years at the latest, and probably sooner...Let’s make some educated guesses about what the New America will look like. It will almost certainly be economically dynamic. Immigration boosts economic dynamism, and more immigration would boost it more. There would also be a lot of upward striving. Immigrant groups tend to work harder than native groups. They save more. They start business at higher rates than natives." David Brooks in The New York Times.
Music recommendations interlude: Sting, "Englishman in New York," 1987.
TAKEI: The defeat of DOMA and the 'ick' factor. "Whenever one group discriminates against another — keeping its members out of a club, a public facility or an institution — it often boils down to a visceral, negative response to something unfamiliar. I call this the “ick.” Indeed, the “ick” is often at the base of the politics of exclusion...For more than 70 years, I’ve watched the “ick” infect American life in a variety of ways and concluded that it’s little more than a function of unfamiliarity." George Takei in The Washington Post.
KRAUTHAMMER: Federal same-sex marriage is now inevitable. "If the argument is just federalism, the court is saying: Each state decides — and we, the court, are out of here. But if the argument is equal protection, one question is left hanging. Why should equal protection apply only in states that recognize gay marriage? Why doesn’t it apply equally — indeed, even perhaps more forcefully — to gays who want to marry in states that refuse to marry them?" Charles Krauthammer in The Washington Post.
KRUGMAN: Invest, divest, and prosper. "Wouldn’t imposing carbon limits raise the cost of electricity? And wouldn’t that destroy jobs? The answer is, yes and no. Yes, new rules on carbon emissions would increase the costs of electricity generation. Power companies would probably close some old coal-fired plants, turning to more expensive lower-emission alternatives — to some extent renewables like wind, but mainly natural gas. Furthermore, they would be forced to invest in new capacity to replace the old sources." Paul Krugman in The New York Times.
SOLTAS: What can states do about gun control? "Congress didn't pass new gun-control laws. Now state legislatures from Colorado to Maryland are trying. Can states do anything that actually works? I posed that question to three experts: David Hemenway of Harvard University, Andrew Papachristos of Yale University, and Eugene Volokh of the University of California, Los Angeles. States can make up for inaction by the federal government -- but only partly, Hemenway told me. A state-by-state approach is most promising for reducing gun suicides and accidents." Evan Soltas in Bloomberg.
BERNSTEIN: When Fed transparency fails, go zen. "More than transparency, the issue is that because their decisions are going to be influenced by incoming data, Mr. Bernanke is able to say “what” but not “when.” That is, he can say: at some point we’re going to start unwinding … can’t say when … probably pretty soon … though maybe not, if the data turns. That message has done more harm than good" Jared Bernstein in The New York Times.
RINES: Monthly economic data are unreliable. "Federal Reserve uses GDP and other data such as employment and hiring to determine if the economy is overheating or cooling off and to make policy based on this data. The uncertainty of the initial data makes Fed policy decisions all the more difficult. Large, unanticipated revisions of key numbers can dramatically change what should have been done, and the assessment of how well it worked." Samuel Rines in The Wall Street Journal.
COWAN AND KESSLER: The third way on entitlement reform. "There is a rising chorus on the left, most recently articulated in an op-ed Monday by Neera Tanden and Michael Linden [“Deficits are not destiny”] of the Center for American Progress, that our fiscal conversation should be declared over and plans for meaningful entitlement reforms mothballed. These voices argue that we can have substantial new spending on public investments, a secure safety net, no middle-class tax increase — all without addressing entitlement spending. Lo, if it were so. But the left’s reasoning is predicated on four fiscal fantasies that Democrats must see through if they hope to expand the economy, help the middle class and keep the safety net solvent." Jon Cowan and Jim Kessler in The Washington Post.
In search of optimality interlude: Multiplication tables taught in school are inefficiently large.
2) The next step for same-sex marriage: figuring out benefits
Administration says it will press to provide marriage benefits in all states. "President Obama signaled Thursday that his administration would extend federal benefits to gay couples living in states that don’t recognize their marriages, a relief for advocates left with a thicket of uncertainty a day after their historic Supreme Court victory. The president said the government should define marriage based on where a couple weds and not necessarily where they live — a definition of wedlock that’s essential to how the administration will implement the court’s decision Wednesday to strike a key provision of the federal Defense of Marriage Act." Lisa Rein and Steve Vogel in The Washington Post.
...Except Social Security, which may require a congressional OK. "As the Obama administration moves to implement the Supreme Court's landmark ruling requiring equal federal treatment for same-sex marriages, its biggest hurdle may come in the payment of Social Security benefits...[F]ederal law determines a spouse's Social Security benefits based on where the wage earner lived, couples living in many non-marriage states may have difficulty qualifying for spousal benefits, legal experts said." Brent Kendall and Jared A. Favole in The Wall Street Journal.
Obama praised the Court decision. "President Obama on Thursday called the Supreme Court’s decision to overturn the Defense of Marriage Act a “victory for American democracy” and said he had directed his administration to find ways to make sure gay couples received the benefits for which they were now eligible...“When it comes to how the state treats people, how the law treats people, I believe that everybody has to be treated equally,” Mr. Obama said." Michael D. Shear in The New York Times.
The case for cutting the link between taxes and marriage. "Ms. Windsor’s tax situation reminds us that the tax code, and the federal government in general, still discriminates in a more fundamental away: against single people, and in favor of the married...The income tax code, effectively, benefits single-earner married couples at the expense of dual-earner ones...All of that, Alstott argues, ought to be tacked onto a system wherein everyone pays their own taxes. No joint-filing, or “married filing separately” status, and no “head of household” status for single parents. Just one income tax schedule for everyone." Dylan Matthews in The Washington Post.
A conservative court swerves to avoid easy definition. "An extraordinary finale to a history-making term once again revealed the Supreme Court to be Washington’s most unpredictable institution. Or at least that’s how it must appear...Said Pamela Harris, former head of the Georgetown Law Center’s Supreme Court Institute and a onetime Obama White House lawyer: “If you weren’t paying close attention, you might say, ‘What a liberal Supreme Court we have.’ ”" Robert Barnes in The Washington Post.
It was a tale of two justices. "The eventful final week of the Supreme Court's term showed that the court's most important ideological struggle isn't between left and right, but the narrower divide of Chief Justice John Roberts's conservatism and a libertarian streak championed by Justice Anthony Kennedy. Often those strains coincide, as when the two justices teamed up in rulings this term protecting businesses against lawsuits. But just when the Roberts Court seemed to have reasserted itself as reliably orthodox, Justice Kennedy—often the swing vote in key decisions—injected a dose of unpredictability in the biggest case of the term." Jess Bravin in The Wall Street Journal.
Lesser evils interlude: Cocaine addiction may be cured by Ritalin.
3) Eat your vegetables -- learn important news in financial regulation
U.S. regulators strike agreement on capital rule. "The Federal Reserve will vote next week to finalize capital rules for U.S. banks after regulators agreed to resolve a separate issue that had delayed action...Banking regulators will soon propose requiring banks to increase the amount of equity they hold against assets, known as the "leverage ratio."...Regulators have broadly agreed on a higher leverage ratio and are expected to soon propose a ratio of between 5% and 6% from the current 3% level, according to people familiar with the talks." Michael R. Crittenden in The Wall Street Journal.
White House makes short list for Bernanke's job. "The Obama administration is assembling a shortlist of candidates to lead the Federal Reserve, in the expectation that chairman Ben Bernanke won't seek reappointment when his second term at the central bank ends in January, according to people familiar with the matter. The search is in the early stages and there is no front-runner, according to these people, who wouldn't divulge any names on the shortlist. A selection might not be announced until early fall, they said. Treasury Secretary Jacob Lew is putting together the list, working with senior White House officials." Peter Nicholas and Jon Hilsenrath in The Wall Street Journal.
...And Rep. Mel Watt, candidate for housing regulator, is embattled. "Rep. Mel Watt, (D., N.C.) on Thursday struggled to overcome Republican concerns that he is unqualified to lead a federal housing regulator, underscoring the uphill battle the White House faces in securing his confirmation...The White House has struggled for years to get an FHFA nominee confirmed. This year, Mr. Obama picked Mr. Watt over well-known economist Mark Zandi." Jessica Holzer and Alan Zibel in The Wall Street Journal.
Consumer spending rises, and home sales are up. "Americans spent more in May as their income rose, encouraging signs after a slow start to the year. The Commerce Department said on Thursday that consumer spending rose 0.3 percent last month, nearly erasing a decline of similar size in April. Income rose 0.5 percent. Consumers, benefiting from low inflation, spent more at retail businesses in May, notably for cars, home improvements and sporting goods. The number of people who signed contracts to buy homes in the United States jumped in May to the highest level in more than six years, a sign home sales will probably rise in the months ahead." The Associated Press.
...And is the economy ready to accelerate, even though everyone's said this for years now? "[T]he four positives of immigration, energy, housing, and financial reform represent powerful forces that will boost the economy over the next year and beyond. A revival of solid growth after six years of recession and slow recovery would give Americans confidence in their prospects for finding a good job and moving up the economic ladder." Philip Swagel in The New York Times.
Fed assurance buoys investors. "Federal Reserve officials are telling investors they misunderstood Chairman Ben Bernanke's statements last week about winding down the central bank's $85 billion-a-month, bond-buying program, and their message appears to be getting through. Stocks gained Thursday for the third day in a row, boosted by upbeat economic data and the latest in a drumbeat of comments from Fed officials assuring investors that credit would remain easy for years to come." Michael S. Derby and Victoria McGrane in The Wall Street Journal.
...N.Y. Fed president to markets: You got it wrong. "William C. Dudley, the president of the Federal Reserve Bank of New York, has come out with the most forceful and clear commentary on what the Fed intends to do in the months and years ahead after Chairman Ben Bernanke’s press conference last week sparked a global market sell-off. There’s only one way to interpret Dudley: Markets got it wrong." Neil Irwin in The Washington Post.
...Mortgage rates spike in response to Fed statement; 30-year crosses 4 percent mark. "Rates have been climbing steadily since May but leapt to 4.46 percent this week, up half a percentage point and crossing the 4 percent mark for the first time since March 2012, according to data released Thursday by Freddie Mac. This comes as economists and the Federal Reserve are becoming concerned that rising mortgage costs could destabilize the housing market — one of the few bright spots in the economic recovery." Amrita Jayakumar in The Washington Post.
Look out below! The price of gold is plummeting. "It’s been a rough couple of month for those who adopt the Ron Paul/Glenn Beck school of portfolio management. Gold, the prized investment of those who wish to guard against a looming hyperinflation or breakdown in society, has been falling sharply, and on Thursday afternoon briefly passed below the $1,200 an ounce level for the first time since 2010. The reasons why are actually somewhat promising for the economic outlook." Neil Irwin in The Washington Post.
Yes, yes, yes interlude: The platinum age of maps.
4) Under lock and Keystone
Environmentalists seek new review of Keystone pipeline plan. "Six advocacy groups have asked the State Department to prepare a new environmental review of the proposed Keystone XL oil pipeline, saying that evidence has emerged showing it will hurt the environment. The demand, contained in a 48-page letter, comes as President Obama has pledged to block the project, which would carry heavy crude from Canada to the Gulf Coast, if it would “significantly exacerbate the climate problem.”" Juliet Eilperin in The Washington Post.
The U.S. will stop financing coal plants abroad. That’s a huge shift. "One of the more significant lines in President Obama’s climate-change speech this week got relatively scant notice. In a major policy shift, Obama said he would place sharp restrictions on U.S. government financing for new coal plants overseas...Those restrictions will most heavily affect the U.S. Export-Import Bank, a government-backed lender that acts to boost American sales overseas. Over the past five years, the bank has provided aid for a handful of large coal plants, including $805 million for a 4,800-megawatt plant in South Africa and $917 million for a 4,000-megawatt facility in India." Brad Plumer in The Washington Post.
Obama nominates Ron Binz to head Federal Energy Regulatory Commission. "President Obama nominated Ron Binz, a strong proponent of renewable energy and former Colorado utility regulator, to head Federal Energy Regulatory Commission Thursday night. Binz will be appointed as a commissioner and upon appointment, will take over as chairman to replace departing chairman Jon Wellinghoff." Juliet Eilperin in The Washington Post.
Sec. Moniz, the optimist. "The short-term plan to reduce greenhouse gas emissions that President Obama outlined this week is achievable with some new programs and better management of existing ones, the new energy secretary, Ernest J. Moniz, said in an interview on Thursday. But he said reaching a longer-term goal would require bigger reductions as well as action from Congress." Matthew L. Wald in The New York Times.
Paging James Taranto for questions nobody's asking interlude: Could Superman punch someone into space?
5) NSA and IRS, two agencies in disrepute
NSA collected U.S. email records in bulk for more than two years under Obama. "The Obama administration for more than two years permitted the National Security Agency to continue collecting vast amounts of records detailing the email and internet usage of Americans, according to secret documents obtained by the Guardian...According to a top-secret draft report by the NSA's inspector general – published for the first time today by the Guardian – the agency began "collection of bulk internet metadata" involving "communications with at least one communicant outside the United States or for which no communicant was known to be a citizen of the United States"." Glenn Greenwald and Spencer Ackerman in The Guardian.
NSA chief says surveillance programs helped thwart dozens of plots. "Gen. Keith B. Alexander, the director of the National Security Agency, provided new details Thursday about the extent to which the government believes its sweeping surveillance powers have led to the disruption of terrorist plots or the arrest of suspects. Speaking at conference in Baltimore, Alexander said that because of the surveillance programs, 42 terrorist plots were disrupted and 12 individuals were identified as having provided material support to terrorist groups. Of the 54 cases he referred to, Alexander said only 13 had a “homeland nexus” and the rest involved cases overseas. Alexander said 25 occurred in Europe, 11 in Asia and five in Africa." Peter Finn in The Washington Post.
In the 1970s, Congress investigated intelligence abuses. Time to do it again? "Loch K. Johnson had a unique perspective on the Senate proceedings [of the Church Commission]. As the committee staffer designated to assist Church, he says he spent more time with the chairman than anyone else on the staff. In 1985, he wrote a book about the experience. Today he’s a professor at the University of Georgia. We spoke by telephone Wednesday" Timothy B. Lee in The Washington Post.
Lawyers said Bush couldn’t spy on Americans. He did it anyway. "A remarkable document released by The Guardian gives the public its first in-depth look at the legal process that justified the dragnet surveillance programs undertaken during President George W. Bush’s first term. And they make clear that lots of people involved in the process — government lawyers, judges, and the lawyers of private telecommunications companies — believed the Bush administration had stepped over the legal line." Timothy B. Lee in The Washington Post.
Company allegedly misled government about security clearance checks. "Federal investigators have told lawmakers they have evidence that USIS, the contractor that screened Edward Snowden for his top-secret clearance, repeatedly misled the government about the thoroughness of its background checks, according to people familiar with the matter. The alleged transgressions are so serious that a federal watchdog indicated he plans to recommend that the Office of Personnel Management, which oversees most background checks, end ties with USIS unless it can show it is performing responsibly." Tom Hamburger and Zachary A. Goldfarb in The Washington Post.
In Snowden playbook, Obama administration prioritized legal channels over diplomacy. "For the first 12 days, the Obama administration’s effort to extradite government leaker Edward Snowden from Hong Kong was a by-the-book legal affair — overseen by the Justice Department and involving few if any diplomatic overtures, according to senior administration officials...The missteps have thrust the United States into a geopolitical confrontation that has embarrassed the Obama administration and strained relations with China, Russia and other countries." Philip Rucker and Sari Horwitz in The Washington Post.
IRS inspector: Targeting was one-sided. "Internal Revenue Service employees flagged for extra scrutiny fewer than a third of progressive groups applying for tax exemptions from mid-2010 through mid-2012, compared with 100% of conservative applicants, an IRS inspector general said...Inspector General Russell George wrote that he found no evidence the IRS used the term "progressive" to systematically screen liberal organizations for scrutiny, as part of the agency's effort to determine whether the groups were engaging in too much political activity to qualify for tax-exempt status." John D. McKinnon in The Wall Street Journal.
Daniel Werfel slammed for ‘incomplete’ report. "Werfel said the report he released on Monday was just an initial review and that more information will be released over time. But Camp questioned why Werfel would release a report finding no evidence of political bias or intentional wrongdoing if the review isn’t yet complete." Lauren French in Politico.
Reading material interlude: The best sentences Wonkblog read today.
How's the public debt looking? Not bad. Lydia DePillis.
Interview: IT outsourcers cry discrimination in immigration bill. Lydia DePillis.
N.Y. Fed president to markets: You got it wrong. Neil Irwin.
Lawyers said Bush couldn’t spy on Americans. He did it anyway. Timothy B. Lee.
Look out below! The price of gold is plummeting. Neil Irwin.
The case for cutting the link between taxes and marriage. Dylan Matthews.
A world of rising health care costs. Eduardo Porter in The New York Times.
Congress contemplating small tweaks to help small businesses weather health care reform. J.D. Harrison in The Washington Post.
Senators propose ‘blank slate’ approach to tax reform. Lori Montgomery in The Washington Post.
House Republicans may split farm bill in two. David Rogers in Politico.
Anthony Foxx unanimously approved as DOT secretary. Emily Heil in The Washington Post.
Judges tell lawmakers they are urged to approve Social Security disability claims. Stephen Ohlemacher in The Washington Post.
Primary and middle schools show educational gains. Stephanie Banchero in The Wall Street Journal.
How to curb obesity: Tax calories, study says. Peter Whoriskey in The Washington Post.
Senate fails to prevent student-loan increases. Corey Boles and Josh Mitchell in The Wall Street Journal.
Wonkbook is produced with help from Michelle Williams.