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Question of the day: Who said this?
"Thus I believe that the House has made its choice: sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end.”
Nancy Pelosi? Steny Hoyer? Chris Van Hollen?
Wrong. That was Hal Rogers, the Kentucky Republican who leads the House Appropriations Committee, after the aptly named THUD bill failed on the House floor (notice how I didn't say it "landed with a thud", or something similar? You can thank me later.)
"THUD," in this case, stood for Transportation, Housing and Urban Development. It's the bill to fund those parts of the government through the next year. The cuts needed to be deep to hit the Ryan budget's target. Too deep, as it turned out. The bill was pulled off the floor as support collapsed around it.
This is what it looks like when the Republican budget strategy collapses.
THUD's fall comes days after House Republicans were supposed to release the Labor, Health and Human Services bill, which required cuts 19 percent beneath sequestration's levels. The bill didn't materialize.
It comes after House Republicans passed defense and veteran's appropriations at higher levels than sequestration permitted -- necessitating deeper cuts elsewhere.
Meanwhile, in the Senate, Republicans are breaking with Mitch McConnell to back appropriations bills that reach pre-sequestration levels -- bills that House Republicans have already dismissed.
Budget politics have an odd rhythm. The budget proposal comes early in the year, and its cuts are vague. It mostly just sets broad targets for different categories of spending. The appropriations bills come later in the year, and that's where cuts need to get specific.
Republicans endorsed the vague outlines of Ryan's budget early in the year. But now they're realizing they can't pass the documents that make those cuts specific -- they're simply too deep. But they can't back out of the Ryan budget, either. The result is a mess -- although one that may make at least a few Republicans, including Hal Rogers, more eager for a face-saving budget deal in the fall.
Wonkbook's Number of the Day: 1.7 percent. That's real GDP growth in the second quarter of 2013, annualized. The figure was reported yesterday.
Wonkbook's Quotation of the Day: “I don’t want transparency only when it’s convenient to the government,” Sen. Al Franken said.
Wonkblog's Graph of the Day: SNAP participation count, graphed by CBPP.
Wonkbook's Top 5 Stories: 1) the next Fed chair intrigue; 2) 200,000 new jobs and 1.7-percent GDP growth; 3) tax reform's trick-or-treat; 4) NSA gets a little surveillance from Congress; and 5) student-loan plan passed.
1) Top story: At the Fed, a Summers romance
Obama defends Summers, says he’s not close to a Fed decision. "During his visit to congressional Democrats on Capitol Hill Wednesday, President Obama defended former treasury secretary, Lawrence Summers, who is a potential candidate to succeed Ben Bernanke as chairman of the Federal Reserve...Obama launched into a defense of Summers, saying he had been critical to restoring the American economy and that he “was not even close to making a decision,” according to one lawmaker. Obama also “expressed frustration” with the negative campaign building against Summers, the lawmaker said." Ed O'Keefe in The Washington Post.
The case for Larry Summers. "Summers is a better dove because he’s a better hawk. Everyone agrees that Summers and Yellen both believe the Fed needs to keep supporting the economy for some time to come. But Summers’s supporters believe he’ll be able to keep that support going longer, if necessary...And they see Summers as an informed, confident and engaged financial regulator — something they worry Yellen wouldn’t be. The argument here isn’t that Yellen’s heart wouldn’t be in the right place, but that her focus would be elsewhere." Ezra Klein in The Washington Post.
@jdlahart: For distinction between moderate and modest, see Summers, Larry.
Is Janet Yellen a hawk in dove's feathers? "If you want to know what Janet Yellen might be like as the head of the Federal Reserve, look at 1996. Attention has focused on Yellen's tenure as the Fed's vice-chair since 2010. But she was also a Fed governor from 1994 to 1996 when the economy was healthy. If she gets the nod, she would probably stick around until 2018, when forecasters in the private sector and the Fed expect the economy to be back at full employment. So the earlier period, rather than her handling of the crisis, might tell us more about how she would steer the Fed. In fact Yellen was hawkish -- surprisingly so for someone often called a dove. People who expect Yellen to lean toward easy money may be surprised by how ready she is to tighten policy when the time is right." Evan Soltas in Bloomberg.
Explainer: Questions for the would-be Fed chairs. Miles Kimball in Quartz.
Where Summers went wrong. "If the past week has shown anything, it is that this strategy of atonement rather than acknowledgment has proved insufficient. When all too many people think of Summers, they still remember him frustrating efforts by Brooksley Born, the former head of the Commodity Futures Trading Commission, to regulate derivatives during the late nineties, or his statement to a Fed conference in 2005 about the rapid growth of securitization on Wall Street, and the development of complex products such as credit-default obligation...Clearly, there was no way for Summers to erase such things from the record. But surely he could have tried to nest them in a narrative about acknowledging past errors, seeking enlightenment, and moving on to new challenges. At some point in the past few years, he should have offered a mea culpa." John Cassidy in The New Yorker.
@mattyglesias: The idea that Summers secretly favors aggressive bank regulation and just forgot to mention it over the past two years is a bit odd.
Bond purchases by Fed will continue, at least for another month. "The Federal Reserve issued a 700-word statement on Wednesday, but four words would have sufficed: see you in September...The statement, issued after a regular two-day meeting of the Federal Open Market Committee, acknowledged the weak pace of growth during the first half of the year, which it described as “modest” rather than “moderate”." Binyamin Appelbaum in The New York Times.
Explainer: Eight things you need to know about Don Kohn, who just might be the next Fed chair. Neil Irwin in The Washington Post.
Funny how gender never came up during Bernanke’s nomination. Or Greenspan’s. Or Volcker’s. "When a woman is up for the job — no matter how qualified — the lurking worry is that the pick will be “driven by gender.” When a man is up for it, gender never enters into the conversation. That’s how privilege works in practice: Gender is invisible when it comes to male appointees but a constant presence when it comes to female appointees...It’s in the way the characteristics we associate with leadership are stereotypically male. It’s in the way boys and girls are pushed towards different subjects " Ezra Klein in The Washington Post.
@BCAppelbaum: If Obama does pick Summers, leaving no female Fed governors, there will be a lot of pressure to find women for the other vacancies.
Fed's Raskin is chosen for deputy Treasury Secretary. "The White House announced Wednesday that it will nominate Federal Reserve Governor Sarah Bloom Raskin to fill the No. 2 post at the Treasury Department, a move that would make her the highest-ranking woman in the agency’s history. In a statement, Treasury Secretary Jack Lew cited Raskin’s deep experience in financial regulation and oversight of the Fed’s sprawling organizational structure as driving the pick...Raskin joined the Fed in 2010 after spending three years as Maryland’s commissioner of financial regulation. She was particularly focused on consumer issues, including overseeing the Fed’s review of foreclosure practices. She also often spoke on untraditional issues such as the role of inequality in economic growth." Ylan Q. Mui in The Washington Post.
Music recommendations interlude: Augustana, "Fire," 2009.
BEUTLER: The Republicans' long-predicted budget comeuppance has arrived. "Republicans have dealt with some embarrassing moments on the House floor over the past year, but none so revealing or damning as today’s snafu, when they yanked a bill to fund the Departments of Transportation and Housing and Urban Development. It might look like a minor hiccup, or a symbolic error. But it spells doom for the party’s near-term budget strategy and underscores just how bogus the party’s broader agenda really is and has been for the last four years...It turns out that when you draft bills enumerating all the specific cuts required to comply with the budget’s parameters, they don’t come anywhere close to having enough political support to pass." Brian Beutler in Talking Points Memo.
TYSON: Game changers for growth. "A recent McKinsey Global Institute study identifies five mutually reinforcing “game changers” that could have a significant effect on GDP growth, productivity, and employment in the US by 2020: shale energy, big-data analytics, exports in knowledge-intensive industries, infrastructure investment, and talent development. Two of these – shale energy and big-data analytics – build on ongoing technological breakthroughs in which the US has a strong lead and depend primarily on private-sector action, not macroeconomic or structural policies." Laura Tyson in Project Syndicate.
BERNSTEIN AND BAKER: What's 'Seinfeld' worth?... "Not only is this a big change — that output, 3.6 percent of the total, lifting the economy to $16.6 trillion this year, is like adding a New Jersey to the nation’s economy — but it raises important questions about what we consider economic value and costs, and what we leave out...Still, as new sources of economic value emerge, it’s important to try to account for them, even if the accounting risks becoming more arbitrary as the measurement issues become more challenging. But it’s equally important to try to measure the value we’re destroying — to “net out” the environmental damage. So here’s the deal, and let’s stick with the movies: we’ll count “Star Wars,” if they’ll count the findings of “An Inconvenient Truth.”" Jared Bernstein and Dean Baker in The New York Times.
SOLTAS: ...And how about a GDP measure for this century? "GDP's biggest remaining oversight is investment in human capital. Here's an example. If a business spends $10,000 on new computers and software, that $10,000 is counted in GDP as an investment. If the business spent the $10,000 on worker training instead, it would be counted as a business expense and is ignored in GDP. This makes no sense: Training is as much an investment as a new computer." Evan Soltas in Bloomberg.
CROOK: Inequality is a separate issue from opportunity for the poor. "If I wanted to be pessimistic, though, I know what I’d be dwelling on right now: the new preoccupation with inequality. Inequality is rising, and that’s a bad thing. What’s worse is that the issue is getting mixed up with what should be a more pressing debate over economic opportunity, which would be better kept separate. This is both a distraction and a danger...It’s right to ask whether the distribution of incomes is fair and to lean against worsening inequality -- say, by fixing corporate governance so the market for top-executive pay works as it should or by taxing the rich more heavily. But it’s wrong to see the gains at the top as proof of the system’s ingrained wickedness, or to forget that clumsy intervention might affect everybody else’s incomes." Clive Crook in Bloomberg.
This is amazing computing interlude: A video illustration of 15 sorting algorithms.
2) GDP grows by 1.7 percent; 200k new jobs
GDP grows by 1.7 percent in Q2 2013. "[T]he Commerce Department reported that the economy, adjusted for inflation, expanded at a better-than-expected annual rate of 1.7 percent in the April-June quarter, even as inflation-adjusted growth in the first part of the year now appears slower than first thought...The pace at which spending by the federal government is dropping stabilized last quarter. It fell by 1.5 percent, compared with an 8.4 percent decrease in the first quarter of 2013 and a 13.9 percent plunge in the final quarter of 2012." Nelson D. Schwartz and Catherine Rampell in The New York Times.
We should be horrified at 1.7 percent GDP growth. "The better-than-expected second-quarter number came at the expense of a downward revision to estimates to the first part of the year, from 1.8 percent to 1.1 percent. Add in anemic growth (at only an 0.1 percent pace) in the fourth quarter of 2012, and we’ve now faced nine months of an expansion at a bit less than a 1 percent annual rate. Every two steps forward for growth seems to be accompanied by a step and a half back...[W]ith 7.6 percent unemployment, the nation could really use a few quarters in a row of 4, 5 or 6 percent growth to get us back to where people can really be pleased with the economy." Neil Irwin in The Washington Post.
ADP: 200,000 more private sector jobs. "Economists surveyed by Dow Jones Newswires expected ADP to report a July advance of 183,000 private jobs. The June ADP employment increase was revised to an increase of 198,000 jobs, from 188,000 reported a month ago." Kathleen Madigan in The Wall Street Journal.
Explainer: Why we don't have jetpacks, in one chart. Dylan Matthews in The Washington Post.
A not-so-bad recession. "The Great Recession (which lasted from the fourth quarter of 2007 to the second quarter of 2009) also looks less formidable, at least in output terms. Based on the latest measures, inflation-adjusted output growth decreased at an annual rate of 2.9 percent during that time, instead of the previously reported 3.2 percent. And the cumulative peak-to-trough contraction in the economy was 4.3 percent, rather than 4.7 percent." Catherine Rampell in The New York Times.
The government now assumes all pension promises will come true. That’s scary. "Until Wednesday morning, the Commerce Department pegged America’s personal savings rate at 4.1 percent for 2012. An every-five-years revision to how the department measures the components of Gross Domestic Product pushed that savings rate up; now it’s 5.6 percent for 2012. The same change makes savings look much stronger before the Great Recession, too: The rate for 2002 was revised up from 3.5 percent to 5 percent. For 2005, it rose from 1.5 percent to 2.6 percent...It decided to start counting all pension promises as savings in the bank. That change is called accrual accounting, and as officials at the BEA point out, it’s a well-accepted practice in the corporate world." Jim Tankersley in The Washington Post.
Our Earth interlude: Temperature data since 1880.
3) Trick-or-treat time for tax reform
Dave Camp plans markup for tax reform in October. "House Ways and Means Committee Chairman Dave Camp plans to move forward on a tax reform bill before a November showdown over raising the debt limit, according to several committee aides...Camp told committee members that he plans to write a tax bill that would cut the top corporate and individual rates to 25 percent and repeal the Alternative Minimum Tax for both corporations and individuals." Kelsey Snell in Politico.
Report: Top US firms park $1.2T offshore. "The report by U.S. PIRG, which analyzed the public filings of the top 100 U.S. publicly traded companies, also found that 82 companies maintain subsidiaries in low-tax jurisdictions located abroad...Just 21 of the 100 companies disclosed what they would pay in U.S. taxes if they brought the profits onshore, according to PIRG, also known as the federation of state Public Interest Research Groups. It noted that companies are required to disclose such information in annual Securities and Exchange Commission filings unless it is "not practical" to do so. Together, these companies would have owed more than $93 billion in additional federal taxes, the report found. The average tax rate that these 21 companies have paid to foreign jurisdictions is 6.9%, according to PIRG." Jessica Holzer in The Wall Street Journal.
Spiders interlude: Here are some exquisite ones from Wired.
4) NSA gets a little surveillance from Congress
Newly declassified documents on phone records program released. "Obama administration officials faced deepening political skepticism Wednesday about a far-reaching counterterrorism program that collects millions of Americans’ phone records, even as they released newly declassified documents in an attempt to spotlight privacy safeguards. The previously secret material — a court order and reports to Congress — was released by Director of National Intelligence James R. Clapper as a Senate Judiciary Committee hearing opened Wednesday morning in which lawmakers sharply questioned the efficacy of the collection of bulk phone records. A senior National Security Agency official conceded that the surveillance effort was the primary tool in thwarting only one plot — not the dozens that officials had previously suggested." Ellen Nakashima in The Washington Post.
...And here's Sen. Wyden on what they show. "The Oregon Democrat said the documents reveal the administration overstated the usefulness of gathering email records under the Patriot Act by saying that bulk data and phone records collection “were unique in that they can can produce intelligence not otherwise available to NSA.” The bulk email collection program has since been shut down due to a “a lack of operational value,” Wyden said, leading him to believe the same may eventually be said about phone records collection." Burgess Everett in Politico.
Obama invites lawmakers to meet over NSA. "A group of House and Senate lawmakers concerned about the reach of the National Security Agency into Americans’ privacy will go to the White House on Thursday to discuss the program with the president, senators said Wednesday after meeting with the president. A source with knowledge of the meeting said the attendees will include members both critical and supportive of the NSA’s data mining programs regarding phone and email records. Sens. Ron Wyden (D-Ore.), Mark Udall (D-Colo.) and Dick Durbin (D-Ill.) will attend, as well as Senate Intelligence Committee Chairwoman Dianne Feinstein (D-Calif.) and ranking member Saxby Chambliss (R-Ga.). House members attending include House Intelligence Committee Chairman Mike Rogers (R-Mich.), ranking member Dutch Ruppersberger (D-Md.) and Judiciary Chairman Bob Goodlatte (R-Va.)." Burgess Everett in Politico.
Explainer: Ever wondered what the top-secret FISA court looks like? We have pictures. Brian Fung in The Washington Post.
Sen. Franken to introduce transparency bill. "Sen. Al Franken (D-Minn.) lashed out this morning at “the lack of transparency” surrounding the collection of Americans’ phone records. Speaking at a Senate Judiciary Committee hearing, Franken blasted top intelligence officials for delays in declassifying secret government documents authorizing the program. “I don’t want transparency only when it’s convenient to the government,” Franken said. The Office of the Director of National Intelligence, he added, “has known for weeks that this hearing was coming and ODNI released this only in the minutes before this hearing began. That doesn’t engender trust.”" Brian Fung in The Washington Post.
NSA chief asks a skeptical crowd of hackers to help agency do its job. "Gen. Keith B. Alexander, director of the National Security Agency, stood in front of a standing-room-only crowd Wednesday, selling the idea of government surveillance programs. His audience? More than 3,000 cybersecurity specialists, including some of the world’s best hackers, an unruly community known for its support of civil liberties and skepticism of the government’s three-letter agencies. Alexander praised the group as one of the brightest collections of technical minds in the world. He asked them to help the NSA fulfill its mission of protecting the country, while also protecting privacy." Robert O'Harrow Jr. in The Washington Post.
Optimal strategies in urinal selection interlude: The world's best game-theory minds at work.
5) Student-loan plan passed
Congress approves student-loan plan. "The millions of college students and parents who will borrow money from the federal government for the coming school year can plan on much lower interest rates than originally offered, as the U.S. House overwhelmingly voted 392 to 31 on Wednesday to approve a Senate plan that would allow interest rates to move with the financial markets. The plan now goes to President Obama, who has already voiced support. House Republican leaders have deemed this a long-term solution, while many Democrats have said this plan will probably need tweaking in future years" Jenna Johnson in The Washington Post.
Minorities and whites follow unequal college paths, report says. "The nation’s system of higher education is growing more racially polarized even as it attracts more minorities: White students increasingly are clustering at selective institutions, while blacks and Hispanics mostly are attending open-access and community colleges, according to a new report. The paths offer widely disparate opportunities and are leading to widely disparate outcomes, said the report released Wednesday by the Georgetown University Center on Education and the Workforce." Michael A. Fletcher in The Washington Post.
Reading material interlude: The best sentences Wonkblog read today.
How Republicans could actually derail Obamacare. Sarah Kliff.
One priest’s early thoughts on Pope Francis’s ways. Ezra Klein.
Why we don’t have jetpacks, in one chart. Dylan Matthews.
The case for Larry Summers. Ezra Klein.
We should be horrified at 1.7 percent GDP growth. Neil Irwin.
Senate confirms ATF director. Sari Horwitz in The Washington Post.
Senate panel approves job-training bill. Libby A. Nelson in Politico.
Five things you don’t know about EPA’s Gina McCarthy but should. Juliet Eilperin in The Washington Post.
Conservative purity becomes harder to define for GOP. Sean Sullivan and Aaron Blake in The Washington Post.
...Nor can Republicans agree on the direction in which they should be heading. Allison Kopicki in The New York Times.
House taking several votes on IRS, EPA to put Obama on defensive. Ed O'Keefe in The Washington Post.
Obama enters Hill healthcare dispute. John Bresnahan and Jake Sherman in Politico.
Wonkbook is produced with help from Michelle Williams.