Wonkbook: Democrats to Boehner: There will be no debt-ceiling negotiation. Seriously.

September 23, 2013

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(Photo by Scott Applewhite/AP)
(Photo by Scott Applewhite/AP)

On Friday afternoon, just hours after the House passed a continuing resolution defunding Obamacare, President Obama placed a call to Speaker Boehner.

Surprisingly, Obama didn't want to talk about the CR, or even the possibility of a shutdown. Instead, in a conversation Boehner's aides characterized as "brief," President Obama reiterated that he would not, under any circumstances, negotiate over the debt ceiling.

Today, Senate Democrats will back Obama up. Patty Murray, the chairwoman of the Budget Committee, and Max Baucus, the chairman of the Finance Committee, are sending a "dear colleague" letter stating "President Obama has been clear that he is not going to negotiate over the debt limit, and Congressional Democrats stand behind him strongly."

The letter goes on to note that "since 1960, the debt limit has been raised a total of 78 times, including 49 increases under Republican Presidents and 29 increases under Democratic Presidents. President Ronald Reagan said in 1983 that, 'the full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate.'"

If it seems odd that Democrats are spending the week before a possible government shutdown trying to talk Republicans out of potentially breaching the debt ceiling sometime in October or November, it's worth keeping three things in mind:

1) Democrats don't fear a shutdown. They do fear a debt-ceiling breach. Politically, Democrats think Republican brinksmanship is all gravy for them, and many believe some kind of massive Republican misstep would actually be healthy for the political system, as it might lead to a public rejection of the GOP's more extreme tactics. But in terms of actual impact on actual human beings, Democrats aren't particularly concerned about the consequences of a shutdown, while they're horrified by the potential consequences of even a short-lived default.

2) Democrats are worried Boehner is backing himself into a corner. A common criticism of Boehner among both Hill and White House Democrats (not to mention some Republicans) is that he's a short-term strategist who buys time and consensus by making promises to his members that he can't deliver on -- and that end up making future crises worse. This is what they see him doing on the debt ceiling, where he's trying to get his members to keep the government open by promising them an even bigger fight over the debt ceiling.

3) Democrats are trying to convince Boehner that they're serious by backing themselves into a corner. Democrats believe Boehner is going to come to them in a few weeks and say that as much as he agrees the debt ceiling simply has to be raised there's no way he can raise it without concessions given the promises he's made in public and to his members. Democrats are trying to preempt this strategy by making a series of very public statements that they won't negotiate, such that they can reply that their credibility would be endangered by any kind of a deal, and negotiations are simply politically impossible for them.

That leaves us in a situation where Boehner can't raise the debt ceiling without concessions and Democrats can't give Boehner anything in return for raising the debt ceiling.

So how does the country gets out of this mess? The most honest answer is no one really knows, at least not yet. Far and away the scariest facet of reporting on the debt ceiling is that even the participants in the process who are extremely confident that Congress will find a way out don't have any plausible explanation for what that way out might be.

Wonkbook's Numbers of the Day: 83 percent and 2.88 times. The first number is the percent of all bids for U.S. Treasuries that came from investors this year. The second is this year's "bid-to-cover ratio" (explainer here), which is how many times the value of bids exceed the value of Treasuries at auction. The combination of numbers show strong demand for U.S. debt. No debt crisis. No bond vigilantes. 

Wonkbook's Graph of the Day: How the housing market has changed, from Nick Timiraos's latest column in The Wall Street Journal.

Wonkbook's Top 5 Stories: 1) next week, Obamacare; 2) immigration reform is stuck in the mud; 3) putting the "un" in gun control; 4) the monetary and the fiscal; and 5) what grade for America's schools?

1) Top story: Next week will bring Obamacare

Obamacare? It depends on where. "There is just one federal health law, but the way Americans experience the debut of its main provisions on Oct. 1 will vary widely depending on where they live..."Your prices, your consumer experience will differ dramatically across states or even regions in states," said Joel Ario, managing director at Manatt Health Solutions, a New York-based health-care consulting practice. Rural areas will likely have fewer insurer choices than urban areas, where insurers are competing more vigorously for new customers." Amy Schatz and Louise Radnofsky in The Wall Street Journal. 

Lower health-insurance premiums, but fewer choices. "Federal officials often say that health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers...To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers." Robert Pear in The New York Times.

The history of Obamacare as idea. "The most important red line of Barack Obama’s presidency was scrawled hastily in January 2007, a few weeks before he even announced he was running for president. Soon-to-be-candidate Obama, then an Illinois senator, was thinking about turning down an invitation to speak at a big health care conference sponsored by the progressive group Families USA, when two aides, Robert Gibbs and Jon Favreau, hit on an idea that would make him appear more prepared and committed than he actually was at the moment. Why not just announce his intention to pass universal health care by the end of his first term? Thus was born Obamacare, a check-the-box, news-cycle expedient that would ultimately define a president." Carrie Budoff Brown and Glenn Thrush in Politico.

As Obamacare looms, it's an ad war. "Starting this week, the White House will kick off a six-month campaign to persuade millions of uninsured Americans to sign up for health coverage as part of insurance marketplaces that open for business on Oct. 1. If too few people enroll, the centerpiece of the president’s Affordable Care Act could collapse...In the face of the intense opposition, the White House is pushing ahead with a vigorous public relations effort that will begin accelerating Monday, according to top White House aides in charge of the program." Michael D. Shear in The New York Times.

@RBReich: Most fanatical series #Emmy goes to House Republicans' efforts to repeal Obamacare.

Even if the federal government were to shut down, Obamacare enrollment would continue. "Shutting down the government won’t shut down the health-care law. In a quirk of the calendar, the start of enrollment for the Affordable Care Act and the first day of a shutdown would fall on the same day, Oct. 1. The good news for President Barack Obama is that cutting off funds for non-essential government programs in a shutdown wouldn’t stop funding for implementing his health care law, health policy experts said...That’s because the 2010 law relies primarily on mandatory spending, which congressional inaction can’t stop. It’s the budget category used for benefits such as Medicare and Social Security." Heidi Przybyla and Alex Wayne in Bloomberg.

@markknoller: Coburn says he agrees with House Republicans objective to shutdown ObamaCare: "if we could do this, we should do it, but we can't."

With deadlines looming, lobbyists push for changes to Obamacare. "Several elements of the law the Chamber still wants to change are significant, such as repealing the employer mandate and cutting new taxes it imposed...For the Chamber and other employer groups, a top priority is revising the law’s definition of full-time workers, from those who work 30 hours per week to 40 hours...For hospitals, the focus is delaying cuts to payments they receive from the government for caring for low-income and uninsured patients...And an array of business interests wants to repeal the 2.3 percent excise tax on medical devices that was enacted to help pay for the health-care initiative." Holly Yeager in The Washington Post.

At Congressional Black Caucus gala, Obama focuses on health care and gun control. "A combative President Obama reiterated Saturday night that he refuses to negotiate with Congress over funding for his signature health-care law and warned that Republican lawmakers are threatening to plunge the nation back into a painful recession...Obama continued to blast House Republicans, charging that their “top agenda” was depriving millions of Americans of health-care coverage. On Friday, the House passed a plan that would avert a government shutdown and keep the government operating through mid-December but would also strip funding for the Affordable Care Act, known as Obamacare." Philip Rucker in The Washington Post.

@ByronYork: Just for record: I believe GOP's last chance to stop Obamacare before implementation was 2012 election.

Doctors brace for surge of patients under health law. "About 25 million Americans are expected to gain coverage under the health law, commonly known as Obamacare. Starting Oct. 1, as many as 7 million uninsured Americans will begin shopping for private plans through government-run exchanges, with many people eligible to have their premiums subsidized by taxpayers. On Jan. 1, Medicaid programs for low-income people will be expanded in about half the U.S. states. The increase in newly insured patients arrives at a time when the nation has 15,230 fewer primary-care doctors than it needs, according to an Aug. 28 assessment by the U.S. Department of Health and Human Services. And emergency rooms report being strained with visits that have risen at twice the rate of population growth." Stephanie Armour in Bloomberg.

@JohnJHarwood: As Rs say shutdown/debt threat is to prevent O-care harm, economist Zandi: "I don't see any evidence Obamacare is impacting job market."

Is this a hospital or a hotel? "Some hospitals in the United States, like Cedars-Sinai in Los Angeles, have long been associated with deluxe accommodations, and others have always had suites for V.I.P.’s. But today even many smaller hospitals often offer general amenities, like room service and nail salons, more often associated with hotels than health care. In the current boom of hospital construction, private rooms have become the norm. And some health economists worry that the luxury surroundings are adding unneeded costs to the nation’s $2.7 trillion health care bill." Elisabeth Rosenthal in The New York Times.

Interview: Dr. Susan Robinson, one of the last four doctors in the U.S. to provide late-term abortionsJia Tolentino in The Hairpin.

The best cancer care isn’t always the most expensive. "America can amply afford the $125 billion we devote to cancer care. Cancer accounts for only about 5 percent of our nation’s $2.8 trillion health-care economy. Yet particularly in the case of advanced cancers, both patients and the wider society could receive greater value for what is spent. Many patients require care delivered with greater thoughtfulness: less-toxic treatment regimes that relieve suffering and protect quality of life when curative care is not possible." Harold Pollack in The Washington Post.

DIONNE: Obamacare's strange bedfellows. "At a moment when the Beltway wing of the GOP is on the verge of shaking the economy to its foundations in an effort to block Obama­care, there’s also a political lesson to be drawn from Ohio and from other states where Republican governors have embraced the expansion of Medicaid, which is a central component of the Affordable Care Act...These chief executives usually follow the party line in being critical of the health law in principle. But they have responsibilities that the radical ideologues in Washington don’t have — to their local hospitals, to their economies and, yes, to their constituents among the working poor who now lack insurance. They understand the difference between “Obamacare” as a right-wing bogeyman and the Affordable Care Act as a reality." E.J. Dionne in The Washington Post.

Music recommendations interlude: Bon Jovi, "Bad Medicine," 1989. (Wonkbookin' from NJ.)

Top opinion

CALDERON AND STERN: The new climate economics. "[T]he primary question that we need to ask is not whether we can reduce emissions, but how public policy can help to achieve these core goals while reducing emissions and building a more climate-resilient economy...Yet genuine questions remain about how fast economies should move on to a low-carbon path, and the most effective way to do so. Some low-carbon policies have clearly been expensive, while other, apparently cost-effective options, have not been pursued at all. Any structural transformation involves costs, trade-offs, and uncertainties, and it is vital that we understand these properly." Felipe Calderón and Nicholas Stern in Project Syndicate

FELDSTEIN: Taper delayed is taper denied. "It is hard to argue with the Fed’s approach that its economic policy should depend on the data. But it is equally hard to reconcile a strategy of multiyear forward guidance with policies that are sensitive to changes in month-to-month economic news...It would be wise, therefore, for the Fed to shift away from its focus on short-term data, to recognise that it has achieved as much as monetary policy can do, and to start at its next meeting on a path to stabilise the size of its bond portfolio." Martin Feldstein in The Financial Times.

KRUGMAN: Free to be hungry. "The right’s definition of freedom, however, isn’t one that, say, F.D.R. would recognize. In particular, the third of his famous Four Freedoms — freedom from want — seems to have been turned on its head. Conservatives seem, in particular, to believe that freedom’s just another word for not enough to eat." Paul Krugman in The New York Times.

MULLAINATHAN: The mental strain of making do with less. "Something similar happens whenever we make do with less, as when we feel that we have too little time, or too little money. Just as the cookie tugs at the dieter, a looming deadline preoccupies a busy person, and the prospect of a painful rent payment shatters the peace of the poor. Just as dieters constantly track food, the hyper-busy track each minute and the poor track each dollar...[P]erhaps the poor are just as capable as everyone else. Perhaps the problem is not poor people but the mental strain that poverty imposes on anyone who must endure it." Sendhil Mullainathan in The New York Times.

TELES: American kludgeocracy. "In recent decades, American politics has been dominated, at least rhetorically, by a battle over the size of government. But that is not what the next few decades of our politics will be about. With the frontiers of the state roughly fixed, the issues that will define our major debates will concern the complexity of government, rather than its sheer scope." Steven M. Teles in National Affairs.

More reading: The latest issue of National Affairs is out. Quite a lot of good stuff to read and digest.

FOLBRE: The business of home care. "The rule changes may strengthen other trends encouraging consumers to hire home-care workers directly (with help from either state agencies or private companies that screen, train or certify potential employees) rather than paying businesses that charge a high and continuing price for those services...Why such pushback if the effects on wages are likely to be small? Because the new rules may directly and indirectly reduce the profitability of home-care agencies by making it more attractive for consumers to bypass their services." Nancy Folbre in The New York Times.

HIATT: Searching for the tipping point on gun control. "Why doesn’t change happen when the need seems so obvious? It seems obvious that military-style weapons with no hunting or self-defense purpose should not be circulating. It seems obvious that people who hear voices and repeatedly fire guns in anger should be treated before they can buy more guns...Americans aren’t going to cede their right to own guns for sport and self-defense. But policies that focus on reducing the dangers of accidental shootings, gun suicides, crimes of passion and mass shootings — over time, with a public health focus, I think they have a chance." Fred Hiatt in The Washington Post.

TIMIRAOS: Rethinking everything housing. "Wouldn't banks still offer the 30-year fixed mortgage without a government guarantee if it's so popular? Maybe, but they would likely require bigger down payments and higher rates. It's a math issue. There is nearly $10 trillion in mortgage debt outstanding today with around $4.5 trillion backed by Fannie and Freddie. Scrapping the government's role means finding trillions of dollars ready to absorb the credit and interest-rate risk for new mortgages, since the firms have backed around two-thirds of those made since 2009" Nick Timiraos in The Wall Street Journal.

DOUTHAT: Good populism, bad populism. "Here's he good news for Republicans: The party now has a faction committed to learning real lessons from the 2012 defeat, breaking with the right’s stale policy consensus and embracing new ideas on a range of issues, from foreign policy to middle-class taxes, the drug war to banking reform. Here’s the bad news for Republicans: The party also has a faction committed to a reckless, pointless budget brinkmanship, which creates a perpetual cycle of outrage and disillusionment among conservatives and leaves Washington lurching from one manufactured crisis to the next. Here’s the strange news for Republicans: These two factions are actually one and the same." Ross Douthat in The New York Times.

We still love you Feynman interlude: On the scientific method.

2) Immigration reform's stalling-out becomes too obvious to ignore

House Republicans say they’ll act on immigration reform this year. "House Republicans intensified their outreach to Latino groups last week, offering renewed pledges that the House will deal with immigration reform this year. The effort has revived hope among advocates that a bipartisan deal can be reached to address the fate of the nation’s 11 million undocumented workers and students...Judiciary Committee Chairman Bob Goodlatte (R-Va.) said Thursday that his panel is working on four new pieces of legislation dealing with border-control laws. " David Nakamura in The Washington Post.

...Meanwhile, others are walking away from its rotting carcass. "A years-long attempt by House lawmakers to write a bipartisan immigration bill has fallen apart, after two of the remaining three Republicans abandoned the effort. The departure of Reps. John Carter and Sam Johnson, both Texas Republicans, is a fresh sign of the steep climb immigration legislation faces in the House. Four Democrats and four Republicans had been trying to craft a broad overhaul of immigration laws, but three of the Republicans have now left. Explaining their departure, Messrs. Carter and Johnson blamed President Barack Obama, saying they could not trust him to enforce current laws or new laws that Congress might pass." Laura Meckler in The Wall Street Journal.

Immigration advocates consider a compromise. "Frustrated by inaction in the House, advocates of a broad overhaul of immigration law are considering whether to compromise on a core demand—that the nation's 11 million illegal immigrants be offered a pathway to citizenship...Under this idea, people here illegally would be allowed to live and work in the U.S., and could then apply for green cards, which are hard to obtain but serve as a prelude to citizenship." Laura Meckler in The Wall Street Journal.

Listen to anything Deepak Malhotra says interlude: Here's his graduation lecture to Harvard MBAs.

3) Putting the "un" in gun control

Gun-control advocates losing ground in the states despite mass shootings. "[I]f the gun debate is reignited after another massacre claimed 12 victims Monday at the Navy Yard in Southeast Washington, it will take place in a country with fewer restrictions on firearms than were in place a year ago. Gun-control advocates had hoped to pass new legislation in states where Democrats control the legislature and governor’s office. But only a handful of blue states — California, Colorado, Connecticut, Delaware, Illinois, Maryland and New York — advanced substantive laws...But gun-rights advocates have pushed new laws in about half the states to relax restrictions on concealed-carry laws." Reid Wilson in The Washington Post.

Obama, at memorial, calls for changes in gun control laws. "President Barack Obama called for changes to gun laws Sunday during a memorial service honoring the 12 people killed by a gunman last week at the Washington Navy Yard. "Part of what wears on us, what troubles us so deeply as we gather here today, is how this senseless violence that took place in the Navy Yard echoes other recent tragedies," Mr. Obama said at the service, which was held at the Marine Corps barracks in Washington, blocks from where the shooting took place." Jamila Trindle in The Wall Street Journal.

Wonkbookmarks interlude: freeindiegam.es.

4) "The monetary and the fiscal, they're equally correct"

Yellen would bring tougher tone to Fed. "Janet Yellen, the lead candidate to succeed Federal Reserve Chairman Ben Bernanke, brings a demanding and harder-driving leadership style to the central bank, in contrast to Mr. Bernanke's low-key and often understated approach. Ms. Yellen, the Fed vice chairwoman, is highly regarded by many central bank staff members, who call her an effective leader with a sharp mind. But she has clashed with others and left some hard feelings in the wake of those confrontations, according to interviews with more than a dozen current and former staff members and officials who worked with her directly in recent years." Jon Hilsenrath in The Wall Street Journal.

For Janet Yellen, nomination may be easy part. "Yellen, should she get the job, would take over at a uniquely difficult time for the nation’s central bank. Since the financial crisis, the Fed has been among the few constant sources of economic stewardship in Washington, pumping money into the struggling economy as Congress and the White House lurched from near-default to the first credit downgrade in the nation’s history to a series of high-stakes spending battles...The Bernanke Fed in its final months may begin the process of cutting down on asset purchases, perhaps in December. This could leave Yellen, who has expressed grave concerns about the level of persistent unemployment, in the awkward position of trying to persuade fellow Fed governors to reverse Bernanke’s position." Ben White in Politico.

Explainer: Economic data coming your way this weekAmrita Jayakumar in The Washington Post.

Demand for U.S. government debt is as strong as ever. "Demand for new Treasuries from their biggest owners is proving impervious to rising yields and the retreat of Wall Street dealers. Bids submitted by investors including mutual funds, foreign central banks, pension managers and insurance companies totaled 83 percent of Treasury debt auctioned this year, compared with 84 percent in 2012 and 37 percent in 2008 at the peak of the worst financial crisis since the Great Depression, according to data compiled by Bloomberg...Investors bid for 2.88 times the $1.521 trillion of notes and bonds sold at Treasury auctions, down from the record 3.11 times the $2.153 trillion sold last year. While the bid-to-cover ratio has fallen for the first time since 2008, demand is the fourth-highest on record going back to 1994." Daniel Kruger in Bloomberg.

Clock ticks as Senate begins budget work. "Senate Majority Leader Harry Reid (D., Nev.) is expected to take steps Monday that likely would lead to an important procedural vote on Wednesday to open debate on the funding bill, according to a Senate Democratic aide. Some of the Senate's most conservative Republicans have vowed to try to block Democrats from passing any version of the budget bill that restores the funding for the health law." Kristina Peterson in The Wall Street Journal.

Shutdown countdown: What the next eight days could bring. "On Friday, the House passed a measure that would keep the government running through mid-December. But it came with what Democrats consider a poison pill: It defunds President Obama’s signature health-care law, known as Obamacare. There is no way whatsoever — think pigs flying — that the Senate will agree to the House plan. Senate Majority Leader Harry M. Reid (D-Nev.) said the House bill was “dead,” then for emphasis added: “Dead.” That sets up eight days of brinkmanship between the Republican House and the Democratic Senate and White House, leading to midnight Sept. 30, when much of the government will shut down if there’s no deal. Leaders on Capitol Hill expect the face-off to go right up to the deadline, if not beyond. Below is a day-by-day look at how it’s all likely to play out — with the caveat that events can change quickly." Paul Kane in The Washington Post.

Banks are essential to the commodities market, say banks. "Who else would play the beneficial roles that banks say they do, without the downsides? The other option is giant commodities houses like Cargill and Glencore getting into the finance business, which they've been doing with about as much zeal. As the New America Foundation's Lina Khan has outlined, that's problematic too, because they're perhaps even less transparent than Goldman Sachs and the rest." Lydia DePillis in The Washington Post.

Is Richmond’s mortgage seizure scheme even legal? "The arguments will now proceed to the two parts of eminent domain law: demonstrating public purpose for the takings and offering fair-value. Since this is the furthest an eminent domain case has made it, it might be useful to step back and walk through the arguments. If the case succeeds, it is likely other cities, which have been hesitant, will consider going forward." Mike Konczal in The Washington Post.

Compsci is cool interlude: Building a Turing machine in Excel.

5) What grade for America's schools?

Do American public schools really stink? Maybe not. "The drumbeat is hard to miss: Our schools are failing. Public education is in crisis. Our students are falling further and further behind. The rhetoric comes from the left and right, from educators and politicians and lobbyists and CEOs and even Education Secretary Arne Duncan. The deep dysfunction of our public schools is said to threaten not only America’s economy but also its national security. But a vocal group of contrarians is challenging that conventional wisdom. The latest weapon in their arsenal: A new book out this week by education historian Diane Ravitch, who argues that the biggest crisis facing public education is the relentless message that public education is in crisis." Stephanie Simon in Politico.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

The best TV show about college returns. We talked to the man behind itDylan Matthews.

Summers lost because liberals don’t trust Obama on financial reformEzra Klein.

The best cancer care isn’t always the most expensiveHarold Pollack.

Is Richmond’s mortgage seizure scheme even legal? Mike Konczal.

Why are some airlines better at saving fuel than othersBrad Plumer.

Et Cetera

The story you would have otherwise missed today: National Guard is new gay rights battleground as four states refuse to handle federal benefitsJosh Hicks in The Washington Post.

Henry Kissinger predicts Syria will comply with 90 percent of chemical weapons dealAaron Blake in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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Timothy B. Lee · September 22, 2013