Wonkbook: We may have a shutdown after all. And that may be a good thing.

September 27, 2013

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(Photo by Andrew Harrer/Bloomberg)
(Photo by Andrew Harrer/Bloomberg)

It looks like we may have a shutdown after all. And that may be a good thing.

On Thursday, Speaker Boehner attempted to execute his latest strategy to avoid a shutdown by distracting his members with a bill that tied an increase in the debt ceiling to, well, everything Republicans have ever wanted. No go.

"About two dozen hard-liners rejected that approach, saying they will not talk about the debt limit until the battle over government funding is resolved," report Lori Montgomery and Paul Kane.

It's still possible the House and Senate will avoid a government shutdown. But at what cost? Politico's Jake Sherman and John Bresnahan report that if "unified Democratic opposition forces Republicans to swallow a government funding bill they deem less-than-satisfactory, House Republicans will certainly counter by increasing their demands for reform when it comes to the debt-ceiling legislation."

It is hard, at this point, to imagine what that even means. Virtually the only demand left out off the list Boehner offered is a pony for each man, woman and child in the Republican Party. But when it comes to the final compromise on the bill, Sherman and Bresnahan are surely right: House Republicans are going to be more resistant to raising the debt ceiling if they feel they didn't even stand and fight on the CR.

If avoiding a government shutdown means breaching the debt ceiling -- or even just increasing the likelihood of a breach in the debt ceiling -- that's a very bad trade.

The corollary, of course, is that accepting a shutdown for a much lower likelihood of a debt-ceiling breach might be a good trade.

As Alec Phillips put it in a research note for Goldman Sachs, "If a shutdown is avoided, it is likely to be because congressional Republicans have opted to wait and push for policy concessions on the debt limit instead. By contrast, if a shutdown occurs, we would be surprised if congressional Republicans would want to risk another difficult situation only a couple of weeks later. The upshot is that while a shutdown would be unnecessarily disruptive, it might actually ease passage of a debt limit increase."

Some House Democrats have also come to believe that a shutdown might be the best way forward. It provides, in their eyes, a relatively safe space for the showdown Republicans clearly want to have. It's visible and dramatic enough that the GOP will feel the public's ire. But it's low stakes enough that the damage to the economy, though real, will be modest. Better to shoot yourself in the foot than shoot yourself in the head.

The hitch in this theory is the calendar. A shutdown would begin 17 days before we hit the debt ceiling. There's just not that much time for the shutdown to play out before the debt ceiling crashes down.

But that might be okay. One reason Republicans in Congress aren't more concerned about the debt ceiling is markets aren't particularly concerned. But if Congress began exhibiting signs of real irresponsibility -- like by shutting down the government -- markets would get concerned in a hurry, and Republicans would begin getting calls from Wall Street and CEOs of major companies well in advance of the 17th.

It's a mark of the insane and reckless turn in our politics that shutting down the government so one of our to major political parties can get the brinksmanship out of its system is emerging as the sober, responsible thing to do. But here we are, greatest nation the world has ever known.

Wonkbook's Number of the Day: $2.1 billion. That's how much it cost us last time, in constant-value dollars, to shut down the federal government, according to the Office of Management and Budget in 1996.

Wonkbook's Graphs of the Day: These two charts show why the U.S. economy is ready for a rebound.

Wonkbook's Top 5 Stories: 1) here comes the shutdown again, falling on my head like a memory; 2) Obamacare delays; 3) two Fed presidents go head-to-head; 4) reining in the NSA; and 5) UN releases climate report today.

1) Top story: Shutdown, here we come!

No clear path to avoid a shutdown. "Congress's rocky path to avoiding a government shutdown became even rougher Thursday, as Speaker John Boehner said the House wouldn't accept the spending plan likely to emerge from the Senate. The Ohio Republican's announcement foreshadows a set of last-minute legislative volleys between the House and Senate to fund federal agencies ahead of a deadline Monday, the final day of the fiscal year." Janet Hook and Kristina Peterson in The Wall Street Journal.

Chart: How a shutdown would impact federal agencies. Josh Hicks in The Washington Post.

Republican hard-liners block strategy to avoid federal government shutdown. "Washington stumbled toward a shutdown as the Republican Party’s rebellious right wing on Thursday blocked a strategy by House Speaker John A. Boehner for navigating a series of deadlines to keep the government funded and avoid a first-ever default. Boehner (R-Ohio) and his leadership team revealed the first step of that plan to rank-and-file lawmakers early Thursday, urging conservatives to shift their ­assault on President Obama’s health-care law to the coming fight over the federal debt limit...But about two dozen hard-liners rejected that approach, saying they will not talk about the debt limit until the battle over government funding is resolved." Lori Montgomery and Paul Kane in The Washington Post.

...Introducing Republicans' 'Plan C.' "Hardline conservatives, wary about their own leadership, want to see how the fight over the CR plays out before voting on a debt-ceiling package. In this scenario, unified Democratic opposition forces Republicans to swallow a government funding bill they deem less-than-satisfactory, House Republicans will certainly counter by increasing their demands for reform when it comes to the debt-ceiling legislation. For the moment, House Republicans will take up the Senate-passed CR — which will arrive in the House at some point Friday — amend it, and send it back across the Capitol. They will likely attach language to prohibit a federal payments for health care for members of Congress and their staff. Also under under consideration are provisions to delay Obamacare’s individual mandate for a year or repeal the medical device tax, which was part of the Affordable Care Act." Jake Sherman and John Bresnahan in Politico.

@thegarance: There's a certain air of the Boy Who Cried Wolf in govt shutdown negotiations. Hard to believe it's really gonna happen now--and yet it may.

Obama’s line in the sand is on the debt ceiling. "On Thursday, Obama categorically rejected the Republican demand that he roll back the Affordable Care Act in order to keep the government open and also refused to entertain negotiations on raising the debt ceiling. Both positions, a centerpiece of his strategy this fall, are striking for a president who has made his willingness to meet the opposition “more than halfway” a defining characteristic of his political persona. Obama gave in on a key feature of his health-care plan in 2010 — a public insurance option — and engaged in a lengthy negotiation over the debt ceiling in 2011. But in his remarks Thursday, Obama said Republicans were trying “to blackmail” him over the health-care law and pledged that he would have none of it." Zachary A. Goldfarb in The Washington Post.

Dems: No Obamacare concessions. "The Democratic leadership team said time and again Thursday that they will only accept a clean continuing resolution, which is precisely what the Senate is set to send back to the House by Saturday. Senate Majority Leader Harry Reid (D-Nev.) will strip out Obamacare defunding language passed by the House last week and send the bill back to the House no later than Saturday, though senators are seeking to move even more quickly but have yet to break through on an expedited time agreement. Reid refused to say whether he would accept a one-week continuing resolution from House members, which could be a last-minute safety valve if the two chambers can’t agree on a longer solution." Burgess Everett in Politico.

Government shutdown would entail costs. "A government shutdown would hinder the economy, waste billions of dollars in federal funds and put a scare in the markets, according to experts. It’s already causing a slowdown in normal operations for agencies and businesses. The Office of Management and Budget estimated in 1996 that the two closures in that fiscal year, which lasted 26 days total, cost the government $1.4 billion, or roughly $2.1 billion in today’s dollars...Most of the cost was a result of Congress granting back pay to federal employees who did not work during the closure, but some of it came from the financial toll of winding down operations and ramping them up again, according to a 1997 report by University of Maryland Baltimore County political scientist Roy T. Meyers. Meyers’s report has been cited by the Congressional Research Service." Josh Hicks and Marjorie Censer in The Washington Post.

@ByronTau: Free protest idea: If federal shutdown also shuts down D.C. government, drop your municipal trash off at the Capitol.

The shutdown would also take away our precious economic data. "The nation's statistical agencies are preparing to downsize economic reports tracking local economies and foreign investment in the U.S., as part of a new wave of budget cuts that is forcing the agencies to re-evaluate how they allocate resources in order to maintain the most prominent economic data...[U]nless Congress changes course, the Commerce Department's Bureau of Economic Analysis plans to eliminate parts of its research and analysis on foreign direct investment, data that are used to track flows of foreign capital into the U.S. The move will eliminate, for example, articles of analysis on the data in the BEA's news publication. Also on the chopping block are some data on county-level transfer payments made by federal programs such as Social Security, Medicare and Medicaid." Jonathan House and Sarah Portlock in The Wall Street Journal.

Sorry, Chris Matthews: Tip O’Neill and Ronald Reagan were terrible at averting shutdowns. "Matthews argues that O'Neill and Reagan's relationship represented a now-gone era of bipartisan cooperation, where things got done. "During this period, government met its deadlines," Matthews writes. "Members of Congress listened and acted. Debates led to solutions. Shutdowns were averted." The government shut down seven times when O'Neill was speaker and Reagan was president. And they were real shutdowns, too." Dylan Matthews in The Washington Post.

KLEIN: Don’t just raise the debt ceiling. Get rid of it forever. "As the debt-ceiling debate gets even more ludicrous, the need to defuse the debt-ceiling bomb forever becomes even more pressing. The basic idea comes from a most unlikely source: Senate Minority Leader Mitch McConnell (R), who proposed in July 2011 to permit the president to unilaterally raise the debt ceiling unless Congress affirmatively voted to stop him. And even if Congress did vote to stop him, the president could veto, and then Congress would need to overturn his veto." Ezra Klein in The Washington Post.

@AmyAHarder: Quiz! Which of these 3 does Congress want to avoid the most? A. Default. B. Government shutdown. Or C. Helium shortage.

KLEIN: The falling deficit has been a disaster for the GOP. "There was a logic to Republicans' 2011 debt-ceiling demands. It was the logic underpinning the party's entire platform. It was the argument that had won them the 2010 election. And it was an argument that made sense as part of negotiations over the debt ceiling. Deficits exploded during the financial crisis...They negotiated spending cuts before they would agree to a debt-ceiling increase. But then something terrible happened to the Republican Party: Success." Ezra Klein in The Washington Post.

KUMAR: How Republicans can win the debt fight. "Fortunately for Republicans, there is a way out that would give them the upper hand in future debates, too. And it has nothing to do with Obamacare...These talks have a rhythm, and what we’re seeing now is a predictable pre-negotiation alignment by the two sides...Both sides could be satisfied with a debt ceiling increase of about $1 trillion --an amount sufficient to get past the 2014 elections --accompanied by an agreement to enact revenue-neutral tax reforms that broaden the base and lower rates. These steps could provide a significant boost to the economy." Rohit Kumar in Bloomberg.

BALZ: Looking to block Obamacare, GOP is party in search of a strategy. "Congressional Republicans have become a party of grievances in search of a strategy...Their anger has welled up to force GOP leaders to respond with ever-riskier strategies to delay, defund or in some other way disrupt the imminent implementation of the [health care] legislation...Republicans clearly lack the votes to win the first battle that will play out through the weekend. Whether they have the will and the unity to take the debt ceiling issue to the brink remains unclear. Right now they are scrambling by the hour, with no clear road map to guide them." Dan Balz in The Washington Post.

LEVINE: Why does anyone buy credit default swaps against the US? "CDS contracts are full of structural nonsense! The main piece of structural nonsense is the cheapest-to-deliver option: When a government defaults, the CDS contract allows its owner to deliver any bond of that government and get back 100 minus the value of that bond...[T]he entire value of a CDS contract on the U.S. government is made up of the value of that cheapest-to-deliver option...The thing is that this option doesn't require a massive, "real" government default. The CDS contract will trigger if the government misses a payment on any Treasury bill or note...Once it triggers, the CDS procedures go into effect, an auction is held, CDS holders get paid off, and the cheapest-to-deliver option becomes valuable...Simplistically speaking, the fact that a bet that pays off $17 costs about $0.30 suggests that the CDS market prices the probability of a temporary default at around 2 percent." Matt Levine in Bloomberg.

Music recommendations interlude: Tom Petty and the Heartbreakers, "I Won't Back Down," 1989.

Top opinion

BESHEAR: My state needs Obamacare now. "[W]hy then is Kentucky — more quickly than almost any other state — moving to implement the Affordable Care Act? Because there’s a huge disconnect between the rank partisanship of national politics and the outlook of governors whose job it is to help beleaguered families, strengthen work forces, attract companies and create a balanced budget...That is especially true in Kentucky, a state where residents’ collective health has long been horrendous. The state ranks among the worst, if not the worst, in almost every major health category, including smoking, cancer deaths, preventable hospitalizations, premature death, heart disease and diabetes. We’re making progress, but incremental improvements are not enough. We need big solutions with the potential for transformational change. The Affordable Care Act is one of those solutions." Steve Beshear in The New York Times.

KENWORTHY: What's wrong with predistribution. "There is much to like in the predistribution approach as I’ve sketched it here, and a full-scale pursuit of its more promising elements would undoubtedly do some good. In the near term, this might be the wise course of action. That’s particularly true in the UK, where it’s unclear whether the wage stagnation of 2003–07 was a harbinger of future trends or merely an aberration. In the long run, however, I’m sceptical that predistribution will be up to the task. The pressures militating against wage growth in lower-half jobs are strong, and in all likelihood they will grow even stronger. We may need to do more. Fortunately, we have another option. Public insurance is a widely used tool for mitigating economic and social risks." Lane Kenworthy for the Institute for Public Policy Research.

KRUGMAN: Plutocrats feeling persecuted. "Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality — namely, the rise of a small but powerful group of what can only be called sociopaths...[S]uch publicly reported statements don’t come out of nowhere. Stuff like this is surely what the Masters of the Universe say to each other all the time, to nods of agreement and approval. It’s just that sometimes they forget that they’re not supposed to say such things where the rabble might learn about it. Also, notice what both men were defending: namely, their privileges." Paul Krugman in The New York Times.

KLEIN: Ted Cruz Republicans listen only to themselves. "The theme of Ted Cruz’s filibuster this week was “Make D.C. Listen.” But Cruz himself doesn’t listen; he talks. And talks. And talks. It’s no wonder the Texas senator can’t hear what the public is actually saying...Public opinion on Obamacare is complicated but generally consistent. The law is unpopular. But a solid majority wants the Republican sabotage to end." Ezra Klein in Bloomberg.

COHN: Why Obamacare was worth it. "If you’re going to judge Obamacare, you can’t do it by looking simply at the minuses or the pluses, as even its advocates are prone to do. You need to look at the whole thing—to see what’s getting better and what’s getting worse. And you can’t do that until you ponder a question few bother to ask: What would the United States look like today if Obamacare hadn’t become law?...One reason Obamacare is so complicated is that it’s full of compromises. The architects had to win votes from rural and conservative lawmakers, satisfy or at least mollify members of the health care industry, and deal with the public’s frequently conflicting impulses. If Republicans ever tried to enact something like the Republican Study Committee proposal—or any other conservative proposal—they’d have to make a whole other set of compromises. The likely result would be a law that looks a lot less appealing than what they are talking about now." Jonathan Cohn in The New Republic.

WOLFERS: Where is the panic over deflation? "The Bureau of Economic Analysis has revised its estimates for the personal consumption expenditures price index. It's an important number, because this is the index the Federal Reserve targets. And remember, it's aiming for inflation of 2 percent. Instead, the index fell in the second quarter. That is, the U.S. is experiencing deflation...[I]t's striking that the Fed's preferred price measure is declining at a time when the main conversation among policy makers is when and how to tighten monetary policy, rather than to make it more accommodative." Justin Wolfers in Bloomberg.

Wonkbookmark interlude: This site lets you explore nearly every single constitution in the world.

2) Is Obamacare deferring failure or using delay to suceed?

Part of Obamacare’s small-business exchanges to be delayed. "Small-business health exchanges run by the federal government will not open for online enrollment until November, the administration said Thursday. But applicants may still enroll by phone, mail or fax beginning Oct. 1...Instead of a live application, the federal government will post a PDF version on Tuesday. Applications will still be taken by phone, mail and fax. Sometime in October, a live application will go up on the Web, the administration said." Sarah Kliff in The Washington Post.

Obama defends health-care law, calling health insurance ‘a right.’ "President Obama offered a ringing defense of his signature health-care law Thursday amid what he called increasingly “irresponsible” Republican tactics to undermine it, ruling out changes as long as he is in office. Traveling to Prince George’s Community College just outside the Capital Beltway, Obama made a moral argument, as well as an economic one, for legislation that will help define his domestic record for history. He said health insurance is now a “right” in the United States, not a benefit available only to those who can afford it." Scott Wilson and Ovetta Wiggins in The Washington Post.

Obama's legacy lives and dies with Obamacare. "President Barack Obama long has pointed to the Oct. 1 rollout of the Affordable Care Act's exchanges as a consequential date for the country. It also is a pivotal moment in his presidency, as the effectiveness of the law likely will shape how history views the Obama administration. While Republicans and Democrats diverge on the merits of the legislation that has come to be known as Obamacare, many from both parties say the president's legacy is on the line." Colleen McCain Nelson in The Wall Street Journal.

Firms are dropping 'mini-med' health insurance plans like it's hot. "Analysts have long speculated that the launch of the insurance exchanges could prompt some employers to drop health coverage. But benefits consultants said they know of few companies now providing insurance that won't offer it to full-time workers next year.In July the Obama administration may have inadvertently opened a window for some companies to drop coverage by imposing a yearlong delay on penalties for employers that don't offer health insurance...Mini-meds are most common in low-wage industries such as retailing, restaurants and agriculture. They are relatively cheap, with premiums around $100 a month or less, depending on their scope." Scott Thurm in The Wall Street Journal.

At $144 a month, Minnesotans will have the cheapest low-cost premium under Obamacare. "In Minnesota, the cheapest bronze plan will cost an average of $144. In Oklahoma, it will be $174. Tennessee is next with a $181 premium, followed by Maryland and Kansas where premiums next year are predicted to cost $197. Wyoming’s cheapest bronze plan will come with the costliest average premium at $425. Alaska’s is estimated at $385 and Mississippi’s is predicted to be $342. Connecticut is next with a $340 premium, followed by Vermont at $336." Niraj Chokshi in The Washington Post.

Feature: How eight lives would be affected by the health lawSarah Kliff, Sandhya Somashekhar, Lena H. Sun and Karen Tumulty in The Washington Post.

Excerpts -- Life under Obamacare: ‘My boss said to tough it out.’ "Towson resident Aniela Russo vividly remembers how it felt to have a heart attack: It was January 2012 and she was working as a make-up artist at a charity benefit. “I wasn’t feeling well, I had numbness in my right arm, I felt really fatigued,” she said. “I was one of the senior make-up artists there and my boss said to tough it out.” The middle-aged single mother of three had heart bypass surgery that Valentine’s Day, and since then has had multiple surgeries for a genetic heart condition. Russo is unemployed, and she and her two youngest children are covered by Medicaid. But Russo is about to go back to work as a self-employed real estate agent, and her income will probably rise enough that she will be ineligible for Medicaid." Sarah Kliff in The Washington Post.

Life under Obamacare: ‘I don’t have it. But I’m not crying.’ "Fatima Abukar has not had health insurance since arriving in the United States from Somalia a decade ago. The health law won’t change that. She is one of millions of people too poor to benefit from Obamacare. Abukar, a legal resident, used to work at a nonprofit thrift store, but now relies on her children, with whom she lives, for financial support. She takes 10 medications, paid for by her family and nonprofit organizations, for chronic conditions including asthma, gastric ulcers, high cholesterol and knee and back pain. She wears five-year-old glasses with scratched lenses and a broken hinge." Sarah Kliff in The Washington Post.

Debate: Is Obamacare workingThe New York Times.

Watch: Obamacare explained in two minutesSarah Kliff in The Washington Post.

Could Obamacare add more Democrats to the voter rolls? Yup. "Republicans have plenty of reasons to dislike Obamacare already, but they haven’t focused on one that could affect them in 2014 and beyond: anyone signing up for insurance under the Affordable Care Act will also have a chance to register to vote...According to Centers for Medicare and Medicaid Services spokesman Brian Cook, applications in the insurance marketplace must include the offer of voter registration because the law “requires states to offer voter registration [at] all offices that provide ‘public assistance’ (including Medicaid applications). Because people applying on healthcare.gov could be eligible for either Medicaid or Marketplace coverage, we will be providing info on voter registration to people who request it.”" Juliet Eilperin and Scott Clement in The Washington Post.

And you thought you had seen it all interlude: Professional shooting's world record.

3) Kocherlakota vs. Stein on monetary policy

Fed official: It is time for resolve in fighting unemployment. "Narayana Kocherlakota is one Federal Reserve policymaker who's had a very interesting intellectual journey over the last three years...His journey to the dovish end of the Fed spectrum culminated Thursday with a speech that puts him among the intellectual leaders of the faction within the central bank that wants to move most aggressively to boost the U.S. economy. It is "A Time of Testing," Kocherlakota said, invoking a line from Paul Volcker...The U.S. economy has the opposite problem now: too-high unemployment and too-low inflation. But Kocherlakota is arguing that, again, resolve by the central bank is the solution." Neil Irwin in The Washington Post.

The Fed's confusing search for clarity. "The Federal Reserve wasn’t trying to surprise investors last week, it’s just not doing a good job of communicating clearly, Jeremy C. Stein, a Fed governor, said Thursday. Indeed, Mr. Stein said that articulating a clear plan for winding down the Fed’s monthly bond purchases was more important than the exact timing of tapering...And he came prepared with a suggestion: The Fed, he said, should cut the volume of its monthly bond purchases by a fixed amount from the current level of $85 billion for each 0.1 percentage point decline in the unemployment rate." Binyamin Appelbaum in The New York Times.

...Jeremy Stein would make a great No. 2 at the Fed. This speech shows why. "There's one name that several Fed watchers, who I have spoken to since Yellen became the clear favorite for chairman, have independently mentioned as a logical contender to be Yellen's No. 2: Jeremy Stein, a Harvard economist who was appointed to the board of governors in 2012 by Obama. A speech he gave Thursday in Germany shows why, but more on that in a bit. In 16 months at the Fed, Stein has established himself as a thoughtful examiner of the interplay between the Fed's monetary policies and financial markets...If he were named vice-chair, that would make him a bit of a hawkish counterweight to Yellen, who has been the leader of the Fed's dovish wing, pushing Bernanke and other colleagues to do whatever it takes to reduce unemployment." Neil Irwin in The Washington Post.

...But a majority of Americans doubt current monetary policies. "Only one in three Americans has confidence in the Federal Reserve’s ability to promote economic growth, while little more than a third think the Fed is spinning its wheels, according to a New York Times/CBS News poll. The remaining respondents said they did not know enough to answer." Binyamin Appelbaum in The New York Times.

Why the labor market looks a little worse today. "Today’s announcement sounded positive if you did not study it, and some news reports reflected that misreading of it. “The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2013 total nonfarm employment of 345,000 (0.3 percent),” said the Labor Department’s announcement. But then it explained that all of that gain, and more, came from changing definitions, not new jobs...[N]ow it has revised its definitions, and decided that “establishments that provide nonmedical, home-based services for the elderly and persons with disabilities” should be classified as health care companies. “Many of these establishments were previously classified in the private households industry,” it said. That added 490,000 workers to the total reported number for last March. On an apples-to-apples basis, however, the result is to reduce job growth in the 12 months through last March by 124,000. The old numbers indicated that job gains in those 12 months averaged 169,000 per month. This change will shave that figure to 159,000." Floyd Norris in The New York Times.

...On the other hand, these two charts show why the U.S. economy is ready for a rebound. "[T]wo key underlying trends point to better days ahead, argue economists at consulting firm IHS Global Insight...First, household formation is heading up nicely – people who bunked with parents, put their marriage plans on hold or stayed in that ratty apartment with three college friends are apparently spreading their wings...Second, households have largely tackled their debt problems – or are at least on the path to doing so. A debt profile poised for disaster – at an average of more than 130 percent of household disposable income – is quickly heading below 100 percent, good news for consumer spending." Howard Schneider in The Washington Post.

Yeah, well, pending home sales keep falling. Not a great sign. "The number of Americans signing contracts to buy previously owned homes fell in August for the third consecutive month, more evidence that higher mortgage rates are restraining the housing-market recovery. But new filings for unemployment benefits dropped to a six-year low last week, offering hope that the labor market is withstanding turbulence from volatile interest rates and uncertainty from Washington. The National Association of Realtors on Thursday said its seasonally adjusted index for pending sales of existing homes fell 1.6% from a month earlier to a reading of 107.7 in August. An index of 100 roughly coincides with annual existing-home sales around 5.3 million." Jeffrey Sparshott in The Wall Street Journal.

...And revisions for Q2 GDP growth came in: 2.5 percent. "The U.S. economy expanded at a 2.5% pace in the second quarter, the government's latest estimate for the period showed Thursday, reflecting stronger performance by businesses and local governments ahead of a rockier second half of the year...Economists had forecast a revised second-quarter growth pace of 2.8%." Sarah Portlock in The Wall Street Journal.

...Also, jobless claims are chillin' near six-year lows. The data is still of unclear quality, though. "Initial jobless claims, a proxy for layoffs, decreased by 5,000 to a seasonally adjusted 305,000 in the week ended Sept. 21, the Labor Department said Thursday. That was lower than economists' forecast of 330,000 new claims and pushed the four-week moving average of claims down to 308,000, the lowest level since June 2007. A Labor Department analyst said data for previous weeks has been brought up to date after underreporting of claims by California and Nevada and that "no special factors" affected the data for the week ended Sept. 21." Jonathan House in The Wall Street Journal.

SEC making a ‘subtle shift’ in its pursuit of individuals. "Wall Street’s top cop said Thursday that her agency is sharpening its focus on individual wrongdoers and making a “subtle shift” in the way it pursues them. Securities and Exchange Commission Chairman Mary Jo White said she has asked her enforcement staff to start probes, when possible, by first taking a hard look at the people suspected of misdeeds within a company, and not just the company itself." Dina ElBoghdady in The Washington Post.

No rush to ink trade deal with Asia, US says. "The top U.S. trade official brushed aside concerns from the business community that Washington is pushing too hard to wrap up a trade pact with Asian and Pacific countries this year. "I don't think we're rushing into anything," U.S. Trade Representative Michael Froman said Thursday at a breakfast sponsored by the Christian Science Monitor. The U.S. has made plenty of progress during the 19 rounds of formal talks on the potential trade deal, as well as during an informal gathering of top negotiators in recent days...Some business and labor groups have complained that the U.S. goal of wrapping up talks with 11 other nations this year on the Trans-Pacific Partnership could lead to compromises on a range of issues important to Americans. Nine business associations, including the U.S. Chamber of Commerce, last week published an advertisement in The Hill newspaper urging negotiators to redouble their efforts to achieve a higher "level of ambition" in the negotiations." William Maudlin in The Wall Street Journal.

Ooh the future is awesome interlude: "First Bionic Leg Allows Mind to Control Movement in Study."

4) How to rein in the NSA

Sen. Feinstein unveils her own bill to reform the NSA’s spying practices. "Wednesday, a handful of lawmakers led by Sen. Ron Wyden (D-Ore.) unveiled a bill that would end the collection of American metadata en masse and make it easier to sue the government for civil liberties violations, among other provisions. Now the leaders of the Senate Intelligence Committee are proposing a bill of their own. Backed by NSA defender Sen. Dianne Feinstein (D-Calif.), this bill is likely to be weaker than Wyden's, but is still aimed at improving transparency at the agency responsible for gathering call records from millions of Americans." Brian Fung in The Washington Post.

Senators push to preserve NSA surveillance. "Ms. Feinstein, speaking at a rare public hearing of the committee, said she and the top Republican on the panel, Senator Saxby Chambliss of Georgia, are drafting a bill that would be marked up — meaning that lawmakers could propose amendments to it before voting it out of committee — as early as next week...[A] rival bill drafted by skeptics of government surveillance, including two members of the committee, Senators Ron Wyden of Oregon and Mark Udall of Colorado, would ban the mass call log collection program. That more extensive step is unlikely to pass the committee. Ms. Feinstein contended that “a majority of the committee” believed that the call log program was “necessary for our nation’s security.”" Charlie Savage in The New York Times.

Here’s how Ron Wyden wants to rein in the NSA. "The legislation's text has not been released yet, but here's what the senators say they hope to accomplish: End bulk collection of Americans' communications records...Limit the legal authority for the PRISM program...Reform the secret surveillance court...The Wyden bill would require declassification of significant opinions by the FISC. It would also name an independent constitutional advocate who would "argue against the government when the FISC is considering significant legal and constitutional questions," according to a bill summary provided by the senators." Timothy B. Lee in The Washington Post.

Markets in everything interlude: "The True Story Of The Great Marijuana Crash Of 2011."

5) UN releases climate report

The science of global warming has changed a lot in 25 years. The basic conclusions haven’t. "The Intergovernmental Panel on Climate Change (IPCC) will begin releasing its massive new synthesis of climate science early Friday morning.* The report, six years in the making, is widely considered the best summary of what we know about climate change. Yet, in some ways, what's most striking is how little the report is expected to alter our broad understanding of global warming. This is, after all, the fifth assessment report that the IPCC has put out since 1990. And the main message hasn't shifted all that radically over the last 25 years. There have been new advances in key areas, from climate history to predicting the effects of sea-level rise. But the core point — that humans are heating up the planet significantly — has stayed remarkably consistent over the past quarter-century." Brad Plumer in The Washington Post.

Explainer: How the Obama administration could hit its climate target, in 1 chartJuliet Eilperin in The Washington Post.

While Keystone XL still enjoys broad approval, issue divides Democrats. "[A] Pew Research Center poll released Thursday finds Americans’ broad support for the project has not wavered even as the issue continues to fracture the Democratic Party’s liberal and moderate wings. The survey finds a public of two minds on energy issues: Americans have a clear preference for expanding alternative energy over fossil fuels – by a 58 to 34 percent margin, and they support curbing greenhouse gas emissions from power plants. But they take a piecemeal approach to policies that boost fossil fuel production, supporting some while opposing others." Scott Clement and Juliet Eilperin in The Washington Post.

Obama looking to replace energy commission nominee. "[A] major fight has been brewing for many weeks over President Obama’s nomination of former Colorado utility regulator Ron Binz to chair the five-member commission. An array of energy trade groups are strongly against him, and a key Senate Energy and Commerce Committee Democrat, Sen. Joe Manchin (W.Va.), has said he won’t vote for him. Although the White House continues to publicly support him, Energy and Natural Resources spokesman Keith Chu said Thursday: “The committee is aware that other candidates are being considered for FERC.”" Al Kamen in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

A bachelor’s degree could cost $10,000 — total. Here’s howDylan Matthews.

The global upper class makes 32 times as much as the global lower classDylan Matthews.

The formal arts are in freefall. But that’s not the end of the storyLydia DePillis.

Life under Obamacare: ‘I don’t have it. But I’m not crying.’ Sarah Kliff.

China’s plan to clean up air pollution could be a climate disasterBrad Plumer.

Fed official: It is time for resolve in fighting unemploymentNeil Irwin.

Jeremy Stein would make a great No. 2 at the Fed. This speech shows whyNeil Irwin.

The global upper class makes 32 times as much as the global lower classDylan Matthews.

These two charts show why the U.S. economy is ready for a reboundHoward Schneider.

Don’t just raise the debt ceiling. Get rid of it foreverEzra Klein.

Part of Obamacare’s small-business exchanges to be delayedSarah Kliff.

The falling deficit has been a disaster for the GOPEzra Klein.

Sorry, Chris Matthews: Tip O’Neill and Ronald Reagan were terrible at averting shutdownsDylan Matthews.

Obamacare, explained in two minutesSarah Kliff.

Life under Obamacare: ‘My boss said to tough it out.’ Sarah Kliff.

The science of global warming has changed a lot in 25 years. The basic conclusions haven’tBrad Plumer.

The Washington Post picked its top American Communists. Wonkblog begs to differDylan Matthews.

Et Cetera

Wonkbook believes David Fahrenthold has one of the best series going in political reporting: federal waste. His latest story -- "Federal employee Mike Marsh’s mission: Getting himself fired, and his agency closed." David A. Fahrenthold in The Washington Post.

The story you'd have otherwise missed: Many big cities face serious pension debt, report says. Michael A. Fletcher in The Washington Post.

Immigration advocates announce plans for demonstrations across countryDavid Nakamura in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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Dylan Matthews | September 26, 2013