Wonkbook: The GOP rewrites its ransom note

October 9, 2013

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Sen. Ted Cruz, R-Texas, center, accompanied by Sen. Marco Rubio, R-Fla., left, and Sen. Mike Lee, R-Utah, right, express their frustration after the Senate passed a bill to fund the government, but stripped it of the defund "Obamacare" language as crafted by House Republicans, Friday, Sept. 27, 2013, on Capitol Hill in Washington. The Republican-controlled House and the Democrat-controlled Senate are at an impasse as Congress continues to struggle over how to prevent a possible shutdown of the federal government when it runs out of money in three days. (AP Photo/J. Scott Applewhite)
Sen. Ted Cruz, R-Texas, center, speaks to the press in this Sept. 27 photo.(Photo by/J. Scott Applewhite/AP)

Two issues led to the shutdown. One was defunding or delaying Obamacare. The other, as Sen. Ted Cruz put it, was "making D.C. listen."

What's been remarkable -- and largely unnoticed -- is that Republicans have abandoned both those demands. But that hasn't led them to reopen the government -- much less swear off a debt-ceiling crisis. So the hostage remains even as the GOP rethinks and rewrites its ransom note.

"It is time, quite simply, to make D.C. listen," Cruz said during his 21-hour filibuster. But Cruz isn't listening to America. Fox News's Megyn Kelly confronted him about this on Monday night:

KELLY:: There is a poll that's just out tonight from Politico Senator show that your numbers with the American people aren't that great. I will show you. This has been released at 9:00 p.m. Eastern. Favorability are rating 26 percent, 45 percent have an unfavorable opinion of you, 29 percent say they aren't sure. So, the question is whether you are costing yourself and the GOP.

CRUZ: Well, I haven't seen the particular poll you are referencing. But I can tell you, at the end of the day, it doesn't matter.

"At the end of the day, it doesn't matter.' Does that sound like someone who's listening to America?

I asked Ted Cruz's office about this on Tuesday. They pointed out that Politico's poll is only of Virginia voters, which is fair enough. But other polls have shown overwhelming national majorities opposed to Cruz's campaign to shutdown the government in order to defund or delay Obamacare. His office says the shutdown is the Democrats' fault because they won't compromise on Obamacare. Cruz isn't listening. He's messaging.

The Republican Party is little better. For all the talk over how unpopular Obamacare is, the congressional GOP, at this point, is much less popular than Obamacare, with a 24 percent approval rating and a startling 70 percent disapproval rating. According to the latest Washington Post/ABC News poll, that's gotten worse since the shutdown. But they haven't reopened the government.

So much for following the will of the people. What's odder about the shutdown, though, is that Republicans have also abandoned their core policy demand. They've largely stopped talking about Obamacare. They're begging simply for negotiations. Their latest plan, in fact, is for another budget commission:

The GOP’s play, announced by Cantor at the meeting, is to push for a bicameral commission that brought comparisons to the “supercommittee” from the 2011 Budget Control Act.

In a Wall Street Journal op-ed, Paul Ryan articulates the emerging strategy. "To break the deadlock, both sides should agree to common-sense reforms of the country's entitlement programs and tax code," he writes. The word "Obamacare" never appears in the piece. Nor does any other reference to the president's health-care law.

The Republican Party initially justified this shutdown and these tactics to itself by arguing that it was channeling the will of the people and justified by the dangers of Obamacare. But they've lost pubic opinion and realized Obamacare isn't up for negotiation. But the loss of their original rationale for the shutdown hasn't led them to reopen the government. So now, as Rep. Martin Stutzman truthfully but unfortunately put it, they're just trying “to get something out of this." They don't know what they want except for something that lets them argue they didn't lose.

Wonkbook's Number of the Day: 8. That's how many lawmakers were arrested in a pro-immigration protest yesterday.

Wonkbook's Graph of the Day: The terrifying price movements in the market for Treasury bills.

Wonkbook's Quotes of the Day: "These are the kinds of people who get eaten by bears," said one senior administration official back in 2011 of House Republicans who were denying the risks of the debt ceiling.

One more: “If anybody tells you it’s clear to anybody let me know,” said Rep. Pete Sessions of how to avoid default and end the shutdown. “I’ll call them collect.”

Wonkblog's Daily Default Dashboard: Is looking slightly worse than yesterday.

Wonkbook's Top 5 Stories: 1) a political crisis for now, but a financial crisis, eventually; 2) it's Yellen; 3) where the exchanges are working; 4) 8 lawmakers arrested in immigration protests; and 5) exporting the oil boom.

1) Top story: Markets begin to get debt-ceiling jitters

Obama renews calls on Congress to end shutdown, raise debt limit. "President Obama, declaring that he is “not budging” on his demand for a debt-limit increase without partisan strings attached, warned Tuesday that there are “no magic bullets” to avoid a devastating default if the ceiling is not raised, and he challenged House Republicans who believe otherwise to go on record by voting on the matter. If a debt-ceiling increase fails “and we do end up defaulting,” Obama said in an afternoon news conference, “I think voters should know exactly who voted not to pay our bills, so that they can be responsible for the consequences that come with it.” Shortly afterward, House Speaker John A. Boehner (R-Ohio) complained to reporters that Obama was demanding “unconditional surrender” by Republicans before he would talk to them. Speaking hours after he and Obama talked on the phone to reiterate their positions, Boehner said he was “disappointed that the president refuses to negotiate.” He insisted that the House will not vote to reopen the government or raise the federal debt limit without unspecified concessions by Obama to curtail federal spending." Ed O’Keefe, Paul Kane and Zachary A. Goldfarb in The Washington Post.

Transcripts: President Obama’s Oct. 8 news conference on the shutdown and debt limit. And House Speaker John Boehner’s statement on the shutdown and debt limitThe Washington Post.

More primary sources: Obama and Boehner spoke this morning. Their summaries of the call are…differentEzra Klein in The Washington Post.

Glenn Thrush's theory of the press-conference questions. "President Barack Obama called on 11 reporters today during his hour-long press conference today. Notably, only one represented a major network (CBS News' Mark Knoller), while many came from news outlets that often go ignored, like Huffington Post, or business-focused outlets like Bloomberg and Financial Times...@GlennThrush: If you want to know who Obama's trying to fire up, look at who he's calling on: Big biz (Bloomberg), the left (HuffPo)." Hadas Gold in Politico.

As debt-limit deadline nears, investors show growing concern about a U.S. default. "Short-term borrowing by the Treasury Department became twice as expensive Tuesday as it had been the day before, one of the most significant signs of alarm in the bond markets since the financial crisis of 2008...The stock market, meanwhile, continued the steady slide that began in mid-September, when Boehner (R-Ohio) embraced a right-wing strategy for using the budget battles to try to dismantle Obama’s signature health-care initiative. The Standard & Poor’s 500-stock index fell 20.67 points to 1,655.45 on Tuesday." Lori Montgomery and Zachary A. Goldfarb in The Washington Post.

@mattyglesias: Best analogy for the debt ceiling—it’s as if your country needs to sell more bonds to avoid financial catastrophe, but you won’t let it.

What’s happening in the Treasury bill market today should terrify you. "[I]n the less widely followed -- but in many ways more important -- market for Treasury bills, things are starting to get scary...[T]he possibility that the Treasury might have trouble paying or might not be able to pay its bills over the next few weeks has grown -- and the interest rate has skyrocketed. It was at 0.16 percent at Monday's close. On Tuesday the rate so far has been almost double that, as high as 0.297 percent." Neil Irwin in The Washington Post.

...Money funds avoid some U.S. debt on fear of repayment delays. "The $2.66 trillion money market industry is preparing for the worst as lawmakers in Washington battle over the U.S. debt ceiling. The funds, including those run by PIMCO, Federated Investors Inc and the largest money fund sponsor - Fidelity Investments - are shying away from government debt that matures in the next few months and keeping more cash on hand to help them withstand any delays in the U.S. paying its creditors." Tim McLaughlin and Ross Kerber in Reuters.

Interview: Harvard political scientist Theda Skocpol on how business doesn't control RepublicansEzra Klein in The Washington Post.

Many Republicans think that default wouldn't be a disaster. "As President Obama steps up his declarations about the dire consequences of not raising the debt limit, increasing numbers of Congressional Republicans are disputing that forecast, as well as the timing of when the Treasury might run out of money and the implications of a default, further complicating the negotiating situation for both Mr. Obama and Speaker John A. Boehner, who must find a way out of the impasse. Both men were counting on the prospect of a global economic meltdown to help pull restive Republicans into line. On Wall Street, among business leaders and in a vast majority of university economics departments, the threat of significant instability resulting from a debt default is not in question. But a lot of Republicans simply do not believe it. A surprisingly broad section of the Republican Party is convinced that a threat once taken as economic fact may not exist — or at least may not be so serious." Jonathan Weisman in The New York Times.

List: Here are those RepublicansBrad Plumer in The Washington Post.

...They should call those worrywarts at the FDIC. "The Federal Deposit Insurance Corp. cautioned Tuesday that banks need to be on guard for risks tied to the current fiscal standoff, saying a slowdown in the U.S. economy or an increase in borrowing rates could constrain liquidity or lead to an increase in bank failures." Michael R. Crittenden and Ryan Tracy in The Wall Street Journal.

@LorcanRK: So, Premium Bonds > 14th amendment > Coin. Not sure anymore where "having a vote and raising the debt ceiling" fits into that function.

...And should talk to every finance minister of every other country. "Top U.S. officials are expected to get an earful this week at a gathering of foreign finance ministers and central bankers, with global concern spreading that political gridlock in Washington would result in the U.S. not making good on its financial obligations. The International Monetary Fund and the World Bank will host top economic officials from around the world in Washington beginning Thursday for several days of talks, and the U.S. situation will be a primary focus. IMF leaders have already warned that a U.S. failure to pay its bills after not raising the debt ceiling would be "catastrophic."...Leaders from Japan, China, Switzerland and Singapore in recent days have called on Washington to resolve its impasse and raise the borrowing limit. Foreign governments hold close to $6 trillion in U.S. government debt." Damian Paletta and Ian Talley in The Wall Street Journal.

@morningmoneyben: What if the debt ceiling is a false flag?

...And even if Treasury were to prioritize, we'd still have one awful recession on our hands. "Economists at Goldman Sachs Group Inc., IHS Inc. and BNP Paribas SA said they expect the Treasury to husband the tax money it collects to make sure it can meet interest and principal payments on the nation’s debt. Other obligations, from salaries of government workers to payments to defense contractors, would face the ax. The result: $175 billion less in government spending during November alone, said Goldman’s Alec Phillips in Washington." Rich Miller and Shobhana Chandra in Bloomberg.

But mainly, Republicans just have no idea where they're going with this. "A reality is beginning to dawn on — and eat away at — many House Republicans: They aren’t at all sure of their party's strategy to re-open government and lift the debt ceiling. After forcing leadership to pick a fight it didn’t want to pick, sitting through hours of meetings with lots of internal hand-wringing and failing to force Democrats to negotiate, the path to avoid a prolonged government shutdown and the first debt default in American history is completely uncertain...Boehner, for the time being, is playing it cool. He has told Republicans in closed sessions and in conversations on the House floor that he has “something up his sleeve.”" Jake Sherman in Politico.

@davidfrum: DC life: My 11 YO came downstairs in mid dinner party to announce she couldn't sleep because she was scared about the debt ceiling

Congress is trying to reopen the federal government agency by agency. "[It] is [an] odd, gaptoothed version of the U.S. government that the House GOP has sketched out over the past eight days in a series of spending bills that would reopen departments and agencie sone piece at a time. The House has passed 11 bills, each funding just one agency or a handful of them. Eight more are in the works...But, in the process, House Republicans have revealed something about themselves: The party of small government is struggling — mightily — to decide how much government it actually wants." David A. Fahrenthold and Ed O'Keefe in The Washington Post.

@chrislhayes: I think odds of some kind of one month (or shorter) CR/Debt Ceiling increase are approaching 100%.

What's next in the shutdown showdown? "With barely a week until the next big deadline — when the federal government runs the risk of not being able to meet its debt obligations — Congress appears to be preparing for several more days of partisan posturing accompanied by no signs of negotiations to solve the ongoing fiscal crises...The chamber will come into session about 10 a.m. Most committee hearings have been postponed because the shutdown has left little administrative staff in place to conduct the hearings. By early afternoon, the House will move into a full legislative session to consider its next set of mini-spending bills...In his chamber, rather than considering new funding bills to open the government, Reid is beginning to put together legislation that would allow the Treasury greater borrowing authority to avoid breaching the so-called debt ceiling." Paul Kane in The Washington Post.

Explainer: A very simple timeline for the debt-ceiling crisisBrad Plumer in The Washington Post.

If Senate Republicans filibuster the debt-ceiling hike, that might force liberals to go nuclear. "Liberals said Tuesday that there may be no other way out of a debt ceiling crisis than to invoke — or at least threaten to employ — the so-called nuclear option, an enormously contentious move that would allow the party to raise the national borrowing limit with 51 votes rather than 60." Manu Raju and Burgess Everett in Politico.

Shutdown denies death and burial benefits to families of four dead soldiers. "The bodies of Sgt. Patrick C. Hawkins, 25; Pfc. Cody J. Patterson, 24; Sgt. Joseph M. Peters, 24; and First Lt. Jennifer M. Moreno, 25, will arrive at Dover Air Force Base in Delaware on Wednesday. The four soldiers were killed Sunday in the Zhari district of Kandahar Province when enemy forces attacked their unit with explosives...Under the shutdown, Carl Woog, a Defense Department spokesman, said on Tuesday, “the Department of Defense does not currently have the authority to pay death gratuities and other key benefits for the survivors of service members killed in action.” The benefits include $100,000 to each family; a 12-month basic allowance for housing, usually given in a lump sum to survivors commensurate with the rank of the service member; and burial benefits" Jennifer Steinhauer in The New York Times.

Explainer: 10 ways the shutdown is making us less safeLydia DePillis in The Washington Post.

Does raising the debt ceiling increase the debt? "Over the years, Congress has passed a series of laws that set tax rules and spending policies. When the amount the government spends under those laws is higher than the amount of taxes the government brings in, it has to borrow money to fund the difference. The accumulated past deficits add up to the total debt. But there's another law that puts a legal cap on the amount of debt the U.S. Treasury can issue. So even though the debt is just a residual of all those past tax and spending decisions, it has to be passed as well." Neil Irwin in The Washington Post.

Debate: What federal spending are we better off without? Including responses from CBPP's Jared Bernstein and Reason's Nick GillespieThe New York Times.

Republicans could lose their House majority because of the shutdown. "[A] provocative set of district-level polls was conducted for MoveOn by Public Policy Polling (D). These are partisan organizations, but I note that of major pollsters, PPP had the best accuracy in 2012. Also, even the worst house biases are no more than 3 percent. As we will see, even that is not enough bias to alter the conclusions here...The swing was toward Democrats for 23 races (below the red diagonal) and toward the Republican for one race (above the diagonal)." Sam Wang in The Washington Post.

RYAN: How we can end this stalemate. "The president is giving Congress the silent treatment. He's refusing to talk, even though the federal government is about to hit the debt ceiling. That's a shame—because this doesn't have to be another crisis. It could be a breakthrough. We have an opportunity here to pay down the national debt and jump-start the economy, if we start talking, and talking specifics, now. To break the deadlock, both sides should agree to common-sense reforms of the country's entitlement programs and tax code." Paul Ryan in The Wall Street Journal.

KLEIN: Cake or debt ceiling? "Politics is full of hard choices and tough tradeoffs. Raising taxes hurts the economy even as it funds crucial government services. Bombing Libya might stop a massacre but it could trap America in another country's grinding civil war. Cracking down on global currency manipulation might help American manufacturers or it might invite devastating reprisals. The debt ceiling isn't like that. The debt ceiling is "cake or death?"" Ezra Klein in The Washington Post.

SCHEIBER: A short-term debt limit increase would be a disaster. "The problem with a short-term debt limit increase is it muddies everything you’re trying to make clear. Suppose Congress reopened the government for six weeks under a temporary funding bill known as a continuing resolution (CR) while at the same time raising the debt limit for six weeks. Obama has said he’s happy to negotiate a fiscal deal once the government is reopened, even as he refuses to negotiate the debt limit. Under this scenario, how would he differentiate between the two?" Noam Scheiber in The New Republic.

BEUTLER: The last stand of the rightwing nutjob. "After two and a half years of debt limit threats and the attendant deluge of misinformation, an alarming number of Republicans think this way. Party leadership is complicit in allowing these dangerous fantasies to flourish, but fortunately they haven’t succumbed, themselves...House Republicans might be an ungovernable mess. But the people who control the floor understand the real dangers of breaching the debt limit. And Democrats don’t need more than 15 or 20 Republican votes to cut the right loose and increase the debt limit. As weak as John Boehner is, he’s not that weak. If we breach, it will be because he chose not to deliver them." Brian Beutler in Salon.

DRUM: Why are we talking about the debt ceiling crisis as if it's normal politics? "I was noodling over Obama's debt ceiling press conference during lunch, and the thing that struck me—again—was how hard it is to truly communicate his postion. And I sympathize. I've written about the basics of the debt ceiling hostage crisis at least a dozen times, and I still don't feel like I've ever been able to get across just how radical the whole thing is...You can't govern a country this way. You can't allow a minority party to make relentless demands not through the political system, but by threatening Armageddon if they don't get what they want. It's not what the Constitution intended; it's not something any president could countenance; and it's reckless almost beyond imagining." Kevin Drum in Mother Jones.

BERNSTEIN: Waiting for the market's call for reason. "What will it take to wake up the moderates such that they insist that House leadership gets us out of this meaningless yet damaging cul-de-sac by letting majority rule on clean bills to patch the budget and raise the debt ceiling? Historically, one option is a big drop in the stock market...The current shutdown, however, isn’t yet generating anything like that large a reaction.  Instead, we’re seeing a dribble downward, with the market off about 400 points, or about 3 percent, over the seven trading sessions through Monday." Jared Bernstein in The New York Times.

HUNT: Killing medical-device tax could save face for Republicans. "[A]s a face-saving concession, the Republicans probably would get an agreement for a separate vote on removing the medical-device tax part of Obamacare. Unlike with central components of Obamacare such as the individual mandate, the administration and congressional Democratic leaders may be willing to budge on a deal that replaces the medical-device tax, which raises about $3 billion per year over the next decade." Albert R. Hunt in Bloomberg.

Music recommendations interlude: Frank Sinatra, "Dancing on the Ceiling."

Top opinion

STIGLITZ: Five years in financial-reform limbo. "America’s mortgage market remains on life-support: the government now underwrites more than 90% of all mortgages, and President Barack Obama’s administration has not even proposed a new system that would ensure responsible lending at competitive terms. The financial system has become even more concentrated, exacerbating the problem of banks that are not only too big, too interconnected, and too correlated to fail, but that are also too big to manage and be held accountable. Despite scandal after scandal, from money laundering and market manipulation to racial discrimination in lending and illegal foreclosures, no senior official has been held accountable; when financial penalties have been imposed, they have been far smaller than they should be, lest systemically important institutions be jeopardized." Joseph E. Stiglitz in Project Syndicate.

PORTER: America's skills gap. "To believe an exhaustive new report by the Organization for Economic Cooperation and Development, the skill level of the American labor force is not merely slipping in comparison to that of its peers around the world, it has fallen dangerously behind...Though we possess average literacy skills, we are far below the top performers. Twenty-two percent of Japanese adults scored in the top two of six rungs on the literacy test. Fewer than 12 percent of Americans did. We are also about average in terms of problem-solving with computers. Paradoxically, our biggest deficits are in math, the most highly valued skill in the work force. Only Italians and Spaniards performed worse. Some 34 percent of adult Americans scored in the top three rungs of the assessment for numeracy, 12.5 percentage points less than the average across all countries." Eduardo Porter in The New York Times.

WOLFERS: Why I'm happy about Janet Yellen. "On a personal note, I’ve known Janet Yellen and her husband George Akerlof, a Nobel laureate in economics, for more than a decade. They are both deeply passionate about the capacity for economics to improve people’s lives, and are also refreshingly human...Tonight, I feel reassured that my daughter’s economic future is in good hands. I also plan to tell her that she, too, can grow up to become the most powerful economist in the world. It’s a potent stimulus." Justin Wolfers in Bloomberg.

GOLDSTEIN: Putting a speed limit on the stock market. "[Banker Brad Katsuyama] and a few of his colleagues decided to leave the bank and start a new place for investors to trade. Rather than woo high-frequency traders, they would limit their advantages. Their trading platform, IEX, is set to open later this month...The goal with IEX, whose owners include mutual-fund companies and other big investors, is to attract only the high-frequency traders who add liquidity and keep away those looking for the kinds of advantages that Katsuyama says are unfair. IEX’s computers will be set up so that, no matter how far away traders’ machines are, everyone will get market information at the same time. IEX also won’t offer many of the special order types favored by high-frequency traders." Jacob Goldstein in The New York Times.

SUNSTEIN: How changing a form can change people's lives. "Low-income students are less likely to apply to selective colleges than their high-income peers. That’s a big problem, because students who attend selective colleges can obtain significant economic returns, and those returns are especially large for low-income students. What might be done to encourage them to apply? Research by Harvard University economist Amanda Pallais provides some intriguing answers. Before 1997, those who operated the ACT allowed students to send reports of their test scores to three colleges free; any additional report cost $6. In 1997, the ACT increased the number of free reports to four. The small step made a big difference. Before 1997, 3 percent of those who took the ACT sent out four reports, whereas 82 percent sent out three. After 1997, 74 percent sent out four reports, whereas 10 percent sent out three." Cass R. Sunstein in Bloomberg.

DOURADO: Let's build a more secure Internet. "[T]he problem is that the physical layer of the Internet’s infrastructure — the hardware that transmits, directs and relays traffic online, as well as its closely knit software (or “firmware”) — is not open-source...Because these hardware designs are closed to public scrutiny, it is relatively easy for surveillance at the Internet’s infrastructural level to go undetected. To make the Internet less susceptible to mass surveillance, we need to recreate the physical layer of its infrastructure on the basis of open-source principles." Eli Dourado in The Washington Post.

New website woohoo interlude: Introducing Wonkblog’s newest site: Know More.

2) It's Yellen

Obama to name Yellen as Federal Reserve chairman on Wednesday. "President Obama on Wednesday will nominate Federal Reserve Vice Chair Janet Yellen to lead the U.S. central bank, officials said, selecting a renowned economist focused on combating unemployment for one of the most powerful positions in the world. Yellen would become the first female chief of the nation’s central bank — or any major central bank. As Fed chairman, she would have vast power over the economy, and her record suggests that she would use it to continue for as long as possible a Fed stimulus program aimed at boosting growth. She would also be the top regulator of the nation’s financial system, an area in which less is known about her views." Zachary A. Goldfarb in The Washington Post.

The biggest challenge Janet Yellen will face as Fed chair. "President Obama's decision to nominate Janet Louise Yellen to be the next chairman of the Federal Reserve System is an endorsement of this simple idea: That the central bank's expansive efforts to support economic growth and bring joblessness down are helping the recovery, and should continue. Yellen was the was the obvious choice if -- and only if -- you believe that the current direction of the nation's powerful central bank is the correct one for the country. Yellen has been not merely an engineer of the Fed's policies of "quantitative easing" and "forward guidance," but a consistent voice within the central bank to go further. She has reliably pushed Chairman Ben Bernanke and his colleagues to explore what else they might do to bring down the 7 percent jobless rate and put the millions of American unemployed back to work." Neil Irwin in The Washington Post.

Start here for your Yellen background reading: Neil Irwin and Ylan Q. Mui's big Janet Yellen profile from AugustThe Washington Post.

More reading: Here's what you should read about Janet YellenSarah Wheaton in The New York Times.

Women scarce at central banks. "If confirmed by the Senate as the next chief of the Federal Reserve, Janet L. Yellen would be the highest-ranking woman ever in an economic policy-making position in the United States — and one of the most powerful women to serve in American government. No woman has led the Fed in the century since it was established, or the Treasury Department in its 224-year history. The United States is hardly alone in that regard: Among the world’s developed nations, there is only a smattering of female central bankers." Annie Lowrey in The New York Times.

In other monetary news: We have a new $100 bill. "[T]he new $100 bill is here, with fancy new security features, such as an image of the Liberty Bell that appears in an inkwell and a 3D blue motion strip down the center...This bill has gone high-tech to fight fraud. Along with that color-changing bell in the inkwell, the paper cash depicts another optical illusion: a pattern of Liberty Bell icons that shifts into a pattern of “100” icons. There’s also a textured jacket for Mr. Franklin and a new view of Independence Hall." Ylan Q. Mui in The Washington Post.

Are banks headed for another $57 billion in losses? "The nation's four largest banks are holding $57 billion of seriously delinquent loans that they've been slow to move into foreclosure over concerns that the Federal Housing Administration, the government mortgage insurer, will refuse to cover the losses and hit them with damages, according to industry sources. The banks — Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo — have assured investors in the footnotes of quarterly filings that the loans are government-insured and therefore pose no threat to their bottom lines, even if they end up in foreclosure...[T]he FHA's guarantee does not apply if lenders are found to have violated underwriting or servicing standards, or to have engaged in misconduct." Kate Berry in American Banker.

Global growth is slowing. "The latest projections for the global economy are out from the International Monetary Fund, and they're not good. Not good at all. The fund, in its World Economic Outlook, now expects the world economy to grow only 2.9 percent this year, down from 3.2 percent it estimated as recently as July. The fund also marked down its forecast for 2014 global growth by two-tenths of a percent, to 3.6 percent." Neil Irwin in The Washington Post.

Adorable animals interlude: A golden retriever listens to guitar music.

3) Where the exchanges are working

State-level health insurance exchanges are doing better than the federal government's. "While many people have been frustrated in their efforts to obtain coverage through the federal exchange, which is used by more than 30 states, consumers have had more success signing up for health insurance through many of the state-run exchanges, federal and state officials and outside experts say...In addition, some states allow consumers to shop for insurance, comparing costs and benefits of different policies, without first creating an online account — a barrier for many people trying to use the federal exchange." Robert Pear and Abby Goodnough in The New York Times.

Here’s what Obamacare looks like when it works. "Washington Health Plan Finder had one of the most troubled launches of any health marketplace, even more so than the glitch-plagued federal exchange. When HealthCare.Gov launched, shoppers could at least access the homepage. But in the Evergreen State, the entire marketplace site was down. If you tried to visit the site Oct. 1, you got internal server error messages. This makes it all the more surprising that, six days later, Washington is now posting some of the highest enrollment numbers in the country. The state has had nearly 9,452 people sign up for coverage since Oct. 1...When you play around with the site, it's easy to see why Washington has some of the best enrollment numbers: It's pretty easy to use." Sarah Kliff in The Washington Post.

Jon Stewart has some questions about Obamacare. "Much to the delight of health nerds across the country, Health and Human Services Secretary Kathleen Sebelius appeared on "The Daily Show" last night. Aside from one opening crack about HealthCare.Gov ("I’m going to try and download every movie ever made and you are going to try to sign up for Obamacare," Stewart told Sebelius), there was surprisingly little talk about the health law's rocky launch. They did spend a lot of time, however, having a pretty confusing conversation about the health law's individual mandate and why the White House has not delayed it." Sarah Kliff in The Washington Post.

Greats interlude: Ernest Hemingway’s macho letter to F. Scott Fitzgerald.

4) Wow, these congresspersons are such rebels

8 lawmakers arrested at immigration protest. "The lawmakers, all Democrats, were detained by the Capitol Police after they stood silently in a line in the middle of a street that borders the Capitol lawn, blocking traffic. As the police handcuffed them behind their backs and led them away, a crowd pressed in, chanting, “Let them go!” The representatives arrested were Joseph Crowley and Charles B. Rangel of New York, Keith Ellison of Minnesota, Al Green of Texas, Luis V. Gutierrez and Jan Schakowsky of Illinois, Raul M. Grijalva of Arizona and John Lewis of Georgia. More than 150 other protesters, many from labor unions and immigrant organizations, were also arrested after they sat down and linked arms in the same street." Julia Preston in The New York Times.

India interlude: So Kerala's new tourism commercial is pretty trippy.

5) Exporting the oil boom

U.S. refiners export more fuel than ever. "U.S. refiners are selling more fuel abroad than ever before, effectively exporting the American energy boom to the four corners of the world...While federal law bars overseas shipments of most U.S.-produced oil, refiners can export petroleum products created from that crude, including gasoline, diesel and jet fuel...In July, U.S. refiners shipped a record 3.8 million barrels of products a day to places as far flung as Africa and the Middle East, according to the latest monthly data from the Energy Information Administration. That volume is nearly 65% above the 2010 export level, when the U.S. oil boom was still in its infancy." Ben Lefebvre in The Wall Street Journal.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

This is the biggest challenge Janet Yellen will face as Fed chairNeil Irwin.

Does raising the debt ceiling increase the debtNeil Irwin.

A very simple timeline for the debt-ceiling crisisBrad Plumer.

What’s happening in the Treasury bill market today should terrify youNeil Irwin.

Jon Stewart has some questions about ObamacareSarah Kliff.

10 ways the shutdown is making us less safeLydia DePillis.

The left thinks business controls the Republican Party. They’re wrongEzra Klein.

Global growth is slowing down at the worst possible timeNeil Irwin.

Republicans could lose their House majority because of the shutdownSam Wang.

Here’s what Obamacare looks like when it worksSarah Kliff.

Many Republicans think breaching the debt ceiling is no big deal. They’re wrongBrad Plumer.

Obama and Boehner spoke this morning. Their summaries of the call are…differentEzra Klein.

Cake or debt ceilingEzra Klein.

Five things you need to know about the new hundred-dollar billYlan Q. Mui.

Et Cetera

Supreme Court skeptical of limits on federal campaign contributionsRobert Barnes in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.

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Neil Irwin · October 8, 2013