Wonkbook: Janet Yellen takes the reins

February 3

Welcome to Wonkbook, Wonkblog’s morning policy news primer by Evan Soltas. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here.


Wonkbook's Number of the Day: 22,000. That's the number of Americans who have appealed the government to correct errors on their Healthcare.gov insurance applications. The website isn't capable of fixing mistakes.

Wonkbook's Graph of the Day: A starting point for how Yellen thinks about monetary policy, from this speech

Wonkbook's Top 5 Stories: (1) Yellen's first day; (2) what Healthcare.gov still can't do; (3) Republican support for immigration reform is shaky; (4) on Keystone, it's up to Kerry; and (5) another small State of the Union promise fulfilled.

1. Top story: Janet Yellen takes the reins

New Fed chief Janet Yellen lets a long career of breaking barriers speak for itself. "When Janet Yellen takes over the reins of the Federal Reserve on Monday, she will become one of the most powerful women in the world — a historic achievement that she has yet to fully embrace. Her status has been trumpeted by others — she is featured in a Microsoft commercial “celebrating the heroic women of 2013” and heralded by glossy magazine Marie Claire as having “triumphed over the haters” — but Yellen has been reticent about the role that her sex has played in her four-decade career. She has even instructed staff members that her new title be simply “chair,” rather than “chairwoman.”" Ylan Q. Mui in The Washington Post.

Cool feature: Letters of advice to Janet Yellen from Donald Kohn, John H. Makin and othersDavid Gura in American Public Media.

Janet Yellen's first big call. "In three years as second-in-command at the Federal Reserve, Janet Yellen worried continuously about high U.S. unemployment and pushed for policies to bring it down. After she is sworn in as Fed chairwoman Monday a new question will almost immediately crowd her agenda: Why is unemployment falling so fast and what, if anything, should the central bank do about it?...Key to that decision is making sense of the falling unemployment rate. She and other Fed officials worry it masks large pockets of stress still plaguing the labor market, including millions of people who want work but aren't looking anymore and therefore are no longer counted as unemployed." Jon Hilsenrath and Victoria McGrane in The Wall Street Journal.

@morningmoneyben: Yellen will be sworn in on Monday by her (alleged) sparring partner, Fed Gov. Daniel Tarullo.

The downside of lower unemployment. "Friday's jobs report could very well show the U.S. unemployment rate fell again in January—this time perhaps in part because federal jobless benefits have ended. A drop related to the expiration of the program would likely reflect two shifts. Some number of jobless may have stopped looking for work and therefore aren't counted as unemployed. Others may have taken jobs they would have turned down if benefits had continued. Several recent research papers suggest the first shift—people dropping out of the labor force—could be the more significant of the two." Victoria McGrane in The Wall Street Journal.

Business knows better than anyone else that the middle class is shrinking. "As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away. If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts." Nelson D. Schwartz in The New York Times.

@TheStalwart: Fun start for Janet Yellen. She's going to have to TRY harder than Bernanke.

Unemployment benefits dominate the agenda. "Democratic and Republican senators have begun working on a new proposal to extend the benefits after not advancing a similar plan a few weeks ago. In a key concession, Democrats are now proposing to pay for the $6 billion extension with “pension smoothing,” which would temporarily increase tax collections from employers by allowing them to pay less now into employee pension funds. A handful of GOP senators are open to the idea but also want to be able to offer other amendments to the plan. If an agreement is reached, votes could be held as soon as next week, said aides familiar with the talks." Ed O'Keefe in The Washington Post.

U.S. trade deals remain on track, says Froman. "Michael Froman, US trade representative, told the Financial Times that the administration was convinced it could secure congressional backing for the deals even after Harry Reid, the Democratic senate majority leader, last week said he would oppose fast-track legislation for any agreements...“Moving a trade bill or a trade agreement through Congress is a marathon, not a sprint”, Mr Froman said. “It’s important that we reach [deals] of high standards, ambition and comprehensiveness. When we do, then we will be able to demonstrate to the Congress the benefits of the agreements for job creation, for promoting growth, for strengthening the middle class in the US. That will form the foundation for support,” he added." James Politi in The Financial Times.

HOLMES: How the Fed learned to talk. "For the last decade I’ve studied the behavior of policy makers at the Fed, the European Central Bank and the central banks of England, Germany, New Zealand and Sweden. Their leaders have for decades searched for a new conceptual anchor for monetary affairs — no longer gold or fixed exchange rates, but an evolving relationship with the public. Communication has become a fulcrum of policy. Policy makers shape expectations and, thus, economic behavior." Douglas R. Holmes in The New York Times.

Music recommendations interlude: Aretha Franklin, "Respect," 1967.

Top opinion

DOUTHAT: Don't do immigration reform. "This time, the populists are right. They’re right about the policy, which remains a mess in every new compromise that’s floated — offering “solutions” that are unlikely to be permanent, enforcement provisions that probably won’t take effect, and favoring special interests, right and left, over the interests of the citizenry at large." Ross Douthat in The New York Times.

Interview: Obama sat down with Bill O'Reilly before the Super BowlFox News.

MULLAINATHAN: Get some sleep, and wake up the GDP. "In one month in 2008, a poll showed that 29 percent of workers had fallen asleep or had been very sleepy at work. The effects can add up: one study in Australia calculated the cost of sleeplessness at 0.8 percent of the country’s gross domestic product. Yet even that number, which emphasizes the physical and medical consequences of inadequate sleep, omits the biggest potential impact on the G.D.P. Most of today’s workers rely on their mental and social skills. And if those workers don’t get enough sleep, their lethargy, crankiness and poor decision-making will hurt the economy in assorted and significant ways." Sendhil Mullainathan in The New York Times.

SUROWEICKI: The Sochi effect. "What makes construction so prone to shady dealings? One reason is simply that governments are such huge players in the industry. Not only are they the biggest spenders on infrastructure; even private projects require government approvals, permits, worksite inspections, and the like. The more rules you have, and the more people enforcing them, the more opportunities there are for corruption...On big government projects, additional factors kick in. Such projects are rare, and construction work is erratic, so politicians with contracts to award have immense leverage." James Suroweicki in The New Yorker.

WILKINSON AND PICKETT: How inequality hollows out the soul. "A few years ago, we published evidence that showed that in developed countries, major and minor mental illnesses were three times as common in societies where there were bigger income differences between rich and poor. In other words, an American is likely to know three times as many people with depression or anxiety problems as someone in Japan or Germany...More recent studies have affirmed the pattern we found. One, looking at the 50 American states, discovered that after taking account of age, income and educational differences, depression was more common in states with greater income inequality. Another, which combined data from over 100 surveys in 26 countries, found that schizophrenia was about three times as common in more unequal societies as it was in more equal ones." Richard Wilkinson and Kate Pickett in The New York Times.

KRUGMAN: Delusions of failure. "Everyone knows about the disastrous rollout, but that was months ago. Since then, health reform has been steadily making up lost ground. At this point enrollments in the health exchanges are only about a million below Congressional Budget Office projections, and rising faster than projected. So a best guess is that by the time 2014 enrollment closes on March 31, there will be more than six million Americans signed up through the exchanges, versus seven million projected." Paul Krugman in The New York Times.

LUCE: Obama's trade agenda hangs on a thin Reid. "If you listened carefully last week you would have heard the soft voice of Harry Reid undoing Barack Obama’s “pivot to Asia”. The Senate Democratic majority leader may largely be unknown outside of the United States. But as one of the two most powerful figures on Capitol Hill he has the authority to wreck his country’s global trade agenda. Last Wednesday Mr Reid made full use of it." Edward Luce in The Financial Times.

Human interlude: When you're too old to be a model any longer.

2. What Healthcare.gov still can't do

Healthcare.gov can't handle appeals of enrollment errors. "Roughly 22,000 Americans have filed appeals with the government to try to get mistakes corrected, according to internal government data obtained by The Washington Post. They contend that the computer system for the new federal online marketplace charged them too much for health insurance, steered them into the wrong insurance program or denied them coverage entirely. For now, the appeals are sitting, untouched, inside a government computer. And an unknown number of consumers who are trying to get help through less formal means — by calling the health-care marketplace directly — are told that HealthCare.gov’s computer system is not yet allowing federal workers to go into enrollment records and change them, according to individuals inside and outside the government who are familiar with the situation." Amy Goldstein in The Washington Post.

How Obamacare's 'Innovation Center' adopted bad research practices. "The idea seemed transformative. The Affordable Care Act would fund a new research outfit evocatively named the Innovation Center to discover how to most effectively deliver health care, with $10 billion to spend over a decade. But now that the center has gotten started, many researchers and economists are disturbed that it is not using randomized clinical trials, the rigorous method that is widely considered the gold standard in medical and social science research...But they have rarely been used to guide health care policy — and experts say the center is now squandering a crucial opportunity to develop the evidence needed to retool the nation’s troubled health care system in a period of rapid and fundamental change." Gina Kolkata in The New York Times.

Abortion rate falls to lowest level since 1973. "The abortion rate in the USA has dropped to its lowest level since the procedure became legal in 1973, according to a new data analysis that reflects a 13% decline in both the abortion rate and the number of abortions from 2008 to 2011...[Guttmacher's Rachel] Jones attributes the decline to more women using "highly effective contraceptive methods such as the IUD" and the fact that the study period was during the recession and sluggish recovery." Sharon Jayson in USA Today.

Glitches in state exchanges give Republicans a cudgel. "With the federal online insurance exchange running more smoothly than ever, the biggest laggards in fixing enrollment problems are now state-run exchanges in several states where the governors and legislative leaders have been among the strongest supporters of President Obama’s health care law. Republicans have seized on the failures of homegrown exchanges in states like Maryland, Minnesota and Oregon — all plagued by technological problems that have kept customers unhappy and enrollment goals unmet — and promise to use the issue against Democratic candidates for governor and legislative seats this fall." Abby Goodnough in The New York Times.

The Internet has room for everything interlude: A Tumblr solely focused on putting googly eyes on metal albums.

3. Republicans suddenly look shaky on immigration reform

Republicans say immigration deal is far from certain, push ‘security first’ approach. "Republicans stressed a “security first” approach to immigration reform Sunday but said the prospects for a deal this year are far from certain, in part because of distrust of the Obama administration. When asked by George Stephanopoulos, host of ABC’s “This Week,” whether a reform package could make it to the president’s desk before 2015, House Budget Committee Chairman Paul Ryan (R-Wis.) said: “I really don’t know the answer to that question. That is clearly in doubt.” Ryan, House Majority Leader Eric Cantor (R-Va.) and Louisiana Gov. Bobby Jindal (R) said in separate appearances on Sunday news shows that they would support an immigration overhaul package, but only if it focused first on security" Niraj Chokshi in The Washington Post.

They still don't have an answer to the crucial question of citizenship, either. "Last week, Republican leaders signaled that they might support a path to legal status, as opposed to citizenship, for adults who entered the country illegally...Pressed by Mr. Garrett about internal party divisions on the issue, Mr. Cantor said: “So far as immigration is concerned, we’ve said all along we don’t believe in a comprehensive fix. We want to go in a step-by-step approach to try and address the problems.”" Emmarie Huetteman in The New York Times.

In a crowded immigration court, seven minutes to decide a family’s future. "Judge Lawrence Burman sat quietly in front of the chaos, adjusting his reading glasses and sifting through a stack of files on his bench. He had 26 cases listed on his morning docket in Arlington Immigration Court — 26 decisions to make before lunchtime about the complicated future of undocumented immigrants in the United States." Eli Saslow in The Washington Post.

...And I mean room for everything interlude: This is a subreddit solely dedicated to "bears doing human things."

4. Will Obama and Kerry approve Keystone?

Report opens way to approve Keystone pipeline. "The State Department released a report on Friday concluding that the Keystone XL pipeline would not substantially worsen carbon pollution, leaving an opening for President Obama to approve the politically divisive project. The department’s long-awaited environmental impact statement appears to indicate that the project could pass the criteria Mr. Obama set forth in a speech last summer when he said he would approve the 1,700-mile pipeline if it would not “significantly exacerbate” the problem of greenhouse gas emissions. Although the pipeline would carry 830,000 barrels of oil a day from Canada to the Gulf Coast, the report appears to indicate that if it were not built, carbon-heavy oil would still be extracted at the same rate from pristine Alberta forest and transported to refineries by rail instead." Coral Davenport in The New York Times.

Explainer: Five takeaways from the report. Brad Plumer in The Washington Post.

It's now Kerry's call. "Pipeline opponents said they were now hanging their hopes on Mr. Kerry, who is expected to issue his conclusion on the pipeline in the coming months. An executive order signed by President George W. Bush gave the secretary of state the final say on cross-border pipeline projects." Sarah Wheaton and Coral Davenport in The New York Times.

In memoriam interlude: Philip Seymour Hoffman.

5. Check the box on another State of the Union promise

FCC to boost fund for broadband in schools. "The Federal Communications Commission plans to double a fund dedicated to bringing broadband Internet connections to schools and libraries, bolstering a White House push to wire all U.S. schools with faster speeds. The plan to be announced Wednesday by FCC Chairman Tom Wheeler is to increase to $2 billion from $1 billion the portion of the E-Rate program for broadband grants...Instead, the FCC will double broadband grants this year and next year with unused E-Rate funds from past years and by shifting away money dedicated to what it views as outdated telephone services such as dial-up Internet." Cecilia Kang in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

This Walmart worker went from temp to store manager. Here’s why that’s so toughLydia DePillis.

Five takeaways from State Department’s review of the Keystone XL pipelineBrad Plumer.

Bernanke: I saved the economy and all I got was this custom baseball cardYlan Q. Mui.

Medicare won’t give a straight answer on Obamacare cost savingsJenny Gold.

Want to end poverty? Brazil’s answer: Give people moneyHoward Schneider.

Congress tried to cut subsidies for homes in flood zones. It was harder than they thoughtBrad Plumer.

Expensive hospitals aren’t better hospitalsSarah Kliff.

Et Cetera

Massachusetts struggles to shelter its homeless beyond motelsJon Kamp in The Wall Street Journal.

Severe drought has U.S. West fearing the worstAdam Nagourney and Ian Lovett in The New York Times.

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

Wonkbook is produced with help from Michelle Williams.

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Lydia DePillis · January 31