Wonkbook: Adios, austerity?

February 21

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(Photo by Jacquelyn Martin/AP)

Wonkbook's Number of the Day: $56 billion. That's the amount of new discretionary spending President Barack Obama will propose in his 2015 budget.

Wonkbook's Graph of the Day: Meet the default caucus.

Wonkbook's Top 5 Stories: (1) bye bye, budget cuts; (2) the case for ending job lock; (3) policy across the pond; (4) a Wonkbook look at Ukraine; and (5) did the Fed just make financial regulation harder?

1. Top story: Adios, austerity?

With 2015 budget request, Obama will call for an end to era of austerity. "Obama will jettison the framework he unveiled last year for a so-called grand bargain that would have raised taxes on the rich and reined in skyrocketing retirement spending. A centerpiece of that framework was a proposal — demanded by GOP leaders — to use a less-generous measure of inflation to calculate Social Security benefits. The idea infuriated Democrats and never gained much traction with rank-and-file Republicans, who also were unwilling to contemplate tax increases of any kind. On Thursday, administration officials said that the grand-bargain framework remains on the table but that it was time to move on." Zachary A. Goldfarb in The Washington Post.

@damianpaletta: White House budget is shaping up to be one that looks to unify Democrats going into November. Not many olive branches to GOP.

Obama’s budget shows how difficult it will be for him to achieve his 2nd-term goals. "The decline in discretionary spending is the result of years of budget battles with Republicans, who wanted sharp cuts in spending. Cutting domestic spending was politically more palatable than increasing taxes or trimming mandatory programs -- even though it's domestic spending that will generate the biggest returns to our nation in the future. So it makes sense that as he unveils a new, aspirational budget, Obama will try to boost domestic spending. He's planning to propose $56 billion in additional 2015 spending, split between defense and non-defense programs. And he wants to concentrate that spending in high-return areas like improving energy efficiency, job training and education." Zachary A. Goldfarb in The Washington Post.

Where sequestration will remain. "The White House budget to be released in early March will aim to repair some of the damage caused by the sequestration cuts enacted one year ago. But rather than fully restore funding for affected government agencies, the budget will leave some agencies still facing cuts, while it funds other priorities." Sam Stein in The Huffington Post.

Graphic: Meet the default caucus. Christopher Ingraham in The Washington Post.

Explainer: What's in the White House budget proposalDamian Paletta in The Wall Street Journal.

How Obama wants to spend. "Obama will bundle the new $56 billion in spending into an "Opportunity, Growth, and Security Initiative," eliminating the remaining non-defense sequestration cuts in place for 2015. The initiative will include: creating 45 new manufacturing institutes, a "Race to the Top" program for states that promote energy efficiency; job training programs aimed at expanding apprenticeships and pairing colleges and private employers; and universal pre-K and expanded Head Start." Zachary A. Goldfarb in The Washington Post.

@JohnJHarwood: for those waking up from long nap, no surprise in Obama budget dropping chained CPI. relic from era of big budget talks, which is now over.

KRUGMAN: The stimulus tragedy. "Five years have passed since President Obama signed the American Recovery and Reinvestment Act — the “stimulus” — into law. With the passage of time, it has become clear that the act did a vast amount of good. It helped end the economy’s plunge; it created or saved millions of jobs; it left behind an important legacy of public and private investment. It was also a political disaster. And the consequences of that political disaster — the perception that stimulus failed — have haunted economic policy ever since...[T]he overall narrative of the stimulus is tragic. A policy initiative that was good but not good enough ended up being seen as a failure, and set the stage for an immensely destructive wrong turn." Paul Krugman in The New York Times.

BEUTLER: There goes conservatives' chance to cut Social Security. "Liberals are celebrating, with good reason, but I think the strongest emotional response should come from reasonable conservatives who have let an inflexible anti-tax orthodoxy destroy the right’s longer-standing goal of slashing and devolving entitlements. The only way they’ll get there with Democrats in power is to pony up some tax revenue." Brian Beutler in Salon.

Music recommendations interlude: Josh Ritter, "The Curse."

Top opinion

MACGILLIS: Why we need traceable cartridges. "Turns out, a gun industry that trumpets every last advance in precision and firepower is less than enthusiastic about technological developments intended to increase the safe operation of guns. If that sounds like too harsh a characterization, consider what has been happening with another form of smart gun technology—engraving a gun’s serial number in its chamber so that the number is stamped on each cartridge as it is fired by the gun, thus allowing police to identify a gun used in a shooting via spent casings found at the scene. This technology—dubbed “microstamping”—is meant to make it vastly easier for police to trace guns that have been used in crimes—in the hundreds of thousands of intentional shootings that vastly outnumber the accidental shootings the electronic chip technology is meant to prevent." Alec MacGillis in The New Republic.

HOWARD AND MILLS: How public policy can help self-driving cars. "[T]he best we can get out of Washington is an announcement this month by Transportation Secretary Anthony Foxx that the DOT intends to "begin working" on a regulatory proposal to someday require vehicle-to-vehicle communications for crash avoidance. Worse, the National Highway Traffic Safety Administration (Nhtsa), the DOT's regulatory agency, is putting the brakes on the driverless revolution. In 2012, Kevin Vincent, the agency's chief counsel, went so far as to call it "a scary concept" for the public." Don Howard and Mark P. Mills in The Wall Street Journal.

BROOKS: Capitalism for the masses. "Republicans need to declare a truce on the social safety net. They need to assure the country that the net will always be there for the truly needy...The big story here is that a major pillar of the American right [Arthur Brooks] is leading his institution [the American Enterprise Institute] to fully embrace capitalism, but also fully embrace government policies that will help the broadest number of people earn their own success. In this era, the invisible hand may not be enough." David Brooks in The New York Times.

RAEMISCH: My night in solitary. "AT 6:45 p.m. on Jan. 23, I was delivered to a Colorado state penitentiary, where I was issued an inmate uniform and a mesh bag with my toiletries and bedding. My arms were handcuffed behind my back, my legs were shackled and I was deposited in Administrative Segregation — solitary confinement. I hadn’t committed a crime. Instead, as the new head of the state’s corrections department, I wanted to learn more about what we call Ad Seg." Rick Raemisch in The New York Times.

Wow this is cool interlude: Google's Project Tango.

2. The case for ending job lock

How Obamacare could unlock job opportunities. "In a sense, Obamacare amounts to a massive transfer of risk. Under the old system, if you quit your job and couldn’t get health insurance, you courted financial ruin every time you did something as mundane as riding your bike or playing pickup basketball. Now that risk is distributed to everyone who buys health insurance (including the government). Free of the massive financial risk of being alive, unemployed Americans can more easily take on risks associated with doing what they want to do...It may seem counterintuitive, but from an economics perspective, this is a good thing, because it encourages the labor force to allocate itself more efficiently. Older workers will finally be able to retire, leaving openings for younger workers. People will switch to jobs that better suit their talents. Parents will be able to spend more time with their families. Such changes don’t always make people wealthier, but they make people happier." Shaila Dewan in The New York Times.

Investors bet big on Obamacare. "A new online broker, Motif Investing, is offering Obamacare’s friends and foes alike a chance to put their money where their mouth is. Co-founded by a former Microsoft executive, Hardeep Walia, and backed by Goldman Sachs and other investors, Motif allows customers to bet on narrowly tailored concepts...The Obamacare motif is up 46.9 percent in the past year, doubling the performance of the Standard & Poor’s 500-stock index (up 22.8 percent)." Joshua Green in Bloomberg Businessweek.

To dodge Obamacare, public sector shifts workers to below 30 hours a week. "Cities, counties, public schools and community colleges around the country have limited or reduced the work hours of part-time employees to avoid having to provide them with health insurance under the Affordable Care Act, state and local officials say...[P]ublic employers generally said they were keeping the restrictions on work hours because their obligation to provide health insurance, starting in 2015, would be based on hours worked by employees this year. Among those whose hours have been restricted in recent months are police dispatchers, prison guards, substitute teachers, bus drivers, athletic coaches, school custodians, cafeteria workers and part-time professors." Robert Pear in The New York Times.

For White House staffer, the health-care law may be harder sell than Obama was. "Two years ago, Marlon Marshall was deputy national field director for President Obama’s disciplined, centralized reelection campaign. His job was to mobilize enthusiastic supporters to do something that cost them nothing: cast a vote. Now he is at the White House working on a very different, and arguably more difficult, effort: helping persuade Americans to get — and in many cases pay for — health insurance. Marshall, 34, is deputy director of the White House Office of Public Engagement, where he is charged with helping to sell the Affordable Care Act." Juliet Eilperin in The Washington Post.

Missouri House files Medicaid expansion bill. "A Republican House member has filed a bill to expand Missouri's Medicaid program, but the bill has a new twist. To be eligible, working-age Medicaid recipients would have to have jobs, said the sponsor, Rep. Noel Torpey, R-Independence. Some participants also would have to pay monthly premiums...Missouri would need a federal waiver of Medicaid rules to implement the Medicaid changes." Virginia Young in The St. Louis Post-Dispatch.

Corbett's final offer for Medicaid in Pennsylvania. "Pennsylvania Gov. Tom Corbett's administration on Wednesday submitted a softer version of its Medicaid proposal that restores some benefits, but is still viewed by analysts as the most extreme state plan to expand coverage under the Affordable Care Act. The state seeks to use federal Medicaid dollars to subsidize commercial insurance for hundreds of thousands of uninsured Pennsylvanians. Just two other states have won approval for the type of alternative coverage plans Gov. Corbett wants to pursue." Amy Worden and Don Sapatkin in The Philadelphia Inquirer.

This is hilarious interlude: Watch these Canadian news anchors celebrate an Olympics gold medal.

3. Policy across the pond

Britain is thinking about some pretty big reforms of its minimum wage. "Prof Sir George Bain, founding chair of the Low Pay Commission, which recommends the minimum wage, told the Financial Times the current system had been successful but had “pretty much run its course”...Options include having the LPC recommend a higher wage floor, probably non-mandatory, for sectors that can afford to pay more such as finance and parts of manufacturing, or a higher rate for certain regions, starting with London...A third way would be to set a medium-term target for the level of the minimum wage, giving business time to adapt to a higher rate. It could be raised above the growth of median earnings at times of sustained economic expansion or when unemployment was low or falling." Brian Groom in The Financial Times.

Interview: Should we extend unemployment insurance — and cut the minimum wage? Yes, says AEI's Michael StrainZachary A. Goldfarb in The Washington Post.

Mortgage troubles near prerecession levels. "The U.S. mortgage delinquency rate—loans that are a payment or more behind but not yet in foreclosure—fell to 6.39% of loans in the fourth quarter of 2013, down from 7.09% a year ago and the lowest rate since the early months of recession in the first quarter of 2008, according to a report Thursday by the Mortgage Bankers Association. The backlog of foreclosure inventory also fell to its lowest level since 2008, while the number of loans on which lenders initiated foreclosure was the lowest since 2006, which was when the housing bubble was starting to burst." Conor Dougherty in The Wall Street Journal.

U.S. jobless claims continue to drop. "Initial claims for jobless benefits, a measure of layoffs, decreased by 3,000 to a seasonally adjusted 336,000 in the week ended Feb. 15. That was slightly more than the 335,000 forecast by economists but continued the downward trend of the past few weeks and was lower than the 344,000 average for all of last year." Jonathan House in The Wall Street Journal.

Explainer: The 20 Zip codes where it is cheaper to buy than rentDina ElBoghdady in The Washington Post.

Consumer prices edged up. "Consumers are seeing a slight pickup in inflation, a development that could reassure some Federal Reserve officials as they roll back their easy-money policies. The consumer-price index, which measures how much Americans pay for everything from hospital visits to heating oil, advanced a seasonally adjusted 0.1% in January from the prior month, the Labor Department said Thursday. Compared with a year earlier, consumer prices increased 1.6%. That was the strongest year-over-year gain in six months and a marked acceleration from October, when the annual gain slowed to 1%." Eric Morath in The Wall Street Journal.

Here’s proof that making money makes you more right-wing and less egalitarian. "Now, two researchers from the United Kingdom say they have proved that having money makes you more conservative and less egalitarian. Nattavudh Powdthavee and Andrew J. Oswald studied the political opinions of people who won the lottery over time and found that the larger the lottery win, the more likely the winners are to adopt right-wing views and believe less in society's role in making sure ordinary people "get a fair share of society's wealth."" Zachary A. Goldfarb in The Washington Post.

Arts interlude: What a professional photographer carries around.

4. A Wonkbook look at Ukraine

The latest on Ukraine, in one paragraph. "European Union ministers sought to broker a political settlement in Ukraine after gun battles between police and anti-government protesters brought the death toll to 75 in two days of the worst violence in the country since Soviet times. Three hours of fierce fighting in Kiev's Independence Square, which was recaptured by the protesters, left the bodies of over 20 civilians strewn on the ground, a short distance from where President Viktor Yanukovich was meeting the EU delegation." Reuters.

Ukraine’s president open to early vote, Polish leader says; scores reported killed in clashes. "As the bloodiest day in Ukraine’s long-running crisis drew to a close with protesters unbowed, President Viktor Yanukovych told European foreign ministers Thursday that he would be open to early elections if that would restore peace...bigger desertion may be taking place in Moscow. President Vladimir Putin, who has steadfastly tried to bind Ukraine and Yanukovych to Russia with economic ties, talked with European leaders about the need to work with them and the United States to find a resolution to Ukraine’s unraveling. This was an abrupt change in tone from the fault-finding that has characterized Russian and Western dialogues on Ukraine." Will Englund in The Washington Post.

E.U. imposes Ukraine sanctions. "The EU has agreed to impose sanctions on Ukrainian officials "responsible for violence and excessive force" after the bloodiest day of clashes in Kiev. In a statement, EU foreign ministers said targeted sanctions including asset freezes and visa bans would be introduced "as a matter of urgency"." BBC.

Neat interlude: The first book on Medium.

5. Did the Fed just make financial regulation harder?

Why Janet Yellen is about to get an earful from 19 other financial leaders. "The world's largest developing nations such as Brazil and India will urge the Fed to reconsider how quickly it winds down the program, G-20 officials said. G-20 finance ministers and central bankers are meeting Saturday as part of Australia's hosting of the world's largest economies. Since the Fed said it planned to begin scaling back its easy-money policies starting in January, investors have fled emerging-markets assets amid concerns about the ability of developing nations to weather uneven growth." Ian Talley in The Wall Street Journal. 

Fed move rattles global financial-regulation talks. "The Federal Reserve's move to impose tough capital rules on foreign banks in the U.S. could complicate global coordination on another postcrisis priority: international agreement on a plan that eliminates the chance any bank is too big to fail. The central bank's decision, which came after months of pushback from overseas policy makers, inflamed other financial-system overseers who saw it as an intentional break from international coordination on postcrisis financial rules. That includes ongoing talks on a plan for dismantling a global financial firm without using government money in a future financial crisis." Ryan Tracy in The Wall Street Journal.

It's past time for the Fed to release its 2008 transcripts. "Anticipation is building about the Federal Reserve's release of full transcripts from its 2008 policy meetings, documents that will shed light on the central bank's actions while the financial crisis deepened and the economy plunged further into recession. The central bank came under criticism for being slow to recognize the full impact of the subprime-mortgage lending crisis, which rippled through the financial system, toppled major financial institutions and exacted still-lingering damage to the economy." Jeffrey Sparshott in The Wall Street Journal.

Hmm interlude: AC/DC's "Thunderstruck," played with cellos.

Wonkblog Roundup

Obama’s budget shows how difficult it will be for him to achieve his 2nd-term goalsZachary A. Goldfarb.

MasterCard, Visa explain why your credit card isn’t saferDanielle Douglas.

The 20 Zip codes where it is cheaper to buy than rentDina ElBoghdady.

Coke or Pepsi? As soda sales crash, Pepsi’s a better betLydia DePillis.

White House budget to boost spending by $56 billion, drop Boehner ‘grand bargain.’ Zachary A. Goldfarb.

Should we extend unemployment insurance — and cut the minimum wage? Zachary A. Goldfarb.

Meet the default caucusChristopher Ingraham.

Here’s proof that making money makes you more right-wing and less egalitarianZachary A. Goldfarb.

Et Cetera

Six attorneys general won’t defend their own state’s gay-marriage bansNiraj Chokshi in The Washington Post.

White House targets patent trollsBarney Jopson in The Financial Times.

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

Wonkbook is produced with help from Michelle Williams.

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