Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara. 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: $1.1 trillion. That's the current amount of student-loan debt, about triple the value a decade ago.
Wonkbook’s Chart of the Day: What you need to know about U.S. health in 8 charts and 3 paragraphs.
Wonkbook's Top 5 Stories: (1) Net-neutrality vote; (2) student loan debt hurts the economy; (3) Burwell's smooth nomination process; (4) the tea party is dead — no, it's alive; and (5) House GOP feeling immigration pinch.
1. Top story: Net neutrality proposal goes to a vote
High noon for the FCC. "Silicon Valley once cheered the election of President Obama, comforted by his stance that Internet service providers should be banned from charging Web sites such as Facebook or Netflix for faster access to American homes. And for much of the past six years, tech firms felt shielded from the possibility that the Internet would ever have separate slow and fast lanes for traffic. But on Thursday, the government is poised to vote on a plan that could make that scenario a reality. Tom Wheeler, a Democratic Obama appointee, is pressing new rules...that would allow an Internet service provider such as Verizon to charge YouTube, for instance, for higher-quality streaming of videos." Cecilia Kang in The Washington Post.
What to watch for in the FCC's vote. Gautham Nagesh in The Wall Street Journal.
The FCC and net neutrality: What you need to know before the vote. Jason Abbruzzese in Mashable.
The plan has sparked uproar before it's even been released. "Federal Communications Commission Chairman Tom Wheeler's proposal to regulate how broadband providers treat content on their networks hasn't been formally released, but already the commission has received hundreds of calls and thousands of comments—along with a number of stern letters from leaders in Congress. Despite the backlash, Mr. Wheeler is forging ahead with his proposal, which the commission is scheduled to take up on Thursday....But even if the commission votes to move forward with the plan, people hoping for a quick or clean resolution to the issue are likely to be disappointed." Gautham Nagesh in The Wall Street Journal.
Among the celebs who are upset about the impending vote: Oliver Stone, Mark Ruffalo and Jello Biafra. Todd Shields in Bloomberg.
Big Cable says it could create 'fast lanes' even if the FCC goes with tough net-neutrality rules. "Broadband providers could still create Internet fast lanes even if federal regulators adopt stronger rules for the Web, as net neutrality advocates are hoping. That's what the cable industry is arguing in a letter to the Federal Communications Commission. The letter, filed Wednesday by the National Cable and Telecommunications Association, opposes the labeling of broadband companies as utilities — a move that would give the FCC much greater authority over Internet service providers like Comcast and Verizon." Brian Fung in The Washington Post.
And the GOP threatens war. "House Speaker John Boehner, Majority Leader Eric Cantor, Whip Kevin McCarthy, and GOP Conference Chairwoman Cathy McMorris Rodgers warned Wheeler on Wednesday that applying 'antiquated regulation on the Internet' would 'needlessly inhibit the creation of American private-sector jobs, limit economic freedom and innovation, and threaten to derail one of our economy's most vibrant sectors.'...Senate Minority Leader Mitch McConnell, Sen. John Thune, Sen. John Cornyn, and other Senate Republicans told Wheeler that utility-style regulations 'would create tremendous legal and marketplace uncertainty and would undermine your ability to effectively lead the FCC.'" Brendan Sasso in National Journal.
What's all this brouhaha over 'reclassification' about? "If broadband were reclassified, the FCC would have the power to enforce net neutrality, which is the concept that all Internet content should be equally accessible. Under Wheeler's proposal, Internet providers could potentially strike deals with companies such as Netflix and Amazon to allow their services to be delivered to consumers faster than other companies without similar deals. Wheeler has said that these deals would be heavily scrutinized by the FCC before receiving approval, but critics worry that such "fast lanes" could make it harder for smaller companies and startups to compete against tech giants." Salvador Rodriguez in the Los Angeles Times.
Explainer: What's at stake in the debate? Mike Snider and Roger Yu in USA Today.
Just like Big Cable, Amazon wants to charge more for access to its pipes. "A few days ago, the New York Times revealed that Amazon had been playing hardball with Hachette, a major New York book publisher with big sellers like Stephen Colbert and Malcolm Gladwell. The e-commerce site wasn't happy with the outcome of contract negotiations, the Times reported, and so has started to suggest other books when customers try to order something from Hachette — and if they proceed to checkout, the book might take weeks to arrive. Authors, understandably, are irate over the unequal treatment." Lydia DePillis in The Washington Post. (Disclosure: Jeff Bezos, founder and CEO of Amazon.com, owns The Washington Post.)
Other tech reads:
U.S. revealed secret legal basis for NSA program to Sprint, documents show. Ellen Nakashima in The Washington Post.
The feds' push for big data. Stephanie Simon in Politico.
AUERBACH: Yes, your internet is getting slower. "Electricity wholesalers such as Enron are akin to Internet service providers such as Time Warner and Comcast in important ways. The electricity wholesalers had incentives to starve the energy market in order to extract greater fees from utilities and consumers. ISPs have similar incentives to manipulate their bandwidth in order to extract fees from websites (such as Netflix and YouTube), as well as not build out any infrastructure that would make bandwidth cheaper or make your Internet faster....This is, in fact, what is already happening." David Auerbach in Slate.
BENNETT: Don't delay wireless spectrum auctions. "Relationships among the Commissioners are frayed right now because of the emotional character of net neutrality. The FCC has typically resolved most issues unanimously, but the spirit of trust and collegiality is less abundant these days....Focusing on a successful auction and then engaging government agencies toward the release of their under-utilized spectrum authorizations is an immensely productive path for the nation’s communications regulator, one that offers a myriad of benefits. Not only can it relieve net neutrality anxiety, it can enable a host of new mobile applications that aren’t even conceivable on wired networks." Richard Bennett in The Hill.
BRAY: The real problem is lack of competition. "The Net neutrality debate obscures the real problem: no competition. If there were three or four nationwide broadband providers, none would dare abuse their power. What’s really needed are incentives for newcomers like Google to bring its superfast Google Fiber network into more cities. It could also make sense for states and cities to build backbone networks, then lease them to private businesses, similar to what’s going on in Western Massachusetts. Until we get more Internet options, we may have to choose between overly broad federal regulation or overwhelming corporate greed." Hiawatha Bray in The Boston Globe.
GREENFIELD: Adding 'fast lanes' doesn't require harming the internet. "Net neutrality proponents continue to write that there is no way to create fast lanes without creating slow lanes. We fundamentally disagree with fast-lane skeptics. In fact, we suspect that many fast-lane skeptics have actually been using fast lanes and did not even realize it: ISPs across the country are delivering managed or specialized network services....Conceptually, if Netflix or any other company wants to pay Comcast or any other ISP to create a dedicated channel for their IP-based service that never touches the actual Internet, we have a hard time understanding why the government needs to impose regulations to prevent that." Rich Greenfield in Re/code.
FELDSTEIN: Piketty's numbers don't add up. "Thomas Piketty has recently attracted widespread attention for his claim that capitalism will now lead inexorably to an increasing inequality of income and wealth unless there are radical changes in taxation. Although his book, 'Capital in the Twenty-First Century,' has been praised by those who advocate income redistribution, his thesis rests on a false theory of how wealth evolves in a market economy, a flawed interpretation of U.S. income-tax data, and a misunderstanding of the current nature of household wealth." Martin Feldstein in The Wall Street Journal.
SUMMERS: Piketty isn't right on everything, but has us pondering the right questions. "Piketty’s timing may be impeccable, and his easily understandable but slightly exotic accent perfectly suited to today’s media; but make no mistake, his work richly deserves all the attention it is receiving. This is not to say, however, that all of its conclusions will stand up to scholarly criticism from his fellow economists in the short run or to the test of history in the long run. Nor is it to suggest that his policy recommendations are either realistic or close to complete as a menu for addressing inequality." Lawrence Summers in Democracy.
WEISSMANN: What would happen if we got rid of the minimum wage? "What if we bid the minimum wage goodbye for good? The Econ 101 answer is that it would create more jobs for low-skill workers, such as teenagers and high school dropouts, as wages drifted down to their market rate. When the cost of labor falls, the argument goes, employers should demand more of it....But when it comes to the labor market, Econ 101 is almost never the whole story." Jordan Weissmann in Slate.
MIAN AND SUFI: Why Geithner is wrong on household debt. "Tim Geithner has a problem with helping underwater homeowners....Whatever reasons he had for opposing assistance to underwater homeowners, a careful evaluation of the policy effects was not among them. The evidence is pretty clear: an aggressive bold attack on household debt would have significantly reduced the horrible impact of the Great Recession on Americans. The fact that Secretary Geithner and the Obama administration did not push for debt write-downs more aggressively remains the biggest policy mistake of the Great Recession." Atif Mian and Amir Sufi in The Washington Post.
VINIK: The Fed is the most important actor in the economy, but no one cares. "While the small period when the Board will have three members will likely have little material effect on the economy, it’s representative of a larger apathy towards the Federal Reserve. Few Americans, much less U.S. Congressmen, appreciate the vast power and importance of monetary policy in the economy. It is not omnipotent, but the Fed still has major control over economic growth. For instance, after sequestration kicked in during the spring of 2013, many economic analysts warned of a steep drop off in growth....Austerity undoubtedly slowed the economy, but the Fed’s extraordinary policies played a vital role in reducing the fiscal drag." Danny Vinik in The New Republic.
BRENNAN: About time food-stamp recipients started dropping. "With the employment situation, and real wages, recovering slowly but steadily, why has it taken this long to put a dent in the number of food-stamp recipients? In large part because this has been such a rotten recovery: Yes, wages have grown a bit and unemployment has dropped, but the share of the population employed has barely budged, the housing market remains depressed, millions have dropped out of the labor force, and jobs have been created much more slowly than in past recoveries. That said, SNAP rolls have always dropped well after the worst of a recession has hit." Patrick Brennan in National Review.
HILTZIK: The dirty truth about the GOP attack on Obamacare. "A crucial component of the Republican Party's assault on the Affordable Care Act always has been ignorance....Now...comes hard evidence that the campaign worked, bigtime....Here's the stunning discovery: 'About 90 percent of all those citing perceived affordability challenges were subsidy-eligible, and among these subsidy-eligible respondents, awareness of the subsidies has remained low.'...Who's responsible for this low level of knowledge? As Jonathan Cohn acknowledges, 'the administration deserves some blame for this shortfall' in information. However, he adds, '(the ACA's) adversaries deserve more.'" Michael Hiltzik in the Los Angeles Times.
Math trick interlude: Multiplication with lines.
2. Student debt is hurting the economy
Student debt is going up, but graduates' incomes aren't. "The New York Fed released its quarterly report on household debt, and as has become the norm, the student debt figures were the most compelling figures in the whole report. Americans had $1.1 trillion in student debt in the first quarter, compared to $659 billion in credit card debt. As recently as 2010, credit card debt exceeded student loan debt. Watching total student debt levels and delinquencies continue to rise, even while other areas of household debt heal from the recession has a slow-motion trainwreck feel to it....And even more horrifying is that young college grads' wages aren't keeping up with the trend." Danielle Kurtzleben in Vox.
Democrats plan student-loan debt push. "U.S. Senate Democrats unveiled legislation on Wednesday to allow millions of Americans with student loan debt to refinance at lower interest rates. Democrats said their measure would let holders of both federal and private undergraduate loans — some with rates of 9 percent or higher — to refinance at 3.86 percent. Drafted in coordination with the White House, the bill is part of Senate Democrats' 2014 legislative agenda aimed at giving all Americans "a fair shot" and rallying the party's liberal base in advance of the November elections." Niels Lesniewski in Roll Call.
How student debt may be stunting the economy. "One of the crucial reasons the housing market has not expanded enough to support robust economic growth is that young adults are not setting up their own households at anywhere near the historical norm....In the not-too-distant past — until just before the 2008 financial crisis, to be precise — around 30 percent of 27- to 30-year-olds had debt issued backed by a home. Even more interesting, 33 percent of the people in that age bracket also had student loan debt. But since then, the proportion of 27- to 30-year-olds with mortgages has plummeted to around 22 percent." Neil Irwin in The New York Times.
Primary source: New York Fed report on household debt.
Why don't realtor data show it? "This whole thing seems like a paradox: Student debt is destroying demand among first-time buyers, but it's not affecting their share of the market. What the what?...What appears to be a paradox with student loans and the housing market isn't a paradox, at all. First-time home-buyers make up a historically normal share of new home-owner families, but a historically small share of new home-buyers, because a big slice of the housing market is owned by big institutional investors who aren't living in the homes they buy. This also suggests that student loans are depressing demand for homes, but only slightly more than the overall market for homes is already depressed for various reasons." Derek Thompson in The Atlantic.
Fannie, Freddie reform bill looks dead, and it's only going to get tougher. "The leading Senate proposal to get rid of Fannie Mae and Freddie Mac is stalled, and the job of figuring out what to do with the two mortgage finance giants isn’t going to get any easier in the final years of the Obama administration. The Senate Banking Committee on Thursday is set to approve a centrist bill backed by the White House, but the legislation is unlikely to advance any further this year and faces opposition from the senators most likely to be calling the shots on housing issues in the next Congress." Jon Prior and MJ Lee in Politico.
Explainer: Why do regulators want to ease mortgage standards? Nick Timiraos in The Wall Street Journal.
Other economic/financial reads:
U.S. producer price gain offers cautionary note on inflation. Lucia Mutikani in Reuters.
Small signs of thaw on the minimum wage on the right. Neil King Jr. in The Wall Street Journal.
Back to the drawing board on unemployment benefits extension? Humberto Sanchez in Roll Call.
U.S. comptroller tells states to prioritize shadow bank oversight. Ryan Tracy in The Wall Street Journal.
Traders may have gained early word on Fed policy, study finds. Matthew Boesler in Bloomberg.
Oops interlude: Truck hits overpass.
3. Smooth sailing ahead for Burwell's nomination
Burwell looks like a lock for HHS secretary. "President Obama’s pick to assume oversight of his signature health law received added bipartisan support Wednesday as more Republicans joined Democrats backing her nomination for secretary of Health and Human Services. The growing support all but guarantees that Sylvia Mathews Burwell will be confirmed easily by the Senate to succeed Kathleen Sebelius, who has guided implementation of the Affordable Care Act for the last four years." Noam N. Levey in the Los Angeles Times.
She pledges to get back misspent funds on failed exchanges. "The Obama administration’s new pick to run Obamacare said she would use 'the full extent of the law' to recover any federal funds that have been misspent on the state Obamacare exchanges that have failed....Overall, the hearing lacked the intense furor that Republicans have aimed at the law for the past four years." Jennifer Haberkorn in Politico.
Long read: Leaders to laggards — why some states are giving up on their exchanges. Dan Diamond in California Healthline.
The GOP's incredible shrinking repeal effort. "Congressional Republicans spent four years joyfully seizing every opportunity to attack Obamacare and call for its repeal. No more. Since the health care law blew past its 7 million sign-ups target last month, Republican leaders have been noticeably more restrained in the way they talk about it, ratcheting down their public calls for repeal. Action has also slowed." Sahil Kapur in Talking Points Memo.
The Medicaid woodwork effect could cost states big time. "From a state budget perspective, there's an important difference between the woodwork population and those newly eligible under the Medicaid expansion. Under the Affordable Care Act, the federal government pays 100 percent of the costs for the Medicaid expansion population through the end of 2016, with the state share gradually increasing to no more than 10 percent. New woodwork enrollees are funded under the traditional Medicaid structure, in which the federal government on average pays 57 percent of the cost — though the federal share varies by state....At least a couple of states have already cited higher-than-expected costs from the phenomenon." Jason Millman in The Washington Post.
Background reading: More people are enrolling in Medicaid even in states that didn't expand it under Obamacare. Reid Wilson in The Washington Post.
Insurers coalition plans to reveal prices. "UnitedHealth Group (UNH) Inc., the largest U.S. health insurer, will lead an industry effort to throw a spotlight on the prices paid for health-care services, making their costs available to consumers on the Internet. The effort, announced today and organized by a nonprofit called the Health Care Cost Institute, builds on steps the Obama administration has taken to shed light on prices charged by health-care providers. Medicare, the program for the elderly and disabled, released databases in 2013 and this year that revealed what it paid hospitals and physicians, over the objections of both industries. The new initiative is more constrained." Alex Wayne in Bloomberg.
Other health care reads:
Bill Clinton urges Dems to defend Obamacare. Zachary A. Goldfarb in The Washington Post.
Explainer: 6 reasons premiums are going up next year. Sarah Kliff in Vox.
Republicans seek to nix medical-device tax in 'tax extenders' bill. Michael Catalini in National Journal.
Animals interlude: Watch these cats try to play "Candy Crush Saga" on a tablet.
4. The tea party is dying; no, wait a minute, it's alive
The tea party won Tuesday. "In Nebraska, tea party favorite Ben Sasse, president of Midland University, easily won the Republican Senate nomination....In West Virginia, former Maryland Republican Chairman Alex Mooney, with strong backing from conservative groups, won the GOP nomination for that state's Second District congressional seat....The victories came a week after the tea party candidate for the Republican Senate nomination in North Carolina was soundly defeated — and a week before Georgia, Kentucky and Idaho feature congressional races where tea party candidates vie with Republican establishment hopefuls. In each of the three states, the tea party candidates are underdogs." David Lightman in McClatchy Newspapers.
But the tea party's road ahead is much tougher. "With Republican Ben Sasse, tea party groups figured out the riddle of winning elections in 2014: Claim a Republican as a member of the tribe, even if his approach to politics doesn't line up exactly with their own. That's not an option in next week's Georgia and Kentucky primaries and later in other Republican bastions where the groups already have committed to true ideologues with tea party credentials as authentic as Sasse's were convenient. None have the look of a runaway winner, as Sasse was Tuesday in Nebraska's five-way primary." Thomas Beaumont in the Associated Press.
Analysis: A modest tea party victory. Charles Babington in the Associated Press.
Chart: The tea party endorsement scorecard. The Washington Post.
The tea party is dead! Long live the tea party! "As the 2014 primary season proceeds, every Tuesday supposedly brings a radical new change in the fate of the Tea Party. Last week, when Thom Tillis won the nomination to be the GOP’s Senate candidate in North Carolina, we heard that the establishment was vanquishing the extreme elements in the party. Now that Ben Sasse has won in Nebraska, with endorsements from Sarah Palin and Ted Cruz in hand, the storyline today has it that the Tea Party has gained new life. But here’s the real story: The Tea Party’s influence isn’t dependent on any particular election....They can keep on losing and still be an incredibly important force in American politics." Paul Waldman in The Washington Post.
In the primaries, so far good news for incumbents. "In a year when it once looked as though many incumbents would be quite vulnerable, exactly none, zero, nada have lost thus far. That goose egg applies not only to sitting House members but to senators and governors as well." Rhodes Cook in The Wall Street Journal.
Americans want to throw the bums out, but they won't. "A new poll from Gallup shows that Americans are more anti-incumbent than they have been in a long time....The poll shows just 22 percent of people say most members of Congress deserve reelection this year. That's lower than at any point since at least 1992. But while people like the idea of ousting members of Congress en masse, they have long been far less willing to say that their own member deserves the same fate....In the vast majority of election years, more than 90 percent of incumbent lawmakers are reelected....While anti-incumbent sentiment doesn't mean Americans are suddenly going to replace entire swaths of Congress, it does matter."> Aaron Blake in The Washington Post.
Sweet dreams interlude: Kids describe their dreams — and make me sleepy in the process.
5. House GOP feeling friendly fire on immigration
Conservatives now pressing the House GOP on immigration reform. "House Republican leaders are mum on a timetable for advancing immigration overhaul legislation and have so far been noncommittal on moving on the issue before the end of the 113th Congress. But a group of mayors and business leaders from across the political spectrum is determined to prove that momentum is growing for a rewrite of the nation’s immigration laws — even among conservatives." Emma Dumain in Roll Call.
More and more tea partyers are getting into the mix. "Grover Norquist, the anti-tax activist who is in favor of an immigration overhaul, convened allies on a conference call Wednesday to keep up the drumbeat for reform in the face of continued resistance from conservatives in the House. The call featured Sal Russo, a co-founder of Tea Party Express, voicing support for an immigration overhaul that offered legal status to immigrants in the country illegally." Russell Berman in The Hill.
Chart: The U.S. immigrant population is booming. But mostly in just a handful of states. Chris Cillizza in The Washington Post.
Democrats shift their focus back to the House GOP. "After months of being on the receiving end of criticism that they’re not doing enough on immigration, Senate Democrats are aggressively pushing the focus back to House Republicans. Liberal activists and lawmakers have largely concentrated on President Barack Obama recently, urging his administration to ease deportations." Burgess Everett and Seung Min Kim in Politico.
Other immigration reads:
Immigration activists, torn on path forward, turn up the heat on Democrats. Associated Press.
Food interlude: Alton Brown makes grilled grilled cheeses.
Medicaid enrollment is growing faster than expected in some states. It’s going to cost them. Jason Millman.
Just like big cable, Amazon wants to charge more for access to its pipes. Lydia DePillis.
Big Agriculture wants to reach millennials, but it started a food fight in the process. Lydia DePillis.
Why Tim Geithner is wrong on homeowner debt relief. Atif Mian and Amir Sufi.
Climate change deemed growing threat to national security by military researchers. Coral Davenport in The New York Times.
The GMO label movement is spreading. If only it had science on its side. Molly Ball in The Atlantic.
Obama to speed infrastructure permits, highlights highway funding squeeze. Jeffrey Sparshott in The Wall Street Journal.
Deficit hawks press ahead at annually pep rally, despite obstacles. Associated Press.
Obama is said to put personal push behind EPA climate emissions rule. Lisa Lerer and Julianna Goldman in Bloomberg.
Income tax yo-yo hits U.S. states. Mark Peters, Heather Haddon and Alejandro Lazo in The Wall Street Journal.
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Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.