Wonkbook: The policy questions behind the VA scandal

May 22

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Wonkbook's Top 5 Stories: (1) The long-evolving VA mess; (2) next steps for new-look Fed; (3) two tech bills' setbacks; (4) a (political and policymaking) climate change?; and (5) state Obamacare exchange casualties in focus.

1. Top story: What's going on at the VA, and how officials want to fix it

Obama defends veterans policies, promises accountability. "Obama sought to reassure lawmakers, veterans and others outraged over allegations that staffers at some Department of Veterans Affairs facilities had doctored records to cover up lengthy wait times and that some patients had died while waiting for care. He said an investigation into allegations of wrongdoing would be completed by next month and that those responsible for problems would be held accountable. But Obama...also defended his overall attention to veterans issues. He said a backlog in disability claims at VA had been reduced and described the wait-time problem as 'a problem for decades, and it’s been compounded by more than a decade of war.'" Juliet Eilperin and Ed O’Keefe in The Washington Post.

Primary source: The full text of President Obama's remarks. The Washington Post.

Explainer: Five takeaways from President Obama's VA remarks. Josh Hicks in The Washington Post.

What the administration plans to do next. "President Obama said Wednesday that he had ordered his top deputies to complete their review of what has gone wrong in the Veterans Affairs’ health system within a month, adding that if veterans are not receiving the care they deserve, 'I will not stand for it.'...Obama said he had ordered VA Secretary Eric K. Shinseki to complete his preliminary review of long wait times and false record-keeping at VA medical centers in several states by next week. His deputy chief of staff, Rob Nabors, who has been ordered to conduct a broader survey of the agency’s health system, will finalize his report within a month, the president added." Juliet Eilperin and Ed O’Keefe in The Washington Post.

How many VA facilities are under investigation? 26 and counting. CNN.

Obama to Shinseki: I've got your back, at least for now. "He offered a careful defense of his VA secretary as a dedicated, disabled veteran, but left himself room to shift course....But on key issues facing the agency — veteran homelessness, the GI Bill for Iraq and Afghanistan veterans, reducing the enormous backlog for services — Obama praised Shinseki's effort, not his results....Reaction from veterans groups was mixed." Kathleen Hennessey and Richard Simon in the Los Angeles Times.

Why isn't Congress calling for Shinseki's head? His military service. "The reason many members are holding back, however, goes much deeper. Unlike Attorney General Eric Holder or former Health and Human Services Secretary Kathleen Sebelius, who recently found themselves on the wrong side of Republican ire, Shinseki is a decorated veteran. A four-star general, Shinseki served in the Army for nearly 40 years, including two combat tours in Vietnam, in which he lost part of his foot to a land mine. The admiration for Shinseki's service has many members letting their pitchforks lie, at least for now." Sarah Mimms in National Journal.

But Congress is trying to give the VA more flexibility. "The House easily passed legislation Wednesday that would make it easier for the Veterans Affairs secretary to fire or demote senior employees, a proposal that gained support after allegations of mismanagement at the agency. The VA Management Accountability Act was first introduced before the recent firestorm over reports that VA medical facilities concealed long waits for healthcare. But the recent developments led House leaders to accelerate its consideration." Michael A. Memoli in the Los Angeles Times.

Explainer: What is the VA Accountability Act? Ed O'Keefe in The Washington Post.

Just how far do the VA's woes go back? Decades. "Looking for a lone villain in the VA debacle...is a fool's errand. It's true that...Obama is yet to eliminate the long waiting times for veterans seeking help. Blaming him alone, however, is to ignore roots of the problem that stretch back decades before....Instead, the sheen of shame over the VA's failures spreads across time and party affiliation. It stains the legacies of presidents as far back as John F. Kennedy and condemns past Congresses whose poor oversight allowed the problem to fester. The VA itself is also not without fault, as bureaucracy and intransigence let the department deteriorate to the point the problem became nearly impossible to fix." Jordain Carney and Stacy Kaper in National Journal.

Flip side: Seven years of promises, but still no fix. Elias Groll in Foreign Policy.

Explainers:

Everything you need to know about the VA — and the scandals engulfing it. Katie Zezima in The Washington Post.

Timeline: The story behind the current VA scandal. The Arizona Republic.

Shinseki rescinds bonus of senior Phoenix VA official. "Secretary Eric Shinseki rescinded a performance bonus of approximately $9,000 that had been given to the director of the Phoenix VA Health Care System, Sharon Helman, according to a VA spokesman. Mr. Shinseki placed Ms. Helman on administrative leave on May 1, along with two other employees, pending the results of a review of the hospital by the agency's acting inspector general, the VA said." Ben Kesling in The Wall Street Journal.

How the failure to expand Medicaid under Obamacare is hurting veterans. "The failure of some states to expand Medicaid is leaving a quarter-million veterans without health insurance. Many assume that all of the nation's veterans are entitled to health care through the Veteran's Administration, but that's not the case; a veteran must have served for two continuous years or the full period for which they were called to active duty in order to be eligible. There are some exceptions — like for individuals who were discharged for a disability sustained in the line of duty — but about 1.3 million veterans remain uninsured nationwide." Adrianna McIntyre in Vox.

SALAM: What we can learn from the VA scandal. "Rather than rely on centralized institutions that struggle to adapt to new circumstances, we need to facilitate the rise of new institutions and new service delivery models that aren’t weighed down by past practice. The VA scandal is just the latest sign that America is being weighed down by outdated, brittle institutions. The federal government shouldn’t be a collection of top-down bureaucracies — it should relinquish power, and serve as a platform for new solutions tailored to new needs as they emerge." Reihan Salam in National Review.

COHN: Long waits aren't just a VA problem. "Some of the problems veterans are having right now have very little to do with the VA and a whole lot to do with American health care. As Phil Longman, author of Best Care Anywhere, noted in his own congressional testimony last week, long waits for services are actually pretty common in the U.S.—even for people with serious medical conditions—because the demand for services exceeds the supply of physicians....The difference is that the VA actually set guidelines for waiting times and monitors compliance, however poorly. That doesn’t happen in the private sector. The victims of those waits suffer, too. They just don’t get the same attention. " Jonathan Cohn in The New Republic.

Top opinion

MEYERSON: Could a higher minimum wage actually boost job creation? "The standard argument — really, the only argument — against raising the minimum wage is that it will lead to job loss. The argument is beloved by die-hard opponents of raising the wage because it provides them with a veneer, however flimsy, of concern about the welfare of the working poor. Economic studies have repeatedly shown that argument to be spurious. Now the latest survey of 350,000 small businesses from Paychex, a payroll provider company, and IHS, a business analysis firm, provides strong indications that the exact opposite may be true." Harold Meyerson in The Washington Post.

MADRICK: Is the Piketty bubble subsiding? "The Piketty bubble may be coming to an end. Economists are starting to criticize the heart of his argument. That is not to diminish important aspects of his book. But the most profound of his claims simply may not hold....In the long run, I think Piketty’s work will indeed prove seminal. It will force economists to deal with the remarkably wide range of issues he raises. But he hasn’t replaced Marx with a more well-founded model of capitalism’s unfairness." Jeff Madrick in Naked Capitalism.

FEYMAN AND BABALIEVSKY: Competition is good, but Obamacare isn't out of the woods. "The point is this – competition would have helped keep 2014 premiums somewhat lower. That’s good. But it is far from clear that 2015 will resemble 2014, or that the law, as currently structured, is sustainable long-term. Pealing back benefit requirements (allowing more competition on benefit design and actuarial value) widening age-rating bands, and overall deregulating the exchanges, can be another powerful tool in keeping premiums down." Yevgeniy Feyman and Fil Babalievsky in Forbes.

RILEY: Job-stealing immigrants? "Throughout the 20th century, periods of higher immigration correlated with periods of lower unemployment. Even recent history attests to this. Under President Bush, there was more immigration (both legal and illegal) and lower unemployment. Under President Obama, the opposite has been true. Maybe the economic lesson here is that countries needn't worry about too many foreign workers entering their labor markets. The time to worry is when the immigrants stop coming." Jason L. Riley in The Wall Street Journal.

KUPIEC: The Fed's misguided blueprint for regulating capital markets. "The process by which the Financial Stability Oversight Council decides that a financial institution is systemically important is neither clearly defined in Dodd-Frank nor is the council subject to congressional oversight. Yet through this process the Federal Reserve can expand its regulatory jurisdiction to any corner of the financial system....Federal Reserve regulation of U.S. capital markets would be a huge mistake....The only way to prevent this from happening is new legislation by Congress that would restrict the FSOC's authority to designate financial institutions as systemically important." Paul H. Kupiec in The Wall Street Journal.

Sports interlude: Tara the hero cat threw out the ceremonial first pitch, and it was a purrfect strike.

2. The new-look Fed is getting some new voices

The Fed's new voice takes shape. "The Federal Reserve's board of governors is poised to get a host of new voices over coming months, a shuffling of personality and perspective that comes as a debate over when to start raising interest rates begins to get louder. The most prominent incoming governor is economist Stanley Fischer, who was confirmed by the Senate on Wednesday on a 68-27 vote....The Senate is expected to also confirm him to become vice chairman of the board, but that vote hasn't been set. Mr. Fischer...is expected to play a leading role helping Chairwoman Janet Yellen forge consensus on the Fed's sometimes-fractious policy committee, which is composed of the seven board members and five of the Fed's 12 regional bank presidents." Pedro Nicolaci da Costa in The Wall Street Journal.

Explainer: What you should pay attention to in the Fed's very busy week. Ylan Q. Mui in The Washington Post.

The hawks and doves start their debate on controlling rates. "Federal Reserve policymakers last month began laying groundwork for an eventual retreat from easy monetary policy with a discussion of how to best control interest rates as they remove trillions of dollars from the financial system. No final decisions were taken, and minutes of the session, released on Wednesday, said the Fed was merely engaged in 'prudent planning' and not signaling it was ready to 'normalize' monetary policy or raise interest rates any time soon. Still, the discussion...coupled with fresh comments by top officials, show an intensifying discussion over both exit-strategy details and a developing split over basic analysis of the U.S. economy." Michael Flaherty and Howard Schneider in Reuters.

Part of the split: How much slack? "Yellen has argued consistently in recent months that labor markets are abundant with slack that will hold inflation and wages down. But she hasn't convinced all her colleagues. Minutes...showed a lengthy debate on this subject and suggested labor-market slack will become an important battleground....Many economists believe lots of slack in the labor market — large numbers of unemployed or underutilized workers — means the Fed can keep interest rates very low to help boost economic growth without generating high inflation. Conversely, they think that if there isn't much slack, or that it decreases rapidly, the central bank should raise rates more quickly." Jon Hilsenrath in The Wall Street Journal.

Primary source: Minutes of the Fed's April 29-30 meeting.

Don't expect alternative rate-hike tools to become the norm. "Two Federal Reserve officials are making the case that the novel tools likely to be employed to push short-term interest rates higher don't necessarily augur a permanent policy-making overhaul....New York Fed chief William Dudley and San Francisco Fed chief John Williams said this week that the new tools — including so-called reverse repos and interest paid on excess reserves — will likely have a role to play in lifting short-term rates from near zero, where they have been since the heights of the financial crisis....Mr. Dudley's and Mr. Williams's comments show how the Fed is still experimenting with key parts of the financial system more than five years after the crisis. " Michael S. Derby in The Wall Street Journal.

Primary source: Dudley's remarks.

Other economic/financial reads:

Summers: Student debt slowing the U.S. housing recovery. Josh Mitchell in The Wall Street Journal.

The young and the jobless: U.N. forecasts stubbornly high youth joblessness. Somini Sengupta in The New York Times.

Lawmakers reach deal on job retraining. Kristina Peterson in The Wall Street Journal.

Trade bank fits some firms against GOP. Kristina Peterson and Michael R. Crittenden in The Wall Street Journal.

Long read: Was it household debt that caused the Great Recession? Heather Boushey in The Atlantic.

Yellen interlude: No monetary policy here, but an interesting commencement speech nonetheless.

3. Patent reform fails — and government surveillance reforms are faltering Surprise!

Patent reform is dead — again. "A yearlong effort to pass legislation protecting companies against so-called patent trolls was declared all but dead on Wednesday, when the bill was removed from the Senate Judiciary Committee’s agenda. Supporters of the bill said heavy lobbying by pharmaceutical and biotechnology companies, universities and trial lawyers prevented the bill from advancing....The bill was meant to limit those companies, widely known as patent trolls, whose main business is to gather dormant patents, threaten infringement lawsuits against supposed violators and then offer to settle for less than the target’s probable cost of mounting a defense." Edward Wyatt in The New York Times.

So close, but so far... "As late as Wednesday morning, Leahy and the bill's two top shepherds — Sens. John Cornyn (R-Tex.) and Chuck Schumer (D-N.Y.) — were said to have settled on the bill's language, saying, as one reform advocate put it, 'pencils down.' 'We thought we were good, and Cornyn thought we were good,' said the advocate...'Leahy's statement dropped publicly without any of the Republicans — including Cornyn — having a heads-up, which as you can imagine, has them a little pissed off.'" Brian Fung in The Washington Post.

Privacy advocates hang up on NSA phone-surveillance overhaul. "Although the bill is likely to pass [the House] Thursday, the changes hammered out in secretive negotiations over the last few days between the Obama administration and leaders on Capitol Hill have led some privacy groups and civil libertarians to withdraw their support. They warn that the revisions, including changes to what sort of government data searches would be permitted, could provide loopholes that would allow massive data collection to continue." Lisa Mascaro in the Los Angeles Times.

Add Silicon Valley to the opposition. "The Reform Government Surveillance coalition — whose members include Google, Facebook, Microsoft, AOL, Apple, Twitter, LinkedIn, DropBox, and Yahoo — issued a statement Wednesday announcing it was pulling its support of the USA Freedom Act. The legislation would take the storage of phone records out of government hands and keep them with phone companies." Dustin Volz in National Journal.

So much for those backup plans. "The House Rules Committee voted late Tuesday to block consideration of amendments from Reps. Justin Amash (R-Mich.), Zoe Lofgren (D-Calif.) and several other lawmakers. The lawmakers are unhappy with a bill intended to reform the NSA, known as the USA Freedom Act, and their measures would have taken additional steps to tighten requirements on the agency. They had sought to add the amendments to both the USA Freedom Act, and a defense policy bill." Kate Tummarello in The Hill.

Selfie interlude: Forget selfies. It's all about dronies now.

4. How the climate is changing...our politics and policymaking — or not

Can Steyer change the politics on climate? "Billionaire environmentalist Tom Steyer plans to finance full-fledged political campaigns in at least seven states key to Democratic fortunes in the 2014 midterms and the 2016 presidential race....The independent efforts run by his super PAC, NextGen Climate, will...seek to mobilize voters on the local impacts of climate change. The group plans to highlight issues such as drought in Iowa and the rising cost of flood insurance in Florida. It will also spotlight the climate-change skepticism of GOP Senate and gubernatorial candidates, and the campaign donations they have received from the fossil-fuel industry." Matea Gold in The Washington Post.

How Senate control could hinge on Dems' opposition to 'war on coal.' "The 'war on coal' rhetoric on the campaign trail isn't about coal and the evolution of the coal industry and climate change. It's about the sort of visual that flickered in the background of Mitch McConnell's Election Day splash page on his website: a defense of a Kentucky that has a tradition of grit and hard work. Obama's upcoming, wonky announcement about how coal plants need to better manage emissions of a global warming gas is going up against that vision of what made and makes Kentucky great. Wonky vs aspirational? Take a guess which message will win out this fall." Philip Bump in The Washington Post.

EPA carbon-pollution crackdown in 3, 2... "With less than two weeks to go, the Environmental Protection Agency is readying a climate rule for existing power plants that requires a steep reduction in carbon emissions while allowing states and companies broad flexibility in how they limit overall greenhouse gas discharges. While key aspects of the proposal are still under discussion...the measure will spur regional carbon-trading programs on the East and West coasts and is likely to draw a legal challenge from some utilities. As currently drafted, the rule would cut greenhouse gas emissions from the utility sector by 25 percent...but the baseline for that reduction has not been finalized." Juliet Eilperin and Steven Mufson in The Washington Post.

Could El Niño alter the political climate on global warming? "The shifts between El Niño and La Niña offer an elegant explanation for at least some or perhaps most of the slowdown in atmospheric warming. The hiatus is said to have begun in 1998, just after the historic El Niño of 1997 and early 1998. La Niña has often prevailed since then, cooling the atmosphere. The return of El Niño is likely to increase global temperatures. Mr. Trenberth believes it is 'reasonable' to expect that 2015 will be the warmest year on record if this fall’s El Niño event is strong and long enough. That could make a difference in the battle for public opinion." Nate Cohn in The New York Times.

Counterpoint: Don't expect such a (political) climate change despite record-hot April. "Which isn't to say that temperature data doesn't influence public opinion on climate change. A University of New Hampshire study in January of 2013 found that more people accepted climate change as temperatures were warmer than expected. That change, though, was almost entirely among independent voters, as this chart shows. Democrats and Republicans were largely set in their belief patterns. That's the ongoing problem when it comes to climate politics. It has become such a politically loaded topic — what hasn't?! — that even one of the hottest Aprils in recorded history likely won't change attitudes much." Philip Bump in The Washington Post.

Out of this world: House science committee has held more hearings on aliens than on climate change. Emma Roller in National Journal.

Chart: Map shows April's record-tying warmth. Climate Central.

Long read: Why do people persist in believing things that aren't true? Maria Konnikova in The New Yorker.

Other environmental/energy reads:

Neb. court to weigh in on Keystone XL. Talia Buford in Politico.

Keystone XL gets some competition. Matthew Philips in Bloomberg Businessweek.

BP wants justices to put some payments from Gulf spill on hold. Collin Eaton in the Houston Chronicle.

Probe finds scant oversight of chemical plants. Hope Yen in the Associated Press.

Animals interlude: Mama bear rescues cub from highway.

5. The state Obamacare exchange casualty list keeps growing and growing

It's crunch time for Obamacare's broken exchanges. "The states that tried and failed to run their own Obamacare health insurance marketplaces aren't quite ready to call it quits....The broken exchanges present two major issues...what happens to the hundreds of millions of dollars that were sunk into these failed exchange systems....Secondly, supporters of the coverage expansion ultimately want to provide the easiest enrollment experience possible in 2015. It turns out that HealthCare.gov — despite its early problems and those that are still ongoing — is the better option for these problem states. And in many cases, states using the federal Web site were just as effective in signing up the eligible population." Jason Millman in The Washington Post.

The latest state Obamacare exchange casualty: Nevada. "Nevada officials will drop the vendor responsible for building the state’s health insurance exchange and move to join the federal HealthCare.gov exchange after a bumpy rollout frustrated thousands of residents seeking coverage. The Silver State Health Insurance Exchange board voted unanimously on Tuesday to dump Xerox, which won the $72 million contract to build Nevada’s exchange. Because so many parts of the exchange were never built, or were built so poorly, the state has only paid Xerox about $12 million." Reid Wilson in The Washington Post.

Oh, Oregon... "The U.S. attorney’s office in Portland has issued subpoenas to Oregon’s health insurance exchange as part of a grand jury investigation into the spectacular failure of the state’s system, which was never able to enroll consumers online even though it spent more than $248 million in taxpayer money on the operation." Maeve Reston in the Los Angeles Times.

Burwell's HHS nomination process is going (Bur)well. "Eight Republicans lent their support Wednesday to the confirmation of a new Health and Human Services secretary, steering clear of another fight over Obamacare. The Senate Finance Committee voted 21-3 to send Sylvia Mathews Burwell's nomination to the full Senate, which will likely hold a final confirmation vote after the Memorial Day recess. The committee's Republican members split 8-3 on the nomination, with Sens. Pat Roberts, John Cornyn, and John Thune voting no." Sam Baker in National Journal.

Other health care reads:

Critics call Obama funding plan for health insurer losses a "bailout." Noam N. Levey in the Los Angeles Times.

Report: Who offers the most affordable exchange coverage? Tony Pugh in McClatchy Newspapers.

The emergency room problem that Obamacare won't solve. Adrianna McIntyre in Vox.

The individual-mandate penalty helped drive health enrollments. Louise Radnofsky in The Wall Street Journal.

Following abuses, Medicare tightens reins on drug program. Charles Ornstein in ProPublica.

Man-on-the-street interlude: Asking people what they think of "Godzilla" being based on a true story.

Wonkblog roundup

Why Southern cities are so much more dangerous for pedestrians. Emily Badger.

It’s crunch time for Obamacare’s broken exchanges. Jason Millman.

D.C. is a bigger financial powerhouse than Shanghai. Christopher Ingraham.

What you should pay attention to in the Fed’s very busy week. Ylan Q. Mui.

The latest sign that everyone has completely given up on a reasonable tax code. Max Ehrenfreund.

Women are still way behind men when it comes to retirement savings. Jonnelle Marte.

Health insurance coverage now costs $23,215 for a typical family. Jason Millman.

We have no idea how big the peer-to-peer economy is. Emily Badger.

Why medical debt is killing your credit score. Danielle Douglas.

What 60 years of political gerrymandering looks like. Christopher Ingraham.

Et Cetera

House GOP blocks immigration proposals. Seung Min Kim in Politico.

The tea party is losing the battle but winning the war. Ben Jacobs in The Daily Beast.

U.S. seeks disclosure of all fees fliers face. Matthew L. Wald in The New York Times.

Texas has 3 of nation's 5 fastest-growing cities. Jesse J. Holland in the Associated Press.

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

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

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