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: 4,700. That's roughly how many more babies were born in the U.S. in 2013 than the year before, the first annual increase since 2007.
Wonkbook’s Chart of the Day: These charts show that Congress really is getting worse.
Wonkbook's Top 4 Stories: (1) The economy's soon-to-end winter doldrums; (2) what EPA's climate proposal would do; (3) Medicaid expansion's ups and downs; (4) a political food fight.
1. Top story: Why you shouldn't worry too much about the downward-revised GDP figures
Economy shrank during first quarter, revised government data show. "The U.S. economy shrank for the first time in three years during the first quarter, according to government data released Thursday morning, but many analysts believe the recovery has already regained its mojo. Businesses depleted their inventories and cut back on investment in the first three months of the year, while harsh winter weather curtailed construction. As a result, the nation’s gross domestic product fell at an annualized rate of 1 percent. The government’s previous estimate had showed the economy essentially flatlining. The decline highlights the fragility of the nation’s recovery but is not likely to derail it altogether." Ylan Q. Mui in The Washington Post.
Primary source: The Bureau of Economic Analysis report.
3 takeaways from the latest GDP numbers. Josh Bivens in The Wall Street Journal.
What's the difference between GDP and GDI? Matthew Yglesias in Vox.
No, this doesn't mean we're in a recession. "That doesn’t mean the U.S. is in a new recession, at least according to the economists who make that determination....The U.S. economy has only contracted a handful of times since 1947 in any quarter outside of a recession, according to the Commerce Department’s Bureau of Economic Analysis, the agency that tracks GDP figures. Average two consecutive quarters together and there have been no declines when the economy wasn’t in a recession." Sarah Portlock in The Wall Street Journal.
Chart: May GDP cheat sheet. Hamilton Place Strategies.
How you know this one isn't a shocker: Markets saw this one coming. "Stock markets paid little mind to the report in early trading Thursday, with investors betting that the first quarter’s inclement weather was a temporary force that wouldn’t hold back the economy as the year progressed. In New York, major stock indexes dipped briefly after the report was issued but quickly bounced back and were sitting on modest gains." Jim Puzzanghera in the Los Angeles Times.
Sunnier days will bring sunnier economic news. "These weather-related temporary factors should fade....Bullish jobs data released on Thursday also bolstered the case for an economy on the rebound as Labor Department numbers showed first-time applications for state unemployment benefits declined 27,000 to a seasonally adjusted 300,000 last week. The four-week moving average for new claims, a better measure of underlying labor market conditions, hit its lowest level since August 2007....Separately, contracts to buy previously owned homes rose in April for a second month, a positive sign for the troubled housing market. The reports added to data on manufacturing and hiring that have buoyed hopes of strong bounce back in growth." Lucia Mutikani in Reuters.
@JustinWolfers: It's a tribute to the strength of the recovery that we can shrug off such a bad quarter without any serious fears it'll lead to a double dip
Later growth figures will further benefit from a rebound effect. "The U.S. economy shrank at a 1 percent annual rate in the first quarter, but the red ink isn’t nearly as scary as it looks. In fact, the downward blip sets the U.S. up for strong growth in the current quarter covering April to June....Output slowed because they weren’t producing as much stuff to go on shelves. Now companies have an incentive to speed up production to rebuild those inventories." Peter Coy in Bloomberg Businessweek.
Uneven factory job growth means uneven regional recoveries. "The U.S. has added about 650,000 factory jobs since their numbers rebounded after the recession, putting manufacturing workers at 12.1 million and reversing a long decline in such jobs. But uneven growth has created regional disparities in the nation's overall economic recovery....U.S. factory-job gains — driven by a range of factors... — have concentrated in pockets since the recession, particularly in the Southeast and Midwest....Gains often have clustered in places...where taxes are low and unions are relatively weak. But private-sector manufacturing jobs declined in 38% of the counties in the Journal analysis." Cameron McWhirter, James R. Hagerty and Tom McGinty in The Wall Street Journal.
Explainer: 5 things to know about the growth in U.S. factory jobs. Cameron McWhirter, James R. Hagerty and Tom McGinty in The Wall Street Journal.
The health-spending rise that softened the GDP drop-off was revised down a bit. "Health care spending didn't rise as dramatically as originally estimated in the first quarter of this year...but the revised 9.1 percent growth rate was still the highest pace since 1980, as Americans gained insurance coverage through President Obama's health care law....The BEA data is part of a body of data suggesting that health care spending is now back on the rise. It will be important to watch to see whether this growth number survives subsequent revisions, and more significantly, whether it's the start of a lasting trend in the coming years, or just a short blip." Philip Klein in the Washington Examiner.
The political angle: Dems may be a bit uneasy. "The figures are bad news for the White House as well as for Democrats running for Congress in November’s midterm elections. Although there’s still time for growth to rebound before then — and recent data on hiring has been more encouraging — little room remains on the runway for an economic takeoff this year." Nelson D. Schwartz in The New York Times.
Other economic/financial reads:
Economic upswing has fewer Americans receiving food stamps. Pam Fessler in NPR.
Thomas Piketty responds to criticism of his data. Neil Irwin in The New York Times.
Primary source: Piketty's full response.
YGLESIAS: Strange, but true — the economy shrank, but more people are working. "Gross Domestic Product shrank at an annual 1 percent rate in the first quarter of the year and the alternative GDI measure of the same thing shrank even more rapidly. Which makes it all the more puzzling that the news on the jobs front, thus far, seems fine....Those 569,000 net new jobs the economy added in the first quarter weren't runaway growth or anything, but it's a bit puzzling to see more people working in the context of less economic output." Matthew Yglesias in Vox.
SALAM: Explaining the shrinking economy. "Lower exports can be attributed to sluggish growth outside of the U.S., yet it has at least something to do with our dysfunctional corporate tax system, as is the case with depressed business investment....Less state and local spending, meanwhile, reflects the ongoing weakness of local economies, and perhaps, if we’re lucky, a sober assessment of the long-term liabilities facing state and local governments. The federal government is not directly responsible for the overall growth rate of the American economy, regardless of what politicians claim. It does, however, play a large role in creating the conditions for business enterprises to invest and grow. And it’s not doing its job well." Reihan Salam in National Review.
McARDLE: Another sick day for the economy. "This doesn't necessarily signal a slide into another recession, so don't rush out to change your money into gold certificates and canned goods. The lousy weather could easily have depressed all three categories, after all. The markets aren't freaking out; they were expecting this downward revision. That said, as I wrote last month, this is a sign of an economy that is still very weak. It has been six years since the financial crisis. Federal government spending is still around 21 percent of GDP, up from 19 percent in 2007, and the Federal Reserve still has a very expansive monetary policy. Under those circumstances, a quarter of negative growth is pretty unsettling." Megan McArdle in Bloomberg View.
MIAN AND SUFI: Student borrowers assume too much risk. "The federal government plays a major role in the student debt markets; 85 percent of all outstanding student loans are owed to the government. Policymakers are now debating reform of student loan programs, and their decisions will have an enormous impact on the manner in which students finance higher education. We believe they should recognize that the central problem with student loans is that they force graduates to bear a disproportionate amount of risk for circumstances completely outside their control." Atif Mian and Amir Sufi in The Washington Post.
SCHUCK: The real VA problem? Congress. "The VA’s failures are similar to the failures of numerous federal agencies. Only the details differ. Congress assures these failures by demanding what it is unwilling to pay for, by preventing agencies from managing their employees effectively and by tolerating operational inefficiencies that no funder of vital services should accept. Pillorying the VA’s leadership is a necessary but not sufficient remedy. Congressional self-scrutiny must also be a big part of any meaningful solution." Peter H. Schuck in The Washington Post.
CALOMIRIS: A better way to address 'too big to fail' banks. "Critics of Dodd-Frank have long argued that the law has not ended the danger posed to taxpayers and the financial system by 'too-big-to-fail' banks....In March, European Central Bank economists Magdalena Ignatowski and Josef Korte released a paper confirming critics' fears. The largest and systemically most important banks, they found, have not perceptibly changed their risk-taking behavior. Megabanks, it seems, don't take Dodd-Frank's orderly resolution authority as a serious constraint on their behavior. What's next? A new funding requirement—contingent capital — could impose the necessary market discipline on megabanks to avoid their failure and the need for taxpayer bailouts." Charles W. Calomiris in The Wall Street Journal.
CASSIDY: Blame gun laws, not Judd Apatow. "After the gun massacre comes the blame game. It was Hollywood’s fault. Social media is responsible. It’s an issue of mental illness. Or suburban anomie. Or, in this case, male adolescent misogyny and sexual frustration taken to the extreme....We’ve seen this narrative play out many times, and one understands the desire to cover all the angles and search for something new. After all, it gets a bit boring and repetitive to state what is, nonetheless, blindingly obvious....It’s not anomie or misogyny, or too much sex, or too little, or anything else having to do with the dreadful but familiar pathologies of male adolescence and post-adolescence. It’s American gun laws." John Cassidy in The New Yorker.
GOLDBERG: Don't let mass killers hold culture hostage. "I am not an absolutist on such things. After all, I’m not naming these killers precisely because I think the culture matters, including the news culture. But I am more concerned about the effects of culture on sane people. Regardless, it seems to me like a kind of insanity to think we can hold the entire society hostage to the reactions of insane people. Why not instead focus on the source of the problem: the very small minority of mentally ill people who pose a danger to themselves and others? And, yes, guns need to be part of that equation. But blanket efforts to ban guns seem like an analogous effort to ban dangerous speech or art." Jonah Goldberg in National Review.
BURKE: Why firing Shinseki isn't the answer. "General Eric Shinseki is not the problem at the Veteran’s Administration (VA). The calls for him to be fired seem to be from those want a quick and simple solution to what is a much deeper problem....Forcing him out now is likely to make the situation at the VA worse — not better — as there will be no one in place for some time to actually take charge to fix the problem....The fundamental problems at the VA are systemic and not individual, though some individuals undoubtedly did very bad things. In large organizations, it is systems that drive behavior. No one individual, even a cabinet secretary, can dictate systemic behavior to such a degree." Catherine G. Burke in Talking Points Memo.
Feel-good story interlude: Soldier adopts dog that saved his life.
2. How will Obama's EPA climate rule work?
How do carbon-pricing 'cap-and-trade' systems work? "The system encourages companies to find the least expensive ways to make the cuts, either by adopting cleaner energy technology or by investing in outside emission-control projects....Congress rejected a national plan of this type during President Obama’s first term, but 10 states, including most of those in the Northeast and mid-Atlantic, have developed their own programs. And the approach is expected to get a huge lift on Monday when Mr. Obama unveils a long-awaited national plan requiring states to lower their power plant emissions. One likely effect will be to encourage more states to adopt systems like California’s." Justin Gillis in The New York Times.
Explainer: Every number you need for the upcoming political fight over climate change. Philip Bump in The Washington Post.
Poll: Americans by and large support CO2 limits from power plants. Yale University and George Mason University.
This proposal will shift us further away from already-declining coal. "American Electric Power Co. (AEP), the top U.S. coal-burning power plant operator, expects to be challenged and shut some of its largest units if the Obama administration proposes a 25 percent greenhouse-emission cut. The company would likely have to retire plants that can’t be relied on to deliver electricity if the U.S. Environmental Protection Agency requires such steep reductions by 2030 in proposed rules to be unveiled June 2, Chief Executive Officer Nick Akins said yesterday in an interview." Mark Chediak in Bloomberg.
Can industry soften the blow? "The coal and utility industries are increasingly worried about the Obama administration's coming climate-change rule, especially the baseline period from which reduction targets will be calculated....The proposal...is expected to set differing state-by-state percentage reduction targets, rather than a single percentage figure, calculated from a baseline year or average set of years, according to people familiar with EPA deliberations on the rule. The year the standard is based on is critical because U.S. carbon emissions have fluctuated significantly in the past decade. Emissions fell 12% between 2005 and 2012." Amy Harder and Alicia Mundy in The Wall Street Journal.
States say cutting carbon is easier than expected. "States that have already started to control such emissions say it's not as hard as they thought it would be. They've ended up exceeding their goals, largely because of abundant natural gas, which burns more cleanly than coal." Elizabeth Shogren in NPR.
Primary source: Key challenges in the carbon standards for existing power plants. Kyle Aarons in the Center for Climate and Energy Solutions.
Natural gas demand will increase. "The Obama administration’s looming new plan to cut carbon dioxide emissions from power plants could help boost electric utilities’ demand for natural gas by as much as 45 percent, according to rough estimates from a leading industry trade group....Even at the bottom end of the forecasted range, the change would represent a hefty climb in domestic demand, potentially as U.S. facilities start selling more natural gas overseas. " Jennifer A. Dlouhy in the Houston Chronicle.
Obama pats self on back on energy. "The Obama administration is making a concerted effort to cast its energy policy as an economic success....The White House argues that significant increases in the domestic production of natural gas and reductions in oil consumption have better positioned the United States to advance its economic and environmental goals....The report...is designed to inoculate the administration against criticism that new...regulations on coal-fired power plants...will increase electricity costs, cost jobs and be a drag on economic growth. "Jim Kuhnhenn in the Associated Press.
Likely court challenges will venture into largely uncharted waters. "The expected legal battle over the Obama administration's coming limits on carbon emissions from existing power plants could provide a rarity for environmental litigation: a case for which there is scant court precedent....Because the provision has been invoked so rarely, courts have had little opportunity to weigh in on it, creating the unusual circumstance in which potential challengers to the carbon rules would be litigating largely on a blank slate against the EPA." Brent Kendall and Alicia Mundy in The Wall Street Journal.
Can environmentalists make climate politically relevant again? "Even as scientists warn about the mounting dangers of climate change, the political operatives are confronting the same problem....How can they make the dangers of global warming real for voters? It's a challenge that's taking on extra urgency this year....And it's one that a flotilla of environmental groups, spearheaded by a $100 million effort from hedge-fund billionaire Tom Steyer, are working overtime to address ahead of the midterm elections." Alex Roarty in National Journal.
Other energy/environmental reads:
Will clean air laws hurt the economy? We're about to find out. Matthew Philips in Bloomberg Businessweek.
Obama, one-time coal lover. Alec MacGillis in The New Republic.
COHN: Cap-and-trade is back. "This is another case in which the right's anger will be at odds with policy positions mainstream conservatives once professed to hold. Cap-and-trade is a market-based alternative to a more straightforward carbon tax....It was actually part of John McCain’s 2000 presidential campaign and Mitt Romney, as governor of Massachusetts, played a key role in setting up the market now operating in the Northeast. If states have the flexibility most experts expect, the conservative anger will be doubly ironic, because this is precisely the way that most conservatives think federalism should work — by giving states freedom to solve problems in ways that best suit their resources and preferences." Jonathan Cohn in The New Republic.
ROGERS: The left has distorted the debate. "In a classic case of projection, Krugman said, 'the European elite’s habit of disguising ideology as expertise, of pretending that what it wants to do is what must be done, has created a deficit of legitimacy.'...Members of the left in America could learn from these words from one of their own. They need to be honest with themselves and others about how the absurdity of their platitudes and the punitive measures they want to take are what is destroying the political debate on global warming, not Republican intransigence or denial that man-made global warming is at hand." Ed Rogers in The Washington Post.
FREEMAN: Teaching an old law new tricks. "Don’t expect big changes anytime soon. Legal challenges could tie up this effort for years. This is the sad reality of climate policy in the United States circa 2014. With Congress paralyzed on the issue, the country’s climate and energy policy is being made in arcane legal battles over the meaning of single phrases in statutes written long ago, leaving government and industry to duke it out in court." Jody Freeman in The New York Times.
Science interlude: Awesome audio illusions.
3. The positives and pitfalls of expanding Medicaid
Medicaid has a far reach — especially in states that expanded it. "More than half of America’s uninsured were eligible this year for Obamacare subsidies or coverage in Medicaid and CHIP, according to data released Wednesday by the Robert Wood Johnson Foundation. That finding suggests more than 27 million previously uninsured people will be covered by 2016, according to RWJF....'Early data suggest that the uninsurance rate in states that expanded Medicaid has dropped more sharply than in states that decided against the expansion,' said Katherine Hempstead, who leads coverage issues at the Robert Wood Johnson Foundation." Kyle Cheney in Politico.
Primary source: The report.
Poll: Few Americans say health law has helped them. Gallup.
Federal grants to states are up for Medicaid, down for most other things. "The federal government has paid out about 20 percent more to states since the start of the recession, an increase that’s almost entirely driven by exploding health-care costs. Federal spending on health care spiked 34 percent between 2008 and 2014....Funding for education and transportation declined by double digits, in addition to a 13 percent decline in 'everything else,' which includes veterans benefits, energy and agriculture." Sarah Ferris in The Washington Post.
And many more people are getting Medicaid just from increased awareness. "States are confronting new concerns that their Medicaid costs will rise as a result of the federal health care law. That's likely to revive the debate about how federal decisions can saddle states with unanticipated expenses. Before President Barack Obama's law expanded Medicaid eligibility, millions of people who already were entitled to its safety-net coverage were not enrolled. Those same people are now signing up in unexpectedly high numbers, partly because of publicity about getting insured under the law." Ricardo Alonso-Zaldivar in the Associated Press.
Charge premiums, and you'll scare them off. "A few states aim to expand Medicaid on their own terms, and are exploring the idea of charging some enrollees a small premium for the public program. Those terms, it turns out, could scare new enrollees off. Charging Medicaid patients monthly premiums — even if those premiums are as low as $10 — causes people to disenroll, according to a new study in the Journal of Health Economics." Adrianna McIntyre in Vox.
How Medicaid plays into hospitals' headaches paying for uninsured. "A new report from the Urban Institute in the most recent Health Affairs journal notes Medicare payments to help compensate for the cost of treating the uninsured in hospitals are set to drop this year as more get coverage through the Affordable Care Act (ACA). Similar payments for Medicaid will begin to fall starting in 2016, which means the healthcare providers might have to take a larger financial hit. If those funding streams begin to dry up, it could pose major financial challenges to providers, especially in states that have not adopted Medicaid expansion or where implementation of healthcare reform has been slow." Ferdous Al-Faruque in The Hill.
States may use Medicaid to pay for college health plan premiums. "Some students headed to college this fall will get top-drawer health coverage at little or no cost. How? Medicaid, it turns out, will pay the premium for the student health plan. Proponents say students who are eligible for Medicaid, the health insurance program for low-income people, get access to a wider network of doctors and hospitals by getting coverage through the college health plans....In addition, the college health plans generally improve student access to mental health and specialist services." Michelle Andrews in Kaiser Health News and NPR.
Fact-check: What did Mitch McConnell mean with his Obamacare statement? Glenn Kessler in The Washington Post.
Other health care reads:
Then vs. now: How dire predictions about Obamacare didn't come to pass. Dan Diamond in California Healthline.
Doctor shortages cited in VA hospital waits. Richard A. Oppel Jr. and Abby Goodnough in The New York Times.
GOP's health push risks 2008-style backlash. Laura Meckler and Kristina Peterson in The Wall Street Journal.
Obamacare lightens load for cancer patients. Judy Peres in Kaiser Health News and the Chicago Tribune.
New FDA warning stickers are coming to a tanning bed near you. Deborah Netburn in the Los Angeles Times.
Medicare frequently overpays doctors for patients' visits. Charles Ornstein in ProPublica and NPR.
Sports interlude: The worst first pitches of all time.
4. Food fight, Washington, D.C.-style
First lady Obama loses the latest lunch fight on the Hill. "House Republicans pushing to relax school nutrition standards backed by first lady Michelle Obama are looking forward to the coming battle with the Senate. They may have picked an unusually high-profile food fight with the White House — and especially the East Wing — but GOP lawmakers behind the push are confident it’s a fight they can win. The House Appropriations Committee voted, 31-18, Thursday to advance a fiscal 2015 agriculture spending bill with a controversial rider that would allow schools to opt out of nutrition rules requiring more fruits and vegetables, less sodium and more whole grain-rich products if they are losing money from the healthier meals." Helena Bottemiller Evich and Bill Tomson in Politico.
All while we face a global obesity crisis. "The world isn’t getting smaller, it’s getting fatter, according to a comprehensive report published Thursday....Whether you’re looking at men or women, children or adults, citizens of rich countries or poor ones, people were much more likely to be overweight or obese in 2013 than they were in 1980, the study found. In 1980...there were 857 million people on the planet who were either overweight or obese. Thirty-three years later, the comparable figure was 2.1 billion. It’s not just that the global population grew." Karen Kaplan in the Los Angeles Times.
First lady enters the political fray. "The First Lady jumped into the political fray this week to defend new standards for healthy school lunches, a policy she’s promoted as part of her 'Let’s Move' campaign against childhood obesity. In a New York Times op-ed published on Wednesday and a speech on Tuesday, Michelle Obama criticized Republicans for promoting legislation that would exempt schools from the standards." Lindsay Wise in McClatchy Newspapers.
Primary source: The campaign for junk food. Michelle Obama in The New York Times.
Other food/nutrition reads:
Bill requiring genetically modified food labeling fails in Calif. Senate. Patrick McGreevy in the Los Angeles Times.
Animals interlude: Giant herd of manatees.
The best and worst first pitches ever: The video evidence. Ryan McCarthy.
Why law enforcement was powerless to stop Elliot Rodger from buying guns. Harold Pollack.
Wisconsin’s bar-to-grocery store ratio puts the rest of the country to shame. Abby Phillip.
This chart suggests that 50 Cent’s first pitch was indeed the worst ever. Max Ehrenfreund.
Neighborhood violence is hurting black kids’ test scores. Emily Badger.
How to dominate "Jeopardy" like Julia Collins. Christopher Ingraham.
How an $84,000 drug is sparking a new health-care debate. Jason Millman.
Autopsy of a city slowly consumed by blight. Emily Badger.
Economy shrank during first quarter, government data show. Ylan Q. Mui.
Justice Department probes banks for fraud. Danielle Douglas in The Washington Post.
DHS head says controversial program should stay. Seung Min Kim in Politico.
Measles surges in U.S. to 288 cases, most since 1994. Sonali Basak in Bloomberg.
Edward Snowden responds to release of e-mail by U.S. officials. The Washington Post.
How Obama wants to make sports safer. Sophie Novack in National Journal.
House boosts funding for gun background checks. AFP.
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Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.