Wonkbook: Obama’s new EPA rule won’t save the world, and it won’t kill the economy

June 3

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.


(Photo by Jim Urquhart/Reuters)

Wonkbook’s Number of the Day: 2,384 square feet. That's the median square footage of new homes built in the U.S. in 2013, compared with 1,525 square feet 40 years prior.

Wonkbook’s Chart of the Day: Charting how the states will factor into the newly proposed EPA climate rule.

Wonkbook's Top 5 Stories: (1) EPA-rule Econ 101; (2) Shinseki's leaving; now what?; (3) health-care data dump; (4) the future of schooling; and (5) super-size my house, please.

1. Top story: The impact of Obama's new emissions rules

That 30 percent CO2 emissions-cut figure isn't as impressive as it sounds. "By 2030, existing plants must cut carbon emissions by 30 percent from 2005 levels. That sounds like a big number....But it’s actually not as significant a reduction as it would seem. By reaching back to 2005, instead of saying the industry has to cut carbon pollutants from current levels, the EPA did the power industry a huge favor....In all, a 30 percent reduction from 2005 levels means cutting a total of 725 million metric tons of CO2 emissions. That puts emissions at 1,691 million metric tons by 2030, or about the same amount of CO2 the power sector emitted in 1987....Had EPA used 2012 as its baseline, a 30 percent cut would’ve taken emissions down to 1,424 by 2030." Matthew Philips in Bloomberg Businessweek.

Why Obama's fuel-efficiency rules are just as big a deal for climate. "Here's a secret: The agency's previous efforts to impose the first-ever carbon limits on passenger cars and light trucks will do more — by just a smidgen — to address climate change. By 2030...the new power plant proposal will cut 550 million metric tons of annual carbon dioxide emissions. The fuel efficiency standards for the passenger car and light truck for the fleet years between 2012 and 2025 will cut 580 million metric tons by that same year. In the short term, the power plant rule would make steeper cuts since the car fleet turns over gradually. By 2020, the power plant rule would cut 370 million metric tons of carbon dioxide, while the car rules will save 180 million metric tons." Juliet Eilperin in The Washington Post.

Primary source: EPA's guide to the rule.

Explainer: Everything you need to know about the EPA's proposed climate rule. Juliet Eilperin and Steven Mufson in The Washington Post.

Say you want an energy revolution? It ain't happenin'. "States will have broad flexibility, meaning that reductions in coal use will come not only from relying more on other power sources, but also from making homes and buildings more efficient, both of which are already happening. 'I don’t think it’s a revolution because our carbon emissions are already going down because of cheap natural gas,' said Michael Lynch, president of Strategic Energy and Economic Research, a consultancy. 'It’s not Obama’s war on coal. It’s reality’s war on coal. Natural gas turns out to be better than coal in the marketplace.” Changes, analysts said, will differ with each energy industry." Clifford Krauss and Diane Cardwell in The New York Times.

Coal companies costs will go up. And nuclear could be an eventual winner. Mark Chediak and Jim Polson in Bloomberg.

Natural gas, too: The rule could further aid natural gas's rise. Jennifer A. Dlouhy in the Houston Chronicle.

Wonky side note: "EPA's 'base case' doesn't include a major Obama administration rule to cut soot- and smog-forming power-plant pollution that blows across state lines. The Supreme Court upheld that rule in late April, but too late for EPA's modeling, so they're modeling a less-aggressive, Bush-era version of that rule." Ben Geman in National Journal.

No, this rule won't kill the economy. There's some economic benefit to counter the costs, too. "Despite fears that the Obama administration's proposed rule to curb carbon-dioxide pollution could wreak severe damage on the economy, the true effect is likely to be much more modest. And a key reason can be linked to the nation's boom in natural gas production. The Environmental Protection Agency, in announcing plans Monday to reduce power plant emissions 30% by 2030 from 2005 levels, estimated that the measure will cost up to $8.8 billion annually for compliance. It noted that the health and social benefits from the cleaner air probably will exceed $55 billion a year by 2030, far outweighing the costs." Don Lee in the Los Angeles Times.

Charts: These charts show the public-health aspects of the rule. Philip Bump in The Washington Post.

Your electric bill's fate depends on your state. "There are a number of reasons it's hard to project what retail electricity might cost in the future. One has to do with energy markets — fluctuation in things like the price of natural gas, which has fallen in recent years. Another is regional variation. Different areas of the country...rely less on coal, whereas the Mid-Atlantic states rely heavily on cheap, coal-fired power. Also, roughly half of states, including Mississippi and Missouri, are regulated. That means utility companies are guaranteed a rate of return and costs are therefore more likely to pass directly to consumers. But energy markets in states like Michigan and Maryland are deregulated, so companies set their prices and it's harder to say how much will pass through." Yuki Noguchi in NPR.

Prepare for a patchwork of state rules. "President Obama’s new plan to fight climate change depends heavily on states’ devising individual approaches to meeting goals set in the nation’s capital, a strategy similar to the one he used to expand health care, often with rocky results. Rather than imposing a uniform standard for reducing power plant carbon emissions, the regulation unveiled on Monday offers the states flexibility to pick from a menu of policy options. But as with health care, the policy could lead to a patchwork of rules that frustrate businesses and invite resistance from states that oppose the policy." Coral Davenport and Peter Baker in The New York Times.

Chart: The cuts that each state has to make. Brad Plumer in Vox.

The rule won't save the climate by itself. But again, that's not the point. "Sighs of relief are being heard around the world as Obama proposes new domestic climate regulations. The U.S. has long obstructed global efforts to rein in climate change, perhaps most notably by refusing to ratify the Kyoto Protocol. Now the international community is hoping to craft a new global climate deal next year in Paris, and many see Obama’s rules as a good sign....Back when Kyoto was crafted, the U.S. was the world’s biggest greenhouse-gas polluter. Now China is (largely because it serves as the planet’s workshop, making much of the stuff the rest of us consume), so China’s reaction will be especially important." John Upton in Grist.

What do you know: China pledges to cap its emissions for first time. "China, the world's biggest greenhouse gas emitter, has pledged to limit its total emissions for the first time....The timing of the announcement – just a day after the Obama administration implemented tough new rules to cut carbon emissions from power plants 30% by 2030 – appears deliberately chosen to show China will also take a leadership role on climate change....Officials have not yet put a figure on what level the cap will be." Adam Vaughan in The Guardian.

The EU got its climate cookie from the U.S. Now, it wants its glass of milk. "The European Union said the U.S. must do more to reduce greenhouse gas emissions than the proposal President Barack Obama’s government released today if it’s to keep talks on limiting global warming on track." Reed Landberg in Bloomberg.

IEA: Hey, rest of world, you're not doing enough either. "It foresees an evolution of the energy industry that 'falls well short' of what is needed to put the brakes on carbon emissions that are widely blamed for climate change. The organization says that policies and market signals are not strong enough to encourage sufficient investment in low-carbon sources and energy efficiency. But some analysts say the agency may be too pessimistic." Stanley Reed in The New York Times.

Why the politics of the rule could matter to its future. "Initially, Obama wanted each state to submit its plan by June 2016. But the draft proposal shows states could have until 2017 — and 2018, if they join with other states. That means even if the rules survive legal and other challenges, the dust won't likely settle on this transformation until well into the next administration, raising the possibility that political dynamics in either Congress or the White House could alter the rule's course. Although Obama doesn't need a vote in Congress to approve his plans, lawmakers in both the House and Senate have already vowed to try to block them." Dina Cappiello and Josh Lederman in the Associated Press.

Other environmental/energy reads:

If Keystone XL pipeline is rejected, oil may still cross Nebraska by rail. Fred Knapp in NPR.

CHAIT: Obama's bid to become the environmental president. "The Obama administration’s announcement today of new regulations on power plants does not mean that it has saved the planet. It does not even mean that we have necessarily bought time to save the planet. It means, simply, that Obama has done everything within his power to fight the most urgent crisis of our time. That is to say, he has put in place a climate-change policy agenda that is likely, though not assured, to be regarded as a historic success." Jonathan Chait in New York Magazine.

KLEIN: Remember when the GOP accepted climate change? "The power plant regulations the Obama administration will announce today are far less ambitious than the proposal McCain offered in Oregon in 2008. They're less ambitious than the proposals Newt Gingrich championed through the Aughts. They're far less than what's required to keep the rise in temperatures to two degrees Celsius. But they're probably at the outer limit of what can be done so long as the Republican Party refuses to even believe in climate change, much less work with the Obama administration on a bill." Ezra Klein in Vox.

BALL: Two unexpected ways the rule will help fight climate change. "To assess the move’s environmental impact, consider a single figure: 1 percent. That’s the rough proportion of yearly global greenhouse-gas emissions that the new EPA plan is projected to cut by 2030....That doesn’t mean partisans on the right are correct when they call the administration’s plan environmentally meaningless....The real question about the impact of the administration’s new climate proposal is whether it will lead other countries to decide that curbing their carbon output is in their economic interest in a way that, before Monday’s announcement, they believed it wasn’t....But Obama's climate plan could spur action in developing countries in at least two ways." Jeffrey Ball in The New Republic.

PETHOKOUKIS: There's a better way than back-door cap-and-trade. "Rather than President Obama’s back-door cap-and-trade plan, better an expanded public investment agenda into clean energy, including advanced nuclear technologies. One such bipartisan approach was sketched in a joint 2010 report from AEI, Brookings, and the Breakthrough Institute....Government has a role to play here, just not the one demanded by the Obama administration and its green activist supporters.." James Pethokoukis in AEIdeas.

CASSIDY: A war on coal worth fighting. "In all likelihood, the ultimate fate of Obama’s plan will hinge on the 2016 Presidential election. For now, though, he has taken the initiative and put the onus on other countries that have used the lack of U.S. action as an excuse for doing nothing, or very little, to reduce their carbon emissions. China and India, for instance, are both building coal-fired power plants. If the new policy goes into effect, the United States, at long last, will be able to tell them 'Do as I do' rather than just 'Do as I say.' Since climate change is a global problem that can only be solved at the global level, that is an important step forward.." John Cassidy in The New Yorker.

CARLSON: A remarkably business-friendly approach. "I want to move away from the legal challenges the rules will undoubtedly face once finalized, however, and emphasize a different point. EPA has drafted a proposed rule that is meant to achieve greenhouse gas reductions in as cost-effective a way as possible and has proposed moderate, not extreme, cuts by 2030. Despite cries from coal producers, some utilities and Republicans in Congress, EPA could have taken a much less business friendly approach." Ann Carlson in Talking Points Memo.

Top opinion

BERNSTEIN: Why is capital so much stronger than labor? "All of this raises a fundamental question that curiously seems to be unasked: why is capital so powerful? One reason is that labor power is so diminished, what with private sector unions at seven percent of the workforce (public sector unions, historically less vulnerable to outside pressure, are at 35 percent but under attack). But that just begs the question: why isn’t labor more powerful, with 'labor' in this context referring to not only unions but to the much larger group that depends on paychecks for their economic well-being. I don’t know the answer to these questions, but my experience as a policy wonk and economist in government has led me to believe that economics, as currently practiced, is part of the problem." Jared Bernstein in Talking Points Memo.

SALAM: Student debt reform vs. higher education reform. "Many of their prescriptions strike me as enormously appealing, including their call for indexing student debt obligations to the state of the labor market....One virtue of this approach is that unlike debt reforms that peg interest payments contingent to income, like those proposed by the Obama administration, it eliminates the risk that graduates will seek to minimize their interest payments by taking lower-paying jobs. The thornier question is how interest payments would vary....while I’m not opposed to Sufi and Mian’s proposal, and while it is certainly superior to recent proposals from President Obama and Sen. Elizabeth Warren, I think we can do better." Reihan Salam in National Review.

NOCERA: A misguided debate on guns and mental illness. "Once again, a mass killing has triggered calls for doing something to keep guns away from the mentally ill. And, once again, the realities of the situation convey how difficult a task that is. There are, after all, plenty of young, male, alienated loners — the now-standard description of mass shooters — but very few of them become killers....There is another way of thinking about this. Instead of focusing on making it harder for the mentally ill to get guns, maybe we should be making it harder to get guns, period. Something to consider before the next mass shooting." Joe Nocera in The New York Times.

Music interlude: Impressive piano performance by this 9-year-old.

2. With the dust settling, what will Congress do to help the VA?

Congress: Quick, time for us to disagree on how to fix the VA. "So now what? That's what many in Washington will be asking this week now that Veterans Affairs Secretary Eric K. Shinseki has resigned....With Shinseki's sudden departure, it's likely that Congress will take weeks, if not months, to sort out the situation. The debate will break down along familiar lines — Democrats and Republicans agree in principle that something must be done, but the House and the Senate can't agree on how to do it. Senate Democrats are pushing to pass a comprehensive bill with several changes, while House Republicans are touting nine veterans-related measures that they've passed in recent months and seen ignored by the Senate." Ed O'Keefe in The Washington Post.

News compilation: Fixing the VA. Kaiser Health News.

What veterans groups want: An 8-point plan. "A group that supports post-9/11 veterans on Monday laid out eight steps it wants Congress and the Obama administration to take in response to the Department of Veterans Affairs’ scheduling scandal and resignation last week of VA Secretary Eric Shinseki. The Iraq and Afghanistan Veterans of America said its plan would ensure accountability for 'bad employees' and 'incompetent managers,' in addition to helping VA keep up with growing demand." Josh Hicks in The Washington Post.

Explainer: Sen. Sanders' bill. "Senate Veterans’ Affairs Committee Chairman Bernie Sanders (I-Vt.) on Sunday proposed a broad bill aimed at addressing the underlying problems behind the inappropriate scheduling practices, in addition to giving the VA greater authority to remove executives for poor performance. The legislation would also allow veterans to use non-VA medical centers when they cannot obtain timely appointments at VA clinics." Josh Hicks in The Washington Post.

Sens. Reed and Coburn on VA chief: Thanks, but no thanks. Burgess Everett and Jeremy Herb in Politico.

VA hospitals vary widely in care. "A detailed tabulation of outcomes at a dozen VA hospitals made available to The Wall Street Journal illustrates a deeper challenge: vastly disparate treatment results and what some VA doctors contend is the slippage of quality in recent years at some VA facilities. Some of the discrepancies are stark, especially for an agency known for offering high-quality care in 50 states." Thomas M. Burton and Damian Paletta in The Wall Street Journal.

Doctor's shortages aren't just a VA problem. "The Veterans Affairs Department is 400 doctors short, The New York Times reports. But the doctor deficit is not limited to the VA—it's a nationwide problem. America is running out of doctors. The country will be 91,500 physicians short of what it needs to treat patients by 2020, according to the Association of American Medical Colleges. By 2025, it will be short 130,600. Like at the Veterans Affairs Department, demand will be highest for primary-care physicians, the kinds of doctors many people go to first before they are referred to specialists." Marina Koren in National Journal.

Caveat: Health care sector seems to be handling the Obamacare primary-care crush — so far. Phil Galewitz in Kaiser Health News and USA Today.

Foodie interlude: The science of barbecue...mmm.

3. An Obamacare surge of another kind

Surge reported in sales of health care plans. "The number of people who bought health insurance on their own outside of the ObamaCare exchanges surged at the beginning of the year, according to a new report. The Kaiser Family Foundation estimates between 3 million and 3.5 million new people signed up for health insurance either through insurance companies or brokers in March. It estimates a total of 15 million people now have individual insurance through the private market." Ferdous Al-Faruque in The Hill.

Primary source: Read the report. Kaiser Family Foundation.

Good question: Are pre-existing condition bans still with us? "But the mix-up raised a broader question: What about the requirement of the Affordable Care Act that prohibited pretty much all pre-existing condition exclusions as of Jan. 1, 2014? Under the law, the only plans that may continue to exclude coverage for pre-existing conditions after that date are individual plans that are "grandfathered," or haven't changed substantially since the law was passed in 2010. It turns out that the Jan. 1 date wasn't quite as set in stone as many have thought." Julie Rovner in NPR.

Hospital pricing is weird. "Thanks to new data from the Centers for Medicare and Medicaid Services, we now have a better sense of how hospitals increase the listed prices year-to-year....The data released today provide a further window into the typically opaque world of hospital pricing, but this doesn't tell the full story. There's still a big debate about what's driving the major variations in pricing — Medicare officials, when they released the data for the first time last year, suggested patients' health status likely played somewhat of a factor. The hospitals themselves said certain types of facilities have higher cost structures." Jason Millman in The Washington Post.

Related: Why transparency isn't enough for health care prices. Dan Keating in The Washington Post.

Other health care reads:

Doctors are donating less often to Republican candidates. Jason Millman in The Washington Post.

How Obamacare tries to make communities healthier. Jeffrey Young in The Huffington Post.

Bowling interlude: Bowling trick shots.

4. What does the future of schooling look like?

Has the world gone crazy over Common Core? "The growing divide over the standards is anything but a laughing matter. Common Core, which is a broad set of learning objectives rather than a mandate, was developed by governors and education officials from across the country. Now, that’s exactly where much of the push-back is coming from. As states have attempted to implement the standards, with varying degrees of success and cooperation, the more divisive and charged the issue has become." Trymaine Lee in MSNBC.

Explainer: What you need to know about the Common Core backlash. The Week.

Let's get to the core of its curriculum problem. "Forty-four states and the District of Columbia have adopted the Common Core State Standards. That means new learning benchmarks for the vast majority of the nation's young students — millions of kids from kindergarten through high school. And, for many of them, the Core will feel tougher than what they're used to. Because they are tougher. It's a seismic shift in education meant to better prepare kids for college, career and the global economy. But new standards as rigorous as the Core require lots of other changes — to textbooks, lesson plans, homework assignments. In short: curriculum and the materials needed to teach it. And that's the problem. Right now, much of that stuff just isn't ready." Cory Turner in NPR.

Obama on schools: Wired up, ready to go (almost). "The Obama administration says it is on track to meet its goal of ensuring that every school has high-speed Internet within five years. President Obama unveiled the broadband initiative in 2013 and urged the independent Federal Communications Commission (FCC) to expand a program that subsidizes Internet access with the goal of wiring 99 percent of schools." Ramsey Cox in The Hill.

How online classrooms are resetting education. "Lawmakers are singing the praises of new online courses that are reducing costs and freeing students from the constraints of the classroom. The increase in online courses has been particularly pronounced at colleges and universities, which are using new technology to attract non-traditional students who need the ability to juggle other responsibilities....Online courses aren’t just happening at the college level, as the virtual classroom is increasingly being used to educate elementary and secondary school students. Richard Culatta, director of the Office of Educational Technology within the Department of Education, said Congress should invest in training to ensure that teachers use new technology effectively." Ramsey Cox in The Hill.

Can schools cope with the rise in immigrant students? Claudio Sanchez in NPR.

Science interlude: This is your brain on pain.

5. Super-size my the housing market

The housing crash did nothing to tamp our appetite for enormous houses. "There was a time during the Great Recession when it looked like Americans were rethinking our mega-homes....Clearly, that moment has passed. Census data released Monday on the characteristics of new single-family housing construction confirms that the median size of a new pad in America is bigger than it's ever been....In 2013, the median size of a new single-family home completed in the United States was 2,384 square feet....What, then, do we want all of this room for? What's particularly striking in the Census Bureau's historic data on new housing characteristics is the growth of what would be luxuries for many households." Emily Badger in The Washington Post.

Why homeowners who got mortgages may still lose their houses. "Since the housing market unraveled in 2008, lenders have slashed the interest rates on millions of mortgages belonging to struggling borrowers — but only for a limited time. And for about 2 million of the loans, that time is up, or soon will be. Starting this year, the rates will begin to gradually rise on those mortgages, and it’s unclear if the homeowners will be able to handle the higher payments, according to an analysis released Monday by Black Knight Financial Services, a mortgage research firm." Dina ElBoghdady in The Washington Post.

Construction spending reached its highest level since 2009. "U.S. construction spending posted modest gains in April, driven by an uptick in home building and government construction that lifted total activity to the highest level in five years." Martin Crutsinger in the Associated Press.

Manufacturing activity is also on the rise. "U.S. manufacturing activity accelerated in May and construction spending rose for a third straight month in April, suggesting economic growth was regaining steam in the second quarter. The economy sank in the first quarter under the weight of a brutally cold winter and a slow pace of restocking by businesses. But businesses appear to rebuilding inventories, with new orders at factories hitting a five-month high in May." Reuters.

Other economic/financial reads:

World Bank rules out significant changes in global GDP forecasts. Sharon Chen in Bloomberg.

Animals interlude: Here's how a two-legged cat gets down the stairs.

Wonkblog roundup

Doctors are donating less often to Republican candidates. Jason Millman.

The housing crash did nothing to tamp our appetite for enormous houses. Emily Badger.

Further evidence of how weird hospital pricing is. Jason Millman.

Why homeowners who got mortgage help may still end up losing their homes. Dina ElBoghdady.

One easy way to end gerrymandering: Stop letting politicians draw their own districts. Christopher Ingraham.

Why ‘transparency’ isn’t enough for health care prices. Dan Keating.

How environmental policy became partisan. Jamie Fuller.

Everything you need to know about the EPA’s proposed rule on coal plants. Juliet Eilperin and Steven Mufson.

Et Cetera

Seattle's $15 minimum wage sets new standard for big cities. Kirk Johnson in The New York Times.

77,000 banks sign up for U.S. tax evasion fight. Reuters.

White House seeks Pentagon delay on immigration. Seung Min Kim in Politico.

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

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

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