Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara (@pkollipara). 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. Follow Wonkblog on Twitter and Facebook.
Wonkbook’s Number of the Day: 16.98 million vehicles. That's the annualized number of vehicles sold in June in the U.S., the highest level since 2006.
Wonkbook’s Chart of the Day: With California now in the mix, 11 states will have breached a $9 minimum wage by 2018, this chart shows.
Wonkbook's Top 4 Stories: (1) Summer transportation headaches; (2) closing the book on SCOTUS's term; (3) economics of our changing health-care system; and (4) cracking down on financial abuse abroad.
1. Top story: Just in time for your July 4 travels, a series of transportation-policy headaches.
Deadline to replenish the Highway Trust Fund: About Aug. 1. "President Barack Obama chided Congress for inaction as his administration began notifying states that federal reimbursements for highway and transit construction projects will slow down as soon as August....The U.S. Transportation Department will stop paying states in full when the Highway Trust Fund dips below $4 billion about Aug. 1, Transportation Secretary Anthony Foxx said at a breakfast today in Washington....Lawmakers are at an impasse both over long-term financing for the Highway Trust Fund and a short-term replenishment to ensure states can keep road construction and repaving projects going for the rest of the year." Jeff Plungis and Angela Greiling Keane in Bloomberg.
What happens when the U.S. hits Aug. 1? "DOT will implement a 'cash management plan' to parcel out federal reimbursements for state outlay....In letters to state transit department chiefs, Sec. Foxx outlined out that this procedure will affect funding for two of the three Highway Trust Fund accounts: the Highway Account and the smaller Mass Transit Account. Under the new dispensation, DOT will reallocate revenue it receives from the federal gas tax to the states in payments every two weeks. The semi-monthly cash management-plan payments will be distributed in proportion to each state's federal apportionment for the fiscal year....The news is slightly less grim for the Mass Transit Account." Kriston Capps in The Atlantic CityLab.
Primary source: Foxx's letter to the 50 states' transportation departments.
As Corker and Murphy keep pitching a gas-tax hike, crickets. "Earlier this month, Murphy proposed raising the gas tax by 12 cents a gallon over the next two years. After that, he wants the tax to go up automatically at the rate of inflation. Murphy's co-sponsor is Republican Senator Bob Corker of Tennessee....Corker and Murphy have proposed corresponding cuts in taxes elsewhere in the budget so lawmakers wouldn't have to swallow an overall tax increase. But Murphy acknowledges it won't be easy....So far the idea has gained little traction on Capitol Hill. And it hit a dead end at the White House." Scott Horsley in NPR.
Background reading: How budget gimmicks hurt an otherwise smart proposal. Howard Gleckman in Forbes.
Traveling for July 4? Gas prices are at their highest for this time of year since 2008. "U.S. drivers will pay the most expensive Independence Day gas prices since 2008, primarily because Iraqi violence has increased global petroleum costs. AAA predicts that 34.8 million Americans will travel 50 miles or more by car during the holiday weekend despite high gas prices....AAA does not believe that high gas prices will have a significant impact on the number of people traveling, but it could result in some consumers cutting back on dining, shopping or other trip activities. AAA’s full Independence Day forecast can be found here." AAA.
If there's any consolation, the Iraq crisis's impact could have been worse. "Heavy fighting in the north of Iraq has had little impact on the southern refineries that produce around 90 percent of the OPEC member's oil shipments. Brent is still up about 3 percent this month, its biggest monthly gain since August. But it has come off the nine-month high of $115.71 hit two weeks ago." Reuters.
Use public transit? Your fares may be going up, thanks to summer's arrival. "Summer is a time for fare increases at some of the nation’s urban and suburban transit systems. On Sunday the Washington-area Metro system increased its fares, while Boston, St. Louis, and Brevard County, Fla. are increasing their fares on Tuesday." Tom Curry in Roll Call.
What's spurring all these recalls by GM? "The Department of Transportation fined GM $35 million for allegedly delaying the recall of more than 2 million mid-2000s model cars that were found to have a dangerous ignition switch flaw. GM since then has acknowledged a series of other problems that led to...additional recalls this week....Critics have accused the Transportation Department of poor oversight, but Foxx argued Tuesday the agency's fines forced GM to admit it had additional problems....Some lawmakers have pushed to remove the cap on the Transportation Department's ability to fine auto companies in cases that are similar to the GM incidents." Keith Laing in The Hill.
The company's regulatory woes aren't hurting its sales. "It has been a mystery in the auto industry in recent months: How can General Motors, embroiled in a safety crisis that has led to the recall of about 29 million vehicles worldwide this year, continue to have such strong sales? On Tuesday, G.M. again defied the negative publicity, announcing that its sales in June rose by 1 percent over the same month a year earlier, to 267,461 vehicles sold, and keeping pace with an overall strong industry performance." Aaron M. Kessler in The New York Times.
Interview: What is Feinberg's thinking behind the GM payouts? Jeff Bennett in The Wall Street Journal.
Other transportation reads:
Airfare is about to get a bit more expensive in order fund TSA security screening. Brianna Ehley in The Fiscal Times.
THOMA: Are calls for income redistribution based on envy or justice? "The idea that envy drives calls for redistribution is based upon the belief that the capitalist system rewards each individual according to their productivity — and the value judgment that each individual has a right to an income that equals his or her contribution to society. Those who are more productive and contribute more have a right to a larger share of our national income....In this scenario, calls for redistribution are nothing more than envy....But what if the accumulation of income and wealth in the hands of a few is driven by market imperfections, legislation, and the formal and informal institutions that shape how capitalism functions?" Mark Thoma in The Fiscal Times.
PORTER: Persuading China to act fast on climate change. "When the Environmental Protection Agency published in June its new rules to combat carbon emissions from power plants, the American political class lit up in debates over what this meant for the country’s carbon emissions, its coal industry and its economic growth. But a more relevant discussion was taking place some 7,000 miles away....The most pressing issue is to what extent and under which conditions China will participate in the global effort to combat climate change. Any hopes that American commitments to cut carbon emissions will have a decisive impact on climate change rely on the assumption that China will reciprocate." Eduardo Porter in The New York Times.
KLEIN: The Ex-Im Bank fight is the most important in the GOP in years. "The battles that have obsessed Washington in recent years have been powerfully consequential....The Ex-Im Bank is not a fight of this magnitude: its destruction might cost a few jobs now, or maybe not, and its absence might generate a few jobs later, or maybe not....But the fight over the Ex-Im Bank might prove, in the long sweep of American politics, to be something of a political turning point. It has become the top priority of a dedicated group of conservative policy entrepreneurs who want to see the Republican Party hack away at the ties between big government and big business. And the Ex-Im Bank might prove to be something their movement badly needs but hasn't scored until now: a win." Ezra Klein in Vox.
TUCKER: Hey, anti-coal warriors, make nuclear peace. "It is ridiculous to think we can go into the Industrial Belt of the Midwest and tell people they must close down coal plants without anything to replace them....With gas leading a manufacturing revival, pressure building to export it, and attempts under way to substitute gas for gasoline in our cars, who knows how long the price will remain low? We should be building nuclear reactors right beside every old coal plant. Had we pursued this path 40 years ago, we would not only have lowered U.S. carbon emissions, as have France and Sweden, but we could be helping other countries reduce theirs as well. We can still, if we go back to that road not taken and revive nuclear energy." William Tucker in The Wall Street Journal.
SEIB: Do we have the makings of a third party? "So you have a populist strain — defined by the classic populist belief that the establishment and its financial power centers don’t have the interest of the common man and woman at heart — running through both parties....There still is much that keeps these two groups of populists apart, most notably differences over cultural issues and a big difference in belief in the value of government activism to address their grievances....But if there emerges a figure who can pull together some of these populist strains into a single coherent movement, there would be the potential for a real shakeup of the political alignment." Gerald F. Seib in The Wall Street Journal.
DOUTHAT: The courts and the changing culture wars. "The reality was always a little more complicated than this, but the basic binary of secular jurists versus religion-friendly legislators had a lot of explanatory power. Now, though, it pretty clearly no longer obtains....On other culture-war fronts — same-sex marriage, most notably — the old dynamic still sort of shows up, with judges repeatedly overturning democratically-enacted (though, in many cases, no longer majority-supported) laws that religious conservatives tended to support. But on religious liberty, the old order is increasingly reversed." Ross Douthat in The New York Times.
Freak accident interlude: This bear got its head stuck in the cookie jar.
2. Tying a bow on the Supreme Court's term
Long read: How did the Supreme Court change America this year? Nineteen legal experts explain. Politico Magazine.
How Roberts brought unexpected pragmatism to the court. "Chief Justice John Roberts joined with unexpected allies — his liberal colleagues — in an alliance that drew some of the Supreme Court's major decisions closer toward the ideological middle....The balancing act sometimes left conservatives such as Justice Antonin Scalia fuming over what they saw as missed opportunities to reduce the federal government's treaty powers, curb environmental regulation and relax limits on antiabortion activism outside women's clinics. But Chief Justice Roberts may be aiming to build a stronger foundation for his jurisprudence by making appeals toward the four liberal-leaning justices, who could see partial accommodation as preferable to outright defeat." Jess Bravin in The Wall Street Journal.
The big cases: How did the Supreme Court rule? The Wall Street Journal.
A scorecard of the Obama administration's mixed record in Supreme Court cases. The Wall Street Journal.
Is Washington gridlock bringing the court together? "Religion is different. The justices divide bitterly over it. Monday's case was further clouded by the issue of reproductive rights and the assertion by the family-owned companies in the dispute that some contraceptive drugs and devices are akin to abortion....In politically gridlocked Washington, the justices, particularly Chief Justice John Roberts, could be feeling institutional pressure to come together rather than pull apart, Harvard law professor Richard Fallon said. But the justices found themselves more apart than together on Monday." Joan Biskupic in Reuters.
A middle path on big business. "The Supreme Court showed there are limits to the business-friendly reputation it has earned under Chief Justice John Roberts, with the term that ended Monday marked by rulings favoring the middle ground on big issues from securities fraud to environmental regulations....This term's business rulings came a year after companies scored several significant victories, including in rulings that made it easier to defeat several types of class-action lawsuits.In some cases, business advocates were on the losing end altogether....The court's other major environmental ruling of the year revived an EPA program designed to limit power-plant emissions blowing across state lines." Brent Kendall in The Wall Street Journal.
Explainer: The court's five most-important decisions this term for business. Paul M. Barrett in Bloomberg Businessweek.
Those not-so-unanimous unanimous rulings. "Faux-nimity? Un-unanimous? The number of rulings without dissent skyrocketed to rates not seen since the 1940s, and the court’s percentage of closely divided decisions dropped to a modern low. Such cases can mask deeper conflicts, and those were on display in the term’s finale this week. The decisions announced Monday showed that stark divisions — conservative opposed to liberal; Republican appointees on one side, Democratic ones on the other; even women vs. men — exist on the court beneath a frequent veneer of 9-to-0 comity....Nonetheless, the outpouring of agreement is noteworthy." Robert Barnes in The Washington Post.
Interactive: A unanimous court, divided. Katie Park, Annie Daniel and Robert Barnes in The Washington Post.
Chart: 60 years of growing polarization at the Supreme Court. Christopher Ingraham in The Washington Post.
The justices agree: Your privacy matters. "Supreme Court justices found more common ground than usual this year, and nowhere was their unanimity more surprising than in a ruling that police must get a judge's approval before searching the cellphones of people they've arrested. The term that just ended also had its share of 5-4 decisions with the familiar conservative-liberal split....But the 9-0 cellphone decision last week may be the most consequential of the justices' 67 rulings....It signaled a high degree of skepticism about the government's authority, without any need to satisfy an impartial judge, to sweep up vast quantities of information that individuals store...as well as other records that companies keep online." Mark Sherman in the Associated Press.
A year after DOMA ruling, gay-rights activists pop question to SCOTUS. "They plan to use the same kind of coordinated legal and public relations strategy that’s led them to 16 out of 16 victories in lower courts, including Tuesday’s in Kentucky, where a district judge appointed by President George H.W. Bush struck down the state’s gay marriage ban. Those decisions, along with movement in states that have legalized marriage legislatively, have created momentum. But they’ve also created an unusually pockmarked legal landscape that has different marriage laws state to state, even in the same region. It’s the sort of situation, many believe, that just might motivate the Supreme Court to step in and establish one set law." Edward-Isaac Dovere in Politico.
But they're wary about the Hobby Lobby ruling's impact. "Gay rights groups voiced cautious optimism Tuesday that this week's Supreme Court decision exempting some corporations from offering contraceptive coverage for female workers will not trigger a widespread assault on same-sex benefits or anti-discrimination laws protecting gays and lesbians in the workplace. But advocates emphasized that the full impact of the high court ruling, which Justice Ruth Bader Ginsburg criticized in her dissent as one of 'startling breadth,' may not be known for years to come." Timothy M. Phelps and David G. Savage in the Los Angeles Times.
Related: How Ginsburg's dissent is shaping the debate over reproductive rights and religious freedoms. Nia-Malika Henderson in The Washington Post.
How the Hobby Lobby case affects other contraception-related cases. "The Supreme Court...confirmed that its decision a day earlier extending religious rights to closely held corporations applies broadly to the contraceptive coverage requirement in the new health care law, not just the handful of methods the justices considered in their ruling. The justices did not comment in leaving in place lower court rulings in favor of businesses that object to covering all 20 methods of government-approved contraception....Tuesday's orders apply to companies owned by Catholics who oppose all contraception....The justices also ordered lower courts that ruled in favor of the Obama administration to reconsider those decisions in light of Monday's 5-4 decision." Associated Press.
SCOTUS adds several corporate cases to its docket for next term. "The Supreme Court on Tuesday added a bundle of new cases...including one involving United Parcel Service Inc. that examines employer obligations to accommodate pregnant workers. The court agreed to hear eight cases examining a range of issues, including employment discrimination, state taxes and antitrust issues....The Supreme Court's decisions to hear the UPS, natural gas and Alabama cases involved the court choosing not to follow the advice of Solicitor General Donald Verrilli, whose office represents the federal government at the court." Brent Kendall in The Wall Street Journal.
Here are some key cases that SCOTUS said no to:
SCOTUS refuses to hear two appeals from Madoff, Stanford fraud victims. Jonathan Stempel in Reuters.
Supreme Court won't hear dispute over Calif. fuel standard. Jeremy P. Jacobs in Greenwire.
Supreme Court passes on Google privacy case. Julian Hattem in The Hill.
Court won't hear case challenging gay-therapy ban. Lisa Leff in the Associated Press.
Other legal reads:
Obama judicial nominees racing to the bench after Reid went nuclear. Al Kamen and Colby Itkowitz in The Washington Post.
Coal company uses glitch to swing for fences against EPA climate rule. Zack Colman in the Washington Examiner.
Samuel Alito: The most important conservative in America today? Dustin Volz and Emma Roller in National Journal.
YGLESIAS: 5 mistakes liberals make about corporate personhood and Hobby Lobby. "Progressives want contraceptives to be broadly available, and the case makes that harder. But the case has also reignited popular outrage and mockery over the legal doctrine of corporate personhood, an issue that's been the subject of intense — but mostly wrongheaded — liberal scorn ever since the Court's citation of the principle in striking down certain campaign finance laws in the Citizens United case." Matthew Yglesias in Vox.
McARDLE: Hobby Lobby should never have come to court. "The Barack Obama administration should have pre-empted the issue by quietly allowing exemptions for nonprofits and closely held corporations that had clear and deep religious beliefs that existed outside of the desire not to pay for contraception. (Hobby Lobby, for example, is closed on Sundays in observation of the Sabbath, even though this costs them sales...) Instead, the administration chose to pick this fight — and got a definitive ruling that will probably have much broader impacts than quiet exceptions. Nor is this surprising." Megan McArdle in Bloomberg View.
GAGE: Should we care about unions' fate? "Most commentary on the Supreme Court’s Harris decision has emphasized the ruling’s limited nature: While public-sector unions can no longer collect certain administrative fees, the decision could have been much broader, and much more damaging to organized labor. But there is another, more important decision that still needs to be made when it comes to unions, and this one will happen mostly outside of the courts. Unless something dramatic changes, Americans are on the verge of living in a nation where the right to organize and to belong to a labor union no longer exists. The country will need to decide, sooner rather than later, if those rights are worth preserving." Beverly Gage in Slate.
Science interlude: How does the immune system work?
3. Some looming economic and technical problems for our changing health-care system
Wasteful and unnecessary care remain problems. "Overtreatment and preventable medical errors are huge drivers of health care costs and lead to thousands of unnecessary deaths every year, but action to reverse both continues to lag....The drive toward more transparent costs is critical to helping people make often complicated choices about their health coverage, from choosing a high-deductible insurance plan to figuring out which plan delivers the best value at the lowest cost, the panel agreed. But panelists stressed that patients...aren’t in the best position to be assertive with their doctors." Kyle Cheney in Politico.
The slowdown in U.S. health spending has put growth more in line with that of other developed countries. "Health-care spending per person grew 1.4 percent in 2011, more in line with similar countries, from about 7 percent in 2002, when most other advanced nations experienced about 3 percent growth....The declining growth rate coincided with a long, severe recession and U.S. health-care policies aimed at reducing drug costs and reining in physician reimbursements, researchers said. Still, at $7,212 per person, the U.S. spent more than any other developed country on health care, with 17 percent of GDP going toward medical costs, according to the study." Marie French in Bloomberg.
What's in a health economist's toolbox for controlling cost growth? "Unbeknownst to most consumers, both the government and private-sector insurers have been making significant changes to how they reimburse hospitals and physicians for the services they provide to patients. Are economists being too hard on healthcare providers? Certainly not. Economists can offer strategies to control costs, while maintaining or improving the quality of care. Doing so can make healthcare and insurance affordable to more Americans." Vivian Ho in The Hill.
Cheaper premiums in proposed skimpier copper plan might come back to bite your wallet anyway. "If you offer it, will they come? Insurers and some U.S. senators have proposed offering cheaper, skimpier 'copper' plans on the health insurance marketplaces to encourage uninsured stragglers to buy. But consumer advocates and some policy experts say that focusing on reducing costs on the front end exposes consumers to unacceptably high out-of-pocket costs if they get sick. The trade-off, they say, may not be worth it." Michelle Andrews in Kaiser Health News.
It's only a matter of time before cyberattacks imperil health records. "The health world is flirting with disaster, say the experts who monitor crime in cyberspace. A hack that exposes the medical and financial records of tens of thousands of patients is coming, they say — it’s only a matter of when. As health data become increasingly digital and the use of electronic health records booms, thieves see patient records in a vulnerable health care system as attractive bait....On the black market, a full identity profile contained in a single record can bring as much as $500....The issue has yet to capture attention on Capitol Hill, which has been slow to act on cybersecurity legislation." David Pittman in Politico.
Obamacare is spurring huge demand for primary care practitioners, especially nurse practitioners... "ACOs and other new models of health care delivery...see nurse practitioners and physician assistants being able to do much of what a primary care doctor does. This includes assisting with checkups and physicals. Research conducted last year by the RAND Corporation said an expansion of patient-centered medical homes and nurse managed-health centers could 'eliminate 50 percent or more of the primary care shortage' in the U.S. by 2025....Nurse practitioners are also in demand from retailers and grocers that continue to open clinics in their stores." Bruce Japsen in Forbes.
Related: Is Obamacare driving this surprising stock? Todd Campbell in Motley Fool.
...and for supply, more generally. "The U.S. is expected to need 52,000 more primary care physicians by 2025, according to a study by the Robert Graham Center, which does family medicine policy research. But funding for teaching hospitals that could train thousands more of these doctors expires in late 2015. Population growth will drive most of the need for family care doctors, accounting for 33,000 additional physicians, the study says. The aging population will require about 10,000 more. The Affordable Care Act is expected to increase the number of family doctors needed by more than 8,000, the study says." Kaitlyn Krasselt and Jayne O'Donnell in USA Today.
Other health care reads:
Health-care exchanges are not properly ensuring applicants’ eligibility, probe finds. Amy Goldstein in The Washington Post.
The crazy way our government buys billions of dollars in drugs. John Tozzi in Bloomberg Businessweek.
Painkiller prescription rates vary widely among states. Kim Painter in USA Today.
NIH expands action on "medical mystery" diseases. Lauran Neergaard in the Associated Press.
Graduation interlude: This graduation speech could get stuck in your head.
4. How the U.S. is cracking down on financial violations abroad
Is the BNP fine a sign of tougher U.S. action abroad? "A U.S. crackdown on financial institutions for alleged sanctions-busting threatens to penalize more European banks after France’s BNP Paribas SA (BNP) was fined a record $8.97 billion for dealing with blacklisted countries....Authorities around the world are increasing their scrutiny of lenders in the aftermath of the financial crisis, looking into allegations ranging from aiding tax evasion to dealings with blacklisted regimes to manipulating interest rates, currencies and commodity prices. The probes are forcing companies in Europe to set aside reserves of cash just as the European Central Bank reviews their balance sheets to see if they are sufficiently capitalized." Shane Strowmatt, Fabio Benedetti and Sonia Sirletti in Bloomberg.
IRS to shine light on citizens' foreign accounts, investments. "The Internal Revenue Service is about to get an unprecedented look at bank accounts and investments U.S. citizens hold abroad, through a law that is making it harder to hide assets from the tax collector....The U.S. government will start imposing 30 percent taxes on many overseas payments to financial institutions that don’t share information with the IRS. That new burden has...created a new standard of global bank-to-government information sharing....No one knows yet how successful the law will be....Still, it allows the U.S. to scoop up data from more than 77,000 financial institutions and 80 governments about its citizens’ overseas financial activities." Richard Rubin in Bloomberg.
The policy implications of the wave of 'tax inversions.' "While it is not illegal for a United States company to seek to lower its tax rate by merging with a foreign company, such deals have large policy implications. If Walgreen were to move, would CVS Caremark be far behind? What about other companies? CVS’s tax rate was about 34 percent last year, which would clearly make it less competitive than a reincorporated Walgreen, both in terms of pricing drugs and attracting investors....All of these inversions...highlight the need for corporate tax overhauls." Andrew Ross Sorkin in The New York Times.
Good luck getting Congress to agree on tax fixes for inversions. "Lawmakers in Congress aren’t about to repeal the tax. They say they don’t want to do modest tinkering with the tax code so they can save the energy...for that bigger, broader tax reform. But in the same breath members of Congress say doing bigger, broader tax reform is impossible in today’s polarized Congress. So nothing happens. In Congress, that is. U.S. corporations, though, aren’t waiting. Moving a headquarters abroad or buying a foreign firm to the same end...once was startling, or considered mildly unpatriotic. Today...executives and boards of many public companies think they have a fiduciary responsibility to shareholders to consider the move." David Wessel in The Wall Street Journal.
Other economic/financial reads:
U.S. factory, auto sales drive growth outlook. Lucia Mutikani in Reuters.
The re-explosion of U.S. house prices is over. Peter Coy in Bloomberg Businessweek.
Housing: Small economic sector with big economic impact. Neil Irwin in The New York Times.
Animals interlude: This kitten is afraid of the carpet.
Oklahoma is winning its Medicaid standoff with the feds — for now. Jason Millman.
Conservatives say the U.S. has done enough to create equality for blacks. Young liberals agree. Emily Badger.
First ladies of finance Yellen and Lagarde are set to face off on economic policy. Ylan Q. Mui.
60 years of growing polarization at the Supreme Court. Christopher Ingraham.
The great American Hispanic wealth gap. Roberto A. Ferdman.
Benjamin Button counties: Where the median age is getting younger. Christopher Ingraham.
The data on America’s annual tradition: injuring ourselves with fireworks. Steven Overly.
These are the companies with the most to lose from the Ex-Im Bank battle. Rebecca Robbins.
How bad policy is making the Great Recession’s damage permanent. Matt O'Brien.
Why Harris v. Quinn isn’t as bad for workers as it sounds. Lydia DePillis.
Male-female pay gap remains entrenched at the White House. Zachary A. Goldfarb in The Washington Post.
Kerry warns U.S. will deport undocumented Central American children. Patricia Zengerle in Reuters.
Independent panel: NSA surveillance program's targeting of foreigners is lawful. Ellen Nakashima in The Washington Post.
More executive actions on the way. Reuters.
Congress quietly deletes key disclosure of free trips by lawmakers, sparking outrage. Shane Goldmacher in National Journal.
Sex offense statistics show U.S. college reports are rising. Nick Anderson in The Washington Post.
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