Wonkbook: Congress fails on infrastructure. Again.
By Ezra Klein,
On Friday, President Obama signed the Surface Transportation Extension Act of 2012. Odds are you didn't hear about it. There wasn't a signing ceremony in the Rose Garden, and no one on the Hill rushed to the cameras to take the credit. The White House's statement was less than 50 words, and neither John Boehner, Nancy Pelosi, Harry Reid, or Mitch McConnell even issued a press release. And for good reason: Each and every one of them is ashamed of this bill. As they should be.
Semi-trucks drive on a highway in North Dakota in March.
But, on September 30, 2009, SAFTEA-LU -- yes, that's actually the 2005 Act's acronym -- ran out. And since then, Congress has passed, and Obama has signed, nine short-term extensions. Nine.
There's plenty of blame to go around on this issue. The short-term extensions have passed under Democrats and Republicans. They've passed under Speaker Pelosi and Speaker Boehner. But, in the weeks before this last short-term extension, the Senate, at least, got tired of falling short. Boxer-Inhofe -- a two-year, $109 billion transportation bill -- passed with more than 70 votes. The White House, which has supported a much larger transportation bill, quickly weighed in on Boxer-Inhofe's behalf: "We are hopeful that the House will move swiftly and in similarly bipartisan fashion to do the same," said Press Secretary Jay Carney.
But the House didn't. Another stopgap was all they could manage. And with the previous stopgap about to run out -- and thus the federal funding that supports many of the nation's infrastructure projects about to dry up -- the Senate followed suit, and, on Friday, Obama signed the bill into law. Quietly.
The Surface Transportation Extension Act of 2012 extends federal funding for 90 days. That means states have 90 days in which they actually know how much transportation funding there will be, and how Washington will apportion it. Come June 30th, however, the stopgap stops, and Congress will either have to pass some long-term legislation or pass a 10th stopgap. If they go the latter route, you can bet that, once again, they'll pass it quietly, and with a well-deserved sense of shame.
1) WE'RE NOT GETTING A HIGHWAY BILL THIS YEAR. Advocates see little chance of a long-term highway bill passing before the election. "Transportation advocates are losing hope for passage of a highway bill before the election following Congress's decision this week to pass another short-term funding extension. Instead of approving the multi-year transportation bill that passed the Senate, lawmakers adopted a temporary extension of legislation that already funds road and transit projects. The short-term measure, signed Friday by President Obama, extends federal transportation funding until June 30...Supporters of a long-term transportation measure argue highway funding is not as simple as extending previous appropriations, such as when Congress passed 22 extensions of funding for the Federal Aviation Administration before approving a multi-year bill for the agency this year. The Congressional Budget Office projected earlier this year that there could be a bankruptcy as early as 2014 in the federal Highway Trust Fund." Keith Laing in The Hill.
Some states are privatizing their infrastructure. "Say you’re a state politician. Your local roads, bridges, and transit systems are all in dire need of upgrades. But there’s not much money left. Budgets are crunched. No one wants to raise taxes. And Congress is throttling back on transportation funding. So what’s left? Privatization, of course. Maryland is the latest state looking to join the fray. At the moment, its legislature is mulling a bill that would encourage the government to seek out private companies to build, operate, and maintain the state’s roads, bridges, and public buildings. Virginia adopted this approach nearly a decade ago. And a growing number of states -- from California to Florida -- have been bringing in private capital to bankroll their transportation needs...Few transportation experts think we can fill our multi-trillion-dollar infrastructure shortfall with private money alone. Still, as many states find themselves scrounging under sofas for cash, privatization may prove increasingly appealing." Brad Plumer in The Washington Post.
2) HEALTH-CARE FALLOUT: Health insurers are worried about what would happen if Obamacare is struck down. "Abandoning the efforts and billions of dollars invested since the law was passed in 2010 would result in turmoil for hospitals, doctors, patients and insurers. Many insurers would have difficulty changing course. 'The risk of repeal and starting from zero frightens them infinitely more' than having to comply with the law as written, said Michael A. Turpin, a former insurance executive who is now a senior executive at USI Insurance Services, a broker...Health insurance companies, which would be freed from some of the already existing regulations limiting their profits, would have to readjust their thinking about how best to compete. While companies would continue to make money by carefully selecting which customers to cover and would adjust their business accordingly, many insurers say the health care market is deeply flawed. 'The system doesn’t work,' said Mark T. Bertolini, the chief executive of Aetna. 'Something has to be done.' The law, 'while imperfect in a number of ways, was a step forward,' Mr. Bertolini said." Reed Abelson and Katie Thomas in The New York Times.
If the Supreme Court strikes down Obamacare, it could have sweeping implications for federal power. "The Supreme Court has yet to rule on President Barack Obama’s health care law, but court watchers already are handicapping the domino effect if it falls. If the justices knock out key parts of the law or bring down the whole thing, the reverberations could be felt across the legal landscape for generations to come, radically reining in the scope of federal power, according to supporters of the law and others who closely track the high court. And if the justices decide the individual mandate is a constitutional overreach, these observers say, federal labor and environmental laws could be the next on the firing line...During three days of dramatic hearings last week, conservative justices signaled they are deeply skeptical of the individual mandate, a pillar of the law that requires nearly all Americans to buy health insurance or pay a fine. And if that goes down, the conservatives didn’t seem much more enthusiastic about upholding the rest of the law or its expansion of Medicaid." Josh Gerstein in Politico.
A few states will start health exchanges no matter what happens in the SCOTUS. "A handful of states say they are planning to press ahead and voluntarily implement a key part of the 2010 federal health-care law even if it is wiped out by the Supreme Court...The health-care overhaul requires that all states have a new insurance exchange where consumers can comparison-shop for policies. The law calls for them to operate like travel websites that sell airline tickets, allowing people to stack up policies next to each other and get plan details in simple terms. The exchanges, set to take effect in 2014, are one of the most popular parts of the new law. States can run their own exchanges or let the federal government do it for them. Officials in Rhode Island, California and Colorado--states where governors are broadly supportive of the law--say they plan to move ahead with their exchanges even if the entire law gets struck down." Louise Radnofsky in The Wall Street Journal.
@joshgreenman: If the mandate is unconstitutional, wouldn't privatizing Social Security be unconstitutional? Government forcing you to buy private product.
@TheStalwart: Craving broccoli
3) AFTER TRAYVON: House Democrats are looking at policy responses to Trayvon Martin's death. "In the wake of the slaying of Florida teenager Trayvon Martin, House Democrats are drafting legislation designed to prevent similar tragedies in the future. The lawmakers want to adopt tougher rules for neighborhood watch programs, eliminate certain state gun laws, rein in racial profiling and require an examination of racial disparities nationwide. The Democrats behind the legislation - all members of the Congressional Black Caucus (CBC) - say the steps might have prevented last month's fatal encounter between Martin, 17, an unarmed African-American walking home from a convenience store in Sanford, Fla., and George Zimmerman, 28, a Latino neighborhood watch volunteer carrying a 9mm handgun. Zimmerman, who was not arrested, says he acted in self-defense after Martin attacked him. Florida’s 'Stand Your Ground' law allows deadly force in some cases of self-defense." Mike Lillis in The Hill.
More civilians are killing people and claiming self-defense. "At a time when the overall U.S. homicide rate is declining, more civilians are killing each other and claiming self-defense--a trend that is most pronounced in states with new 'stand your ground' laws. These laws, which grant people more leeway to attack and even kill someone who is threatening them, are attracting close scrutiny following February's controversial killing of 17-year-old Trayvon Martin in Florida by a neighborhood watchman. Florida has one of the broadest self-defense laws of the 25 states with some version of a 'stand your ground' principle. So-called justifiable homicides nearly doubled from 2000 to 2010, the most recent data available, when 326 were reported, according to a Wall Street Journal analysis of crime statistics from all 50 states. Over that same 11-year period, total killings averaged roughly 16,000 a year, according to the state figures." Joe Palazzolo and Rob Barry in The Wall Street Journal.
4) Seniors hold more than $35 billion in student loans. "The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens. New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old. That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation’s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt. " Ylan Mui in The Washington Post.
5) Fannie and Freddie's regulation may reconsider its position on principal reductions. "For years, the federal regulator overseeing the taxpayer-backed mortgage-finance giants has resisted calls to have the firms cut loan balances, often referred to as principal write-downs. But in recent weeks he has come under intense pressure to change course, especially now that the U.S. Treasury is offering to split the cost. In an interview this past week, Edward DeMarco, acting director of the Federal Housing Finance Agency, said while he's still skeptical about the benefit of principal reductions, 'we said all along, if money came from another source, we'd have to reconsider our position.' He says his agency will make a decision by mid-April. The offer by the Treasury Department to help pay for principal write-downs has put Mr. DeMarco in a tough spot: He's consistently argued that his mandate to reduce losses at the firms means putting the narrow interests of the firms ahead of broader housing market policy. The Treasury's subsidies could reduce those costs, but don't change his underlying doubts about whether principal reductions are good policy." Nick Timiraos in The Wall Street Journal.
1) TOOBIN: The Supreme Court could redefine what government can do. "The decision is a great deal more important than its immediate political aftermath. It’s about what the government can do, not just who runs it. If the Court acts in line with the sentiments expressed by the conservatives last week, it could curtail the policymaking options of Congress for a generation. An adverse decision on the Affordable Care Act could even jeopardize the prospects for conservative legislative priorities, like health-insurance vouchers or private retirement accounts in lieu of Social Security. It is simply not the Supreme Court’s business to be making these kinds of judgments. The awesome, and final, powers of the Justices are best exercised sparingly and with restraint. Their normal burdens of interpreting laws are heavy enough. No one expects the Justices to be making health-care policy any more than we expect them to be picking Presidents, which, it may be remembered, is not exactly their strength, either." Jeffrey Toobin in The New Yorker.
2) KRUGMAN: Paul Ryan's budget relies on wishful thinking. "On Thursday Republicans in the House of Representatives passed what was surely the most fraudulent budget in American history. And when I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities...The Ryan budget purports to reduce the deficit -- but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes. And we’re talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close? None." Paul Krugman in The New York Times.
3) THALER: Presidents can't control gas prices. "Everyone knows it’s dangerous to ingest gasoline or to inhale its fumes. But I am starting to believe that merely thinking about the price of gasoline can damage cognitive processing. Thus I may be risking some of my precious few remaining brain cells by writing about that topic. Here is a one-item test to see whether you are guilty of cloudy thinking about gas prices: Do you believe that they are something a president can control? Many Americans believe that the answer is yes, but any respectable economist will tell you that the answer is no...Here is why: Oil is a global market in which America is a big consumer but a small supplier. We consume about 20 percent of the world’s oil but hold only 2 percent of the oil reserves. That means we are, in economics jargon, 'price takers.' Domestic production has increased during the Obama administration, but it has had minimal effects on global prices because, as producers, we are just too small to matter much." Richard Thaler in The New York Times.
4) PEARLSTEIN: The Supreme Court won't overturn Obamacare. "I don’t agree with the conventional wisdom that, in light of last week’s oral arguments, it’s a sure thing that the court will overturn the law or its individual mandate. Judging from their blatantly partisan bleating from the bench, it is certain that Justices Antonin Scalia and Samuel Alito will join Clarence Thomas in doing whatever it takes to impose their conservative, free-market, nothing’s-changed-since-1788 agenda on the country...In the end, Roberts will see the institutional peril in overturning the most significant piece of domestic legislation in a generation, particularly in the wake of the overtly partisan decisions of Bush v. Gore and the Citizens United. With Kennedy in tow, the chief is likely to articulate a modest new limit on Congress’s power to regulate interstate commerce that would allow health reform to proceed in some fashion." Steven Pearlstein in The Washington Post.
5) DOUTHAT: The mandate was a political solution. "When the Obama White House set out to make the liberal dream of universal health coverage a reality, it faced two obvious political obstacles. The first was the power of the interlocking interest groups -- insurance companies, physician associations, pharmaceutical companies -- that potentially stood to lose money and power in a comprehensive reform. The second was the price tag of a universal health care entitlement, which promised to be high enough to frighten vulnerable members of Congress. The key to overcoming both obstacles, it turned out, was the mandate to purchase health insurance. In arguments before the Supreme Court last week, the health care mandate was defended as a kind of technocratic marvel -- the only policy capable of preventing the complex machinery of reform from leaking smoke and spitting lug nuts. But the mandate is actually a more political sort of marvel." Ross Douthat in The New York Times.
@Atul_Gawande: Implication Douthat implies we must accept: increasing inequality in not just income but also access to survival.
New Zealand pop interlude: Kimbra plays "Settle Down" live at SXSW.
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Still to come: Riskier investments don't always pay off for pension funds; insurers worry about what happens if Obamacare is gone; cities ponder big changes; little chance of a highway overhaul before the election; and famous movie scenes, plus cats.
Consumer spending increased despite weak income gains. "Americans stepped up their spending in February despite meager gains in income, as they shopped for cars and other long-lasting goods and shelled out more at the gas pump. Consumer spending increased 0.8% in February, adjusted for seasonal factors, the biggest monthly increase since July, the Commerce Department said Friday. Figures for spending in January were revised higher. Economists had expected a 0.6% rise in February consumer spending. In a worrying sign, the rise in spending wasn't accompanied by strong growth in wage and salary income, which rose only 0.2% in both February and January. Income growth is crucial for consumer spending. Consumers also are having to spend more because of rising gasoline prices...Consumer spending fuels roughly two-thirds of economic demand, making it a key driver of growth in the economy." Neil Shah in The Wall Street Journal.
A little-noticed provision in the JOBS Act is drawing concern. "A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public--a provision that might have prevented investors from finding out about Groupon Inc.'s early accounting questions until after they had been resolved. The provision, part of the bill passed by Congress and expected to be signed by President Barack Obama this week, would enable companies to submit confidential drafts of their initial-public-offering documents to the Securities and Exchange Commission before they file publicly. Critics say that measure would allow a company like Groupon, which had well-publicized disagreements with the SEC over its accounting last year, to resolve such issues under the radar, without investors learning of them until later although still before any IPO. The provision is getting increased attention in the wake of Groupon's disclosure of further accounting problems." Michael Rapoport in The Wall Street Journal.
@mattyglesias: Admittedly, the JOBS Act is all but certain to spur growth in the long-suffering pyramid scheme sector.
A few lawmakers voted no on all the budgets this year. "For some lawmakers last week, 'yes' was never the right answer. In all, nine Democrats and five Republicans pulled the 'no' lever on all seven budgets the House considered on Wednesday and Thursday, which included offerings of all ideological stripes...The 'none of the above' caucus did see its numbers drop this year, from roughly two dozen to 14, even as there were more than a couple repeat members. Some centrist Democrats who voted against all five budgets in 2011 threw their support behind a proposal this year from Reps. Jim Cooper (D-Tenn.) and Steve LaTourette (R-Ohio) that incorporated the ideas of the fiscal commission. But backers of that alternative said there was deep behind-the-scenes division over whether to bring it up for a vote, since all centrists were not yet in agreement on how the proposal should look." Bernie Becker and Erik Wasson in The Hill.
@NKingofDC: The Dow roars to its best quarter since 1998---while oil is up for 10 of the last 13 quarters. Of the 3 that were down, two were last year.
Parody interlude: Game of Ponies returns!
States' approaches to implementing health reform are drawing new focus. "Variations in the way states have moved to implement the 2010 federal health-care law have taken on greater significance after last week’s Supreme Court hearings, whose tone heightened speculation that the statute would be overturned. With the exception of Arizona, all of the states and the District of Columbia have amended their health insurance rules or practices to comply with mandates imposed by the law. Those mandates include the elimination of lifetime coverage limits and the requirement that many insurers allow parents to put adult children younger than 26 on their plans. States used a range of methods that, at the time, amounted to little more than technical variations in approach. Now those distinctions could make all the difference." N.C. Aizenman in The Washington Post.
Republicans are struggling to find bipartisan support for their Medicare proposals. "Republicans have also failed to get mileage out of Wyden's cooperation with Ryan last December. While the Medicare proposal in the House-approved budget retains the Ryan-Wyden plan's option for seniors to stay in traditional Medicare, it contains several differences that have enabled Wyden to stop shy of endorsing Ryan's reforms." Julian Pecquet in The Hill.
Fiscal troubles are forcing cities to consider dramatic steps. "A number of cities and counties around the country with long-term problems have found themselves pushed over the edge by the recession and its lingering aftermath. The audience here listened to war stories from the emergency fiscal managers that Michigan has installed in a couple of its most distressed cities. Even Nassau County, on Long Island, one of the wealthiest counties in the nation, has seen its perennially troubled finances placed under a state-appointed control board...Attempts to plug budget holes with one-time transactions are giving way to other approaches, Mr. Stanton said. The conference was devoted to a discussion of the strengths and weaknesses of the more powerful tools being used in many cities these days, including receiverships, emergency declarations and even bankruptcy." Michael Cooper and Mary Williams Walsh in The New York Times.
Disputes over tactics may delay postal reform. "A disagreement over tactics in the Senate may derail efforts to avert the closure of hundreds of mail-processing centers and rural post offices around the country. Congress will have only a month after the two-week April recess to pass legislation before a moratorium on post office closures expires on May 15. Senate Majority Leader Harry Reid (D-Nev.) had planned to bring legislation to the floor this past week to overhaul the U.S. Postal Service to minimize the impact on mail delivery but he cannot round up enough votes in his caucus. Reid in recent days has worked out a deal with Sen. Bernie Sanders (I-Vt.), a vocal advocate of stopping cuts in service planned by the postal service, to advance the legislation but two key Democratic senators, Max Baucus (Mont.) and Jeff Merkley (Ore.) are holding out for more. The fight could make it tough for the Senate to pass the postal reform bill and win approval from the House before the five-month moratorium on closing post offices expires." Alexander Bolton in The Hill.
@ezraklein: Patents are one of those areas of public policy where the divide isn't left/right, but incumbents/non-incumbents, and money/not-money
Mashup interlude: Famous movie scenes + famous cat videos.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.