Ezra is on vacation today.
1) The leading GOP presidential candidates squared off in the last debate before Florida's primary report Dan Balz and Amy Gardner: "Mitt Romney and Newt Gingrich sparred here Thursday night over immigration, taxes and wealth, lobbying, and colonizing the moon in a debate that underscored the potential consequences of a loss for either of the leading Republican presidential candidates in Tuesday’s high-stakes Florida primary...The tension between the two contenders was evident throughout the evening, confirming how significant the next several days could be in the race. Gingrich arrived here with momentum from his victory in South Carolina, but polls show the contest is extremely tight heading into the weekend."
3) But the economy isn't expanding enough to make up for lost growth, report Ben Casselman and Josh Mitchell: "The U.S. economy has taken more than two years to claw its way back to producing the amount of goods and services it did just before the last recession. But what about all that 'lost' growth? After slumps, growth usually sprints forward--allowing the economy to not only regain its previous peak but also add enough on top to make it seem as if no recession ever happened. After the early 1980s recession, for instance, the U.S. notched five straight quarters of over 7% growth, quickly putting the economy back on its previous expansion path. That hasn't happened this time...Economists say the nature of the recession helps explain the slow recovery. Aftershocks from the financial crisis have left banks reluctant to lend, making it hard for companies, and especially start-ups, to get access to capital. The housing market, which has historically helped lead the economy out of recession, remains deeply depressed."
4) The defense budget will shrink for the first time since 1998, reports Craig Whitlock: "The Pentagon budget will shrink slightly next year for the first time since 1998, the Obama administration said Thursday, in an attempt to chip away at the federal deficit while reorienting the armed forces toward Asia. Under the proposal, the administration will reduce the size of the Army and Marine Corps, trim the number of fighter aircraft and ships, and seek congressional approval for another round of military base closures...The Pentagon said it would ask Congress for $525 billion in 2013, which represents a 1 percent decrease from the current year. While the difference may sound small, it represents a new era of austerity for the Defense Department that would have been unthinkable just a few years ago, when the military was still accustomed to huge annual raises after the attacks of Sept. 11, 2001."
5) Supply-side economics is at the core of Gingrich's economic agenda, reports Brady Dennis: "With the economy at the core of the presidential campaign, Newt Gingrich has received help from a group of relatively unknown economic thinkers -- including two former advisers to Herman Cain -- who share an unwavering faith in the school of thought known as 'supply-side economics' that rose to prominence more than three decades ago. Unlike Mitt Romney, who long ago surrounded himself with mainstream Republican economists, Gingrich has turned to more zealous advisers who believe the only true solution to healing the nation’s deficit is to spur economic growth through sharp tax cuts, reduced regulation and a tight rein on monetary policy, rather than focusing too keenly on spending cuts."
6) Obama unveiled his energy plans, report Laura Meckler and Keith Johnson: "Working to advance his 'all of the above' energy strategy, President Barack Obama on Thursday embraced natural gas as a transportation fuel, saying it is cleaner and cheaper than oil, and much more abundant inside the U.S...Later Thursday, at an event at Buckley Air Force Base in Aurora, Colo., outside Denver, Mr. Obama touted his administration's support for alternative energy, particularly through the military. The president highlighted a Navy announcement that it will buy a gigawatt of clean energy, enough to power 250,000 homes per year, and mentioned a solar energy installation on the base. The White House natural-gas plan, contingent on congressional support, also includes tax credits to offset part of the cost of upgrading trucks to run on natural gas and federal help to spur the creation of five additional natural-gas corridors on heavy trucking routes."
@AdamSerwer: Deep Thought: Republican audiences like Obamacare when Romney explains it.
1) Entrepreneurship can't flourish without government, writes Paul Krugman: "Mitch Daniels, the former Bush budget director who is now Indiana’s governor, made the Republicans’ reply to President Obama’s State of the Union address. His performance was, well, boring. But he did say something thought-provoking -- and I mean that in the worst way...We should be grateful to Mr. Daniels for his remarks Tuesday. He got his facts wrong, but he did, unintentionally, manage to highlight an important philosophical difference between the parties. One side believes that economies succeed solely thanks to heroic entrepreneurs; the other has nothing against entrepreneurs, but believes that entrepreneurs need a supportive environment, and that sometimes government has to help create or sustain that supportive environment. And the view that it takes more than business heroes is the one that fits the facts."
2) Eliminating fossil fuel subsidies would make a big impact, writes Matthew Yglesias: "What if I told you that we could obtain half the reduction in carbon emissions needed to stave off climate disaster not with new government interventions in the economy but simply by removing existing interventions? Fatih Birol, chief economist of the International EnergyAgency is telling you exactly that. In data released this month as part of the IEA’s latest World Energy Outlook report, he shows that in 2010 the world spent $409 billion on subsidizing the production and consumption of fossil fuels, dwarfing the word’s $66 billion or so of subsidies for renewable energy. Phasing fossil fuel subsidies out would be sufficient to accomplish about half the reduction in greenhouse gas emissions needed to meet the goal of preventing average world temperatures from rising more than 2 degrees Celsius."
3) The Fed's commitment to low interest rates is a good start, writes Robert Kuttner: "The Federal Reserve, in a remarkable acknowledgement of how soft the economy is, has disclosed a vote of its open market committee to keep short term interest rates close to zero for at least three more years--until late 2014. This means that the Fed will keep pumping money into the economy by purchasing bonds at whatever level is required...The move suggests that the Fed has learned one of the two key lessons of monetary policy from the Great Depression, though it has yet to learn the other. The first lesson was to intervene massively when the economy faces deflationary pressures, to make money as cheap and plentiful as possible. By definition, when the economy is in a severe slump and banks aren’t lending and business isn’t borrowing, inflation is the last thing to worry about."
@justinwolfers : The Fed's new communications strategy is what happens when you task a committee with improving clarity. There's a management lesson there...
4) The government must prioritize innovation, writes Alex Tabarrok: "We like to think of ourselves as an innovation nation, but our government is a warfare/welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision. Innovation, however, is not a priority of our massive federal government. Nearly two-thirds of the U.S. federal budget, $2.2 trillion annually, is spent on the four biggest warfare and welfare programs, Medicaid, Medicare, Defense and Social Security. In contrast, the National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion."
5) Corporate campaign spending and growing inequality are a dangerous combination, writes Elizabeth Drew: "Citizens are now faced with evidence of the growing power of organized moneyed interests in the electoral system at the same time that the nation is more aware than ever that the inequality among income groups has grown dramatically and economic difficulties are persistent. This is a dangerous brew. Political power is shifting to the very monied interests that four decades of reform effort have tried to contain. The election system is being reshaped by the Super PACs and the greatly increased power of those who contribute to them to choose the candidates who best suit their purposes. But little attention is being paid to the fact that our system of electing a president is under siege. While the political press is excitedly telling us how the polls on Friday compare with the ones on Tuesday, little notice is taken of the danger to the democratic system itself."
Music video interlude: Florence + The Machine's "Lover To Lover."
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Still to come: Questions for Obama's refinancing plan; drug benefits exceed new standards; the Senate will vote on insider-trading; clean energy subsidies are declining; and a dog watches a movie.
@petersuderman: Romney edging toward the correct answer: I'm proud of being rich, and I want to make sure that every American also has the same opportunity.
Private equity is getting new scrutiny, reports Jia Lynn Yang: "Mitt Romney’s opponents have spent weeks slamming the private-equity industry where he made his fortune, saying it profits from dismantling companies and laying off workers...A class-action antitrust lawsuit against private equity’s most powerful players threatens to further damage the industry’s reputation and, perhaps by extension, Romney’s. It alleges that the firms colluded to drive down the prices paid in some of the most ambitious buyouts in corporate history. Perhaps more significantly, it is forcing an industry known for its secrecy to hand over reams of internal documents and offer up its top executives for depositions. So far, some of the most sensitive information has been kept under seal."
Obama's mortgage refinancing plan is facing questions, reports Suzy Khimm: "The ongoing housing crisis is among the biggest reasons that our economy is still in a funk, and on Tuesday, President Obama laid out a new plan to help resolve it. He wants Congress to pass a bill that would allow 'every responsible homeowner' to refinance at lower interest rates, estimating that it would save every participant about $3,000 a year on their mortgage. Obama would pay for his mass-refinancing plan by levying a new fee on big financial institutions. But economists on both left and right have raised large questions about the plan. The biggest concern is how much risk taxpayers would be taking on through this approach to mass refinancing. A White House official, speaking on the condition on anonymity, indicated that the plan would be fairly broad in scope: It would not only include mortgages that the government already holds through Fannie Mae and Freddie Mac, but also to holders of loans backed by the private sector as well."
Businesses ramped up their spending on goods, report Josh Mitchell and Robbie Whelan: "American businesses stepped up their spending going into the new year, propelled by an economic upswing that has yet to lift much of the housing market. New orders for U.S. durable goods--those lasting longer than three years, such as automobiles and kitchen appliances--rose 3% in December from November, the Commerce Department said Thursday. The data suggest that business spending on equipment climbed for the first time in three months, indicating renewed confidence among companies. However, a separate report Thursday reflected weakness in housing--a departure from a recent stream of signals that the sector may be inching out of its recession-era depths. Sales of newly built homes were weaker than expected in December, falling 2.2% from November to a seasonally adjusted annual rate of 307,000 homes."
The Senate voted to approve a rise in the debt limit, reports Robert Pear: "The Senate voted on Thursday to allow a further increase in the federal debt limit, permitting President Obama to borrow $1.2 trillion more to operate a government that spent about 55 percent more than it collected in revenue last year. The 52-to-44 vote generally followed party lines, with Democrats supporting the increase in borrowing authority and Republicans opposed. In the House last week, Republicans passed a 'resolution of disapproval' to stop the increase in the debt limit. But the Senate refused on Thursday to take up that measure. The upshot is that the debt limit will rise immediately to $16.4 trillion, from the current ceiling of $15.2 trillion."
It could take another five years to fully unwind TARP, reports Alan Zibel: "The U.S. government’s rescue of the financial system could last for five more years as the Treasury Department unwinds its investments in hundreds of banks and other companies propped up in the aftermath of the 2008 financial crisis, a government watchdog said Thursday. The Bush administration launched the financial rescue plan in the autumn of 2008 at the height of the financial crisis. At its launch, Congress authorized spending $700 billion on the bailout known as the Troubled Asset Relief Program, or TARP. The Treasury Department currently estimates that the final cost for TARP will be $68 billion. As of the end of last year, about $414 billion had been spent through 13 programs, while $278 billion had been repaid and $51 billion was still available to be spent, according to a quarterly report to Congress by the special inspector general for the TARP program."
New forecasts are casting doubt on Greece's efforts to secure a new rescue package, reports Landon Thomas Jr.: "Even as Greece tries to convince creditors that its debt-reduction efforts are on track, gloomy new International Monetary Fund forecasts about its long-term economy are threatening to derail talks meant to secure the nation’s next big installment of bailout funds. The concerns, stemming from an analysis that the I.M.F. has been quietly sharing with European officials and Greece’s creditors in recent weeks, come at a crucial time for Athens. The new Greek government is in dual-track talks with private and public sector creditors, trying to make the case that its program for reducing long-term debt is working. The government seeks to persuade private creditors to provide relief by taking some losses on their bond holdings, and to persuade its public sector lenders to release a scheduled allotment of bailout money, possibly as much as 30 billion euros ($39 billion)."
The view from space interlude: The aurora australis as seen from the International Space Station.
@DLeonhardt: Romney has long been able to deliver an unusually succinct, eloquent defense of a health-care mandate, even if he no longer uses the word.
Drug benefits already exceed new federal standards, reports Sam Baker: "Healthcare plans already provide drug coverage that’s far more generous than new federal minimums established under the healthcare reform law, according to an analysis from Avalere Health. The healthcare law lays out 10 categories of 'essential health benefits' that every insurance plan will have to cover beginning in 2014. The law left it to the Health and Human Services Department to define the specifics of essential benefits, and HHS in turn passed that job on to the states. The approach has sparked concern that people in some states will only be entitled to a skimpy benefits package."
The Senate will take up a congressional insider-trading bill, reports Kimberly Kindy: "A Senate bill that would ban members of Congress from buying and selling stock based on nonpublic information they learn as they craft legislation will be taken up by the chamber Monday. The bill was passed by the Senate’s Homeland Security and Governmental Affairs Committee last month. The proposed law also would require that stock trades be reported in public disclosure statements within 30 days. President Obama drew attention to the bill during his State of the Union address Tuesday. 'Send me a bill that bans insider trading by members of Congress,' he said. 'I will sign it tomorrow.'"
The debate over right to work is looking to Oklahoma, reports Melanie Trottman: "As Indiana moves closer to adopting a right-to-work law, both sides in the debate are zeroing in on the experience of Oklahoma, the last state to ease union-dues requirements under a similar law. The Indiana House passed legislation Wednesday to ban contracts requiring private-sector employees to pay union dues or fees, and final adoption of the measure is all but certain in the coming days. During weeks of intense debate, supporters and opponents in Indiana have held up Oklahoma as the test case for whether adopting a right-to-work law sends jobs to a state, the central promise of the bill's proponents."
Adorable animals being adorable interlude: A dog watches a movie intensely.
Clean energy subsidies are on the decline, reports Diane Cardwell: "Assisted by technological innovation and years of subsidies, the cost of wind and solar power has fallen sharply -- so much so that the two industries say that they can sometimes deliver cleaner electricity at prices competitive with power made from fossil fuels. At the same time, wind and solar companies are telling Congress that they cannot be truly competitive and keep creating jobs without a few more years of government support. Their efforts received a boost on Thursday from President Obama, who called for a package of tax credits for renewable power as part of a broader energy plan that he outlined while on a campaign swing through Nevada and Colorado. But the lobbying by the wind and solar industries comes at a time when there is little enthusiasm for alternative-energy subsidies in Washington."
The Senate is nearing agreement on transportation bill, reports Ashley Halsey III: "As House Republicans prepared to release a spending proposal intended to overhaul the federal transportation system, Senate Democrats on Thursday rushed to complete a bipartisan effort to end a stalemate that has undermined transportation programs for almost three years. The flurry of activity on the Senate side came a day after U.S. Transportation Secretary Ray LaHood said that differences between House and Senate proposals presented 'a pretty big gulf to overcome' and that it was unlikely a bill would win approval in this election year...She said the bill will reach the Senate floor before transportation funding expires March 31. The last long-term funding bill ran out in 2009, and transportation planners have been hamstrung by uncertainty during eight temporary extensions."
The Obama administration announced a major overhaul of national forest rules, reports Juliet Eilperin: "The Obama administration finalized a rule Thursday governing the management of 193 million acres of national forests and grasslands, establishing a new blueprint to guide everything from logging to recreation and renewable energy development. The guidelines -- which will take effect in early March and apply to all 155 national forests, 20 grasslands and one prairie -- represent the first meaningful overhaul of forest rules in 30 years. The George W. Bush administration had issued a management-planning rule for national forests in 2008, but a federal court struck it down the next year on the grounds that it did not provide adequate protection for plants and wildlife. In announcing the new procedures, Agriculture Secretary Tom Vilsack said they were crafted to enhance the nation’s water supplies while maintaining woodlands for wildlife, recreation and timber operations."
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.