Happy high-stakes European Summit day! European leaders are meeting today in Brussels to try and hash out the future of the euro zone. Of course, European leaders have met in Brussels before to try and hash out the future of the euro zone. And the euro zone's future remains, up till now anyway, unhashed.

In this file picture taken on Nov. 24, German Chancellor Angela Merkel (L), French President Nicolas Sarkozy (C) and Italian Prime minister Mario Monti attend a press conference during an european mini-summit on the debt crisis. (ERIC FEFERBERG/AFP/GETTY IMAGES)

The situation is no better for the troubled economies in Southern Europe. Yes, everything is terrible now. But a deal isn't going to make it better anytime soon. It might even make it feel worse. After all, a deal means economy-crushing austerity for the foreseeable future. It means giving bureaucrats in Brussels control over budgets. It means the continuation and even expansion of a euro zone experiment that has, let's face it, been a disaster for the weak participants in the euro. Merry Christmas, voters!

The alternative is worse, of course. It's an unbelievable catastrophe, in fact. But how do politicians explain the abstract and unpredictable consequences of a break-up to their people? Do they tell them to go read this op-ed by William Buiter? Or this report from Nomura? Or this report from UBS? Elections are not decided by readers of the Financial Times.

Here at home, we have vastly easier decisions to make and little evident ability to make them. We're well into December and the payroll tax cut hasn't been extended, there's little talk of unemployment benefits getting a reprieve, a series of deficit-reduction commissions have failed, and it was only four months ago that we almost defaulted on our debt. The United States of America, with one government, one language, and one people, can hardly do the easy stuff. The euro zone, with 17 different governments, now has to do some unimaginably hard stuff. Marry Christmas, politicians.

Top stories

1) Europe is holding a summit to save the euro, report Anthony Faiola and Michael Birnbaum: "European leaders set to gather here for a summit billed as the last, best chance to save the euro sniped at one ­another behind closed doors Wednesday...To quell a crisis that is threatening the global economy, Germany and France, the two largest nations in the euro zone, are calling for an agreement by Friday to rewrite European Union treaties to automatically punish overspending governments...But frictions were already breaking out Wednesday, with the Germans blasting an alternative proposal being floated Wednesday by Herman van Rompuy, the head of the European Council of heads of state, and drafted with the input of smaller E.U. nations. The plan envisions a potentially larger bailout fund for nations in crisis and suggests a more tempered approach to fiscal discipline that could win approval faster and more easily."

The FT is liveblogging it: http://on.ft.com/rY42Z8

2) But it has more short-term issues to deal with too, reports Howard Schneider: "For all the attention European leaders are giving to possible long-term changes in the euro zone at their summit in Brussels this week, they still have an immediate financial crisis to confront. They will have to develop strategies to keep markets from swooning, banks from collapsing and one or more European governments from defaulting. Those steps will center on several crucial questions: Will the International Monetary Fund get involved? How much more will the region’s wealthier governments contribute to keep their neighbors solvent? What more will the European Central Bank do? A number of ideas have been floated for possible IMF involvement, including a plan that would use the agency as a conduit for some euro-zone governments to lend money to others."

3) Obama has said he'll veto ay effort to tie the payroll tax extension t the Keystone Pipeline project, reports David Nakamura: "President Obama warned Congress on Wednesday not to tie approval of a payroll tax cut to other sensitive measures such as the Keystone Pipeline project, which his administration delayed last month. Speaking at a brief news conference after a meeting with Canadian Prime Minister Stephen Harper, Obama said he would block any attempt by Congress to attach the payroll tax cut provision to another legislative measure. 'Any effort to try to tie Keystone to the payroll tax cut, I will reject,' Obama said...Boehner spokesman Brendan Buck suggested in a statement that a bill that includes a payroll tax cut along with other measures -- most likely the Keystone Pipeline -- was forthcoming."

4) It looks like there's a deal on spending for the next year, reports David Rogers: "Congressional negotiators moved closer to a year-end spending deal Wednesday with Senate Democrats playing the role of mediator between President Barack Obama and House Speaker John Boehner -- each of whom is trying to out-muscle the other going into the 2012 elections. The giant bill, which would exceed $1 trillion when war funding is counted, must be filed in the House by Monday night to ensure floor action before Dec. 16, when the latest stopgap continuing resolution is due to expire...Major chapters covering the Pentagon, Homeland Security and Veterans Affairs departments are already largely settled, and tentative agreements are in place for the Environmental Protection Agency and Indian Health Services budgets -- two sensitive issues for Western Republicans."

5) It doesn't look like Obama's CFPB nominee will break a filibuster, reports Ylan Mui: "The political stalemate that has dogged one of the centerpieces of President Obama’s financial reform efforts -- a new consumer watchdog agency -- showed no signs of breaking on Wednesday as the Senate neared a critical vote to confirm the agency’s director. Forty-five Republicans have threatened to filibuster a confirmation vote scheduled Thursday for Richard Cordray to lead the Consumer Financial Protection Bureau, which launched in July to oversee products such as credit cards and mortgages...Republicans want to replace the agency’s director with a five-member commission and give other regulators stronger powers over its decisions. They also want to subject the new agency to the congressional appropriations process. The CFPB is currently funded through the Federal Reserve."

Top op-eds

1) The payroll tax cut should be deeper and permanent, writes Eugene Ludwig: "Payroll taxes are the most regressive taxes most Americans pay with respect to current income, and one of the biggest drags on workers’ pay. Cutting them stimulates demand by giving more money to more of those who spend it...Taxes on payrolls effectively encourage the overconsumption of resources like energy and land and the underutilization of labor. Historically, this increased labor productivity, but also decreased employment by tens of millions of jobs. To correct the imbalance, we must cut payroll taxes, as other advanced industrialized countries have done...Mr. Romney is right about the need for certainty -- and that’s precisely why we should cut payroll taxes deeply and permanently, both for employers and employees."

2) A euro zone collapse would usher in a global depression, writes Willem Buiter: "Exit, partial or full, would likely be precipitated by disorderly sovereign defaults in the fiscally and competitively weak member states, whose currencies would weaken dramatically and whose banks would fail. If Spain and Italy were to exit, there would be a collapse of systemically important financial institutions throughout the European Union and North America and years of global depression. Consider the exit of a fiscally and competitively weak country, such as Greece - an event to which I assign a probability of about 20-25 per cent. Most contracts, including bank deposits, sovereign debt, pensions and wages would be redenominated in new Drachma and a sharp devaluation...would follow. As soon as an exit was anticipated, depositors would flee Greek banks and all new lending governed by Greek law would effectively cease."

3) The euro crisis is more about growth than debt, writes Ezra Klein: "A deal is on the table: If the weak nations join the fiscal union, Germany and the European Central Bank will mount a rescue and the debilitating run on government bonds will be over. But the weak nations worry that without better growth prospects, joining the fiscal union means giving up sovereignty over their budgets and accepting economy-crushing austerity. In other words, if the prospects for growth were good, the institutional changes would be an easy sell, and the debt problems would mostly take care of themselves. However, if the growth isn’t there, then ultimately, the institutional reforms won’t be sustainable, because the nations on the periphery won’t be able to reduce debt burdens without destroying their economies. That’s why the situation is rightly understood as the European growth, institutions and debt crisis -- in that order."

4) The Keystone pipeline won't actually create jobs, writes Bill McKibben: "Twenty thousand jobs. All summer and fall, while the Keystone pipeline debate raged, that was the one constant...The number came originally from a report paid for by Transcanada, the company building the pipeline. The original State Department review, however, found that the actual number would be 5,000 at best -- and these jobs would be temporary, lasting the year or so it took to build the pipeline...Few reporters bothered to cite the only study not funded by Transcanada. A Cornell University labor think tank found that the pipeline could create closer to 3,500 temporary jobs -- and these would be offset by job losses that the pipeline would create by raising gas prices across the Midwest."

French electronica interlude: M83 plays "Midnight City" live.

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Still to come: Republicans want a income tax cut to replace the payroll tax cut; the administration has overruled the FDA on Plan B; the House approved a major anti-regulation bill; Obama's green car initiatives have hit some roadblocks; and the best whistled rendition of "Georgia on My Mind" you'll ever see on an '80s talk show.


Republicans want to cut income, rather than payroll, tax, report Scott Wong and Manu Raju: "Senate Republicans are trying to find a way to fight back against White House attacks that they’re out to raise taxes on the middle class, with some weighing whether to float an income tax credit. Senators have been discussing replacing the payroll tax cut extension favored by Democrats with the tax credit, several senators told POLITICO on Wednesday. It’s highly unlikely Republicans would offer the tax credit proposal as an alternative this week to Majority Leader Harry Reid’s revised payroll tax-cut extension plan. But the idea has been batted around in hallway discussions and closed-door meetings this week as they try to fend off a barrage of attacks from President Barack Obama and shore up divisions in their conference over the payroll tax cut."

We need a progressive consumption tax, writes Robert Frank: "The good news is that we could pull a few simple policy levers that would greatly reduce the adverse effects of growing income gaps without threatening the benefits that have been made possible by improved technology and increased competition.
The simplest step would be to scrap the current progressive income tax in favor of a much more steeply progressive tax on each household’s consumption...If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment."

Stand-up interlude: Paul F. Tompkins appears on "Conan".

Health Care

The administration overruled the FDA on emergency contraception, reports Rob Stein: "The Obama administration stunned women’s health advocates and abortion opponents alike Wednesday by rejecting a request to let anyone of any age buy the controversial morning-after pill Plan B directly off drugstore and supermarket shelves. For what the Food and Drug Administration thinks is the first time, the Department of Health and Human Services overruled the agency, vetoing the FDA’s decision to make the contraceptive available without any restrictions. Revealing a rare public split, FDA Administrator Margaret A. Hamburg said her conclusion that the drug could be used safely by women of all ages was nullified by Health and Human Services Secretary Kathleen Sebelius."

Plan B's political path has been windy, reports Sarah Kliff: "Plan B has, for over a decade now, had an incredibly complex path toward obtaining federal approvals. It’s been marked by multiple administrations’ officials resignations and created a complicated web of regulations around the contraceptive. It started in 1999, when the FDA approved Plan B as a prescription emergency contraceptive. Four years later, its manufacturer asked FDA to make the drug available over the counter but that request was rejected, citing a lack of data on how it affects women under 16. Two FDA officials resigned in 2005 after the FDA announced it would indefinitely postpone any further review of providing Plan B over the counter. Although just a year later, the agency decided it would allow women over 18 to purchase the drug over the counter."

HHS is allowing easier access to Medicare data, reports John Carreyrou: "In an abrupt policy change, the Department of Health and Human Services will make its huge Medicare claims database more broadly available to the public, to help consumers and employers make better-informed decisions about medical care. In particular, the federal agency will relax its restrictions on the release of information about individual doctors who participate in Medicare, the $524 billion federal program for the elderly and disabled, reversing a three-decade position that doing so would violate physicians' privacy rights. The new rules implement a little-noticed provision of the health-care overhaul Congress passed last year. Dow Jones & Co., The Wall Street Journal's parent company, filed a lawsuit earlier this year seeking to overturn a 1979 federal-court injunction barring the release of Medicare physician information."

Domestic Policy

The House passed the "mother of all anti-regulatory bills", reports Peter Kasperowicz: "The House on Wednesday passed legislation that would require Congress to approve all major federal regulations with an effect of $100 million or more, a Republican attempt to rein in what they see as the expanding regulatory burden faced by companies across the country. The Regulations from the Executive in Need of Scrutiny (REINS) Act, H.R. 10, was approved in a mostly party-line vote. The bill passed 241-184, and only four Democrats joined Republicans. Republicans have passed several bills this year aimed at slowing the pace of regulations, but Democrats, who generally oppose them all, see the REINS Act as the Republicans' signature bill on regulations. 'H.R. 10 is the mother of all anti-regulatory bills,' House Judiciary Committee Ranking Member John Conyers (D-Mich.) said."

The bill could make for a big payday for lobbyists, reports Suzy Khimm: "The REINS Act would send any 'major rule' that’s estimated to cost the economy more than $100 million to Congress -- or have adverse effects on consumers, the business climate and individual industries -- for an up-or-down vote. If Congress doesn’t approve the regulation in 70 days, it won’t take effect. The bill is dead-on-arrival in the Senate, but it underscores some of the GOP’s biggest anti-regulatory talking points...Interest groups routinely spend massive sums of money to persuade federal regulators to make changes or carve-outs, or block rules from being enacted...But federal regulators heading up that process don’t have campaign coffers to fill. Shifting the approval of such rules to Congress would, accordingly, shift their lobbying over to elected lawmakers who rely on campaign contributions."

Senate Democrats are promising plenty of filibusters if they lose their majority, reports Manu Raju: "The White House and Senate Democrats are issuing a blunt warning to Minority Leader Mitch McConnell and his fellow Republicans: You live by the filibuster, you’ll die by the filibuster. Furious at Republicans for blocking votes on an appeals court nominee and the head of a new consumer watchdog agency, Democratic saber-rattling is intensifying, with fresh warnings that McConnell -- or any new Republican administration -- will face major repercussions if they come into power in 2013. 'The standard in the Senate is now being lowered so much so that opposition parties in the future will thwart the will of any administration,' said Sen. Jack Reed (D-R.I.). 'There’s an old saying, 'What goes around, comes around,'' said Sen. Barbara Boxer (D-Calif.)."

There actually won't be a House committee vote on banning insider trading, reports Brody Mullins: "One day after scheduling a vote on legislation banning insider trading in Congress, a House committee canceled the vote, saying there isn't enough agreement to proceed. Rep. Spencer Bachus (R., Ala.), chairman of the House Financial Services Committee, postponed the vote after meeting with senior House Republicans. 'A significant number of members of the committee on both sides of the aisle have indicated a desire for additional time to study this issue before the committee moves forward with the markup that was announced for Dec. 14,' Mr. Bachus said in a statement Wednesday evening. The move is a blow to the legislation, which had been rapidly gaining momentum in recent weeks. The bill, sponsored by Rep. Louis Slaughter (D., N.Y.), had garnered the support of more than 180 lawmakers."

School test scores are improving, reports Stephanie Banchero: "Large urban school districts have made steady gains on elementary-school math and reading exams in the past nine years but continue to score far below national averages, according to federal data released Wednesday. The results from the 2011 National Assessment of Educational Progress reveal that cities such as New York, Atlanta and Houston posted double digit gains on several exams since 2002, helping close the chasm between their performance and that of districts nationwide. The national tests, administered by the U.S. Department of Education, are given to students in fourth and eighth grade every two years. The data released Wednesday compare the performance of children in 21 urban school systems in fourth and eighth grade to their peers nationwide. The exams test a representative sample of students in every state, as required by federal law."

Vintage TV interlude: A man does an impressive whistle version of "Georgia on My Mind" on an '80s talk show.


The administration's green car investments aren't paying off soon, report Carol Leonnig and Joe Stephens: "The Obama administration has poured roughly $5 billion in taxpayer funds into the electric-car industry, offering incentives to manufacturers, their suppliers and even car buyers who might want to go green. But analysts say the risk is rising that taxpayers in many cases will not see a return on their money soon, if ever. Instead, they warn that some federally subsidized companies could be forced to shut down in coming months...Obama predicted in 2008 that green cars would create thousands of new U.S. jobs as demand soared. But in recent months, production lines and sales expectations have been dramatically scaled back. A123 Systems, a battery maker that received $380 million in government support, announced recently that declining orders had forced layoffs."

Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.