But there's nevertheless good reason to lament Daniels' absence from the race. Over the past two years, many in the GOP have taken their opposition to Obama's policies so far that they've tipped into a kind of denial about the underlying problems themselves. Republicans have a plan for opposing the Affordable Care Act, for instance, but nothing for covering the uninsured. They have attacked both Obama's stimulus proposals and the very idea of Keynesian stimulus proposals, but that's left them with few answers for the unemployed. Daniels, however, was charting a different course.

In a series of op-eds for the Wall Street Journal, Daniels broke with the pack and began challenging Obama's policies by promoting solutions of his own. In September of 2010, he published a call for a second stimulus based around a payroll tax cut and full expensing of capital investments made by businesses. Both policies later turned up in the December tax deal. In February of 2011, by which time "repeal and repeal" had become the Republican Party's consensus health-care policy, Daniels wrote an article laying out six reforms that he thought could make the Affordable Care Act more appealing to conservatives, or at least to him. You didn't have to agree with Daniels' policy proposals to prefer his style of constructive engagement to the "just say no" attitude that had become dominant in the Republican Party.

In the final line of Daniels' stimulus op-ed, the Hoosier summed up his approach. "Grown-ups make trade-offs," he wrote. "Pass the brandy, then let's get busy." The Republican primary field would've benefited from that attitude, and, if Daniels had captured the nomination and made the campaign a contest between the two parties' proposed solutions for the country's manifold problems, the country would've, too.

Five in the morning

1) New York's special election tomorrow has turned into a referendum on Ryancare, reports James Hohmann: "Two days before a special congressional election, a Republican House candidate unexpectedly trailing in the polls is explaining to voters that she does not want to destroy Medicare. By the political axiom that 'when you’re explaining, you’re losing,' Jane Corwin is losing...A Siena College poll put Democrat Kathy Hochul up 4 points over Corwin and confirmed what’s clear on the ground: Medicare is the biggest issue in this western New York district...Rep. Paul Ryan’s name won’t appear on the ballot Tuesday, but Democrats feel increasingly confident Hochul will win in this red district because they made the race a referendum on the Wisconsin Republican’s budget plan."

2) Mitch Daniels won't run, reports Chris Cillizza: Indiana Gov. Mitch Daniels won’t seek the 2012 Republican presidential nomination, a decision that could well throw the field open to other late entrants. 'In the end, I was able to resolve every competing consideration but one, but that, the interests and wishes of my family, is the most important consideration of all,' Daniels said in a statement emailed to supporters early Sunday morning. 'If I have disappointed you, I will always be sorry.'”

3) But Tim Pawlenty will, reports Aaron Blake: "The video, titled 'A Time for Truth,' aims to be the anti-campaign announcement, shunning the usual pomp and circumstance for a somber message that Pawlenty says is more important than balloons and idealistic speeches. 'The truth is, our country’s in big trouble,' Pawlenty says. 'We have far too much debt, too much government spending, and too few jobs. We need a president who understands that our problems are deep and has the courage to face them. President Obama doesn’t; I do.' Pawlenty confirms in the video that he is indeed running for president, though the official announcement awaits Monday in Iowa. The theme of the ad — essentially, ‘I’m not flashy, but that’s not what we need right now’ — plays to Pawlenty’s strength as a candid but not terribly exciting candidate, and it sets in motion the kind of campaign he is expected to run in the months ahead. In the video, Pawlenty seeks to contrast his style with Obama, who is known for his strong speech-making ability."

Watch Pawlenty's announcement video: http://bit.ly/mvVhrn

4) Departing SecDef Bob Gates doesn't want deep defense cuts, reports Phil Stewart: "Outgoing Defense Secretary Robert M. Gates warned Sunday against sharply cutting the size and reach of the U.S. armed forces to trim the deficit, portraying the country’s military might as an essential safeguard of global stability. The comments to graduating students at the University of Notre Dame came as some Republicans and Democrats look to defense as a way to address the U.S deficit, running about $1.4 trillion for this fiscal year, which ends Sept. 30. President Obama announced plans in April to hold national security spending below the rate of inflation for the next 12 years, a move that would save about $400 billion, mainly from Defense Department budgets."

5) GOP presidential candidates are embracing unorthodox economic plans, report Byron Tau and Ben Smith: "In this Republican primary season, no economic or monetary policy is too unorthodox for an electorate hungry for change. The Republican field is filled with potential candidates who have called for radical overhauls of the tax code, the abolition of the IRS, an end to the Federal Reserve central bank— and even a return to the gold standard...In one particularly striking recent moment, former Minnesota Gov. Tim Pawlenty railed against 'fiat currency' in a recent appearance on Fox — a signal to a narrow constituency of voters who believe that America’s woes began when it abandoned the gold standard in the 1930s. He also has gone on the record supporting a flat tax — a single-rate income tax that would eliminate the bracket system."

Radio session interlude: The Thermals play "Now We Can See" live on KEXP.

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

Still to come: Corporate investigations done by the feds often rely on companies' own investigators; the administration is challenging Indiana's cuts to family planning; the job market for college grads is looking better; regulators say one of the major US nuclear reactor designs is structurally flawed; and two pugs form a conga line.


States are cutting unemployment benefits, hoping the Feds will make up the difference, reports Keith Freking: "Some of the states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps. Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida...In times of high unemployment, states have come to count on extra help from the federal government. Some say that reliance is playing a role in the bills to cap benefits."

Corporate investigations by the SEC and DOJ often outsource the investigating to the companies themselves, reports David Hilzenrath: "As the U.S. government steps up investigations of companies suspected of paying bribes overseas, law enforcement officials are leaving much of the detective work to the very corporations under suspicion. The probes are so costly and wide-ranging that the Justice Department and Securities and Exchange Commission often let the companies investigate themselves and then share the results. The strategy is especially common in cases of foreign corruption but also extends to domestic investigations involving issues as varied as health-care fraud and shady accounting... The private investigators help determine what evidence the government sees."

Banks' real estate holdings are slowing the housing recovery, reports Eric Dash: "The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery. All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead... Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody's."

Mexico wants its central banker to head the IMF, report Andres Martinez and Jonathan Roeder: "Mexico central bank Governor Agustin Carstens will be presented as a candidate for managing director of the International Monetary Fund, the Finance Ministry said in an e-mailed statement today...Finance Minister Ernesto Cordero will present Carstens’ candidacy, the statement said. The government will likely nominate Carstens tomorrow, said Ricardo Ochoa, head of international affairs at the ministry, in a phone interview. With Carsten’s nomination, Mexico joined Australia, China and other nations in calling for the new managing director of the lender to be chosen because of merit and not the convention that the position should go only to Europeans."

Austerity has failed in Europe, writes Paul Krugman: "Nobody bought into the doctrine of expansionary austerity more thoroughly than Jean-Claude Trichet, the president of the European Central Bank, or E.C.B. Under his leadership the bank began preaching austerity as a universal economic elixir that should be imposed immediately everywhere, including in countries like Britain and the United States that still have high unemployment and aren’t facing any pressure from the financial markets. But as I said, the confidence fairy hasn’t shown up. Europe’s troubled debtor nations are, as we should have expected, suffering further economic decline thanks to those austerity programs, and confidence is plunging instead of rising."

A "strong dollar" isn't necessarily a good thing, writes Christina Romer: "In November 2008, I was sharing a cab in Chicago with Larry Summers, the former Treasury secretary and a fellow economic adviser to the president-elect. To help prepare me for the interviews and the hearings to come, Larry graciously asked me questions and critiqued my answers. When he asked about the exchange rate for the dollar, I began: 'The exchange rate is a price much like any other price, and is determined by market forces.' 'Wrong!' Larry boomed. 'The exchange rate is the purview of the Treasury. The United States is in favor of a strong dollar.' For the record, my initial answer was much more reasonable..A high price for the dollar, which is what we mean by a strong dollar, is not always desirable."

Guilty or not, Dominique Strauss-Kahn was a great IMF director, writes Robert Kuttner: "Last October, Strauss-Kahn sat beside the director general of the International Labor Organization, a Chilean socialist named Juan Somavia, at an unprecedented joint conference on restoring jobs and growth. Unlike the Wall Street formula, Strauss-Kahn's was not a call for austerity but for employment...He warned, 'But fiscal tightening can lower growth in the short term, and this can even increase long-term unemployment, turning a cyclical into a structural problem. The bottom line is that fiscal adjustment must be done with an eye kept keenly on growth.' To say that you don't usually hear such talk from the chief of the IMF is to put it mildly."

Adorable animals being adorable together interlude: Two pugs form a conga line.

Health Care

The administration is fighting Indiana on funding for family planning clinics, reports Robert Pear: "The Obama administration is raising serious objections to a new Indiana law that cuts off state and federal money for Planned Parenthood clinics providing health care to low-income women on Medicaid. The objections set the stage for a clash between the White House and Gov. Mitch Daniels, a Republican, over an issue that ignites passions in both parties. The changes in Indiana are subject to federal review and approval, and administration officials have made it clear they will not approve the changes in the form adopted by the state. Federal officials have 90 days to act but may feel pressure to act sooner because Indiana is already enforcing its law, which took effect on May 10, and because legislators in other states are working on similar measures."

One doctor, Deb Richter, was instrumental in getting single-payer passed in Vermont, reports Abby Goodenough: "Many people move to Vermont in search of a slower pace; Dr. Deb Richter came in 1999 to work obsessively toward a far-fetched goal. She wanted Vermont to become the first state to adopt a single-payer health care system, run and paid for by the government, with every resident eligible for a uniform benefit package... Twelve years later, Dr. Richter will watch Gov. Peter Shumlin, a Democrat, sign a bill on Thursday that sets Vermont on a path toward a single-payer system -- the nation’s first such experiment -- thanks in no small part to her persistence. Though scores of people pushed for the bill, she was the most actively involved doctor -- 'the backbone,' Mr. Shumlin has said, of a grass-roots effort."

Health care cost controls are already being implemented, writes Steve Pearlstein: "Over the past few years, most of the big insurance companies have begun to collaborate with willing hospitals to link annual rate increases to quality improvement. This year WellPoint took all of this one step further by announcing that its contracts will not allow for any increase for any hospital that fails to reach an agreed-upon set of quality benchmarks, with bonuses for hospitals that exceed them...They can debate all they want up on Capitol Hill about whether the growth in Medicare funding will be cut by $400 billion or $500 billion over the next 10 years, but let me assure you they won’t get anywhere near those numbers unless initiatives like value-based purchasing and Accountable Care Organizations succeed."

Romneycare is working in Massachusetts, writes the New York Times editorial board: "Since reform was enacted, the state has achieved its goal of providing near-universal coverage: 98 percent of all residents were insured last year. That has come with minimal fiscal strain. The Massachusetts Taxpayers Foundation, a nonpartisan fiscal monitoring group, estimated that the reforms cost the state $350 million in fiscal year 2010, a little more than 1 percent of the state budget...The average premiums paid by individuals who purchase unsubsidized insurance have dropped substantially, 20 percent to 40 percent by some estimates, mostly because reform has brought in younger and healthier people to offset the cost of covering the older and sicker."

States are cutting funding for HIV meds, reports Shefali Kulkarni: "Cash-strapped states are scaling back efforts to provide life-saving medicines to HIV patients. The result: more than 8,300 people -- a record number -- are on waiting lists in 13 states to get antiretrovirals and other drugs used to treat HIV and AIDS or the side effects, mental health conditions or opportunistic infections. And that number probably understates the need, say advocates, who note that many states have simply eliminated waiting lists or reduced eligibility...Florida, which already has the nation’s longest waiting list for HIV prescription drug assistance, held public hearings as officials consider cutting the eligibility threshold in half to $21,780 or less in annual income."

Domestic Policy

Citizens United followup cases could invalidate large swaths of campaign finance law, reports Robert Barnes: "James Bopp, the Republican activist and anti-campaign regulation crusader who brought the original Citizens United case, estimates he and his associates are involved in 25 to 30 cases around the country. He suffered a defeat in the latest federal appeals court to weigh in on the issue. A three-judge panel of the U.S. Court of Appeals for the 8th Circuit refused to stop Minnesota’s corporate campaign spending disclosure law, saying it was unlikely to violate free speech rights. But one dissenting judge said the law did not conform with the Citizens United decision, and Bopp plans to ask the entire circuit to hear the issue. The next stop after that would be the U.S. Supreme Court."

College grads are facing a better job market, report Sara Murray and Joe Light: "This year's college graduates have better career prospects than their peers did a year ago--as long as they're looking in the private sector. Employers plan to hire 19% more new graduates this year than in 2010, according to a survey by the National Association of Colleges and Employers. That means students were more likely to have offers as they head toward graduation. Among college seniors who applied for positions, the survey said, 41% had an offer this year, up from 38% last year...Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank, says new graduates have the advantage of access to on-campus recruiting and a job market that is finally gaining strength after a deep recession. 'It's the class of 2009 and 2010 who are now going to face...even harder odds,' she says."

Federal workers' pension cuts come a long time after the private sector's, report Lisa Rein and Eric Yoder: "By targeting federal pensions as a culprit in the growing national debt, White House officials and congressional leaders are taking aim at a benefit lost long ago by many workers at private companies -- a guaranteed retirement check paid largely by the boss. These traditional pensions, called defined-benefit plans, have long been an attractive feature of government work. But President Obama’s bipartisan fiscal commission has described them as 'out of line' with private-sector retirement packages, which rely increasingly on 401(k)-style accounts that require employees to contribute more and carry more risk. Now, as part of a compromise to limit federal borrowing, many Democrats and Republicans want federal civil servants to do the same: Pay more into their pensions."

The House is asking questions about the FCC's revolving door with industry, reports Cecilia Kang: "The chairman of the House Oversight and Government Reform Committee has sought information about the departure of Federal Communications Commission member, Meredith Attwell Baker, for a new job at Comcast. Rep. Darrell Issa (R-Calif.) sent a letter to FCC Chairman Julius Genachowski on Wednesday asking questions related to Baker’s move to Comcast, a company she regulates, so soon after voting in favor of the cable giant’s merger with NBC Universal. The deal was approved by the FCC in a 4-1 vote in January. Baker had said in speeches that the process took too long. Last week, she announced she would leave her position as the FCC’s junior Republican minority member to become the senior vice president of Comcast’s Washington lobbying shop."

Look at these planes interlude: An hour of takeoffs and landings at Logan International Airport condensed into 2 1/2 minutes.


A nuclear reactor model currently being built has a number of structural flaws, reports Matthew Wald: "In a setback for the only model of nuclear reactor for which ground has been broken in the United States, government regulators have found additional problems with the design of its shield building, a crucial component, the chairman of the Nuclear Regulatory Commission said on Friday. The chairman, Gregory B. Jaczko, said that computations submitted by Westinghouse, the manufacturer of the new AP1000 reactor, about the building’s design appeared to be wrong and 'had led to more questions.' He said the company had not used a range of possible temperatures for calculating potential seismic stresses on the shield building in the event of an earthquake, for example."

The GOP is pushing for approval of an oil pipeline, reports Andrew Restuccia: "House Republicans plan to ratchet up pressure on the Obama administration next week to approve a massive oil sands pipeline, arguing that the project is essential amid high gas prices and the country's dependence on Middle Eastern oil. Republicans on the House Energy and Commerce Committee have invited a top executive at TransCanada -- the company hoping to secure the Obama administration’s approval to build the controversial pipeline that would stretch from Alberta, Canada, to refineries in Texas -- to testify at a Monday hearing. The hearing will focus on draft legislation being floated by top Republicans on the panel that would expedite the Obama administration’s consideration of the pipeline, known as Keystone XL."

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