Yesterday marked the two-week countdown till Thanksgiving. That means there's less than two weeks until the day before Thanksgiving, which also happens to be the day the supercommittee must complete its work. And that means there is really only about a week, or perhaps a week and a few days if they don't mind cutting it close, for the supercommittee to send something to the Congressional Budget Office.


The sun rises over the Capitol building in Washington on Nov. 1. (Andrew Harrer/BLOOMBERG)

Consider what came before the supercommittee. The Fiscal Commission. The Gang of Six. The negotiations between Senate Majority Leader Harry Reid and House Speaker John Boehner over the government shutdown. The budget process. The debt-ceiling negotiations between Majority Leader Eric Cantor and Vice President Joe Biden. The debt-ceiling negotiations between President Barack Obama and Boehner. The debt-ceiling negotiations between Reid and Senate Minority Leader Mitch McConnell. None of these discussions led to a big deficit-reduction deal. The supercommittee, in fact, was the product of the failed negotiations over the debt-ceiling.

But these negotiations failed for a reason. Republicans are steadfastly resistant to any serious increase in revenues -- and no, the recent Republican offer to raise taxes by $300 billion and then cut them by $3.4 trillion does not represent significant progress on this front. Without an increase in revenues, however, Democrats won't permit deep cuts to Medicare or Medicaid or Social Security. Nothing has caused the two parties to change their positions on those questions. And so it was never obvious what the supercommittee was supposed to do when it got down to that basic choice. The theory was that the trigger would force them to act, but since Republicans refused to include tax increases in the trigger and Democrats were thus able to protect Medicaid and Social Security and most of Medicare and concentrate cuts in the Pentagon, it's never been exactly clear why both parties wouldn't prefer the trigger to a deal.

Top stories

1) The Senate has passed the veterans' portion of the jobs bill, reports Rosalind Helderman: "On the eve of Veterans Day, the Senate approved new measures to help unemployed former service members, advancing a modest piece of President Obama’s $447 billion jobs package with rare bipartisan support. The bill, approved Thursday by a vote of 95 to 0, would extend tax credits to businesses that hire unemployed veterans. It would also provide new dollars for retraining older unemployed veterans for high-demand fields and includes programs designed to make it easier to get civilian certifications for military training. The vote came after weeks of partisan sniping over the president’s jobs plan. The Senate held doomed votes on the package as a whole and then on pieces of the proposal."

2) Democrats' latest supercommittee offers includes new stimulus spending and Medicare cuts, report Erik Wasson and Julian Pecquet: "Democrats on the supercommittee have proposed that the savings from the end of the wars in Iraq and Afghanistan be used to pay for a new stimulus package, according to a summary of the $2.3 trillion plan obtained by The Hill. The latest offer from Democrats on the deficit panel, made Monday night to their Republican counterparts, would use some of the war savings to help pay for spending on infrastructure...The new plan from Democrats cuts a total of $1 trillion from federal spending, $100 billion of which would come from Medicare benefits. Another $250 billion in cuts would be made to payments to Medicare providers."

3) Greece has a new prime minister, reports Michael Birnbaum: "Economist Lucas Papademos will be Greece’s next prime minister, the Greek president’s office announced Thursday, giving a non-politician the job of passing an unpopular bailout plan before elections are held next year. The selection by the two main political parties ended four days of squabbling over how to structure a unity government. Papademos, 64, and the rest of the government are to be installed Friday. The former vice president of the European Central Bank, an early favorite for the premiership, is seen as an able, if uncharismatic, bridge between Greece and its powerful creditors...Papademos assured Greeks and anxious Europeans elsewhere that he would push through the austerity measures that are a condition of the $177 billion bailout plan announced at the end of October."

4) Republicans are moving forward with two separate balanced budget amendments, reports Jennifer Steinhauer: "[The amendments] will get their first votes in both chambers of Congress since 1995, as part of the law passed in August to raise the debt ceiling. The first vote will be next week in the House...Conservative Republicans in both chambers favor a version of the bill that features far more restrictions on spending and taxes than previous measures. That sort of bill would almost certainly fail to get the minimum 48 votes needed from House Democrats...The House will attempt to bridge the gap by offering the Coke Classic version of balance budget amendments, nearly identical to the measure that passed the House in 1995 but then failed in the Senate by a single vote. That bill would simply prohibit outlays exceeding total receipts for that fiscal year."

Top op-eds

1) Education is behind rising inequality, writes Raghuram Rajan: Ssomething other than plutocrat-friendly policies is largely responsible for the growing inequality. That something is education and skills. True, not every degree is a passport to a job. Freshly-minted degree holders, especially from lower-quality programs, are finding it particularly hard to get a job nowadays, because they are competing with experienced workers who are also jobless. Nevertheless, the unemployment rate for those with degrees is one-third the unemployment rate for those without a high school diploma. Close examination suggests that the single biggest difference between those at or above the top tenth percentile of the income distribution and those below the 50th percentile is that the former have a degree or two while the latter, typically, do not. Technological change and global competition have made it impossible for American workers to get good jobs without strong skills."

2) The European Central Bank needs to ease, and ease dramatically, writes Ryan Avent: "To give the single currency the best chance for survival, the ECB needs passable growth, and therefore must loosen monetary policy dramatically. Unlike the Bank of England and the Fed, it has room to cut its benchmark interest rate, and it should continue to do so, from the new 1.25% rate to near zero. Draghi should then turn to quantitative easing (QE) programs like those deployed by the Bank of England and the Fed. QE supports economic activity through several different channels. It can boost market expectations of future growth. It can increase inflation expectations; higher expected inflation can encourage current spending and reduce the effective cost of borrowing, which also encourages new spending and investment. QE should also reduce the value of the euro."

3) Austerity in Italy won't work, writes Tyler Cowen: "In the short run, what the country needs is more revenue, relative to expenditure. If you cut the government expenditures, in the short run revenues go down, including tax revenues. Maybe you substitute in some private sector outputs for public sector outputs and furthermore maybe those private sector outputs bring higher utility to the citizenry. But they don’t bring higher revenue, not in the short run. The financial crisis, now exacerbated by a revenue shortage, destroys the economy before the potential gains from the expenditure-switching have a chance to kick in. Furthermore, if the broader economy is dysfunctional, the gains from expenditure-switching to the private sector may not show up even in the medium run. Growth-enhancing reforms can take many years to pay off, as we see from the histories of New Zealand, Chile, or the ex-communist countries."

4) Don't blame the welfare state for the Euro crisis, writes Paul Krugman: "It’s true that all European countries have more generous social benefits -- including universal health care -- and higher government spending than America does. But the nations now in crisis don’t have bigger welfare states than the nations doing well -- if anything, the correlation runs the other way. Sweden, with its famously high benefits, is a star performer, one of the few countries whose G.D.P. is now higher than it was before the crisis. Meanwhile, before the crisis, 'social expenditure' -- spending on welfare-state programs -- was lower, as a percentage of national income, in all of the nations now in trouble than in Germany, let alone Sweden. Oh, and Canada, which has universal health care and much more generous aid to the poor than the United States, has weathered the crisis better than we have."

5) Visitors need a guide to acceptable and unacceptable forms of inequality, writes David Brooks: "Beer inequality is on the way down. There used to be a high status difference between microbrews and regular old Budweiser. In academic jargon, beer had a high Gini Coefficient. But as microbrews went mainstream, these status differences diminished. Cupcake inequality is on the way up. People will stand for hours outside of gourmet cupcake stores even though there are other adequate cupcakes on offer with no waiting at nearby Safeways. Travel inequality is acceptable. It is perfectly normal to have separate check-in lines and boarding procedures for airline patrons who have achieved Gold, Platinum, Double Ruby or Sun God status."

Music video interlude: Summer Camp's "You Might Get Stuck on Me".

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

Still to come: European leaders are now predicting a recession; Democrats' latest supercommittee offer cuts health care reform; the Senate rejected an attempt to roll back net neutrality; the Obama administration is delaying its Keystone pipeline decision; and a baby who loves Biggie Smalls.

Economy

European leaders are predicting a recession, reports Howard Schneider: "Europe may be slipping into a 'deep and prolonged recession' as high levels of government debt, financial market turmoil and political paralysis stoke a dangerous downward cycle, the European Commission said Thursday. Growth has already stagnated across the region, a major economic zone that includes the 17 countries that use the euro as well as others, such as Britain, that don’t. The commission slashed its 2012 growth forecast for the region to a mere 0.6 percent but said there was a high probability that growth could slow even further. As Greece and Italy continued struggling with leadership crises, the report offered a pointed analysis of the depth of the economic dilemma Europe faces and the potential cost to the world economy."

More aggressive easing is gaining momentum within the Fed, reports Neil Irwin: "Federal Reserve officials who advocate new action to try to strengthen the economy are becoming more vocal in their push, taking their arguments to the public and making them more forcefully within the Fed policy committee. But words haven’t resulted in deeds -- and the consensus view among the central bank’s top policymakers is that there would need to be clear evidence of new deterioration in the economy to justify any move to pump out more money. A flurry of speeches in recent weeks led some people in the financial markets to conclude that the central bank is in a hair-trigger stance, on the verge of some new action, such as buying hundreds of billions of dollars of mortgage-related securities in a bid to bring down mortgage rates."

The US is thinking about how to repackage mortgages, report Shahien Nasiripour and Robin Harding: US policymakers are considering ways to buy troubled government-guaranteed mortgages from a new refinancing programme in case investors balk, according to people familiar with the matter. The initiative, known as the home affordable refinance programme (Harp), was changed last month so it can refinance mortgages that amount to more than 125 per cent of the value of a home. Such loans are currently not eligible for inclusion in standard mortgage-backed securities. Officials are considering three main options to support the new effort. Their first preference is for Fannie Mae and Freddie Mac, the US-controlled mortgage financiers, to package these mortgages into a new class of mortgage-backed securities for sale to private investors, if the pricing is reasonable."

Americans' economic mood isn't getting any better, reports Ylan Mui: "The economy is getting stronger, with the nation’s gross domestic product growing at its fastest clip so far this year. The number of new people signing up for unemployment benefits has steadily declined, and consumer spending is rising. But by almost any measure, Americans remain unhappy. Consumer confidence has plunged to levels last seen during the financial crisis. A recent Nielsen poll found that nine out of 10 Americans believe the country is still in a recession...This persistent pessimism has perplexed economists...Most of the time, our emotions and our actions move in tandem. But the gap between the two has widened since the financial crisis. Economists say something will have to give -- Americans will perk up or, more worrisome, the recovery will conform to their low expectations."

The US should ditch Taiwan to save the economy, writes Paul Kane: "There are dozens of initiatives President Obama could undertake to strengthen our economic security. Here is one: He should enter into closed-door negotiations with Chinese leaders to write off the $1.14 trillion of American debt currently held by China in exchange for a deal to end American military assistance and arms sales to Taiwan and terminate the current United States-Taiwan defense arrangement by 2015. This would be a most precious prize to the cautious men in Beijing, one they would give dearly to achieve...The deal would eliminate almost 10 percent of our national debt without raising taxes or cutting spending...And it would eliminate the risk of involvement in a costly war with China."

Adorable children who used to read Word Up magazine interlude: A baby who loves the Notorious B.I.G.

Health Care

Supercommittee Dems offered to cut health care reform's preventative care fund, reports Julian Pecquet: "Public health advocates immediately pushed back Thursday after a Democratic proposal to slash the healthcare law's Prevention and Public Health Fund became public. Supercommittee Democrats have proposed cutting the trust fund by $8 billion, more than half the $15 billion set aside for the fund in its first 10 years. Republicans call the program a 'slush fund' because it gives the Secretary of Health and Human Services broad latitude to grant awards. The Trust for America's Health announced Thursday after the proposed cuts were made public that it has so far collected signatures from 704 public health groups on a letter defending the fund."

Domestic Policy

The Senate rejected a bill to roll back net neutrality, reports Cecilia Kang: "The Senate upheld Internet access rules known as net neutrality on Thursday, rejecting a move to overturn the Federal Communications Commission’s regulations. The Republican-backed bill to scrap the FCC’s net neutrality rules failed to pass muster in a 46-to-52 vote that fell strictly along party lines. Sen. Kay Bailey Hutchison (R-Tex.) proposed the resolution to overturn the rules under the Congressional Review Act, sighting the FCC’s questionable authority to introduce rules for Internet access providers. Hutchison and several Republican lawmakers say the rules that dictate how Internet service providers handle Web content for customers would be overly burdensome to communications firms."

Congress is considering expanding home loan guarantees, reports T.W. Farnham: "The debate over setting new limits on government support for the housing industry is facing a crucial test in Congress this week as lawmakers decide whether to extend federal guarantees for home loans up to $729,750. The National Association of Realtors has been pushing hard for the extension and managed to gather 60 votes for an amendment that would accomplish it, sponsored by Sen. Johnny Isakson (R-Ga.). The Realtors, perhaps not coincidentally, have been Isakson’s biggest benefactor, spending $604,000 last year on his reelection and a total of $1.3 million, including for his first run for office in 2004. The support for Isakson is part of an unusual strategy by the trade association to spend large amounts not directly in donations to candidates but rather on independent campaign advertising."

The FHA could need a bailout, reports Nick Timiraos: "Concerns are rising that the Federal Housing Administration could run out money if the economy doesn't recover soon, raising the risk the agency would seek a taxpayer bailout for the first time in its 77-year history. Since the mortgage crisis erupted five years ago, the FHA has played a critical role in housing finance as private lenders retreated. It backs about a third of all new mortgages originated for home purchases, up from around 5% in 2006. But, as the FHA prepares to release its annual financial report next week, a forthcoming study by Joseph Gyourko, a real estate and finance professor at the University of Pennsylvania's Wharton School, estimates that the FHA faces around $50 billion in losses in the coming years."

Native-born workers aren't gaining employment after an immigrant exodus in Alabama, reports Elizabeth Dwoskin: "Alabama enacted an immigration law in September that requires police to question people they suspect might be in the U.S. illegally and punish businesses that hire them. The law, known as HB56, is intended to scare off undocumented workers, and in that regard it’s been a success. It’s also driven away legal immigrants who feared being harassed...One of the big selling points of the immigration law was that it would free up jobs that Republican Governor Robert Bentley said immigrants had stolen from recession-battered Americans. Yet native Alabamians have not come running to fill these newly liberated positions. Many employers think the law is ludicrous and fought to stop it. Immigrants aren’t stealing anything from anyone, they say."

Too-real satire interlude: A version of the American Jobs Act that could beat a filibuster.

Energy

The administration has delayed a decision on the Keystone pipeline until after the election, reports Juliet Eilperin: "The Obama administration will delay action on a controversial cross-country oil pipeline in order to assess a shift in its route, officials announced Thursday, effectively putting off a politically vexing decision until after next year’s election. The move is the latest twist in a more-than-three-year review process that has evolved from a fairly routine decision within the federal bureaucracy to a very public debate over national energy policy...Officials at the State Department, which oversees the permitting process, had once promised a decision on the proposal by Alberta-based TransCanada by year’s end. But they said Thursday that they had to extend their review of the 1,700-mile pipeline to address Nebraskans’ objections to building across the state’s sensitive Sandhills region."

The White House is complying with Congress' Solyndra subpoena, reports Andrew Restuccia: "The White House agreed Thursday to provide House lawmakers with internal communications related to the $535 million Solyndra loan guarantee, Republicans said. The agreement comes a week after Republicans on the House Energy and Commerce Committee’s investigative panel subpoenaed the White House for all internal communications on Solyndra, the solar panel maker that filed for bankruptcy in September. The deadline for producing the requested documents was Thursday. The White House had balked at the subpoena, arguing it is too broad. White House counsel Kathryn Ruemmler told committee lawmakers that she would provide documents if Republicans narrowed their request."

The Senate rejected a proposal to roll back EPA rules, report Ben Geman and Josiah Ryan: "The Senate on Thursday blocked Sen. Rand Paul’s (R-Ky.) bid to kill new EPA power plant pollution rules. In a 41-56 vote, lawmakers thwarted Paul’s resolution to overturn the Cross-State Air Pollution Rule, which requires curbs in smog and particulate-forming pollution from plants in 27 states in the eastern half of the country. Six Republicans voted with Democrats against the resolution. Centrist Democratic Sens. Joe Manchin (W.Va.) and Ben Nelson (Neb.) joined Republicans in voting to overturn the rule. The six Republicans who voted against the Paul resolution were Sens. Lamar Alexander (R-Tenn.), Kelly Ayotte (N.H.), Scott Brown (Mass.), Susan Collins (Maine), Olympia Snowe (Maine) and Mark Kirk (Ill.)."

Environmentalists' Keystone victory will be shortlived, writes Michael Levi: "Oil pipelines are hardly the only pieces of energy infrastructure that will require government approval in coming years. This is particularly true if the United States wants to build a new clean-energy economy...For green groups, the shortest route to blocking fossil fuel development appears to be leveraging local opposition. Many will seek to turn this not only against the Canadian oil sands but against United States oil production and coal exports, too. At the same time, they will find themselves increasingly appealing to the federal government for help in overriding local opposition to wind farms, solar plants, long distance transmission lines and other critical pieces of zero-carbon infrastructure. These two endeavors will conflict."

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