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Wonkbook: The return of moderate Mitt

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook dashboard

RCP Obama vs. Romney: Obama +3.1%; 7-day change: Obama -0.9%.

RCP Obama approval: 49.7%; 7-day change: -0.1.

Intrade percent chance of Obama win: 66.6%; 7-day change: -6.3%.

Wonkbook's number of the day: 115,000. Today's jobs day! At 8:30 a.m., we'll get the first read on how many jobs the economy created in September. According to the 88 economists surveyed by Bloomberg News, the consensus expectation is that we'll get at about 115,000 jobs, and the unemployment rate might inch up a bit. 

It's worth emphasizing that today's jobs number, whether it's high or low, is also going to be dead wrong. We've been learning the hard way lately that these initial numbers are subject to quite a bit of error. Last week, for instance, we got new data showing the economy had created 386,000 more jobs than we thought between April 2011 and March 2012. That said, the likelihood that a political media hungry for new narratives to impose on the election will stay its hand out of fear of future data revisions is, well, not good.

Top story: Moderate Mitt?

Meet 'Moderate Mitt,' the man who emerged from Wednesday night's debate. "He used the first presidential debate to speak out forcefully to its wide television audience against the idea of cutting taxes for the wealthy, noting that 'high-income people are doing just fine in this economy.' Asked if there was too much government regulation, he answered, 'regulation is essential.' And he praised the Massachusetts health care bill, calling it a 'model for the nation.' These are all things that President Obama says occasionally on the campaign trail. But in this case, the lines were uttered at the debate Wednesday night in Denver by his Republican opponent, Mitt Romney. Mr. Romney ran to the right in the Republican primaries in 2008 and this year, describing himself this winter as having been a 'severely conservative' governor. This week, he pivoted to the center, as many political analysts had long expected him to do, seeking to appeal to more centrist general election voters. In doing so, Mr. Romney used striking new language to describe his policy proposals on taxes, education and health care in ways that may assuage independent voters -- but which may be sowing confusion about how Mr. Romney would govern." Michael Cooper, David Kocieniewski, and Jackie Calmes in Politico.

@sahilkapur: Looks like conservatives have set Romney free. No more demanding ideological fealty, whatever it takes to win.

Moderate Mitt continues: he apologized for '47 percent' commentary in an interview. "Republican presidential candidate Mitt Romney has described his disparaging remarks about the 47 percent of Americans who don't pay federal income taxes as 'not elegantly stated.' Now he's calling them 'just completely wrong.'...Initially, Romney defended his view, telling reporters at a news conference shortly after the video was posted that his remarks were 'not elegantly stated' and that they were spoken 'off the cuff.'" The Associated Press.

@ObsoleteDogma: Romney's performance last night pretty strong evidence that the problem wasn't him, it was the party. Once he unshackled, he did great.

Moderate Mitt threw Obama off-kilter during the debate. Now the campaign is trying to re-orient. "President Obama sought to put a sluggish debate performance behind him Thursday with a pair of combative speeches in swing states, as his campaign advisers acknowledged that he would have to change his approach before meeting Republican nominee Mitt Romney again on a national stage. Obama advisers said the president decided before Wednesday’s debate that he would not fight his rival before a prime-time television audience. They acknowledged that Obama will have to do more in the next debate to defend his record and hold Romney more accountable for his economic proposals, which the president sharply criticized Thursday on the campaign trail." Scott Wilson and David Nakamura in The Washington Post.

@davidfrum: I like Debate Romney way more than all those other Romneys.

The good news for the Obama campaign is their huge September fundraising haul. "President Obama’s campaign raised more money in September than any candidate has raised in a previous month this year, according to several Democrats familiar with the campaign’s money-raising operation. Several sources said the president’s haul last month exceeded the $114 million he raised in August, in part on the strength of donations that flowed in after the Democratic National Convention and former president Bill Clinton’s well-received speech. One Democrat familiar with the fund-raising effort said Mr. Obama and his allies at the Democratic National Committee raised more than $150 million in September." Michael D. Shear in The New York Times.

@ezraklein: Seeing some odd Twitter traffic that the president is "rope-a-doping" Romney. Not really sure how that would work. Romney loses his voice?

We're now waiting to see how Moderate Mitt looks in the latest polls. "[H]ere are some of the more thoughtful estimates from the election wonks...John Sides: '1.25 points...It could end up being a bit more, if you think that Obama has been out-performing the fundamentals of the race, and thus we were due for a course correction'...Nate Silver: 'It seems likely that Mr. Romney will make at least some gains in head-to-head polls after the debate, and entirely plausible that they will be toward the high end of the historical range, in which polls moved by about three percentage points toward the candidate who was thought to have the stronger debate.'...[H]ow much they tighten will be very telling. Wednesday was as good a night as Romney can expect to have in the rest of this campaign, in front of as big an audience as he’ll get, with a maximum of media coverage. So his bounce will help tell us how many voters really remain persuadable, or at least how many of the persuadable voters are paying attention to the final events of the campaign." Ezra Klein in The Washington Post.

BROOKS: The return of moderate Mitt. "[O]n Wednesday night, Romney finally emerged from the fog. He broke with the stereotypes of his party and, at long last, began the process of offering a more authentic version of himself...Romney didn’t describe a comprehensive governing philosophy, but he gave us a hint of a strong center-right pragmatic approach. It starts with 1986-style tax reform and Wyden-Ryan Medicare reform and then offers a glimpse of experimental pragmatism on most everything else...Romney’s debate performance signals the return of Governor Mitt. Democrats call it hypocrisy; I call it progress." David Brooks in The New York Times.

KLEIN: Romney's return to moderation is confusing. "[T]he question the debates raised is which Romney voters will be choosing if they mark his name on the ballot...One thing Romney emphasized over and again was the need to hammer out his policy agenda through negotiations with Congress. And that, I think, provides the answer. If Romney is facing a Democratic Congress that demands compromise in return for votes -- the same situation he faced in Massachusetts -- he’ll be more like the Massachusetts moderate he presented as last night. If he’s facing a Republican Congress that’s pulling him to the right and threatening to reject his proposals and force him into a primary in 2016, he’ll be more like the candidate we saw in this year’s primaries and throughout much of this campaign." Ezra Klein in The Washington Post.

DOUTHAT: Moderate Mitt wiggled out of dumb promises on taxes. "[T]he Republican candidate essentially doubled down on the second half of his commitment — no net tax cut for the rich, tax relief for the middle class — while downplaying the perhaps-unworkable, perhaps-not rate reduction. I see some liberals calling this a bare-faced lie, but it seemed much more like a clear-enough promise that if both his goals can’t be achieved, he’ll prioritize the second one over the first...The liberal meltdown on MSNBC after the debate was unseemly and ridiculous but not entirely without justification, since the president lost this debate almost as much as Romney won it...But the biggest lost opportunity, to my mind, was Obama’s demurral when asked about his differences with Romney on Social Security." Ross Douthat in The New York Times.

CHAIT: He is from Massachusetts. "Tonight’s debate saw the return of the Mitt Romney who ran for office in Massachusetts in 1994 and 2002. He was obsessive about portraying himself as a moderate, using every possible opening or ambiguity — and, when necessary, making them up — to shove his way to the center. Why he did not attempt to restore this pose earlier, I cannot say. Maybe he can only do it in debates. Or maybe conservatives had to reach a point of absolute desperation over his prospects before they would give him the ideological space. In any case, he dodged almost every point in the right wing canon in a way that seemed to catch Obama off guard." Jonathan Chait in New York Magazine.

@MattZeitlin: To deny the caricature developed by the Obama campaign, Romney has to adopt the one that's dogged him since 2007

How moderate Mitt would regulate Wall Street. "Last night, Mitt Romney styled himself as a moderate centrist who would—of course—support regulating Wall Street...Romney didn’t get too specific about what he liked about Dodd-Frank or his own version of financial reform. But he finally did offer one very concrete example of the kind of regulation that he would support—and presumably preserve in some form—and it would certainly put him at odds with the right flank of his party. The problem with Dodd-Frank, Romney said, wasn’t simply that it was too much bad regulation, but that it was too vague when it came to good regulations." Suzy Khimm in The Washington Post.

@dandrezner: That moment when you realize Big Bird is going to stalk Romney at all his campaign rallies...

KRUGMAN: Romney's sick joke. "What Mr. Romney actually proposes is that Americans with pre-existing conditions who already have health coverage be allowed to keep that coverage even if they lose their job — as long as they keep paying the premiums. As it happens, this is already the law of the land. But it’s not what anyone in real life means by having a health plan that covers pre-existing conditions, because it applies only to those who manage to land a job with health insurance in the first place (and are able to maintain their payments despite losing that job)...What Mr. Romney did in the debate, in other words, was, at best, to play a word game with voters, pretending to offer something substantive for the uninsured while actually offering nothing. For all practical purposes, he simply lied about what his policy proposals would do." Paul Krugman in The New York Times.

NOONAN: How the Romney camp should pivot from this debate. "The real Romney is the one who can communicate. He's straight and direct and not fancy, forgivably jargony, but worried about America and sincere. That's the Romney who showed up for the debate. Stay that guy!...There's no way to know if the debate changed everything but for the next few weeks Pretend it has. Underscore the gain in stature your candidate now enjoys. Makes things new, dress it up...Everyone at podiums. Stop with the rambling man with the cordless mic on the empty stage...Everyone in suits and ties. Enough with the high-thread-count, open-collar shirts with the sleeves rolled up. The presidency is not a TED conference. Especially for Paul Ryan. You know what we like to see in a 42-year-old man who wants to change a 45-year-old program? Grown-up clothes...Maintain the rhetorical tone and tenor of the debate -- sharp but respectful." Peggy Noonan in The Wall Street Journal.

@jbarro: It's silly if the Obama camp thought he could decline to engage. Obama's record sucks. He has to make the case that Romney would be worse.

Top op-eds

YGLESIAS: . "[I] it's extremely frustrating to me how the topic of immigration continues to be sequestered away from mainstream economic debate. We treat it as a kind of narrow issue of ethnic politics (working class Latinos vs working class whites) or interest groups (tech companies want to hire Indian engineers) rather than as the core economic policy question it deserves to be...[T]he default assumption should be that if an able-bodied, law-abiding person wants to move here to get a job that'd be mutually beneficial...We treat the desire to migrate here with suspicion, as a problem we need to solve with better guards and biometric identity verification systems rather than as something that should be taken at face value. The United States of America is a much better-than-average place to live. Lots of people would like to move here. Taking advantage of that fact has, historically, been far and away the biggest contributor to American national greatness. We should do it again." Matthew Yglesias in Slate.

WESSEL: How to curb health care costs. "Isn't it true that we spend huge sums on people who are in their last year of life, and isn't finding a socially acceptable way to stop doing that the best way to slow health-care spending? The short answer: Yes to the first part, no to the second. About 25% of all spending by Medicare, the insurance program for the elderly and disabled, is done in the last year of life, according to analysis by the Centers for Medicare and Medicaid Services. That's a lot of money (roughly $125 billion a year) spent on about 5% of Medicare beneficiaries who die each year (roughly 2.5 million people.)...It also is a mistake to argue that all care in the waning days of life is worthwhile. It isn't...[But] if the U.S. is going to slow the growth of health-care spending -- as it must if it is to reduce federal budget deficits to sustainable levels -- we need to look somewhere besides end-of-life care...Like what? Well, there is widespread agreement that the U.S. health-care system has evolved into an extraordinarily inefficient one...One place to look is the cost of caring for the chronically ill, an enormous and growing share of the Medicare and overall national health-care tab. About 5% of the whole population has five or more chronic conditions (high blood pressure, heart disease, respiratory disease, diabetes, etc.) and they account for 21% of all health-care spending, according to Gerard Anderson, a Johns Hopkins University health economist." David Wessel in The Wall Street Journal.

ESPENSHADE: How to reduce educational inequality without affirmative action. "Supporters of race-conscious affirmative action in higher education are not optimistic that it will survive. But they shouldn’t despair. A Supreme Court ruling against the university might put ethnic and racial diversity on college campuses on a firmer footing for the long term. It would spur Americans who care about racial inequality to seek alternatives to affirmative action by addressing the deeply entrenched disadvantages that lower-income and minority children face from the beginning of life." Thomas J. Espenshade in The New York Times.

WALPIN: Why ending racial preferences is the right thing to do. "Like most universities, Texas offers no assistance to Asian-Americans. To the contrary, the affirmative-action program prefers blacks and Hispanics over Asian-Americans. American history is replete with discriminatory college quotas on Jews and Asian-Americans, for example, because on merit alone they would fill too many 'slots.' This country must reject the return of such discriminatory quotas -- the reciprocal of affirmative action...In its ruling in Fisher v. University of Texas, the Supreme Court should follow Chief Justice John Roberts's excellent instruction in the closing of his 2007 opinion in Parents Involved In Community Schools v. Seattle School District No. 1: the 'way to stop discrimination on the basis of race is to stop discriminating on the basis of race.'" Gerald Walpin in The Wall Street Journal.

BLOOMBERG VIEW: If we're trying to create jobs, look to new business, not small business. "The biggest winner of this week’s presidential debate was not Republican presidential nominee Mitt Romney or President Barack Obama. It was small business...Yet to portray small businesses as the engine of job growth is to vastly overstate their role...More important, recent economic research shows that small companies play no greater role in job creation than large ones do. What matters more is age: New businesses account for the biggest share of job gains. Those companies tend to be small yet unprofitable. They would be largely unaffected by an upper- income tax increase...[T]he bigger contributors to job growth are startups, which account for roughly 3 percent of employment in most years." Bloomberg View.

Iran interlude: What hyperinflation looks like.

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

Still to come: the jobs report today; Obamacare and health premiums; the gender gap; natural gas and wind power in transition; and how to surive (or maximize your chances thereof) a plane crash.


What you need to know about today's jobs report. "The monthly jobs report usually gets a lot of attention, but the September numbers due on Friday are likely to absorb an outsize amount of oxygen because of the election just over a month away. Here are some crucial details economists and analysts are likely to be looking for in the report...Economists are predicting job growth of 113,000, far below the economy’s long-term trend and too slow to absorb just those coming of age into the labor force." Catherine Rampell in The New York Times.

@Goldfarb: I'm going to say it: Last month's jobs report was MORE important than this month's.

A new release of a different jobs survey was lackluster. "Small businesses cut back on hiring over the summer and small-to-medium sized firms have lowered their staffing plans for the future, according to two reports released Thursday. The National Federation of Independent Business, a small-business trade group, said the net change in employment per firm over the three months ended in September was -0.23, worse than the July and August readings. The negative result indicates slightly more firms cut workers than the share of firms who added staff." Kathleen Madigan in The Wall Street Journal.

Factory orders looked awful, also. "US factory orders suffered the worst decline for more than three years in August...Companies cut their orders from US factories by 5.2 per cent in August, the biggest decline since January 2009, the US commerce department said on Thursday...Economists fear a further decline in the manufacturing sector, which is regarded as the mainstay of the US recovery and accounts for about 12 per cent of the economy." Anjli Raval in The Financial Times.

The Fed may be moving towards a target to reduce unemployment. "The Fed minutes from the Sept. 12-13 meeting, in which the Federal Open Market Committee agreed to a third round of purchases of mortgage-backed securities for an indefinite period (a policy known as 'QE3'), are out, and they signal that if anything, the resulting policy was tamer than some wanted." Dylan Matthews in The Washington Post.

@dylanmatt: It's official: most Fed policymakers want to tie rates to a number like the unemployment rate or NGDP. Wow.

In any case, Bernanke wants to clarify plans. "Federal Reserve officials are considering another revamp of their communications policies...While central-bank officials believe the assurances have helped hold down long-term interest rates, they find the fixed date to be confusing, and they are looking at a new approach. The idea under consideration is to keep offering assurances of low rates, but tie those assurances to what is happening in the economy rather than a point on the calendar...Under a new communications approach, the Fed might commit to keeping short-term interest rates near zero until the unemployment rate dropped from its present 8.1% to 7%, 5.5% or another level. It might add that it would raise short-term rates if inflation were to rise above 3%, 2.25% or some other rate. Such markers would be meant to give the public a clearer road map for the path of interest rates." Jon Hilsenrath and Kristina Peterson in The Wall Street Journal.

@jimtankersley: FOMC members said QEIII "cud lift consumer & business conf by emphasizing the (Fed) commit. to continued progress toward its dual mandate"

How Fannie and Freddie are putting burdens on banks. "A battle over who gets stuck with tens of billions worth of bad housing loans made during the boom years explains why many Americans still can't get a mortgage as interest rates hit a new low...[T]housands of would-be homeowners are being locked out of the market because lenders, facing a hard-line stance from Fannie Mae and Freddie Mac, have grown wary of making new loans. The two mortgage giants have been forcing banks to take back an increasing number of loans that the banks made during the boom years and sold to Fannie and Freddie. To protect themselves from such demands in the future, banks are ratcheting up credit and documentation standards for new mortgages...So far, Fannie and Freddie have asked banks to repurchase $66 billion in mortgages made between 2006 and 2008." Nick Timiraos in The Wall Street Journal.

Just when you thought interlude: That politics couldn't get any more bizarre, mix in World of Warcraft.

Health Care

How Obamacare affects health premiums. "President Obama pointed to the recent slowdown in health insurance costs during last night’s debate as evidence Obamacare was working. Mitt Romney said that projected premium growth was evidence of an opposite trend: That Obamacare will cause families’ health costs to rise. So, who is right? Here’s what we do know about the health law and premiums: It likely did increase the cost of insurance coverage by requiring more expansive coverage. But the law’s impact doesn’t explain longer-term trends in the price of a health plan...Health plans under Obamacare cost more because they’re delivering more benefits. Customers are paying more -- and getting something back in return." Sarah Kliff in The Washington Post.

What are 'compounding pharmacies,' and why you need to know. "A meningitis outbreak that has now killed five patients and sickened 35 is focusing renewed attention on the little-regulated world of drug-mixing pharmacies, after injections made by a Massachusetts facility were tied to the illnesses...Pharmacies such as the New England Compounding Center create alternative versions of medicines, such as liquid forms of drugs, to meet special needs. Compounding can be as simple as mixing creams that treat poison ivy rashes and acne. The pharmacies are licensed by state boards of pharmacy, but aren't regulated as strictly as traditional drug makers...The U.S. now has about 3,000 compounding pharmacies after having virtually none in 2000, according to the International Academy of Compounding Pharmacists. They account for about 3% of the roughly $300 billion yearly U.S. prescription-drug market." Jonathan D. Rockoff and Timothy W. Martin in The Wall Street Journal.

Big Medicare fraud bust. "The Department of Health and Human Services was eager to tout a major Medicare fraud bust Thursday: HHS and the Justice Department said they filed charges against 91 people in seven cities alleging roughly $430 billion in Medicare fraud. Many of the defendants are accused of billing Medicare for services they never provided. The total includes $230 million in home health fraud, $100 million from community mental health facilities and $49 million in ambulance fraud, HHS said." Sam Baker and Elise Viebeck in The Hill.

HHS inks $3M ad contract to promote federal health insurance exchange. "The Obama administration has awarded a $3-million public relations contract to highlight a central piece of President Obama's healthcare law — the 'fallback' insurance exchanges the federal government will set up in some states. Public relations firm Weber Shandwick won the $3.1-million contract." Sam Baker in The Hill.

Domestic Policy

Is there a gender gap any more? "The gender gap between men and women has been shrinking for decades but it may be smaller than people think when things like education and work benefits are taken into consideration, according to a paper by economists at the Federal Reserve Bank of St. Louis..'Research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap,' the authors write...[The] gender gap in wages [was] approximately 13%. But when [one] considered total compensation, the gender gap dropped to 3.6%" Conor Dougherty in The Wall Street Journal.

Just in case interlude: How to survive a plane crash -- or at least how to maximize your odds of survival.


A natural-gas export boom is coming. "Energy companies are racing to export natural gas from the U.S. as they search for more-profitable markets amid a continent-wide gas glut that has depressed prices to the lowest levels in a decade...The Alaska project is the latest sign of the transformation of the U.S. from a heavy energy importer into a major producer and likely exporter...The low prices, however, have benefited consumers who rely on the fuel for heat and electricity, and have helped spark a revival in manufacturing, where gas is used in products ranging from fertilizer to steel. Many big consumers of natural gas are worried currently proposed projects, which could export more than a third of daily production in the continental U.S., would raise natural-gas price." Daniel Gilbert and Tom Fowler in The Wall Street Journal.

And states are looking for how to raise revenues from the boom. "A dozen states since 2011 have seen proposals to impose a new tax on oil and gas production, or to raise, lower or amend an existing tax, according to the National Conference of State Legislatures. Most of the proposals have died or never got off the ground. At least 36 states impose some sort of severance tax on oil, gas, coal, timber and minerals, generating more than $11 billion in revenue in 2010. Of those, 31 states levy severance taxes specifically on production of oil and gas, according to the legislative conference." Julie Carr Smyth in The Associated Press.

Wind power looks to make gale-force cutback in cost. "Vestas Wind Systems A/S and Siemens AG, the biggest manufacturers of offshore wind turbines, and 42 other companies are participating in an initiative to lower power-generating costs for the technology and promote investments that may reach as much as $630 billion by 2035...The technology is still costly, coming in at about $226 a megawatt-hour, according to levelized cost of energy data from Bloomberg New Energy Finance. That compares with $85 for land- based wind turbines, $82 for coal and $71 for natural gas. The U.K. government is trying to get the cost of offshore wind farms down to 100 pounds ($161) a megawatt-hour by 2020." Alex Morales in Bloomberg.

And gas prices look primed to fall. "U.S. gasoline prices at the pump are poised to drop by year end, if history is any guide, as refineries resume production, Europe exports more fuel to the East Coast and Americans drive less. Prices at service stations may fall about 6.3 percent to $3.54 a gallon, according to eight years of seasonal data compiled by Bloomberg. Gasoline deliveries to the U.S. from Europe may rise 35 percent, according to the median of eight estimates in a Bloomberg News survey. Demand has declined an average of 3.6 percent from July through December during the past five years, Energy Department data show."Barbara J. Powell in Bloomberg.

Wonkbook is produced with help from Michelle Williams.



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