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Wonkbook's Number of the Day: 896,409. That's the size of the backlog of disability claims at the Department of Veterans Affairs as of Nov. 3, according to a story by Steve Vogel of The Washington Post. That number has more than doubled from the 391,127 which were pending when Obama took office, due to a variety of factors including returning troops and changes to disability rules. Roughly 570,000 of the current claims -- two-thirds of them -- have been pending for more than 125 days. VA Secretary Eric K. Shinseki previously stated he hopes the problem can be resolved by 2015.
Top story: Will Mitt Romney's deductions camp help avert the austerity crisis?
Boehner-Obama negotiations to start on Friday. "Friday’s White House meeting offers a fresh start -- and one timed to allow Boehner to first secure his own nomination as the speaker in party meetings this week. But Obama will also have to show more give on the spending side of the ledger if he expects Boehner to steer reluctant Republicans toward a year-end deal." David Rogers in Politico.
@TheStalwart: JPM: "Republican Senator Minority Leader McConnell hasn't been as conciliatory as Boehner re the fiscal cliff"
Politico explains: 5 scenarios for the austerity crisis.
Democrats may call on Romney's idea to cap deductions. "With both parties positioning for difficult negotiations to avert a fiscal crisis as Congress returns for its lame-duck session, Democrats are latching on to an idea floated by Mitt Romney to raise taxes on the rich through a hard cap on income tax deductions...The cap -- never fully detailed by Mr. Romney -- is similar to a longstanding proposal by Mr. Obama to limit income tax deductions to 28 percent, even for affluent households that pay a 35 percent rate. But a firm cap of around $35,000 would hit the affluent even harder than Mr. Obama’s proposal, which has previously gotten nowhere in Congress." Jonathan Weisman in The New York Times.
@pourmecoffee: Do we really have to give policy challenges Harry Potter names? "Barack Obama and the Ceiling of Debt." "Barack Obama and the Fiscal Cliff."
Liberal groups rumble for the coming tumble. "With President Obama seeking a deal to avoid the fiscal cliff, liberal groups that campaigned aggressively for his reelection are mobilizing to oppose concessions they fear he could make on Medicare and Social Security. Leaders of the nation’s labor unions and other liberal groups are planning Tuesday to press Obama at the White House to reject the kind of cuts in Medicare and Social Security that he has previously offered to make. On Thursday, left-leaning lawmakers and seniors groups plan to rally on Capitol Hill against any changes to entitlements." Zachary A. Goldfarb in The Washington Post.
@damianpaletta: Busy week on #fiscalcliff. Obama meets w/ labor Tues, CEOs & press conf Wed, civic ldrs & Cong Friday. & House makes ldrship moves.
And so are the business groups. "Tension among the country’s leading business lobbies has become more pronounced this week as competing groups jostle for attention from Capitol Hill and the White House over their favored approaches to resolving the ongoing deadlock over tax and spending policy. On Wednesday, President Obama is set to meet the chief executives of a dozen leading U.S. corporations in an effort to garner high-powered business backing for his effort to forge a deficit reduction deal...Those expected to attend include the chief executives of Honeywell, Wal-Mart and General Electric, some of whom are Republicans." Tom Hamburger in The Washington Post.
What do the young people want? Austerity now or later? "Deficit hawks hold up the fate of future generations to drive home their warnings about ballooning government debt. But does the next generation want cutting the deficit to be our biggest priority?...Millennials are less inclined to see deficit reduction as a priority as compared to other age groups, and they’re more concerned about government action to fix the economy...That seems to reflect the ongoing struggles that younger Americans are facing in a weak economy: The unemployment rate for 18- to 34-year-olds is 10.8 percent, compared to 7.9 percent for the general population." Suzy Khimm in The Washington Post.
@TheStalwart: History isn’t written yet, but both The Debt Ceiling and The Fiscal Cliff are terms that will have worked to the detriment of Democrats.
Obama will take campaign for budget deal to the nation. "President Obama, emboldened by his decisive re-election and lessons learned over four years in office, is looking to the renewal of budget talks with Republicans this week as a second chance to take command of the nation’s policy debates...Mr. Obama will not simply hunker down there for weeks of closed-door negotiations as he did in mid-2011...He will travel beyond the Beltway at times to rally public support for a deficit-cutting accord that mixes tax increases on the wealthy with spending cuts...[S]uccess or failure will depend on Mr. Obama, starting with his attempts to steer negotiations during the lame-duck Congress, which starts Tuesday." Jackie Calmes in The New York Times.
@conorsen: In watching the fiscal cliff give and take in the press, feels like 2011 was peak DC dysfunction.
He's also planning some old-fashioned deal-making. "President Obama has many motivations to strike a new tone as he begins his second term at the White House in January. Warmer relations with Congress, the business community, and other power players outside his tight inner circle could help him make tangible progress across the board before lame-duck status looms. Obama has been criticized throughout his first term for being an aloof and distant figure. And lawmakers on both sides of the aisle have expressed disappointment that he hadn’t reached out enough on the phone and in person...[O]observers and those close to the White House expect that all to change during a second term. They anticipate a more engaging Obama, who will work with lawmakers on everything from the so-called 'fiscal cliff' to immigration reform." Amie Parnes in The Hill.
@AnnieLowrey: S&P puts the chance of the United States going over the fiscal cliff (ahem, austerity cliff) at 15 percent.
Sen. Corker optimistic 'there is a deal' to get beyond ‘fiscal cliff'. "Sen. Bob Corker (R-Tenn.) signaled optimism on Sunday that legislators would be able to reach a deficit-reduction plan that would avoid looming tax-rate increases and spending cuts...'So the ying of revenue we understand and I think there's a very good pro-growth way of putting that in place so you're actually getting revenues from me and other folks that make above 'x' dollars. But what you have to have tied to that is true entitlement reform so people know you solve the problem.'" Daniel Strauss in The Hill.
...But Sen. Murray says Dems would let Bush-era rates expire before taking 'unfair deal'. "Sen. Patty Murray (D-Wash.) on Sunday said Democrats were prepared to allow the expiration of all George W. Bush-era tax rates if Republican lawmakers objected to raising taxes on the wealthiest...The Washington senator is likely to become chairwoman of the Senate Budget Committee." Meghashyam Mali in The Hill.
@mattyglesias: Fiscal cliff is boring. Let’s skip to Ginsburg resigns, Obama nominates Goodwin Liu, and the GOP stages an awesome new racial panic.
KLEIN: Austerity cred likely to count for little in 2016 election. "If you tick through the main Republican contenders for 2016 -- and through the Republican ranks more generally -- what you’ll find are a lot of politicians who made their names by promising to be the very best at bringing down deficits...But what if we get some “grand bargain” over the next year? Add that to the likely economic recovery over the next four years, and 2016 probably isn’t going to be about who can cut the most from the deficit...There are a number of powerful Republicans who would see their futures dimmed by a grand bargain that credibly puts deficits on a declining trajectory. That’s going to make it harder for them to agree to such a bargain." Ezra Klein in The Washington Post.
RUBIN: The fiscal delusion. "[P]lans [to cut marginal tax rates but broaden the tax base] rely on reducing or eliminating many tax deductions, exclusions and the like, known collectively as tax expenditures. Reducing tax expenditures to pay for both lower personal income tax rates and deficit reduction may seem like a politically attractive alternative to raising tax rates or cutting entitlements or other spending. However, many of these tax expenditures are important and popular policy programs on which people now rely. They include the deductibility of mortgage interest, charitable contributions and the exclusion from income of employer-provided health insurance. Some tax expenditures should be cut back and reformed. But when the substantive effects and political realities of large-scale reductions are examined, it becomes clear that there would not be sufficient savings to reduce tax rates and also cut the deficit." Robert Rubin in The New York Times.
BARRO: Why the millionaire will keep his tax break. "Conservatives have taken a lot of well-deserved mockery about their overconfidence in last week’s election. But this week, I am seeing overconfidence from liberals that they are about to win the coming tax fight in Congress. They’re not...Democrats cannot force Republicans’ hand unless they are more willing than Republicans to let all the Bush tax cuts expire. And they won’t be. A full expiration might well cause a new recession, which would be even more politically damaging for the Barack Obama administration than for congressional Republicans." Josh Barro in Bloomberg.
KRUGMAN: Hawks and hypocrites. "Contrary to the way it’s often portrayed, the looming prospect of spending cuts and tax increases isn’t a fiscal crisis. It is, instead, a political crisis brought on by the G.O.P.’s attempt to take the economy hostage. And just to be clear, the danger for next year is not that the deficit will be too large but that it will be too small, and hence plunge America back into recession. Deficit scolds are having a hard time with this issue. How can they warn us not to go over the fiscal cliff without seeming to contradict their own rhetoric about the evils of deficits?" Paul Krugman in The New York Times.
BROOKS: The case for a deal. "During his first term, President Obama faced a wicked problem: How do you govern in a highly polarized, evenly divided country with House Republicans who seem unwilling to compromise?...Now re-elected with Republicans still in control of the House, Obama faces the problem again. You might say the success of his second term rests upon him solving it...The economic crisis interrupted him last time, but President Obama still has a chance to build a great middle-class economy. It’ll take a deal-maker, not a warrior." David Brooks in The New York Times.
PONNURU: How the GOP failed economics. "Republicans are engaged in some public “soul-searching,” which is what we usually call it when members of a defeated party explain that the party went wrong by not taking the advice they’ve been giving all along. One of the most common arguments at the moment is that demography has become doom for Republicans...While there is something to each of these arguments, Republicans are making a mistake by thinking about voters in these categories. The root of the party’s electoral challenge isn’t demographics: It’s economics." Ramesh Ponnuru in Bloomberg.
STEPHENS: Or maybe they just weren't that bright. "Can we, as the GOP base, demand an IQ exam as well as a test of basic knowledge from our congressional and presidential candidates? This is not a flippant suggestion: There were at least five Senate seats in this election cycle that might have been occupied by a Republican come January had not the invincible stupidity of the candidate stood in the way...Running for president should be undertaken only by those with a reasonable chance of winning a general election. It should not be seen as an opportunity to redeem a political reputation or audition for a gig on Fox News. Mitt Romney won the nomination for the simple reason that every other contender was utterly beyond the pale of national acceptability." Bret Stephens in The Wall Street Journal.
GELMAN AND FELLER: The culture war between the rich. "As in previous elections, richer voters leaned Republican while lower-income voters came out strong as Democrats. But there’s much more to this story. The maps we have made show that the election was not just about red and blue states. What’s actually going on is that the division between red and blue America is mostly about a split among richer voters...The so-called culture war between red and blue America is concentrated in the upper half of the income distribution, and voting patterns reflect this." Andrew Gelman and Avi Feller in The New York Times.
KLEIN: A remarkable, historic period of change. "Max Weber wrote that 'politics is the strong and slow boring of hard boards.' It is not a vocation that rewards impatience. Progress is slow. It’s tough. It requires compromises and is marked by disappointments. It’s incremental even when it needs to be transformational. At least, that’s how it usually is. But step back and take an accounting of these last few years...Americans of good faith disagree over the worth of these initiatives and the nature of these milestones. None of us know the verdict that history will render. But we can say with certainty that the pace of change has been breathlessly fast. We have toppled so many barriers, passed so many reforms, completed so many long quests, begun so many experiments, that even those of us who’ve been paying attention have become inured to how much has happened." Ezra Klein in The Washington Post.
Top long reads
Ryan Lizza asks how Republicans can respond to the pressures of immigration: "When historians look back on Mitt Romney’s bid for the Presidency, one trend will be clear: no Republican candidate ever ran a similar campaign again. For four decades, from Richard Nixon to Ronald Reagan through the two Bush Presidencies, the Republican Party won the White House by amassing large margins among white voters...Romney’s loss to Barack Obama brought an end not just to his eight-year quest for the Presidency but to the Republican Party’s assumptions about the American electorate."
Got tips, additions, or comments? E-mail me.
Corporate earnings show less weakness than expected in economy. "Of the 428 companies that have reported, according to FactSet, 70 percent have beaten analyst projections of their profitability. It is shaping up, as analysts had forecast, to be the first quarter in almost three years in which earnings declined. But it wasn’t quite the bloodbath that had been expected. Analysts had forecast a 3.1 percent decline in earnings when the quarter ended, yet so far it has dropped by only 0.1 percent. But what’s particularly notable is how the good news on earnings came about. It’s not from higher sales. In fact, only 40 percent of the companies that have reported beat analyst forecasts on their revenues. In other words, corporate America found other ways to become more profitable in the third quarter, squeezing expenses such as worker salaries to improve their bottom line even when their top line wasn’t doing all that well." Neil Irwin in The Washington Post.
2 million could lose unemployment benefits unless Congress extends program. "More than 2 million Americans stand to lose their jobless benefits unless Congress reauthorizes federal emergency unemployment help before the end of the year. The people in danger of having their unemployment checks cut off are among those who have benefitted least from the slowly improving job market: Americans who have been out of work longer than six months." Michael A. Fletcher in The Washington Post.
Study: NAFTA raised pay here and abroad. "Economists Lorenzo Caliendo of Yale and Fernando Parro of the Federal Reserve built a trade model to analyze how the agreement changed the level of trade between the three countries and their residents’ welfare levels. They find that the effects of NAFTA dwarf those of any other agreement, with greater effects than all other tariff reductions undertaken by the three countries put together. All three countries saw real wages increase as a result of NAFTA." Dylan Matthews in The Washington Post.
Europe defers further Greek austerity. "Finance ministers from euro zone countries meeting here late on Monday praised reforms taken by Greece and gave the country two more years to make budget cuts, a concession that is expected to require additional funding of nearly 33 billion euros, or $42 billion...Last week, Greece’s shaky coalition won a tight vote on a package of austerity measures and fiscal overhauls totaling 17 billion euros for the next four years." James Kanter in The New York Times.
Sandy skews economic data. "Sandy has passed, but its impact on America's economic numbers is just beginning...With Americans losing work-hours, income and even jobs and now replacing destroyed cars and homes, U.S. economic data over the next two months could see sharp moves that make it harder to gauge the economy...Economists say Sandy delivered a modest blow to overall economic output, possibly knocking 0.2 percentage point off the nation's growth rate in the fourth quarter." Neil Shah in The Wall Street Journal.
Headwinds to housing's recovery? "While sales have improved from their post-housing crash lull—builders are on track to sell 389,000 new homes this year -- that rate is only slightly above 2009's 375,000 and well below the peak's 1.3 million, according to the Census Bureau...A big concern is the fiscal cliff, which threatens to derail recent economic recovery. Meanwhile, the foreclosure crisis drags on and mortgage lending standards remain stubbornly tight, keeping many would-be buyers away from the closing table." Dawn Wotapka in The Wall Street Journal.
Unbundling our households could help housing. "Based on demographics and previous trends in household formation, it looks as if the country still has about 1.8 million fewer households today than it would have in a more 'normal' economy, and most of that total household deficit is accounted for by the lower numbers of households formed by those in the 15-34 age group. Demographics suggest that there should be about 1.1 million more households headed by younger Americans today than there actually are." Catherine Rampell in The New York Times.
The problem of single-parent poverty, and what public policy can do about it. "The US is the only OECD country without paid maternity leave; a parent's job isn't protected if he or she takes a day off to care for a sick child; and the US still lacks affordable, high-quality child care...Over one-quarter of US children lives with a single parent, the highest proportion among developed countries...The US, with among the highest rates of child poverty across the OECD, also has among the top three single-parent household poverty rates—at just under 50 percent, behind only Luxembourg and Japan." Karen Kornbluh in The Atlantic.
Data visualization interlude: The Obama coalition in statistics.
The new health plan: more carrots, more sticks. "Benefits-enrollment season is here, offering workers a glimpse of their health coverage for next year. For many, the picture will be familiar: higher costs and more incentives to improve their health. Underlying the details is a longer-term trend in health benefits. For many years, U.S. companies have been seeking to shift more responsibility onto employees...The question is how much the employee-responsibility approach can affect overall health costs over the long term, and what effect those efforts have on workers' health. Research has long shown people will use less health care as they pay more out of their pockets. A study released last year by Rand Corp. researchers said health spending for families with a deductible of $500 a person or more dropped an average of 14% compared with those in traditional plans with lower deductibles; families also reduced their use of some preventive services such as vaccinations, even though deductibles were waived for them." Anna Wilde Matthews in The Wall Street Journal.
HHS moving quickly on key regulations. "Since Election Day, HHS has submitted regulations to the Office of Management and Budget on essential health benefits, insurance regulations, wellness programs and quality initiatives." Sam Baker and Elise Viebeck in The Hill.
Study: Paying doctors differently saves lives. "There’s a lot of talk right now in health policy circles about moving away from a system where we pay for volume of care (a fee-for-service system, in health wonk parlance) toward one where we pay for the value of care (usually known as pay-for-performance)...A British study finds that paying for performance can also save lives...[T]he researchers saw a 1.3 percent decrease in mortality rates, after adjusting for some overall drops in mortality rates in the United Kingdom." Sarah Kliff in The Washington Post.
Why comparative effectiveness research fails. "'Comparative effectiveness' studies, which compare one treatment for a particular illness against another to determine which works better, have received a lot of attention and billions of dollars in federal support in the last few years. But when I mentioned comparative effectiveness research recently to a colleague who I know is particularly interested in treatments and the clinical trials behind them, he let out a loud snort and guffaw before I even finished saying the words...Despite many useful and even potentially cost-saving findings, many of them failed to change doctors’ practice and patient care." Pauline W. Chen, M.D. in The New York Times.
For hurried states, Obama administration extends health law deadlines. "The Obama administration will allow states additional time to plan health insurance exchanges, giving hurried officials more breathing room to set up the marketplaces at the heart of the Affordable Care Act. States now have an extra month to send the federal government 'blueprints' for how they will have the health exchange up and running by 2014, according to a letter Health and Human Services Secretary Kathleen Sebelius sent to governors Friday. They must still inform the Obama administration whether they plan to set up an exchange by the original deadline of Nov. 16. Planning documents must follow by Dec. 14." Sarah Kliff in The Washington Post.
Is Obamacare too much work? "By the end of this week, states must decide whether they will build a health-insurance exchange or leave the task to the federal government. The question is, with as many as 17 states expected to leave it to the feds, can the Obama administration handle the workload." Sarah Kliff in The Washington Post.
The rise of the retail clinic, and why it matters. "Retail clinics have recently boomed in popularity. Visits to these clinics, often set up in shopping malls or drug stores, quadrupled between 2007 and 2009. What we know less about is what that means for the quality of American health care. On the one hand, these clinics increase access to health care services at a potentially lower price. On the other, doctor groups argue that the retail clinics will worsen care by disrupting the relationship between patients and physicians...[A recent study] found that visits to retail clinics were associated with fewer trips to the primary care doctor to diagnose a new problem. Those who went to a retail clinic were also less likely to see their primary care doctor going forward." Sarah Kliff in The Washington Post.
The GOP rethink
Glenn Hubbard -- a.k.a Romney's economic advisor a week ago -- now supports higher tax revenues from wealthy. "Glenn Hubbard, who advised Barack Obama’s rival Mitt Romney on his losing presidential bid, is the latest prominent conservative to suggest Republicans should change tack and accept the president’s structure for impending budget talks...'The first step is to raise average (not marginal) tax rates on upper-income taxpayers,' he wrote [in the Financial Times]. 'Revenues should come first from these individuals.'" James Politi and Stephanie Kirchgaessner in The Financial Times.
And Bill Kristol said they shouldn't be a dealbreaker. "John Boehner suggested last week that Republicans would be open to compromise on taxes -- so long as tax rates don’t go up. Now Weekly Standard editor Bill Kristol has suggested that they give way on that, too. On Fox News this Sunday, Kristol said: 'You know what? It won’t kill the country if Republicans raise taxes a little bit on millionaires. It really won’t, I don’t think. I don’t really understand why Republicans don’t take Obama’s offer to freeze taxes for everyone below $250,000. Make it $500,000, make it a million. Really? The Republican party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans?'" Suzy Khimm in The Washington Post.
Paul Ryan, though, says his plan had nothing to do with GOP loss in 2012. "In his first post-Election Day television interview, former GOP vice-presidential nominee Paul Ryan said Monday that he doesn’t believe that the 2012 White House campaign was a referendum on his plan to cut the federal budget and overhaul entitlement programs such as Medicare...When Mitt Romney announced Ryan as his running mate, Democrats vowed to make Medicare a centerpiece of the campaign. But exit polls suggest that the issue was not as potent as Democrats had believed it would be." Felicia Sonmez in The Washington Post.
Boehner to House GOP: Fall in line. "On a conference call with House Republicans a day after the party’s electoral battering last week, Speaker John A. Boehner dished out some bitter medicine, and for the first time in the 112th Congress, most members took their dose...With President Obama re-elected and Democrats cementing control of the Senate, Mr. Boehner will need to capitalize on the chastened faction of the House G.O.P. that wants to cut a deal to avert sudden tax increases and across-the-board spending cuts in January that could send the economy back into recession. After spending two years marooned between the will of his loud and fractious members and the Democratic Senate majority, the speaker is trying to assert control, and many members seem to be offering support." Jonathan Weisman and Jennifer Steinhauer in The New York Times.
Immigration talks to begin in the Senate. "Sen. Chuck Schumer (D-N.Y.) said Sunday that he will be making a renewed push for reforms to the nation’s immigration laws along with Sen. Lindsey Graham (R-S.C.). 'Sen. Graham and I have talked and we are resuming the talks that were broken off two years ago,' Schumer said on NBC’s 'Meet The Press.'..'I intend to tear this wall down and pass an immigration reform bill that’s an American solution to an American problem, but we have nobody to blame but ourselves when it comes to losing Hispanics and we can get them back with some effort on our part,' Graham said Sunday on CBS’s 'Face The Nation.'" Sean Sullivan in The Washington Post.
Policy for our vets
VA sees a mountain of disability claims through 2015. "As President Obama’s first term winds down, his administration has reported significant progress in combating several high-profile veterans problems, including reducing unemployment and homelessness. But in another key area -- the backlog of disability claims -- the problem has worsened under Obama’s watch...When Obama took office in January 2009, the number of pending claims at the Department of Veterans Affairs was 391,127. As of Nov. 3, that number was 896,409, including 570,970, or 66 percent, that have been pending longer than 125 days. VA Secretary Eric K. Shinseki vowed two years ago to 'break the back of the backlog by 2015.'" Steve Vogel in The Washington Post.
Wonkblog explains: Five facts about veterans’ health care.
John Kerry, the next defense secretary? "President Obama is considering asking Sen. John F. Kerry (D-Mass.) to serve as his next defense secretary, part of an extensive rearrangement of his national security team that will include a permanent replacement for former CIA director David H. Petraeus. Although Kerry is thought to covet the job of secretary of state, senior administration officials familiar with the transition planning said that nomination will almost certainly go to Susan E. Rice, the U.S. ambassador to the United Nations." Karen DeYoung and Greg Miller in The Washington Post.
Ice ice baby interlude: Seeing climate change through the receding glaciers.
Interior proposal would limit commercial oil shale development on federal lands. "The Interior Department on Friday issued a final plan to close 1.6 million acres of federal land in the West originally slated for oil shale development. The proposed plan would fence off a majority of the initial blueprint laid out in the final days of the George W. Bush administration. It faces a 30-day protest period and a 60-day process to ensure it is consistent with local and state policies. After that, the department would render a decision for implementation." Zack Colman in The Hill.
And still, the march to #1 in oil and gas production moves ahead. "The United States will overtake Saudi Arabia as the world’s leading oil producer by about 2017 and will become a net oil exporter by 2030, the International Energy Agency said Monday. That increased oil production, combined with new American policies to improve energy efficiency, means that the United States will become 'all but self-sufficient' in meeting its energy needs in about two decades...The report [also] predicted that the United States would overtake Russia as the leading producer of natural gas in 2015" Elisabeth Rosenthal in The New York Times.
With ‘fiscal cliff’ looming, carbon tax getting closer look. "Here’s a riddle: If Congress doesn’t want to raise income tax rates but wants to raise revenue, what can it do? One answer: Pass a carbon tax...A relatively moderate-sized carbon tax could raise $1.25 trillion over the next decade, a huge chunk of the money needed to bring the federal budget deficit under control. And the idea is getting a closer look now that the election is over and the 'fiscal cliff' is looming." Steven Mufson in The Washington Post.
Nevertheless, green politicians did something they normally don't: they won. "Climate-minded voters were pleased to see President Obama reelected on Tuesday, and to hear him call out 'the destructive power of a warming planet' in his victory speech. But they also scored some notable wins in state houses and Congress this year. Here are five 'climate hawks' that will take office in 2013." Kate Sheppard in Mother Jones.
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