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Wonkbook's Number of the Day: $8 billion. That's the amount states will pay to cover the Medicare expansion in the Affordable Care Act, according to a study by the Kaiser Family Foundation. That's roughly one percent of the total $808 billion cost of the expansion, 99 percent of which will be borne (at least for now) by the federal government.

Today in Wonkbook: Reid and McConnell clash over the filibuster, special coverage of the austerity crisis, turnover in the Cabinet and federal agencies, the Supreme Court, and our continuing coverage of the economy, health care, and energy.

Top story: The fight over the filibuster.

Sens. Reid and McConnell went head-to-head on the filibuster. It's just the start. "So much for holiday cheer. Senator Harry Reid of Nevada, the majority leader, and his Republican counterpart, Senator Mitch McConnell of Kentucky, had a legislative throwdown on the Senate floor Monday afternoon over the future of the filibuster, a sore issue for both parties. Mr. Reid has said that at the beginning of the next Congress, he will attempt to diminish the power of Republicans to slow or stop legislation by putting limits on the filibuster...Mr. Reid would like to limit what procedural motions are subject to filibusters, and to force senators to return to the practice of standing around forever, reading the phone book or what have you, if they choose to filibuster a bill before its final passage." Jennifer Steinhauer in The New York Times.

Republicans are now warning of a filibuster shutdown. "A partisan war is brewing that could bring the government to a screeching halt as early as January -- and no, it’s not over the fiscal cliff. It’s all about the filibuster...Republicans are threatening even greater retaliation if Reid uses a move rarely used by Senate majorities: changing the chamber’s precedent by 51 votes, rather than the usual 67 votes it takes to overhaul the rules...What Reid appears most likely to do is push for an end to the filibuster on so-called motions to proceed, or the beginning of a debate on bills or nominations. If Reid goes this route, senators could still filibuster virtually any other aspect of Senate business, including any movement to end debate and call for a final vote on a bill." Manu Raju in Politico.

They're worrying about marginalization. "Both parties have toyed with using the 'nuclear' option; Republicans considered it when they held a majority to prevent Democratic filibusters of judicial nominations by President George W. Bush. The debate has seen Reid and McConnell shift positions as they have moved from the majority to the minority and vice versa...He added that Senate rules have previously been changed on the filibuster, which once took 67 votes to cut off. Sixty votes are now required to end a filibuster." Ramsey Cox in The Hill.

Could Republicans really shut down the Senate? Would they? "Almost certainly, the answer is no -- because nothing about reforming the rules would change the incentives for the minority party to obstruct. Take nominations, for example. Why would Republicans have a greater incentive to obstruct them after majority-imposed reform? To punish the majority? What does that give them? Indeed: after the majority shows they are willing to impose rule change by simple majority, the minority party may have reduced incentives to "shut down" the Senate. After all, what's been done once could be done again. So if Republicans really did start forcing, for example, a week of floor time to get minor executive branch nominees confirmed, Democrats could threaten to change the rules to eliminate that option." Jonathan Bernstein.

KLEIN: McConnell's five biggest whoppers on the filibuster. "The specific changes Reid envisions aren’t particularly dramatic: He wants to be able to make the motion to debate a bill — but not the vote to pass it — immune to the filibuster; he wants the time it would take to break a filibuster to be shorter; and he wants whoever is filibustering to have to hold the floor of the Senate and talk. None of these changes would alter the basic reality of the modern U.S. Senate, which is that it takes 60 votes to get almost anything done. In my view, that means they wouldn’t do much to fix the Senate at all. Nevertheless, McConnell is furious. But many of the arguments he was making on the floor Monday don’t hold up to even the barest scrutiny." Ezra Klein in The Washington Post.

Top op-eds

COX AND ARCHER: $16 trillion? Why we're in way deeper than just debt. "[T]he full extent of the [entitlements] problem has remained hidden from policy makers and the public because of less than transparent governmnet financial statements... For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The U.S. Treasury 'balance sheet' does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations...The actual liabilities of the federal government -- including Social Security, Medicare, and federal employees' future retirement benefits -- already exceed $86.8 trillion, or 550% of GDP." Chris Cox and Bill Archer in The Wall Street Journal.

KLEIN: Abraham Lincoln and inequality. "On the one hand, there was [in Abraham Lincoln's day] -- and, to a lesser degree, is -- an American class system. The idea that America is a classless society is now, and has always been, a myth...One accelerant to American social mobility has always been that our class system was weaker than the European class system, in part because our country was younger than the aged civilizations of Europe...Part of the genius of the American system has been the recognition that the country benefits from a less ossified class of elites. Where the class systems of other cultures held that there was a certain segment of the population that was born to rule and everyone would suffer if the common man rudely shouldered his way to the front, Americans believed we were better off if men like Lincoln -- men born to illiterate parents in log cabins -- had the ability to lead the nation. And we were right." Ezra Klein in The Washington Post.

GLAESER: Cities and self-defense against climate change. "As New York looks to the future after Hurricane Sandy, it must remember a great paradox of cities. The world’s urban agglomerations are often particularly vulnerable to natural and man-made disaster, yet they are also especially well-suited to defend their space...Sea walls are expensive. One recent estimate is that they cost $35 million per mile and require maintenance that costs from 5 to 10 percent of that amount per year. At such a price, protecting the entire mid-Atlantic region would be prohibitively expensive, yet defending New York City would be affordable. A great wall running from Sandy Hook in New Jersey to the Far Rockaways would cost less than $500 million based on that estimate." Edward Glaeser in Bloomberg.

ROSENTHAL: The lord of the taxes. "Listening to the conservative activist Grover Norquist talk about the no-new-taxes pledge that he has made his life’s work can be like listening to a die-hard 'Lord of the Rings' fan explain the back story to how the age of elves is ending and the age of men is beginning. It’s all about arcane rites and rules that are impossible to follow, and it’s treated like religion...[It's] pretty clear that he views the no-taxes pledge as a thing of awesome majesty, an act of pure faith, something that cannot be laughed at...He declared piously that, after all, the pledge is not to him (which, of course, it is) but rather to voters (which, of course, it is not)." Andrew Rosenthal in The New York Times.

PONNURU: Blame the message, not the messengers. " Senate Republicans say they are therefore going to get more involved in primary campaigns. In the process, they will find that candidate selection isn’t easy to fix -- and is the least of their problems...Republicans have now lost seats in three of the last four Senate elections. The party’s message isn’t sufficiently attractive to win a majority of the votes, it appears, absent highly favorable circumstances. No change in the process of picking candidates can possibly fix that problem." Ramesh Ponnuru in Bloomberg.

Markets in everything interlude: Rides in an original 'popemobile': 300 euro an hour, plus VAT.

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

The austerity crisis

Obama will meet with another group of CEOs tomorrow. "Mr. Obama, while standing firm on his viewpoint during talks with Republicans, called House and Senate leaders over the weekend to prod discussions, invited business leaders to the White House to enlist their support and planned a public event for Wednesday to press his position on taxes...The enlistment of business is also a marked change for the administration. The two have been repeatedly at odds during Mr. Obama's first term. The president's Wednesday CEO meeting comes the same day a number of other chief executives are traveling to Washington to try to convince lawmakers to reach a deficit-reduction deal." Damian Paletta and Carol E. Lee in The Wall Street Journal.

...But businesses are racing to get ahead of the onset of austerity. "More U.S. companies are racing to get ahead of the looming fiscal cliff. Faced with a possible tax increase on dividends next year, boards are approving bigger payouts and cutting checks faster to avoid 2013 rates...The moves would send hundreds of millions of dollars back to shareholders before tax hikes that could kick in next year either automatically or as a result of negotiations between the White House and Congress...Companies are betting that tax rates on dividends are heading upward next year, even if the exact level isn't yet known." Dana Mattioli and Alexandra Berzon in The Wall Street Journal.

Poll: People think Washington will act like 'spoiled' kids amid austerity crisis.

Both sides are laying groundwork for the next phase of debate. "Private talks between President Obama and top congressional leaders in search of a deal to avoid the year-end 'fiscal cliff' are accelerating, officials said Monday, even as the president began ramping up pressure on Republicans to extend tax cuts for the middle class. Obama telephoned House Speaker John A. Boehner (R-Ohio) and Senate Majority Leader Harry M. Reid (D-Nev.) over the weekend, in a sign that high-level negotiations are advancing with only weeks to go before an automatic series of spending cuts and tax hikes starts to hit nearly every American." Zachary A. Goldfarb and Lori Montgomery in The Washington Post.

Wonkbookmark: 'Debt Reckoning,' The New York Times' running feed on the austerity crisis.

White House: Growth to slow if middle-class tax cuts rise. "Such a crimp on demand would curb the growth of real consumer spending by 1.7 percentage points in 2013 and slow the growth of the overall economy by 1.4 percentage points, according to the report prepared by the President’s Council of Economic Advisers." Peter Baker in The New York Times.

Interview: Rep. Sander Levin: Letting unemployment benefits expire would be a ‘human cliff’.

Will the austerity crisis break the grip of Grover Norquist? "Grover Norquist’s anti-tax pledge has been a sacred and unchallenged keystone of the Republican platform for more than two decades, playing a central role in almost every budget battle in Congress since 1986. But Norquist and his pledge, signed by 95 percent of congressional Republicans, are now in danger of becoming Washington relics as more and more defectors inch toward accepting tax increases to avert the 'fiscal cliff.'" Aaron Blake in The Washington Post.

Explainer: What's the AMT?

Congressional proposal could create 'bubble' in tax code. "The coming Congressional debate over fiscal policy is sure to feature a wide array of proposals, some of which would hit certain taxpayers harder than others. But one idea being floated by Congressional negotiators, as described in an article by The New York Times’s Jonathan Weisman on Thursday, is hard to defend from the standpoint of rational public policy making. Its arithmetic could require that the 300,000th dollar of income was taxed at a rate of about 50 percent -- even while the three millionth dollar of income, or the three billionth, was taxed at a lower 35 percent rate instead." Nate Silver in The New York Times.

Want to replace the payroll tax? Well, we're gonna need $12 trillion from somewhere. "New York Times columnist Ross Douthat caused a bit of a stir by proposing that we not just extend the payroll tax holiday, but eliminate the payroll tax altogether. Let’s set aside the merits of such a proposal for the future sustainability of Social Security and Medicare, not least because a major part of Douthat’s case is that eliminating the tax makes it easier to cut, or at least change, the former. What would such a repeal cost, and how could one pay for it?" Dylan Matthews in The Washington Post.

Want to keep the estate tax low? So does Sen. Baucus. "Senate Finance Committee Chair Max Baucus wants to protect an estate tax reduction from any deal averting the fiscal cliff, according to his hometown newspaper. Baucus told the Great Falls Tribune in an interview Sunday that he wants to keep the Bush-era rate for estate taxes in order to protect ranchers and farmers who pass their properties on to their children...Baucus is working to preserve a reduction in estate taxes that exempts the first $5 million of an estate’s value for individuals and taxes the remainder at 35 percent." Kevin Robillard in Politico.

Filling the Cabinet and agencies

America's next top energy and EPA secretaries. "Among the names being bandied around for a possible successor to Energy Secretary Steven Chu, we’re hearing two a bit louder of late: former Colorado Gov. Bill Ritter and John Podesta, founder of the Center for American Progress...Another spot likely to open up is that of Environmental Protection Agency chief, with current top dog Lisa Jackson all but certain to step down. We’re hearing that among the names mentioned to replace her, Deputy Administrator Bob Perciasepe is being touted by those who think his relatively cordial relationship with business and his position as a career staffer would make him much less of a lightening rod for criticism." Emily Heil in The Washington Post.

SEC's Shapiro to make exit next month. "Mary L. Schapiro announced on Monday that she will step down as chairman of the Securities and Exchange Commission in mid-December, and President Obama announced that he would designate Elisse Walter, one of the SEC’s Democratic commissioners, to replace her...While there have been rumors of Schapiro’s potential departure for months, the SEC chief often dodged the issue when asked directly. But people close her say she’s been exhausted by the pace and pressure of the job as she has tried to restore the agency’s standing and mission." Dina ElBoghdady in The Washington Post.

Turnover in the patent chief. "U.S. patent chief David Kappos, who will step down in January, is leaving his successor a couple of gifts: an overhauled patent code and a somewhat smaller application backlog...He is widely credited for making the federal agency more efficient during his 3 1/2 year tenure and for helping put into place some of the biggest changes in decades to the system of granting patents." Ashby Jones in The Wall Street Journal.


How St. Louis turned its public schools around. "Kelvin Adams, an unpretentious leader who had spent the previous 18 months as the chief of staff of the New Orleans Recovery School District, [took over]...The turnaround is grounded in using data to drive every decision and getting the best leaders and teachers in schools. Students now take standardized math and reading exams three times a year, and Mr. Adams insists principals craft proposals -- delivered to him -- that detail plans to boost scores in each classroom. He holds principals accountable for the results and has replaced more than half. He also worked with teacher-union leaders to create a mentoring program that aids teachers who struggle, but dismisses those who fail to improve." Stephanie Banchero in The Wall Street Journal.

The Supreme Court

The Supreme Court just opened up the door to another Obamacare challenge. "The Supreme Court has ordered an appeals court to reopen arguments on the Affordable Care Act’s employer mandate and contraceptive coverage provisions, opening a potential path back to the highest court by late 2013...[I]t does want are answers on two other provisions that it challenged: the mandate that employers provide insurance coverage and the requirement that contraceptives be covered." Sarah Kliff in The Washington Post.

Read: The petition for certiorari in the case Liberty University v. Geithner.

Justices decline to consider whether Constitution requires insanity defense. "The Supreme Court on Monday declined to consider whether the Constitution requires states to allow the mentally ill to claim insanity as a defense against criminal charges. The court gave no reason for turning down a challenge of Idaho’s decision not to allow the defense, and three justices objected...All states and the federal government once allowed the insanity defense. But that changed with the public outrage over John W. Hinckley Jr.’s acquittal for reasons of insanity in his assassination attempt on President Ronald Reagan in 1981." Robert Barnes in The Washington Post.

...But are they just 'politicians in robes'? "Many judges hate it when news reports note this sort of thing, saying it undermines public trust in the courts by painting them as political actors rather than how they like to see themselves -- as disinterested guardians of neutral legal principles. But there is a lot of evidence that the party of the president who appointed a judge is a significant guide to how that judge will vote on politically charged issues like affirmative action." Adam Liptak in The New York Times.


Household incomes stagnated in October. "Inflation-adjusted median annual household income was more or less flat in October, stuck at $51,378...Annual median household income has been circling around the $51,000 mark for about two years, even though the recession officially ended more than three years ago. In fact, October’s median household income measure was 4.7 percent lower than its counterpart of $53,937 in June 2009, the official end of the Great Recession." Catherine Rampell in The New York Times.

Meet Mark Carney, the Canadian who just became England's top central banker. "In international central banking circles, it counted as a bombshell: The new governor of the Bank of England will be Mark Carney, currently governor of the Bank of Canada. Carney is to take over for Mervyn King in June, when King’s term ends...More than anything, the promotion of Carney from the helm of a $1.75 trillion economy to a $2.4 trillion economy is a signal of how much the world of central banking has changed in the aftermath of the financial crisis...Carney is a master of this delicate intersection between markets, regulation and central banking." Neil Irwin in The Washington Post.

Intrade goes off limits to Americans. "On Monday, Intrade announced that it would bar all Americans from participating in its prediction markets after the U.S. Commodity Futures Trading Commission filed a lawsuit against the site...the CFTC’s lawsuit was fairly straightforward. Intrade, which is based in Ireland, wasn’t merely allowing participants to bet on the outcomes of events like elections or wars or the Oscars. The site was also allowing its U.S. customers to bet on the future price of things like gold or oil between 2007 and 2012, the lawsuit said. If that’s true, it would mean Americans were essentially able to buy and sell commodity options on Intrade away from regulated exchanges. According to the CFTC, that’s against the law." Brad Plumer in The Washington Post.

Music recommendations interlude: Eric Clapton, "My Father's Eyes," 1998.

Health Care

Study: Accountable care organizations have a real impact in cost reduction.

Obamacare’s Medicaid expansion will cost $808 billion. The price tag for states? $8 billion. "States are now in the middle of determining whether to expand their Medicaid coverage under the Affordable Care Act. A new report from the Kaiser Family Foundation aims to help with that decision. The report finds that states are going to spend significantly more on Medicaid under the Affordable Care Act -- but that the expansion accounts for a relatively small fraction of those costs." Sarah Kliff in The Washington Post.

Read: The Kaiser Family Foundation's report, 'The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis'.

Hospital readmissions targeted in Medicare cost-cutting effort. "After years of gently prodding hospitals to make sure discharged patients do not need to return, the federal government is now using its financial muscle to discourage readmissions. Medicare last month began levying financial penalties against 2,217 hospitals it says have had too many readmissions. Of those hospitals, 307 will receive the maximum punishment, a 1 percent reduction in Medicare’s regular payments for every patient over the next year, federal records show." Jordan Rau in Kaiser Health News and The New York Times.

FAQ: Everything you need to know about Obamacare’s coverage options, in one post.

Fixing the modern hospital. "American hospital architecture was based on crude, now-outdated notions of efficiency and economy. Hospitals were designed for the wants and needs of doctors and hospital administrators. Patients weren't ignored -- but they weren't top priority, either. Now, health care reform is fundamentally changing the way hospitals are run, and with it the way they look. A combination of crushing costs, government edicts, and fierce competition for the millions of newly insured patients that will result from federal health-care legislation has put the patient front and center." Russ Mitchell in Kaiser Health News and Fast Company.

Underwater basketweaving interlude: That's one sport the citizens of Charlestown, S.C. should consider, given this map which shows the impact of forecasted changes in sea level.


Climate talks begin in Doha, Qatar. ".N. talks on a new climate pact resumed Monday in oil and gas-rich Qatar, where negotiators from nearly 200 countries will discuss fighting global warming and helping poor nations adapt to it. The two-decade-old talks have not fulfilled their main purpose: reducing the greenhouse gas emissions that scientists say are warming the planet. Attempts to create a new climate treaty failed in Copenhagen three years ago but countries agreed last year to try again, giving themselves a deadline of 2015 to adopt a new treaty. A host of issues need to be resolved by then, including how to spread the burden of emissions cuts between rich and poor countries." The Associated Press.

...But a report finds broken promises. "[H]ow much of the talk -- even the seemingly “easy” commitments to honor, like cash support to poor countries -- are actually fulfilled? Not many, says a report to be released today by a British think tank. Some of the world’s richest countries have failed to honor their financial pledges to some of the world’s poorest...According to the report by the International Institute for Environment and Development — which also examined whether nations were giving enough, whether funds were loans or grants and whether they went toward mitigation or adaptation projects — transparency is lacking when it comes to funds committed to fighting global climate change...Of the $30 billion committed under fast-start, very little has actually reached the recipient countries. Even less has made its way into adaption projects that poor countries." Christopher F. Schuetze in The New York Times.

Watch: The history of climate change negotiations in 83 seconds.

The rise and fall of the American wind industry. "Twenty years ago, it would have been difficult to find a single wind turbine looming over the hills and plains of the United States. Things have changed since then -- and dramatically so. Thanks to a series of tax credits from Congress as well as ambitious state-level mandates, wind power has taken off...But now that rapid expansion is about to come to a halt, or at least slow down dramatically." Brad Plumer in The Washington Post.

House Dems request briefing on offshore oil explosion. "House Democrats want Black Elk Energy to explain how an explosion at an offshore oil platform that killed two workers and left another missing occurred. Democrats on the Energy and Commerce and Natural Resources committees sent a letter Monday to the firm’s chief requesting a briefing. The letter signatories asked Black Elk CEO John Hoffman to provide possible causes for the Nov. 16 incident in the Gulf of Mexico about 18 miles southeast of Grand Isle, La." Zack Colman in The Hill.

Wonkbook is produced with help from Michelle Williams.