Today in Wonkbook: The debt ceiling and the austerity crisis; the economy; changing medicine; the Republican rethink continues; and alternatives (or not) to alternative energy policy.
Top story: Debt ceiling debate roils austerity-crisis negotiations
The debt ceiling steals spotlight in austerity-crisis negotiations. "As Republicans consider making a strategic retreat from their traditional opposition to higher taxes, a new flash point is emerging in the high-stakes budget negotiations: the legal limit on government borrowing...Without an increase in the debt ceiling, the government would default on its obligations. Republican lawmakers, sensing that this gives them bargaining power in the budget talks, are resisting any increase in the limit unless the White House makes concessions, such as agreeing to deep spending cuts." Rosalind S. Helderman in The Washington Post.
Democrats strengthen their hand on the debt ceiling. "A small but growing number of Republicans are urging their party to concede on higher tax rates. Now Democrats are starting to strengthen their hand on the debt ceiling. My colleague Greg Sargent reports that the Business Roundtable is poised to support President Obama’s proposal to give the White House the authority to raise the debt ceiling without Congress’s approval, as such standoffs are really bad for business and for consumer confidence." Suzy Khimm in The Washington Post.
...But McConnell just blocked an up-or-down vote on it. "In a bit of parliamentary squabbling common only to the United States Senate, the chamber will not be voting Thursday on President Obama’s proposal to largely shift responsibility for raising the debt ceiling from Congress to the White House. Senate Minority Leader Mitch McConnell (R-Ky.) proposed an immediate vote on the idea Thursday morning, as a way to highlight potential Democratic unease with the idea. This afternoon, Senate Majority Leader Harry M. Reid (D-Nev.) called that bluff, asking to proceed to immediate vote on the measure. But he asked for an up-or-down vote, allowing the Senate to skip to a final vote by which the measure could be approved on a simple 51-vote majority." Rosalind S. Helderman in The Washington Post.
He's going to play 'bad cop.' "Senate Minority Leader Mitch McConnell has found shrewd ways to solve some of Washington's most intractable budget standoffs. In the current battle, the Kentucky Republican is taking a notably tougher tone, leading colleagues to wonder about his role as the debate unfolds. Mr. McConnell has been aggressive where House Speaker John Boehner (R., Ohio) has been conciliatory." Naftali Bendavid in The Wall Street Journal.
It's now one-on-one negotiations of the austerity crisis. "At House Speaker John A. Boehner’s request, Senate leaders and Representative Nancy Pelosi have been excluded from talks to avert a fiscal crisis, leaving it to Mr. Boehner and President Obama alone to find a deal, Congressional aides say." Jonathan Weisman and Peter Baker in The New York Times.
Take the small tax increase, get a huge entitlement deal, some Republicans say. "A growing chorus of Republicans is urging House leaders to abandon their staunch opposition to higher tax rates for the wealthy with the aim of clearing the way for a broad deal that would also rein in the cost of federal health and retirement programs...Republicans are eager to win changes to fast-growing safety-net programs, such as raising the eligibility age for Medicare and applying a less-generous measure of inflation to Social Security benefits." Lori Montgomery and Rosalind S. Helderman in The Washington Post.
CHAIT: The case for raising the Medicare retirement age. "[The liberal's] basic case is that raising the Medicare retirement age is a really stupid way to save money because it just forces people to stop buying health care through Medicare, which is relatively cheap, and start buying it through private insurance, which costs way more. They’re all totally right about this. Still, when the question comes to what concessions the Democrats are going to have to accept, rather than what policy makes the most sense, raising the Medicare age seems like a sensible bone to throw the right." Jonathan Chait in New York Magazine.
MARCUS: The Medicare age and its consequences. "The lesson of health-care reform is that every tweak to this complex mechanism has far-reaching, often unintended, consequences. Raising the eligibility age is worth debating but not without considering the ripple effects of this seemingly simple change." Ruth Marcus in The Washington Post.
WESSEL: The cost of all this uncertainty. "Economists sometimes belabor and measure what the rest of us find obvious. Take this assertion: When it's unusually hard to tell where the economy and government policy are going, businesses will be reluctant to invest and hire...And now economists Steven Davis of the University of Chicago and Scott Baker and Nicholas Bloom of Stanford have a way to measure policy uncertainty, which they attempt to link to the vigor of the economy. Half of their economic-policy-uncertainty index comes from a computerized reading of relevant references in 10 newspapers." David Wessel in The Wall Street Journal.
BELT, BERNSTEIN, GALE, AND SWAGEL: Let's just jump off the cliff. "To avoid a recession, we propose temporary tax and spending measures to boost near-term demand without making choices between the agendas of the two parties. We see this last point as essential. Getting past the cliff with the least damage to the economy requires not making choices about fundamental long- term issues in a lame-duck setting. This means that our proposal doesn’t separate upper-income tax brackets from other tax rates as sought by President Obama, but neither does it extend all rate cuts as sought by Republicans. Instead, all tax rates go up." Bradley Belt, Jared Bernstein, William Gale, and Phillip Swagel in Bloomberg.
BROOKS: Glasnost for the GOP. "Senator Marco Rubio won the Jack Kemp Foundation’s Leadership Award earlier this week. In his speech accepting the award, he sketched out his Republican vision. Some of the policies he mentioned were pretty conventional for someone of his party...But the speech really began to sing toward the end...Over the past month, the Republican Party has changed far more than I expected." David Brooks in The New York Times.
KRUGMAN: Who's been forgotten in the fiscal cliff? "Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis...The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff." Paul Krugman in The New York Times.
BLAKE: The Republican lack of leverage. "The central issue of the fiscal cliff talks favors Democrats overwhelmingly. So far, the dominant issue has been whether Republicans will vote to raise tax rates on the wealthiest Americans. And depending upon which poll you look at, as much as two-thirds of the American public supports this as a way to deal with the country’s budget issues. Democrats have had better messaging on this than in previous clashes." Aaron Blake in The Washington Post.
STRASSEL: The White House's coming Pyrrhic victory. "So successful has the White House been in defining this fight, few have stopped to consider how paltry that victory is likely to be. For a short-term win on this ideological issue, President Obama may well cede most everything else...So, that Obama 'victory': On Jan. 1, the president gets to give a news conference gloating over his tax win. He then faces four years and 20 days of a presidency marked by his ownership of a faltering economy, a spiraling debt problem, automatic sequester cuts, no prospect of further spending or tax revenue, and a debt-ceiling time bomb. If that's this president's idea of 'victory,' maybe it's what he deserves." Kimberely A. Strassel in The Wall Street Journal.
Comparative disadvantage interlude: The Harvard Economics Department performs 'Call Me Maybe.'
Where the economy is headed
Cautious companies are stockpiling cash. "American nonfinancial corporations held $1.74 trillion in cash and other liquid assets at the end of the third quarter, the Federal Reserve said Thursday. That is $44 billion more than three months earlier and more than erases the prior quarter's slight decline." Ben Casselman in The Wall Street Journal.
As Sandy fades away, unemployment filings fall. "The Labor Department said Thursday that applications for unemployment benefits dropped 25,000 last week to a seasonally adjusted 370,000...Before the storm hit on Oct. 29, new jobless claims had fluctuated this year from 360,000 to 390,000. They were above 400,000 for most of last year." The Associated Press.
Soaring rents drive apartment construction boom. "As residential building recovers from a near standstill after the housing crisis, much of the momentum is coming not from subdivisions with green lawns and two-car garages but from rental apartments. Multifamily construction nationwide is two-thirds of the way back to its prerecession peak, while single-family home construction is still only about a third of the way back to its peak." Shaila Dewan and Nelson D. Schwartz in The New York Times.
Cold War finally defrosts as Congress approves Russian trade agreement. "Congress overturned long-standing trade restrictions with Russia on Thursday, achieving a top priority for U.S. businesses, but slapped Moscow over human-rights abuses as a rift between the two governments widened. The Senate voted 92-4 to grant Russia permanent normal trade relations, following widespread House support for the measure in November. President Barack Obama plans to sign the bill." Sudeep Reddy in The Wall Street Journal.
...What about Cuba next? "Sen. Jeff Bingaman (D-N.M.) called for the United States to end its embargo against Cuba on Thursday. Bingaman’s comments came after the Senate voted 92-4 to end a Cold-War-era trading prohibition against Russia...Bingaman said that fact that the Castro brothers are still in power in Cuba is proof that the embargo hasn’t worked against the communist country." Ramsey Cox in The Hill.
Now that's a big bird interlude: The 'Argentavis.'
GOP-led committee releases guides for implementing health law. "The House Small Business Committee is releasing documents to help those in the business comply with President Obama's healthcare law...The move reflects some Republicans' grudging acceptance of the healthcare reform law since Obama's reelection, which all but ensured its survival." Elise Viebeck in The Hill.
NJ Gov. Christie vetoes health insurance exchange. "He rejected a bill Thursday that was designed to establish a state-run health insurance exchange, while leaving open the possibility he might change his mind later...The governor, who faces a re-election fight next year in a state Mr. Obama won by 17 points, said the Obama administration had failed to allay concerns over how much the exchanges would cost and how much leeway the states will have to design them." Neil King Jr. and Louise Radnofsky in The Wall Street Journal.
A crowded emergency department can kill you. "A crowded emergency department waiting room is more than unpleasant: New research suggests it’s a serious hazard to your health...They found, in a new Annals of Emergency Medicine study, that patients who came in through a crowded emergency department had 5 percent greater odds of dying in the hospital. Those patients also had longer hospital stays and higher costs, the same paper finds." Sarah Kliff in The Washington Post.
Restaurant chains ditch plans to cut workers' hours in response to health law. "The company that owns the Olive Garden and Red Lobster restaurants backed down Thursday from its plan to cut employees' hours in response to President Obama's healthcare law." Sam Baker in The Hill.
Musical recommendations interlude: Fleetwood Mac, "Little Lies," 1987.
The Republican re-think
Sen. DeMint heading to Heritage Institute. "DeMint is known for his ceaseless work on behalf of a particular political project: trying to make the Republican Party more conservative. He’s pursued this objective both strategically and tirelessly...To state the obvious, you don’t name Jim DeMint head of your think tank because you’re trying to improve the quality of your scholarship. You name DeMint head of your think tank because you’re trying to become the leader of the conservative wing of the Republican Party." Ezra Klein in The Washington Post.
Colbert for Senate interlude: Because you know it would be hysterical.
Alternatives to alternative energy
What about energy efficiency? Maybe not... "The Senate passed a bill Thursday easing federal regulations on the manufacture of coolers, water heaters and other appliances." Ramsey Cox in The Hill.
...But the GOP is now promising a new law on efficiency. "A prominent GOP House Energy and Commerce aide said committee members are looking to work with the Senate on sweeping energy efficiency legislation next Congress. Patrick Currier, counsel with the committee’s Energy and Power subcommittee, said lawmakers will likely start by using a bill co-sponsored by Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio) as the template." Zack Colman in The Hill.
Not so fast on natural gas exports, Wyden says. "Don’t expect a long-awaited report issued Wednesday that blesses expanded natural-gas exports to end the battle over the topic...The report called exports a net economic benefit for the U.S., but it would also raise prices to some extent. Export critics fear that sending lots of gas overseas could raise costs for domestic manufacturers that rely on the fuel." Zack Colman and Ben Geman in The Hill.
ZAELKE AND RAMANATHAN: Why we must go beyond CO2. "We can slow this warming quickly by cutting emissions of four other climate pollutants: black carbon, a component of soot; methane, the main component of natural gas; lower-level ozone, a main ingredient of urban smog; and hydrofluorocarbons, or HFCs, which are used as coolants. They account for as much as 40 percent of current warming." Durwood J. Zaelke and Veerabhadran Ramanthan in The New York Times.
Here's what the inauguration is going to be like. The Washington Post.
Ten ways to reduce inequality without raising tax rates. Dylan Matthews in The Washington Post.
Could a platinum coin prevent the debt crisis? Brad Plumer in The Washington Post.
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Wonkbook is produced with help from Michelle Williams.