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's Number of the Day: 0.7 percent. That's the likely hit to GDP growth this year which will result if the U.S. does not avert the sequester. Growth has averaged around two percent annually since the recession, so that would be a significant blow -- and one that would come on top of the fiscal contraction in the "cliff" deal.

U.S. Defense Secretary Leon Panetta (L) and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey talk about the sequester at a news briefing on Jan. 10. (Photo by Alex Wong/Getty Images)

Wonkblog's Graph of the Day: The "one percent" gets nearly a quarter of all the benefits from tax expenditures.

Wonkbook's Top 5 Stories: 1) What you need to know on the sequester; 2) what the Fed will talk about this week; 3) the White House goes all in on background checks; 4) we're actually going to get some immigration reform proposals; and 5) Eric Cantor has ideas for the GOP.

1) Top story: Everyone is saying the sequester will happen. Will it?

The sequester: another fiscal shock waiting to happen. "The $1.2tn in automatic spending cuts that Barack Obama once promised to avert are looking increasingly likely to occur because of entrenched politics in Washington, threatening a shock to confidence in the US economy. Economists have long assumed that the so-called sequester – a budgetary mechanism passed in 2011 that takes effect on March 1 and slashes the Pentagon’s budget by $600bn over 10 years while cutting discretionary spending for government programmes by another $600bn – would be replaced or reversed by Congress." Stephanie Kirchgaessner, James Politi and Robin Harding in The Financial Times.

Explainer: Where the sequester bites. A budgetary breakdown from CRFB.

How bad do economists think the sequester would be? "If it kicks in as scheduled in March, Macroeconomic Advisers, a consultancy, reckons it would knock 0.7 percentage points off growth this year." The Economist.

How the sequester is inefficient. "The drastic $85 billion in automatic spending cuts Congress approved in hopes of heading off another deficit showdown may or may not occur, but federal agencies say the threat hasbeen disrupting government for months as officials take costly and inefficient steps to prepare...This is what happens when the federal government prepares for something Congress never intended to become a reality." Lisa Rein in The Washington Post.

Republicans think the sequester gives them leverage. They're wrong. "The problem with the GOP’s plan to use the sequester as leverage is evident as soon as you stop using the vague term “sequester” and instead call the policy what it is: A bunch of very dumb — but extremely Democrat-friendly — spending cuts." Ezra Klein in The Washington Post.

Ryan says the Republicans are ready to let the sequester happen. "On Sunday morning, Rep. Paul Ryan reiterated a message that House Republicans have been trying to push since the fiscal cliff deal happened: The GOP is unafraid to let the sequester take effect...[G]iven the genuine fears that rank-and-file GOP members expressed about the sequester’s defense cuts, it’s unclear whether House Republicans’ message on the sequester is political bluster or a genuine threat." Suzy Khimm in The Washington Post.

@robertcostaNRO: House conservatives are gambling/planning that 3mo ext will lead to big cuts w/ CR, sequester cuts kept, and major spending showdown in May.

And Congress thinks they're going to go through, too. "Congressional leaders sound increasingly resigned to the possibility that across-the-board government spending cuts could start taking effect on March 1, as scheduled, and continue for at least a few weeks. There is no publicly known congressional action under way to try to defer, replace or avoid the budget cuts." Corey Boles in The Wall Street Journal.

BERGNER: The case for across-the-board budget cuts. "You know the cliché: America's fiscal condition might be grim, but lawmakers should avoid the 'meat ax' of across-the-board spending cuts and instead use the 'scalpel' of targeted reductions. The problem with this argument is that, given today's politics, it is nonsensical...The most likely way to achieve significant reductions in spending is by across-the-board cuts." Jeff Bergner in The Wall Street Journal.

Music recommendations interlude: Santana, "El Farol," 1999.

Top op-eds

KHANNA: It is now illegal to unlock your smartphone. "It's embarrassing and unacceptable that we are at the mercy of prosecutorial and judicial discretion to avoid the implementation of draconian laws that could implicate average Americans in a crime subject to up to a $500,000 fine and up to five years in prison." Derek Khanna in The Atlantic.

KRUGMAN: Republicans' faux re-think. "[T]he picture of the G.O.P. as the party of sneering plutocrats stuck, even as Democrats became more openly populist than they have been in decades. As a result, prominent Republicans have begun acknowledging that their party needs to improve its image. But here’s the thing: Their proposals for a makeover all involve changing the sales pitch rather than the product. When it comes to substance, the G.O.P. is more committed than ever to policies that take from most Americans and give to a wealthy handful." Paul Krugman in The New York Times.

KONCZAL: The Fed is out of it. "The Federal Reserve recently released the transcripts of the meetings of its Board of Governors in 2007, covering a time when the first rumblings of the financial crisis were beginning to appear...As of 2007, the Fed was unprepared for what was to come, though not mainly for the reason most commentators are highlighting. The initial reporting on the transcripts has focused on whether or not the Fed saw the financial crisis coming, and most find that the Fed did not. But the Fed also missed something much more important." Mike Konczal in Bloomberg.

DIONNE: The urgency of growth. "Gradually, establishment thinking is moving toward a new consensus that puts growth first and looks for deficit reduction over time. In the last few months, middle-of-the-road and moderately conservative voices have warned that if we cut the deficit too quickly, too soon, we could throw ourselves back into the economic doldrums — and increase the very deficit we are trying to reduce." E.J. Dionne in The Washington Post

HILSENRATH: The economic trust deficit. "Trust is an essential lubricant for economic activity. It makes investors, employers, policy makers and consumers willing to take part in transactions with each other, which in turn drives spending, investing and growth. You don't hand money or make promises to somebody unless you think that person is going to make good on his promises." Jon Hilsenrath in The Wall Street Journal.

Urban interlude: The "vertical slum" of Caracas, Venezuela.

2) The Fed's monetary-policy committee meets this week

The Fed is beginning to think about an exit strategy from monetary easing. "Inside the central bank, however, debate is once again shifting from whether the Fed should do more to stimulate the economy to when it should start doing less...The officials who led the push for stronger action have turned to defending the need to continue asset purchases for as long as possible, while those who opposed the policy are pressing for an early end date." Binyamin Appelbaum in The New York Times.

...But they'll keep an accommodative stance for now. "Federal Reserve officials are likely to continue their easy-money policies when they gather this week to weigh a mixed economic outlook and a recent run of low inflation. The Fed has said it would maintain its $85 billion bond-buying programs, aimed at boosting the economy by lowering long-term interest rates, until it sees substantial progress in labor markets. It has also said it would keep short-term interest rates near zero until the jobless rate drops to at least 6.5%, as long as inflation remains steady." Jon Hilsenrath in The Wall Street Journal.

And here's what's happening in economic data this week. "Monday, things kick off with the December durable goods report, the first major reading on capital spending as businesses grappled with the approaching “fiscal cliff.” Analysts expect an overall 2 percent rise for the month, but are expecting that orders for nondefense capital goods excluding aircraft fell by 1 percent as 2012 came to a close." Neil Irwin in The Washington Post.

Meanwhile, the U.S. is working slowly on a big trade deal with Europe. "President Barack Obama is committed to reaching an agreement to smooth trade with the European Union, the United States’ top negotiator has said, but only if it is constructed in a way that would overcome objections from farm groups and that could win congressional approval...On both sides of the Atlantic, proponents of a deal have expressed frustration about the delaying of an official report by a U.S.-European working group that would set the stage for formal talks. The delay has fed the widespread perception that Mr. Obama does not care that much about a trade pact." Jack Ewing in The New York Times.

Things Wonkbook didn't know existed interlude: Indoor kite competitions.

3) In gun debate, White House goes all in on background checks

The White House wants to make this all about background checks. "President Barack Obama unveiled a broad array of new gun control proposals last week, but already his administration has narrowed the main force of their effort behind just one: universal background checks. That was the message Vice President Joe Biden effectively delivered here Friday as he launched the administration’s road campaign in support of the new restrictions developed in the wake of the school massacre at Newtown, Conn." Reid J. Epstein and John Bresnahan in Politico.

NRA's LaPierre gets another forum to delegitimize his cause. "Wayne LaPierre, the controversial CEO of the National Rifle Association, will testify before the Senate Judiciary Committee on gun control next week, the panel announced on Friday." John Bresnahan in Politico.

Reid isn't totally on board with Obama's gun control plans -- and why that's awkward. "Reid's delicate peace with gun-rights backers is sure to weigh on him as he takes on a prickly role: presiding over the Senate debate on gun control...Mr. Reid's own mixed history on gun control—he has voted for some measures and opposed others—suggests he may not embrace the full package of measures, particularly Mr. Obama's proposed ban on some semiautomatic rifles deemed assault weapons...In the end, Mr. Reid's personal views on the issue could take a back seat to those of Democrats running next year to retain seats in states with a conservative tilt." Patrick O'Connor in The Wall Street Journal.

War, war, war interlude: A laconic history of the world, in a map.

4) The immigration policy conversation is about to get real 

Wonks get the Senate's immigration-policy blueprint this week. "A bipartisan blueprint on immigration policy due to be released this week will include a path to citizenship for the estimated 11 million people now in the country illegally, a top Senate Democrat said Sunday...Under the evolving plan, those who go through the new system wouldn't be allowed to jump ahead in the process for seeking citizenship." Alan Zibel and Dion Nissenbaum in The Wall Street Journal.

...Obama will begin the conversation on a different track. "President Obama and a bipartisan group of senators will begin separate but simultaneous efforts next week to build support for an overhaul of immigration laws, an effort that had long stalled in Washington but was pushed to the forefront again during the 2012 presidential campaign." Ashley Parker in The New York Times. 

...And Boehner signs onto immigration policy action. "A bipartisan group of House members has been quietly meeting and is close to an agreement on changes to propose the nation’s immigration laws, House Speaker John A. Boehner (R-Ohio) said last week in a speech to a Republican group. In a speech that was closed to the press, Boehner told the Ripon Society, a Republican public policy organization, on Tuesday that it is 'time to deal' with immigration changes." Rosalind S. Helderman in The Washington Post.

Tumblr interlude: Weird vintage things.

5) Eric Cantor has ideas for the GOP. Will they listen?

How Eric Cantor wants to move on from 2012. "After lying low for several months, Mr. Cantor is reasserting his presence in the Capitol, even as Speaker John A. Boehner continues his struggles to maintain Republican unity. In the coming weeks, the majority leader plans to lay out a second, softer track for his party beyond the constant cycle of budget showdowns and deficit talks. Notably, that track will include a new push for private-school vouchers for underprivileged children, health care options beyond the old fight over the president’s health care law, new work force training initiatives and a renewed push for science, technology and engineering visas for would-be immigrants." Jonathan Weisman in The New York Times.

...But GOP leaders say there's no re-think needed. "[T]he party’s main problem, dozens of Republican National Committee members argued in interviews over three days this week, is who delivers its message and how, not the message itself. Overwhelmingly they insisted that substantive policy changes aren’t the answer to last year’s losses." James Hohmann in Politico.

The GOP wants to do something in 2014 it failed to do in 2010 and 2012: take the Senate. "Iowa is one of a handful of states where Republicans have the opportunity to pick up Democratic Senate seats in 2014 — West Virginia, Minnesota and Alaska are the three other obvious examples. However, the party also seems likely to face a political dynamic that has plagued it for each of the last two elections: the most conservative candidate wins the primary, but then loses the general election." Chris Cillizza in The Washington Post.

...But Democrats aren't in all too bad of a position. "Republicans essentially would have to run the table next year to win the majority...In the past decade, only three Democratic incumbents have lost reelection: Tom Daschle of South Dakota in 2004, along with Russ Feingold of Wisconsin and Blanche Lincoln of Arkansas in 2010. The majority party continues to be in a strong position. Republicans need to gain six seats and the developments in the past few weeks would not get them there." James Hohmann and John Bresnahan in Politico.

Vistas interlude: A wonderful panoramic shot of London at dusk.

Et Cetera

Start your week with a longread: Barack Obama sits down with Franklin Foer and Chris Hughes of The New Republic.

Nicholas Stern: 'I got it wrong on climate change – it's far, far worse.' Heather Stewart  and Larry Elliott in The Guardian.

Interviews: Ezra Klein and Steven Teles talk about the American 'kludgeocracy.' Dylan Matthews and George Tsebelis talk about 'veto players.' The Washington Post.

How liberals would do entitlement reformDavid Nather in Politico.

What Obama's second-term roster meansPeter Nicholas in The Wall Street Journal.

Who will run the World Trade Organization next? Howard Schneider in The Washington Post.

How the personal finance industry patronizes women. Helaine Olen in Slate.

Roe v. Wade at 40, and how the pro-lifers see itSarah Kliff in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.