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.
Wonkblog's Graph of the Day: The State of the Union in graphs.
Wonkbook's Top 5 Stories: 1) Obama's new policy agenda; 2) a leading Republican calls for smarter cuts than the sequester; 3) why this recovery is not good enough for the middle class; 4) Lew's confirmation hearing; and 5) Wisconsin and Illinois decide on exchanges.
1) Top story: Here's the real State of the Union question: Can any of it pass Congress?
Obama's second-term policy campaign has begun. "President Obama chose a factory in economically distressed Appalachia on Wednesday as the stage set to showcase his State of the Union proposals to strengthen American manufacturing...Obama intends to use backdrops such as this one, with the real-life trappings of American manufacturing, to rally support at a time of deep economic uncertainty." Scott Wilson in The Washington Post.
...And you can expect to hear a lot about the key SOTU themes on this tour. "Asheville was the first of three stops in a campaign-style swing that has become a tradition after the State of the Union speech." Mark Landler and Jonathan Weisman in The New York Times.
Explainer: What the polls say on Obama's proposals. Aaron Blake in The Washington Post.
READ: Obama's pre-k plan.
What Nobel laureate economists (and early childhood advocate) James Heckman said about it: "Holy smokes!"
There'll be a speech coming today. "Details of the president’s proposal are expected to be unveiled on Thursday when Mr. Obama visits a Head Start program in Decatur, Ga., but he indicated in his speech that the federal government would work with states to supplement preschool efforts. While supporters herald the plan as a way to help level the playing field for children who do not have the advantages of daily bedtime stories, music lessons and counting games at home, critics argue that providing universal preschool could result in federal money being squandered on ineffective programs." Motoko Rich in The New York Times.
Explainer: Grover Whitehurst on the research context for universal preschool. Brookings Institute.
The preschool proposal faces an uncertain future. "Administration officials added that the plan would call for federal spending, much of it crafted to offer states an incentive to put more money into pre-kindergarten. The proposal also calls for parents to pay pre-K tuition, on a sliding scale, they said...As of 2010-2011, about 28% of 4-year-olds were enrolled in state-funded preschool programs, according to the National Institute for Early Education Research, based at Rutgers University. States spent about $5.5 billion on the programs." Stephanie Banchero in The Wall Street Journal.
@AnnieLowrey: Two big proposals to tackle inequality: minimum wage and universal preschool.
Obama proposal on early childhood ed reflect shifting views. "A small but increasing number of states have invested tax dollars in preschool during the past decade, and millions of parents are walking their 3- and 4-year-old children into classrooms instead of keeping them at home or with a babysitter...In 2011, it spent a relatively small amount of money, $633 million, on competitive grants for states to create high-quality preschool programs." Lyndsey Layton and Susan Svrluga in The Washington Post.
@elidourado: High quality universal preschool is not in our opportunity set. Really mediocre universal preschool is an option, though.
Pre-K is a better investment than the stock market. "Obama is riffing off considerable literature suggesting that early childhood education is a tremendously effective investment. Unlike many areas of policy, a number of randomized controlled trials (RCTs) have been conducted to measure the effects of high-quality early childhood education...He found that the annualized rate of return was somewhere between 7 percent and 10 percent. For comparison, historically the stock market has grown an average of 5.8 percent each year." Dylan Matthews in The Washington Post.
Theme-by-Theme: The minimum wage
The minimum-wage fight, explained. "[W]ith Boehner’s strong opposition, it’s hard to see a push to raise the minimum wage gaining real traction in the House. We’ll find out in the coming months how strong an effort the White House and its allies intends to apply toward passing a wage increase, especially considering all of the other legislative priorities on Obama’s plate (immigration reform, gun control and a host of fiscal matters, to name a few)." Sean Sullivan in The Washington Post.
Policy explainer: 4 things to know about the minimum wage proposal. Dylan Matthews in The Washington Post.
@mattyglesias: Minimum wage critics rarely recognize the existence of enormous loopholes which seriously attenuate disemployment effects.
Get ready for a new political fight over the minimum wage. "Mr. Obama hadn't alerted Democrats in Congress that he planned to propose a higher minimum wage in his State of the Union address, though lawmakers quickly embraced the policy, according to congressional aides. The approach reflected a contrast to the considerable advance work the White House conducted before proposing other challenging measures, such as new gun regulations. A sustained White House push is important because raising the minimum wage faces a tough path, particularly in the Republican-controlled House, and would likely require significant support from Mr. Obama and his allies in and outside of Congress." Kristina Peterson in The Wall Street Journal.
Theme-by-Theme: Energy and environment
Obama said he wants to double energy efficiency by 2030. Is that possible? "The U.S. economy squanders too much energy. And the government can help wring out all that waste. That was one of President Obama’s big ideas in his State of the Union last night. So how, exactly, would this plan work? One clue is to look at the Alliance to Save Energy’s big report (pdf) on how to double U.S. energy productivity by 2030. The report notes that the U.S. economy is far less energy-efficient than many other industrialized nations, including Japan, France and Germany." Brad Plumer in The Washington Post.
American homes are getting more efficient. But that doesn't always translate into less energy consumption. "One of President Obama’s goals in his State of the Union address was to make American homes twice as energy-efficient by 2030. But would that actually curtail overall energy use and reduce U.S. carbon emissions? That’s a trickier question. So here’s one way to look at it. A new report from the Energy Information Administration finds that U.S. homes have become far more energy-efficient over the past decade. But newer homes actually use slightly more energy than older ones. That’s because they’re also about 30 percent bigger and contain more electronic gadgets." Brad Plumer in The Washington Post.
Theme-by-Theme: Immigration reform
The GOP is working on smaller-bore alternative plans. "Conservative GOP senators expressed concern Wednesday that bipartisan comprehensive immigration reform proposals might promise more than they can deliver...[Sen. Vitter] said he would introduce six bills Wednesday that would help address illegal immigration enforcement first and then lawmakers can try to deal with those already illegally in the country later." Ramsey Cox in The Hill.
Good! We agree reforms are needed. Bad! We don't agree on which reforms. "[D]espite the bipartisan call for broad action, partisan divides on how the complex topic should be tackled were on display Wednesday as the Senate held its first substantive hearing on the path forward." Rosalind S. Helderman in The Washington Post.
Opinion on the 2013 State of the Union address
CROOK: Obama swerves to the center. "Last night’s State of the Union wasn’t divisive. It wasn’t even all that liberal. Admittedly, the promised policies were mostly variations on first-term themes -- support for sophisticated manufacturing, clean energy, education reform, infrastructure spending and so on. But Obama advanced them modestly and in terms calculated to appeal to centrists." Clive Crook in Bloomberg.
KLEIN: Where were Rubio's new ideas? "After an election, the winning party typically tries to pass the policies it campaigned on while the losers go back to the drawing board to try to work up a more appealing agenda. But last night’s dueling speeches revealed, strangely, the reverse. President Obama’s agenda has become much more ambitious since the election, ranging from universal pre-kindergarten to raising the minimum wage to gun control to immigration reform. But neither the Republican Party’s agenda nor its rhetoric has changed a whit." Ezra Klein in The Washington Post.
HENNINGER: The 'State of Obama' speech. "Here's what has to be understood. It's all about him. A State of the Union speech normally is about relating a president's public policies to conditions in the country. An Obama State of the Union speech is about one thing: the Obama project...That we are all just riding in Barack Obama's sidecar should have been obvious from day one." Daniel Henninger in The Wall Street Journal.
DIONNE: Obama's audacity of freedom. "President Obama is a freer man than he has been at any point in his presidency. He is free from the need to save an economy close to collapse, from illusions that Republicans in Congress would work with him readily, from the threat of a rising tea party movement and from the need to win reelection. This sense of freedom gave his State of the Union address an energy, an ease and a specificity that were lacking in earlier speeches written with an eye toward immediate political needs. It was his most Democratic State of the Union." E.J. Dionne in The Washington Post.
ZAKARIA: Obama aims small on infrastructure. "Having tried several times to propose infrastructure bills of around $50 billion — or just 0.3 percent of gross domestic product (GDP) — the president further scaled back, proposing a 'fix-it-first' plan that repairs 70,000 bridges falling down nationwide. This would apply a band-aid on America’s growing cancer of failing infrastructure." Fareed Zakaria in The Washington Post.
Music recommendations interlude: Pure Prairie League, "Amie," 1973.
BAUM: The Fed's pioneers. "The Fed continues to usher us down the risk path, with neon lights to guide the way. Yes, policy makers talk about reducing unemployment -- one of the Fed’s dual mandates -- but the public must have trouble understanding the linkage between taking risks (bad, based on recent experience) and creating jobs (good). If the Fed can’t do a better job of explaining policy, maybe it should consider talking less." Caroline Baum in Bloomberg.
KLEIN: On the left and right, an emerging case for less defense spending. "The irony, of course, is that Republicans want to attack federal spending, but not the military spending that has been the single largest contributor to deficits. Their remedy is to keep taxes low, defense spending high and seek savings elsewhere. It would be nice to have someone like Frank around to skewer the absurdity of that prescription." Ezra Klein in Bloomberg.
YGLESIAS: Bushonomics is back. "[L]ast night Florida Sen. Marco Rubio made clear in words what those of us who’ve been watching Republican deeds have long suspected: The party deeply yearns not for new ideas but for George W. Bush’s ideas. Bushonomics is back." Matthew Yglesias in Slate.
SALTSMAN: A $9 minimum wage already exists. "For many low-wage employees, single parents in particular, the minimum wage is already above $9 an hour...In a state such as New York, a single parent raising two children on the minimum wage would see their annual wage of $15,080 jump to $21,886 with the EITC, for an effective hourly wage of $10.52." Michael A. Saltsman in The Wall Street Journal.
LU AND REES: Is it time for public policy to address asteroid risk? "To defend ourselves, we first have to find and track the asteroids (like 2012 DA14) large enough to do great damage should they strike Earth. There are about one million such asteroids in dangerous orbits near Earth, yet scientists have identified the trajectories of less than 1% of them...[W]e should be doing the same to reduce our societal risk of a catastrophic asteroid impact." Ed Lu and Martin Rees in The Wall Street Journal.
MAKIN: Why Republicans can and should learn to love the sequester. "The sequester admittedly will produce short-term pain for those served by affected programs. But the impact will be limited. Cutting government spending by $110 billion per year would lower total federal spending, currently at about $3.6 trillion per year, by 0.3%. That is a minuscule reduction in spending, especially in view of the widely proclaimed need to cut the deficit." John Makin in The Wall Street Journal.
Humorous interlude: Stephen Colbert on the GOP establishment and right wing.
2) Republicans say they'll take the sequester, but they're also open to smarter cuts
Meet Hal Rogers, the Republican who wants to tone down the sequester. "With a governmentwide spending bill due to expire next month, House Appropriations Committee Chairman Hal Rogers is proposing to substitute a modified version that puts defense and veterans programs on more permanent footing and better able to deal with threatened across-the-board cuts March 1." David Rogers in Politico.
...But most Republicans seem to think it's going to happen. They're increasingly OK with that. "Top congressional Republicans predicted Wednesday that the sequester will hit at the end of the month – the latest chapter in the series of budget battles that have stymied Washington in the last few years." Seung Min Kim in Politico.
New warnings keep coming in, though. "The automatic budget cutting set for March 1 would hamper the government’s ability to protect the public in a range of areas, according to several warnings that were sounded Wednesday...DHS Secretary Janet Napolitano said frontline law enforcement personnel would have to be furloughed for a total of 14 days and the department might have to lay off employees." Eric Yoder in The Washington Post.
Is the deficit losing its urgency? "President Obama’s State of the Union address laid down the marker for a new, activist phase of his presidency — one in which he will not allow concerns about the deficit to dictate the major policy decisions that confront him...Obama is convinced that he has gained the upper hand on fiscal issues, in part because the latest projections show the deficit is coming down from its record levels." Karen Tumulty and Lori Montgomery in The Washington Post.
Another humorous interlude: Aziz Ansari talking about happiness.
3) Our inching recovery might not be enough
Retail sales inched up this month. "U.S. retail sales rose 0.1% in January to a seasonally adjusted $416.6 billion, the Commerce Department said Wednesday. Within the report, sales at department stores also climbed, echoing positive news last week from retailers...There also is evidence Americans are buying only essentials—groceries, gasoline and warm clothes—while curbing discretionary spending on cars, meals out, furniture and other items." Sarah Portlock and Andrew Ackerman in The Wall Street Journal.
Consumers keep spending, despite payroll-tax hike. "The second major piece of evidence is in on how the 2 percentage point increase in payroll taxes that went into effect January 1 affected consumer behavior. And the results are: Eh, not so much...[T]here is some consolation in the fact that Americans didn’t react to a fall in their after-tax paychecks by panicking and pulling back on spending abruptly." Neil Irwin in The Washington Post.
But growth is not enough to heal the middle class. "In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed. The wealthy have continued to do well. But a percentage point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after World War II." Jim Tankersley in The Washington Post.
So here's how Obama wants to make a middle-class economy. "Redistribution to save the middle class now and education to help it grow later. Their theory, put simply, is that if the economy isn’t going to share the gains of growth naturally, then it’s the government’s job to step in and make sure the rising tide lifts all incomes. To that end, the Obama administration has been among the most explicitly redistributive presidencies in modern memory." Ezra Klein in The Washington Post.
It's stil tough out there for small businesses. "In survey after survey, owners of small businesses report unbridled pessimism about the economy. The small-business optimism index from the National Federation of Independent Business — a major industry group for small businesses that surveys a sample of its members each month — is stuck at recessionary levels. In January’s report, released this week, expectations for business conditions six months from now were at their fourth-lowest reading in nearly 40 years." Catherine Rampell in The New York Times.
Japan interlude: Competitive wood planing.
4) What you need to know about Lew
Yesterday was his confirmation hearing in the Senate. "Treasury secretary nominee Jack Lew on Wednesday defended his work at Citigroup and argued that his long career in government and business qualified him to become the President Obama’s top economic adviser. After more than three hours of questions at his confirmation hearing, Lew appeared unruffled by grilling from Republicans about a wide range of topics, from his investment in a fund registered in the Cayman Islands to his thoughts on comprehensive tax reform." Jia Lynn Yang in The Washington Post.
Lew got tough questions, but there were few fireworks. "The Senate Finance Committee pummeled Treasury secretary nominee Jacob “Jack” Lew with questions Wednesday, but the outgoing White House chief of staff kept his cool, and there was little reason to think his confirmation will be in jeopardy. Lew volleyed particularly tough questions on his track record as a senior executive of Citigroup at a time when the bank received federal bailouts and his investments in partnerships that were registered in the Cayman Islands. But he offered straightforward answers to even the more antagonistic grilling, and the overall tone of the hearing was one of mutual respect, even from Republican skeptics of Lew." Neil Irwin in The Washington Post.
Explainer: 5 issues Lew needed to tackle. Neil Irwin in The Washington Post.
Why Obama wants Lew as Treasury Secretary. "Aside from his time on Wall Street from 2006 to 2008, Mr. Lew has spent most of his career as a Democratic budget official — and the White House chose him in no small part for that experience...Over and over, Mr. Lew asserted his longtime budget bona fides and willingness to work with Republicans." Annie Lowrey in The New York Times.
The link you're going to send to everyone right now interlude: A long time ago, Valentine's Day was a day to be mean to people.
5) Medicare, Medicaid, exchanges, health policy, oh my!
After 7 years, will Medicare finally have a leader? "The Center for Medicare and Medicaid Services is the federal government’s largest agency. It runs on a budget of nearly 1 trillion taxpayer dollars and oversees the two programs largely considered to pose the greatest long-term threat to the federal budget. But for nearly a decade now, this hulking agency has been without a confirmed director." Sarah Kliff in The Washington Post.
Can Wisconsin cover the uninsured without Medicaid? Here's what they're trying in the Badger State. "This just in from the Wisconsin State Journal: Wisconsin Gov. Scott Walker says his state will not participate in the Medicaid expansion. He instead has a completely different plan to cover Wisconsin’s uninsured — and, as his spokesperson explained to me moments ago, it seems to have legs." Sarah Kliff in The Washington Post.
Illinois is going with a joint federal-state exchange. "The Health and Human Services Department gave conditional approval Wednesday to a 'partnership' insurance exchange in Illinois." Sam Baker in The Hill.
3 ways Obama said he wants to cut Medicare. "It essentially boils down to three policy proposals: Bringing Medicaid drug rebates to Medicare Part D, means-testing the Medicare program for higher-income seniors and moving toward pay-for-performance reimbursement methods." Sarah Kliff in The Washington Post.
...And drug companies hate the first one. "Obama has proposed the Part D rebates before, and the policy has long been a priority of liberal Democrats in Congress. His proposal would save the government roughly $138 billion over 10 years, according to the Congressional Budget Office's analysis of the most recent White House budget proposal." Sam Baker in The Hill.
Laugh interlude: A Georgia state congressman wants to ban unflattering uses of Photoshop.
No, Marco Rubio, government did not cause the housing crisis. Mike Konczal.
Can Wisconsin expand insurance without Medicaid? Sarah Kliff.
4 things to know about Obama's minimum-wage increase plan. Dylan Matthews.
Will Medicare finally get someone in charge? Sarah Kliff.
A summary of the Lew hearing's highlights. Neil Irwin.
Can we double energy efficiency by 2030? Brad Plumer.
Why prekindergarten is a better investment than stocks. Dylan Matthews.
North Carolina Republicans just passed a law which reduces weekly unemployment benefits by 35 percent. Robbie Brown in The New York Times.
The U.S. Postal Service is now looking to Congress for approval on sweeping changes. Ron Nixon in The New York Times.
Senate Republicans launch push for a Balanced Budget Amendment. Rosalind S. Helderman in The Washington Post.
Obama's new scorecard for colleges needs a lot of work, experts say. Richard Perez-Pena in The New York Times.
Obama has renominated the NRLB recess appointees. Steven Greenhouse in The New York Times.
What a U.S.-E.U. trade deal would accomplish. Howard Schneider in The Washington Post.
Wonkbook is produced with help from Michelle Williams.