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In June 2005, Senator Barack Obama headed to Knox College in Galesburg, Illinois, to deliver what his team billed as a major address on the problems bedeviling the American economy.
Today, the "Knox College speech" holds a special power in the White House. It's considered the cleanest, clearest formulation of President Obama's economic philosophy. It's also considered one of the key moments when Senator Obama showed he had the broadness of vision necessary to become President Obama.
But here's the punchline: In June 2005, the unemployment rate was five percent, and annualized growth in the preceding quarter had been 4.2 percent. Today, the unemployment rate is 7.6 percent and growth last quarter was two percent. The problems Obama identified at Knox College -- globalization, technological change, failing schools, outdated skills --are with us, but so too is an ongoing unemployment emergency that Washington has pretty much resigned itself to.
Last night, the White House began trying to whip up enthusiasm for a new series of economic speeches that will begin, once again, at Knox College.
"Over the next several weeks," White House communication chief Dan Pfeiffer wrote, "the President will deliver speeches that touch on the cornerstones of what it means to be middle class in America: job security, a good education, a home to call your own, affordable health care when you get sick, and the chance to save for a secure, dignified retirement. They will include new ideas and new pushes for ideas he has discussed before. They'll outline steps Congress can take, steps he'll take on his own, and steps the private sector can take that benefit us all."
The question, of course, is "to what end?" In the first Knox College speech, Obama was simply laying down an intellectual marker. This time, he's setting up an economic argument he'll have to carry into the coming battles over the debt ceiling and appropriations.
"How does America find its way in this new, global economy?" Obama asked in 2005. "What will our place in history be?"
For the American economy, those questions are, if anything, tougher today than they were then.
Wonkbook's Number of the Day: 1.5 percent. That's the pace of economic growth economists expect in the second quarter. Down from a forecast of 1.9 percent as of June.
Wonkbook's Quotation of the Day: "You're going to see a lot more...You're going to see bipartisan votes coming out of the House to derail this thing," said Speaker John Boehner. By most counts, the House is nearing 50 votes to defund or repeal the Affordable Care Act.
Wonkblog's Graphs of the Day: The likelihood of the non-existence of Bigfoot.
Wonkbook's Top 5 Stories: 1) a new economic push from Obama; 2) more filibusters, again; 3) how Big Medicine affects government; 4) House can't make up its mind on immigration; and 5) the fast-growing security state.
1) Top story: Obama's new economic agenda
Obama to unveil new agenda on economy. "With major battles looming in the fall over the federal budget and the debt ceiling, President Obama is trying to regain the initiative, embarking on a campaign-style tour of the Midwest this week to lay out his agenda for reinvigorating the nation’s economy, administration officials said Sunday. Mr. Obama’s offensive will begin on Wednesday in Galesburg, Ill., with what his aides are saying will be a major address on economic policy at Knox College. Officials declined to provide details of the president’s message, but said he would set his terms for what they expect will be another bruising battle with a Republican-controlled House over the nation’s fiscal policies." Mark Landler in The New York Times.
@markknoller: WH tonight promoting Pres Obama speeches Wednesday in IL & MO on boosting economic recovery beginning with the middle class.
U.S. growth outlook stuck in neutral. "Disappointing economic and corporate-earnings reports in recent weeks have dashed hopes that the U.S. was at last entering a phase of solid, self-sustaining growth. Instead, while economists expect a modest second-half pickup in growth, few are predicting the kind of substantial rebound needed to quickly bring down unemployment, raise wages and insulate the U.S. from economic threats abroad...Economists now believe the economy grew at an annualized rate of just 1.5% in the second quarter, according to The Wall Street Journal's latest survey of forecasters. The economists have become markedly more pessimistic since June, when they estimated a 1.9% pace for second-quarter growth." Ben Casselman in The Wall Street Journal.
Longread -- A shuffle of aluminum, but to banks, pure gold. "This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country." David Kocieniewski in The New York Times.
Explainer: Key economic data coming your way this week. Amrita Jayakumar in The Washington Post.
Higher rates aren't enough to stall housing. "The surge in rates could test buyers' appetites to pay above asking prices, potentially slowing the run-up in home prices witnessed in the first half of the year. The biggest pinch will be felt by potential homeowners in high-cost housing markets that had been stretching to qualify for the largest loan possible...Does this mean the housing recovery is over? No, especially if rates rise because the economy is improving." Nick Timiraos in The Wall Street Journal.
@morningmoneyben: All the "pivot" jokes have a point, but it's not like a president can't talk about the economy many different times/ways
Midwest oil-glut problem solved. "Energy investors closely track the difference, or spread, between the so-called West Texas Intermediate spot price in the U.S. and the Brent price in Europe. The spread has vanished over the past few months...American prices dropped $20 below world levels because it became impossible to get all the oil out of the middle of the country quickly and cheaply." Evan Soltas in Bloomberg.
Banks need far more structural reform to be safe. "[H]aving a clear sense of who is in charge of what is vital when it comes to management and supervision, especially in times of stress. Structural reform and “living wills” can be used to help clarify lines of authority, align business risk with organisational form and simplify structures of complex financial institutions." Michael Barr and John Vickers in The Financial Times.
Companies square off in tax-rewrite battle. "The top Democrat and Republican on the Senate Finance Committee have given other lawmakers until Friday to defend current tax breaks and practices, mobilizing many companies to fight for their favorite provisions. Meanwhile, House Ways and Means Chairman David Camp (R., Mich.) could begin advancing a plan after Congress's August recess, putting even more pressure on companies to weigh in. Adding fuel to the process, global finance ministers from the Group of 20 largest economies, meeting in Moscow on Friday and Saturday, endorsed a major overhaul of international taxation designed to reduce corporate tax avoidance." Damian Paletta in The Wall Street Journal.
CORAK: Who's your daddy? "child’s prospects are actually more fluid elsewhere, not just in the most equal countries, like Denmark or Sweden, but even in countries like Canada that have moderate levels of inequality, as I demonstrate in a forthcoming paper in the Journal of Economic Perspectives. American children raised at the top, and at the bottom, are more likely to land on the same rung of the income ladder as their fathers than their Canadian counterparts. More than one-quarter of sons raised by fathers in the top 10 percent stay in the top 10 percent as adults, and another quarter fall no further than the top third. Meanwhile, half of those raised by fathers in the bottom 10 percent remain at the bottom or rise no further than the bottom third." MIles Corak in The New York Times.
COWEN: Wealth taxes, a future battleground. "The mathematical reality is that wealth is becoming more important, relative to income. In a new paper,“Capital Is Back: Wealth-Income Ratios in Rich Countries 1700-2010,”Professors Thomas Piketty and Gabriel Zucman of the Paris School of Economics have performed the heroic task of measuring wealth for eight leading economies: the United States, Canada, Britain, France, Italy, Germany, Japan and Australia." Tyler Cowen in The New York Times.
KRUGMAN: Detroit, the new Greece. "re Detroit’s woes the leading edge of a national public pensions crisis? No. State and local pensions are indeed underfunded, with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal." Paul Krugman in The New York Times.
Music recommendations interlude: Boards of Canada.
CHAIT: The anarchists of the House. "The Republican Party has spent 30 years careering ever more deeply into ideological extremism, but one of the novel developments of the Obama years is its embrace of procedural extremism. The Republican fringe has evolved from being politically shrewd proponents of radical policy changes to a gang of saboteurs who would rather stop government from functioning at all. In this sense, their historical precedents are not so much the Gingrich revolutionaries, or even their tea-party selves of a few years ago; the movement is more like the radical left of the sixties, had it occupied a position of power in Congress...The hard right’s extremism has bent back upon itself, leaving an inscrutable void of paranoia and formless rage and twisting the Republican Party into a band of anarchists." Jonathan Chait in New York Magazine.
DOUTHAT: The Texas abortion experiment. "What happens to a modern society when abortion is restricted? This question is at the heart of the debate over Texas’s new abortion law...One possible answer is that Texas will make a forced march into squalor, misery and patriarchal oppression...In the first case, many European countries already have versions of Texas’s late-term abortion ban on the books. France, Germany and Italy all ban abortions after the first trimester, and impose waiting periods as well." Ross Douthat in The New York Times.
SCHIEBER: The last days of Big Law. "Of all the occupational golden ages to come and go in the twentieth century—for doctors, journalists, ad-men, autoworkers—none lasted longer, felt cushier, and was all in all more golden than the reign of the law partner. There was the generous salary, the esteem of one’s neighbors, work that was more intellectual than purely commercial. Since clients of white-shoe firms typically knocked on their doors and stayed put for decades—one lawyer told me his ex-firm had a committee to decide which clients to accept—the partner rarely had to hustle for business. He could focus his energy on the legal pursuits that excited his analytical mind. " Noam Schieber in The New Republic.
KONCZAL: If Dodd-Frank doesn’t work, here are four things that could. "[A]long the way, many ideas more aggressive than what ended up in the final bill were proposed, debated, and immediately dropped, or fizzled out with only a handful of votes. But these ideas influenced other parts of Dodd-Frank to make them better, while proposing an alternative story about what went wrong in 2008 and how to keep it from happening again. And it’d be a shame if they disappear down a historical memory hole." Mike Konczal in The Washington Post.
But it bends towards justice interlude: Enigma codebreaker Alan Turing to be given posthumous pardon.
2) The return of the filibuster fight?
Here we go again with the filibuster. "[T]here’s already a queue forming of new Obama nominees, and Republicans aren’t about to lay down and let this group go through. Rep. Mel Watt’s nomination to lead a key housing agency appears in peril. The top Judiciary Committee Republican is slowing down Obama’s pick to lead the Bureau of Alcohol, Tobacco, Firearms and Explosives. Sen. Rand Paul (R-Ky.) is hinting at another talking filibuster — this time of the FBI director nominee — in order to get information on the president’s drone program." Burgess Everett in Politico.
Wow wow wow interlude: What NYC would look like in the Grand Canyon.
3) Is medicine just a racket?
How a secretive panel uses data that distorts doctors’ pay. "Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs...But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals. If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting." Peter Whoriskey and Dan Keating in The Washington Post.
Indiana says health plan costs will spike to $570. That’s not the full story. "Indiana’s $570 figure comes from squishing together all the filings –- every plan that is bronze, platinum or anywhere in between –- and coming up with one composite. We don’t know whether a bronze plan in Indiana will be incredibly expensive, which is certainly a possibility, or if some high-priced platinum offerings are pushing up the average...When you start digging into these rate filings, you see that the rates Indiana carriers expect are pretty similar to what other states are seeing." Sarah Kliff in The Washington Post.
Republicans in Arizona are at odds on Medicaid. "Ms. Brewer’s maneuvering, including a threat to veto any bill brought before her until the expansion was voted on and a last-minute call for a legislative special session to force the vote, has sparked ire among the Republican rank and file. In interviews, many of its most loyal members conceded that the party’s once cohesive ideology has been tainted by the governor’s stance, and they are arming themselves for payback." Fernanda Santos in The New York Times.
Why is the U.S. so sick? "Americans die younger and experience more injury and illness than people in other rich nations, despite spending almost twice as much per person on health care. That was the startling conclusion of a major report released earlier this year by the U.S. National Research Council and the Institute of Medicine." Laudan Aron in Slate.
Boehner promises more House votes to derail Obamacare implementation. "Speaker John Boehner (R-Ohio) vowed Sunday to hold more House votes to thwart ObamaCare, a major priority for the GOP as the law is implemented. "You're going to see a lot more," Boehner told CBS's "Face the Nation." "You're going to see bipartisan votes coming out of the House to derail this thing. The House has voted nearly 40 times to defund, dismantle or repeal the healthcare law, prompting frustration from Democrats who say the votes are aimed at sabotage." Elise Viebeck in The Hill.
...And the White House wants to get on the offensive. "The White House is working to get back on offense in the debate over ObamaCare, after a surprise delay in part of the implementation knocked its message off course. President Obama touted the law’s benefits in a White House speech Thursday, emphasizing a provision that is already in place and heralding positive news about the cost of insurance policies sold through the law’s insurance exchanges. The standard line from Obama and his allies was that the law had been passed by Congress, signed by the president, upheld by the Supreme Court, and then affirmed again by Obama’s reelection. But the decision to delay the employer mandate cut against that narrative of inevitability." Sam Baker in The Hill.
Billionaires interlude: Chuck Feeney, who gave away almost everything he had and is now down to $2M.
4) What is the House thinking on immigration?
House panel to weigh citizenship for young immigrants. "House Republican leaders will test this week whether rank-and-file GOP lawmakers are willing to rally around creating a path to citizenship for a subset of people in the U.S. illegally: those brought to the country as children...On Tuesday, a House panel is set to debate a measure aimed at such young immigrants, the first public airing of where the party's rank-and-file stands on the issue. The proposal—drafted by House Majority Leader Eric Cantor and Judiciary Chairman Bob Goodlatte, both Virginia Republicans—fits into the party's promised piecemeal approach to changing immigration laws." Kristina Peterson in The Wall Street Journal.
Boehner declines to share position on pathway to citizenship. "Speaker John Boehner on Sunday declined to state whether he supports a path to citizenship for illegal immigrants, saying that voicing his personal opinion would make it "harder for us to get a bill." The Ohio Republican also refused to answer whether he would bring an immigration measure to the floor that includes a citizenship process." Elise Viebeck in The Hill.
The business lobby will play a key role in any deal with the GOP. "With political momentum behind an immigration overhaul flagging, advocates are counting on business groups to turn up the pressure on skeptical House Republicans who are much less susceptible to that lobby than they have been in the past." Jonathan Weisman and Ashley Parker in The New York Times.
Your world interlude: What quicksand looks like.
5) What grows faster: weeds or the security state?
NSA growth fueled by need to target terrorists. "The nation’s technical spying agency has enlarged all its major domestic sites — in Colorado, Georgia, Hawaii, Texas and Utah — as well as those in Australia and Britain. Since the attacks of Sept. 11, 2001, its civilian and military workforce has grown by one-third, to about 33,000, according to the NSA. Its budget has roughly doubled, and the number of private companies it depends on has more than tripled, from 150 to close to 500, according to a 2010 Washington Post count." Dana Priest in The Washington Post.
Bill requiring warrants for email searches nears Senate vote. "The chairman of the Senate Judiciary Committee is pushing to fast-track legislation that would require police to obtain a warrant before accessing emails and other private online messages. Sen. Patrick Leahy's (D-Vt.) goal is for the Senate to unanimously approve his bill before the August recess, according to one of his committee aides. Any opposition could delay a vote until after Congress returns in the fall. Read more: http://thehill.com/blogs/hillicon-valley/technology/312383-warrant-requirement-for-email-searches-nears-senate-vote#ixzz2ZkLcbvkp Follow us: @thehill on Twitter | TheHill on Facebook" Brendan Sasso in The Hill.
Reading material interlude: The best sentences Wonkblog read today.
Why it’s hard for the government to create green jobs. Lydia DePillis.
Does Dodd-Frank work? We asked 16 experts to find out. Mike Konczal.
If Dodd-Frank doesn’t work, here are four things that could. Mike Konczal.
Six crazy ideas for saving Detroit. Lydia DePillis, Timothy B. Lee, and Dylan Matthews.
Aurora, Colo., marks one year since movie theater shooting. Dan Elliot and Thomas Peipert in The Washington Post.
The math between the leak crackdown. Sharon LaFraniere in The New York Times.
Wonkbook is produced with help from Michelle Williams.