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I think a fair summation of the state of play on the Federal Reserve right now is:
1) All else being equal, President Obama would like to choose Larry Summers;
2) Right now, the White House is trying to figure out how unequal all else is.
On the merits, they think the preference many on the left have for Janet Yellen is a bit puzzling. Yellen and Summers are both strongly committed to reducing unemployment. They're both committed to implementing Dodd-Frank -- as much as the left mistrusts Summers on financial regulation for his actions in the 1990s, the White House believes that he, like many others, is strongly committed to regulating Wall Street now. They see a lot of the opposition to Summers is based on bad or outdated information.
But they're not unaware that Summers is a polarizing choice. So some of what's happening right now, I think, is that they're figuring out whether opposition to Summers is soft or hard. There are trial balloons going to the kind of people who will be asked to render verdicts on the choice and, in the cases where those people are skeptics of Summers, efforts to see if they can be talked down a bit.
This has had the side effect -- probably anticipated, and perhaps even welcome -- of mobilizing Summers's critics. I don't know if the blowback (see Noam Scheiber, Felix Salmon, Scott Sumner, Dave Dayen, Senator Jeff Merkley, etc) is more or less than the White House expected. But they're getting to see it. And remember that they're also getting positive feedback from fans of Summers, who are underrepresented in the econo-blogosphere, but very present in the ranks of economic and Wall Street heavyweights who've worked or fundraised at high levels in Democratic administrations.
The result is that the White House is getting to test the reaction to a Summers pick at a time when they can still choose Yellen, or even go back to the drawing board and look at Roger Ferguson or Donald Kohn or Alan Blinder or anyone else.
One thing that's really jumped out in my canvassing on this, though: The White House is running a very insular process. People I would've thought are being heavily consulted report that they've had little or no contact with the White House. People who have been consulted are surprised at the superficiality of the discussions. If the president is making any calls to ask for advice himself, he is making very, very few of them.
This is a dynamic, of course, that favors a candidate like Summers who knows the inside players extremely well rather than a candidate like Yellen whose support lies outside the White House.
Wonkbook's Number of the Day: 10 percent. That's roughly the cut to funding for public defenders relative to last year, thanks to sequestration and other reductions.
Wonkbook's Quotation of the Day: What went down at a Appropriations Interior and Environment subcommittee markup, as told by Politico's Darren Goode: "Top subcommittee Democrat Jim Moran of Virginia stormed out of the markup, calling the bill a 'disgrace.' 'It should be an embarrassment to the subcommittee, the full committee and to the Congress as a whole,' Moran said...'I just can’t participate in this markup,' Moran said before walking out. [Chairman Mike] Simpson said, 'I’ll mark you down as undecided.'"
Wonkblog's Graphs of the Day: Year-over-year change in home prices.
Wonkbook's Top 5 Stories: 1) Obama goes on the road to promote economic policy; 2) defanging the NSA; 3) a 20-week abortion ban; 4) immigration in the House; and 5) the sequester and political inequality.
1) Top story: Everything you need to know about Obama's speech series
On the economy, Obama says, ‘Washington has taken its eye off the ball.’ "President Obama on Wednesday said the fragile economic recovery is being undermined by worsening partisan politics in Washington and urged the country to stand behind him as Republicans try to roll back his vision of government...The hour-long speech broke little policy ground but introduced a less-restrained Obama ahead of a major economic debate this fall over the federal budget and the best way to ensure sustained growth...The event here Wednesday was the first in a series of speeches that Obama plans to deliver over the next two months on the economic challenges facing the country, advisers said." Scott Wilson and Zachary A. Goldfarb in The Washington Post.
Obama says the economy grows best from the middle. Research suggests he’s right. "A strong middle class boosts economic growth. Two major studies a decade apart reach this conclusion. In a 2001 paper for the World Bank, economist William Easterly studied the performance of economies across time and borders and found “a higher share of income for the middle class” to be “empirically associated with higher income and higher growth” in a country. A pair of International Monetary Fund economists found in a 2011 paper that countries with lower income inequality tend to experience more sustained periods of growth. Why? In large part, political stability. It’s better for your economy if the poor aren’t rioting — or if the rich aren’t investing large amounts of their money in home security." Jim Tankersley in The Washington Post.
@markknoller: Actually, Pres Obama delivers his next economy speech tomorrow afternoon at the Jacksonville Port (JAXPORT), FL.
The depressing reality of ‘the recovery’: Americans aren’t getting jobs. They’re retiring. "[W]hile the headline unemployment number is well below its recession-era peak, that’s almost 100 percent due to declines in the labor force participation rate — that is, the share of the population that’s either employed or actively looking for work...To drive the point home, Alpert calculates what the unemployment rate would be absent any decline in labor-force participation. Spoiler: it’d be right where it was during the worst of the recession." Dylan Matthews in The Washington Post.
Explainer: 5 takeaways from Obama's speech. Ben White in Politico.
Obama's view of the economic challenge. "[T]he returns to labor just are not as high as they used to be. Robots and computers and globalization have in many cases made your average American worker less valuable – particularly if he or she is less educated. For a while, the housing bubble and cheap credit papered over those problems. But once the bubble burst and the recession hit, the problems afflicting millions of households became obvious." Annie Lowrey in The New York Times.
Meet President Obama’s new economic message. Same as his old economic message. "Instead what the speech seemed designed to do is to re-state the arguments that worked during the campaign for Obama in hopes of framing the coming government shutdown and debt ceiling debates on friendly political ground for the President and Congressional Democrats. He did so more pointedly than he had in the past and with more urgency as well, pledging to spend the next several weeks touring the country — he will stop in Florida and Missouri later this week — making the case." Chris Cillizza in The Washington Post.
@MikeGrunwald: The idea Obama could've created more jobs with more "focus" is nuts. R's blocked fully offset small biz tax cuts! & UI! & infrastructure!
Why President Obama’s big economic speech will likely change very little. "Obama was laying down a marker; this was going to be a b-i-g speech. Mark it on your calendars. And yet, during that same OFA fundraiser, Obama acknowledged that no matter how lofty his goals or his rhetoric, the fundamental realities of the politics of the economy were almost certain to remain unchanged." Chris Cillizza and Sean Sullivan in The Washington Post.
@davidmwessel: Obama's Knox College speech reads like State of the Union 2.0
Is this really the strongest economy since 1999? "As for the strongest start since 1999, that is also accurate, at least if you use the number of jobs, rather than the percentage change. This year, private-sector employment rose by 1,234,000 jobs during the first six months. That is more than in any comparable period since 1999. But comparing gross numbers can be misleading. This year’s gain of 1.0938 percent is not as good as the 2011 gain over the same period, which was 1.12 percent, or 1,209,000 jobs. And on a percentage basis it was also a smidgen below the 2005 first half, when 1,211,000 jobs, or 1.0942 percent, were added." Floyd Norris in The New York Times.
New home sales and factory activity rise. "Showing no signs of slowing in the face of higher mortgage rates, sales of single-family homes increased 8.3 percent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008, the Commerce Department said." Reuters.
KLEIN: That was a lot of hype for very little policy. "It’s not that President Obama’s big economic speech was bad. It’s that it was, unexpectedly, a warm-up rather than the main event. Obama said it himself...This speech marked the Obama administration’s pivot from emergency measures to create jobs right now to a more long-term agenda for creating jobs...In economist terms, Obama is moving from trying to fix “cyclical” problems — namely, the joblessness caused by an awful recession — to “structural” problems." Ezra Klein in The Washington Post.
SOLTAS: Yesterday's speech showed Obama needs fresh economic policy ideas. Here are 8. "1. Go really, really big on job training. The federal government runs dozens of programs that provide job training and placement across Cabinet departments. There's mixed evidence as to whether they make any difference at all. Republicans, such as Senator Tom Coburn, have been trying to scrap them and start over for years. Obama should outdo them all by presenting three options: (1) privatize them with social-impact bonds, (2) block-grant the funds to the states, or (3) create a single federal job-training office in the Labor Department. He should ask for the funding to be doubled in return. 2. Link the Earned Income Tax Credit with inequality...A conservative solution to inequality might tie the size and eligibility of the credit to a measure of inequality, such as the 95th-percentile hourly wage, for instance, or with productivity." Evan Soltas in Bloomberg.
COHN: Obama's old ideas are still good ones. "Yes, you heard a version of this during the State of the Union address, and in Obama’s Democratic Convention speech, and on dozens of other occasions...[I]t’s fundamentally the same pitch he has always made, about using government to make sure that the economy doesn't stall and that growth benefits a large swath of Americans and not just the wealthiest and luckiest...The arguments for these measures seem no less valid now than they were six months or a year ago...The reason Obama keeps calling for these steps is that congressional Republicans keep blocking them." Jonathan Cohn in The New Republic.
DIONNE: Obama is going big. "Obama is making this bid in the face of a political culture that is far more cynical than it was in the days of FDR or the Gipper. He confronts adversaries determined to move the country in exactly the opposite direction from the one he would have it choose. And up to now, the president has been foiled or distracted whenever he has tried to focus the public conversation on reversing rising inequality and restoring social mobility." E.J. Dionne in The Washington Post.
Music recommendations interlude: Tycho, "A Walk," 2011.
ORNSTEIN: The unprecedented and contemptible attempt to sabotage Obamacare. "When Mike Lee pledges to try to shut down the government unless President Obama knuckles under and defunds Obamacare entirely, it is not news—it is par for the course for the take-no-prisoners extremist senator from Utah. When the Senate Republicans' No. 2 and No. 3 leaders, John Cornyn and John Thune, sign on to the blackmail plan, it is news—of the most depressing variety...What is going on now to sabotage Obamacare is not treasonous—just sharply beneath any reasonable standards of elected officials with the fiduciary responsibility of governing." Norm Ornstein in NationalJournal.
EMANUEL AND STEINMETZ: Be skeptical of hospital rankings. "The U.S. News & World Report "Best Hospitals" rankings for 2012-13 were released last week, followed by the usual media hoopla and a few chest-thumping press releases from hospitals at the top of the list. Whether the rankings actually mean anything is an entirely different story...What is not in the U.S. News quality measures? Glaringly absent is any measure of hospital-acquired infections...The incidence of preventable falls and bed sores is also not measured by U.S. News, nor is the rate of readmissions because initial care was not done properly." Ezekiel J. Emanuel and Andrew Steinmetz in The Wall Street Journal.
WESSEL: Four ideas to fix higher ed. "Increasingly one hears parallels in Washington being drawn between higher education and health care. Both are heavily financed by the federal government. Both are essential and inefficient. Both are characterized by century-old institutions and habits that may block technology from improving productivity...The president essentially is asking: If the federal government is trying to pay for quality, as opposed to volume, in health care, should it do the same in higher education?" David Wessel in The Wall Street Journal.
MCDONOUGH: The rise of the religious left. "While politicians like Rick Perry and pundits like Bill O’Reilly may clog up a lot of media airtime, the proportion of religious conservatives in the United States is shrinking with each successive generation, and close to 20 percent of Americans today are religious progressives, according to a new survey conducted by the Public Religion Research Institute and the Brookings Institution. Religious conservatives account for 28 percent of the total population (38 percent are religious moderates and 15 percent are nonreligious), but religious progressives already outnumber them in the millennial generation." Katie McDonough in Salon.
More more more interlude: The best Carlos Danger tweets.
2) Amash and Conyers nearly defang the NSA
Proposal to restrict NSA phone-tracking program defeated. "A controversial proposal to restrict how the National Security Agency collects Americans’ telephone records failed to advance in the House by a narrow margin Wednesday...Lawmakers voted 217 to 205 to defeat the proposal from an unlikely coalition of liberal and conservative members...The plan, sponsored by Reps. Justin Amash (R-Mich.) and John Conyers Jr. (D-Mich.), would have restricted the collection of the records, known as metadata, only when there was a connection to relevant ongoing investigations. It also would have required that secret opinions from the Foreign Intelligence Surveillance Court be made available to lawmakers and that the court publish summaries of each opinion for public review." Ed O'Keefe in The Washington Post.
How the vote broke down. "Republicans broke 134-94 against the amendment, while Democrats split 111-82 in favor of the proposal. The pattern among members fit no simple ideological or generational divide. But with the White House and NSA brass weighing in, both parties’ top leaders—who enjoy more access to intelligence matters—tended to vote in opposition to the amendment." David Rogers in Politico.
How the Amash NSA amendment even got to a vote. "If there is one episode that defines John Boehner’s leadership style, it’s how Rep. Justin Amash, the most defiant Republican in the House, won the right to offer a controversial amendment to curb the National Security Agency’s ability to collect phone data from Americans. It left a wide swath of House Republicans scratching their heads...And even after GOP leadership privately determined Amash’s threats were likely empty — that he didn’t have the votes to keep the Defense appropriations bill from coming to the floor — top aides to Boehner, Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy (R-Calif.) staff spent the week holding Amash’s hand, helping him turn an unworkable amendment into language that would effectively quash one of the spy agency’s most effective tools." Jake Sherman in Politico.
The White House is trying to have it both ways on NSA transparency. "Carney called Amash’s proposal a “blunt approach” and “not the product of an informed, open or deliberative process.” That’s ironic, because the Obama administration has opposed previous attempts to make the debate over the NSA more transparent...The president has claimed the NSA programs were transparent because of the existence of the Foreign Intelligence Surveillance Court (FISC). But the court’s secretive procedures provide little information to guide public debate." Andrea Peterson in The Washington Post.
Reading between the lines interlude: Congressional bill names, unspun.
3) Are we heading towards a federal ban of abortion after 20 weeks?
Late-term abortion bans have public support. "In the new survey of 1,000 Americans, 44% said they would support a ban in their state on abortions 20 weeks postfertilization, compared with 37% who would oppose such a ban. Overall, 28% of respondents say abortion should be legal under all circumstances, while 21% say it should be legal most of the time. The poll found that 11% say abortion should be illegal without exceptions, while 37% say it should be illegal with some exceptions." Neil King Jr. in The Wall Street Journal.
Marco Rubio wants to be lead sponsor on anti-abortion bill. "“If someone else would like to do it instead of me, I’m more than happy to consider it. But I’d like to be the lead sponsor,” the Florida Republican said. “I feel very strongly about this issue. And I’d like to be the lead sponsor on it if we can find language that we can unify people behind.”" Burgess Everett in Politico.
Our data on health premiums has been pretty bad. Not anymore. "On Monday, the Government Accountability Office sent back a thick stack of insurance data, broken down by state, explaining the cost of health insurance. Analysts there used data from HealthCare.Gov, a new site created under the Affordable Care Act where insurers post their offerings and how much they cost...Still, this is probably the best data set we have on insurance premiums so far. It’s also a dense report, 62 pages of line-by-line data that I’ve found a bit easier to digest in a chart." Sarah Kliff in The Washington Post.
The success or failure of Obamacare will depend on the young. "President Barack Obama's signature initiative rests on what Mr. Meiffren and his peers choose. If flocks of relatively healthy 20- and 30-somethings buy coverage, their insurance premiums will help offset the costs of newly insured older or sicker people who need more care. If they don't, prices across the U.S. could spike. Traditional insurance industry tools for managing risk—such as charging sick customers higher prices—are banned under the law, raising the importance of attracting young, healthy buyers." Christopher Weaver and Louise Radnofsky in The Wall Street Journal.
Games interlude: Can You Name These Cities by Their Starbucks Locations?
4) Does immigration reform have a fighting chance in the House?
Sign of home seen in House for immigration reform. "As House Republicans took a tentative step forward on an immigration overhaul this week and raised the possibility of citizenship for those brought to the United States illegally as young children, immigration advocates found themselves pondering a new question: Is the potential concession as far as many House Republicans are willing to go, or are they slowly inching their way toward a broader compromise?...Tuesday’s hearing showed that House Republicans were open to at least some possibility of legalization or citizenship." Ashley Parker in The New York Times.
Poll: Steve King's district supports a path to citizenship. "[I]t turns out that voters in King’s northwest Iowa district hold pretty friendly views on legalization and ultimately citizenship for undocumented immigrants, a new poll finds. A poll being released later Wednesday by the American Action Network shows that 68 percent of voters in Iowa’s Fourth Congressional District supports an “earned pathway to legal status,” while 65 percent support an “earned pathway to citizenship.” Of the Republican voters in King’s district, 70 percent back a path to legal status, while 51 percent back a pathway to citizenship." Seung Min Kim in Politico.
TV interlude: Mythbusters vs. Breaking Bad.
5) Yes, the sequester is hurting. But those whom it's hurting are with little political voice. Those spared have an unequal say in the debate.
Public defenders say sequester is hurting poor clients. "Public defenders and their advocates told a Senate panel Tuesday that the budget cuts known as sequestration are taking heavy toll on legal representation for the poor, causing delays and lengthy furloughs that could worsen next year...Federal defenders already were facing a 5 percent budget reduction when $85 billion in spending cuts began coursing through federal agencies in March, lopping another 5 percent from the budget this fiscal year. Some courts have limited the hours they hear criminal matters. Defenders across the country are taking up to 15 days without pay, forcing postponements in many criminal proceedings." Lisa Rein in The Washington Post.
House panel approves bill with deep cuts for EPA. "The Appropriations Interior and Environment subcommittee voted 7-4 to send the full committee a $24.3 billion spending plan that would deliver a nearly 19 percent cut to the EPA and the Interior Department, going beyond the reductions agreed to under sequestration. The bill includes a 34 percent cut in the EPA’s budget, leaving the agency $5.5 billion next year...But top subcommittee Democrat Jim Moran of Virginia stormed out of the markup, calling the bill a “disgrace.” “It should be an embarrassment to the subcommittee, the full committee and to the Congress as a whole,” Moran said...“I just can’t participate in this markup,” Moran said before walking out. Simpson said, “I’ll mark you down as undecided.”" Darren Goode in Politico.
Reading material interlude: The best sentences Wonkblog read today.
Court says skipping ads doesn’t violate copyright. That’s a big deal. Timothy B. Lee.
You know the economy is bad when people can’t even afford McDonald’s. Lydia DePillis.
Why Rep. John Conyers wants to defund NSA’s phone snooping. Andrea Peterson.
That was a lot of hype for very little policy. Ezra Klein.
The White House is trying to have it both ways on NSA transparency. Andrea Peterson.
Microsoft is doomed, but first it’s going to make a ton of money. Timothy B. Lee.
Read: Obama’s big speech on the economy. Zachary A. Goldfarb.
Senate approves plan to lower interest rates on student loans. Jenna Johnson in The Washington Post.
Postal Service bill close to passing key House committee. Lisa Rein in The Washington Post.
Tax committee transforms into Fort Knox. Kelsey Snell in Politico.
Obama's NLRB nominees move closer to confirmation. Melanie Trottman in The Wall Street Journal.
An economic prophet on the issue of declining income mobility. David Leonhardt in The New York Times.
New defaults trouble the TARP program. Shaila Dewan in The New York Times.
Obama's new Cabinet to have fewer minorities. Al Kamen in The Washington Post.
Can Organizing for Action persuade wavering lawmakers? Maybe. Matea Gold and Ruth Tam in The Washington Post.
Wonkbook is produced with help from Michelle Williams.