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(Photo by J. Scott Applewhite/AP)
(Photo by J. Scott Applewhite/AP)

Wonkbook's Number of the Day: 181,280,466. That, believe it or not, is the number of new records that the National Security Agency drew from Yahoo and Google databases within a period of 30 days at the beginning of the year. More on this major break in the NSA story from Barton Gellman and Ashkan Soltani here.

Wonkbook's Quotation of the Day: “I much prefer to be here today explaining these programs, than explaining another 9/11 event that we were not able to prevent." That's a talking point -- one of several "Sound Bites That Resonate" -- that NSA officials were officially encouraged to use to justify surveillance programs.

Wonkbook's Graph of the Day: Why immigration is the best entitlement reform around.

Wonkbook's Top 5 Stories: 1) Sebelius and Obama on Obamacare; 2) the NSA has been secretly inside Google and Yahoo; 3) what the Fed sees; 4) smaller fiscal deficits, smaller fiscal deals; and 5) two House Republicans support immigration reform.

1) Top story: Obamacare has problems you haven't even heard about yet

Here's a new problem with Obamacare: inaccurate provider-network data. "Many new health exchanges don't yet let shoppers see which doctors accept which insurance plans. Where exchanges do post the so-called provider lists, they often contain inaccurate or misleading information, some doctors say, including wrong specialties, addresses and language skills, and no indication whether providers are accepting new patients. Exchange officials blame the insurance industry, where inaccurate and out-of-date provider lists are nothing new. "I don't think we realized that the underlying data had quite this number of problems. Now, it's becoming more transparent," said Joshua Sharfstein, Maryland's secretary of health and the chairman of its exchange...[I]n addition to providing wrong information, the lists may give consumers a false impression of how big the networks are, some physicians say." Melinda Beck in The Wall Street Journal.

There appear to be some big security issues left over as well. "A Sept. 27 memo to Tavenner from her deputies showed that just days before the site went live, security certification “was only partly completed.” Sebelius said “mitigation strategies” are “under way right now.” Alex Wayne in Bloomberg.

...They just caught a huge security gap that was in the system, too. "Ben Simo, an Arizona-based security researcher, discovered as late as last week a flaw in the site that would have allowed an attacker to take over a customer's whole account in the insurance hub. According to CNN, Simo's report detailed how it was possible to guess a username and have the system confirm it existed. Then he showed how tricking the system's password-reset mechanism could give up a user's e-mail address, unencrypted. A reasonably determined attacker might then be able to use that account information against its owner, finding out the answers to recovery questions and other sensitive information." Brian Fung in The Washington Post.

@carlquintanilla: Trader just said to me: "Isn't it amazing? If this were a CORPORATE mtg, it'd be: 'What's the problem, what's the fix.'" #Sebelius

More tech problems emerge with health-care Web site. "The Web site, HealthCare.gov, was down again most of the morning while Sebelius was testifying before a House committee. And new security issues with the site were raised Wednesday after an internal memo obtained by The Washington Post and other media outlets showed that, days before the Web site’s launch, administration officials knew it put the privacy of user data at risk. " William Branigin and Sandhya Somashekhar in The Washington Post.

@philipaklein: Sebelius says she won't issue hardship exemptions to people who get their insurance cancelled, even though exchanges don't work.

The White House told insurance execs to keep quiet on Obamacare. "After insurance officials publicly criticized the implementation, White House staffers contacted insurers to express their displeasure, industry insiders said. Multiple sources declined to speak publicly about the push back because they fear retribution..."The White House is exerting massive pressure on the industry, including the trade associations, to keep quiet," [Robert Laszewski] said." Drew Griffin and Chris Frates in CNN.

What Obama said yesterday. "President Obama delivered a spirited defense of his health-care law Wednesday in the face of problems with the launch of its online insurance marketplace, vowing that “we are going to see it through.”...“This marketplace is open now,” Obama said of HealthCare.gov. “The deal is good. The prices are low. But let’s face it, we’ve had a problem. The Web site hasn’t worked the way it’s supposed to.”" Philip Rucker and William Branigin in The Washington Post.

Transcript: President Obama’s Oct. 30 remarks on the new health-care law in BostonThe Washington Post.

...He backed off of his 'if you like your plan, you can keep it' line. A bit. "Obama used a speech in Boston to tell Americans that they could obtain improved insurance if they shopped around. This comes after the president has long said that people who like their health plans would be able to keep them after the new law takes effect next year...In his speech, Mr. Obama added caveats to his broad promise that people could keep their current coverage: "For the vast majority of people who have health insurance that works, you can keep it." He acknowledged that some people would need to obtain new plans and that a fraction of Americans would pay more but get more comprehensive coverage." Colleen McCain Nelson and Peter Nicholas in The Wall Street Journal.

...But who's to blame? Obama says it's 'bad apple insurers.' "President Obama tried a new tack Wednesday as he fought back against criticism of his Obamacare claims...Obama during a speech in Boston sought to cast the issue Wednesday as trying to weed out "bad apple insurers" who don't provide enough coverage..."Remember, before the Affordable Care Act, these bad apple insurers had free rein every single year to limit the care that you received or used minor pre-existing conditions to jack up your premiums or bill you into bankruptcy."" Aaron Blake in The Washington Post.

@pfeiffer44: Shorter GOP message at the hearing today: Obamacare is terrible, why is it so hard to get Obamacare?

...Whatever Obama says now, he'll pay dearly for 'if you like your plan, you can keep it.' "It is a catchy sound bite that has turned around to bite the hand that fed it to the country: If you like the health insurance you have, you can keep it. President Obama’s credibility has taken a hit over that line, which he tossed off in various versions during countless campaign stops and policy speeches. The damage comes not just from the fact that it does not happen to be true, which hundreds of thousands who had bought coverage on the individual market are learning as they receive notices of cancellation from their insurers. The deeper problem with that promise is that it attempted to gloss over the fact that choices and trade-offs were part of the effort to reform the nation’s sprawling, troubled health-care system." Karen Tumulty in The Washington Post.

Fact-check: Glenn Kessler delivers four Pinocchios on "you can keep it." The Washington Post.

...Sen. Landrieu wants to prevent the plans from dropping. "Sen. Mary Landrieu said Wednesday she would propose legislation to ensure all Americans could keep their existing insurance coverage under Obamacare, a fresh sign of the political problems the law’s rollout has created for congressional Democrats...Landrieu said that her bill would “grandfather” in soon-to-be-cancelled plans, even if insurance holders could find better policies through the exchanges." Manu Raju in Politico.

A news-you-can-use explainer: Why insurers drop their plans, and what you can do if it happens to youJulie Appleby in Kaiser Health News.

‘We’re not getting that reliable data:’ The most important moment of the Sebelius hearing. "Health and Human Services Secretary Kathleen Sebelius spent about three hours testifying before Congress this morning. From all of that, there is one sentence that was arguably the most important things she said. It was about health insurance plans, which are still not receiving accurate data from Healthcare.gov. "The system isn't functioning, so we're not getting that reliable data," Sebelius told legislators, answering a question about why the administration will not release enrollment data." Sarah Kliff in The Washington Post.

Explainer: From ‘brosurance’ to tricycles, the Sebelius hearing was pretty weirdSarah Kliff in The Washington Post.

Delayed again: Critical function of health care law’s small business exchange pushed back. "Marilyn Tavenner, head of the Centers for Medicare and Medicaid Services, which is in charge of the federal exchange, revealed a revised timeline for the small-business exchange during a congressional hearing on Tuesday, stating that employers will not be able to actually enroll in plans online until the end of next month." J.D. Harrison in The Washington Post.

@thegarance: Sebelius: Indy market has high churn: 1/3 <6 months in it and >50% less than 1 yr.

Sebelius said it would be illegal for her to buy Obamacare. That’s not quite right. "I dropped a note to Tim Jost, a law professor at Washington & Lee University, and arguably the one human being on this entire planet who knows the Affordable Care Act the very best. He's pretty convinced that, if she wanted to, Sebelius could sign up for marketplace coverage. It would be a pretty crummy financial deal — she would forgo robust employer and Medicare coverage to pay her own way — but it would be legal...[A] Medicare spokesperson tells Igor Volsky that she also has enrolled in Medicare Part A, which covers hospital trips for the elderly. Health insurers are not allowed to sell Medicare beneficiaries coverage through the marketplace." Sarah Kliff in The Washington Post.

@jimgeraghty: Is anyone arguing that Sebelius did a good job today? I suppose we can credit her for not running from the room crying.

CROOK: The longer-term threats to Obamacare's viability. "Those eligible for subsidies to make their insurance more affordable need to provide an estimate of their future income so their subsidy can be calculated. One of the problems with the site, it seems, has been the difficulty of integrating the insurance marketplace with the subsidy calculation so that buyers can see net-of-subsidy prices. But that blending of prices and estimated future income -- modified adjusted gross income, to be precise -- poses problems that go far beyond the site. Health insurance is complicated to start with. Now marry it to fluctuating incomes and a tax system of ludicrous complexity. It’s an administrative nightmare, with or without a working website." Clive Crook in Bloomberg.

@philipaklein: Sebelius: "The website never crashed. It is functional at a very low speed."

AARON: Obamacare is changing health insurance for the better. "[Obamacare] bars certain common practices of insurance companies that most people find unacceptable at best, outrageous at worst...The major problem has not been venality by insurers — although there has been some of that — but lousy incentives that drove normal human beings to engage in socially deplorable practices. Obamacare is changing the system. With the requirement that people carry approved coverage, anticipated profits on some customers will offset anticipated losses on others." Henry J. Aaron in the New York Daily News.

DAVIDSON: Obama wants you to get rich on Obamacare. "According to Thomson Reuters, private equity investment, usually the lifeblood for entrepreneurialism, has dropped by an astonishing 65 percent in the health care sector this year...matter what investors thought about Obamacare politically — and surely many there did not think much of it — the law was going to make some people very rich. The Affordable Care Act, he said, wasn’t simply a law that mandated insurance for the uninsured. Instead, it would fundamentally transform the basic business model of medicine. With the right understanding of the industry, private-sector markets and bureaucratic rules, savvy investors could help underwrite innovative companies specifically designed to profit from the law." Adam Davidson in The New York Times.

COHN: Why are Republicans complaining about disrupting the individual insurance market? "The real issue is about the true trade-offs of policy. Both sides offer them. With Obamacare, a small number of people lose their current insurance but they end up with alternative, typically stronger coverage. Under the plans Republicans have endorsed, a larger number of people would lose their current insurance, as people migrated to a more volatile and less secure marketplace." Jonathan Cohn in The New Republic.

FRUM: The Obamacare ripoff. "I happen to be one of the hundreds of thousands of people whose insurance coverage was canceled for not complying with the terms of the Affordable Care Act...As best I can tell, the ACA will require me to pay $200 a month more for a policy that is marginally worse than the one I have now. " David Frum in The Daily Beast.

HILTZIK: What kinds of plans, exactly, are getting axed? "Back in March, Consumer Reports published a study of many of these plans and placed them in a special category: "junk health insurance." Some plans, the magazine declared, may be worse than none at all...Many of the supposedly bereft insurance customers being paraded before viewers of network and cable news -- and dredged up by House Republicans during today's theatrical grilling of Health and Human Services Secretary Kathleen Sebelius -- fall into this junk category." Michael Hiltzik in The Los Angeles Times.

BEUTLER: Republicans' Obamacare lie. "[I]t’s important to distinguish complaints about cancellation notices from complaints about rate shock. Critics of the law have done their level best to create the impression that everyone who’s received a cancellation notice has experienced, or will soon experience, rate shock. But it’s not true...Some people who receive these notices will be pleasantly surprised to find that the most similar new plan offered by their current provider is actually cheaper than their old one. Others will be told that a similar plan will cost more." Brian Beutler in Salon.

SUDERMAN: The problem with that broken promise. "The Obama administration’s response to a spate of recent stories reporting that individuals would lose access to their current health plans as a result of Obamacare—despite explicit presidential promises that this would never happen—has been a combination of misdirection and bulls__t...The important notion here is that if anything happens that people don't like, it's not the administration's fault. But the administration clearly played the key role in the insurance market changes that led to plans being canceled." Peter Suderman in Reason (read also this follow-up).

CHAIT: Republicans' health care plan is to repeal and cackle. "[C]onservatives want this moment to represent something more than a political victory. They sense an ideological victory: the discrediting of the Affordable Care Act as a policy model, a new opportunity for them to substitute their own vision. And there they are not only mistaken but deluding themselves in the fundamental way they have deluded themselves all along...What conservatives have never fully acknowledged is that its lack of popularity reflects not a broad agreement with the right’s ideological critique but a deep aversion to change." Jonathan Chait in New York Magazine.

Music recommendations interlude: Sufjan Stevens, "Impossible Soul."

Top opinion

HAYDEN: The 'High Noon' scenario. "[W]e are asking other countries what aspects of our espionage make them uncomfortable...American intelligence works to meet the needs and follows the lead of American policy makers. There is actually a formal framework for national intelligence priorities agreed upon regularly at the National Security Council level...The American signals-intelligence community is being battered at home from extreme left and extreme right, and it's being battered from abroad for just being extremely good." Michael Hayden in The Wall Street Journal.

EDSALL: When class trumps identity. "Howard Rosenthal, a political scientist at N.Y.U., wrote to me pointing out that the Times’s own detailed map of precinct results shows a more complex and interesting pattern. “Just looking at voters over $100K misses something. $100K is zilch in Manhattan,” Rosenthal observed. Christine Quinn, the city council speaker, “basically carried all the precincts bordering Central Park East, South and West” – some of the richest precincts in the city...One of the most interesting conclusions that can be drawn from the primary results was that class trumped race, gender and sexual identity, all factors that have played strong roles in recent Democratic contests. “Any racial vote for Thompson simply disappeared,” N.Y.U.’s Rosenthal noted. “Gender and sexual orientation were of at best marginal benefit to Quinn. So I think the election was largely about redistribution,” Rosenthal said." Thomas B. Edsall in The New York Times.

CHAIT: Environmentalists' Keystone error. "Estimates differ as to how much approval of the Keystone pipeline would increase carbon emissions, but a survey of studies by the Congressional Research Service found that the pipeline would add the equivalent of anywhere between 0.06 percent to 0.3 percent of U.S. greenhouse gas emissions per year. By contrast, the Natural Resources Defense Council’s proposal for EPA regulations would reduce U.S. emissions by 10 percent per year – 30 times the most pessimistic estimate of Keystone’s impact." Jonathan Chait in New York Magazine.

HAUSMANN: Why you should care about the economics of 'tacit knowledge.' "Why is it that today’s smaller and more educated urbanized families in emerging-market economies are so much less productive than their counterparts were a half-century ago in today’s rich countries? Why can’t today’s emerging markets replicate levels of productivity that were achieved in countries with worse social indicators and much older technologies? The key to this puzzle is tacit knowledge. To make stuff, you need to know how to make it...Recent research at Harvard University’s Center for International Development (CID) suggests that tacit knowledge flows through amazingly slow and narrow channels." Ricardo Hausmann in Project Syndicate.

PORTER: The problem with cutting the deficit with cutting programs. "[T]he modest objectives carry a silver lining: taking a timeout from the inside-the-Beltway obsession with gouging government programs to rein in the nation’s budget deficit could save the economy from a lot of harm...[T]he bigger problem is the exact opposite: severe budget cutting is shrinking the federal government too much for it to do its necessary jobs." Eduardo Porter in The New York Times.

This is the best interlude: Somebody carved all of the faces of Supreme Court justices into jack-o-lanterns.

2) The NSA's spying is a bit more than 'muscular' -- it's on steroids

NSA infiltrates links to Yahoo, Google data centers worldwide. "The National Security Agency has secretly broken into the main communications links that connect Yahoo and Google data centers around the world, according to documents obtained from former NSA contractor Edward Snowden and interviews with knowledgeable officials. By tapping those links, the agency has positioned itself to collect at will from hundreds of millions of user accounts, many of them belonging to Americans...The NSA’s principal tool to exploit the data links is a project called MUSCULAR, operated jointly with the agency’s British counterpart, the Government Communications Headquarters . From undisclosed interception points, the NSA and the GCHQ are copying entire data flows across fiber-optic cables that carry information between the data centers of the Silicon Valley giants." Barton Gellman and Ashkan Soltani in The Washington Post.

Explainer: How this works, laid out in a nice illustrationBarton Gellman, Todd Lindeman and Ashkan Soltani in The Washington Post.

More explaining: A summary of what the latest documents say from a legal standpointBenjamin Wittes, Matt Danzer, Lauren Bateman and Sean Mirski for the Lawfare blog.

PRISM already gave the NSA access to tech giants. Here’s why it wanted more. "The operations take place overseas, where many statutory restriction on surveillance don't apply -- and where the Foreign Surveillance Intelligence Court (FISC) has no jurisdiction...But the NSA may have preferred its back-door method of accessing the data because it was less visible to the technology companies holding the data. By accessing data without the knowledge of tech companies, it didn't have to worry that the volume of data iit was accessing could raise privacy alarm bells within those companies." Andrea Peterson in The Washington Post.

NSA pushed 9/11 as key 'sound bite' to justify surveillance. "The document, obtained by Al Jazeera through a Freedom of Information Act request, contains talking points and suggested statements for NSA officials (PDF) responding to the fallout from media revelations that originated with former NSA contractor Edward Snowden. Invoking the events of 9/11 to justify the controversial NSA programs, which have caused major diplomatic fallout around the world, was the top item on the talking points that agency officials were encouraged to use. Under the subheading “Sound Bites That Resonate,” the document suggests the statement “I much prefer to be here today explaining these programs, than explaining another 9/11 event that we were not able to prevent.”" Jason Leopold in Al Jazeera America.

The NSA's statement: "NSA has multiple authorities that it uses to accomplish its mission, which is centered on defending the nation. The Washington Post’s assertion that we use Executive Order 12333 collection to get around the limitations imposed by the Foreign Intelligence Surveillance Act and FAA 702 is not true. The assertion that we collect vast quantities of U.S. persons’ data from this type of collection is also not true." The Washington Post.

Google statement: "We have long been concerned about the possibility of this kind of snooping, which is why we have continued to extend encryption across more and more Google services and links, especially the links in the slide. We do not provide any government, including the U.S. government, with access to our systems. We are outraged at the lengths to which the government seems to have gone to intercept data from our private fiber networks, and it underscores the need for urgent reform." The Washington Post.

What NSA's Keith Alexander said. "Asked about the leak, Gen. Keith Alexander, the NSA’s leader, said earlier Wednesday he was unaware of the Post’s report — adding the NSA is “not authorized” to access companies data centers and instead must “go through a court process” to obtain such content.." Tony Romm in Politico.

NSA tapped the Vatican's phones. "The National Security Agency spied on cardinals as they prepared to select the new pope — perhaps including even Cardinal Jorge Bergoglio, who emerged from last spring’s conclave as Pope Francis, a leading Italian news magazine reported in Wednesday’s (Oct. 30) editions...including the phones in the Santa Marta guesthouse that housed Bergoglio and the rest of the College of Cardinals." Eric J. Lyman in The Washington Post.

Not all reporters have superpowers interlude: But this one is a basketball pro.

3) Amid low inflation and economic weakness, Fed keeps buying bonds

Federal Reserve leaves stimulus intact. "Their statement about the economy hardly changed from September and gave little direction as to when the central bank believes it can pull back its stimulus and allow the recovery to stand on its own...In a statement released Wednesday , the Fed’s policy-setting committee said the labor market has improved and economic growth was “moderate.” But the committee noted that unemployment is still high and that policies out of Washington have curtailed the recovery’s momentum." Ylan Q. Mui in The Washington Post.

Read: The October FOMC statement.

How the Federal Reserve is like a snake eating itself. "here were some details in the Fed's policy statement that offer a useful lesson in how they're thinking about the economy -- and how the central bank's policies will intersect with financial markets and the economy in the months and years ahead. First, some new language. The Fed said in its statement that evidence suggests "the recovery in the housing sector slowed somewhat in recent months." Later, they deleted a point that had been included in their September statement." Neil Irwin in The Washington Post.

Some light Fed humor: A deer ran into a glass window at the Cincinnati Fed. And so the economics correspondents got to do some stand-up comedyPhil Izzo in The Wall Street Journal.

Inflation stays below Fed's target. "The consumer-price index, which measures what Americans pay for everything from bread to dental care, rose 0.2% from August, the Labor Department said Wednesday. Core prices, which exclude volatile food and energy costs, increased 0.1%. From a year ago, overall prices were up 1.2% while core prices were up 1.7%...The Fed's preferred inflation gauge, the Commerce Department's price index for personal consumption expenditures, also suggests inflation is weak. The latest PCE price index showed overall and core prices were 1.2% higher in August from a year earlier." Josh Mitchell in The Wall Street Journal.

Graph: Inflation, year-over-yearFederal Reserve Economic Data.

Private hiring slows. "U.S. private-sector employers hired the fewest workers in six months in October...Employers in the private sector added 130,000 new jobs to their payrolls this month, the ADP National Employment Report showed on Wednesday. That was the lowest reading since April and was below economists' expectations for a gain of 150,000 jobs." Reuters.

Excerpt: New EPI paper on wages and labor standards. "Four states passed laws restricting the minimum wage, four lifted restrictions on child labor, and 16 imposed new limits on benefits for the unemployed...Fifteen states passed laws restricting public employees’ collective bargaining rights or ability to collect “fair share” dues through payroll deductions...Fifteen states passed laws restricting public employees’ collective bargaining rights or ability to collect “fair share” dues through payroll deductions." Gordon Lafer for the Economic Policy Institute.

Read: Link to the paper (goes live at 8:30 a.m.). Economic Policy Institute.

Bank of America says the government may sue it over mortgages. "A U.S. attorney plans to recommend that the Justice Department file a civil lawsuit against Bank of America over its bundling of home loans into securities, the bank said Wednesday in a regulatory filing...In a quarterly filing Wednesday, Bank of America said a working group comprised of state and federal prosecutors is investigating its purchase, packaging and underwriting of home loans and residential mortgage-backed securities." Danielle Douglas in The Washington Post.

Watch: Should you bet on America? Here’s what you missed at Wonkblog’s New York eventThe Washington Post.

Rich people think the economy is doing just fine. Here’s why that matters. "[T]here is one group who thinks things are looking pretty peachy: the wealthy...The survey's economic sentiment index is up to 93 this fall, rising 22 points since the spring. It's also the highest since the fall of 2007, before the recession began, when it was at 108. The researchers, who survey 327 affluent households, consider an index above 100 as a "positive" view of the economy and the 93 level as "neutral". Still, surveys of the rest of the masses of Americans reveal views on the state of the economy that are anything but neutral." Neil Irwin in The Washington Post.

This may be the one way to laugh at the NSA news interlude: Can you sketch things better than the NSA?

4) Smaller fiscal deficits, smaller fiscal deals

Congratulations, America! Your deficit fell 37 percent in 2013. "[T]he Treasury and Office of Management and Budget is out with the final budget results. Surprise! The deficit fell quite a bit in 2013. The federal government took in $680 billion less revenue than it spent, or about 4.1 percent of gross domestic product. In 2012, those numbers were $1.087 trillion and 6.8 percent of GDP. That means the deficit fell a whopping 37 percent in one year...What's behind it? Most of all, there was more revenue. Government receipts totaled $2.774 billion, up $325 billion from 2012, and rising to 16.7 percent of GDP from 15.2 percent...Overall outlays were $3.454 trillion, the treasury said, falling $84 billion compared with the 2012 fiscal year." Neil Irwin in The Washington Post.

What a deal that cuts entitlements would look like. "The key here is the definition of “entitlements” and the distinction between cutting “entitlement spending” and “entitlement benefits.” Most people consider entitlements to encompass the major social welfare programs: Medicare, Medicaid, and Social Security. But the Journal is using a broader definition that also includes agricultural subsidies. A clearer term for this broader category would be “mandatory spending”—as distinct from the discretionary spending in the budget...[T]hat still leaves the door open to cuts that don’t affect benefit levels—and Obama lists many of them in his 2014 budget...[For instance:] • Reduce Medicare coverage of bad debts, by reimbursing providers at 25 percent rather than 65 percent ($25 billion). • Impose Medicare provider efficiencies, including limits on physician self-referral of ancillary services ($20 billion). • Reduce Medicare compensation to teaching hospitals ($11 billion). • Cut waste, fraud, and abuse in Medicare and Medicaid ($4.1 billion). • Realign Medicare payments to rural providers with actual cost of care ($2 billion)." Joshua Green in Bloomberg Businessweek.

Budget talks lack the usual fireworks. "[S]ome lawmakers were encouraged by the opening of the talks, given it was largely free of the take-it-or-leave-it rhetoric that dominated during the recent government shutdown. "I think there is a different spirit today," said Alabama Sen. Jeff Sessions, the ranking Republican on the Senate Budget Committee...The 29 members of the budget panel, whose formal role is to set the path for government spending by reconciling budget bills passed by the House and Senate, seemed to rally around the idea of setting relatively modest targets. That includes easing the impact of across-the-board spending cuts known as sequestration and reaching a deal to keep the government open before current funding expires Jan. 15." Janet Hook in The Wall Street Journal.

If the talks get stuck, it'll be on this issue: taxes. "House Budget Committee Chairman Paul Ryan (R-Wis.), the lead negotiator for House Republicans, said tax loopholes should be closed only in the context of comprehensive tax reform...The budget talks, on the other hand, should be limited to cutting spending “in a smarter way,” Ryan said. He added, “If this conference becomes an argument about taxes, we’re not going to get anywhere.”" Lori Montgomery in The Washington Post.

Democrats are divided in these budget talks. "Democrats in Congress insist that Republicans, to prevent billions of dollars in scheduled cuts to military programs next year, must agree instead to raise new revenues by closing some tax breaks. But the White House, eager to end the arbitrary cuts known as sequestration for both military and domestic programs, has not linked taxes and Pentagon spending for a short-term budget deal covering a year or two." Jackie Calmes and Jonathan Weisman in The New York Times.

Wonkbook watched the movie "Gallipoli" last night interlude: Here's actual color footage of World War I.

5) Meet the House Republicans who support immigration reform

Ros-Lehtinen becomes second Republican to back immigration bill. "Rep. Ileana Ros-Lehtinen (R-Fla.) on Tuesday became the second House Republican to endorse immigration reform legislation from Democrats. "It's important to keep the conversation going in trying to fix the broken immigration system. I favor any approach that will help us move the negotiations forward,” the congresswoman said in a statement that was provided to The Hill by a spokesman...Rep. Jeff Denham (Calif.) became the first Republican to support Garcia's measure over the weekend." Rebecca Shabad in The Hill.

More House Republicans may sign on soon. ""While I'm the first Republican to support this legislation I expect others to sign on in the coming days," Rep. Jeff Denham (R-Calif.) said during a conference call late Monday afternoon." Cameron Joseph in The Hill.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Congress tried to cut subsidies for homes in flood zones. It was harder than they thoughtBrad Plumer.

Should we use geoengineering to cool the planetBrad Plumer.

Sebelius said it would be illegal for her to buy Obamacare. That’s not quite rightSarah Kliff.

How the Federal Reserve is like a snake eating itself. Neil Irwin.

Here’s Zillow’s strategy for dominating online real estateLydia DePillis.

Facebook’s new users are overseas, where it can’t make much money off themLydia DePillis.

Should you bet on America? Here’s what you missed at Wonkblog’s New York eventWonkblog.

From ‘brosurance’ to tricycles, the Sebelius hearing was pretty weirdSarah Kliff.

HIV counseling is often ineffective. So we should make HIV testing less cumbersomeHarold Pollack.

‘We’re not getting that reliable data:’ The most important moment of the Sebelius hearingSarah Kliff.

Congratulations, America! Your deficit fell 37 percent in 2013Neil Irwin.

Paypal to government: Be more like usLydia DePillis.

Rich people think the economy is doing just fine. Here’s why that mattersNeil Irwin.

Et Cetera

Poll: Obama's job approval falls to 42-51Neil King Jr. in The Wall Street Journal.

Senate resumes fight over Obama's nomineesPaul Kane in The Washington Post.

Mel Watt could be two votes short of 60 for confirmation to FHFA. Jon Prior and MJ Lee in Politico.

Senate confirms Katherine Archuleta as the next federal personnel chiefLisa Rein in The Washington Post.

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

Wonkbook is produced with help from Michelle Williams.