Welcome to the third annual Wonky awards, where we recognize outstanding achievements — and spectacular disasters — in policy wonkery. Let’s get to them.
Wonk of the year: Janet Yellen
On Feb. 1, Janet Yellen will (barring last-minute confirmation problems) become one of the most powerful people in the world as she takes over the chairmanship of the U.S. Federal Reserve. But her imprint has already been felt across the world economy.
As the top lieutenant to Chairman Ben Bernanke, Yellen was a key engineer of a monetary easing program announced in late 2012 and carried out over the course of 2013. It combined bond buying — $85 billion a month, set to taper down to zero over the course of 2014 — with clearer communication about what might trigger interest rate increases down the road. Those policies have kept the economic recovery on track even as Congress has slashed spending and increased taxes. The Bernanke-Yellen Fed, in effect, offset much of the damage of fiscal austerity in America.
Now Yellen is poised to take center stage. It was a long, ugly summer in which advocates of both Yellen and Larry Summers campaigned for their favored candidate for the Fed chairmanship. Summers ultimately withdrew amid Senate opposition, and it was Yellen’s quiet, un-flashy, cerebral leadership that won her the spot. She faces big challenges as Fed chair, from managing a wind-down of the Fed’s easy money policies to taking on its broader role overseeing the financial industry. But her skills at managing these challenges so far earn her our Wonk of the Year honor.
Policymaker of the year: John Kerry
This season on the TV show "Homeland," basically everything the CIA does is with an eye toward forging a grand bargain with Iran, in which the United States loosens sanctions, and Iran gives up pursuit of a nuclear weapon. Crazy gambit after crazy gambit — including involuntary hospital commitments, entrapment of Iranian officials, assassination of other Iranian officials, use of a wanted terrorist as a U.S. asset, etc. — is meant to get us closer to that goal.
So it's funny that, as the series was airing, the real-life Islamic Republic of Iran’s representatives were in Geneva hashing out a bargain on exactly those lines with U.S. Secretary of State John Kerry. It’s not permanent, and a permanent deal will be much tougher to craft. But it sets in motion a process that could culminate in a lasting accord, after a first Obama term that featured little improvement in U.S.-Iran relations and little progress in convincing Iran to ratchet down its nuclear program.
Kerry's first year was far from smooth — and was often ugly. The Obama administration made a number of inept gestures toward war in Syria before ultimately negotiating a deal to secure the Bashar al-Assad regime's chemical weapons. It stood by as the democratically elected government of Egypt fell victim to a military coup. And Kerry is still working on a final status agreement between Israel and the Palestinian Authority. But the deals do signal that the United States can and will sit down and hash things out before taking military action. It’s an intriguing development, and by far a bigger policy change than anything that happened in Congress this year. That's why Kerry gets our Policymaker of the Year award.
Think tank of the year: Kaiser Family Foundation
If you have a question about the Affordable Care Act, the odds are pretty high the Kaiser Family Foundation has your answer. Want to know how many states are expanding Medicaid? That’s here. All the new provisions that take effect in 2014? Done. A calculator to figure out if you qualify for an insurance subsidy? Yep, they've got it -- and made it available to the public months before HealthCare.gov.
With the health-care law front and center this year, the Kaiser Family Foundation has consistently offered the most up-to-date and accurate information on health policy, churning out dozens of research papers addressing everything from the likelihood of death spiral in the exchanges to the number of Americans left out of the Medicaid expansion. Their collection of State Health Facts is pretty much a health wonk’s dream — and their monthly tracking poll on the health-care law is an indispensable barometer of public opinion.
Pundit of the year: Bob Laszewski
While the failed launch of HealthCare.gov was bad news for the Obama administration, it was great news for Bob Laszewski, a health industry consultant who turned up on the front page of most national newspapers. Laszewski was in a unique position: He was willing to tell reporters what he heard from insurers at a time when the health plans themselves, and the Obama administration, weren’t talking.
Laszewski doesn’t hide his point of view; he’s no fan of the Affordable Care Act. And the information he shared was rarely good news for HealthCare.gov, but more a portrait of chaos behind the scenes. But it was also one of the most accurate and public accounts of how poorly things were going during the first few months of Obamacare.
Book of the year: "Lean In," by Sheryl Sandberg
"Lean In," Facebook chief operating officer Sheryl Sandberg’s call for women to assert themselves in the workplace, is not a long book. It’s not even a very revolutionary book, in terms of its message. Feminists before her have pointed out that women sometimes hold their own careers back.
But in terms of its impact on public dialogue, "Lean In" was a bombshell. Since its publication in the early spring, debate around the role of privilege in shaping the terms of female advancement has ping ponged around the internet, with Sandberg taking heavy criticism for asking women to shoulder the burden of a structurally unequal employment system while mostly letting the men who have shaped it off the hook. Part of that stemmed from the parallel movement orchestrated by her PR apparatus, with its “Lean In circles” and a Web site that curates the news of empowerment. Sandberg had her defenders, but it all felt a little... corporate.
The result: A new spectrum of feminist philosophy, ranging from Anne Marie-Slaughter’s “Why Women Can’t Have It All” institutional critique on one pole to Sandberg’s personal responsibility exhortation on the other. Oh, and the use of the phrase “lean in” to describe “trying harder,” for women and men alike.
Graph of the year: Our fast-shrinking deficit
Congress has been fighting about deficits almost continuously since Republicans took the House in 2010. That’s how we got sequestration and the "fiscal cliff" and various debt-ceiling showdowns. But the dynamics behind this fight are shifting fast. The federal budget deficit fell 37 percent in 2013, thanks to faster growth, more tax revenue, the draw-down in Afghanistan, and recent spending cuts. As a result, the Congressional Budget Office expects U.S. debt to stay stable for the next decade as the economy improves (it will then start rising again as health-care costs grow).
Are those falling deficits good or bad? It depends who you ask. Many economists would argue that deficits are shrinking much too quickly given our still-hurting economy — Congress should either spend more or cut taxes further to get us back to full employment. On the other hand, the fact that deficits are shrinking helps reduce the number of ugly showdowns in Washington. Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) recently reached an agreement on spending levels for the next two years with surprisingly little rancor. The chart above deserves some credit.
#Winning of the year: Abenomics
Barely a year ago, the Japanese economy was the world’s biggest snoozefest. It had crept along at stagnant growth rates, with low-grade deflation, for the last two decades. Nothing changed: No growth. No inflation. No depression.
Then the government of Shinzo Abe was elected in December 2012 with an audacious plan to apply full-scale Keynesian remedies to jolt the Japanese economy to life. Fiscal stimulus, check. Aggressive monetary policy, check. Rooseveltian resolve to do whatever it takes to bring growth back to Japan, double check. The results thus far are everything a Japan booster might hope for. Japanese GDP is on track to have grown about 2 percent this year, according to the IMF’s World Economic Outlook. After years of falling prices, prices rose 0.7 percent this year. The Japanese stock market was up 57 percent in 2013.
Will all this translate into higher standards of living for Japanese citizens? Has Japan ended its long economic funk once and for all? And can Japan emerge into a more prosperous age without a debt crisis or outburst of excessive inflation? Those questions don’t have answers yet. But so far, Abenomics is pure #winning for the world’s third-largest economy.
Fail of the year: HealthCare.gov!
The disastrous rollout of the Affordable Care Act’s Web site took this Wonky in a walk. While the Obama administration had promised to the country something like Expedia for health insurance, the initial product was a constantly-crashing, nearly impossible-to-use Web site. HealthCare.gov barely functioned at its launch; six people signed up on the first day. Consumers couldn’t get through the shopping process -- and, when they did, health insurers found tons of inaccuracies in their enrollment forms. California and Kentucky managed to build functional health insurance Web sites, but not the federal government.
The Web site did show huge improvements in December, followed by a big spike in enrollment. But October and November were essentially “lost” months for HealthCare.gov, where barely anyone could enroll -- and that’s left the Obama administration behind initial enrollment projections for 2014.
Most significant economic trend: The U.S. oil and gas boom
The United States boosted its production of oil and natural gas once again in 2013. And that’s still having ripple effects throughout the economy. One recent study from Boston Consulting Group estimated that cheap natural gas is now saving the average U.S. household at least $425 per year. The shale-gas boom is attracting at least some manufacturers back to America, particularly petrochemical companies. And the glut of natural gas is still reducing U.S. carbon-dioxide emissions by crowding out (dirtier) coal in the electricity sector.
The oil boom is a big deal, too: Thanks to advanced drilling techniques, the United States boosted its oil production by roughly 1 million barrels per day in 2013. That extra supply was crucial for offsetting declines in production elsewhere in the world — without the U.S. boom, global oil prices would have surged considerably.
There are still plenty of reasons to be ambivalent about the drilling frenzy currently taking place across the United States — environmentalists have raised all sorts of concerns about shale fracking, from methane leaks to pollution issues. But there’s little doubt that it continues to be a major economic development.
Most important 3-digit number: 834.
For decades — decades! — the 834 transmission had existed in lowly obscurity, a sad little file that insurance companies used to transmit enrollment information. But in 2013, nobody would put 834s in the corner: These files a lynchpin issue for the health-care law, when insurers started noticing lots of inaccuracies in the data. Even more, health plans realized that thousands of the files weren’t even being sent -- and without an 834, insurers couldn’t know that a shopper had picked their plan.
And thus, the true importance of the 834 was realized — and fought over. A lot. The Obama administration was mum for weeks on how many 834s had gone out inaccurately, culminating in an angry White House media briefing where Jay Carney was pressed repeatedly on this three-digit number. Never before — and probably never again — will an 834 transmission hold the national spotlight as it did in 2013.
Regulation of the year: The Volcker Rule
It took a shockingly long time to craft (three years). It is mind-bogglingly complex (71 pages of regulations). It is being phased in slowly (compliance required by July 2015). But now the provision of the Dodd-Frank Act meant to stop too-big-to-fail banks from engaging in speculative trading activity has the full force of law. It is tougher, and with fewer loopholes, than many financial reform advocates had thought plausible just a year ago.
As Mike Konczal writes, the rule's completion was helped along by a few things. The London Whale trading scandal at JPMorgan showed how even the best-run banks can record billions of trading losses if they are allowed too free a hand; Treasury secretary Jack Lew has pledged that the final rule would prevent a major bank from engaging in that type of activity in the future. Bipartisan pressure against the big banks from Capitol Hill helped energize regulators to craft a strong Volcker Rule, as did outside advocacy groups that engaged with zeal in commenting during the the regulation-writing process.
Giant banks will surely again find a way to get themselves in trouble. But the Volcker Rule rule has ended up as a strongly crafted set of restrictions about some of the activities that could most easily endanger the financial system.
Worst self-inflicted wound: Sequestration
Imagine you were negotiating with someone to buy a car. But the two of you couldn’t agree on a price. Instead of just walking away, you made a deal. You agree to attach a piano to a crane hanging over the car. And if you don’t reach a deal by next Tuesday, the piano will be rigged to drop, crushing the car. That will give you the impetus to finally reach a deal. Sequestration is the hanging piano. And the U.S. economy is the newly crushed car.
The policy of across-the-board spending cuts for most discretionary federal government spending was designed to be a policy so painful that neither Democrats nor Republicans would allow it to go into effect. Agreed as part of an August 2011 deal to raise the debt ceiling, it was only meant to be the gun to Congress’s head to coax a longer-term deficit reduction deal. But with Republicans unwilling to consider tax increases, and Democrats unwillingness to cut entitlements without also increasing taxes, there was no deal to be had, and so the cuts went into effect March 1.
The CBO estimates that the sequestration resulted in 0.2 percent to 1.2 percent less economic activity in the third quarter, and cost between 300,000 and 1.6 million jobs. Nice job, Congress!
Most ominous milestone: Carbon-dioxide levels hit their highest point in 650,000 years
All things considered, 2013 was an excellent year for humanity. Life expectancy was up. Extreme poverty was going down. War was becoming less frequent. That all counts as genuine progress.
There’s one catch, though. Humans continued to load ever more heat-trapping greenhouse gases into the atmosphere, setting the stage for future warming. Back in May, the amount of carbon dioxide in the atmosphere hit 400 parts per million, the highest level in at least 650,000 years (and possibly in millions of years). This shift guarantees that the planet will get hotter, and sea levels will keep rising in the decades ahead — and it will likely mean other unexpected changes in store.
One of the key questions for the coming decades is whether we can continue to improve human welfare without burning fossil fuels endlessly and pushing those carbon levels higher and higher. So far, we haven’t quite figured it out.
Academic talk of the year: Larry Summers on “secular stagnation”
At first glance, Larry Summers’s presentation to the IMF in November seemed fairly straightforward: The United States and Europe might be in a permanent condition of slow economic growth. It’s not just the recession and its aftermath. Even during the 2000s, we had a huge housing bubble, and yet the economy was only so-so, and inflation stayed strangely low.
But there were a number of provocative points that fell out of Summers’s talk. One is that our economy may be in a place where we need bubbles for growth. Another is that the economy won’t automatically right itself -- stagnation could last for many years. Central banks may need to radically rethink how they do monetary policy. Otherwise they could be stuck in a bind where they’re injecting ever more money into an economy to avoid a worse and worse recession.
Academics of the Year: Emmanuel Saez and Thomas Piketty
This was the year that inequality made it big. Obama devoted a whole speech to the topic. Bill de Blasio was elected mayor of New York on a promise to fight it. The think tank closest to the administration launched a whole spin-off dedicated to studying it.
It’s doubtful any of that would have been possible without the work of Berkeley’s Emmanuel Saez and the Paris School of Economics’s Thomas Piketty, who have put together the most comprehensive dataset ever on how the incomes of various economic classes have fared since 1913. What they found was an enormous surge in inequality, and stagnant middle incomes, in recent decades. Those findings have set the terms for the inequality debate ever since.
Saez and Piketty aren’t afraid to draw policy conclusions from their work, either. Both support much, much higher marginal tax rates on the rich; in a paper with Nobel laureate Peter Diamond, Saez suggests the top rate should be 73 percent. Peter Orszag said the duo’s research was proving influential in the Obama administration as well. Their presence is only going to grow next year, not least because Piketty’s book, "Capital in the Twenty-First Century," drops on March 24. The book is already a bestseller in France.
White paper of the year: The spreadsheet error heard round the world
Austerity has dominated the policy conversation for the past three years. And one of the most influential pro-austerity papers was Carmen Reinhart and Kenneth Rogoff's "Growth in a Time of Debt," which argued that economic growth severely suffers when a country's public debt level reaches 90 percent of GDP. That 90 percent figure has often been cited as a big reason why countries must trim their deficits — even if their economies are still weak.
That all changed in 2013. An attention-grabbing critique in April by Thomas Herndon, Michael Ash and Robert Pollin disputed the case for austerity. Among other things, they argued that Reinhart and Rogoff had made a spreadsheet error that slightly swayed their results. (Herndon, a grad student at UMass-Amherst, had noticed the error when he asked Reinhart and Rogoff for their data as part of a class assignment to replicate existing results).
To be sure, there were far more serious critiques of Reinhart/Rogoff (there’s a good case that weak growth causes high debt, rather than the other way around). But the spreadsheet error got all the attention — and, at least in some corners of the policy world, gave people space to rethink austerity.
Dissenter of the year: Edward Snowden
The years since Sept. 11, 2001 have seen a marked evolution in Americans’ willingness to accept government intrusions on their privacy in the name of preventing terrorism. We've gone from unquestioning acceptance to widespread skepticism. And, when President Obama was elected, he seemed determined to give security fever a rest.
Edward Snowden showed us that President Obama had done no such thing. The internal documents that the 29-year-old National Security Agency contractor released illustrated the shocking power of government observation, obtained with the assistance of companies to which Americans have entrusted vast amounts of their personal lives.
But it wasn’t just the data dump that changed how we thought about being watched. It was also how Snowden, in the face of intense criticism from people who saw him as a traitor and a thief, articulated why the broad reach of the state is so concerning. "I don't want to live in a world where everything that I say, everything I do, everyone I talk to, every expression of creativity or love or friendship is recorded,” he said in one interview. Americans are still divided over whether that’s a huge problem or not. But Snowden has made himself a strong voice for the opposition.
Policy lie of the year: Obama's “If you like your plan, you can keep it” line.
President Obama promised repeatedly that if Americans like their health insurance plans, under Obamacare, they could keep them. In 2013, millions of Americans found out that wasn’t quite right, and that the health-care law would eliminate their plans, which didn’t cover a minimum set of required benefits. This wasn’t a glitch in the health-care law; it was a key feature. Obamacare’s drafters wanted insurance to cover more benefits than the plans on the individual market right now. And that meant, for those who liked their skimpier benefit packages, they would not have the opportunity to keep those old policies.
Sleeper economic issue of the year: The rise of Mexico’s economy
It gets scant attention here at home, but Mexico has added 2 million jobs since 2010 and is growing fast. The trends are particularly pronounced in auto manufacturing: Mexico has been adding auto industry jobs over the past decade while the rest of North America has been shedding them. If this continues, it could have a huge impact on the immigration debate: Many demographers expect illegal immigration into the United States to keep shrinking in the years ahead as Mexico gets richer.
Underrated economic indicator of the year: The declining homeownership rate
America’s homeownership rate reached an all-time high in June 2004, hit the skids as the housing bubble inflated, and has been declining ever since. It’s now at 65.3 percent, still way above historical levels, but clearly a meaningful correction to the run-up of the 1990s and early 2000s.
With that comes a serious change in how the economy functions: Fewer households take on housing-related debt, a smaller part of the financial system is tied up in consumer mortgages, and people find vehicles for financial security other than a fixed physical asset that may or may not be worth more down the line. A lower homeownership rate also impacts the shape of our communities: People are more mobile and able to move to employment opportunities, whether it be in the tech campuses of Silicon Valley or the gas fields of North Dakota. Builders are shifting from suburban single-family homes to dense, urban apartment complexes, which in turn lessens the need for personal automobiles. It even changes our political system, as renter-heavy cities shade bluer and rural areas stay red.
Overrated economic indicator of the year: Uncertainty
What do businesses want? We’ve heard over and over again that they want “certainty”: A solid understanding of what economic conditions they’re going to be dealing with for a non-trivial period of time. Without certainty, they won’t invest in their infrastructure, start new ventures, or hire more people. That’s why Republicans often decry new regulations: Sorting them out takes time, which allows uncertainty to fester.
But there's little evidence for this. Stanford and the University of Chicago came up with an index to track uncertainty. It's fallen to levels not seen since before the recession started in 2008. In theory, that should mean hiring and productivity are back to normal too, right? Well, not quite. Employment bumped along at the same tepid pace, as did GDP growth — hardly a dramatic response to a problem that appeared to have been solved. Which doesn’t mean that uncertainty isn’t still annoying for businesses. It’s just no excuse for stagnation.
Obscure-yet-important regulatory agency of the year: CCIIO
The Center for Consumer Information and Insurance Oversight is the sub-section of the Centers for Medicare and Medicaid Services that solely exists to implement the Affordable Care Act. Boy did it have a busy year! In 2011, we gave CCIIO this very same Wonky for its role in putting out lots and lots of health law regulations. This year, they take home the award for overseeing the pretty terrible rollout of HealthCare.gov--and the race to fix it. It was CCIIO that that held daily war room meetings back in October, to assess the problems with the Web site. From their Bethesda office building, CCIIO’s work had a direct impact on the millions of Americans shopping for insurance under the health-care law -- and both the problems, and successes, they encountered.
Obscure-yet-important regulation of the year: CFPB’s Qualified Mortgage rule
Back before the housing bubble popped in 2008, one of the main forces inflating it was banks’ willingness to give almost anyone a mortgage: no income, no assets, no problem. That resulted in a lot of people taking on loans they had no hope of paying back, landing them in massive sinkholes of debt when real estate values collapsed.
This year, the two-year-old Consumer Financial Protection Bureau — itself a product of reforms following the economic collapse — finalized a regulation to stop that from happening when it kicks in on Jan. 10. The “Qualified Mortgage” rule (QM, to its friends) requires lenders to determine that borrowers have the ability to repay their loans, and creates a safe harbor from litigation for mortgages that fit criteria relating to documentation, fees, and a borrower’s debt-to-income ratio. Right now, since banks became extremely cautious after getting soaked in the housing crisis, the vast majority of loans originated already qualify. But should the market get overly exuberant again, the new rule should prevent lending to excess, and the hangover that might follow.
Most worthwhile yet hopeless policy crusade of the year: Land value tax
Most taxes — income taxes, property taxes, sales taxes, payroll taxes, investment taxes, wealth taxes, even consumption taxes — tax things we want to encourage. That's perverse. So why not change this?
Taxing land would raise enough revenue to replace most all taxes. That’s especially true if you expand the definition of “land” to include other inherently scarce natural resources like oil, coal, natural gas, gems, and water, as UC Riverside’s Mason Gaffney has argued. And the great thing about land, as opposed to income or consumption, is that it doesn’t shrink in response to taxes. We’ve got the land we’ve got. So taxing it doesn’t destroy it. It’s a way to raise a ton of money from rich landowners without any economic distortions.
For more on the case for land taxes, see Jesse Myerson at Salon and Stuart Brittain at the Financial Times. It’s the rare non-trivial policy idea that really does have something in it for both sides, and it deserves more attention.
Best use of graphs: American accent maps
Old school language family maps are an imprecise instrument, to put it mildly: Squiggly lines scrawled across continents to denote where people might have similar patterns of speech. This year, The New York Times reinvented the form. Using questions modeled off the Harvard Dialect Project, it reverse engineered quiz-takers’ region of origin from linguistic quirks like what they call potato bugs and whether they say pop or soda. The resulting heat maps are a striking visualization of how Americans talk now, and if the posts in Wonkblog’s Facebook feed from people stunned by the quiz’s accuracy are any indication, solid proof that everybody copies what they hear around them.
Worst use of graphs: This random soccer graph
It’s apropos of basically nothing whatsoever, but the chart above was our favorite graphical dud of the year. As Business Insider’s Walter Hickey noted, “I never thought it was possible but I actually understand soccer less after looking at this chart.”
Most worthwhile Canadian initiative: Abolition of the Canadian Senate
The Canadian Senate is not nearly as bad as the U.S. Senate. But following a scandal in which Canada's senators were accused of improperly using public funds, interest in eliminating it grew considerably, with support for abolition reaching its highest point since the 1990s.
While abolition has champions on all sides of the aisle, its most consistent backer is the left-leaning New Democratic Party, whose leader Thomas Mulcair has launched a campaign called Roll Up the Red Carpet promoting abolition. For fighting for the removal of a pointless body that mainly serves as a source of patronage appointments, Mulcair and the NDP get the highly coveted Worthwhile Canadian Initiative award.
Least worthwhile Canadian initiative: Rob Ford
Let’s recap: Toronto mayor Rob Ford has admitted to smoking crack while in office. He's endured a stream of stories all year about his substance abuse and erratic behavior. The major Toronto papers have called on him to resign. Yet he remains surprisingly popular — and refuses to step down. Earlier this year, we talked to a Canadian political scientist about the mystery of Ford. There were some great insights there, but we’re still befuddled.
Best/worst mash-up of pop culture and policy: Sharknado and the debt ceiling
Remember Sharknado? Hopefully not. At some point this summer, a bunch of media types in D.C. and New York collectively decided to watch a movie about tornadoes that launched sharks on a city. Or something like that. Then they tweeted about it. Yeah...
Anyway, Sharknado was a thing at some point. And former Council of Economic Advisers chairman Alan Krueger brought it up during the whole debate over whether or not to lift the debt ceiling: "You have this tornado which brings sharks and they land on people’s heads. I think if we cross the debt limit, it would be worse for the financial sector.” Come to think of it, that sums up the whole debt-ceiling fight pretty well.
--The Second Annual Wonky Awards, 2012
--The First Annual Wonky Awards, 2011