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Wonkbook: Will there be another debt-ceiling fight?

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Wonkbook's Number of the Day: 51.3. That was the latest data point for a key indicator of manufacturing health. Readings above 50 indicate growth, but the latest number suggest the U.S. isn't moving as fast as many began to hope in recent weeks.

Wonkbook's Graph of the Day: The rise of deportations.

Wonkbook's Top 5 Stories: (1) debt-ceiling back in the spotlight; (2) imagine there's no Fed easing; (3) Obamacare vs. the Seahawks; (4) finally, the farm bill; and (5) chess moves for 2014.

1. Top story: Will there be another debt-ceiling fight?

Lew sets debt ceiling deadline for end of February. "Treasury Secretary Jacob Lew has set a deadline for Congress to come to an agreement on extending the debt ceiling: the end of the month. Lew, in an interview on set to air Monday night on NPR, says the Treasury Department is not able to use as many "extraordinary measures" as it usually does to extend the deadline. Congress, in its October deal to end the government shutdown, extended the debt ceiling until Feb. 7, but Treasury is able to use such measures to get by between the deadline and when it actually loses borrowing authority. Lew is saying the latter will happen at the end of the month." Aaron Blake in The Washington Post.

Why now? "Last year when the country's borrowing authority expired, Treasury was able to free up money by deferring new investments in its civil-service disability and retirement fund. Here's how it works: Throughout the year, securities in the fund mature, or interest is earned on the securities, and that money is credited to the fund. In an unusually dire situation where Treasury has run out of borrowing authority, it's possible for the government to defer those credits temporarily and apply that money towards issuing more debt to pay its bills. It's just a way of rearranging things for a while until Congress raises the debt ceiling. This year, though, this major tool won't be available. By a fluke of timing, there isn't money scheduled to be credited to the fund in the coming weeks. And so Treasury has less time to work with." Jia Lynn Yang in The Washington Post.

@RameshPonnuru: Some house Rs are talking about tying the obamacare risk corridor issue to the debt ceiling but overstatement to say that's the plan.

House GOP finalizes debt-limit playbook. "Several House members told The Washington Post on Monday that Republican leaders have narrowed their list of possible debt-limit strategies to two options: trading a one-year extension for approval of the Keystone XL pipeline, or trading a one-year extension for repeal of the Affordable Care Act’s risk corridors. Both plans, which were first discussed last week at the House GOP’s annual retreat in Cambridge, Md., will be debated further Tuesday morning, when House Republicans meet at the Capitol. House Speaker John A. Boehner (R-Ohio) is said to be open to either approach, as long as it can win heavy GOP support." Robert Costa in The Washington Post.

@TPCarney: If GOP base values risk-corridor repeal over Keystone funding, that tells you something about a shift in the GOP, doesn't it?

...Here's one of the reasons they aren't planning to press hard. "Fifty-four percent of those questioned say they would blame the GOP in Congress if the debt ceiling isn't raised, with 29% saying they'd hold the President more responsible. Twelve percent say they'd point fingers at both sides." CNN.

Treasury expects to borrow $284 billion this quarter, if the debt ceiling is lifted. "The Treasury Department estimated Monday it will issue $284 billion in net marketable debt from January to March, $19 billion more than it projected three months ago. That would leave government accounts with $130 billion in cash at the end of the period, compared with an earlier forecast of $45 billion...The Treasury, in its first estimate for the period, said it expects to pay down $40 billion in debt from April to June. Revenue will outstrip spending during the quarter." Jeffrey Sparshott in The Wall Street Journal.

@TheStalwart: Debt ceiling fight coming at a perfect time.

Don't forget about those tax refunds. "A fresh battle over the debt ceiling is looming, and lawmakers will have less time and flexibility to negotiate than in earlier fights because of the annual rush of people seeking tax refunds this month...The Internal Revenue Service processed 45.9 million tax returns for the week ended March 1, 2013, paying out $135 billion in refunds, according to agency data. It processed 45.9 million additional tax returns the following week, paying out a further $154.7 billion in refunds." Damian Paletta in The Wall Street Journal.

BARRO: Republicans are still bluffing about the debt ceiling. "Republicans and Democrats both know that Republicans will get tagged with the blame for any economic crisis that ensues from hitting or approaching the debt limit. Democrats can win any debt ceiling fight by repeatedly saying "no" to anything other than a clean increase. That's why, in 2013, the Republican-controlled house twice (in January and October) passed debt ceiling increases without meaningful policy concessions, after insisting that they would only raise the debt ceiling in exchange for meaningful policy concessions." Josh Barro in Business Insider.

Music recommendations interlude: John Lennon, "Watching the Wheels," 1980.

Top opinion

PRESCOTT AND OHANIAN: What to do about slow productivity growth. "The productivity of U.S. workers has grown at an average annual rate of about 2.5% since 1948, but has averaged only about 1.1% since 2011—less than half the historical...Getting the U.S. economy back on track will require a much higher annual rate of new business startups. Sadly, the annual rate of new business creation is about 28% lower today than it was in the 1980s, according to our analysis of the U.S. Census Bureau's Business Dynamics Statistics annual data series." Edward C. Prescott and Lee H. Ohanian in The Wall Street Journal.

NOCERA: The gun report, one year later. "[T]he biggest surprise, especially early on, was how frequently either a child accidentally shot another child — using a loaded gun that happened to be lying around — or an adult accidentally shot a child while handling a loaded gun...After The Gun Report had been up and running for a while, several Second Amendment advocates complained that we rarely published items that showed how guns were used to prevent a crime. The reason was not that we were biased against crime prevention; it was that it didn’t happen very often." Joe Nocera in The New York Times.

BERNSTEIN: Small tax deals within reach. "A positive outcome of the fact that we’re now debating inequality and opportunity (instead of deficit reduction) is that members of both parties have been compelled to offer some ideas to help less-advantaged workers other than just reducing the deficit. One idea that has surfaced with bipartisan support is to expand the earned-income tax credit, a highly effective, pro-work wage subsidy for low-income workers. But workers without children are currently all but left out of the earned-income tax credit — their average benefit is under $300 per year compared with around $2,800 per year for families with children." Jared Bernstein in The New York Times.

SCHEIBER: Why we should socialize the law. "The only way to bring about the ideal of equal protection under the law is to boost spending on lawyers for the poor and middle class, and to prevent the affluent from spending freely. We must, in effect, socialize the legal profession...The idea would be roughly as follows: in criminal cases, we decide what the accused should be able to spend to defend themselves against a given charge—securities fraud, grand theft, manslaughter, etc. No one can spend more, even if she has the money, and those who can’t afford the limit would receive a subsidy for the full amount beyond what they would have spent on their own (say, beyond a certain percentage of their annual salary or net worth). In civil cases, we decide what the plaintiff should be able to spend to pursue an award of a particular amount, or to pursue a particular kind of claim, and what the defendant should be able to spend in response." Noam Scheiber in The New Republic.

BROOKS: What the machines can't replace. "[T]he age seems to reward procedural architects. The giant Internet celebrities didn’t so much come up with ideas, they came up with systems in which other people could express ideas: Facebook, Twitter, Wikipedia, etc. That is to say they designed an architecture that possesses a center of gravity, but which allowed loose networks of soloists to collaborate." David Brooks in The New York Times.

Physics interlude: The perfect billiards break.

2. Imagine there's no easing, it's painful if you try, Wall Street sings

Another swoon on Wall Street, as the world adjusts to life without QE. "U.S. stock markets continued a dreary 2014 with another broad decline as investors hedged against the possibility that the economic recovery is on shaky ground. Major indexes in the United States are down between 4 and 7 percent for the year, a performance tracked by markets in Europe, Asia and elsewhere in a worldwide bout of uncertainty...main programs it used to support the economy following the 2008 crisis — leaving investors guessing about how the transition to more normal monetary policy will work and what weaknesses it might expose in countries or companies that have become dependent on easy money." Howard Schneider in The Washington Post.

Yellen is sworn in. "Ms. Yellen was sworn in by Fed Gov. Daniel Tarullo, the central bank said in a statement. She succeeds Ben Bernanke, whose term ended Friday...Key questions during her term as chairwoman will be how quickly to wind down the bond program this year and when to start raising rates. The economy recently has shown signs of faster growth, though since the recession ended there have been repeated false starts." Jeffrey Sparshott in The Wall Street Journal.

Bernanke goes to Brookings. "Chairman Ben S. Bernanke joined the Brookings Institution as a distinguished fellow in residence today – just two days after leaving office as the head of the Federal Reserve and captain of the nation's economy...[I]t recently launched a new initiative known as the Hutchins Center on Fiscal and Monetary Policy, with which Bernanke will be affiliated." Ylan Q. Mui in The Washington Post.

Factory output slowed in January. "The Institute for Supply Management's index of manufacturing, in which any reading above 50 indicates expansion, fell to 51.3 in January from 56.5 in December—the biggest one-month drop since May 2011. The reading, based on a survey of corporate purchasing managers, shows the manufacturing sector is expanding, but at a sharply lower pace than last fall. The report showed widespread weakness. An index of new orders plummeted to 51.2 from 64.4, an especially sharp drop and worrying because it suggests coming months could be weaker." Neil Shah and Eric Morath in The Wall Street Journal.

Spending on home remodeling rises. "Homeowners spent $130 billion on remodeling projects last year, according to data released Monday by the U.S. Census Bureau. That was up 3.1% from 2012 and was the largest amount of home-remodeling spending since 2007, the year that the housing downturn began. Permits for remodeling jobs in the U.S. rose 5.1% last year from 2012, the largest increase since 2010 when the figures began their rebound from a 10-year low, according to permit-tracking company BuildFax." Kris Hudson in The Wall Street Journal.

Maps interlude: Where is corruption a problem?

3. Obamacare vs. the Seahawks

Seattle has a great football team — and an awesome Obamacare exchange, too. "The Seahawks certainly have something big to celebrate when they return to Seattle -- that they get to go home to what might arguably be the best-functioning health insurance exchange in the nation, of course...To learn what, exactly, sets Washington apart, I got a chance to hear from Washington Health Plan Finder executive Richard Onizuka on Monday at Academy Health's National Health Policy Conference...[W]hat stood out about Washington wasn't that it had the best preparation or plan going into the exchange. It's that the state has been pretty adaptable, shifting things around as it entered a totally new health care landscape. " Sarah Kliff in The Washington Post.

NIH and drug companies launch search for new medicines. "Ten big drug companies that have spent billions racing one another to find breakthroughs on diseases like Alzheimer's have formed an unusual pact to cooperate on a government-backed effort to accelerate the discovery of new medicines. Under a five-year collaboration to be announced on Tuesday, the companies and the National Institutes of Health have agreed to share scientists, tissue and blood samples, and data. They aim to decipher the biology behind Alzheimer's, Type 2 diabetes, rheumatoid arthritis and lupus, and to thereby identify targets for new drugs...The pact is unusual because drug companies are traditionally secretive about their science, rushing to acquire patents to protect rights to potential future drugs. The new agreement bars participants from using any discovery for their own drug research until the project makes data public on that discovery." Monica Langley and Jonathan D. Rockoff in The Wall Street Journal.

New rule grants patients direct access to lab test results. "Clinical laboratories must give patients access to their own lab-test results upon request, without going through the physician who ordered them, according to a new federal rule announced Monday by the Department of Health and Human Services. The rule, first proposed in 2011, is part of an Obama administration effort to give patients more control over their own health information." Melinda Beck in The Wall Street Journal.

Where health insurance is the least affordable. "If you are buying health coverage in the Colorado ski resort towns, the Connecticut suburbs of New York City or a bunch of otherwise low-cost rural regions of Georgia, Mississippi and Nevada, you have the misfortune of living in the most expensive insurance marketplaces under the new health law. The 10 most expensive regions also include Alaska and Vermont and large parts of Wisconsin and Wyoming. The ranking is based on the lowest price "silver" plan, which is the mid-level plan that the majority of consumers are selecting." Jordan Rau in Kaiser Health News.

The abortion rate is at a 30-year low. "[R]esearchers don't think it's the 44 abortion restrictions passed between 2008 and 2011 that have led to the decrease in the abortion rate. Instead, they point a finger at more widespread contraceptive use. The use of long-acting reversible contraceptives like intra-uterine devices which tend to be more effective, for example, has more than quadrupled over the past decade." Sarah Kliff in The Washington Post.

If the latest Obamacare lawsuit succeeds, Obamacare is in big trouble. "Another lawsuit is now being pursued, Halbig v. Sebelius, which also poses another potential threat to the Affordable Care Act. Unlike these other cases, Halbig is not rooted in weighty constitutional or political principles. Simply put, it is a nuisance lawsuit that seizes on a sloppy but obvious drafting error to undermine the obvious intent of the new law." Harold Pollack in The Washington Post.

Holy cow interlude: No, this is not a video game. It's the real-world nation of Slovenia, after four days of ice storm<.

4. Finally, the farm bill

Farm bill on verge of passage after a long three years of haggling in Congress. "After three years of arduous haggling, the Senate is expected to give final passage Tuesday to a new five-year farm bill that the House passed last week. President Obama is expected to sign it when it gets to his desk. The $956.4 billion package has sailed through Congress in recent days with little opposition, making it a rare bipartisan accomplishment in an otherwise rancorous and unproductive era." Ed O’Keefe and Kimberly Kindy in The Washington Post.

The farm bill is up for a final vote soon. Here’s why so many people hate it. "It's too expensive. The current farm bill was supposed to save money. Its backers in Congress are touting the fact that the legislation cuts $16.5 billion from the deficit over the next decade, compared with simply extending previous law. But that's a relatively small trim compared with other proposals. In its 2014 budget, for instance, the White House had asked for farm legislation that would have saved twice as much, $38 billion — mainly by slashing payouts to farmers." Brad Plumer in The Washington Post.

Yikes interlude: South Koreans drink twice as much liquor as Russians and more than four times as much as Americans.

5. Chess moves for 2014

Obama moves to the right, stressing economic opportunity rather than inequality. "For years, Mr. Obama has spoken of gaps in both income and opportunity between the privileged and everyone else in a changing economy. But his emphasis has shifted. In his State of the Union address last week, he spoke 10 times of expanding “opportunity” and twice of income inequality. That ratio was roughly flipped in his signature speech on the topic in Osawatomie, Kan., just over two years ago." Jackie Calmes in The New York Times.

President Obama, Joe Biden to headline House Democratic retreat. "President Barack Obama and Vice President Joe Biden will be the headline speakers at next week’s House Democratic retreat in Cambridge, Md., according to Democratic insiders. Obama and Biden will also host a meeting with the House Democratic Caucus at the White House on Tuesday afternoon, the White House announced Monday." John Bresnahan in Politico.

Fractures emerge between Obama and Democrats in Congress. "A phalanx of Democrats, including Senate Majority Leader Harry Reid, have announced opposition to the president's top trade initiative. Many Democrats are clamoring for Mr. Obama to act soon to allow construction of the Keystone XL pipeline—a decision the White House is expected to make before midterm elections. Vulnerable Democrats are bluntly criticizing the rollout of the 2010 health-care law. Even an under-the-radar issue such as a flood-insurance bill has been a point of tension." Janet Hook and Peter Nicholas in The Wall Street Journal.

Democrats line up for Waxman’s prime committee post. "Reps. Frank Pallone (D-N.J.) and Anna Eshoo (D-Calif.) both announced Monday that they will seek to become the top Democrat on the House Energy and Commerce Committee. That top Democrat would stand to become chairman or chairwoman if Democrats took control of the House." Aaron Blake in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

One quarter of all Super Bowl ads were made by this one companyLydia DePillis.

Just when you thought it was safe to ignore Congress—the debt ceiling returnsJia Lynn Yang.

Seattle has a great football team — and an awesome Obamacare exchange, tooSarah Kliff.

The farm bill is up for a final vote soon. Here’s why so many people hate itBrad Plumer.

Shadow Fed? Bernanke’s move to Brookings solidifies think tank’s influenceYlan Q. Mui.

The abortion rate is at a 30-year lowSarah Kliff.

If the latest Obamacare lawsuit succeeds, Obamacare is in big troubleHarold Pollack.

Et Cetera

We really don't know that much about threats to the water supplyAlexandra Berzon in The Wall Street Journal.

Preschool is having its policy momentRichard Perez-Pena and Motoko Rich in The New York Times.

Immigration advocates fight to halt deportationsDavid Nakamura in The Washington Post.

U.S. plans car-to-car warning systemMatthew L. Wald in The New York Times.

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

Wonkbook is produced with help from Michelle Williams.



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