Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara. To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here.
Wonkbook’s Number of the Day: $81.8 trillion. That's how much wealth American households and nonprofits hold, a new record, as the rich keep getting richer.
Wonkbook’s Chart of the Day: Do Americans think the American Dream is dead?
Wonkbook's Top 5 Stories: (1) Happy 1st Snowden Anniversary!; (2) and Happy Jobs Friday!; (3) say hello to Secretary Burwell; (4) a "Flash Boys" effect?; and (5) a deal on VA reform.
1. One year post-Snowden, how have tech and privacy been affected?
Congress is still stuck on NSA reform. "Senate lawmakers expressed doubt about legislation to overhaul the National Security Agency’s bulk-data collection program Thursday as the U.S. marked the first anniversary of surveillance revelations from whistleblower Edward Snowden. Last month, the House overwhelmingly passed the USA Freedom Act, legislation that would move bulk data collection from the NSA to phone companies. It’s not clear yet what the Senate will do about the legislation." Amy Schatz in Re/code.
Senators agree on the need for reform, but are split on the how. "As a Senate panel took its first look Thursday at a key surveillance reform bill on the one-year anniversary of Edward Snowden’s first disclosures, lawmakers agreed on only one thing: The measure needs work....Technology companies and privacy organizations worried about surveillance have warned — as some lawmakers did Thursday — that the measure doesn’t go far enough to actually prevent the bulk data collection it tries to ban. But several other lawmakers worried that putting phone companies in such a pivotal position for national security was a mistake." Alex Byers in Politico.
What has really changed? "A year later, Edward Snowden is an international celebrity, and the United States is internationally infamous for its profoundly invasive and technologically advanced surveillance practices. The American public is more cynical about how the government treats privacy issues, and the president is a little bit more outspoken in talking about how the intelligence community works. But only a little. All those changes are pretty subjective, though. When it comes down to the specific, measurable impact of the Snowden leaks on the country and the world, you have to wade into the weeds a little bit, and separate out the difference between more insight and actual change. As it turns out, the world today looks a lot the world before Snowden. Just angrier and more confused." Adam Clark Estes in Gizmodo.
If it's any consolation to privacy advocates... "Perhaps the biggest victory for civil liberties advocates has been heightened public awareness around government surveillance and data collection." Andrea Peterson in The Washington Post.
5 questions one year after Snowden. Joseph Marks in Politico.
What are the experts saying on the first-year anniversary? Electronic Frontier Foundation.
Not-so-breaking news: Still no sign of Snowden in any courtroom. "Edward Snowden faces charges that threaten to send him to prison for decades. Prosecutors in Virginia accuse him of stealing government property and sharing defense and intelligence secrets with people unauthorized to see them. But one year after his leak shook the Obama administration, Snowden is nowhere near a courtroom." Carrie Johnson in NPR.
Tech companies are losing trust overseas. "Whatever you may think about Edward Snowden the man — is he a traitor or a hero? — one fact is indisputable. His leaks shook the U.S. technology industry to its core. And the reverberations keep on coming. Take Cisco. The Silicon Valley giant is now at risk of losing its once-stellar reputation with foreign customers — at the exact same moment it needs to grow abroad." Aarti Shahani in NPR.
And they're beefing up their security to avoid mass spying. "Instead of aggressively lobbying Washington for reform, Google Inc, Microsoft Corp and other tech companies have made security advancements their top priority, adopting tools that make blanket interception of Internet activity more difficult....As part of a 'Reset the Net' campaign now reaching a mainstream audience, Google on Wednesday said it was releasing a test version of a program allowing Gmail users to keep email encrypted until it reaches other Gmail users, without the company decrypting it in transit to display advertising." Joseph Menn in Reuters.
Have we reached a new Internet era? More regulations, and higher consumer costs, are on the way. "Any hopes of retaining the light-touch regulation of the internet’s early days, when governments were grappling with its implications, already looked like wishful thinking. But the shock from the Snowden disclosures has greatly accelerated the shift. However it plays out in detail, the direction is clear. Regulations will be tougher and courts more prone to set limits....One result of all of this, inevitably, will be higher costs....These may be costs worth paying. But in the wake of the Snowden disclosures, there is a danger of excessive reactions that cut into the potential benefits of digital services." Richard Waters in The Financial Times.
Judge to feds: Don't toss out that surveillance data. "A federal judge affirmed Thursday that the U.S. Government must preserve records of National Security Agency surveillance relevant to ongoing lawsuits challenging the legality of the practice, including data gathered under a controversial provision allowing harvesting of foreigners' U.S.-based e-mail and social media accounts. Acting on a request from the Electronic Froniter Foundation, U.S. District Court Judge Jeffrey White said evidence about the government's use of Section 702 is relevant to the case and must be preserved." Josh Gerstein in Politico.
Obama interlude: The president's workout video.
McELWEE AND DALY: Is it time to ditch GDP? "Imagine this: your state is thinking about building a new coal plant. Gross domestic product measures how much money that project would produce. But it can’t account for the children who get asthma or the people who die from that air pollution. And that’s a problem. What was once a highly technical debate about the failures of conventional economic metrics is fast becoming a world movement to unseat GDP and replace it with something better. In America, many states are finding new, more holistic measures of progress. Already, Maryland, Oregon and Vermont have begun using the genuine progress indicator (GPI)." Sean McElwee and Lew Daly in The Washington Post.
KRUGMAN: A climate domino? "It’s true that America, acting alone, can’t save the planet. We need international cooperation. That, however, is precisely why we need the new policy....It’s fairly certain that action in the U.S. would lead to corresponding action in Europe and Japan. That leaves China....We certainly don’t want to count on Chinese altruism. But we don’t have to. China is enormously dependent on access to advanced-country markets — a lot of the coal it burns can be attributed, directly or indirectly, to its export business — and it knows that it would put this access at risk if it refused to play any role in protecting the planet." Paul Krugman in The New York Times.
RAMPELL: Seattle's bold minimum-wage experiment. "That’s exactly what it is: a relatively unprecedented experiment whose effects on workers, businesses and the local economy are unknowable. Anyone who claims otherwise is either lying or misguided. Despite literally hundreds of studies focusing on the minimum wage, top economists are still uncertain about the consequences of raising it. In a survey of several dozen elite academics last year, exactly zero said they had a strong sense of what happens to the lowest-skilled workers when you require companies to pay them more." Catherine Rampell in The Washington Post.
CHAIT: Has Obama saved the Earth or doomed it? "Liberal reactions to President Obama’s power-plant regulations have spanned a wide gamut....The only real difference in these putatively different assessments is the standard against which Obama is being held. Has Obama done everything within his power to protect future generations against climate change? Yes. Is everything within his power enough? No. There are several ways in which Obama’s power is limited....This is not to absolve Obama of any responsibility for the long-term future. He needs to set the predicate for the long-term green revolution as best as he can." Jonathan Chait in New York Magazine.
LEVINE: The SEC will keep thinking about high-speed trading. "The SEC's core view is that the fundamental business model of high frequency trading is fine. There are probably some abuses at the margins, and shedding some light on those margins will be enough to correct those abuses. But for the most part, White thinks, our market structure is nothing to be embarrassed about, so there's no reason to fear broader disclosure. To be fair, White's speech is not just about disclosure. In particular, whatever you think about the ordinary-course economic impact of high-frequency trading, you might worry that unchecked algorithms can occasionally go haywire and destabilize markets." Matt Levine in Bloomberg View.
SMITH: What happens when the economy baffles economists? "The uncomfortable truth is this: The reason we don’t really know why recessions happen, or how to fight them, is that we don’t have the tools to study them properly. This is the situation biologists were in when they were trying to fight disease before they had microscopes. Not only did they not have the right tools, they didn’t even have any way of knowing what the right tools would be! So I can’t tell you when macroeconomics will have a real breakthrough....The fact is, there are just some big problems that mankind doesn’t know how to solve yet." Noah Smith in Bloomberg View.
2. What will we learn in the jobs report?
We may see a report that underscores the recovery's resilience... "U.S. employers likely maintained a solid pace of hiring in May, returning employment to its pre-recession level and offering confirmation the economy has snapped back from a winter slump. The government's closely watched jobs report on Friday is expected to show that nonfarm payrolls increased by 218,000 positions, according to a Reuters poll of economists. That would be a deceleration from April's outsized 288,000 job gain, when hiring was still bouncing back from a winter lull, but it would mark a fourth straight month with gains above 200,000 and an important milestone in the economy's recovery." Lucia Mutikani in Reuters.
Explainer: What to look for in Friday's jobs report. Eric Morath in The Wall Street Journal.
...and that we've recovered all the jobs lost in the recession. "Back in January of 2008, we had 138,365,000 jobs. As of April, we were at 138,252,000 jobs. That jobs gap of 114,000 jobs is very narrow and an even vaguely healthy economy should be able to add that much in May. Continued declines in the number of people filing for unemployment insurance suggests that nothing terrible happened in May and we should expect to beat the January 2008 number. That will mean more people are at work than at any time before in American history." Matthew Yglesias in Vox.
Why is it so hard to define unemployment? "What does it mean to be unemployed? Depends on what country you’re in....There is universal agreement that unemployed people meet two basic requirements: They don’t have a job, and they want a job. Those characteristics separate the unemployed from, say, your 90-year-old grandmother who is retired and has no interest in working It is the third requirement that gets messy: Unemployed people must also be looking for work. But what counts as 'looking for work'? Applying for a job? Scanning a job board? Updating your résumé? Signing up for LinkedIn? The difficulty in settling on a single definition becomes clear when comparing the United States to our neighbors in the north." Ylan Q. Mui in The Washington Post.
Retail sales have been strong. That's a good sign for the economy. "Good weather and sales promotion in stores drove consumers into malls in May as the summer shopping season began. Major chain stores posted a 4.3% sales increase in May compared with the same month a year earlier in figures released Thursday, beating analysts' expectations of a 3.9% rise, according to Thomson Reuters' tally of nine big retailers. Stripping out the effect of drug stores, last month's retail sales were up 4.4%....Healthy retail sales, along with a pickup in areas such as manufacturing and construction, are giving a boost to the U.S. economy, according to a Federal Reserve survey released earlier this month." Shan Li in the Los Angeles Times.
Looking ahead, jobless claims show a continuing strong labor market. "The number of Americans filing new claims for unemployment benefits rose last week, but the underlying trend continued to point to a firming labor market. Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 312,000 for the week ended May 31, the Labor Department said on Thursday. While jobless claims have been choppy in recent weeks because of problems seasonally adjusting the data around moving holidays such as Easter and Passover, they have continued to suggest the jobs market was strengthening." Lucia Mutikani in Reuters.
Across the ponds, the interest-rate situation shows that things aren't looking so sanguine. "The European Central Bank is now doing everything short of quantitative easing to belatedly try to stop the continent's slow slide toward a Japanese-style lost decade — or worse. After hinting that it was prepared to take bold, or at least some, action in the face of still-rising unemployment and still-falling inflation, the ECB unveiled a trio of new measures at its June meeting: First, it cut interest rates about as much as they can be cut. Specifically, it lowered its main refinancing rate from 0.25 percent to 0.15 percent, and the rate it pays on bank deposits from 0 to negative 0.1 percent. That's right, it's now charging banks to hold money with them overnight." Matt O'Brien in The Washington Post.
Astronomy interlude: A beautiful, colorful image of our cosmos from NASA.
3. Say hello to HHS Secretary Burwell
Burwell's textbook campaign. "She assiduously courted lawmakers. Promised to be more transparent and responsive. Won them over with her private-sector credentials. In short, Sylvia Mathews Burwell ran a textbook campaign for one of the most controversial posts in the administration: implementing Obamacare. With her overwhelming confirmation Thursday to succeed Kathleen Sebelius at Health and Human Services, Burwell has already started to cultivate a friendlier relationship with Republicans — one that could ease some of the tensions between the Hill and HHS simmering for four years over Obamacare. And her skillful navigation of what could have been a tricky confirmation process could serve as a case study for future Obama cabinet nominees." Seung Min Kim and Jennifer Haberkorn in Politico.
Related: The roll-call vote in the Senate. Associated Press.
Early start: As she arrives, the government is overhauling the Obamacare website. "But the makeover—and the tight timeline to accomplish it—are raising concerns that consumers could face another rocky rollout this fall when they return to the site to choose health plans. Some key back-end functions, including a system to automate payments to insurers, are running behind schedule....Among the changes in the new version of HealthCare.gov: a revamp of the site's consumer-facing portion including the application for coverage most people will use, as well as the comparison tool that lets them shop for plans," Spencer E. Ante, Anna Wilde Matthews and Louise Radnofksy in The Wall Street Journal.
A lot fewer Americans may end up paying the penalty for not having insurance. "Four million people are projected to pay the U.S. penalty for not carrying health insurance next year, about one-third less than previously estimated, after the Obama administration created exemptions from the fine. The Patient Protection and Affordable Care Act requires most Americans to carry insurance starting this year, or pay a tax of as much as 1 percent of income. The Congressional Budget Office lowered its estimate of the number of people who will pay that fine in a report released yesterday, saying the government will take in $3 billion less than expected from the payments." Alex Wayne in Bloomberg.
New milestone for uninsured rate: 15.6 percent in the first quarter, the lowest since 2008. Gallup.
Trying to make sense of looming Obamacare premium hikes? Mind the benchmark. "Health insurance premiums grew on average 10 percent annually in the three years before ObamaCare went into effect according to a new study. Critics of the Affordable Care Act have warned premiums will soar under the rules and regulations of the law. But until now there has been little data available with which to compare the premium increases. A study from the Commonwealth Fund published Thursday found premiums in 22 states grew on average 10 percent each year from 2008 to 2010. “These findings provide a benchmark to compare future trends against...” said David Blumenthal, president of the Commonwealth Fund." Ferdous Al-Faruque in The Hill.
An Obamacare delay you might not have heard about is having quite the effect. "The Obama administration delayed employee choice in 2014 for nearly the three dozen SHOP marketplaces that the federal government is running — those exchanges are open for business, but employers determine which insurance plans their employees can pick, just like how things worked before the ACA. The administration had also given states with federal SHOPs until this past Monday to request another year-long delay of the employee choice program. Without the choice feature, advocates fear the SHOP exchanges won't be as much as a draw for businesses....Enrollment in the SHOP exchanges have gotten off to a slow start since October." Jason Millman in The Washington Post.
Other health care reads:
Is the GOP's Obamacare repeal effort losing its zeal? Sam Baker in National Journal.
Animals interlude: Dear kitten...
4. A busy day of regulatory news, punctuated by the SEC
The SEC is trying to catch up with trading technologies. "Securities and Exchange Commission Chairman Mary Jo White laid out a proposal Thursday that aims to help regulators cope with a technological revolution that has turned stock trading into an endeavor driven and dominated by fast computers — sometimes with disastrous results. It could take years before the various initiatives she outlined come to fruition, if they take off at all. But the plan marks a significant first step for an agency that’s struggled to keep up with the technological prowess of the traders and markets it oversees." Dina ElBoghdady in The Washington Post.
...including high-speed trading. Maybe 'Flash Boys' is having somewhat of an effect? "White said she has numerous proposals in the works, including an 'anti-disruptive trading' rule to rein in aggressive short-term trading by high-frequency traders during vulnerable market conditions, and a plan to force more proprietary trading shops to register with regulators and open their books for inspection. She also said her staff is working on measures to improve how trading firms manage risks around their use of computer algorithms."
Not just high-speed trading, but also 'dark pools.' "White added the SEC is working on a handful of transparency measures beyond high-speed trading. One such rule would require alternative trading venues such as dark pools and brokerage internalizers to disclose more to regulators and the public about how they operate. Dark pools allow investors to execute trades anonymously and do not make trading data available until after the trade is complete. Another proposal would seek to mitigate potential conflicts of interest at brokerages by requiring more disclosure on how they handle orders for large institutional investors." Susan N. Lynch in The Washington Post.
In other regulatory news, what might result from the GM report? "If Ms. Barra was hoping the investigation by Anton R. Valukas, a former United States attorney hired by G.M., would allow the automaker to hit the reset button on the worst safety crisis in its history, many outsiders saw the report as powerful ammunition in continuing their struggles with the company — over compensation for crash victims, potential criminal behavior by employees and fixes to a regulatory system that allowed the defective ignition switch to go uncorrected for more than a decade....A variety of legislative proposals are growing from the ignition switch crisis." Matthew L. Wald and Rachel Abrams in The New York Times.
And new insights from a BP oil spill report. "The steel drill pipe on BP’s Macondo exploration well in the Gulf of Mexico buckled under extreme pressure and kept the blowout preventer from sealing the well during the April 2010 disaster that sank the Deepwater Horizon rig, according to a new report....In its report, the Chemical Safety and Hazard Investigation Board said that the blowout preventer’s blind shear ram — an emergency hydraulic device with two sharp, powerful cutting blades — probably did activate on the night of April 20, contrary to the conclusions reached by some other investigations. But the device ended up puncturing the off-center pipe, sending huge volumes of oil and gas to the surface and triggering the massive oil spill, the board said." Steven Mufson in The Washington Post.
Cars interlude: The world's fastest police cars.
5. What does the Senate's VA deal do?
We have a deal on VA reform. "Senators announced a broad proposal Thursday to address health-care failures at the Department of Veterans Affairs that would authorize spending $500 million to hire more doctors and nurses, allow veterans to be cared for outside the overburdened system and give the next veterans secretary greater authority to fire employees for incompetence. The bipartisan deal comes less than a week after Veterans Affairs Secretary Eric K. Shinseki was forced to resign when investigators reported that thousands of veterans were routinely subjected to long delays before they could get the care they needed, and that employees took extensive steps to cover up the problem." Ed O'Keefe in The Washington Post.
Explainer: What the proposal would do. German Lopez in Vox.
Mark your calendars, wonks: VA watchdogs to offer testimony before Congress on Monday. Josh Hicks in The Washington Post.
A VA nominee hits the dust. "Reports have linked Jeffrey Murawsky—who was Obama's choice to serve as the department's next undersecretary for health — to an Illinois facility where staff allegedly placed veterans on such secret waiting lists for medical appointments. He was also a physician at the facility, and he technically remains on staff. Murawsky asked the White House and Sloan Gibson, the VA's acting secretary, to pull his nomination to be the department's next undersecretary for health." Jordain Carney in National Journal.
Dancing animals interlude: Watch these kittens dance!
Less than zero: Europe introduces negative interest rates to save its economy. Matt O'Brien.
Just 13 percent of uninsured people will pay the Obamacare penalty, report predicts. Jason Millman.
What our reasons for moving say about the state of the economy. Emily Badger.
Sen. Elizabeth Warren wants you to be able to refinance your student loans. Max Ehrenfreund.
This is why it’s so hard to define unemployment. Ylan Q. Mui.
How Medicaid lowers high school dropout rates and leads to more college grads. Emily Badger.
Are extreme swings in home prices a thing of the past? Dina ElBoghdady.
These states want another Obamacare delay. Jason Millman.
It’s time to abolish the GDP. Sean McElwee and Lew Daly.
"Jeopardy’s" top female player ever talks gender and that "Simpsons" episode where Chief Wiggum stages "Man of La Mancha" in jail. Christopher Ingraham.
Oklahoma pulls out of Common Core. Caitlin Emma in Politico.
China working to cap greenhouse-gas emissions as soon as possible, Xie says. Alex Morales in Bloomberg.
$4.5 billion needed for brain research initiative, report says. Sonali Basak in Bloomberg.
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Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.