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: 2.1 to 2.3 percent. That's the year's projected economic growth, according to the Federal Reserve, down from a previous projection of nearly 3 percent.
Wonkbook’s Chart of the Day: 21 charts that explain how America is changing.
Wonkbook's Top 5 Stories: (1) Speed bumps ahead for transportation funding; (2) the Fed's inflation-worker conundrum; (3) Obamacare data dump; (4) wonky labor roundup; and (5) what to expect in the House GOP leadership races.
1. Top story: Getting up to speed on the rapidly changing transportation-funding debate
Transportation secretary to Congress: We need more moolah, and fast. "Transportation Secretary Anthony Foxx said Tuesday that time is quickly running out for Congress to approve a new round of road and transit funding. Foxx said the latest projections from budget analysts show that the transportation department’s Highway Trust Fund will run out of money in August, a full month before the scheduled expiration of federal transportation funding." Keith Laing in The Hill.
Chart: The Highway Trust Fund's balance is dangerously low. Department of Transportation.
Bump at the pump? Bipartisan duo of senators propose 12-cent hike in U.S. gas tax. "The proposal to hike the 18.4-cent federal tax for the first time since 1993 came from Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) and won quick endorsement from an array of advocates ranging from road builders to AAA. In addition to increasing the tax by 6 cents in each of the next two years, the senators want the rate indexed to inflation. Failure to keep pace with inflation over the past 20 years, along with steadily increasing fuel economy, has caused the Federal Highway Trust Fund that receives the money to sink to a dangerous level." Ashley Halsey III in The Washington Post.
How does the Highway Trust Fund work? Amanda Bayhi in Better Roads.
America’s transportation needs are huge. Too bad the way we fund them is broken. Lydia DePillis in The Washington Post.
Primary source: Senate must face fiscal reality in pending highway bill. Sen. Bob Corker (R-Tenn.) in The Washington Post.
Until recently, policymakers tried to do everything but raise gas taxes. "One concept backed by Senators Harry Reid and Rand Paul is to use the proceeds from a windfall of taxes on repatriated corporate profits. An even less likely idea from House Speaker John Boehner is to cut back on mail delivery and put the savings into the trust fund. Both ideas have drawbacks, and they fight the founding principle of the Highway Trust Fund, which is that construction and maintenance of highways and bridges should be paid for by the people who use them....Another alternative, of course, is just to spend less money on fixing highways — let the potholes get a little bigger and the bridges a little rustier. But the American people don’t seem to like that option." Peter Coy in Bloomberg Businessweek.
The White House's recent idea: Pair new tolls with corporate tax reforms. "With pressure mounting to avert a transportation funding crisis this summer, the Obama administration Tuesday opened the door for states to collect tolls on interstate highways to raise revenue for roadway repairs. The proposal, contained in a four-year, $302 billion White House transportation bill, would reverse a long-standing federal prohibition on most interstate tolling....While providing tolling as an option to states, the White House proposal relies on funding from a series of corporate tax reforms, most of them one-time revenue streams that would provide a four-year bridge." Ashley Halsey III in The Washington Post.
Gas-tax hikes are the simplest solution, but an unpopular one. "It's widely viewed as the simplest fix to solve the potential crisis. But in a midterm-election year, no one has even floated the possibility until now. Tax hikes in general are broadly unpopular, and a gas-tax increase would hit a huge number of Americans where it would hurt most. But Murphy said the tough choice would pay dividends for the fund in the long run, and Corker said it was an 'embarrassment' that no one has spoke about this potential solution already....It's not yet clear what kind of support the plan will have in the Senate — where one-third of members are facing re-election bids — or in the House. But it has picked up support from groups like the Chamber of Commerce and AAA." Brett Logiurato in Business Insider.
Poll: Majority of riders willing to endure gas-tax hike. Keith Laing in The Hill.
Can Congress approve a long-term fix in time? If not, senators seek a six-month patch. "Senate Finance Committee members...including committee Chairman Ron Wyden, told reporters today that lawmakers in both parties want to make sure the trust can meet its obligations through the end of this year as Congress pursues a longer-term measure that includes broader changes to transportation programs. Wyden, an Oregon Democrat, and other lawmakers said there is still no consensus yet on how to finance the so-called 'patch.'" Laura Litvan in Bloomberg.
The states have wildly varying ideas in mind in case the trust fund runs out. "The issue is a hot topic in Missouri....The state's Republican-led Legislature recently passed a resolution to ask voters for a sales-tax increase....Several other states, including New Hampshire, have recently passed fuel-tax increases, and others such as Michigan are debating ways to boost funding for road and transit projects....Vermont has freed up $15 million to cover a potential federal shortfall, but that would buy it only eight or nine weeks before it would have to consider curbing projects....Georgia will use about $130 million in state bonds to support...projects but will stop contracting out some new ones in July without a federal aid solution." Jon Kamp and Kristina Peterson in The Wall Street Journal.
Another looming transportation-funding problem: Airports. "Airports and airlines disagreed Wednesday at a House hearing about whether to raise fees on tickets to pay for airport construction projects. The fees, called passenger-facility charges, raise $2.8 billion each year to pay for projects such as runway improvements or gate expansions, but airport executives say it isn't enough. The fees are capped at $4.50 per leg or $18 per round trip and were last raised in 2000. The fees are added to a passenger's ticket, depending on the airports they use. Airport executives told the House Transportation subcommittee on aviation that the money hasn't kept pace with the growth in passengers, so they propose to raise the cap to $8.50 per leg." Bart Jansen in USA Today.
Other transportation reads:
Congress slams GM over "deadly breakdown." David Shepardson and Melissa Burden in The Detroit News.
NHTSA to extend ignition-switch investigation to 1.2 million Chrysler vehicles. Hilary Stout and Christopher Jensen in The New York Times.
USA TODAY: Raise the gas tax. "As the summer driving season begins, motorists are already navigating overcrowded, pothole-pocked highways and deteriorating bridges. Soon, thanks to a gridlocked Congress, drivers might also contend with abandoned construction sites. The federal Highway Trust Fund is just weeks from running out of money, which would halt a number of road and transit improvement projects. There's talk in Washington of various quick fixes. But no consideration is being given to providing the trust fund with the stable income source it so desperately needs." Editorial Board.
MORRISSEY: The postal service is not a piggy bank. "There is a shell game currently underway on Capitol Hill. The House Republican Leadership are trying to use the elimination of essential postal services as a means to pay for temporarily extending the exhausted Highway Trust Fund. Unfortunately for taxpayers and postal customers, the game is rigged. The reality is that all the shells are empty." Rafe Morrissey in Roll Call.
THOMA: Why monetary policy is so tricky for the Fed. "How far is the economy from a full recovery? When should Federal Reserve policymakers, who are finishing their two-day meeting today, begin raising interest rates? Should the Fed speed the pace of its tapering of quantitative easing? All of these questions depend critically on a piece of data economists call the output gap, the difference between actual output and the economy's potential, or the full employment level. Unfortunately, however, both of these quantities are difficult to measure, leaving policymakers at least partially in the dark as to the state of the economy." Mark Thoma in CBS News.
HILLYER: The death of civilized political discourse? "Chris Cillizza wrote a very important column about how people thinking about politics increasingly believe, and say, that not only are their philosophical opponents wrong, but that they are stupid, or even moronic, and that their very motives are suspect, even evil. Cillizza rightly argues that this is a disturbing trend that should be resisted whenever possible. But, at risk of doing nothing more than prove his point even more strongly, I actually think these attitudes run more one way than the other — at least in political discourse by elected officials and well established news outlets and journals of opinion." Quin Hillyer in The Washington Post.
CHINN: Sunk costs and considering intervention in Iraq. "One might conclude that we cannot allow the sacrifice of treasure (and blood, see here) be in vain. However, economic theory suggests that sunk costs should not be considered in evaluating whether an enterprise should be undertaken. Rather, the (realistically appraised) costs and benefits of given options should be compared — that is a prospective evaluation is called for. Moreover, this debate should be explicit and public. That is because, should Iraq descend into chaos or break up, there will doubtless be recriminations emanating from certain circles. In this regard, we do not need a replay of the 'Who Lost China?' debate (as if it was America’s to lose), which distorted American foreign policy for decades." Menzie Chinn in Econbrowser.
ORNSTEIN: Setting the record straight on a polarizing debate. "At first glance, the Pew study shows that both sides have moved sharply — which is true. That top line has made opponents of the idea of asymmetric polarization almost gleeful. But the value of this study, based on 10,000 interviews done in a solid methodological way, lies in its nuances. Here it is clear that many changes, especially in levels of antipathy toward those on the other side, or toward the value of compromise, have occurred significantly more strongly on the right. But it is the top line that has drawn the attention of participants in both of the aforementioned debates and that demands an additional response beyond that given by my longtime colleague and writing partner Tom Mann." Norm Ornstein in National Journal.
SEPKOWITZ: Why U.S. health care is so expensive and pathetic. "It is not an exaggeration to say that the health care community in the U.S. is vibrant, that our innovation is unprecedented, that because of discoveries made right here in the U.S. of A., realistic hope for treatments against previously untreatable diseases is at an all-time high, that our medical training is the envy of the world, that patients with means fly to the U.S. for their various angioplasties and chemotherapy and hip replacements. They are voting with their feet on the high quality of care in the U.S. How, then, did we as a population fall so far off the rails? The simple answer is that it is not simple." Kent Sepkowitz in The Daily Beast.
World Cup interlude: No one loves watching the World Cup more than this dog.
2. Parsing Yellen's words: How will the Fed tackle rates without triggering worker-harming inflation?
Markets mostly ignored the FOMC's dot charts. It was all about Yellen's words. "Investors trying to divine the outlook for Federal Reserve interest-rate moves are ignoring the dots and focusing on Chair Janet Yellen’s words. Fed officials today released forecasts, represented as dots on charts, showing that starting next year interest-rates would rise from zero faster than previously expected....The median rate is calculated from a series of anonymous dots, or pin-point forecasts, that accompany officials’ outlook for growth, unemployment and inflation....David Robin, managing director and interest-rate strategist at Newedge USA LLC, the derivatives and futures arm of Societe Generale, said 'the dots don’t matter.'" Craig Torres and Steve Matthews in Bloomberg.
When will the Fed start hiking rates? "Signaling their confidence that the economy is on track for growth strong enough to keep reducing unemployment, Federal Reserve officials nudged up their projections for short-term interest rates in 2015 and 2016, though they slightly reduced their outlook for rates in the longer-run....With the job market gradually improving, the Fed is...slowly turning its attention to the timing and pace of short-term interest rate increases. It has kept short-term rates near zero since December 2008 and isn't planning to start raising them until next year." Jon Hilsenrath in The Wall Street Journal.
But the Fed policymakers haven't figured out how to do it. "Federal Reserve Chairwoman Janet Yellen said Wednesday that central bankers are still working out the mechanics of how they will raise short-term interest rates in the future....At question is a plan the Fed announced in 2011 that laid out the steps the central bank would take to push monetary policy back toward more normal levels. Since then, Fed officials have suggested major parts of that plan are being reconsidered. At the same time, the central bank has been testing new tools it hopes will better control short-term rates, that will likely supplant, at least for a time, the Fed’s traditional strategy of adjusting short-term interest rates by tweaking the level of reserves available to the banking system." Michael S. Derby in The Wall Street Journal.
Background reading: The Fed disagrees on what to do next: When will it end reinvestments? Ylan Q. Mui in The Washington Post.
Fed's conundrum: Holding down rates without sparking inflation that harms workers. "Four years ago, 6.8 million Americans were out of work for six months or longer. Half as many are now. That might sound like good news, but it isn't. Nearly four-fifths of those who became long-term unemployed during the worst period of the downturn have since migrated to the fringes of the job market....Only one in five, according to the study, has returned to lasting full-time work since 2008. The plight of these millions is now at the center of a contentious debate among top U.S. officials....Deliberations over the nature of the long-term unemployed are particularly lively within the Federal Reserve." Jon Hilsenrath and Victoria McGrane in The Wall Street Journal.
Charts: Behind the Fed rate debate. The Wall Street Journal.
How Yellen feels about rising inflation: Don't sweat it — for now. "Federal Reserve Chair Janet Yellen is downplaying concerns about rising inflation despite recent signs that price increases are picking up. Consumer prices have risen 2.1 percent in the past 12 months, the Labor Department said Tuesday. If maintained over time, that rate would exceed the Fed's target for inflation of 2 percent and signal a potential need to raise short-term interest rates from near zero. Higher rates could possibly limit economic growth. But at a news conference, Yellen is suggesting that rising inflation may prove temporary." Josh Boak in the Associated Press.
Yellen says she isn't giving up on those long-term unemployed just yet. "Federal Reserve Board Chair Janet Yellen on Wednesday said that she remains hopeful that many of the long-term unemployed, as well as people who have dropped out of the labor market completely, will eventually be drawn back in as the economy improved. She conceded, however, that there may be some degree of 'permanent damage' to the labor force from the Great Recession." Rob Garver in The Fiscal Times.
What Yellen didn't say: It's time to declare QE3 effectively over. "There was something missing from Federal Reserve Chair Janet Yellen’s press conference Wednesday. Gone was the endless introspection over how the central bank should wind down its trillion-dollar bond-buying program. Neither Yellen nor the reporters questioning her seemed to doubt that the Fed would continue to reduce its purchases by $10 billion a meeting until the program ends altogether late this year. This helicopter is ready for landing. Quantitative easing is effectively over." Ylan Q. Mui in The Washington Post.
As expected, the Fed cut its asset purchases another $10 billion and lowered its growth forecasts. "The nation’s central bank lowered its forecast for growth this year to between 2.1 percent and 2.3 percent, down from its previous prediction of nearly 3 percent. The mediocre expansion is primarily the result of a disastrous winter in which the economy actually shrank by 1 percent....The Fed kept its estimate of the rate of growth next year unchanged at 3 percent to 3.2 percent....That description of the nation's economic situation is stronger than the one given after the Fed’s last meeting in April — and enough to convince officials to continue scaling back support for the economy." Ylan Q. Mui in The Washington Post.
Explainer: 3 things the world can teach the Fed. Ylan Q. Mui in The Washington Post.
Why the growth forecasts matter: They're statements of policy. Timothy B. Lee in Vox.
Other economic/financial reads:
Investment flows return to emerging markets. Michael S. Arnold, Patrick McGroarty and Emre Peker in The Wall Street Journal.
Housing market sluggish due to millions of missing households. Chris Arnold in NPR.
Animals interlude: The Running of the Goats.
3. The numbers are in on Obamacare premiums, for now and next year
Premiums rise at biggest insurers, fall at rivals. "Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching. That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year....At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets." Louise Radnofsky in The Wall Street Journal.
Chart: A state-by-state breakdown. The Wall Street Journal.
Subsidies cut premiums by 76 percent on average. "The Americans who qualify for tax credits through the new federal insurance exchange are paying an average of $82 a month in premiums for their coverage — about one-fourth the bill they would have faced without such financial help, according to a new government analysis. But the analysis shows wide variations among states....Overall, the report shows, the average monthly tax credit this year is $264. Without the federal help, the average premium chosen by people eligible for a tax credit would have been $346 per month, and the subsidy lowered the consumers’ premiums, on average, by 76 percent." Amy Goldstein in The Washington Post.
Explainer: The major findings of the HHS report. Ricardo Alonso-Zaldivar in the Associated Press.
More charts: Millions of Americans are paying less for Obamacare than they are for cable. German Lopez in Vox.
Sticker shock not so shocking, conservative economist says. "A new analysis from a conservative health-care economist suggests that Obamacare sticker shock wasn't nearly as steep as other studies previously suggested. Consumers who bought their own coverage between 2010 and 2012 saw the average cost of their plan increase between 14 percent and 28 percent when they switched to new coverage under the Affordable Care Act....That's smaller than the effect measured by other studies, including one from the Manhattan Institute this morning finding that individual premiums increased 49 percent between 2013 and 2014." Jason Millman in The Washington Post.
Report: Modest premium hikes await next year. "Across the nine-state group, average monthly silver premiums will rise by 8 percent from $324 in 2014 to $350 in 2015. In particular, average monthly silver premiums will rise in eight of the states, ranging from a 2.5 percent increase ($8) in Rhode Island to a 16 percent average increase ($54) in Indiana. Oregon was the only state examined in which average premiums will decrease for 2015 — falling 1.4 percent or $3 per month." Matthew Eyles in Avalere Health.
Other health care reads:
The VA is finally conducting monthly investigations at hospitals. German Lopez in Vox.
What we now know about cancelled non-group plans. Jon Gabel in Health Affairs.
E-cigarette makers under fire in U.S. Senate. Jennifer C. Kerr in the Associated Press.
Report: Government warnings about antidepressants may have led to more suicide attempts. Brady Dennis in the The Washington Post.
Fewer women are having labor induced early. That's good for children's health. Katherine Hobson in NPR.
Science interlude: Gone: How erasing billions of birds shocked us.
4. A trove of data on labor
U.S. workers can't get no satisfaction. "Fewer than half of American workers were satisfied with their jobs in 2013, according to a new survey from the Conference Board. In almost every individual measure—from wages and retirement plans to vacation policies and commutes — workers are less content with their jobs than they were in 1987, when the research group started tracking the topic. Back then, 61.1% of workers said they were satisfied with their work. The decline suggests a steady erosion of trust and loyalty between employers and employees." Lauren Weber in The Wall Street Journal.
Liberal think tank urges Obama to act on inequality. "Eight million mostly female workers and their families rely on low-wage jobs supported by the government's $1.3tn annual spending on goods and services, according to a new report. The report by Demos, which examines how the federal contracting system contributes to inequality, found that 21 million people — 7% of the US population — rely on low-wage jobs in the federally dependent workforce. Demos is a liberal public policy thinktank that focuses on economic issues." Karen McVeigh in The Guardian.
Americans on average say they sleep nine hours a night. Really? What gives? "To arrive at their sleep estimates, the BLS asks respondents what time they go to bed at night, and what time they get out of bed in the morning. But people do any number of, ahem, 'non-sleep activities' in bed before they actually fall asleep at night, or after they wake up. These activities, which include things like personal grooming and reading in bed, are not reported separately in the BLS survey. 'We may be capturing some of those activities right before they fall asleep,' Denton told me. Another crucial caveat is that the BLS sleep estimates also include time spent napping." Christopher Ingraham in The Washington Post.
Charts: Young whippersnappers: Children eliminate one hour of leisure time for working parents each day. Eric Morath in The Wall Street Journal.
Are Boomers too tired or too broke to launch new businesses? "Over the past decade...nonprofits have started programs to help aging workers launch second acts as entrepreneurs — and extend their income-earning years amid fears that Americans aren’t saving enough for retirement. Despite those efforts, research published last month by the Small Business Administration showed that workers approaching the traditional retirement age of 65 are less likely to go into business for themselves. Now a new survey presents a puzzling set of results. Baby boomers are just as likely to see entrepreneurial opportunities as their younger counterparts, but they’re less likely to be entrepreneurs." Patrick Clark in Bloomberg Businessweek.
Can big data boost the paltry number of female, minority tech workers? "The need for more diversity in the high-tech sector took on renewed urgency recently when Google voluntarily released the diversity stats of its workforce. Among the startling data points: Just 2 percent of the company's workers are African-American and just 3 percent are Hispanic. Whites comprise 61 percent of Google's employees, and 70 percent are men." Nancy Cook in National Journal.
Primary source: Workforce diversity at Yahoo.
Depressing, but true: Studies show link between long-term joblessness and depression. Jon Hilsenrath in The Wall Street Journal.
Educated workers are flocking to San Francisco, the middle class is moving to Atlanta. Matthew Yglesias in Vox.
Obama interlude: Smithsonian Institution creates first 3-D portrait of the president.
5. Previewing the House leadership elections
How the leadership races could result in more conservative policy. "House of Representatives Republican lawmakers pressured candidates for party leadership jobs on Wednesday to put a higher priority on conservative principles in setting the legislative agenda for the chamber. The scramble for support could prompt House Republicans to draw harder lines on some controversial measures in the coming months, such as funding bills for highway construction, the Export-Import Bank and government agencies." Julia Edwards and David Lawder in Reuters.
McCarthy, Scalise look strong. "House conservatives failed Wednesday morning with a last-ditch effort to delay Thursday's leadership elections by one week, a victory for well-organized candidates like Majority Whip Kevin McCarthy and Rep. Steve Scalise, both of whom are favored to win their respective races. Conservatives have quietly been talking for several days about attempting to move back Thursday's election, saying the short turnaround...was not fair to candidates who are not as well-known throughout the conference." Tim Alberta and Sarah Mimms in National Journal.
Whoever wins the race: Don't get too comfy. This is an audition for November. "Members across the ideological spectrum are frustrated with the policy-making process under Speaker John Boehner and tired of the feuding between factions. Majority Leader Eric Cantor’s stunning primary loss provided an opportunity to address both issues by bringing fresh blood into the leadership and pressing something of a reset button. But Thursday’s election is unlikely to calm the waters. In fact, things might get a whole lot rockier with November’s conference elections looming on the horizon." Tim Alberta and Billy House in National Journal.
Southern discomfort in the House? "An aggrieved bloc of Southern House Republicans is flexing its political muscle, trying to stake a regional claim to increased congressional power after nearly four years of feeling neglected. As the House GOP reshuffles its leadership, these Southern Republicans are demanding more of the spoils of a congressional majority that they feel responsible for creating in 2010, wanting at least one seat at the leadership table and more chairman’s gavels on some of the most important committees. The current situation is in stark contrast to the clout wielded by that region after the original Republican revolution in 1994." Paul Kane in The Washington Post.
Other political reads:
Long read: The big lobotomy — how Republicans made Congress stupid. Paul Glastris and Haley Sweetland Edwards in Washington Monthly.
As bills pile up, Congress contemplates a lame duck. Billy House in National Journal.
Obama's poll pain may not be GOP's gain. Dante Chinni in The Wall Street Journal.
Music interlude: OK Go's latest eye-popping music video.
How the American diet has failed. Roberto A. Ferdman.
The average American gets nearly nine hours of sleep each day. Yes, you read that right. Christopher Ingraham.
What would it cost to "fix" Obamacare? Jason Millman.
Federal Reserve lowers economic forecast but continues to cut bond purchases. Ylan Q. Mui.
Iraq’s biggest oil refinery is on fire. How important is that? Steven Mufson.
Obamacare ‘sticker shock’ not so shocking, conservative economist suggests. Jason Millman.
Should states be doing more to protect college students? Jonnelle Marte.
Three lessons the world can teach the Federal Reserve. Ylan Q. Mui.
Yesterday's news we didn't have room for: Jindal moves to withdraw Louisiana from Common Core standards. Lyndsey Layton in The Washington Post.
Many displaced by Superstorm Sandy still await housing help. Laura Kusisto and Josh Dawsey in The Wall Street Journal.
The government has a proud, long history of reforming Washington's football team. Matt Berman in National Journal.
U.S. bill on email privacy gathers majority support in the House. Alina Selyukh in Reuters.
Wall Street's latest fad is built on sand. Anna Driver in Reuters.
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