Another week of uncertainty on the fiscal cliff
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Today in Wonkbook:the fiscal cliff; monetary policy; immigration; the economy; the Supreme Court; the Affordable Care Act; the green agenda.
Top story: Another week of uncertainty on the fiscal cliff
Obama, Boehner meet on 'fiscal cliff,' but no deal is reached. “President Obama summoned House Speaker John A. Boehner to the White House on Thursday, but their talks over the looming ‘fiscal cliff’ failed to break the impasse over taxes and clear the way for a deal to head off painful austerity measures set to hit in January. After the 50-minute session in the Oval Office, aides to both men described the meeting as a frank exchange and said the lines of communication remained open. But Boehner prepared to return to Ohio for the weekend, with no further negotiations on his schedule.” Lori Montgomery and Paul Kane in The Washington Post.
@BCApplebaum: What’s needed is a Washington DVR so that we can all skip the next two weeks of fiscal cliff nonsense.
Time is running out. “The speaker's tone — and the hostile White House response — raised the level of pessimism that a wide-ranging agreement could be reached quickly to head off hundreds of billions of dollars in automatic tax increases and spending cuts beginning next month. Adding to the sense that the two sides might not come together, rank-and-file Republicans said the leadership had not begun laying the groundwork for a major concession on taxes.” Jonathan Weisman and Jackie Calmes in The New York Times.
@damianpaletta: Lots of noise on fiscal cliff talks today but one things seems certain – it ain’t pretty.
Fiscal cliff tightwalk likely to take toll on economic growth. “Much of Washington’s focus on the ‘fiscal cliff’ is driven by two possible economic outcomes: Either the White House and Congress forge a grand bargain to resolve the budget battle and economic growth takes off, or they fail and recession hits. But the result of the fight could well be something in between: more middling growth next year as business and consumer confidence suffers from another drawn-out spectacle.” Sudeep Reddy in The Wall Street Journal.
@pourmecoffee: Obama and Boehner are meeting at 5. It’s not even about fiscal cliff. Michelle is going to bake them treats and just let them PLAY.
…But it won’t be the tax hikes crippling the economy. “Under pressure from Senate Republicans, the Congressional Research Service withdrew a September report that concluded that there was no correlation between top individual tax rates and economic growth. Republicans claimed that the report was biased in tone and faulted its methodology, and convinced the agency to remove the report from circulation. The CRS has now released a revised edition of the report that changes some of the language that Republicans had found most objectionable, bolsters the arguments cited in favor of tax cuts and clarifies its methodology. But its underlying conclusion about the Bush tax cuts remains the same.” Suzy Khimm in The Washington Post.
White House, nonprofit groups battle over charitable deductions. “The White House and the nation's most prominent charities are embroiled in a tense behind-the-scenes debate over President Obama's push to scale back the nearly century-old tax deduction on donations that the charities say is crucial for their financial health. In a series of recent meetings and calls, top White House aides have pressed nonprofit groups to line up behind the president's plan for reducing the federal deficit and averting the year-end ‘fiscal cliff,’ according to people familiar with the talks.” Jerry Markon and Peter Wallsten in The Washington Post.
@mattyglesias: I would love to publish a critique/evaluation of Boehner's proposed fiscal cliff replacement except ... he doesn't have one.
Dems divide on Medicare. “A growing number of Democrats in the Senate are ready to offer up a key concession on Medicare to try to reach a deal on the fiscal cliff: higher premium payments for wealthy seniors…Means testing won't reduce Medicare costs enough for Republicans who want a big deal on entitlements and the idea still outrages some liberal Democrats in the House and Senate who fear that it's a foot in the door to much deeper cuts to the senior-citizen health care program.” Jennifer Haberkorn and Manu Raju in Politico.
@JohnJHarwood: House GOP leadership aide: Obama-Boehner meeting today taking place because “a shakeup is required” in fiscal cliff talks
Can liberals take Medicare off the table? “The stalemate in the latest round of ‘fiscal cliff’ talks still hasn't been broken. But one thing has started to become clearer: Democrats are hardening their position against an increase in the Medicare eligibility age.” Suzy Khimm in The Washington Post.
Meanwhile, the far right menaces the GOP leadership. “The leaders of dozens of major conservative organizations joined together Thursday to jointly pen an open letter to congressional Republicans, warning them not to cave to Democratic demands to raise tax rates on the wealthy in a deal to avert the year-end ‘fiscal cliff’ or otherwise compromise on leading conservative issues with Democrats.” Rosalind S. Helderman in The Washington Post.
Poll: Actual Republicans don't want to cut or tax anything. “Peter Suderman of Reason magazine summarizes a new McClatchy-Marist poll that gave voters a suite of options for reducing the deficit. Democrats in the poll support new taxes but oppose spending cuts. As for Republicans? Well, Republicans oppose everything.” Ezra Klein in The Washington Post.
KLEIN: Honestly, Obama’s tax hike is pretty small. “The main complaint Republicans have about the White House is that it's obsessed with raising taxes. But the strangest thing about the ongoing fiscal cliff talks is how little revenue the White House is demanding…Still, the White House's relatively paltry revenue demands undermine the argument that the fiscal cliff is, for them, all about extracting the maximum level of revenue. The expiration of the Bush tax cuts presents a once-in-a-generation opportunity to sharply increase the amount of revenue the federal government takes in. For the most part, they're letting it go by.” Ezra Klein in The Washington Post.
KRUGMAN: The GOP’s existential crisis. “We are not having a debt crisis…The U.S. government is having no trouble borrowing to cover its deficit. In fact, its borrowing costs are near historic lows…No, what we're having is a political crisis, born of the fact that one of our two great political parties has reached the end of a 30-year road. The modern Republican Party's grand, radical agenda lies in ruins — but the party doesn't know how to deal with that failure, and it retains enough power to do immense damage as it strikes out in frustration.” Paul Krugman in The New York Times.
YGLESIAS: The permanent crisis “If you want to know why the fiscal-cliff talks are having such a devilishly hard time reaching resolution, you need to look behind the issues--taxes, spending, stimulus, austerity--that are dominating this month's debate and start looking ahead to the next debate. Specifically, gaze dolefully forward to February or March or maybe April when the total volume of nominal federal debt will reach the statutory cap on borrowing.” Matthew Yglesias in Slate.
Lists interlude: The best (and worst) media errors and corrections of 2012.
JINDAL: Birth-control politics. “The American College of Obstetricians and Gynecologists announced its support last month for selling oral contraceptives over the counter without a prescription in the United States. I agree with this opinion, which if embraced by the federal government would take contraception out of the political arena. As a conservative Republican, I believe that we have been stupid to let the Democrats demagogue the contraceptives issue and pretend, during debates about health-care insurance, that Republicans are somehow against birth control. It’s a disingenuous political argument they make.” Bobby Jindal in The Wall Street Journal.
COHEN: Energy, America’s hope. “With the United States running a huge deficit, the incomes of the ’99 percent’ stalled, the fiscal cliff approaching fast, the nation's dependence on external financing from China acute, and Washington gridlock a recurrent political condition, this may seem like an odd moment to be bullish on America. But I am. The main reason is the huge shift already underway in the politics of energy and oil…In other words, think of the world before the first oil shock of 1973 to get some notion of what is afoot.” Roger Cohen in The New York Times.
WADWHA: To whom, the future? “Policy makers worry about the implications of a rising China, leading some to wonder whether China will own the future. China may well defy gravity and continue on its growth trajectory for a couple more years, but I predict the growth will not last. Technology will accelerate forces that are already at play. This means the more likely scenario — the one that we should worry about — is a falling China. Such a decline will likely create greater nightmares for China's neighbors and for the United States.” Vivek Wadwha in The Washington Post.
JOHNSON: What Volcker sees. “On Monday, at the end of a long day of wrangling over technical details at the Federal Deposit Insurance Corporation's Systemic Resolution Advisory Committee, Paul A. Volcker cut to the chase. The resolution authority created by the Dodd-Frank financial reform legislation was a distinct improvement on the previous situation, making it easier to handle the failure of a single large financial institution.” Simon Johnson in The New York Times.
Music recommendations interlude: Wham!, “Last Christmas, 1984.
Monetary policy’s moment
The Fed’s ‘Great Communicator’? “Like Greenspan, the current Fed chairman, Ben S. Bernanke, also has a degree from the school of Fed-speak — in addition from Harvard and MIT. But while Greenspan was famously obfuscatory, Bernanke has pushed in the opposite direction. He has moved the central bank away from ambiguity and toward specificity, a shift that culminated in Wednesday's decision to link Fed policymaking to numeric targets for unemployment and inflation…Yet the big question that remains is whether this clearer approach has simply made the reticent economics professor a better communicator — or a more effective steward of the nation's economy.” Zachary A. Goldfarb in The Washington Post.
Why the Fed is talking. “The Fed's push to speak more clearly is partly motivated by political considerations. During the prosperous 1990s, the success of monetary policy was its own justification. After a financial crisis that the Fed failed to avert or predict, in the fourth year of a recovery that continues to disappoint, the Fed has no better defense than to explain what it is doing as clearly as possible…Ms. Yellen and her colleagues have now concluded that transparency actually enhances the impact of the Fed's policies, particularly in the current circumstance. The Fed cannot push short-term rates below zero, but it still can reduce long-term rates, which are based on the expected level of short-term rates over the life of a loan, by persuading investors that those rates will remain near zero.” Binyamin Appelbaum in The New York Times.
Meet ‘C-Lar,’ the Fed’s newest stress test for banks. “The US Federal Reserve is carrying out its first ever system-wide stress test of bank liquidity in a move that could force banks to change their funding sources. Known internally as ‘C-Lar’ — the liquidity version of the Fed's annual ‘comprehensive capital analysis and review’ — the examination only began recently. According to people familiar with the matter, it covers some of the 19 banks subject to the capital tests as well as some of the largest foreign banks with US operations.” Shahien Nasiripour in The Financial Times.
ECB says we ought to love that austerity. “The European Central Bank has weighed in on an increasingly controversial topic among economists: the effect of fiscal austerity on the economy…The ECB's conclusion is that focusing on short-term fiscal multipliers is ‘too narrow.’ In short, fiscal consolidation is great for long-run growth. And in the short run, it isn't as bad as the IMF suggests.” Brian Blackstone in The Wall Street Journal.
Europe signs off on common bank oversight. “European leaders Thursday approved joint regulation of the region's major banks, an important step in resolving the euro zone's three-year financial crisis. Finance ministers agreed that the European Central Bank would assume authority over perhaps 180 banks accounting for more than 90 percent of the assets within the 17-nation euro zone, and in other European Union nations that choose to participate.” Howard Schneider in The Washington Post.
Think the Fed has been too timid? Check out Britain and Japan. “Over the past few years, Ben Bernanke and the Federal Reserve have taken a number of unprecedented steps to lift the U.S. economy out of its malaise. But there are some economists who still think the Fed could go much, much further. And they may have finally found a willing audience over in England's central bank…There's also Japan to consider. The country has been flailing for years with dismal growth and has just officially dipped back into yet another recession. The Liberal Democratic Party, which is poised to win the parliamentary elections on Sunday, has said it might require the central bank adopt a 3 percent nominal growth target.” Brad Plumer in The Washington Post.
Photography interlude: Who runs Washington.
The moment we work out the fiscal cliff, expect a major push on immigration. “Top Obama aides are already laying the groundwork for a campaign-style operation to broaden the base of support for a mega-bill. The White House will not only target Latino voters, but also religious leaders, law enforcement and others, according to sources familiar with the administration's thinking. Officials have met in recent weeks with prominent Hispanic activists like Henry Munoz on the issue of immigration reform.” Anna Palmer in Politico.
But will it be citizenship? “Both parties are promising to use 2013 to advance long-stalled immigration legislation, but an early dispute on whether to give 11 million people in the country illegally a path to citizenship — or a legal status that stops short of that--could complicate the effort.” Laura Meckler in The Wall Street Journal.
Dangerous maps interlude: Where you can execute atheists.
How’s that economy?
Retail sales inch up in November as Americans buy cars, electronics. “Americans shelled out $412 billion in November — 0.3 percent more than in October — as rising demand for cars and electronics, as well as an early holiday shopping season, lured them online and into stores, the Commerce Department said Thursday.” Abha Bhattarai in The Washington Post.
The jobless numbers look pretty good, too. “The number of Americans filing new claims for jobless benefits fell sharply last week to a near four-year low…Initial claims for state unemployment aid fell for a fourth consecutive week, dropping by 29,000 to a seasonally adjusted 343,000, the Labor Department said on Thursday. They are now at their lowest level since early October, and within a hair of territory last seen in early 2008.” Reuters.
Oh, the places you’ll go interlude: New York City’s new Museum of Mathematics.
What the Supreme Court is up to
Hearing more ACA Lawsuits, this time on the contraceptives mandate. “The Supreme Court famously upheld most of the Affordable Care Act in June. But in a year or two we may see another riveting Supreme Court drama growing out of the health law, this one driven by the passionate objections of many religious employers to the so-called contraceptive mandate.” Stuart Taylor Jr. in Kaiser Health News.
KAHLENBERG: How the case for gay marriage undermines the case for affirmative action. “The Supreme Court's decision to hear gay-marriage cases from New York and California this spring means the justices will weigh in on two highly fraught social questions this term--same-sex marriage and affirmative action in higher education…Justice Anthony Kennedy is likely to be the swing vote in these cases, and many are predicting he will side with conservatives to limit racial preferences and with liberals to support gay marriage. Paradoxically, the very reasoning that could guide Kennedy to support marriage equality may bolster his decision to curtail race-based affirmative action, spurring colleges to adopt new approaches.” Richard D. Kahlenberg in Slate.
More photography interlude: Snapshot Serengeti, classifying animal photos.
Implementing the Affordable Care Act
Health-care reform, Massachusetts-style. “If patients stay healthy and avoid costly medical care, [doctors] get more money. This simple shift in how healthcare is paid for — long seen as key to taming costs — has been occurring in pockets of the country. But nowhere is it happening more systematically than in Massachusetts, the state that blazed a trail in 2006 by guaranteeing its residents health insurance. Now Massachusetts, a model for President Obama’s 2010 national healthcare law, may offer another template for national leaders looking to control health spending.” Noam N. Levey in The Los Angeles Times.
HHS pledges ready health-insurance exchanges for 2014. “States and the federal government will be ready to open up new insurance exchanges just a year from now, a top Health and Human Services Department (HHS) official said Thursday. Gary Cohen, the leader of the federal implementation effort, said exchanges will be operational on Jan. 1, 2014, as called for in President Obama’s signature healthcare reform law.” Sam Baker in The Hill.
How the feds ended up in charge. “Most people buying coverage on the Affordable Care Act’s exchanges will be working through a system run by the federal government, according to a new analysis. Consulting firm Avalere Health estimated Thursday that two-thirds of people likely to purchase coverage on the marketplaces will buy through a federally administered or ‘partnership’ exchange.” Elise Viebeck in The Hill.
Architectural interlude: The post-World War II churches of Europe.
The green agenda
Oil demand will remain weak, IEA says. “The International Energy Agency Wednesday slightly raised its forecast for oil demand for 2013, but said the tepid rate of global economic expansion would keep demand relatively sluggish. In its monthly market report, the Paris-based agency, which represents major energy-consuming nations, upped its forecast for global oil demand in 2013 by 110,000 barrels a day to 90.5 million barrels a day.” Dow Jones Business News.
Will the West ever solve its water woes? “[T]he best estimates suggest that demand will continue to outstrip supply, much as it has in the past decade. By 2060, the median shortfall could reach 3.2 million acre-feet (or about five times as much water as Los Angeles uses each year). The amount of irrigated farmland is also expected to shrink.” Brad Plumer in The Washington Post.
Conservatives are resisting a ‘revenue-neutral’ carbon tax. “[Conservative] organizations pushed back against proposals for a ‘revenue-neutral’ carbon tax, a design that some policy experts have floated as a way to win support from fiscal conservatives. That structure would use revenue from taxing emissions to reduce other tax rates or would return that money to consumers. But the 14 groups sending the letter warned lawmakers not to believe those claims. ‘Promises of revenue neutrality will be broken’ they argued. They added that ‘reducing U.S. emissions won't stop or delay climate change.’” Zack Colman in The Hill.
Apps interlude: The Sunlight Foundation’s ‘Sitegeist’.
Deposit insurance bill stalls in Senate Edward Wyatt in The New York Times.
Sen. Jeff Merkley's talking filibuster: How it would work. Dylan Matthews in The Washington Post.
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