from washingtonpost.com
To read more by Ezra and his team, go to Wonkblog.
(Photo by Shawn Thew/EPA)
Here's the Republican Party's problem, in two sentences: It would be a disaster for the party to shut down the government over Obamacare. But it's good for every individual Republican politician to support shutting down the government over Obamacare.
These smart-for-one, dumb-for-all problems have a name: Collective-action problems.
Politics is rife with collective-action problems. Political parties often benefit from passing a bill, or cutting a deal, even when it's in the interest of each individual politician to vote the other way. Keeping members in line during these moments is the key job of party leadership. Threats, flattery, fundraising money, and plum committee assignments are all deployed to keep members of Congress from undermining the group in order to help themselves.
The best way to understand the plight of the modern GOP is that the party leadership is no longer powerful enough to solve its collective-action problems.
In February 2011, Speaker Boehner and Majority Leader Cantor wanted to use the threat of a government shutdown to force concessions from the Obama administration. It was, after the 2010 midterms, a fight they thought they could win.
But they're doing everything possible to avoid a government shutdown now. First they tried to just move a continuing resolution to keep the government funded at current levels. Then they tried moving a resolution that kept the government funded at current levels and also held a vote on defunding Obamacare.
According to the National Review's Robert Costa, now they're
giving up: They'll move a resolution to fund the government at current levels save for Obamacare and let Sen. Ted Cruz and his merry band of radicals try and pass it through the Senate. Once it falls apart, and a shutdown is near, they hope to be able to attract the votes to keep the government open.
It's worth stepping back and recognizing what this means: Not only is the GOP's leadership unable to solve their party's collective-action problems. They have to actively pretend to be part of the problem themselves.
"What we're seeing unfold in the House is something that has animated internal House deliberations all 2013: the end of power as we knew it,"
writes Costa. Absent a Republican president or Republican nominee for president, "power has shifted away from the Capitol leadership offices to Tea Party Inc and backbench."
But the question isn't just what happens to a Republican Party that can no longer solve its collective-action problems. It's what happens to the country if the Republican Party can no longer solve its collective-action problems. Is it a government shutdown? Or is it something worse, like a debt-ceiling breach?
Wonkbook's Number of the Day: $10 billion. That's the
market consensus for how much the Fed will reduce, or "taper," the pace of its monthly asset purchases today. The central bank currently buys $85 billion a month in bonds.
Wonkbook's Graph of the Day: Eurodollar futures. (Yeah, we wonk hard. Here's a helpful
primer from the CME Group on what they are and what they tell us about monetary-policy expectations.)
Wonkbook's Top 5 Stories: 1) Fed meeting out at 2 p.m.; 2) CBO report out; 3) policies to respond to the Navy Yard shooting; 4) this is a one percent you'll love; and 5) an update on inequality.
1) Top story: Why are you Yellen about the taper?
What to expect from the huge Fed meeting that concludes today. "For the first time in months, the outcome of the meeting is genuinely in question. The Fed must decide whether to begin pulling back on the rate at which it pumps new money into the U.S. economy; it has been buying $85 billion in bonds using newly created money for the last year, but now may well be ready to start closing the spigot. It would be the most concrete step the Fed has taken toward trying to wind down its aggressive interventions to support economic growth...Assuming the Fed begins its long-telegraphed “taper” of bond purchases, Bernanke will face the core question of: Why is the central bank taking its foot off the accelerator of growth at a time measures of job growth and consumer spending have showed signs of slowing and inflation has been quite low?"
Neil Irwin inThe Washington Post.
Wonks, open your scheduling app: The FOMC meeting statement is released at 2:00 p.m. EST, and the press conference will begin at 2:30 p.m.
What bond purchases would be reduced in a taper? It's an important question. "Some Wall Street economists are convinced the Fed will pull back on Treasurys first and keep buying mortgage-backed securities at their current pace...[G]oing into this meeting, Fed officials hadn’t settled on a strategy, according to interviews with officials and their public comments. Instead, there were two lines of thinking at the Fed on how to structure a pullback from the bond programs and the issue would be discussed at the meeting. One line of thinking is that the Fed should pull back on Treasury purchases first, because mortgage bond purchases do more to boost the economy and thus should be left in place longer...The second line of thinking is that the Fed should keep its exit from its bond buying programs simple...So the Fed should reduce its purchases of Treasurys and mortgage-backed securities proportionately in the name of simplicity."
Jon Hilsenrath and Victoria McGrane in The Wall Street Journal.
@D_Branchflower: Is fed really going to taper given weak data on cpi jobs consumer confdnce retail sales new home purchases mrtgge apps & rising bond yields?
The stock market expects the Fed to taper. "U.S. stock investors are braced for the Federal Reserve to take the first step toward cutting back on its monetary stimulus, but the outlook for equities may depend more on whether the Fed signals continued "tapering" is a foregone conclusion. Many investors say there would likely be few ripples from a decision by the Fed to make a one-off reduction in the bond-market purchases it has been employing. In that scenario, future decisions by the Fed to scale back bond buying would remain "data dependent"—in other words, based on the pace of the economic recovery. However, some say stocks could be in for a selloff should the Fed signal it has decided to set a steady course toward winding down its so-called quantitative-easing efforts. For the most part, stock investors appear to expect the Fed to announce Wednesday that it will cut its $85 billion-a-month purchases of U.S. Treasurys and mortgage-backed securities by $10 billion, or at most $15 billion."
Chris Dietrich, Alexandra Scaggs, and Matt Jarzemsky in The Wall Street Journal.
@ReformedBroker: My baseline expectations for the Taper: $10 billion in Treasurys $5 billion in MBS $5 billion in Amazon Prime subscriptions
Inflation? What inflation? "In August, overall prices were up 1.5% from a year earlier, slower than the 2% pace in July but faster than the recent low of 1.1% in April. Core prices were up 1.8% in August, rising one-tenth of a percentage point from the previous month to its highest rate since March...Inflation, as measured by the PCE index, was 1.4% for July, its most recent reading."
Sarah Portlock in The Wall Street Journal.
Homebuilders confident. "The National Association of Home Builders, an industry trade group, said Tuesday that its housing-market index stood at 58 this month, unchanged from last month's figure, which was revised slightly downward. Even with the revision, the index remained at the highest level since November 2005, when housing was in the thick of a historic boom."
Josh Mitchell in The Wall Street Journal.
@morningmoneyben: What if villains make off with the FOMC statement tomorrow??? It would be a "Taper Paper Caper!" Thanks I'll show myself out.
Yellen vs. Kohn is the new Summers vs. Yellen. "Both Yellen and Kohn would take office as arguably the most qualified Fed chief in history. Each has served as the No. 2 official of the institution -- Yellen from 2010 to the present, Kohn from 2006 to 2010. Each had extensive experience at the institution before that -- Yellen as a governor and as president of the San Francisco Fed for a combined nine years, Kohn as a governor for four years and as a staffer for more than three decades before that, including a long run as a senior adviser to Alan Greenspan."
Neil Irwin in The Washington Post.
@JoshZumbrun: George likely to dissent if no taper; Bullard could if they taper with soft CPI; Rosengren and/or Evans could due to weak labor markets
Janet Yellen backed the repeal of Glass-Steagall in 1997. That’s not such a big deal. "[S]upporting the repeal of Glass-Steagall in 1997 doesn't say that much about somebody's opinions on regulating Wall Street today. And, in general, we don't know very much about Janet Yellen's views on the subject. As I've argued before, the support for her on this dimension (as opposed to on the monetary policy dimension) really comes from an anybody-but-Summers impulse."
Ezra Klein in The Washington Post.
@TheStalwart: Reminder to full the entire @themoneygame crew tomorrow for Taper Day: @bysamro @mamtabadkar @stevenperlberg @rjwile @boes_
...And we'll sneak one more big fin-reg story in: SEC to unveil pay-ratio proposal. "The SEC has been struggling with the initiative since 2010, when it was tucked into a massive financial overhaul law in response to public outrage about excessive executive pay. Earlier attempts to get the plan off the ground faltered after fierce opposition from corporate lobbyists, who cast the mandate as overly burdensome...On Wednesday, the SEC is scheduled to unveil how it plans to carry out the law."
Dina ElBoghdady in The Washington Post.
Top opinion
SLAUGHTER: Muzzling the dogs of war. "Sitting in Paris as the United States’s first ambassador to France, Thomas Jefferson reflected on how the new US government could avoid the errors of European “despots” who kept their people subjugated through war and debt. Writing to James Madison, he observed that the US Constitution had at least checked “the Dog of war,” by transferring “the power of letting him loose from the Executive to the Legislative body, from those who are to spend to those who are to pay.” "
Anne-Marie Slaughter in Project Syndicate.
SUNSTEIN: How poverty takes over the mind. "Harvard University economist Sendhil Mullainathan and Princeton University psychologist Eldar Shafir found that being poor, and having to manage serious financial problems, can be a lot like going through life with no sleep. The reason is that if you are poor, you are likely to be preoccupied with your economic situation, and your mind has less room for other endeavors. This claim has important implications for how we think about poverty and for how we select policies designed to help poor people."
Cass R. Sunstein in Bloomberg.
BERNSTEIN: Charting a path to shared prosperity. "This is a remarkable and persistent disconnection between growth and living standards. For well over a decade, households that would have gotten ahead in previous periods of our economic history have failed to do so. Even when the top was outpacing the rest, as in the 1980s and 1990s, middle and low-income households made up some ground. Poverty rates declined at least somewhat in the 1980s expansion, and fell considerably more in the full-employment economy of the latter 1990s."
Jared Bernstein in The New York Times.
KONCZAL: A loss for Summers is a win for America. "The Summers candidacy ultimately failed because the criticisms leveled against him, amassed over his career, made him look particularly unsuited for the Federal Reserve. Those supporting him pointed to his sharp intellect. By this, they meant the intelligence of a fox -- knowing a little about a lot of different topics. But the Fed chairmanship is the ultimate hedgehog job -- having to know everything about two narrow but crucial topics: the economics of money and financial regulation."
Mike Konczal in Al Jazeera America.
2) What you need to know from the CBO report
First things first: Here's the
link to the report. Here's the CBO's own
summary.
Congressional Budget Office
Budget office warns that national debt is eventually unsustainable. "The report projected the deficit in 2015 to be equal to 2.1 percent of the economy’s output, or just one-fifth of the peak shortfall at the height of the recession in 2009. But starting in 2016, deficits are projected to rise again as more baby boomers begin drawing from Medicare, Medicaid and Social Security — the fast-growing entitlement programs, which Democrats and Republicans cannot agree on how to rein in...The budget office said that by 2023, the annual deficit would rise to an estimated 3.5 percent of the G.D.P., which is just beyond the level that many economists consider sustainable in a growing economy. By 2038, it would be 6.5 percent."
Jackie Calmes in The New York Times.
Year-end tax cuts have nearly doubled projected size of national debt, CBO says. "The biggest driver of federal spending -- health care programs – is rising more slowly than in the past, according to a new report by the nonpartisan Congressional Budget Office. But a New Year’s Day law that permanently extended the George W. Bush-era tax cuts for the vast majority of Americans is projected to drive borrowing from outside investors to 100 percent of the economy by 2038. Previous projections showed the debt drifting down to 52 percent of GDP by that time...To shrink the debt back down to historic levels – under 40 percent of the economy – Congress would have to raise taxes or cut spending by roughly $4 trillion over the next decade, the CBO said. That means enacting savings worth 2 percent of the economy for each of the next 25 years, or $350 billion in 2014."
Lori Montgomery and Paul Kane in The Washington Post.
3) For the Navy Yard shooting, a menu of policy responses
Navy Yard gunman had history of mental illness, checkered military career, officials say. "While the motive in Monday’s attack remains unclear, FBI officials said they were examining the mental history of Alexis, who was killed Monday in a gun battle with police after killing at least 12 people at the Navy Yard. Officials at a Rhode Island military base — who received an August report from the Newport Police Department that Alexis was hearing voices — are cooperating in the inquiry, according to Lisa Rama, a public affairs officer at Naval Station Newport...Alexis was cited at least eight times for misconduct for offenses as minor as a traffic ticket and showing up late for work but also as serious as insubordination and disorderly conduct."
Sari Horwitz, Craig Whitlock and Jerry Markon in The Washington Post.
Broad review of government’s security check system launched. "President Obama directed his budget office to conduct a government-wide review of security standards for contractors and employees across federal agencies. Defense Secretary Chuck Hagel ordered a broad review into security and access to military installations worldwide. And leading members of Congress said they would launch investigations into how federal agencies assess the security risks of potential hires."
Carol Leonnig and Ed O'Keefe in The Washington Post.
Report faults Navy's base-access vetting. "An inspector general's report released Tuesday accused the Navy of granting access to some of its bases without proper background checks...
The report says one system used by the Navy, the Navy Contractor Access Control System, or NCACS, "did not effectively mitigate access control risks." As a result, the report says, at least 52 convicted felons received routine access to Navy bases, "placing military personnel, dependents, civilians and installations at an increased security risk.""
Julian E. Barnes in The Wall Street Journal.
Here’s why mass shooters are so difficult to stop. "The problem is, the type of lone shooter who attacked the Navy Yard and Fort Hood, especially an insider who doesn't need to break in, is still among the hardest kind of threat to protect against. The federal anti-terrorism standards still focus strongly on maximizing standoff distance and preventing building collapse as the most economical way to protect people against attacks, but that doesn't do much good when a gunman's already inside the building."
Lydia DePillis in The Washington Post.
Here’s the full explanation of just how lax the Navy Yard’s access controls were. "Yesterday, a federal official leaked some key information in a Department of Defense Inspector General report on how the Navy, in an attempt to cut costs, had let down its guard in vetting contractors for access to at least 10 military bases. This afternoon, the document went live online...In 2010 through 2012, the Navy outsourced out its ID processes to an Oregon-based company called Eid Passport. They were in charge of performing contractor background checks using public records -- which weren't always "up to date, complete, accurate, or available" -- and issuing credentials through a system called Rapidgate. The Navy allowed those background checks to take the place of its standard vetting process for Department of Defense employees."
Lydia DePillis in The Washington Post.
By the numbers: Government contractors and security clearances. "3.6 million: The total number of people with confidential or secret-level security clearance. 1.4 million: The total number of people with top-security clearance. More than 4.9 million: The number of federal government workers and contractors with security clearances in 2012. More than $1 billion: The amount the Office of Personnel Management (OPM) received in 2011 to conduct more than 2 million background investigations. $4,005: The base price for a top secret clearance investigation conducted by the OPM in 2012. $260: The base price of a secret clearance conducted by the OPM. 18: The number of OPM and contract background investigators and record searchers who have been criminally convicted. 54: The number of defense department contractors criminally charged with fraud between 2001 and 2011."
Masuma Ahuja in The Washington Post.
Obama calls for gun control in wake of Navy Yard shooting. "President Obama called on Congress on Tuesday to revisit gun control legislation, saying in the wake of Monday's deadly mass shooting at the Washington Navy Yard that lawmakers should take what he considers "basic actions" to toughen the nation's gun laws. In an interview with the Spanish-language television network Telemundo, Obama said the country's background check system for gun buyers is so weak it makes the United States vulnerable to mass shootings."
Philip Rucker in The Washington Post.
Navy Yard shooting unlikely to jump-start the debate over tougher gun control laws. "[T]here is little expectation that the tragic event will generate enough political momentum to produce any new legislation...The events come at a time of shifting public sentiment on guns. Public support for stricter laws has faded since April, when the Senate failed to advance a bipartisan proposal to expand the federal background check system for gun sales. The recent recall of two Colorado state legislators who supported stricter state gun laws is also viewed as a warning to lawmakers who favor stricter gun control laws."
Ed O'Keefe in The Washington Post.
...The Senate basically just said "thanks, but no thanks" on another attempt at gun control. "There still aren’t 60 votes for the commercial background check legislation devised by Sens. Joe Manchin (D-W.Va.) and Pat Toomey (R-Pa.) and Senate leadership is loath to pursue another failed gun push. “We are going to move this up as quickly as we can, but we’ve got to have the votes. I hope we get them but we don’t have them now,” said Senate Majority Leader Harry Reid (D-Nev.)...“I don’t think we can try to legislate after every mass shooting,” said Illinois Sen. Mark Kirk, one of four Republicans to support Manchin-Toomey."
Burgess Everett in Politico.
In the states, renewed gun debate hasn’t produced many results. "Gun-control advocates had hoped to pass new legislation in states where Democrats control the legislature and governor’s office. But only a handful of blue states — New York, California, Colorado, Connecticut, Illinois, Delaware and Maryland — advanced substantive new laws...But gun-rights advocates have pushed new laws in about half the states to relax restrictions on concealed-carry laws...And several states, including Alabama, Arkansas, Indiana, Louisiana, South Dakota, Tennessee, Texas and Virginia, passed laws that loosen restrictions on guns carried by school safety officials."
Reid Wilson in The Washington Post.
4) The one percent you'll love
Medical-cost inflation is lowest in half-century. "The prices paid for medical care in July rose just 1% from a year earlier, the slowest annual rate of growth since the early 1960s, according to Commerce Department data. Health-care increases now trail overall inflation, which itself has been historically slow in recent years. The price data help explain why growth in overall health spending has slowed down in the past several years. The trend, if continued, has big implications for the government's finances because health-care costs are the biggest long-term driver of the federal deficit."
Eric Morath and Louise Radnofsky in The Wall Street Journal.
House GOP weighs more aggressive push against Obamacare. "The leadership is giving increased consideration to stripping out funding for the healthcare law in a continuing resolution to keep the government running after Sept. 30, Republican lawmakers said as they exited a meeting of the leadership Tuesday afternoon. A senior GOP aide said it was "likely" the House would send to the Senate a continuing resolution that defunded the healthcare law but that leaders had decided not to combine it with legislation raising the debt ceiling."
Russell Berman in The Hill.
The Republican civil war over defunding/delaying Obamacare is getting bloody. "A growing number of Republicans are scoffing at Louisiana Sen. David Vitter’s push to stop federal contributions that will help pay for health coverage for lawmakers and their staff under the new Obamacare exchanges. Vitter’s crusade has effectively put his GOP colleagues in the unenviable position of hurting themselves and their staff financially or siding with another political attack on a law the party universally despises. The latest pushback is another sign of how the long-running GOP fight to repeal Obamacare has suddenly degenerated into an internal Republican battle, prompting widespread concerns among party elders."
Manu Raju and Jennifer Haberkorn in Politico.
Meet the House Republicans who support ‘Delay Obamacare’ bill. "Congress has less than two weeks to pass a short-term spending plan before a possible government shutdown Oct. 1, so Speaker John A. Boehner (R-Ohio) and his lieutenants are scrambling this week to come up with a strategy that an overwhelming majority of House Republicans can support...More than 50 House Republicans aligned with those groups are cosponsoring legislation introduced last week by Rep. Tom Graves (R-Ga.) that would fund the federal government in part by delaying implementation of the health-care law until Jan. 2015."
Ed O'Keefe in The Washington Post.
Appeals court rules in favor of Obamacare birth control. "A U.S. appeals court ruled Tuesday that a for-profit manufacturing corporation must cover birth control in its employee health plan despite the religious beliefs of the company's owners. The decision from the Sixth Circuit Court of Appeals represents a victory for the Obama administration in a series of ongoing fights over the contraception policy, which critics see as a violation of religious freedom."
Elise Viebeck in The Hill.
Most states with few insured citizens aren’t expanding Medicaid under Obamacare. "States whose citizens are most likely to be uninsured are also more likely than not to refuse extra aid under the president’s health-care law. Six of the 10 states with the lowest rates of coverage have no plans to expand low-income aid under Obamacare, according to an analysis of new Census data. Meanwhile, eight of the 10 states with the highest rates plan to allow the expansion...Of the 25 states with the highest rates of health coverage, only seven are refusing expansion at this time. Of the half of states with the lowest coverage rates, 15 have no plans to expand Medicaid."
Niraj Chokshi in The Washington Post.
Three million people gained insurance in 2012. Don’t thank Obamacare. "New Census data show that the country's uninsured rate fell from 15.7 percent in 2011 to 15.4 percent in 2012. Nearly all of that change appears to be attributable to enrollment in public programs such as Medicaid and Medicaid. Coverage in private health plans, like those that employers purchase, didn't budge."
Sarah Kliff inThe Washington Post.
How calorie counts can backfire. "The idea behind calorie counts -- which Obamacare forced chain restaurants to add to their menus -- was that one reason Americans were gaining weight was that prepared food was often deceptively caloric...The theory was that if calorie information was right there in front of them, Americans would, of course, choose lower calorie options. Few considered that the opposite might happen...McDonald's is using the calorie count for the exact opposite purpose public-health advocates intended: It's using high calorie counts to convey what an incredible deal their food is."
Ezra Klein in The Washington Post.
5) Inequality brings us back to the era of acid-washed jeans. Both should be out of style.
The typical American family makes less than it did in 1989. "he most depressing result comes when you look at the longer view of household incomes in the United States. This chart shows real median household income over the past 25 years; that is, the money earned, in inflation-adjusted dollars, by the family at the exact middle of the income distribution...In 1989, the median American household made $51,681 in current dollars (the 2012 number, again, was $51,017). That means that 24 years ago, a middle class American family was making more than the a middle class family was making one year ago."
Neil Irwin in The Washington Post.
Does your family make over $232,000? Congrats, you’re in the top 5 percent. "If you're in a family of four, and your family's income surpasses $66,000 a year, you're doing better than the typical American family. If you're making six figures, then you're doing much better than the typical American family. If you're making $200,000 or more, you're in truly rarified territory."
Dylan Matthews in The Washington Post.
US to include home-care workers in wage and hours law. "Under the new rule, home care aides, unlike baby sitters, would be covered under the Fair Labor Standards Act, the nation’s main wage and hour law. In an unusual move, the administration said the new regulation would not take effect until Jan. 1, 2015, even though regulations often take effect 60 days after being issued. Industry experts say most of these workers are already paid at least the minimum wage, but many do not receive a time-and-a-half overtime premium when they work more than 40 hours a week. About 20 states exclude home care workers from their wage and hour laws."
Steven Greenhouse in The New York Times.
The White House is giving 2 million health-care workers a raise. "Since 1974, the minimum wage has had something called the "companionship exemption," which allows people who perform companionship roles – babysitting, for example – to be paid a wage lower than the the federal minimum. For decades, home health aides existed in this companionship category and were exempted from federal minimum wage protections...Right now, the average wage for a home health worker is $9.70 an hour, which is above the minimum wage of $7.25, meaning that there is a significant number already earning above the wage threshold. For these workers, the overtime protections could be especially relevant."
Sarah Kliff in The Washington Post.
4 million more people would be poor if it weren’t for food stamps. "It's a particularly important statistic, given that House Republicans are moving a bill that would cut funding for the SNAP program by $39 billion over a 10-year period. Farmers and the elderly are mobilizing against it, hoping that conservatives from poorer districts won't have the stomach to cut their constituents' benefits by that much."
Lydia DePillis in The Washington Post.
Wonkblog Roundup
Et Cetera
Wonkbook is produced with help from Michelle Williams.
