In other words, the Bush tax cuts expire on Dec. 31. The automatic spending cuts begin on Dec. 31. The debt ceiling likely won’t come due till February, or perhaps even March. So the scenario in which we reach a debt ceiling showdown is a scenario in which the two parties have already failed to come to an agreement on spending and taxes.

That is to say, it’s a scenario in which we’ve already reached the fiscal cliff and fallen over the edge. It’s a scenario in which the Bush tax cuts have probably expired, and the spending cuts have probably begun. It’s a scenario in which the markets are already in some amount of turmoil, and the forecasters are already sharply warning that Congress is dragging the country into a double-dip recession. It’s a scenario in which the two parties are already under tremendous pressure, in which Washington has been in some sort of semi-crisis for months, and in which all the possible deals have already been tried and failed. (It’s also a scenario, incidentally, in which our projected deficits are much lower, because our expected tax revenues are so much higher.)

The alternative possibility is that Congress has passed, and the president has signed, some sort of short-term patch to prevent the tax cuts from expiring and the spending cuts from triggering. But Boehner just radically reduced the odds of that: Why would Democrats patch the Bush tax cuts, which give them leverage, just so Boehner could provoke a debt-ceiling crisis in order to give his party leverage?

So we’re not likely to have a “debt-ceiling crisis.” We’re either likely to solve our fiscal problems early in the year in way that defuses Boehner’s debt-ceiling threat or we’re likely to spend 2013 in a state of permanent crisis in which Congress lights the economy on fire by failing on the Bush tax cuts, the automatic spending cuts, the debt ceiling, and the appropriation bills needed to keep the federal government open.

That’s not a scenario that looks like August 2011, when the debt ceiling was the only thing on the docket. It’s an economic crisis that looks more like September 2008, when Lehman was collapsing. And in that world, it’s so hard to predict the resulting financial chaos, public outrage, interest group pressure, and political terror that it’s almost impossible to say anything about how the crisis would be resolved, or who might benefit.

]]> http://feeds.washingtonpost.com/click.phdo?i=25b612058f58af7c182c79e72b068adc http://www.washingtonpost.com/blogs/ezra-klein/post/boehners-debt-ceiling-crisis-would-be-so-much-worse-than-you-think/2012/05/16/gIQAzXe1TU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/boehners-debt-ceiling-crisis-would-be-so-much-worse-than-you-think/2012/05/16/gIQAzXe1TU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/Fragment/SysConfig/WebPortal/twpweb/rss/mobile/blog-entry.jpp?id=1000.4.1436286021 http://www.washingtonpost.com/blogs/ezra-klein/post/boehners-debt-ceiling-crisis-would-be-so-much-worse-than-you-think/2012/05/16/gIQAzXe1TU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/boehners-debt-ceiling-crisis-would-be-so-much-worse-than-you-think/2012/05/16/gIQAzXe1TU_blog.html http://www.washingtonpost.com/blogs/ezra-klein/post/boehners-debt-ceiling-crisis-would-be-so-much-worse-than-you-think/2012/05/16/gIQAzXe1TU_search.html 1000.4.1436286021 f663ebf8-9f7a-11e1-b635-cd65c275a1e2 Wed, 16 May 2012 12:22:00 EST Wed, 16 May 2012 12:23:02 EST 20120516172302 The Washington Post /WashingtonPost/Content/Blogs/ezra-klein/201205/the debt ceiling nightmare scenario.xml /WashingtonPost/Content/Blogs/ezra-klein/201205/the debt ceiling nightmare scenario.xml BlogStory ezra-klein.dwp:carousel/ezra-klein_carousel.dwc:story BlogStory The Washington Post Let’s say you were an ordinary person living in Greece and had a stash of euros deposited in your local bank. You’ve been watching all the political chaos unfold on TV and listening to chatter about how Greece might exit the euro altogether. What would you do?

And that’s exactly what a lot of Greeks have been doing these past two years — withdrawing about €2 to €3 billion worth of euros from the country each month. Lately, though, these withdrawals have been accelerating. A lot. On Monday, Greek depositors took out some €700 million in a single day, sending their euros elsewhere for safekeeping. It’s a rational move by those individuals. The problem, though, is that if everyone in Greece does this, it could inadvertently get Greece kicked out of the euro.

After all, someone needs to replace the lost euros in those Greek banks. Otherwise the banks can’t keep functioning. Recently, Greece’s central bank has stepped in and provided banks with emergency loans — some €60 billion all told. But there are limits to how much aid the central bank can offer ( having to do with collateral ). In theory, the Bank of Greece could get permission from the European Central Bank to inject even more euros into the banking system. But at some point the ECB may just decide it’s not worth pouring endless euros into rickety banks in an unstable country that might leave anyway.

In the meantime, the Greek government can’t get its hands on enough euros, either. Many of its attempts to raise revenue are failing. For instance, as the Financial Times’ Masa Serdarevic reports, the government recently tried to force people to pay property taxes by folding them in with electricity bills. In response, Greeks simply stopped paying their electricity bills.

So at a certain point, Greece could face a situation in which it no longer has enough euros for its day-to-day operations. Banks and ATMs could no longer dispense euro notes. Civil servants would have to be paid in IOUs. Intense pressure would grow on the government to introduce a brand-new currency — to bring back the drachma, say.

At that point, the country would have no choice but to leave the euro. “Exit, in other words, becomes a fait accompli,” writes Ryan Avent. “The debate over whether or not Greece ought to leave then becomes moot.”

Now, it’s not clear that Greece has reached this stage. For one, Greek people (for whatever reason) aren’t taking all of their euros out of Greek banks — about 75 percent of deposits still remain, or about €160 billion. And it’s still an open question as to whether the European Central Bank will pull the plug on Greece or whether European technocrats will, instead, do everything they can to hold the euro zone together. But that’s how a bank panic in Greece could become self-sustaining. As Paul Mason puts it, the fate of the euro may now rest in the hands of Greece’s bank customers.

Related: FAQ: What’s wrong with Greece? And can it be fixed?

Of course he will. For one thing, it worked well for him in 2011. Republicans got more than $900 billion in immediate spending cuts, as well as $1.2 trillion in triggered spending cuts -- though they don't much like the $500 billion or so of those cuts scheduled to fall on the Pentagon. They also drove President Obama's approval ratings beneath 40 percent. And while I'm not one who thinks Republicans intentionally tank the economy to undermine Obama, there's little doubt that the effect of the debt-ceiling debacle was to set back the recovery, brightening Republican prospects and darkening Democratic ones. The fact is that it's easier to be sanguine about economic showdowns when you're not the ones in charge.

For another, it's Boehner's only option in 2012. The Democrats, for once, have nothing but fiscal leverage. They've got the expiration of the Bush tax cuts, which all Republicans would hate and many Democrats would welcome. They've got the aforementioned spending trigger, which Republicans really have begun to fear for its cuts to defense spending. They can do nothing -- or, more likely, offer Republicans a deal they can't accept -- and the resulting paralysis will swing fiscal policy far, far, far to the left. Threatening to default on the national debt is Boehner's only piece of counter-leverage.

So of course Boehner will try and use the debt ceiling as leverage again. And again. And again. It's pretty clear that, at this point, there's no going back to the time when debt-ceiling increases came smoothly. If I were the market, I'd take the fact that the leader of one of the two parties has publicly said that he "welcomes" debt-ceiling showdowns as evidence that the United States is almost certain to default on its debt -- if only temporarily -- within the next decade or so.

The question is what, aside from complain, Democrats and the business community will do to stop him. Somehow, the debt ceiling needs to be taken off the table once and for all, either because Republicans forced a default in a way that they were blamed for the consequences and scared into never doing it again or because the president successfully pulled off one of the more creative maneuvers suggested during last year's showdown (Bill Clinton, for instance, argued that Obama should invoke the Fourteenth Amendment -- which says "the validity of the public debt of the United States ... shall not be questioned" -- to raise the debt ceiling unilaterally).

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RCP Obama vs. Romney: Obama +1.8%; 7-day change: Obama +1.6%.

RCP Obama approval: 48.0%; 7-day change: +0.7%.

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Top stories

1) Boehner threatened another debt-mageddon "Washington braced Tuesday for a replay of last summer’s tense battle over the burgeoning national debt as House Speaker John A. Boehner threatened again to block an increase in the federal debt ceiling without significant new cuts in spending. Treasury Secretary Timothy F. Geithner and other senior Democrats quickly blasted the Ohio Republican, arguing that his ultimatum could put the nation’s credit rating -- and the broader economy -- at risk early next year, when the debt is expected to hit its $16.4 trillion limit." Lori Montgomery in The Washington Post.

@damianpaletta: Boehner's debt ceiling "line in the sand" is very similar to what he said last year; Definitely got the attention of White House and D's

@ObsoleteDogma: Shorter Boehner: Regulatory uncertainty is bad. But default uncertainty is good.

INTERVIEW: Sen. Tom Coburn on defusing the debt bomb.

READ: Mitt Romney’s remarks on the debt.

@MichaelSLinden: As a fiscal policy analyst, I'd like to thank Mitt Romney for offering no specifics whatsoever so I can go home at a normal time tonight.

2) Greece failed to form a new government, triggering new elections. "The threat of a full economic collapse in Greece escalated Tuesday after warring political factions here failed to forge a new government, triggering fresh elections and heightening chances that this rudderless Mediterranean nation could be forced to abandon the euro...A nation in danger of running out of cash to operate the government, and where fearful residents in recent days have been rapidly withdrawing more of their savings from Greek banks, faces uncertain new elections next month. Opinion surveys have shown that Syriza, a party that wants to break the terms of Greece’s bailout deal and that came in a surprise second in the last vote, is polling in first place...European finance ministers -- whose taxpayers have largely funded the bailout for Greece -- were quick to push back Tuesday. Given the potential shock waves if Greece is forced to leave the euro zone, there have been suggestions in recent days that European officials might show more lenience with Athens." Anthony Faiola in The Washington Post.

Surging bank withdrawals in Greece sparked fears of a bank run. "Greek depositors withdrew €700 million ($898 million) from the country's banks on Monday, fueling fears of a bank run amid the growing political disarray. With deposits falling, Greek banks become even more dependent on the European Central Bank to meet their funding needs, exposing the central bank to potentially huge losses if Greece leaves the euro area. Greek President Karolos Papoulias told the country's political leaders that bank withdrawals plus buy orders received by Greek banks for German bunds totaled some €800 million on Monday, a transcript of his comments said. A central bank official confirmed the figures...Monday's deposit withdrawal far outpaced Greek banks' steady decline in deposits since the start of the country's debt crisis in 2009, as depositors withdraw cash and transfer funds overseas." Brian Blackstone and David Enrich in The Wall Street Journal.

@grossdm: So, Greece is seeking to solves its economic problems through QE -- quantitative electioneering

3) The Senate will vote on several GOP budget proposals today. "The Senate on Wednesday will hold six hours of debate and votes on four different Republican budget resolutions, in an apparent attempt to demonstrate that they will not be supported in the Democratic-led Senate. A fifth budget measure up for a vote, from Senate Budget Committee ranking member Jeff Sessions (R-Ala.), is based on President Obama's budget and is seen as an attempt to embarrass the White House. But Senate Budget Committee Chairman Kent Conrad (D-N.D.) said Tuesday that debate and votes on the GOP proposals would show there is little appetite for these plans. He also said it would give the country a chance to understand that last year's Budget Control Act already sets spending caps for Congress. Democrats have been under fire for failing to pass any budget resolution...One of the four GOP budget resolutions to be debated Wednesday is H.Con.Res. 112, the budget resolution approved by the House in March." Pete Kasperowicz in The Hill.

4) The Justice Department started a criminal probe into JPMorgan Chase's loss. "The Justice Department has initiated a criminal probe into the $2 billion trading loss at JPMorgan Chase, a law enforcement representative familiar with the situation said Tuesday. The inquiry is at a very early stage, said the person, who spoke on the condition of anonymity because the matter is private. Many details about the loss at JPMorgan are murky, so it is unclear what laws, if any, may have been violated. But the attention from federal officials indicates that regulatory pressure is rising on JPMorgan, and its chief executive Jamie Dimon, to explain what exactly led to the bank’s multi-billion dollar misstep. That, in turn, has rekindled questions about whether government regulators are equipped to monitor banks making risky, complex trades...Dean Boyd, a Justice spokesman, declined to comment." Jia Lynn Yang and Sari Horwitz in The Washington Post.

Too big to fail banks have gotten bigger. "JPMorgan Chase’s $2 billion blunder is throwing the spotlight on an awkward truth for President Barack Obama’s promise to end the era of big bank bailouts: The same institutions that were deemed 'too big to fail' before the financial collapse are even bigger now. Efforts to manage the size of such institutions were at the heart of the Dodd-Frank financial law passed in July 2010. But nearly two years later, many of the law’s regulations remain in limbo, as federal agencies muddle through long rule-making processes against stiff industry opposition...All the while, the country’s biggest financial institutions continue to grow. The five largest, which controlled $6.1 trillion in assets before the collapse, by the end of 2011 had assets worth $8.5 trillion -- equal to more than half of U.S. economic output, according to Federal Reserve data." Patrick Reis in Politico.

@BCAppelbaum: This whole JPM story underscores one reason we don't have effective financial regulation: Our public officials don't understand finance.

Top op-eds

1) PORTER: It's time for the euro to come to an end. "Social upheaval across the euro area suggests that it may be time to call it quits and try to work out an orderly process to re-establish national currencies throughout the bloc. Europe would be in much better shape if the euro didn’t exist and each member country had its own currency. Monetary union has shackled together nations with vastly different economies, depriving them of an independent monetary policy that can help them through rough times. The interest rate and exchange rate that serve Germany also have to serve Spain, though that country has more than four times Germany’s joblessness. The main problem is that while leaders eagerly embraced the monetary bond, they rejected its necessary complement: a central budget that would transfer money from successful regions to underperforming ones, as the United States government sends tax dollars collected in Massachusetts to pay for unemployment benefits in Nevada." Eduardo Porter in The New York Times.

2) FROST: The FDIC shouldn't protect investment banks. "I suggest that we divide the two functions into separately owned, managed and regulated entities. That's the only way we can ensure that their riskier businesses don't undermine the insured deposits that are the foundation of a stable and healthy economy. Taxpayer safety-net programs, such as the Federal Deposit Insurance Corporation (FDIC), should be available only to banks in business to provide insured deposits. Financial institutions that provide primarily investment, hedging and speculative services don't deserve protection either by the FDIC's explicit guarantees or by an implicit understanding that taxpayers will bail them out because there is no other alternative. Indeed, this kind of protection is a perversion of capitalism and can distort its good outcomes...We need a real and impregnable firewall that keeps one part of the banking system--and the economy--from being consumed when the other goes into flames." Tom Frost in The Wall Street Journal.

3) ROSEN: Competitive bidding can hurt patients. "On the face of it, competitive bidding sounds like a very good idea. If one supplier can provide power wheelchairs or oxygen masks for 30 percent less than another, it’s hard to argue for contracting with the more expensive supplier, especially at a time when everyone is looking for ways to save money. A one-year experiment with expanded competitive bidding that was recently conducted by Medicare yielded cost savings of 42 percent, without reducing the quality of care, and was hailed as a great success. But as a doctor working with patients on the ground, I have doubts about that quality-of-care measure, and I worry that those savings obscure a potentially serious problem...If competitive bidding is predicated on supplying equipment at the lowest possible price, something has to give. And more likely than not, that something will be patient care." Dennis Rosen in The New York Times.

4) ORSZAG: Want good news on jobs? Look to big businesses. "Big business, we keep being told, has been so hampered by regulatory uncertainty over the past few years, it has been reluctant to hire workers. So it is surprising to read the results of a little-known survey from the Bureau of Labor Statistics: Very large businesses, it turns out, have been expanding their domestic workforces relatively rapidly. If, since January 2011, businesses of all sizes had hired at the same rate as those with 5,000 or more employees, we would have almost 4 million more jobs today...The JOLTS data highlight the importance of exploring how the continuing deleveraging process and resultant sluggish growth in demand is affecting smaller businesses in particular. With the percentage of working Americans stuck at a depressed level, we sure could use those extra 2 million to 4 million jobs." Peter Orszag in Bloomberg.

5) ALEXANDER: Washington should take over Medicaid and let states handle education. "Staring down steep tuition hikes, students at the University of California have taken to carrying picket signs. As far as I can tell, though, none has demanded that President Barack Obama accept a Grand Swap that could protect their education while saving them money. Allow me to explain. When I was governor of Tennessee in the early 1980s, I traveled to meet with President Ronald Reagan in the Oval Office and offer that Grand Swap: Medicaid for K-12 education. The federal government would take over 100% of Medicaid, the federal health-care program mainly for low-income Americans, and states would assume all responsibility for the nation's 100,000 public schools...If we had made that swap...states would have about $92 billion a year in extra funds, as they'd keep the $149 billion they're now spending on Medicaid and give back to Washington the $57 billion that the federal government spends per year on schools." Lamar Alexander in The Wall Street Journal.

Cover interlude: Screaming Females play Sheryl Crow's "If It Makes You Happy" for the AV Club.

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

Still to come: Free trade with Colombia is in effect; Catholic bishops are close to suing over birth control; backlash against tests is growing; energy independence is within reach; and a puppies'-eye view of life.

Economy

The Senate will vote on two Fed nominees on Thursday. "Senate Majority Leader Harry Reid (D-Nev.) today set up a procedural vote for Thursday on two nominees to join the Federal Reserve whose nominations have stalled because of opposition from Sen. David Vitter (R-La.)...Vitter blocked attempts in March to quickly confirm Harvard University economics professor Jeremy Stein, a Democratic nominee, and former private-equity executive Jerome Powell, a Republican nominee...Asked whether he was confident that he would have the 60 votes to invoke cloture on the nominations, Reid said, 'Well I sure hope so, we’ve been waiting months and months.'...Senate Minority Leader Mitch McConnell (R-Ky.) said he believes there is bipartisan support for the nominees...Without the two nominees in place, the Federal Reserve Board will remain short-handed as it attempts to support the economic recovery" Humberto Sanchez in Roll Call.

The dip in gas prices eased inflation. "The recent slide in gasoline prices in the U.S. has pushed the nation's annual rate of inflation to its lowest level in more than a year, easing some economic strains on consumers. The consumer price index, which measures what Americans pay for everything from breakfast cereal to doctor visits, was unchanged from March to April, ending three months of increases, the Labor Department said Tuesday. A 2.6% drop in the gasoline-price index helped offset rising costs for many other items. Overall prices are now running 2.3% higher than a year ago, the smallest increase since February 2011...The inflation figures have mixed implications for the recovery. Lower gasoline and utility costs are keeping a lid on household expenses, effectively boosting Americans' spending money. However, prices are climbing broadly, most notably for food, but also medical care, rents, autos and airfares." Josh Mitchell in The Wall Street Journal.

States are using foreclosure prevention funds to plug budget gaps. "Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps. In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts. The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes...As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge." Shaila Dewan in The New York Times.

House Republicans are planning a vote on a 'fast track' proposal for tax reform. "Speaker John Boehner said in a speech Tuesday that House Republicans would try to attach a timeline to fast-track a broad tax overhaul to a vote extending the George W. Bush-era tax rates before the November elections...'Our bill to stop the New Year’s Day tax increase will also establish an expedited process by which Congress would enact real tax reform in 2013,' Boehner (R-Ohio) said in remarks to a fiscal summit in Washington. 'This process would look something like how we handle Trade Promotion Authority, where you put in place a timeline for both houses to act.'...GOP aides said that, even though Boehner specifically discussed Trade Promotion Authority on Tuesday, House Republicans are looking at a variety of expedited processes that have been used in the past, and have yet to settle on just one." Russell Berman and Bernie Becker in The Hill.

@grossdm: Memo to Boehner, the markets, etc.: the House passing legislation won't be sufficient to avert tax increases. They'll have to make a deal

The euro zone narrowly missed recession. "The euro-zone economy narrowly escaped recession in the latest quarter thanks to a surprising rebound in Germany, which offset deepening downturns in Spain and Italy. Although the region avoided two straight quarterly drops in gross domestic product, the common benchmark for recession, the figures nonetheless reflect a deepening divide between Germany and the rest of the euro zone that complicates the bloc's efforts to stem its debt crisis...Euro-zone GDP was unchanged from the previous quarter, said Eurostat, the European Union's statistics agency. In annualized terms, GDP rose 0.1% from the fourth quarter, according to calculations by J.P. Morgan Chase. Economists had expected an annualized contraction of around 1%. GDP fell at a 1.2% rate in the fourth quarter...European stock markets rose initially on the figures, which eased fears that the debt crisis may trigger an economic free fall." Brian Blackstone in The Washington Post.

Export-Import Bank reauthorization cleared the Senate by a wide margin. "On a broad bipartisan vote of 78 to 20, the Senate voted Tuesday to extend the life of the U.S. Export-Import Bank and expand its authority to make loans to U.S. exporters. In the 'Schoolhouse Rock' version of how Capitol Hill works, this is what Congress does all the time -- passes legislation. But it made for big news on this Capitol Hill, where protracted partisan warfare has meant that lately the story has more often been about votes forced by one party or the other to indignantly demonstrate the other’s opposition...Tuesday’s bill was the rarest of breeds: a lasting compromise on an issue of substance. It renewed the charter of what is commonly referred to as the Ex-Im bank for three years and will over that time raise the cap on the total financing the bank can guarantee from $100 billion to $140 billion." Rosalind Helderman in The Washington Post.

The U.S.-Colombia free trade agreement took effect. "A free-trade agreement between the U.S. and Colombia took effect Tuesday after years of negotiations and despite strong opposition from U.S. labor organizations, which are worried about jobs being sent abroad and union-busting violence in Colombia. The first products shipped tariff-free were crates of Colombian roses and other flowers that landed Tuesday morning at Miami's airport...President Barack Obama signed the free-trade agreement with Colombia in October, days after Congress gave its final approval following heated debates. The deal was originally negotiated by the Bush administration, but President Obama reworked the deal to satisfy Democrats. The U.S. exported $14 billion of goods to Colombia last year, everything from cars to consumer electronics to food, and exports are expected to rise by more than $1.1 billion as a direct result of the pact, according to the International Trade Commission." Dan Molinski in The Wall Street Journal.

Adorable children singing interlude: Two girls cover Gotye's "Somebody That I Used To Know" from the back seat of the car.

Health Care

Catholic bishops are threatening to sue over the birth control mandate. "The Catholic Church's U.S. hierarchy warned Tuesday that without quick action by Congress, it will sue the Obama administration for mandating that insurance plans provide birth control to women without a co-pay. '[F]orcing individual and institutional stakeholders to sponsor and subsidize an otherwise widely available product over their religious and moral objections serves no legitimate, let alone compelling, government interest,' lawyers for the U.S. Conference of Catholic Bishops wrote in a letter to federal regulators. Several small Catholic universities have already filed suit over the policy...The bishops' notice came in 20 pages of comments submitted to the Department of Health and Human Services (HHS) on a forthcoming rule to accommodate certain religious organizations, such as Catholic hospitals, that were not exempted from the original mandate." Elise Viebeck in The Hill.

Obamacare will expand healthcare options for immigrants. "The Obama administration’s drive to cut down on America’s uninsured is about to get multilingual. Come 2014, when core provisions of the Affordable Care Act kick in, millions of legal immigrants will have new options for gaining health coverage. And like U.S. citizens, most will be subject to the individual mandate, under which they will be required to get coverage to avoid a penalty. The national health law explicitly excludes illegal immigrants -- a politically explosive topic -- and bans them from the new state insurance exchanges, even if they use their own money. They will make up a big chunk of the remaining uninsured population. But advocates say states have good reasons to reach out and get uninsured legal residents covered -- especially as the federal government picks up most of the tab...In 2014...legal immigrants will be able to shop for health coverage through the new state insurance exchanges." Kyle Cheney in Politico.

Domestic Policy

The backlash against standardized testing is growing. "The increasing role of standardized testing in U.S. classrooms is triggering pockets of rebellion across the country from school officials, teachers and parents who say the system is stifling teaching and learning. In Texas, some 400 local school boards--more than one-third of the state's total--have adopted a resolution this year asking lawmakers to scale back testing. In Everett, Wash., more than 500 children skipped state exams in protest earlier this month...The efforts are a response to the spread of mandatory testing in the past decade. Proponents say the exams are needed to ensure students are learning and teachers' effectiveness is measured. Critics say schools are spending disproportionate time and resources on the tests at the expense of more-creative learning. They also contend the results weigh too heavily in decisions on student advancement, teacher pay and the fate of schools judged to have failed." Stephanie Banchero in The Wall Street Journal.

The NLRB suspended implementation of its union elections rule. "The National Labor Relations Board (NLRB) suspended implementation on Tuesday of a rule that would speed up union elections. On Monday, U.S. District Judge James Boasberg struck down the regulation. In his ruling, the judge said the labor board only had two members vote on the final rule in December 2011 when it needed three members to form a quorum. In the wake of the court decision, the agency is temporarily suspending the rule's implementation, which went into effect on April 30. Further, Lafe Solomon, the NLRB's acting general counsel, withdrew guidance he sent to the labor board's regional offices and told those offices to follow the old union election rule instead. The agency is still considering its response to the court ruling...'We continue to believe that the amendments represent a significant improvement in our process and serve the public interest by eliminating unnecessary litigation,' said NLRB Chairman Mark Pearce." Kevin Bogardus in The Hill.

Dog's-eye view interlude: Life from on top of puppies.

Energy

Energy independence is no pipe dream. "Every president since Richard Nixon has called for the U.S. to wean itself from needing oil from unstable or unsavory countries. The nation's new-found energy riches are likely to bring that ambition closer to reality in the next two decades, according to many forecasters. It's no pipe dream. The U.S. is already the world's fastest-growing oil and natural gas producer. Counting the output from Canada and Mexico, North America is 'the new Middle East,' Citigroup analysts declare in a recent report. The U.S. Energy Information Agency says U.S. oil imports will drop 20% by 2025. Oil giant BP projects the U.S. will get 94% of its energy domestically by 2030, up from 77% now, as oil imports fall by half...Most enticing, a team of analysts and economists at Citigroup argues that the U.S., or at least North America, can achieve energy independence by 2020." Tim Mullaney in USA Today.

@umairh: So consider how our political institutions are paralyzed by a financial crisis. Now think about energy, water, etc crises. Sweet!

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

What you’re seeing here are the number of “cloture” motions in every congressional session since 1919. Cloture is the procedure used to break a filibuster. Between 1919 and 1975, a successful cloture motion required two-thirds of the Senate. Today, it requires three-fifths, or, in cases where all 100 senators are present and voting, 60 votes. As you can see, the majority is having to try and break many, many, many more filibusters than ever before.

This is an imperfect measure. On the one hand, it’s susceptible to changes in congressional strategy: If the majority begins trying to break the filibuster more often, you could see more cloture votes, even though the filibuster isn’t actually being used any more frequently. On the other side, it misses the many, many, many filibusters that never receive a cloture vote, either because the majority decides that a cloture vote is too time-consuming — simply holding a cloture vote takes about 30 hours of floor time — or because they won’t win it.

That said, it is, at least, a relatively consistent measure, and it’s the best one we have. And most observers agree that its basic point is correct: We’re seeing many more filibusters today than we ever did before. But I actually think that’s the wrong way to think about it.

The issue today isn’t that we see 50, or 100, or 150 filibusters. It’s that the filibuster is a constant where it used to be a rarity. Indeed, it shouldn’t even be called “the filibuster”: It has nothing to do with talking, or holding the floor. It should be called the 60-vote requirement. It applies to everything now even when the minority does not specifically choose to invoke it. There are no longer, to my knowledge, categories of bills that don’t get filibustered because such things are simply not done, though there are bills that the minority chooses not to invoke their 60-vote option on. That’s why Harry Reid says things like “60 votes are required for just about everything,” though there are a small number of bills where the majority uses the budget reconciliation process to short-circuit the 60-vote requirement.

An interesting implication of this graph: The filibuster has become more common even as it’s become easier to break. Until 1917, the filibuster couldn’t be stopped. And until 1975, you needed two-thirds of the Senate, rather than three-fifths. So as it’s become less powerful, it’s become more common. What that means is that the rise of the filibuster is largely about “norms” in the Senate. It didn’t become more effective and thus more popular. It actually became less effective, but parties chose to use it more.

There’s an interesting question around exactly when this change in norms happened. If you look at the graph, you have three major moments of discontinuity. One, around 1972, that appears to provoke reform of the filibuster rules so cloture is easier to achieve. Another, in the early 1990s, that seems covers the latter half of George H.W. Bush’s administration and the beginning of Bill Clinton’s presidency. And then the practice absolutely skyrockets when Barack Obama takes office.

We can argue about why there were these jumps. But their long-term effect seems to be to raise the bar permanently. Every time filibustering becomes much more common, it pretty much remains at that level, even as Congress and the White House changes hands. So the filibuster becomes more common under Bill Clinton, but remains almost that common under George W. Bush.

For more on the filibuster, here’s Greg Koger making the case that it’s clearly constitutional. Jonathan Bernstein agrees with him. Here’s more from Common Cause on their lawsuit.

Here are the numbers: If 7.5 million Americans signed up for car-sharing services, the RAND study estimates that greenhouse-gas emissions from all U.S. vehicles would decline just 0.6 percent. If we got outlandish and assumed a future in which 20.3 million Americans (or about 12.5 percent of all eligible drivers) used car-sharing, then emissions from light vehicles would still just drop 1.7 percent.

That’s not nothing, but the drop in pollution seems fairly meager. How come?

To see why, it’s worth looking at how car-sharing reduces emissions. For one, fewer cars need to be manufactured in the first place — according to one survey, one shared vehicle displace nine to 13 private vehicles. Second, people drive fewer overall miles when using a service like Zipcar, in part because they’re constrained by the hourly rate. Third, car-sharing vehicles tend to be newer and more fuel-efficient.

But here’s the twist. For the most part, the people who sign up for car-sharing services were barely driving anyway. On average, Americans who use these sharing services see their car ownership numbers drop from 0.47 cars per household down to 0.24 cars per household. In other words, they went from barely owning cars to… barely owning cars. In contrast, car ownership for the country as a whole is about 1.87 vehicles per household. That’s one reason the effect on climate pollution is so small.

Indeed, as StreetsblogDC’s Tanya Snyder points out, public transportation — taking the bus or train — is a much more effective way for city dwellers to cut emissions. “One person taking transit to work instead of driving can save more than two metric tons of carbon dioxide emissions a year, according to APTA,” Snyder notes, “as opposed to the above estimate of 0.89 tons per person car-sharing.”

Now, the RAND study authors — Keith Crane, Lissa Ecola, Scott Hassell, and Shanthi Nataraj — point out that increased car-sharing could have all sorts of other benefits that aren’t counted in the numbers above. If millions more people use services like Zipcar, that means there’s less need for parking spaces. That frees up valuable land in urban areas. Car-sharing can also cut down on traffic jams and congestion, which can reduce travel times and conventional air pollution. It can also reduce transportation costs for many people — renting a car periodically is typically much cheaper than owning one.

“Because many transportation problems can be improved by small changes in the number of vehicles using the roads,” the authors note, “these benefits may be particularly valuable in large metropolitan areas.”

So what would need to happen for car-sharing to take off — growing to 7.5 million drivers or even 20.3 million drivers? The RAND study argues that these services need to become a lot more convenient — by, for instance, becoming widespread enough in cities such that anyone who needs a car at any time can get one. And there are a few policies that states and cities could do to help these services along, from doling out more parking spaces to car-sharing to tweaking state insurance policies so that peer-to-peer vehicle sharing becomes more viable. California is already experimenting with the latter.

Is this realistic? That’s unclear. The report cautions that optimistic projections about car-sharing have proved wildly off-base in the past. One report from 1994, for instance, found that the “market potential” for car-sharing in Germany was 2.45 million people. A decade later, only 70,000 people were using the service.

By the way, the full RAND report isn’t even primarily about car-sharing. It mostly discusses a new and comprehensive way to analyze the energy savings from various technological advances — there’s also a section, for instance, on the impacts of switching from newspapers to e-readers (they find, again, modest savings in greenhouse-gas emissions).

]]> http://feeds.washingtonpost.com/click.phdo?i=695301b7dc5c1d815ed88d23259fded3 http://www.washingtonpost.com/blogs/ezra-klein/post/how-big-can-car-sharing-get-in-the-united-states/2012/05/15/gIQAGybsRU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/how-big-can-car-sharing-get-in-the-united-states/2012/05/15/gIQAGybsRU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/Fragment/SysConfig/WebPortal/twpweb/rss/mobile/blog-entry.jpp?id=1000.4.1404578494 http://www.washingtonpost.com/blogs/ezra-klein/post/how-big-can-car-sharing-get-in-the-united-states/2012/05/15/gIQAGybsRU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/how-big-can-car-sharing-get-in-the-united-states/2012/05/15/gIQAGybsRU_blog.html http://www.washingtonpost.com/blogs/ezra-klein/post/how-big-can-car-sharing-get-in-the-united-states/2012/05/15/gIQAGybsRU_search.html 1000.4.1404578494 2dae87a2-9ec8-11e1-bca6-727bcbdbf866 RAND Corp carbon emissions Tue, 15 May 2012 15:09:00 EST Wed, 16 May 2012 10:11:35 EST 20120516151135 The Washington Post /WashingtonPost/Content/Blogs/ezra-klein/201205/how big car sharing get.xml /WashingtonPost/Content/Blogs/ezra-klein/201205/how big car sharing get.xml BlogStory ezra-klein.dwp:carousel/ezra-klein_carousel.dwc:story BlogStory The Washington Post http://ads.pheedo.com/click.phdo?s=695301b7dc5c1d815ed88d23259fded3&p=4 695301b7dc5c1d815ed88d23259fded3 ]]> Tue, 15 May 2012 15:09:00 EST Defense contractors have slowed hiring. Tax advisers are warning firms not to count on favorite breaks. And hospitals are scouring their books for ways to cut costs.

Across the U.S. economy, anxiety is rising about the potential for widespread disruptions after the November election, when a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending.

The halls of the U.S. Capitol are already teeming with people warning of disaster if lawmakers fail to defuse a New Year’s budget bomb scheduled to raise taxes for every American taxpayer and slash spending at the Pentagon and most other federal agencies.

Last week, hospital executives came to complain about big scheduled cuts in Medicare payments. Next month, university presidents plan to raise the alarm about big scheduled cuts in federal research grants. And the chief executives of Lockheed Martin and other aerospace giants last Wednesday passed out digital countdown clocks ticking off the seconds until “over 1 million American jobs” will be lost to big scheduled cuts in defense.

“How do you plan for chaos?” Marion Blakey, president of the Aerospace Industries Association, sighed during a break between meetings with lawmakers, who could provide little assurance that the spending cuts would be averted. “It’s almost a unique moment in government because there’s so much at stake. And there’s nothing that inspires confidence that this will get done.”

The uncertainty is already prompting some firms to take action. Many more say they will be forced to contemplate layoffs and other cost-cutting measures long before the end of the year unless the Republican House and the Democratic Senate come up with an alternative path to tame deficits. But with control of the White House and both chambers of Congress in play on Nov. 6, aides say it is impossible to begin mapping a strategy for compromise until they know who wins the election, by how much and on which issues.

In the meantime, political leaders are focused less on finding solutions than on drawing lines in the sand. In a speech Tuesday, House Speaker John A. Boehner (R-Ohio) plans to address the issue of national debt, which will once again be nearing its legal limit in January, just as the tax hikes and spending cuts are due to hit.

According to advance remarks provided to The Post, Boehner will insist that any increase in the debt limit be accompanied by spending “cuts and reforms greater than the debt limit increase” — the same demand that pushed the Treasury to the brink of default during last summer’s debt-limit standoff.

“This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance,” Boehner plans to say at the Peter G. Peterson Foundation fiscal summit. “If that means we have to do a series of stop-gap measures, so be it.”

Last week, the House approved a plan to protect the Pentagon in January by reconfiguring $110 billion in across-the-board spending cuts — known as “sequestration” — so they would fall exclusively on domestic programs, such as food stamps and health care for the poor.

But one aerospace lobbyist glumly noted that the House bill will be “dead on arrival” in the Senate, where Majority Leader Harry Reid (D-Nev.) has vowed to block any effort to undo the defense cuts unless Republicans drop their opposition to higher taxes for the wealthy.

“The answer is very simple to our Republican colleagues who want to help with defense: Revenues,” said Sen. Charles E. Schumer (D-N.Y.). “The way to deal with sequestration is put revenues on the table.”

As lawmakers bicker, the approaching deadline has taken on the nightmarish “aspect of a slow-motion train wreck,” said Ajay Rajadhyaksha of Barclays Capital, with onlookers helpless either to prevent the carnage or to get out of the way.

“I feel like we’re really in uncharted waters,” said Robert Greenstein, president of the left-leaning Center on Budget and Policy Priorities. “On the one hand, you say: ‘We’re a functioning country. Somehow, we’re going to work this out.’ But then you ask: ‘What’s the scenario for a potential solution?’ And you can’t come up with anything that you can see actually passing Congress.”

The impending upheaval is the result of multiple policy changes all set to hit at the same time. The George W. Bush-era tax cuts are scheduled to expire in December, along with a temporary payroll-tax holiday sought by President Obama. Meanwhile, Congress last summer paired a debt-limit increase with $1.2 trillion in across-the-board spending cuts over the next decade that almost no one wants to see happen.

For the moment, most economic forecasters are taking a sanguine view. Mark Zandi of Moody’s Analytics predicts that the lame-duck Congress will make a deal to rescind half the spending cuts and raise taxes for the wealthiest 2 or 3 percent of households — but leave everyone else alone.

“There’s a lot of room for compromise,” Zandi said, noting that Boehner and Obama came close to agreement last summer.

But others are skeptical that lawmakers, fresh from the combat of the campaign trail, will be able to agree on anything. Federal Reserve Chairman Ben S. Bernanke recently warned that the Fed would have “absolutely no . . . ability whatsoever” to cushion the shock to the economy if the nation sails over what he calls the “fiscal cliff” in January. And many analysts worry that the uncertainty will itself begin to dampen economic growth long before New Year’s Day.

Kaman Corporation chief executive Neal Keating said his firm is already scaling back hiring in Jacksonville, Fla., where the company builds cockpits for Blackhawk helicopters. He was hoping for new contracts to refit the nation’s aging fleet of A-10 Warthog attack planes.

“So many of those things are now uncertain,” Keating said, adding that plans to hire 200 workers have been put on hold. Without further clarity, Keating said, he could be forced to start ramping down purchases and cancelling shifts sometime this summer.

“One of the most frustrating things is [that] people in Washington say, ‘Well, we don’t think sequestration is going to happen,’ ” he said. “But we’re responsible for planning and running a business.”

Nicholas Wolter, chief executive of the Billings Clinic, a chain of nonprofit medical facilities in Montana, said a scheduled 2 percent cut in Medicare payments would hammer his finances. But options being circulated to replace those cuts could also hurt, he said. In addition, a formula that maintains Medicare rates for doctors is also set to expire.

“You’re not sure which of them might end up in legislation,” Wolter said. “They’re all potentially real.”

Tax policy is also causing heartburn. Kate Barton of Ernst & Young said she is advising clients not to count on the renewal of a slew of popular business tax breaks that expired in December. Even incentives for research and development, which are revered in both parties, could get caught in the year-end logjam.

“We’re not trying to be alarmist. But it’s a time when the telescope and the crystal ball are really foggy,” Barton said. “You talk to one person and you hear one thing; you talk to another and you hear something else.”

This month, about 120 university lobbyists gathered near Metro Center in hopes that top aides to Reid and Boehner would shed light on the fiscal end game. They didn’t. Instead, Reid’s deputy chief of staff for policy, Bill Dauster, cited a “good, if dour,” independent analysis that “many election outcomes would produce dynamics not conducive to getting a deal” at all before the new Congress takes office in January.

“You just don’t get the sense that there’s even a secret plan yet. It’s scary,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, who has been meeting with corporate leaders in an effort to build support for a comprehensive deficit-reduction plan.

During a recent dinner in Washington, Lawrence H. Summers and Robert Rubin mulled the situation. Both men led the Treasury Department during the Clinton administration, and Summers was Obama’s top economic adviser in 2009 and 2010. They concluded that, whatever happens on Election Day, exhausted lawmakers are likely to resort to a short-term deal that extends all the tax cuts, postpones the spending cuts and pushes the deadline for fiscal calamity into the spring of 2013.

But even that move would be risky, Rubin argued, potentially inviting another downgrade of the U.S. credit rating, roiling financial markets and shattering confidence that the United States will ever get its debt problem under control.

Solutions are easy to come by “when you’re sitting at the Council on Foreign Relations in New York,” said Rubin, the council’s co-chairman. “It’s a lot harder to do it when you’re sitting in Washington and it’s one minute of midnight.”

But perhaps that somehow makes them better banks? Economies of scale and all that? Not according to this study (pdf) from the Cleveland Fed:

Our calculations indicate that the cost to the economy as a whole due to increased systemic risk is of an order of magnitude larger than the potential benefits due to any economies of scale when banks are allowed to be large.

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The clearest development has been the growth of health-care costs — 50 years ago, Medicare and Medicaid didn’t even exist. Today, the two programs account for about a quarter of all federal spending. Defense spending, meanwhile, has gone from half of the federal budget to a quarter.

It’s also worth noting that federal spending has, over the past 50 years, grown at a pretty similar rate to the rest of the economy. In 1962, the federal government spent $707 billion, accounting for 18 percent of GDP. By 2011, federal spending had inched up to account for 24 percent of the economy or, in dollar figures, $3.1 trillion.

A Wolters Kluwer poll out this morning finds that not only are most consumers turning to the Internet to answer medical questions, but that they also put strong faith in their own diagnosis. Among college educated Americans, 63 percent say they have “never” misdiagnosed themselves. Add in those who have say they’ve “rarely” made a wrong call and the number jumps up to 84 percent.

As for why all the Googling? About one-third of Americans say it has to do with access issues, and not wanting to wait to see a doctor, while another 23 percent argue that they can do just as good, if not better, than their physician in figuring out what ails them.

Among those who do self-diagnosis, not everyone will head to a doctor for a second (or, really, first) opinion: 23 percent of those surveyed indicate they do not discuss their self diagnosis with their doctor.

Unfortunately, this poll does not have information on the accuracy of self-diagnoses, whether the 63 percent who are certain they cracked their medical case actually did. If they do tend to be right though, that might be one step towards holding down health care costs, with individuals doing a bit more of the legwork before taking a trip to the doctor’s office.

It’s truly an honor to be with you in the historic Mellon Auditorium. It was here in the spring of 1949 that the United States and our closest allies gathered to sign the North Atlantic Treaty, giving birth to NATO.

On that occasion, President Truman declared that people ‘with courage and vision can still determine their own destiny. They can choose freedom or slavery.’

In our time, all of these great nations face a grave threat to freedom, one from within, and that is debt. It is shackling our economies and smothering the opportunities that have blessed us with so much.

Once again the world looks to the United States for what it always has: an example. It is the example of a free people whose hard work and sacrifice make up the sum total of thriving towns and a vibrant economy. It’s a humble government that lives within its means and unleashes the potential of first-rate ideas and world-class products. It’s a nation never content with the status quo and always on the make.

I got a glimpse of this example growing up working at my dad’s tavern just outside Cincinnati, and then lived a piece of it running my own small business.

Instead of this shining example, what does the world now see?

A president on whose watch the United States lost its gold-plated triple-A rating for the first time in our history;

A Senate, controlled by the president’s party, that has not passed a budget in more than three years;

And, earlier this month, another unemployment report showing that the world’s greatest economy remains unable to generate enough jobs to spur strong and lasting growth.

If you should know one thing about me, it’s that I’m an optimist.

Yes, times are tough, but our future doesn’t need to be dark. We don’t have to accept a new normal where the workplace looks more like a battlefield and families have to endure flat incomes, weak job prospects, and higher prices in their daily lives.

We have every reason to believe we can come out of this freer and more prosperous than ever. And we will, if we confront our challenges now while we still have the ability to do so.

For the solution to what ails our economy is not government — it’s the American people.

The failure of ‘stimulus’ — a word people in Washington won’t even use anymore — has sparked a rebellion against overspending, overtaxation, and overregulation.

Americans, who take pride in living on a budget, recognize we can’t go on spending money we don’t have, and that our economy is stuck in large part because it’s stuck with debt.

Nationwide, we’re seeing a groundswell of support for bold ideas that reject small politics, cast off big government, and return us to common sense and first principles — the kind of ideas that will restore prosperity and substantially improve the trajectory of our economy.

In March, as part of our Plan for America’s Job Creators, the House passed an honest budget with real spending cuts, pro-growth tax reform, and serious entitlement reform. It’s a far-reaching effort to control government’s worst habits and capitalize on the American people’s best. This budget gets our fiscal house in order AND promotes long-term growth. Far from settling for stability, it offers a true path to prosperity.

Various bipartisan commissions and coalitions have devised ambitious plans as well. The math and the mix are different, but the goals are mainly the same.

And of course, there are summits like these that bring together people who just get it. Of course, while I’m happy to be here and I’m sure we all enjoy each other’s company, we can also agree that we’ve talked this problem to death.

It’s about time we roll up our sleeves and get to work.

For all the focus on Election Day, another date looms large for every household and every business, and that’s January 1, 2013.

On that day, without action by Congress, a sudden and massive tax increase will be imposed on every American – by an average of $3,000 per household. Rates go up, the child tax credit is cut in half, the AMT patches end, the estate tax returns to 2001 levels, and so on.

Now, it gets a little more complicated than that. What will expire on January 1 is cause for concern – as is what will take effect. That includes:

Indiscriminate spending cuts of $1.2 trillion – half of which would devastate our men and women in uniform and send a signal of weakness;

Several tax increases from the health care law that is making it harder to hire new workers;

As well as a slate of energy and banking rules and regulations that will also increase the strain on the private sector.

But … it gets even more complicated than that.

Sometime after the election, the federal government will near the statutory debt limit.

This end-of-the-year pileup, commonly called the ‘fiscal cliff,’ is a chance for us to bid farewell — permanently — to the era of so-called ‘timely, temporary, and targeted’ short-term government intervention.

For years, Washington has force-fed our economy with a constant diet of meddling, micromanagement, and manipulation. None of it has been a substitute for long-term economic investment, private initiative, and freedom

Previous Congresses have encountered lesser precipices with lower stakes, and made a beeline for the closest lame-duck escape hatch.

Let me put your mind at ease. This Congress will not follow that path, not if I have anything to do with it.

Having run a business, I know that failing to plan is planning to fail. The real pain comes from doing nothing … ‘austerity’ is what will become necessary if we do nothing now. We’ll wake up one day without a choice in the matter.

There’s also no salvation to be found in doing anything just to get by, just to get through this year.

‘Nothing’ is not an option, and ‘anything’ is not a plan. To get on the path to prosperity, we have to avoid the fiscal cliff, but we need to start today.

To show my intentions are sincere, I’ll start with the stickiest issue, and that of course is the debt limit.

On several occasions in the past, the debt limit has been the catalyst for budget agreements. Last year, however, the president requested a quote-unquote ‘clean’ debt limit increase – business as usual.

Well I’ve run a business, and that’s no way to do it. It’s certainly no way to run a government either, especially one that has run up a debt bigger than the entire economy. Business as usual will no longer do.

So last year around this time, I accepted an invitation to address the Economic Club of New York. I went up there and said that in my view, the debt limit exists in statute precisely so that government is forced to address its fiscal issues.

Yes, allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process.

We shouldn’t dread the debt limit. We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction.

That night in New York City, I put forth the principle that we should not raise the debt ceiling without real spending cuts and reforms that exceed the amount of the debt limit increase.

From all the way up in Midtown Manhattan, I could hear a great wailing and gnashing of teeth. Over the next couple of months, I was asked again and again if I would yield on my ‘position,’ what it would take, if I would budge…

Each and every time, I said ‘no’ … because it isn’t a ‘position’ — it’s a principle. Not just that — it’s the right thing to do.

When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase. This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance.

If that means we have to do a series of stop-gap measures, so be it — but that’s not the ideal. Let’s start solving the problem. We can make the bold cuts and reforms necessary to meet this principle, and we must.

Just so we’re clear, I’m talking about REAL cuts and reforms — not these tricks and gimmicks that have given Washington a pass on grappling with its spending problem.

Last year, in our negotiations with the White House, the president and his team put a number of gimmicks on the table. Plenty of thought and creativity went into them — things like counting money that was never going to be spent as savings.

Maybe in another time, with another Speaker, gimmicks like these would be acceptable.

But, as a matter of simple arithmetic, they won’t work.

They won’t work, and as I told the president, we’re not doing things that way anymore.

What also doesn’t count as ‘cuts and reforms’ are tax increases. Tax hikes destroy jobs — especially an increase on the magnitude set for January 1st. Small businesses need to plan. We shouldn’t wait until New Year’s Eve to give American job creators the confidence that they aren’t going to get hit with a tax hike on New Year’s Day.

Any sudden tax hike would hurt our economy, so this fall – before the election — the House of Representatives will vote to stop the largest tax increase in American history.

This will give Congress time to work on broad-based tax reform that lowers rates for individuals and businesses while closing deductions, credits, and special carveouts.

Eyebrows go up all over town whenever I talk about this, but when I say ‘broad-based’ tax reform, I mean it. We need to do it all … deal with the whole code, personal and corporate it’s fairer and more productive for everyone.

That’s why our bill to stop the New Year’s Day tax increase will also establish an expedited process by which Congress would enact real tax reform in 2013. This process would look something like how we handle Trade Promotion Authority, where you put in place a timeline for both houses to act.

The Ways Means Committee will work out the details, but the bottom line is: if we do this right, we will never again have to deal with the uncertainty of expiring tax rates.

We’ll have replaced the broken status quo with a tax code that maintains progressivity, taxes income once, and creates a fairer, simpler code.

And if we do THAT right, we will see increased revenue from more economic growth.

Again, change doesn’t need to be sudden or painful.

Last fall, when I addressed the Economic Club of Washington, I said that making relatively small changes now can lead to huge dividends down the road in terms of debt reduction. As we approach the issue of the debt limit again, we need to continue to bear this in mind.

As you know, we could eliminate all of the unfunded liabilities in Social Security, Medicare and Medicaid tomorrow, and the effect within the Congressional Budget Office 10-year window could be minimal.

That’s because changes to these programs take time and are phased-in slowly.

For example, when Congress last increased the retirement age for Social Security, the increase – a mere two years – was scheduled to fully take effect 40 years after the law was enacted.

Another example: take the House Budget Resolution and its assumptions for Medicare reform. Those would not even begin until after 2022.

Smart and modest changes today mean huge dividends down the line.

Now, I can already hear the grumbles … partisans getting all worked up or people saying, eh, let’s wait until after the election.

We can’t wait. Employers large and small are already bracing for the coming tax hikes and regulations, which freeze their plans. The markets aren’t going to wait forever; eventually they’re going to start reacting.

We now know that we ignore these warnings at our own peril.

That’s why the House will do its part to ease the uncertainty surrounding the fiscal cliff. And I hope the president will step up, bring his party’s Senate leaders along, and work with us.

Because if there’s one action-forcing event that trumps all the rest — even the debt limit — it’s presidential leadership.

Ladies and gentlemen, I believe President Obama cares about this country and knows what the right thing to do is. But knowing what’s right and doing what’s right are different things.

The difference between knowing what’s right and doing what’s right is courage, and the president, I’m sorry to say, lost his.

He was willing to talk about the tough choices needed to preserve and strengthen our entitlement programs, but he wasn’t ready to take action.

As it turned out, he wouldn’t agree to even the most basic entitlement reform unless it was accompanied by tax increases on small business job creators.

We were on the verge of an agreement that would have reduced the deficit by trillions, by strengthening entitlement programs and reforming the tax code with permanently lower rates for all, laying the foundation for lasting growth.

But when the president saw his former colleagues in the Senate getting ready to press for tax hikes, he lost his nerve. The political temptation was too great. He moved the goalposts, changed his stance, and demanded tax hikes.

We ended up enacting a package with cuts and reforms larger than the hike. But it could have been so much more.

The letdown was considerable. And, in turn, our nation’s credit rating was downgraded for the first time.

Well it should also be the last time that happens, which is why I came here today.

If the president continues to put politics before principle – or party before country, as he often accuses others of doing – our economy will suffer and we may well miss our last chance to solve this crisis on our own terms.

But if we have leaders who will lead … if we have leaders with the courage to make tough choices and the vision to pursue a future paved with growth, then we can heal our economy and again be the example for all to follow.

I’m ready, and I’ve been ready. I’m not angling for higher office. This is the last position in government I will hold. I haven’t come this far to walk away.

All my life, I’ve operated by a simple code: if you do the right thing for the reasons, good things will happen.

Well, NOW is the time to do the right thing.

Let’s do it for the right reasons – we don’t need to be dragged kicking and screaming. That’s not the American way. Let’s summon the courage and vision to choose freedom, to choose prosperity, and to determine our destiny.

Then we’ll not only have succeeded in solving this crisis – we’ll be worthy of that success.

Thank you all.

— A five-year investigation concludes that a man was wrongfully executed in Texas.

— Study: 29 percent of Americans will sleepwalk in their lifetime. (Seriously?)

— The NRCC is banking on an openly gay Republican to win in Massachusetts.

— A weirdly moving short film about plywood.

Today America faces a financial crisis of debt and spending that threatens what it means to be an American. Here in the heartland you know in your hearts that it’s wrong.

We can’t spend another four years talking about solving a problem that we know we are making worse every single day.

When the men and women who settled the Iowa prairie saw a fire in the distance, they didn’t look around for someone else to save them or go back to sleep hoping the wind might blow another direction. They knew that their survival was up to them.

A prairie fire of debt is sweeping across Iowa and our nation and every day we fail to act that fire gets closer to the homes and children we love.

This is not solely a Democrat or a Republican problem. The issue isn’t who deserves the most blame, it’s who is going to do what it takes to put out the fire.

The people of Iowa and America have watched President Obama for nearly four years, much of that time with Congress controlled by his own party. And rather than put out the spending fire, he has fed the fire. He has spent more and borrowed more.

The time has come for a president, a leader, who will lead. I will lead us out of this debt and spending inferno. We will stop borrowing unfathomable sums of money we can’t even imagine, from foreign countries we’ll never even visit. I will bring us together to put out the fire!

A lot of people think this is a problem we can’t solve. I reject that kind of “can’t do” defeatist talk. It’s wrong.

What’s happened here isn’t complicated. Washington has been spending too much money and our new president made things much worse. His policies have taken us backwards.

Almost a generation ago, Bill Clinton announced that the Era of Big Government was over.

Even a former McGovern campaign worker like President Clinton was signaling to his own party that Democrats should no longer try to govern by proposing a new program for every problem.

President Obama tucked away the Clinton doctrine in his large drawer of discarded ideas, along with transparency and bipartisanship. It’s enough to make you wonder if maybe it was a personal beef with the Clintons … but really it runs much deeper.

President Obama is an old-school liberal whose first instinct is to see free enterprise as the villain and government as the hero. America counted on President Obama to rescue the economy, tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of dollars to the companies of his friends and added almost as much debt as all the prior presidents combined.

The consequence is that we are enduring the most tepid recovery in modern history.

The consequence is that half of the kids graduating from college can’t find a job that uses their skills. Half.

The consequence is that retirees can no longer get by on savings and Social Security.

The consequence is that the length of time it takes an unemployed worker to find a job is the longest on record.

This is why even those who voted for Barack Obama are disappointed in him.

Disappointment is the key in which the president’s re-election is being played. Americans will not settle for four more years of the same melancholy song. We can and we must do better.

President Obama started out with a near trillion-dollar stimulus package – the biggest, most careless one-time expenditure by the federal government in history. And remember this: The stimulus wasn’t just wasted – it was borrowed and wasted. We still owe the money, we’re still paying interest on it and it’ll be that way long after this presidency ends.

Then there was Obamacare. Even now nobody knows what it will actually cost. And that uncertainty has slowed our economy. Employers delay hiring and entrepreneurs put the brakes on starting new businesses, because of a massive, European-style entitlement that Americans didn’t want and can’t afford.

When you add up his policies, this president has increased the national debt by five trillion dollars.

Let me put that in a way we can understand. Your household’s share of government debt and unfunded liabilities has reached more than $520,000 under this president. Think about what that means. Your household will be taxed year after year with the interest cost of that debt and with the principal payments for those liabilities. Of course, it won’t be paid off by the adults in your household. It will be passed along to your children. They will struggle throughout their lives with the interest on our debts — and President Obama is adding to them every single day.

And that’s the best case scenario. The interest rate on that debt is bound to go up, like an adjustable mortgage. And there’s a good chance this debt could cause us to hit a Greece-like wall.

Subprime mortgages came close to bringing the economy to its knees. This debt is America’s Nightmare Mortgage. It is adjustable, no-money down, and assigned to our children. Politicians have been trying to hide the truth about this nightmare mortgage for years — just like liar-loans.

This is not just bad economics; it is immoral.

During my time in business and in state government, I came to see the economy as having three big players – the private sector, the states and localities and the federal government.

Of these three, the private sector is by far the most efficient and cost effective. That’s because scores of businesses and thousands of entrepreneurs are competing every day to find a way to deliver a product or a service that is better than anyone else’s. Think about smart phones. Blackberry got things going. Then Apple introduced the iPhone. Now the Android platform leads the market. In the world of free enterprise, competition brings us better and better products at lower and lower cost. Innovate and change or you go out of business. And the customer — us — benefits.

Government doesn’t begin to compare when it comes to change and improvements that provide better and less expensive services and products. But among governments, the states and localities are more responsive than the federal government, probably because there is a degree of competition between them.

The slowest, least responsive sector is the federal government. Nobody hears “Washington, D.C.” and thinks “efficiency.”

Imagine if the federal government was the sole legal supplier of cell phones. First, they’d still be under review, with hearings in Congress. When finally approved, the contract to make them would go to an Obama donor. They’d be the size of a shoe, with a collapsible solar panel. And campaign donors would be competing to become the all-powerful app czar.

My point is this: As President Obama and old-school liberals absorb more and more of our economy into government, they make what we do more expensive, less efficient and less useful. They make America less competitive. They make government more expensive.

What President Obama is doing is not bold; it’s old.

As president, I will make the federal government simpler, smaller, smarter – and, by the way, more in keeping with the vision of the framers of our Constitution.

This is why I do not, for one moment, share my opponent’s belief that our spending problems can be solved with more taxes. You do not owe Washington a bigger share of your paycheck.

Instead of putting more limits on your earnings and your options, we need to place clear and firm limits on government spending. As a start, I will lower federal spending to 20 percent of GDP within four years’ time – down from the 24.3 percent today.

The president’s plan assumes an endless expansion of government, with costs rising and rising with the spread of Obamacare. I will halt the expansion of government and repeal Obamacare.

Working together, we can save Social Security without making any changes in the system for people in or nearing retirement. We have two basic options for future retirees: a tax increase for high-income retirees, or a decrease in the benefit growth rate for high-income retirees. I favor the second option; it protects everyone in the system and it avoids higher taxes that will drag down the economy.

I have proposed a Medicare plan that improves the program, keeps it solvent and slows the rate of growth in health-care costs.

Both of these reforms are relatively simple, compared to the far more difficult choices we’ll face if we do nothing. Of course, Medicare and Social Security are also easy to demagogue, and I expect the president to continue doing that in this campaign. But Americans are on to that game, and I’m not going to insult voters by pretending that we can just keep putting off entitlement reform. I will continue to speak honestly, and, if elected, I will do what is right for the people of America.

The president has made little effort to rein in redundancy and waste.

In 2011, the Government Accountability Office found 34 areas where agencies, offices, or initiatives in the federal government had overlapping objectives or were providing similar services. The GAO estimated that fixing this redundancy could save over $100 billion. Yet, one year later, only three of these 34 areas had been fully addressed. Only one program was actually defunded.

In 2010, 17 federal government agencies gave $7.7 billion to more than 25 United Nations programs, billions of it voluntarily.

Another example: There are 94 federal programs in 11 agencies that encourage “green” building. A report found that the results of their initiatives and investments are, quote, “unknown.”

We see the same bureaucracy and overhead in our anti-poverty programs. Last year, the federal government spent more than $600 billion on more than 100 different programs that aim to help the poor.

My approach to federal programs and bureaucracy is entirely different. Move programs to states or to the private sector where they can be run more efficiently and where we can do a better job helping the people who need our help. Shut down programs that aren’t working. And streamline everything that’s left. It’s time for the people of America to take back the government of America.

Entitlement reform, doing away with redundancy and waste, and shifting services and programs to the economic player who can deliver them best – these are all serious steps toward getting our debt and spending under control.

But above all, we need to shake off the static big-government mindset of these past few years and all the limits and regulations that go with it. We need a big turnaround here, and it requires a focused, unrelenting, long-term agenda for economic growth.

Instead of leading the world in how much we borrow, America must continue to lead the world in how much we build, create and invent.

With all that we’ve been through these past few years, the challenges can seem awfully big, and some might look at America and wonder if we have lost our confidence. But confidence is not what is missing. All that’s lacking now is direction and leadership.

These have been years of disappointment and decline, and soon we can put them behind us. We can prosper again, with the powerful recovery we’ve all been waiting for, the good jobs that so many still need, and, above all, the opportunities we owe to our children and grandchildren.

All of this can be more than our hope – it can be our future. It can begin this year, in the choice you make, so I ask for your help, your support and your vote on the sixth of November.

It won’t have anything to do with a business deal gone awry, or

The figure comes from Bloomberg Government, where number crunchers have taken a look at what happens if the Supreme Court strikes down the Affordable Care Act and its expected expansion of health care coverage to 32 million Americans. They find that, should the Affordable Care Act be found unconstititional, insurance companies will lose $1 trillion in revenue between 2013 and 2020.

To put that in perspective, $1 trillion accounts for about 9 percent of all revenue that health insurers are expected to earn in the same period. It’s one-half of a percent of the country’s Gross Domestic Product. Add up the annual revenues of America’s five largest banks - Bank of America, J.P. Morgan, Wells Fargo, Wachovia and U.S. Bancorp- and you’re still about $500 billion short of what health plans can expect to lose if the Supreme Court decides against Obamacare.

“It’s the sheer size of the number that was startling,” says Bloomberg Government health care analyst Matt Barry. “I don’t know if people fully appreciate the stakes involved here. It’s not just politics - there’s a lot of money, and a lot to lose.”

The majority of that loss - $880 billion - would be from the 16 million Americans expected to purchase coverage on the individual market. Two-thirds of that revenue would be in the form of federal subsidies, for low- and middle-income Americans to purchase coverage. The rest would come from individuals, responsible for whatever part of the premium subsidies do not cover.

Another $220 billion would be lost from the Medicaid expansion, where states have often turned to insurers to manage the entitlement program.

Much of the revenue, expected from the health reform law, would have gone out the door to other parts of the health care sector. Covering more subscribers, after all, means paying for more medical costs - and Obamacare requires health insurers to spend at least 80 percent of each premium dollar on health care costs. Barry is working on follow-up research to look at how repeal would impact other industries.

But even with most money headed elsewhere, the law still leaves decent space for insurers to profit: The Bloomberg Government study estimates that, of the $1 trillion in revenue, health plans would keep $174 billion.

“That’s a significant amount of revenue,” says Barry. “It kind of makes you scratch your head a bit to wonder why insurers initially opposed this. But maybe after it passed, they finally ran the numbers and realized what was at stake.”

Ezra Klein: So ‘taxmageddon’ is coming at the end of the year. Depending on how you look at it, it’s an opportunity for Congress to trigger a massive and unnecessary fiscal crisis, or to actually get some serious legislating done on our long-term fiscal issues. Are you optimistic about the outcome?

Tom Coburn: No. But it depends on what the mix is. If President Obama is still president and we’re in control of the Senate, I think you’ll see significant attempts to get something done. But I don’t think they’ll be much more successful than what we saw in August. And I wouldn’t consider that very successful. If Romney wins and we win control in the Senate, we have to send a signal that we’re going to fix it in order to take away all that potential risk to the economy. You have to say we’ll work all over the Christmas holidays to get it fixed.

EK: When you look at the Romney scenario, it seems Republicans have spent a few years now learning how to take tough votes on the budget, particularly on the Ryan plan. So if Republicans control the House and Senate, it seems to me that you’d see quite dramatic action on those issues, as they can be passed with 51 votes through budget reconciliation.

TC: Well, you can. Ryan has a good plan. I don’t think it goes fast enough. But the fact is he’s got a plan. The president won’t put out a plan. The Senate Democrats won’t put out a plan. It’s kind of like boxing with a shadow. You can’t ever hit it. But it doesn’t matter if you’re Democrat or Republican. The pain will get worse every year we don’t fix these things. And there will come a time when it won’t matter if you’re a Republican or Democrat. And I don’t have much faith right now that we’re up to the task of coming to agreement to fix this.

EK: I want to come back to the question of the plans in a second,. But your book opens by imagining a very dire fiscal crisis in 2014. And this goes to your contention that Ryan’s plan doesn’t bring down the debt fast enough. Where do you get the urgency of your schedule? I look at Treasuries and they’re selling with very low yields. So you can say that’s just the Federal Reserve manipulating prices. So then I look at credit default swaps on the United States, and there are no alarm bells there, either. I look at countries like Japan and England that have carried on with very high debt levels for a very long time. We’ve seen other countries that control their own currency manage very high debt levels throughout the 20th Century.

TC: Well, you need to go study Japan. They’re going to crash.

EK: People have been saying that for 20 years.

TC: You have two things coming together. This is the first year they’ll be a net issuer of debt outside their country. They’ve totally financed all their debt internally. We haven’t. That’s one big difference. They also have a much lower birth rate. Seven births for every 1,000 people. So their population is shrinking and their demographic shift is much worse than ours. And this year, the postal system there that runs all their retirement accounts will not be buying any government debt. Zero. So the Japanese government, for the first time, is going into the international market. And the yen’s value is going to decline against every major currency. Whether that happens this year or next year or in three years, it’s going to happen. And they’ve now had almost two decades of no real GDP growth. So Japan isn’t going to make it. The reason they haven’t had any problems is they haven’t asked anyone else in the world to buy their debt. Now they’re going to have to.

The same thing ultimately will happen to us, but we’ll be the last person it happens to. The world still views this as the safest place. You see Greece, which will probably be out of the euro by the end of this year. Then you look at Spain and Italy and Portugal and Ireland. Europe is going to print money just like Ben Bernanke is printing money. And what’s the end result of that? Inflation.

EK Well, it depends how you manage it.

TC: How do you sterilize $3 trillion worth of debt?

EK: The difficulty for me when you say that is I’m a market-oriented guy. I trust the markets, more or less. And if you look at the market’s inflation expectations, they’re not high. They don’t think what the Fed has done will lead to inflation.

TC: They don’t now. But nobody ever does when you print money like that. If you study [Carmen] Reinhart and [Kenneth] Rogoff and what they said, they know what’s coming. Every country that’s ever been with a debt crisis and has printed money has ended up with an intentional inflation problem. Think for a minute that you’re Ben Bernanke. You’re trying to control inflation, jumpstart the economy, and improve the unemployment rate. What do you think his long-term answer for this is?

EK: At the moment, I don’t think he has one.

TC: His long-term answer is inflation.

EK: Not only do I think that would be an okay answer, but Reinhart and Rogoff do, too. Rogoff has been arguing for higher inflation for a long time. But Bernanke says he won’t permit that. And I don’t see a reason he would allow inflation later but oppose it now, when it could really help. In fact, what he’s been saying is he won’t do the monetary stimulus many want now specifically because he doesn’t want to deanchor inflation expectations later.

TC: But 10 years from now, our bonds won’t be two percent. So what percentage of the total budget do interest costs become if you normalize back to the historical average? If you do that today, you add $650 billion to our annual interest costs. How long do you think he can keep two percent inflation? If he does, then we’ll continue to have two percent growth. In other words, if we start getting the growth, then we’ll see the inflation. The reason there’s no inflation now is there’s no velocity to the money. We’ve got $2 trillion sitting on the sidelines with corporations in this country. Another few trillion in personal bank accounts. And the reason is no one has confidence in the future. And it’s not so much the details of the plan to fix it as the psychological confidence it will get fixed. And that’s why I voted for Bowles-Simpson.

EK: When Bowles-Simpson went before the House, it was rejected by a huge bipartisan majority. Do you see there as being any possibility that one outcome of the taxmageddon period could, be a grand bargain in the Gang of Six/Simpson-Bowles vein?

TC: I don’t know the answer to that, frankly. My hope would be we reach a grand compromise. But the vote in the House proves what I said in the book. You had a vote in the House on a plan that could solve our problems and the Democrats didn’t vote for it because it touches Social Security and Republicans vote against it because of revenues. Both sides accentuated their differences rather than sending a signal to the international community that we could get together and cut $4.5 trillion over the next 10 years. Which raises the question: Why are they here? If you’re here just to get reelected, you’re worthless to the country.

EK: You’re searingly critical of Congress in the book. So let me ask you: How do you fix the Senate?

TC: Let the Senate operate the way it’s supposed to. put stuff through committees. bring it up in regular order. Have an open amendment process. I’m the number one amendment offerer in the Senate in the last few years.

EK: Congratulations.

TC: Well, it’s not necessarily a compliment. But the point is the Senate really could work if you let it work on the real issues. If you were to put Simpson-Bowles on the floor and really have a strong debate on that bill, it could get through the Senate.

EK: When I talk to the party tactician types, the senators trying to figure this out, their argument is that when you try to do this out in public, with 24-hour news media broadcasting every move and every possible compromise, the issue polarizes, the interest groups descend, the party bases descend, and solutions get taken off the table. In the end, they think there will have to be some big backroom deal. They think a more open process would make this harder, not easier.

TC: I just adamantly disagree. That’s the sickness of Washington. What that really says is the politician doesn’t want to stand up and debate and tell their interest groups no. We had the pharmacists in here earlier. They want a bill to protect community pharmacies. And I said, you know what, the market is changing, I’m not about to support a bill, even though you support me, that doesn’t allow the market to work this thing out. I think the reason you get this kind of analysis is because people won’t stand up and do what they think is right because it hurts their political chances. And on our bonds, our bonds will be fine until they’re not, till that tipping point comes when they say crap, we can’t get out of it.

EK: As you just said, you’re a market guy. You want the market to work things out. You believe in the market’s ability to work things out. So why do you think your view of our likely debt and inflation path is so much more dire than the market‘s?

TC: Because the market is biased towards up. Why do you invest in the market? Not because you think you’ll lose money. Why do you invest in bonds? To make money. Where is the contrarian view?

Let me give you one example. Five weeks ago, Bernanke said there would be no QE3. What happened to the 10-year bond in four days? It rose 48 basis points. What the market said then is if there’s no more QE3, we’re going to short the value of a bond. That’s one little signal. What if you get 20 signals? How do you explain the Chinese getting rid $160 billion of our debt last year? Eventually, they’re not going to buy our debt. Who bought most of our debt last year? It was the Federal Reserve. Go out there and try and float $10 billion of our long-term debt. You can’t. There’s no market. Because the long-term market is saying, send us a signal that you’ll fix this. And so the reason we have the shortest debt maturity in our country’s history is first, because you can’t sell long-term debt because no one wants to buy it, and second, because long-term debt makes the deficit look worse.

Look, I may not be right. But what I see and the people I read -- all I do at night is read economic reports on people’s view of us -- and when you look at it, Spain, won’t make it, the European Central Bank will eventually print money. You agree?

EK: I’m hoping so.

TC: They’ll do that to buy time. And where I agree with Paul Krugman is you can’t just have austerity. You need growth, The question is how do you get the growth. Do you get the government-driven growth, or do you get confidence and certainty so that the private money comes in and creates the growth? One costs you double. The other costs you half. So there’s a fourfold difference in where you get the growth from. When you borrow the money to spend $800 billion, you got that debt hanging on you, which Reinhart and Rogoff have proven without a doubt, when you’re at 90 percent and above, and we’re at 101 percent right now, debt-to-GDP, that’s at least a one percent cut to growth.

EK: To go back to Krugman, if he were sitting here, he’d say in this crisis there’s been no evidence anywhere that cutting deficits leads to growth. We’ve not seen it in the euro zone or the UK. And he’d say the Reinhart/Rogoff story is a correlation story. It doesn’t prove that high debt always and everywhere hurts growth.

TC: Go look at Sweden. Here’s what Sweden did. They cut their spending and their taxes. They have the best growth rate in Europe. They had a surplus this year. They had growth at six-plus percent. They actually did a Reagan style approach to their problem by cutting spending and cutting taxes. And they’re the fastest growing with a decline in their debt-to-GDP ratio.

EK: But correct me if I’m wrong, but if I recall, Sweden’s monetary policy went towards a very sharp devaluation, they’ve been driven by export growth, and alongside Israel, they’ve been more aggressive than any other central bank in the world. They’ve done stuff that if we did it here, people would lose their minds.

TC: I think there are monetary parts to that. But their finance minister put in place tough stuff. They had people who left Sweden because of the tax ratio. Now they’ve moved back. And it’s not a perfect example, but it’s an exception to the Krugman story.

EK: Is there anything we need but deficit reduction to get growth back on the right path?

TC: It’s signals. The number one thing, and I think most economists would agree, confidence matters. If you have negative confidence, then you get much lower growth. If you have positive confidence you get much better growth with the same set of numbers. I think people are so disgusted with Washington that if we send a signal we’re actually going to fix this -- with any combination of tax and spending, remember that I voted for Simpson-Bowles -- we’ll get our mojo back when people have some confidence in the future and see their Congress solving their problems.

EK: It seems your view is that just as the market needs to have faith in your demographics and in the flexibility of your labor market and the competitiveness, it has to have faith in your political system’s capacity to deal with long and short-term threats. Do you see any reason for the market to have that faith right now?

TC: No. One of my biggest worries is what happens if Romney wins and Republicans control both chambers, do they have the courage to do what it takes to fix the country? It’s kind of their last chance. If they’re given the favor of control and they don’t act on it, why should you ever trust them again? You shouldn’t. It’ll be the death knell of the Republican Party. They controlled it all for four years under Bush and grew the government. They created a new entitlement with no revenue. Went against the very tenets of what they said they believe.

One of the reasons I wrote the book was to show a whole lot of people how many stupid things we do. I don’t really blame presidents too much. You gotta get appropriations. I say the problem is not that we don’t get along. We get along too well. Government is twice the size it was 10 years ago. The president can’t spend the money if we don’t appropriate it. So it’s not a president problem. It’s a congressional problem.

EK: On the other side of that hypothetical, let’s say Obama wins, but Republicans hold the House and maybe even take the Senate. How do they act in that hypothetical? Are they more or less willing to compromise with Obama?

TC: I don’t know. I’m not good at predicting that. If President Obama is president again, those problems are still there and we have to solve them. He knows that. We’ve had conversations where he’s told me he’ll go much further than anyone believes he’ll go to solve the entitlement problem if he can get the compromise. And I believe him. I believe he would.

In California, passing a budget or raising taxes requires a two-thirds majority in both the state’s Assembly and its Senate. That need not pose a problem, at least in theory. The state has labored under that restriction for a long time, and handled it with fair grace. But as the historian Louis Warren argues, the vicious political polarization that’s emerged in modern times has made compromise more difficult.

All of this, however, has been visible for a long time. Polarization isn’t a new story, nor were California’s budget problems and constitutional handicap. Yet the state let its political dysfunctions go unaddressed. Most assumed that the legislature’s bickering would be cast aside in the face of an emergency. But the intransigence of California’s legislators has not softened despite the spiraling unemployment, massive deficits and absence of buoyant growth on the horizon. Quite the opposite, in fact. The minority party spied opportunity in fiscal collapse. If the majority failed to govern the state, then the voters would turn on them, or so the theory went.

That raises a troubling question: What happens when one of the two major parties does not see a political upside in solving problems and has the power to keep those problems from being solved?

If all this is sounding familiar, that’s because it is. Congress doesn’t need a two-thirds majority to get anything done. It needs a three-fifths majority, but that’s not usually available, either. Ever since Newt Gingrich partnered with Bob Dole to retake the Congress atop a successful strategy of relentless and effective obstructionism, Congress has been virtually incapable of doing anything difficult because the minority party will either block it or run against it, or both. And make no mistake: Congress will need to do hard things, and soon. In the short term, unemployment is likely to remain high and the economy is likely to remain weak unless Congress can muster another round of serious stimulus spending. The economist Karl Case, co-founder of the famed Case-Shiller housing index, now believes that earlier optimism about our economic recovery — which he shared — was misplaced. “The probability is very high of a serious double dip like 1982,” he told the New York Times. The housing market seems to be sagging again, and the government’s interventions — not just the stimulus but also relaxed standards at Fannie Mae, Freddie Mac and the Federal Housing Authority — are set to end.

Further out, the long-term deficit problem, which is driven largely by health-care costs, is startling. The Center for Budget and Policy Priorities estimates that debt will reach 300 percent of gross domestic product come 2050 — and that estimate might be optimistic. But solutions seem unlikely. No one who watched the health-care bill wind its way through the legislative process believes Congress is ready for the much harder and more controversial cost-cutting that will be necessary in the future.

Similarly, Sens. Kent Conrad and Judd Gregg recently suggested a bipartisan deficit commission that would reach a consensus on the budget and report back to a grateful Congress. On Tuesday, a Wall Street Journal editorial showed the conservative interest in such compromises: Republicans should “agree to a deficit commission only if it takes tax increases off the table,” it said, reminding wavering Republicans that “President George H.W. Bush renounced his no-new-taxes pledge and made himself a one-termer.”

These two problems get to the essential difficulties confronting the nation: There is no doubt that minority parties generally profit in elections when the unemployment rate is high. But given that reality, what incentive do they have to help the majority party lower the unemployment rate? Further out, there is no doubt that the majority party has an incentive to prevent a fiscal crisis on its watch. But what incentive does the minority party have to sign on to the screamingly painful decisions that will avert crisis?

In another system of government, that wouldn’t much matter. In our system of government, which requires a supermajority in the Senate for most projects, it matters a lot. On Jan. 20, for instance, the Senate is expected to vote on raising the debt ceiling. Generally, this is a bipartisan vote, as the debt is a bipartisan creation. This year, Senate Minority Leader Mitch McConnell reportedly told Majority Leader Harry Reid that if he wants an increase in the ceiling, he owns it and needs to find the votes for it. That’s the sort of budgetary brinksmanship that brings us back to California.

The lesson of California is that a political system too dysfunctional to avert crisis is also too dysfunctional to respond to it. The difficulty is not economic so much as it is political; solving our fiscal problem is a mixture of easy arithmetic and hard choices, but until we solve our political problem, both are out of reach. And we can’t assume that an emergency, or the prospect of one, will solve the political problem for us. If you want to see how that movie ends, just look west, as we have so many times before.

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They seemed to feel there were alternatives to giving Byrd what he wanted, he told the six economic advisers; there weren’t, and he gave them a lesson in political realities. You couldn’t get around the Senate, he said, telling them about a President, a President at the very height of his popularity, who had tried it, attempting in 1938 to unseat southern conservative senators by going into their states to campaign against them. “Of course, you could try to take it to the country. FDR tried that, with his tremendous majority, and got licked,” he said. “It wouldn’t work” if they tried it now, either.

And the Senate has gotten a lot harder to manage since then.

It’s the same political problem that Obama is facing with his other big legislative achievement, the Affordable Care Act. On health care, Obama has tried to make the best of the situation by promoting some of the early benefits of the law, like coverage of young adults up to 26 under their parents’ plan. But the most controversial part of the law — the individual mandate — hasn’t yet gone into effect, and neither have the state-based insurance exchanges.

Similarly, there’s a major lag between the passage of Dodd Frank in July 2010 and its start date. And unlike the case of Obamacare, it wasn’t supposed to be that way: Legislators had originally planned for much of the law to go into effect in 2011 and this year. But regulators are way behind schedule, and Dodd-Frank has been stuck in the bureaucratic purgatory known as the “rule-writing process.” The Dodd-Frank Act provides the blueprint, but it’s up to the Federal Reserve, the Securities and Exchange Commission and all the other major agencies to write the rules.

Parts of Obamacare went through the same process. But the enormous complexity of modern finance and the rules intended to govern them has made the rule-writing process for Dodd-Frank perhaps even more onerous and time-consuming. Regulators have missed most of the deadlines in the original law.

Even when the new regulations are finalized, banks typically have a long time to comply with them. The Volcker Rule, for example, is scheduled to go into effect in July, but banks will have about two years to adjust to the new ban on speculative bets for their own benefit, known as proprietary trading.

When the changes do go into effect, they won’t necessarily register as “reform” to the layperson. Unlike Obamacare, most of the new rules don’t directly affect consumers. Yes, there’s the Consumer Financial Protection Bureau and new restrictions on debit-card fees, but most of the changes won’t be visible to Main Street.

Most of Dodd-Frank’s rules, in fact, are meant to be preventive. And, as TARP has proved, prevention is a hard political selling point: It’s tough to convince the public that you’ve done good because things could have been worse, whereas egregious mistakes that happen in spite of the rules (e.g. MF Global, JPMorgan’s gambling away $2 trillion) are much more visible.

Instead, what ordinary Americans are most likely to see is the messy, confusing process of turning these rules into final law, a process that’s heavily dominated by bank lobbyists. Federal regulators typically meet with the groups that submit formal, detailed recommendations on new regulations. Industry groups have poured money, time and resources into this process, and it shows: Regulators from the Commodity Futures Trading Commission, FDIC, the Fed and SEC have held a whopping 3,445 meetings with outside groups since Dodd-Frank’s passage, according to law firm Davis Polk, which has been tracking the process.

That doesn’t mean that federal regulators will necessarily side with the big banks at the end of the day. But until the rules are finalized, we’re left to wonder whose side they’re really on. And even when that day finally comes, the public won’t necessarily be keen on what really just happened on Wall Street

The rest of the column is an attempt to explain why President Obama isn’t getting crushed right now. Brooks settles on Obama’s “version of manliness that is postboomer in policy but preboomer in manners and reticence.” But the premise of the column is wrong: If you look at the fundamentals right now, the president should not be getting crushed. In fact, he should be slightly ahead, which is pretty much where he is in most polls.

Brooks never actually defines what he means by “the fundamentals.” The evidence he provides in his column is mostly an assortment of recent poll results related to how voters feel about the economy, Obama’s plan for the economy, and Obama’s view of the role of government.

It’s not clear how Brooks is deciding which poll results are worth including and which are not. For instance, a new USA Today/Gallup poll finds that “though an overwhelming 71% rate economic conditions as poor, a 58% majority predict they will be good a year from now.” That poll — and others like it — don’t make it into the article.

Which is not to say they should. Picking and choosing poll results is generally a useless exercise. They’re hard to interpret, and often conflicting. Which is why it’s almost the opposite of what people usually mean when they talk about “the fundamentals.” Typically, “the fundamentals” mean you’re specifically not talking about polls. You’re talking about what’s actually going on in the economy, and in the political system.

In that view, the primary fundamentals are these: Obama is the incumbent. The economy is growing at a moderate pace. There’s no serious third-party challenge. We’re not losing massive numbers of soldiers in a foreign war. And when you look at those fundamentals, the reality is this: Incumbent presidents very, very rarely lose under those conditions.

I recently had to study this fairly closely in order to build the Wonkblog election model. The results seemed too optimistic for the president: At very modest levels of economic growth, the model would predict a win. But the model was picking up something real. Since 1948, only three incumbent presidents have lost reelection campaigns: Gerald Ford, Jimmy Carter and George H.W. Bush. Carter and Bush both ran in very bad economies. Ford was a bit of an odd case, as he took office after Richard Nixon resigned over Watergate.

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There are reasons to mistrust models like that one, or to believe that this year will be different in a way that the model can’t predict. I go into some of them here. But the fact remains: The fundamentals right now predict a close race and, most likely, an Obama win — though it’s easy to come up with a scenario in which Greece wrecks the euro zone, the resulting financial crisis wrecks our recovery, and the fundamentals shift to predict an Obama loss.

Now, there is some evidence that Obama is slightly more popular than an ad hoc model of presidential popularity — which is different from a model of who will win the election — would predict. Political scientist John Sides thinks he’s outperforming expectations by about 2.7 percentage points. And so if Brooks wants to argue that his particular version of “ESPN masculinity” is making up the difference, then fair enough. But in terms of the election’s fundamentals, there’s no mystery that needs to be explained here. Obama is very much in the range you would expect.

If I seem pedantic on this point, it’s because this is one of my pet peeves in political commentary: Pundits take political situations that can be explained through the fundamentals and then attribute them, without any evidence, to the telegenic characteristics of individual politicians or the messaging decisions made by their campaigns. Then, a few years later, the fundamentals turn around, and suddenly our great communicator has forgotten how to give a speech or run a campaign — or vice versa. Remember that in 1982, Ronald Reagan was under 40 percent in the polls. Then the economy rebounded, and he romped to victory in the election.

It happens to be the case that Brooks likes Obama’s “hypercompetitive, restrained, not given to self-doubt, rarely self-indulgent” temperament, which is fine. But here he’s presented readers with a mystery that isn’t a mystery, and then told them, without evidence, that “most of the cause is personal” and “the key is [Obama’s] post-boomer leadership style.” Not that Brooks thinks that, or sees a case for it, but that that’s how it is. But it isn’t! Or, at the least, we have no evidence for it.

And now we can see this in glorious chart form, thanks to Dave Altig of the Federal Reserve Bank of Atlanta. Since the recession began, the “labor force participation rate” has fallen from 66 percent to 63.6 percent. Altig estimates that about 0.9 percentage points of the drop was due to demographic factors, while about 1.5 points was due to the horrible economy. In other words, if the recession had never happened, the labor force participation rate would probably be about 65.1 percent:

So that’s about 1.5 percent of the eligible population — or about 3.6 million workers* — who have been elbowed out of the workforce by a subpar economy that didn’t have enough jobs for everyone. (Although note that these subpar conditions began back in 2003 and accelerated with the recession.) So how many of these people will actually return to the workforce if the economy ever picks up steam again?

That’s a tricky question because, as economist Brad Delong points out, many of those discouraged workers are in danger of losing their skills and work contacts and becoming “part of the ‘structurally non-employed’ who we will never see back at work, barring a high-pressure economy of a kind we see at most once a generation.”

Here’s another graph, from Julie Hotchkiss of the Atlanta Fed, looking at what labor-force dropouts between 25 and 54 are actually doing once they leave:

There’s been a big surge in workers going back to school — it’s likely that they’ll be back in the work force someday. But there’s also been a big surge in workers going on disability, as eligibility has gotten easier. Workers on disability are unlikely to come back. There’s also the mysterious “other” category — it’s not clear whether these workers will ever return to the workforce.

The question of how many labor force dropouts come back to the workforce isn’t an idle one. It will affect how many jobs we need going forward. After all, if the labor force swells, then the U.S. economy will have to add more jobs to keep up.

Altig estimates that if the labor force participation rate stays where it is currently, then the U.S. economy will need to add just 144,000 jobs per month to get down to 7.5 percent unemployment by the end of 2013. On the other hand, if the labor force grows back to 65.1 percent — say, because a vast reserve of heartened workers start scanning wants ads again — then we’ll need to add 304,260 jobs per month to get to the same level.

* Correction: It’s 3.6 million workers missing from the labor force, not 4.5 million as originally stated.

A team of public health researchers looked at health-care patterns among gay and bisexual men before and after Massachusetts legalized same-sex unions in 2003 (this was prior to the state’s health insurance expansion). Health-care research has increasingly looked at how policy interventions that change the larger environment impact health-care outcomes. In this case, they wanted to know whether legal same-sex marriage — which had the potential to reduce risk factors such as stress — might have an impact.

They found that it did: In the 12 months after the legalization of same-sex marriage, the men studied had a 13 percent decrease in both medical and mental health-care visits. When the researchers dug into what types of visits, exactly, were going down, many looked to be related to depression and stress.

“One mechanism that may explain these findings is a reduction in the amount and frequency of status-based stressors that sexual minority men experience when institutionalized forms of stigma are eliminated,” they concluded in a 2011 article in the American Journal of Public Health. “Examination of [medical billing codes] showed reductions in several medical and mental health diagnoses that are associated with stress — including hypertension,depression, and adjustment disorders — which is consistent with the hypothesis that stress may be an intervening pathway.”

Bondurant thinks the filibuster is unconstitutional. And, alongside Common Cause, where he serves on the board of directors, he’s suing to have the Supreme Court abolish it.

In 1806, the Senate, on the advice of Aaron Burr, tried to clean up its rule book, which was thought to be needlessly complicated and redundant. One change it made was to delete something called “the previous question” motion. That was the motion senators used to end debate on whatever they were talking about and move to the next topic. Burr recommended axing it because it was hardly ever used. Senators were gentlemen. They knew when to stop talking.

That was the moment the Senate created the filibuster. But nobody knew it at the time. It would be three more decades before the first filibuster was mounted — which meant it was five decades after the ratification of the Constitution. “Far from being a matter of high principle, the filibuster appears to be nothing more than an unforeseen and unintended consequence of the elimination of the previous question motion from the rules of the Senate,” Bondurant writes.

And even then, filibusters were a rare annoyance. Between 1840 and 1900, there were 16 filibusters. Between 2009 and 2010, there were more than 130. But that’s changed. Today, Majority Leader Harry Reid says that “60 votes are required for just about everything.”

At the core of Bondurant’s argument is a very simple claim: This isn’t what the Founders intended. The historical record is clear on that fact. The framers debated requiring a supermajority in Congress to pass anything. But they rejected that idea.

In Federalist 22, Alexander Hamilton savaged the idea of a supermajority Congress, writing that “its real operation is to embarrass the administration, to destroy the energy of government and to substitute the pleasure, caprice or artifices of an insignificant, turbulent or corrupt junta, to the regular deliberations and decisions of a respectable majority.”

In Federal 58, James Madison wasn’t much kinder to the concept. “In all cases where justice or the general good might require new laws to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no longer the majority that would rule; the power would be transferred to the minority.”

In the end, the Constitution prescribed six instances in which Congress would require more than a majority vote: impeaching the president, expelling members, overriding a presidential veto of a bill or order, ratifying treaties and amending the Constitution. And as Bondurant writes, “The Framers were aware of the established rule of construction, expressio unius est exclusio alterius, and that by adopting these six exceptions to the principle of majority rule, they were excluding other exceptions.” By contrast, in the Bill of Rights, the Founders were careful to state that “the enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”

That majority vote played into another principle, as well: the “finely wrought” compromise over proper representation. At the time of the country’s founding, seven of the 13 states, representing 27 percent of the population, could command a majority in the Senate. Today, with the filibuster, 21 of the 50 states, representing 11 percent of the population, can muster the 41 votes to stop a majority in the Senate. “The supermajority vote requirement,” Bondurant argues, thus “upsets the Great Compromise’s carefully crafted balance between the large states and the small states.”

Establishing that the Founders intended Congress to operate by majority vote is different than saying that it’s unconstitutional for Congress to act in another way. After all, the Constitution also says that Congress has the power to “determine the Rules of its Proceedings.”

But as Bondurant notes, there’s precedent for the Supreme Court to review congressional rules: In 1892, in United States v. Ballin, the Court held that while “the Constitution empowers each house to determine its rules of proceedings,” it “may not by its rules ignore constitutional restraints or violate fundamental rights.” And while some may argue that the filibuster has, at this point, been around for well over a century, the Supreme Court has previously held that the fact that “an unconstitutional action has been taken before surely does not render that same action any less unconstitutional at a later date.”

Bondurant makes a strong case. Will the Supreme Court buy it? I have no idea. But perhaps it’s a moot point. There’s evidence that some of the Senate’s most powerful members are preparing to take reform into their own hands. On Thursday, Reid, who has traditionally been a defender of the filibuster, took to the Senate floor to apologize to all the reformers he had stymied over the years.

“The rest of us were wrong,” he said. “If there were anything that ever needed changing in this body, it’s the filibuster rule, because it’s been abused, abused and abused.”

More from The Washington Post:

Budget time bomb sparks anxiety

Greece headed for new elections as talks collapse

Why isn’t Obama getting crushed right now?

Will America’s labor-force dropouts ever come back?

JPMorgan’s Dimon wins shareholder vote on pay

Travis Sharp, a budget analysis at the Center for a New American Security, ran the numbers based on Romney’s plan for defense spending for CNNMoney and found that the presumptive GOP nominee would increase Pentagon spending in 2013 by $96 billion. That’s about a 17 percent increase over 2012 spending levels—nearly the same amount by which the public wants to decrease the defense budget, according to the Stimson Center’s recent study.

Sharp based his calculation on Romney’s campaign promise to make the base defense budget—discretionary spending that excludes the cost of war in Iraq/Afghanistan—at least 4 percent of GDP every year. By contrast, the Pentagon’s current base budget is 3.3 percent of GDP in 2013, according to the Office of Management and Budget. (To be more precise, Romney’s Pentagon budget covers about 95 percent of total defense spending, but it’s close enough for a ballpark estimate.)

Defense costs would mount up even more quickly in later years: If Romney’s plan were adopted for the next decade, defense spending would increase by $2.1 trillion by 2022, as compared to the Defense Department’s current base budget plan, Sharp tells CNN.

But in recent decades, the marriage-as-firm view has crumbled -- and not just because social mores have changed. "Washing machines, dishwashers and microwave ovens have reduced the value to the family 'firm' of employing a domestic specialist," say Stevenson and Wolfers, who are, themselves, married. "Cheap clothes can be imported from China, rather than sewn at home. Healthy meals can be purchased from the freezer at Trader Joe’s. What’s more, legal and social changes have broken down many of the barriers keeping women out of the labor market...All these developments have increased the opportunity cost of having a spouse stay home, because that spouse now has greater value in the marketplace."

One possibility was that, as the traditional economic case for marriage fell apart, marriage itself would decline as an institution. But that didn't happen. Rather, we developed a new kind of marriage. "Modern partnerships are based upon 'consumption complementarities' -- the joy of sharing things and experiences -- rather than the production-based gains that motivated traditional marriage," continue Stevenson and Wolfers. "Consistent with this, co- parenting has replaced the separate roles of nurturer and disciplinarian. We have called this new model of sharing lives 'hedonic marriage.' These are marriages of equality in which the rule “opposites attract” no longer applies in the same way, because couples with more similar interests and values can derive greater benefits. So likes are now more likely to marry each other."

And it's into this institution that gay couples are being admitted, because the nature of this institution doesn't provide a good argument for their exclusion.

Gay couples couldn't credibly promise to provide each other with the separate and specialized skills -- separate for reasons of legal discrimination, and social beliefs about what men and women could do -- that were the basis of the older conception of marriage. But gay couples can certainly share the joy of things and experiences, they can certainly improve each other's lives, they can certainly co-parent, they can certainly bring increased economic stability to a household by combining two incomes -- they can do all the things that form the basis of what Stevenson and Wolfers call "hedonic marriages."

In other words, one story here is that our attitudes have changed towards homosexuality, and that's certainly true. But another is that our attitudes have changed towards marriage -- even heterosexual marriage -- in ways that opened the institution for gays. And that's true, too.

Wonkbook dashboard

RCP Obama vs. Romney: Obama +1.4%; 7-day change: Obama +0.4%.

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Top stories

1) Greece's coalition talks remain deadlocked. "Greece’s president is set to resume coalition talks on Tuesday with the country’s political leaders in another attempt to avoid a fresh general election after a meeting on Monday evening ended without agreement. Antonis Samaras and Evangelos Venizelos, the conservative and socialist leaders, and Fotis Kouvelis, head of a leftwing splinter group, held a fruitless one-hour discussion on how to escape the crisis but agreed to meet again, along with other party heads. President Karolos Papoulias has another 48 hours to persuade politicians to join a national unity government according to the constitution or face having to call another election...Alexis Tsipras, the leader of Syriza, the radical leftwing coalition that rejects the terms of Greece’s international bailout, refused to participate in Monday’s talks. 'We’re not going to join in selective meetings of political leaders ... The circle of contacts provided for by the constitution has been completed,' he said." Kerin Hope and Peter Spiegel in The Financial Times.

The standoff is raising worries of a European economic crisis. "Political deadlock in Greece rattled world markets Monday, reviving fears that the fractious Mediterranean country could spurn an international bailout, abandon the common European currency and risk a fresh round of world economic turmoil. European stock indexes fell, with Greece’s market now at a 20-year low, while the euro currency continued a recent decline against the dollar. U.S. stocks also fell. Coming only days before the leaders of the world’s Group of Eight industrialized nations meet at Camp David, the standoff in Greece over its political direction has thrust Europe’s troubles to the top of the agenda. A downturn in Europe could stagger a fragile recovery in the United States and undermine growth around the world. Fighting a new downturn would be a challenge for the major economies, many of which have not fully stabilized since the last big economic crisis." Howard Schneider and Anthony Faiola in The Washington Post.

FAQ: Why is Greece in such trouble? And can it be fixed?

@ezraklein: "Syriza" is a rather evil-sounding name for a political party. Pretty sure it means Hydra in Greek.

2) Senate leaders reached a deal to move the Export-Import Bank bill forward. "Legislation to extend the Export-Import Bank’s charter advanced in the Senate Monday evening after agreement was reached on addressing tea party demands to reopen a bipartisan deal approved only days ago by the House. Five GOP amendments will be permitted Tuesday -- some re-litigating specific agreements reached by House leaders. But in each case, a supermajority of 60 votes would be required, leaving Senate Majority Leader Harry Reid (D-Nev.) hopeful that the House package will survive intact and go quickly to President Barack Obama for his signature this week...Monday’s agreement, as announced by Reid, came only minutes before a scheduled procedural vote in which he would have needed 60 votes himself to move on to the bill. By coming to terms on the amendments, Reid avoided that challenge, but as part of the same deal, he will need 60 votes for passage of the bill." David Rogers in Politico.

3) JPMorgan Chase's loss has the banking industry scared. "A Congressional committee announced plans on Monday to hold a hearing on the financial regulatory overhaul that will look at the JPMorgan loss. Wall Street’s representatives, fearing that the entire banking industry might pay for JPMorgan’s sins, are trying to contain the fallout in Washington, people close to the matter said...JPMorgan, however, is stepping away from another public panel on the Volcker Rule. The Commodity Futures Trading Commission, one of the regulators writing the Volcker Rule, will host a public roundtable this month about the new regulation and has invited JPMorgan to speak. Last week, JPMorgan suggested that one of its top Volcker Rule experts would attend. But then the bank said that this person had a scheduling conflict. Rather than dispatch another executive to Washington, the banks recommended an employee at another bank.." Ben Protess and Ed Wyatt in The New York Times.

The fiasco claimed its first casualty. "JPMorgan Chase on Monday announced the abrupt retirement of the executive who oversaw the unit that lost $2 billion trading exotic securities, the latest twist in a story that has exposed the gulf between how Wall Street views itself and how the public sees the financial sector. To the bank, its actions -- which included appointing an executive to investigate what went wrong -- were an example of how it could take the initiative in cleaning up its own shop. But to many lawmakers and analysts, the question remains how a bank with a sterling reputation could get into such trouble two years after Congress passed laws to prevent dangerous financial gambling...On Monday, the bank announced that Chief Investment Officer Ina Drew, who oversaw the London unit, would leave the firm, which she has served for 30 years...The bank also announced that Mike Cavanagh, a top executive, would lead a team of officials to investigate the losses." Zachary Goldfarb and Steven Mufson in The Washington Post.

FAQ: What happened at JP Morgan? And should you care?

@lizzieohreally: Carl Levin just waved highlighted parts of Dodd-Frank at me. Which was awesome.

@SuzyKhimm: Part of Obama's problem in selling Dodd-Frank: many new regs aren't written yet, much less implemented. Similar to Obamacare conundrum.

4) Businesses are bracing for taxmageddon. "Defense contractors have slowed hiring. Tax advisers are warning firms not to count on favorite breaks. And hospitals are scouring their books for ways to cut costs. Across the U.S. economy, anxiety is rising about the potential for widespread disruptions after the November election, when a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending. The halls of the U.S. Capitol are already teeming with people warning of disaster if lawmakers fail to defuse a New Year’s budget bomb scheduled to raise taxes for every American taxpayer and slash spending at the Pentagon and most other federal agencies...The uncertainty is already prompting some firms to take action. Many more say they will be forced to contemplate layoffs and other cost-cutting measures long before the end of the year unless the Republican House and the Democratic Senate come up with an alternative path to tame deficits." Lori Montgomery and Rosalind Helderman in The Washington Post.

5) The House GOP may link tax cut extensions with a tax reform vote this summer. "House GOP leadership is considering linking a short-term extension of the expiring Bush-era tax cuts to an overhaul of the tax system this summer, aiming to give its party a campaign talking point and to pressure Senate Democrats to act. While the details of the plan are very much up in the air, one option being considered is passing a bill extending the 2001 and 2003 tax rates for one year along with a resolution affirming GOP principles for tax reform. The measures could also include some form of fast-track authority, much like the power granted to the Joint Committee on Deficit Reduction, to expedite floor consideration of a tax reform plan in 2013, when the Bush-era tax cuts would again expire...Boehner is expected to address this and other financial issues at a speech before the Peter G. Peterson Foundation Fiscal Summit today." Daniel Newhauser and John Stanton in Roll Call.

Top op-eds

1) KLEIN: The filibuster may be unconstitutional. "According to Best Lawyers -- 'the oldest and most respected peer-review publication in the legal profession' -- Emmet Bondurant 'is the go-to lawyer when a business person just can’t afford to lose a lawsuit.' He was its 2010 Lawyer of the Year for Antitrust and Bet-the-Company Litigation. But now, he’s bitten off something even bigger: bet-the-country litigation. Bondurant thinks the filibuster is unconstitutional. And, alongside Common Cause, where he serves on the board of directors, he’s suing to have the Supreme Court abolish it...At the core of Bondurant’s argument is a very simple claim: This isn’t what the Founders intended. The historical record is clear on that fact. The framers debated requiring a supermajority in Congress to pass anything. But they rejected that idea." Ezra Klein in The Washington Post.

2) SALAM: The U.S. economy shouldn't follow China's model. "Americans have always looked abroad for inspiration. Alexander Hamilton drew on the experience of Britain and France to shape the economic institutions of the early republic. In the early 19th century, Henry Clay championed tariffs, a national bank, and internal improvements in an effort to match Britain’s economic might. As the 19th century gave way to the 20th, Germany emerged as an industrial colossus, and American intellectuals had a new model. During the 1950s, at least some Americans, mainly but not exclusively on the political left, saw the breakneck modernization of the Soviet Union as a clear indication that the old-fashioned market economy was on its last legs...But the belief that we had much to learn from the Soviets was both dangerous and stupid. And much the same can be said for the current enthusiasm over China’s economic model." Reihan Salam in National Review.

3) BERWICK: Cheaper healthcare can mean better healthcare. "Reducing costs won’t just rescue health care; it will also help rescue our schools, our roads, our museums, our wages, and the competitiveness of our corporations...The route is simple: improve care. In a study in the Journal of the American Medical Association, my colleague Andy Hackbarth and I estimated the amount of pure waste in American health care -- overtreatment that helps no patient at all (like treating viral infections with antibiotics), errors and injuries from unsafe care, failures in coordination (such as sending people home from hospitals without supports), needless administrative complexity, failures of price competition, and fraud. The lowest estimate of total waste in these six categories was 21 percent of health care costs; the highest was 47 percent; and the midpoint was 34 percent. When we are wasting $1 in of every $3, it makes no sense to say we cannot afford to make health care a human right without rationing. Don’t cut care. Cut waste." Donald Berwick in The Boston Globe.

4) SCHMITT: Link worker pay to corporate taxes to fight inequality. "The tax code can be part of the solution. The first step is to end the preferential treatment of income from capital gains, which economists like Princeton’s Alan Blinder have shown to have no lasting effect on total investment or the economy. But we can and should go further, actively using the corporate tax code to create a real incentive to pay CEOs less, and workers more, by linking the head honcho’s compensation to both employee salaries and tax rates. Here’s how the idea could work. The current corporate tax rate is a flat 35 percent. In an equity-based corporate tax system, companies with a pay ratio at the historic norm of 40:1, or even up to 60:1, would pay the existing rate and be able to deduct executive pay. But companies that pay their top executives more than 60 times the average worker (including employees in overseas subsidiaries) would pay a higher rate, 40 percent, and those with extreme pay differentials, 80:1 or higher, would pay 45 percent." Mark Schmitt in GOOD.

5) STEVENSON AND WOLFERS: An economic mode of marriage equality. For our grandparents’ generation, marriage was about separate roles, separate spheres and specialization. Gary Becker, an economist at the University of Chicago, won the Nobel Prize partly for describing the family as an economic institution -- a bit like a small firm that employs people with different skills to produce both income and a well-run household. In Becker’s view, the joining of husband and wife yields a more productive firm, because it allows one spouse to specialize in earning income from working in the market, while the other specializes in the domestic sphere. The division of labor allows for greater productivity, just as it does in the workplace...Modern marriage offers different benefits. Today, we search for a soul mate rather than a good homemaker or provider. We are more likely to regard marriage as a forum for shared experiences and passions. Viewed through an economic frame, modern partnerships are based upon 'consumption complementarities' -- the joy of sharing things and experiences -- rather than the production-based gains that motivated traditional marriage. Consistent with this, co- parenting has replaced the separate roles of nurturer and disciplinarian." Betsey Stevenson and Justin Wolfers at Bloomberg View.

Anti-folk interlude: Kimya Dawson plays "I like Giants" live.

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

Still to come: A fall in commodities prices sparks worries of deflation; a turf war over primary care; colleges begin to confront costs; regulators worry about solar flares; and a harbor seal pup explores the water for the first time.

Economy

New data suggests the eurozone has returned to recession. "Industrial production in the 17 countries that use the euro fell unexpectedly in March, leaving little doubt the region contracted for a second straight quarter in the first three months of the year and returned to recession, data by Eurostat showed Monday. The European Union's statistical agency will publish the first estimate of first-quarter gross domestic product Tuesday. Economists are forecasting a 0.2% quarterly decline, according to a Dow Jones Newswires poll. Industrial production fell 0.3% on the month in March and by 2.2% on the year. The latter was the steepest drop since a 3.7% decline in December 2009, while the monthly decline was because of a sharp 8.5% decrease in energy production as the weather in March was warmer than usual for the time of year, a Eurostat statistician said...The data were weaker than expected. Economists had forecast a 0.5% monthly increase and a 1.2% year-on-year fall." Ilona Billington in The Wall Street Journal.

Commodities prices fell to a new yearly low. "The prices of key commodities fell to their lowest level of the year on Monday, dragged down by worries about Europe’s debt crisis and the possibility of a slowdown in China, the world’s second-largest economy. An emerging concern among some economists and investors is that the declining prices of materials such as gold and crude oil could be an early signal of deflation -- a decline of prices that is economically corrosive because it makes it more difficult for businesses to make a profit. The downturn in prices is reflected in broad measures of commodity prices. The Standard & Poor’s GSCI, an index tracking prices for crude oil, gold, copper and several other commodities, has dropped more than 6 percent this month so far. Even the price of gold, which usually rises when investors have concerns about the economy, has fallen." Jia Lynn Yang in The Washington Post.

Smile for the camera interlude: Videos of people who think they are posing for a picture.

Health Care

Romney and Obama differ sharply on Medicare. "President Obama and Mitt Romney agree on one thing about Medicare: the differences between them are huge...Mr. Romney, who would limit the government’s current open-ended financial commitment to Medicare, contends that Mr. Obama has no workable plan to prevent Medicare from going bankrupt. Under the Romney proposal, the government would contribute a fixed amount of money on behalf of each beneficiary, and future beneficiaries could use the money to buy private insurance or to help pay for traditional Medicare...Mr. Obama assails the Romney proposal for the same reason he denounced a similar plan devised by Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee: the government contribution, he says, would not keep up with the rising cost of health care, so Medicare beneficiaries -- older Americans and people with disabilities -- would have to pay more of the cost." Robert Pear in The New York Times.

A primary care turf war is heating up. "Nurse practitioners are rolling out a campaign this week to explain what, exactly, nurse practitioners do -- and why patients should trust them with their medical needs...The AANP will follow up on the public relations blitz with state-level lobbying efforts, looking to pass bills that will expand the range of medical procedures that their membership can perform...All states have 'scope of practice' laws, which regulate what medical procedures each profession can, and cannot, perform, given their level of education...In 16 states, nurse practitioners can practice without the supervision of another professional such as a doctor. Other states, however, require a physician to sign off on a nurse practitioner’s prescriptions, for example, or diagnostic tests. As the health insurance expansion looms, expanding those rules to other states has become a crucial priority for nurse practitioners." Sarah Kliff in The Washington Post.

A senator is floating a plan to make HIV drugs cheaper. "Why do American patients pay tens of thousands of dollars each year for HIV drugs that cost just hundreds in Africa? Drugmakers wave their patent rights in developing countries as part of the President’s Emergency Fund for AIDS Relief. But the higher cost of brand-name drugs in the United States makes it difficult for many HIV patients to stay on drug regimens that can cost as much as $30,000 a year. That’s the challenge a Senate subcommittee will explore on Tuesday at a hearing on how to narrow the gap. It’s mainly a vehicle one proposed solution -- a proposal by Sen. Bernie Sanders (I-Vt.) that would award prize money rather than grant patent rights to manufacturers that develop new HIV drugs, allowing the medication to go straight to the generic market. But the hearing will also look at the root causes of a dilemma that has had some HIV patients and drugmakers at odds for years." J. Lester Feder in Politico.

@petersuderman: This new issue of Health Affairs looks so, so awesome. All coverage expansion all the time!

Domestic Policy

Broadcasters are pushing back on recent FCC moves. "TV broadcasters look at the Federal Communications Commission’s recent drive to move them off frequencies and put their political advertising rates on the Internet and draw one conclusion: The FCC has it in for television. And broadcasters are fighting back by publicly airing that charge in the midst of the ongoing policy debate on freeing up airwaves for wireless broadband...For decades, television’s use of the airwaves was virtually unchallenged. Under Chairman Julius Genachowski, the FCC has focused on fostering mobile broadband as the essential communications platform of the future. As broadcasters see it, television has become a much less important medium to the agency...In the wrangling over spectrum, broadcasters see the wireless industry -- which is clamoring for access to more airwaves to satisfy the exploding amount of broadband data traffic -- as their main foe. As the wireless industry sees it, the best use of finite spectrum resources is mobile broadband." Brooks Boliek in Politico.

A federal judge struck down a NLRB rule on union elections. "A federal judge ruled Monday that a contentious union election rule proposed by the National Labor Relations Board (NLRB) is 'invalid.' In an 18-page memorandum opinion, U.S. District Judge James Boasberg struck the regulation down, saying the labor board only had two members when it voted on the final rule in December 2011. Boasberg said the agency needed at least three members to have a quorum for action on the rule...Two NLRB members -- Chairman Mark Pearce and then-Member Craig Becker, both Democrats -- participated in adopting the rule. The labor board’s third member at the time, Republican Brian Hayes, did not participate...The judge said the decision by the U.S. District Court for the District of Columbia 'may seem unduly technical,' but cited a 2010 Supreme Court ruling that the NLRB needs a quorum of three members to issue regulations and make rulings. Boasberg said his ruling was not made on the merits of the union election rule and noted the NLRB could vote again to pass it." Kevin Bogardus in The Hill.

@AlecMacGillis: Dems' failure to pass labor law reform in '09-'10 haunts once again--a judge just threw out NLRB's incremental new rule to ease organizing.

Colleges are beginning to confront costs. "College presidents across the country are confronting the same realization, trying to manage their institutions with fewer state dollars without sacrificing quality or all-important academic rankings. Tuition increases had been a relatively easy fix but now -- with the balance of student debt topping $1 trillion and an increasing number of borrowers struggling to pay -- some administrators acknowledge that they cannot keep putting the financial onus on students and their families. Increasingly, they are looking for other ways to pay for education, stepping up private fund-raising, privatizing services, cutting staff, eliminating departments -- even saving millions of dollars by standardizing things like expense forms...The problems aren’t confined to public colleges. Administrators at some nonprofit private institutions said they too had come to realize they could not keep raising tuition and fees." Andrew Martin in The New York Times.

Adorable animals exploring the world interlude: The firsts of a harbor seal pup.

Energy

A transmission line for offshore wind is moving forward. "A pioneering proposal to build a wind power transmission line on the ocean floor from southern Virginia to northern New Jersey cleared a hurdle on Monday when the Interior Department opened the way for the project’s sponsors to start work on an environmental impact statement. The Bureau of Ocean Energy Management, part of the Interior Department, said that no competitor had emerged for the right-of-way for the proposed transmission line, known as the Atlantic Wind Connection, allowing the bureau to issue a 'determination of no competitive interest.' By linking wind farms 15 to 20 miles off the coast, the backbone would greatly reduce the number of individual radial lines needed to bring the energy to shore...Construction of the full project would take about 10 years, according to the company. The right-of-way corridor, including branches to reach the shore at intermediate points, would run about 790 miles, the Interior Department said." Matthew Wald in The New York Times.

Regulators are considering options to protect the grid from solar flares. "With a peak in the cycle of solar flares approaching, U.S. electricity regulators are weighing their options for protecting the nation's grid from the sun's eruptions--including new equipment standards and retrofits--while keeping a lid on the cost. They are studying the impact of historic sunstorms as far back as 1859 to see if the system needs an upgrade, and encountering a clash of views on how serious the threat is and what should be done about it...The sun is expected to hit a peak eruption period in 2013, and while superstorms don't always occur in peak periods, some warn of a disaster. John Kappenman, a consultant and former power engineer who has spent decades researching the storms, says the modern power grid isn't hardened for the worst nature has to offer. He says an extreme storm could cause blackouts lasting weeks or months, leaving major cities temporarily uninhabitable and taking a massive economic toll." Ryan Tracy in The Wall Street Journal.

Highway crashes are the leading cause of fatalities for oil and gas workers. "Over the past decade, more than 300 oil and gas workers like Mr. Roth were killed in highway crashes, the largest cause of fatalities in the industry. Many of these deaths were due in part to oil field exemptions from highway safety rules that allow truckers to work longer hours than drivers in most other industries, according to safety and health experts. Many oil field truckers say that while these exemptions help them earn more money, they are routinely used to pressure workers into driving after shifts that are 20 hours or longer...Last year, the National Transportation Safety Board said it 'strongly opposed' the oil field exemptions because they raise the risk of crashes. This threat will grow substantially in coming years, safety advocates warn. According to federal officials, more than 200,000 new oil and gas wells will be drilled nationwide over the next decade." Ian Urbina in The New York Times.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

— “Simply stated, once you are the market, you are no longer a hedge.”

— Bet you’ll never guess the world’s busiest airline route.

— An investigation into how Louisiana built the world’s prison capital.

— The economics of NHL teams in the Sun Belt.

— An interview with a safecracker.

More progressive communities... tend to favor more old-fashioned names. Parents in more conservative areas come up with names that are more creative or androgynous.

“Sometimes people have a naive expectation that people who are politically conservative on social issues would name their kids in traditional ways, and it doesn’t always happen that way,” says Andrew Gelman, a professor of statistics and political science at Columbia University and author of “Red State, Blue State, Rich State, Poor State.”

The reason for more outlandish-sounding names cropping up in conservative quarters is simple, Wattenberg says. Women in red states tend to have their first children earlier than women in blue states. A 23-year-old mom is more likely to come up with something out of the ordinary than one who is 33.

Also notable in the 2010 data: After years of languishing, Elvis has once again cracked the top 1,000 names for the first time in a decade.

What, exactly, are Greek politicians bickering about these days?

Here’s the dilemma: These austerity measures are spectacularly unpopular, and Greek voters keep punishing any party that tries to implement them. That puts the whole bailout deal at risk. Under the terms of the deal, the Greek government is supposed to pass an additional €11 billion in spending cuts this summer before it receives its next bailout payment of €31 billion. If those cuts don’t happen, Greece won’t get its bailout money. It will then default on its debts, and the country would likely have to leave the euro. That could be bad.

So how did the recent Greek elections make this whole situation worse?

Basically, the elections have created a deadlock in the Greek parliament. The two Greek parties that had previously supported the bailout agreement, PASOK and New Democracy, lost votes. They no longer have enough seats to form a government on their own. Instead, a lot of voters flocked to the Coalition of the Radical Left, or Syriza, which is led by a 37-year-old engineer, Alexis Tsipras. Syriza flatly opposes the austerity/bailout agreement and refuses to form a government with any other party that doesn’t agree. At the moment, there aren’t enough votes for a pro-bailout or an anti-bailout government.

What happens if the Greek parliament can’t break the deadlock and form a functioning government?

Then there will be a new set of elections, probably on June 17. This is the most likely outcome, says Kevin Featherstone, a professor of contemporary Greek studies at the London School of Economics.

But it’s not at all clear what would happen in the next election. Polls show that Syriza, the anti-bailout party on the left, is gaining in popularity. That could create more paralysis. Many Greek experts think that Tsipras doesn’t actually want to lead — he just wants to complain about spending cuts and the troika deal while leaving it to other parties to actually implement the painful austerity measures. But Syriza’s also getting popular enough that he’s making it tough for a pro-bailout government to form.

So the politicians are paralyzed. What do the Greek people actually want?

Greek public opinion seems to be all over the place. Polls show that some 80 percent of Greeks would like to stay in the euro, but they also don’t want to agree to the austerity measures that are part of the bailout deal, especially with unemployment already at 21.7 percent. “People do not understand that if Greece backs off from its commitments, they’ll have to leave the euro,” says Elias Papaioannou, an economist at Dartmouth who’s in Greece right now. He says that much of the TV chatter in Greece gives off the impression that it’s possible to stay in the euro and oppose the bailout.

Well, is there any way for Greece to stay in the euro and somehow still avoid sweeping austerity measures?

Not really. Papaioannou notes that there are plenty of ways, in theory, to tweak the terms of the troika bailout to make it a bit less painful for Greece. Greece could get even more time to pay off its debts. It could be allowed to ease up on spending cuts and wage cuts — to implement them over a longer time period. (Remember, Greece’s economy is expected to shrink by 6 percent this year, so it’s not a great time for austerity.) Wealthier European countries could also pony up some more cash to help ease the Greek people through this period of contraction. But there’s only so much tinkering that can be done, adds Papaioannou. Greece is very severely in debt, and it’s going to have to make some painful adjustments no matter what.

So what’s the best-case scenario for Greece staying in the euro?

One possible scenario is that Greece’s president appoints a new technocratic government to implement the austerity measures, says Featherstone. This could only happen, however, if the president was supported by PASOK and New Democracy — the two pro-bailout parties — as well as the Democratic Left party. That last party is pro-euro but anti-austerity and would probably take a huge hit in popularity if it turned around and supported a caretaker pro-austerity government. “It’s a slim chance that this will happen,” says Featherstone. On Monday, Greek President Karolos Papoulias will meet with the parties for one last-ditch effort to form a government.

And even if Greece did form a new government that was in favor of the bailout agreement, could they actually go through with the austerity measures?

That’s not clear, either. Experts say that both left-wing and right-wing parties — including the growing neofascist Chrysi Avgi, or Golden Dawn party — are likely to take to the streets if a new government forms and pushes through with €11 billion in additional cuts. Bitter strikes and protests could ensue. Likewise, Syriza will no doubt denounce whatever government pushes through an austerity bill.

Germany and other European leaders are now openly talking about kicking Greece out of the euro. Won’t threats like those convince Greek politicians that they need to make cuts?

Maybe not. It’s quite possible that threats from the rest of Europe could actually hurt the chances that Greece will cave, says Papaioannou. He notes that similar threats by Germany before the May 6 elections may well have pushed people to extremist parties. “It’s totally counterproductive,” says Papaioannou.

But wouldn’t Greece actually be in worse shape if it got kicked out of the euro?

Probably. A recent analysis from UBS Investment Research found that Greece could lose 50 percent of its economic output in the first year alone after an exit. Not only that, but Greece wouldn’t get any bailout money from the troika, and it wouldn’t be able to borrow money from anyone else, so it would have to implement even more severe austerity measures than it’s already being forced to do. Other reports have found less apocalyptic, but still dire consequences. The Financial Times has a fuller rundown of some of the ways a Greek exit could play out. None of them are pretty.

So even though Greeks don’t actually want to leave the euro, and even though it would be horrible, they could still manage to get themselves kicked out inadvertently?

Right. Of course, it’s possible that Germany and the rest of Europe will try to find a way to accommodate Greece, rather than letting the euro implode. But right now there’s a standoff, and it’s not at all clear who’s going to blink first — or if anyone will blink at all.

But there aren’t that many Singapores. Consider this interview with Will Smith. He’s explaining to a French interviewer why he’s willing to pay higher taxes. Then, at 1:20, the interviewer tells him that the Francois Hollande wants to raise the top marginal tax rate in France to 75 percent. Hilarity ensues.

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More from PostBusiness:

Who stands to get rich from Facebook IPO? (PHOTOS)

Ezra Klein: So JP Morgan lost $2 billion. They’re not asking for a bailout. They’re not threatening to capsize either themselves or anyone else in the system. And so they say, and it’s not an entirely unfair question, why is this Elizabeth Warren’s business, or the U.S. Congress’s business? Isn’t making bad investment decisions legal?

Elizabeth Warren: That is what Jamie Dimon has said. He says it’s stupid and sloppy but we’ll fix it. So stay away. But what if the next loss is $20 billion or $200 billion? Is he saying JP Morgan should be entitled to continue to take these bets right up until the day it lands in the taxpayers lap again?

Banks are different than other kinds of companies. We learned that in 2008. They run the risk of bringing down our jobs, our pensions, our economy. The basic deal we made with them is they get to operate banks — the things that take savings and investments and checking accounts and get a federal guarantee — in return for submitting to substantial oversight to make sure their activities are safe.

EK: That gets us to the Volcker rule, which is what would keep banks that get that guarantee from gambling with customer money and a federal backstop. But at this point, I don’t think very many people — even people who follow this stuff quite closely — have a very specific sense of what the difference between a good and bad Volcker rule is. So how do you think about that?

EW: I’m going to reframe it slightly: Who profits from the complexity of the Volcker rule? It’s the largest financial institutions. No financial institutions want a simple Volcker rule. They want layers and layers of complexity because it’s in complexity that there are loopholes. That’s where it’s possible to back up regulators who are not quite certain about the ground they stand on. And it’s a larger problem with our regulatory structure: Complexity favors those who can hire armies of lobbyists and lawyers. The big push I made at the Consumer Financial Protection Bureau was simple rules. Simple mortgage documents. Simple credit card agreements. Because complexity creates too many opportunities for an army of lawyers to turn the rules upside down.

EK: I agree that complexity is where lobbyists and lawyers work their dark magic. But when I talk to people in the industry about this, they say that simple rules sound great, but they’re not really possible. It’s hard to distinguish a hedge from a bet, or a speculative trade from a legitimate one. The world is complex, and that’s why regulators and politicians who don’t like Wall Street and don’t like being browbeaten by lobbyists end up allowing complex rules, too.

EW: Here’s another way to look at what you just described: That’s the strongest argument for a modern Glass-Steagall. Glass-Steagall said in effect that hedge funds should be separated from commercial banking. If a big institution wants to go out and play in the market, that’s fine. But it doesn’t get the backup of the federal government. If it’s too complicated to implement the Volcker rule, do you say we give up and let the largest financial institutions do what they want? Or do you say maybe that’s the reason we need a modern Glass-Steagall?

EK: Do you support a modernized Glass-Steagall law?

EW: Yeah! I’ve talked with Sen. Maria Cantwell from Washington State. She’s been working on that, and I think the debate should be on the table.

EK: What about breaking up the big banks?

EW: You’re approaching risk from two different directions. One is the risk of the activity. That’s the Volcker rule. The other direction is to say risk is an assumption of size. Community banks shouldn’t have to deal with complex regulatory oversight, but the largest institutions should be subject to far more aggressive oversight and have to pay more for the protections they receive from the American taxpayer. Then shareholders may decide to invest in institutions that are not so large.

EK: One of the scarier aftereffects of the crisis is that the biggest banks have become much bigger, right? JP Morgan Chase, if I remember correctly, now has more than $2 trillion in assets, where before the crisis, it was well beneath that.

EW: I was just talking about this this morning. One of the things I remember is when we were writing the reports trying to put some accountability into the system in 2008 we kept talking about how there was too much concentration in the banking industry. I remember this! I was on television talking about it. I talked to reporters about it. And now there’s more concentration than there was then. We moved in exactly the wrong direction.

EK: And the thing that worries me about that, at least when applied to this crisis, is that if you think about the appetite for risk being a contributor to bubbles and blowups, we’re not even five years out from Lehman. Regulators are looking over everyone’s shoulder. You’d expect the appetite for risk to be very low right now. And even in this atmosphere, JP Morgan managed to blow up billions of dollars in insanely complex derivatives.

EW: And when Jamie Dimon is holding himself out as the hero of the day for having been the world’s most prudent banker. All of that is going on at the same time. The moment of once-burned, twice-shy, passed quickly! The bankers have been ready to get right back into playing with matches and firecrackers and every other combustible thing they can find. That’s why I think this is really about the system, not Dimon. If JP Morgan has to admit to taking on risks that would cause a $2 billion loss, what’s happening at the other financial institutions, the ones that haven’t held themselves out as models of prudence? No one knows because there is no effective oversight.

EK: Can Dodd-Frank work if it’s effectively implemented?

EW: I think Dodd-Frank is a strong bill that moves in the right direction. But the market keeps changing. The practices keep changing. The idea that we’ll pass one law and then declare that problem is solved, we’ll be back again in 50 years, just doesn’t work anymore. We had a double problem here: Both deregulation and the failure to adapt to new financial conditions and products and practices. That’s what permitted risk to multiply in the system until it nearly brought the economy to its knees.

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Until now, psychiatry has acknowledged that, within limits, symptoms of depression after the death of a loved one are part of the human condition. Accordingly, in its definition of “major depressive disorder” the existing DSM incorporates a “bereavement exclusion.” In the proposed new version, this is replaced by an ambiguously worded footnote. “People who have depressive symptoms as part of their grief will now be diagnosable with a mental disorder,” says NYU professor Jerome Wakefield, a leading opponent of the change, “and ­potentially be the target of treatments that they don’t need.” The revision could affect as many as 4 or 5 ­million people each year.

A similar change has been made to the diagnosis of “adjustment disorder.” The draft creates a new category of “adjustment disorder—­related to bereavement,” whose wording is so broad that it’s hard to imagine who might not be covered. Depression has strict diagnostic criteria, but this, Wakefield says, “is the first time that grief feelings—not depressive symptoms—have been pathologized. Practically everyone who is grieving will fall under this. They’re transforming our relationship to grief.”

The editorial board of The Lancet, a leading medical journal, has come out in opposition to these changes. Proponents of the change, however, contend that changing the definition could make it easier for the bereaved to seek treatment during difficult times as it would come with a specific diagnosis.

The key player in Greek politics right now is Alexis Tsipras, the 37-year-old leader of Syriza, which has unexpectedly emerged as the second-largest party in Greece. Tsipras has refused to participate in a grand coalition, and so now Greece is headed to a second election — and Syriza might come out of that even stronger. Matt Yglesias looks at what Tsipras wants:

On the face of it, his policy makes no sense. He says he rejects the EU-imposed austerity program but wants to stay in the Euro and in the European Union. But Greece has a large primary budget deficit and no source of market financing. The EU is insisting on an austerity program, but it’s also giving them cold hard cash in the interim. Reject the austerity program and you lose the EU/IMF money and need to implement an even harsher austerity program. Tsipras is a bit like a guy standing in your living room threatening to blow his own brains out unless you pay him money, a proposition he offers on the theory that you’d rather not see your furniture ruined.

Of course, what Tsipras wants and what he’ll be willing to take when he sits down with euro zone officials are very different things. The major development in the last few days is that euro zone officials are publicly talking about how they’d manage a Greek exit — or, as folks are calling it, a “grexit.” As Yglesias puts it, they want to convince the Greeks that “Tsipras can shoot himself if he likes, and nobody will stop him. The hope is that faced with the decision, he won’t pull the trigger and eventually a coalition grand enough will emerge to tell the Greeks to be ‘responsible’ and accept the austerity.”

Over at FT Alphaville, they’re rounding up opinions on what a “Grexit” would mean for financial markets. It’s not pretty. The question is whether, at this point, it’s actually inevitable. If I’m reading him right, I think Mohammed el-Erian thinks it is. But note that this isn’t the first time we’ve been told that the end game is near only to watch Europe figure out a way to avert crisis and muddle along.

There were a few twists. Democrats were willing to pay more than Republicans for low-carbon electricity. Older Americans were less willing to shell out extra. Southerners balked at the highest price tags. And respondents were a tad more reluctant to pay extra when they found out that the clean energy standard could include nuclear power and natural gas. “This result is not surprising,” the authors note, “given the negative publicity regarding shale gas hydraulic fracturing and the Fukushima nuclear accident.”

Still, the researchers — Harvard’s Joseph Aldy and Yale’s Matthew Kotchen and Anthony Leiserowitz — found that, on the whole, Americans were willing to endure a 13 percent increase in the price of electricity for cleaner sources.

As it happens, there’s an actual bill that would basically achieve all this. In the Senate, Jeff Bingaman has put out a Clean Energy Standard that would push utilities to get 84 percent of their power from lower-carbon energy sources by 2035. That includes natural gas, nuclear power, solar, wind, geothermal and biomass.

According to an analysis by the Energy Information Administration, the bill would increase electricity prices 4 percent by 2025 and 18 percent by 2035. That’s roughly in the acceptable range in the survey, perhaps a bit high. Bingaman’s bill, according to the EIA, would also cut carbon emissions in the electricity sector by 44 percent — mostly by replacing coal plants with natural gas, more nuclear power and renewables.

That doesn’t mean the bill could ever pass Congress, however. One thing that the Harvard and Yale researchers found was that people’s willingness to pay varies significantly by congressional district. So they looked at Congress. Assume that you need to get 218 votes in the House and 60 votes in the Senate to pass a bill and overcome a filibuster. Now assume that each politician will be responsive to the median voter in his or her district.

In that case, the researchers found, the clean energy standard would have to cost less than $48 a year to pass the House. And it would have to cost less than $59 a year to pass through the Senate and overcome a filibuster. That is, a clean-energy standard could pass if it increased rates by less than 5 percent.

In other words, clean-energy advocates shouldn’t get too excited about these polls. Yes, the average American may be willing to pay quite a bit more for clean energy. But that doesn’t mean Congress will follow.

As Michael Hiltzik of the Los Angeles Times writes, we don’t need to get too technical here. “Leaving aside the sophistication of the transactions themselves, JPMorgan’s trader, a London-based derivatives expert whose portfolio was so outsized he became known in the markets as the London Whale, essentially bet that corporate debt was becoming less risky as corporations were getting stronger -- in trading parlance, he was long corporate debt. But he did so in a way that even a tiny hiccup in the index he was trading could be exploited by rival traders. And that’s what happened.” If you want to get technical, however, FT Alphaville has you covered.

No one really knows yet. Matt Levine, the editor of Dealbreaker, thinks they simply messed up the math that was governing the trade. “This looks like the CIO’s trading desk modelling the actual [profits and loss] and risks of the trade wildly wrong. That seems to me like the simplest way to lose a billion dollars without noticing it. You can see that in Jamie’s ‘just ’cause we’re stupid doesn’t mean everybody else was’: this was not driven by the market moving against them (though it seems to have), it was driven by them getting the math wrong.”

How much did JP Morgan lose on it?

We don’t know. We probably won’t know for awhile. The number $2 billion is floating around. But it could easily be closer to $5 billion when all is said and done. The key here is that the trade isn’t over. JP Morgan Chase is still trying to get out of its positions. How quickly they do that, and where the market moves between now and then, will decide the extent of their total losses.

Will JP Morgan need a bailout?

No. It’s hard to believe, but $2 billion, or even $5 billion, just isn’t that much money to the bank. In 2011, JP Morgan’s profits were $19 billion in 2011. And CEO Jamie Dimon called that “mildly disappointing” at the time.

So does this matter at all?

Yes.

Why?

For one thing, JP Morgan was known as the best manager of risk on Wall Street. That’s largely because they made it through the financial crisis mostly unscathed. But it turns out that even the best manager of risk isn’t very good. This trade, in fact, looks a lot like the financial crisis: They bet on something unlikely as if it was impossible. That’s what all those banks did when they made bets on the belief that the housing market never goes down everywhere all at once. It’s a reminder that this is a kind of mistake that even “good” banks make. And remember -- JP Morgan made this mistake less than four years after the fall of Lehman Brothers, so this came at a time when the lessons of the crisis are fresh in everyone’s mind, and when regulators are watching closely.

So that’s it? The national media is engaged in a collective attack of post-traumatic stress because the only bank it kinda-sorta trusted did something dumb?

No. There’s a political dimension here, too. JP Morgan has used its sterling reputation to fight the Volcker rule. That’s the regulation that says that banks that take commercial loans and get federal insurance to protect those loans -- banks that you might open a checking account with, like JP Morgan -- can’t make speculative bets on their own behalf. If you’re going to be a bank, then you can’t play at the casino.

The problem is that it’s very hard to say when a bank is betting on its own behalf and when its betting on its clients’ behalf. JP Morgan says that this trade was a “hedge”: It was there to reduce risk, not make money. But given how exquisitely it blew up in JP Morgan’s face, now regulators are going to make sure that the Volcker rule would stop trades like this one from happening. Otherwise, they’ll get the blame next time. That means a much tighter Volcker rule -- which in turn means JP Morgan (and other banks) won’t make as much money in the coming years. That’s part of why all their stocks are tumbling. JP Morgan, for instance, lost $14.5 billion on Friday.

And the government may not stop with the Volcker rule. The SEC has opened an investigation. And remember: this is an election year. If a few congressmen band together to propose some much more stringent regulations on the banks, there’s some chance that they could sail through as both parties try to show they’re tougher on the banks.

What else could they do?

Lots. If you look hard enough, you can find many, many regulatory changes that were left out of Dodd-Frank.

For instance, Eliot Spitzer points out that Jamie Dimon, the CEO of JP Morgan Chase, “sits on the board of the New York Federal Reserve Bank—the very organization that is supposed to oversee his bank’s financial practices, the organization that is supposed to issue all sorts of regulations that control what his bank can do, the very organization he has been lobbying to relax the rules about the bets he wants to make...The Fed conflict is so obvious that it defies any possible rationalization or explanation. For a decade, the New York Fed has failed to pick up on any of the significant Wall Street threats: excess leverage, subprime fraud, dangerous concentration in “too big to fail” entities. Maybe the reason is that the board is controlled by the very voices that have been at the root of the failure. There has been not the slightest voice of protest from the board—yet it is a public organization!”

Can’t Wall Street just lean on Congress to stop them?

Possibly. But remember that the most aggressive and effective of Wall Street’s defenders was...Jamie Dimon. And his argument was always that the financial crisis was, in large part, a case of many banks being stupid. But JP Morgan had been smart. And was it really fair to punish JP Morgan for the mistakes of Washington Mutual.

But as Noam Scheiber writes, JP Morgan’s bad trade just annihilated that argument. “We now have ironclad proof—as if we really needed it—that everyone is capable of disastrous stupidity. But that’s the one thing Dimon can’t admit, since it would require him to support intrusive regulations. Stupidity, in Dimon’s mind, is always isolated and explainable, not systemic and unavoidable...[but] almost every mitigating circumstance he cited actually strengthens the case for reform. Dimon made clear that the loss wasn’t the work of a rogue trader: The position was completely authorized, he suggested, just poorly executed and weakly monitored. One shudders to think what might have happened at a less scrupulously-managed bank—of which there are many—when the losses could have escaped detection much longer. ”

What are you more worried about? JP Morgan or Greece.

Oh, Greece. A thousand times Greece. This JP Morgan thing is bad for JP Morgan. What’s going on in Europe might be bad for the global economy. Or, to put it another way, JP Morgan’s losses are something you might be angry about, or smug about, but they’re not something you should be worried about. This isn’t a second financial crisis or anything.

I have more questions, and you haven’t answered them.

Leave them in comments. I’ll try and update this post as appropriate.

My boss when I was a hapless staffer, former Senator Bill Bradley, once said of the institution, “You hold power but you can never claim power.” That’s the dilemma of Veep and all of Iannucci’s work. His characters have won—they’ve won elections, been given some formal power, even if it’s just a tie-breaking vote in the Senate. They vaguely want to use that power for some good—clean energy or education. But the actual ability to use or claim power continually eludes them. Where Veep falls short, then, is only in Louis-Dreyfuss’s smiling indifference to that fate...As in Seinfeld, life is an endless stream of annoyances and embarrassments, but you move on. Without painfully feeling the futility of sensible liberalism, there isn’t quite enough comedy. The show will be better when Selina Meyer stops smiling.

I’m just happy they’re emphasizing filibuster reform.

“We know that the Affordable Care Act will extend health coverage to millions of Americans,” said Penny Kaye Jensen, president of the American Academy of Nurse Practitioners. “It’s important for consumers to understand what we do and that we’re fully prepared to care for them.”

Through advertisements, public service announcements and events, the organization will try to raise the profile of the country’s 155,000 nurse practitioners.

The campaign looks to exploit what many say is a looming doctor shortage. The Association of American Medical College predicts that the country will have 63,000 too few doctors as soon as 2015.

“With the serious shortage of family doctors in many parts of the country, nurse practitioners — or NPs as they are known — can provide expert, compassionate and affordable care,” the group will contend in a radio public service announcement.

The AANP will follow up on the public relations blitz with state-level lobbying efforts, looking to pass bills that will expand the range of medical procedures that their membership can perform.

“A fully enabled nurse practitioner workforce will increase access to quality health care, improve outcomes and make the health-care system more affordable for patients all across America,” Jensen said.

All states have “scope of practice” laws, which regulate what medical procedures each profession can, and cannot, perform, given their level of education. These laws regulate everyone from dental hygienists to physician assistants up to nurse practitioners, who all hold graduate degrees in medical education.

In 16 states, nurse practitioners can practice without the supervision of another professional such as a doctor. Other states, however, require a physician to sign off on a nurse practitioner’s prescriptions, for example, or diagnostic tests.

As the health insurance expansion looms, expanding those rules to other states has become a crucial priority for nurse practitioners. “We’re all educated and prepared to provide a full range of services,” said Taynin Kopanos, AANP’s director of state government affairs.

The nurse practitioners’ campaign, however, is unlikely to move forward without a fight: Doctors’ groups have often opposed such efforts of other professional societies to expand their medical authorities. The American Medical Association, which lobbies for doctors, often contends that such laws could put patients at risk.

“Non-physician professionals play vital roles in providing high-quality patient care, but no other health-care professionals’ education and training comes close to physicians’ more than 10 years of medical education and 16,000 hours of clinical experience,” AMA President Peter Carmel said.

Legislative analysts at the AMA say they’ve seen an uptick in state legislation meant to increase the powers of other professionals since the Affordable Care Act passed. Legislators have introduced about 400 such bills this year.

Nurse practitioners say they do have the skills necessary to treat patients with more autonomy. Unlike other nurses, all nurse practitioners hold either a master’s or doctorate degree in medical education.

Alongside the legislative push, the group also will focus on public education. Data suggest that they have their work cut out for them: A 2010 AANP poll found that while most Americans report having been seen by a nurse practitioner, few knew that their medical expertise goes beyond that of traditional, registered nurses, who go through less medical training.

Fourteen percent of the adults surveyed thought that nurse practitioners could prescribe medication, although sometimes with a physician’s supervision, an authority they have in all states. They can also order diagnostic tests and scans, such as X-rays and MRIs, but only 18 percent thought such powers were within their scope of practice.

“People stop at the word nurse and don’t understand the word practitioner,” Jensen said. “Obviously we are nurses, but we also have advanced education. We think there’s a misunderstanding on the patients’ behalf.”

Jensen hopes to see her members out at health fairs, church groups, rotary clubs and other community events to get the word out about the work they do, and the role they hope to fill as health insurance coverage expands.

“I think I was surprised about patients knowing so little, even if they’ve seen us,” she said. “That really was the springboard for this campaign, that we need to be expanding our visibility.”

Over at Seeking Alpha, Gene Kirsch tried to put Hedgegate into a broader context. "JPMorgan losses are reported to be actually $800 million in Q2 with the potential for legal and other losses up to $4.2 billion over a longer period of time, possibly exceeding one year," he wrote. "The banking unit of JPMorgan Chase alone made $12.4 billion last year. The holding company has over $2.26 trillion in assets and is the largest U.S. bank and 8th largest in the world. The holding company made $29.9 billion in operating income and just over $20 billion in net income for 2011. So, this initial loss of $800M represents approximately 4% of its total net profit for all of 2011, less than 2.7% of its operating income."

The firm, in other words, can manage it. Though as Brad DeLong was quick to point out, tallying the direct losses misses the episode's larger impact on the firm's value. "The revelation that JPMC did not have control over its derivatives book--even though accompanied by promises of multiple firings and deep reforms--destroyed 1/7 of JPMCs franchise value." Turns out the market doesn't much like it when what's reputed to be the safest bank on Wall Street turns out to be incompetent.

Jared Bernstein draws out the larger lesson nicely, and so I'll quote him at some length. "The fundamental truth here is the one known since Adam (Smith, that is) and amplified by the great financial economist Hy Minsky: humans underprice risk. Their proclivity to do so increases as the business cycle progresses and confidence takes over (remember, JP’s bet was unwound by the fact that the economy wasn’t as strong as they thought). The advent of a global derivatives market with notional trades in the trillions greatly amplifies the risks."

"The fact that humans like Jamie Dimon—he who presided over JP’s self-proclaimed 'fortress balance sheet'—he who inveighed against financial reform as imposing unnecessary oversight on such skilled risk managers as he and his staff—fall prey to this fundamental truth only underscores the lesson of this episode in financial hubris."

"And that is this: financial markets are inherently unstable. They will neither self-correct nor self-regulate. Their instability poses a threat to markets and economies and people across the globe. Therefore, they need to be regulated. That’s not to say that anyone knows the best way to do this yet in order to balance the necessity of oversight with the dynamics of the markets. We don’t know where to set the speed limits. It must be an iterative process. But we do know they need to be set, and JP’s loss should be taken as a warning that our tendency is to set them too low."

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RCP Obama approval: 48.0%; 7-day change: +0.7%.

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Top stories

1) Euro zone leaders are seriously discussing a Greek exit. "Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout. The comments by members of the European Central Bank’s governing council indicate that the risk of eurozone fragmentation is being taken increasingly seriously by the region’s policymakers. They mark a significant shift at the ECB, which has previously argued that European treaties do not allow for an exit and that a break-up would cause incalculable economic damage." Ralph Atkins in the FT.

Greece is headed towards new elections. "Greece appears headed to new parliamentary elections next month, further delaying its efforts to meet international demands to overhaul its economy, after leaders of the country’s major political parties declared little hope Sunday for a last-ditch effort to form a coalition government...Greek President Karolos Papoulias met with politicians Sunday in an effort to construct a unity government that could guide the country through the bailout program, and he planned to continue discussions Monday. But with top leaders expressing little hope for compromise after a week of efforts, it appeared likely that Papoulias would be forced to call new elections, most likely for June 10 or 17. Hopes for compromise have rested on Alexis Tsipras, the leader of the anti-bailout Coalition of the Radical Left Party, also called Syriza...But Tsipras has refused to go along with the pro-business New Democracy party, which won 19 percent of the May 6 vote, and the Socialists, who won 13 percent." Michael Birnbaum in The Washington Post.

KRUGMAN: "we’re talking about months, not years, for this to play out."

@TheStalwart: Weird. As @renovatio_news points out, #quediceKrugman (What Krugman Says) is trending in Spain. http://twitpic.com/9ktvbo

2) Wall Street looks the same to voters. The giant $2 billion trading loss at JPMorgan Chase highlights a central problem in President Barack Obama’s case for a second term: Four years after the financial crisis nearly brought the nation to its knees, very little appears to have changed. No high-profile bank executives are in jail. Special multi-agency task forces to go after financial fraud and mortgage market abuses appeared in State of the Union addresses, only to issue a few news releases and mostly vanish from public view. And now one of the largest banks in the United States, headed by a Democrat and operating with government guarantees, has turned in the kind of headline-grabbing, casino-style style loss that drives voters crazy and that Obama’s financial reform bill was supposed to stop. Ben White in Politico .

JPMorgan Chase has been lobbying to make exactly the kind of trades that just lost the company billions of dollars. "Soon after lawmakers finished work on the nation’s new financial regulatory law, a team of JPMorgan Chase lobbyists descended on Washington. Their goal was to obtain special breaks that would allow banks to make big bets in their portfolios, including some of the types of trading that led to the $2 billion loss now rocking the bank. Several visits over months by the bank’s well-connected chief executive, Jamie Dimon, and his top aides were aimed at persuading regulators to create a loophole in the law, known as the Volcker Rule. The rule was designed by Congress to limit the very kind of proprietary trading that JPMorgan was seeking...The loophole is known as portfolio hedging, a strategy that essentially allows banks to view an investment portfolio as a whole and take actions to offset the risks of the entire portfolio. That contrasts with the traditional definition of hedging, which matches an individual security or trading position with an inversely related investment -- so when one goes up, the other goes down." Edward Wyatt in The New York Times.

The real response to JPMorgan Chase's loss may come from global regulators, not the Volcker rule. "The size and scale of the surprise $2bn loss at JPMorgan Chase last week is likely to accelerate plans by global regulators to force banks to improve their trading risk models...While initial reactions to the JPMorgan loss last week focused on how it could reshape the US debate over implementing the 'Volcker rule' ban on proprietary trading, the misstep by one of the world’s largest banks could have far broader consequences. The Basel Committee on Banking Supervision, which sets global rules, has already sought a replacement for Value at Risk - the main measure of potential trading losses - and looked at additional capital requirements to cover potential damages that are not adequately measured by existing models. That project was seen as a long-term effort when it was announced two weeks ago, but it has now gained urgency and could be pushed through more quickly." Brooke Masters and Tracy Alloway in The Financial Times.

CONFUSED? Here's an explainer on JPMorgan Chase's loss.

@davidmwessel: Barney Frank on JPM: Case that banks don't need new rules to avoid repeat of '08 crisis "at least $2 billion harder to make today” (DJNS)

3) Republican state officials are dragging their feet on setting up exchanges. "In about two dozen states across the country, the insurance marketplaces at the heart of the 2010 health-care law remain in limbo, with Republican governors or lawmakers who oppose the statute refusing to act until the Supreme Court decides its constitutionality...In states with Democratic governors, such as New Hampshire and Minnesota, it is often Republican-dominated legislatures that are causing the hold-up. And in six states where Republicans hold both branches of government, including Kansas and South Dakota, state assemblies haven’t even considered laws to establish the marketplaces. Though the battles primarily break along partisan lines, there have been at least a half-dozen exceptions. Last spring, the Republican governor of Nevada chose not to stand in the way of an exchange bill adopted by the majority Democratic assembly." N.C. Aizenman in The Washington Post.

4) Congressional transportation bills won't fill America's infrastructure funding shortfall. "The nation’s population is growing at a steady pace, yet infrastructure investments lag. The lifelines of commerce -- roads, bridges, runways, ports -- are showing their age, and in this era of fiscal austerity it may be a long time before they get rebuilt...The financing fiasco has been well-known for years -- in fact, the last transportation bill, enacted in 2005, ordered up a blue-ribbon commission tasked with studying the financing problem and making recommendations for how to fix it. The National Surface Transportation Policy and Revenue Study Commission’s final report, issued in January 2008, a year before the last transportation bill was to expire, recommended that the country needs to be investing at least $225 billion annually from 'all sources' for the next 50 years in order to upgrade infrastructure to a state of good repair and make transportation advances. The Senate’s current transportation bill, in comparison, would fund highways and transit at $109 billion over two years." Kathryn Wolfe in Politico.

Top op-eds

1) BAKER AND HASSETT: We need a targeted response to long-term unemployment. "Policy makers must come together and recognize that this is an emergency, and fashion a comprehensive re-employment policy that addresses the specific needs of the long-term unemployed. A policy package that as a whole should appeal to the left and the right should spend money to help expand public and private training programs with proven track records; expand entrepreneurial opportunities by increasing access to small-business financing; reduce government hurdles to the formation of new businesses; and explore subsidies for private employers who hire the long-term unemployed. Those who hire for government jobs must do their share, too: managers who are filling open positions should be given explicit incentives to reconnect these lost workers. Every month of delay is a month in which our unemployed friends and neighbors drift further away." Dean Baker and Kevin Hassett in The New York Times.

@davidfrum: "50 to 100% increase in death rates for older male workers in yrs immediately following a job loss"

2) YGLESIAS: America is headed towards default. "House Republicans voted to take money away from programs meant to help poor people and give it to the military instead. That’s not my idea of wise policy, but that’s what was terrible about it. The problem is that the vote constitutes a collective Republican welching on the agreement that was reached last spring to raise the statutory debt ceiling and avoid national default. Yesterday’s vote doesn’t undo the deal or cause any immediate problems, but by so speedily backing out of their agreement, the Republicans have done something much worse--made it impossible for anyone to negotiate with them in the future, because it’s clear they cannot be trusted to keep the promises they made. If President Obama wins re-election, the debt-ceiling issue will have to be confronted again, but now in a Congress that has been poisoned by the Republicans’ welching on the last agreement. The country, in other words, is set for an even more severe version of the crisis that crushed financial markets last summer." Matthew Yglesias in Slate.

3) KRUGMAN: JPMorgan Chase's loss proves the need for bank regulation. "Banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on. Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive 'panics,' which can wreak havoc with the economy as a whole...So what can be done? In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight. On one side, the scope for panic was limited via government-backed deposit insurance; on the other, banks were subject to regulations intended to keep them from abusing the privileged status they derived from deposit insurance, which is in effect a government guarantee of their debts." Paul Krugman in The New York Times.

@Austan_Goolsbee: #lettersyouwontsee: Dear Mr. Volcker, you were right all along. we're now fixing things and won't let it happen again. yours, wall St.

4) SLOAN: JPMorgan Chase doesn't prove the need for the Volcker Rule. "The Volcker Rule, named for former Federal Reserve chairman Paul Volcker, is an example of the problem involved in regulating giant companies in a complex world. The principle sounds wonderful and simple: Don’t let banks use federally insured deposits for risky trades. But implementing it is proving to be incredibly difficult, as realists, including me, predicted would happen. Once bank lawyers finish finding loopholes in the detailed provisions, whatever they prove to be, the rule will probably have little meaningful impact. So bash Morgan all you like for its trading losses, and feel free to snicker at the spectacle of Jamie Dimon losing his swagger and having to eat crow. But don’t confuse Morgan’s mess-up with the supposed need for the Volcker Rule. The Volcker Rule would have symbolic impact, by appearing to rein in Wall Street. But it will prove to be more useful as a full-employment act for loophole specialists than for reining in the banks." Allan Sloan in The Washington Post.

5) SNOW: Tax cuts on dividends and capital gains should stay. "Nine years ago this month Congress passed President George W. Bush's Jobs and Growth Tax Relief Reconciliation Act. That bill's lower rates on capital, as well as the continuity in tax policy it established, have helped make our economy far more resilient. The legislation's centerpiece was a reduction in the taxation of dividends and capital gains to 15%. Unfortunately, the 2003 tax rates, including those on capital income, are due to expire at the end of the year. Capital warrants special tax treatment because of the central role it plays in generating economic growth and jobs. Capital is the very lifeblood of the market economy, the mainstay of innovation, and the foundation for future prosperity. As more of it is put to work today, labor output and wages will rise tomorrow. An appreciation of that critical relationship should guide how the tax system treats earnings from capital." John Snow in The Wall Street Journal.

6) THALER: Beware of slippery slope arguments on healthcare. "One pernicious category of imaginary risks involves those created by users of the dreaded 'slippery slope' arguments. Such arguments are dangerous because they are popular, versatile and often convincing, yet completely fallacious. Worse, they are creeping into an arena that should be above this sort of thing: the Supreme Court, in its deliberations on health care reform...Justice Scalia is arguing that if the court lets Congress create a mandate to buy health insurance, nothing could stop Congress from passing laws requiring everyone to buy broccoli and to join a gym...Please stop! The very fact that a slippery slope is being cited as grounds for declaring the law unconstitutional -- despite that 'significant deference' usually given to laws passed by Congress -- tells you all that you need to know about the argument’s validity. Can anyone imagine Congress passing a broccoli mandate law, much less the court allowing it to take effect?" Richard Thaler in The New York Times.

Top long reads

Jeffrey Toobin on how John Roberts orchestrated Citizens United: "Citizens United is a distinctive product of the Roberts Court. The decision followed a lengthy and bitter behind-the-scenes struggle among the Justices that produced both secret unpublished opinions and a rare reargument of a case. The case, too, reflects the aggressive conservative judicial activism of the Roberts Court. It was once liberals who were associated with using the courts to overturn the work of the democratically elected branches of government, but the current Court has matched contempt for Congress with a disdain for many of the Court’s own precedents. When the Court announced its final ruling on Citizens United, on January 21, 2010, the vote was five to four and the majority opinion was written by Anthony Kennedy. Above all, though, the result represented a triumph for Chief Justice Roberts. Even without writing the opinion, Roberts, more than anyone, shaped what the Court did. As American politics assumes its new form in the post-Citizens United era, the credit or the blame goes mostly to him."

Andrew Martin and Andrew Lehren on the skyrocketing cost of college: "With more than $1 trillion in student loans outstanding in this country, crippling debt is no longer confined to dropouts from for-profit colleges or graduate students who owe on many years of education, some of the overextended debtors in years past. Now nearly everyone pursuing a bachelor’s degree is borrowing. As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden. Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education -- up from 45 percent in 1993, according to an analysis by The New York Times of the latest data from the Department of Education. This includes loans from the federal government, private lenders and relatives. For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000."

'90s nostalgia interlude: Nine Inch Nails play "The Becoming" in studio..

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

Still to come: Wholesale prices are down; rebates will be credited to the ACA; Secure Communities expands; the IEA doesn't like Obama's plans; and cats, in slow motion.

Economy

Europe's woes could hit the U.S.. "During bouts of European turmoil in the past two years, U.S. financial markets regularly stumbled and growth ebbed due to fears of a euro-zone meltdown. But Europe muddled through and avoided calamity, and the effects on the U.S. economy weren't all bad. U.S. exports to Europe rose, and many U.S. banks benefited as overseas competition fell away. Now, the troubles in the currency union--the threat of a Greek exit from the euro zone, rising borrowing costs in Spain and Italy, recessions in several European countries--are renewing fears of an escalating crisis that could deliver a more serious blow to the fragile U.S. recovery. U.S. companies are bracing for a hit. Networking giant Cisco Systems Inc. last week blamed worries about Europe, along with other uncertainty, for its cautious outlook. Watchmaker Fossil Inc. reported a slowdown in German sales on top of deeper pullbacks in Italy and Spain. Chemicals firm Celanese Corp. attributed its disappointing results to weakening European demand." Sudeep Reddy in The Wall Street Journal.

Wholesale prices declined for the first time this year. "U.S. wholesale prices declined for the first time this year, suggesting a drop in energy costs is helping to keep inflation under control. The index of producer prices, which measures how much wholesalers and manufacturers pay for goods and materials, fell a seasonally adjusted 0.2% in April from a month earlier, the Labor Department said Friday. The decline, the first since December, was due entirely to cheaper prices for energy goods, including gasoline and utility gas...The report on producer prices suggests inflation is subdued, after a run-up in oil prices earlier this year pushed costs beyond the Federal Reserve's annual inflation target of roughly 2%. Lower inflation could reassure Fed officials as they keep a key interest rate exceptionally low through late 2014 to stimulate the economy. Lower inflation also gives the Fed more room to act, perhaps through additional bond purchases, if economic growth falters." Josh Mitchell in The Wall Street Journal.

@BobCusack: "Where are the jobs?" references (from both parties) in the Congressional Record between '09-'12: 357. Between '05-'08: 3.

Vintage bicycle manufacturing tutorial interlude: How a bicycle is made.

Health Care

Insurers will be required to credit premium rebates to Obamacare. "Health-insurance companies must tell customers who get a premium rebate this summer that the check is the result of the Obama administration's health-care law, according to federal guidelines released Friday. The move is the latest sign the Obama administration is trying to draw attention to the law's benefits before the fall elections, even though the law faces an uncertain future. The Supreme Court is expected to decide in June whether its central plank--a mandate that everyone carry insurance--violates the Constitution. Mitt Romney, the presumed Republican presidential nominee, has pledged to wipe out the law if elected. Under the 2010 legislation, insurers that don't spend a specified amount of revenue on actual medical care--as opposed to administrative costs--must refund the difference to customers." Louise Radnofsky in The Wall Street Journal.

Domestic Policy

The Senate cybersecurity bill is running into privacy concerns. "There’s yet another hurdle for Sen. Joe Lieberman’s cybersecurity bill: Democrats who say it doesn’t go far enough to protect consumer privacy. With Senate Republicans standing firm against the measure, the friendly fire from Democrats means there’s only more work ahead as Lieberman and others scramble to cobble together 60 votes to move the bill. A handful of members, including Sens. Al Franken of Minnesota and Richard Blumenthal of Connecticut, are echoing the concerns of civil liberties groups, which are growing increasingly fearful that consumers’ data could end up being passed around by companies and the government as security experts share with each other information about emerging cyberthreats. To them and others, the Senate measure as written would specify too few limitations on how data could be used and cover entities with too broad a protection from liability." Tony Romm and Jennifer Martinez in Politico.

The Obama administration will expand the controversial Secure Communities program. "Obama administration officials have announced that a contentious fingerprinting program to identify illegal immigrants will be extended across Massachusetts and New York next week, expanding federal enforcement efforts despite opposition from the governors and immigrant groups in those states. In blunt e-mails sent Tuesday to officials and the police in the two states, Immigration and Customs Enforcement officials said the program, Secure Communities, would be activated 'in all remaining jurisdictions' this Tuesday...Last year, officials at the agency said they had determined that they did not require consent from states to start the program. Citing antiterrorism legislation that Congress passed in 2002, the officials canceled agreements they had signed in 40 states and said they would extend the program nationwide by 2013." Julia Preston in The New York Times.

Minority contracts fell last year for the first time in a decade. "U.S. government contracts to black-and Hispanic-owned small businesses fell last year for the first time in a decade, declining at a sharper rate than awards to all companies. Contracts to the black-owned firms dropped 8 percent to $7.12 billion in the fiscal year that ended Sept. 30, compared with fiscal 2010. Awards to Hispanic-owned businesses decreased 7 percent to $7.89 billion, according to federal procurement data.Contracts to the two minority groups fell at a faster pace than all contracts, which dipped 1 percent as the U.S. government slowed spending to help reduce the federal deficit. The gap may reflect stiffer competition over a shrinking pool of revenue and the recession’s greater impact on black and Hispanic firms...The absence of these set-aside programs may help explain the dip in awards for some minority groups, said James McCullough, who leads the government contracts practice at Fried Frank Harris Shriver & Jacobson in Washington." Danielle Ivory in The Washington Post.

Cuteness amplified interlude: Cats in slow motion.

Energy

Fracking is sparking a boom in sand mining. "Scouts armed with geological maps and elevations from Google Earth are knocking on doors in the upper Midwest in search of what seems too common to mine: sand. The sedimentary material is in high demand among U.S. oil and natural-gas producers, setting off a sand rush in Wisconsin, Minnesota and other Midwestern states. While adding jobs, the mining boom is prompting pushback from some local residents, who are surprised by the frenzy and leery of its impact on their communities. Sand mined in the Midwest is used in places such as North Dakota and Pennsylvania to tap oil and gas reserves. The U.S. producers' demand for sand reached 28.7 million tons in 2011, up from six million tons in 2007, according to independent laboratory PropTester Inc. and consultancy Kelrik LLC...Sand, injected deep underground to prop open fractures in shale formations and allow oil and gas to flow out, is important in 'fracking.'" Mark Peters and Isabel Ordonez in The Wall Street Journal.

Lawmakers are torn on how to use high-speed rail funds. "As roads become more crowded each year, transportation planners have been looking for a game-changer that can reduce congestion and efficiently move millions of people. Enter rail -- a centuries-old mode that may be a shining savior to those hoping to push the United States into a new way of getting people around at high speeds. But it won’t work everywhere -- a lot depends on simple geography. And lawmakers are torn between how to use limited funds: along the densely packed East Coast, which has a history of commuter rail, or out West, where California has ponied up billions of dollars to build a high-speed system, much of it from scratch. Amtrak’s Acela service from Boston to Washington runs the fastest trains in the country, maxing out at 150 mph and increasing soon to 160 mph...Three thousand miles away, California is inching ever closer to its high-speed rail vision, having formally approved the initial Central Valley route." Burgess Everett and Adam Snider in Politico.

The IEA has concerns about Obama's plans to increase oversight of oil markets. "Barack Obama’s plans for strengthened supervision of the oil markets have come under fire from the International Energy Agency, which has warned they could lead to sharp swings in crude prices. The warning, contained in the agency’s monthly oil market report, came in response to moves by authorities in the US and Europe to crack down on what they see as excessive speculation in commodities markets using derivatives. The US president’s proposal to give the Commodity Futures Trading Commission authority to direct exchanges to raise margin requirements to address increased price volatility or prevent excessive speculation or manipulation could have the opposite effect, the western countries’ oil watchdog said on Friday. The IEA said raising margin requirements in oil futures trading might increase price volatility and concentrate market share in the hands of large speculators while having no effect on price levels." Guy Chazan in The Financial Times.

America is running out of helium. "Sure, Congress has plenty of crises to deal with: a weak economy, an expiring highway bill, the end-of-the-year 'taxmageddon.' But now there’s another one floating into view. The United States is running out of helium. Yes, helium. Thanks, in part, to a 1996 law that has forced the government to sell off its helium reserves at bargain-bin prices, the country’s stockpile of the relatively rare and nonrenewable gas could soon dwindle...Congress is slowly grasping the extent of the problem. At a sleepy Senate hearing Thursday morning, the Energy and Natural Resources Committee listened to an array of experts chat about the gas. The hearing was tied to a bill, sponsored by Sens. Jeff Bingaman (D-N.M.) and John Barrasso (R-Wyo.), that would change how the government sells helium from its Federal Helium Reserve (yes, this exists) in order to prevent shortages." Brad Plumer in The Washington Post.

@mattyglesias: Helium Privatization Act is a classic example of inefficient pseudo-privatization gone horribly wrong

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

I wanted to (anonymously!) add one thing to your recent thoughtful post about NSF funding: The point you make applies even to research not funded by the NSF. My research, like much else, sometimes reaches findings or uses methods that might make sitting politicians uncomfortable. In the last couple years I have received several peer reviews from the top journals in the discipline that have chastised me for potentially making politicians uncomfortable and therefore endangering NSF funding for others with my research. Thus even for those of us who have never used NSF funding and don’t plan to, this kind of politicization chills what we can publish and what we study because the interests of our discipline as a class appear in jeopardy.

Original post here. Here’s Rep. Jeff Flake’s response.

On Wednesday, House Republicans passed a bill to eliminate the ACS, 232 to 190, out of fear that the government survey was an unconstitutional invasion of privacy. According to the Census Bureau, the annual survey is an essential tool for local officials across the country, as the decennial census paints a portrait of the country only in very broad strokes — and only every 10 years, at that. “Information from the survey generates data that help determine how more than $400 billion in federal and state funds are distributed each year,” the Census Bureau explains. Yes, there may be questions about how many flush toilets are in the house, but the data could help, say, a local government determine the water needs of its residents.

Washington City Paper’s Shani Hilton takes a closer look at how critical the ACS is to providing social services on the local level. “Without [the ACS] we really wouldn’t have a reliable way to look at income, poverty, and housing costs on the state level,” Jenny Reed of the D.C. Fiscal Policy Institute tells her. Eliminating the ACS would also blindside business, which depends on the data to help tailor products and services to customers.

Just listen to executives at Target describe how they use ACS data in this video flagged by Businessweek. “The Census Bureau data gives us information on population density or on owner occupancy where we know space is at a premium. So thinking about folding chairs, smaller furniture to help guests where have smaller spaces,” explains Ted Smetana, director of store segmentation for Target. “By using Census Bureau data, in combination with our sales data, we’re able to better understand how we can meet our guests’ needs.”

But the GOP’s Big Brother argument could gain traction at a time when Americans are growing increasingly concerned about how their personal information is being collected. But unlike Google or the Internet’s data-scrapers, the Census Bureau ensures that the information it makes public hides the identity of the respondents. And though the survey is mandatory, it’s something that Americans themselves fill out — not information that’s being collected unbeknownst to them.

But perhaps it isn’t a coincidence that the anti-ACS push happened the same week that House Republicans also voted to eliminate funding for political science research through the National Science Foundation, as Ezra Klein explained earlier. Behind both GOP initiatives is the belief that it isn’t the business of government to gather certain kinds of knowledge or information — whether it’s about the country’s individual citizens or the nature of its political systems. But in certain cases, the price of government not knowing is that many others will be left in the dark as well.

Yes, helium. Thanks, in part, to a 1996 law that has forced the government to sell off its helium reserves at bargain-bin prices, the country’s stockpile of the relatively rare and nonrenewable gas could soon dwindle.

Party supply stores are already feeling the pinch, as recent helium shortfalls have driven up the price of helium-filled balloons. But it’s not birthday parties we should worry about. A severe helium shortage, experts say, would cause problems for large swaths of the economy, from medical scanners to welding to the manufacturing of optical fibers and LCD screens.

Congress is slowly grasping the extent of the problem. At a sleepy Senate hearing Thursday morning, the Energy and Natural Resources Committee listened to an array of experts chat about the gas. The hearing was tied to a bill, sponsored by Sens. Jeff Bingaman (D-N.M.) and John Barrasso (R-Wyo.), that would change how the government sells helium from its Federal Helium Reserve (yes, this exists) in order to prevent shortages.

“Chances are you’ve heard little or nothing from your constituents about helium over the past 15 years,” said Walter Nelson, director of helium sourcing at Air Products and Chemicals. “That’s a good thing!” But if the problem doesn’t get fixed soon, Nelson warned, there will be serious “grumbling” across the land.

So how did we get to this point? Back in the 1920s, when blimps and other airships seemed like a useful military technology, the United States set up a national helium program. In the 1960s, it opened the Federal Helium Reserve, an 11,000-acre site in the Hugoton-Panhandle Gas Field that spans Texas, Oklahoma and Kansas. The porous brown rock is one of the only geological formations on Earth that can hold huge quantities of helium. And the natural gas from the field itself was particularly rich in helium — a relative rarity in the world.

By 1996, however, the Helium Reserve looked like a waste. Blimps no longer seemed quite so vital to the nation’s defense and, more important, the reserve was $1.4 billion in debt after paying drillers to extract helium from natural gas. The Republican-led Congress, looking to save money, passed the Helium Privatization Act, ordering a sell-off by the end of 2014.

‘Fire sale’ prices

And, since the Federal Helium Reserve provides about one-third of the world’s helium each year, this has upended the entire market. There’s little incentive to conserve, recycle or find new sources of helium. Instead, we’ve been frittering it away. And once helium escapes into the air, it can’t be recovered. That’s partly why, since 2011, the world has been running into shortages, as demand has outstripped supply.

Worse, under existing law, the Federal Helium Reserve could run out of money to operate as early as mid-2013. When that happens, it will still have a large chunk of the world’s helium supply locked in the reservoir — but no one will be able to access it.

“If Congress does not act,” Bingaman said, “the helium program will disappear altogether in less than three years, leaving our hospitals, national labs, domestic manufacturers and helium producers without an adequate supply.”

Witnesses at the hearing painted apocalyptic scenes. Take, for instance, MRI scanners. About 40 million MRI exams are conducted each year to help doctors diagnose everything from strokes and cancer to torn ligaments. Health-care experts have debated whether MRI scans are overused, but everyone agrees these machines are valuable.

Yet a helium shortage could ruin them. Tom Rauch, a health-care supply-chain manager for General Electric, explained that the powerful magnet in an MRI machine must be constantly cooled by liquid helium. Without timely refills, the magnets run the risk of permanent damage.

“Replacing an MRI often involves a crane, street closures and knocking down ceilings and walls of a care facility,” Rauch said.

Maintaining supplies

Bingaman and Barrasso’s bill would revamp the Federal Helium Reserve program so that it doesn’t shut its doors by the end of 2014. Instead, helium would be sold off more judiciously to preserve a steady supply until other domestic or international sources could be developed. Under the new law, the reserve would start selling helium at market rates to encourage private producers to extract more helium (or recycle the stuff).

Russia, Algeria and Qatar have all recently built processing facilities for helium. Canada, China and Poland are also thought to have potential reserves, according to the U.S. Geological Survey. Other facilities could well pop up if the prices rise; the key question is whether it will be an orderly transition or a chaotic scramble worldwide.

But the prospect of chaos doesn’t seem to be terrifying anyone yet. For most of the Senate hearing, just two senators — Bingaman and Barrasso — hung around, and after asking the witnesses a few desultory questions, they disbanded about an hour later.

]]> http://feeds.washingtonpost.com/click.phdo?i=44a13ad63944fb0c759660b4da8087d0 http://www.washingtonpost.com/blogs/ezra-klein/post/congress-turns-its-attention-to-americas-helium-crisis/2012/05/12/gIQA4fIbKU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/congress-turns-its-attention-to-americas-helium-crisis/2012/05/12/gIQA4fIbKU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/Fragment/SysConfig/WebPortal/twpweb/rss/mobile/blog-entry.jpp?id=1000.4.1297018402 http://www.washingtonpost.com/blogs/ezra-klein/post/congress-turns-its-attention-to-americas-helium-crisis/2012/05/12/gIQA4fIbKU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/congress-turns-its-attention-to-americas-helium-crisis/2012/05/12/gIQA4fIbKU_blog.html http://www.washingtonpost.com/blogs/ezra-klein/post/congress-turns-its-attention-to-americas-helium-crisis/2012/05/12/gIQA4fIbKU_search.html 1000.4.1297018402 14bf2b42-9c44-11e1-a60b-8ea306e23f17 Environment John Barrasso US Congress health care Sun, 13 May 2012 07:00:00 EST Mon, 14 May 2012 09:01:57 EST 20120514140157 The Washington Post /WashingtonPost/Content/Blogs/ezra-klein/201205/helium crisis.xml /WashingtonPost/Content/Blogs/ezra-klein/201205/helium crisis.xml BlogStory ezra-klein.dwp:content_well/ezra-klein_story_stream.dwc:story BlogStory The Washington Post http://ads.pheedo.com/click.phdo?s=44a13ad63944fb0c759660b4da8087d0&p=4 44a13ad63944fb0c759660b4da8087d0 ]]> Sun, 13 May 2012 07:00:00 EST On Thursday, on a mostly party-line vote, the House passed an amendment by Rep. Jeff Flake (R-Ariz.) to prohibit the National Science Foundation from funding political science research. And, in doing so, it politicized one of the main ways this country funds scientific research.

As Christopher Zorn writes, the NSF runs a widely respected peer-review program that decides what science to fund. If Flake wanted to reduce the funding available to the NSF in total, that would be one thing (and, to be fair to Flake, he has proposed that in the past). But what he’s doing here is telling the NSF what is and isn’t acceptable science to fund. That’s not how scientific decisions are supposed to work. And the effect could be chilling.

Flake was quick to give examples of the “waste” that motivated his amendment. There was the “$700,000 to develop a new model for international climate change analysis” and the “$600,000 to try to figure out if policymakers actually do what citizens want them to do.” In other words, Flake didn’t like the kind of research that the NSF was funding in the political science arena, and so he barred the NSF from funding political science at all.

Now imagine you’re part of a discipline that isn’t political science, but that relies on NSF funding. Or imagine you’re on one of the NSF panels that funds those disciplines. Think you’ll be a bit more careful about submitting or greenlighting work on climate change? Of course you will.

If Flake had cut NSF funding, that would be one thing. Instead, he inserted politics — and his personal preferences — into the NSF’s funding-review process. That’s a much more dangerous precedent to set.

I have conflicted feelings about the public money that goes to academic research — including political science — in this country. I admire and rely on the work that comes out of these disciplines. But for all the public money that goes to support them, there’s a decided lack of public-spiritedness in how they act.

The research is often locked away in pricey journals. There’s a premium placed on unnecessary convoluted rhetoric that confuses and dissuades interested outsiders. There’s almost no effort put into connecting research with the public debate — and academics who try and engage in it often risk professional and social sanction. If it were up to me, any research that took even a dollar of taxpayer funds would have to be in an open-access journal and stored in a publicly searchable repository. While much of this research deserves public support, the prevailing mores in academia don’t.

But I have no conflicted feelings about wanting scientific decisions to remain free from meddling congressmen. Perhaps there’s some process by which the NSF could do a better job judging research proposals. But I’m quite sure that process doesn’t include Jeff Flake looking over the NSF’s shoulder, telling it which subjects he likes and which he doesn’t.

“I could barely sleep,” says Erin Matson, action vice president at the National Organization for Women. “I’m so thankful and grateful that this is the legacy she’s leaving. After so many go-arounds on these issues, it’s hugely important for her to say, ‘I’m going to step aside and fill this position with someone younger.’”

Matson became president of NOW’s Minnesota chapter at age 23, and was elected to her current, national position at 29, making her the youngest person to hold the post. She had no reservations about aggressively advocating for the work Millennial women do in the pro-choice movement. We spoke Friday about why Keenan’s announcement mattered, where the pro-choice movement heads next and what inter-generational gaps do -- and don’t -- exist. A transcript of our discussion, edited for length and clarity, follows:

Sarah Kliff: What did you make of Nancy Keenan’s decision to step down to make way for a younger generation of pro-choice leaders?

Erin Matson: Nancy Keenan had no reason that she had to initiate this watershed moment with her departure. It’s unusual, from my vantage point in D.C.’s organizational, feminist world to see older leaders say, “We need to make space for younger leaders.”

Nancy Keenan is a class act. She’s done something unusual, to put it lightly, in saying ‘I’m going to make space for younger women. And I’m going to do that with my own two feet.’

SK: And what do you think about her statement, that there needs to be more space for young leaders. Do you think that’s true?

EM: Having a young leader is more than symbolic. The face that people sees matters. It gets at the tactics and approaches that we’re going to be using. Young, women activists are very angry, and we’re feisty. We want to put on our loafers and go lobby. But we also want to put on our sneakers, go outside, and yell. I think we need a movement that incorporates all of that.

SK: One issue that Nancy and I spoke about is this idea of an “intensity gap” among young voters, where abortion rights opponents tend to see the issue as more important than supporters. That’s what NARAL finds in its own polling. What do you make of that?

EM: I’ve seen that poll and seen other polls. From everything I’ve seen, the most motivated group on abortion rights are conservative, older white men, which is scary. But I think this is an issue of education. I recently saw a poll, in April, where 80 percent of women didn’t know Mitt Romney’s position on contraception. But if they did know it, they disagreed with it by a two-to-one margin.

SK: What role do you think Roe v. Wade plays, or should play, in the pro-choice movement now? I know it often gets talked about as a dividing line in pro-choice politics, with a generation that came up before Roe and now a new generation that has followed.

EM: It matters, but I think in a different way than it did before. When you look at the people who were alive during Roe talk about it, it’s as if they were the ones struggling, and everything now is just maintenance. You hear a lot of talk of ‘never go back’ and about rolling back rights.

For younger women of reproductive ago, the way we’ve come to this isn’t about taking away rights. It’s about, why is my birth control so damn expensive? Why do I have to forgo a week’s worth of groceries to afford an abortion? That’s a huge issue. So I think the frame of a past referential, this idea of ‘let’s not go back,’ isn’t as relevant to a younger generation.

SK: Do you think everything that’s happened this year, the fights over Planned Parenthood’s funding and contraception, could become a similar moment for a younger generation?

EM: I firmly believe this is an Anita Hill moment for my generation.Tthe fact that I’m seeing so many women spontaneously rise up, without the support of a paid organizer reaching out to them, that’s really big. You see people going to the statehouse on their own, and the pressure is working. I’m thinking about how Gov. [Bob McDonnell in Virginia] took a partial step backwards on the vaginal probe law. That matters.

SK: Tell me a bit more about your own experience as a young leader in the pro-choice movement. I understand you’re the youngest person to ever hold your position at NOW?

EM: Yes. I was 29 when elected, which does make me the youngest. I was also the youngest state president, at 23, in Minnesota. I can’t tell you how many meetings I’ve been at, with older women talking about reaching to younger women, but I’m the only one there. There are other young women out there. It’s a question of whether or not they’re included.

I’ve had to fight quite a few battles over the issues that I want to focus on, or the tactics, or what our priorities should be. It’s not personal. I’m not saying either group is better. But people tend to be engaged in issues that tend to touch their own lives. And that’s one of the reasons we need to see an infusion of younger people. It’s got to be about our issues, too.

— Exploding the myths of manufacturing.

— FT Alphaville Tumblr.

— The National Zoo’s new otters are named “Pork Chop, Pickles, Saffron, Olive, Peaches, Turnip, Radish, Rutabaga and ... Kevin.”

— The stresses of undercover police work.

These days, fewer and fewer jobless workers are receiving government aid. According to NELP, two-thirds of all jobless workers qualified for state or federal unemployment insurance in 2010. Last year, that number shrunk to 54 percent. This year, it will go below 50 percent. If Congress lets all of its extended-unemployment programs lapse at the end of this year, says NELP, then “only a quarter of jobless Americans will be receiving unemployment insurance.”

Proponents of benefit cuts will sometimes argue that these workers will now be exceptionally motivated to go get hired now that they’ve been cut off. But how realistic is that? As economist Mark Thoma argues here, there are still 3.4 job seekers for every opening in the job market. That’s abnormally high. In fact, it’s still higher than at any point in the 2002 recession. And it means that many people answering job ads and sending in resumés are going to come up empty-handed, no matter how motivated they are.

What’s more, many of the workers that are now losing their benefits are part of the long-term unemployed — they’ve been out of work for at least one year or more. (About 3.9 million workers fall into this category.) Economists have compiled plenty of evidence that these workers have the hardest time finding new jobs, either because they’ve lost skills and job contacts since being laid off or because employers are leery of hiring people who have been out of work for so long.

“Will cutting unemployment benefits now, as many states are about to do, produce net benefits for the economy?” asks Thoma. “Probably not.” Instead, he notes, many of these workers could well “enter the underground economy, go on long-term disability, or pursue other less than desirable means of supporting themselves.”

If there were ever a time when Tom Udall and Jeff Merkley were prophetic, it’s tonight. These two young, fine senators said it was time to change the rules of the Senate,and we didn’t. And they were right. The rest of us were wrong -- or most of us, anyway. What a shame...

Mr. President, I am finished here, but I just want to say again, for those that are listening here or watching, Senator Udall and Senator Merkley want to do something to change the rules regarding filibuster. If there were anything that ever needed changing in this body, it’s the filibuster rule, because it’s been abused, abused, and abused.

Reid’s comments came after Republicans filibustered his attempt to move a House-passed compromise reauthorizing the Export-Import Bank. But the proximate cause of Reid’s ire hardly matters. The point is that he’s concluded he was wrong to oppose filibuster reform when Democrats had the chance.

Election wonks I know think that if President Obama wins re-election, Democrats have even odds -- and maybe even a bit better -- of retaining control of the Senate. Their margin will be slim. But a slim margin is all they’ll need for filibuster reform if they follow the Merkley/Udall plan, which uses a process called “the Constitutional option” to change the rules with 51 votes. More on that here.

Consider, though, what this means if Republicans retake the Senate. The leader of the Senate Democrats appears to have endorsed some version of filibuster reform. That doesn’t make filibuster reform an inevitability. But it does make it likelier. And wouldn’t Republicans prefer it happen on their watch than when the Democrats control the institution? Probably.

Earlier this week, I wrote that we were seeing “the outlines of a necessary systemic crisis leading to an overdue set of procedural reforms in the Senate.” My point was that both parties are becoming more and more intent on changing the Senate’s rules, and that suggests we’re only one Senate crisis away from one party or the other actually following through on it. That post is looking pretty good right now.

“Does this happen to you often?” he was asked by a reporter.

“All the time,” he said, scribbling his signature.

George Clooney? Mark Ruffalo?

Nope. It was Paul Volcker, the 84-year-old former chairman of the Federal Reserve who still manages to leave veteran legislators a bit starstruck. Widely credited for ending the stagflation crisis of the 1970s, Volcker, the godfather of central banking, has resurfaced as Washington has been soliciting his advice about how to rein in Wall Street. JPMorgan’s $2 billion loss announced on Thursday has made the spotlight on Volcker even brighter.

Volcker, who served as Fed chairman during the Carter and Reagan administrations, didn’t write the rule that bears his name. But he has since risen to defend the Volcker Rule, which prohibits government-backed banks from making certain kinds of speculative bets for their own benefit, rather than their clients’. And he made clear on Capitol Hill this week why he believes such restrictions are necessary.

“It is surely inappropriate that those activities be carried out by institutions benefiting from taxpayer support, current or potential,” he told the Senate Banking Committee on Wednesday afternoon.

That was the day before JPMorgan Chase owned up to its huge loss on a bad bet that looks, to many, like the kind of gamble that the Volcker Rule was meant to prevent when it was passed in 2010 as part of the Dodd-Frank overhaul.

It’s unclear whether the rule would have kept JPMorgan trader Bruno Iksil in the U.K. — nicknamed the “London Whale” — from taking such a high-risk bet. The bank essentially carried out a complicated hedge on a stack of corporate bonds, which the Volcker Rule, as currently drafted, would permit. The problem, however, is that JPMorgan’s bet seems to go above and beyond what a hedge is meant to do: Rather than simply buy insurance to protect the corporate bonds, Iksil reportedly bet as much as $100 billion that those firms would never default.

For a firm like JPMorgan, $2 billion is a drop in the bucket. The banking giant isn’t expected to fail or need a bailout any time soon. But the big loss shows how Wall Street banks are still able to make risky bets for their own benefit. And JPMorgan’s embarrassment won’t necessarily stop the same from happening elsewhere, potentially increasing risk to the financial system. In fact, similar bets by JPMorgan’s chief investment office made the bank $5 billion in 2010. Other banks could decide that gambling with their money is still worth the that chance — and that they can do a better job than JPMorgan did at pulling it off.

That’s why supporters of a strong Volcker Rule — which federal officials are still finalizing before the measure’s July start date — are now clamoring for a more expansive regulation with fewer loopholes. And Volcker’s own words before the Senate this week could strengthen their argument. If banks are still allowed to treat trading like a casino, yet are big enough to warrant government support if things go awry, they’re benefitting from the assumption that they’re Too Big To Fail — “that losses will be socialized, with the potential gains all private,” as Volcker explained.

After the financial meltdown, “understandably, the public feels aggrieved and wants serious reform,” Volcker said Wednesday. “The Volcker Rule is part of this formula.” (I asked Volcker’s office whether he had any thoughts about the JPMorgan debacle, but he wasn’t available.)

What, then, is holding back regulators from implementing a strong, clear Volcker Rule? Volcker himself acknowledges that the draft of the rule, at 300 pages, has gotten bloated and complex partly because bank lobbyists are pushing for carve-outs.

“I could give you stories all day about lobbyists making things more complicated,” Volcker said as he left the hearing room. “They may do it [because] they want to disrupt the whole process, but they ... say, ‘We want to make sure that this particular little operation we have — is it good or bad?’”

Volcker did say that he was “encouraged” by the progress that regulators appear to be making on finalizing the rule that bears his name. And — perhaps more than do his acolytes on Capitol Hill — he believes that banks will comply.

“You don’t trust the banks?” he asked, as he left the Senate building. “I implicitly trust the banks.”

[Some of the content in this entry could not be displayed on this device.]

“Because it is not known whether the Affordable Care Act will remain, in whole or in part, it would be imprudent for New Jersey to create an exchange at this moment in time before critical threshold issues are decided with finality by the Court,” Christie said in a Thursday statement.

Christie is only the second Republican governor to veto such a bill — the first was New Mexico Gov. Susana Martinez, who did so last year — but many more have cited the Supreme Court to delay action on implementing the Affordable Care Act. Alabama recently delayed action on a health exchange citing the looming uncertainties, as has Illinois.

The Supreme Court decision isn’t that far off at this point: It’s expected to come down in late June. In about two months time, these states will know a lot more about whether Obamacare still stands. The big question then is, how much can they do?

States that get going after the Supreme Court decision will have about six months to tackle a massive to-do list: Pass legislation that authorizes an exchange, hire a board to govern it, find vendors to set up the technical aspects and have it nearly up and running by Jan. 1, 2013, so that it can begin accepting customers next fall.

The conventional wisdom in health policy circles right now is that states that have not taken steps toward implementation yet just will not have the capacity to do so, on such a short time frame. Some of it has to do with the sheer scale of the task; California, for example, has been working on its exchange for over a year now, and is still far from being done.

There are technical roadblocks, too, like the fact that there’s a finite number of vendors — the technology companies that know how to run insurance marketplaces, most of whom already have a slew of contracts.

In states like New Jersey, where work has not started yet, it looks increasingly likely that a state-run exchange will not be in the cards. If the Supreme Court upholds Obamacare, then it will likely be the federal government stepping in to set up the health insurance exchange in New Jersey — and in any other states that have yet to get moving.

That’s from Josh Bivens at the Economic Policy Institute. Note that during this same time period, the very richest Americans saw their income rise by far more than those in the 20th-99th percentiles, as you can see in this graph from the Center on Budget and Policy Priorities.

So even as the rich were making more and more money, they were paying lower and lower effective tax rates. Sweet deal.

“It’s a sizable gap—perhaps even a missile-sized gap,” suggested R. Jeffrey Smith, an editor at the Center for Public Integrity and former Washington Post reporter, unveiling the findings Thursday morning at the Stimson Center. On average, Smith and his co-authors found the public wants $103.5 billion in defense budget cuts, or 18 percent of the current budget; Republicans want $74 billion cut, on average, Democrats want a $124.4 billion cut, and independents want a $112.2 billion reduction. Participants evaluated 87 percent of defense discretionary spending, so their cuts might even be higher if the entire defense budget were covered.

Now just compare that to what both Republicans and Democrats are currently proposing: Rep. Paul Ryan (R-Wisc.) and House Republicans are trying to pass a budget that would keep base discretionary spending the same in 2013, as compared to the previous year. President Obama proposes a relatively small $4 billion cut to such spending below current levels. Both parties want to avoid the automatic defense spending cuts that are scheduled to happen in 2013 as part of August’s debt ceiling deal, which slashes defense spending by $63 billion. It's not quite an apples-to apples comparison — the defense budget in the survey was about 1 percent mandatory spending, which falls outside discretionary spending — but there’s a big divide between the public and Washington either way.

Smith acknowledges that it might be tempting to dismiss “the people’s defense budget” — which he co-authored with Steve Kull of the University of Maryland’s Program for Public Consultation and Matt Leatherman of the Stimson Center—as coming from a misinformed if well-intentioned public. “How can they possibly know how much?” he postulated. “Don’t they know. . .that all this current spending is blessed by military regional commanders, and those regions military commanders get reams of intelligence every day on the perils out there?”

But Smith and his co-authors stress that they designed the study to make participants—who they said were a representative sample—as well informed as possible: they provided context, information and detailed, opposing viewpoints for each part of the budget, replicating budget deliberations as they actually happen in Congress and the White House. Participants considered type of spending—for each divisions of the armed forces, weapons programs, military health care, etc.—and decided whether it was worth, say, spending more money on special ops (yes!) or a new $1 trillion fighter jet (no way).

“It wasn’t a willy-nilly exercise they went through, they made these cuts in an informed manner,” Leatherman said.

By contrast, when Americans are typically asked the question in the abstract— “would you cut defense spending, keep it the same, or increase it?”— most will generally oppose cuts, Kull said. What prompts people to change their minds--so much so that they’d ultimately push for a 18 percent reduction in defense spending?

It’s two things, Kull explains. First, survey participants were given more background: for example, they were shown how defense spending compared to all other kinds of government spending, and how current spending compares historically. Then, they had the ability to specify exactly how they’d treat different types of spending. He explains: “If they can offer a specific amount, it gets away from the blank check problem”--the fear that legislators will slash programs without much rhyme or reason.

The problem, they acknowledge, is that the average American doesn’t typically get the inside look at the budget, and there isn’t much public pressure on policymakers, who’ve gotten an earful from the Pentagon when it comes to defense spending. Defense Secretary Leon Panetta, for instance, “is talking about catastrophe and devastation if cuts go further,” said Leatherman. As a result, Smith add later, the “noisy minorities” dominate, and the public is left in the dark.

It needn’t be that way, the researchers insisted. “You say, oh yeah, the public they don’t want cut anything, yet they want a balanced budget. They’re completely incoherent, right? They’re just a big baby, right?” said Kull. “But you give them tools to act in rational way, and they’ll act in a rational way.”

Dimon, for his part, doesn't see the relevance. “Just because we’re stupid doesn’t mean everybody else was,” he said on a Thursday conference call. “There were huge moves in the marketplace but we made these positions more complex and they were badly monitored.”

But the point of the Volcker rule -- and of financial regulation more generally -- isn't to punish banks for being evil. It's to protect the rest of us from banks being stupid. And if the most prudent of the big banks can't keep itself from being this stupid this soon after the financial crisis, then it's pretty clear we're going to need very strong rules to keep them from being stupid in the years to come, when the lessons of the financial crisis have faded more completely.

As Reuters' Felix Salmon writes, "JP Morgan more or less invented risk management. If they can’t do it, no bank can. And no sensible regulator can ever trust the banks to self-regulate."

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Top stories

1) A massive bet gone wrong cost JP Morgan Chase at least $2 billion. "A massive trading bet boomeranged on J.P. Morgan Chase & Co., leaving the bank with at least $2 billion in trading losses and its chief executive, James Dimon, with a rare black eye following a long run as what some called the 'King of Wall Street.' The losses stemmed from wagers gone wrong in the bank's Chief Investment Office, which manages risk for the New York company. The Wall Street Journal reported early last month that large positions taken in that office by a trader nicknamed 'the London whale' had roiled a sector of the debt markets. The bank, betting on a continued economic recovery with a complex web of trades tied to the values of corporate bonds, was hit hard when prices moved against it starting last month, causing losses in many of its derivatives positions. The losses occurred while J.P. Morgan tried to scale back that trade." Dan Fitzpatrick, Gregory Zuckerman, and Liz Rappaport in The Wall Street Journal.

The loss is putting the spotlight on the Volcker Rule. "JPMorgan Chase’s $2 billion trading loss, which was disclosed on Thursday, could give supporters of tighter industry regulation a huge new piece of ammunition as they fight a last-ditch battle with the banks over new federal rules that may redefine how banks do business...The centerpiece of the new regulations, the so-called Volcker Rule, forbids banks from making bets with their own money, and a final version is expected to be issued by federal officials in the coming months. With the financial crisis fading from view, banks have successfully pushed for some exceptions that critics say will allow them to simply make proprietary trades under a different name, in this case for the purposes of hedging and market-making. The missteps by JPMorgan could highlight that murky line between proprietary trading and hedging. The bank unit responsible for losses takes positions to hedge activities in other parts of the bank." Nelson Schwartz in The New York Times.

@lizzieohreally: Dimonfreude.

@BCAppelbaum: If losing $2 billion in your trading operations doesn't violate the Volcker Rule, is it possible that we might need a broader rule?

@ezraklein: At this point in time, I feel comfortable predicting Jamie Dimon will not replace Tim Geithner as Secretary of the Treasury

2) The U.S. ran a monthly surplus for the first time since 2008. "The federal government posted a budget surplus in April as tax receipts rose, the first month that revenue has outpaced spending in more than three and a half years. The Treasury Department, in its latest monthly budget figures out Thursday, said the government ran a surplus of $59.12 billion during April, compared with a deficit of $40.39 billion a year earlier. Economists surveyed by Dow Jones Newswires had projected a $30.00 billion surplus. The federal government has historically run a budget surplus in April, when many Americans file their tax returns. Over the past 58 years, there have been 44 April surpluses, a Treasury official said. But from late 2008 up until two months ago, the government ran steady deficits amid weaker tax receipts and heavy spending following the financial crisis. The government last ran a monthly surplus in September 2008, the same month that Lehman Brothers Holdings Inc. filed for bankruptcy." Jeffrey Sparshott in The Wall Street Journal.

@DaveedGR: Obviously, the April surplus is due to taxes coming in. Remarkable that there hasn't been a surplus in any April since 2008...

3) Republicans may not offer a comprehensive replacement for Obamacare. "Republicans might not offer a comprehensive plan to replace President Obama’s healthcare law if the Supreme Court strikes it down this summer. House Republicans had said they would have a healthcare bill ready to go by the time of the ruling to present a clear alternative to the Democrats’ Affordable Care Act. But now, with the high court’s ruling just weeks away, some conservatives are urging the party to abandon that strategy, fearing voters will recoil from another sweeping revamp of the healthcare system...Ditching a comprehensive proposal could also make it easier for Republicans to steer the public’s focus away from popular elements of the Affordable Care Act that are unlikely to make the cut in a GOP plan...But a piecemeal strategy on healthcare could present its own risks. Republicans campaigned in 2010 on 'repealing and replacing' Obama’s law, but have struggled to clearly articulate a healthcare platform of their own." Sam Baker in The Hill.

4) Europe delayed a loan payment to Greece. "Euro-zone governments held back part of a big scheduled loan payment in a warning shot to Greece Wednesday, as outside pressure mounted on the country's politicians to pull together a pro-euro coalition to take charge of the government. Greece's euro-zone partners agreed to release only €4.2 billion ($5.5 billion) in previously agreed financing, to be paid out Thursday, holding back €1 billion at least until June. That would be paid only if Greece keeps to pledges it made to secure a bailout. With Athens in political turmoil after a fractured result in weekend elections, and a new vote likely by June, German politicians cautioned that further aid could be withdrawn if Greece abandons austerity targets--even if that pushes the country from the bloc...Thursday's payment is needed for Greece to pay €3.3 billion it owes the European Central Bank next week. The aid was agreed in March by euro-zone governments as part of Greece's €130 billion second bailout program." Alkman Granitsas, Laurence Norman, and Matthew Dalton in The Wall Street Journal.

5) Almost 250,000 Americans will lose their unemployment insurance this weekend. "More than 230,000 jobless Americans will lose their unemployment insurance by this weekend as reductions in the federal program that provides extended benefits to the long-term unemployed take broader effect. The new round of reductions is hitting eight states this month, meaning that about 400,000 long-term unemployed Americans in 27 states will have been cut off of the federal government’s extended unemployment benefits program this year, according to an analysis by the National Employment Law Project, which advocates for the unemployed. The cuts stem from a congressional agreement this year that will reduce the maximum duration of unemployment benefits from 99 weeks to 79 weeks as the nation’s jobless rate declines. Most states provide 26 weeks of benefits, and the federal government provides the rest, partially through a complicated formula that requires jobless rates to be both high and increasing to reach the benefit limit." Michael Fletcher in The Washington Post.

6) The House passed the GOP's sequester replacement bill. "The House approved sweeping legislation on Thursday to cut $310 billion from the deficit over the next decade -- much of it from programs for the poor -- and shift some of that savings to the Pentagon to stave off automatic military spending cuts scheduled for next year. The legislation has no chance of passing the Senate or of becoming law. The White House issued a stern veto threat, saying the bill would 'fail the test of fairness and shared responsibility.' But the legislation’s prescriptions and priorities could define the 2012 Congressional elections -- and are likely to affect the race for the White House...The bill’s political sensitivity came through in the 218-to-199 vote. Democrats were united in their opposition. Sixteen Republicans sided with the Democrats, and one Republican voted present. 'I voted my conscience, and I voted my district,' said Representative Mike G. Fitzpatrick, a Republican from suburban Philadelphia, who voted no." Jonathan Weisman in The New York Times.

Top op-eds

1) REICH: J.P. Morgan Chase makes the case for Glass-Steagall. "Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets)...What just happened at J.P. Morgan - along with its leader’s cavalier dismissal followed by lame reassurance - reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed’s recent recommendation that Wall Street’s giant banks be broken up should be heeded." Robert Reich.

2) KRUGMAN: Talk of structural unemployment is an excuse for inaction. "So now we’re in another depression, not as bad as the last one, but bad enough. And, once again, authoritative-sounding figures insist that our problems are 'structural,' that they can’t be fixed quickly. We must focus on the long run, such people say, believing that they are being responsible. But the reality is that they’re being deeply irresponsible...So what’s with the obsessive push to declare our problems 'structural'? And, yes, I mean obsessive. Economists have been debating this issue for several years, and the structuralistas won’t take no for an answer, no matter how much contrary evidence is presented. The answer, I’d suggest, lies in the way claims that our problems are deep and structural offer an excuse for not acting, for doing nothing to alleviate the plight of the unemployed...All this talk about structural unemployment isn’t about facing up to our real problems; it’s about avoiding them, and taking the easy, useless way out. And it’s time for it to stop." Paul Krugman in The New York Times.

3) ALTER: Obama and Romney offer differing views of capitalism. "A more useful distinction may be between venture capitalists and human capitalists. Romney came up as a private-equity investor. Like his party, he believes in his heart that the way forward for the U.S. is to slash taxes for the wealthy even further so that they have more venture capital to invest in businesses. Obama came up as a community organizer. Like his party, he believes in his heart that a great nation must invest in human capital through education, health care and infrastructure...Last week brought a classic example of the differing approaches. The tussle over doubling interest rates for student loans (scheduled for July 1) was a controversy ginned up for the Obama campaign, but it was also an acid test. Democrats wanted to pay for the lower rate with a modest business tax; Republicans responded with plans to scuttle the preventive health-care part of Obamacare, despite much evidence of its efficacy for both people and budgets. " Jonathan Alter in Bloomberg.

4) CARPENTER AND KNEPPER: Occupational license reform would spur economic opportunity. "Since the 1950s, the number of U.S. workers needing an occupational license--effectively a government permission slip to work--has grown from one in 20 to nearly one in three, according to a 2010 study by Morris Kleiner (University of Minnesota) and Alan Krueger (Princeton). The burdens these licenses impose on would-be workers and entrepreneurs are substantial...The risk of a few bad haircuts seems worth a roll of the dice if the upside is more economic opportunities. But the truth is that consumers are capable of judging the quality of many services for themselves. If lawmakers in Michigan and elsewhere want to help more Americans find jobs, they should start by reducing or removing burdens that do little more than protect some people from competition by keeping others out of work." Dick Carpenter and Lisa Knepper in The Wall Street Journal.

5) BAKOPOULOS: Greek voters didn't have a chance to reject austerity without rejecting Europe. "It’s clear that Greeks -- derided throughout the Continent as lazy and corrupt, hobbled by the bailout deal’s austerity measures and humiliated by the troika (the European Central Bank, European Commission and International Monetary Fund) -- have put their trust outside the mainstream...But an election usually asks: who, or what, are you for? Not this one. If voters were given any choice, it was this: either accept the austerity measures or be forced to leave the euro zone. A double bind, this either-or option is unable to give expression to the complexity of both yes to Europe and no to austerity. Just before the vote, the German finance minister issued a warning: If Greek voters did not elect a government that would abide by the terms of the deal, 'then Greece will have to bear the consequences.' But the consequences are unclear. Vote correctly, or else. Or else what?" Natalie Bakopoulos in The New York Times.

Top long reads

Binyamin Appelbaum profiles financial blogger Joe Weisenthal: "Weisenthal is often -- perhaps more often than anyone else -- the first person to describe new data on Twitter. And almost as quickly, he repeats the thought, with a new headline, on Business Insider. When the government reported that only 120,000 jobs were created in March, well below expectations, he quickly rewrote the draft of his tweet: 'DISASTER: MARCH JOBS REPORT MISSES EXPECTATIONS AT 120K. (Analysts expected +205K)' A search on Twitter suggests that this, at 8:30 on the dot, was the first line published on the subject. Weisenthal managed to post a complete sentence before one of his main rivals, a blogger whose handle is ZeroHedge, tweeted just this: '120k.'...And then Weisenthal and his audience moved on to the next thing. Around 10 a.m., he posted a new article. The headline read, 'FORGET THE JOBS REPORT: The Most Important Number of the Day Hasn’t Even Come Out Yet.'"

James Bandler and Doris Burke investigate the struggles of HP: "Dr. Phil could fill a month's worth of shows just examining HP's board, whose dynamics have resembled those of rival junior high school cliques more than what is supposed to be a sage guiding force. At times, as we'll see, HP directors have refused to be in the same room with one another and have accused each other of lying, leaking, and betrayal. Time and again they've failed in their choice of CEO -- their most important task -- selecting a new leader whose most salient trait is that he or she is the opposite of the last one. All of this has impeded the company from tackling the fundamental problem it faces: Simply put, Hewlett-Packard has lost its way. The company is in the midst of an existential crisis. It remains a behemoth, No. 10 on the Fortune 500, with $127 billion in sales last year and $7 billion in earnings. But the trajectory is ominous. Those profits, for example, were 19% lower in 2011 than in the previous year."

'60s nostalgia interlude: Jimi Hendrix plays "Rock Me Baby" live at Monterey 67.

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

Still to come: CEOs push for deficit reduction; an abortion rights leader is stepping down; low scores on a science exam; oil independence may not be a realistic goal; and bear cubs hop aboard the love train.

Economy

A rise in imports widened the trade deficit. "The U.S. trade deficit widened in March but other data Thursday reflected two conditions that could spur the economic recovery: strong American exports and falling oil prices. The March trade gap expanded 14.1% from February to $51.8 billion, the government said. Growing demand from consumers and businesses for goods and services from abroad, along with high oil prices that have since retreated, sent imports surging 5.2% to a record $238.6 billion. But exports also showed strength, rising at the fastest pace since last summer to set their own record. Despite Europe's fiscal woes and Asia's slower growth, the U.S. sent abroad $186.8 billion in goods and services in March, up 2.9% from February. Exports have climbed for the past four months, defying forecasts of slower growth due to the recession in the euro zone. U.S. manufacturers appear to have been helped by a historically weak dollar as well as subdued wage growth at home." Josh Mitchell in The Wall Street Journal.

The House passed the first appropriations bill of the year. "The House on Thursday approved the first appropriations bill of the year, a measure that spends $51 billion on the Departments of Commerce and Justice, NASA and other related agencies. The spending bill, H.R. 5326, was approved in a 247-163 vote in which eight Republicans voted against it, reflecting opposition to the amount spent in the bill. But it also picked up the support of 23 Democrats...The bill is among the least controversial of the 12 annual appropriations bills but has little chance of becoming law on its own. The White House has said President Obama will veto any and all of the 12 bills until the House renounces the top-line spending level in the overall budget written by Rep. Paul Ryan (R-Wis.). The legislation cuts spending by about 3 percent compared to current levels, which Republicans said shows their ongoing commitment to trim spending. The GOP said spending by agencies covered by the bill has been cut by 20 percent over the last three budget cycles." Pete Kasperowicz in The Hill.

CEOs are making a new push for a deficit deal. "Top business executives, many of whom sat on their hands during last year's frantic debate about raising the federal debt ceiling, have begun mobilizing and plan to be more vocal in urging Congress to reach a bipartisan deficit-reduction deal by the end of the year. Executives have been meeting privately with lawmakers, urging them to start laying the groundwork now so they can reach an agreement after the November elections to avoid the large tax increases and heavy spending cuts scheduled to take effect in January. They worry those measures could tip the economy back into recession and create turmoil in financial markets, according to people who have attended some of the meetings. J.P. Morgan Chase & Co. chief executive James Dimon hosted a lunch for several dozen chief executives and two U.S. senators late last month, one of the latest in a series of private meetings aimed at drumming up support for a political agreement." Damian Paletta in The Wall Street Journal.

Subsides are fueling gains in manufacturing. "As chairman and principal owner of Revere Copper Products, Mr. O’Shaughnessy runs one of America’s oldest manufacturing companies, started by Paul Revere himself, a fact that exerts considerable pressure. As he put it: 'What kind of a message are you sending to the people of the country if you abandon America?' But spend a day with him, and a more complex picture emerges. He wonders sometimes about the less patriotic alternative of relocating production to Asia or closing the factory entirely on the ground that Revere’s profit margin here is too thin -- less than $1 million on $450 million in annual revenue...What staves off those alternatives are labor concessions and a substantial government subsidy, something he and others in the United States say is increasingly important to fuel a nascent recovery in manufacturing...With such support, the key measure of manufacturing’s presence in America is ticking upward." Louis Uchitelle in The New York Times.

@jbarro: Just got woken up. I swear I was in the middle of a dream where I was arguing w/ a reporter about transfer taxes.

Engineering interlude: A real life Mario Kart.

Health Care

The leader of an influential abortion rights advocacy group will step down. "At the end of this year, Nancy Keenan will step down from her post as president of NARAL Pro-Choice America, the country’s oldest abortion-rights advocacy group. The 60-year-old Keenan said she is leaving out of concern for the future of the pro-choice movement -- and thinks she could be holding it back.Nancy Keenan will retire as president of NARAL Pro-Choice America at the end of the year. In recent years, Keenan has worried about an 'intensity gap' on abortion rights among millennials, which the group considers to be the generation of Americans born between 1980 and 1991. While most young, antiabortion voters see abortion as a crucial political issue, NARAL’s own internal research does not find similar passion among abortion-rights supporters. If the pro-choice movement is to successfully defend abortion rights, Keenan contends, it needs more young people in leadership roles, including hers." Sarah Kliff in The Washington Post.

An F.D.A. panel backed the preventive use of a H.I.V. drug. "A drug already used to treat H.I.V. infection should also be approved to prevent it, an advisory panel to the Food and Drug Administration said on Thursday. The recommendation is the first time that government advisers have advocated giving antiviral medicine to healthy people who might be exposed through sexual activity to the virus that causes AIDS. One panelist called approving the drug 'an amazing opportunity to turn the tide on this epidemic.' Studies have shown that people who take the medicine, Truvada, every day have a greatly reduced risk of infection. The F.D.A. usually accepts the advice of its advisory panels, which are made up of outside medical experts...Experts say better methods of prevention are needed because there are 50,000 new H.I.V. infections a year in the United States. Several speakers emphasized Thursday that that number had not budged in 15 to 20 years." Denise Grady in The New York Times.

Domestic Policy

Scores remained low on a national science test. "U.S. eighth graders made modest gains on the latest national science exam, but more than two-thirds still lacked a solid grasp of science facts, according to figures released Thursday that renewed concerns American schools are inadequately preparing children for college and the workforce. The 2011 National Assessment of Educational Progress, an exam administered by the U.S. Department of Education, showed that 32% of students were proficient in science, compared with 30% the first time the new version of the science exam was administered, in 2009...Teachers and education-advocacy groups cite various possible causes for weak scores, including a lack of qualified science teachers, budget cutbacks and a narrowing of the curriculum prompted by the No Child Left Behind law. That 2002 U.S. statute caused schools to be evaluated solely on math and reading tests, which persuaded some to reduce science education." Stephanie Banchero in The Wall Street Journal.

Congress is considering subsidizing the deductibles on crop insurance. "It's a deal that most businesses would relish: Buy an insurance policy to cover losses or falling prices, and the government will foot most of the bill. Such an arrangement has been enjoyed for more than a decade by the farmers who grow crops such as corn and soybeans, and the companies that insure them. And it's about to get even better. The farm bill now before Congress includes a provision -- estimated to cost about $3 billion a year -- that would help cover the losses farmers suffer before their crop insurance policies kick in. Those losses, termed deductibles, can run in the tens of thousands of dollars for a typical mid-size farm. Supporters say it's a money saver because it would replace an existing subsidy costing $5 billion a year. That subsidy, known as direct payments, pays farmland owners a set amount regardless of whether they've planted crops on the land." Kim Geiger in The Los Angles Times.

Adorable animals being adorable together interlude: All aboard the (bear cub) love train!

Energy

Oil independence may not be possible. "Over the past few years, the United States has experienced a boom in oil and gas production. And that’s led a few commentators to declare that the country is on the verge of ending its dependence on foreign energy and supply disruptions. Alas, that’s never fully possible...Even if the United States goes further and somehow manages to produce every last drop of the oil and gas it needs to run its economy, the country would still be vulnerable to events in the Middle East, tensions in Iran, strikes in Venezuela and other disruptions in the oil markets.... As the CBO explains, oil prices are set by the global oil market. 'Disruptions in oil production in one country will cause the world oil market to readjust so that all countries and firms continue to receive oil at the new prevailing price.' Even if the United States produced 100 percent of its own oil, the price would still go up if rising demand from China outstripped the ability of supplies to keep up." Brad Plumer in The Washington Post.

@AndrewRestuccia: A lively version of "Chain of Fools" is playing before confernce call with Grover Norquist, Rep. Pompeo, Sen DeMint on energy tax credits

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

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The 60-year-old Keenan said she is leaving out of concern for the future of the pro-choice movement — and thinks she could be holding it back.

“There’s an opportunity for a new and younger leader,” Keenan said during a Wednesday interview in her downtown Washington office. “Roe v. Wade is 40 in January. It’s time for a new leader to come in and, basically, be the person for for the next 40 years of protecting reproductive choice.”

NARAL, which was founded in 1969, is in the middle of a multi-year effort to engage millennials on abortion rights. For three years, the group has used surveys and focus groups to try to better understand young voters. When the landmark Supreme Court case Roe v. Wade reaches its 40th anniversary next year, NARAL hopes to roll out a more extensive campaign.

“People give a lot of lip service to how we’re going to engage the next generation,” Keenan said, “but we can’t just assume it will happen on its own.”

Keenan has held the job for eight years, during which NARAL has lobbied Congress on 55 abortion-related votes and worked on over 4,000 pieces of state legislation. She describes herself as part of a “postmenopausal militia,” the baby-boomer activists who, as college students in the 1970s, fought for abortion rights. When the Supreme Court ruled in Roe v. Wade that the Constitution protected a woman’s right to an abortion, those activists won. Today, they run many of the major abortion-rights groups, such as NARAL, Planned Parenthood and the National Organization for Women.

Keenan joined NARAL in late 2004, after a lengthy career in Montana politics, a state where support for abortion rights was not always a popular position.

“She took on this issue in the 1980s, before 1992 and the Year of the Woman made it something you talked about,”said Jim Messina, President Obama’s campaign manager, who came up with Keenan in Montana politics. “I remember her continuing to talk about abortion rights...It was politically controversial, and Nancy didn’t care.”

Messina, who was a deputy chief of staff in the White House, remembers relying on Keenan’s advice -- and frankness -- during the health-care reform debate. The administration often came into conflict with abortion-rights groups, who protested new regulations in the health-care act meant to sway antiabortion Democrats.

“She is someone who can disagree with us and be honest about it,” he said. “I consulted with her frequently when I was at the White House. She would always tell you the truth...She was very loud and willing to use the ‘f’ word. That’s why I like her.”

During her tenure, Keenan helped send pro-choice candidates to Congress. In a 2008 post-election analysis, National Journal ranked NARAL the second-most effective endorser in highly contested Congressional races.

There were also setbacks. In the 2010 midterm elections, a wave of antiabortion legislators swept into Washington and took control of state governments across the country. The number of states with solidly antiabortion governors and legislatures spiked from 10 to 15.

“You go through those really good days, and we’ve had a lot of those, and you cherish them,” Keenan said. “The bad days, they happen, too. And they’re a lesson.”

States passed a record 92 abortion restrictions in 2011, more than any other year since Roe. The lesson that Keenan took away then, was that elections matter. So do the voters who will soon dominate them.

Millennials will make up 40 percent of the electorate by 2020, and Keenan questions whether she’s the right leader to reach these new groups.

“This issue has got to be a voting issue for them,” Keenan said. “If we want to continue protecting abortion rights in this country, this is so clearly the case.”

NARAL’s research, however, suggests it has a ways to go: Young voters do not make abortion rights a priority at the polls. In 2010, the group’s poll of 700 young Americans showed a stark “intensity gap” on abortion. Most antiabortion voters under 30 (51 percent) considered it a “very important” voting issue. Among abortion-rights millennials, that number stood at 26 percent.

“There is an intensity gap between our side, being pro-choice, and the other side,” Keenan said.

Part of that, abortion-rights advocates think, has to do with the different battles faced by each generation. Where baby boomer advocates fought for a constitutional right to legal abortion, younger activists have grown up with that right as a guarantee.

“I was born two months after Roe v. Wade was settled, so, in a way, the battle was won,” said Stephanie Schriock, president of EMILY’s List, which works to elect Democratic women who support abortion rights to public office. “Our grandmothers and mothers fought these battles with intensity. When you’re fighting to hold onto something, rather than get something, it gets less intense.”

Under Keenan’s leadership, NARAL has begun aiming its message at young supporters. Using surveys and focus groups, the organization researched how those who have grown up in an era of legal abortion think about women’s right to choose. NARAL is now testing video concepts and putting together a campaign to mark four decades under Roe v. Wade.

By then, Keenan will have left her post, and NARAL will be recruiting those younger supporters to become leaders throughout the organization.

“I expect to see more young people involved in this organization,” said Rosalyn Levy Jonas, chair of NARAL’s board of directors. “I expect to see more young people on the board. I think those are important considerations for us.”

Abortion rights opponents, however, contend that Keenan and her colleagues are fighting a losing battle. A change in leadership, they say, won’t galvanize young supporters.

“This is not about tactics or strategy,” said Marjorie Dannenfelser, president of the anti-abortion group Susan B. Anthony List. “This is about the youth trending pro-life, or ambivalent.”

]]> http://feeds.washingtonpost.com/click.phdo?i=0aa9d55b373125a033fb3927b7a4de81 http://www.washingtonpost.com/blogs/ezra-klein/post/exclusive-naral-president-nancy-keenan-to-step-down/2012/05/10/gIQAn85PGU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/exclusive-naral-president-nancy-keenan-to-step-down/2012/05/10/gIQAn85PGU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/Fragment/SysConfig/WebPortal/twpweb/rss/mobile/blog-entry.jpp?id=1000.4.1235243259 http://www.washingtonpost.com/blogs/ezra-klein/post/exclusive-naral-president-nancy-keenan-to-step-down/2012/05/10/gIQAn85PGU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/exclusive-naral-president-nancy-keenan-to-step-down/2012/05/10/gIQAn85PGU_blog.html http://www.washingtonpost.com/blogs/ezra-klein/post/exclusive-naral-president-nancy-keenan-to-step-down/2012/05/10/gIQAn85PGU_search.html 1000.4.1235243259 e8877b1e-9ad7-11e1-976b-0c2657763581 Reproductive Health Nancy Keenan Montana Supreme Court abortion rights Thu, 10 May 2012 16:29:00 EST Fri, 11 May 2012 10:14:04 EST 20120511151404 The Washington Post /WashingtonPost/Content/Blogs/ezra-klein/201205/NARAL.xml /WashingtonPost/Content/Blogs/ezra-klein/201205/NARAL.xml BlogStory ezra-klein.dwp:content_well/ezra-klein_story_stream.dwc:story BlogStory The Washington Post Geoffrey Kabaservice, author of a new book on the fall of the Republican Party’s moderate wing, doesn’t think Richard Lugar deserved his reputation as a centrist:

Angry as the Tea Party became with him, Lugar had also been disowned by the moderate faction of which he was once a part. Indeed, the Senate’s dwindling number of Republican moderates expressed more frustration with Lugar than with any other colleague because they felt that too often he sided against them despite his better judgment. Rhode Island Senator Lincoln Chafee, a liberal Republican, was convinced that it galled Lugar to witness George W. Bush and Richard Cheney undoing decades of bipartisan achievements in international relations. Yet “time and again,” Chafee wrote in his book Against the Tide, “Senator Lugar showed an unwillingness to fight with the White House over the direction of our foreign policy.”

“In 2008, I published an article saying we haven’t seen any movement on same sex marriage ever,” Lewis, a professor of public management and policy at Georgia State University, admits with a laugh. “But that was using data a few years old. If you look back at the numbers now, you can see that support really began to take off in 2004.” He estimates that by the end of 2011, support was at about 46 percent — up from 30 percent in 2004.

Lewis’s estimates, which aggregate many different polls over many years to come up with a fuller picture of public opinion on this issue, show that support for same-sex marriage has increased by 16 points since 2004. The increase has been fastest among Democrats and slowest among Republicans. That means the issue has gotten more polarized, too.

Support varies dramatically between different states, Lewis continues. “My most recent estimates suggest majority support for same-sex marriage in 16 states.” With the exception of Alaska, those 16 states are all safe states for Obama. But Lewis’s latest numbers only go through 2011. “If we figure support has gone up another two points in the last year, that would push Wisconsin, Arizona and Maryland into majority-support territory, and Illinois and Minnesota right on the borderline.”

You can argue that these polls overstate the support gay marriage actually has among voters. After all, it’s a perennial loser at the ballot box. But Lewis notes that the same analysis “showed 35 percent support in North Carolina. And that’s pretty consistent with the vote there.”

For all that, Lewis is skeptical that the issue will make much of a difference in 2012. “My guess would be the people who are most intensely motivated by this issue are trapped in their choices. I don’t think that there are many people who are so opposed to same-sex marriage that they’ll vote on that basis and are not already voting for the Republican. And likewise, same-sex supporters for whom this is a voting issue are voting for Obama.”

Turns out, McAllen may not be so special. New data suggests that hundreds of hospitals across the country spend just as much, if not more, than the hospital Gawande profiled:

The average patient from Doctors Hospital cost Medicare $18,708, 4 percent more than the national median per patient payment of $17,988.

But their costs to Medicare were the same or less than patients at other 790 hospitals. Medicare paid as much for the average patient at Doctors as it did for patients at MedStar Georgetown University Hospital in Washington, D.C., Florida Hospital in Orlando or Wyoming Medical Center in Casper.

Hospitals in other regions look much worse than McAllen, where the priciest hospital in McAllen, South Texas Health System, cost Medicare 7 percent more than the median. In Las Vegas, patients at 14 of 16 hospitals cost Medicare 9 percent or more above the national median. Los Angeles has hospitals whose patients cost Medicare 30 percent or more above the national median.

This, of course, does not include data on outcomes, which makes it hard to know whether the extra spending in some areas is a worthwhile investment. Either way, it suggests that McAllen isn’t necessarily an anomaly: High health care costs are everywhere.

While that last part is true--federal law does require emergency rooms to stabilize a patient with a life-threatening condition--there are a few recent stories worth reading to understand why that doesn’t mean the United States has universal access to health care.

The federal law that requires hospitals to take all patients into emergency rooms is EMTALA, or the Emergency Medical Treatment and Active Labor Act passed in 1986. It requires hospitals that receive federal funds (just about all of them, thanks to Medicare) to provide treatment to anyone needing emergency care, regardless of their ability to pay.

It does not, however, specify what treatments hospitals have to provide. And there, Kaiser Health News’ Jenny Gold reports, new research shows that privately-insured children tend to get more comprehensive care:

Children with public insurance (Medicaid or CHIP) or who had no coverage are at least 22 percent less likely than those with private insurance to receive testing or to undergo procedures when they visit the hospital emergency departments, researchers from Children’s Hospital Boston found. In addition, children with no insurance are less likely to receive any medication than children with public or private insurance.

EMTALA only requires hospitals to provide care to those in an “emergency,” which the law defines as situations where a lack of care could place “the individual’s health in serious jeopardy” or cause “serious impairment to bodily functions.” That does not leave much space for many of the things health insurance covers like primary care, screenings and follow-up treatment. Namely, all the things that, after an emergency room trip, are supposed to keep us out of there in the future.

“If you’re acutely obstructed by massively advanced colon cancer, it’s likely you can get emergency surgery to end the blockage,” Aaron Carroll writes for CNN. “But your cancer is likely too far advanced to cure at that point. Moreover, you’re not going to get chemotherapy in the emergency department nor could you have gotten the colonoscopy that might have detected the cancer far earlier.”

As for the care that patients receive in an emergency room, it’s not always free.Gold recently looked at a hospital that has been chasing after one low-income patient for a $1,800 bill for prenatal care. That patient currently has $1.25 in her bank account. The New York Times has also probed the aggressive tactics used by hospitals to recoup unpaid bills.

Emergency rooms are indeed required to treat the most serious cases that show up at their doors. Calling that universal coverage, however, is probably somewhat of a misnomer.

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But here’s the kicker: Even if the United States goes further and somehow manages to produce every last drop of the oil and gas it needs to run its economy, the country would still be vulnerable to events in the Middle East, tensions in Iran, strikes in Venezuela and other disruptions in the oil markets.

To see why, here’s an interesting chart from a new report out of the Congressional Budget Office on energy security. It looks at how gasoline prices have moved in Japan, Canada and the United States in the past decade:

These three countries are all in very different oil situations. Canada is a net exporter of oil — it’s achieved the dream of “oil independence.” The United States, by contrast, still imports around 60 percent of its crude. And Japan imports just about all of its crude. Yet gasoline prices have followed the same pattern for all countries, rising and falling as global events dictate. (The absolute levels are a bit different among the different countries because of taxes and fees.)

That shouldn’t be surprising. As the CBO explains, oil prices are set by the global oil market. “Disruptions in oil production in one country will cause the world oil market to readjust so that all countries and firms continue to receive oil at the new prevailing price.” Even if the United States produced 100 percent of its own oil, the price would still go up if rising demand from China outstripped the ability of supplies to keep up. The price would still go up if Iran threatened to close the Strait of Hormuz. And so on.

The only way the United States could completely shield itself from global swings in price, the CBO notes, is by cutting itself off from the world oil markets and preventing its domestic producers from ever selling crude abroad. Even then, CBO notes, this could only work if the United States kept discovering large new domestic fields and could somehow force multinational oil companies to keep investing in the United States even if they found it unprofitable to do so. In other words, it’s an unrealistic goal.

Now, it’s true that more production in the United States could, potentially, increase the world’s overall supply of oil, lowering the absolute price of crude a bit. But even here, the CBO is doubtful that more U.S. production would have a large impact on global prices — most likely, producers in other countries would cut back on production in response, “diminishing or eliminating the effect.” (Saudi Arabia, for instance, recently announced that it would reduce a planned drilling expansion because of increased production in Brazil and Iraq.)

This doesn’t mean that boosting U.S. oil production is pointless. Importing less oil from abroad would help shrink the U.S. trade deficit. Dollars spent on oil would stay within the country rather than flee overseas. That’s not nothing. But according to the CBO, even a massive surge in production wouldn’t likely do very much to buffer the United States from the sorts of wild and harmful swings in the oil market that are becoming increasingly common.

The only real protection against oil volatility, the report concludes, is to become more fuel-efficient and ramp up alternatives to crude.

When faced with this type of electoral upset in small member states, the EU has historically adopted two distinct response strategies, one aimed at voters and the other aimed at recalcitrant political leaders.

The first strategy was employed in 2009 when the Irish first rejected the Lisbon Treaty reforming the European Union. Subsequently, when a few meaningless revisions were added to the Treaty, the Irish voters adopted it in a second referendum. It was the threat of economic and political isolation that persuaded them to change their mind.

The second strategy unfolded at Cannes last year. It was then that the EU threatened Greek political leaders with economic ruin (in the form of a euro exit) in order to force them to rethink their response.

Both these strategies were designed to overcome member state democratic processes and get to the “right answer” for the European Union as a whole.

And if that fails? “It would be reckless to force Greece out without adopting the type of 10-year plan for euro area integration called for by Mario Draghi, the ECB president, including steps like a banking union and a road map toward eurobonds and a common fiscal policy,” writes J. Funk.

Zoom into the country level and you can see this even more clearly. Here is unemployment in Spain, Italy, France, Greece, Portugal, and Ireland. As you can see, it’s skyrocketing:

And here are the structural budget deficits for the same set of countries. As you can see, they’re falling:

All the numbers in this post, by the way, come from the International Monetary Fund’s latest data (pdf). Values for 2012 and 2013 are the Fund’s estimates.

What about gays who live in states that don’t have gay marriage? Should North Carolina be able to decide that its gay residents don’t get to file joint federal income tax returns, even if they are legally married by another state? Should gay federal workers get spousal benefits only if they work in gay marriage states? Or should the federal government treat gay couples as married no matter where they move?

There is also the issue of joint federal-state programs like Medicaid. These programs are operated by the states, but the federal government pays much of their cost and imposes certain rules about how states must operate them. Should the federal government require that states recognize gay marriages for the purposes of these programs?

And there is the immigration issue. Should gay marriages (foreign or domestic) be valid for immigration to the United States?

Some portion of marriage policy can be left up to the states. But gay marriage is also very much a federal issue requiring federal policy solutions. In the coming months, Barack Obama will need to address them, whether he wants to or not.

Both the Massachusetts Senate and House have released bills that aim to cut at least $150 billion in health-care costs over the next 15 years. They do so by setting a global cap on health-care spending, under which health-care providers get paid for the quality — rather than quantity — of medicine they provide.

As for making sure those bills make it across the finish line and become law? That task lies, in no small part, with Massachusetts state Sen. Richard Moore. As chairman of the Massachusetts legislature’s Committee on Health Care Financing, he’s been at work on health cost control legislation for 15 months — and will be the guy negotiating what the final product looks like.

“It hasn’t been all harmony and light, but everybody seems to feel we need to move in the same direction,” Moore told me in an interview this week. “There’s the general agreement that, if we focus on getting the best quality, we can drive down cost and ensure access for everybody.”

But there are some differences of opinion among Massachusetts legislators that could become roadblocks, namely determining how aggressive the state ought to be in slowing health-care cost growth.

The House has proposed capping health-care cost growth slightly lower than the rest of the economy, while the Senate would go allow costs to rise just faster than Gross State Product. Moore, for his part, is open to a more restrictive cap albeit not as tight as the Massachusetts House proposal.

“I’d love to get below inflation,” he says, “But we’re just concerned that might be too drastic. That’s almost like cutting the average rates of the past few years increases in half. We think the House version moves in that direction too quickly.”

There are also questions of enforcement: If Massachusetts does cap its health-care spending, how can it make sure that health-care providers will stay within the budget? Both bills will have a state agency watch over the process, with authority to write a “corrective action plan” if it didn’t see costs moving in the right direction.

I asked Moore whether such an agency would have enough teeth to enforce steep spending cuts. “We didn’t want to hold the hammer all the way out there,” he explains. “I think the folks in health care understand this is their job, so you might not need the hammer. And we will have someone watching, with the authority to require work plans. Maybe they’ll come back to us and eventually ask for more authority.

“We view this as a step in the right direction but not necessarily the end solution.”

What Moore says he is committed to is ensuring that a bill moves this session, regardless of any obstacles that come up in ensuing weeks and months.

“There’s general agreement this has got to be the direction of health care,” he says. “I have been working on this for 15 months. You work on something for that long, with so many people, maybe it’s not surprising that there’s a lot of agreement.”

]]> http://feeds.washingtonpost.com/click.phdo?i=a819e4706f2d84f28defb691fccba15e http://www.washingtonpost.com/blogs/ezra-klein/post/massachusetts-wants-to-cut-150-billion-in-health-costs-can-it-succeed/2012/05/10/gIQAvaYUFU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/massachusetts-wants-to-cut-150-billion-in-health-costs-can-it-succeed/2012/05/10/gIQAvaYUFU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/Fragment/SysConfig/WebPortal/twpweb/rss/mobile/blog-entry.jpp?id=1000.4.1221529611 http://www.washingtonpost.com/blogs/ezra-klein/post/massachusetts-wants-to-cut-150-billion-in-health-costs-can-it-succeed/2012/05/10/gIQAvaYUFU_blog.html?wprss=rss_ezra-klein http://www.washingtonpost.com/blogs/ezra-klein/post/massachusetts-wants-to-cut-150-billion-in-health-costs-can-it-succeed/2012/05/10/gIQAvaYUFU_blog.html http://www.washingtonpost.com/blogs/ezra-klein/post/massachusetts-wants-to-cut-150-billion-in-health-costs-can-it-succeed/2012/05/10/gIQAvaYUFU_search.html 1000.4.1221529611 1781f99a-9a96-11e1-976b-0c2657763581 Health Care Richard Moore Massachusetts Senate health care Thu, 10 May 2012 08:26:12 EST Thu, 10 May 2012 10:47:03 EST 20120510154703 The Washington Post /WashingtonPost/Content/Blogs/ezra-klein/201205/Massachsuetts cutting health costs.xml /WashingtonPost/Content/Blogs/ezra-klein/201205/Massachsuetts cutting health costs.xml BlogStory ezra-klein.dwp:content_well/ezra-klein_story_stream.dwc:story BlogStory The Washington Post For the President of the United States to endorse gay marriage is certainly, as Vice President Joe Biden would say, a big you-know-what deal. But what's actually changed this morning?

Then, of course, there's the political fallout. This is unpredictable, of course. And my guess is that it probably hurts Obama a bit more than it helps him. But overall, I think Jonathan Bernstein is right that it's largely being overhyped by both sides.

"Yes," he writes, "some marriage-equality advocates had talked about withholding support unless the president 'evolved.' But realistically, there was no way that political activists — people accustomed to the normal give-and-take of politics — were not going to appreciate the wide gulf between Obama and Mitt Romney on lesbian, gay, bisexual and transgender issues." Similarly, "it’s highly unlikely that anyone who, otherwise was fine voting for Obama despite disagreeing with him on ending 'don’t ask don’t tell' and each of the other measures he has supported and in many cases has enacted, would draw the line here."

"And what of everyone else?" Asks Bernstein. "The millions of Americans, most likely a large majority, who don’t really care very much? They’re still not going to care very much."

But there are many Americans for whom this will matter quite a lot. Many of them are young Americans who perhaps have only recently realized that they're gay, and who live in places, or with families, they know will have trouble accepting that fact. To them, the president's words are a signal that they can look forward to a future in which they will be accepted, and in which they can live in a way that makes them happy. His words are proof that it gets better. And that's a big deal.

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RCP Obama vs. Romney: Obama +1.3%; 7-day change: Obama -1.8%

RCP Obama approval: 47.3%; 7-day change: Obama -.3%.

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Top stories

1) The polling on gay marriage has flipped. According to surveys included in the PollingReport.com database, an average of 50 percent of American adults support same-sex marriage rights while 45 percent oppose it, based on an average of nine surveys conducted in the past year. This is a reversal from earlier periods: support for same-sex marriage has been increasing, and opposition to it has been decreasing, at a relatively steady rate of perhaps two or three percentage points a year since 2004...In addition, there is no longer evidence of an “enthusiasm gap” with respect to same-sex marriage: an NBC News/Wall Street Journal poll in March found that 32 percent of Americans said they strongly favored same-sex marriage, while 31 percent strongly opposed it. Nate Silver in the New York Times.

2) The president's personal position is catching up with his administration's legal strategy. Obama’s Justice Department withdrew more than a year ago from defending the Defense of Marriage Act’s definition of marriage as 'a legal union between one man and one woman.' Attorney General Eric Holder started backing away from DOMA in suits brought by same-sex couples in Connecticut, Vermont, and New Hampshire. The idea in these cases is that in states that recognize same-sex marriage, the federal government should follow state law and stop denying the economic benefits of marriage—estate tax deductions, Social Security benefits, pensions, and the like—to married gay couples....As Mother Jones’ Adam Serwer points out, Obama caught up to his administration’s legal position today without going beyond it. He said 'at a certain point I've just concluded that for me personally it is important for me to go ahead and affirm that I think same-sex couples should be able to get married,' and he also said he thinks the states should decide the question of legalization for themselves. Emily Bazelon in Slate.

3) The Bundesbank may accept higher inflation. "The Bundesbank, the most hawkish of central banks, has signalled it would accept higher inflation in Germany as part of an economic rebalancing in the eurozone that would boost the international competitiveness of countries worst-hit by the region’s debt crisis. A future German inflation rate above the eurozone average could be part of a natural adjustment process as crisis-hit countries pulled themselves out of recession, the Bundesbank argued in evidence to German parliamentarians submitted on Wednesday...The Bundesbank has for some time seen European Central Bank policy as too loose for Germany. The willingness to contemplate higher domestic inflation in public comments points to a new-found flexibility in German thinking...Despite the Bundesbank’s conciliatory stance on inflation, German policy makers have been among the toughest in insisting that Greece sticks to its agreed reform programme underpinning its bailout in the aftermath of Sunday’s Greek election." Ralph Atkins in The Financial Times.

4) Banks are throwing their weight behind Obama's Fed nominees. "President Barack Obama's two nominees to the Federal Reserve Board have received support from the financial-services industry, including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. Sen. David Vitter (R., La.) has effectively blocked Senate confirmation of the nominees, Harvard University economics professor Jeremy Stein and former private-equity executive Jerome Powell. Wall Street firms have been quietly pressing Mr. Vitter to drop his objections, an aide to the senator said. Senate leaders aren't expected to bring the nominees to the floor for debate, a potentially lengthy process unlikely to be welcomed by either party in an election year. The Senate generally confirms nominees through the faster process of unanimous consent. Unless Mr. Vitter changes his mind, the two Fed nominations are unlikely to advance." Kristina Peterson in The Wall Street Journal.

5) The House will vote today on a plan to cut health-care spending rather than defense. "The House is expected to vote Thursday on a Republican plan that would spare the Pentagon from the deep across-the-board spending cuts envisioned as part of last summer’s debt-ceiling agreement, reviving what has been an emotional debate in Washington about the best ways to reduce the federal budget deficit. With a series of troubling end-of-year deadlines looming, Republicans are proposing to replace the first round of $110 billion in reductions, which are set to take effect in January. The cuts are a first-year down payment on $1.2 trillion in reductions spread over 10 years, which were to be split evenly between the military and domestic programs. To forestall the defense hit, the GOP proposal would cut funding for food stamps, eliminate key pieces of the federal health-care law and slash funding designed to help the government better monitor the financial sector." Rosalind Helderman in The Washington Post.

@MichaelGrabell: The Sequester Replacement Reconciliation Act is probably the hottest name for a bill I've ever seen.

@ChadPergram: Ryan on bill to change sequester: The supercmte didn't do its job. We're doing what the supercmte was supposed to do: prioritize spending.

6) The FDIC will outline its plan to take down failing banks. "When the next crisis brings a major financial firm to its knees, U.S. regulators will seize the parent company but allow its units around the globe to keep operating while the mess is cleaned up, according to a planned announcement Thursday from the Federal Deposit Insurance Corp. The equity stakeholders of the large bank or other financial firm will be wiped out, and bondholders will face losses as their holdings are swapped for equity in a new entity, as a part of the FDIC's plan. Nearly four years after the massive government bailouts of the financial crisis, regulators are looking to chip away at the tacit understanding that the government will step in to save top financial institutions seen as vital to the economy or banking system. As part of that effort, acting FDIC Chairman Martin Gruenberg will outline the agency's strategy in a speech in Chicago Thursday, his first public remarks on the dismantlement plans for banks." Victoria McGrane in The Wall Street Journal.

7) The CFPB will propose tighter mortgage lending regulations. "The Consumer Financial Protection Bureau said it planned to propose tighter mortgage lending regulations that would limit the ability of banks and mortgage brokers to charge certain transaction fees, possibly ending one of the most abusive costs levied on consumers when they buy a house. Bureau officials said that the rules, which were released Wednesday ahead of formal introduction this summer, would ban mortgage companies from charging origination fees that vary with the amount of the loan...The consumer bureau also said it would require that lenders offer a reduced interest rate when a consumer opted to pay upfront discount points and would require lenders to offer a loan option without points. During the financial crisis, some lenders charged the points without lowering the interest rate. Changing that rule, the bureau believes, will make it easier for consumers to weigh offers from multiple lenders." Edward Wyatt in The New York Times.

Top op-eds

1) KLEIN: Polarization is largely attributable to Republicans. "Look no further than Senator Richard Lugar’s concession statement Tuesday night, which showed, in its wan effort to make the two parties sound equivalently extreme, just how much further the Republican Party has gone...Whether the Republican Party is 'the problem' is a subjective judgment. Perhaps you loathe taxes and, in the face of all available evidence, consider global warming a hoax. In that case, the Republican Party is doing exactly what it should be doing. But there is simply no denying that the Republican Party has gone much further right than the Democratic Party has gone left, and that, from policy pledges to primary challenges, it has done much more to discourage its members from compromising than the Democratic Party has. So if you think polarization is the main problem in Washington today, then Mann and Ornstein are right: Your beef is largely with the Republicans." Ezra Klein in Bloomberg.

2) HANSEN: If tar sands drilling continues it's game over for the climate. "Global warming isn’t a prediction. It is happening. That is why I was so troubled to read a recent interview with President Obama in Rolling Stone in which he said that Canada would exploit the oil in its vast tar sands reserves 'regardless of what we do.' If Canada proceeds, and we do nothing, it will be game over for the climate. Canada’s tar sands, deposits of sand saturated with bitumen, contain twice the amount of carbon dioxide emitted by global oil use in our entire history. If we were to fully exploit this new oil source, and continue to burn our conventional oil, gas and coal supplies, concentrations of carbon dioxide in the atmosphere eventually would reach levels higher than in the Pliocene era, more than 2.5 million years ago, when sea level was at least 50 feet higher than it is now. That level of heat-trapping gases would assure that the disintegration of the ice sheets would accelerate out of control...Civilization would be at risk." James Hansen in The New York Times.

3) YGLESIAS: It shouldn't be so hard for foreign visitors to come to the U.S. "For a depressed economy, exports function as a magic elixir. Demand--and with it jobs--appears from outside, generating new income that cycles through the economy, This is why President Obama, as part of his recovery strategy, has set a goal of doubling exports over five years. Talk of exports normally conjures up images of factories and container ships, but many of America’s exports are services. The nation’s biggest service export is in some sense not an export at all--it’s travel and tourism, an industry begging for respect on National Travel and Tourism Week...As far as the national balance sheet goes, tourism functions exactly like an export. Foreigners come here and spend money, leaving extra funds in American hands, with which we can purchase oil and Chinese toys. It’s an export realm in which the United States has very strong fundamentals." Matthew Yglesias in Slate.

4) SALMON: Principal reductions can benefit everybody. "Principal reduction in mortgage modifications has to become the rule rather than the exception. The reason the government’s efforts to fix the mortgage market have failed so miserably is that those efforts have centered on interest payments, not the total amount owed. A sluggish housing market will act as an economic drag for as long as millions of homeowners owe vastly more than their house is worth. If done right, these policies can be implemented in a positive-sum way, making everybody -- including the banks doing the write-downs -- better off. For instance, the government could impose higher capital standards on banks that insist on marking underwater defaulted mortgages at par, and give the banks an incentive to write down principal that way, while making the whole banking system safer at the same time...If we don’t want the United States to continue to suffocate under the weight of far too much debt, we have to start making serious efforts to bring our debt burden down." Felix Salmon in Reuters.

5) WILL: The medical device tax will mean fewer life-extending inventions. "Congress, ravenous for revenue to fund Obamacare, included in the legislation a 2.3 percent tax on gross revenue -- which generally amounts to about a 15 percent tax on most manufacturers’ profits -- from U.S. sales of medical devices beginning in 2013. This will be piled on top of the 35 percent federal corporate tax, and state and local taxes. The 2.3 percent tax will be a $20 billion blow to an industry that employs more than 400,000, and $20 billion is almost double the industry’s annual investment in research and development. An axiom of scarcity is understood by people not warped by working for the federal government, which can print money when it wearies of borrowing it. The axiom is: A unit of something -- time, energy, money -- spent on this cannot be spent on that. So the 2.3 percent tax, unless repealed, will mean not only fewer jobs but also fewer pain-reducing and life-extending inventions...which have reduced health-care costs." George Will in The Washington Post.

Top long reads

Marcus Walker examines the failings of Europe's bailout of Greece: "Two years after Europe bailed Greece out to protect the euro, the rescue has become a debacle that threatens to unravel the common currency. After Greece's May 6 elections left pro-bailout parties too weakened to govern the country, more elections are likely in June, with no guarantee a stable government will emerge. By next month, Athens must identify €11.5 billion, or $15 billion, in fresh spending cuts or face suspension of the international loans it needs to pay pensions and run schools. If it doesn't get the money, it would eventually have to print its own. Greece's growing turmoil is the culmination of a radical austerity experiment and botched economic overhaul that have pushed the nation to the brink of social and political breakdown. The story of the ill-fated bailout suggests that forcing deep austerity on individual member states won't save the euro and may worsen its crisis."

Susan Headden on the search for better standardized tests: "Critics of testing habitually protest its cost, implying that the millions spent on assessment would be better put toward smaller class sizes, expanded library hours, or the restoration of art and gym. But despite testing’s huge and growing role in education, the U.S. now devotes less than a quarter of a percent of per-pupil spending to assessments. That’s less than the cost of buying each of America’s students a new textbook. The American education system is at a major crossroads, one that few Americans are aware of. The new assessments--the product of a huge investment of time, knowledge, and talent--are only two years away from being put in place, and they’re desperately needed. It’s too early to know whether they will work as advertised, and even if they do, the danger is that states will quickly revert to their old habits of doing assessment on the cheap. But if we do this right, we could finally provide educators like Caryn Voskuil with one of the tools they need most: a test worth teaching to."

Robert Rothman on the Common Core and its effect on innovation: "In some ways, the American elementary and secondary education system is undergoing a transition similar to what the American rail system underwent around the time of the Civil War. For decades, each state has set its own expectations for what students should know and be able to do at each grade level. These standards might reflect the tradition of local control of education, but they have made it difficult for students to move from state to state; students transferring from fourth grade in, say, Indiana, might face a different set of expectations when they arrive in fifth grade in Illinois. And, by fragmenting the educational marketplace, these varied standards have impeded the kinds of innovations that might otherwise come with economies of scale--in testing, textbooks, and teacher education."

British post-punk interlude: Django Django plays "Default" live on Later with Jools Holland.

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

Still to come: The Fed approved Chinese banks; primary care doctors will be getting more for Medicaid patients; the F.T.C. and the White House want online privacy legislation; it's a good time to be a solar installer; and a super-medley of songs from Super Mario Bros. 3.

Economy

Europe may be open to relaxing Greece's payment deadlines. "As another day passed with Greece no closer to a working government, European officials suggested Wednesday that they had a new tool in their mission to keep the shared euro currency with all its partners: time. A ticking watch may be the most powerful bargaining chip Europe has against the possibility that anti-bailout voices in Greece will push it off the euro. Every day that ends without new European bailout money for Greece to pay its bills heightens the pressure on its leaders to comply with the austerity measures that come as a condition of the $171 billion rescue package. But German officials signaled Wednesday that they may be willing to relax some of the nation’s payment deadlines if a pro-bailout government comes to power...They may even be willing to consider reducing the interest payments on Greece’s emergency loans, sweetening the deal without abandoning any of the fundamental overhauls they say Greece needs to get its economy on track." Michael Birnbaum in The Washington Post.

@TonyFratto: I used to believe Greece couldn't exit the euro. Now I think it's only a matter of timing.

@esoltas: Likelihood of Eurozone exit soars on @Intrade -- 69% by yearend 2014, 54% by 2013, 35% by 2012. http://pic.twitter.com/ES1kbQqF

Fannie Mae won't need additional taxpayer aid for the first time since the bailout. "Fannie Mae, the government-backed mortgage financier, said on Wednesday that it made a profit in the first quarter and that it did not need additional bailout money -- a first since the federal government took it over in fall 2008. A slowdown in the decline of home prices and in the number of homes entering serious delinquency allowed the company to eke out a profit after paying its dividend to the Treasury. Fannie Mae also said losses on its portfolio of home mortgages had probably peaked and that it expected better profits in the future, another sign that the worst might be over for the battered American housing market. The company reported quarterly net income of $2.7 billion, up from a $6.5 billion loss in the first quarter of 2011. Fannie has received about $116 billion from the Treasury over the last three and a half years and paid back about $23 billion in dividends." Annie Lowrey in The New York Times.

Export-Import Bank reauthorization is headed towards the Senate. "Ending months of haggling, the House voted Wednesday to extend the Export Import Bank’s charter through September 2014 and raise its loan exposure cap to $140 billion -- a 40 percent increase. The bill must still pass the Senate but the lopsided 330-93 House margin makes it harder for conservatives to obstruct. Republicans split 147-93 for the measure, and Democrats, whose party controls the Senate, were unanimous in their support...Wednesday’s vote caps a remarkable odyssey is which all of modern Washington’s politics seemed to descend with a thud on the once obscure enclave of overseas financing for U.S. manufacturers. Pushed to the brink, the bank is only weeks away now from seeing its charter expire at the end of May, by which point it will have also exhausted its $100 billion cap and be unable to take on further transactions in the pipeline." David Rogers in Politico.

@TPCarney: 93 GOP votes against the Export-Import Bank, as compared to 50 Nays in 2002: Evolution!

@Amy_NJ: Overheard in a Capitol elevator: "Another day in the United States Senate. I couldn't be more excited."

The Fed approved the U.S. expansion plans of Chinese state banks. "Giant banks owned by the Chinese government are coming to the U.S. The Federal Reserve on Wednesday approved plans by three state-backed Chinese banks to expand in the U.S., including the first acquisition of a U.S. retail-banking network by a state-owned Chinese lender. The approval is a landmark step for U.S. banking regulators. Chinese banks long have sought access to the U.S. banking system in order to provide financing to Chinese companies operating overseas and to do business with foreign investors looking for exposure to the Chinese currency, the yuan. But they have been stymied in previous attempts by assorted delays and rejections...The Federal Reserve effectively is giving its seal of approval to China's bank-regulatory system, a big step for U.S. regulators given their past concerns about the adequacy of Chinese supervision of banks." Jon Hilsenrath, Robin Sidel, and Lingling Wei in The Wall Street Journal.

Compilation interlude: People say "you just don't get it, do you?" a lot in films.

Health Care

A new regulation will boost Medicaid payments for primary care doctors. "Primary care doctors could get a pay raise next year for treating Medicaid patients, under a rule announced by the Obama administration Wednesday. The proposed regulation implements a two-year pay increase included in the 2010 health-care law. The increase, effective in 2013 and 2014, brings primary care fees for Medicaid, which covers indigent patients, in line with those for Medicare, which insures the elderly and some disabled patients. Although Medicaid is jointly funded by states and the federal government, the pay boost would be covered entirely with federal dollars totaling more than $11 billion over the two years it would be in effect...Administration officials also noted that the law has already increased Medicare payments to primary care doctors -- awarding more than 150,000 physicians almost $560 million in additional compensation in 2011." N.C. Aizenman in The Washington Post.

Some lawmakers want a permanent 'doc fix.' "Reps. Allyson Schwartz (D-Pa.) and Joe Heck (R-Nev.) introduced a bill Wednesday to reform how Medicare pays healthcare providers and to avoid a cut to reimbursement rates on Jan. 1. The bipartisan measure would repeal Medicare's current reimbursement formula and replace it with a new system of payment models. It would also give doctors small boosts in payment rates for four years. Money for the changes would coming from war savings from troop withdrawals in Iraq and Afghanistan -- a move Republicans have opposed in the past as a 'Ponzi scheme.'...The proposal instructs the Centers for Medicare and Medicaid Services to create new payment model options aimed at giving providers more flexibility based on specialty, region or type of practice. Doctors who treat Medicare patients are scheduled to see a 30 percent cut to their reimbursements on Jan. 1, 2013, if Congress does not step in." Elise Viebeck in The Hill.

Domestic Policy

The FTC and the White House are urging Congress to pass online privacy legislation. "The Obama administration and the nation’s chief privacy regulator pressed Congress on Wednesday to enact online privacy legislation...Jon Leibowitz, chairman of the Federal Trade Commission, which enforces limited Internet privacy laws, and Cameron F. Kerry, general counsel for the Commerce Department, said at a hearing of the Senate commerce committee that writing new laws and giving the F.T.C. the power to enforce them with civil penalties would promote Internet commerce by increasing the trust that Americans put in online transactions. Currently, the F.T.C. monitors whether Internet companies that have privacy policies keep their promises to consumers about when and where they will share personal information. But the commission lacks the authority to assess penalties for most transgressions, and it has little authority over how companies operate when they have no written privacy rules." Edward Wyatt in The New York Times.

Game music interlude: Meine Meinung play a super-medley of songs from the Super Mario Bros. 3 soundtrack.

Energy

Consumer resistance to 'smart meters' is slowing a grid upgrade. "A growing consumer backlash against new wireless digital technology for measuring power usage is slowing U.S. utilities’ $29 billion effort to upgrade their networks. States including California, Maine and Vermont have responded to customer concerns about higher bills and safety by offering them the option of keeping their conventional devices for an extra charge. The fee may discourage drop-outs from the 'smart-meter' program, in which household usage data is transmitted over radio waves to local utilities such as PG&E Corp. (PCG), Central Maine Power Co. and Central Vermont Public Service Corp. (CV), which can use the information to charge higher rates during times of peak demand...The meters are key to the 'smart grid' being rolled out nationwide to increase delivery flexibility. Investment by utilities in the new grid has totaled $15.4 billion through the first quarter of 2012 and is projected to increase by another $13.4 billion through 2015." Mark Chediak in Bloomberg.

Solar installers are thriving. "Jay Nuzzi, a New Jersey state trooper, had put off installing solar panels on his home here for years, deterred by the $70,000 it could cost. Then on a trip to Home Depot, he stumbled across a booth for Roof Diagnostics, which offered him a solar system at a price he couldn’t refuse: free. Mr. Nuzzi had to sign a 20-year contract to buy electricity generated by the roof panels, which he would not own. But the rates were well below what he was paying to the local utility...Similar deals are being struck with tens of thousands of homeowners and businesses across the country. Installers, often working through big-box chains like Home Depot or Lowe’s, are taking advantage of hefty tax breaks, creative financing techniques and a glut of cheap, Chinese-made panels to make solar power accessible to the mass market for the first time. The number of residential and commercial installations more than doubled over the last two years to 213,957, according to Greentech Media, a research firm." Diane Cardwell in The New York Times.

@AndrewRestuccia: Dingell quotes from "Oliver Twist" at hearing on electric reliability #youdontseethateveryday

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

— America’s war on tourism.

— Why are cities worse for allergies? A lack of diverse bacteria, perhaps.

— The economics of geoengineering.

— Yet another study finding that long commuters are horrible for your health.

In 2004, the conventional wisdom was that John Kerry lost in part because Republicans supercharged evangelical turnout using gay marriage ballot initiatives and in part because Democrats needed candidates who seemed, in some hard-to-define way, more tough and “American.” No more French-speaking windsurfers.

Four years later, Democrats won with an African-American candidate named Barack Hussein Obama who opposed the Iraq War, and eight years later that candidate endorsed gay marriage in an election year.

So much for the conventional wisdom, I guess. Chris Cillizza has more on the politics. Adam Serwer notes that, in policy terms, Obama’s position is identical to that of...Dick Cheney. Still, for the President of the United States to say that he personally supports gay marriage is, as Joe Biden would put it, a big you-know-what deal.

Which was thoroughly surprising. Bayh had never shown much interest in process issues. He wasn’t a co-sponsor of the major campaign-finance reforms. He’d never authored a proposal to remake the filibuster. And yet here he was, unveiling a fully formed, genuinely radical plan to remake the institution he’d never evinced the slightest interest in changing. He’d gone, overnight, from a thoroughly unremarkable senator to a thoroughly remarkable near-retiree.

But Bayh’s retirement speech wasn’t the only classic of the genre. There was Olympia Snowe’s broadside, in which she leveled with the American people and said that “I do not realistically expect the partisanship of recent years in the Senate to change over the short term.” If it were up to me, that’s where discussions of how to “fix” Washington would start. Instead, it’s usually something they deny.

Nor is it just Republicans who give great resignation. When Rep. Barney Frank announced his retirement, he held a press conference in which he argued, that “the leverage you have within the government has substantially diminished. The anger in the country, the currents of opinion are such that the kind of inside work I have felt best at is not going to be as productive for the foreseeable future, and not until we make some changes.”

For Frank, a lion of the House who had recently chaired the powerful Financial Services Committee, to say that the “inside” game — which is to say, traditional legislating — is more or less dead was a remarkable admission. It’s also correct: From the Simpson-Bowles Committee to both Gangs of Six to the deficit-reduction “supercommittee,” the last few years have been marked by the near-continuous failures of backroom negotiations.

The truth is that if you stopped listening to serving members of Congress and instead talked only to the retirees and the losers, you’d have a much better idea of how Congress really works -- and what should be done about it.

Of course, the clear view of Congress’s failures that often accompanies retirement doesn’t always last very long. Take Bayh. After decrying the influence of money in politics and polarization on the Senate, he joined the lobbying firm McGuire Woods, the private-equity giant Apollo Management, and Fox News. “It’s as if he’s systematically ticking off every poison he identified in the body politic and rushing to dump more of it into the water supply,” I wrote.

On Twitter, The Atlantic’s Matt O’Brien helpfully closed the circle on this by proposing “The Bayh Corollary”: “The things [politicians] do after they retire are much worse than the things they say after they retire.” That seems right, too. We’ll see, in a year or two, whether Lugar manages to avoid it.

But at the same time support has grown, The Fix’s Rachel Weiner points out that efforts to legalize gay marriage have fared pretty horribly at the ballot box:

Thirty-two times since 1998, voters have gone to the polls and voted against gay marriage. Thirty-eight states prohibit gay marriage in some fashion. Even in “blue” states like California, Oregon and Delaware, gay marriage bans stand. North Carolina’s Amendment One Tuesday night was just the latest in a long line of failures at the ballot box for proponents of gay marriage. (Support for bans is falling over time, according to HRC: in 2004 they passed on average 71 percent to 29 percent, but in 2008 the average was 57 percent to 43 percent.)

The six states with legal gay marriage have all gotten there through the courts or the legislature; none have done so by popular vote. So how does gay marriage keep losing the popular vote at the same time that it’s becoming more popular?

Some of it, Weiner notes, comes down to timing--especially in North Carolina, which passed an amendment barring same-sex marriage on Tuesday. “North Carolina was the last state in the South to pass a constitutional amendment banning gay marriage,” she notes. “It likely would have come up earlier if Democrats had not held the state’s legislature for 140 years straight.”

Location matters, too: Ballot initiatives to ban gay marriage have tended to come up in more conservative states, places like Georgia, Mississippi, Kentucky and Louisiana.

But some of it might have nothing to do with gay marriage at all, and everything to do with the vehicle: The ballot initiative. The majority of issues put to a public vote tend to fail - and that’s been true since the early 1900s, according to analysis from the Initiatives and Referendum Institute. A total of 2,314 state-level ballot initiatives have gone to public vote since Oregon offered the first in 1904. Of those, fewer than half - 942, or 41 percent - have been approved.

“One rule of thumb widely known among initiative consultants is that ballot initiative issues are generally easier to kill than pass,” Ron Facheux, editor in chief of Campaigns and Elections, wrote in a 2001 article on the issue. “To pass a proposition, you have to offer a compelling reason why the change is both needed and desired. To defeat one, usually all you need to do is raise doubt.”

Over at Transport Politic, Yonah Freemark has a post highlighting one particularly dramatic example of this in Pittsburgh. Due to a $64 million funding shortfall, the city’s Port Authority is threatening to close roughly 40 percent of its routes in the city this year. The before and after maps are really stunning. Here’s what Pittsburgh’s system looks like before the cuts:

And here’s the skeletal “after” shot:

It’s not as if Pittsburgh’s population is shrinking and can get by with a smaller transit system, either — according to the Census Bureau, Allegheny County appears to have grown in the past year, and the city is expected to keep adding people in the coming years. Freemark also notes that Pittsburgh is a particularly transit-dependent city: Nearly 20 percent of its workers use transit to get to work, a high number even for a city, and more than 25 percent of the city’s households have no vehicle.

Although Pittsburgh is an extreme case, it’s not an isolated one. Transportation 4 America has been trying to track service cutbacks around the country with this useful map. The Massachusetts Bay Transportation Authority in Boston recently carried out a series of service cuts because of a $161 million funding shortfall — even though overall ridership rose roughly 3 percent last year. States and cities don’t have the money to keep up with growing ridership.

There’s a federal policy question here too: Right now, as the House and Senate are hashing out a transportation bill, one question at stake is whether Congress should do more to help states and cities keep their buses and trains running when local budgets get squeezed.

At the moment, Congress doesn’t do this. Federal funds for mass transit can only be used for new capital projects, not operations. That explains why Pittsburgh is getting $348 million from Congress to build a light-rail tunnel extension under the Allegheny River, but can’t find $64 million to keep its existing buses and trains running.

Now, one could argue that local governments should be responsible for keeping Pittsburgh’s buses running. After all, there’s nothing stopping Pennsylvania from doing what other states have done and raise revenues — say, fuel taxes — in order to fund Pittsburgh’s transit service. (The Port Authority of Allegheny County is also using the specter of service cuts to demand a restructuring of the bargaining agreement with transit employees, so there are still plenty of ways this fight could resolve itself without federal aid.)

But even stepping back from Pittsburgh’s situation, critics of the current transit-funding approach argue that it has potentially harmful side effects for the nation as a whole. Freemark, for instance, had earlier done a short study finding that a heavy reliance on local funds for transit operations seems to have created inequalities around the country. Poorer cities, not surprisingly, tend to have much shabbier transit service than wealthier cities. Freemark argues that this, in turn, forces more low-income households to purchase cars, raising their costs and putting these areas at a further disadvantage.

It’s possible, however, that this could change. The transportation bill that the Senate passed in March would have provided states more flexibility to use federal transit funds to operate existing buses and trains in addition to buying new equipment. This idea was never adopted by House Republicans, though, so it’s still unclear whether it will make it through. The two sides are currently negotiating over a larger bill this week.

For a decade now, the formula that supposedly sets Medicare’s budget has returned results that fall far short of the program’s actual costs. So every year, Congress passes legislation to make up the difference — often after a drawn-out fight. Legislators work up through the Christmas holidays, doctor payments get delayed and patients get nervous. But without fail, a short-term doc-fix always passes. Then it runs out, a year or so later, and Washington goes through the same policy dance all over again.

It’s hard to find anyone in Washington who thinks this is the right way to handle health-care policy. Even so, it’s a funding fight that could soon become more frequent, as the health reform law lays the groundwork for an analogous doc-fix in the Medicaid program.

Right now, Medicaid pays doctors 34 percent less than Medicare, which, in turn, pays less than private insurance. Health policy experts worry that such low payment rates scare doctors away from the entitlement program, creating access issues for Medicaid patients.

The health reform law changes that: It raises Medicaid rates for primary care to match those of Medicare for 2013 and 2014. That, the Obama administration hopes, will lure doctors to accept Medicaid patients — and also prevent some costly emergency room visits down the line.

But there’s a problem: The payment boost runs out at the end of 2014. While the federal government estimates that it will spend $11 billion raising provider rates for 2013 and 2014, no additional federal funds are appropriated beyond that.

There’s already some thinking, among the health-care provider community, that a fierce lobbying battle could play out as doctors look to turn a short-term pay boost into a permanent one.

“We’re ready to lobby for what’s right to improve the situation,” says Roland Goertz, chair of the Academy of Family Physicians. “We’re ready to go to the mat for what works, and we need to be going in this direction.”

Primary care reimbursements are, in Goertz’s view, an issue worth fighting for — especially after gaining a foothold within the Affordable Care Act. “There’s little question that low reimbursement discourages doctors from caring for Medicaid patients,” he said. “Medicaid parity will enable doctors to care for more Medicaid patients.”

Differences certainly exist between Medicaid and Medicare funding. The former tends to have a stronger lobbying presence in Washington that is front-and-center in Medicare funding fights. Older Americans vote at higher levels, giving increased urgency to the Medicare doc-fix.

At the same time, Congress doesn’t usually like to come out against doctors: Their approval ratings are among the highest of any profession. And if groups like Goertz’s are ready to fight, Congress could be in for a double dose of doc-fix come 2014.

More interesting, however, is the voting records of their replacements. Six of them couldn’t be assessed because they lost in the general election. But of the five challengers who defeated incumbent Democrats and went on to serve in Congress, two were more liberal their predecessor, two were more conservative, and one voted pretty much the same. Of the eight Republican challengers who won the election, six proved more conservative than their predecessor, and only two were more liberal.

In other words, Republican primaries served to push the party to the right, while Democratic primaries didn’t. And remember: These numbers don’t include conservative primary challenges that helped convince Republican moderates to drop out, like the one Olympia Snowe faced in Maine, or that pushed the incumbent to switch parties, like the one faced by Arlen Specter in Pennsylvania or Lisa Murkowski in Alaska, or primary challenges that were unexpectedly close and so scared the incumbent into voting in a more conservative fashion both before and after the race.

“This provides a partial explanation for polarizing trends in Congress,” writes the VoteView team. As you can see in their graph, which I’ve posted above, Republicans have moved much further to the right than Democrats have moved to the left, and there’s been a sharp spike in Republican polarization over the past few years, which is the period of time in which these primaries have been happening.

“I could write in my mother’s name. I really wouldn’t make any difference, because nobody’s listening to me anyhow,” says Dan Beck, a cop and former sheriff from Ohio’s Allen County, who still wears a sheriff’s pin on his jacket lapel.

Beck was among the activists, policy wonks, and Republican legislators who are lending their voices this week to conservative radio hosts who’ve gathered in Washington to focus on illegal immigration. Organized by the Federation for American Immigration Reform — a leading advocacy group in the fight against illegal immigration — the confab made it clear that the presidency isn’t the movement’s primary battleground.

Many say they’re not entirely sure what Romney’s positions on immigration really are. And even they were, they wouldn’t believe the promises that he’s making anyway.

“At this point, we’re still trying to figure out — he’s still deciding his immigration position. I’d like him to be a little bit stronger on it,” says Rusty Humphries, a radio host from Atlanta, after he wrapped up a broadcast of his eponymous, nationally syndicated show. When I pressed him to elaborate, he stopped me. “Can I be honest? I’ve been in this room all day long, and this”— he gestures to a flyer — ”is the only thing I’ve seen, that’s been handed to me. So I honestly don’t have any idea what he’s said at this point.”

The flyer passed around the event highlighted a gaffe this week from Romney’s Hispanic outreach director, Bettina Inclan, who told reporters that the former Massachusetts governor was still deciding his stance on immigration. In fact, Romney has an entire section on his campaign Web site devoted to immigration: he wants to establish a verification system akin to e-Verify to screen employees on their immigration status, for instance, and “absolutely opposes any policy that would allow illegal immigrants to ‘cut in line.’” During the GOP primary, Romney routinely attacked Gingrich and other opponents for holding more moderate views.

But anti-immigration activists aren’t feeling too heartened: Inclan’s gaffe has made some even more wary about where Romney really stood, giving them even fewer reasons to believe that he’d stay faithful to his campaign promises. “I could not for a moment assure you that he would be a strong opponent of illegal immigration, or a strong supporter of illegal immigration. I don’t know. And I’m not sure he does,” former GOP Congressman and anti-immigration firebrand Tom Tancredo said outside the confab, shortly before a fan rushed up to get his autograph. (“Keep the faith!” he wrote in a copy of his book, “In Mortal Danger.”)

“[Romney’s] waffled so much. He claims to be a conservative, and he’s trying to convince people he’s truly conservative. Let me know the truth — I’ve been a cop for 30 years,” says Beck.

Instead, anti-immigration activists turning their sights to matters closer home: state laws to keep illegal immigrants away from the polls, bills to replicate Arizona’s police checks on immigration status, and initiatives by local law enforcement to carry out their own crackdowns. Beck, for one, wants more sheriffs to follow the model of Arizona’s Joe Arpaio — “my hero,” he says — and expand their efforts to identify and detain illegal immigrants, putting pressure on Washington from the ground up. Sheriffs “need to get out of their offices and band together as a group,” he says. “Then the group needs to come to Washington D.C. and start pounding on these legislators’ doors.”

They’ve also converged over voter ID laws, which have become a new battleground for conservative activists who want to crack down on voter fraud — and say that illegal immigrants are among the most common perpetrators. The Obama game plan, Tancredo claims, is “to identify those places, those cities and those states where you have high numbers of immigrants, welfare recipients, and that sort of thing, who can be energized to get to the polls — even if they’re not legally able to do so.” Tancredo, in response, is preparing to launch a project in Colorado focusing on the issue. “We’re going to be out in force in battleground states,” promises Tancredo. (As for Romney, he says, “I’ll take him.”)

The voter ID issue previously united the tea party and the anti-immigration movement in 2010, which came together to dispatch poll-watchers across various states and localities. Democrats cast that effort as voter intimidation and suppression, pointing out that there was little evidence of voter fraud in 2010, despite the right’s hullabaloo. But such grassroots focus on electoral nuts-and-bolts could end up helping the GOP ticket in 2012, Romney included: watching polling stations presumably also means voting at them.

Insurgent conservative candidates like Richard Mourdock, who just topped Richard Lugar in the Indiana Senate primary, could also inspire more enthusiasm from disillusioned conservatives. Anti-immigration activists hated Lugar’s support for the DREAM Act, which he originally co-sponsored. If Romney’s elected, Congress “is our only fallback position,” says Tancredo. If it’s Obama, “it’s the only thing we have.”

But like their counterparts on the left, the anti-immigration know that state and local efforts ultimately aren’t enough to overhaul the immigration system to their liking. If the Supreme Court strikes down Arizona SB 1070, for instance, Tancredo admits that it will be “back to the drawing board.”

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Chait sees “the frightening outlines of a future systemic crisis” here. But I might rephrase that a bit: I see the the outlines of a necessary systemic crisis leading to an overdue set of procedural reforms in the Senate.

It’s clear that the nominations process is broken, and has been for some time. Conservatives believed this during the Bush years: Sen. Bill Frist, when he was majority leader, famously tried to abolish the filibuster on judicial nominations. Liberals have come to the same view during Obama’s presidency -- in part because it’s gotten worse. As Marge Baker of People for the American Way has written:

Once being confirmed by the Judiciary Committee—usually without opposition—President Obama’s circuit court nominees have waited a staggering average of 136 days for a vote from the full Senate, compared to just 30 days for President Bush’s nominees at the same point in his presidency. For district court nominees, historically confirmed quickly and easily except under the most extraordinary of circumstances, the average wait after committee approval has been 90 days under Obama, in contrast to 22 days under Bush.

Speeding the path for nominees was part of the deal that Sens. Harry Reid and Mitch McConnell struck in 2010 to avert Democrats from pursuing more far-reaching reforms in the Senate. But it didn’t solve the problem: the nomination process remains gummed up. And so, in his 2012 State of the Union, Obama took the unusual step of asking the Senate “to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.”

All this, I think, might prove to be prologue for a decisive showdown on the issue. Imagine Obama wins a second term and Democrats hold the Senate -- perhaps because Lugar’s loss lets them mount a pick-up in Indiana. Then, a vacancy arises on the Supreme Court. If the vacancy comes from the liberal side of the Court -- say, Ruth Bader Ginsburg chooses to retire -- that’s likely to go relatively smoothly. But if it comes from the conservative side of the Court -- imagine Anthony Kennedy stepping down -- it won’t.

Obama nominates a well-qualified, broadly liked, moderately liberal replacement. And Republicans filibuster him. And keep filibustering him. And perhaps Obama even proposes a second nominee, who also gets filibustered. And, eventually, Democrats, who will not take kindly to the idea that they’re no longer allowed to confirm nominees to crucial positions, use the GOP’s intransigence as an opportunity to rewrite the rules on nominations, protecting almost all of them from the filibuster.

Wouldn’t it be hard for them to do that after bitterly protesting Republican efforts to do something similar in 2005? Perhaps. But on the other hand, Republicans will face the same charges of hypocrisy for having tried eliminate the judicial filibuster in 2005. And behind closed door, both Senate Democrats and members of the administration think that the nominations process is deeply broken, and that if they could somehow fix it, they would have done something important to help future administrations -- both Republican and Democrat -- govern more effectively.

I’m not saying this is the most likely outcome. And it’s certainly not my preferred outcome — as I’ve said many time, I’d like to see bipartisan rules reform that phases in. But given the level of frustration I hear on these issues, and the way the two parties are likely to react to something as high-stakes as changing the balance of power on the Supreme Court, I’m not sure it’s a particularly unlikely outcome, either.

To put it another way, imagine a historian looking back from that crisis. It would all seem so obvious as a historical narrative: Republicans almost did it in 2005. Then Democrats thought about doing it in 2011. Then Obama called for the Senate to do it in 2012. And then, in 2014, it just happened. We’re getting closer and closer to dramatic reforms in the Senate. The question, at this point, is less whether they’ll happen than when they’ll happen, and who will be in power when they do.

I would like to comment on the Senate race just concluded and the direction of American politics and the Republican Party. I would reiterate from my earlier statement that I have no regrets about choosing to run for office. My health is excellent, I believe that I have been a very effective Senator for Hoosiers and for the country, and I know that the next six years would have been a time of great achievement. Further, I believed that vital national priorities, including job creation, deficit reduction, energy security, agriculture reform, and the Nunn-Lugar program, would benefit from my continued service as a Senator. These goals were worth the risk of an electoral defeat and the costs of a hard campaign.

Analysts will speculate about whether our campaign strategies were wise. Much of this will be based on conjecture by pundits who don’t fully appreciate the choices we had to make based on resource limits, polling data, and other factors. They also will speculate whether we were guilty of overconfidence.

The truth is that the headwinds in this race were abundantly apparent long before Richard Mourdock announced his candidacy. One does not highlight such headwinds publically when one is waging a campaign. But I knew that I would face an extremely strong anti-incumbent mood following a recession. I knew that my work with then-Senator Barack Obama would be used against me, even if our relationship were overhyped. I also knew from the races in 2010 that I was a likely target of Club for Growth, FreedomWorks and other Super Pacs dedicated to defeating at least one Republican as a purification exercise to enhance their influence over other Republican legislators.

We undertook this campaign soberly and we worked very hard in 2010, 2011, and 2012 to overcome these challenges. There never was a moment when my campaign took anything for granted. This is why we put so much effort into our get out the vote operations.

Ultimately, the re-election of an incumbent to Congress usually comes down to whether voters agree with the positions the incumbent has taken. I knew that I had cast recent votes that would be unpopular with some Republicans and that would be targeted by outside groups.

These included my votes for the TARP program, for government support of the auto industry, for the START Treaty, and for the confirmations of Justices Sotomayor and Kagan. I also advanced several propositions that were considered heretical by some, including the thought that Congressional earmarks saved no money and turned spending power over to unelected bureaucrats and that the country should explore options for immigration reform.

It was apparent that these positions would be attacked in a Republican primary. But I believe that they were the right votes for the country, and I stand by them without regrets, as I have throughout the campaign.

From time to time during the last two years I heard from well-meaning individuals who suggested that I ought to consider running as an independent. My response was always the same: I am a Republican now and always have been. I have no desire to run as anything else. All my life, I have believed in the Republican principles of small government, low taxes, a strong national defense, free enterprise, and trade expansion. According to Congressional Quarterly vote studies, I supported President Reagan more often than any other Senator. I want to see a Republican elected President, and I want to see a Republican majority in the Congress. I hope my opponent wins in November to help give my friend Mitch McConnell a majority.

If Mr. Mourdock is elected, I want him to be a good Senator. But that will require him to revise his stated goal of bringing more partisanship to Washington. He and I share many positions, but his embrace of an unrelenting partisan mindset is irreconcilable with my philosophy of governance and my experience of what brings results for Hoosiers in the Senate. In effect, what he has promised in this campaign is reflexive votes for a rejectionist orthodoxy and rigid opposition to the actions and proposals of the other party. His answer to the inevitable roadblocks he will encounter in Congress is merely to campaign for more Republicans who embrace the same partisan outlook. He has pledged his support to groups whose prime mission is to cleanse the Republican party of those who stray from orthodoxy as they see it.

This is not conducive to problem solving and governance. And he will find that unless he modifies his approach, he will achieve little as a legislator. Worse, he will help delay solutions that are totally beyond the capacity of partisan majorities to achieve. The most consequential of these is stabilizing and reversing the Federal debt in an era when millions of baby boomers are retiring. There is little likelihood that either party will be able to impose their favored budget solutions on the other without some degree of compromise.

Unfortunately, we have an increasing number of legislators in both parties who have adopted an unrelenting partisan viewpoint. This shows up in countless vote studies that find diminishing intersections between Democrat and Republican positions. Partisans at both ends of the political spectrum are dominating the political debate in our country. And partisan groups, including outside groups that spent millions against me in this race, are determined to see that this continues. They have worked to make it as difficult as possible for a legislator of either party to hold independent views or engage in constructive compromise. If that attitude prevails in American politics, our government will remain mired in the dysfunction we have witnessed during the last several years. And I believe that if this attitude expands in the Republican Party, we will be relegated to minority status. Parties don’t succeed for long if they stop appealing to voters who may disagree with them on some issues.

Legislators should have an ideological grounding and strong beliefs identifiable to their constituents. I believe I have offered that throughout my career. But ideology cannot be a substitute for a determination to think for yourself, for a willingness to study an issue objectively, and for the fortitude to sometimes disagree with your party or even your constituents. Like Edmund Burke, I believe leaders owe the people they represent their best judgment.

Too often bipartisanship is equated with centrism or deal cutting. Bipartisanship is not the opposite of principle. One can be very conservative or very liberal and still have a bipartisan mindset. Such a mindset acknowledges that the other party is also patriotic and may have some good ideas. It acknowledges that national unity is important, and that aggressive partisanship deepens cynicism, sharpens political vendettas, and depletes the national reserve of good will that is critical to our survival in hard times. Certainly this was understood by President Reagan, who worked with Democrats frequently and showed flexibility that would be ridiculed today — from assenting to tax increases in the 1983 Social Security fix, to compromising on landmark tax reform legislation in 1986, to advancing arms control agreements in his second term.

I don’t remember a time when so many topics have become politically unmentionable in one party or the other. Republicans cannot admit to any nuance in policy on climate change. Republican members are now expected to take pledges against any tax increases. For two consecutive Presidential nomination cycles, GOP candidates competed with one another to express the most strident anti-immigration view, even at the risk of alienating a huge voting bloc. Similarly, most Democrats are constrained when talking about such issues as entitlement cuts, tort reform, and trade agreements. Our political system is losing its ability to even explore alternatives. If fealty to these pledges continues to expand, legislators may pledge their way into irrelevance. Voters will be electing a slate of inflexible positions rather than a leader.

I hope that as a nation we aspire to more than that. I hope we will demand judgment from our leaders. I continue to believe that Hoosiers value constructive leadership. I would not have run for office if I did not believe that.

As someone who has seen much in the politics of our country and our state, I am able to take the long view. I have not lost my enthusiasm for the role played by the United States Senate. Nor has my belief in conservative principles been diminished. I expect great things from my party and my country. I hope all who participated in this election share in this optimism.

So what jobs still remain? The Brookings Institution has a fascinating new report on the geography of U.S. manufacturing jobs that delves into this topic, and a few charts stand out. First, here’s a look at the composition of U.S. manufacturing jobs, as of 2010. Note that food manufacturing has become the biggest single sector in terms of jobs:

Brookings also has a series of interactive maps that reveal where the manufacturing jobs are actually located. Most of them are still clustered in large metropolitan areas:

As the authors of the report, Susan Helper, Timothy Krueger and Howard Wial find, the vast majority of U.S. manufacturing jobs — about 79.5 percent — are located in large metropolitan areas. The numbers are even higher for high-tech manufacturing, which is particularly dependent on dense clusters of workers and suppliers.

What’s more, many cities tend to specialize strongly in a particular type of manufacturing. The six most common clusters are computers and electronics, transportation equipment, low-wage manufacturing, chemicals, machinery, and food production. For example, just 20 cities around the country specialize almost exclusively in chemical manufacturing — including, most prominently, Baton Rouge, Louisiana.

The authors also find that the rapid flight of U.S. manufacturing jobs to the South appears to have halted of late. Between 1980 and 2000, the Northeast and Midwest United States were shedding manufacturing jobs, while the South and West saw an increase in employment. (The West gained many of the high-tech jobs, while the South specialized in lower-wage manufacturing.) That trend seems to have stopped for now. All manufacturing regions lost jobs at a roughly equal rate during the recession. And, since 2010, the Midwest has been adding manufacturing jobs twice as fast as the rest of the country.

Note: In the first chart above, “other” includes furniture, electrical equipment, wood products, pharmaceuticals, beverage and tobacco, transportation equipment other than aerospace and motor vehicles and parts, apparel, textile and textile product mills, petroleum and coal products, and leather.

A study of about 700 teenagers, published this week in the Archives of Pediatric Medicine, found California teens to be consuming 158 fewer, daily calories than comparable high school students in other states. Keep in mind, that counts all the food eaten outside of school, indicating that California teens aren’t loading up on junk food after heading home.

“Unequivocally, California students in this study reported less at-school intake of fat, sugar, and total calories — the nutritional measures that California laws were designed to regulate — compared with other states in our sample, the report concludes. California may see stronger results than other studies of school nutrition regulation because, as the authors point out, its restrictions are the strictest in the nation.

To be sure, there’s also evidence on the other side of this issue: Other research has found junk food bans, for example, not to correlate with better nutritional outcome, mostly because of what kids eat at home (or, sometimes, what they sneak into school).

A 158 calorie-consumption reduction, however, will likely warrant significant attention in the public health community. That’s a huge change in eating habits and one that could make a significant dent in obesity rates. Researchers have previously estimated that, if children ate just 64 fewer calories each day, the obesity rate would fall 10 percent lower than where it stood in the mid-2000s.

RCP Obama vs. Romney: Obama +0.2%.

RCP Obama approval: 47.3%.

Top stories

1) Senate Republicans filibustered a student loan bill. "Senate Republicans on Tuesday blocked consideration of a Democratic bill to prevent the doubling of some student loan interest rates, leaving the legislation in limbo less than two months before rates on subsidized federal loans are set to shoot upward. Along party lines, the Senate voted 52 to 45 on a key procedural motion, failing to reach the 60 votes needed to begin debating the measure. Senator Olympia J. Snowe, the moderate Republican from Maine who is retiring, voted present...Republicans say they want to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for low- and middle-income undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent. But the Republicans would not accept the Senate Democrats’ proposal to pay for a one-year extension by changing a law that allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income." Jonathan Weisman in The New York Times.

@RBReich: Showdown looming on student loans. Ds want to finance w tax hike on rich, Rs w cut in Obamacare. Prez campaign in miniature.

@sethdmichaels: also, 45>52. as usual.

2) Sen. Richard Lugar of Indiana loses GOP primary to Mourdock ."Republican Sen. Richard G. Lugar of Indiana, a 35-year member of the Senate and one of Washington’s leading experts on U.S. foreign policy, lost his bid for reelection Tuesday after a conservative backlash inside the GOP denied him his party’s nomination for a seventh term. Lugar’s loss — the first for a senator this year — appears to be another victory for the tea party conservatives who roiled the Republican Party in 2010 when they defeated two GOP senators in primaries and knocked off several more establishment favorites in open Senate primaries." Paul Kane in The Washington Post.

3) The start of the highway bill negotiations dealt a blow to House GOP hopes. "It was a conservative Oklahoma Republican who told the House GOP not to even start. At the beginning of Tuesday’s conference committee negotiations on a transportation reauthorization bill, Sen. James Inhofe threw cold water on any hopes House Republicans had that their Senate colleagues would put up a fight with Democrats on the long-delayed bill, lecturing conservatives from the House on the art of compromise. House Republicans came into the meeting hoping to use Speaker John Boehner’s (Ohio) sweeping reform to transportation programs as their negotiating position -- despite the fact that Boehner was unable to pass that measure and the highway bill that finally did pass the House did not include most of those reforms...But Inhofe, one of the most conservative lawmakers on the Hill and the ranking member of the Senate Environment and Public Works Committee, made it clear early he would not be backing the play." John Stanton in Roll Call.

@AndrewRestuccia: Inhofe on transp bill: "Having been ranked as the most conservative [lawmaker] many times, the conservative position is to pass this thing."

4) Job openings rose in March. "U.S. job openings rose in March, a sign that employers gained confidence heading into the spring. The nation had 3.74 million job vacancies at the end of March, about 5% higher than February and the highest level since July 2008, the Labor Department said Tuesday. The rise was driven in part by growing demand for workers in construction and manufacturing. The rate of hiring, however, was flat--and the government's broader report on unemployment, released last week, showed that the pace of hiring has slowed since March...Federal Reserve Bank of Richmond President Jeffrey Lacker said Tuesday that the skills mismatch could lead the economy's long-term, or natural, unemployment rate to be higher than what economists now project, as workers take longer to acquire skills and fill vacancies." Josh Mitchell and Jeffrey Sparshott in The Wall Street Journal.

@grossdm: oh, and I know you'll be shocked. Private sector job openings rose 198K in March, while public-sector openings fell 26K

5) HHS's new rate review authority isn't having much of an impact. "The Department of Health and Human Services isn’t that much of a bully, it turns out. Health insurers flagged by the department for 'unreasonable' premium hikes are refusing to back down in the first year of HHS’s new rate review authority. The health reform law gave HHS the power to scrutinize 'unreasonable' rate hikes in states that didn’t have robust review programs. But 'scrutiny' doesn’t give the department power to actually block the rates from going into effect. HHS can use its bully pulpit to publicly shame insurers whose rates don’t pass its sniff test - and HHS has done just that, holding four media calls since November to scold insurers each time it’s made a new 'unreasonable' determination. Faced with the choice of dealing with some negative press on the national stage or upending their business plan, the four insurers that have been dinged by HHS have all chosen to stick with the business plan." Jason Millman in Politico.

6) The House rejected several additional spending cuts. "The House on Tuesday evening rejected several proposals to slash spending in a series of votes that pitted younger Republicans against more senior GOP members who argued against further spending reductions. The House voted on seven Republican amendments that would have cut $1.4 billion in additional spending from the 2013 appropriations bill for the Departments of Commerce and Justice, H.R. 5326. Members accepted just one of them -- a proposal from Rep. Andy Harris (R-Md.) to reduce funding for a climate website at the National Oceanic and Atmospheric Administration. That amendment saved $542,000, and was approved 219-189. But the rest of the amendments were defeated...The most aggressive proposal came from Rep. Paul Broun (R-Ga.), who submitted language that would have cut 3 percent of all salaries and overhead covered by the bill. That amounted to a cut of $847 million, but was rejected in a 137-270 vote." Pete Kasperowicz in The Hill.

Top op-eds

1) WOLF: Hollande must force a change of course for the eurozone. "What, then, might Mr Hollande do?...He should give enthusiastic support to the wise recent remarks by Wolfgang Schäuble calling for higher German wages. He should then point out that there seem to be only five ways this can end. The first and best would be symmetrical adjustment of the imbalances that built up before the crisis, along with reform in weaker countries. The second would be a permanent transfer of resources from surplus countries to deficit ones. The third would be a painful shift of the eurozone into external surplus - a Germany writ large, so to speak. The fourth would be semi-permanent depressions in weak countries. The last would be partial or total break-up of the eurozone. The only sensible choice is the first. But that is not the path the eurozone is now on. Austerity has to be matched to the realistic pace of adjustment and structural reform." Martin Wolf in The Financial Times.

2) PORTER: Net neutrality is essential for innovation. "Imagine a network of private highways that reserved a special lane for Fords to zip through, unencumbered by all the other brands of cars trundling along the clogged, shared lanes. Think of the prices Ford could charge. Think of what would happen to innovation when building the best car mattered less than cutting a deal with the highway’s owners. A few years ago, Tim Wu, a professor at Columbia Law School...warned members of the House judiciary committee that this could be the fate of the Internet...Fifty years ago, consumers were allowed to hook up only Bell telephones to their Bell phone lines. But in the 1960s, the F.C.C. and the courts forced the Bells to accept any device that didn’t threaten the network. The decision unleashed a torrent of innovation -- including the answering machine, the fax and the first device that allowed us to explore what would become the Internet: the modem. Innovation online requires an open playing field, too." Eduardo Porter in The New York Times.

3) ORSZAG: The super rich face income volatility too. "Over the past three decades, the highest incomes in the U.S. have risen dramatically, and that has appropriately received lots of attention. At the same time, however, these high incomes have also become much more volatile, and that has gone almost unnoticed. Conventional wisdom suggests that low-income households experience the greatest changes in response to macroeconomic conditions -- their income falls the most when the economy weakens, and it picks up the most when the economy recovers. That conventional wisdom is in need of some updating. Today, the impact of macroeconomic events on household incomes forms a U-shaped curve -- it is greatest at the bottom and the top of the income distribution and smallest in the middle...Since the early 1980s, the income of the top 1 percent has fluctuated more than average over the business cycle, rising five percentage points more per year than the overall average during economic expansions and falling 3.7 percentage points more per year during recessions." Peter Orszag in Bloomberg.

4) JENKINS: The government is holding back broadband. "Broadband history may be short, but it's already starting to rhyme. In the early days, what were still known as the Baby Bells were treated as DSL monopolists, forced to resell access to their broadband lines to competitors at cost. Undermined, naturally, was their incentive to invest, especially to push network switches closer to residential neighborhoods, the secret to getting cable-like speeds from the old copper phone network. The result is the world we have today: Cable operators increasingly are the only choice for high-speed fixed broadband in many neighborhoods...But there is no shortage of spectrum; as much spectrum exists as ever has existed. Rather, there is spectrum starvation--a new and fast-growing user, the wireless industry, is being starved of spectrum its customers would willingly pay for because of an archaic government allocation system in which economic logic does not penetrate." Holman Jenkins in The Wall Street Journal.

5) GLAESER: Americans will continue to have an array of living styles. "How has the Great Recession reshaped America? Does the decline in New York’s financial sector herald the 'demise of the luxury city,' as Joel Kotkin has recently suggested? Or instead has this watershed meant 'the death of the fringe suburb,' as Christopher Leinberger speculates? In fact, none of America’s diverse living styles is about to perish. Incomes remain highest in the large, well-educated coastal cities, even though Kotkin is right that they remain challenged by the high cost of government. Population growth remains strongest in the car-oriented cities of the Sun Belt...It is a great thing that Americans can opt to live in dense cities or sprawling suburbs. As long as people pay the social costs of their actions, and are not subsidized by policies that artificially favor one living style over another, then it is splendid that we have plenty of options, some with sunshine and inexpensive mass-produced housing and others with high wages and costly apartments." Edward Glaeser in Bloomberg.

Top long reads

Alison Fairbrother on how an angler and two government bureaucrats may have saved the Atlantic Ocean: "Price is a lifelong striped bass fisherman with no formal training as a scientist. Yet he has spent the last four decades cutting open bass stomachs in a kind of renegade ecological study, charting the precipitous decline of the lowly menhaden. Price’s interest in the species is indirect; menhaden aren’t prized by anglers. But they are prized by striped bass. The little fish has historically been the striper’s most significant source of protein and calories. In fact, menhaden are a staple in the diets of dozens of marine predators in the Atlantic and its estuaries, from osprey to bluefish to dolphin to blue crab. In a host of undersea food chains, menhaden--also known as pogy and bunker--are a common denominator. They have been called the most important fish in the sea."

Bluegrass interlude: Old Crow Medicine Show play "Next Go 'Round" live on WRLT.

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

Still to come: Borrowers face delays; the FDA bill moves forward; Common Core faces a backlash; gas isn't headed for $4 this summer; and a game of feline tetherball.

Economy

House GOP leaders are considering bundling appropriations bills. "With an eye toward the legislative calendar, House GOP leaders are considering bundling must-pass spending bills to accelerate the lengthy process of debating them on the floor. In doing so, however, they risk angering conservatives, who note that leadership has long promised an open process so they can offer hundreds of amendments aimed at cutting spending that they can tout on the campaign trail. All of this underscores the quandary Appropriations Chairman Hal Rogers faces in trying to pass his dozen bills before the House adjourns this presidential election year: Short workweeks and pushback from Members of both parties will make it a difficult task to complete...Rep. Tom McClintock gathered 43 House Republican signatories, many from the conservative Republican Study Committee, on a letter sent Tuesday to Speaker John Boehner (R-Ohio) and Cantor asking that appropriations bills be brought to the floor individually." Daniel Newhauser in Roll Call.

Borrowers looking to refinance mortgages face big delays. "Clogged mortgage pipelines have created headaches for hundreds of thousands of Americans trying to take advantage of low mortgage rates, which averaged 4.05% for the week ending April 27, according to the Mortgage Bankers Association. Those rates have helped thousands of Americans free up cash or retire debt...But considering how far mortgage rates have dropped, the refinancing burst has been lackluster by historical standards. A surge in demand has come at a time when fewer banks control a larger share of the mortgage market than they did before the financial crisis. Banks also are being more careful about whom they lend money to and how they process loans. It now takes the nation's biggest mortgage lenders an average of more than 70 days to complete a refinance, according to Accenture Credit Services, up from 45 days a year ago." Nick Timiraos and Ruth Simon in The Wall Street Journal.

The House is set to pass a bill reauthorizing the Export-Import Bank. "A bill to raise the Export-Import Bank’s lending cap 40 percent by 2014 will pass the U.S. House today, lawmakers of both parties predict, although Republican leaders aren’t formally urging members to support it. House Speaker John Boehner endorsed the measure. Still, many Republicans oppose it, saying the bank distorts free markets by subsidizing loans for export sales. The legislation, H.R. 2072, was negotiated by Majority Leader Eric Cantor, a Virginia Republican, and second-ranking Democrat Steny Hoyer of Maryland...The vote will be conducted through an expedited procedure requiring a two-thirds majority for passage. Republicans control the House with 292 members to 190 Democrats and three vacant seats. If all members vote, the bill will need 289 votes to pass under the streamlined procedure." James Rowley in Bloomberg.

Donald Layton will be Freddie Mac's new CEO. "Freddie Mac is preparing to name Donald Layton, the former chief executive of online brokerage E*Trade Financial Corp., as its next CEO, according to people familiar with the matter. The company is expected to announce the hiring as soon as Thursday, these people said. That would end a six-month search for the mortgage giant's third chief executive in the four years since the government took control of it. Mr. Layton had been considered the frontrunner for the job for more than a month. His appointment is subject to approval by the Federal Housing Finance Agency--which regulates Freddie and its sibling, Fannie Mae--and by the Treasury Department...In Mr. Layton, Freddie and its regulator are selecting a financial-services veteran whom the government has turned to in the past and who is willing to work for much less money than a typical chief executive." Nick Timiraos and Joann Lublin in The Wall Street Journal.

Hollande disagrees with key partners on structural reform. "When Mario Draghi called a couple of weeks ago for a growth pact to match the European Union’s fiscal austerity drive, François Hollande, now France’s president-elect, could barely contain his delight...What got less attention was Mr Hollande’s revealing admission that he did not share Mr Draghi’s vision, quickly endorsed by Angela Merkel, the German chancellor, that such a growth plan should be focused on structural reforms, such as increasing labour market flexibility. Mr Hollande was not coy about this. 'Can we really believe that liberalism, privatisations and deregulation, which led us to the financial crisis we are in, will help us get out of the crisis?' he said...His programme falls well short of embracing the sort of structural reforms called for by Mr Draghi and Ms Merkel, which are currently being introduced in Italy and Spain and are seen by many as essential to revitalising France’s economy." Hugh Carnegy in The Financial Times.

Adorable renditions of Shakespeare interlude: Brian Cox teaches a two year-old to recite Hamlet's soliloquy.

Health Care

Schools may be key to preventing obesity. "Obesity is so entrenched in the U.S. that it would take an intense push by schools, employers, doctors and others to reverse an epidemic that accounts for billions of dollars in annual health-care costs, concluded a report released Tuesday. The report by the Institute of Medicine, an influential independent body that advises the federal government on health policy, recommended requiring at least 60 minutes of physical activity a day in schools and considering excise taxes on sugar-sweetened beverages. It urged food companies to improve nutritional standards for foods marketed to people under 18 years old, recommending that mandatory standards be considered at all levels of government if the companies don't adopt their own...Schools, in particular, should be a 'national focal point' for obesity prevention, because children spend up to half their waking hours and consume as many as half their daily calories there, the report said." Betsy McKay in The Wall Street Journal.

The FDA user fee bill advanced. "The 'must-pass' Food and Drug Administration user fee bill was sent to the full House Energy and Commerce Committee on Tuesday morning on a raft of blown kisses from Democrats and Republicans on the Health Subcommittee. After more than a year of work, at least 10 hearings related to user fees and 'intense negotiations as recently as last weekend,' Joe Pitts (R-Pa.), chairman of the subcommittee said its members praised their staffs and one another and passed the bill by unanimous voice vote. It took less than a half-hour. The Energy and Commerce Committee will mark up the bill Thursday. Backers hope to move it to the floor quickly with the goal of getting it wrapped up -- or very close to final -- before the Supreme Court rules on the health law in late June. Industry sources worry the fallout from the ruling, no matter how it goes, could politicize the otherwise relatively bipartisan legislation and slow down, if not derail, its passage." Brett Norman in Politico.

Domestic Policy

The Common Core standards are facing pushback. "The Common Core national math and reading standards, adopted by 46 states and the District of Columbia two years ago, are coming under attack from some quarters as a federal intrusion into state education matters. The voluntary academic standards, which specify what students should know in each grade, were heavily promoted by the Obama administration through its $4.35 billion Race to the Top education-grant competition. States that instituted changes such as common learning goals received bonus points in their applications...Conservative lawmakers and governors in at least five states, including Utah and Alabama, recently have been pushing to back out, or slow down implementation, of Common Core. They worry that adoption of the standards has created a de facto national curriculum that could at some point be extended into more controversial areas such as science." Stephanie Banchero in The Wall Street Journal.

A cyberattack against natural gas pipelines has been under way for months. "A sophisticated cyberattack intended to gain access to US natural gas pipelines has been under way for several months, the Department of Homeland Security has warned, raising fresh concerns about the possibility that vital infrastructure could be vulnerable to computer hackers. The department’s Industrial Control Systems Cyber Emergency Response Team said recently that it had identified a single campaign behind multiple attempted intrusions into several different pipeline companies since December last year. There was no information about the source or motive for the attack, but industry experts suggested two possibilities: an attempt to gain control of gas pipelines in order to disrupt supplies or an attempt to access information about flows to use in commodities trading...The threat of attacks on IT systems has prompted the US authorities to step up their security efforts in recent years, including the creation of ICS-CERT, designed to protect critical infrastructure." Ed Crooks in The Financial Times.

The FAA is under fire for its response to safety risks. "The Federal Aviation Administration was slow to respond to serious safety risks highlighted by employees, including air-traffic-control violations and lax airline maintenance, according to a government watchdog. Directing unusually sharp criticism at the FAA and the Department of Transportation, the Office of Special Counsel on Tuesday released documents and findings covering several cases that it said highlighted 'the recurring nature of the problems' over the years. The conclusions, according to the report, reveal a pattern of 'insufficient responses by the FAA' to resolve urgent safety hazards and internal organizational weaknesses...In a number of instances, according to the documents, it took FAA management years to implement fixes--and sometimes required repeat warning from employees--even after the original hazards were substantiated." Andy Pasztor in The Wall Street Journal.

Animal athletics interlude: Two cats play an epic game of tetherball.

Energy

The EIA no longer sees gas hitting $4 this summer. "Gasoline prices likely won’t reach a national average of $4 per gallon during the summer driving season, the federal Energy Information Administration (EIA) said Tuesday, walking back earlier predictions. That’s welcome news for consumers, who have grown increasingly worried about the effect of high gasoline prices on their pocketbooks. EIA, the Energy Department’s independent statistical arm, predicted Tuesday in its short-term energy outlook that gasoline prices will average $3.79 per gallon during the April-to-September summer driving season. The estimate is 16 cents lower than the average price EIA predicted in April. EIA said at the time that prices at the pump would average $3.95 per gallon during the summer, peaking in May at $4.01 per gallon. In its short-term energy outlook Tuesday, EIA said it lowered its prediction because of 'falling global crude oil prices over the past month.'" Andrew Restuccia in The Hill.

@Ben_Geman: Coal losing ground. EIA sees power gen. from coal sliding 15% in ’12, nat gas increases 24%. But coal forecast to regain some ground in ’13

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

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— Rare photos of Hong Kong’s Kowloon Walled City, which was perhaps the most densely populated place on Earth before being razed in 1993.

— How an angler and two government bureaucrats may have saved the Atlantic Ocean.

— “He saw it, he loved it, he ate it.”

— Roll Call’s John Stanton tracks down Congress’s tattooed members.

— In 1981, desperate for cash, American Airlines sold lifetime first-class passes for $350,000. Now the company’s desperately trying to revoke them.

I have two thoughts to add. First, the Death Star is a bit misunderstood. It is primarily a tool of domestic politics rather than warfare, and should be compared to alternative means of suppressing the population of a galaxy. Second, as a weapon of war, it should be compared to alternative uses of scarce defense resources. Understood properly, the Death Star is not worth it.

The Death Star and the Dictator’s Dilemma

The classic problem of representative democracy is that citizens must delegate power to leaders, and then ensure that leaders do not use that power to serve their own interests. As James Madison states, “In framing a government which is to be administered by men over men, the great difficulty lies in this:You must first enable the government to control the governed; and in the next place oblige it to control itself.” Dictators suffer a similar problem of delegation, but in reverse. Dictators must delegate the tasks of subduing and taxing the population to internal security forces, and of maintaining external security to subordinate governors and generals. Any delegated power, however, could be used to displace the dictator. Internal security forces can assassinate the dictator or join in palace coups. Military leaders can use their forces to rebel against the dictator or secede from the dictator’s realm with a slice of territory. So the dictator must carefully design her security apparatus to maintain control of the population without empowering potential rivals. This challenge grows acute the more dispersed the dictator’s realm and the greater the number of external threats. (For more on the strategy of dictatorship, see here. Political scientists, feel free to add citations in the comments section).

I see the Death Star (DS) as the Emperor’s solution to the dictator’s dilemma. First, note that its construction precedes the Rebel Alliance; the plans are first developed by the Separatists in Episode 2 and, by the time it is completed, the Rebel Alliance has just won its “first victory.” While it may have some use as a deterrent against possible invaders, the DS is primarily a tool of domestic politics. Prior to its completion, the Emperor is compelled to keep the Imperial Senate around, presumably to maintain the semblance of popular consent. But the Senate imposes some inefficiency — meddling in military strategy, perhaps, or directing spending to some favored planets. Once the DS is operational, the Emperor can disband the Senate and, instead, empower Imperial governors to suppress the local population and extract revenue. Here’s the critical scene:

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But how can the Emperor guard against rebellion by one of these governors? Or revolt by a local planet’s population? The answer is simple: He can zip around in the baddest weapon in the galaxy, destroying his foes with the push of a button. No foe could fight back, and the DS is mobile enough to respond to multiple threats in short order.

Note that this scheme provides an easy answer to the question, “how can we afford a Death Star?” If the scheme works, the Death Star will pay for itself dozens of times in the additional tax revenue from fearful planets, and by the money not spent by the military putting down revolts with conventional weapons.

But will it work? Only if it induces cooperation through fear. Every planet blown up represents a tremendous loss of potential future revenue, so like nuclear weapons today, the actual use of the DS is a calamity. Moreover, like nuclear weapons, they only work as a deterrent if they are used judiciously. Citizens throughout the galaxy must believe that failure to pay their taxes and comply with their Imperial masters will lead to detonation, but also that compliance will save them. The fact that the DS was used against Alderaan, however, would likely have had the opposite effect. Alderaan is “peaceful” and “has no weapons.” It was detonated because its teenage senator was secretly aiding the Rebel Alliance and waited too long to give up Dantoonie. To me, that’s a little too Caligula to induce rational compliance. One imagines the conversations on other planets:

Peasant 1: Did you hear the Empire blew up Alderaan? What kind of government blows up one of the richest planets in the galaxy because of one smack-talking teenager? It could be any of us next.

Peasant Windu: Enough is enough! I have had it with these [redacted] emperors on their [redacted] Death Star!

If the net effect of the DS is to make every person in the galaxy think their planet could be the next one arbitrarily destroyed, it actually mobilizes them to join the rebellion.

If the DS is an uncertain solution to the problem of internal security, what are the alternatives?

1) Democracy? Unacceptable to the seeker of unlimited power. Your faith in your friends is your weakness.

2) A Sith Academy? During the Old Republic, the Jedi did a good job of providing internal security at a very low price. Why not repeal the limitation on Siths and create a small, powerful and cheap guard of Sith lords?

This is also unacceptable. An army of Siths, however small, would be a large pool of potential rivals and assassins, all angling to seize the throne. In the end, just having one other Sith around was the Emperor’s undoing; dozens of Siths would lead to anarchy.

For this reason, dictators have favored delegation to minions who are ineligible to replace them, such as eunuchs, lower-class citizens, foreign bodyguards or captives from an underprivileged social group. This leads me to:

3) Upgrading the internal security apparatus.

A) Clones. The Emperor already has a military force of clones. Why not a bureaucracy of clones? They could be designed to be smart, honest and unambitious, and they would be relatively cheap. This would help with the knotty problems of tax collection and law enforcement.

B) Domination of planetary elites. There are tried-and-true methods for gaining compliance without having to pay for massive armies or float around the galaxy in a planet-killing machine. The emperor could compel the political and economic elites of each planet to send their children (as hostages) to Imperial schools, where they will learn about all the great things the Empire is doing. Second, the Emperor could assign Imperial bodyguards to the elite of every planet to protect those who are loyal, report on those who are not and eliminate the worst. If the Emperor followed this approach, the Organa family would be sleeping with the fishes and Alderaan would still be paying taxes.

C) Imperial takeover of rebellious planets. Again, destroying a planet is a tremendous loss for the Imperial treasury. It would be far more profitable for the Emperor to seize rebellious planets (once subdued by his new and improved army – see below), imprison the rebels and bring in settlers and Imperial workers to keep the planet’s economy humming.

Upgrading the internal security apparatus is a far more cost-effective option than a DS for the next Sith dictator.

The Death Star as Super-Weapon?

When I watch Star Wars films now, I often find the battles simplistic because there is little tactical thinking. How would people actually use and respond to these futuristic weapons? The best exception to this pattern is the Rebels’ attack on the Death Star in Episode IV. Instead of attempting a large-scale frontal assault with their strongest ships (the anticipated response) they sent small ships armed with an asymmetric advantage: blueprints of the DS revealing a womp rat-sized weakness.

That is what the Rebels should have done. When I was a congressional staffer working on defense policy in the 1990s, one of the most insightful essays I read was Richard K. Betts’s “The Downside of the Cutting Edge” (National Interest, 1996), which makes this point: Once one has a force that can beat anyone in a fair fight, no one will want to fight fair. Even if the Empire eventually built a DS without a design flaw, its enemies would find some way to fight it indirectly. For example, when its not destroying planets, the DS also likes to grab passing ships in its tractor beam, drag them inside, and then scan them for bad guys. It would be simple to rig a decoy ship as a massive bomb, piloted by a robot with orders to detonate the ship once it’s inside the DS.

The Emperor should not expect, therefore, that a single super-weapon will vanquish all foes. As Seth Masket notes, the same money could be used to make some much-needed, lower-risk investments in the Imperial military. Some examples:

1) Information Security. Wouldn’t it be nice if some too-dumb-to-talk 30-year-old bucket of bolts couldn’t hack into the DS’s computer system in a few seconds? I would think so.

2) Troop Transportation. How does the U.S. military get around in the desert? Humvees and Bradley fighting vehicles. How do elite scouts of the future get around? On overgrown lizards. It’s just embarrassing.

3) More robots, please. I get it: The “Clone Wars” featured Republic clones vs. the robot armies of the separatists, and the clones won. Still, though, some of those robots would be really useful in tactical situations, perhaps guided by clones on the ground.

4) More probe droids, please. After the Yavin debacle, the Empire sent out probe droids to scan remote systems. Why not keep a few loitering on every planet on a permanent basis? Then it would be lot harder for any rebellion to hide.

5) Practice, Practice, Practice. An entire legion of the Emperor’s best troops was defeated by a village of teddy bears fighting with sticks and stones. It’s just embarrassing. Clearly they needed better training in tactics, marksmanship and hand-to-paw combat.

Again, it is my belief that a rational dictator could make better use of the resources that would be used to build Death Stars.

So, in conclusion: The Death Star is bad for internal security and a misallocation of military resources. No thank you!

Gregory Koger is a political scientist at the University of Miami. This post was originally published on the Monkey Cage, and we at Wonkblog thank them for letting us republish it.

In fact, Ryan was moving ahead with a GOP bill that would actually slash programs that aid the poor — proposing a $33 billion cut to food stamps, for instance — to replace automatic reductions of defense spending that were part of August’s debt-ceiling deal. But House Republicans insist that such cuts actually show a cool-headed, warm-hearted approach to poverty. By battling waste, fraud and abuse in social programs, they explain, Republicans can make the government more effective at helping Americans who are actually in need.

It’s logic that seems hard to argue with: Who, after all, thinks that a lottery winner should be on food stamps for two years after she netted $1 million? The reality is that the new Republican bill does take steps to close loopholes and eliminate redundant programs. But the Republicans’ sequester replacement does much more than target waste and fraud in social programs. It cuts aid to those who are legitimately receiving benefits.

At Monday’s budget markup, Republicans firmly rejected the notion that the cuts will actually hurt the poor. “Taking food from children? Not true,” declared Rep. Marlin Stutzman, a freshman Republican from Indiana, sitting at the paper-clogged table where the House committee was finalizing its version of the sequester replacement. His words echoed Ryan’s response to earlier attacks from Catholic bishops and activists who accused his budget of “crucifying” the poor.

As the deliberations dragged into the night, the GOP lawmakers doubled down on their line that they want to give aid to those who qualify, and that their bill simply aims to target scammers gaming the system and bureaucrats oblivious to government waste.

The House GOP proposal “does not change the eligibility criteria for SNAP one bit,” declared Ryan, who shed his jacket as the meeting wore on. “Where in the government do we have waste? Should prisoners be getting SNAP benefits? Should lottery winners getting SNAP benefits?...People eligible for the benefits should get them. It shouldn’t go beyond that.”

Back at home, the public “hears about lottery winners receiving food stamps, and we sit here hearing about taking food out of the mouths of babes,” added Rep. Tim Huelskamp (R-Kansas).

Ryan is correct that the House Republicans’ newest budget doesn’t radically reform eligibility standards for programs like food stamps. Rather, the bill accelerates the phase-out of a stimulus program that raised benefits for all food stamp beneficiaries. It was originally scheduled to expire at the end of 2013, but the GOP bill would halt the program immediately, cutting benefits by $57 per month. It would also eliminate a provision that allows states to offer food stamps to Americans whose incomes are just slightly above the limit for assets.

The bill, however, would reduce benefits for nearly all households that receive food stamps — about 44 million in total — and would cut them off entirely for 2 million who are currently qualified for food assistance, according to the left-leaning Center on Budget and Policy Priorities, at a time when unemployment remains above eight percent.

There’s a legitimate argument about which Americans should receive food stamps and how much they should receive. But the GOP legislation doesn’t eliminate fraud or abuse. It eliminates or reduces benefits to Americans who legitimately received them.

The Republicans are also proposing cuts aimed at closing loopholes that both parties agree should be closed. At the hearing, Rep. Tim Huelskamp (R-Kan.) brought a giant check to illustrate a loophole that allows states to spend just $1 on home-energy assistance to get beneficiaries up to $1,560 in food aid from the federal government, as the District of Columbia has recently done.

“They make people eligible when they aren’t qualified....and we can’t find 4 percent to cut?” Huelskamp said, waving the check in the air.

The provision was, in fact, originally intended to make needy citizens eligible for more food assistance. It lets poor Americans who already receive aid to heat their homes — through the Low Income Home Energy Assistance Program — get a deduction that helps them qualify for more food aid.

Senate Democrats on the Agriculture Committee have proposed raising the states’ contribution to $10 a year. But House Republicans want to eliminate the provision entirely, which would reduce food stamp benefits for about 1.3 million households by $90 month, according to the Congressional Budget Office.

Republicans do follow through on their promise to reduce what they believe are “duplicative programs.” The bill would cut a job-training program administered by SNAP to food-stamp beneficiaries by 72 percent. The logic is that the government funds many other job-training programs, so this particular one is redundant. But critics point out that it’s unclear whether people who had to leave one program after it closed would necessarily find assistance in another program.

House Democrats raised harsh objections during Monday’s markup of the budget bill. “Why are we picking on food stamps?” Rep. Earl Blumenauer (D-Ore.) asked the room. “We should not be cutting benefits for 46 million people in order to deal with occasional lottery winner. What are the odds there?”

Blumenauer and his colleagues were pushing for an amendment that would restore the cuts to food aid in the budget bill. And for a split second, he even seemed to win over Ryan. When the clerk asked the budget chairman whether he’d vote for his fellow lawmaker’s amendment—reversing his position on food stamps— Ryan was absorbed in a side conversation and caught unprepared.

“Ay —” Ryan suddenly stopped himself. “No!” He chuckled, smiling at his Democratic colleagues. “Almost got me, almost got me.”

House Republicans defeated Blumenauer’s amendment, 13-19, and passed the rest of the sequester replacement a few hours later.

This was something of a surprise. When it comes to preventing teen pregnancy, the Obama administration has staked out a decidedly anti-abstinence-only-education stance. The president has, in previous budgets, zeroed out funds for such programs as federal reviews have found such programs to have no impact on sexual abstinence and, in some cases, include inaccurate information on sexuality.

“I do believe that contraception has to be part of [the] education process,” Obama said on the campaign trail in 2008.

Even so, abstinence-only education has hardly disappeared from federally funded teen pregnancy prevention programs. Curriculums that teach abstinence as the singular method of birth control retained a $55 million budget in 2012, a full third of the $176 million available during President George W. Bush’s last year in office.

In April, the Office of Adolescent Health added Heritage Keepers’ Abstinence-Only curriculum to a list of evidence-based teen pregnancy prevention programs. Heritage Keepers is the first abstinence-only curriculum to become eligible for the Obama administration’s $75 million Teen Pregnancy Prevention Fund.

“What we’re hoping is that getting one program on the list shows they’re willing to look at the issue of teens and sexual risk avoidance,” says Valerie Huber, president of the National Abstinence Education Association. “I certainly do hope this could be the beginning of a new trend.”

The move quickly drew the ire of liberal groups, many of whom signed onto an April 30 letter asking Health and Human Services to explain the decision.

The department, however, has no plans to do so. Health and Human Services spokesman Mark Weber said that the program met the two benchmarks for approval as “evidence-based:” It had a strong study design and demonstrated a statistically significant impact on students’ behavior.

The vast majority of programs reviewed do not make the cut: Of the 225 pregnancy prevention strategies that the administration has so far reviewed, it has approved just 31 as “evidence-based.”

“What we’re committed to is impartial research, and then sharing the information so that communities can make the choices that are appropriate for them,” Weber said.

As evidence on the Heritage Keepers curriculum, Health and Human Services cites a 2011 unpublished study of 2,215 middle school students conducted by a group of Salt Lake City-based researchers. It compared the portion of “sexually-experienced” students among those in the abstinence-only program, and those outside it. This metric frequently is used in evaluations of comprehensive sex education as well, as a proxy for understanding how student behaviors may change.

For the control group — which was not in the Heritage Keepers curriculum, — the number rose from 29.2 percent at the start of the program to 43.2 percent one year after the program concluded. Among those in the abstinence-only program, there was a smaller increase, from 29.1 to 33.7 percent.

“It’s encouraging that the science is recognized,” says Anne Badgley, CEO of Heritage Services, which developed the curriculum. “All sides of this issue have a long way to go on connecting why programs do or don’t work. I really think what we need to be having is a discourse that gets out of the deep ideological divide and starts focusing on the outcomes here.”

Moving forward, Huber hopes to see more programs added to the evidence-based set of interventions of that Health and Human Services will cover. The Obama administration certainly hasn’t been kind to abstinence-only education; aside from $250 million in earmarked, Affordable Care Act funds, there’s only about $5 million in dedicated funding in other government programs.

Working with an administration whose budgets have repeatedly attempted to end abstinence-only education, however, could be a whole lot worse. “I’m actually hopeful that we will see more good, good sexual risk avoidance program developed,” says Huber. “That can really set a foundation for us.”

And austerity really is happening in Europe. The best way to see this is to look at the change in the “structural budget deficit” for each euro zone country — that’s the amount of deficit countries have once you factor out economic conditions. (After all, you don’t want to count a surge in tax revenues due to economic growth as “austerity.”) In other words, this is the part of the deficit that governments have direct control over. And, according to data from the IMF’s World Economic Outlook (see table B-7), most euro zone countries have been sharply cutting their structural deficits since 2009.

There’s been a lot of austerity. And there’s a lot more austerity planned. Here’s a chart we made showing this:

Some countries have led the way in shrinking their structural deficits since 2009, trimming spending and hiking taxes: Greece, Portugal, Ireland, and Spain are the leaders in this regard. Others have engaged in just a tiny bit of austerity, like Germany and the Netherlands. And Finland stands out as an outlier, having actually engaged in a bit of fiscal stimulus between 2009 and 2011.

Now, one question to ask is whether austerity is actually hurting economic growth in Europe. There are some signs that it is. The Financial Times’ Martin Wolf created the chart below — using similar IMF data — showing that there’s a very sharp correlation between the amount of belt-tightening carried out between 2008 and 2012 and the amount of economic growth each country enjoys:

There are a few countries that (slightly) buck the trend. Both Germany and France carried out small amounts of austerity, and they still managed to grow a tiny bit. Likewise, Netherlands and Finland engaged in a bit of stimulus, but their economies still contracted a little bit. On the whole, though, the relationship holds: More austerity was correlated with weaker economic growth.

And if that’s the case, it’s a problem. Because if a country’s economy is shrinking, then its debt troubles are likely to grow. (It’s tough to rein in your debt-to-GDP ratio when GDP is falling faster than your debts.)

And Wolf has another graph here showing that very few euro zone countries have actually managed to reduce their overall deficits in the past three years by engaging in austerity. The effects of weaker growth are swamping the savings from budget-cutting. The only real exceptions are Greece — which has engaged in so much belt-tightening that its actual deficits have fallen — and Italy, which has seen a very modest improvement over the past two years. The rest of Europe seems to be in even worse budget shape than before, despite carrying out austerity measures.

So that’s the basic shape of what’s going on. Countries in the euro zone have been pushing forward with austerity, through a combination of spending cuts and tax increases. Even those countries that could potentially afford to engage in more stimulus, like Germany, are instead putting on the brakes. And, as Wolf argues, there’s a case to be made that austerity is causing a lot of economic pain without actually solving Europe’s debt woes. That might be one reason why it’s so unpopular.

(The Economist’s Ryan Avent has more charts and commentary on this topic.)

Update: Veronique de Rugy replies to say she never denied that Europe was engaged in austerity. Her point was that European-style austerity has involved spending cuts and large tax hikes. Fair enough. On that we’re in agreement, and apologies if I misread her. (Whether austerity might have worked better if it had been more heavily tilted toward spending cuts, as she suggests, is a separate and more complicated question.)

Of the 49 votes cast on behalf of Medicare (Gore amendment) on September 2, 1964, we lost two supporters in the last election -- Senators Keating and Salinger. However, we picked up five new supporters -- Senators Bass, Harris, Kennedy (Robt.), Montoya, and Tydings.

We also had three supporters who missed the vote this year -- Senators Bayh, Hartke, and Kennedy (Ted).

Thus if all our supporters are present and voting we would win by a vote of 55 to 45.

Of course, if we could persuade Senator Russell (who is on the brink) to support Medicare this year our margin should be even greater.

That letter would never be written today. Confidently asserting that any major piece of legislation could pass with 60 votes would be enough to get a political aide fired. The modern Senate requires 60 votes to pass pretty much anything. The exception are bills that can be passed through budget reconciliation, but that process comes with its own limitations and problems. If you don’t know that today, you are not qualified to work in politics.

In Johnson’s time, however, the Senate was not governed by the filibuster. This chart counts “cloture” votes, which are the votes you take to break a filibuster, and thus give us a way to count whether the majority is having to face down a lot of filibusters. Johnson was president during the 88th, 89th, and 90th sessions of Congress. And as you can see, there weren’t many filibusters:

Which is all to say that Alec MacGillis is right: The idea that an LBJ could simply come along and bring Congress to heel is a wishful anachronism. The Senate doesn’t need a great man. It needs better rules.

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Ezra, the first year of a presidential term is where legislative agendas are won and lost. Would the GOP still be able to obstruct on the scale that they have or will re-election force them to concede on the major legislative items, tax reform, immigration reform, climate and energy reform. If not, what tools are even available for the President should he return to office with the same congressional make up?

Assuming the GOP still controls the House and keeps it close in the Senate, they could absolutely obstruct on the scale we’ve seen in recent years. The question is whether they’ll want to. You can think of a few reasons they may not.

1) More must-pass items they care about. They don’t want all the Bush tax cuts to expire. They don’t want the Pentagon to see massive spending cuts. They may not even want to be blamed for a breach of the debt-ceiling.

2) Political rethink: They’ll have just failed to unseat Obama. They’ll likely have suffered some congressional losses. That will mean they’ve lost two presidential elections in a row. Political parties often begin a rethink at about that time, and perhaps some in the GOP will start to wonder whether catering to the far right is really serving them so well in general elections.

3) Personal desire. Many legislators do want to legislate. They didn’t come to Washington and give up all that time with their families and friends just to write press releases calling Harry Reid a jerk. They put a lot of their “let’s get something done” instincts on hold to beat Obama, but that failed, and so maybe they’ll want to spend a few years getting something done.

All that said, I think it remains quite likely that cooperation is rare to nonexistent, and that it’s just more brinksmanship and missed opportunities. The forces of polarization are strong.

In a second term Obama would no doubt finish his political evolution, with no more elections to win, and move in the direction of legalizing gay marriage, don’t you think?

I really don’t know. I don’t think Obama can legalize gay marriage by fiat, though perhaps I’m wrong about that. If it does have to go through Congress, I think they’d be unlikely to pick that fight unless they really thought they could win it. So while I could certainly see him coming out for gay marriage in clearer terms, I don’t know what their legislative calculus will be on the issue.

You mention the possibility of Supreme Court vacancies. What are the odds of Associate Justice Hillary Clinton?

I’ve often wondered if this is a job she’d want. In certain ways, it would make a lot of sense. And we used to have much more of a tradition in this country of nominating politicians to the Supreme Court (see, for instance, Sandra Day O’Connor). But I don’t know what’s in Hillary’s heart on this, or in Obama’s.

One area where there seems to be broad agreement among voters is the dysfunction of the political system, from campaign finance to the legislative process. Even for the politicians themselves, a dynamic in which they are always fundraising/campaigning and then can’t bring about any change once they’re elected can’t be a fun way to spend one’s time in office. Theoretically, this means that both parties would be interested in improving their own work environment. While there would a disincentive for incumbent lawmakers and the interest groups they represent to just sit back and let this happen, a cleaner political process would ultimately benefit the nation as a whole. How likely is it that Obama and the congressional leadership would give this area more attention during a second term?

This is, to me, one of the key questions of modern politics. The system is bad for both parties. Democrats can’t govern smoothly when they’re in the majority, but neither can Republicans. Very few politicians like spending so much of their time raising money. No politicians like the low esteem in which the public holds them. And yet they do nothing about it.

The problem is that the two sides never quite have the same incentives at the same time to change it. Majorities may not like the filibuster, but minorities do. Politicians may not like raising money, but when they’re incumbents, they know their fundraising networks give them an advantage over challengers.

I’ve always thought the right way to fix the system would be a bipartisan commission -- I know, I know -- that sets rules that the two parties agree will go into effect in six years, when no one knows who will control any branch of government.

Can you imagine the firestorm that would erupt if Obama got to appoint a successor to one of the Republican justices? How does Obama get the votes in the Senate?

By appointing a candidate they have trouble opposing. It does seem to be the case that qualified SCOTUS candidates who can’t be painted as truly extreme tend to be confirmed. Perhaps that will change. But if Republicans just keep rejecting candidates, I think you could see, in that case, Democrats finish what Sen. Bill Frist started and end the judicial filibuster.

Since the stock market will be affected by Spain and Greece, and the rising price of oil would stifle economic growth, how much is the president’s re-election out of his hands?

Quite a bit, I think. We vastly overstate the role of campaigns in deciding elections and presidents in driving economies.

Pundits seem to fetishize tax reform. Broaden the base by cutting marginal rates and removing “loopholes” and everything will be fine and dandy. But lobbyists for those loopholes don’t disappear. And members of Congress, especially senators, have a great deal of leverage when you need a supermajority to pass anything. So just like after the 1986 tax reform, the loopholes make their way back into the tax code, and eventually you’re left with a tax code with many of the same loopholes as before AND lower marginal tax rates. What is the advantage for Democrats for pursuing such an arrangement?

Well, if you can “fix” the tax code for 10 or 15 years, I think that’s pretty good. It’s like cleaning out a storm gutter: Yes, it’ll just fill back up with crud. But you still have to do it.

That said, your broader point is well taken: “Reform” always sounds great in theory. It gets very difficult in practice. From where I sit, it’s made vastly, vastly harder because there’s no current agreement on how much revenue the tax code should raise. Until there’s some resolution to that question, I don’t see how you do tax reform.

One topic I was surprised that you didn’t mention was the economy. Assuming that Obama wins with the economy roughly as it is now -- growing, but too sluggishly -- do you think he’s going to attempt any major additional measures? Might the administration use the “fiscal cliff” as a negotiating point to obtain additional stimulus, infrastructure spending, or something of the kind? Are there any other significant economic measures that you think they might seek?

I do think you could see infrastructure and related measures included in a taxmageddon deal. But I didn’t say much more on major stimulus packages because, while the Obama administration would certainly like to pass the American Jobs Act, Republicans won’t let them. Remember that the question of the piece wasn’t so much what “should” get done as what “will” get done, or at least tried.

How can you possibly condone Obama’s decimation of American Sovereignty? Another 4 years will be the end of this country as we know it - as it would slink into George Soros’ One-World tentacles. How can you possibly not see how Obama’s gradually eroding our rights and grabbing power for an all-invasive government body, not unlike so many Soc ialistic and Communist regimes? How can you , Mr Klein, be so gullible and blind? You call yourself an educated thinking man? Advocating for another term is treasonous. Are you on George Soros’ payroll?

Posted without comment.

How does the winner of Mourdock/Lugar affect any possible strategy the Obama campaign may have in terms of Indiana? Isn’t Joe Donnelly a prohibitive favorite against Mourdock? I’ve heard the President plans to fight for the state like he did in ‘08.

If Mourdock wins, Indiana is more gettable for the Dems, and the party will spend more there. But I think the main effect in Indiana is on other Republicans: If Lugar loses, it shows that the party is still successfully primarying incumbents, and so there’s more reason for Republicans to worry about compromising in the future. That makes it harder to get to any deals.

If the President wins re-election, what are the odds Simpson/Bowles will be brought up in Congress?

Well, it got brought up in the House and soundly rejected. As for the chances that something S-Bish becomes the resolution to ‘Taxmageddon’? Low, but not zero.

You and other congress watchers seem to tiptoe around the obvious and inescapable conclusion of your reporting and analysis: the GOP wants unemployment to remain high because they perceive Obama will be blamed for it. This is the Occam’s razor explanation for obstructing stimulus (which they support during GOP administrations) and Fed appointments, but you won’t say it squarely. Why not? What would convince you that the GOP is actively trying to discourage the economy from improving?

More evidence. Everything the GOP does is perfectly consistent with a “motivated reasoning” model of human behavior, in which people sincerely convince themselves of what their personal and group incentives lead them to believe. So, to use a non-economic example, i think Republicans sincerely oppose, and even hate, the individual mandate now, even though it was a Republican policy just a few years ago. The change was triggered by partisanship, but the way it actually functioned is by people convincing themselves that the mandate is terrible, unconstitutional policy.

In general, I think political debates are both much more sincere and much less rational than most folks believe.

Is there a way for Obama to cut defense spending without making Americans feel ...unsafe? I always felt like defense cuts would do major help for our budget, but I never hear it brought up.

I think so. Polling seems to suggest the public is much more open to defense cuts than Washington is. And remember, major defense cuts are currently baked into the cake of the sequester. Republicans are going to have to give up a lot to get them out of there.

It seems like the argument against austerity rests on the assumption that they’ve drastically cut government spending. David Brooks calls the European austerity “partly mythical.” Does this cause the argument against austerity to lose its legs?

I don’t understand this new argument in which austerity is only cuts in spending, not tax increases. But at any rate, Brooks is wrong that the European austerity is mythical. Here’s the Economist on the subject.

Would Obama tackle a comprehensive immigration policy?

He’d sure like to. The question is whether the votes will be there.

Do you think there’s any historical evidence to back up Romney’s implication that a 2nd term Obama would be unworried about re-election and therefore unfettered in his agenda? Were there really any big, major, game-changing, history-making policies from Clinton’s, Bush’s or Reagan’s second terms? I think we’d have to go back to Nixon’s 2nd term environmental acts to really see Second Term Hubris in action.

Yeah, it doesn’t make much sense. For one thing, structurally, Obama still has to deal with Congress. For another, he still cares about winning the 2014 midterm, and his party cares about winning in 2016. His legacy will be important to him.

So, in sum, he doesn’t have any new powers in his second term that allow him to act more ambitiously, and nor is he actually freed from worrying about the future. Obama in a second term will be a lot like Obama in a first term. The question is what events and political constraints he’ll be facing.

You mention Lew and Bowles and possible replacements for the departing Timothy Geithner. What are your thoughts on other prominent positions? Do you expect Bernanke to confirmed for another term? Do we know of any other departing secretaries and who would be in line to replace them? What about all the “acting” dept heads? Confirmations were hard in the first term. The second would be MUCH worse if the Dems lose control of the Senate.

I doubt Bernanke will get a third term. I’d be surprised if he even wanted one, on some level. As for confirmations, I wouldn’t be shocked to see a major push to streamline the Senate confirmation process, though I don’t know what form it will take.

Ezra, you seemed to be suggesting that we need to have a fixed percentage of something (say GDP) that we all “agree” to collect as taxes. Or did I read you wrong? Do you think that’s a good idea?

In context of tax reform, which I think is what you’re referring to, you need to know what revenue target you’re looking to hit. That is to say, you’ll have different rates, and you’ll close different deductions/expenditures, if you’re looking to raise 18 percent of GDP than if you’re looking to raise 23 percent of GDP.

I’m an independent who can no longer vote Republican mainly because their economic ideology cannot be substantiated by 30 years of data. However, the Democrats, as my only alternative, is very depressing. Anyway, despite the whining we hear from Wall Street, the Obama administration has done very little to bring the cheats and thieves to justice who are responsible for the economic debacle we are recovering from. Frankly, that’s been my biggest disappointment with Obama. Any chance we see perp walks from Wall Street bigshots and Alan Greenspan in a second term? Thanks.

Doubt it.

Ezra, if the Supreme Court puts the kibosh on Obamacare, or even just on some parts of it, how do Obama and the Democrats respond? (As someone who’s been self-employed for many years, I am acutely concerned about this...)

If they overturn the whole thing, which most Court watchers consider unlikely, there’s not much Dems can do. If they only overturn the individual mandate, or the individual mandate and some related provisions, then there’s basically a showdown: the law exists. The money for it will be spent. Dems won’t permit repeal. So either Republicans and Democrats have to agree on some fix or states have to figure out how to run their insurance markets without a national-level individual mandate.

In your column you write that Obama would like to apply Race to the Top to other areas of policy. What do you mean by this?

In previous budgets, the Obama administration has proposed expanding the “Race to the Top” model -- in which states are given money in return for reforms -- to higher ed, to pre-k, to juvenile justice, to transportation. More on that here.

A large hospital can make itself a “must-have” for a health insurer’s network and demand higher reimbursements, while an insurer might decide it can live without the smaller hospital down the street.

For their part, health insurance plans aren’t putting much downward pressure on those prices. In discussing interviews with insurers and hospital administrators, Berenson describes insurers as seemingly “resigned” to the fact that hospitals will demand higher payments for their services.

“According to both plan and provider representatives we interviewed,” the researchers write, “health plans have not recently been aggressive in negotiations with powerful providers....Terms such as truce and detente were used to describe the current state of relations between health plans and powerful hospitals. As a respondent from a must-have hospital said, Blue Cross Blue Shield is ‘such a big player and we are such a big player—we have to come to terms.’”

Why aren’t health insurers more aggressive negotiators? For one, there’s the risk of losing a must-have hospital that won’t contract with a health plan that expects to pay less for hospital services. “There is a dynamic in the market that makes it impossible for a private payer to change anything,” one interviewee tells Berenson. “Employers would not support plans in showdowns against hospital systems.”

When hospitals increase rates, the fallout for the health plan is not necessarily negative. Much of the increase can get passed on to insurance subscribers as a hike in premiums. Employers could potentially ditch an insurance plan over premium spikes, but if no insurer is bargaining rates down, there are few alternatives.

The Affordable Care Act could help push prices down by requiring additional review for any premium increases over 10 percent. The rule could give health plan an incentive to demand lower prices from hospitals, if only to dodge additional regulatory scrutiny.

Berenson is skeptical that the law’s provision will be enough to drive down costs. He makes the case for more government intervention in rate-setting with a system like Maryland’s, where the state decides how much hospitals can charge. In Massachusetts, the state’s payment reform law could also move the state in that direction.

So, plenty of aid groups, along with Secretary of State Hillary Clinton, have endorsed the Global Alliance for Clean Cookstoves, a push to get 100 million homes around the world to adopt cleaner stoves and fuels by 2020. The technology exists. It’s cheap. It’s simple. What could go wrong?

One problem is that having a cheap, clean technology is no guarantee that it will be properly adopted. In a new NBER paper, economists Rema Hanna, Esther Duflo and Michael Greenstone note that there’s been very little evidence on whether these stoves work in the real world. They looked at a randomized control trial that handed out cleaner stoves to 15,000 people in Orissa, one of India’s poorest rural areas, and tracked the results over five years. The stoves were a bargain, costing about $12.50 a pop, and they used a chimney to keep smoke away from the users.

What Hanna and her colleagues found is that in the first year of using the stoves, households saw a serious drop in smoke inhalation. The cleaner cookstoves were working exactly as they did in the laboratory. But in the years after that, the stoves stopped working effectively. “We find no evidence of improvements in lung functioning or health and there is no change in fuel consumption (and presumably greenhouse gas emissions),” the authors write.

So what went wrong? Basically, none of the earlier evaluations of the clean cookstoves had taken into account how households in places like India would actually use the things. In early tests, there were trained technicians on hand at all times to inspect and repair the stoves. Not surprisingly, households used the stoves frequently. But when the technicians departed and the owners had to clean the chimneys themselves, they lost interest over time. People were spending too many hours conducting repairs and eventually just preferred to switch back to indoor cooking fires.

What’s more, laboratory tests had found that the more modern stoves could boil water more quickly using less fuel. This led to the idea that they could help households burn less coal and biomass overall — and so cut greenhouse-gas emissions. But Hanna and her colleagues found that the cleaner stoves did not appear to affect how long the households in Orissa actually spent cooking. “[T]here is no evidence,” they write, “of a reduction in greenhouse gas emissions.”

It’s a dismal finding. But it suggests that for aid projects — as well as for any effort to reduce greenhouse-gas emissions and tackle climate change — having the right technology won’t always be enough. “As engineers and scientists, it is easy to fixate on the technology,” concludes S.C. over at the Economist’s Free Exchange blog. “It is a lot harder, however, to predict human behaviour and how that interacts with technology.”

Rajan presented a paper titled “Has Financial Innovation Made the World Riskier?” His answer, put simply, was “Yes.” He was dismissed by the assembled masters of the universe. “Misguided,” said Larry Summers. But Rajan was right.

In this month’s Foreign Affairs, Rajan is back with another warning. “The industrial countries have a choice,” he writes. “They can act as if all is well except that their consumers are in a funk and so what John Maynard Keynes called ‘animal spirits’ must be revived through stimulus measures. Or they can treat the crisis as a wake-up call and move to fix all that has been papered over in the last few decades and thus put themselves in a better position to take advantage of coming opportunities.”

This time, Rajan’s comments are being received more favorably. Greg Mankiw, the Harvard economist who advises Mitt Romney, called the essay “wise.” Tyler Cowen, the George Mason University economist who runs the popular blog Marginal Revolution, was even more direct: “Rajan nails it,” he wrote.

But he is once again on the opposite side of the issue from Summers. This time, however, there has been an unusual role reversal: It is Summers who is trying to rouse an economics profession that has settled into a kind of complacency, and Rajan whose argument is more comfortable to much of the political and economic establishment.

Rajan’s commentary is perhaps the clearest manifesto yet from the school of post-recession thought that I’ve come to think of as “the long-termers.” The long-termers don’t deny the enormous and ongoing human suffering caused by the recession. They don’t argue that the best course is passivity. Rather, they argue that there’s not much that we can or should do in the short run, and so we may as well focus on long-run issues such as the design of the tax code and the quality of our schools. (For another example of long-termism, see today’s David Brooks column.)

But as Summers sees it, the short run has a nasty tendency to become the long run. “The evidence is that cyclical problems harden into structural problems,” he says, “because people who have been out of work for a year lose their ability to work.”

The longer you’ve been unemployed, the harder it is to get back into the labor force. “If you’ve been unemployed for a few weeks, your chance of finding a job is 30 or 40 percent,” says Michael Reich, an economist at the University of California at Berkeley. “If you’ve been unemployed for six months, it’s 10 percent.”

Since the recession began, the “labor participation rate” has fallen to levels not seen since 1981. Some of that is older workers retiring. But much of it is discouraged workers giving up on searching for new jobs.

Fewer workers, of course, means less economic growth and lower tax revenue. In a recent study, Summers, alongside Berkeley’s Brad DeLong, showed that in a depressed economy, stimulus measures could pay for themselves if they worked to prevent these kinds of long-term labor crises.

Rajan, of course, agrees that it would be good to address these problems if we could. He thinks it would be great to employ more workers rebuilding the nation’s infrastructure, but he doesn’t think we can get those projects up and running fast enough to make a difference. He thinks it would make sense to write down much of the housing debt in the parts of the nation that have been hit hardest by the economic crisis, but he doesn’t think the politics will permit that. He thinks that as long as the housing market is choking on foreclosures, there’s not much that monetary policy can do, as it mainly works through stimulating demand for housing.

“I don’t see great short-term solutions,” he says. “When people say austerity is not the answer, fine; if you have great things to spend on, let us know what they are.”

To Summers, though, this fatalism is sober-sounding nonsense. “Surely we can have public employment grow as rapidly as it did during George W. Bush or Bill Clinton’s presidency,” he says. “Surely we can have classes across America be as small as they were five years ago. Surely if you put more money into the hands of lower-income people they will spend a substantial fraction of it.”

In a reversal from their earlier debates, it is now Rajan’s argument that is easier for the political class to embrace: Proposing more stimulus, or more expansionary Federal Reserve policy, is politically dangerous in a way that calling for education reform simply isn’t. But unlike before, we don’t have to choose between the two sides.

We could spend more on teachers and classroom repairs now while passing budget cuts and tax increases that really kick in after unemployment has dropped to, say, 7 percent. We could rebuild the nation’s infrastructure while doubling down on our education reforms. We could, in other words, make both the short term and long term better. But we’re doing neither. And Summers and Rajan, in case you’re curious, both oppose that course of inaction.

Robert Sherretta was quick to grab the mike after the Shadow committee opened up its panel to questions from the audience. After 20 years on as an investment adviser on Wall Street, “I can tell you that there are those who are chomping at the bit to get their boiler rooms started, to take advantage of the act,” Sherretta told the audience. “They’ll keep it hidden for five to 10 years, and it will resurface in investors lawsuits. I can assure you of that.”

The room fell silent for a moment while Chester Spatt, a white-haired professor from the Carnegie Mellon University and committee member, turned to his microphone. “The broad view--we appreciate your perspective--the broad view is that there are potential suitability issues and questions regarding fraud and risk enforcement,” he said. “It’s the reason we framed the issues the way we did, emphasizing the importance of future cost-benefit analysis.”

Translation: Yes, there may be folks out there who take advantage of the new rules for raising capital to dupe guileless investors. But if and when that happens, the appropriate folks should take the appropriate measures to add up the pluses and minuses.

Sherretta told me later he didn’t leave convinced by Spatt’s comeback. But in Congress, at least, has finally begun to warm to these kind of arguments. The JOBS Act passed in early April with major bipartisan support and the president’s signature. Initially a GOP proposal, the law makes it easier for startups and other young, emerging companies--most of which begin as small businesses--to fundraise from ordinary Americans, among other investors. Like Sherretta, federal regulators and state watchdogs warned that the law could make it easier for unscrupulous companies to dupe mom-and-pop investors. But the dual promise--to create jobs and help small businesses raise capital while banks remain reluctant to lend--proved irresistible to members of Congress.

Heartened by such victories, Republicans are now pushing aggressively for repealing major parts of Dodd-Frank. AEI’s Shadow committee, by contrast, has struck more moderate tone, taking time to suggest ways to ensure that smaller efforts like the JOBS Act ultimately succeed. The legislation, for instance, allows some non-accredited companies to raise major sums of capital through crowdfunding. “We do think the SEC should monitor those for abuses,” Spatt suggested. “The committee encourages Congress to hold hearings annually, or to ask Government Accountability Office to deliver a report annually” on the legislation.

But to critics, the Shadow committee is simply offering a fig leaf--albeit one full of technical details and white papers-- that hides the real risks of deregulation. “Those of you who think that a couple of congressional committees or a GAO study is going to scare anybody off is mistaken,” Sherretta explained. Another financial industry veteran at the event, Bonnie Watchtel, raised concerns that the JOBS Act would let inexperienced investors getting fooled into thinking they were backing the next Facebook. “These are very, very speculative investments, and they are going to lose all their money,” Watchel told the audience. “That’s where the tears are going to be.”

The Shadow committee members assured the financiers that they did, in fact, hear their concerns. “That’s why this thing was entitled ‘Two Cheers for the JOBS Act!’” said Peter Wallison, AEI’s chair of financial policy studies, referring Watchel to the group’s new position paper on the law. Congress, for example, could make future changes to law to address any shortcomings, he added.

But that’s assuming that the federal government is willing to undertake the long slog of crafting carefully calibrated regulations--the Great White Hope of think-tanks across Washington--and that the financial industry will respond accordingly. That, Sherretta believes, is anything but reality.

“I come from the practitioner side of things, and I see in people in academia try to view a kind of utopia. They don’t understand that carnivorous mind that Wall Street has,” he said, cutting out of the panel early for a meeting on Capitol Hill. “It has the mindset to look for every possible loophole.”

The reason for austerity's deep unpopularity isn't particularly complicated: It's not, on any level, working, except perhaps to give the Germans political room to negotiate (inadequate) bailouts. It hasn't stabilized borrowing costs for the endangered countries. It hasn't brightened growth prospects for the continent. And it's proving politically unsustainable, too, as countries vote in new governments who've promised to renegotiate the terms of the pact. If the euro zone is going to survive, it needs to try something new.

So what else could the euro zone do? My colleague Brad Plumer has compiled just such a list, and rather than summarize it, I'm going to let you read it in full. So here's Brad with five policies that various experts have suggested that the euro zone might consider instead, and one that no one wants:

1) More inflation from the European Central Bank. More economic growth would make Europe’s problems a lot easier to handle. If Spain and Italy were growing at a healthy clip, their deficits would naturally shrink. One institution that could, potentially, help the euro zone grow faster is the European Central Bank. Here’s Paul Krugman: “The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation.” More inflation would help uncompetitive countries like Spain bring down their costs more quickly, and it would potentially spur more spending and growth.

The problem? Both Germany and Europe’s central bank have long been temperamentally hawkish on inflation. Most recently, the ECB declined to cut interest rates, even though the euro zone is tumbling back into yet another recession.

2) More stimulus from euro zone countries that are in sound budget shape. It would be hard for countries like Greece or Spain to borrow money now and spend it on stimulus projects, with the promise of cutting spending later once the economy’s improved. As Joe Gagnon told me a while back, there’s no way to make that promise of future austerity credible — unlike in the United States, where there’s lots of policy inertia, future European parliaments can easily undo past pledges. Lenders would likely balk.

But just because Greece, Italy, Spain, Portugal and others have to rein in their budgets doesn’t mean everyone in the euro zone necessarily has to follow suit. Joseph Stiglitz, for one, has called on wealthier countries such as Germany to invest more in infrastructure and technology to stimulate Europe’s economy. “I hope,” Stiglitz said, “the debate will be what are the things we can do to promote growth rather than how do we strangle each other together.”

3) Open the bailout fund for bigger countries. Right now, Europe’s wealthy countries have bailed out smaller peripheral countries such as Ireland, Portugal and Greece. But some commentators think the bailout fund may need to get even bigger — and extend to countries that threaten to haul down the whole euro zone, like Spain.

Here’s Wolfgang Munchau, writing in the Financial Times: “Fixing the Spanish crisis will have to start with the banks. … The only halfway benign solution I can see would involve a European rescue programme for Spain that focuses specifically on the recapitalisation and downsizing of the financial sector. Spain would also need to undershoot the eurozone’s average inflation rate over many years to redress some of the lost price competitiveness. At the same time, the country needs to go easy on austerity.” The trouble, again, is that this will require more money from wealthy countries like France, Germany, the Netherlands, and Finland.

4) Eurobonds. Many individual members of the euro zone have large budget deficits. Spain’s is 8.5 percent. Ireland’s is 13.1 percent. But if you look at the euro zone as a single entity, things look better. Last year, the euro zone’s deficit was just 4.1 percent of GDP — less than half of the United States’. In theory, Europe should be able to borrow money at fairly cheap rates if it could issue a single bond for the entire continent. And that would give the euro zone some breathing room to deal with its current woes. Many Europeans, from politicians like Hollande to commentators like Gavyn Davies, have called for just such a “eurobond.”

But there are all sorts of hitches. If the euro zone had one single bond, then countries like Spain and Italy would see their borrowing costs fall, but countries like Germany and Finland would have to pay more to borrow money. It could also create moral hazard — spendthrift countries would feel less pressure from investors to rein in their debts. The Economist’s Ryan Avent recently ran through a few proposals from European think tanks to surmount these problems.

5) More fiscal integration. The euro zone, as we’ve seen, is made up of a bunch of wildly disparate countries. German workers are much more productive than Spanish workers, for instance. And that makes it hard for Spain to compete as long as it’s using a currency, the euro, that’s better-suited for more productive workers in Germany.

One idea, then, has been for the euro zone to do what the United States does and redistribute resources from rich to poor. As James Galbraith explained here, the U.S. has long used programs such as Social Security or unemployment insurance or the TVA to lift up the poorer regions and make sure that states don’t implode when they fall into recession. Hollande, for one, has suggested that Europe move in this direction, with wealthier states funding a bigger European Investment Bank that can bankroll industrial projects in poorer countries.

But is that enough? One problem is that thorough fiscal integration could involve some truly colossal sums. Remember, West Germany spent $1.9 trillion over 20 years in an attempt to modernize East Germany. And, because there were no language barriers, millions of East Germans could simply migrate West. Greek and Portuguese workers would have a tougher time doing that.

6) Countries could just start leaving the euro zone. Of course, it’s possible that none of the above ideas would work. Germany doesn’t exactly sound thrilled with the idea of expending further vast resources to prop up countries like Italy and Spain and Greece.

In that case, it’s always possible that individual nations could decide that being part of the euro is an unworkable idea and just leave. Jacob Goldstein explains how this would work for Greece. The country would default on its debt and would no longer have to keep spending money on interest payments. It could also devalue its currency in order to make its exports more competitive. Of course, in the short run, foreign investors would flee Greece, the country would have to slash spending considerably, and its economy would likely collapse.

As Slate’s Matt Yglesias writes, “If Greece tried to exit the [euro] — or more likely was forced out by Spain or Italy cutting the cord — they’d be in for a dose of much more severe austerity. Think about Greek living standards converging with Serbia and Bulgaria.” Still, the fact that it’s a painful option doesn’t mean it’s not an option.

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RCP Obama vs. Romney: Obama +1.0%; 7-day change: Obama -2.1%.

RCP Obama approval: 47.1%; 7-day change: -.5%.

Top stories

1) Germany won't back down on austerity. "The world will be watching closely when French President-elect François Hollande meets with German Chancellor Angela Merkel for early clues on how willing the two leaders are to reconcile their approaches to resolving the euro-zone crisis...Ms. Merkel and her government, fearful of popular resistance in Germany, have made clear in recent weeks that they won't soften their austerity demands embodied in a fiscal pact, a point the German leader reiterated on Monday. 'We in Germany, and me personally, are of the opinion that the fiscal pact is nonnegotiable,' Ms. Merkel told reporters at her party's headquarters in Berlin. 'I consider the fiscal pact to be right and I think there is a basic process in Europe that we agree that after elections, whether in big countries or little countries, we cannot just put everything up for discussion that was negotiated previously.'" Gabriele Parussini and William Boston in The Wall Street Journal.

2) Greece may be headed towards a repeat election. "Greece is bracing for a repeat general election after its centre-right leader failed to win leftwing support to form a 'national salvation government' in the wake of Sunday’s inconclusive outcome at the polls...The repeat election would probably take place on June 17, he said...The stalemate puts at risk the timetable for disbursement of Greece’s next loan tranche from its second €174bn bailout. Despite a recent transfer of €3.5bn to cover financial emergencies, the country faces being unable to meet pension, salary and debt commitments next month...Antonis Samaras, whose New Democracy party finished first but fell well short of a parliamentary majority, on Monday proposed a coalition of pro-reform parties to ensure Greece remains in the eurozone...But Alexis Tsipras, on a roll after his leftwing coalition Syriza vaulted into second place, almost quadrupling its share of the vote, rejected the offer outright." Kerin Hope in The Financial Times.

@chrislhayes: The entire post-war European system was designed & constructed to produce economic security and avoid crisis and radicalization.

3) The House GOP's plan to cut health-care spending rather than defense passed out of the Budget Committee. "House Republicans, seeking to prevent defense-spending cuts at the end of the year, advanced a plan that would instead reduce spending on health-care programs, food aid and other major domestic initiatives of the Obama administration. The bill developed by House Budget Committee Chairman Paul Ryan (R., Wis.) would cut about $261 billion in domestic spending over the next decade and roll back portions of the 2010 health-care law and the Dodd-Frank financial overhaul. It was approved Monday by the House Budget Committee on a 21-9 party line vote and likely will be approved by the House later this week. But it is a dead letter in the Senate because the cuts in the social safety net are anathema to Democrats who control that chamber...A sizable portion of the domestic cuts in the House GOP bill come from programs benefiting the poor, including food stamps, Medicaid, and a child tax credit." Janet Hook and Damian Paletta in The Wall Street Journal.

@sahilkapur: In Budget hearing, Rep. Doggett (D) holds up sign calling GOP bill "Wreckonciliation"; Camera pans to Paul Ryan grinning from ear to ear.

4) Low expectations greet the highway bill negotiations. "The committee of lawmakers appointed to negotiate a new federal highway bill will meet for the first time Tuesday, beginning their talks amid low expectations for a deal in a charged election-year environment. Many observers, including Transportation Secretary Ray LaHood, have expressed doubt that Congress will pass a multiyear bill before the November election. But leaders of the 47-member panel from both House and Senate say they have a blueprint -- hewing closely to their respective chamber’s approach -- for the talks to defy the seemingly long odds...The talks are likely to center, at least at the outset, on a controversial cross-country pipeline that has emerged as an anti-Obama rallying cry for Republicans. The House version of the transportation and infrastructure bill approves the Keystone XL pipeline to bring Canadian oil sands to Gulf Coast refineries." Keith Laing in The Hill.

5) Sen. David Vitter is blocking the confirmation of any Fed nominees before the election. "President Barack Obama's two nominees to the Federal Reserve appear likely to fall victim to a long-running political feud, which would leave the central bank short-handed as it struggles with tough regulatory and monetary policy questions. Republican Senator David Vitter has demanded that the Senate hold a debate before any vote on the nominees, which would require Democratic leaders to muster a super majority to move forward - a hurdle that may be too high to clear. As a result, the Senate may end up abandoning the nominees, Harvard economist Jeremy Stein and investment banker Jerome Powell, and leave a decision on filling out the normally seven-member Fed board until after this year's presidential election...Leaving the central bank short-staffed deprives it of top-notch monetary policy and financial market expertise that could prove valuable given the stop-and-go nature of the U.S. recovery and economic threats coming from Europe." Mark Felsenthal and David Lawder in Reuters.

@BCAppelbaum: News of the Vitter hold is like learning the results of an autopsy. The outcome was clear; now we know the proximate cause.

@justinwolfers: I don't know a single serious economic--left or right--who thinks putting a hold on Stein & Powell is a good idea. I bet you can't find one.

Top op-eds

1) STIGLITZ: The ECB could pave the way for growth in Europe. "This we should know by now: markets on their own are not stable. Not only do they repeatedly generate destabilizing asset bubbles, but, when demand weakens, forces that exacerbate the downturn come into play...States with balanced-budget frameworks are forced to cut spending as tax revenues fall - an automatic destabilizer that Europe seems mindlessly bent on adopting...Europe as a whole is not in bad fiscal shape; its debt-to-GDP ratio compares favorably with that of the United States. If each US state were totally responsible for its own budget, including paying all unemployment benefits, America, too, would be in fiscal crisis. The lesson is obvious: the whole is more than the sum of its parts. If Europe - particularly the European Central Bank - were to borrow, and re-lend the proceeds, the costs of servicing Europe’s debt would fall, creating room for the kinds of expenditure that would promote growth and employment." Joseph Stiglitz in Project Syndicate.

2) BROOKS: The economy needs structural change, not stimulus. "Many people on the left are having a one-sided debate about how to deal with a cyclical downturn. The main argument you hear from these cyclicalists is that the economy is operating well below capacity. To get it moving at full speed, the government should borrow and spend more. The federal government is now running deficits of about $1 trillion a year. Some of these cyclicalists believe the deficit should be about $1.4 trillion...Other people -- some on the left but mostly in the center and on the right -- look at the cyclicalists and shrug. It’s not that they are necessarily wrong to bash excessive austerity. They’re simply failing to address the core issues. The diverse people in this camp -- and I’m one of them -- believe the core problems are structural, not cyclical. The recession grew out of and exposed long-term flaws in the economy. Fixing these structural problems should be the order of the day, not papering over them with more debt." David Brooks in The New York Times.

3) KLEIN: Larry Summers is taking on 'the economy needs structural change, not stimulus" types. "Rajan’s commentary is perhaps the clearest manifesto yet from the school of post-recession thought that I’ve come to think of as 'the long-termers.' The long-termers don’t deny the enormous and ongoing human suffering caused by the recession. They don’t argue that the best course is passivity. Rather, they argue that there’s not much that we can or should do in the short run, and so we may as well focus on long-run issues such as the design of the tax code and the quality of our schools. But as Summers sees it, the short run has a nasty tendency to become the long run. 'The evidence is that cyclical problems harden into structural problems,” he says, “because people who have been out of work for a year lose their ability to work.'" Ezra Klein in the Washington Post .

4) REYNOLDS: Saez and Piketty are wrong about taxes. "The first paper, by Peter Diamond of MIT and Emmanuel Saez of the University of California, Berkeley, appeared in the Journal of Economic Perspectives last August. The second, by Mr. Saez, along with Thomas Piketty of the Paris School of Economics and Stefanie Stantcheva of MIT, was published by the National Bureau of Economic Research three months later...Messrs. Diamond and Saez's 2011 paper ignores all studies of elasticity among the top 1%, and instead chooses a midpoint of 0.25 between one uniquely low estimate of 0.12 for gross income among all taxpayers (from a 2004 study by Mr. Saez and Jonathan Gruber of MIT) and the 0.40 ETI norm from 30 other studies. That made-up estimate of 0.25 is the sole basis for the claim by Messrs. Diamond and Saez in their 2011 paper that tax rates could reach 73% without losing revenue." Alan Reynolds in The Wall Street Journal.

5) SACHS: Scandinavian structuralists point the way. "French and Greek voters have rejected Europe’s current macroeconomic framework. The headlines cry that voters demand growth rather than austerity. Yet growth is not a policy but an outcome. A vote rejecting the incumbents does not define the policy alternatives...Macroeconomic debates are mostly ideological rather than empirical. This is a shame. The diverse experiences across the OECD economies can clarify a lot about the various schools of thought. Of all the high-income countries, it is the northern European countries, including social democratic Scandinavia and the Netherlands, and social-market Germany, that have the most favorable combination of low budget deficits, high employment, and global competitiveness. Of course the specific challenges and current conditions differ by country, and so too will the best packages." Jeffrey Sachs in The Financial Times.

Singer-songwriter interlude: Joshua Radin plays "I'd Rather Be With You" live on Smooth Radio.

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

Still to come: Taxpayers could profit from AIG; obesity's rise will continue; the Senate filled vacant seats at the FCC; the government is set to approve more drilling; and a elephant shows off its talent for the harmonica.

Economy

Consumer borrowing saw its biggest jump in over a decade. "Americans are stepping up their borrowing, possibly a good sign for the economy as households become less determined to whittle debt and more willing to spend. Consumer borrowing on credit cards, car loans, student loans and other types of installment debt grew at a seasonally adjusted 10.2% annual rate to $2.54 trillion in March from February, the Federal Reserve said Monday. Mortgages aren't included in the tally. March's climb was the biggest monthly leap since November 2001, when zero-percent financing on car loans touched off a surge in borrowing after the September 11 terror attacks...Economists say it isn't clear yet whether the shift reflects consumers becoming more confident in a strengthening economy or strained households feeling the need to borrow...Banks appear to have loosened lending standards a bit and may be giving consumers more access to credit." Josh Mitchell in The Wall Street Journal.

Senate Republicans will filibuster the student loan bill over offsets. "Despite a desire to pass legislation to forestall an increase in student loan interest rates, Republicans are expected to filibuster a Democratic student loan relief measure in a bid to change the offset. 'We’ll defeat cloture on' the Democrat’s bill, said Senate Minority Whip Jon Kyl (R-Ariz.). The Senate is slated to vote Tuesday at noon on a motion to invoke cloture, or limit debate, on the motion to proceed to the bill. The cloture motion requires 60 votes to beat back a filibuster and move forward on the measure. Last week, Senate Republicans had signaled a willingness to at least move on to the bill and appeared inclined to give Democrat the 60 votes needed...The Democratic student loan bill would cover the $6 billion cost of preventing the rise in interest rates by eliminating a corporate tax loophole that allows wealthy individuals to pay less in Social Security and Medicare taxes. Republicans oppose the offset because they believe it would hurt job creation." Humberto Sanchez in Roll Call.

The White House threatened a veto of a spending bill that undercuts the debt-ceiling deal. "The White House on Monday threatened to veto a bill funding the Commerce and Justice departments that is slated to come to the House floor on Tuesday. The House GOP bill provides $51.1 billion in funding, a reduction of $1.6 billion below last year’s level. The top problem for President Obama with the bill is that it is part of an overall effort to cut $27 billion from domestic programs compared to the August debt ceiling deal’s Budget Control Act (BCA) while increasing weapons spending...The White House has said that Obama will sign none of the 12 annual spending bills, even if they make it through the Democratic Senate, unless the House GOP abandons its overall budget plans...The veto threat says the bill does not contain enough funding for National Oceanic and Atmospheric Administration (NOAA), Census Bureau, International Trade Administration (ITA), Office of the U.S. Trade Representative (USTR ) and community policy programs." Erik Wasson in The Hill.

@jonathanweisman: WH makes good on pledge, threatens to veto first spending bill to House floor cuz it is lower than July spending deal, cuts NOAA, COPS, NASA

Taxpayers could make a profit on the AIG bailout. "Taxpayers could make a profit of up to $15.1 billion on the emergency assistance extended to American International Group during the financial crisis, the Government Accountability Office said Monday. The Federal Reserve and the Treasury made available more than $180 billion in aid to the struggling financial giant in 2008...'Based on the composition of the remaining federal assistance to AIG [and] the repayment and recovery progress thus far on all assistance . . . the government could receive total returns of approximately $15.1 billion in excess of the assistance provided, including interest, dividends, and fees,' the GAO said in its report. The GAO report noted, however, that those gains do not reflect the 'subsidy costs associated with the assistance.' The GAO did not calculate such costs, which relate to the compensation the government received in exchange for taking on great risks in 2008." Zachary Goldfarb in The Washington Post.

Robots are cool interlude: The first successful perching on a human hand by a robotic bird airplane.

Health Care

Obesity is projected to continue its rise. "Obesity in the United States is projected to continue its rise over the next 18 years, extending to 42% of Americans by 2030, according to a study released Monday by the Centers for Disease Control and Prevention. That expected growth in the proportion of obese Americans -- up from 34% -- contained good news and bad: Obesity's growth has slowed from the record-setting pace that has marked most of the last three decades; at the same time, the numbers of the severely obese -- those carrying 80 or more pounds more than the healthy, normal weight for their height -- is expected to grow by 130%. The continued growth in obesity will be expensive, said CDC statisticians: Additional spending on healthcare for Americans who will join the ranks of the obese in the next 18 years was projected to reach $549.5 billion over the next two decades." Melissa Healy in The Los Angeles Times.

The House is set to begin mark up on the FDA bill. "Congress is quickly moving ahead on a must-pass Food and Drug Administration bill, and so far, negotiators have been able to avert any major controversies. The House Energy and Commerce Committee’s Health Subcommittee is set to mark up its FDA bill Tuesday, and lawmakers are hoping to convene a full-committee markup just two days later. Congress has until Sept. 31 -- the end of the fiscal year -- to reauthorize the user fees that the FDA collects from drug and medical device companies. The fees have to be renewed every five years, and the reauthorization usually becomes a vehicle for broader policy changes. Energy and Commerce Republicans released their bill Friday, and seemed to steer clear of the biggest potential fault lines -- such as proposals to alter the FDA’s core mission...The agency would lose a big chunk of important funding if the fees were allowed to run out." Sam Baker in The Hill.

Domestic Policy

The Senate approved two FCC nominees. "The Senate unanimously approved two nominees to fill vacant seats at the Federal Communications Commission Monday, ending a months-long standoff that left the agency at less than full strength. On Monday, the Senate confirmed Jessica Rosenworcel, a Democrat, and Ajit Pai, a Republican, to fill two empty seats on the FCC's five-member board. Both are former Senate and FCC staffers who easily got a nod of approval from the Senate Commerce Committee last year after a confirmation hearing. Although neither nominee drew significant criticism from lawmakers, their nominations were stalled for months because of a hold by Sen. Chuck Grassley (R., Iowa), who was upset that the FCC didn't give him documents related to wireless startup LightSquared...Ms. Rosenworcel will fill a seat left open by former FCC commissioner Michael Copps...Mr. Pai fills a seat left open by Meredith Attwell Baker, who left the FCC to become NBC's top lobbyist." Amy Schatz in The Wall Street Journal.

Musical animals interlude: Shanthi the elephant plays the harmonica.

Energy

Gas prices are declining sharply. "Gasoline prices fell for the fifth consecutive week, extending a sharp decline that has eased fears that prices would soon top $4 a gallon at the pump. The average price of regular gasoline dropped to $3.790 a gallon as of Monday, the U.S. Energy Information Administration said, down 3.8% from the 2012 peak of $3.941 reached April 2. Many of the forces that drove gasoline up are reversing, and that is helping bring prices back down, though they still remain near record highs. Tensions over Iran's nuclear program have eased, while softening economies in the U.S. and Europe have curbed demand. At the same time, some refineries pegged for closure are coming back online, and bottlenecks in the supply of crude oil are becoming unclogged. The changes have led analysts to temper their price predictions for the summer driving season. A few months ago, some were saying pump prices could shoot above $4 a gallon and even reach $5 by the summer, but now they say that is highly unlikely." Liam Pleven in The Wall Street Journal.

@morningmoneyben: Remember when everyone freaked about gas prices? They are going down. Has Romney claimed credit yet?

Mitt Romney's EPA might not be the radically different agency he envisions. "Mitt Romney isn’t certain about climate change, wants to reverse or halt a handful of the Obama administration’s environmental policies and would put the interests of business -- and Congress -- before the will of one of the executive branch’s most embattled agencies. But what really happens at Romney’s Environmental Protection Agency? Romney may talk a big game, but the reality is he’ll face significant roadblocks in Congress and the courts that may make wholesale change difficult. Moving new environmental legislation -- particularly to weaken current laws -- would prove difficult at best in such a divided Congress, which struggles to coalesce on nearly anything. And the courts -- tasked with interpreting the environmental legislation that is often deliberately vague, complicated and designed to rest on scientific information -- can often order the EPA to take action or revise legislation." Erica Martinson in Politico.

The U.S. is set to approve a substantial natural gas drilling plan. "U.S. officials are expected Tuesday to approve a plan by Anadarko Petroleum Corp. to drill 3,700 natural-gas wells in eastern Utah, capping a yearslong review of a project that will be one of the largest in the region. Approval for the Greater Natural Buttes project in the Uintah Basin, to be announced by Interior Secretary Ken Salazar, comes as the Obama administration is supporting natural-gas production...The Greater Natural Buttes project is the uncommon case in which an energy company won the support of environmental groups, which are often vocal critics of oil and natural-gas development. Anadarko agreed to pull previous proposals to expand drilling to new areas, including parts of a proposed red-rock wilderness area...instead, Anadarko said in its environmental-impact statement, its wells would be drilled from existing wellpads, using technology that allows the well to curve away from a straight-down path and tap new deposits." Tennille Tracy and Jim Carlton in The Wall Street Journal.

Republicans will attempt to block funding for lightbulb efficiency standards. "A House Republican is planning in the coming weeks to revive the GOP offensive against federal lightbulb efficiency standards. Rep. Michael Burgess (R-Texas) will offer an amendment to Energy Department spending legislation that would block funding for implementation of the standards, the lawmaker's office told The Hill. The standards have come under fire from conservatives in recent years. Republicans won the inclusion of a similar provision in an omnibus spending compromise that House and Senate lawmakers agreed to in December. The provision blocked funding for implementation of the law for fiscal year 2012. Burgess’ amendment would apply to fiscal year 2013...The House Appropriations committee approved the Energy Department’s fiscal 2013 spending bill late last month. The legislation is expected to come up for a floor vote in the coming weeks." Andrew Restuccia in The Hill.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

— Go behind the scenes with the New York Times’ chart-makers.

— Remember those frozen cows, trapped in a cabin, that the Forest Service was considering blowing up? Turns out, they’ll use saws to remove the carcasses instead.

— McDonald’s advertising budget is equal in size to Aruba’s GDP.

— Kevin Drum asks: When was the last time we elected a president whose main experience was in business?

The strategic justification for it is that, sometimes, it’s better for the president to let the people get there on their own rather than forcing the issue and losing — an event that can set movements back years, if not decades, as politicians become skittish long past the point that the danger has actually passed.

Obama’s claim that he’s evolving on the issue, and his very good record on gay rights generally, has paradoxically made it harder for Obama to continue holding out against gay marriage. His “evolving” position and overall record have left gay advocates fully persuaded that he does favor full equality for gay and lesbian Americans, increasing impatience for him to say so already, and making them all the more certain that his failure to do so is rooted in nothing but political calculation.

The political calculation is fairly straightforward. Take North Carolina, writes Brett LoGiurato. “It’s a swing state. Obama would love to carry it and its 15 electoral votes again in the 2012 election. And oh by the way, it’s about to pass a bill on Tuesday that would ban both gay marriages and civil unions.”

And perhaps that’s the point: The political calculation makes so much sense, and the policy makes so little sense, that few doubt they’re for gay marriage even as no one can accuse them of actually supporting gay marriage.

It turns out, however, that Democrats aren’t alone in trying to bewilder the voters on this issue. On MSNBC today, Reince Priebus, chairman of the Republican National Committee, said that “the president’s position as it sits today is the same position as Mitt Romney.” Of course, as Dave Weigel points out, the difference is that where Obama wants to punt on the issue for a while longer, Romney has promised to “support sending a federal constitutional amendment defining marriage as the union between one man and one woman to the states for ratification.” Obama opposes such an amendment.

And that, in the end, is Obama’s real pitch to the gay community: He’s not Mitt Romney. Better to have the guy who’s “evolving” on the issue than the guy who’s not. Kinda gives a new meaning to the slogan “change we can believe in,” doesn’t it?

So many observers are wondering whether Europe will shift course now that France’s newly elected president, Francois Hollande, has called for a change. But what else could Europe do? Here’s a list of six policies that various experts have suggested that the euro zone might consider instead:

1) More inflation from the European Central Bank. More economic growth would make Europe’s problems a lot easier to handle. If Spain and Italy were growing at a healthy clip, their deficits would naturally shrink. One institution that could, potentially, help the euro zone grow faster is the European Central Bank. Here’s Paul Krugman: “The Continent needs more expansionary monetary policies, in the form of a willingness — an announced willingness — on the part of the European Central Bank to accept somewhat higher inflation.” More inflation would help uncompetitive countries like Spain bring down their costs more quickly, and it would potentially spur more spending and growth.

The problem? Both Germany and Europe’s central bank have long been temperamentally hawkish on inflation. Most recently, the ECB declined to cut interest rates, even though the euro zone is tumbling back into yet another recession.

2) More stimulus from euro zone countries that are in sound budget shape. It would be hard for countries like Greece or Spain to borrow money now and spend it on stimulus projects, with the promise of cutting spending later once the economy’s improved. As Joe Gagnon told me a while back, there’s no way to make that promise of future austerity credible — unlike in the United States, where there’s lots of policy inertia, future European parliaments can easily undo past pledges. Lenders would likely balk.

But just because Greece, Italy, Spain, Portugal and others have to rein in their budgets doesn’t mean everyone in the euro zone necessarily has to follow suit. Joseph Stiglitz, for one, has called on wealthier countries such as Germany to invest more in infrastructure and technology to stimulate Europe’s economy. “I hope,” Stiglitz said, “the debate will be what are the things we can do to promote growth rather than how do we strangle each other together.”

3) Open the bailout fund for bigger countries. Right now, Europe’s wealthy countries have bailed out smaller peripheral countries such as Ireland, Portugal and Greece. But some commentators think the bailout fund may need to get even bigger — and extend to countries that threaten to haul down the whole euro zone, like Spain.

Here’s Wolfgang Munchau, writing in the Financial Times: “Fixing the Spanish crisis will have to start with the banks. … The only halfway benign solution I can see would involve a European rescue programme for Spain that focuses specifically on the recapitalisation and downsizing of the financial sector. Spain would also need to undershoot the eurozone’s average inflation rate over many years to redress some of the lost price competitiveness. At the same time, the country needs to go easy on austerity.” The trouble, again, is that this will require more money from wealthy countries like France, Germany, the Netherlands, and Finland.

4) Eurobonds. Many individual members of the euro zone have large budget deficits. Spain’s is 8.5 percent. Ireland’s is 13.1 percent. But if you look at the euro zone as a single entity, things look better. Last year, the euro zone’s deficit was just 4.1 percent of GDP — less than half of the United States’. In theory, Europe should be able to borrow money at fairly cheap rates if it could issue a single bond for the entire continent. And that would give the euro zone some breathing room to deal with its current woes. Many Europeans, from politicians like Hollande to commentators like Gavyn Davies, have called for just such a “eurobond.”

But there are all sorts of hitches. If the euro zone had one single bond, then countries like Spain and Italy would see their borrowing costs fall, but countries like Germany and Finland would have to pay more to borrow money. It could also create moral hazard — spendthrift countries would feel less pressure from investors to rein in their debts. The Economist’s Ryan Avent recently ran through a few proposals from European think tanks to surmount these problems.

5) More fiscal integration. The euro zone, as we’ve seen, is made up of a bunch of wildly disparate countries. German workers are much more productive than Spanish workers, for instance. And that makes it hard for Spain to compete as long as it’s using a currency, the euro, that’s better-suited for more productive workers in Germany.

One idea, then, has been for the euro zone to do what the United States does and redistribute resources from rich to poor. As James Galbraith explained here, the U.S. has long used programs such as Social Security or unemployment insurance or the TVA to lift up the poorer regions and make sure that states don’t implode when they fall into recession. Hollande, for one, has suggested that Europe move in this direction, with wealthier states funding a bigger European Investment Bank that can bankroll industrial projects in poorer countries.

But is that enough? One problem is that thorough fiscal integration could involve some truly colossal sums. Remember, West Germany spent $1.9 trillion over 20 years in an attempt to modernize East Germany. And, because there were no language barriers, millions of East Germans could simply migrate West. Greek and Portuguese workers would have a tougher time doing that.

6) Countries could just start leaving the euro zone. Of course, it’s possible that none of the above ideas would work. Germany doesn’t exactly sound thrilled with the idea of expending further vast resources to prop up countries like Italy and Spain and Greece.

In that case, it’s always possible that individual nations could decide that being part of the euro is an unworkable idea and just leave. Jacob Goldstein explains how this would work for Greece. The country would default on its debt and would no longer have to keep spending money on interest payments. It could also devalue its currency in order to make its exports more competitive. Of course, in the short run, foreign investors would flee Greece, the country would have to slash spending considerably, and its economy would likely collapse.

As Slate’s Matt Yglesias writes, “If Greece tried to exit the [euro] — or more likely was forced out by Spain or Italy cutting the cord — they’d be in for a dose of much more severe austerity. Think about Greek living standards converging with Serbia and Bulgaria.” Still, the fact that it’s a painful option doesn’t mean it’s not an option.

Health-care economist N. Meltem Daysal compared outcomes for insured heart attack patients in California over a six-year period, 1999 to 2006, when the state saw a 19 percent reduction in mortality rates for such cases. Across the state, however, there was huge variation in how health outcomes were improving: San Francisco and Los Angeles had decreases between 26 percent and 30 percent, while in Sacramento, the drop was just 13 percent.

Daysal wanted to know what was different about the patients in the three cities. He controlled for basic demographic information, like age and race, as well as a set of preexisting risk factors that were present at admission, like a history of heart failure or hypertension.

What he saw was cities that treated more uninsured patients seeing worse outcomes for those who came in with coverage. Daysal estimates that, if uninsurance were eliminated, there would be 3 to 5 percent fewer deaths among those who already had coverage.

What’s happening here? Daysal describes it as “negative spillover,” where the hospitals that treat more uninsured patients end up footing a higher bill for uncompensated care. That takes away resources they could be spending on hiring better doctors, upgrading medical equipments or making a whole host of investments that could improve health outcomes. Worse care, for all patients treated at the facility, ensues.

On the flip side, increasing insurance coverage could have positive spillover effects, improving quality of care even for the already-insured. “Taken together, my results suggest that policies aimed at addressing the issue of uninsurance may have additional benefits to insured patients residing in the same communities,” Deysal concludes. That means the Affordable Care Act, which is expected to extend coverage to 32 million Americans, could have some fringe benefits for those already covered.

The comics have fudged the issue for decades. Marvel now describes it as an “extra-government” body, although many takes on the organization have clearly emphasized its international character. Yet U.S. presidents have fired S.H.I.E.L.D. directors (Fury, Tony Stark/Iron Man) and appointed others (Norman Osborn/The Green Goblin, incumbent Steve Rogers/Captain America) — although that might operate by an informal international understanding, much like the U.S. appoints the director of the World Bank.

It’s hard to imagine a truly international organization with international stakeholders permitting a guy named “Captain America” to run their elite strike force, though.

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Specifically, an austerity program that curbs the deficit by 1 percent of GDP reduces real incomes by about 0.6 percent and raises unemployment by almost 0.5 percentage points. What’s more, the IMF found, the losses are twice as big when the central bank can’t or won’t cut interest rates (that’s a good description of what Europe’s central bank is doing right now). Income and employment don’t fully recover even five years after the austerity program is enacted:

This is more or less the situation that Europe’s facing. In 2011, Greece’s austerity package amounted to 11.1 percent of GDP. Spain’s was 3.1 percent. Great Britain’s was 2 percent. Italy’s was 1.8 percent. Those include a mix of spending cuts and tax hikes. If the IMF paper is correct, those measures will pinch sharply for years. And many of these countries were already struggling with soaring unemployment. Little wonder that austerity isn’t popular.

Now, the IMF authors point out that fiscal consolidation is still worth pursuing in certain cases. Some countries really do run up against unmanageable debt levels. Greece, for example, is broke. For years, the government was essentially lying about its finances. At this point, Greece’s main options are to exit the euro zone — with all the chaos that that entails — or to stagger along with a bailout from the E.U. and the IMF. So far, Greece has chosen the bailout. But as a condition of the funds, E.U. and IMF officials demanded big budget cuts and tax hikes. And those measures are having a devastating effect on ordinary Greeks. And so, on Sunday, Greek voters threw out the pro-bailout parties.

But Greece is something of a special case within Europe. Other now-troubled European countries, such as Spain and Ireland, were acting quite responsibly, budget-wise, before the 2007 recession hit. Their deficits then soared because their housing bubbles burst and their economies collapsed. And the rules of the euro zone decreed that these countries needed to respond by curtailing their deficits. But the resulting austerity has been crippling economic growth — and, in the case of countries like Spain, all that belt-tigthening seems to be making the deficit situation worse, not better. Lately, Spanish bond yields have been rising sharply, an indication that investors are leery of Spain’s ability to repay its debts.

So if austerity’s not working, what’s the alternative? In the Financial Times, Gavyn Davies recently argued that Spain needed other remedies besides its “austerity trap.” His proposals included everything from higher inflation to looser monetary policy from Europe’s central bank to significant labor-market reforms. Similarly, Francois Hollande, France’s new president, has argued that euro zone countries needed more economic growth, and not simply more austerity, to get through the crisis.

It’s not clear that Europe’s leaders will move in this direction. Germany is the most powerful country in the euro zone, and many of Germany’s key policymakers are still very much in favor of austerity as the main solution to the euro zone’s woes. But with voters now in revolt, it’s unclear how long Europe will be able to stay the course.

Related: Are there alternatives to austerity in Europe? Here are six.

The idea, from the FDA’s point of view, is to take away obstacles that keep Americans from managing their own health care. About 20 percent of prescriptions written in the United States go unfilled, indicating to regulators that a trip to the pharmacy may be an obstacle for Americans seeking health care.

The FDA contends that some consumers may not even go as far as getting a prescription because of the “cost and time required to visit a health-care practitioner.” Right now, they’re looking at possible scenarios where a prescription could be required for the first round of medication or that a pharmacist could offer counseling at point-of-purchase.

There is precedent for what the FDA wants to do. In 2003 the agency cleared heartburn drug Nexium to be sold without prescription. It’s made similar switches for heavily-used allergy medications like Claritin and Zyrtec, also in the early 2000s.

Doctors are not thrilled with the idea, contending that patients should be consulting with their doctors as they manage chronic conditions.

“Self-diagnosis and treatment conflict with the care coordination and disease management that new health care payment and delivery models are trying to achieve,” contends American Medical Association president Peter Carmel.

Carmel, in a USA Today op-ed, goes on to argue that without the guidance from doctors, patients will be less likely “to take the medicine they need when they need.” Most insurers do not cover over-the-counter medications in their benefit packages, creating the possibility of a financial roadblock.

At the heart of this discussion is a fundamental disagreement over what role doctors play in managing patient care. The FDA proposal views a trip to the physician that it says is unnecessary as a hindrance to care.

Doctors see themselves as enablers: They can help Americans manage their health care, a crucial task as chronic conditions become increasingly prevalent.

The FDA proposal is still in formative stages -- a request for comment in the Federal Register — which means there’s a lot of space for this debate to evolve. Where the discussion heads on this particular issue could end up guiding a lot of U.S. health policy on what role doctors play in managing patient care - and, at what point, the patient takes charge.