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Wonkbook: EPA moves on carbon; BP spill worse than we thought; WH had a secret health-care plan


It's Friday here in Washington, and the week is winding down. No votes are expected in either the House or the Senate. The big news, however, is that the Environmental Protection Agency is readying to move on greenhouse gases. They're starting with sources emitting at least 100,000 tons -- originally, they discussed using 25,000 tons -- but even so, this is exactly what the business community fears, and exactly what they wanted a climate-change bill to protect them from. Funny how this came two days after Kerry and Lieberman introduced the American Power Act, huh?

We're also getting Commerce Department data on April retail sales, Fed data on April industrial production, and a Treasury Department report card on how well its foreclosure program is working. It's early in the morning, and this is Wonkbook.

Top Stories

The EPA is cracking down on greenhouse gas emissions, reports Sindya Bhanoo: "The Environmental Protection Agency unveiled a final rule on Thursday for regulating major emitters of greenhouse gases, like coal-fired power plants, under the Clean Air Act. Starting in July 2011, new sources of at least 100,000 tons of greenhouse gases a year and any existing plants that increase emissions by 75,000 tons will have to seek permits, the agency said."

The size of the oil spill was underestimated, reports Justin Gillis: "Two weeks ago, the government put out a round estimate of the size of the oil leak in the Gulf of Mexico: 5,000 barrels a day. Repeated endlessly in news reports, it has become conventional wisdom. But scientists and environmental groups are raising sharp questions about that estimate, declaring that the leak must be far larger. They also criticize BP for refusing to use well-known scientific techniques that would give a more precise figure. The criticism escalated on Thursday, a day after the release of a video that showed a huge black plume of oil gushing from the broken well at a seemingly high rate. BP has repeatedly claimed that measuring the plume would be impossible."

The White House had a secret plan to bypass Baucus and pass its own health care bill, reports the Washington Post: "Last August, the White House put together its own health-care bill with an eye toward goosing the process and getting around the slow-moving Senate committee chairs -- but then kept it under wraps: Early in the month, White House Chief of Staff Rahm Emanuel gathered a small team to secretly begin drafting a White House bill. If Senate Finance Committee Chairman Max Baucus didn't move soon, Emanuel wanted to be ready with a measure to send directly to the Senate floor, bypassing the committee. He calculated that the simple act of putting together a rival blueprint might be enough to jolt Baucus into action."

"And Emanuel, fed up with a spate of leaks, warned the aides in trademark fashion: 'If this gets out, I'll [expletive] kill you.'

Volcanic interlude: A gorgeous HD timelapse video of the Eyjafjallajökull eruption in Iceland.

Table of contents: Jobless claims down (and other economic news); Andrew Cuomo investigating the ratings agencies (and other FinReg news); can big business save climate-change legislation (and other environmental news); insurers trying to wiggle out of new regulations (and other health care news); early-childhood education lasts into adolescence (and other education news); and Michael Gerson thinks Republicans should tread carefully on immigration.


Jobless claims are down a bit, report Sarah Lynch and Tom Barkley: "The Labor Department said in its weekly report Thursday that initial claims for jobless benefits fell by 4,000 to 444,000 in the week ended May 8. That decline was right in line with the expectations of economists surveyed by Dow Jones Newswires. The previous week's level was revised slightly upward to 448,000 from 444,000."

Foreclosure is still rising, reports Renae Merle: "More people lost their homes to foreclosure in April as banks worked through a backlog of troubled borrowers, according to data released Thursday. The number of homes repossessed, the final stage of the foreclosure process, reached 92,432 in April. That is flat from March, up just 1 percent, but represents a jump of 45 percent from April 2009, according to RealtyTrac, an online service that estimates it tracks about 90 percent of the housing market."

Obama wants a bailout for schools, writes Nick Anderson: "The Obama administration on Thursday threw its support behind a $23 billion measure intended to avert large-scale teacher layoffs, urging Congress to include the effort in a spending bill lawmakers are drafting to fund wartime costs and other urgent needs."

An anti-porn provision tacked on by Republicans stymied a House jobs bill, report Jared Allen and Russell Berman: "Democrats had labeled their COMPETES Act -- a bill to increase investments in science, research and training programs -- as their latest jobs bill....But the Republican motion to recommit the bill -- a parliamentary tactic that gives the minority one final chance to amend legislation -- contained language prohibiting federal funds from going 'to salaries to those officially disciplined for violations regarding the viewing, downloading, or exchanging of pornography, including child pornography, on a federal computer or while performing official government duties.' That provision scared dozens of Democrats into voting with Republicans to approve the motion to recommit. "

Bernanke toured a pastry factory to connect with Main Street, reports Neil Irwin: "Ben S. Bernanke is one of the world's leading historians of monetary theory. Now, he also knows how they make Tastykakes. While the European economy teetered and Congress considered fundamental changes in financial regulation, Bernanke, the Federal Reserve chairman, made his way to Philadelphia for a conference on community development. He toured a shipyard, as well as the Tasty Baking Co., which makes plastic-wrapped cupcakes and other pastries commonly purchased at convenience stores....The message: I care about Main Street."

HUD Secretary Shaun Donovan sees the case for modifying the mortgage-interest deduction, writes Laura Meckler: "Housing and Urban Development Secretary Shaun Donovan said today that modifying the home interest deduction could satisfy two objectives: reducing the deficit and rebalancing federal housing policy. But he also made clear that the Obama administration isn’t actively considering, much less endorsing, such a step, which could affect millions of homeowners. Some out 40.8 million tax returns claimed the home interest deduction for 2007, according to the Tax Foundation."

Businesses need to prepare for the post-cheap money era. write Andrew Schwedel and Karen Harris: "Exhibit A is the cost of capital. No matter how strong the coming cycle, borrowing costs will be at least two to three percentage points higher than during the last period of robust growth. That's partly because the crisis demonstrated that pre-2007 risk premiums were perilously low and will have to adjust upward across the spectrum of financial markets. Government borrowing will increasingly 'crowd out' the private debt markets in the developed world as governments compete with private borrowers for available funds. And the credit markets are still very much on edge."

The US ain't Greece, writes Paul Krugman:"The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years."

"Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe. If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn’t, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts, and investors are skeptical about whether those cuts will actually happen."

"It’s worth noting, by the way, that Britain — which is in worse fiscal shape than we are, but which, unlike Greece, hasn’t adopted the euro — remains able to borrow at fairly low interest rates. Having your own currency, it seems, makes a big difference."

Math geek interlude: The alchemy by which simple math turns risky investments into AAA gold.

WANT interlude: Rhubarb ginger downside-up oatmeal cake.

Financial Regulation

Andrew Cuomo is investigating eight banks about misleading ratings agencies, reports Tomoeh Murakami Tse: "Cuomo's investigation is focusing on the relationships between the banks and the agencies that rated certain mortgage-related securities packaged by the banks and sold to clients, said the sources, who spoke on the condition of anonymity because the investigation is ongoing. Investigators are looking at whether the banks gave false information to the agencies about the assets in the securities to get better ratings, the sources said."

There's a case for the over-the-counter derivatives market, writes Mark Brickell: "Using private credit information, banks can decide to make a swap without taking collateral, just as they would to make an unsecured loan. Futures traders, in contrast, outsource the credit risk of all their derivatives to central counterparties called clearinghouses, which require cash collateral or 'margin' payments. If American companies were required to make such margin payments on their swaps, they would have to set aside billions of dollars that would no longer be available, as 3M testified last year, to build more factories or create new jobs."


The EPA is egging on the Senate, writes Brad Plumer: "A couple of things are happening here. One, it's now going to be very tough for new coal-fired power plants to get built in the United States. Given that those plants are a major source of carbon pollution, that's a significant step. Second, the EPA's clearly pressing ahead with its own regulations—and that might give the Senate the kick it needs to pass a climate bill. But the agency's also being cautious and moving very deliberately on this stuff—indeed, it's backing off from it's previously planned 25,000-ton threshold."

The American Power Act is being boosted by big business, report Kasie Hunt and Jeanne Cummings: "While the green lobby is already firing up grass-roots support and running ads to advance the bill, getting the 60 Senate votes needed to pass it will require help from corporate lobbying shops with deep ties to conservative Democrats and Republicans...The competing interests of the crowd were noted by Lew Hay, chairman and chief executive officer of Florida Power & Light, a power company that relies mostly on natural gas, nuclear and renewable energy. He jokingly applauded Kerry and Lieberman for 'threading the needle' so adroitly that he could share a stage with coal-powered Duke Energy’s CEO Jim Rogers."

The White House is caught in a strange and unexpected partnership with BP, reports Juliet Eilperin: "It was a relationship for which neither the White House nor BP was well prepared. And it stands in contrast to the arm's-length distance that the U.S. government kept from Exxon after the Valdez spill in 1989. Thomas A. Campbell, who served as the National Oceanic and Atmospheric Administration's general counsel at the time, said it would have been politically toxic for the government to collaborate: 'We weren't able to even talk to Exxon, except on purely technical issues.'"

"Why the change? The success or failure of the Obama administration's response -- involving about 13,000 workers and 460 vessels, along with 1.4 million feet of boom laid against the spreading slick -- depends largely on BP's expertise and technology. "

Transocean, the operator of the Gulf oil rig, is trying to avoid paying up, report Mark Long and Angel Gonzalez: "Transocean Ltd., the owner and operator of the Deepwater Horizon drilling rig that burned and sank last month unleashing a massive oil leak into the Gulf of Mexico, Thursday filed in federal court a petition to limit its liability to just under $27 million. The world's biggest offshore driller filed the request in the U.S. District Court in Houston under a century-and-a-half-old law that allowed the Titanic's owners to limit their liability following that ship's 1912 sinking."

Pop music interlude: Like Glenn Beck, Ke$ha is our fault.

Health-care reform

Insurers are trying to water down the medical loss requirement in health care reform, reports David Hilzenrath: "Starting next year, insurers covering individuals and small groups must have medical loss ratios of at least 80 percent, and insurers in the large group market must have ratios of at least 85 percent...Insurers already won a round in the drafting of the new law. It allows them to count not just medical bills but also 'activities that improve health-care quality.' That language leaves considerable room for interpretation."

Obamacare still saves money, writes Tim Noah: "Boehner's calculation of the additional cost to the health care law (widely repeated in the press) is simply wrong. Boehner says it's $115 billion, which would reduce the law's 10-year budget savings to a mere $28 billion. That would be a startling change. But roughly $85 billion of that $115 billion is money that's already being spent. The true spending increase attributable to Obamacare is therefore more like $30 billion."

Donald Berwick is being opposed as a "rationing expert, reports Kate Pickert: "The reason? Berwick is, by all accounts, a huge fan of the National Health Service, Britain's single-payer health care system. During the health reform debate, NHS was a dirty acronym associated with rationing and horror stories of patients denied needed care due to cost. The NHS is far from perfect, but it does, by World Health Organization measures, provide generally better overall care to the entire population of the UK than the U.S. system at a fraction of the per capita cost."


Good child care helps kids academically, reports Shirley Wang: "Having high-quality child care as a youngster can yield dividends when kids become teenagers, according to a new report. A study released Friday found that benefits associated with child-care providers and preschool programs that encourage such activities as language, reading and game-playing last well into adolescence. In particular, teenagers who had such child-care performed significantly better academically than those given low-quality or no care outside the home. Researchers said the study, which tracked more than 1,000 children from birth through age 15, is the first to document the long-term effects of routine child care."

We need free trade in brainpower as well as goods, writes Ben Wildavsky:"This intense scholarly competition and exchange—call it free trade in minds—is shaking up the academy. But the anxiety it creates on college campuses and beyond has led to periodic outbursts of academic protectionism...An even bigger problem is what might be called psychological protectionism: the sentiment that if foreign nations are getting ahead academically, we in the West must be falling behind.

"Ian Gow, the founding president of Nottingham University's Ningbo campus in China, has cautioned that China's partnerships with British universities are a one-way street, intended to vacuum up Western science and technology strengths that China is desperate to gain: 'British institutions must stop viewing this aggressively ambitious country through rose-tinted spectacles.' This apprehensive response to the globalization of universities is misguided. It amounts to modern-day mercantilism, the outmoded idea that in order to prosper a nation must grab the maximum share of a finite amount of global capital. Nothing could be further from the truth."

Education interlude: Towards a better math class.


Opposing immigration is political suicide for the GOP, writes Michael Gerson: "Immigration issues are emotional and complex. But this must be recognized for what it is: political suicide. Consider that Hispanics make up 40 percent of the K-12 students in Arizona, 44 percent in Texas, 47 percent in California, 54 percent in New Mexico. Whatever temporary gains Republicans might make feeding resentment of this demographic shift, the party identified with that resentment will eventually be voted into singularity. In a matter of decades, the Republican Party could cease to be a national party."

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: NASA Goddard.

By Ezra Klein  |  May 14, 2010; 7:15 AM ET
Categories:  Wonkbook  
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Next: Being skeptical of financial innovation: The derivatives case study


Regarding the above comments about the environment, the WP recently made some news when they (among others) opted not to publish a climate-change-related op-ed by scientists. Seems you have to be an anti-science skeptic these days to get any media attention.

Posted by: Lomillialor | May 14, 2010 7:42 AM | Report abuse

can we please STOP with the "saves money" lines. We all know that no one will actually know this for some time so the claims from honestly both sides are ludicrous.

As far as the MLR issue goes that is a serious bone of contention. If we strictly limit what goes into the MLR then what you'll see is the abrupt stopping of services such as disease management, 24 hour hotlines served by nurses funded by insurers etc. If people don't want to pay for it that's fine but then don't complain when you get crap for it.

What is neglected in the statements about Berwick is that while YES the NHS does have much less cost and somewhat better outcomes for now if the US instituted a fee schedule for all providers at NHS levels you'd see our costs go down to theirs or lower. But then again you'd also likely see the shortage of docs that we have not become severe. That's why (even though I'm for capitation) it needs to be done slowly and in a reasonable manner including additional compensation for positive outcomes.

The Cleveland Clinic model should be showing the way.

Posted by: visionbrkr | May 14, 2010 8:41 AM | Report abuse

So the WH had a secret plan that no one was to know about on health care. This secret plan then was supposed to move Baucus to action even though no one was going to know about it. Yeah that makes sense.

Posted by: endaround | May 14, 2010 8:43 AM | Report abuse

oops. should read "the shortage of docs that we have NOW become severe"

Ezra gotta work on the ability to adjust our typos!

Posted by: visionbrkr | May 14, 2010 8:45 AM | Report abuse

Even if the BP oil spill is more than the "round" estimates it still pales in comparison to Mexico's Ixtoc I spill further south in the Bay of Campeche in the 70s, which was something like 20,000 barrels a day for 10 months. In those warm waters the oil is degraded and consumed by microbes fairly quickly...the Gulf of Mexico survived that mess (which reached up into Texas!) and it will recover from this one too. I grant you, any loss of wildlife and fisheries is tragic, and its great motivation for getting onto energy sources other than oil. However, for the time being we need to expect situations like this occasionally---its the price we pay, so count ourselves as part of the blame, not just BP.

Posted by: Texican1 | May 14, 2010 9:03 AM | Report abuse

@vb: There is no shortage of doctors specializing in diseases of the wealthy. Lots of cosmetic surgeons, dermatologists, etc.

Posted by: srw3 | May 14, 2010 9:18 AM | Report abuse

That the EPA's moving on carbon emission regulation is the best news I've heard all week. If anything can make big business really PRESSURE the GOP (and Business Dog Dems) to pass cap-and-trade, this is it.

Posted by: rt42 | May 14, 2010 9:21 AM | Report abuse

"can we please STOP with the "saves money" lines."

If the tea baggers and you stop with the "stop spending money" lines, maybe we have a deal.

Posted by: Lomillialor | May 14, 2010 9:21 AM | Report abuse

@vb: can we please STOP with the "saves money" lines

As soon as the "will bankrupt the country" lines stop as well. If claims on both sides are bogus, why should only the costs less messages stop. It just plays into the insurance industry's misinformation campaign.

Posted by: srw3 | May 14, 2010 9:26 AM | Report abuse

s reports, it has become conventional wisdom. But scientists and environmental groups are raising sharp questions about that estimate, declaring that the leak must be far larger. They also criticize BP for refusing to use well-known scientific techniques that would give a more precise figure. The criticism escalated on Thursday, a day after the release of a video that showed a huge black plume of oil gushing from the broken well at a seemingly high rate. BP has repeatedly claimed that measuring the plume would be impossible."

i have never seen less access to information or worse dissemination of information, than we have had on the oil spill.
dont understand it.
the last thing, janet napolitano said for the press, after being there, is that it is comforting that a lot of the spillage may be natural gas."
would she like to tell all of us that? who told her that?
i would like to hear from the napolitano, salazar and chu on a regular basis, about what is going on there.
the best place to find information is on for the people in the region....otherwise, it is just hearsay, that is told half-jokingly, about the tophat not working.
are they still burning the oil?
british petroleum has apparently bought up one third of the world supply of dispersant.
does anyone care?
does the epa have any accountability to the american people to let us know if bp should be using this amount in our waters?
is anybody there?????

Posted by: jkaren | May 14, 2010 9:28 AM | Report abuse


First off dermatologists are not necessarily "diseases of the wealthy" as you put it. Sure some dermatologists focus on specialties that have nothing to do with income. Also cosmetic surgeons that deal with accidents/burn victims are not limited to the wealthy.

Either way I don't get your point? Insurers don't cover them (if they're cosmetic) so its completely out of their pocket. What do we care then? While i'm on the subject (and I'll open up a can of worms here) but I don't believe that IVF treatment should be covered under healthcare and I've LONG felt this way but my lovely liberal state of NJ REQUIRES IT on many market segments. What does it do? It adds about 5-7% to EVERYONE's premiums. I feel horrible for you if you want to have a child and can't conceive but its not medically necessary so it should not be covered. Not only that but the incidence of preemies, multiple births etc also make the cost issue we have much much worse. Not to mention many of those preemies die which make our CDC statistics look worse than the rest of the world for invalid reasons (not that it really matters unless some bash us with them)



and btw you weren't throwing me in with the tea baggers were you?

Posted by: visionbrkr | May 14, 2010 9:38 AM | Report abuse


wasn't it the President who said that rising healthcare costs were bankrupting the country? What's been done to stop the rise in costs? Some nice pilot programs? Giving people insurance in four years (actually Medicaid) so that they use the doctors offices instead of ER's?

As soon as the "will bankrupt the country" lines stop as well. If claims on both sides are bogus, why should only the costs less messages stop. It just plays into the insurance industry's misinformation campaign.

Posted by: srw3 | May 14, 2010 9:26 AM | Report abuse

So you're ADMITTING the "costs less" messaging is bogus? I'd expect the insurance industry (for all the bashing they get) would sign on today for cost certainty in the form of price controls. Heck, the government would be doing their job for them.

Posted by: visionbrkr | May 14, 2010 9:47 AM | Report abuse

The EPA should be abolished and the ESA should be repealed . Here is a group of folks who have too much power;with no science to back up their power.

Posted by: yokohlman | May 14, 2010 10:07 AM | Report abuse

The tone of that Time blog is sort of disingenuous. Berwick might like NHS but he also makes the argument that it could be occasionally justified, in the interest of being patient-centered, for physicians to perform unnecessary tests (one of the few areas where I disagree with Berwick, actually). She knows this and even links to his stuff on Health Affairs that goes over that. Unnecessary services are the opposite of rationing but she's just trying to write a catchy headline.

Posted by: ThomasEN | May 14, 2010 10:42 AM | Report abuse


First, why did you break up the Beatles?

Second, the world's most respected scientists disagree with you. Here's a link from the first comment above to prove it.

Posted by: Lomillialor | May 14, 2010 10:51 AM | Report abuse

"i have never seen less access to information or worse dissemination of information, than we have had on the oil spill.
dont understand it....
i would like to hear from the napolitano, salazar and chu on a regular basis, about what is going on there.


Sadly, I have come to the conclusion that we don't get regular press briefings from cabinet-level officials about the Deepwater disaster, because more often than not the answer to every question would be "We don't know."

It is increasingly clear that the Federal government is little more than a bystander in any oil spill, and especially so when the leak is a mile below the surface of the ocean. Officials will probably be more comfortable when the oil reaches the shoreline and the wetlands, because then there will be a clean-up operation to supervise, and the government will have something that they can do besides hold hearings.

It is maddening that our government gives away our own natural resource to the oil companies, even subsidizes its taking, without first requiring a viable plan to cope with the worst case scenario in the event of the accident, and resources in place to carry out the plan immediately in concert with the government. The clueless and helpless behavior of industry and government in this situation is galling, and it is extremely disappointing that we are not getting better leadership from the White House and from the Congress to at least suspend future drilling and require better safety measures and disaster plans for the wells that are already in operation.

Posted by: Patrick_M | May 14, 2010 11:12 AM | Report abuse

Patrick and jkaren,

stop bashing my president's administration

Posted by: visionbrkr | May 14, 2010 11:36 AM | Report abuse


We call like we see 'em. This is certainly not "Obama's Katrina," but neither is it any kind of positive model for disaster management.

jkaren is right that even if we can't always get the kind of definitive information we would like, it would be helpful if there was some kind of regular briefing by an official in a position to give the best information about the disaster and the strategies to stop the leak and mitigate the environmental damage.

Posted by: Patrick_M | May 14, 2010 2:21 PM | Report abuse

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