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Wonkbook: Arizona bill blocked; Fannie/Freddie reform coming; feds lose track of majority of Gulf oil


A judge has blocked key provisions of the Arizona immigration law as it was slated to take effect today; the White House is preparing for an overhaul of Fannie Mae and Freddie Mac next year; it's not clear whether our recovery is in a rough patch or our rough patch was interrupted by a few months of something we mistook for recovery; and the federal government cannot account for most of the oil lost in the Gulf spill.

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A judge has issued a stay on some of the more controversial provisions of the Arizona immigration law, report Stephanie McCrummen and William Branigin: "U.S. District Judge Susan R. Bolton ruled that the injunction would apply to the portion of the state law that requires police to try to determine the immigration status of a person they arrest, stop or detain while enforcing other laws if they reasonably suspect the person is in the United States illegally...Also put on hold were parts of the law requiring foreigners to apply for or carry certain documents, making it a state crime for undocumented workers 'to solicit, apply for or perform work,' and mandating verification of the immigration status of any arrested person prior to release, the ruling said."

The past decade is the hottest on record:

The White House is preparing to reform Fannie and Freddie next year, reports Zachary Goldfarb: "'We want the private sector back in,' said another administration official, who also spoke on the condition of anonymity. 'There are signs, but it's very minor, I have to say.' Jeffrey Goldstein, under secretary for domestic finance at the Treasury, wrote in an essay on the White House Web site Tuesday that it will be very difficult to totally unwind the government's role in covering losses related to the housing crisis."

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It's hard to say whether we're in a rough patch of the recovery or our rough patch was interrupted by a few months of something we thought was recovery, reports Neil Irwin: "Just Wednesday, the government announced a surprising 1 percent drop in June orders for durable goods and a compilation of anecdotal reports from around the country by the Federal Reserve showed a recovery that is increasingly uneven. This fit into the pattern of recent economic indicators showing that the transition to a self-sustaining recovery has been rocky. Fits and starts are common during early stages of economic expansion. Before long, it should be clear whether the summer of 2010 has indeed been a mere soft patch as recovery took hold."

Most oil leaked into the Gulf is still unaccounted for, report David Fahrenthold and Leslie Tamura: "Up to 4 million barrels (167 million gallons), the vast majority of the spill, remains unaccounted for in government statistics. Some of it has, most likely, been cleaned up by nature. Other amounts may be gone from the water, but they could have taken on a second life as contaminants in the air, or in landfills around the Gulf Coast...Relying on the latest estimate of the leak's total volume -- 60,000 barrels (2.5 million gallons) per day, at most -- then 5.2 million barrels may have escaped over 86 days. Of that, about 1.2 million barrels were either siphoned, burned or skimmed."

Singer-songwriter interlude: Jesca Hoop's "Feast of the Heart".

Still to come: Stimulus funds are going directly to private jobs; the energy bill runs into problems with its natural gas provisions; Olympia Snowe will back Elena Kagan's nomination; and the trailer for Titanic II, a real movie.


States are using stimulus funds to pay private salaries, reports Catherine Rampell: "About 247,000 workers will have been placed in these subsidized jobs by the end of September, according to the Center on Budget and Policy Priorities, a research organization. The jobs cover everything from assembly-line work to white-collar positions like business development, and typically pay $8 to $15 an hour, according to LaDonna Pavetti, a director at the center. There are exceptions: San Francisco, for example, pays up to $74,000 in annual salary, which employers can also supplement with additional pay."

The IMF is tempering its criticism of China's currency policy:

Elizabeth Warren's GOP colleagues on the TARP oversight panel offered praise for her tenure, reports Brady Dennis: "the two men said they were troubled by recent reports that Warren's work on the oversight panel, namely the criticisms of Treasury contained in its reports, might hinder her chances as a candidate to direct the new consumer bureau. 'In our view,' McWatters wrote, 'such a proposition would besmirch the integrity and creditability of the panel as well as the critical and fundamental role of independent oversight. What point is there in having a watchdog that is a blind supporter of, or an apologist for, the subject of its oversight?'"

Obama is beginning a renewed push for a small business loan package:

The SEC will not allow a refight of the principle behind FinReg, reports Fred Barbash: "Schapiro said, 'The regulatory process is not designed to redebate issues that Congress has resolved. Rather, investors, leaders of small and large businesses, academics and others who identify issues, and who offer ideas and alternatives, can help us create a regulatory structure that supports our shared goals over the long term.'"

Casey Mulligan argues the house buyer's tax credit's effect has been minimal:

David Wessel considers the Obama administration's options before the Bush tax cuts expire at year's end: "And then there's the deficit. Raising taxes on the over-$250,000 crowd isn't going to cure it. The price tag on the Obama-backed extension of Mr. Bush's middle-class tax cuts and stopping the alternative minimum tax from reaching down into the middle class is $2.5 trillion over 10 years, the Joint Tax Committee says. Unofficial estimates circulating on Capitol Hill say that's about 85% of the price tag for extendingall the Bush tax cuts."

Peter Orszag's legacy will be prying budget authority from the legislature and to the executive, writes Matt Bai: "Mr. Orszag has promoted and carried out an effort by the White House to pry away from Congress some of the responsibility for making hard decisions, especially when it comes to the budget. In the process, he has signaled that an administration populated from the top down by Capitol Hill alumni is intent on altering the balance of power between the branches of government."

Matt Miller thinks the deficit commission's proposed 21% of GDP spending limit is too small: "As a matter of math, if you run the government at a smaller level than did Ronald Reagan while accommodating this massive increase in the number of seniors on our health and pension programs, you have to decimate the rest of the budget. That's especially the case when you consider that health costs in the Reagan era were around 10 percent of GDP, while they're now 17 percent, headed toward 20."

Late Night Interlude: Kristen Schaal on The Late Show.


A dispute over natural gas production is causing problems for the energy bill, reports Coral Davenport: "Senate Majority Leader Harry Reid (D-Nev.) added the language Tuesday requiring natural gas drillers to disclose the chemicals they pump into the ground as part of the hydraulic fracturing, or hydrofracking, process...Sen. Jim Inhofe of Oklahoma said the new requirements could effectively end onshore natural gas production. He noted that some states already have hydrofracking safety and disclosure regulations but that making the requirements national would freeze the industry."

Senators have no incentive to act responsibly on climate change, writes Stephen Stromberg: "Senators from coal states and the South worried that their regions would be disproportionately hurt. The effects of climate change won't be dire for years; and Congress, with its frequent elections, isn't good at accepting short-term pain for long-term gain. With few exceptions, Republicans have behaved shamefully on climate issues in this Congress, opposing policies that their party embraced in the 1990s (think cap-and-trade). Yet none of them will pay a price in November, and many GOP challengers will benefit."

Over a million gallons have escaped from the Michigan oil spill:

Brad Plumer previews the cap and trade system going into effect among Western states: "This cap would be the real thing, covering most large industrial facilities as well as the transportation sector (that last is probably the biggest source of emissions in most of these states, which aren't particularly coal-heavy, and transport wouldn't get regulated until 2015). All told, the program would aim to cut overall emissions in the five participating states/provinces 15 percent by 2020--roughly in line with the U.S. Copenhagen goals."

Jeffrey Sachs argues Obama should go straight to the public on climate change: "The Obama administration should have tried - and should still try - an alternative approach. Instead of negotiating with vested interests in the backrooms of the White House and Congress, Obama should present a coherent plan to the American people. He should propose a sound strategy over the next 20 years for reducing America’s dependence on fossil fuels, converting to electric vehicles, and expanding non-carbon energy sources such as solar and wind power. He could then present an estimated price tag for phasing in these changes over time, and demonstrate that the costs would be modest compared to the enormous benefits."

Daniel Gross thinks electric car prices will go down quickly:

Questionable movie sequels interlude: The trailer for Titanic II.

Domestic Policy

Olympia Snowe is the fourth GOP senator to back Elena Kagan's nomination, reports Julie Hirschfield Davis: "Snowe says Kagan has met her standards for a justice with her strong intellect, respect for the rule of law and understanding of the Supreme Court's important but limited role. She also says endorsements from conservative lawyers show that Kagan has a reputation for a sound judicial temperament. Democrats have more than enough votes to confirm Kagan in a vote expected next week."

A quarter of law enforcement-aided deportations come from one county in Arizona:

Republicans are warning the Department of Homeland Security to not use executive powers to allow illegal immigrants to stay, reports Scott Wong: "The Homeland Security Department has maintained it has the authority to grant extensions to those who are in the country illegally “based on the merits of cases,” but again emphasized that there are no plans to grant blanket amnesty to the estimated 11 million undocumented immigrants."

Six House members staged a sit-in on the Senate floor to protest Senate inaction:

David Leonhardt argues investing in early childhood education reaps huge dividends: "Just as in other studies, the Tennessee experiment found that some teachers were able to help students learn vastly more than other teachers. And just as in other studies, the effect largely disappeared by junior high, based on test scores. Yet when Mr. Chetty and his colleagues took another look at the students in adulthood, they discovered that the legacy of kindergarten had re-emerged. Students who had learned much more in kindergarten were more likely to go to college than students with otherwise similar backgrounds. Students who learned more were also less likely to become single parents. As adults, they were more likely to be saving for retirement. Perhaps most striking, they were earning more."

Jackie Hunter argues we should encourage pharmaceutical companies to go open source:

James Wilentz argues the US can learn from the Haitian health care system: "A public-private partnership like the one contemplated for Haiti could be created here. The government, through the Centers for Medicare and Medicaid Services, could team up with health care systems that provide high-quality care to people of all income levels -- Kaiser-Permanente, in California, comes to mind, as does the Mayo Clinic network; the Geisinger Health System, in Pennsylvania; Partners HealthCare, in Boston; and Intermountain Healthcare, in Utah -- to provide a public option."

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Julie Dermansky/TWP

By Ezra Klein  |  July 29, 2010; 6:22 AM ET
Categories:  Wonkbook  
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Next: Research desk: How much do the Bush tax cuts help small businesses?


Ezra.. Fior once tell it as it is... AZ Law Blocked??? NAHH only Partially Blocked....What's with you Obummer fanatics? The whole Truth Scares you??? Freddie and Fannie Must be fully investigated and may be Frank and Dodd can be fitted for Horizomntal Black and White Striped Suits??? Would that be ahoot!

Posted by: redhawk2 | July 29, 2010 12:18 PM | Report abuse

I'm just a pharma neophyte, but that Jackie Hunter article is so vague that it's a cloud. Pharma veteran Derek Lowe agrees:

Ezra/Dylan, did you read that thing? It's meaningless.

Posted by: Klug | July 29, 2010 1:38 PM | Report abuse

Hey, Mister Journ-O-list,

Are you going to resign today? Tomorrow? You are a sniveling little weasel of a reporter.

Posted by: DavidKeene1 | July 29, 2010 1:52 PM | Report abuse

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