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Wonkbook: Jobless claims jump; Social Security cuts; GOP warns businesses not to help Dems

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New unemployment benefits claims reached 500,000 -- their highest level since November. That "feels more double dip-ish than tepid growth-ish," tweeted Neil Irwin. The White House is quietly deleting some of its climate change promises from its web site. Senate Republicans are angrily e-mailing businesses supporting a Democratic push to cut taxes on businesses. Laura Meckler has some specifics on the cuts and reforms the deficit commission is contemplating for Social Security. Health-care reform's supporters are changing their messaging to reflect the reality that the bill's popularity has not substantially increased since passage. And Timothy Geithner is one of the few people involved in finance desperate to convince people that he never worked at Goldman Sachs.

Oh, and the lobster truck lives! Welcome to Wonkbook.

Top Stories

New jobless claims have jumped to 500,000, reports Frank Ahrens: "Thursday's news was especially discouraging, not only because new jobless claims are back on the rise but also because they never dropped low enough for lasting job creation to begin. Economists say that the weekly claims number needs to get into the low 400,000s and stay there before employers will start hiring new workers and bringing back laid-off ones. Indeed, the economy needs to add 125,000 jobs each month merely to keep up with population growth. Instead, 'this report indicates that the pace of firings and layoffs has increased,' Barclays Capital wrote in a report."

The White House quietly removed climate change promises from its website: http://politi.co/c8U6Lz

Senate Republicans are playing hardball opposing the extension of a package of business tax credits, reports Chris Frates: "When a group of 22 companies recently wrote a letter in support of Senate Finance Committee Chairman Max Baucus’s plan to pay for the tax credits by closing several business tax loopholes, Senate Minority Leader Mitch McConnell’s office e-mailed several of the companies asking what they were doing. The message McConnell was sending to the companies, said a Republican business lobbyist, was, 'Don’t think you can play' with Democrats to pass the tax credits 'because they’re going after your friends and they’re coming after you next.'

Eugene Robinson says Washington has missed Obama's "genuine winning streak" lately: http://bit.ly/9OUmjh

The debt reduction commission might recommend cutting Social Security benefits, reports Laura Meckler: "In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said. On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission."

A whole lot of people (wrongly) think Timothy Geithner once worked at Goldman Sachs: http://nyti.ms/aOqZtk

Health-care reform supporters are switching up messaging, reports Ben Smith: "The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA -- one of the central groups in the push for the initial legislation. The call was led by a staffer for the Herndon Alliance, which includes leading labor groups and other health care allies...The confidential presentation, available in full here and provided to POLITICO by a source on the call, suggests that Democrats are acknowledging the failure of their predictions that the health care legislation would grow more popular after its passage, as its benefits became clear and rhetoric cooled."

Obama made four recess appointments on Thursday, reports Ed O'Keefe: "Maria del Carmen Aponte, the administration's pick for ambassador to El Salvador...Elisabeth Hagen as the Agriculture Department's undersecretary for food safety, Winslow Sargeant as chief counsel for advocacy at the Small Business Administration and Richard Sorian as assistant secretary for public affairs at the Department of Health and Human Services."

Folk interlude: Bon Iver plays "Skinny Love" on Jools Holland.

Still to come: The CBO looks at the Bush tax cuts; China is investing in electric cars; pay checks are due to fall due to rising health premiums; and world championship-level yo-yoing.

Economy/FinReg

The CBO says extending the Bush tax cuts helps short-term but poses danger in the long-run, reports Brady Dennis: "The CBO's baseline scenario assumes that the Bush-era tax breaks will expire, as current law provides. In that case, next year's deficit would fall to $1.07 trillion, or 7 percent of the country's total economic output, or gross domestic product, according to agency estimates. By 2012, the deficit would shrink to $665 billion, or 4.2 percent of GDP."

Human investors are outpacing "quant" models on Wall Street: http://nyti.ms/cUeNwn

Banks are taking the hit on bad loans they helped push, writes Floyd Norris: "Already the four big commercial banks -- JPMorgan Chase, Bank of America, Wells Fargo and Citigroup -- have taken losses of $9.8 billion on loans they have repurchased or expect to be forced to repurchase. Moshe Orenbuch, an analyst at Credit Suisse, says he thinks that figure will rise to $20 billion or $30 billion before the wave is over. Other analysts think the number could be significantly higher. Even now, long after we learned just how bad the underwriting standards were, it is surprising to see how bad many of these loans were. In the second quarter, Wells Fargo repurchased $530 million of mortgage loans. It concluded those loans were worth, on average, a little less than half their face value."

More Americans say they're happy with their pay level than ever: http://nyti.ms/bbDKE3

Paul Krugman questions deficit reduction as a means of appeasing the "bond Gods": "On Thursday, the rate on 10-year U.S. bonds was only 2.58 percent. So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused."

Daniel Indiviglio investigates how expensive mortgages would be without government backing: http://bit.ly/bMq4Ip

Steve Pearlstein argues out-of-control banker pay is the product of too little competition: "This story, first reported by Bloomberg News and confirmed by several government and Wall Street sources, goes a long way in explaining why so many people on Wall Street get paid so much more than everyone else. A handful of established firms control access to global financial markets and use this power to extract monopoly-like profits and funnel them to their executives and employees. The reason for the lack of price competition is pretty simple: The banks know that if they start offering big discounts, all their rivals will be forced to do the same."

Megan McArdle thinks it's time to stop talking about stimulus and start talking about easing the transition into a slower economy: http://bit.ly/9cRYqv

Dexterity interlude: The 2010 World Yo-Yo Championships.

Energy

A 22-mile plume of oil remains in the Gulf, report David Fahrenthold and Kimberly Kindy: "What was certain, at least at that time, was that it wasn't disappearing. Scientists tested the levels of dissolved oxygen to find out whether they were unusually low, which would indicate that microbes were at work. But they weren't. The researchers declined to speculate about how their findings should alter the government's official 'budget' of what became of BP's oil. Their inquiry, they said, was limited to finding the plume -- and, for now, they couldn't say what percent of the spilled oil it contained."

China is investing big in electric and hybrid cars, reports David Barboza: "The government said a group of 16 big state-owned companies had already agreed to form an alliance to do research and development, and create standards for electric and hybrid vehicles. The plan aims to put more than a million electric and hybrid vehicles on the road over the next few years in what is already the world’s biggest and fastest growing auto market."

The panel investigating the oil spill is calling witnesses: http://bit.ly/by4w36

BP's final well plugging won't come until September, reports Kristen Hays: "Concern over how to safely proceed after pouring cement in the Macondo well from the top, as well as weather delays, pushed the last step past the U.S. Labor Day holiday on September 6 from mid-August, retired Coast Guard Admiral Thad Allen said at a briefing in Washington. 'As we get to the end, we are very close to putting this well away," Allen said. 'I think none of us wants to make a mistake at this point.' Allen authorized BP on Thursday to craft a plan to retrieve the failed blowout preventer atop the Macondo well about a mile beneath the ocean surface and replace it with another before drilling resumes on the relief well."

Federal tax credits incentivize energy-efficient A/C systems: http://bit.ly/b29RTw

USAID is linking the Pakistani earthquaker to climate change, writes Josh Rogin:
"'We should expect to have more large-scale weather events as we see more systematic warming of our planet,' said Rajiv Shah, the head of the U.S. Agency for International Development, pointing to what he described as a clear trend of increasing natural calamities tied to climate change. USAID has already responded to 64 natural disasters this year. Pakistani Foreign Minister Shah Mehmood Qureshi said that the unprecedented size of the flood was due at least in part to warming factors, such as the melting of glaciers in the Himalayas."

Practical joke interlude: Justin Long gets texts for a middle schooler named Eduardo.

Domestic Policy

Higher health care premiums are shrinking paychecks, reports Jeffrey Young: "The companies surveyed expect their costs of health-care benefits to rise an average of 8.9 percent next year. The legislation Obama signed in March will contribute an estimated 1 percentage point to the higher expense, Helen Darling, the business group's president, said at a press conference in Washington today. Employee-paid portions may see small increases, she said."

Congress previously considered changes to birthright citizenship in the 90s: http://politi.co/atymit

Paul Tough argues for funding even unproven education models: "A certain skepticism with regard to innovation is always wise, especially in public education, where highly touted new programs often turn out to be disappointments. The problem is that for low-income and minority Americans, the status quo is a deepening calamity. The New York state test results released last month showed that the gap in reading scores between black and white elementary- and middle-school students grew from 22 percentage points in 2009 to 30 points in 2010, while the math gap grew from 17 points to 30 points."

Alberto Gonzales defends birthright citizenship: http://bit.ly/dzhZ5F

John Podesta defends Obama on school reform: "Educators have complained that the tests mandated by the No Child Left Behind Act are too rigid and don't provide an adequate assessment of what children need to learn to succeed. Most reformers agree. That's why the Obama administration set aside $350 million in its Race to the Top grant program to help states develop next-generation assessments that better evaluate what students should know. The new exams aim to inform instruction as well as better measure the skills students need to succeed in college and the modern workplace. Continually improving the way we measure success is not obsessive -- it's smart."

Closing credits: Wonkbook compiled with the help of Dylan Matthews, Mike Shepard, and Sakina Rangwala. Photo credit: Rasdourian/CC/Flickr

By Ezra Klein  |  August 20, 2010; 6:28 AM ET
Categories:  Wonkbook  
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Next: A private Medicare system would be a costlier Medicare system

Comments

I would love to be the badass dude for something as obscure as yo-yoing. Clearly he's the coolest dude there and the crowd of yo-yo-lovers adore him.

Posted by: MosBen | August 20, 2010 7:42 AM | Report abuse

"Republicans are angrily e-mailing businesses supporting a Democratic push to cut taxes on businesses."

Republicans are going to overplay their hand. This is the essence of what a small 'c' conservative should want--forcing Democrats to sign on to some, if not all, of the conservative line on tax cuts as the preferable form of economic stimulus.

They really are preparing for a victory in November that's a mile wide and an inch deep.

"The White House quietly removed climate change promises from its website"

And, on the other hand, I'm liking Obama more everyday. ;)

"More Americans say they're happy with their pay level than ever:"

When you're friends are out of the work, or your spouse, you're just happy you have a job. ;)

"The government said a group of 16 big state-owned companies had already agreed to form an alliance to do research and development, and create standards for electric and hybrid vehicles."

IMO, this is better news than any anemic carbon-trading boondoggle we'd end up passing. First of all, developing nations like China are much, much more egregious polluters than the US--tapping that down will do some good (obviously, the plants that product the electricity also need to be designed to be less polluting). Secondly, if you really want to do a nationwide electric-car infrastructure right, then it's best to do it where there is tremendous growth on the horizon. The US is very established, it's going to be hard for us to change our infrastructure, and slow, with limited payoff.

Where as in China, they are having to develop a ton of infrastructure right now--so why not make it electric? Why not have recharging stations at every gas station or at ever "rest stop" or what have you. Sounds like good news to me.

"That's why the Obama administration set aside $350 million in its Race to the Top grant program to help states develop next-generation assessments that better evaluate what students should know. The new exams aim to inform instruction as well as better measure the skills students need to succeed in college and the modern workplace. Continually improving the way we measure success is not obsessive -- it's smart."

Yeah, as someone who works in a school system in one of the states that won Race to the Top Grants, I'm pretty sure that's not going to happen. It's basically No Child Left Behind, only moreso.

Posted by: Kevin_Willis | August 20, 2010 8:20 AM | Report abuse

Out of control banker pay is not related to a lack of competition. That's what the bankers want you to believe.

Banker pay is directly related to superficially low tax rates for the wealthy and good old American greed.

Lowering tax rates on the wealthy has given large businesses and banks the incentive to fork over more pay to the execs instead of using it to hire people or fund internal R&D. As taxes for the execs get higher though, the businesses decide not to give as much to the execs because more of it will end up in gvmt coffers because of personal taxation.

Posted by: lauren2010 | August 20, 2010 8:53 AM | Report abuse

"USAID is linking the Pakistani earthquaker to climate change, writes Josh Rogin:"

I hate to be the typo police, but that's a pretty bad misspelling of 'floods'.

Posted by: jbandlow | August 20, 2010 8:58 AM | Report abuse

Ezra,

I'm honestly surprised you'd link to that Politico story on the healthcare messaging? Have you watched the presentation slides they give? If you did you'd see that either they're stupid (certainly possible) or deliberately misleading those giving the message (unless of course they're in on it which is likely too). The jist of my concern is a heart-wrenching story detailed here:

"My name is Lindsay, I'm 23 years old and I have a 6 year old son named Jacob who has asthma. We got our health insurance from my husband's employer, but he lost his job recently. He found a new job that pays OK but his new health insurance company will not give Jacob coverage because he has a pre-existing condition"

uh, FALSE. I'm guessing those brilliant scholars that put together this lovely powerpoint presentation have never heard of HIPAA.

And the lies just keep on coming.


Posted by: visionbrkr | August 20, 2010 9:23 AM | Report abuse

So Geithner helped propagate the myth he was once in GS. And he willfully did it at a time it was bad politics to do so.

Now I wonder if Obama deadpans about being a Muslim or a Kenyan. Or if Iran has a nuke. Or about raising taxes on everyone.

Do you think a Republican would joke in any form about raising taxes or reforming health care? Hell no.

This all relates to the fact that Republicans are experts in getting people to believe in myths and Democrats are experts at allowing it to happen and seem unable to educate anyone about any issue despite their supposed superior IQ.

Democrats are politically inept and this Geithner episode is but one example of it.

Posted by: lauren2010 | August 20, 2010 9:27 AM | Report abuse

would have also liked a link to this story from KHN that I read last night:

http://www.kaiserhealthnews.org/Stories/2010/August/19/high-risk-pools-health-insurance.aspx


------

wait so not only are many if not most of the high risk pools late in implementation they're also denying people due to ineligibility (remember you have to have been subjected to pre-existing conditions in the last 6 months and be able to provide proof of that) AND the premiums are unaffordable for many.

Wow this is working swimmingly! Nice to know that two thirds of people applying for this have not been approved. Wonder how the spin is going to work on that one.

Posted by: visionbrkr | August 20, 2010 10:07 AM | Report abuse

So Ezra,

The last slide on the new health-care messaging presentation instructs Democrats to "Don't say the law will reduce costs and the deficit". Does this mean that YOU will stop saying it?

Posted by: cummije5 | August 20, 2010 10:09 AM | Report abuse

Ezra;

What happened to last weeks column that all unemployment came on George Bush's watch. Last week claims were 484,000 this week 500,000. Who is currently President?

When you are wrong you are really wrong!!! Could be your Journolist training.

CK

Posted by: ckessler55943 | August 20, 2010 10:52 AM | Report abuse

@ckessler55943:
The vast bulk of unemployment is directly related to George Bush and the policies of that administration.

The increase can just as easily be attributed to a recalcitrant minority doing anything and everything to make people feel like the country is going in the wrong direction.

Given the 'bikini graph' that clearly shows Obama turning 700K+/month job losses inherited from Bush into 100K+/month job gains in about a year, it's hard to say he's causing job 'losses'. That hasn't stopped the GOP from doing it, but that doesn't make their lies true.

There are many things Obama can do better on, like not giving into GOP demands that weaken the accomplishments he has made, but pointing out the hypocrisy of the GOP on just about every issue isn't something that he should stop doing.

Posted by: rpixley220 | August 20, 2010 11:38 AM | Report abuse

"Given the 'bikini graph' that clearly shows Obama turning 700K+/month job losses inherited from Bush into 100K+/month job gains in about a year, it's hard to say he's causing job 'losses'. That hasn't stopped the GOP from doing it, but that doesn't make their lies true."

Agreed, but now there is cause for concern about a possible "double bikini," given the recent numbers, especially the worst-since-November new claims for the week just past.

Posted by: Patrick_M | August 20, 2010 12:05 PM | Report abuse

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