Ezra Klein's Blog, page 892

Your doctor doesn't know what works

Let's say your doctor does everything right. She follows the best medical guidelines. She only prescribes treatments that have been vetted by the Infectious Diseases Society of America and are widely believed to help. She never tries to make a quick buck, or give a patient false hope, by ordering a test or procedure that's not likely to help. In that world, how many of the treatments that she's prescribing will have high-quality clinical studies supporting their use?

One in seven. Yikes. Michael Mandel looks on the bright side:

The conventional wisdom was that breakthroughs in understanding the human genome would provide better treatments within the existing structure of medicine – like putting better windows or a new floor or more comfortable furniture into an existing house. The implicit belief is that we could build on existing medical knowledge, add in the new knowledge of the genome, and quickly get to new products.

But what if the main lesson of the past ten years is that the house itself has rotten foundations and needs to be rebuilt completely? What if the biosciences sector can't afford to take anything for granted from existing medicine because too much of it is not evidence-based?

This is both bad news and good news. Starting from scratch and rebuilding foundations is obviously a daunting and expensive task, and helps explain why the biosciences sector has struggled to produce breakthrough treatments. On the other hand, when you are rebuilding foundations, a lot of progress can be made without anything visible from the outside.

Why do unions care about Medicaid?

Jon Cohn looks at the Medicaid section of Wisconsin Gov. Scott Walker's "budget-repair bill":

Under Walker's proposal for Medicaid, his Secretary of Health could use "emergency" powers to redefine some of the program's most basic parameters: Whom it enrolls, what premiums and co-payments [it] charges, etc. Normally, these sorts of decisions would require assent of the full legislature. But, according to Jon Peacock of the Wisconsin Council on Children and Families, under Walker's proposal the Secretary of Health would need approval only from a joint legislative committee whose membership is heavily tilted towards the majority party. (The Center has more information about the proposal at its website.)

Because Medicaid is a federal-state partnership, federal guidelines do impose some limits on what Wisconsin could do. The state could not, for example, stop offering coverage to children. And in order for Walker's change to take effect, I gather, the federal government would have to issue a waiver. Typically the feds issue waivers only when states show they can improve or bolster coverage, not when they are looking to weaken it. But Walker's budget effectively puts a gun to Washington's head: If the state doesn't get permission to change the program in the way he wants, under Walker's proposal, it would simply reduce Medicaid to the bare minimum permissible under federal law.

This is the exact sort of proposal that unions tend to fight. Why? It's hard to say. Relatively few of their members are on Medicaid. The whole point of being in a union, on some level, is that you don't have to be on Medicaid. But unions have this odd notion of "solidarity." So whenever Medicaid cuts end up on the agenda, you'll find the labor movement is the only well-funded, mass-membership lobby throwing its shoulders into the fight to save Medicaid.

This is the role that unions play that some of my conservative friends are missing. Megan McArdle, for instance, asks, "In what way do public sector unions act as a check on the power of corporations?" You can find one of the answers in Walker's agenda. Corporations aren't lobbying against Medicaid, of course. But they're lobbying for massive corporate tax cuts. And they look likely to get them (in fact, they've already gotten some). But the hundreds of millions of dollars or billions of dollars that those tax cuts add to the deficit will have to be made up somewhere. And Medicaid is a likely target. There is no one behind Medicaid with even an ounce of the political power that the business community wields.

No one, that is, except unions. And unions also happen to be the only organized interest group standing in opposition to continual tax cuts for corporations and the wealthy. This is why this fight is so important to both sides. If it were just about the money, it would be easier to resolve. But it's not just about money. And it's not, as McArdle goes on to suggest, about "some extra benefits for the teachers' unions." After all, the unions have already offered to make the concessions on benefits that Walker has asked for. Rather, this is about the balance of political power in Wisconsin and, given the potential for other governors to adopt Walker's proposal, nationally. It's about whether there will be anyone left to speak up next time a state with a yawning deficit proposes to give corporations a massive tax break while slashing Medicaid benefits. And that matters.

Did the auto industry cripple Detroit?

An interesting thesis from Ed Glaeser:

Ford, Durant, David Dunbar Buick, the Dodge Brothers, the Fisher Brothers, Henry Leland – it seems as if Detroit once had an automotive genius on every street corner. ... But while their great invention made Detroit wildly productive for decades, it also sowed the seeds for the city's decline. Cities work best when they are filled with smart people and small companies that innovate by exchanging ideas. Huge automobile plants, like Henry Ford's River Rouge Plant, were highly productive, but they were isolated from the rest of the city.

Part of Ford's genius was that he was able to provide high wage jobs for less-educated workers; this helped turn Detroit into a city with too few nonautomotive skills.

Glaeser concludes that Detroit has spent too much upgrading its infrastructure -- note the beautiful, but empty, people mover -- and not enough on its people. But there might be a reason for that. If you build a train in Detroit, you can be pretty sure it'll stay in Detroit. You can't say the same for its residents. Consider this study examining the way one state's investment in education can end up benefiting a more desirable neighbor. "Massachusetts, California, or New Jersey may benefit more from an investment in Mississippi's research universities than Mississippi does," the authors concluded. Education, in other words, gives people the option to leave. And they take it.

The question for Detroit, then, isn't just about making investments in human capital, but about keeping the humans around long enough to see some returns on those investments. So what does Detroit have over New York or Washington or Portland? It's not weather, potential income, safety, or school quality -- the normal markers of comfort and opportunity. Perhaps it's the pride of place, and the emotional appeal of a resurrection narrative, that we saw in the ad Chrysler ran during the Super Bowl. Or perhaps I'm just grasping at straws.

The unintended costs of a government shutdown

Just anticipating a shutdown wastes a great deal of time -- agencies must understand OMB and Justice guidelines, and then develop contingency plans for reduced activities. Those plans must identify which employees are "excepted" from furloughs and which are not; those who aspire to "essential" status but do not get it receive an unwelcome message. And when regular appropriations are delayed, uncertainty about final appropriations leads many managers to hoard funds; in some cases, hiring and purchasing stops.[...]

Over the long run, the shutdown could cause other costs. Now that contractors have learned they face a risk of interrupted work, they might charge the government a premium for this risk. Knowledge that furloughs are possible may also threaten the governments' ability to attract and retain quality personnel.

That's from Roy Meyers's "Late Appropriations and Government Shutdowns: Frequency, Causes, Consequences, and Remedies" (pdf).

Column: Wisconsin is about power, not money

You've probably heard politicians fret that state governments - or, worse, the federal government - will default on their debts. House Speaker John A. Boehner called the prospect of a federal default "a financial disaster not only for our country, but for the worldwide economy." Nasty stuff.

But it's worth asking why a default would such a problem. Can't we just launch a missile at our creditors, or promise to do better next time? Well, no. Our creditors have power over us. If the actors who make up the entity we loosely refer to as "the market" - that means everyone from banks to hedge funds to China - don't get paid back, they'll go nuts. They'll realize we're fiscally irresponsible. They'll stop lending us money, or at least start charging us more when they do. Interest rates will skyrocket, and the economy will grind to a halt.

So America's various governmental entities are looking for ways to avoid defaulting on their debt - or at least defaulting on their debt to the powerful. That addendum is important, because one of the strategies that's emerging is to default on debt to the less powerful, the people who don't have the power to wreck our economy.

This is a crucial fact about the economy, and one often underplayed by economists: power matters. It's worth more, in many cases, than money. And that's what's really at issue in Wisconsin. It's why Gov. Scott Walker is uninterested in taking concessions from the unions on wages and benefits if they don't come alongside concessions on collective bargaining. What he wants isn't a change in the balance of payments. It's a change in the balance of power.

The deal Wisconsin made with its state employees was simple: Accept lower wages than you could get in the private sector now in return for better pensions and health-care benefits when you retire. Now Walker wants to renege on that deal.

Rather than stiff the banks, in other words, he wants to stiff the teachers - but the crucial twist he's added, the one that's sent tens of thousands of workers into the streets, is that he wants to make sure they can't fight back once he does it.

The reason you can't stiff bondholders is that they can make a state or country regret reneging on the deals they've made. They can increase borrowing costs far into the future, slowing economic growth and, through the resulting economic pain, throwing politicians out of office. That gives them power. An ordinary teacher does not have access to such artillery. Unless, of course, she's part of a union.

Unions - through collective bargaining, strikes and other means - give workers power. They make reneging on contracts with their members painful. They also make negotiations less lopsided.

They're not perfect, of course. They sometimes negotiate bad deals, or misbehave, or hand good money over to bad people, or put their short-term interests ahead of the public's long-term interests. But then, so do corporations and politicians.

But their power matters for more than just debt repayment. For all their faults, unions tend to see their constituents as not just their own members, but the "working class," broadly defined. That's why you'll find labor's fingerprints on everything from the two-day weekend to Medicare to the Civil Rights Act of 1965 - none of which require you to flash a union card before you can benefit from them. They act -- quite self-consciously -- as a counterbalance to corporate power. There's no reason, after all, that unions should be leading the fight to see the Bush tax cuts for the wealthy expire. That's political capital they could be spending on reform of the nation's labor laws. And yet they are.

To get a sense of what a world without unions would look like - a world where power is distributed radically differently - you need look no further than Walker's own proposals. In his State of the State speech, he said, "The decisions we face are not easy and the solutions we must approve will require true sacrifice." He's already called for plenty of it from not only state employees, but also the low-income residents who rely on Wisconsin's BadgerCare program.

But some won't have to sacrifice nearly so much. Walker's campaign platform called for sharp cuts in corporate taxes, including "eliminating corporate taxes for the first two years of operation." His budget repair bill proposes to allow the state to sell energy plants "with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state," and goes on to say that "any such purchase is considered to be in the public interest."

What you're seeing there isn't necessarily a world where deficits are lower. Rather, it's a world where power is distributed very differently. You can argue that that's a good thing, though I'm skeptical. But let's not confuse a discussion over political power with a discussion over deficits.

Wonkbook: Are Republicans overreaching? Or just negotiating effectively?

The showdown in Wisconsin continues, and the one in Washington is just beginning. In Wisconsin, Democrats and unions have offered Gov. Scott Walker the benefit concessions he's asked for, but not the end to collective bargaining he's demanded. Thus far, he's said no -- and he's threatened to let a Friday deadline for restructuring the state's debt come and go, at a cost to Wisconsin of more than $160 million, if Democrats don't agree to return and allow the full passage of his proposed law.

In Washington, we're getting closer and closer to a government shutdown. There's now talk of a continuing resolution to push the deadline back by a couple of weeks, but Republicans will only accept it if it includes many of the cuts they're asking for in their full spending bill. A shutdown isn't a sure thing yet, but many who were dismissing the idea of it a month ago are taking it seriously today.

Republicans and Democrats, it seems, govern rather differently. Republicans are proving themselves willing to do what liberals long wanted the Obama administration to do: Play hardball. Refuse compromise. Risk severe consequences that they'll attempt to blame on their opponent. The Obama administration's answer to this was always that it was important to be seen as the reasonable actor in the drama, to occupy some space known as the middle, and to avoid, so much as possible, the appearance of dramatic overreach. This is as close as we're likely to come to a test of that theory. In two cases, Republicans have chosen a hardline and are refusing significant compromise, even at the risk of terrible consequences. Will the public turn on them for overreach? Applaud their strength and conviction? Or not really care one way or the other, at least by the time the next election rolls around?

Top Stories

The fight in Wisconsin is spreading to Ohio and Indiana, report Neil King, Thomas Burton, and Kris Maher: "The clash between Republicans and unions that caught fire in Wisconsin last week escalated Monday: Labor leaders planned to take their protests to dozens of other capitals and Democrats in a second state considered a walkout to stall bills that would limit union power... On Monday, thousands of steelworkers, autoworkers and other labor activists surrounded the Indiana state capitol to protest a bill before the legislature to dramatically weaken the clout of private-sector unions...In Ohio, union officials are expecting 5,000 or more protesters Tuesday at the state house, where a legislative panel is considering a Republican-backed bill that would restrict collective-bargaining rights for about 400,000 public employees."

Even some union workers in Wisconsin back the governor's ban on state employee collective bargaining, report A.G. Sulzberger and Monica Davey: "A simmering resentment over those lost jobs and lost benefits in private industry -- combined with the state's history of highly polarized politics -- may explain why Wisconsin, once a pioneer in supporting organized labor, has set off a debate that is spreading to other states over public workers, unions and budget woes. There are deeply divided opinions and shifting allegiances over whether unions are helping or hurting people who have been caught in the recent economic squeeze. And workers themselves, being pitted against one another, are finding it hard to feel sympathy or offer solidarity, with their own jobs lost and their benefits and pensions cut back or cut off."

The House GOP will not pass even a two-week spending extension without cuts, reports Janet Hook: "House Republican leaders, facing a crucial budget face-off with the White House and Senate Democrats, are scrambling for ways to avoid a government shutdown--or at least the blame for one...GOP leaders now are preparing a short-term spending measure to keep the government open for about two additional weeks while broader budget talks are conducted...In exchange for extending the deadline, Republicans want Democrats to agree to cut spending even in that short-term measure, and will try to put the onus on Democrats if they oppose it...Sen. Charles Schumer of New York, a member of the Democratic leadership, conceded no ground."

The White House is reviewing the impact of a government shutdown, reports Damian Paletta: "White House officials have begun reviewing the potential impact of a brief lapse in new government funding if Congress doesn't pass a temporary spending measure by March 4, people familiar with the matter said. The administration's review, led in part by the Office of Management and Budget, has looked at a range of issues, including the protocol to keep key government functions operational if Congress fails to pass a temporary spending measure by the end of next week. 'As part of the executive branch charged with overseeing the management of the federal government, OMB is prepared for any contingency as a matter of course,' OMB communications director Kenneth Baer said. The current temporary spending law expires March 4."

In-store appearance interlude: The xx play "Intro" and "Crystalised" live.

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Still to come: Wisconsin's governor is standing his ground; states are trying different tactics to block health care reform; Democrats are attacking border security cuts in the Republican spending bill; and four cats fall asleep with noodle cups on their heads.

Economy

Wisconsin Gov. Scott Walker is not giving any ground, reports Meredith Shiner: "Wisconsin Gov. Scott Walker continued to stand his ground Monday night, challenging the 14 Democratic senators who have fled to Illinois to return to 'where they belong' so Republicans can move forward with his budget-cutting plan. Over the chants of 'Resign! Resign!' heard through the marble walls of the governor's conference room from protesters in the rotunda mere yards away, Walker calmly delivered a defense of his controversial plan to eliminate the collective bargaining rights of many of Wisconsin's public workers. He reiterated the need to balance the budget, weighed down by a deficit of more than $3 billion. And he accused his state's Democrats of shirking their responsibilities and being opaque in the process."

Public workers need unions for the same reason private sector workers do, writes Nelson Lichtenstein: "Public employees are legally protected from managerial caprice. But as anyone who has dealt with a government bureaucracy knows, such rules require enforcement. You can hire a lawyer, but for the vast majority of low- and middle-income public servants, a union is far more powerful and effective. The most famous public-sector strike in the 20th century demonstrates this. In 1968, sanitation workers in Memphis, Tenn., were public employees covered by civil service rules. But they were also all African Americans, humiliated on the job daily by white supervisors and other officials. A typical grievance: When it rained, they had no place to take shelter."

Indefinite stagnation doesn't have to be the new normal, writes Timothy Noah: http://slate.me/i2mj5z

Public and private sector unions are fundamentally different, writes David Brooks: "Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest. Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with."

Wisconsin is about power, not money, writes Ezra Klein: "America's various governmental entities are looking for ways to avoid defaulting on their debt - or at least defaulting on their debt to the powerful. That addendum is important, because one of the strategies that's emerging is to default on debt to the less powerful, the people who don't have the power to wreck our economy. This is a crucial fact about the economy: Power matters. It's worth more, in many cases, than money. And that's what's really at issue in Wisconsin. It's why Gov. Scott Walker (R) is uninterested in taking concessions from the unions on wages and benefits if they don't come alongside concessions on collective bargaining. What he wants isn't a change in the balance of payments. It's a change in the balance of power."

Neil Irwin interviews Dallas Fed president Richard Fisher: http://wapo.st/fQF59V

George Will takes three lessons from Wisconsin, and puts Walker in some very heady company: "Walker's calm comportment in this crisis is reminiscent of President Reagan's during his 1981 stand against the illegal strike by air traffic controllers, and Margaret Thatcher's in the 1984 showdown with the miners' union over whether unions or Parliament would govern Britain. Walker, by a fiscal seriousness contrasting with Obama's lack thereof, and Obama, by inciting defenders of the indefensible, have made three things clear: First, the Democratic Party is the party of government, not only because of its extravagant sense of government's competence and proper scope, but also because the party's base is government employees. Second, government employees have an increasingly adversarial relationship with the governed. Third, Obama's "move to the center" is fictitious."

Great moments in video editing interlude: Radiohead's Thom Yorke dances to "Single Ladies".

Health Care

GOP state governments are experimenting with ways of blocking health care reform, report N.C. Aizenman and Amy Goldstein: "With battles over the president's signature health legislation underway in the courts and on Capitol Hill, a third line of attack is forming in the states: Practically every week, a Republican governor or lawmaker announces a new effort to kill the health-care law or undercut its implementation. Some have returned federal funding to prepare for the rollout and halted early planning work. But others are moving forward even as they pursue efforts to overturn the law... After a federal judge in Florida not only struck down the health-care law but suggested that his judgment was the 'functional equivalent of an injunction,' officials in three of the 26 states party to the suit - Alaska, Florida and Wisconsin - declared the law 'dead.'"

Provisions in the health law will force a reduction in hospital readmissions: http://bit.ly/f5SAvN

The White House wants to change how the health law handles long-term care, reports Robert Pear: "One of Senator Edward M. Kennedy's legacies in the new health care law, intended to allow the chronically ill and people with disabilities to continue living in their homes, is too costly to survive without major changes, Obama administration officials now say. Republican lawmakers, who have vowed to repeal the health care law, cite the administration's acknowledgment as yet another reason to do so. But the health and human services secretary, Kathleen Sebelius, says the law gives her plenty of authority to make the necessary changes to the program without Congressional action. To make the program viable, Ms. Sebelius said, she is considering changes in the eligibility criteria."

Domestic Policy

Democrats are objecting to border security cuts in the GOP spending bill, reports Julia Preston: "Preparing for the fight next week in Congress over federal spending legislation, Democratic leaders in the Senate said they will not support a bill with $60 billion in budget cuts that passed the Republican-led House on Saturday because it reduces funding for border security. In a letter sent on Monday to House appropriations leaders, Senator Charles Schumer of New York and two other Democrats said the House bill would shrink the Border Patrol by 870 agents and cut $272 million in funds for surveillance systems to monitor the border with Mexico. They said those cuts would cancel gains from a bill adopted last August, with virtually unanimous bipartisan support, that increased border funding by $600 million, adding 1,000 new agents to the Border Patrol."

The Koch brothers are active players in the Wisconsin dispute, reports Eric Lipton: "State records show that Koch Industries, their energy and consumer products conglomerate based in Wichita, Kan., was one of the biggest contributors to the election campaign of Gov. Scott Walker of Wisconsin, a Republican who has championed the proposed cuts. Even before the new governor was sworn in last month, executives from the Koch-backed group had worked behind the scenes to try to encourage a union showdown...To union leaders and liberal activists in Washington, this intervention in Wisconsin is proof of the expanding role played by nonprofit groups with murky ties to wealthy corporate executives as they push a decidedly conservative agenda."

A newly replicated study shows elite colleges don't give an earnings boost, writes David Leonhardt: http://nyti.ms/hIgfBG

Adorable animals sleeping in a group interlude: Four cats sleep while wearing noodle cups as hats.

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams. Photo credit: Darren Hauck/Reuters.

You can't separate public and private unions

One of the themes some commentators have adopted is that private-sector unions are fine -- important, even -- but public-sector unions have to be stopped. Or at least it's all right if they're stopped. The difference, as Joe Klein puts it, is that "Industrial unions are organized against the might and greed of ownership. Public employees unions are organized against the might and greed ... of the public?"

I don't think this really holds up. Labor unions organize to get the best possible deal -- or what they think of as the best possible deal -- for their workers. This usually pits them against managers who want to get the best possible deal -- or what they see as the best possible deal -- for their institution. Unions are not just about challenging the "might and greed" of private-sector CEOs, but about recognizing the different incentives faced by managers and workers, and about correcting the tremendous power imbalance between those who can be fired for asking too many questions or demanding a different bargain and those who get to do the firing and would prefer a more submissive workforce and a status quo that they've created and defined.

And let's let go of the idea that the public is on the hook for unions made up of government workers but not for unions made up of janitors in Las Vegas hotels. If private-sector unions negotiate higher wages that lead to higher corporate costs, those costs are passed on to the consumer. If public unions negotiate higher wages that lead to higher taxes, those taxes are paid for by the taxpayer. If public or private unions negotiate work rules that stifle innovation or impede good service, the public bears the brunt of that, too.

But that goes in the other direction, too: Just as the public pays some of the costs of unions, they also reap many of the benefits. The weekend is one of those benefits, and so too are the pensions and health-care packages that many employers offer. A lot of the safety rules that many workers take for granted were the product of union agitation and pressure. Plenty of industries have had to increase their wages because unions took root in certain companies and the threat of their spread forced the non-unionized companies to give their employees gains similar to those made by the unionized workers. Unions are also the most powerful lobby fighting against things like tax cuts for the rich and for things like universal health care. And those benefits, just like those costs, have come from the labor power provided by the combined strength of public and private unions. Solidarity, and all that.

For the record, I'd happily take a deal wherein the collective bargaining rights of public workers were weakened but private workers were given card check and the other labor-law reforms needed to create some semblance of fair elections. But that deal is not on the table. For a variety of reasons -- some relating to international competition, some to the changing nature of the American economy, some relating to political decisions -- private-sector unions have been all but destroyed in recent decades. In fact, it's the opposite of the deal on the table, which, by weakening public-sector unions, would accelerate the destruction of private-sector unions.

American labor -- and all the good and the bad that it does -- is one unit, combining the density and dues of both its public- and private-sector members. If public-sector unions had never been founded, labor would've been much weaker in the 20th century. If they're killed now, a resurgence of private-sector unions becomes even more unlikely going forward. The stakes here are for American labor -- and the public -- as a whole. They are not limited to a few public-sector unions.

How to read the president's budget

Bruce Bartlett provides the Cliffs Notes.

What's an elite education worth? (Part II)

A decade ago, two economists -- Stacy Dale and Alan Krueger -- published a research paper arguing that elite colleges did not seem to give most graduates an earnings boost. As you might expect, the paper received a ton of attention. Ms. Dale and Mr. Krueger have just finished a new version of the study -- with vastly more and better data, covering people into their 40s and 50s, as well as looking at a set of more recent college graduates -- and the new version comes to the same conclusion. ...

Ms. Dale -- an economist at Mathematica, a research firm -- and Mr. Krueger -- a Princeton economist and former contributor to this blog -- added a new variable in their research. They also controlled for the colleges that students applied to and were accepted by. Doing so allowed them to capture much more information about the students than SAT scores and grades do. Someone who applies to Duke, Williams or Yale may be signaling that he or she is more confident and ambitious than someone with similar scores and grades who does not apply. Someone who is accepted by a highly selective school may have other skills that their scores didn't pick up, but that the admissions officers noticed.

Once the two economists added these new variables, the earnings difference disappeared. In fact, it went away merely by including the colleges that students had applied to -- and not taking into account whether they were accepted. A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.

That's David Leonhardt, though note the caveat:

A few major groups did not fit the pattern: black students, Latino students, low-income students and students whose parents did not graduate from college. "For them, attending a more selective school increased earnings significantly," Mr. Krueger has written. Why? Perhaps they benefit from professional connections they would not otherwise have. Perhaps they acquire habits or skills that middle-class and affluent students have already acquired in high school or at home.

My previous post on this subject is here.

Wonkbook: Rare holiday edition

Usually, Wonkbook doesn't go out on federal holidays. But we'd forgotten it was a federal holiday. And it seemed silly to waste the work. So here's a special, blog-only, edition of Wonkbook.

Top Stories

A House budget vote this weekend raised the likelihood of a government shutdown, reports Paul Kane: "The prospect of a government shutdown appeared more possible Saturday after the House passed a budget measure in the pre-dawn hours that cuts $61 billion - and was immediately rejected by Senate Democrats and President Obama...The debate over the size and scope of the government now moves to the Senate, where leaders have already said that the House plan cuts way too deep and that they are planning a far more modest proposal. But with the Senate out of session all next week, senators have left themselves just a few days to take up a bill before March 4, when the stop-gap measure that is currently funding the government expires. Given the tight time frame, it's unlikely the two chambers can agree on a compromise."

Ed O'Keefe reminds us what a shutdown looks like in practice: "Budget disagreements between Bill Clinton and Republicans prompted these incidents in 1995 and 1996, as federal agencies halted operations and stopped paying workers. For more than 20 days, about 260,000 federal employees in the D.C. area stayed home, or reported for duty only to be sent packing hours later...Agencies retroactively paid workers once the doors reopened, but many government contractors - paid separately by private employers - earned nothing during the shutdown...Obama also warned against suggestions of a shutdown. 'This is not an abstraction,' he said at his news conference last week. 'People don't get their Social Security checks. They don't get their veterans payments. Basic functions shut down. And it - that, also, would have an adverse effect on our economic recovery.'"

Nancy Pelosi has proposed legislation avoiding a shutdown by extending current spending rates for another mont -- but Boehner isn't interested, reports Jonathan Allen: "House Minority Leader Nancy Pelosi introduced a stopgap spending bill Friday night that would fund the government at current levels through March 31, laying down a Democratic marker against Republican efforts to cut from the budget...The government will run out of the authority to spend money on March 4 if Democratic leaders at the White House and in Congress can't reach a compromise with House Republicans. House Speaker John Boehner (R-Ohio) has said that he won't accept even a short-term bill that doesn't cut from current levels, while Pelosi and her Senate counterpart, Majority Leader Harry Reid (D-Nev.), have taken the position that a stopgap measure should fund the government without any reduction."

A moderate Republican is trying to broker a deal in Wisconsin, report Douglas Belkin and Kris Maher: "With Wisconsin Gov. Scott Walker maintaining a hard line on his budget bill and Democratic senators refusing to return to Madison to vote, attention is turning to a group of moderate Republican senators to negotiate a compromise to the stalemate that has drawn thousands of protesters to the state capital for a sixth straight day. The proposal, written by Sen. Dale Schultz and first floated in the Republican caucus early last week, calls for most collective bargaining rights of public employee unions to be eliminated - per Mr. Walker's bill - but then reinstated in 2013...But with Democratic senators indicating they are willing to remain away from the capital indefinitely, state government remains shut down with no end in sight."

Surf pop interlude: Brian Wilson plays "Heroes and Villains" live.

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Still to come: Combined federal, state and local debt exceeds that following World War II; the House spending bill blocks funding for health care reform implementation; unions are warming to the Obama administration after its response to the Wisconsin crisis; the House bill includes riders obstructing EPA climate regulations; and scientists try to build a brain in a computer.

Economy

Combined federal, state, and local debt has reached post-WWII levels, reports Steven Mufson: "The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates. But any similarity between 1946 and now ends there. The U.S. debt levels tumbled in the years after World War II, but today they are still climbing and even deep cuts in spending won't completely change that for several years... The key factor in the rapid drop in government debt, said Harvard University economist Kenneth Rogoff, was fast economic growth... But today the U.S. economy is in a polar opposite condition."

The Senate Democratic leadership is split on including Social Security in deficit talks: http://on.wsj.com/eHtzyX

The G20 has approved vague language on correcting global economic imbalances, reports Damian Paletta: "Negotiators from the world's leading economies haggled all night over seemingly technical details regarding how to measure global economic imbalances. They eventually produced a 53-word sentence intended to appease all sides--and open to interpretation by all sides...Negotiators from the world's leading economies haggled all night over seemingly technical details regarding how to measure global economic imbalances. They eventually produced a 53-word sentence intended to appease all sides--and open to interpretation by all sides...Officials acknowledged that it could create as much confusion as it does attention."

Ben Bernanke defended US monetary policy at the G20 conference: http://wapo.st/gRqChQ

We seem much more comfortable defaulting on debt to teachers than to banks, writes Ezra Klein: "There's been a lot of concern lately that states or municipalities will default on their debt. This is considered the height of fiscal irresponsibility -- an outcome so dire that some are considering various forms of federal support. But the talk that states or cities will default on their obligations to teachers or DMV employees? That's considered evidence of fiscal responsibility. And perhaps it's a better outcome, as defaulting to the banks makes future borrowing costs higher, and can hurt the state economy in the long-run. But it's not a more just outcome."

The Wisconsin governor's union bill isn't about spending, it's about reducing worker power, writes Paul Krugman: "Why bust the unions? As I said, it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state's budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there's not much room for further pay squeezes. So it's not about the budget; it's about the power. In principle, every American citizen has an equal say in our political process. In practice, of course, some of us are more equal than others...Given this reality, it's important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions."

The NFL is a model monopoly, writes Steven Pearlstein: http://wapo.st/gVXBK6

Taxes on harmful activities are one of the best ways to close the deficit, writes Robert Frank: "A tax on any activity not only generates revenue, but also discourages the activity. The second effect, of course, underlies the claim that taxes inhibit economic growth. That's often true of taxes on useful activities, a primary source of current tax revenue. Job creation, for example, is discouraged by the payroll tax, and investment is discouraged by the income tax, which is also a tax on savings. But the reverse is true when we tax activities that cause harm to others...Taxes levied on harmful activities kill two birds with one stone. They generate desperately needed revenue while discouraging behaviors whose costs greatly outweigh their benefits."

Bipartisan negotiations, not budget proposals, will be the main vehicle for deficit reduction, write Erskine Bowles and Alan Simpson: "A bipartisan process is where this must start....The real test is whether he follows through on these good intentions. He has to provide the leadership necessary to create an environment in which it is possible to begin serious negotiations on the tough choices ahead. Building trust and mutual respect is critical to reaching a principled compromise on real fiscal reform. To accomplish something significant, a process has to be formed that puts the right people in the room - leaders who are willing to work together constructively and who are empowered to represent the administration and both parties in Congress. That cannot happen if all involved are not confident that others are negotiating in good faith.

Old technology and older music interlude: A "floppy disk organ" plays Bach's "Toccata and Fugue".

Health Care

The spending bill passed by the House strips funding to implement health care reform, reports David Nather: "The House voted Friday to block funding for the health care law in several ways...As expected, lawmakers approved Rep. Denny Rehberg's amendment to the continuing resolution, which bars all payments to 'any employee, officer, contractor, or grantee of any department or agency' to implement the law...But they also gave unexpected victories to Steve King of Iowa, approving broader measures to deny any implementation funds in the continuing resolution and block salaries to enforce the entire law. And another measure by Jo Ann Emerson of Missouri to block funding for the Internal Revenue Service to enforce the individual mandate - the wildly unpopular requirement for everyone to get health coverage starting in 2014 -- was also approved."

The Obama administration has reversed a Bush-era rule allowing health workers to refuse to offer treatments for reasons of conscience: http://on.wsj.com/gHjSDI

Sen. Kent Conrad wants to revisit the pharmaceutical industry's deal with the administration, reports Alexander Bolton: "Conrad said he 'personally' liked the idea of empowering the secretary of Health and Human Services to negotiate prescription drug prices on behalf of Medicare beneficiaries. Finding savings in the Medicare prescription drug benefit, however, could run afoul of a deal President Obama cut with the drug industry in 2009. The administration pledged not to support collective bargaining on behalf of Medicare beneficiaries in exchange for $80 billion worth of discounts from the drug industry for seniors. Other Democrats are leery about reopening a contentious debate over healthcare reform, Medicare and Medicaid."

Health care reform will make the individual insurance market less of a nightmare, writes Donna Dubinsky: http://nyti.ms/ihSeT6

Domestic Policy

Union leaders are warming to Obama after his response to Wisconsin, report Glenn Thrush and Abby Phillip: "Obama's strongly-worded opposition to GOP plans to repeal the collective bargaining rights of Wisconsin public state employees, which he termed an 'assault' on workers' rights, has gone a long way towards repairing the relationship between the president and his union allies after two years of mutual disappointment and friction...'The president has been accused of watching situations to see how they develop so I think the fact that he issued a clear, clean, quick statement was critical for the relationship. It helps enormously,' said former SEIU president Andy Stern, a key Obama labor ally who served on his deficit commission."

Wisconsin's teacher's union is ordering members back to work: http://wapo.st/ht4x1q

The House spending bill cuts everything from cancer research to border security, reports Philip Rucker: "With both chambers in recess until the week of Feb. 28, Senate Democrats are mounting a public relations blitz this week highlighting specific cuts in the House bill that may be unpopular with the public, such as funding for cancer research. Democrats are also seizing on some line-item cuts to paint Republicans as 'schizophrenic' in their 'indiscriminate budget cutting,' a senior Democratic leadership aide said. For instance, the bill would cut at least $272 million in border security and immigration enforcement, including fencing and surveillance technology. A Democratic analysis shows this would scale back the number of agents patrolling the Mexican border from 21,370 to 20,500."

A new bill would bar the government from shutting down the Internet: http://politi.co/hTVEqq

Obama's proposed cuts to community anti-poverty programs are indefensible, writes Bob Herbert: "Community action agencies were established decades ago to undergird the fight against poverty throughout the U.S., in big cities, small towns, rural areas -- wherever there were people in trouble. It's the only comprehensive antipoverty effort in the country, and the need for them has only grown in the current long and terrible economic climate. President Obama's proposal to cut the approximately $700 million grant by 50 percent is an initiative with no upside. The $350 million reduction is meaningless in terms of the federal budget deficits, but it is enough to wreck many of these fine programs and hurt an awful lot of people, including children and the elderly."

We're straight-up building Skynet now interlude: Henry Markram tries to create a full computer model of the human brain.

Energy

The House spending bill strips funding for EPA climate regulations, reports Darren Goode: "House Republicans led a charge late into the night Friday against Obama administration decisions to regulate greenhouse gas emissions, block mountaintop removal mining and allow increased use of ethanol in gasoline. The continuing resolution faces an uphill climb in the Senate and a veto threat from President Barack Obama, but the myriad votes against the administration's energy and environmental initiatives this week will likely not be the last. Rep. Mike Simpson (R-Idaho), chairman of the Interior-EPA Appropriations subpanel, said the strong support for riders blocking the Environmental Protection Agency will build momentum for future attempts to pass more permanent pushbacks on the agency's regulations."

The EPA is beginning its regulatory review: http://bit.ly/hJ7BVq

Sen. Jeff Bingaman's retirement could hurt future clean energy efforts, reports Darren Goode: "The retirement of Sen. Jeff Bingaman -- the low-key New Mexico Democrat known for his ability to strike centrist deals with Republicans -- raises questions about the long-term impact his departure will have on the development of energy policy in future Congresses...For the last decade, Bingaman has been the top Democrat on the Energy panel, working in an unusually close bipartisan manner with Republicans...Bingaman's decision probably will not affect his agenda this Congress, though it at least means the absence of fundraising and other distractions a reelection effort would bring. 'Perhaps it will provide more time for him to try and move these bipartisan clean energy bills through the Senate,' said Dan Weiss, a senior adviser at the Center for American Progress Action Fund."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.