Ezra Klein

Source.

The November jobs report is ugly. Last month, the jobs report showed the economy added 150,000 jobs, sparking hopes that recovery was underway. And the recent economic data had been good: Black Friday saw a lot of shoppers, and initial unemployment claims had been going down. The expectation was that November's report would be yet another piece of good news.

It isn't. The economy created 39,000 jobs in November -- about 160,000 fewer than it'd need to begin cutting into unemployment, and about 100,000 less than it'd need to just keep up with population growth. Speaking of unemployment, the unemployment rate edged up to 9.8 percent.

It's not that these numbers are catastrophic: They're worse than October but better than September. They're just evidence that the labor market's recovery hasn't taken hold yet -- and that is catastrophic. This likely explains why the Federal Reserve is agitating for not just quantitative easing, which it can simply do on its own, but more fiscal stimulus, which Congress would need to approve.

If there's any good news in the report, it's the revisions. "The change in total nonfarm payroll employment for September was revised from -41,000 to -24,000, and the change for October was revised from +151,000 to +172,000." That is to say, the September and October reports undercounted by about 40,000 jobs. That's cold comfort, though.

When Mitch McConnell demanded that Senate Democrats bring the Bush tax cuts for a vote before moving onto other business, I don't think this is what he meant. Yesterday, House Democrats passed an extension of the Bush tax cuts -- but only for income under $250,000. The tax cuts for income over $250,000 never saw a vote. Now the Senate is moving to do much the same thing, though it'll vote on two different proposals: First, the tax cuts for income under $250,000, and then the Schumer compromise extending the breaks for all income under $1,000,000.

Of course, Hill staffers have been perfectly clear that they're viewing these as messaging votes. The bipartisan talks led by Jack Lew and Tim Geithner are ongoing, and there's talk of a deal in which all the tax cuts would be temporarily extended and so too would $150 billion of further tax breaks and stimulus measures (notably an extension of both unemployment insurance and Obama's Making Work Pay tax credit). So the tax cuts being passed this week don't mark the end of this process. They mark the beginning of the end.

Meanwhile, the fiscal commission is set to vote today. Expectations are that 10 of 18 members -- including Sens. Dick Durbin, Kent Conrad, Mike Crapo, and Tom Coburn -- will support the measure. That's well below the 14-person supermajority needed to furnish a recommendation, but it's the next best thing -- a solid majority backed by some powerful legislators. It's hard to be confident about the prospects of a difficult package designed to address a long-term problem when you watch the difficulty Congress is having addressing the urgent expiration of a popular raft of tax cuts, but this will at least give the fiscal commission an argument to push forward: A 10-person majority that includes both Durbin and Coburn is sufficient for the package's supporters to credibly argue the commission's report deserves consideration by Congress and may indeed be the starting point for a compromise.

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The House has voted to extend tax cuts for income $250,000, reports Janet Hook: "The House approved legislation Thursday that would extend current tax rates on income up to $250,000 while allowing taxes on higher earnings to rise, a largely symbolic vote that pointed to divisions among Democrats in the waning days of their dominance on Capitol Hill. The bill passed 234-188, but 20 Democrats opposed it-- mostly lawmakers who lost on Election Day and who agree with Republicans that it is bad policy to let any tax rates rise amid a fragile economy. Three Republicans voted for the bill. The legislation is doomed in the Senate, and President Barack Obama has signaled a willingness to give ground to the Republican position."

The Senate will hold two tax cut votes Saturday, reports Felicia Sonmez: "A bipartisan plan that would have brought four competing proposals for extending the Bush-era tax cuts to the Senate floor fell through Thursday night, leaving both parties again pointing fingers at each other. Democrats said a last-minute objection by a Republican senator scotched the deal, and they accused the GOP of opposing progress on the issue it has touted as its top priority for the lame-duck session...Reid (D-Nev.) told reporters late Thursday that, following the collapse of the deal, the Senate is now poised to file cloture on only the two Democratic proposals, with a vote slated to take place on Saturday."

Obama will likely agree to a temporary extension of all Bush tax cuts, report Lori Montgomery and Shailagh Murray: "The White House and congressional Republicans have begun working behind the scenes toward a broad deal that would prevent taxes from going up for virtually every U.S. family and authorize billions of dollars in fresh spending to bolster the economy. Negotiations have accelerated in recent days as Congress has confronted deadlines for extending a series of tax cuts that expire at the end of the month, renewing emergency jobless benefits and keeping the government funded into next year. The talks mark the dawn of a new era on Capitol Hill, with resurgent Republicans holding far more leverage and commanding a more prominent role in crafting legislation."

The debt commission's plan will receive a majority, but not the supermajority required to get the commission's recommendation, reports Jackie Calmes: "Thursday, 10 of the 18 commission members had endorsed the package put forward this week by the panel’s co-chairmen, former Senator Alan K. Simpson, Republican of Wyoming, and Erskine B. Bowles, former chief of staff to President Bill Clinton. But five members announced their opposition and a sixth -- Andy Stern, former president of the Service Employees International Union -- privately told the chairmen he would vote no."

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Indie cover interlude: Yo La Tengo play Cat Stevens' "Here Comes My Baby".

Still to come: Long-term unemployment might become permanent unemployment for many workers; how the Fed saved Toyota and Harley Davidson, not to mention the world; the child nutrition bill passed; a group of Senators is fighting to preserve ethanol subsidies; and a cat who's quite good at camouflage.

Recap: The Democrats have really mucked up the tax cuts; party disunity has its benefits; and three reasons to relax -- a bit -- about the deficit.

Elsewhere:

1) House Dems passed an extension of the tax cuts for income under $250,000. There's no reason that Senate Democrats and the White House couldn't simply push this as their position, too.

2) How the U.N. Development Program's Human Development Report makes sub-Saharan Africa look worse than it really is.

3) The Chipotle burrito theory of the federal budget.

4) I don't watch Sandra Lee very much. Is this -- could this possibly be -- typical?

The view from campus, via an e-mail I received:

I'm a student at the University of Oklahoma. Today the University hosts recruiters for the U.S. State Department who come to campus to talk to students about career opportunities with the department. In addition to the federal government, Chevron, Halliburton, Goldman Sachs, Exxon Mobile and others also have a recruiting presence on campus. If these employers want highly skilled, highly specialized degrees to join their workforce, they've got to be offering attractive salary and benefits.

If a federal agency recruiter hands a student a recruiting packet and says, "Oh, by the way, there's this little matter of a pay freeze," while the private sector recruiters are talking about potential stock options, guess where that student is going to head when he graduates?

Americans for America. The New Century Foundation for Progress. A Bright Future for Children and Families. PAC names are a genre unto themselves. A proud, optimistic, vapid genre that's designed to sound so much like apple pie that you never think to look at the filling -- or, to be less metaphorical, the money. The Sunlight Foundation decided to have some fun with this and set up a PAC-name generator. Some of these PACs are the real deal, but most are just perfect PAC names waiting to find a home.

What exactly is it that "Strong Women, Good-Looking Men and Above Average Children for Liberty" is advocating? Because whatever it is, I want to advocate it, too.

Soon-to-be-House Speaker John Boehner is not happy to see the House Democrats pushing a bill that includes only the tax cuts for income under $250,000. “I’m trying to catch my breath so I don’t refer to this maneuver going on today as chicken crap, all right?�

There are 238,781 households in John Boehner's district. There are 2,824 of them with an income above $200,000. That's 1.1 percent. And that 1.1 percent is too large, as many of those people make between $200,000 and $250,000, and so every dollar of their income will be eligible for the tax cuts the Democrats are pushing.

So in all likelihood, what separates a tax cut bill that's "chicken crap" from a tax cut bill that's great is its treatment of the richest 1 percent of households in Boehner's district. And $700 billion slapped right onto the deficit. If Republicans win this debate despite the unpopularity of their position and its violent contradiction to their stated concern for the deficit, it'll be one of the most impressive coups in recent political memory.

Photo credit: Harry Hamburg/AP.

The deficit is a problem, particularly in the long term. But to listen to Alan Simpson and Erskine Bowles, you'd think it was going to eat your children. Tomorrow. Without cleaning up the mess.

There's some deficit fear-mongering going around town. Some of it is a function of partisanship: The deficit makes Obama and the Democrats look bad, and that's led a lot of people who want Obama and the Democrats to look bad to get much more excited about debt than they were in, say, the Bush years. If you want to know how seriously to take this, note that the same folks warning that the U.S. is following Greece's path to "to fiscal disaster" are trying to add $4 trillion to the deficit by extending all of the Bush tax cuts indefinitely.

But some of it is a function of legitimate concern. Simpson and Bowles are certainly in this because they're really worried about the debt. The problem is, being concerned about something means you have to get other people concerned, too. And that sometimes requires some overstatement, or at least emphasizing all the reasons for worry. But there are reasons to take heart, too. Here are three of them worth keeping in mind as this conversation moves forward:

1. The market isn't worried -- at least not yet. We worry about the deficit because high deficits create a specific problem for the American economy: high interest rates on government debt, which show that the market is worried about our ability to pay the debt back but also make it hard for both the government and the private sector to borrow. But we're not seeing high interest rates. The government can sell a 10-year bond with a 2.54 percent interest rate right now. When George W. Bush entered office, that was 5.16 percent. When Bill Clinton took charge, it was 6.6 percent. When George H.W. Bush said the oath, it was 9.09 percent.

2. We're the only game in town. The markets can turn on us, of course. After all, they've turned on us before (as you can see from the 1991 interest rate), and they're turning on Greece and Ireland now. But where are they going to go? They need to find government debt that's safer than ours. The natural choice would've been Europe, but the continent is a fiscal basket case. Japan's economy is worse than ours. And China? Riskless? You have to be kidding me. The global economy just doesn't offer conditions conducive for the market to run somewhere else.

3. Debt hasn't gone up by as much as you think. We tend to think of debt in terms of government borrowing. But not all of the country's debt comes from the government. It also comes from businesses and households. And that debt -- private debt -- has plummeted in recent years as companies and households sit on their cash rather than leverage themselves. So though it's true that public debt has risen sharply, private debt has dropped precipitously. The total amount of American debt that the global capital markets are being asked to absorb, in other words, has not changed by nearly as much as people think. A lot of what's happened is we've replaced private debt with public debt. This wouldn't matter if the government were continuing to borrow at the same rates even as the economy recovered, but it isn't.

What you'll notice with this list is that it's about the deficit in the short to medium term. For now, interest rates are low. For now, there's nowhere else for the money to go. For now, the rise in public debt has been paired with a drop in private debt. We have serious long-term problems that aren't amenable to these excuses. But that's the old story about how we need to get our health-care spending under control, and it's a story that we can resolve over a period of years or even decades -- which is exactly what all the deficit plans do in their health-care sections.

All of which is arguably reason for optimism. I don't think the chances for a big deal in the next year or two look very good. Nothing Congress does to reduce the deficit will match the damage it's going to do by extending the Bush tax cuts. But we might well see a large number of smaller deals reached in coming years -- much as we saw during the '90s (we had deficit-reduction bills in 1990, 1993, 1995 and 1997). And though you wouldn't know it from the rhetoric, that might be enough. Maybe.

Sen. John Cornyn's threat to leave Republican senators who vote against the earmark ban to the tender mercies of primary challengers is provoking spasms of yearning among liberals who envy that sort of party discipline. But should it? Consider this graph tracking the partisan composition of the Senate over the past 40 years:

Democrats have higher highs, and Republicans have lower lows. The difference is only a couple seats here and there -- Republicans top out at 55 seats in 2006, and Democrats at 61 seats in 1977 -- but in the United States Senate, a couple of seats really matters. It was the primary challenge that drove Arlen Specter from the Republican Party that was ultimately responsible for health-care reform. Without Specter's temporary membership in the Democratic Party, Reid wouldn't have had the 60 votes needed for passage. Similarly, Joe Lieberman, who Democrats let hang onto his seniority even after he endorsed the Republican presidential candidate in 2008, was also a crucial vote for the health-care bill, though he certainly extracted his pound of flesh along the way. To put it another way, party disunity is probably responsible for Democrats' most important achievement in generations.

Republicans suffered for their unity this year, too. If not for primaries in which the much more conservative, but much less electable, candidate took the nomination, Delaware, Colorado and Nevada would've flipped to the Republicans. That would've left the Senate with a 50-50 split -- and made it much likelier that, say, Ben Nelson or Joe Lieberman walked across the aisle to hand control to the Republicans.

Party disunity isn't very emotionally satisfying. Quite the opposite, really. But it often works.

Seldom is the question asked: Why not eat insects?

This post by Greg Sargent contains some wise words on the psychology of the Democrats:

At risk of overgeneralizing, the problem isn't that Dems aren't capable of winning an argument. It's that they don't think they're capable of winning a protracted political standoff, even on an issue where the public is on their side, once Republicans start going on the attack. They seem to set their goal early on at salvaging a compromise, rather than going for the win. As a result, they tend to telegraph weakness at the outset, sending a clear message that they'll essentially give Republicans what they want as long as they can figure out a way to call it a compromise.

It's very important to realize how strong of a hand Democrats had -- and to some degree, have -- on the Bush tax cuts. Right or wrong, the Democrats' original position on this was that the tax cuts for income under $250,000 should be extended, and the tax cuts for income over $250,000 should expire. The public agrees: 49 percent share the Democrats' position, 14 percent want all the tax cuts to go, and 34 percent want to see all the tax cuts extended. Put another way, 63 percent of Americans don't want the tax cuts for the rich extended.

The GOP understood this just fine: Back in July, Rep. Dave Camp, then the ranking Republican on the House Ways and Means Committee, admitted that his party couldn't hold tax cuts for the middle class hostage in order to secure tax cuts for the rich. "I'll probably vote for it myself," he said of the Democrats' proposal. In September, John Boehner joined him. "If the only option I have is to vote for some of those tax reductions," he told Bob Schieffer, "I'll vote for it."

Democrats, it seemed, had won this one. They had the popular position, the president's veto pen and control of the Congress. But they simply refused to carry the ball over the goal line. Instead, they began negotiating with themselves, talking about millionaires' brackets and short-term extensions. Republicans noticed the Democrats' disarray and lost their fatalism: "Incoming House Majority Leader Eric Cantor (R-Va.) said on Bloomberg Television he was ready to instruct GOP members to vote down legislation Democrats plan to bring to the floor that would extend the expiring Bush-era tax cuts only for the middle class."

Now it looks like all the tax cuts will be extended, at least for the moment. But it's a baffling outcome. The structure of the situation favored -- and continues to favor -- the Democrats. No tax cuts pass without their support, and Republicans have previously admitted that their position isn't popular enough to prevail in a standoff. The only thing that's changed is that Republicans have realized Democrats aren't confident enough to enter a standoff. But it didn't have to be this way. Think back to early this week, when the president announced the federal pay freeze. "The hard truth is that getting this deficit under control is going to require broad sacrifice," he said. "And that sacrifice must be shared by the employees of the federal government." Here's what he could've said next:

It also must be shared by those among us who've prospered most in recent years. Even before the financial crisis, middle-class incomes had stagnated. But the incomes of the wealthiest Americans hadn't. Similarly, America's upper class has recovered from the crisis much quicker than the working class. There's nothing wrong with that: The country depends on the ingenuity and resourcefulness of its most successful citizens. But in a time of high deficits and belt tightening, it makes $700 billion in tax cuts that go solely to the top 2% an unreasonable expense. Those tax cuts were passed in a time of surplus, and now we're in a time of deficits. As our situation changes, so must our policy. I will veto any bill that extends those tax breaks.

He not only could've said it, he could've stuck to it. But he didn't. Instead, Jack Lew and Tim Geithner are now supposed to negotiate out a deal, and the White House will be blamed for the inevitable concessions and disappointments it includes. I'm not against deal-making, of course, and I've regularly defended the administration's pragmatic concessions. But there are times when you can get more at the negotiating table, and times when you can get more by declaring that there's simply nothing to negotiate. This was the latter.

Photo credit: Melina Mara/The Washington Post.

We do, apparently:

More than half — 53 percent — of all economists in the United States are employed by the government.

(Hat tip: Catherine Rampell.)

I really worry when Barry Eichengreen -- perhaps America's most knowledgeable economist when it comes to E.U.-related issues -- begins saying things like this:

The Irish “rescue package� finalized over the weekend is a disaster. You can say one thing for the European Commission, the ECB and the German government: they never miss an opportunity to make things worse.

It pains me to say this. I’m probably the most pro-euro economist on my side of the Atlantic. Not because I think the euro area is the perfect monetary union, but because I have always thought that a Europe of scores of national currencies would be even less stable. I’m also a believer in the larger European project. But given this abject failure of European and German leadership, I am going to have to rethink my position.

There's much more at the link, and it gets more, not less, depressing.

"Do we really need another deficit-reduction plan?" I ask Andy Stern. I like this stuff, but even I'm getting exhausted by the endless parade of plans, each just slightly different than the last, and none with an obviously supportive constituency in Congress. He laughs. "Yes," he says. "We need to debate as many as we possibly can. We need to get this right."

Stern, the former president of the Service Employees International Union, is a member of the Simpson-Bowles Commission. He's not the only participant to bring out his own plan (pdf) -- both Rep. Jan Schakowsky and Alice Rivlin have already released separate proposals -- but his plan is more clearly distinguished from the others. This is, in part, because where they reduce one deficit, he reduces two.

Stern's proposal cuts and raises about $4 trillion by 2020, which is comparable to the Simpson-Bowles proposal, and sufficient to get us back to the black. "But we need to appreciate that we have two deficits," Stern says. "A fiscal deficit, and an investment deficit. A family under stress would think hard before they didn’t invest in their kid’s education. A company under stress would think hard about not investing in new equipment that it needed. I wanted to show you can invest as well as cut."

Stern's critique of the fiscal commission is that its mandate has been too narrow: You can cut and tax your way to a balanced budget, but more is needed for a dynamic economy. His plan calls for the creation of "a permanent fund beginning in 2015, with an initial investment of $75 billion dollars, increasing by 3% annually. A range of long term investments (e.g. infrastructure, smart grid, education, and broadband) will be recommended each year by an outside panel of experts appointed by the President and Congress."

The point, he says, is that Congress isn't very good at creating space in the budget -- or in the budget process -- for long-term investments. In a PAYGO world, investing in something new means taking from something old, and the old thing has entrenched interests, while the new thing rarely does. So if we want long-term investments, we need a dedicated fund with a dedicated funding source. Stern proposes a few possibilities: a financial transaction tax, for instance, that would add a 0.25 percent-0.5 percent charge onto stock transactions if the stock is held for less than a year (that way, it mainly falls on professional investors making speculative trades, not ordinary investors managing their retirement savings). Another option is a surcharge on income over $1,000,000.

You can imagine a lot of ways to fund such a project. Stern's point is that you can implement one of them at the same time you're reducing the broader deficit. General austerity doesn't mean there aren't opportunities -- and even a need -- for targeted investment. That raises the question, of course, of whether Stern plans to vote for the Simpson-Bowles plan on Friday. "I'm still trying to figure out what I want to do on that," he says. "But the thing I definitely wanted to do was highlight a larger discussion on jobs, investment, and competitiveness which the commission and the country still needs to have."

Photo credit: Haraz N. Ghanbari/AP.

We're fast approaching the midnight hour for the Bush tax cuts, and Congress still hasn't reached a deal. In fact, it increasingly looks like they won't really reach a deal. Instead, they'll punt: We'll see a short extension of the tax cuts, coupled with the hope that some future Congress will do a better job. If that's what we end up getting, however, it'll be an open question why we had to wait till the last moment, and go through so much drama and acrimony, to get to it. The Bush tax cuts have been set to expire this month for the last 10 years. A long legislative process over what to do next makes sense if you're making the tough choices and building the unlikely coalitions necessary to, well, do something next. But not if you aren't.

There's something slightly perfect, however, about watching the tax cuts barrel towards extension at the same moment that the fiscal commission releases its final report and takes its final vote. Some of the commission's legislative members have begun making positive noises about the body's proposal, and the final vote may not be as disastrous for Simpson and Bowles as many expected. At the same time, whatever the Simpson-Bowles Commission ends up doing, part of Congress's role is to be the country's fiscal commission. And watching their ability to plan for the expiration of the Bush tax cuts and chart a thoughtful path forward, it's difficult to say that they seem up to the task.

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Democrats will likely accede to a temporary extension of all Bush tax cuts, report John McKinnon and Janet Hook: "Separate from the formal negotiations, congressional aides from both parties have begun discussing a temporary extension of the expiring tax cuts...They have considered short-term extensions of a number of business and individual tax provisions that are expired or expiring, such as a popular research credit and middle-class protection from the alternative minimum tax. A likely outcome includes a one- to three-year extension of the Bush-era income tax rates and a two-year extension of the business provisions, according to aides. The package could include Democratic priorities such as extension of tax breaks that benefit the working poor, as well as further extension of unemployment benefits for the long-term jobless."

Republicans are blocking all action in the Senate until a deal is reached on the Bush tax cuts, reports David Herszenhorn: "Not even 24 hours after President Obama met with senior Republican Congressional leaders and expressed hopes for a “new dialogue,� renewed partisan fury engulfed the Senate on Wednesday, as Republicans threatened to block any legislation until a deal is reached to extend the expiring Bush-era tax cuts, potentially derailing the Democrats’ busy end-of-year agenda. The blunt threat was made in a letter to the majority leader, Harry Reid of Nevada, and signed by all 42 Senate Republicans."

Real talk: This is less about the Bush tax cuts -- which are currently being negotiated, and will not move faster if people get angrier -- than about stopping Democrats from passing other priorities, like the DREAM Act.

It's also strengthening filibuster-reform advocates like Sen. Jeff Merkley: And you know what? His new reform proposal makes a lot of sense.

The debt commission's members expressed cautious support for its chairmen's final proposal, report Lori Montgomery and Brady Dennis: "While only seven of the 18 members endorsed the package outright, others staked out positions that could change the terms of the well-worn Washington debate over taxes and spending. Sen. Richard J. Durbin (D-Ill.), one of the panel's most influential liberals, embraced a proposal to raise the retirement age to 69 in 2075, calling it 'not radical' and 'acceptable to me'...Rep. Jeb Hensarling (Tex.), a leader of the GOP's conservative wing, said he could live with a proposal to cut military spending and increase overall federal tax collections as long as income tax rates were lowered, spending cuts were enforced and Democrats agreed to reexamine the growth of spending envisioned under the recent health-care law."

FCC chairman Julius Genachowski has gave a speech laying out his network neutrality proposal: "Consumers and innovators have a right to a level playing field. No central authority, public or private, should have the power to pick which ideas or companies win or lose on the Internet; that’s the role of the market and the marketplace of ideas. And so the proposed framework includes a bar on unreasonable discrimination in transmitting lawful network traffic."

Early reaction: Telecom companies like it, network neutrality advocates and content providers like Google and Facebook do not.

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

Supergroup interlude: Gayngs play "The Last Prom on Earth".

Still to come: The Fed's aid programs went to businesses like Caterpillar and GE; a Senate hearing assails "mini-med" health plans; the food safety bill may not pass after all; the GOP majority is disbanding the House climate change committee; and a salsa-dancing dog.

Recap: The best and worst ideas in the fiscal commission's final report; Republicans dare Democrats to reform the filibuster; and Obama's bad poker.

Elsewhere:

1) Avik Roy rounds up the fiscal commission's health-care proposals.

2) Google attacks its grifters.

3) I think Ross Diuthat is right about Wikileaks.

4) Felix Salmon assesses Gawker's new strategy and structure.

Recipe of the day: It's the first night of Channukah, so here are some latke ideas.

Mitch McConnell's threat to filibuster literally everything Democrats want to do until Democrats and Republicans agree to a compromise on the Bush tax cuts can be read as a power play, but it can also be read as a dare: At this point, Republicans are sure that they can abuse the rules as much as they'd like and Democrats won't dare do a thing about it. McConnell's blanket filibuster now joins Richard Shelby's blanket hold as the two most egregious acts of procedural brinkmanship in a Congress that's been chock-full of rules-based obstruction.

If there's a wild card here, it's Sen. Jeff Merkley and the other Democrats who've been agitating for rules reform for well over a year now. Today, Merkley released his proposal (pdf), and it's a detailed, thoughtful and supportable package of reforms -- even for those who believe in the filibuster.

Merkley starts with a simple observation: "The Senate’s original commitment to full and open debate has been transformed into an attack designed to paralyze and obstruct the Senate’s ability to function as a legislative body." That leads to a principle that's not often associated with reform of the filibuster, but perhaps should be: "Reforms should increase the ability of the minority party to participate in the process. Any approach that fails to take this approach will be viewed as a power grab and will be counterproductive."

On page 116 of “The Promise,� Jonathan Alter describes President Obama's approach to the stimulus as "bad poker." "Instead of holding his cards close, and then sweetening the pot for Republicans with tax cuts in the final negotiations, [Obama] offered nearly $300 billion in tax cuts at the front-end of the process. ... It was a big bargaining chip left off the table."

Obama has since admitted as much. "It might have been better for us not to include tax cuts in the original package, let the Republicans insist on the tax cuts, and then say, O.K., you know, we’ll compromise and give you your tax cuts," he told Peter Baker. So why does he keep including the tax cuts?

Annoyed congressional staffers and baffled strategists rattle the list of concessions the White House has unilaterally made to Republicans from memory. There were the $300 billion in tax cuts, of course. The non-security discretionary spending freeze, a longtime Republican demand that the Obama administration simply announced during the 2010 State of the Union (Republicans responded by demanding discretionary spending cuts back to 2008 levels). During the climate-change debate, the administration gave away an expansion of offshore drilling, loan guarantees for nuclear power plants and delay of EPA regulations until 2011 -- all Republican demands that Lindsey Graham, John Kerry and Joe Lieberman were hoping to trade for GOP support. "Obama had served the dessert before the children even promised to eat their spinach," reported Ryan Lizza. "Graham was the only Republican negotiating on the climate bill, and now he had virtually nothing left to take to his Republican colleagues." And most recently, there's the two-year freeze in federal pay.

Different parts of the White House give different answers when asked about this strategy. Some argue that these decisions were simply good policy, and the president is right not to treat them as bargaining chips. The whole theory of legislative politics as some sort of negotiation is wrong, they say. The Republicans were never going to negotiate, and so holding these as chips would've simply meant never doing them. Better to do them unilaterally and get the credit. Some will defend certain policies but not others. The tax cuts were done unilaterally because the administration was committed to a particular design that it thought would do more for the economy, though this doesn't get mentioned much because it makes them look less bipartisan. And some staffers just laugh ruefully when you use the word "strategy."

"The best negotiator I ever came across was [former Reagan and Bush chief of staff] Jim Baker," says Paul Begala, who served as an adviser to President Clinton. "He began every negotiation with this sentence: 'Nothing is agreed to till everything is agreed to.' So no one can pocket anything, and no one suffers for making the first move." To many Democrats, Republicans have simply proven the wisdom of Baker's strategy: They keep pocketing these gains without giving the White House any credit, while both the Democrats and Obama take lashings from their base for being insufficiently principled and tactically incompetent.

Julia Ioffe has a fascinating article on the prevalence and increasing acceptability of infidelity in Russia:

20 years ago an affair was considered a career-wrecking scandal. But by 1998, a study showed that Russian men and women led their peers in 24 other countries in their willingness to engage in and approve of extramarital affairs. Since then, these attitudes have taken hold more deeply after a prolonged consumer boom that encourages Russians to indulge their whims and desires. What does this culture of infidelity look like, and what are the costs?

There are fewer numbers in here than I'd like, but this sort of thing probably isn't amenable to survey data. What it basically shows, however, is the degree to which economic reality drives moral judgments. Russia has 10 percent fewer men between ages 15 and 64 than women, it's quite poor given its level of development, and men are far better off. That's a pretty good recipe for a society in which male sexual preferences will win out, and because they win out, eventually become tacitly, if not explicitly, accepted.

How did I not know Top Chef All Stars was premiering tonight? As a preview, here's Richard Blais, who's my favorite among the contestants, preparing tofu in beef fat, which was his answer to the "perplexed tofu" challenge in season four:

David Pogue runs through 10 lessons he's learned in 10 years covering technology. It's a good list, but I'd add one more: I think the cool, knowing thing is to dismiss a lot of the breathless gadget-hype out there, but I'm becoming increasingly convinced that this stuff matters much more than most people are willing to admit. I remember poo-pooing Twitter a few years ago, but now the micro-writing service is an important part of not just my life, but many millions of other people's lives. Frankly, I can't get my head around the implications of Facebook having 500,000,000 members -- and growing. And these are young technologies that people are just starting to figure out. We really don't know their full reach and potential.

I was talking with Tim Wu on Tuesday, and he argued that the direction these technologies take are going to be much more important in terms of human freedom than most of the policy decisions we're likely to make in the near future. And he's probably right about that. Cell phones open communication options for the third world that were inconceivable years ago. Authoritarian regimes struggle to lock the internet down, but are only partially successful. Privacy norms are being totally transformed. People who have trouble navigating traditional social situations suddenly have a whole new expanse of both commercial and personal opportunities to traverse. All this stuff matters, and the enabling technologies and ideas are coming so fast that the coverage is almost necessarily breathless. But that doesn't mean it's wrong.

Here's the story of bipartisanship since the election. President Obama asked the House and Senate Republican leaders, John Boehner and Mitch McConnell, to the White House on Nov. 18 to talk through a compromise on the Bush tax cuts and other pressing agenda items. Two days before the meeting, McConnell and Boehner said they couldn't make it because of "scheduling conflicts." They asked for a two-week delay. The White House agreed.

The night before the meeting, White House officials capitulated on a longtime GOP demand and froze pay for federal workers. They did not do this in consultation with the GOP, which blunted its worth as a token of bipartisan good faith. But most Republicans nevertheless understood it as a nod to their priorities and momentum. "The President has done the right thing today by taking steps to check the explosive growth of government," said Rep. Paul Ryan, who is set to chair the House Budget Committee. "This is the kind of cooperation we were hoping for when we advanced this proposal last May, and we’re glad to see the President embrace this spending cut proposed by House Republicans."

The morning of the meeting, Boehner and McConnell did not respond with the kind of cooperation the White House was hoping for. Instead, they published a joint op-ed in The Washington Post. "We made a pledge to America to cut spending, rein in government, and permanently extend the current tax rates so small-business owners won't get hit with a massive tax hike at the end of December," they said. "That's what Americans want. And that's the message Republicans will bring to the meeting today." So much for compromise.

We won't know until Friday whether the final proposal from Alan Simpson and Erskine Bowles can attract the votes of 14 of the commission's 18 members. Right now, the outlook is doubtful. But we do have the final proposal, so we know the policy options they're offering. Here are the four best and five worst parts of the plan:

The good:

A payroll tax holiday in 2011: Simpson and Bowles embrace the Bipartisan Policy Commission's proposal for a payroll-tax holiday in 2011. Actually, "embrace" might be a strong word. They say Congress should "consider" it. Still, a nod toward the need for policies speeding recovery is better than ignoring that need altogether.

Process, process, process: The Simpson-Bowles recommendations correctly identify congressional inertia as the central impediment to deficit reduction. And so they try to address it. To enforce discretionary spending cuts, they make spending that busts the caps ineligible for the reconciliation process, demand that Congress take a separate vote, and then instruct OMB to cut appropriations spending across-the-board by the amount that Congress has overspent unless Congress takes another vote to stop them. Inertia, in this case, is on the side of the deficit hawks.

On the health-care side, they strengthen the Independent Payment Advisory Board by applying it to all health-care providers sooner. They push tax reform through a "failsafe" that automatically increases taxes if Congress doesn't rework the system by 2013. They also include rules forcing different bodies to watch over health-care spending and the full government budget and automatically offer recommendations for reform if costs exceed preset limits. Whether these are the exact right procedural reforms is up for debate -- and probably doubtful. But the commission is right to emphasize the need for procedural reforms.

Defense spending and tax expenditures are major problems: The most positive impact the commission has had on the debate has been to move two formerly sacrosanct categories of spending onto the table. There's a lot of money in the defense budget, and much of it is wasted, but when Washington talks about cutting spending, it usually talks about "non-defense discretionary spending." The commission cuts equally from defense spending and non-defense spending. Tax expenditures like the mortgage-interest deduction also tend to get a pass, but here they come under the knife. It's very difficult to imagine any budget deal that isn't aggressive on both these fronts, so kudos to the commission for adding them.

A two-sided deal on Social Security: I don't particularly like the commission's Social Security recommendations, but I do like their vision of a deal that's more than just cuts and taxes. Their proposal sharply increases Social Security's minimum benefit, making it a better deal for poor retirees, if not for the average retiree. It also increases benefits for very old retirees, who may have outlived their savings. That's a good addition to the eventual debate over the system's solvency and sufficiency.

The bad:

The outcome of yesterday's long-awaited powwow between President Obama and the Republican congressional leadership was a plan for further powwows -- these helmed by OMB director Jack Lew and Treasury Secretary Tim Geithner and including one negotiator from both parties from both chambers -- meant to get past the impasse over the Bush tax cuts. Which is to say, the White House just took ownership of this process. A bad deal is now their bad deal. A failure to reach a deal is now their failure to reach a deal. And one of those outcomes is probably more likely than a great deal that somehow makes everyone happy.

The White House could've left this to Congress and simply run against -- and vetoed -- any outcomes they didn't like. That they're inserting themselves this directly is surprising considering that many in the building believe the legislator-in-chief role Obama assumed over the last two years yoked them to congressional dealmaking and sunk their popularity. It suggests, actually, that this approach is encoded deeper in the administration's DNA than some previously thought.

Top Stories

Obama and Congressional Republicans launched negotiations on extending the Bush tax cuts yesterday, report Shailagh Murray and Perry Bacon: "The most tangible publicly announced accomplishment in the two-hour closed-door session was an agreement to form a bipartisan group to seek a solution to the impasse over taxes. The group - Treasury Secretary Timothy F. Geithner, White House budget director Jacob Lew and two lawmakers from each party - held its first meeting Tuesday afternoon...What could break the logjam is a deal to extend all the cuts temporarily, along with horse-trading on other issues important to both parties, according to people present at the White House meeting."

The fiscal commission will release -- but will probably not agree on -- a plan, reports Lori Montgomery: "Co-chairmen Erskine Bowles and Alan K. Simpson said they would release their final blueprint when the commission convenes Wednesday morning. Like the original, they said the new plan would offer an aggressive prescription for reducing deficits by nearly $4 trillion by the end of the decade. But the panel's 18 members - including a dozen sitting lawmakers from both parties - will have until Friday to review the document and decide whether to support it. After two days of one-on-one meetings with their members, Bowles and Simpson acknowledged that it will be difficult to assemble the 14 votes that would allow them to issue official recommendations."

The commission will release its report at 9:30am today: And you'll be able to download it here.

The Senate passed major food safety legislation, reports Lyndsey Layton: "The Senate on Tuesday approved the biggest overhaul to the nation's food safety laws since the 1930s. The 73-to-25 vote gives vast new authorities to the Food and Drug Administration, places new responsibilities on farmers and food companies to prevent contamination, and -- for the first time - sets safety standards for imported foods, a growing part of the American diet. The legislation follows a spate of national outbreaks of food poisoning involving products as varied as eggs, peanuts and spinach in which thousands of people were sickened and more than a dozen died."

But rejected a moratorium on earmarks, reports Felicia Sonmez: "The Senate on Tuesday rejected a plan that would impose a two-year moratorium on federal earmarking for lawmakers' pet projects, with a handful of Republicans joining with most Democrats to defeat the measure. The proposal, which would have needed a two-thirds majority to pass, failed by a 39-to-56 margin. Seven Democrats voted for the ban, including Sens. Mark Udall (Colo.) and Claire McCaskill (Mo.) (who were among the bill's co-sponsors), Evan Bayh (Ind.), Michael Bennet (Colo.), Russ Feingold (Wis.), Bill Nelson (Fla.), and Mark Warner (Va.). McCaskill and Nelson are both up for re-election in 2012 and are likely to face tough battles to hold onto their seats."

Real talk: There are a lot of Republican senators who voted for the earmark ban but who are very thankful to their Democratic colleagues for killing the idea. Think Mitch McConnell, Olympia Snowe, and other longtime defenders of earmarks who didn't feel politically secure saying no to the tea parties on this one.

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Cartoon band interlude: Gorillaz plays "Glitter Freeze" on Late Night with David Letterman.

Still to come: The fiscal commission is still split; a challenge to health care reform has been dismissed in court; the Senate has rejected an earmarks ban; a bipartisan group of Senators is fighting ethanol subsidies; and a bulldog goes to war with a doorstop.

Recap: Mitch McConnell's political psychology -- and ours; the federal-pay freeze and private-sector resentment; and why is the Obama administration making the tax cuts its problem?

Elsewhere:

1) "I'm a senior at Harvard and I'm undocumented."

2) Inexpensive HDMI cables are a right, not a privilege.

3) If this sentiment is really prevalent among Republicans, it explains a lot.

4) Is there any evidence that the actual budget deficit matters politically?

Recipe of the day: Grilled brussels sprouts.