Federal Reserve Chairman Ben Bernanke told legislators Tuesday that sharp spending cuts and tax increases scheduled to take effect in early 2013 could slow the recovery if federal officials do not take further action.

Despite the recent upturn in the jobs market, Bernanke acknowledged that “the pace of the recovery has been frustratingly slow” and warned legislators against impeding near-term growth in the name of cutting the long-term deficit, reiterating arguments he made before the House Budget Committee last week.

In his testimony, Bernanke described his modestly optimistic outlook for 2012, saying that Fed officials “expect somewhat stronger growth this year than in 2011.” According to last week’s jobs report, the United Staters added 243,000 jobs in January, bringing the unemployment rate down to 8.3 percent, defying many forecasts. Bernanke singled out the revival of manufacturing as a significant factor in leading the recovery. “US manufacturers have become increasingly competitive on global stage,” he said, crediting the country’s leadership in education, research, and technology.

But Bernanke raised concerns that a sharp, immediate push to reduce the deficit could harm the recovery in the upcoming months. In January 2013, he pointed out, the Bush tax cuts will expire, and the major spending reductions triggered by the Budget Control Act will take effect, absent any further action by Congress. As a result, “there will be sharp change in fiscal stance of the federal government. Without compensating action, it would indeed slow the recovery,” Bernanke told the committee members.

However, Sen. Pete Sessions (R-Ala.), the highest-ranking Republican on the committee, pressed Bernanke to answer whether the country’s current deficit was itself holding back the recovery and discouraging key market players. “They’re not reacting to the current level of debt. What they’re attentive to is the process,” Bernanke said, pointing to the political dysfunction that lead to the Standard & Poor’s downgrade of the US credit rating last year.

Instead, Bernanke recommended that legislators come up with a deficit reduction plan phased in over a longer period of time to reduce the risk of immediate shocks to a still-vulnerable economy while promoting a more sustainable fiscal path. “What we want to do is have a credible, strong plan so that the economy doesn’t hit a huge pothole,” he said.

Bernanke also defended the Fed’s policy of keeping interest rates at historically low levels. Last month, the Federal Open Market Committee announced that it expected to keep interest rates at near zero through late 2014. During the hearing, Republican senators raised concerns that the Fed’s strategy would lead to runaway inflation. Bernanke pointed out that inflation had remained relatively low throughout his tenure and expected that trend would continue. “Our projections are that inflation will be very subdued—probably below our 2 percent target in 2012 and 2013.”

Portlandia, the IFC series that returned for its second season last month, updates its theme song:

[Some of the content in this entry could not be displayed on this device.]

Related: The New Yorker profile of Portlandia stars Fred Armisten and Carrie Brownstein and is worth a read.

Yesterday, I wondered over a Gallup poll showing that residents of Washington, D.C., are vastly more optimistic about the economy than residents of any of the 50 states. We’re even more optimistic than North Dakotans, who have a 3.4 percent unemployment rate. Ex-Postie Alec MacGillis sends in a possible answer:

It’s demographics. I’ve wondered about this, too, in seeing similar numbers the past couple years, and figured out that while part of it of course is the relatively stronger local economy, an even bigger differentiating factor is the District’s large black population. In national surveys these past few years, African-Americans have had far higher rates of optimism about the economy and country, even though they’ve been hit harder than anyone. We can speculate about why that’s so — it might be Obama’s presidency, or it might be that they have been through hard times before and so are less likely to feel beaten down by the recession. But that’s what’s behind econ confidence figure — us being inside the recession-proof bubble, and a 50 percent black population.

Alec, by the way, is at the New Republic’s excellent campaign blog these days.

Ben Adler wonders whether landmarking has gone too far:

Landmarking is under attack on two fronts: architectural and economic. Critics in the first category are not opposed to landmarking, but worry that architecturally undistinguished buildings and neighborhoods are winning landmark status for political or sentimental reasons. The result, they say, is a public that embraces architectural nostalgia rather than innovation. At the same time, some economists and policy experts maintain that cities are limiting their economic potential by constraining the supply of new housing and commercial development through too much landmarking. The outcome: Most desirable cities are too expensive for middle-class families.

Matthew Yglesias adds an example from right here in Washington.

A top official of the Susan G. Komen for the Cure foundation who was involved in the controversy over the group’s funding of Planned Parenthood resigned Tuesday.

Karen Handel, vice president for public policy, acknowledged that she had supported Komen’s decision to pull funding for Planned Parenthood in a resignation letter obtained by The Atlanta Journal Constitution. However, she said the decision-making process began before she joined the organization last year, and the policy change was thoroughly vetted at every level within the organization and unanimously agreed to by the board at a November meeting.

“The Board specifically discussed various issues, including the need to protect our mission by ensuring we were not distracted or negatively affected by any other organization’s real or perceived challenges,” Handel wrote to Komen’s CEO and founder Nancy Brinker.

Handel also said she was “deeply disappointed by the gross mischaracterization” of her involvement. The policy change, which would have barred grants to organizations under government investigation, was reversed last week. Planned Parenthood is the subject of a probe launched by Rep. Cliff Stearns (R - Fla.) into whether it has used federal funds to pay for abortions.

During an unsuccessful bid for governor of Georgia in 2010, Handel ran on a platform of defunding Planned Parenthood. Several former Komen employees have said that Handel was a driving force behind Komen’s decision to defund Planned Parenthood.

“Questions about the issue of our involvement with Planned Parenthood significantly ramped up at the time Komen decided to hire Karen,” said John Hammerly, a former senior communications advisor at Komen, who left the Foundation in August 2011.

A Komen board member, John Raffaelli, has disputed that account.

In her resignation letter, Handel, who began working for Komen in January 2011, said that “the controversy related to Planned Parenthood has long been a concern to the organization,” and that the de-funding decision was not based on “anyone’s political beliefs or ideology. Rather, both were based on Komen’s mission and how to better serve women, as well as a realization of the need to distance Komen from controversy.”

Handel said she appreciated an offer by Brinker of a severance package, but declined it.

Petitions calling for Handel’s resignation have been circulating on liberal web sites in recent days.

In a statement on Handel’s resignation, Brinker said, “We have made mistakes in how we have handled recent decisions and take full accountability for what has resulted.”

Related Links

- On Komen, did the media have ‘abortion blinders’?

- ‘Irrevocable’ damage: 24 hours in the life of a Komen executive

- In funding battles, Planned Parenthood’s silver lining

In 2011, Gallup’s polling showed that President Obama averaged an 80 percent approval rating among Democrats and 12 percent among Republicans, making his third year in office one of the most polarizing on record. For a candidate whose campaign promised an era of post-partisan unity, it must be a disappointing reality check.

But on Friday, political scientist Keith Poole released a study that probably cheered the White House. According to Poole’s highly respected classification system, Obama is the most moderate Democratic president since World War II. Which raises a question: How can Obama simultaneously be one of the most divisive and most moderate presidents of the past century?

Poole’s study is based on a system for sorting politicians known as “DW-Nominate.” But DW-Nominate doesn’t directly measure ideology. Instead, it measures coalitions. It’s got pretty much every roll-call vote taken between 1789 and December 2011. It looks to see who votes together and how often. The assumption is that the most ideological members of both parties will do the least crossover voting. And it works. Its results line up with both common sense and alternative ways of measuring ideology, like the scorecard kept by the American Conservative Union.

Over the past century, DW-Nominate has revealed a steady increase in congressional polarization. Democrats have moved to the left, while Republicans have moved to the right. But Republicans have moved a lot farther than Democrats.

“Republicans in both chambers are polarizing more quickly than Democrats,” said Sean Theriault, a political scientist at the University of Texas at Austin. “If the Democratic senators have taken one step toward their ideological home, House Democrats have taken two steps, Senate Republicans three steps and House Republicans four steps.”

Political scientists call this “asymmetric polarization,” and there’s evidence of it all around us. Forty years ago, zero Republicans in Congress had signed a pledge to oppose tax increases in any and all circumstances. Today, almost all of them have. There’s no corresponding pledge on the Democratic side.

DW-Nominate rates presidents by processing Congressional Quarterly’s “Presidential Support” index, which tracks roll-call votes on which the president has expressed a clear position. The system then rates the president by looking at the coalitions that emerged in support of his legislation. In essence, it judges the president’s ideology by judging the ideology of the president’s congressional supporters. So how, in an age of incredible congressional polarization, could this system rank Obama as a moderate?

One answer, says Poole, is that Obama is very careful about taking positions on congressional legislation. In the 111th Congress, he took only 78 such positions. Compare that with George W. Bush, who took 291 positions during the 110th Congress, or Bill Clinton, who took 314 positions during the 103rd Congress. So part of the answer might be that, with the exception of high-profile bills such as health-care reform, Obama is hanging back from most of the congressional squabbling.

Another is that the system doesn’t account for preference intensity. The health-care reform law was a very polarizing vote. But it was only one vote. Or, depending on how CQ counted the law’s multiple legislative incarnations, a couple of votes.

Although the peculiarities of using DW-Nominate to rate presidents are worth pointing out, the data also tell us something else that’s important: Obama is a pretty moderate president. I doubt he’s actually more moderate than Clinton, as the system suggests. But he’s vastly more moderate than the political rhetoric surrounding his presidency — something that was also true for Clinton.

Obama’s financial rescue effort was largely a continuation of the Bush administration’s policies. He resisted calls to nationalize or break up the big banks; modeled his health-care reform bill after legislation that Republicans had proposed in Congress and Mitt Romney had passed in Massachusetts; extended the Bush tax cuts once and intends to make most of them permanent; signed legislation cutting domestic discretionary spending to its lowest level in decades; and supported the same sort of cap-and-trade plan that John McCain once introduced in the Senate. Obama’s presidency has been ambitious, and it’s been polarizing. But in terms of the policy it has produced, it’s been much closer to the market-based approach of Clinton than the forthright reliance on government of LBJ.

Republicans, however, can and should take partial credit for this. Obama is so moderate in part because the Republicans are so extreme. Politicians are ideological, of course, but they are also opportunistic. And the GOP, in closing ranks against almost every major initiative Obama has attempted, has taken away most of his opportunities to be truly liberal. The fight to get to 60 votes in the Senate has ensured, over and over, that Obama must aim his legislation at either the most conservative Democrats or the most moderate Republicans. In this, Obama has only been as liberal as Democratic Sen. Ben Nelson and Republican Sen. Scott Brown have permitted him to be. And that’s not very liberal.

That’s left Obama as a moderate president in an immoderate time. For progressives, that moderation has been repeatedly frustrating. For conservatives, it’s been obscured by a caricature of the president as a free-enterprise-hating socialist. And for the White House, it’s been a calculated strategy. We’ll know in November whether it was the right one.

The political brinksmanship that left the country hanging in limbo just a few months ago has significantly subsided, and that’s helped with the economic recovery, argue VoxEU’s Scott Baker and Nicholas Bloom.

According to Baker and Bloom’s index of “policy uncertainty” — which is based on media mentions of economic uncertainty, soon-expiring tax provisions and the degree of disagreement among economic forecasts — the outlook for U.S. policy is far more stable than it was just six months ago, when Washington was roiled in the debt-ceiling debate. And Baker and Bloom argue that the stability has helped the U.S. economy get back on its feet, pointing to recent evidence of recovery.

The sharp drop in policy uncertainty is the outcome of a few obvious changes: August’s Budget Control Act should keep another debt-ceiling debate at bay until the end of 2012, while “discussions of regulatory and tax reforms have subsided; and attention has moved on to the Republican primaries,” Baker and Bloom write. There will still be a big debate over extending the payroll tax and unemployment benefits, which expire at the end of February. But there’s a general consensus that major policy reform will have to wait until the post-election, lame-duck session, at the earliest. That said, they acknowledge that “policy uncertainty still appears extremely high in Europe with the Eurozone crisis,” which could hold back the U.S. economy as well.

As a prominent breast cancer researcher and activist, Susan Love is no stranger to the Susan G. Komen Foundation. Love runs a breast cancer research foundation that bears her name, and she organized the Army of Women, more than 360,000 women to whom breast cancer researchers can blast out requests for subjects. But the Komen Foundation is so entrenched in the world of breast cancer fundraising, Love says, that she often finds a “G” inadvertently inserted as her middle initial. “It’s unfortunate that we’re both named Susan,” she told me in an interview yesterday. “But I can’t change my name.”

But here’s what Susan Love can do: use last week’s Komen controversy to lure donors to her own group, potentially lessening the group’s behemoth status in the breast cancer charity and research world.

“There certainly are a lot of people who are saying, ‘I’ll never give to Komen again,’ ” says Love. “We want them to realize there are alternatives. They don’t have to switch fields, because there are other people who are working very hard on these issues and who could benefit even more from their donations.”

Komen, founded in 1982, has long dominated the breast cancer charity landscape. Komen had $357 million in revenue last year and is the world’s largest cancer charity. But with a strong backlash last week to the group’s decision (since reversed) to defund Planned Parenthood, Love sees a perfect opportunity to make a pitch to donors looking to defect.

To that end, Love’s Army of Women network got an e-mail blast last Thursday, urging those who want to continue supporting breast cancer research to “redirect” funds to her group.

“Let’s redirect all the money that will be spent on investigating Planned Parenthood into funding studies looking to find the cause and prevent the disease once and for all,” the e-mail says. “Let’s redirect our anger to making mammograms unnecessary because we know how to prevent the disease.”

Love says that her supporters’ reaction to that e-mail has been mixed. She doesn’t yet have data on how the e-mail, or the Komen decision, has impacted her own group’s fundraising. “We had a majority who thought it was great, and agreed with us,” she says. “We had some people who were antiabortion and were mad about it.”

And then, there were some who were confused: “There were at least a few people who didn’t realize that we are not the Susan G. Komen Foundation.”

Whether breast cancer charities will see a funding boost remains to be seen. The Avon Walk for Breast Cancer, a two-day walk to raise money for research, has field numerous inquiries on its Facebook wall from Komen donors seeking more information on its own relationship with Planned Parenthood. It’s put together a fact sheet that explains the group received one grant application from the group in the past five years. Avon did not fund that grant because of the “highly competitive” nature of the grant program, not any policy involving the group.

I reached out to Avon’s communications director, Karyn Margolis, who had heard some rumblings of Komen walkers switching groups, but said that “most of it is anecdotal.”

“It’s hard to know what interest is coming from Komen or word of mouth, since we have a great reputation,” she says. “Also, we’re two days, and the Komen walks are three days, so there’s an aspect that might appeal to those who don’t want to commit for as long.”

For her part, Love hopes that this past week has Komen’s donors taking a second look at what, exactly, their dollars support. She’s contends that the group spends too heavily on breast cancer awareness and is too light on research.

“Komen certainly has increased the visibility in this country and around the world, and it’s a great sense of community,” says Love. “That being said, once you have NFL players wearing pink ribbons, I think you’ve accomplished visibility and it’s time to move on to research.”

And, a fundraising bump for her own group would be nice, too.

Related Links

- On Komen, did the media have ‘abortion blinders’?

- ‘Irrevocable’ damage: 24 hours in the life of a Komen executive

- In funding battles, Planned Parenthood’s silver lining

- What Planned Parenthood does, in one chart

Since I've written many, many Wonkbooks on the threat that Europe poses to America's recovery, it's worth pointing out that there is an increasing number of smart observers downgrading -- if not entirely dismissing -- the continent's importance to the American economy.

Paul Krugman, for instance, argues that "a sharp fall in exports to Europe would be only a small direct hit to demand," though he says that "if European events cause a Lehman-type event, disrupting financial markets world-wide, all bets are off."

Slate's Matt Yglesias chimes in with some optimism on the financial channel. For one thing, Europe's series of half-solutions have bought the American financial system time to cut its exposure to European debt and insulate itself from catastrophe. For another, Europe's priorities in the crisis have, in certain ways, been favorable to our interests. "While Europe's leaders haven't hit upon a way to forestall a years-long span of catastrophically high unemployment and falling living standards," Yglesias writes, "they do appear to be really really really really committed to saving banks. This kind of 'bankers and rich people first' approach to coping with an emergency is terrible for the average European, but it does take care of our main concern from Europe, which was that we might get hit with a sudden credit crunch."

The Economists' Ryan Avent tried to look at the "animal spirits" side of the equation by graphing the Euro Stoxx 500 (an index of major European stock) against the S&P 500. He found both some good news and some bad news: "You can see that American equities outperformed European ones over this period, and that the gap between the two has grown over time. What is also obvious, however, is the high level of the correlation between the two indexes; they move in different magnitudes, but very rarely are out of step with each other entirely."

"The odds of euro-induced global recession have gone down, but the euro-zone crisis will be one of the biggest downside risks to American growth in 2012," Avent concludes. That may not sound like an optimistic statement, but compared to how the world looked six months ago, it is. And if you really want to feel good about Europe this morning -- which I don't particularly advise, but perhaps I'm just a pessimist -- you might note, as Business Insider's Joe Weisenthal does, that we're seeing some unexpected signs of growth across the continent.

Top stories

1) The building blocks for an eventual deal are emerging, report Peter Spiegel, Hugh Carnegy and Quentin Peel: "The concept of setting up a special escrow account for Greece, where resources from the country’s €130bn rescue fund would be used first to service the country’s debt before being handed over to Athens, would tie the hands of the Greek government without imposing Germany’s controversial plan for an external 'budget commissioner'...The latest proposal, coming from both France and Germany, may help to placate officials in European capitals who are looking for more supranational control over Greece’s budget and reform efforts. The escrow account could be run by the International Monetary Fund or by the Fund in conjunction with the EU...However, the scheme will not necessarily persuade Eurozone leaders to come up with the additional to pull Greece back from the brink of default yet again."

But that's not all: Greece also agreed to cut 15,000 public-sector jobs. They have not, however, come to a deal on wage cuts.

@JimPethokoukis: Citi: "We raise our estimate of the likelihood of Greek EA exit to 50% over the next 18 months, from 25-30% previously"

@WestWingReport: If #Greece had one #Euro for each time its fiscal crisis was at a "critical stage" (like today), Greece would not have a fiscal crisis

2) Payroll tax extension negotiations are looking bleak, report Seung Min-Kim and Jake Sherman: "House Ways and Means Committee Chairman Dave Camp’s private assessment of the payroll tax debate is pretty bleak. Late Monday afternoon in Speaker John Boehner’s office, the Michigan Republican told House GOP leadership that the negotiations to extend the tax holiday seem like a replay of the disastrous deficit supercommittee, according to several sources present. Democrats are dragging out negotiations because they think it helps them politically, and Senate Majority Leader Harry Reid (D-Nev.) won’t let Sen. Max Baucus (D-Mont.) cut a deal, Camp told GOP leaders, according to the sources. No one besides Baucus, Camp said, is willing to make the decisions necessary to move forward -- two assessments not shared by Democrats. The tax holiday expires at the end of this month."

GRAPH: All measures of unemployment are falling.

3) Wall Street says financial regulation is ruining their lives, reports Gabriel Sherman: "The crash four years ago was shocking enough to the financial class. But what is happening on Wall Street now is even more terrifying. No doubt the economy itself--the crisis in Europe, the effects of the tsunami in Japan, America’s sputtering recovery--has played a large part in the financial industry’s struggles. But even the most stubborn economies improve eventually. The bigger issues are structural. The Dodd-Frank financial-­reform act, much maligned, has already begun to change the shape of the financial system--even before a number of its major provisions are proposed to go into full effect this coming July. Banks are working hard to interpret Dodd-Frank’s provisions in a way most favorable to them--and repealing Dodd-Frank is a key piece of Mitt Romney’s campaign platform."

Suzy Khimm is skeptical: http://wapo.st/xpu9qJ

4) Obama backed off his opposition to super PACs, report Jeff Zeleny and Jim Rutenberg: "President Obama is signaling to wealthy Democratic donors that he wants them to start contributing to an outside group supporting his re-election, reversing a long-held position as he confronts a deep financial disadvantage on a vital front in the campaign...The decision, which comes nine months before Election Day, escalates the money wars and is a milestone in Mr. Obama’s evolving stances on political fund-raising. The lines have increasingly blurred between presidential campaigns and super PACs, which have flourished since a 2010 Supreme Court ruling and other legal and regulatory decisions made it easier for outside groups to raise unlimited donations to promote candidates."

@RyanLizza: I for one am shocked that Obama, who all but killed the public financing system for pres. elections in 2008, has now relented on super PACs.

@brookejarvis: This bit is new news: Obama "favors action--by constitutional amendment, if necessary" to limit superPACs/ curb Citizens United

5) Obama's upcoming budget plan will look familiar, reports Laura Meckler: "President Barack Obama will release his budget plan next week, calling for $3 trillion in deficit reductions over 10 years, including $1.5 trillion in tax increases to fall mostly on the wealthiest Americans. If that sounds familiar, it's because the president essentially laid out his budget plan in September, following a failed bipartisan deficit-reduction deal. Mr. Obama's plan for fiscal year 2013, which starts Oct. 1, will mirror the September proposal, senior administration officials said. In presenting his plan, Mr. Obama will argue for new spending in targeted areas, tax cuts to spur manufacturing and new investments in education. He will build on his State of the Union message, saying his plan would foster an 'America built to last,' aides said."

Top op-eds

1) The Fed needs to give the economy another boost, writes Matthew Yglesias: "Under the circumstances, the best thing the Fed could do for economic confidence is to not be complacent. It’s great that the unemployment rate has fallen from over 10 percent to 8.3 percent, but, really, shouldn’t we consider even a single month of unemployment above 8 percent as evidence of catastrophic failure? If the Fed launched another round of QE just when people think it’s not needed, it would send exactly the right signal to the economy. The alternative of waiting for bad news to strike before delivering another boost only tells people that we’re aiming for mediocrity. What the jobs numbers are telling us, however, is that the doubters are wrong. The American economy still has the capacity to add jobs and American workers have the capacity to do them. What the economy needs most of all right now is a clear signal that the powers that be aren’t satisfied yet."

2) Obama is, confusing, both moderate and polarizing, writes Ezra Klein: "In 2011, Gallup’s polling showed that President Obama averaged an 80 percent approval rating among Democrats and 12 percent among Republicans, making his third year in office one of the most polarizing on record. For a candidate whose campaign promised an era of post-partisan unity, it must be a disappointing reality check. But on Friday, political scientist Keith Poole released a study that probably cheered the White House. According to his highly respected classification system, Obama is the most moderate Democratic president since World War II. Which raises a question: How can Obama simultaneously be one of the most divisive and most moderate presidents of the past century?"

3) 'Right to work' laws won't bring back manufacturing, writes Ron Klain: "For most policy problems, there is usually a simple answer and a correct answer; they are rarely the same thing. That dilemma is evident in the debate about what the U.S. can do to boost its manufacturing sector. One side was staked out by President Barack Obama in his State of the Union address. Building on the success of his rescue of the auto industry, the president set forth a multipronged approach toward a broader reinvigoration of manufacturing...The opposite approach is embodied by the Republican who delivered that party’s response to Obama’s speech, Indiana Governor Mitch Daniels. His single-minded and simple 'manufacturing plan' wasn’t a feature of his response -- a doom-and-gloom affair that offered little in the way of true alternatives -- but rather was contained in Daniels’ decision to sign a right-to-work law in the days that followed the speech...There are two problems with right-to-work laws as simple solutions for our manufacturing woes: They aren’t right and they don’t work."

4) The U.S. should move away from employer-based healthcare to avoid conscience conflicts, writes Ramesh Ponnuru: "Kathleen Sebelius, the secretary of Health and Human Services, says that a new health-care regulation 'strikes the appropriate balance between respecting religious freedom and increasing access to important preventive services.'...It’s a strange sort of balance. The Constitution provides specific protection to only the first of the two goods being balanced ('religious freedom' and 'increased access'). That protection contains no hint of a suggestion that it is up to federal regulators to strike whatever balance they consider appropriate between religious freedom and their other goals...The best solution would be for the federal government to stop encouraging people to get health coverage through their employers in the first place. If people bought their own health insurance with their own money -- rather than relying on their employer or other taxpayers -- they could pick the policies that best fit their expected needs and moral convictions."

5) Romney shouldn't accept dependency, writes Marc Thiessen: "In Reagan’s vision, conservatives should never accept a permanent underclass trapped in dependency and despair. But that is precisely what Romney described. Here is what Romney said: 'We have a very ample safety net, and we can talk about whether it needs to be strengthened or whether there are holes in it. But we have food stamps, we have Medicaid, we have housing vouchers, we have programs to help the poor.' So Romney is fine with an entire class of Americans being permanently on food stamps, Medicaid, housing vouchers and other government welfare programs? His solution for our fellow citizens trapped in poverty and dependency is to find holes in the safety net and repair them? That is not conservatism. That is liberalism."

Punk rock interlude: Fugazi plays "Merchandise" live at The Asylum.

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

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Still to come: A settlement on foreclosures may not go far enough; Congress can't agree on a doc fix; Congress passes long-term funding for the FAA; the House infrastructure bill moves forward despite revenue disagreements; and a cat tries to get a dog's tongue.

Economy

The housing market is showing wider signs of improvement, reports Vicki Needham: "The housing sector is showing improvement in a growing number of metropolitan areas. The list of housing markets showing measurable improvement expanded by 29 metros in February to 98 on the National Association of Home Builders/First American Improving Markets Index released on Monday. All today, 36 states are represented by at least one market on the list...Home builders have pointed out that while the overall market continues to struggle against a glut of foreclosures, tight lending standards and high unemployment, among other factors, there are steady improvements across the country that indicate the market has hit bottom and will gradually regain its health."

@mattyglesias: Will be ironic if GOP obstruction across 2009 produces a recovery perfectly timed for Obama's reelection.

Low skill workers are being left behind by the drop in unemployment, reports Michael Fletcher: "The nation’s jobless rate has declined to its lowest level in three years, a fact that has left Jamie Bean, an unemployed air-conditioner repairman, feeling more left out than ever...Bean’s predicament is not unlike that of many people who have a high school education or less. Not only were they hit especially hard by the recession but they have continued losing ground in the recovery that has followed. By disproportionate numbers, these Americans have given up looking for work, making the nation’s recovery appear better than it is. If the unemployment rate counted the 2.8 million people who want jobs but have stopped looking, it would sit at 9.9 percent rather than its current 8.3 percent."

Some say the foreclosure deal won't go far enough, reports Brady Dennis: "As state and federal officials near completion of a settlement with banks over shoddy foreclosure practices, a question that has loomed over the talks for months remains: Is it a good enough deal? After nearly 500 days of drawn-out negotiations, public infighting and private cajoling, the emerging settlement would force banks to overhaul their mortgage-servicing practices. It could also require the banks to pay as much as $25 billion in penalties that would be put toward helping struggling homeowners and borrowers who lost their homes to foreclosure in recent years...Some liberal groups and consumer advocates have argued that the expected terms amount to little more than a drop in the bucket, given the size of the housing crisis. Millions of homeowners remain either in foreclosure or are badly delinquent on their mortgages, and the pending deal would reach only a fraction of them."

Stop-motion interlude: An entomologist's nightmare.

Health Care

Lawmakers are deadlocked over Medicare provider payments, reports Robert Pear: "House and Senate negotiators are deadlocked over how to prevent a deep cut in Medicare payments to doctors who treat millions of Medicare beneficiaries, an impasse that could threaten broader legislation on a payroll tax cut. Lawmakers in both parties said they wanted to give doctors a small increase, but could not agree on how to cover the cost. The issue, which is being negotiated as part of the talks over maintaining a reduction in payroll taxes for 160 million Americans, pits health care providers against one another -- doctors versus hospitals -- in a type of conflict that is most likely to become more common as the federal government tries to throttle back the growth of Medicare costs. The payroll legislation would also continue jobless benefits for many of the nation’s unemployed. In the absence of agreement, doctors’ fees will be cut 27 percent next month, and many doctors say they could not continue treating Medicare patients under the lower payments."

Junk food remains widely available in schools, reports Dina ElBoghdady: "Nearly half of elementary school children can buy junk food at school, a trend that contributes to the childhood obesity epidemic and underscores the need for federal regulation of school snacks, according to a study published Monday in a pediatric journal. The study, funded by the Robert Wood Johnson Foundation, comes as federal regulators are crafting a proposal that would set new nutrition standards for foods and beverages sold in vending machines, snack bars and elsewhere in schools. The proposal will not cover foods that are part of the federally subsidized school meal program. That program was revamped recently by the Obama administration and requires participating school cafeterias to start serving twice as many fruits and vegetables, more whole grains and less sodium and fat when the next school year begins."

Should we regulate sugar like alcohol? Some researchers think so.

Domestic Policy

Congress passed a long-term funding bill for the FAA, reports Burgess Everett: "After 1,590 days and 23 short-term extensions, Congress finally gave the FAA a long-term funding bill. The Senate voted, 75-20, Monday evening to send the conference report to the White House, where President Barack Obama is expected to sign it. The House passed the bill Friday. The $64 billion, four-year bill should officially restore stability to the beleaguered FAA. In the past year, the agency has experienced both a two-week partial shutdown that put thousands out of work and the resignation of FAA Administrator Randy Babbitt in December after his arrest on suspicion of drunken driving. But the bipartisan compromise was not without critics. Many labor groups, including the Communication Workers Association, bashed the labor compromise. CWA President Larry Cohen said it amounted to 'a deliberate attack on workplace rights,' concerning Democrats, of whom only 24 voted for the bill in the House."

Congress' insider-trading legislation would crack down on the political intelligence industry, reports Kevin Bogardus: "The lucrative market for political intelligence that runs from Washington to Wall Street could be more fully exposed by insider-trading legislation that is moving quickly through Congress. Lobbyists and operatives are bristling at a provision in the Stop Trading on Congressional Knowledge (STOCK) Act that would require many traders of political intelligence to register for the first time under the Lobbying Disclosure Act (LDA). Observers say the intelligence trade is rapidly growing into a multimillion-dollar industry, powered by clients at hedge funds and other financial firms that can turn a tidy profit on the inside dope about the workings of Congress."

Interspecies friendship interlude: A cat tries to steal a dog's tongue..

Energy

The GOP infrastructure bill is moving forward despite revenue doubts, report Burgess Everett and Adam Snider: "The House’s surface transportation bill -- the GOP’s major job-creation initiative -- is off to an inauspicious start, but Republican leaders are pushing full speed ahead. Although several conservative groups have criticized the five-year, $260 billion measure for relying too much on nontraditional revenue sources like oil drilling, House leaders received a critical endorsement from Grover Norquist, the founder and president of Americans for Tax Reform...Last week, three committees passed major sections of the bill: Ways and Means approved the financing title; Natural Resources cleared three energy bills -- including oil drilling in the Arctic National Wildlife Refuge -- designed to cover some of a shortfall that estimates indicate could top $50 billion; and Transportation and Infrastructure spent 18 hours considering 103 amendments."

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

— Ryan Lizza: The 2012 election’s real swing voters are “disproportionately young, female and secular.”

— The economics of that Clint Eastwood/Chrysler Super Bowl ad.

— GOP Rep. John Fleming thought the Onion’s fictional “abortionplex” was real.

— Half of American pets are dangerously overweight.

— Will Amazon open its own brick-and-mortar bookstores?

President Obama has a sweeping new housing plan that has a slim chance of getting anywhere in Congress. But that doesn’t mean the White House doesn’t have its own tools at its disposal. Last month, the administration expanded its own program to help more home owners with mortgages held by Fannie Mae and Freddie Mac — a move that a new JP Morgan reports says will ultimately help about a half-million borrowers modify their mortgages.

In January, the Treasury Department made changes to the Home Affordable Modification Program to make it easier for borrowers to apply for mortgage modifications that would lower their payments or lower their principal, making them less likely to go into foreclosure. A new JP Morgan report estimates that the changes will lead 1.9 million more potential borrowers to qualify for mortgage modifications, along with 500,000 investors who rent properties, according to Housing Wire.

Altogether, JP Morgan expects the HAMP expansion “to result in 500,000 mortgage modifications that otherwise would not have taken place.” That would help HAMP get back on track with its intended mission: Both HAMP and its cousin HARP (Home Affordable Refinance Program) reached only a fraction of intended beneficiaries, due to recalcitrant mortgages services, fraud, overly stringent rules and other problems. Altogether HAMP has reached only about 900,000 borrowers, well short of the Obama administration’s 3 to 4 million target.

If the changes to HAMP end up succeeding, it could help the Obama administration build the case for the mass refinancing plan they’re pushing to Congress.

Among the indicators Gallup tracks is the “Economic Confidence Index.” The index combines Americans’ assessments of the current condition of the economy and their view of whether it’s getting better or worse, and ranges from +100 to -100, with negative numbers indicating a worse outlook for the economy. In 2011, the index stood at -37. But not in the District of Columbia.

As you can see in the table atop this post, the residents of Washington are more optimistic than, well, anyone else. Our Index is -4. The next-most optimistic state, North Dakota, is at -26. That’s rather odd, given that North Dakota’s unemployment rate is 3.4 percent, while the District of Columbia’s is stuck above 10 percent.

One possibility is that the poll is wrong. Another is that the political nature of the economic crisis leaves residents of Washington feeling more in control than residents of other states. But the truth is that I don’t have a good explanation for this result. Do you?

The Brookings Institute’s Hamilton Project is out with a new study showing a strong correlation between income and marriage. While marriage rates have dropped as a whole over the last few decades, there’s been much a steeper decline in marriage among low-income Americans. Michael Greenstone and Adam Looney suggest that one reason for that drop is that labor-market changes that have altered marriage prospects for those trying to make ends meet, countering conservative claims that social norms and values are responsible for the trend.

Marriage rates among lower-income men and women have declined, but Greenstone and Looney offer different explanations for each gender. Among men, they say, those “that experienced the most adverse economic changes also experienced the largest declines in marriage” between 1970s and the present day.

By contrast, women have made big gains in the labor market over the past few decades. But their greater participation in the workforce--combined with a low-income male population, increasing prison rates for men, high unemployment and diminished earning power--has also kept more women from marrying. As s result, there’s a similar, if less dramatic, correlation between income and marriage among women:

That said, the authors worry about the downside for lower-income Americans of both sexes, particularly for those with families. Among single-parent households of both men and women, “the combination of declines in marriage and declines in economic opportunity have contributed to worse outcomes for some people, and especially for some children,” they write. In other words, poorer Americans are even worse off, in socioeconomic terms, if they stay single.

A paper in this month’s Nature makes the case:

Government imposed regulations on the marketing of alcohol to young people have been quite effective, but there is no such approach to sugar-laden products. Even so, the city of San Francisco, California, recently banned the inclusion of toys with unhealthy meals such as some types of fast food. A limit — or, ideally, ban — on television commercials for products with added sugars could further protect children’s health. To start, [the Food and Drug Administration] should consider removing fructose from the Generally Regarded as Safe (GRAS) list, which allows food manufacturers to add unlimited amounts to any food. Opponents will argue that other nutrients on the GRAS list, such as iron and vitamins A and D, can also be toxic when over-consumed. However, unlike sugar, these substances have no abuse potential. Removal from the GRAS list would send a powerful signal to the European Food Safety Authority and the rest of the world.

This is one of a few regular frameworks floating around in nutrition policy to reduce the consumption of unhealthy food that would take a cue from policy successes in separate arenas. A paper in the New England Journal of Medicine last fall suggested a “cap and trade” approach, where regulators would set a cap on the amount of “Ingredients such as salt, sugar, and unhealthy fats,” theoretically driving up the price of such products. Denmark, meanwhile, recently went forward with an across-the-board tax on foods with high fat contents.

(h/t: Aaron Carroll)

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Wired’s article on self-driving cars suggests that the remaining hurdles are at least as much legal as they are technological:

Beyond bureaucracy, there are deeper legal questions. Ryan Calo, director for privacy and robotics at Stanford Law School’s Center for Internet and Society, which is studying the legal framework for quasi-autonomous vehicles, notes how active the liability landscape already is when it comes to cars’ safety features. “People sue over all kinds of stuff. People sue because some feature that was supposed to protect them didn’t. People sue because their car didn’t have a blind-spot warning when other cars at the same price point did.” Imagine the complexity we’ll have when cars drive themselves. Who will be responsible for their operation — the car companies or the drivers? What happens, for example, when a highway patrol officer pulls over a self-driving car? Who gets the ticket? As a RAND report observed, even as automakers create more semiautonomous technologies, they “will want to preserve the social norm that crashes are primarily the moral and legal responsibility of the driver, both to minimize their own liability and to ensure safety.” Consider what happened to the remote-parking assistant BMW developed a few years ago for getting into narrow spots. “You push a button and the car goes in and parks itself” while the driver waits outside, says Donald Norman, the Design of Future Things author. When he asked BMW executives why he didn’t see it on the market, Norman says he was told, “The legal team wouldn’t let them go forward.”

Meanwhile, James Fallows is waiting on flying cars.

In a post aimed at economist Paul Krugman, Tyler Cowen writes that “it is a bit of an embarrassment for many commentators that the (admittedly weak) recovery is coming right after the end of the fiscal stimulus.” I don’t understand this, for at least three reasons:

- What makes this recovery different from previous recoveries? Cowen appears to believe we have turned the corner. I hope he’s right. But the economy has added an average of 178,000 jobs per month over the last four months. During the first four months of 2011, the economy added an average of 206,000 jobs per month. Perhaps the next four months will look like January (243,000 jobs) rather than October (112,000 jobs), but we have been through longer stretches of robust jobs growth than this one. It seems early for sweeping claims about what the recovery has proven.

- There is a detailed debate about New Keynesian models and Old Keynesian models that is well above my head. But it’s worth noting that the foundational argument for the stimulus package -- the infamous Bernstein-Romer paper -- anticipated a fairly rapid recovery even in the absence of significant fiscal stimulus. That paper was clearly too optimistic, but it also suggests that the pro-stimulus side was working from a model that assumed the economy could turn even in the absence of significant government support. It would just be an uglier, slower recession. Here’s the graph, with reality -- at least, reality through October 2011 -- added onto the top:

- I would like to hear more about how Tyler sees “old” and “new” Keynesians as differing in their current approach to the economy. Most of the people he’s criticizing seem to believe something like, “the economy has a bit of momentum to it, but the recovery would be more secure if we passed a larger payroll tax cut, sent some more aid to state and local governments, embarked on a program of infrastructure spending, got a stronger commitment to growth from the Federal Reserve, passed a long-term deficit reduction plan that includes tax increases, and hoped for the best in Europe.” Which of these recommendations do New Keynesians disagree with?

Here’s Krugman’s response, by the way,

President Obama has nominated Jeremiah Norton — a former Treasury official under Bush and current JP Morgan executive — to the Federal Deposit Insurance Corporation. The nomination could smooth over tensions with Senate Republicans who are still incensed over Obama’s recess appointment of Richard Cordray to the Consumer Financial Protection Board and could potentially filibuster a handful of other key nominees to the FDIC and the Federal Reserve. In fact, Reuters writes that the Senate GOP leadership reportedly recommended Norton to the White House for the position.

That said, Norton is hardly an ideological, anti-government conservative. As a deputy assistant secretary to then Treasury secretary Hank Paulson, Norton not only helped craft the TARP bank bailout and the takeover of Fannie and Freddie, but also helped convince a reluctant Paulson that this was the right course to take. In “Too Big to Fail,” Andrew Ross Sorkin describes how Norton, together with his colleague Dan Jester, prepared the controversial proposal to shore up banks by injecting government funds.

Norton himself had initial doubts about the plan. “This is crazy,” he reportedly said at the time. But ultimately he and Jester sold Paulson on TARP, Sorkin explains. “Based on the work of Jester, Norton, and [assistant secretary for financial institutions David] Nason, [Paulson] wanted to forge ahead and invest $250 billion of the TARP funds into the banking system,” Sorkin wrote. Norton contributed similarly to the government takeover of Fannie and Freddie. “It was a difficult decision, the secretary didn’t want to be here, to go into the firms,” Norton told C-SPAN in 2008. But, he concluded, “this action was necessary to prevent systemic risk that would harm the broader economy.”

Norton still might encounter some objections from the right, as both TARP and the government conservatorship of Fannie and Freddie have come under growing fire from the tea party wing of the GOP. What’s more, the Congressional Budget Office recently raised the cost of TARP in 2012, and the government control of Fannie and Freddie has extended well beyond the 15-month “timeout” that Norton, Paulson and others had originally envisioned.

That said, having apparently received the GOP leadership’s blessing, Norton should have an easier time in the Senate, where 33 Republicans voted to support TARP in 2008 (though not all of them are still in office). And it’s the second time that the White House has taken the Senate GOP leadership’s advice on FDIC leadership, having already followed Mitch McConnell’s recommendation to pick Thomas Hoenig for another key FDIC post.

Graphic designer Adam Ladd records his daughter identifying famous brand logos. Cuteness ensues.

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The health reform law’s requirement that health insurance companies cover birth control without co-pay has seen increased media attention last week. The White House has mounted a more aggressive defense of the provision as it sees more blowback to the provision. Here’s some background on how the debate started, where it stands now and where it’s headed:

How did this all start?

The health reform law requires that insurance companies cover preventive services for women without any co-pay beginning this summer. It did not, however, specify what services to cover — that was left to the Obama administration. With guidance from the Institute of Medicine on the issue, Health and Human Services published a regulation on Aug. 1, 2011 that included birth control as part of the preventive package. That regulation also had a conscience clause, which allows religious employers who object to birth control — and also primarily employ those of their own religion — to be exempt from the requirement. That would allow churches to opt out of the new requirement.

What’s the fight about now?

Some religious leaders say that the exemption wasn’t wide enough: That the Obama administration should allow all faith-based employers regardless of who they employ, to opt out of the new requirement if they object to contraceptives. This wider definition would exempt, among others, Catholic hospitals. The United States Conference of Catholic Bishops has lobbied aggressively for this wider conscience clause, as have a number of prominent Catholics who supported the health reform law. But in final regulations last month, the Obama administration did not expand the exemption.

Let’s say the Obama administration had expanded the conscience clause. Would that allow Catholic hospitals not to provide birth control to their patients?

No, it would not. This regulation only applies to the health insurance that a hospital, charity or other employer provides for its employees. It does not regulate the care that a Catholic charity provides to its patients. As Health and Human Services Secretary Kathleen Sebelius wrote recently in a USA Today op-ed, “our rule has no effect on the long-standing conscience clause protections for providers, which allow a Catholic doctor, for example, to refuse to write a prescription for contraception.”

What happens next?

Two Catholic universities have already filed lawsuits challenging the mandated coverage of contraceptives as a violation of religious freedoms protected under the First Amendment. The Catholic bishops are also looking to file a similar challenge, and some observers expect these challenges could wind their way up to the Supreme Court.

The new rule is starting to play a political role, too, in the 2012 election. Republican candidates have come out against the contraceptive requirement. Former House Speaker Newt Gingrich blasted it as “a direct assault of freedom of religion.” The Obama campaign and its allies have repeatedly defended the new requirement, attacking the Republican field as anti-contraceptives.

How have contraceptive mandates been handled previously?

Twenty-eight states currently require insurance plans to cover contraceptives, although two exclude emergency contraceptives from that mandate.

Nine states do not have conscience clause. Four states have what the Guttmacher Institute describes as “narrow” exemptions, similar to the federal one, which allows churches and other institutions that primarily employ those of their own religion to opt out. Seven states have “broader” exemptions that cover other religious institutions, but not hospitals. Then eight states have “expansive” conscience clauses that allow at least some hospitals not to provide contraceptive coverage.

What about if you get health care through your employer?

Approximately 90 percent of employer-based insurance plans cover contraceptives, according to the Guttmacher Institute, although many may charge co-pays for birth control, which the health reform law will eliminate.