1. The IRS “scandal” is rapidly devolving from a formal investigation of potential criminal law-breaking (which remains unlikely) into a bifurcated debate over (a) an alleged widespread effort by the Obama administration to intimidate conservatives during the 2012 campaign (the topic of most conservative chatter, typified by a Wall Street Journal column by James Taranto arguing that the president’s attacks on conservative political groups operated as a “dog whistle” to all government agencies encouraging partisan behavior), and (b) the White House’s fecklessness in handling the “scandal” before and after it emerged.  These are very different, and often conflicting, “story lines,” that will be competing for attention as the investigation continues.

2. The three-dimensional chess involved in getting immigration reform legislation through Congress was illustrated yesterday by the successful Senate Judicial Committee action reporting a bill to the floor, which required compromises on same-sex couples’ rights and “high-skills” visas that gave Democrats heartburn, and the continued stalemate within the House Gang of Eight (which over-optimistically or misleadingly reported an “agreement in principle” last week) over health care provisions unacceptable to House Democrats.

3. Even as the supposed Washington obsessions with economic and fiscal policy disappeared further from sight, Fed chairman Ben Bernanke lashed Congress in testimony before the Joint Economic Committee for very nearly inverting his recommended formula of short-term stability (or mild stimulus) combined with long-term deficit reduction measures. It’s the most direct attack yet by the Fed on fiscal austerity measures (folded into warnings that monetary policy can accomplish only so much), but it’s unlikely to produce much reaction, particularly from Republicans pleased with short-term spending cuts and demanding more.

4. In a real live election, the second largest city in America elected a new mayor, and almost nobody noticed.  That would include a great many citizens of the city involved, Los Angeles.  Only 19% of registered voters turned out to give city councilman Eric Garcetti a comfortable (54-46) runoff victory over city controller Wendy Greuel, despite a total of $33 million in campaign expenditures since the race began.

But the president’s pick portends big changes in housing policy. After all, the FHFA is the main federal regulator overseeing housing policy, and whoever runs it will have a major impact on home ownership, mortgage lending, and the future of Fannie Mae and Freddie Mac, the two mortgage giants in federal conservatorship.

But for all the fanfare surrounding the nomination of Watt, there’s one small matter standing in the way. Though DeMarco is a holdover from the Bush administration, the current political climate in Congress means he isn’t going anywhere anytime soon.

That’s because nominees for FHFA Director must be confirmed by the Senate. In years past, Congress routinely ratified the President’s choices. No longer. Nowadays Senate confirmations are the political equivalent of a reality TV show, in which lawmakers preen for the cameras, fight among themselves and nominees are subjected to a merciless and microscopic scrutiny of their personal lives.

Continue reading at US News & World Report.

1. It took very little time for the news from Oklahoma to stimulate (a) assurances from Oklahoma’s two Republican senators that any disaster response or recovery funds would need to be “offset”with budget cuts elsewhere; (b) criticism of the senators for lack of compassion; (c) criticism of the critics for “politicizing” a tragedy.  That’s all aside from the usual arguments over the connection between global warming and the continuing upsurge in violent weather.

2. The focus of House GOP Benghazi investigations shifts today from focus on post-incident talking points to alleged lack of military response when the incident was happening.  That also brings into sharper focus an underlying effort to undermine Obama’s standing on national security, given the obvious parallels between questions about the president’s whereabouts during the Benghazi attacks with his high-profile engagement in the operation to kill Osama bin Laden.

3. The House GOP IRS investigation continues to search for “ultimate responsibility” for the excessive scrutiny of conservative applications for 501(c)(3) status, even as growing conservative “protests” in Washington and around the country more broadly attack IRS.

4. Another poll (from the Washington Post/ABC) comes out showing public concern, centered among but not confined to, self-identified Republicans, about possible administration culpability in the IRS and Benghazi “scandals.” But the same survey shows the president’s job approval rating holding steady, and also that congressional Republicans widely thought to be focusing on unimportant matters, which creates a real dilemma for GOP in deciding whether to further fan the “scandal” flames.

1. With impressive speed, congressional Republicans are seeking to link IRS scrutiny of organizations applying for 501(c)(4) status to general negative perceptions of the agency, particularly with respect to tax audits of individuals (not at issue in the tax-exempts’ cases) and alleged IRS hostility to conservative religious groups. A leading indicator: a bill introduced by Rep. John Fleming (R-LA) suspending all IRS tax audits for 18 months until the depths of the “scandal” are plumbed.

2. Public opinion research continues to show tepid public reaction to “Obama scandals.” A new CNN-ORC survey shows Obama’s job approval rating actually increasing to 53% as of late last week. Poll internals show belief in major presidential wrongdoing in Benghazi and IRS cases still mostly limited to Republicans and conservative independents.

3. Senate Judiciary Committee has already disposed of 99 amendments to the Gang of Eight-based immigration reform bill, and plans to report bill to the floor by week’s end. Most successful amendments look more like standard senatorial constituency-tending rather than effort to tweak the overall shape of the bill.  Having avoided a meltdown last week, the House “Gang of Eight” group working on immigration reform seems to have gone back to ground, satisfied for the moment with an “agreement in principle.”

4. Democrats looking ahead to 2016 are buzzing about the Jason Horowitz Washington Post piece on turnover in HillaryLand since 2008. Of particular interest to progressives suspicious of HRC is the apparent self-exile of pollster and “chief strategist” Mark Penn, now working for Microsoft and disclaiming interest in politics.

1. The first day of the House Ways & Means Committee hearing on IRS scrutiny of tax-exempt applicants indicates Republicans will expand scope to examine other instances of alleged IRS “politicization,” particularly if they can’t find evidence White House involved in “targeting” decisions. Get out your fishing poles.

2. A semi-public tussle between House GOP backbenchers and leadership seems to be breaking out over how to handle scandal investigations, as the latter fret about “overreaching” and the 1998 precedent while the former react to pressure from “the base.”

3. Polling from Gallup indicates “below-average” public interest in the Benghazi and IRS “scandals.” Interestingly enough, the two subjects register about the same interest levels, even though the Benghazi “scandal” has been in the news off-and-on for eight months and the IRS “scandal” is brand new and ill-defined.

4. In non-scandal news, the House “Gang of Eight” announces “agreement in principle” on immigration reform, just a day after rumors of a deadlock spread. It appears, however, the agreement has several major holes where competing provisions will be voted on in committee, particularly as related to health coverage of newly legalized immigrants, and the size of the proposed “guest worker” program.  All in all, it looks like an effort to “move the process along” rather than a breakthrough.

Tempting as it may be, attacking private lenders alone will not solve the student debt problem. For one, private student loans are an increasingly small fraction of total outstanding student debt. And while overall student loan defaults have been rising, private student loan defaults have been falling. Second, although not innocent, villainizing private lenders misses the point: outstanding student debt is rising too much too fast. A government-controlled student loan market will not solve the underlying problem that recent college graduates are struggling in today’s slow-growth economy.

Since the 2008 financial crisis, the Department of Education has essentially taken over the entire student loan market. The federal guarantee program was scrapped, and interest rates on subsidized Stafford loans were “temporarily” cut in half. New government student loans increased 40 percent over 2008-2012 while new private loans fell 75 percent, to just $6 billion last year. The government now holds over 85 percent of the $1 trillion in outstanding student debt. Meanwhile, just three major private lenders remain active in the market.

There’s no doubt that subsidized government student loans must be an essential part of higher education funding. College remains the best way to raise incomes and the government plays an essential role in providing access to higher education for those who are otherwise unable to afford it.

But making the government the only higher education lender, at subsidized rates, risks turning student lending into a faucet that can’t be turned off.  A government that controls all student lending could eventually be forced to get into the business of controlling today’s excessively rising tuitions. That could be a slippery slope the government may not want to slide into.

Instead of attacking the bearer of bad news, we should use private market insights to help guide future education policy. Right now the private market is questioning the financial viability of student debt. The student loan asset-backed securities (SLABS) market remains well below pre-crisis levels. The latest bond offering from Sallie Mae, which tied performance to older student debt obligations, was cancelled after two weeks. Clearly the market has doubts about the underlying quality of student debt. We would be wise to take these doubts seriously.

Part of this private market uncertainty is due to the rising chorus of student debt legislation – nobody wants to invest in an asset that may not make it to maturity.

But that’s exactly the point – investors realize young college graduates are struggling to pay off their debt for reasons other than interest rates. PPI research shows earnings for recent college graduates fell 15 percent – or by $10,000 in annual terms – since 2000. The slow-growth economy of the last decade hit young people harder than other age groups, with many college graduates taking lower skill jobs for less pay. The private market is signaling that recent college graduates are financially over-extended.

It’s easy to attack private lenders for unfairly charging high interest rates at a time when borrowing costs are historically low. But the fact is students are charged higher interest rates because they are not AA+ rated governments. They are borrowers with little to no credit whose repayment is dependent on future earnings, taking out a loan with no collateral. It’s not so simple to refinance this debt, public or private, especially if expected future earnings are falling.

Eventually the Obama administration will have to decide if subsidizing the entire student loan market is desirable or sustainable. Until then, it should work with private lenders instead of working to squeeze them out. That includes requiring better communication with borrowers and encouraging more repayment alternatives for private loans. It also includes borrower protections in the form of responsible oversight. But it should not include showing private lenders the exit.

1. Within a 24-hour period, the White House signaled support for “reporter news shield” legislation, released a large batch of emails from the period leading up to the Benghazi “talking points,” and fired the acting IRS director. There are also rumors surfacing that Obama is considering Massachusetts Gov. Deval Patrick (a former Assistant Attorney General) as a possible replacement for Attorney General Eric Holder if that particular kitchen gets too hot.  None of these actual or prospective steps is likely cool off Republican efforts to pursue all three “scandals” aggressively, but it is clear the White House isn’t buying the “damage control” strategy of refusing to “validate” complaints.

2. There’s now a minority opinion within and outside the GOP holding that the Scandal Offensive will or should lose momentum before long. The Editors of National Review have warned Republicans not to put all their eggs in this basket, citing 1998 (a midterm election when Republicans lost House seats–a very rare occurrence for the party not holding the White House–after seeking Bill Clinton’s impeachment) as a precedent.  And Ezra Klein summarizes the holes appearing in all three “scandals,” particularly in terms of presidential involvement.

3. An interesting and little-noted straw in the wind on the IRS/non-profits front: Franklin Graham complains directly to the president about IRS “targeting” of two 501(c)(3) organizations he controls, raising the possibility of the debate over tax-exempts being extended from “social welfare organizations” to the much larger universe of churches, charities and think tanks.

4. Meanwhile, back in the world of more conventional partisan warfare, the Senate HELP Committee has approved the nomination of Thomas Perez as Secretary of Labor on a party-line vote.  This could set up a dual showdown on the Senate floor, where Harry Reid has already hinted he’ll re-open filibuster reform if Republicans block a pending vote on Consumer Financial Protection Bureau director Richard Cordray.  If this actually happens, the stakes could be a lot bigger than any one or two nominations.

1. White House quickly getting behind “reporter shield” legislation long promoted by Sen. Chuck Schumer, after expressing lukewarm support at best in the past.

2. Heads will surely roll at IRS, and top Democrat on tax-writing Ways & Means Committee, Sander Levin, is already asking for resignations of acting director and officer in charge of nonprofits.

3. One of the scarce non-scandal stories at Politico reports House Gang of Eight at “impasse” on immigration bill.  This would have been a very big story a week ago.

4. My own prediction: IRS “scandal” will soon produce a major resurgence of “Fair Tax” and other flat-tax proposals that eliminate IRS altogether.  Despite being ignored in Washington, such schemes have never lost popularity with the conservative “base.”

1.The perpetual struggle between government security agents trying to stop and punish “leaks” and news organizations trolling for them has blown up again in the AP “scandal,” which because of the timing is getting far more attention that it would otherwise command.  Merits aside, the case gives news media more of a natural stake in the meta-story of “Obama scandals;” note political scientist Brendan Nyhan’s research suggesting big presidential scandals are generally a “co-production” between the opposition party and “elite political media.”

2. The details coming out about the IRS’ selective scrutiny of applications for 501(c)(4) status paint a picture of  mid-level tax officials overwhelmed with an explosion of applications going into the last two electoral cycles, utilizing a logical but politically disastrous “screen.” Ironically, the large 501(c)(4)s that have played so large a role in recent politics (e.g., American Crossroads GPS and Americans For Prosperity on the right, Priorities USA on the left) escaped scrutiny altogether, though that could change if Congress goes beyond investigations and looks into clarifying the laws under which the IRS operates.

3. In terms of the overall impact of this “triple play,” as Stu Rothenberg is calling it: Emory University’s Alan Abramowitz thinks the media are vastly overplaying it as having a certain or decisive impact on the 2014 midterm elections.

The electorate is deeply divided along party lines. These partisan divisions are very deep because they now coincide with other divisions such as race, values and ideology. Therefore, events such as these are very unlikely to cause any large or long-term shift in evaluations of the president let alone party identification or voting intentions.

4. On the intraprogressive front, watch for congressional Democrats to begin distancing themselves from the administration on the IRS and possibly the AP issues; the president himself, of course, has harshly criticized the IRS, but may not be able to disclaim ultimate responsibility.

WASHINGTON — In California, internet and tech growth is spreading outside the Bay Area to other regions not traditionally associated with the technology and internet industries, accelerating job growth and economic recovery in the state, says a new report released today by the Progressive Policy Institute (PPI).

The report, written by PPI’s chief economic strategist Dr. Michael Mandel, highlights recent encouraging signs of job growth in the Internet and tech sector in California that could lift the state out of its economic doldrums, including hard-hit areas such as the Central Valley.

The study examined help-wanted ads across California and found that ads for computer and mathematical occupations in the Central Valley are up by almost 12% over the past year, compared to a smaller 3% gain in the Bay Area. The number of want ads for media and communications workers—many of them related to social media, websites, and other online activities—is up by 34% in Southern California and 42% in the San Diego region. And, demand for web developers is skyrocketing in the Central Valley and Central Coast.

Each of these jobs has the added benefit of creating more jobs in the local economy, from plumbers and janitors to accountants.

The data, notes Mandel, “suggests that the California economy may be approaching a critical inflection point. If the Internet/tech growth continues at its current pace, it may be enough to lift the whole state out of its economic doldrums, including hard-hit areas such as the Central Valley. It also suggests that state government policy should be directed toward encouraging Internet/tech growth, rather than suppressing it.”

Download the policy brief.