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Congress Chews on Econ Recovery, While Biz Tax Breaks Take Hits

CAF’s Borosage urges a re-think on business tax cuts: “He's likely to pay a price both in delay and in diminished effectiveness for the plan that emerges. He'd be more likely to get a big and bold plan passed swiftly if he had put together his package, called on the Congress to pass it, invited Republicans to join or take the risk of standing in the way, while saving any concessions on business taxes until the end if he actually needed to round up the votes.”

Consider the Evidence makes a similar point regarding plans to delay repeal of Bush tax cuts on the wealthy. (via Economist’s View)

Politico has Sen. Chuck Grassley describing GOP resistance despite tax cut proposals: “There’s a lot of good news in the tax area. But our party is raising questions about the stimulus coming from giving money to the states. And I think that’s going to be a hard swallow.”

Grassley is then rebutted by former McCain econ adviser Mark Zandi: “Cuts in state and local government outlays are sure to be a substantial drag on the economy in 2009 and 2010. Additional federal aid to state governments will fund existing payrolls and programs, providing a relatively quick economic boost. States that receive checks from the federal government will quickly pass the money on to workers, vendors and program beneficiaries. Arguments that state governments should be forced to cut spending because they have grown bloated and irresponsible are strained, at best.”

The Hill finds liberal congresspeople tolerant of the new tax cut proposals: “Rather than being carved out of a finite stimulus plan, the tax cuts have essentially been loaded on top of a package so big it has something for nearly everyone. Public works projects and job creation haven’t been displaced from the massive package, which Obama and Congress are hoping can shake the economy from its downward slump. ‘Because of that, the tolerance for these tax cuts is a lot higher,’ said Rep. Raúl Grijalva (D-Ariz.).”

The Hill also quotes Rep. Lynn Woolsey noting the wealthy will eventually pay their fair share: ““There will be a time when the top half of 1 percent will have to give something back.”

Wonk Room praises expanding the child tax credit, criticizes refunds for corporate losses.

Dean Baker on TPMCafe: “How Many Jobs Is 80 Votes Worth? … If the effort to court Republicans means switching from spending to tax cuts, which will create fewer jobs per dollar; and from tax cuts for low and middle income families to tax cuts for businesses and the wealthy, which will create even fewer jobs, then President Obama will be paying a big price in jobs lost for those Republican votes.”

TNR’s The Plank rounds up political arguments in support of the tax cut strategy.

Deadline Feb. 16

ABC’s Stephanopoulos has more on timing for economic recovery package: “I've been told to expect the bill to be introduced in Congress probably on Monday. Hearings and markups for the bill are expected in the House and the Senate as early as next week. Votes are expected to begin in the House shortly after Obama is inaugurated on Jan. 20th …the one thing he's adamant about is timing. The president-elect wants this bill on his desk for signature by President's Day on Feb. 16.”

Econ Recovery First, Deficit Reduction Later

NYT reports on Obama’s budget priorities: “President-elect Barack Obama on Tuesday braced Americans for the unparalleled prospect of ‘trillion-dollar deficits for years to come,’ a stark assessment of the budgetary outlook that he said would force his administration to impose tighter fiscal discipline on the government. Mr. Obama sought to distinguish between the need to run what is likely to be record-setting deficits for several years and the necessity to begin bringing them down markedly in subsequent years.”

W. Post reports shows Obama wants to signal long-term fiscal responsibility: “An economic adviser said yesterday that the president-elect plans to unveil ‘major initiatives’ designed to eventually bring the deficit under control as part of his first budget proposal, which he will submit to Congress next month. Obama also has scheduled a news conference for today to make a ‘personnel announcement’ related to budget reform, aides said.” (ABC reports that will be “a new position designed to combat waste and improve efficiency.”)

Are congressional Blue Dogs sharpening their hatchets? W. Post: “Congressional aides said one possibility would be a return to the stringent budget rules of the late-1980s, when overspending automatically triggered across-the-board cuts to federal programs, a process known as ‘sequestering.’”

EARLIER, Krugman warned: “in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938”

NYT reports on American Economic Assoc. conference, and realization that economic thinking atrophied under conservatism:

Nearly every economist who spoke here agreed that a dollar invested in, say, a new transit system or in bridge repair is spent and respent more efficiently than a dollar that comes to a household in a tax cut. A bigger percentage of the latter is saved, they said. There was concern, however, that the nation lacked enough “shovel ready” projects that could be ramped up quickly, generating jobs.

What is more, the economists did not agree on the best projects to pursue. As Mr. Auerbach pointed out, after a generation of ignoring public spending in their research, the nation’s mainstream economists lacked the expertise to help guide the process.

Robert Reich: “As the buyer of last resort, the federal government must respond if that cycle is to be reversed. In my judgment, this will require a stimulus of about 6 and a half percent of gross domestic product, or a total of some $900 billion, spread over two years. That’s my estimate for the shortfall in private demand. But the federal government should stand ready to spend larger sums if necessary to get the economy back on track toward full capacity. The danger is not that the government will do too much; the danger is that it will do too little, too late.”

Reid Optimistic on EFCA

Sen. Majority Leader Reid tells The Hill:

Reid declined to speculate as to when the controversial, union-backed “card-check” legislation will pass the upper chamber. Yet he said the bill is important to him and Obama.

“The union movement was hurt very, very badly in the Bush administration, and we are going to reverse that.”

Reid said he is interested in working with Republicans on card-check.

“But remember,” Reid said with a smile, “we think we only need two Republican votes.”

Dr. Gupta for Surgeon General

Ezra Klein raves: “Sanjay Gupta, arguably the nation's most trusted health care authority, will back on TV screens arguing for Obama's universal health care plan, lending it his credibility as a doctor, a trusted media presence, and the nation's surgeon general. It's a far cry from the days when Ira Magaziner and Hillary Clinton were reform's best known advocates.”

Krugman boos: “I do remember his mugging of Michael Moore over Sicko. You don’t have to like Moore or his film; but Gupta specifically claimed that Moore ‘fudged his facts’, when the truth was that on every one of the allegedly fudged facts, Moore was actually right and CNN was wrong.” ( FLASHBACK: Dr. Gupta’s Bias)

Tapped’s Tim Fernholz: “The surgeon general ‘serves as America's chief health educator by providing Americans the best scientific information available on how to improve their health and reduce the risk of illness and injury,’ according to the official website. Someone who has made a career of synthesizing complex medical knowledge into television specials seems to be the right person to educate Americans about their health.”

Gooznews: “I’m told he has a genuine commitment to public health and combating obesity. [But] Dr. Gupta routinely commits one of the cardinal sins of journalism: he has disclosed as recently as 2007 that he takes money from and owns stock in lots of health care companies that he reports on, including and especially the drug industry. Where I used to work, that was a firing offense.” (UPDATE: Gooznews has retracted that post.)

Newsbusters offers the conservative attack line: “A Surgeon General Who Backs an Obesity Tax?”

Legally Enforceable Equal Pay Coming Right Up

The ITT List’s Art Levine: “Now Republicans and big business interests are horrified by the prospect that the new Democratic Congress seems poised to pass two major fair pay for women bills that can help all workers. They’re scheduled to be voted on by the House of Representatives this week."

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