Conservatives Say Yes To Tax Cuts, No To Helping The Jobless
The GOP says no to helping the unemployed, but yet to tax cuts for the wealthy: "Republicans almost unanimously oppose spending $33.9 billion for extended unemployment benefits for some 2.5 million people who've lost them, because they say it would increase federal budget deficits. At the same time, they're pushing a permanent extension of Bush administration tax cuts, especially for the wealthy, which could increase federal budget deficits by trillions of dollars over the next 10 years. How do they justify this? ...Conservatives contend that tax policy should be considered differently from spending. Taxes spur the economy, their thinking goes, because the more consumers spend and invest, the more businesses will hire and the more the economy will grow. Reducing tax revenue, they claim, will force spending restraint on Congress. On the other hand, they say that extending unemployment benefits without offsetting revenue doesn't appreciably boost the economy and could weaken jobless workers' incentive to seek new employment. Liberals, boosted by a report earlier this year from the nonpartisan Congressional Budget Office, maintain that the jobless benefits go to those who need them most and are likely to spend them quickly, and that multiplies their economic effect. The CBO and Congress' Joint Committee on Taxation said earlier this year that extending the original Bush-era tax cuts would increase budget deficits by $2.56 trillion during this decade. Deficits under Obama's budget plan are expected to total about $9.75 trillion over the next 10 years.
Senate Minority Leader Mitch McConnell says the Bush tax cuts didn't lower revenues: "'That's been the majority Republican view for some time,' Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. 'That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.' The CBO and other budget experts strongly disagree. And Democrats want to preserve the Bush tax cuts for people making less than $200,000-$250,000 a year -- but only for them. Allowing them to expire for wealthier people would raise hundreds of billions of dollars over 10 years, which could allow them to offset the spending Republicans currently decry."
McConnell's statement makes Ezra Klein sad: "There are fiscal theories that I disagree with, and that I think are cruel, and that make me upset. But very few actually make me sad. Sen. Mitch McConnell, however, hit my sore spot today. 'There's no evidence whatsoever that the Bush tax cuts actually diminished revenue,' he told Brian Beutler of TPMDC. 'They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.' In other words, this is why Republicans don't think tax cuts need to be paid for. They pay for themselves. Why does this make me sad? Because it's hard to see the country prospering when one of its two major political parties is this economically illiterate. McConnell isn't some backbencher. He's Senate minority leader. And he thinks there's 'no evidence whatsoever that the Bush tax cuts actually diminished revenue.'"
Steve Benen summarizes the main pitfall of economic know-nothingism. It leads to blocking unemployment benefits with one hand, extending tax cuts with the other, both in the name of stabilizing the economy: "This week, the Senate Republican leadership made one of the single dumbest policy arguments imaginable: policymakers shouldn't even try to pay for massive tax cuts for the wealthy, because they pay for themselves. GOP officials see the overwhelming evidence that Bush's tax policies helped produce a massive deficit, but they reject it, preferring to believe a ridiculous fantasy. ...Republicans are a creative bunch, especially when it comes to selling garbage, but I'm not sure how even the GOP can spin this: 'We really care about the deficit, so we have to reject popular aid to jobless Americans. But we don't really care about the deficit, so we demand massive tax breaks for the wealthy.' Even the increasingly-conservative Washington Post editorial board isn't buying the GOP line, calling it 'nonsense.'"
Paul Krugman says people can't handle the truth about tax cuts that drain revnues and don't pay for themselves: "A number of people have reacted to Mitch McConnell's defense of Jon Kyl, with his remarkable claim that the Bush tax cuts paid for themselves. In a rational world, the failure of the economy to do anything special after those tax cuts, following a boom period after the Clinton tax hike, would have cast strong doubt on any claims about the favorable impacts of tax cuts on the economy, let alone on the claim that these effects are so strong as to generate more revenue than the losses from the cuts. As this nice chart shows, the actual path of revenue was pretty much what you would have expected if the Bush cuts had no supply-side effect at all. But judging from the reaction both to my post and to Menzie Chinnâ', there are a lot of people who can't handle the truth. Put up a simple chart of revenues or growth over time, and they start screaming that you're cherry-picking data; that you're a liar for not mentioning Jimmy Carter, or something; or, the all-purpose response, 9/11! 9/11! 9/11!"
Help Wanted: America (Still) Needs Jobs
A new government report says the Recovery Act created more jobs than expected: "President Barack Obama's Recovery Act has created between 2.5 and 3.6 million jobs, according to the latest quarterly report released by the White House. This is a substantial increase over previous estimates of jobs created by the economic stimulus package. The report also suggested the stimulus may have raised US growth by about 3%. However, the report came as newly released minutes revealed that the Federal Reserve revised down its forecast for US growth this year.
Polls show Americans are skeptical about the impact of the stimulus: "Many Americans are skeptical about whether the American Reinvestment and Recovery Act of 2009 is really helping. In a CBS News poll this week, 56 percent of respondents said the stimulus hasn't had an impact on the economy, and 18 percent said it has made things worse. Just 23 percent said it has made the economy better. And, in a shift since April, the CBS poll found that, when asked to choose between two options, slightly more Americans (47 percent) favor reducing the federal deficit than spending more federal money to create jobs (46 percent). Three months ago the poll found 42 percent opting for deficit reduction and 50 percent for spending on jobs.
Larry Summers posts a reasoned analysis on the urgency of extending unemployment benefits: "Some opponents of providing relief to unemployed families have been making the fallacious claim that unemployment benefits are a cause of the unemployment we are face today. Some of them have even taken an article I wrote two decades ago, under different economic circumstances, and used excerpts out of context to suggest that I share their view. This is a misreading both of my research and of the economic situation today. In an economy that is as demand constrained as ours, whatever small changes in search intensity may be associated with unemployment insurance are not the reason for the persistence of joblessness. With five unemployed Americans seeking work for every job opening available, there can be little doubt that the overwhelming cause of unemployment is not a lack of will among the jobless to find work, but a lack of work opportunities. Opposing extending unemployment benefits will do nothing to put people back to work. It will not result in an increased number of job openings to apply for. And it will not result in a higher level of employment. What it will do is create a more difficult situation for thousands of families hit hardest by the economic crisis and cut off a powerful channel for spurring economic growth."
Jed Lewison explains why Summers' words will fall on deaf ears: "Summers's words are unimpeachably correct, but they will fall on deaf ears. The reason is simple: Republicans in Congress simply aren't listening to rational economic analysis. The only thing they care about is that cutting unemployment benefits hurts the economy and they believe hurting the economy will help them win the election. It's shocking and sad that a major political party would resort to such craven tactics for partisan gain, but it is what it is. And at this point, trying to sit down with them and talk as adults just isn't working. It's time to unleash the facts and call them out for what they are trying to do: wreck the economy to win a campaign. The only way to get Republicans to the table will be to make them pay a political price for their malicious obstruction, and the best way of doing that is expose them for who they are."
Rep. Charles Rangel accuses the GOP of blocking unemployment extensions and economic progress: "Democrats have been pushing for weeks to extend benefits for 1.7 million workers whose payments are about to expire. The extension would continue benefits through the end of November. The actions by Senate Republicans are just plain cruel. Holding back benefits while ridiculing those in need is worse than adding insult to injury. Contrary to statements we've heard from some Republican opponents, these workers are not lazy or undeserving, and they do not enjoy being unemployed. Ask your friend who's without a job -- it's about restoring their livelihood and dignity. All they need is a little push from their government and encouragement from their fellow Americans so they can get back on their feet."
The Chamber of Commerce urged the White House to cut corporate taxes and rein in spending: "The US Chamber of Commerce on Wednesday stepped up its broadside against the Obama administration’s economic strategy, urging the White House to cut corporate taxes and rein in spending to boost job creation and avoid a double-dip recession. The administration hit back, saying it would not return to the days of 'lax regulation' that allowed the financial crisis and the Gulf of Mexico oil spill to happen. The terse letters between the administration and the powerful lobby group come as big business increasingly voices concern that Barack Obama, president, is 'anti-business'. 'The administration took their eye off the ball,' Tom Donohue, the chamber's president, said at a Jobs for America summit on Wednesday, at which the lobby group presented recommendations for putting the economy on the right track."
James Parks has some real questions for the Chamber Commerce's 'Jobs Summit': "Here are three questions the AFL-CIO and working people would like to ask the Chamber: 1. Big corporations and Wall Street had their way for eight years under the Bush administration and we’re just beginning to undo the damage. Which corporation is the model to show there is too much government regulation? The Wall Street firms that tanked the economy? Massey Energy mining, whose long record of safety violations led to miners being killed? BP, whose long record of violations led to workers being killed and is still destroying the Gulf of Mexico? 2. Why are there no unemployed workers at your event? Millions of Americans are out of work and have lost their benefits. But according to the agenda, there is not a single one of them represented at this event. This shows the real purpose of their event. Not to create jobs for people, but to keep the status quo for Big Business and their profits. 3. If you think there’s too much government regulation, can we continue to expect statements from Chamber President Tom Donohue that taxpayers should be responsible for corporate bad actions like he said about BP?"
Matt Yglesias writes that the size of the unemployment crisis calls for extended unemployment benefits: "I don't think people should be dismissive of the idea that unemployment insurance has a disemploying impact on incentives. And that’s why in normal times you don't want to offer an unlimited amount of unemployment insurance. But faced with a massive gap between the number of people looking for work and the number of job openings, this just doesn't matter as much as it otherwise would and the humanitarian and aggregate demand impacts are way more important."
Joan McCarter reminds us that more stimulus to create jobs might be a good idea, too: "More stimulus to create more jobs would be a really smart solution right now, but that seems not to be on anyone's to-do list. The only solution available in the immediate term — extend unemployment benefits. But it also means extending the critical assistance to states that the Republicans have also been blocking, because another half a million jobs are likely to be lost without it."
Economy Update
The Fed expects a weaker recovery: "The Federal Reserve has become more pessimistic about the economy. The Fed's latest forecast, included in the minutes of the central bank's June 23 meeting released Wednesday, is the latest sign of growing concern that the recovery is losing steam. ...Only a few months ago, many economists thought the Fed would no longer need to consider moves to stimulate the economy. Instead, the Fed was expected to start worrying more about the possibility of inflation. But the Fed now predicts the unemployment rate would be between 9.2% to 9.5% this year, slightly worse than the 9.1% to 9.5% range it forecast in April. Unemployment was 9.5% in June, but has averaged 9.7% over the first half of the year. The Fed also lowered its outlook for the job market in the coming years. It now forecasts unemployment will stay between 8.3% to 8.7% next year, up from its earlier estimate of a range of 8.1% to 8.5%."
China's economic growth slows down: "China's economy continued to grow at a robust pace last quarter, a spokesman for the National Statistics Bureau said Thursday. China's gross domestic product, the broadest measure of economic output, grew at an annual rate of 10.3% during the second quarter of 2010. But the pace eased compared to the 11.9% rate during first quarter. With more than 1.3 billion people, China is the world's largest country, and that fact, combined with its rapid economic growth of recent years, has made it a major player in the global economy. The moderate slowdown was widely anticipated and is not a cause for concern for economists, many of whom were worried about China's economy overheating being at risk of rampant inflation."
The Race For Red/Blue November
Sharon Angle says her race against Harry Reid is "God's calling": "When you have God in your life ... he directs your path," Angle told the Christian Broadcasting Network in an interview posted on its website Wednesday. Asked why she entered the race, Angle said "the reason is a calling." "When God calls you he also equips you and He doesn't just say, 'Well today you're going to run against Harry Reid,'" the tea party favorite said. In the Bible "Moses has his preparatory time. Paul had his preparatory time. Even Jesus had his preparatory time," the former legislator said, citing her years in public office as her preparation for the race.
Booman is blunt about what Democrats stand to gain if they lose seats in November: "These midterms are not actually elections that the Democrats want to win. Political fortunes move like a pendulum. It's simply not possible to win four elections in a row in a two-party system. And the elections we really want to win are in 2012. Winning now would make that impossible. What we want is to lose, but lose modestly. ...What worries me is that we'll have something more akin to the 1994 midterms which pretty much ruined the promise of Bill Clinton's presidency (before he delivered the final self-inflicted death blow). So, we have to consider why the public isn't putting two-and-two together and blaming the Republicans for government inaction on key issues of concern. While the administration's message effort deserves some blame, and the media deserves much more, it's also a problem that there are precious few Democrats out there explaining the Party of No strategy, the procedures they are using to obstruct, and what would be passed if Republicans (and some conservative Democrats) were not standing in the way. Even more importantly, there are almost no Democrats discussing the incredible amount that has been achieved despite these tactics."
Obama promises to help House Dems: "Facing criticism from House Democrats, President Barack Obama promised their leaders Wednesday night that he'll actively support their agenda and Democratic lawmakers as they head into tough midterm elections this fall, according to a congressional leadership aide. ...The meeting came as congressional Democrats, fearing disaster in the fall elections, have expressed frustration with the Obama team and its efforts to help Democrats. They also were angered when White House press secretary Robert Gibbs said over the weekend that enough seats were in play for Democrats to lose the House. Obama was told of the concerns of rank-and-file lawmakers, some of whom think the president hasn't been doing enough to use his bully pulpit on their behalf, considering that they are all up for re-election in November, the aide said. Obama won't face voters again until 2012. Obama said that he understood the criticism and promised full engagement and support on substance and message through the fall, the aide said. With high unemployment dragging down incumbents, a key focus will be on jobs and how individual congressional districts are helped by Democrats' policies.
Black Tea?
The NAACP passed a resolution condemning what it sees as racism in the Tea Party Movement: "The resolution pits the nation's oldest civil rights organization, with its storied history of wins on behalf of racial justice, against a grassroots conservative movement that has won some recent political races and is flexing its muscle in Republican circles. 'We take no issue with the Tea Party. We believe in freedom of assembly and people raising their voices in a democracy,' Ben Jealous, president and CEO of the National Association for the Advancement of Colored People, said in a statement. 'We take issue with the Tea Party's continued tolerance for bigotry and bigoted statements. The time has come for them to accept the responsibility that comes with influence and make clear there is no space for racism and anti-Semitism and other forms of bigotry in their movement,' Jealous said.
Rep. Chris Van Hollen says the Tea Party has racist elements, but the whole movement shouldn't be labeled racist: "'The Tea Party movement is an amorphous movement, so I would say that the Tea Party movement, as a whole, cannot be easily identified,' Van Hollen, D-Md., said on ABC/Washington Post’s 'Top Line.' 'And I think the NAACP made a distinction,' he added. 'What they pointed out was, at many of these rallies, you certainly have elements that are racist. I think that's indisputable -- I mean, we’ve seen some of the signs. But they called upon the Tea Party movement as a whole to condemn those remarks. That's how I understand what the NAACP did."
Michael Tomasky writes that the NAACP/Tea Party kerfluffle provides an opening for the return of Obama circa. 2004: "I would like to see Obama take all this swirling madness on directly. Presidents never do this sort of thing, basically on the theory that if they get involved they're just keeping the madness alive. But, well, the madness is alive. It's not like it's going anywhere. I'd love to see Obama address this Hitler-Lenin kind of business directly. In doing so, he'd also have to go after the liberal base too, and say for example that something like the NAACP resolution just heightens divisions. It would echo the Obama from the 2004 convention. Is it too late to get any of that back? Is that Obama completely gone? I actually don't think so. Fine, 30% of the country despises the guy. But 30% is with him hell or high water, basically, and the other 40% don't like the shape of the economy and aren't wild about the job he's doing, but they don't hate him. A message pegged to them aimed at lowering temperatures would look like leadership."
Earl Ofari Hutchison writes that the Tea Party should welcome the NAACP resolution: "Tea party leaders push back against the charge that they are racist by endlessly citing popular anger at the perceived big government creep, taxes, runaway spending, and "socialist leaning" Obama administration programs as the sole cause for their rage at Washington and mainstream politicians. The evidence is compelling that this is a sincere if wrongheaded belief. The NAACP then was still right to call out the tea party for saying and doing nothing about the bad actors that spew their racism within the tea party movement. They create mischief and havoc, poison the racial air, and in some cases pose a physical danger. Tea party leaders should welcome, not curse the NAACP for pointing that out. "
Don't Drill Here, Don't Drill Now
A newly discovered leak delays BP's efforts to stop the gusher in the Gulf: "A leak in a crucial piece of equipment may stall BP's effort to stop the massive oil gusher Thursday in the Gulf of Mexico. The equipment, called a choke line, started leaking Wednesday, another setback for the beleaguered company in its hope of stopping the disaster. The company will need to fix the leak before it can run the vital tests that could show whether an end to the environmental disaster is finally in sight, the company said. There was no timetable for when the leak was to be fixed, a company spokesman said early Thursday morning. And video images of the busted oil well showed a continuous flow of ominous dark oil streaming from the ocean floor.
BP could face a seven-year offshore drilling ban: "The House committee on natural resources voted in favour of precluding companies with poor safety records from offshore oil exploration permits. The proposed law does not name BP, but would apply to any company that has experienced 10 or more deaths in the last seven years. The April explosion of BP's Deepwater Horizon rig killed 11 workers. According to the draft legislation, the deaths must have taken place at drilling, production facilities, or refineries, and must have broken US health and environment laws."
The bill in question also contains as many as 200 amendments aimed at preventing a similar disaster: "The House Natural Resources Committee on Wednesday began weighing as many as 200 amendments to a bill that would reorganize offshore energy leasing on the continental shelf. While still just a draft, the bill reflects the direction of the committee and its chairman, including measures that would: * Abolish the Minerals Management Service (MMS), dividing its functions among three new entities in order to keep enforcement sharp and prevent the buildup of a "cozy" relationship between regulators and the regulated. One bureau would manage leasing and permitting of offshore and onshore oil and gas and renewable energy-related activities, including environmental studies. A second would conduct all inspections and investigations, and issue health, safety, and environmental regulations. The last would collect energy-related revenues. * Ensure that only qualified people become oil and gas inspectors, including training them at a federal academy to strict new ethical standards. * Prevent oil companies from getting the sort of sweeping exemptions from environmental review that past offshore drilling operations won under the now-defunct Minerals Management Service. The bill, for instance, would eliminate the use of "categorical exclusions" from the National Environmental Policy Act that were routinely used by the now-defunct Mineral Management Service.
The New York Times writes of the necessity of the new moratorium on offshore oil drilling: "There were howls from the usual quarters -- from industry, predictably, and from Mary Landrieu, the Democratic senator from Louisiana, who said the new moratorium would cost 'thousands of hard-working Louisianians' their jobs. One must sympathize with the battered residents of Ms. Landrieu' home state. But one cannot ignore the fact that most of the gulf' 3,000 producing platforms and shallow-water drilling rigs are still in business, or that President Obama has earmarked $100 million specifically for relief of unemployed oil workers. The main thing that cannot be overlooked is that it would be folly to resume drilling until everything has been done to make drilling as safe as it can be and to ensure a rapid response when systems fail."
Against all odds, Democrats will bring a climate bill to the Senate floor — and soon: "The push for a climate bill in 2010 isn't ending with a whimper after all. Senate Democratic leaders are going to take a bill to the floor and bet that they can find 60 votes to pass it, Darren Samuelsohn reports in Politico. And it could happen by the end of July... Instead of a comprehensive cap on carbon across the whole economy, the bill would cap emissions from just the electric utility sector -- a compromise that Democratic leaders hope will be more palatable to many senators. David Roberts ran through the merits of a utility-only cap last month: Of all sectors of the U.S. economy, electric utilities are the biggest emitter. The cheapest ways to cut carbon pollution involve the inefficient electric-power sector (particularly coal-burning plants). It's less attractive than an economy-wide cap, but probably better than no cap at all. Expect to hear much more about this. But is this thing going to pass? It's not clear -- it never has been -- how the bill will gain the support of Republicans and conservative Democrats in the Senate -- where 41 noes outweigh 59 yeses."
What Brown Can't Do
With November, Scott Brown's power as a Senate swing vote is likely to end: "Sen. Scott Brown (R) of Massachusetts has one of those classic Senate offices that freshmen typically wait decades to get – fireplace, balcony, a view of the Capitol. And he is, for now, the swing vote for any major legislation that majority Democrats want to move. Come November, all that could all change. After midterm elections, Senator Brown’s temporary home in Sen. Edward Kennedy’s former office will be up for grabs by senators who outrank him (he’s currently 99th in seniority). And if the minority picks up seats, as predicted, Brown will no longer be the crucial 41st Republican. To get to the 60 votes needed to move an agenda in the Senate, a weakened Democratic majority may have to reopen broader bipartisan channels for doing business."
Matt Yglesias explains the fleeting nature of the Scott Brown Era: "What's more, the successful careers of Olympia Snowe and Susan Collins demonstrate pretty conclusively that Republican politicians can stay overwhelmingly popular in New England via fairly minimal gestures toward compromise. At the same time, formidable as they are as politicians, I don't think anyone needs to live in fear of underestimating Snowe or Collins as visionary political leaders. They've never used their pivotal status to reshape the national agenda or build center-out legislative coalitions or anything like that. Sometimes they agree to trim something down a bit (Bush tax cuts, Obama stimulus) and sometimes they refuse to vote for something at all (Affordable Care Act) but this is a form of difference-splitting small ball politics. And Brown, based on what one can tell from his time in the Senate thus far, seems very content to follow along in this mold."
