Each morning, Bill Scher and Terrance Heath serve up what progressives need to affect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
Obama Proposes $50B Infrastructure Investment
President backs $50B more for road, rail and runways, GOP leaders deride more "stimulus." USA Today: "'This will not only create jobs immediately, it's also going to make our economy hum over the long haul,' Obama said ... House Minority Leader John Boehner, R-Ohio, said the roads, rails and runways plan is a 'doubling down' on the $862 billion White House stimulus plan that he dubbed a failure..."
Conservative opposition to infrastructure investment based on protecting Big Oil from paying for the cost. The Hill: "... Obama will continue to run into opposition from many Republicans and oil-state Democrats by following recommendations outlined in his earlier budget proposal to scale back oil and gas industry tax incentives. This includes not allowing oil and gas companies to take advantage of a manufacturing tax credit other industries are allowed to use. He would also aim to pay for the initial $50 billion infrastructure investment by not allowing oil and gas companies to reduce the tax deduction companies can claim on foreign earned income."
NYT's Bob Herbert effusive: "...President Obama finally began to vigorously push the kind of high-profile, rebuild-America infrastructure campaign that is absolutely essential ... The details of the proposal are less important than whether the proposal itself is a sign that Mr. Obama and his party are ready, at long last, to engage this awful economy with the sense of urgency ... The plan won’t help Democrats in November. It’s already too late for that. But a good faith commitment to rebuilding the infrastructure would show that the party has some idea of the scale of the effort that’s needed..."
Paul Krugman shrugs: "1. It’s a good idea 2. It’s much too small 3. It won’t pass anyway — which makes you wonder why the administration didn’t propose a bigger plan ..."
Salon's Joan Walsh "encouraged" by infrastructure proposal: " It's probably not enough, and even this modest bill probably won't get the Republican and conservative Democratic support it needs to pass. But it's good to see the president acknowledge that the government has a responsibility to continue to spend its way out of this recession, and not merely hinge his program on small business and research and development tax cuts."
WH could do more not just to create jobs, but jobs with good wages. HuffPost's Robert Kuttner: "...while Republicans would resist legislating a serious public jobs program, the administration should fight for one anyway. And there is plenty that government could do right now to improve jobs pay via executive powers. One of those powers is government's role as a contractor. The other is to enforce laws already on the books that prohibit employers from stealing wages and that guarantee workers the right to join or organize unions."
Economist's View's Mark Thoma happy to see the "infrastructure bank" back on the table: "It doesn't have the automatic stabilization properties I talked about here, but it provides a good institutional foundation for countercyclical infrastructure policy in the future either through an automatic mechanism that ramps up infrastructure spending when the economy turns downward, or using discretionary authority."
The Transport Politic says $50B is not enough: "The proposal, though certainly a refreshing move from an Administration that over the last few months had threatened a 'freeze' on spending, may simply not go far enough to produce effective change, especially for the national high-speed rail program ... As things stand, with the $50 billion to be spread out between all modes in the transportation system, far less will actually be spent on any one mode. This means that smaller, incremental projects are likely to be the biggest beneficiaries here."
How much more is needed? Several hundred billion says NY Review of Book's Jeff Madrick: "... if jobs are to be created in sufficient quantity, the economy needs another fiscal stimulus of several hundred billion dollars as well as still more aggressive loosening of monetary policy by the Federal Reserve ... Aside from the new infrastructure plan, the administration is looking only to tax credits, mostly for small business, to create incentives for job creation. While useful, these will have a modest impact at best. Among the more pernicious consequences of lasting high unemployment is that workers begin to lose their skills and fail to develop new ones on the job. It is now time to consider a federal jobs project—an employer of last resort— like the successful programs of the 1930s."
Time's Jay Newton-Small contents right-leaning Dems will not embrace more public investment: "...I know the base is depressed and labor is a big part of the base, but when congressional Democrats asked Obama to talk about jobs and the economy this most certainly was not what they had in mind. The very last thing vulnerable Blue Dogs want to be discussing right now is another big, partisan spending bill..."
Stimulus has not wowed Ohio yet, reports Bloomberg: "A construction crew lined the main road heading into Wilmington, Ohio, choking traffic and kicking up dust one August afternoon as workers rebuilt sidewalks ... For Dan Stewart, it hasn’t been welcome news. 'From the time they put up the first barricades, downtown has been dead,' ... The electorate has grown so angry and disillusioned that even a federal project delivering jobs has become the object of ridicule in a county where as many as 3,000 people were thrown out of work when the local DHL unit of Deutsche Post AG shut down last year."
AFSCME launches ad attacking opponents of state aid jobs bill. Politico's Ben Smith: "At a moment when Republicans across the country are casting public workers and their unions as an increasingly dire threat to fiscal health, public labor giant AFSCME is set to announce a $1.5 million television, radio and Web campaign boosting Democrats and attacking Republicans in four battleground states: Michigan, Nevada, Ohio and Pennsylvania."
Obama To Pair Infrastructure Plan With Biz Tax Cuts
President to announce $200B business tax cut to promote investment. CNN: "In another move aimed at stabilizing the still-shaky economy, President Barack Obama on Wednesday will introduce a new $200 billion tax cut giving businesses across the country an incentive to buy new equipment in the short term, according to a senior administration official. The tax cut would allow businesses to write off 100 percent of new investments in plants and equipment made between now and the end of 2011 ... the president will officially unveil [the plan] Wednesday during an economic speech in Cleveland, Ohio."
Final price tag on tax cut will be much smaller than sticker price. NYT: "The upfront deduction would allow businesses of all sizes to keep more money now and would give large corporations, many of which are sitting on cash because of uncertainty about the economy, an incentive to spend and invest. It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case."
WH hopes businesses won't wait for Congress. Reuters: "The tax write-off would be retroactive to September 8, the day the president announces it, the official said. The hope is that businesses would go ahead and make investments in plant and equipment without waiting for congressional approval of the proposal.
Conservative economists praise business tax cut plan. WSJ: "The investment incentive would embrace a long-held wish by conservative economists that had never won support from either Republican or Democratic administrations. 'Temporary investment incentives like this can have big effects because they really pull investment forward,' said R. Glenn Hubbard ... former chairman of the Council of Economic Advisers under President George W. Bush ... Kevin Hassett, an economist at the conservative American Enterprise Institute, praised the Obama plan, saying it 'goes to show they've learned their lesson' from the 2009 stimulus. He estimated the tax change would expand business equipment investment by 5% to 10%."
While Robert Reich rips it: "Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable. "
Former WH budget chief Peter Orszag debuts as NYT columnist, backs temporary but finite extension of the Bush tax cuts : "...over the medium term, the tax cuts are simply not affordable. Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned ... a key part of this deal is actually ending the tax cuts in 2013 — and that will surely require a presidential veto on any bills to extend them after that."
Bond Market Still Betting On America
Bond markets support emphasis on growth, not austerity. Bloomberg: "While a majority of economists surveyed by the National Association for Business Economists last month said deflation is a bigger threat than inflation, the bond market shows investors expect a prolonged period of stable prices. That’s good news for President Barack Obama, who needs to finance stimulus measures and attract capital to fund an unprecedented budget deficit."
Roll Call's Stan Collender lances deficit hysterics who ignore the bond markets when convenient: "Why is it seemingly so easy to dismiss what the bond market is saying today when what it said before was taken as gospel and as if it was handed down from on high? ... it’s hard not to conclude that the primary reason the bond market doesn’t have the influence it had before is that it is saying something very different from what many want to hear."
Orszag's debut column dismisses bond market's approval of deficit spending as temporary: "A benign bond market, however, is a luxury we won’t enjoy forever if we fail to tackle our long-term fiscal problem. What’s more, losing the confidence of the bond market could prove painful, since it is widely known that our fiscal trajectory is unsustainable and market sentiment may therefore shift quickly and unpredictably. In any case, as the economy recovers, the dominant problem will move from depressed demand to excessive budget deficits."
Trade unions in France launch strike to protest plan to raise retirement age reports Reuters.
New Government Council To Manage Systemic Risk
New systemic risk council about to form under Wall St. reform law. W. Post: "..., the council will have the authority to direct regulators to issue new rules regarding capital, liquidity and leverage levels and to impose more onerous rules on firms that it deems to be systemically important. As a last resort, the council can agree by a two-thirds vote to break up large, complex firms if members agree that they pose a grave threat to the country's financial stability."
Politics, not just legal authority, played a role in Lehman's demise. NYT's Andrew Sorkin: "A trove of new e-mails and notes released as part of the [financial crisis] commission’s investigation may provide a more concrete answer ... politics of the moment played a factor — or at least was discussed among senior and junior staff — in the decision not to lend to Lehman Brothers, perhaps the greatest mistake of the crisis."
Felix Salmon optimistic on global capital requirements: "I very much hope that Die Zeit is right about the Basel III capital requirements ... They start with a bare minimum Tier 1 capital requirement of 6%; that’s a substantial increase of 50% over the 4% minimum that holds right now. And then they get tougher. There’s also a 3% conservation buffer: essentially, if your Tier 1 capital is less than 9%, you’re constrained in what you can do; certainly you can’t pay out dividends to shareholders. On top of that, the countercyclical capital buffer is being set at another 3%, which means that in good times, healthy banks wanting to pay dividends will need Tier 1 capital of 12% ... The banks are going to scream bloody murder about these numbers, I’m sure, and start waxing apocalyptic about reduced credit availability and lower economic growth and quite possibly plagues of locusts as well."
Conservatives Line Up Behind Big Oil
Get Energy Smart Now chronicles conservative candidates' support of Big Oil against pursuing clean energy: "The themes that emerge show Republican enthusiasm for the following: Increased offshore drilling along our coastlines, including in very deep water. Transforming the Arctic Wildlife Refuge into an oilfield. Pushing for expanding oil production from Oil Shale and Tar Sands."
NYT edit board says don't rush lifting of offshore drilling moratorium, after latest oil rig fire: "...it was a very good argument for maintaining the present moratorium on deep-water drilling in the gulf and removing it only when industry has met the standards the administration set forth in the spring."
Here Comes The Wave?
Rothenberg Political Report predicts major Republican gains in November, but notes the battle has not yet been fully joined: "National and local polls continue to show further deterioration in Democratic prospects. Given that, we are increasing our target of likely Republican gains from 28-33 seats to 37-42 seats, with the caveat that substantially larger GOP gains in the 45-55 seat range are quite possible. The next few weeks will be crucial, as Democratic incumbents seek to drive up Republican challengers' negatives and strengthen their standing in ballot tests."
AFL-CIO President Richard Trumka trying to rally members behind Democrats. Truthout: "'The Republican Party of NO doesn't want our vote,' says Trumka. 'All they want is for us to stay home. They want us to feel hopeless and disgusted so they can come back by default.' ...'We know you are angry,' Trumka told a recent gathering of labor leaders, 'but we have made progress. No one said this was going to be easy...'"
Steve Benen reports that former GOP Sen. Chuck Hagel is waiting for his party to "return to its senses": "...it didn't come as much of a surprise to see the center-right Nebraskan take his party to task in a recent interview with the Washington Diplomat. 'I don't see them presenting any alternatives, any new options or any new thinking,' Hagel said. 'If the Republicans get back in power, what are they going to do? There is no articulation. It's just a 'no no no, I'm against Obama because he's a socialist and he's taking America in the wrong direction.' That's certainly an opinion, but what about you, Mr. Republican? What would you do?'"
