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.
President Elevates Tax Cut Fight
President Obama frames tax cut choice on ABC's Good Morning America, but stops short of veto threat: "We're prepared to give the middle class, who haven't seen a wage increase, haven't seen incomes increased, who are most likely to spend any tax cut and recirculate in the economy to help grow the economy. We're prepared to do that right now. And what they are saying is that we're going to borrow $700 billion, despite the fact that they say they're concerned about the deficit, in order to provide a tax break to folks who don't need it ... when the [ranking Republican on a] congressional committee was asked, what do you plan to do if you guys retake Congress, he said, we're going to go back to the exact same policies that were in place before Obama came into office. Well, we lost 4 million jobs in the six months before I came into office."
TNR's Jonathan Cohn notes the President's tough language on tax cuts in yesterday's economic speech: "Note the phrasing here: He's accusing Republicans of holding the middle class tax cut 'hostage' to their insistence on tax cuts for the wealthy."
The Hill reviews possible tax cut scenarios when Congress returns: "The most likely scenario, given the politics of the tax debate, is [a temporary] extension of all the tax rates ... It’s possible Obama could get his way this fall when congressional Republicans and Democrats play a game of legislative chicken ... Some Democrats have suggested a compromise in which all taxpayers making less than $1 million would see the low rates extended, which they argue would be difficult for Republicans to oppose ... [Or] a protracted debate over the fate of the Bush tax cuts could leave Congress in gridlock and push the issue into next year."
McClatchy reviews pros and cons for raising taxes on wealthiest in a weak economy: "'It depends on what you are going to do with the money," [Brookings economist Karen] Dynan said. 'If the money goes back to small businesses, the unemployed, then I think it's likely to stimulate aggregate demand. If you use it to pay down the deficit ... it would be a negative' in stimulating demand for goods and services."
Slackwire notes Obama econ adviser Austan Goolsbee previously found that R&D tax incentives don't impact business investments: "Looks like Goolsbee is the perfect pick to succeed Romer -- his advice is already being ignored even before he's been hired."
Rortybomb more charitable: "All things considered if this is all that can move I suppose I should support it. But it’s terrible bang-for-the-buck style stimulus if it is even that, and supporting rent structures inside R&D pipelines is hardly the investment that energy-retrofitting homes or building rail would be for the 21st century economy."
W. Post's Matt Miller laments that a payroll tax holiday appears to be off the table: "Ask any economist or businessperson what kind of tax cut would be the biggest boost to job creation and the answer is clear: a cut in payroll taxes, because it would directly reduce the cost of employment. Ask any social justice champion which tax is the unfairest tax of all and the answer is clear: the payroll tax, because on the employee side it is 6.3 percent of wages up to a cap of $106,800, thus taking a bigger bite, proportionally, out of a dishwasher's paycheck than a CEO's. So which tax has the Democratic White House decided it won't propose cutting as part of its last-ditch scramble to convince voters before November that it's serious about jobs? The payroll tax."
President's Economic Plan Hit From All Sides
W. Post sees little enthusiasm for President's broader econ plan: "[The plan] is not satisfying many of the groups he needs on his side - not lawmakers on Capital Hill who are leery of raising the deficit by spending more, not economists who say the plan is too modest to create many jobs, and not business groups that say the tax benefits come with too many strings attached. Even some vulnerable Democrats - who have been begging the White House for a jobs strategy to present to recession-battered voters - quickly condemned the president's latest proposal, suggesting that it bears an uncomfortable resemblance to last year's unpopular stimulus package. 'I will not support additional spending in a second stimulus package,' said Sen. Michael Bennet (D-Colo.) ... 'We must make hard choices to significantly reduce the deficit,' he said."
OurFuture.org's Bob Borosage knocks Obama's economic speech for leaving out why recovery has been sluggish: "This was a powerful presentation ... He summarizes the conservative ideas and policies that drove us over the cliff, and offers a contrasting belief in a government on the side of working people ... But he gives no clue as to why the recovery has been so slow. There is no real mention of the financial wilding that caused the economic bubble and bust. He does not repeat his powerful argument that the recovery is slow because we can't go back to the old economy, and shojuld not want to."
Reuters' Felix Salmon reports on a blogger call with the WH econ team, comes away with reduced expectations: " The main message was that the Obama administration’s new economic-stimulus proposals were essentially ways of front-loading attempts to create long-term economic growth, and that unemployment would come down as and when that growth arrived. I wasn’t particularly convinced ... maybe what we’re seeing here is a White House economic team which is fully cognizant of what government economic policy can and can’t achieve. And while keeping the economy from slipping back into recession is something doable, bringing unemployment back down, even to where it was when Obama first took office, isn’t."
Fed report suggests slowing economic growth. W. Post : "'Economic growth at a modest pace was the most common characterization of overall conditions,' said the report, released Wednesday afternoon and based on interviews with businesspeople from mid-July through the end of August. However, five of the regional Fed banks east of the Mississippi River 'highlighted mixed conditions or deceleration in overall economic activity.'"
OECD report suggests slowing global economic growth, need for more stimulus. Bloomberg: "The global economic recovery is proving slower than projected and policy makers may need to extend or bolster stimulus programs to support it, the Organization for Economic Cooperation and Development said ... Recent data suggest the economy of the Group of Seven nations could grow at an annualized rate of about 1.5 percent in the second half, below the 1.7 percent previously envisaged and the 3 percent rate of the first six months of the year ... The outlook comes as investors signal worries that the global rebound from last year’s recession is fading as stimulus ebbs and governments look to cut back record budget deficits ...
The Nation's Robert Scheer says "It's the mortgages, Stupid": "With 11 million homeowners underwater on their mortgages and 3 million more already foreclosed, we have to assume, given the average household size, that some 40 million Americans are feeling mighty strapped. The numbers grow to an overwhelming majority when you take into account the distress of all homeowners, who have watched the value of the family nest egg dwindle even if they substantially paid down or paid off their mortgage debt ... The anger of wannabe consumers who no longer feel they have the wherewithal to feed that most important of American passions is what is fueling the widespread rage against elected officials."
The American Prospect's Tim Fernholz says we may not just have a recession on our hands. We may be in for a long shock: "Our economy has been running below potential for some time now; according to the Fed, we're still only using about 75 percent of our economic capacity while unemployment remains high. Micro-economic evidence suggests that young people entering the job market during a recession face lower wages for the rest of their lives, and the long-term unemployed lose skills. Broadly, this same phenomenon translates into lower demand for goods and services and results in lower supply, perhaps permanently. Call this Paul Krugman's 'new normal' theory -- the economy is changing because of this crisis, and not for the better."
Robert Reich says we should not accept a "new normal": "The underlying problem is structural, not cyclical. There will be no return to normal because normal got us into the hole in the first place. And the normal kind of prescriptions can’t possibly get us out. Until the economy is restructured so more Americans share in its gains, the economy won’t make many gains. We’ll be forever trying to scale a wall that can’t be, because the vast majority of Americans lack the purchasing power to move upward."
Conservatives Start Proposing Ideas. It's Not Pretty
Mark Thoma notes that Rep. Boehner's plan to revert back to 2008 spending levels means cutting food stamps: "I just want to reinforce this message from John Keefe: 'Food Stamp Participation Climbs 10%: ... in this serious recession, more and more people have turned to the social safety net for help in meeting the needs of daily life. ...' When Boehner talks about rolling back the budget to pre-stimulus levels, this is one of the programs that could be affected."
TNR's Jonathan Chait unimpressed with Gov. Mitch Daniels' conservative stimulus plan: "Sure, you rely on magical constitutional thinking and empirically false analysis of federal pay. And your savings only make it 9% of the way to your stated goal. And the four revenue offsets you promised are really only three offsets plus one unrelated ideological hobbyhorse. But it was a good try."
"GOP Claims $50 Billion For Infrastructure Is Too Pricey, While Pushing $800 Billion Tax Cut For The Rich" notes Wonk Room's Pat Garofalo: "But many Republicans, at the same time that they are claiming that a $50 billion investment in America’s infrastructure is a budget-buster, are pushing to extend the Bush tax cuts for the wealthiest two percent of Americans. At $830 billion, the price tag for extending that sliver of the Bush cuts is more than 16 times the cost of Obama’s infrastructure proposal."
Conservatives Can't Quit Social Security Privatization
Another conservative Senate candidate backs Social Security privatization. Wonk Room's Pat Garofalo: "Rep. John Boozman (R-AR), who has his party’s nomination for the Senate, has been taking some flack from Sen. Blanche Lincoln (D-AR) for being an enthusiastic supporter of privatizing Social Security. The Boozman camp is pushing back, claiming that Boozman does not support privatizing Social Security, but merely the creation of private Social Security accounts ... If that sounds a lot like privatization, that’s because it is."
Rortybomb blasts proposals to raise the retirement age when older Americans struggle to find jobs: "To raise the retirement age at this point, a point where the economy is not showing any additional interest in hiring older workers than it did a decade ago, and instead leaving them to rot in the unemployment lines, is a direct insult to what Social Security stands for."
Sec. of State Clinton calls deficit a "national security threat." The Hill quotes: "It poses a national security threat in two ways: it undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable."
More Warren Buzz
Elizabeth Warren met with the President, reports W. Post: "An administration official, who spoke on the condition of anonymity because the visit had not been publicized, acknowledged that Warren met with Obama but noted Wednesday that the president is still considering multiple candidates for the job ... Obama spokesman Robert Gibbs said Tuesday that he knew of no imminent plan to name a bureau chief, but added, 'I can't rule out that at some point that may come during the week.'"
What did Bob Rubin know at Citigroup, and when did he know it? Bloomberg: "Charles O. “Chuck” Prince and Robert Rubin were among Citigroup Inc. officials who knew 2007 losses were mounting on mortgage assets that U.S. regulators have faulted the bank for not disclosing, a court filing shows ... U.S. District Judge Ellen Huvelle asked the agency last month to explain what senior executives knew as she considers approving Citigroup’s $75 million settlement with the regulator. The agency’s identification of Prince and Rubin may trigger questions from the judge about why the agency didn’t bring claims against more people, said Peter Henning, a professor at Wayne State University Law School in Detroit."
"Will Anyone Hold Rubin And Prince Accountable?" asks OurFuture.org's Zach Carter.
Insurers Keep Fighting Health Care Reform
"Insurers Don’t Think They Should Be Held To Any Standards When Setting Premium Rates" reports Wonk Room's Igor Volsky: "Here is AHIP’s Karen Ignagni, the industry’s top lobbyist, just six days ago ... 'Rates that are actuarially justified should be deemed reasonable' ... all that phrase means is that an actuary has looked at the math and said it adds up. It doesn’t account for the fact that a lot of those costs go towards administrative expenses or marketing and it certainly doesn’t mean that this is the appropriate or best possible premium."
Health reform pessimists at Medicare actuary office sound a little less pessimistic in new report. NYT: "A new government study says President Obama’s health care law will have negligible effects on total national health spending in the next 10 years, neither slowing nor fueling the explosive growth of medical costs ... The government report, by the office of the chief Medicare actuary, undermines the claims of the law’s fiercest critics and some of its biggest champions."
Climate Nice In California
California's governor and senator nominees taking big risk supporting anti-carbon cap ballot initiative. TNR's Brad Plumer: "Part of it is that the state's voters are pretty eco-friendly—more than two-thirds of them support California's AB32, which aims to cut emissions to 1990 levels in the next decade ... But here's an even bigger factor: Business groups in California are split on the issue. Sure, the oil and gas industry is throwing a lot of money at the ballot initiative that would suspend AB32 ... But, against that, a number of well-funded tech companies in Silicon Valley want AB32 to go forward."
Grist's David Roberts skeptical Sen. Reid can squeak through a higher renewable energy standard: "Maybe Reid is right that if he approaches Republican senators during the lame duck session they’ll be free of electoral pressure and ready to get something done an RES. Maybe I’ll be proven wrong and readers will be right to scold me for seeing the Congressional GOP as a purely malign force in contemporary energy policy. I certainly hope so ... But at the moment my pessimism-of-the-intellect is sitting on top of my optimism-of-the-will, giving it a wedgie."
Tougher drilling rules needed, says Interior Dept. panel. NYT: "The report recommended hiring dozens of new inspectors and giving additional training to those already on the job. It also urged a more robust system of enforcement, including greater authority to cite violations and impose fines."
Where's That Wave?
No sign of right-wing wave in key states. Time's Jay Newton-Small: "...the tsunami hasn't yet been reflected in three new CNN/TIME/Opinion research polls of registered voters in Kentucky, California and Florida out today. In fact, most races were tied or just within the margin of error."
E.J. Dionne reminds us that it's not November yet, and the election is far from over: "...there is another possibility: that we are now at the Republican peak ... Republican voters simply can’t get more enthusiastic without violating the law by casting multiple ballots. Democrats, on the other hand, have a large swath of yet-to-be motivated sympathizers. For Republicans, the costs of tea party extremism are beginning to balance the benefits of the movement’s energy ... Republicans had better start defining themselves. If they don’t, Obama, who labeled them the party of 'stagnant growth, eroding competitiveness and a shrinking middle class,' is now happy to do it for them. And that’s what changed in Milwaukee and Cleveland."
"Wall Street fills coffers of top GOP candidates" reports The Hill: "Between February and June, financial, insurance and real estate interests contributed heavily to five Senate Republican candidates: Ohio's Rob Portman ($820,000), Pennsylvania's Pat Toomey ($728,000), California's Carly Fiorina ($650,000), Illinois' Mark Kirk ($618,000) and Florida's Marco Rubio ($613,000), according to data compiled by the Center for Responsive Politics."
