MORNING MESSAGE: The Real Cost Of $60B In Tax Cuts
OurFuture.org's Robert Borosage:"David Leonhardt in the NYT does a good service by laying out simply what $60 billion a year in tax cuts -- the amount that will go to those earning over $250,000 if the Republicans get their way ... Universal preschool for 3- and 4-year-olds ... Free college, including room and board, for about half of all full-time students ... Can anyone with a straight face and a decent heart actually stand up and say it is better to give this money to the affluent than to provide high quality pre-school to every child? No, but defenders of the top end tax cuts are not called upon to do that. Becuase neither the president nor the Democrats in Congress are making this case. This is why we need independent communications capacity for progressives inside and outside the Congress."
President, GOP close to deal on tax cuts and jobless aid. NYT: "Rather than extending the tax rates only on income described by Democrats as middle class ... the deal would also keep the rates for higher earners, probably for two years. In return, Republicans said they would probably agree to extend jobless aid for the long-term unemployed ... the House speaker, Nancy Pelosi, and many other House and Senate Democrats voiced deep unhappiness [and] expressed their belief that the White House did not appear to be getting enough for such a big concession ... White House officials, meanwhile, expressed hope of sealing a deal swiftly ... clearing the Congressional calendar for ... ratification of the New Start arms treaty with Russia and the repeal of the “don’t ask, don’t tell” policy ... [The president said[ he would not agree to any deal unless it included the extension of jobless aid [and] the extension of a number of tax breaks for middle- and lower-income Americans that were included in last year’s economic stimulus plan."
More details from McClatchy: "Careful not to make a linkage before Saturday's [Senate] vote [on ending tax cuts for the wealthy], [White House] officials outlined about $150 billion worth of tax cuts and credits that are set to expire. They include unemployment insurance and the alternative minimum tax ... A host of recovery-related tax measures are also be on the table, including tax incentives for small businesses to hire new workers, tax help for college students and tax credits for companies engaged in research and development."
NYT's Paul Krugman argues the political risks of a deal are worse than the economic risk of a tax increase: "...while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils ... A two-year extension of the Bush tax cuts, it estimated, would lower the unemployment rate next year by between 0.1 and 0.3 percentage points ... not enough to justify the apocalyptic rhetoric ... [But] if Democrats give in to the blackmailers now ... [Republicans will] have every incentive to keep taking hostages."
Economist Mark Zandi makes the case for the deal. NYT: "Temporarily extending tax cuts for wealthy Americans would help the economy enough to be worth the cost, said Mark Zandi, an independent economist; and so would extending unemployment benefits."
House Dems may not go along with a deal. HuffPost's Howard Fineman: "The House arithmetic is dicey -- which is why Biden and [WH Chief of Staff Pete] Rouse spent two hours discussing it with Pelosi, Majority Leader Steny Hoyer and House campaign chairman Rep. Chris Van Hollen ... The assumption is that Democrats would not want to risk blowing up the deal -- let alone risk being held responsible for raising taxes on everyone ... some Democratic backbenchers, increasingly estranged from the White House and the president, seem willing to do so -- or at least talk bravely about it."
Wall St. considers moving up bonus payments in case tax cut deal falters reports NYT>
Simpson-Bowles Lives?
Elements of Simpson-Bowles, including Social Security cuts, may be taken up by Congress next year. Bloomberg: "Republicans signal they intend to make their first order of business federal programs directed at specific groups ... Dick Durbin of Illinois, the Senate’s No. 2 Democrat, says: 'If we want to come up with something bipartisan to work on together, Social Security is a good candidate.' Durbin also said in an interview that 'this commission opened a door that nobody has looked behind a long time, and that’s tax expenditures.'"
Stan Collender punctures the illusion of broad support for Simpson-Bowles: "Don't read too much into the bipartisan support for some of the options. If these same proposals are considered at all, they will next be debated in a very different political context ... Don't read too much into the enthusiastic response the plan received from various deficit hawk groups. Many of them supplied the commission with staff, helped develop what ultimately was proposed, and had a stake in its outcome ... not especially indicative of any larger movement toward what was proposed."
Simpson-Bowles not forcing seniors to eat catfood fast enough, argues W. Post's Robert Samuelson: "...spending on the elderly, now about two-fifths of the budget, was treated too gently. Social Security's full eligibility age would have increased slowly to 69 years around 2075. These programs are essential, but eligibility ages should be raised faster and, for wealthier recipients, benefits cut more."
NYT explores who will be affected by the proposed federal employee pay freeze: "Mathew Kolodzie, 31, is a Department of Defense firefighter ... He is paid $48,113 a year, which he says is enough for him and his family to get by; he and his wife have one daughter and 'one on the way.' But, he said, 'This pay freeze isn’t the greatest timing, especially around Christmas.' ... the government has worried for years that a wave of retirements is about to hit, possibly costing dearly in talent, experience and institutional memory."
Who Doesn't Hate Jamie Dimon?
Felix Salmon on what the NYT missed about JPMorgan Chase's Jamie Dimon: "[The profile] mever really grapples with JP Morgan’s sheer enormity — the root cause of substantially all the enmity between Dimon and those who would seek to hobble his plans for global domination. Is JP Morgan too big to fail? If so — and surely the answer is yes — then how can Dimon justify its existence, or his own plans to make it even bigger?"
Baseline Scenario's Anat Admati criticizes Dimon's support for the Basel committee's international captial standards: "Basel may have asked the right question, but it did not come up with the right answers, mainly because it allows banks to remain dangerously leveraged, setting equity requirements way too low."
Breakfast Sides
Fed may not be done trying to boost employment. Bloomberg: "Federal Reserve Chairman Ben S. Bernanke said the economy is barely expanding at a sustainable pace and that it’s possible the Fed may expand bond purchases beyond the $600 billion announced last month to spur growth ... The Fed’s policy of purchasing Treasury securities shouldn’t be considered simply printing money, Bernanke said. 'The amount of currency in circulation is not changing,' he said. 'The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities.'"
Steep climb for DREAM Act, reports The Hill: "Even as Democrats in both chambers prepare to consider the measure this week, Republicans and centrist Democrats are already lining up to shoot it down."
Possible agreement in international climate talks. Mother Jones' Kate Sheppard: "The [draft] text proposes that countries agree to hold the increase in global average temperature below 2 degrees Celsius above pre-industrial levels, and states that countries 'should take urgent action to meet this objective consistent with science and on the basis of equity.' ... there should be a review of the goals between 2013 and 2015, both to determine whether the proposed cuts are adequate, and whether parties should strengthen the temperature goal to 1.5 degrees Celsius instead ...On the question of reducing emissions, it includes two options for what countries will put forward: 'targets' or 'commitments.' It's also open-ended as to whether those goals will be formalized ... On the question of [developed nations] financing a global climate fund, here are the two options ... a goal of mobilizing jointly USD 100 billion dollars per year by 2020 [or] 1.5% of their GDP per year by 2020 to address the needs of developing countries..."
