MORNING MESSAGE: Jobs Fix Deficits
OurFuture.org's Dave Johnson: "The economy is slowing, with signs of trouble on the horizon. Trade deficits are huge, a bad manufacturing number this week, Europe still stagnant and slipping (because of austerity), China slowing … This slowing is not happening because people are 'worried about the fiscal cliff.' … The slowdown is because the jobs are not coming back fast enough, wages are stagnant and falling, and the government is not doing anything about it … the country could just hire people to do those jobs that need doing — like FDR did. How hard is it to understand that?"
Republicans Cracking On Taxes
Politico suggests Republicans may accept raising top tax rate to 37%: "If Republicans split the difference between current top rates — 35 percent — and Clinton-era rates — 39.6 percent — Obama will get his tax rate increase on the rich, and Republicans can say they stopped him from hiking rates as far as he originally wanted. Some Republicans think it’s not such a bad idea to press Obama to accept a 37 percent top rate, getting him to agree to massive entitlement reform, spending cuts and tax reform. That way, Republicans can fold a losing hand and go home for Christmas."
NYT suggests Republican caucus giving Boehner flexibility: "Should his support hold up, Mr. Boehner, who faced a frequent battering from his own members over the last two years as he tried to seal deals on various spending agreements, would be better able to negotiate from a point of relative Republican unity. And, most important, he would be viewed as able to sell a deal to his once-fractious caucus. On Wednesday, in a private meeting between Mr. Boehner and House Republicans, member after member spoke in support of him, in some cases saying a deal they would have rejected six months ago would most likely be taken today … Several Republicans said Wednesday that the combination of the onerous nature of the potential tax increases and spending cuts and the realities of the recent election combined to bolster Mr. Boehner’s support."
Three Senate Republicans explicitly back higher taxes on wealthy. CNN: "'I know we have to raise revenue,' [Sen. Tom Coburn] told MSNBC. 'I don't really care which way we do it. Actually, I would rather see rates go up than do it the other way, because it gives us a greater chance to reform the tax code and broaden the base in the future.' … Sens. Susan Collins and Olympia Snowe, both Republicans from Maine, said later Wednesday they, too, would support the tax rate increase on the wealthy, though they would like to see a caveat to 'protect small business owners' who include their business income on their personal tax returns."
"A few dozen Republicans [are] signaling they are ready to bargain" on taxes reports Bloomberg.
"Cantor Says House Will Not Adjourn Until Deal Reached" reports NYT.
Dems Up Stakes With Push To End Debt Limit Abuse
"Debt limit complicates deficit talks" reports The Hill: "President Obama and congressional Republicans on Wednesday ratcheted up their threats on an increase in the debt ceiling, complicating fiscal-cliff negotiations that had already stalled over taxes."
Pelosi rejects raising Medicare eligibility age. W. Post quotes: "I am very much against that, and I think most of my members are … I don’t see any reason why that should be in any agreement … I don’t anticipate that it will be in it."
President "absolutely" will go over "cliff" if GOP won't accept higher tax rates, says Geithner. CBS quotes: "There is no prospect (for) an agreement that doesn't involve rates going up on the top 2 percent of the wealthiest Americans."
Europe Suffering From Austerity, Cronyism
Reckless behavior by Greece's 1% contributed to its debt crisis. NYT: "Greece’s economic troubles are often attributed to a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media — often owned by the magnates — that make up the Greek power structure … everal dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs. The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism."
Britain extends austerity program for an additional year. NYT: "The architect of the austerity program, George Osborne, the chancellor of the Exchequer, told Parliament on Wednesday that the government had missed one of its self-imposed debt-cutting goals and would have to extend the belt-tightening into 2018 … his presentation drew heckling and laughter from some opposition lawmakers … The next general election in Britain will take place in 2015, well before the end of austerity measures that have included cuts in welfare services and the elimination of tens of thousands of public sector jobs."
Jared Bernstein urges Washington to focus on growth, not debt, in NYT oped: "The first thing to do is keep applying the accelerator on pro-growth policies that strengthen near-term demand and labor quality, including paycheck supports (like the payroll tax break), training for unemployed workers and investment in bridges, tunnels and other infrastructure. Over the longer term, we might want to think of immigration reform as a way to counteract our decelerating work force."
