MORNING MESSAGE: Fix The Trade Deficit. Fix The Economy.
OurFuture.org's Dave Johnson: "Yet another report is out showing how the trade deficit is costing us millions of jobs and hurting our economy. This report has specific numbers: between 2.2 million and 4.7 million U.S. jobs, between 1 percent and 2.1 percent of the unemployment rate and a gross domestic product increase of between 1.4 percent and 3.1 percent ... The trade deficit is huge. It transfers around $1 billion a day out of our country. For those well-to-do elites so worried about the budget deficit instead of American jobs, factories, industries and our ability to make a living in the future, the trade deficit increases our budget deficit by between $78.8 billion and $165.8 billion."
Pressure Builds On GOP To Repeal Sequester
Dems prepared to hammer GOPers from military districts. Politico: "...they’re already eyeing at least 10 Republican-held seats with strong military connections from Florida to California to target in 2014, after sequester cuts have trickled down to local bases where jobs are lost and voters notice ... If sequestration happens, House Democrats say they’ll have tangible proof that the GOP is a dysfunctional party that can’t even tie its own shoelaces on something as essential to its long-standing tradition as the Pentagon budget."
Senate Dems working on proposal to replace sequester in part with revenue increases. CNN: "While a source familiar with the plan did not specify any cuts that would be part of the package, he did outline three areas for possible revenue increases to be proposed 'in the next couple of weeks.' ... The first tax proposal includes an increase in taxes on the so-called 'carried interest' income paid to private equity firms ... The next area Democrats want to mine for money is losing tax incentives for offshoring ... Finally, the source said that Democrats want to remove [the incentive] for taxpayers [to] describe themselves as an 'S-Corporation' as a way to avoid paying payroll taxes."
NYT's Paul Krugman explains why the fiscally responsible thing to do on the deficit is wait: "...we’re still living in the aftermath of the worst financial crisis since the Great Depression, and the Fed, in its effort to fight the slump, has already cut interest rates as far as it can [and] can’t blunt the job-destroying effects of spending cuts ... now is very much not the time to act; fiscal austerity should wait until the economy has recovered, and the Fed can once again cushion the impact."
Effects of unemployment more wide-ranging than usual. NYT's Catherine Rampell: "Four out of five Americans know relatives or family friends who were laid off during the last few years or were laid off themselves ... Usually a lot of people churn in and out of unemployment during a recession. In the wake of the recent financial crisis, however, the layoffs were large but appeared more targeted, with people being very unlikely to cycle back into a job once displaced — hence the record lengths of unemployment duration for those who did lose their jobs. These new Heldrich data suggest that a lot more people were exposed to layoffs through friends and family."
New Investigative Front Into Credit-Rating Firms
NY AG launches investigation into credit-rating firms. WSJ: "His office is investigating the ratings the three firms issued on mortgage-backed deals before the crisis ... it isn't clear [he] would be able to proceed with any legal action related to crisis-era ratings because of a 2008 agreement his predecessor made with the firms."
"Why Do Banks Get Away With Murder?" asks Daily Beast's Daniel Gross: "Prosecutors fear that indicting a highly leveraged, highly indebted institution would trigger a cascade of unwanted outcomes—capital flight, bank runs, disruptions in vital markets ... A pretty clear rule of thumb has emerged: if you work at a well-known, large, systematically important financial institution, you may lose your bonus—but not your freedom ... The trauma of the Lehman Brothers collapse has caused prosecutors around the world to treat banks with kid gloves."
Breakfast Sides
House Dems assert their power. NYT: "So far this year, two major bills — the multibillion dollar Hurricane Sandy aid package and the fiscal compromise that let tax rates on high-earners rise — have made it through the House without a majority of Republicans voting yes. That left Democrats as the ones who provided the needed votes. Before that, the last time a bill passed the House with a minority of the majority party behind it was in 2009 ... One of the major choices Mr. Boehner could face this year is whether to allow immigration or gun control legislation to reach the floor even if there is strong dissent within his caucus."
Business and labor close to immigration agreement. NYT: "...they are discussing what they call a 'data-driven system' that would determine how many “provisional workers” would be let in each year to work on farms, summer resorts and elsewhere ... the number of provisional workers permitted might increase when America’s unemployment rate was low and then shrink if the rate was high."
