Tag: Deficit

As negotiations continue between the White House and House Speaker John Boehner, leading economist Dean Baker joins us to discuss the myths about the so-called fiscal cliff. With little more than two weeks before the deadline, President Obama insists on an immediate increase in the top two income-tax rates as a condition for further negotiations on changes to spending and entitlement programs. But Boehner said Washington’s “spending problem” is the biggest roadblock to reaching a deal and has urged the White House to identify more spending cuts. “This idea that, somehow, if we don’t get a deal by the end of the year we’re going to see the economy collapse, go into a recession, really that’s just totally dishonest,” says Baker, the co-director of the Center for Economic and Policy Research. “The basis for this is that we don’t have a deal all year. And the fact that you don’t have a deal December 31st does not mean you don’t get a deal by December 31st, 2013.”

Transcript can be read here.

Where is the Tea Party now that the Republican Party wants to cut Medicare? Does anyone remember the 2010 election that gave the right wing extremists control of the House of Representatives and the disruption these Tea Partiers caused at Democratic Town Halls with their signs and demands that government keep their hands off Medicare? Anyone? Buehler?

So far not a peep from this vociferous crowd now that the Republicans are holding tax reform and budget negotiations hostage demanding major cuts to Medicare and Medicaid and raising Medicare eligibility age to 67 because wealthy white men are living longer.

The popularity for Medicare, Medicaid and Social Security, the three programs that are the major components of the social safety, is overwhelming. According to an ABC News/ Washington Post Poll (pdf) 79% of Americans do not want Medicare cut at all. By a large majority (65%) they would prefer tax hikes on the wealthy than reduction of payments to hospitals and doctors. Meanwhile, the Republicans in the House and Senate, who still think they won in November, are demanding drastic cuts after they campaigned against those very cuts.

Subbing for MSNBC’s Rachel Maddow on her show, Chris Hayes talks about the effort to defend Medicare and making the program more efficient with Rep. Jan Schawkowsky (D-IL), a member of the House Budget Committee.

A group of CEO’s from major US corporations have been lobbying Capitol Hill to put cuts to the social safety net at the forefront of negotiations to “fix the debt’ at the same time asking for more tax breaks while they reap the benefits of billions in government contracts and hand themselves lucrative pay raises and pensions while they bankrupt companies and underfund their employee pension funds.

From the Huffington Post

A group of high-profile corporate CEOs are lobbying Capitol Hill this week to put Social Security and Medicare cuts at the forefront of deficit reduction negotiations. Their own retirement funds, however, are secure: The coalition includes 54 CEOs who have amassed combined pension assets of more than $649 million from their companies’ executive retirement plans, according to a new report from the Institute for Policy Studies, titled “A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts.”

The CEOs’ employees are much less secure in their retirement than the CEOs. According to the report, less than 60 percent of the 71 public companies offer pension plans for their employees. Of the 41 companies that do, 39 of them haven’t contributed enough to their workers’ pension funds to enable the plans to pay out their anticipated obligations. Among the companies with employee pension funds in the red, these deficits exceed $100 billion.

The CEOs are among 71 chief executives of publicly traded companies who belong to the Fiscal Leadership Council of the influential Campaign to Fix the Debt, a group which has raised more than $60 million to lobby for a debt deal driven by cuts to “entitlements.” The coalition will meet Wednesday morning with congressional leaders, according to sources familiar with the group’s lobbying activities. The group, funded in part by former private equity magnate Peter G. Peterson’s foundation, has pledged to push for austerity during the lame duck congressional session, and beyond. Peterson has spent nearly half a billion dollars in recent years pushing his austerity agenda.

As the debate heats up over whether to cut Medicare, Social Security or Medicaid in order to maintain federal spending and corporate tax breaks, companies with well-compensated CEOs who preside over underfunded employee pension funds invite a new round of questions about the motives, and methods, of the CEOs pressuring Congress and the White House to cut programs for the middle class.

As the White House begins a series of meetings today on the looming “fiscal cliff,” a coalition of the largest corporate firms and advocacy groups is lobbying for wide-ranging cuts in government spending, including to programs like Medicare and Social Security. The group, which includes 80 of the country’s most powerful CEOs, is called the Campaign to Fix the Debt. It was co-founded by former Clinton White House Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson, previously the co-chairs of President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. Critics have accused the group of using the budget crisis to push for corporate tax cuts. We are joined by Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies and co-author of the new report, “The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks.“

The middle class, elderly, students and the poor have paid more than their “fare share” in this economic downturn while Wall St. and these megacorporations have continued to rake in billions. Social security, medicare and medicaid should be removed from any talks about the “fiscal cliff” myth. Lambert Strether at Corrente enumerated it best.

   Not one penny of cuts to Social Security, Medicare, Medicaid, or any other social insurance program, and any savings to be paid out as benefits.

The Democrats are defending programs. But they should be defending households. Here are some of the social insurance programs that are on the table, even if Social Security, Medicare, and Medcaid turn out to be off the table:

   Unemployment benefits extension in 2013 ($40 billion): If long-term unemployment benefits are allowed to expire at the end of the year, some 2 million jobless will be affected. Kogan says “there will be some extension, because that’s just brutal. It’s just a question of how much.”

   Pell Grants ($36 billion) (pdf): These need-based grants help some 10 million low-income students afford college.

   Section 8 Housing Assistance ($19 billion): Section 8 vouchers allow more than 2 million super low-income families to afford decent housing in the private market.

   Job Training ($18 billion in 2009): Loads of federal job training programs help millions of seniors, Native Americans, farm workers, veterans, young people, and displaced or laid-off workers with career development.

   Head Start ($7.9 billion):  The program, which helps kids from disadvantaged homes be better prepared to start school, had about a million enrollees in 2010. Research has shown that Head Start generates real long-term benefits for participants.

   Low-Income Home Energy Assistance Program ($3.47 billion): In 2011, about 23 million poor folks got help paying the winter heating bills through LIHEAP.

   Community Health Centers ($3.1 billion (pdf): In 2011, more than 20 million patients, 72 percent of whom were below the poverty line, got healthcare through federally-supported community health centers.

   Title 1 Education Grants ($322 million) (pdf): Under the No Child Left Behind Act, school districts serving a big percentage of low-income kids get financial assistance to help them meet state academic standards.

   Women, Infants, and Children ($7.2 million in 2011): The Department of Agriculture’s WIC program helps low-income moms and babies get access to supplemental nutrition and health care referrals. WIC has about 9 million participants, most of whom are kids.

Not one penny should be cut from of any of these programs. Go scuttle an aircraft carrier or something. Stop one of the wars. Whatever, dude. You’re the Preznit.

Know your president by the friends he keeps.

h/t Suzie Madrak at Crooks and Liars

And no, I’m not talking about the past anti-labor ties like former COS Rahm Emanuel who called labor unions “f-ing retarded” and condescendingly opined about “where are they going to go?” if they expect more from Democrats. No, I’m not talking about the NAFTA and China PNTR hatchet man that helped crush US industry before he became mayor of the President’s home town of Chicago attacking the teacher unions that helped elect this President. And I’m not talking the former U.S. Secretary of Commerce and JP Morgan Executive that also worked with Rahm and the Clinton administration to pass NAFTA either.

Of course, there still are plenty of anti-labor ties to choose from such as Jeffrey “China! China! China!” Immelt who serves as chairman of his outside panel of economic advisers while retaining his post as chairman of the board and CEO of the GE; the non tax paying conglomerate that outsourced its X-ray division from Wisconsin to China. Of course I don’t need to which brings me to the main point of this piece.

(h/t Rick Pearlstein)

We are being told that the mess this President caused when he helped pass the Bush tax cuts in exchange for 1 year of unemployment insurance – which was unnecessary because Republicans caved on UE extension before – WITHOUT even securing a rise in the debt ceiling by putting his full trust in John Boehner with the full faith and credit of the US. This of course gave Boehner immense political power and the right hostage needed to cause the debt ceiling debacle just like I predicted. Well here are are again dealing with the fallout.

Already? Obama Tells Supporters to Expect ‘Bitter Pills’

As the Huffington Post, who listened in on the call, reports:

The president, speaking from a White House phone, cautioned listeners to expect disappointments during his second term. As he has in the past, Obama warned that he was prepared to swallow some bitter pills during the negotiations, including some that would agitate the base.

“As we move forward there are going to be new wrinkles and new frustrations, we can’t predict them yet,” he said. “We are going to have some triumphs and some successes, but there are going to be some tough days, starting with some of these negotiations around the fiscal cliff that you probably read about.”

Though his encouragement to his activist base may be encouraging to some, the President’s preemptive admission that he’s willing to give away bargaining chips so early in the game will surely irk those who criticized Obama for his negotiating style throughout his first term. That will be doubly true for progressives who have publicly called for a more hardline stance when it comes to defending key social programs like Social Security, Medicare, and Medicaid.

We know from the president’s interview with the Des Moines register that much of what was in the memo revealed by Bob Woodward as part and parcel of all of this nonsense we shouldn’t even have to be dealing with in the first place is a starting point. Oh yes, many will screech about how Simpson Bowles is dead because the commission was a failure, but the horrible ideas live on through our elected leaders that keeps bringing them back to life.

Obama vows debt-cutting ‘grand bargain,’ immigration reform in Des Moines Register interview

“I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs,” Obama said. (The White House quickly clarified that he meant $2.50 of spending cuts for every dollar in new tax revenue.)

“We can easily meet-‘easily’ is the wrong word-we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction, and even more in the out-years …

This is not going to help the unemployed and it’s economic illiteracy. When you hear things like, “We all agree we must pay down the deficit,” it might as well be, “We all agree on economic illiteracy. Come on. Everybody’s doing it.”  Anyone who is still making excuses for this doesn’t even understand why this fake fiscal cliff, really an austerity bomb as Brian Beutler of TPM puts it, is coming back up in the first place.

“The past isn’t dead. It isn’t even past.” – William Faulkner

This is quite literally true so for all those “that was then this is now” excuse makers, you have a lot of studying and reading to do.

Chris Hayes, host of Up with Chris Hayes,  discusses the stand-off between President Obama and House Republicans over the “fiscal cliff,” the name given to the combination of the expiration of the Bush tax cuts and the sequestration cuts mandated by last year’s debt ceiling agreement. Chris’ “filibuster” in the first segment is a “Cliff Note” summation of the debate about the so-called “fiscal cliff.”

Chris is joined for a comprehensive, and somewhat wonky, discussion with Hakeem Jeffries, newly elected Congressman representing the 8th Congressional District in Brooklyn, New York State Assemblyman; Teresa Ghilarducci (@tghilarducci), labor economist and director of the Schwartz Center for Economic Policy Analysis at The New Schoo; Edward Conard, former partner at Bain Capital from 1993-2007 and author of “Unintended Consequences: Why Everything You’ve Been Told About The Economy Is Wrong;” Ohio Democratic Senator Sherrod Brown; and Molly Ball (@mollyesque), national political reporter for The Atlantic.

I found this article  about the debt/deficit/”fiscal cliff” from letdgetitdone quite interesting. It presents a very compelling argument, point by point, why this entire discussion about a “fiscal cliff” is a myth. He concludes his argument:

So, current claims that we have a fiscal crisis, must debate the debt, must fix the debt, and must immediately embark on a long-term deficit reduction program to bring the debt-to-GDP ratio under control, all misconceive the fiscal situation because they are based on the idea that fiscal responsibility is about developing a plan to bring the debt-to-GDP ratio “under control,” when it is really about using Government spending to achieve outputs that fulfill “public purpose.” There is no fiscal crisis that will require “a Grand Bargain” and cuts to popular discretionary spending and entitlement programs. It is a phoney issue.

The only real crisis is a crisis of a failing economy and growing economic inequality in which only the needs of the few are served. MMT policies can help to bring an end to that crisis; but not if progressives, and others continue to believe in false ideas about fiscal sustainability and responsibility, and the similarity of their Government to a household. To begin to solve our problems, we need to reject the neoliberal narrative and embrace the MMT narrative about the meaning of fiscal responsibility. That will lead us to fiscal policies that achieve public purpose and away from policies that prolong economic stagnation and the ravages of austerity.

While everyone has been focused on the Supreme Court hearings over the constitutionality of the individual mandate of the Patient Protection Affordable Care Act and the tragic murder of a black teenage boy in Florida by a “gun toting vigilante”, the Republican held House of Representatives has been up to its usual shenanigans threatening not only to shut down any infrastructure construction but now planning to shut down the government entirely. Even though they have vowed to defeat the current resident of the Oval Office, knowing they have a “friend”, the Republicans continue to make themselves more unpopular with the majority of their own constituents. This is what they have been up to while the traditional media focused on SCOTUS and a possible racially motivated murder:

The House voted down the proposed White House budget by a vote of 0 – 414. I suppose one could call that “bipartisan.” Nust up was the annual ritual of the Black Caucus Budget which failed but at least managed to garner 107 votes. Then they rejected the “Bowles-Simpson” Budget proposal, which really wasn’t, giving it only 38 votes.

Thus they finally came to Rep. Paul Ryan’s budget, which is a revision of his budget that was passed last year and soundly rejected by both sides of the aisle in the Senate. The current bill passed with a partisan vote of 228-191. All but 10 Republicans voted against the bill mostly because it didn’t cut enough. The bill has no chance of passing the Senate but its passage reignites the same issues of cutting taxes for the rich on the backs of those who can least afford it:

He again proposes tax cuts for the rich at the expense of seniors, the disabled, and children. He would cut taxes by roughly $3 trillion $4.6 trillion (according to a Tax Policy Center analysis just put out), with most of the tax cuts going to people earning more than $200,000. His proposed cuts to Medicare, Medicaid, and food assistance would all fall heavily on seniors, the disabled, and children. Ryan’s budget is doubly bad for children because his proposed cuts to public investments (mostly infrastructure and education) would cause children to inherit a country with crumbling roads and bridges and to enter the labor market with fewer skills.

It would also cut non-defense discretionary spending to lows not seen in the 50’s but raise the defense budget that the Pentagon says it doesn’t need:

Because it doles out trillions of dollars in tax cuts to the rich and corporations, the budget approved by House Republicans today – authored by Budget Committee Chairman Paul Ryan (R-WI) – would increase deficits and drive up the national debt. In fact, under the plan, “deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.”

Those increases would come despite the gigantic spending cuts that Ryan has in mind, which would eviscerate the social safety net and non-defense discretionary spending (even while the budget increases defense spending). As the Economic Policy Institute noted today, the plan Republicans adopted would drive discretionary spending down to its lowest level in more than 50 years.

Click on image to enlarge

The House also refused to pass the very bipartisan Senate Transportation bill managing only to pass a stop gap 90 day bill to fund current transportation and construction projects:

Despite several efforts to advance a bipartisan Senate bill championed by (Sen. Barbara) Boxer, House leaders opted for a three-month extension while they try to break a deadlock that has stalled their own proposal to fund transportation by expanding offshore oil drilling.

The extension leaves transportation financing in an increasingly precarious position.

This won’t win them any votes in the Fall

One of the reasons that the Republicans lost so badly in 2006 and 2008 and the reason the Democrats took such a dive in 2010 was the economy. Since then the job approval rating of Congress has plummeted with the Republicans fairing worse than the Democrats but only slightly. In regards to the economy the public in general doesn’t think that President Obama is doing such a great job, either. People are worried about jobs, good jobs not deficits. Deficit and the national debt are not what is holding back the economy, it’s jobs.

The Republicans in the House seem to be intent on killing more jobs with its latest suicide pact that would cut everything from taxes for the wealthy, food stamps, destroy Medicare, and spending cuts. As Roger Hicky in his Huffington Post article point out, the Republican budget clearly rejecting what the American public wants.

The only thing that could save Republicans would be if Democrats, like Oregon Senator Ron Widen or House Democratic Whip Steny Hoyer, persuaded their party to ignore American public opinion and join with the GOP in destroying Medicare, cutting Social Security, and slashing public spending in a way that cripples the economy and rewards the wealthy. That’s what the Ryan Republican budget would do, and Democrats — and Americans who believe in majority rule — need to explain the extreme nature of this budget to the American people. [..]

So, the brand-new Ryan Republican budget, so very like last year’s Ryan budget, is already unpopular with the American majority, in all of its major elements. Progressives and Democrats should immediately publicize its many unpopular pieces so the public knows about them all. We should immediately demand to know whether the Republican candidates for president embrace it. And we should keep a wary eye out for Democrats who are willing to give the Republicans cover. When the Paul Ryan Republicans — enemies of everything the American majority believe in — are putting a gun to their heads and are about to pull the trigger, progressives should get out of the way and publicize the results — from now until the November elections.

It is obvious from the results of these kinds of cuts in Europe, austerity budgets don’t work. The Occupy Wall Street movement changed that conversation six months ago.

If Obama and the Democrats are smart, they’ll listen to the American public, sit back and let the Republicans pull the trigger.

Up Date: Ezra Klein, writing in the Washington Post, sums up Ryan’s latest version of a “budget plan” in one sentence:

Ryan’s budget funds trillions of dollars in tax cuts, defense spending and deficit reduction by cutting deeply into health-care programs and income supports for the poor.

The last I checked that isn’t going to win them any elections but you never know when the Democrats will ride into save the day. Calling Ron Wyden.

The deadline for the bicameral Super Committee to come up with a deal on deficit reduction is a week away. While many American’s don’t think that the committee will meet the deadline thus triggering large mandated budget cuts to defense and entitlements, we have President Obama warning the committee not to “cheat” by changing the law so that those cuts, particularly to the Defense, would not go into effect should the committee fail. Meanwhile, the committee’s Democratic members are proposing a $2.3 trillion tax-and-cut proposal “that includes $400 billion in Medicare and Medicaid reductions,” but only if Republicans compromise by putting new tax revenues on the table that in the end would only amount to $350 billion in new tax revenue.

The other really unacceptable proposal that the Democrats have put on the table to get the Republicans to agree to a paltry $350 billion in tax revenues, is making the Bush/Obama tax cuts permanent, even though the White House has said that President Obama would veto any bill that made those cuts permanent. Perhaps they are counting on Obama doing his usual last minute capitulation and he would sign the bill.

The Democrats are scrambling to try to make this look like a good deal but it’s not. Letting the Bush/Obama tax cuts expire would solve more of the deficit problem than anything that this committee or Congress has proposed by increasing tax revenues $1 trillion over the next 10 years. To their credit though, the Democrats have rejected the Republican offer that would cut all the tax rates across the board by 20%, lowering the top tax bracket to 27% from 35% assuming the Bush tax cuts would be extended. This would reduce tax revenues by $200 billion in just one year.

This is a muddled mess that is not really a crisis at all and in the long run won’t create any jobs but deepen the economic crisis that has been created by the burst of the housing bubble, job killing foreign trade agreements, unfair tax codes and the lack of banking regulation.

John Aravosis at AMERICAblog nails what has exacerbated much of problem: the Democrats negotiating techniques, or rather, the lack of them. The Republicans negotiate while the Democrats come to the table and offer their bottom line, so there is nowhere to go but to cave to Republican demands:

Note how the Republicans are still skewing their proposals towards large budget cuts and little tax increases, whereas the Democrats are offering 50-50 budget cuts and tax increases. That means that if both parties make concessions as they move to the “middle” – which is highly unlikely, the Dems will cave while the Rs will stay put – the “middle” will be a point at which there are more budget cuts than tax increases. Why? Because the Democrats, as always, are making their final offer – half tax increases, half budget cuts – first, so there’s nowhere to go but down.

This had been the Democratic approach since 2006 when the party gained control of both houses of Congress. It’s no wonder that voters are disgusted with both parties and that the Democrats lost the House in 2010. By gutting our social safety networks to protect the wealthy and appease the Republicans, the Democrats could well lose more in 2012 if they don’t start listening to the demands of the American people.

h/t to DCblogger at Corrente

Scarecrow at FDL observed this morning, “Dems discover GOP is nuts. Who knew?” I have no idea what took them so long but I am worried that they will just enable the insanity by going along with INSANE ideas like making the Bush tax cuts permanent for tax increases that will impact on the already tax burdened 99%.

Brian Buetler at TPM thinks that the Super Committee is heading for a catastrophe:

A key member of the Senate Democratic leadership team has openly predicted the panel will gridlock and fail, and placed the blame squarely on Republicans.

As GOP committee members met privately, Maryland Rep. Chris Van Hollen – a Democrat on the panel – told Bloomberg, “You need to close some of these tax loopholes and you need to generate additional revenue. And so that balance is going to be important. We saw the dueling letters just last week. We had a bipartisan group in the House that said, ‘Look, everything is on the table including revenues – tax revenues.’ And within 24 hours you had 33 [Republican] Senators say, ‘no new net tax revenues.'”

Republicans responded with a trial balloon, provided first to Wall Street Journal editorial writer Stephen Moore. “One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income,” he wrote. “In exchange, Democrats would agree to make the Bush income-tax cuts permanent. This would mean preventing top rates from going to 42% from 35% today, and keeping the capital gains and dividend tax rate at 15%, as opposed to plans to raise them to 23.8% or higher after 2013.”

That “trial balloon” is in now way a “positive development” for the economy or the 99%:

This isn’t offered as a concession Republicans are willing to make in exchange for entitlement cuts – a key Democratic demand. It’s designed as a concession Republicans are willing to make if Democrats will agree to make all of the Bush tax cuts permanent – and thereby throw away an enormous amount of leverage they have over Republicans who are committed to extending them.

Democrats, thus, would be expected to agree to throw in entitlement cuts anyhow , just because. And to underscore the downside, the non-partisan Congressional score keepers would likely score this as a giant budget buster – not the trillion-plus-dollar deficit reducing deal the panel is supposed to be pursuing.

Yes, this is another version of the insanity of the last 30 years that keeps getting a resuscitated like a bad plot in a porn flick. And the Democrats are just realizing that this latest rewrite is INSANE:

A Democratic aide with knowledge of the GOP offer called their ideas “ludicrous”

“This is another effort for them to spin that they are being reasonable, but what they’ve put on the table is so insanely unreasonable that I actually think it moves the ball in the opposite direction,” the aide told NBC News.

“It’s devious, because it looks in some respects reasonable on the surface, but it’s a totally unreasonable proposal.”

According to the aide, in order to raise $300 billion in tax revenue and lower the top individual tax rate to 28 percent, you would need to “decimate all tax expenditures” and increase taxes on capital gains and dividends, something he doubts Republicans would support.

It’s unclear whether the $300 billion would be part of a deficit reduction deal with overall savings north of $2 trillion, or, more likely, a minimum package of $1.2 trillion in deficit reduction. Aides are split over how lofty of a target to set.

The aide also noted that CBO has reported that making the Bush tax cuts permanent would increase the deficit by $4 trillion in the next 10 years.

The reality check here is that you cannot raise $300 billion dollars in tax revenues and drop the top rate to 28 percent without touching capital gains and dividends. Republicans really want those Bush tax cuts made permanent do badly they are willing to pretend that they are throwing Grover Norquist off the bus. Reality, Grover, while feigning strong disapproval, is most likely praying that this passes.