“Larger Deficits, More Inequality”: The House Republicans’ Head Scratching Economics
Whether you worry about the sluggish recovery, budget deficits, or widening inequality, you should be scratching your head at what the House of Representatives is up to this week.
On the one hand, the House will likely pass the small business tax cut sponsored by House Majority Leader Eric Cantor, which adds $46 billion to the deficit, largely benefits very high-income taxpayers, and has little potential for creating jobs. On the other hand, the House Agriculture Committee has approved a proposal, as part of its deficit reduction mandate, to cut $36 billion from the Supplemental Nutrition Assistance Program—formerly food stamps—a program that goes mainly to low-income households and is one of the best policies we have for creating jobs in a weak economy.
In Tuesday’s post on the New York Times Economix blog, Bruce Bartlett, who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Reps. Jack Kemp and Ron Paul, asks the question, “Do small businesses create jobs?” He appropriately cites the research showing that politicians’ worship of small businesses as jobs creators is misguided, and that it is start-up firms, not small firms per se, that are the job creators. Moreover, many of those who would benefit from the tax cut are affluent doctors, lawyers, and stockbrokers—hardly the local mom and pop store that most people imagine when they hear the phrase “small business.”
Bartlett is scathing on the Cantor bill:
There may be policies that would increase the number of business start-ups and aid employment this way. But an across-the-board tax cut for every small business, defined only in terms of employment, is nothing but …[a] giveaway unlikely to create any jobs whatsoever.
Bartlett’s indictment is backed up by standard “multiplier” or “bang-for-the-buck” analyses from the Congressional Budget Office and private analysts like Mark Zandi, chief economist of Moody’s Analytics. In contrast to an increase in SNAP benefits, which they find to be among the most cost-effective measures for stimulating economic growth and job creation in a weak economy, both the Congressional Budget Office and Zandi find business tax cuts similar to the Cantor bill to be among the least effective. The economic growth and job creation impact per dollar of nutritional assistance spending is six to eight times larger than that of an across-the-board tax cut.
Here is what the House is doing with these two measures: It is adding $46 billion of tax cuts, nearly half of which will go to those making more than $1 million, to the budget deficit. According to the official Joint Committee on Taxation estimate, about $45 billion of it will be received in 2012-13, when the economy could in fact use a boost to jobs. At the same time, any stimulus from the tax cut will be wiped out by the $8 billion of the $36 billion SNAP cut that also would occur in 2012-13.
The bottom line on these actions is that they produce larger budget deficits, more inequality, and no net new jobs. So when I see the House moving in exactly the opposite direction of what is fair and makes economic sense, I’m inclined to ask: “Is it really more politically appealing to cut taxes for millionaires and increase the budget deficit than to maintain food benefits for the poor that also give an extra boost to the economic recovery?”
By: Chad Stone, Chief Economist at the Center on Budget and Policy Priorities, Washington Whispers, U. S. News and World Report, April 19, 2012
“Sustaining Their Prejudices”: The Arizona Immigration Law Is A Constitutional Nightmare
You thought the healthcare case created a storm. Well you haven’t seen anything yet. Next week the Supreme Court hears oral arguments on the constitutionality of SB 1070, the Arizona immigration law. Any case that involves race creates political fireworks.
The Arizona law is a constitutional nightmare.
One part of the law allows the police to hold people arrested indefinitely until their immigration status is verified. What it means is that American citizens who look like illegal immigrants because they have brown skin and who are suspected of a crime can be held indefinitely without trial. This part of the law violates the due process clause in the Fifth Amendment and the equal protection clause in the 14th Amendment. SB 1070 flushes fundamental American civil liberties down the toilet.
The Arizona law states that “the intent of the law is attrition through enforcement to deter the unlawful entry and presence of illegal aliens.” Well, you have a constitutional problem right there. Article I, Section 8 the Constitution clearly gives Congress, not the states the power “to establish a uniform Rule of Naturalization.”
The state says it had to act since the feds haven’t acted. There are several problems with this argument.
The reason that the founders gave Congress the power to regulate immigration is that there would be chaos if each of the 50 states did the same thing and created their own immigration policies.
For another thing, the logic of the Arizona argument is the same thing as saying that it or any other state could declare war against another country if Congress didn’t. Article 1, Section 8 not only gives Congress the power to set rules of naturalization, it also gives it the power to declare war. And why not let the states instead of Congress have the Article I power to coin money. Of course that would lead to economic disaster. I don’t know about you but I don’t have the math skills to figure out the exchange rate for financial transactions between Maryland and Virginia.
Finally, the state’s argument that the feds are not acting is just wrong. Illegal immigration has slowed steadily in the last few years. There has been a large increase in the number of Border Patrol agents stationed on the Mexican border. And the Obama administration has deported record numbers of illegal immigrants convicted of crimes. But supporters of SB 1070 just want to overlook the facts so they can sustain their prejudices.
George W. Bush and Barack Obama proposed a solution to the problem that doesn’t even violate the Constitution. These presidential proposals would intensify enforcement of immigration efforts at the Mexican border, penalize employers who hire undocumented workers, and create a path to citizenship for people in the U.S illegally. Congress failed to act on either of the proposed laws. Even though the two presidential proposals are similar, several GOP senators who supported the Bush proposal now oppose the Obama bill. Go figure.
After the court issues rules on the Arizona law in June, the justices should disperse as quickly as possible because whatever they do, there will be a lot of very unhappy people out there.
By: Brad Bannon, Washington Whispers, U. s. News and World Report, April 19, 2012
“Eric’s Zombie Lie”: Cantor Says It’s Time To Tax The Poor
House Majority Leader Eric Cantor justifies his latest big tax break for millionaires by dragging out an old, big lie.
CANTOR: We also know that over 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair. And should we broaden the base in a way that we can lower the rates for everybody that pays taxes. […]
KARL: Just wondering, what do you do about that? Are you saying we need to have a tax increase on the 45 percent who right now pay no federal income tax?
CANTOR: I’m saying that, just in a macro way of looking at it, you’ve got to discuss that issue. […] I’ve never believed that you go raise taxes on those that have been successful that are paying in, taking away from them, so that you just hand out and give to someone else.
Let’s just do this again, debunk that zombie lie. The more than 45 percent of people who “don’t pay income taxes” don’t pay federal income tax because they’re too poor!They pay federal payroll taxes. They pay sales taxes in most states. They pay a larger share of their income in taxes than rich people do. And they are students, and disabled people, and the elderly who don’t have income.
And you know who doesn’t pay income tax? Two dozen Fortune 500 companies that avoided corporate income taxes altogether in 2011.
And Eric Cantor says that we need to take even more money away from poor Americans and give it directly to “those that have been successful.” That’s the Republican version of redistribution of wealth.
10:57 AM PT: The Cantor NASCAR/NFL owners tax break just passed, 235-173. Ten Republicans voted no, one voted present, and 10 Democrats voted for it.
By: Joan McCarter, Daily Kos, April 19, 2012
“What A Revolting Development This Is”: Romney’s Immigration Adviser Says Mitt Won’t Support GOP DREAM Act
During the GOP presidential primary, Mitt Romney staked out the most extreme position on immigration of any Republican candidate. Romney even campaigned with his immigration policy adviser Kris Kobach, the author of Alabama and Arizona’s harsh immigration laws, on Martin Luther King Day.
Now that Romney is the presumptive nominee, he’s trying to soften his immigration rhetoric to win over Hispanic voters. The Romney campaign even tried to publicly downgrade Kobach from “adviser” to mere “supporter” yesterday — an effort that failed after Kobach refused to play along.
Nor is this the only example of Kobach refusing to let Romney etch-a-sketch away his harsh positions on immigration. After Romney said over the weekend that Republicans need to embrace a Republican DREAM Act to win over Hispanic voters, Kobach told the Washington Post’s Greg Sargent that the former Massachusetts governor will not support any version of the DREAM Act that offers a path to legal status — like the GOP version Sen. Marco Rubio (R-FL) plans to introduce. And he added that no Republican should support such a proposal:
[Kobach] stated flatly that he didn’t think Republicans — or Romney — should, or would, support any version of the DREAM Act that provides undocumented immigrants with any kind of path to legal status.
If Romney sticks to this — and Kobach said he would — there’s very little room for him to moderate his approach to immigration. In addition to advising Romney on immigration, Kobach is a national GOP voice on the issue, suggesting the right would not permit any move of this kind.
“I’d absolutely reject any proposal that would give a path to legal status for illegal aliens en masse,” Kobach said. “That is what amnesty is. I do not expect [Romney] to propose or embrace amnesty.”
Details of Rubio’s proposed DREAM Act have not been announced, but the first-term senator has outlined a plan that would not offer a direct path to citizenship but would enable them to remain in the country legally. Despite his promise to veto the DREAM Act earlier in his campaign, Romney told a crowd at a private fundraiser that he wants a Republican DREAM Act to make the GOP the party of “opportunity.”
But if Rubio’s plan includes a path to legal status, or if Romney supports a plan that does, then Kobach said it would be an “unacceptable” proposal. “A path to legal status for someone who is here illegally is amnesty by definition,” he said. “It gives the alien what he has stolen.”
By: Amanda Peterson Beadle, Think Progress, April 18, 2012
“Not To Worry Ladies”: Rick Perry And The Texas GOP Has Your Back
After doing their best to dismantle the Women’s Health Program—and losing federal funding in the process—the state’s Republicans promise they’ll find the money somehow.
Texas health officials are telling low-income women not to worry. The Women’s Health Program, the Medicaid program serving 130,000 women, will still be there for them. Of course, how it will be paid for and whether enough clinics will be left providing services are still subjects up for debate.
The Republican-dominated Texas Legislature cut funding for the program—which offers poor women basic reproductive health services like birth control and cancer screenings—by two-thirds last year. The cuts came out of fear that the health-care providers were too linked with the so-called abortion industry. Just to be safe, conservative lawmakers barred Planned Parenthood from participating in the program. Of course, since the beginning of the program, no public dollars could go to abortions, and women could only participate if they were not pregnant.
The results were swift. The budget cuts resulted in clinic closings around the state, and the decision to exclude Planned Parenthood violated federal policy, meaning that the federal government, which paid for 90 percent of the $35 million program, would no longer pay for any of it. Protests have broken out around the state. Planned Parenthood has already filed a lawsuit.
But not to worry—Governor Rick Perry promised that the state would take over the Women’s Health Program. Yesterday, state health officials unveiled their plan. Step one: Stay on the federal tab a few months longer. Step two: They’re working on it.
The Texas Health and Human Services Commission will ask the feds to keep funding them through November 1. (Texas was supposed to get cut off at the end of April.) By then, presumably, the state will find some way to free up dollars. That’s hardly a cakewalk. Texas has been in a fiscal crisis since 2011. For the last two-year budget, lawmakers had to deal with a $22 billion shortfall, resulting in unprecedented cuts to education and underfunding of Medicaid programs by almost $5 billion. The state has a structural deficit thanks to a dysfunctional tax structure. Yesterday, Perry announced his “Budget Compact,” which asks lawmakers to pledge no new or increased taxes as well as offering voters a constitutional amendment that would limit spending increases to the population growth.
Given the situation, $35 million isn’t going to be easy to find, unless the state comes up with a way to get more federal money. Which may be its best option. According to The Texas Tribune, officials “hinted the state could free up state dollars to fund the Women’s Health Program by seeking federal block grants for other programs.”
But even if they find the money, there’s still the problem of clinics. Planned Parenthood clinics served almost 50 percent of the women participating in the WHP. With those providers out of the picture, the remaining clinics have to shoulder the burden—and they have to do so with a major funding cut. As the Austin Chronicle notes, non-Planned Parenthood clinic Community Action Inc. has had to close 11 of its 13 clinics in Central Texas. The two remaining ones are in danger as well. In their plan for taking over the program, state officials say they will try to increase the number of providers.
The head of the state’s biggest health agency, Tom Suehs, has promised that things will be fine, dismissing the “scare tactics and misinformation campaigns.” The bigger challenge, he says, is “making sure women get accurate information about the program in the midst of organized attempts to confuse and frighten those who rely on it.”
Maybe it’s just me, but what’s confusing is a health-care policy that makes it hard to access health care.
BY: Abby Rapoport, The American Prospect, April 18, 2012
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