“Doesn’t Even Rise To The Level Of Pitiful”: Sorry, Republicans; The Keystone XL Pipeline Is Not A Jobs Agenda
In the new Congress, Republicans will have the majority in both the Senate and the House for the first time in eight years. As they get ready to take power, their rhetorical focus is clear: jobs, the economy, and more jobs.
So far, there are two main proposals on deck for the GOP. First, the Hire More Heroes Act, which would make it easier for small businesses that hire veterans to deny health care to their employees. Second, they want to immediately build the Keystone XL pipeline, a project that would transport oil from Canada to the Gulf Coast.
On their own, these are both extremely small-bore policies. But as a jobs agenda, this doesn’t even rise to the level of pitiful. It’s the latest evidence that Republicans continue to struggle with basic macroeconomics — and it does not bode well for the nation should they win the White House in 2016.
Let’s examine the Hire More Heroes Act first. ObamaCare requires that all businesses that have over 50 full-time employees provide health-insurance benefits. This law would exempt veterans from counting toward that cap, thus making it easier to expand a business over 50 employees if you hire veterans.
On its face, this might not even be a terrible idea. Health-care policy experts have long argued that funneling American health care through employer subsidies is bad, locking people into jobs they don’t like for fear of losing coverage, and increasing health-care spending. Rolling that system back very slightly might be a good thing. My problem is that there’s no reason to direct general social spending to veterans so preferentially.
But make no mistake, this is a tiny, tiny policy involving a relative handful of people and jobs.
Keystone XL is bigger in one respect. Generous estimates predict that the pipeline would create around 42,000 temporary jobs — about 2,000 construction jobs and the rest in supplying goods and services.
How many long-term jobs? Fifty. That’s right, 50 whole long-term jobs. (One more, and the pipeline would have to get health insurance for them! Unless they hired veterans, I suppose.)
Furthermore, the argument that Keystone XL would help by lowering gas prices just had the legs kicked out from under it, with the price of oil plummeting toward $50 per barrel with no sign of stopping. This was always a bogus argument, since the pipeline is a drop in the bucket compared with world supply, but now it makes even less sense.
To get a sense of the bigger picture, the U.S. economy pumped out probably close to 3 million jobs total last year. The GOP’s proposals, if enacted, will fail to make more than a small ripple in the job market.
The problem with the American economy is the same problem we’ve had since 2007: a lack of demand. With factories idle and workers unemployed, there’s not enough spending and not enough investment. Nations have two options for attacking this problem. First, spend money, through government investment in things like infrastructure, or handouts to citizens in the form of checks or tax cuts (fiscal policy). Second, use control of the money supply to ease credit and stimulate lending (monetary policy).
Republicans used to accept this framework, proposing a $713 billion government stimulus bill as recently as 2009. But they’ve since regressed intellectually to the pre–Great Depression era. The economic policy of the GOP today is almost indistinguishable from the days of Herbert Hoover and Andrew Mellon. Their platform is muddled on fiscal policy, proposing massive spending-side cuts coupled with large tax cuts for the rich — which in macro terms would cancel each other out. On monetary policy, they propose tighter money and reexamining the gold standard — which would slow the economy and throw people out of work. At best, it’s a large net negative for workers.
After the colossal failure of Hoover, when the Republican Party was largely locked out of national politics for a generation, they learned that parties ignore the lessons of Keynes at their peril. But it seems they will have to learn them again — and if they win full power in 2016, it will be at everyone’s expense.
By: Ryan Cooper, The Week, January 6, 2014
“Austerity’s End Strengthens U.S. Recovery”: Speechless, Republicans Fall Back To Peddling More Nonsense
For a variety of partisan and ideological reasons, the right finds it necessary to believe austerity helps the economy. Conservatives, on Capitol Hill and off, remain wedded to the idea that taking capital out of the economy and weakening demand will lead to more growth, all evidence to the contrary notwithstanding.
In an amusing twist, as the U.S. economic recovery gains strength, some on the right actually feel vindicated.
Grover Norquist would like Republicans to shut up about how bad the economy is, and instead take credit for the recovery.
The prominent anti-tax crusader hasn’t turned into a bullhorn for President Barack Obama’s economic policies; he still thinks they’re a drag on jobs and wages. But he’s also grown critical of his fellow Republicans for making poor strategic and messaging decisions on several key issues. Rather than tying the economic recovery to spending cuts ushered in by the sequester and to the continuation of 85 percent of the Bush tax cuts, he said, some in the party have insisted their own leaders fumbled those items.
It’s an interesting course correction for the right. In recent years, Republicans have said the combination of the Affordable Care Act, federal regulations, and higher taxes on the wealthy are crushing the economy. That argument obviously doesn’t make any sense in light of the strongest growth and job creation in over a decade.
So Norquist is suggesting his party flip the script: sure the economy is starting to soar, he says, but that’s only because deep spending cuts like “the sequester” gave the nation a big boost. Austerity took capital out of the system, some conservatives are now arguing, and just look at how great the results are!
It’s important to understand the degree to which Norquist has the story backwards. Recent developments haven’t bolstered conservative economic theories; they’ve done the opposite.
First, the national economy hasn’t improved as a result of spending cuts, but rather, the end of spending cuts.
For a long stretch, government spending cutbacks at all levels were a substantial drag on economic growth. Now, finally, relief is in sight. For the first time since 2011, local, state and federal governments are providing a small but significant increase to prosperity. […]
Across the nation, state and local governments, Democratic and Republican alike, are spending on projects that were stalled. Teachers, who were laid off in droves in recent years, are being hired again. Even federal spending in some sectors is on the rise.
The more the public sector starts to reinvest, as opposed to scaling back, the stronger economic growth becomes. This is the polar opposite of Republican economic theory, and yet, the laws of supply and demand don’t much care about politicians’ ideology.
Second, as Danny Vinik explained, “one of the big reasons that the economy kicked into gear in the latter half of this year is that the Murray-Ryan budget deal alleviated much of sequestration. Fiscal policy, finally, is largely not standing in the way of stronger growth.”
Paul Krugman last week seemed to anticipate Norquist’s argument, and preemptively destroyed it.
Suppose that for some reason you decided to start hitting yourself in the head, repeatedly, with a baseball bat. You’d feel pretty bad. Correspondingly, you’d probably feel a lot better if and when you finally stopped. What would that improvement in your condition tell you?
It certainly wouldn’t imply that hitting yourself in the head was a good idea. It would, however, be an indication that the pain you were experiencing wasn’t a reflection of anything fundamentally wrong with your health. Your head wasn’t hurting because you were sick; it was hurting because you kept hitting it with that baseball bat.
And now you understand the basics of what has been happening to several major economies, including the United States, over the past few years. In fact, you understand these basics better than many politicians and commentators. […]
[I]n America we haven’t had an official, declared policy of fiscal austerity – but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments. The good news is that we, too, seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result.
I can appreciate the dilemma facing Norquist and his allies when it comes to explaining the sudden economic surge. Indeed, after the strongest economic growth in 11 years, Republicans greeted the news with total silence – literally.
And if I were in their shoes, I’d probably be speechless, too. But that’s no excuse for peddling nonsense – those hoping to credit austerity for a healthy recovery clearly have no idea what they’re talking about.
By: Steve Benen, The Maddow Blog, January 2, 2014
“Making Stuff Up”: A Republican Ruse To Make Tax Cuts Look Good
As Republicans take control of Congress this month, at the top of their to-do list is changing how the government measures the impact of tax cuts on federal revenue: namely, to switch from so-called static scoring to “dynamic” scoring. While seemingly arcane, the change could have significant, negative consequences for enacting sustainable, long-term fiscal policies.
Whenever new tax legislation is proposed, the nonpartisan Congressional Budget Office “scores” it, to estimate whether the bill would raise more or less revenue than existing law would.
In preparing estimates, scorekeepers try to predict how people will respond to a new tax law. For example, if Congress contemplates raising the excise tax on cigarettes, scorekeepers consider existing trends in cigarette consumption, the likelihood that the higher taxes will induce some smokers to quit, and the prospect that higher prices will increase incentives for cigarette smuggling. There are no truly “static” revenue estimates.
These conventional estimates do not, however, include any indirect feedback effects that tax law changes might have on overall national income. In other words, they do not incorporate macroeconomic behavioral changes.
Dynamic scoring does. Proponents point out, correctly, that if a tax proposal is large enough, then those sorts of feedback effects can aim the entire economy on a slightly different path.
Such proponents argue that conventional projections are skewed against tax cuts, because they do not consider that cutting taxes could lead to higher economic output, which would make up at least some of the lost revenues. They maintain that dynamic scoring will, therefore, be both more neutral and more accurate than current methodologies.
But the reality is more complex. In order to look at the effects across the entire economy, dynamic modeling relies on many simplifying assumptions, like how well people can predict the future or how much they care about their children’s future consumption versus their own.
Economists disagree on the answers, and different models’ predicted feedback effects vary wildly, depending on the values selected for those uncertain assumptions. The resulting estimates are likely to incorporate greater uncertainty about the magnitude of any revenue-estimating errors and greater exposure to the risk of a political thumb on the scale.
Consider the nonpartisan scorekeepers’ estimates of the consequences of a tax-reform bill proposed last year by Representative Dave Camp, Republican of Michigan. Using different models and plausible inputs, the scorekeepers estimated that, under the bill, total gross domestic product might rise between 0.1 percent and 1.6 percent over the next decade — a 16-fold spread in projected outcomes. Which result should be the basis of congressional scorekeeping?
But the bigger problems lie deeper. Federal deficits are on an unsustainable path (as it happens, because of undertaxation, not excessive spending). Simply cutting taxes against the headwind of structural deficits leads to lower growth, as government borrowing soaks up an ever-increasing share of savings.
The most optimistic dynamic models get around this by assuming that the world today is in fiscal equilibrium, where the deficit does not grow continuously as a percentage of gross domestic product. But that’s not true. If you add the reality of spiraling deficits into those models, they don’t work.
To make these models work, scorekeepers must arbitrarily assume either that we tax more and spend less today than is really the case — which is what they did for the Camp bill — or assume that a tax cut today will be followed by a spending cut or tax increase tomorrow. Economists describe such a move as “making counterfactual assumptions”; the rest of us call it “making stuff up.”
In practice, these models are political statements. They show the biggest economic effects by assuming that tax cuts are financed by unspecified future spending cuts. The smaller size of government, not the tax cuts by themselves, largely drives the models’ results.
Further, the models are not a step toward more neutral revenue estimates, because they assume that, while individuals make productive investments, government does not. In reality, government spending contributes significantly to economic output. Truly dynamic modeling would weigh the forgone economic returns of government investments against the economic gains from lower taxes.
The Republicans’ interest in dynamic scoring is not the result of a million-economist march on Washington; it comes from political factions convinced that tax cuts are the panacea for all economic ills. They will use dynamic scoring to justify a tax cut that, under conventional scorekeeping, loses revenue.
When revenues do in fact decline and deficits rise, those same proponents will push for steep cuts in government insurance or investment programs, because they will claim that the models demand it. That is what lies inside the Trojan horse of dynamic scoring.
By: Edward D. Kleinbard, Law Professor at the University of Southern California and a former Chief of Staff of the Congressional Joint Committee on Taxation; Op-Ed Contributor, The New York Times, January 2, 2015
“The ‘Wayback’ Machine”: Republicans And The Siren Song Of The Past
President Obama’s dramatic move to reopen relations with Cuba crystalizes the larger story of his presidency: In many significant ways, he has dragged America into the 21st century. But how long will we stay here? I ask because so many Republicans seem nostalgic for the golden era of Chubby Checker, Elvis Presley and The Shirelles, or the slightly more recent decade when Lionel Richie and Olivia Newton-John topped the charts.
For now, Republicans are sitting in the metaphorical green room of history, waiting for their onstage close-up. They’re free to rail against anything and everything Obama does, knowing that his core achievements will be protected for two more years by Senate Democrats and Obama himself. Even the new Republican-controlled Congress can expect filibusters and vetoes if it goes too far in trying to obliterate the Obama era.
The real test will be what the GOP does if and when it has the relatively unfettered capacity to work its will — for instance, if it elects a president in 2016. That person would have to decide whether to roll back the many Obama policies achieved through executive action, regulations and a handful of major laws. Would he or she revive a Cold War with Cuba, stop nuclear talks with Iran, break a climate agreement with China? Revoke temporary legal residency for millions of immigrants? Take away health coverage from millions who are newly insured? Lower the minimum wage for federal contractors? Weaken consumer protections against banks? Reduce tax rates on the rich?
At least a few GOP lawmakers and 2016 prospects must be secretly relieved that Obama is taking the heat for some decisions that were necessary and/or inevitable. We have thriving automobile and renewable energy industries, even as Republicans have been able to rail against government “bailouts” and “picking winners.” We aren’t sending combat troops into quagmires, prolonging a long-failed isolation policy toward Cuba or courting confrontation with Iran, and the GOP can still hammer Obama as weak, indecisive and naive. America has finally joined the rest of the developed world in offering broad access to health insurance — and Republicans, in an act of political jiu-jitsu for the record books, have ridden the new law to two midterm routs.
The positioning so far in the 2016 presidential race is revealing. Most of the hot GOP prospects have a foot in the 1980s, the 1960s or both. The field is crowded with aggressive interventionists, supply-side tax cutters and climate-change skeptics. Some seem to want to prolong the Cold War. Sen. Marco Rubio of Florida, whose parents left Cuba well before Fidel Castro’s revolution and takeover, has been so emotional and militant in opposing Obama’s Cuba shift that The New Yorker’s Andy Borowitz wrote a parody called “Rubio Vows to Block Twenty-First Century.” (“We cannot stop time, perhaps, but we can defund it”). What’s most striking about Rubio’s old-school views is his age. He’s just 43.
To give them their due, several future contenders are trying to formulate plans for a 21st-century Republican Party. Rubio and Wisconsin Rep. Paul Ryan are looking at alternative ways to fight poverty, while Rubio and former Florida governor Jeb Bush support comprehensive immigration reform that deals with the millions of illegal immigrants already in America. Sen. Rand Paul of Kentucky is a warrior for privacy rights and criminal justice reform, he backs Obama on Cuba, and he’s against what the libertarian Cato Institute’s David Boaz calls “promiscuous interventionism” abroad.
Yet in crucial areas, they and many other GOP prospects are still modeling themselves on an illusory Ronald Reagan. The actual Reagan raised as well as cut taxes, grew the government, terminated a U.S. mission in Lebanon — that is, cut and ran — after 241 military personnel were killed in a bombing, and negotiated with “evil empire” leader Mikhail Gorbachev to reduce nuclear weapons. But who in the Republican field will emulate the practical, flexible Reagan who was open to discussion and compromise?
Paul stands out at this point for rejecting the Reaganesque Republican ideal of America as global supercop with its nose — not to mention its bombs and troops — in everyone’s business. He’s on the same page as his colleagues, however, when it comes to tax cuts as an economic cure-all. His draconian proposals to cut taxes, slash spending and balance the budget in five years are about as newfangled as Hall and Oates.
Given his name and his race, Obama’s two election victories were potent symbols of a new century and the promise of an increasingly diverse nation. Yet the real 21st-century pillars of his presidency are his policies, from energy and health care to immigration and diplomatic engagement. My fingers are crossed that in their rush to reject all things Obama, Republicans won’t reflexively climb into the wayback machine and embrace the ideas of the past.
By: Jill Lawrence, The National Memo, January 1, 2015
“People Make Mistakes About Sex And Stuff Happens”: Will Dirty Pol Vito Fossella Replace Dirty Pol Michael Grimm?
Anthony Weiner sexted with scores of women, only getting caught when a photo of his crotch went viral, and still ran for mayor two years later. Eliot Spitzer spent more than $15,000 on high-price prostitutes, and after resigning his governorship in disgrace, ran for New York City comptroller five years later. Rep. Charlie Rangel was censured by the House of Representatives and was urged by the president of the United States to step aside, and he still ran and won re-election—three more times.
And now to this list of New York pols who refuse to go away, it may be possible to add another name: Vito Fossella.
The former Staten Island congressman was one of New York City’s most prominent Republicans, regularly winning re-election by double digits. He was often talked about as a future New York mayor.
But all of that came to an end in 2008, when the 43-year-old Fossella got a little too sloshed at a White House reception honoring the New York Giants Super Bowl victory and was arrested for driving under the influence in northern Virginia. The scandal could have been the kind that amounts to a mere hiccup in the baroque New York political scene, but it became a bit more serious when it was revealed that Fossella, a married father of three, had been cruising around the D.C. suburbs because he was off to see his mistress, with whom he had fathered a child—a fact that was revealed when Fossella called the woman to pick him up from his overnight stay in jail.
But now that Rep. Michael Grimm is joining the crowded club of New York politicians who have resigned in disgrace, is Fossella ready to join the nearly equally crowded club of lawmakers who have mounted ill-fated comeback attempts?
“Vito’s name has come around a couple of times. He is very beloved in the Staten Island community,” said Leticia Remauro, a former Staten Island GOP chairwoman and a political consultant. “He served the community well, but he clearly has to make a decision based on why he left.”
John Catsimatidis, a supermarket magnate who lost a bid for the Republican nomination in the 2013 mayor’s race, won Staten Island, a victory many attribute to the introductions Fossella made on the island. Before Grimm announced he was stepping down, Catsimatidis used his Sunday morning AM radio show to urge the congressman to give up the seat and suggested that he support Fossella.
“Vito is the most experienced. If he wants it, it is his for the taking,” Catsimatidis told The Daily Beast by phone from the Bahamas. As for Fossella’s baggage, Catsimatidis, a major donor to Republican causes, said: “Who doesn’t have baggage? People make mistakes about sex and stuff happens.”
Catsimatidis appeared to step back a bit from his comments over the weekend, however, saying he would commission a poll to find out who was the most viable Republican—Fossella, district attorney Dan Donovan, or Assemblywoman Nicole Malliotakis.
Donovan, who has come under withering criticism for his inability to win an indictment against a New York City police officer in the strangulation death of Eric Garner, a black Staten Island man selling loose cigarettes, announced Tuesday morning that he was “seriously considering the race.” Although Donovan remains a popular figure on Staten Island even after the Garner grand jury decision, many island political analysts said they doubted he had many ambitions beyond the DA’s office.
Guy Molinari, a former Staten Island borough president, pushed back against that view. “It is his dream [to go to Congress] and he is going to be running,” Molinari said. “He is entitled to it. The reading I have right now is that all of the elected officials, with the exception of Malliotakis, are lining up behind Donovan.”
When Fossella was first elected to Congress in 1997 at age 32, Molinari was described as his political godfather. In the intervening years, the two had a falling out, and the tribal divisions of Staten Island’s Republican Party split between a Molinari camp and one loyal to Fossella. Molinari was an enthusiastic backer of Grimm, but when Fossella loyalists in Staten Island’s GOP leadership endorsed Fossella in 2008 even though he said he would not run in light of his scandal, Molinari attacked his protégé in unusually personal terms.
“It’s going to be ugly, it’s going to be nasty, but he has to know that would come out in the course of a campaign. Everything he has done will be brought to light by me in this campaign,” Molinari said at the time, pledging a primary battle. “I have a difficult time believing that Fossella would put his own personal ambitions above his family. His family has been through enough, and I couldn’t believe that he would be willing to put them through all of that once again.”
Fossella declined to run again, but in the years since he has mused aloud about challenging Grimm. Now that Grimm is gone, the question is whether Fossella was merely tweaking Molinari or was serious about seeking a return to Congress.
“I think he had a genuine interest in that seat,” said one Fossella ally, who said the former congressman was unlikely to challenge Donovan if the district attorney decided to run. “It’s a great gig to be the DA, and I think Danny likes doing it. The likelihood as I see it is that Donovan stays where he is.”
Fossella did not respond to requests for comment for this article, but in a television interview Tuesday night, he gave a tepid denial, saying he was “not really” interested in running again and that “my hope is that the people of Staten Island and Brooklyn go to the polls and just choose the best person for all of us.”
These days the former congressman appears to have reconciled with his Staten Island family and has rebuilt his life working as a lobbyist for a firm owned by former U.S. Senator Al D’Amato. He appears frequently on television as a political commentator. If he were to run, he would have to overcome deep skepticism from Washington Republicans, who are not likely to want to replace one scandal-scarred Staten Island Republican with another scandal-scarred Staten Island Republican. The district, which also includes parts of Brooklyn, is by far the most Republican in New York City—Bill de Blasio failed to carry it even as he romped to victory in the 2013 mayor’s race—and should be a relatively easy Republican win in a special election, which conservative base voters are more likely to turn out for. But if Democrats lose this year, they think they can win the seat in 2016 riding Hillary Clinton’s coattails—something Republicans also sound keenly aware of, even if they have their own motives for discouraging a Fossella campaign.
“Under the circumstances, with the problems he has had, and in this atmosphere with the issues that are out there,” said Molinari, “I just don’t think Fossella runs.”
By: David Freedlander, The Daily Beast, December 31, 2014
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 