By: E. J. Dionne, Jr, Opinion Writer, The Washington Post, December 18, 2011
What Happens To The Economy If The Payroll Tax Cut Expires?
Yesterday, House Speaker John Boehner (R-OH) threw cold water on a temporary extension of the soon-to-expire payroll tax cut that had passed overwhelmingly in the Senate on Friday. “Well, it’s pretty clear that I and our members oppose the Senate bill,” Boehner said, despite the fact that on Friday he had called it a “good deal” and a “victory.”
House Republicans intend to vote down the Senate’s bill tonight, leaving the issue unresolved. But what happens if the payroll tax cut is allowed to expire? According to several economic analysts, it would severely affect growth and job creation next year:
– According to Macroeconomic Advisers, allowing the payroll tax cut to lapse “would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs.”
– Barclay’s estimated that letting the cut expire would knock 1.5 percent off of first quarter growth next year.
Meanwhile:
– Ameriprise Financial Services estimated that extending the cut “is likely to add between 750,000 to 1 million jobs.”
– Susan Wachter, a finance professor at the University of Pennsylvania’s Wharton School, calculated that the payroll tax cut “would add 1 percentage point to economic growth and create 1 million jobs next year.”
– Regional Economic Models Inc. estimated that the cut would pump “$120 billion into U.S. households in 2012.”
“If the Europe mess weren’t there, there would be a good case for letting taxes go back up,” said Joel Prakken, the chairman of Macroeconomic Advisers. “But a combination of a big tax increase plus the threat from Europe, when the economy is still in the doldrums — why take that risk?” If the House does vote down the Senate’s bill, the Senate will have to come back into session in order to craft a final agreement.
By: Pat Garofalo, Think Progress, December 19, 2011
The Pointlessness Of Being A Republican House Speaker
It appears that the House will vote later today on a plan to extend payroll tax cuts for two more months that breezed through the Senate by an 89-10 margin over the weekend. But there’s no suspense: Speaker John Boehner even says it’s going to fail. So why go ahead with the vote? There are some technical and procedural reasons, but it probably has more to do with an attempt at face-saving on the speaker’s part.
The problem for Boehner, as has been amply demonstrated this year, is that he’s a speaker who lacks the muscle typically associated with his title. This really isn’t his fault. The GOP’s House membership can roughly be divided into two groups: 1) Conservative true believers (many of whom won their seats in 2010) who embody the Tea Party’s anti-Washington, anti-Obama, anti-compromise absolutism; and 2) conservatives who have some pragmatic instincts but who are terrified of acting on them in the Obama era, lest it prompt a primary challenge from a Tea Party purist.
Now consider what Boehner, an 11-term House incumbent who led the GOP in the lower chamber during the final few years of the Bush presidency, represents to the average Tea Party activist: the exact sort of entrenched D.C. insider who spent the Bush years signing off on W’s big government agenda and giving conservatism a bad name, thereby abetting the rise of Obama in 2008. He managed to secure the speaker’s gavel for the 112th Congress mainly by being in the right place at the right time, but he’s had to wield it with the knowledge that scores of his members (along with the conservative activists and media personalities who have credibility with the Tea Party base) are ready to punish him the minute he sells them out. Add in the presence of an ambitious No. 2 House GOP leader who isn’t very fond of Boehner and who enjoys far more trust from the Tea Party crowd, Eric Cantor, and it becomes clear that Boehner is essentially a speaker-in-name-only.
Which makes situations like the payroll tax debate painful to watch. The rate is set to rise to 6.2 percent unless an agreement can be reached by the end of the year, and after some intense posturing, it seemed like one had been struck over the weekend, with Senate Democrats and Republicans voting nearly unanimously to extend it through February and to pay for it with a series of small cuts previously agreed to by both parties during deficit reduction talks. To mollify Republicans, a provision was included to force Obama to decide on the Keystone XL pipeline by February. The deal could hardly have been described as a big win for either side. It was what it was: a way to prevent a tax increase on millions of middle class Americans that neither party wants to be blamed for.
Boehner was well aware of this. Senate Minority Leader Mitch McConnell kept him in the loop as he negotiated with Majority Leader Harry Reid, with Boehner saying then: “If the Senate acts, I’m committed to bringing the House back — we can do it within 24 hours — to deal with whatever the Senate does.” But when McConnell and Reid struck their deal and the Senate approved it on Saturday, Boehner took part in a conference call with the House’s GOP members. According to numerous reports, he started out by calling it a “good” deal and expressing his support. But then Cantor and his allies trashed it, and so did numerous other members on the call. A strong speaker, one who isn’t constantly on guard against potential mutinies, might have laid down the law at this point and leaned on his leadership team to twist arms and bring the membership into line. But Boehner was in no position to do that, and he hasn’t been all year.
So that was that. By Sunday, Boehner was on television calling the deal unacceptable, vowing that the House GOP wouldn’t approve it, and raising the possibility that the tax cuts will expire at the end of the year. Which brings us to today’s pointless vote. Asked by Greg Sargent to reconcile Boehner’s eagerness to move on a McConnell-Reid deal last week with his new position, Boehner’s spokesman claimed there was no inconsistency because the speaker had only said that the House would act on it — not that the vote would turn out a certain way.
Believe that if you want, but this sure feels like only the latest episode in which Boehner wanted to protect his party from inflicting political damage on itself but had no standing to do so.
By: Steve Kornacki, Salon War Room, December 19, 2011
Newt Gingrich And His “Rock, Paper, Scissors” Constitution
The closer Newt Gingrich gets to the Republican nomination for president, the more unhinged become his attacks on the independence of the federal judiciary. In early October, when Gingrich was nowhere in the polls, he ginned up a patently unconstitutionalargument for subpoenaing judges to come before Congress to justify and explain what Gingrich considers their “radical” decisions. “The spectacle would be like a dog walking on its hind legs,” said Bruce Fein, the respected conservative attorney and former Reagan official, when asked about Gingrich’s plan. “You are surprised not that it is done ineptly, but that it is attempted at all.”
Now, leading most polls, but evidently still needing his own radical pitch, Gingrich has doubled down on his crackpottery. On Sunday morning, he told Bob Schieffer of CBS News’ Face The Nation that the Capitol police, or federal marshals, could and should come and arrest those judges if they refuse to respond in person to a subpoena seeking to publicly shame them for making unpopular decisions. He also delivered this shuddering version of the Constitution, an unfamiliar Rock-Paper-Scissors version, in which the promise of separation of powers is akin to a playground game:
Here’s the key — it’s always two out of three. If the president and the congress say the court is wrong, in the end the court would lose. If the congress and the court say the president is wrong, in the end the president would lose. And if the president and the court agreed, the congress loses. The founding fathers designed the constitution very specifically in a Montesquieu spirit of the laws to have a balance of power not to have a dictatorship by any one of the three branches.
Poof, just like that, the leading candidate’s “key” to nowhere. What Gingrich really is saying, under the guise of blasting “elitist” judges, is that the Bill of Rights would no longer be used to protect individual rights because the judges who help ensure those (often unpopular) rights can be outvoted by the White House and the Congress. In President Gingrich’s world, evidently, the Supreme Court would not have the final say on the law. The majority, as represented by the popularly elected branches, would have the ultimate vote. Not in every case, Gingrich says, just in some. Does that reassure you the way he meant it to?
Here’s the Face The Nation video from this morning in which Gingrich says “… there’s no reason the American people need to tolerate a federal judge who who is that out of sync with an entire culture….” http://www.cbsnews.com/video/watch/?id=7392048n
There are two possibilities for this level of jeremiad. Either Gingrich actually believes this nonsense, in which case he would be a constitutionally dangerous president, or he doesn’t, in which case he’s committing constitutional heresy just to win a few primary votes. Either way, it is conduct unbecoming a president. Close your eyes for a second and imagine if a Democratic candidate for the White House suggested that the judiciary be neutered by the White House and Congress; if a “liberal” running for president suggested that individual liberties and minority rights would hereafter be defined by Washington. Wouldn’t Gingrich be first in line with his pitchfork and torch?
You don’t need to be a lawyer, politician or scholar to hear the contradictions in Gingrich’s latest argument. He’s against “elitist” judges but not against the lobbyist-infused Washington insiders who would overrule them. He rails on the 9th Circuit for its Pledge of Allegiance ruling as though it were the law of the land (it is not, as your school-age child is likely to tell you). Similarly, he picks on a federal trial in judge in Texas whose school prayer ruling was almost immediately overturned on appeal. Small beer, indeed, for the monumental remedies Gingrich seeks; it’s like destroying the whole house to get rid of a few nagging flies.
“I think part of the advantage I have is that I’m not a lawyer,’ Gingrich told Schieffer. “And so as a historian, I look at the context of the judiciary and the constitution in terms of American history.” The fact that Gingrich is not a lawyer helps explain why he sounds so ignorant about the law. The fact that he is an historian helps explain why he’s hanging much of his theory on some hoary precedent involving Thomas Jefferson, the slave owner, who eliminated 18 of 35 judges back in his day. Never mind the constitutional precedent and practice of the intervening 200 years, Gingrich’s argument goes, it happened once so it should happen again.
I cited Judge Johnson above not just because his quote is a timely reminder to demagogues like Gingrich that they are often responsible for the very “activism” they decry. Judge Johnson, as a federal trial judge in Alabama from 1955-1979, essentially devoted his entire judicial life to helping to ensure that black citizens would gain the basic civil rights that governors and state legislators and the Congress and the White House would not give them. Imagine how many times Judge Johnson would have been called onto the carpet on Capitol Hill under a Gingrich Administration. On which side of that history would you want to be?
The last word goes to Fein, the proud Reaganite. On Sunday afternoon, he called Gingrich’s ideas “more pernicious to liberty than President Franklin Roosevelt’s ill-conceived and rebuked court-packing plan.” More colloquially, Fein told me in October when Gingrich first went off the rails on this issue: “This is crazy. It would bring us back to the pre-Magna Carta days… The idea that these legislators, who haven’t read the Constitution or their own statutes, are going to lecture federal judges about the law is ridiculous. It’s juvenile. It’s high school stuff.” Indeed—and thus perfect for a bumper-sticker: Your Constitution: Rock, Paper, Scissors, Newt.
By: Andrew Cohen, The Atlantic, December 18, 2011
Mitt Romney Still Making Millions From Lucrative Bain Capital Retirement Deal, Pays Little Taxes
2012 GOP presidential hopeful Mitt Romney has been banking on his time running the private equity firm Bain Capital to be a major selling point for his campaign. “I spent my career in the private sector. I think that’s what the country needs right now,” Romney says.
Romney has had to contend with the fact that Bain made a lot of its money buying up companies, then laying off workers and reneging on benefits to gut those companies, burying them with debt as Bain walked away with millions. In fact, one of his former business partners has explicitly said, “I never thought of what I did for a living as job creation.” And as it turns out, even after Romney left the firm, he was profiting from Bain’s activities due to a lucrative retirement deal:
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.
The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.
Since Romney left, Bain has made its money gutting companies like KB Toys and Clearchannel, laying off thousands of workers and leaving the companies under heavy debt loads, while Romney has reaped the benefit. Adding insult to injury, the money Romney has been collecting from Bain is likely not taxed as normal income but as “carried interest,” meaning it is subject to the capital gains tax rate of 15 percent rather than the top income tax rate of 35 percent:
[S]ince Mr. Romney’s payouts from Bain have come partly from the firm’s share of profits on its customers’ investments, that income probably qualifies for the 15 percent tax rate reserved for capital gains, rather than the 35 percent that wealthy taxpayers pay on ordinary income. The Internal Revenue Service allows investment managers to pay the lower rate on the share of profits, known in the industry as “carried interest,” that they receive for running funds for investors.
Because Romney’s income is almost exclusively derived from what are qualified as investments (he recently said he has no income that qualifies for the personal income tax), he is able to drive his tax rate to absurdly low levels for someone making as much as he does. Citizens for Tax Justice estimated that Romney pays about a 14 percent tax rate, below the level at which many middle-class families are paying. And he’s paying that low rate on money made via dismantling companies and eliminating jobs.
By: Pat Garofalo, Think Progress, December 19, 2011
Newt Gingrich And The Revenge Of The Base
It is one of the true delights of a bizarrely entertaining Republican presidential contest to watch the apoplectic fear and loathing of so many GOP establishmentarians toward Newt Gingrich. They treat him as an alien body whose approach to politics they have always rejected.
In fact, Gingrich’s rise is the revenge of a Republican base that takes seriously the intense hostility to President Obama, the incendiary accusations against liberals and the Manichaean division of the world between an “us” and a “them” that his party has been peddling in the interest of electoral success.
The right-wing faithful knows Gingrich pioneered this style of politics, and they laugh at efforts to cast the former House speaker as something other than a “true conservative.” They know better.
The establishment was happy to use Gingrich’s tactics to win elections, but it never expected to lose control of the party to the voters it rallied with such grandiose negativity. Now, the joke is on those who manipulated the base. The base is striking back, and Newt is their weapon.
It’s not as if the criticisms being leveled at Gingrich are wrong. On the contrary, there is a flamboyant self-importance and an eerie sense of mission about him. “I am a transformational figure,” he has said. He explains the hatred of his enemies as growing from their realization that “I’m so systematically purposeful about changing our world.” He has also declared: “I have an enormous personal ambition. I want to shift the entire planet. And I’m doing it.”
But wait a minute: Gingrich offered the first set of thoughts in 1994 and spoke of shifting the planet way back in 1985. Newt, in other words, has been Newt for a long time. Yet many of the same conservatives who now find him so distasteful were cheering him on for the very same qualities when he was their vehicle for seizing control of the House of Representatives in 1994. Liberals who criticized these traits in Gingrich back then were tut-tutted for not “getting it,” for failing to understand the man’s genius. It’s only now, when Gingrich threatens the GOP’s chances of defeating Obama, that party elders have decided that what they once saw as visionary self-confidence is, in fact, debilitating hubris.
Gingrich is said to be too tough on his opponents, too quick to issue outlandish charges. He’s actually been quite candid about his take-no-prisoner approach to politics.
“One of the great problems we have had in the Republican Party is that we . . . encourage you to be neat, obedient, and loyal and faithful, and all those Boy Scout words which would be great around the campfire but are lousy in politics. … You’re fighting a war. It is a war for power. … Don’t try to educate. That is not your job. What is the primary purpose of a political leader? To build a majority.”
That would be Gingrich in 1978, reported by John M. Barry in his excellent “The Ambition and the Power,” a book about the fall of former House speaker Jim Wright and Gingrich’s role in bringing him down. Again, Gingrich is a thoroughly consistent figure. The guy you see now is the same guy who always preached a scorched-earth approach to politics.
And in truth, the party took his approach to heart. If discrediting John Kerry’s service in Southeast Asia through false attacks in 2004 was what it took to reelect a president who had avoided going to Vietnam, what the heck. Those who believe in Boy Scout virtues don’t belong in politics, right?
Perhaps the establishment will yet manage to block Gingrich. There are certainly enough contradictions in his record, and he carries more baggage than an overburdened hotel porter. When National Review, that keeper of conservative ideological standards, recently criticized Gingrich for “his impulsiveness, his grandiosity, his weakness for half-baked (and not especially conservative) ideas,” its editors were reciting from a catechism that his critics wrote long ago. Meet the new Newt, same as the old Newt.
This quality endows Gingrich with a peculiar integrity, which I realize is a problematic word to apply to such a problematic figure. I use it in a very specific sense: He is who he is and always has been. The base knows this and loves him for it. But for Republican leaders, Gingrich has become inconvenient. He’s the loudmouthed uninvited guest who is trying to rejoin the country club. The effort to blackball Newt Gingrich will be the next drama in this fascinating train wreck of a campaign.
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