“Repeated Unforced Errors”: The House GOP’s Big Gamble
In for a dime, in for a dollar. Or, in this case, $260 billion. That’s the amount of spending cuts in a bill Paul Ryan and House Republicans are preparing today for floor action later this week. The bill is meant to avert the deep cuts in defense spending mandated by the failure of the deficit supercommittee. But more broadly, this is the continuation of a fascinating gamble.
Here’s the story. If Congress doesn’t act, across-the-board cuts required by the supercommittee go into effect in January 2013 — cuts to both the Pentagon and domestic programs that both parties find unacceptable. There’s general agreement that the earliest Congress will agree on how to prevent those cuts will be in a lame duck session after the election. And yet what the two parties are doing about this fact couldn’t be more different.
The Democrats, who prefer smaller cuts paired with tax increases on upper-income taxpayers, have been in no hurry at all to advance that agenda in actual legislative terms. Senate Dems, as Republicans will shout until they’re blue in the face, did not pass a budget resolution this year. House Democrats, too, are reported to be leaning against offering an alternative to this new GOP bill.
By contrast, Republicans are holding vote after vote on their agenda — voting on unpopular measures that are the stuff of opposition researchers’ dreams, even though those bills are going nowhere. The measure they’ll be dealing with in later this week, if they stick to plans, slashes (among other things) “food stamps, funding for the 2010 healthcare and financial regulatory laws and the refundable child tax credit.”
Republicans appear to be taking these votes in order to give their Members a chance to go on record in favor of deep spending cuts before the real negotiations between the parties on averting the supercommittee-mandated cuts start in earnest. The only votes Dems are taking are against GOP initiatives. That may seem cowardly, but it’s also quite sensible, since anything they propose isn’t going anywhere, and those future talks will decide what really happens.
The real mystery is why Republicans are constantly voting on bills containing unpopular provisions (attacking the child tax credit???), especially since these votes are merely symbolic. It’s possible that it’s because they believe their own rhetoric and mistakenly believe voters will reward them for “courage.” It’s possible that inexperienced Members simply trust Ryan, and that he doesn’t think his agenda is unpopular. But whatever the motive, it’s hard to see what the House GOP is up to as anything other than a repeated unforced error that Democrats will likely exploit during the fall campaign.
By: Jonathan Bernstein, The Washington Post Plum Line, May 7, 2012
“Massive Tax Breaks For The Rich”: GOP Budget Plan To Reduce The Debt Actually Makes The Debt Worse
House Budget Committee Chairman Paul Ryan (R-WI) released the GOP’s new budget this morning, and in doing so, he touted it as a plan to make America’s level of debt more sustainable. “We’ve shared with Americans a specific plan of action that cuts spending, pays off the debt and gets our economy back on the path to prosperity,” Ryan said.
The problem with Ryan’s rhetoric is that his plan fails to match it. By giving massive tax breaks to corporations and the top one percent and preserving unsustainable levels of defense spending, the House GOP’s plan to reduce the debt would fail to reduce the debt. In fact, because it assumes levels of revenue that are pure fantasy under his tax proposals, the plan would actually increase the debt, according to an analysis by Center for American Progress Tax and Budget Policy Director Michael Linden:
But the House budget’s entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget’s tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.
The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama’s budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.
As Linden notes, the GOP’s “debt reduction” isn’t just based on fantasy levels of revenue — it’s based on “massive, unrealistic” spending cuts as well. Medicaid would face $1 trillion cuts in the first decade, while education and workforce training programs would get cut in half and transportation funding would be reduced by nearly 25 percent. The plan, which also ignores previous deals and increases defense spending, would also require deep cuts in other vital domestic programs.
“If you agree it’s morally wrong to ignore the most predictable crisis in U.S. history, this is your budget,” Ryan tweeted yesterday. Apparently, though, it seems Ryan and his Republican colleagues got so wrapped up in creating a budget that benefits the top one percent, they forgot to actually reduce the debt.
By: Travis Waldron, Think Progress, March 20, 2012
“Twisted Minds, Politics Edition”: Mitt Romney’s Remarkable Work of Staggering Dishonesty
As Greg Sargent, Steve Benen, and others have amply demonstrated, Mitt Romney has a problem with the truth. Throughout his campaign, he has openly lied about his previous positions, his beliefs, and the records of his opponents, Republican or otherwise. In a speech today on economic freedom at the University of Chicago, Romney continued the trend, building a mostly substanceless case against President Obama on the basis of half-truths and falsehoods. You can read the whole speech if you’d like. For now, I’d like to highlight a few passages that sum up Romney’s case against Obama in fact-free aplomb. First, there’s this:
For three years, President Obama has expanded government instead of empowering the American people. He’s put us deeper in debt. He’s slowed the recovery and harmed our economy.
There are a few things missing from this account. First is the fact that the Great Recession began in 2008 and was already on its way to reach its nadir by the time Obama took office. By the time the stimulus began to take effect, the economy was well on its way to the bottom, and independent analyses agree that the administration’s policies kept the country out of a depression, even if it wasn’t enough to juice the recovery.
What’s more, neither the stimulus nor the administration’s later policies were responsible for the deficit explosion of 2009 and 2010. The recession—and the drastically reduced tax revenues it produced—was responsible for a good portion of the deficit. The rest was the result of Bush-era policies like tax cuts and the wars in Iraq and Afghanistan. As economist Mark Thomas points out, government spending under Obama has increased at a lower rate than under Reagan, George H.W. Bush, or George W. Bush. The only president to have a lower rate of spending was, you guessed it, Bill Clinton.
On to the next passage, which is brazen in its disregard for the truth:
President Obama has proposed raising the marginal tax rate from 35% to 40%. He has proposed special breaks for his favorite industries, further increases for businesses he dislikes, and endless credits and subsidies intended to shape our behavior in this society. […]
If you invest your savings in a new business and are one of the fortunate few who see success – and make a profit – President Obama wants to take 40% of it.
President Obama wants to restore marginal tax rates on the rich to where they were before George W. Bush took office. While the American public might not understand marginal tax rates, it’s almost certainly true that Mitt Romney has a handle on the concept. Which means that the former Massachusetts governor is lying to his audience when he says that “President Obama wants to take 40 percent” of your income. An increase in marginal tax rates, or even a millionaire’s surtax, would only apply to income over a certain point. If the Bush tax cuts were repealed, and the top marginal rate went up to Clinton-era levels for income over $250,000, then it’s only the $250,001st dollar that would be affected.
Beyond that, the claim that Obama has proposed tax increases for “businesses he dislikes” only makes sense if you include policies designed to lower rates and broaden the tax base. “You could portray the president’s call to remove subsidies for oil and gas companies that way, and also his call to end the carried-interest loophole, which benefits hedge funds and investment companies,” says Michael Linden, director for tax and budget policy at the Center for American Progress. You might disagree with those policies, but Obama isn’t playing favoritism.
On that note, here is how Romney concludes his speech:
But, now, after spending three years attacking business, President Obama hopes to erase his record with a speech. In a recent address, he said that, “We are inventors. We are builders. We are makers of things. We are Thomas Edison. We are the Wright Brothers. We are Bill Gates. We are Steve Jobs.”
The only thing that’s true here are the quotes from Obama. The rest? False. Here are some excerpts from speeches the president has given over the last three years (all emphasis mine).
All across America, even today, on a Saturday, millions of Americans are hard at work. … They are the more than half of all Americans who work at a small business or own a small business. And they embody the spirit of possibility, the relentless work ethic, and the hope for something better that is at the heart of the American Dream.
Government can’t guarantee success, but it can knock down barriers that keep entrepreneurs from opening or expanding. […] This is as American as apple pie. Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery. The folks standing beside me are going to lead this recovery.
As part of the bipartisan tax deal we negotiated, with the support of the Chamber, businesses can immediately expense 100 percent of their capital investments. And as all of you know, it’s investments made now that will pay off as the economy rebounds. And as you hire, you know that more Americans working will mean more sales for your companies. It will mean more demand for your products and services. It will mean higher profits for your companies. We can create a virtuous circle.
[I]f you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making your products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.
The point is simply to say that the only Barack Obama who has spent his presidency criticizing business is the Barack Obama that exists in Mitt Romney’s head. Indeed, the same goes for this speech, and his entire campaign—Romney is running against policies that haven’t happened and an Obama that doesn’t exist. Exaggeration is normal in politics, but this goes beyond garden-variety embellishment—Romney’s speech, along with much of his rhetoric, is a remarkable work of staggering dishonesty. So far, he hasn’t really suffered for it.
By: Jamie Bouie, The American Prospect, March 19. 2012
“Poor-People Programs”: Mitt Romney’s Budget In About 150 Words
Let’s try to make this as simple as possible. Money comes into the federal government through taxes and bonds. The vast majority of it is then spent on old-people programs, poor-people programs, and defense.
Mitt Romney is promising that taxes will go down, defense spending will go up, and old-people programs won’t change for this generation of retirees. So three of his four options for deficit reduction — taxes, old-people programs, and defense — are now either contributing to the deficit or are off-limits for the next decade.
Romney is also promising that he will pay for his tax cuts, pay for his defense spending, and reduce total federal spending by more than $6 trillion over the next 10 years. But the only big pot of money left to him is poor-people programs. So, by simple process of elimination, poor-people programs will have to be cut dramatically. There’s no other way to make those numbers work.
By: Ezra Klein, The Washington Post, February 25, 2012
Heads-up: Deficit Reduction Won’t Create Jobs
It’s budget time, and that means that we can expect to hear the Washington elite wailing about the budget deficit for the next several weeks. When hearing the cries about out-of-control deficits, people would be best advised to turn off their television sets, put down their newspaper, and smash their computers. (Okay, don’t smash your computer.)
The economy has one major problem right now and that is a serious lack of jobs. We still have more than 25 million people unemployed, underemployed, or who have given up looking for work altogether because there are no jobs. This should be the issue that everyone in Washington is talking about.
Instead, many politicians and pundits want to distract people’s attention from unemployment by complaining about the deficit. They have deceived many people into thinking that the economy would somehow be stronger and there would be more jobs if the deficit was reduced, either due to spending cuts or increased taxes.
This view makes no sense. There are no businesses that are going to hire additional workers because the government laid off school teachers or firefighters and we cut back spending on food stamps. Businesses hire more workers when they see more demand for their product. All of these actions that reduce the deficit, either on the spending or tax side, translate into less demand and therefore less employment. In short, those who want to cut the deficit now are lobbying for fewer jobs and higher unemployment.
This is only part of the story that they got wrong. The other part is the cause of the deficit. There are thousands of people running around Washington blaming the deficit on out-of-control spending or irresponsible tax cuts. Both sides are way off the mark.
It is easy show from the data that the huge deficits of the last three years are the direct result of the economic plunge caused by the collapse of the housing bubble. The budget deficit was actually quite modest in 2007, and it was projected to remain low in 2008-2010, even before the Bush era tax cuts expired.
However, the deficits came in much higher than projected because the collapse of the economy sent unemployment soaring and tax revenues plummeting. There is an irony in this situation. Back in the years 2002-2007 some of us were warning about the housing bubble, but our voices were largely drowned out by the big deficit hawks.
Of course now that the bubble has collapsed and the deficit has exploded we are still hearing the same complaints from the deficit hawks. If the country had paid less attention to the deficit hawks back in the bubble years, and more attention to the bubble, then we would not have had such a horrible recession and the deficit hawks would not have a large budget deficit to complain about today.
By: Dean Baker, U. S.ews and World Report, February 10, 2012
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