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“There’s Plenty Of Money, Really”: Congressional Republicans Continue To Make Believe That Spending Cuts Are Good For Everyone

Don’t think for a second that congressional Republicans sincerely believe draconian cuts in federal spending stimulate the economy.

I know. They uniformly claim that spending cuts spark growth. But consider this.

During the 15-day shutdown of the federal government one and a half years ago, the United States lost some $24 billion in economic activity, according to a 2013 Standard & Poor’s report. Only Texas senator Ted Cruz and the conservative wing wanted the shutdown, while the rest of the Republican Party bore the brunt of cratering public opinion polls.

So when House Budget Committee chair Tom Price, a Georgia Republican, introduced a plan last month to cut more than $5 trillion in spending to balance the budget in nine years, take it for what it is — a purely political ploy to arouse conservatives in preparation for 2016.

The Price plan has no chance of becoming law with a Democrat in the White House, and a slim chance even with a Republican president. In repealing the Affordable Care Act and eviscerating food stamps while allocating tens of billions in defense spending (more than requested), it’s irresponsible. But in calling for the partial privatization of Medicare, it’s politically toxic. Beyond that, a Price plan put into law would be downright destructive. Sucking that much money out of the economy could possibly trigger, at the very least, another painful recession.

Still, congressional Republicans will continue to make believe that spending cuts are good for everyone, because like all make-believe stories, the Price plan has the advantage of sounding plausible. And because it sounds plausible, it feels persuasive to many voters. After all, growth is sluggish. Wages are flat. There isn’t enough money. It’s time to get serious and cut. That’s why Price titled his plan “A Balanced Budget for a Stronger America.”

In fact, there is enough money. Always has been. The trick is looking beyond one class of taxpayer dutifully paying its fair share to another class with the power, and the privilege, of avoiding paying its share.

According to a new report by Citizens for Tax Justice (CTJ), 304 of the 500 top U.S. corporations stashed more than $2 trillion in profits in offshore accounts in 2014, avoiding as much as $600 billion in U.S. taxes.

Among these are the most popular American brands: Apple, Nike, Microsoft, Safeway, and Clorox. These are among just 28 of the top 500 companies to report the tax rate they would pay if they had repatriated profits to the U.S. The rest didn’t bother. They don’t have to report.

But even those reporting to the IRS were probably lowballing their total U.S. tax liability. If they said they earned their enormous profits in tax havens, they probably didn’t, because the countries that shelter the money, like Bermuda or the Cayman Islands, don’t have economies that can produce such enormous profits. Those profits can only be earned in countries with robust economies like the U.S.

Furthermore, the foreign tax rate they paid was far lower than the tax rate they would have paid in the U.S. Indeed, the 28 firms bothering to tell the IRS what they would have paid in U.S. taxes paid a foreign tax rate of about 10 percent on a total of $470 billion. You almost certainly paid a higher percentage on less income.

Ironically, the offshoring trend has grown since the economic collapse of 2008, the very event Republicans cite when calling for more and deeper spending cuts. The CTJ survey found 77 firms increased their caches by at least $500 million while another seven U.S. companies — Apple, General Electric, Microsoft, IBM, Google, Oracle, and Gilead Sciences — piled high their cash hoards with more than $5 billion.

The trend is poised to become permanent. CTJ researchers report an acceleration of what’s known as “corporate inversions,” meaning American firms reincorporate in foreign countries to avoid paying most or all taxes on profits earned in the U.S.

And — no surprise here — the firms with the most money overseas are the first to lobby Congress to avoid paying taxes on that money. To stop this vicious cycle, CTJ researchers recommend putting an end to something called “deferrals,” an SEC rule that incentivizes tax sheltering. Then all profits earned by U.S. corporations anywhere in the world would be subject to U.S. taxes in the year they were earned.

The CTJ report does more than offer advice on creating a more equitable tax code. It reminds us that the frame of our budget debate is much too narrow. It is typically limited to spending, not revenues, much to the benefit of Republicans, while Democrats are left complaining about the unfair treatment of the middle class.

But the CTJ report does something else, something its authors don’t come right out and say. Our very narrow budget debate is as much about patriotism and national character as it is about justice and fiscal responsibility. Or at least it should be.

Billions and billions are hidden overseas while the rest of us are forced to fight over crumbs. That’s degrading and undignified but also unpatriotic. Prosperity is not only for the very few with the power to enjoy it. This isn’t feudal England.

This is America.


By: John Stoehr, The National Memo, April 14, 2015

April 15, 2015 Posted by | Federal Budget, Republicans, Spending Cuts | , , , , , , , | Leave a comment

“Gimmicky Nature Of The Contingency Fund”: The Intra-GOP Budget Fight Grows Toxic Ahead Of Schedule

At the beginning of a week where action was scheduled to begin on a FY 2016 congressional budget resolution, it looked like Republicans were on the brink of a big split between fiscal hawks in the House who wanted to maintain caps on defense spending negotiated with the Obama administration and/or to require specific cuts in domestic spending to offset adjustments, and defense hawks in the Senate who wanted above all to blow up the defense caps forever and blast them to hell as a first step towards a 1980s-style defense buildup.

Those intra-Republican dynamics remain in place, but the fight has broken out much earlier than expected, in the House itself, and in fact in the House Budget Committee, where Paul Ryan’s successor as chairman, Tom Price of GA, can’t seem to get the votes to report a budget resolution. The Hill‘s Vicki Needham has the arcane story:

Negotiations to resolve a dispute over defense spending blew up Wednesday night in the House Budget Committee, as the panel came up short of approving a nearly $3.8 trillion Republican blueprint.

Budget Chairman Tom Price (R-Ga.) saw the chances of pushing through an amendment to boost defense spending without offsets fade quickly in the waning hours of a markup of the GOP’s budget proposal, in the latest misstep for House Republicans.

Without a resolution, the Budget panel packed up for the night with Price saying the committee may reconvene Thursday, after even House Majority Leader Kevin McCarthy (R-Calif.) wasn’t able to break the impasse.

House leadership had tested the waters for an amendment from Rep. Todd Rokita (R-Ind.) — which would bump up funding to $96 billion for an emergency account earmarked for overseas conflicts without a pay-for — in an effort to attract reluctant defense hawks.

Majority Whip Steve Scalise (R-La.) and his chief deputy, Rep. Patrick McHenry (R-N.C.), started reaching out to GOP Budget Committee members about whether a proposal to appease defense hawks could pass the panel even before Price kicked off his budget mark-up, according to aides.

Basically, Republicans anticipated trouble on the floor passing a budget resolution that already included a big chunk of change for an off-budget “contingency fund,” and tried to get an extra $20 billion thrown in to placate the defense hawks, but fiscal hawks on the committee–including that highly symbolic freshman, Rep. Dave Brat of VA, the man who slew Eric Cantor–said no.

Meanwhile, outside the hothouse–yes, pun intended–of the lower chamber, defense hawks were already complaining about the gimmicky nature of the contingency fund and are demanding a straight-up major boost in defense spending. Neocon WaPo blogger Jennifer Rubin was shrieking yesterday that the initial House budget resolution represented a “political betrayal” and a “disaster for national security.”

Trouble is, it’s not easy to find a way to accommodate still more defense spending in a budget that already (a) has the aforementioned phony-baloney “contingency fund,” (b) achieves its “balanced budget” targets only via “dynamic scoring” BS and by assuming revenues from implementation of Obamacare even as it proposes to abolish it, (c) proposes partially privatizing Medicare and dumping Medicaid on the states, and (d) stipulates vast but unspecified additional “entitlement” savings outside Social Security and health care.

There’s just no obvious way out of the budgetary math problems the GOP has invented for itself. If Republicans cannot come up with a consensus budget agreement, we’ll have another high-profile example of that party’s inability to govern, and there will also be no way to proceed with the plan to pass a reconciliation bill to repeal Obamacare to show “the base” what Republicans will be able to do once the hated incumbent has left office.

Expect the gimmickry to reach new heights.


By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, March 19, 2015

March 20, 2015 Posted by | Budget, Fiscal Policy, GOP | , , , , , , | Leave a comment

“The Republican Congress Is A Mess”: Boehner; Senate Democrats Need To ‘Get Off Their …’

GOP House leaders emerged from a Republican Conference meeting Wednesday with a persistent refrain on Department of Homeland Security funding: The House has done its job; it’s time for the Senate to act.

During their weekly Republican leadership press conference, Speaker John Boehner repeatedly called on the Senate to take up the House-passed DHS funding bill, which Senate Democrats have repeatedly blocked the chamber from considering.

“You know, in the gift shop out here, they’ve got these little booklets on how a bill becomes a law,” a fired-up Boehner said, as camera shutters clicked away. “The House has done its job! Why don’t you go ask the Senate Democrats when they’re going to get off their ass and do something?!”

When Boehner was asked if this standoff with the Senate was how he planned for the DHS bill to play out — Senate Republicans now insist it’s on House Republicans to send over a new bill — Boehner said the process was working “exactly” the way he envisioned it.

“The House did its job,” Boehner said. “We won the fight to fund the Department of Homeland Security, and to stop the president’s unconstitutional actions. Now it’s time for the Senate to do their work.”

But if they don’t, does Boehner ever intend on throwing the Senate a lifeline?

“The House has done its job,” Boehner said. “It’s time for the Senate to do theirs.”

Time and again, Republican members trickling out of the Wednesday morning conference meeting stubbornly repeated some variation of Boehner’s new favorite line: The House did its job, now it’s the Senate’s turn.

During conference Wednesday, members heard from two of their former House colleagues now in the Senate: Cory Gardner of Colorado and Shelley Moore Capito of West Virginia.

But instead of Gardner and Moore Capito quelling the House insistence that the Senate act, the two freshmen senators got an earful that they weren’t doing enough.

According to Rep. Ron DeSantis of Florida, one member in the conference meeting told the senators they shouldn’t be letting the Senate go home on the weekend.

DeSantis said there were ways Republicans could pressure Senate Democrats — simultaneously noting he’s “not an expert on kind of how the Senate’s run” — and he said the sense among the public was that Senate Republicans weren’t doing enough.

In a mocking tone, DeSantis said the Senate’s attitude was, “‘OK, have a vote, OK, you don’t have 60, OK, we got to move on to something else now.’”

House members simply aren’t satisfied with the Senate’s effort on the House-passed DHS bill, which would block President Barack Obama’s executive action on immigration. And House Republicans aren’t moving off their position that the Senate take up their bill. That insistence was typified Wednesday in one particularly iron-willed exchange between Budget Chairman Tom Price and a reporter.

“The speaker’s position, and our position, is that the House has already acted; it’s time for the Senate to act,” the Georgia Republican said Wednesday morning.

Asked if the more likely option then was for a continuing resolution or for a shutdown, Price said the option was for the Senate to act.

Presented with Senate Majority Leader Mitch McConnell’s comments Tuesday that it was “obviously” up to the House to send over a new bill, Price was emphatic. “The House has acted,” he said, content to leave it at that.

But Rebecca Shabad, a reporter for The Hill, was not content to leave it at that. She asked if Price thought the House might have to act again. “It’s up to the Senate to act,” Price replied.

Asked again if a CR was more likely, given the short amount of time before a DHS shutdown on Feb. 28, Price resorted to a similar line. “The House has acted. It’s up to the Senate to act,” he said.

And that’s the official position from House Republicans: They’re not budging.

A similarly obstinate back-and-forth is playing out between Boehner and McConnell in the press. Boehner continues to insist the DHS funding bill is up to the Senate, while McConnell points to three failed votes to proceed to the legislation.

When Boehner was asked about the constantly evolving McConnell-Boehner relationship Wednesday, he didn’t say much.

“I love Mitch,” Boehner said. “He has a tough job to do, and so do I.”

And that was that.

Adam Jentleson, spokesman for Senate Minority Leader Harry Reid (D-NV) later issued the following statement on Boehner’s comments:

“We know Speaker Boehner is frustrated but cursing is not going to resolve the squabbling among Republicans that led to this impasse. Democrats have been clear from day one about the way out of this mess: take up the clean Homeland Security funding bill which Republicans signed off on in December – and which is ready to come to the Senate floor – pass it, and move on. If Republicans want to debate immigration policy next, Democrats are happy to have that debate.

“Neither Speaker Boehner nor Senator McConnell appears willing to do the right thing and stand up to the extremists in their caucus like Senator Ted Cruz who have led us here. As we speak, Senator McConnell is on the verge of wasting three entire weeks that could have been used to pass a clean Homeland Security bill simply because he is unwilling to stand up to Senator Cruz.

“The Republican Congress is a mess, pure and simple. Democrats are happy to help our Republican colleagues resolve their problems but the first step is for Republican leaders to do the right thing and pass a clean bill to fund Homeland Security.”


By: Matt Fuller, The National Memo, February 11, 2015

February 12, 2015 Posted by | Dept of Homeland Security, John Boehner, Mitch Mc Connell | , , , , , , , , | Leave a comment

“Obamacare Is Not A Job Killer”: How Critics Are Misreading A New Government Report

The Congressional Budget Office today released the latest update of its projections for the economy and the budget, including Obamacare. And a fair reading would be that not a ton has changed since last time. CBO now expects the law will lead to 25 million people getting health insurance, while some 31 million people will remain uninsured. It will require a lot of new government spending but, because of offsetting revenue and cuts to other programs, it will actually reduce the deficit.

But CBO revised one finding and, all day long, critics have been seizing on the revision as proof that the law is a boondoggle.

The real story, as usual, is a lot more complicated.

The projection is about how the Affordable Care Act will affect labor output—that is, the number of hours Americans work every year. From the get-go, CBO assumed that Obamacare would slightly reduce labor output, relative to what it might have been without the law in place. Why? The CBO gave a bunch of different reasons.

For one thing, CBO reasoned, the financial assistance Obamacare provides depends on income. The more money you make, the less assistance you get. CBO argued that this would discourage some workers from putting in more hours, since the reward for working harder would be more income but less assistance on health insurance. In addition, CBO noted, historically some people have taken or held on to jobs exclusively to get health insurance. Obamacare makes it possible to get coverage without a job. As a result, CBO predicted, some of these people would stop working—or, at least, work fewer hours.

These weren’t the only ways that Obamacare will affect jobs, according to the CBO. And sometimes Obamacare will lead to people working more hours—for example, by giving people with chronic medical problems more freedom to switch jobs or start their own firms.

Overall, the CBO had said previously, Obamacare’s net effect would be a reduction in total labor compensation of about 0.5 percent. Now, citing new research on the effects of taxes, CBO is predicting that the net effect will eventually be twice as large—a full 1 percent reduction in compensation, or the rough equivalent of what we’d expect if two million fewer people were in full-time jobs.

That sounds like a big deal—and Obamacare critics certainly treated it like one. Here’s the conservative publication Newsmax: “Simply put, the new analysis from the nonpartisan agency suggests the 2010 Affordable Care Act is driving businesses and people to choose government-sponsored benefits rather than work.” Here’s Republican Congressman Tom Price: “This independent analysis by the Congressional Budget Office confirms that Obamacare will destroy economic opportunity and with it financial security for many American families.” And here’s a spokesman for the National Republican Congressional Committee: “There is no way to spin this. Because of #ObamaCare, there will be 2.5 million less jobs in our economy.” (If you want more quotes, Glenn Kessler and Greg Sargent of the Washington Post have nice roundups—and some good analysis of their own.)

But CBO didn’t actually say Obamacare would lead to 2 million fewer jobs. It said that Obamacare would lead to the “equivalent” of 2 million fewer jobs. In reality, CBO expects a much larger group of people to reduce their hours by a much smaller amount. Only a relative few will stop working altogether.

More important, CBO says, most of the people working fewer hours will be choosing to do so. And that’s a very different story from the one Obamacare critics are telling. Some of the people cutting back hours will be working parents who decide they can afford to put in a little less time with their co-workers and a little more time with their kids. Some will be early sixty-somethings who will retire before they reach 65, rather than clinging to low-paying jobs just to get health benefits. “This is what we want in a fair society,” says Jonathan Gruber, the MIT economist and Obamacare architect. “We don’t want to enslave the old and sick to their jobs out of some sense of meanness. If they are dying to quit/retire, then let them. That’s a good thing, not a bad thing.”

Of course, some able-bodied Americans will cut back on hours for reasons that conservatives, in particular, might not like. To put it crudely, they’ll work fewer hours simply simply because they don’t feel like working so hard. But whether or not that’s so problematic, it’s also the inevitable by-product of any program that makes assistance conditional on income. The Earned Income Tax Credit works that way. So do food stamps and Medicaid.

And so, by the way, would the new health care proposal from three Republican senators, which makes subsidies available to people with incomes at 299 percent of the poverty line but not those with incomes at 300 percent. The only question with programs like these is how big the disincentive to work is—and whom, exactly, it affects. The only alternatives are to give help to everybody (which requires much more government spending) or to give help to nobody (which leaves many more people struggling).

Ironically, the CBO report included two other findings that should, if anything, make most people more optimistic about Obamacare’s future. First, the CBO found that the law will reduce the deficit by a little more than initial projections suggested. Second, it found that the now-infamous “risk corridor” program, in which government and insurers share gains and losses, will result in net payments from insurers to the government, rather than the other way. (Jonathan Chait has the details on that drama.)

The change in projected deficits isn’t very large and the risk corridor prediction comes with more uncertainty than usual, so you wouldn’t want to bet a lot of money on either prediction coming true. But both findings call into more serious doubt two of the Republicans’ favorite talking points—that Obamacare will drive up the deficit and that, because of the risk corridor program, it’s a “taxpayer bailout” of insurers. As of today, those claims look even weaker than they did before.

Will Republicans stop making these arguments? Or will they at least acknowledge some uncertainty about them? Nope. And that’s a prediction in which you can feel very confident.


By: Jonathan Cohn, The New Republic, February 4, 2014

February 6, 2014 Posted by | Affordable Care Act, Jobs | , , , , , , , | 2 Comments

“The Three Stages Of Obamacare Acceptance”: It’s Increasingly Difficult To See How Repeal Would Work, Even With Full GOP Control

Now that Obamacare is clearly moving forward, Republicans are adjusting to a new reality: it may no longer be a realistic option to simply wait until the law collapses under its own weight and vanishes entirely. GOP lawmakers are increasingly discussing a range of responses, from proposing profound changes to finally embracing a comprehensive alternative.

Which raises a question: Is it possible to envision a future in which Republicans and Democrats do enter into real negotiations over the future of the law and the health system, in which each side gets some changes it wants, in exchange for accepting some of the other’s proposed changes?

Yes, it is. But to get there, Republicans will first have to pass through what might be called the Three Stages of Obamacare Acceptance.

Right now, Republicans entertaining changes or alternatives are still proceeding from the premise that no outcome is acceptable unless it fatally cripples the law or eliminates it entirely. Republicans don’t believe the law can be fixed, since they think that even if it does work according to its own lights, it will still amount to a colossal policy failure. If Republicans want to hold that position indefinitely, there’s not much Dems can do about it.

But if Republicans do get to a point where crippling or eliminating the law is not the only acceptable outcome, there are scenarios under which they might negotiate for certain types of changes to the law, in exchange for changes Dems or liberals want.

Larry Levitt of the Kaiser Family Foundation laid out the types of incremental changes Republicans might pursue. He suggested Republicans might propose various ways of relaxing Obamacare’s regulations, in keeping with conservative policy ideas, that wouldn’t destroy the law. For instance, they could propose allowing insurance sales across state lines so competition drives down prices, something liberals might be willing to accept under certain circumstances if the law’s uniform federal minimum coverage standards are kept (which could theoretically prevent the “race to the bottom” liberals fear).

Or Republicans could propose to make tax deductions available to those over 400 percent of the poverty line who do not qualify for Obamacare subsidies, helping those who see premiums go up (which Republicans have turned into a major issue) and mitigating Obamacare’s redistributive elements a bit. Or Republicans could propose relaxing the limitations on age ratings, allowing insurance companies to charge more than the current three-to-one ratio the law mandates between older and younger people.

In exchange, liberals might ask for subsidies to be expanded to those who fall into the Medicaid gap — making too little to qualify for subsidies but too much to qualify for Medicaid in states that haven’t opted in to the expansion. Or they might ask for more in subsidies for those who currently qualify.

The point is, there are scenarios under which real negotiations over the future of the law could take place. But Republicans would have to be willing to accept something less than its complete destruction. (As Jonathan Bernstein has detailed, a general unwillingness by Republicans to try to get some of what they want on multiple issues has made the GOP into a kind of dysfunctional “post policy” opposition.)

Let’s be clear: It is certainly still possible that over the long term, Obamacare could fail, if, say, the demographic mix is bad, insurers pull out, and the exchanges collapse. If so, Republicans would theoretically be able to simply wait for the law to fall apart in a few years. But some experts are cautiously optimistic that the latest enrollment numbers suggest the law could be on track to work.

And that’s where the Three Stages of Obamacare Acceptance come in — presuming, again, that the law works at least moderately well over the long term:

* Stage One: A dim awareness that there might be some good elements in the law, and that the public might not support returning to the old system. GOP Rep. Jack Kingston, for instance, recently suggested that it might not be “responsible” to simply let the law fall apart, and that lawmakers should be open to anything in it that would help people get coverage. Kingston was immediately slapped down by his primary opponent and quickly reiterated his zeal to get rid of it entirely. Something similar happened to a GOP Senate candidate in Michigan.

* Stage Two: A genuine recognition that large numbers of people are already benefitting from the law, and that this reality needs to be reckoned with — such as by proposing alternatives or changes that purport to accomplish similar goals, even as the elimination or crippling of it remains a paramount aim. GOP Rep. Tom Price has proposed an alternative designed, in part, to cover people with preexisting conditions, but it would probably cover far fewer people, and Price continues to insist on Obamacare’s repeal, maintaining its demise is a certainty.

Meanwhile, Senator Ron Johnson has admitted that “we have to deal with the people who are currently covered under Obamacare,” and to do this, he has proposed keeping the exchanges while getting rid of the individual mandate. The latter, experts say, would fatally undermine the law, and as such this isn’t a serious proposal.

* Stage Three: Republicans accept Obamacare is likely here to stay, abandon the premise that the only acceptable outcome is crippling or eliminating the law, and negotiate to achieve incremental changes they want. This is the scenario outlined by Levitt above. It’s hard to know when this might happen in earnest – certainly not in 2014, and GOP presidential primary politics could also make this difficult next year. But you’re already seeing this a bit with GOP governors who are negotiating with the feds to create their own versions of the Medicaid expansion.

It’s always possible Republicans could win the presidency and both houses of Congress in 2016 and pass legislation repealing the law. And again, if the law fails over time, the above stages could be moot. But it’s increasingly difficult to see how repeal would work in practical terms, even with full GOP control. What’s more, as Jonathan Cohn has detailed, experts think early returns suggest the law is likely to work out. Which means you can begin to imagine Stage Three kicking in. At some point.

“If Republicans were to accept that the law is in place for the foreseeable future, then one could envision tweaks that could move it in a more conservative direction without undermining its goals, while also providing improvements to the law that liberals are looking for,” Levitt says.


By: Greg Sargent, The Plum Line, The Washington Post, January 2, 2014

January 3, 2014 Posted by | Affordable Care Act, GOP | , , , , , , , | Leave a comment

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