GOP Wants to Weaken Economy

I agree with Brian Beutler at Salon that the GOP is opposing an extension of unemployment benefits because they don’t want to do anything to help the economy — besides helping the affected families, an extension would create jobs and raise GDP.

From  “GOP’s ulterior motive on unemployment:  Economic sabotage?”:

“Congress has never cut off these benefits when unemployment has been as high as it is right now, and the long-term unemployed and chronically poor aren’t equivalent populations.  So there’s got to be more going on than just conservative indifference.

“Some Republicans would claim the deficit is too high to renew benefits, but we know that’s not true because the deficit is shrinking fast, and there are myriad, painless ways to defray the cost….

“Unemployment benefits make people’s lives better and buoy a fragile, but possibly accelerating recovery.  Some Republicans are apparently reluctant to give Democrats and the economy a shot in the arm right now.”

There are no principles involved here,  just pure politics.  From now on, it’s going to be all about the GOP retaking the Senate, and after the mid-terms, it’s going to all about the GOP retaking the White House.  No governing, just campaigning.

Happy Days Are Here Again…

Consumer confidence is at its highest level since February 2008.

Housing prices in 20 major cities jumped 10.9% in the past year, the biggest annual increase since April 2006.

We know the deficit is looking much, much better than expected, as recovery brings more revenue to the government.

So for 2014, the GOP is left trying to sabotage Obamacare and trying to milk all the mileage they can out of the Benghazi, IRS, and reporter (AP/Fox’s James Rosen) “scandals.”  I remain unconvinced that any of these is really a true scandal.

Buried Under the “Scandal” Avalanche

There is some really good news out of Washington, if you look under the rocks of Benghazi, the IRS, and the AP.

The budget deficit is projected to drop to $642 billion for FY 2012, which ends on September 30.  That’s a whopping $200 billion less than the CBO estimated in February, when it adjusted the deficit downward to account for sequester spending cuts and 2012 tax increases.  This new projection comes strictly from higher-than-expected tax revenue.  This will be the first time the deficit has been under a trillion since 2009.

Things are so rosy that the deficit might be only a smidge over 2% of GDP by 2015, compared to more than 10% of GDP back in 2009.

In fact some economists, like Jared Bernstein, think the deficit may be coming down too quickly, keeping unemployment high.


Quote of the Day

“Yes, total debt in the U.S. economy, public and private combined, has risen dramatically relative to G.D.P. No, this doesn’t mean that we as a nation have been living far beyond our means, and must drastically tighten our belts. While we have run up a significant foreign debt (although not as big as many imagine), the rise in debt overwhelmingly represents Americans borrowing from other Americans, which doesn’t make the nation as a whole any poorer, and doesn’t require that we collectively spend less. In fact, the biggest problem created by all this debt is that it’s keeping the economy depressed by causing us collectively to spend too little, with debtors forced to cut back while creditors see no reason to spend more.

“So what should we be doing? By all means, let’s restore the kind of effective financial regulation that, in the years before the Reagan revolution, helped deter excessive leverage. But that’s about preventing the next crisis. To deal with the crisis that’s already here, we need monetary and fiscal stimulus, to induce those who aren’t too deeply indebted to spend more while the debtors are cutting back.

“Unemployment, not excessive money printing, is what ails us now — and policy should be doing more, not less.”  Emphasis added.

Paul Krugman, from “The Urge to Purge,” NYT

Yet Another Phony Number

We here at Embattled Farmers want you to make up your mind based on accurate numbers.  That’s why we pointed out that the real sequester number for FY 2013 is about $44 billion (from the Congressional Budget Office), not the $85 billion that keeps getting thrown around.

Today’s phony number is $1.5 trillion, the amount the GOP claims the Dems want to raise taxes.

The Dem budget actually calls for $975 billion in taxes and an equal amount in spending cuts.

Where does the GOP get the extra billions?  By not recognizing that the Dem budget is an alternative to sequestration and assuming that the sequester is permanent.  Under that assumption, you’d have to come up with more than $975 billion, $1.5 trillion to be exact, to pay down the sequester.  But that’s a false premise.

For more, see “Republicans Falsely Claim Dem Budget Increases Taxes $1.5 Trillion,” Brian Beutler, Talking Points Memo

Prez Has More Sequester Flexibility Than WH Admits

From On The Money blog; The Hill; Erik Wesson, Jeremy Herb and Keith Laing:

“The White House has made the case it has almost no flexibility….

“But budget experts say some nuances within the law do give the administration some room to maneuver, though they acknowledge it is limited.

“For example, the administration has broad authority to define ‘program, project and activity,’ according to Barry Anderson, a former budget official under President George H. W. Bush.  He said this would allow some flexibility in making cuts.

“OMB said Friday that it will be issuing the sequester order on the account level and agencies will determine the program, project and activity definition.”

The WSJ argued that the President has a lot of flexibility in its op-ed  “The Sequester Revelation”:
“[T]he White House says it must now cut across the board regardless of how important a given PPA is.
“Not so fast.  Programs, projects and activities are a technical category of the federal budget, but the sequester actually occurs at the roughly 1,200 broader units known as budget accounts.  Some accounts are small, but others contain hundreds of PPAs and the larger accounts run to billions of dollars.  For the Pentagon in particular, the distinction between PPAs and accounts is huge.”
The President’s hands may be tied, but we’re not going to see any burn marks from this sequester.  If they wanted to send the Harry Truman to the Persian Gulf tonight, they certainly could.

Blame Cantor?

From “How Eric Cantor Gave Us an Endless Series of Fiscal Crises,” Elspeth Reeve, The Atlantic Wire:

“The person who deserves the most blame for the sequester… is not President Obama or John Boehner, but House Majority Leader Eric Cantor. That’s not just because the Virginia Republican wanted to delay a big deficit bill until after the election, when he thought he’d be working with President-elect Mitt Romney, but because Cantor can’t decide whether the best course for his own career is to side with Boehner and more moderate Republicans or with the Tea Party radicals.

“He can’t decide whether to help Boehner negotiate with the White House to pass actual legislation or to undercut Boehner to get conservatives’ support. In the summer of 2011, Boehner had been negotiating with Obama on a grand bargain to raise the debt ceiling and reduce the deficit. Cantor helped kill it.

“From the ashes of the grand bargain rose the sequester.

“Cantor wavered again between helping Boehner and undercutting him in the back during the fiscal cliff negotiations at the end of 2012. Cantor endorsed Boehner’s ‘Plan B,’ which would have permanently extended the Bush tax cuts for those making less than $1 million a year…. But conservative Republicans revolted because there weren’t spending cuts included. Cantor seemed to draw a lesson from this. As the House got ready to vote on a Senate deal to extend the Bush tax cuts for those making less than $400,000, Cantor announced he wouldn’t support it.”

I’m no fan of Eric “Lean and Hungry” Cantor.  But you can’t blame one guy for the disfunction that the House GOP is causing right now.  He couldn’t stop it if he tried.  Cantor is like Mitt — a man of tremendous personal ambition, but not much ideology.  He’s more a victim and prisoner of the Tea Party than a true believer like, say, Michele Bachmann or Louis Gomert or Steve King.  To remain Majority Leader, Cantor must also be a champion of the Tea Party because there are so many of them.  But he does it more out of fear for his future than out of fanaticism.

Solving the Sequester? We Just Had an Election About That.

From Ezra Klein at Wonk Blog, WaPo:

I don’t agree with my colleague Bob Woodward, who says the Obama administration is ‘moving the goalposts’ when they insist on a sequester replacement that includes revenue.

“Think back to July 2011. The problem was simple. Republicans wouldn’t agree to raise the debt ceiling without trillions of dollars in deficit reduction. Democrats wouldn’t agree to trillions of dollars in deficit reduction if it didn’t include significant tax increases. Republicans wouldn’t agree to significant tax increases. The political system was at an impasse, and in a few short days, that impasse would create a global financial crisis.

“The sequester was a punt. The point was to give both sides a face-saving way to raise the debt ceiling even though the tax issue was stopping them from agreeing to a deficit deal. The hope was that sometime between the day the sequester was signed into law (Aug. 2, 2011) and the day it was set to go into effect (Jan. 1, 2013), something would…change.

“There were two candidates to drive that change. The first and least likely was the supercommittee. If they came to a deal that both sides accepted, they could replace the sequester. They failed.

“The second was the 2012 election. If Republicans won, then that would pretty much settle it: No tax increases. If President Obama won, then that, too, would pretty much settle it: The American people would’ve voted for the guy who wants to cut the deficit by increasing taxes.

The American people voted for the guy who wants to cut the deficit by increasing taxes.

“In fact, they went even further than that. They also voted for a Senate that would cut the deficit by increasing taxes. And then they voted for a House that would cut the deficit by increasing taxes, though due to the quirks of congressional districts, they didn’t get one.”  Emphasis added.

GOP Way Out in Right Field with Wrong Policies

A new Pew Survey released today shows that on some issues, support for the Dem position and opposition to the GOP position is very, very lop-sided.  You don’t usually see numbers like these.

For example, 76% want to deal with the deficit by both raising taxes and cutting spending.  Only 19% agree with the GOP policy of no tax increases.

On President Obama’s proposal to raise the minimum wage to $9.00 an hour, 71% agree, with only 26% opposed.

On passing major gun control legislation, 67% agree and 29% oppose.

On toughening emission standards for power plants, 62% agree and 28% oppose.

These numbers aren’t just terrible for the GOP, they’re not healthy for our two-party system.






Good News, Bad News

What’s worse than high federal deficits?  Reducing the deficit too quickly.

The CBO projects that if the sequester takes effect on March 1, the federal deficit for fiscal 2013 will be $845 billion, the first time the deficit has been below $1 trillion in five years.

But the other side of that coin is their prediction that unemployment will stay above 7.5% all year and that GDP will grow at a pathetic 1.4%.

Recognizing that there isn’t going to be a big budget deal between now and March 1, President Obama is asking for more limited spending cuts and tax reforms to replace the sequester.