Category Archives: Federal budget

Things that could get me to toss confetti in 2013

ConfettiThere are things that could get me to toss confetti for 2013.   Not many, mind you, which would justify the consequent vacuuming, but a goodly handful.

#1. The Senate of the United States of America does something constructive with the FILIBUSTER rule.   The original rule was intended to prevent the willful trampling of minority points of view, but the abuse of the rule is now part of the clichéd “Washington Gridlock.”  There is a delicate balance between Majority Rule and Minority Rights, but Obstruction for its own sake is not a laudable occupation.

#2. The Republicans in the House of Representatives eschew the  Hastert Rule , under which a majority of the majority party caucus must agree to the passage of a bill before a vote can be taken on the House floor.  This might have been a lovely idea if the current majority party caucus weren’t the replication of that other cliché– a wheelbarrow load of frogs.  Governance requires compromise, and compromise demands the admission that we don’t always get everything we want.  Ideological posturing is not a substitute for principled discourse.

#3.  Someone in a position to do something about it finally figures out that arguments over raising the debt ceiling are academic at best and consummately silly at worst — rather like announcing that because I overspent my budget for this holiday season I’m going to chop up my credit cards and not pay the bills.  Aside from being the most fiscally irresponsible action imaginable, it’s also a manifestation of the idea that the full faith and credit of the United States is some kind of bargaining chip in ideological squabbling.

#4. The National Rifle Association (aka No Rational Argument) stops pretending to care about the right of our citizens to keep and bear arms, and honestly announces that its ultimate intention is to promote the sale of as many firearms as its manufacturing donors can create.  After that, it should be far easier to discuss comprehensive background checks, closing the gun show loophole, and banning military style assault weapons.

#5. More people, perhaps even more people in the national media, stop referring to “The” government and start calling it what it is — OUR government.   “The” government calls to mind the institution which cracks down on Moonshiners, or enforces school integration, or ignores calls to make Jefferson Davis’s birthday a national holiday.  “The” government didn’t decide to integrate public schools — “our” government did. “The” government didn’t decide to enact regulations to prevent air and water pollution — “our” government did.  And, “The” government didn’t create the Food Stamp (SNAP) program — “our” government did that.  And so it goes.  Continual references to “The” government is an unfortunate holdover from the Reaganesque caricature of government designed to promote the financial health of the economic elite by appealing to the discontent with those laws “our” government enacted to promote OUR general welfare.

#6. Our representatives on Capitol Hill learn to say “____ isn’t the end of the world as we know it.”  I could do with a great deal less hysterical hyperbole.  “This is the Largest Tax Increase In The History of the Universe!”  Probably not.  “This is the worst violation of human rights ever!” Probably not that either.  “This will create the worst calamity known to man.” Probably not.  “This will destroy our ____.”  Again, probably not.  Excuse me while I chuckle at the pomposity of this meaningless prognostication.

#7.  Journalists who seek to inform me via the television set prove to be (1) knowledgeable about the subject under discussion, and (2) include fact checking as part of the “context” of which they speak so often.  If a statement made by a politician is factually inaccurate, they will tell me; and I hope they’ll be able to offer a correction.  I really don’t care if they are correcting the record in the wake of Left Wing Larry or Right Wing Richard’s pontification.  The object of the exercise should be to impart accurate information so far as it can be known — I can get my “entertainment” elsewhere.  Bluntly, the “he said, she said, and then he said” reactions from professional chatterati or elected representatives is less entertaining than a good professional wrestling match, which at least has the grace to admit it’s a scripted farce.

#8. Somebody finally declares the Culture Wars over and done with.  Our contemporary version appears to incorporate a toxic dose of good old fashioned misogyny.  Women make up about 51% of our population and telling them they cannot have an abortion (even in the cases of an ectopic pregnancy or as the result of a rape) is paternalistic to the core.  Worse still would be telling them that their employer can decide if their health insurance plan covers contraceptive medication.

#9.  On a related note, it really doesn’t do to blame God for everything.  I’d cheer the week that some blowhards weren’t showcased in the media for pronouncing God’s Wrath for … whatever.  Hurricane Katrina — God’s wrath for a Gay Pride gathering? Really?  God’s wrath because we don’t pray hard enough?  That certainly doesn’t explain the attack on congregants in the Knoxville Unitarian church.  God’s Wrath because we don’t have organized  prayer in schools? Huh?  No one at Columbine High School, Platte County High School, Northern Illinois University, Virginia Tech University, or Sandy Hook Elementary knew how to pray and practiced it regularly? Spare me the Westboro Wannabes who “know” the mind of God better than a six year old child.

#10.  The confetti will fly when we begin to have a serious discussion about global climate change without having to incorporate the phony “science” offered up by the fossil fuel industry.  No, there isn’t a “controversy” here. And, no reputable science deflects our responsibility as human beings for the contamination of which we are clearly capable.

Speaking of the Almighty, there’s an old story about the man caught in a flood which seems appropriate at the moment.  “Why, he cried out to God, am a trapped in these flood waters?”  The Almighty, sorely tired of listening to the wailing, said, “I sent you warnings.” “When?”  “When?” responded the Deity. “When indeed.” “I sent you warnings on the radio. You ignored me. I sent you warnings in television broadcasts, and you ignored me. I even sent a deputy sheriff to personally advise you to evacuate. And, you ignored him too.”  ….

We’ve been visited with major named storms, watched ice caps diminish, seen glaciers disappear… and all together too many people are ignoring the warnings.

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Filed under abortion, conservatism, ecology, energy policy, family issues, Federal budget, filibuster, Filibusters, Global warming, Gun Issues, Health Care, national debt, pollution, public health, racism, religion, VA Tech, Women's Issues, Womens' Rights

A Quick Lesson In Chart Reading: Boehner’s Graph

What is Wrong Boehner Chart

Read the original article here.

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Filed under Boehner, Congress, conservatism, Economy, Federal budget

To Heck With It? Rep. Heck Tries To Explain The Inexplicable

As if Nevada Representative Heck (R-NV3) didn’t make sense on the Benghazi Bluff, he’s released a little video of some 2.07 minutes to offer up his explanation of his “position” on the Fiscal Cliff/Austerity Bomb/Bunny Slope GOP poutrage du jour.

Representative Heck seems to have missed the part of the election in which the President won.  He does appear to cling to the message that the electorate wants the Congress to cooperate and negotiate with the Administration on how to address deficit reduction.   Let’s go back to the beginning.

There would be NO Fiscal Cliff, Austerity Bomb, or Bunny Slope had the Congressional Republicans not decided to make the debt ceiling such a humongous BFD, as the Vice President might say, in 2011.   Here’s the core of the problem:

“* 2010. Obama signs healthcare overhaul into law. Obama creates Simpson-Bowles deficit reduction panel. Its plan for drastic fiscal reform is largely ignored. Led by Tea Party conservatives, Republicans win control of House of Representatives in midterm elections. Obama agrees to extend Bush tax cuts for two years. Deficit shrinks to $1.3 trillion. (emphasis added)

* 2011. Treasury Department request for increase in U.S. debt ceiling becomes focus of fight in Congress. Republicans, Democrats settle dispute by forming “super committee” to examine fiscal reform. Debt ceiling raised. U.S. credit rating downgraded. Super committee collapses in discord. Deep, mandatory budget cuts triggered for 2013. Stock market makes choppy advance. Deficit estimated at $1.6 trillion.” [Reuters/Yahoo]

One might think a shrinking deficit, followed by economic recovery weak enough to create a bulge in 2011, would be sufficient to take some of the wind from the Free Marketeer Frigate sails, but since “Tax and Spend Democrats” have been the target of choice for Republicans since the New Deal, the GOP/Tea Party can’t quite manage to free itself from the bonds of its traditional narrative long enough to make sense in a reality based universe.

Here’s the reality:

Slowest Spending in Decades

Yes, that’s right — St. Ronald de Reagan’s terms showed annualized federal spending growth of 8.7% and 4.9%.  George W. Bush’s administrations saw annualized federal spending growth of 7.3% and 8.1%.  Even if we attach the 2009 stimulus package to the Obama Administration, his first term only saw annualized spending growth of 1.4%.  [HuffPo] [WSJ/Marketwatch]

So, terms like “out of control spending” and similar hyperbole from the right wing of the right wing party, become a fictional narrative rather than an accurate description of our current federal fiscal issues.   Representative Heck seems to prefer the comforting fiction of campaign rhetoric to current economic realities.

But wait, there’s more!  Representative Heck is worried about our fragile economic recovery… “We should not be raising anyone’s tax rates.”  This is boilerplate.  If the economy is booming, by GOP lights we can’t raise taxes because this would impinge on our prosperity; and, if the economy is fragile we can’t raise any taxes then either.  In short, we can never ever never raise anyone’s taxes even if we have to pay for two wars and keep the basic government services afloat during a recession.

Thirty seconds into Rep. Heck’s presentation he notes the House has passed a bill that would continue the Bush Tax Cuts of 2001 and 2003 for another year so we can “work on a permanent solution.”   Yes, that would certainly make the top 1% happy little campers.  This is also known as kicking the can down the road.  Anyone notice the conflict here?  On one hand Representative Heck is telling us that the federal deficit is a horrible no good thing which MUST be addressed — while telling all who will click on his little video that it’s perfectly all right to take yet another year to deal with it.

There’s more boilerplate to come, “the tax increases,” by which he means rate increases will cost 700,000 jobs.  In this instance he’s parroting Speaker Boehner, who in turn is mashing up a study by Ernst & Young:

“Boehner repeatedly cited an Ernst & Young analysis to claim that raising taxes on upper-income earners would “destroy nearly 700,000 jobs in our country.” But that analysis assumes revenue from the taxes would be used “to finance a higher level of government spending,” even though Obama would use the added revenue to reduce the deficit. The analysis also takes an extremely long view: Only “two-third to three-quarters of the long-run effect” is expected to occur within a decade.”  [Politifact]

Thus, even if we take the Ernst & Young study at face value, the effects are far less dramatic than Representative Heck’s intonation.   Those who looked into the Chamber of Commerce sponsored study found the assumptions flawed: “It is telling that when the additional tax revenues are used for across the board tax cuts, then the negative GDP impact is largely washed out and the employment impact is positive,” Zandi says.”  (Moody’s) [TPM]  However, removing the assumptions from the study wouldn’t achieve the Chamber of Commerce’s political interests, nor the interests of the Wall Street traders who are delivering Republican marching orders.

So, no one should be surprised when Rep. Heck parrots another line, this time from the Romney Campaign that we can fix all our troubles with “pro-growth tax reform which eliminates loopholes and deductions…”

OK, which ones?  Let’s look at the deductions first.   The most common tax deduction is on home mortgage interest.  In the reality based portion of the United States of America about 70% of the tax benefit from home mortgage interest deductions goes to taxpayers earning less than $200,000 per year. [NAHB]  Further, “Households with incomes between $40,000 and $75,000 receive, on average, $523 from the mortgage interest deduction. Households with incomes above $250,000 receive $5,459, or more than 10 times as much.”  [AProg] [Original Wharton Study pdf]

The second most common tax deduction is for charitable contributions.  Needless to say, some eleemosynary institutions are loath to see caps on this kind of expenditure.  However, the deductions nearer and dearer to people’s hearts are the deductions for state, local, and real estate taxes.  “You can deduct state and local income taxes paid during the year with one important exception: You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income.” [Daily Finance]  And, “You can claim a deduction for real estate taxes on any state, local or foreign taxes on real property so long as they are based on the assessed value of the real property.” [Daily Finance]

Finally, the last on the list of most commonly itemized deductions are for medical expenses.  “You can deduct expenses for the diagnosis, cure, mitigation, treatment or prevention of disease. This generally includes the costs of physicians, surgeons, dentists and other medical practitioners as well as medical equipment, supplies and diagnostic devices prescribed by a physician. Deductible medical expenses also include the cost of health care insurance premiums and the costs of getting to and from your appointments.” [Daily Finance]

So, if we cap all itemized deductions at some contrived number like the 2% Solution, what happens?   We get a big middle class tax hike, illustrated below:

Tax Expenditure Cap

If we look specifically at what the Republicans were offering in the last presidential election another reality comes to the fore — the ARITHMETIC doesn’t add up:

“According to the Tax Policy Center, “the Romney plan would lower federal tax liability by about $900 billion in calendar year 2015 compared with current law, roughly a 24 percent cut in total projected revenue.”

So for Romney’s tax plan to be revenue neutral, as he has pledged, he would need to close tax breaks to the tune of $900 billion in 2015. That is not going to happen. Every tax break together costs about $1.1 trillion annually according to the Congressional Research Service — so Congress would need to make a nearly complete sweep to get the math right under Romney’s plan, a politically unrealistic outcome.” [HuffPo]

If we conclude that the deductions aren’t going to make the numbers, then what about those “loopholes?”

No one’s given a precise answer to this question — and we may not get one.  One insightful article may have grasp the key point, “Tax loopholes have become the modern equivalent of wasteful spending–a generic and vastly overestimated pool of money politicians can cite as offsets for their expensive policies.” [USNWR]   When some members of Congress have been pressed for details the minutiae makes its appearance — close the deduction for luxury skyboxes in athletic arenas, close the deductions for rum manufacturers and racetracks, eliminate deductions for second homes… [HuffPo]

While it might be nice to eliminate some of the special interest deductions in an overhaul of the tax code, (1) it shouldn’t take a year to find them — most of them are well known to those who make the tax code their life’s work, and (2) closing them won’t provide nearly enough revenue — unless we start talking about The Big Five Deductions, and the attendant tax hike on the middle class.

We’re only a bit over a minute into Representative Heck’s video when he observes the horrible state of affairs we must face if the Pentagon budget faces the Sequester Monster… but that’s a post for another day.

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Filed under Economy, Federal budget, Heck, tax revenue, Taxation

The Campaign for the Middle Class Isn’t Over

The candidates are no longer running ads, the campaigns have been shut down, BUT the campaign for the American Middle Class continues.  The next phase comes as the Congress debates how to reduce the national debt — brought to us by two wars fought “off the books,” ill considered tax rate reductions, and a nasty recession.  If the American Middle Class is to avoid the detonation of the Austerity Bomb (aka the Fiscal Cliff) then we need to:

(1) Let our Senators and Representatives know that without an increase in the tax rates for millionaires and billionaires the ARITHMETIC necessary to reduce the national debt doesn’t add up.

(2) Remind our Senators and Representatives that federal discretionary spending has already been cut by $840 billion to $916 billion over the next ten years [QS] in the Budget Control Act of 2011.

(3) Let our Senators and Representatives know that we understand merely closing a few loopholes in the tax code isn’t nearly enough to make a serious dent in the national debt.  If they are serious about debt reduction then “increasing revenues” can’t be a code phrase for “tinkering with deductions and loopholes.”

If millionaires and billionaires don’t want a national debt passed along to their children and grandchildren — it just might behoove them to help pay off some of it.

 

 

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Filed under Congress, Federal budget, income tax, national debt, Politics, Senate

A Very Simple Illustration of Republican Fiscal Cliff Hanging

 

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Filed under conservatism, Federal budget, national debt, Politics, Republicans, Taxation

Fiscal Cliff or Stairway to Heaven?

As the Nevada Progressive points out, the looming “fiscal cliff” is a meaningful moment for the Republicans in the U.S. Congress.   The somewhat sordid history of this “cliff” which in actuality could be more like a slight slope is summarized as:

“The United States fiscal cliff refers to the effect of a series of recent laws which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013.  These laws include tax increases due to the expiration of the so-called Bush tax cuts and across-the-board spending cuts under the Budget Control Act of 2011.” [link]

At this point, even the well informed may need a reminder that the term ‘fiscal cliff’ was coined by Federal Reserve Chairman Ben Bernanke, who was concerned that the impact of the failure of the Super Committee to reach an agreement would depress the economy:

“For the record, although the explanation wasn’t reported or repeated as much as the catchphrase itself, Bernanke actually said the fiscal cliff was about the large spending cuts and tax increases already scheduled to occur being far too big for the current U.S. economy to handle at one time. “I hope that Congress will look at [the spending cuts and revenue increases] and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date,” he told the committee.

In other words, “fiscal cliff” means the big deficit reductions that have been both inadvertently and intentionally scheduled to go into effect at the turn of the year are the absolutely wrong fiscal policy at that time and that the economy will be damaged if they are not changed.” [OF.org]  (emphasis added)

For those likely to hit the panic button — some programs are exempted from the budget cuts: Social Security, federal pensions, and veteran’s benefits.  Social Security is properly called an entitlement program, because the beneficiaries have paid into it, and it is supported by payroll taxes and its own trust funds.  No one, repeat NO ONE, has “spent” money earmarked for the Social Security Trust Funds.  [SSA]

For those likely to run screaming into the sage brush about THE DEFICIT, we should note that reductions in military operations in Afghanistan will reduce that beast, and we should remember that the Affordable Care Act also has some deficit reduction benefits.  Cherry-picking selective think tank and editorial board musings notwithstanding, the  “CBO and JCT estimate that enacting both pieces of legislation—H.R. 3590 and the reconciliation proposal—would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues.” [WH.gov]

The central question about the ‘fiscal cliff’ is whether or not  it becomes a stairway to heaven for the American middle class.  It’s a cliff if the Republican controlled Congress obstructs the negotiation process such that ALL tax breaks enacted during the Bush Administration expire — including those for those earning less than $250,000 annually.  It’s a stairway to heaven, if the Congress can agree to allow the tax breaks for millionaires and billionaires to expire, and retain the tax breaks for middle class families.

It’s a cliff if the Congress demands that automatic economic stabilizers like unemployment insurance support, nutrition programs, and other means by which we prevent highly volatile economic swings are cut in order to prevent the upper 1% of American income earners from having to pay any increased taxation.  It’s a stairway if the economic stabilizers can be themselves stabilized, perhaps even if in slightly reduced forms.

It’s a cliff if the tax breaks for 97% of American small businesses are lost in the interest of sparing the top 0.01% of American income earners any tax increases.  It’s a stairway if tax breaks for 97% of American small business owners are maintained, and the deficit is reduced by encouraging economic growth, and by taxing the top 1% more fairly.

The newly re-elected President had some words about this choice:

“President Obama said he refuses to accept any approach that isn’t balanced. “I’m not going to ask students and seniors and the middle class to pay down the entire deficit,” while higher earners get tax cuts, he said.

The President said he will ask Congress to pass a bill that will continue the tax cuts for the middle class, which he says will eliminate much of the uncertainty in the nation. After that point, he said, he and Congressional leaders can work on a compromise for the remaining tax cuts.” [CSPAN]

The President’s own words, on video (not yet embeddable) from CSPAN.

 

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Filed under Bush Administration, Congress, Economy, Federal budget, House of Representatives, national debt, Obama, Politics

Windsock Mitt

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October 7, 2012 · 11:55 am

The Crisis That Isn’t: The Romney/Ryan Campaign in Whopperville

Whopperville, U.S.A.At rally in Lima, Ohio, GOP VP Candidate Paul Ryan says Pres Obama not doing anything about the debt crisis & is making it worse.” via Mark Knoller.

Not doing anything? First, it’s hard to understand why a sitting member of Congress could miss the information that federal government spending has flat-lined during the Obama Administration.  Marketwatch explains:

“Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.  Even hapless Herbert Hoover managed to increase spending more than Obama has.”

For the arithmetically challenged, Marketwatch provides a chart:

How does Marketwatch substantiate the contention that spending increases during the Obama Administration are slower than even the Hoover Administration?

If spending increases are at the slowest rate in decades, AND federal spending has flat-lined during the Obama Administration — then how does one conclude the Obama Administration isn’t doing anything about the budget deficit and is actually “making it worse?”

One doesn’t … unless you are a resident of Whopperville in a Brave New World:

“One hundred repetitions three nights a week for four years, thought Bernard Marx, who was a specialist on hypnopaedia. Sixty-two thousand four hundred repetitions make one truth.”  – Brave New World (Aldous Huxley)

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Filed under 2012 election, Economy, Federal budget, Politics

Supreme Court Rules In Favor Of ACA: Heller Kicks The Gator Ade Bucket

Senator Dean Heller (R-NV), or as the Fine Wordsmith The Gleaner calls him, “The Senator By Appointment Only,”  wants us all to know that he is not pleased by the Supreme Court’s ruling on the Affordable Care Act and Patients’ Bill of Rights.

“Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse. Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes. Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.

“This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs. The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth. This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.

Let us parse:

Heller:Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse.”

Coupling “job-killing” and “healthcare” is a Republican construction which doesn’t do anything more than seek to associate a change in health care statutes with something (anything) negative.  If unemployment in Nevada were at 2%, and the nation’s major problem was smog, then it would be easy to imagine that the ACA and Patients Bill of Right would be “pollution producing.”  That’s speculative, so let’s drill down a bit further.

Let’s go to that bastion of liberal thinking, Forbes, to see if the ACA/PBR is actually “job killing?”  The answer: No.  In fact, when we go to the Urban Institute’s Study the Massachusetts health care reform enacted under Governor Romney’s administration did NOT produce “job killing” results:

The graphic reduction is difficult to read, so click on the image for the full sized version in the Urban Institute’s original study.  What happens when we take a look at the right hand side of the chart?

While the U.S. was experiencing a decline in full time jobs during the Recession of 3.6%, Massachusetts saw a 2.8% drop.  While the U.S. witnessed a 0.8% increase in part time employment, Massachusetts saw a 0.9% increase.  Whether Governor Romney wants to admit it or not, the Massachusetts plan is the closest statutory comparison to the Affordable Care Act we have, and the numbers about “job losses” in Massachusetts don’t make the Republican point.

Neither do the national numbers: “Since the Affordable Care Act was signed into law, the economy has created 3.5 million private sector jobs, including 488,000 jobs in the health care industry. The unemployment rate is 8.3%, lower than it was in March 2010.”  [Hoyer] And this: “360,000 small businesses have taken advantage of tax credits that are making health insurance more affordable for 2 million workers.  As many as four million small businesses are eligible for these credits.” [Hoyer] And, again, this: “…over 2,800 employers are participating in the Early Retiree Reinsurance Program, which is helping provide coverage to 13 million early retirees who are not yet eligible for Medicare.”  [Hoyer]   Whether we look at national numbers or state numbers, or both — the health care reforms enacted in Massachusetts and in the United States are NOT job killing.

Heller:Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes.”

Yes, many things happened while foreclosure rates in Nevada were leading the nation,  and during this time what was the GOP agenda on financial reform and mortgage relief?

On October 12, 2010 Representative Eric Cantor (R-VA) laid out the GOP position on the foreclosure crisis: “Republican leader Eric Cantor chose to break his silence on the foreclosure crisis, with other Republicans quickly picking up the talking points.  And his position should come as no surprise.  Rep. Cantor came to the defense of the housing industry and laid blame squarely on the feet of the American homeowner.” [C2C]

Then, there was the infamous comment from current GOP standard bearer Governor Romney on home foreclosures: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said when asked what he would do to jump-start the floundering housing market.” [WashMonthly Oct 2011]

Thus, while Congress was debating, the President was signing, and then the Department of Health and Human Services was implementing the provisions of the Affordable Care Act and Patients Bill of Rights, the Republicans were blaming homeowners for the foreclosure debacles and the leader among the GOP presidential candidates was asserting that Nevadans who were in the foreclosure process should close their eyes and Think of the Free Market.  In other words, the Congress could have been debating the desirability of regulating Sea Horse Races, and the GOP wouldn’t have been much interested in legislating solutions to the housing crisis.

Heller:Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.”  We won’t go into the part in which the Ryan Budgets in their various incarnations cut massive amounts from Medicare AND sought to turn the program into a voucher/coupon program.  Let’s just deal with the blatantly misleading statement about cuts to Medicare, and see what the professional fact checkers had to say:

“Under the act, Congress voted to reduce $500 billion in projected Medicare spending over the next 10 years, not in one substantial chunk. The reductions are aimed at eliminating parts of the Medicare program seen as ineffective or wasteful. For example, the plan phases out payments to the Medicare Advantage program, an optional program set up under the George W. Bush administration, where seniors could opt to enroll in a private insurance program and the federal government would subsidize a portion of their premium.”  [PolitiFact.com, 5/10/11] (emphasis added)

Under the Affordable Care Act the savings were reinvested in the Medicare program itself, not simply cut from the budget and the program privatized.  And note — some cuts were made to the taxpayer subsidies to insurance companies offering highly profitable optional insurance.  The cuts were in areas considered wasteful, and were NOT related to basic Medicare services.

Heller:This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs.”   This statement is straight out of the GOP Talking Point Random Generator.

Interesting how Republicans like Senator Heller become really engaged in the problems of the Middle Class when taxes or fees might be increased, but rarely (if ever) when said Middle Class is getting pounded by corporate raiders, union busters, private equity Giant Squids, and stagnating wages.   Be that as it may, if the middle class wants a colossal tax increase — it’s more likely to come from the Republicans.

There is, for example, the tax proposal set forth by Governor Romney, about which the Christian Science Monitor reported:

“In any case, not extending the 2009 tax cuts still in effect in 2012 means that Romney’s plan would, on average, raise taxes for households in the bottom two quintiles, relative to what they’re paying this year.  Mitt Romney’s tax plan would cut taxes, by about $180 billion in 2015 alone, relative to current tax policy. And, despite all arguments to the contrary, a disproportionate share of the savings would go to households with the highest incomes.”  (emphasis added)

Ezra Klein, Washington Post columnist, added this analysis of Governor Romney’s plan:

“Note that the Tax Policy Center could only conduct a partial analysis of Romney’s tax plan. That’s because Romney’s proposal itself is incomplete. He’s said that he wants to scrap various deductions in the tax code, particularly for high earners, in order to broaden the tax base. But he hasn’t offered any details about which deductions he’d scrap or how, so there wasn’t anything for the Tax Policy Center to analyze.

Based on the details Romney has provided so far, his plan would lower tax rates for the top quintile by 5.4 percent, saving the wealthiest an average of $16,134. (The top 1 percent of earners, meanwhile, would save an average of $149,997.) The lowest fifth of earners, by contrast, would see a small tax increase of 1.3 percent under Romney’s plan, owing the federal government an additional $143 extra on average.

Obama’s tax proposal, meanwhile, would keep tax rates roughly the same except for married couples making over $250,000 per year (or single earners making more than $200,000 per year). On average, under Obama’s plan, the top 1 percent would be paying about $87,173 more per year.”

Klein offers the following illustration:

There are many “ifs” involved in the Romney tax proposal, incomplete as it is, but there are some deductions which if eliminated would have a definitely negative impact on middle income level Americans:

“Most middle-class families would get little help. About 18 million working families would actually pay higher taxes because Romney would end the American Opportunity Tax Credit for college and cut tax credits for taxpayers with children and earned income.”  [OCCD]

In fine, if one would like to see a tax structure which bestows the greatest advantages on those who already have great advantages — Governor Romney and the Republicans are your kind of people.

There’s nothing quite like tossing in a phrase like Excessive Regulations to stir the hearts of the financial and insurance sectors, both of whom dislike being told, for example, that using premium payments for CEO compensation and advertising aren’t the best use of consumer dollars.   And, the phrase tickles those who think the EPA is merely a professional thorn in the side of the energy sector — Deep Water Horizon notwithstanding.  It’s often notable that when expounding on the “excessive regulations” in the ACA, very few — if indeed any — examples are offered.

Ah, the now hoary and hirsute talking point “uncertainty and hiring” comes back for yet another encore.   The “uncertainty” allegation is a one size fits all gob-lob at any legislation or legislative proposal which might cause corporations to THINK about what they’re doing.

We’ve been told that implementing the provisions of the Dodd Frank Act on financial regulation reform creates “uncertainty.”  In this instance there’s something to be said for a bit of uncertainty — no bank should believe that it “certainly” has the latitude to use depositors funds to play around in proprietary trades, or has blanket permission to bet against the interests of its own clients, or has leave to arbitrarily play with interest rate reporting because it wants to make its own books look better.

And for the umpteenth time — small business hiring won’t increase until small businesses (not to be confused with Washington, DC lobby shops and hedge funds) see the demand for their goods and services increase such that their current staffing levels are insufficient to meet customer needs.   The only thing that is Certain is that middle class income and middle class jobs need to advance in order to improve aggregate demand.  This has precious little to do with the desires of the Wall Street Wizards to play cowboy with depositors dollars.

Heller:The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth.”

Now what could be adding to the national debt?

So, if we are really serious about reducing the federal deficit — then we get rid of the Bush Tax Cuts! And, we do something to get more “growth” into the economy.  Hardly the austerity prescription being touted by Senator Heller and his Republican cohorts.

Heller:This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.”

Yes, the House will make another symbolic move at “repealing” the Affordable Care Act during the week of July 9th.  Meanwhile, what are “market based reforms?”

Representative Paul Ryan has suggested some “market based” reforms which mean that Medicare recipients will get a “coupon” or voucher toward paying their private health insurance premiums.   This is essentially a government subsidy for health insurance corporations to give them an “incentive” to offer health insurance for the elderly.  Meanwhile back in the real world — the reason we have Medicare in the first place was that insurance corporations do not want to offer plans for elderly people — they get sick, and old, and old and sick.

This might be a good time to remind ourselves that it’s not a “free market” when some corporations are being subsidized by the taxpayers to offer services and products they don’t otherwise want to sell.  For those keeping score, “market based solutions” is GOP-Speak for privatization.

Not to belabor the point much further, but the GOP response to the ACA ruling as evidenced by Senator Heller is simply to offer no solutions to demonstrated problems, and demonstrations about issues of primary interest to the upper 1% of the American income earning public.  It is a tale bedecked with focus group tested buzz words and talking points, which can mean almost anything to their devoted listeners, and almost nothing to anyone seeking solutions to real American problems.

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Filed under 2012 election, Bush Administration, conservatism, Economy, employment, family issues, Federal budget, financial regulation, Foreclosures, Health Care, health insurance, Heller, Insurance, Medicare, national debt, Nevada politics, Politics, privatization, Republicans, Taxation, unemployment

Wall Street Fine, Main Street Not So Much, States Caught in the Middle

The situation in Nevada is beginning to demonstrate the universal application of the great literary phrase: “It was the best of times, it was the worst of times.”  Consider the following information from a Las Vegas Sun article about therapeutic services for disabled children back in March:

“In 76 percent of the cases reviewed, the state did not provide all of the services called for in plans agreed to by state caseworkers and families. This was “due to a lack of available personnel resources” and reduced hours the state had to contract with therapists.”

In 52 percent of cases, the state did not initiate services within 30 days, as required by the federal government. This was “attributable to the lack of personnel resources as a result of the reduction in the amount of funds available for contract services.”

There are 2,477 children receiving these services, such as they are, and another 250 ranging in age from newborn to 3 years of age on a waiting list.   So youngsters with autism, physical disabilities, developmental issues, and other serious medical challenges are in the cross hairs of a support system in which “fewer children could have more services, or more children could have fewer services.”  This is what an austerity budget means.   For everyone. If there are no increases in revenues, then all public services will be caught in the same bind as the kids — fewer may have more, or more can receive fewer.

However, in a political climate still clutching the remnants of the failed Voodoo economics of the Trickle Down Artists, and the ephemeral mythology that lower taxes magically transforms spreadsheet pixel dust into increased revenues,  any attempt to raise revenue is the antithesis of good politics.  [“Sandoval, not in favor of business tax initiative“, LVSun]

The often and well debunked MYTH [EconoFact]  that lower rates of taxation will generate the revenues necessary to provide essential government services simply doesn’t work in the real world in which there are pot holes in asphalt, 30 kids in a kindergarten class, not enough health inspectors to cover the number of restaurants in a single year, not enough deputies to keep trucks from speeding through small towns, aging fire fighting equipment, and what might generously be called “antique” drinking water delivery systems.

For small businesses in Nevada this isn’t the best of times either.  Nevada’s experiencing job growth of about 1.1% YOY, a tick behind the national YOY job growth of 1.4%.  [DETR] Of special note is that the capital region — Carson City — has lost 4.2% of its job growth.  In fact, the capital city MSA is the only one in the state which is having declining job growth.

When the “business” of a MSA is primarily government then the private sector is affected when government declines.  We can craft a little home-made chart showing what happened to Carson City in terms of the percentage change YOY in its taxable sales as reported to the Department Of Taxation, as the state shed jobs and shaved the budget.  (pdf reports)

It’s no wonder small businesses and local retailers feel the bind when there’s been only one YOY increase since 2007 — and they started digging and backfilling out of the prior four year hole.  This is what an “austerity” budget looks like to local businesses trying to function in an area in which government payrolls help support the local economy.

So, why all the demand for “austerity,” if it doesn’t help provide public services and it doesn’t help local businesses? 

Federal and state deficits are a problem when interest rates are high.  Here’s one of the simplest explanations I’ve found so far:

“When long-term interest rates are high, a federal deficit competes against and “crowds out” private borrowing and investment. When long-term interest rates are low, the federal deficit is not taking away from borrowing by the private sector. On the contrary, the federal deficit is acting as a needed boost to aggregate demand in the economy, an action also known as “fiscal policy.” When the economy is slack, every dollar of reduction in federal spending takes three or four dollars off of our gross national product.”  [Grayson](emphasis added)

Got that?   The “crowding out private borrowing and investment” happens when interest rates are HIGH.”   So, what are the long term interest rates now?  The Treasury 20 year CMT is 2.13%. [Treasury] What does this look like in a historical context?  This:

The overall trend line doesn’t seem to indicate “high interest rates” does it?  Notice that the top of the line for the interest rates shown on the chart doesn’t go above 5.5%  Now, let’s compare that to the 30 yr. CMT for a previous era, say 1980 to 1990:

Since the old 30yr column has gone the way of the DoDo, and really long term Treasuries are spoken of as 25+’s, perhaps a better comparison would be the current 20 year rates:

The rate for 20 year notes hasn’t crept up over 3.08% during 2012 thus far.  We could sit and look at pretty charts all day, and the message would remain the same — this is NOT a period of HIGH interest rates, therefore the old “government borrowing drives out private capital” maxim doesn’t apply.  What the heck! Let’s look at one more — the U.S. Treasury’s Yield Curve showing the yields (rates) for all the notes available:

And, there it is — a graphic illustration of Low Interest Rates.  So, let’s get this straight.  We have to have an “austerity budget,” meaning that the federal government has to cut back on aid to the states, because when the government has to borrow money it crowds out private investment — EXCEPT when interest rates are low.   No, this doesn’t make sense, and Laura D’Andrea Tyson explains why:

“The “crowding out” argument explains why large and sustained government deficits take a toll on growth; they reduce capital formation. But this argument rests on how government deficits affect interest rates, and the relationship between government deficits and interest rates varies.

When there is considerable excess capacity, an increase in government borrowing to finance an increase in the deficit does not lead to higher interest rates and does not crowd out private investment. Instead, the higher demand resulting from the increase in the deficit bolsters employment and output directly, and the resulting increase in income and economic activity in turn encourages or “crowds in” additional private spending.”  [NYT] (emphasis added)

How do we know when we have excess capacity?  High unemployment is one really good tell.   What have we learned?

(1) Austerity budgets, the result of program funding cuts without any new revenue don’t serve to provide basic services for Nevada citizens, and others throughout the nation.

(2) We know that in regions in which government spending constitutes one of the major supports of the local economy local retailers and other small businesses see their sales decline.

(3)  Deficit reduction is necessary when government borrowing during periods in which we are operating at or close to our economic capacity when interest rates will be affected by the “crowding” to get capital.

(4) Our interest rates, for even very long term treasury notes, are exceedingly  low.

(5) Our economy is not functioning close to its capacity — witness the unemployment rates.

Therefore, the argument that we have to privatize Social Security, turn Medicare into a voucher coupon program, cut women and children off WIC nutrition support, take SNAP benefits from working families, cut spending for infrastructure maintenance and improvement, slash preventative medicine and wellness programs, and leave the national parks to rot…. because We Have To Reduce The Deficit — is ultimately ideology and currently bogus economics.

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Filed under conservatism, Economy, Federal budget, Health Care, Infrastructure, Medicaid, Medicare, Nevada economy, nevada health, Nevada politics, nevada taxation, public employees, recession, Romney, Social Security, Taxation