The sequester—a set of deep, across-the-board cuts to discretionary spending set to take effect if lawmakers cannot agree to a longterm budget deal—was never supposed to happen. But as the deadline for reaching an agreement ticks ever closer, Congress appears hopelessly deadlocked. Under the original agreement, sequestration would have triggered $100 billion in cuts to both defense and non-defense discretionary spending on January 1—an 8.2 percent reduction in non-defense expenditures. The “fiscal-cliff” deal reached in December reduced that amount to $85.3 billion and pushed the deadline back to March. Under the new deal, non-defense discretionary spending would be cut by $42.7 billion yearly for the next nine years. This is on top of $1.5 trillion in cuts over the next decade that have already been enacted.
Barack Obama’s State of the Union address last week—which called for, among other things, universal pre-K and raising the minimum wage—offered a bold program for rebuilding the middle class. But the president’s continuing commitment to budgetary austerity makes these commitments hollow, if not cynical. And just as Obama and the Democrats paid the price in the 2010 midterm election for excess caution and conciliation, the results of tokenism are not likely to be pretty in the midterms of 2014.
Senate minority leader Mitch McConnell says Senate Republicans will unanimously support a balanced-budget amendment, to be unveiled Wednesday as the core of the GOP’s fiscal agenda.
There’s no chance of passage so why are Republicans pushing it now? “Just because something may not pass doesn’t mean that the American people don’t expect us to stand up and be counted for the things that we believe in,” says McConnnell.
The Senate vote just before dawn in favor of a permanent tax hike on the top one percent defers virtually all of the other budget battles. Assuming the House follows suit today, it is up to President Obama and the Democrats to radically change the conversation.
Top Democrats and leading progressives are arguing that Social Security shouldn't be part of negotiations over the fiscal cliff. As Senator Richard Durbin said in a speech on Tuesday:
Social Security doesn't add a penny to the debt and should not be part of any deficit reduction talks. We can and must do what we can to ensure its solvency for another 75 years, but that is another topic for another time.
Likewise, writing in the Huffington Post yesterday, my colleague Bob Kuttner called Social Security (and Medicare) "extraneous" to the fiscal challenges at hand. Moreover, Kuttner writes:
I’m trying to remain optimistic that the president and congressional Democrats will hold their ground over the next month as we approach the so-called “fiscal cliff.”
But leading those negotiations for the White House is outgoing Secretary of Treasury Tim Geithner, whom Monday’s Wall Street Journaldescribed as a “pragmatic deal maker” because of “his long relationship with former Treasury Secretary Robert Rubin, for whom balancing the budget was a priority over other Democratic touchstones.”
A new Purple Strategies poll of 12 swing states shows President Obama with a lead of 49% to 44% over Mitt Romney. In August, the same poll had Romney ahead by 1%, so this is a sharp swing towards Obama. Part of Romney's problem is that only 38% of the voters see him in a favorable light vs. 52% who regard him unfavorably. Obama's favorability is above water with 49% to 46%.
Willard M. Romney has released his 379-page tax return. His income was $13.69 million, of which $450,740 was earned (business) income. The rest was mostly interest, dividends, and capital gains. He paid $1.9 million in federal tax. Below is the income portion of Romney's tax return.
No idea is more central to conservative economic thinking than the belief that cutting taxes leads to higher economic growth. One can certainly understand the appeal of this belief: Itwouldbe great if government could collect the same amount of revenue, but with much lower tax rates, because those rates fostered strong growth.
As we celebrate Occupy Wall Street’s first birthday, the movement's pivoted from financial regulation to focus on crushing consumer debt. While reforming debt is crucial (particularly student debt), finance remains an imminent threat to the American economy. We shouldn't forget it.
There's little evidence that Wall Street's changed since 2008. The drumbeat of flagrant financial crimes has continued unabated in the year since Occupy Wall Street’s inception. As Senior Fellow Wallace Turbeville aptly illustrates, the culture of the "alpha" remains.
News came out last week that fossil fuel interests have spent over $153 million in television ads attacking the President’s clean energy agenda, including criticizing new air pollution rules and the delay of the Keystone XL pipeline. This figure is likely to grow, as there is still two months before the election. And, this is in addition to the $13 million the fossil fuel industry gave to the Republican National Committee and associated PACs, $950,000 to the Democratic National Committee, and $70 million spent in lobbying.
Ben Bernanke’s announcement Thursday that the Fed would keep easing money sent the stock market soaring, but more important was his declaration that there is only so much the Federal Reserve can do.
The Fed’s latest move, approved by the policy-setting Open Market Committee, will buy a total of $85 billion in bonds every month, including $40 billion per month of mortgage-backed securities. This pumps vast sums into the economy. It is the equivalent of printing money. Bernanke’s hope is to drive down interest rates generally, especially on home mortgages.
The big news today wasn’t Mitt Romney’s continued fumbling over foreign policy (for which Team Romney is surely grateful). It was the Federal Reserve’s decision to embark on a new round of quantatative easing. For the uninitated, quantatative easing—or QE to the cool kids—is a strategy for generating growth in the economy. Right now, the problem in the economy is a lack of demand. Consumers aren’t spending, and so businesses aren’t hiring, and so banks are not lending, and so on. One way to deal with this is to provide income to people, throw out benefits, tax cuts, or public works—i.e., stimulus.
The right-wing press is chock-a-block with articles decrying the Obama administration’s romance with industrial policy. So reflexive is this ideology that some of them are even written by major beneficiaries of industrial policy, whose sense of entitlement must be so ingrained that they fail to notice this anomaly.
Exhibit A appeared in Monday’s Wall Street Journal op-ed page, in which Charles Koch of Koch Brothers fame took out after crony capitalism and industrial policy.
On July 26, as traders were once again deserting Spain’s government bonds, setting up the risk of a default and a deeper crisis of the euro, Mario Draghi, president of the European Central Bank surprised and delighted financial markets. Speaking off the cuff in London, he vowed to do “whatever it takes” to save the European economy.