Budget

While You Weren’t Looking, Michigan Turned Into Texas

Flickr/CedarBendDrive
The Michigan legislature’s lame duck session is only three weeks long, but the state house didn't need more than 18 hours to move the state sharply to the right. During a marathon session Thursday and Friday, the state house passed a variety of very conservative bills on issues from abortion to gun control to taxes. You can’t say they’re not efficient. The state, which favored Obama by 9 points and has long been home to a moderate-progressive movement, may now have a set of laws that puts it on America’s more conservative end. Perhaps most shocking for pro-choice advocates was the effort to restrict abortion rights—or, as Mother Jones put it, “ the abortion mega-bill. ” Assuming the governor signs the bill into law, women in Michigan will now have to buy separate insurance policies to cover abortion. Otherwise, even in cases of rape or miscarriage, the abortion will not be covered. Clinics that provide more than 120 abortions a year will now face significantly more stringent licensing...

The Strange Republican Shift on Taxes

Flickr/401(K) 2012
There's been an odd change in Republican rhetoric in the last few weeks about taxes. As we all know, for a couple of decades now, particularly since George H.W. Bush went back on his "Read my lips" promise and agreed to a tax increase to bring down the deficit, Republicans have been uncompromising and dogmatic that taxes must never be raised in any form, ever. That's part of the pledge Grover Norquist has made nearly all of them sign—not just that rates should only ratchet down, but also that they will "oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates." With the bitter taste of defeat still lingering in their mouths, many have realized that there is going to be some increase in the wealthy's taxes. But to hear them talk now, you'd think that they don't much care how much people pay in taxes, so long as the top marginal income rate doesn't go up. Here's Karl Rove writing in The Wall Street Journal ,...

Why Republicans Won't Get Specific

This squirrel sees right through you, McConnell. (Flickr/Californian Em)
A few years ago, somebody (forgive me for forgetting who it was) suggested that newspapers should have a daily feature called "Things That Are Still True," which would remind readers of important facts that are still important even if they haven't generated news in the sense of being new. In that spirit, during the current budgetary debate it's a good time to remember what I think is one of the three or four most enduring and important facts about American politics and public opinion. Almost half a century ago, Lloyd Free and Hadley Cantril argued that Americans as a whole were ideologically conservative but operationally liberal, meaning that in broad terms they like "small government," but when one gets specific it turns out they like almost everything government does, and want it to do even more of it. This fact explains practically everything about how the Republican and Democratic parties set about appealing to voters. Republicans talk in broad, ideological terms about small...

Why Does Obama Want to Spend $8 Trillion on Defense?

United States Air Force
Washington is in a fiscal panic, yet surprisingly few people are asking an obvious question: Why in the world is the Obama administration proposing to spend $8 trillion on security over the next decade? Included in that giant sum is not just Pentagon spending, but also outlays for intelligence, homeland security, foreign aid, and diplomacy abroad. If the administration gets its way, security spending would account for a fifth of all government outlays over the next decade. Such spending would be roughly twice as great as all non-mandatory spending through 2022—a category that includes everything from NASA to Pell Grants and national parks. And—get this—around 40 cents of every dollar collected from individual income taxes over the next decade under the president's plan would go for security spending, according to White House estimates. That's a whole lot of defense for a country that, as of 2014 (when U.S. forces withdraw from Afghanistan), will be officially at peace and faces no...

Mitch McConnell Doesn't Understand What the Debt Ceiling Is

Flickr/Gage Skidmore
Now that Republicans have pretty much resigned themselves to the idea that there is going to be some kind of tax increase for the wealthy, they're comforting themselves with the idea that come early next year, they'll still be able to re-enact the lovely conflict we had over the debt ceiling in 2011 and hold the American economy hostage to their demands. President Obama has quite sensibly said that we ought to just get rid of the debt ceiling itself, since it serves no purpose and allows a party to engage in just this kind of economic blackmail if it's desperate and cynical enough. So Republicans are pushing back, none more so than Senate Minority Leader Mitch McConnell. But in the process, McConnell has revealed that he has no idea how the debt ceiling actually works. What McConnell has been saying is that if we eliminate the debt ceiling, it will give the president all kinds of new powers, to spend money willy-nilly however he wants to, run up the debt, and generally become a kind...

What Raising the Medicare Eligibility Age Means

President Johnson signing Medicare into law in 1965.
After a campaign in which Republicans attempted to pillory Barack Obama for finding $716 billion in savings from Medicare (via cuts in payments to insurance companies and providers but not cuts to benefits), those same Republicans now seem to be demanding that Obama agree to cuts in Medicare benefits as the price of saving the country from the Austerity Trap, a.k.a. fiscal cliff. Oh, the irony! You'd almost think that they weren't really the stalwart defenders of Medicare they pretended to be. And there are some hints that the Obama administration is seriously considering agreeing to raise the Medicare eligibility age from 65 to 67 as part of this deal. It's a dreadful idea, and as we discuss this possibility, there's one really important thing to keep in mind: Medicare is the least expensive way to insure these people. Or anybody, for that matter. In all this talk of the bloated entitlement system, you'd be forgiven for thinking Medicare was some kind of inefficient, overpriced big...

Republicans, Exposed

(Flickr/David Silver)
President Barack Obama’s persistence has managed to smoke out House Speaker John Boehner and the Republicans. Their just-announced plan for cutting the deficit is what we suspected: cuts in Medicare and Social Security; no higher tax rates on the rich; limits on tax deductions that would hit the middle class as well as the wealthy, but only raise half the revenue of Obama’s plan; and a lot of fudging with numbers. The Republicans might as well be parading around with a sign that reads “Kick Me.” None of this stuff solves the real problem of getting a recovery going. If you believe that deficit reduction is required, it doesn’t even solve that. And the plan cuts into social insurance programs that are hugely popular, while Obama defends them. Best of all, the corporate deficit hawks marching under the banner “Fix the Debt” are left out in the cold. Nobody is emphasizing austerity as an economic cure. Corporate Democrat Erskine Bowles is yesterday’s news (sit down, please), almost as...

It's Time to Kill the Debt Ceiling

(AP Photo/CBS News, Chris Usher)
There are a number of strange aspects to the negotiation/maneuvering/posturing now taking place between the White House and congressional Republicans about the Austerity Trap (a.k.a. fiscal cliff), but one that hasn't gotten much attention is the disagreement over the debt ceiling. As part of their initial offer, the White House included something I and other people have been advocating for some time: Just get rid of the debt ceiling altogether. The Republicans, particularly in the House, don't seem to be interested. But we should take a good look at how crazy their position on this issue is. In an ordinary negotiation, each side has things it wants, while it dislikes some or all of the things the other side wants. A union wants higher wages for its workers, while the company doesn't want to pay the higher wages. You'd rather have your partner do the laundry while you do the dishes, but your partner doesn't like doing the laundry either. The White House wants to increase taxes on the...

Explaining the Mortgage Interest Deduction

Biltmore House, where the mortgage is probably paid off by now. (Flickr/Steve and Sara Emry)
Something strange has happened in the past few days as we have approached the Austerity Trap (aka "fiscal cliff"). Suddenly, people are actually talking about the possibility of cutting back on the home interest deduction, a "gift," as Mitt Romney might call it, that dwarfs most others the federal government distributes (among tax expenditures, only the deduction for health insurance costs the government more). I continue to believe that there's just no way Congress is going to touch the MID, cherished as it is by so many. But I could be wrong, and this is a good time to brush up on where the deduction came from and what its consequences are. The mortgage interest deduction came about essentially by accident. When the Constitution was amended in 1913 to allow for an income tax, Congress made all interest payments deductible. Mortgage interest wasn't mentioned specifically, and there was no suggestion that this was something necessary to promote home ownership. But as more Americans...

Grover's World

Flickr/Donkey Hotey
(Flickr/Gage Skidmore) Grover Norquist W ashington is full of advocates and lobbyists, working in organizations both large and small. The ones that we think of as the most powerful, like the AARP or the U.S. Chamber of Commerce, are huge operations with armies of people swarming Capitol Hill and deluging reporters with press releases. Then there's Grover Norquist. One guy (actually a guy with an organization, Americans for Tax Reform), with one issue who has done such a spectacular job of bending Washington to his will that he has become a national figure. In the upcoming Congress, there will be 234 Republicans, 219 of whom have signed The Pledge, the promise never to raise taxes. In the Senate, there will be 45 Republicans, 39 of whom have signed. The Pledge (you can see it here ; it's all of 60 words) commits its signatories not only to "oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses," but also to "oppose any net reduction or...

What Do Republicans Want?

(AP Photo/Jacquelyn Martin, File)
(AP Photo/Carolyn Kaster, File) In this November 16, 2012, file photo, President Barack Obama acknowledges House Speaker John Boehner of Ohio while speaking to reporters in the Roosevelt Room of the White House in Washington, as he hosted a meeting of the bipartisan, bicameral leadership of Congress to discuss the deficit and economy. A big coalition of business groups says there must be give-and-take in the negotiations to avoid the "fiscal cliff" of massive tax hikes and spending cuts. But the coalition also says raising tax rates is out of the question. The group doesn’t care that President Barack Obama campaigned to raise tax rates on the rich. A s we head into negotiations on the Austerity Trap (better known by the inaccurate moniker "fiscal cliff," which I refuse to use), there's a clear narrative emerging. This narrative has it that Democrats want to see taxes increase on rich people, which Republicans aren't happy about, while Republicans want to see entitlement "reform,"...

The Time Is Right to Get Rid of the Debt Ceiling

A much more attractive ceiling. (Flick/Richard Carter)
Kevin Drum has written a very helpful explainer on everything you'd want to know about the fiscal cliff/curb/staircase/trap, and near the end he reminds us that the debt ceiling is going to come up again early next year. "However, an agreement to raise the debt ceiling will almost certainly be part of the negotiations surrounding the fiscal cliff." Which is good, but I'd like to suggest that Congress go a step further. Instead of raising the debt ceiling, meaning we'd have to revisit the issue again in a year, why don't they go ahead and eliminate it once and for all? Just because something has been around for three quarters of a century, that doesn't mean it's in any way useful, and this is one little legislative artifact we can do without. Before last year the debt ceiling was raised 75 times since its creation in 1939, and nearly all of those increases were nothing more than an opportunity for the opposition party of the moment to give a few floor speeches railing against the...

Get Out the Union Vote

(Flickr/Wisconsin AFL-CIO/Justin Geiger)
Despite setbacks in several states, the American labor movement came out a clear winner in Tuesday’s elections. Most important, they played a key role in ensuring the re-election of President Obama, and contributed significantly to Democratic Senate victories in hotly contested races in Massachusetts, Ohio, Wisconsin, and Virginia. How effective were the unions’ massive voter-education and mobilization programs in the swing states? This year, for the first time, the network exit polling didn’t ask whether respondents were union members, though it did ask if there was a union member in their household. Historically, while union-household voters are more pro-Democratic than voters with no union members at home, the gap is smaller than that between actual union members and non-members. Also historically, union membership doesn’t make much of a difference among, say, African-American women, who are going to vote Democratic at a 95-percent rate whether or not they belong to a union. Where...

Who's to Blame for the "Fiscal Cliff" Misnomer?

Flickr/su-lin
Now that the election is over, the next big item on the government's agenda is dealing with two sets of changes that are scheduled to begin at the start of 2013. The first involves changes to the tax code: The Bush income tax cuts will expire, bringing rates back to where they were during the Clinton years, and so will the payroll tax cuts enacted as part of the 2009 stimulus package and later extended. The second set of changes is the "sequester," under which a series of rather dramatic cuts to government spending will take place. Collectively, these events are being referred to by everybody as the "fiscal cliff," a term that is both misleading and dangerous. Which got me wondering: Where did it come from? And whose fault is it? I'll keep you in suspense on that for a moment, but here's a good brief explanation from Jonathan Chait about why the term "fiscal cliff" is such a misnomer: But here is a case where a bad metaphor has caused everybody to think about the matter in exactly the...

Why Obama Needs to Restart the Conversation on the Economy Now

When the applause among Democrats and recriminations among Republicans begin to quiet down—probably within the next few days—the President will have to make some big decisions. The biggest is on the economy. His victory and the pending “fiscal cliff” give him an opportunity to recast the economic debate. Our central challenge, he should say, is not to reduce the budget deficit. It’s to create more good jobs, grow the economy, and widen the circle of prosperity. The deficit is a problem only in proportion to the overall size of the economy. If the economy grows faster than its current 2 percent annualized rate, the deficit shrinks in proportion. Tax receipts grow, and the deficit becomes more manageable. But if economic growth slows—as it will, if taxes are raised on the middle class and if government spending is reduced when unemployment is still high—the deficit becomes larger in proportion. That’s the austerity trap Europe finds itself in. We don’t want to go there. This is why...

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