“A Republican aide e-mails me: “The Speaker, Sen. Reid and Sen. McConnell all agreed on the general framework of a two-part plan. A short-term increase (with cuts greater than the increase), combined with a committee to find long-term savings before the rest of the increase would be considered. Sen. Reid took the bipartisan plan to the White House and the President said no.”
Read the rest here.
Comments »“As I read the Constitution, the Congress writes the laws and you get to decide what you want to sign,” Boehner said, recounting what he told the president, according to two sources.
Each year for the past two decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty.” In recent years, the Census has reported that one in seven Americans are poor. But what does it mean to be “poor” in America? How poor are America’s poor?
For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. For example, the Poverty Pulse poll taken by the Catholic Campaign for Human Development asked the general public: “How would you describe being poor in the U.S.?” The overwhelming majority of responses focused on homelessness, hunger or not being able to eat properly, and not being able to meet basic needs.[1] That perception is bolstered by news stories about poverty that routinely feature homelessness and hunger.
Yet if poverty means lacking nutritious food, adequate warm housing, and clothing for a family, relatively few of the more than 30 million people identified as being “in poverty” by the Census Bureau could be characterized as poor.[2] While material hardship definitely exists in the United States, it is restricted in scope and severity. The average poor person, as defined by the government, has a living standard far higher than the public imagines.
Read the rest here.
Comments »Comments »WASHINGTON (AP) – Echoing President Barack Obama’s warning, Senate Majority Leader Harry Reid says Social Security payments would stop if there is no deal to raise the government’s borrowing limit by Aug. 2.
Speaking on the Senate floor, the Nevada Democrat said flatly that payments for veterans benefits and the military, as well as Social Security, would cease if the government defaults on its obligations. His statement goes beyond Obama, who said earlier this week that he could not guarantee Social Security checks will be issued on Aug. 3.
Later, a Reid spokesman said the senator meant to say the payments “could” stop, which would be consistent with the president’s comments.
Republicans have called such statements scare tactics.
About 55 million Americans receive Social Security payments each month, totaling about $60 billion.
This gives me so much pleasure.
Comments »NEW YORK (CNNMoney) — Buffeted by high taxes, strict regulations and uncertain state budgets, a growing number of California companies are seeking friendlier business environments outside of the Golden State.
And governors around the country, smelling blood in the water, have stepped up their courtship of California companies. Officials in states like Florida, Texas, Arizona and Utah are telling California firms how business-friendly they are in comparison.
Companies are “disinvesting” in California at a rate five times greater than just two years ago, said Joseph Vranich, a business relocation expert based in Irvine. This includes leaving altogether, establishing divisions elsewhere or opting not to set up shop in California.
“There is a feeling that the state is not stable,” Vranich said. “Sacramento can’t get its act together…and that includes the governor, legislators and regulatory agencies that are running wild.”
The state has been ranked by Chief Executive magazine as the worst place to do business for seven years.
“California, once a business friendly state, continues to conduct a war on its own economy,” the magazine wrote.
Comments »In a nod to Big Business, President Obama on Monday issued an executive order asking independent agencies to rid their books of old and outdated regulations.
The White House made a similar request earlier this year to agencies it oversees. The new order asks agencies that don’t answer to the White House to join in this call to cut red tape.
“We are taking immediate steps to eliminate millions of hours in annual paperwork burdens for large and small business and save more than a $1 billion in annual regulatory costs,” said Obama in a memo accompanying the order.
The order, which was delivered to independent agencies on Monday, signals the White House’s sensitivity to complaints lobbed by big business groups and Republicans — that bureaucratic red tape and new rules are putting a crunch on job creation.
These groups are especially complaining about rules implementing expanded health care coverage, Wall Street reform and improved air quality standards.
By Paul Kane and and Lori Montgomery, Updated: Saturday, July 9, 8:41 PM
“House Speaker John A. Boehner abandoned efforts Saturday night to reach a comprehensive debt-reduction deal worth more than $4 trillion in savings, telling President Obama that a midsize package was the only politically possible alternative to avoid a first-ever default on the nation’s mounting national debt.
Boehner (R-Ohio) told Obama — who is hosting a key meeting Sunday evening on the debt issue — that their efforts to “go big,” as the speaker says, were stymied by the toughest issues: taxes and entitlements. Democrats continued to insist on tax reforms that would not pass muster in the conservative-dominated House, and Republicans wanted cuts to programs such as Medicare and Social Security that Obama and Senate Democrats would oppose.
“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase,” Boehner said in a statement released less than 24 hours before the Obama meeting is to take place.”
Comments »Comments »A top House Republican Wednesday signaled new flexibility on White House demands to close wasteful or ineffective tax loopholes as a way to bridge differences with President Barack Obama and Capitol Hill Democrats in talks on a plan to reduce the deficit and pave the way to increase the government’s borrowing authority.
“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” said House Majority Leader Eric Cantor, R-Va. Cantor added that any revenues raised from closing such loopholes “should be coupled with offsetting tax cuts somewhere else.”
Cantor’s comments reflected important, if nuanced, flexibility for Republicans. His earlier position was that closing loopholes should wait for a comprehensive effort to reform the tax code.
Cantor declined to specify what tax cuts should be financed by any new loophole-related revenues, but he declined to rule out using them to pay for renewing expiring tax cuts like a popular credit for new research and development that’s popular with businesses.
The show of flexibility comes in advance of a White House meeting Thursday between Obama and top congressional leaders.
Paul Krugman writes (citing Noah Smith) that he agrees with the empirical findings in my critique of the revival of Keynesian activism in the 2000s (the stimulus packages of 2001, 2008 and 2009). In particular, he writes that “it’s far from clear that the ARRA actually led to much of a rise in government spending, while the tax cuts that made up much of the stimulus were probably largely saved.”
But he then goes on to say that the stimulus was too small. That’s not what I found in my paper. As I stated in the paper, my “results do not lend support to” the view “that the stimulus was too small.” Rather the paper showed that “a larger stimulus package—with the proportions going to state and local grants, federal purchases, and transfers to individual the same as in ARRA—would show little change in government purchases or consumption.”
Now, I know that Krugman is trying to distinguish between good and bad Keynesian stimulus packages, and that he would like a stimulus package with higher proportions going to federal, state, and local government purchases than the 2009 stimulus, or, for that matter, the 2008 stimulus or the 2001 stimulus. But experiences from the 1970s raise serious doubts about the political and operational feasibility of such discretionary fiscal policy. So do recent experiences in many other countries, as shown by Hyun Seung Oh and Ricardo Reis.
In a simple Keynesian model, all the government has to do to combat a recession is quickly increase government purchases, but the difficulty with doing so in practice is one of the classic arguments against discretionary fiscal policy. Of course, it is not the only argument. Small or unreliable multipliers, the legacy of increased debt, the unpredictability and temporariness of such policies are some of the other arguments. Using dynamic models with expectations and incentives, I have found very small multipliers (around .5)
Read the rest here.
Comments »Breaking with current economic orthodoxy, Robert Barro, Paul M Warburg Professor of Economics at Harvard University, said large spending plans should be undertaken only if they can be justified financially on their own merits. Any other spending plans end up costing the country even more than the initial outlay as interest on the debt has to be paid and the deficit cleared.
“In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can’t just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect,” he said.
“The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that’s not macroeconomics.”
Turning to the $600bn (£373bn) to $800bn US package, he added it was “mainly a waste of money”. Stimulus programmes, he said, offer little more than “rearranging the timing” of economic growth. “Possibly you could make an argument that it’s worth it. But it’s going to be a negative-sum thing overall, so you have to think it’s a big benefit for boosting the recovery.”
Read the rest here.
Comments »MINNEAPOLIS (Reuters) – Minnesota’s state government began a broad shut down on Friday going into the July 4 holiday after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal.
Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year.
The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed and state parks and campgrounds closed ahead of what is usually their busiest stretch of the year for the July 4 holiday.
Dayton and Democratic legislative leaders Senator Tom Bakk and Representative Paul Thissen met for more than a week with Republican leaders including House Speaker Kurt Zellers and Senate Majority Leader Amy Koch. The leaders met several times on Thursday in the governor’s office.
Neither Dayton nor the Republican leaders gave any indication when they would meet next to discuss the budget.
“I deeply regret that the last week of intense negotiations between the Republican legislative leaders and Senator Bakk, Representative Thissen and myself have failed to bridge the divide between us,” Dayton said in a speech.
He said his last proposed two-year general fund budget was $35.7 billion, but the differences between his approach and the Republican leaders had not changed since January. The gap between the two sides stood at $1.4 billion, he said.
“Gov. Jerry Brown has signed into law California’s tax on Internet sales through affiliate advertising which will immediately cut small-business website revenue 20% to 30%, experts say.
The bill, AB 28X, takes effect immediately. The state Board of Equalization says the tax will raise $200 million a year, but critics claim it will raise nothing because online retailers will end their affiliate programs rather than collect the tax.
Amazon has already emailed its termination of its affiliate advertising program with 25,000 websites. The letter says, in part:
(The bill) specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.
We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.
Read the rest here.
Given all the craziness with oil, peak oil theories, etc, i thought this would spark an interesting debate.
I have no way to verify this; perhaps a fly on the wall could confirm or deny such a claim.
You only need to listen to the first 3 minutes.
[youtube:http://www.youtube.com/watch?v=NbakN7SLdbk 450 300] Comments »Developing…..
– tax hikes are off the table
-a tax hike will not pass the house of representatives
-will not agree to raise deficit unless their are real spending cuts…no targets, no more kicking the can down the road
-without cuts we will impede job growth
-Cantor makes it clear that conversation can continue if Democrats take tax hikes off the table
Comments »Sounds like a plan….
Not that you care, but my proposal is no government paycheck should be more than double the national average income at the federal level and only match the national average at the state level…
Comments »SAO PAULO (Reuters) – The International Monetary Fund cut its forecast for U.S. economic growth on Friday and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits.
The IMF, in its regular assessment of global economic prospects, said that bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies.
The global lender forecast that U.S. gross domestic product would grow an anemic 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively.
The outlook elsewhere was mixed. The IMF said it was slightly more optimistic about the euro area’s growth prospects this year, but a lack of political leadership in dealing with that crisis and the budget showdown in the United States could create major financial volatility in coming months.
“You cannot afford to have a world economy where these important decisions are postponed because you’re really playing with fire,” said Jose Vinals, director of the IMF’s monetary and capital markets department.
“We have now entered very clearly into a new phase of the (global) crisis, which is, I would say, the political phase of the crisis,” he said in an interview in Sao Paulo, where the forecast was published.
In the United States, the political problems include a fight over raising the debt ceiling. Fears that the world’s biggest economy could default, even briefly, have rattled markets, with Fitch Ratings saying even a “technical” default would jeopardize the country’s AAA rating.
Meanwhile, Greece has edged closer to default as euro zone officials disagree on a possible second aid package for the indebted country. With strikes and protests around the country, political turmoil has added to uncertainty, stoking fears that the government will not be able to tighten its belt enough to reduce crippling deficits.
“If you make a list of the countries in the world that have the biggest homework in restoring their public finances to a reasonable situation in terms of debt levels, you find four countries: Greece, Ireland, Japan and the United States,” Vinals said.
Read the rest here.
Comments »When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco’s Bill Gross told CNBC Monday.
Much of the public focus is on the nation’s public debt, which is $14.3 trillion. But that doesn’t include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at “nearly $100 trillion,” that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won’t find a solution overnight.
“To think that we can reduce that within the space of a year or two is not a realistic assumption,” Gross said in a live interview. “That’s much more than Greece, that’s much more than almost any other developed country. We’ve got a problem and we have to get after it quickly.”
Read the rest here.
Comments »“Most critiques of Krugman as a public intellectual begin with what is apparently an obligatory disclaimer, usually in the very first sentence — something to the effect that Krugman is a very accomplished and well-respected economist. Then comes the “But . . .” and the critique proceeds in earnest, often scathingly.
But why concede this honor to Krugman? So what if he won the Nobel Prize? The real test of Krugman’s mettle as an economist is the accuracy of his economic forecasting. The fact is that, with about three decades of evidence now in, Krugman’s track record, to use a technical term favored by economists, sucks.
He’s not always candid about this. But once, under the pressure of a televised debate with conservative talk-show host Bill O’Reilly, Krugman blurted out an understated if truthful self-evaluation: “Compare me . . . compare me, uh, with anyone else, and I think you’ll see that my forecasting record is not great.”
The most egregious example of “not great” is Krugman’s utterly incorrect 1982 prediction that inflation would soar. He made this prediction from no less lofty a perch than the White House, as staff member of the Council of Economic Advisers in the first Reagan administration. In a memo titled “The Inflation Time Bomb” Krugman wrote with co-author Lawrence Summers, “We believe that it is reasonable to expect a significant reacceleration of inflation . . . at least 5 percentage points to future increases in consumer prices. . . . This estimate is conservative.”
It also turned out to be hilariously, side-splittingly, knee-slappingly, rolling-on-the-floor wrong. Except for a tiny uptick the very next month, inflation didn’t rise; it fell. Four years later, it had fallen to 1.18 percent, a rate so low as to border on deflation.”
Read the rest here.
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