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Economy

New Study Finds High-Income Tax Cuts Don’t Stimulate Economic Growth

By Travis Waldron on Sep 12, 2012 at 6:45 pm

Congressional Republicans and their party’s presidential nominee have both pushed plans to cut taxes on the wealthiest Americans in hopes that such a move would stimulate the economy and aid the recovery from the Great Recession. A new study, however, indicates that tax cuts for the wealthiest earners fail to generate economic growth at the same pace as tax cuts aimed at low- and middle-income earners.

The study, conducted by Owen M. Zidar, a former staff economist on President Obama’s Council of Economic Advisers and a graduate student at California-Berkeley, examined economic growth in the states with the most high-income earners. Zidar reasoned that “states with a large share of high income taxpayers should grow faster following a tax cut for high income earners” if the tax cuts had the economic effect conservatives claim.

What he found, though, is that the effect of tax cuts for the rich was “insignificant statistically,” as Reuters’ David Cay Johnston reported:

“Almost all of the stimulative effect of tax cuts,” Zidar found, “results from tax cuts for the bottom 90%. A one percent of GDP tax cut for the bottom 90% results in 2.7 percentage points of GDP growth over a two-year period. The corresponding estimate for the top 10% is 0.13 percentage points and is insignificant statistically.”

Zidar’s study provides more empirical backing to what the U.S. has experienced over the last 30 years. Supply-side tax cutting policies have not led to the growth their Republican proponents promised. The Bush tax cuts, for instance, were followed by the weakest decade for economic expansion on record.

Still, Republicans, some of whom admit that the Bush tax cuts didn’t lead to the desired growth, are sticking to their ideology. Republican presidential nominee Mitt Romney proposed a tax cut that is four times larger than the Bush tax cuts; the GOP has fought efforts to allow the high-income tax cuts expire at the end of the year, arguing that doing so would dampen growth; and Republican governors across the country have pushed tax cut packages aimed at the wealthy even as their states struggle with budget shortfalls.

Security

Republicans Shake Their Heads At Romney’s Libya Attack On Obama: He ‘Stepped In It’

By Ben Armbruster on Sep 12, 2012 at 6:24 pm

Photo: David Calvert/Getty Images

The Washington Post editorial board, which is usually a reliable ally for Republicans on foreign policy, today offered sharp criticism of Mitt Romney’s claim that Obama sympathized with the attacks on Americans in Egypt and Libya yesterday, which left four American foreign service officers dead and others wounded. The Post said Romney’s attack “is a discredit to his campaign.”

While the Romney campaign’s unofficial press secretary Jen Rubin tried to rally some troops around the GOP presidential nominee, it doesn’t look like the day is turning out to be a big winner for Romney as Republicans are turning out en masse to denounce his attacks:

  • “I don’t think President Obama sympathizes with those who attacked us. I don’t think any American does.” — Former Bush administration DHS Secretary Tom Ridge

  • “In the wake of this violence, the rush by Republicans — including Mitt Romney, Sarah Palin and scores of other conservative critics — to condemn him for policies they claim helped precipitate the attacks is as tortured in its reasoning as it is unseemly in its timing.” — Mark Salter, former chief of staff and top campaign aide to Sen. John McCain (R-AZ)

  • “They were just trying to score a cheap news cycle hit based on the embassy statement and now it’s just completely blown up,” said a very senior Republican foreign policy hand, who called the statement an “utter disaster” and a “Lehman moment” — a parallel to the moment when John McCain, amid the 2008 financial crisis, failed to come across as a steady leader. … “This is just unbelievable — when they decide to play on it they completely bungle it.”

  • But [a former Romney adviser] does have a good read on Romney–a man with a healthy sense of pride, and who’s already invested in the idea of Obama as an appeaser. It was the only plausible explanation the adviser could think of for how “they stepped in it,” in his words.

  • “I don’t feel that Mr. Romney has been doing himself any favors, say in the past few hours, perhaps since last night. Sometimes when really bad things happen, when hot things happen, cool words or no words is the way to go.” — Conservative commentator Peggy Noonan

  • “This is a time when we all should reflect on those who continue to give, even the last measure, of service and sacrifice, to promoting and defending America’s interests abroad. This is above all a reminder that politics should end at the waters edge.” — Jon Huntsman, former Republican governor of Utan and 2012 GOP presidential candidate.

    • The Post editorial board had some advice for Romney. “He would do well to consider the example of Republican former secretary of state Condoleezza Rice, who issued a statement Wednesday lamenting ‘the tragic loss of life at our consulate,’ praising Mr. Stevens as ‘a wonderful officer and a terrific diplomat’ and offering ‘thoughts and prayers’ to ‘all the loved ones of the fallen.’”

    Obama shot back at Romney this afternoon, saying he has “a tendency to shoot first and aim later.” “It’s important for you to make sure that the statements that you make are backed up by the facts,” the president told 60 Minutes. “And that you’ve thought through the ramifications before you make them.”

    Justice

    Federal Appeals Court Tells Idaho Prosecutors To Back Off Woman Who Had An Abortion

    By Ian Millhiser on Sep 12, 2012 at 6:00 pm

    Two years ago, an Idaho woman named Jennie Linn McCormack became pregnant. McCormack lives off of no more than $250 a month in child support payments, the nearest abortion clinic to her home is nearly 140 miles away in Salt Lake City, Utah, and it would charge up to $2000 to perform an abortion. So when she decided to terminate her pregnancy, she obtained an abortion-inducing medication online. After she took the drug, McCormack found herself being prosecuted for violating an Idaho law making it a felony for a woman to “terminate[] her own pregnancy otherwise than by a live birth.”

    In a unanimous decision joined by Reagan-appointed Judge Donald Walter, the U.S. Court of Appeals for the Ninth Circuit blocked Idaho from resuming this prosecution, which had previously been dismissed by a court order that also gave prosecutors the option of refiling against McCormack. Significantly, the Ninth Circuit’s opinion strongly suggests that any attempt to prosecute a woman who obtains an abortion — as opposed to the provider who authorizes or proscribes the procedure — is unconstitutional:

    Most modern state criminal statutes continue to apply criminal liability to third parties who perform abortion in a manner not proscribed by the statute. These statutes, known as physician-only statutes, impose criminal liability on anyone other than a licensed physician from performing abortions. But many of these same criminal statutes expressly exempt women from criminal liability for obtaining an abortion and do not hold them liable for actions or inactions that affect their pregnancy outcomes. When state statutes do not expressly exempt pregnant women, state courts interpreting them have concluded that pregnant women are exempt from criminal prosecution . . . . Consistent with this history, there is no Supreme Court precedent that recognizes or suggests that third party criminal liability may extend to pregnant women who obtain an abortion in a manner inconsistent with state abortion statutes. . . .

    While the Supreme Court has permitted many restrictions that make obtaining an abortion more difficult, particularly for low-income women, it has not authorized the criminal prosecution of women seeking abortion care. Imposing criminal liability upon women for their providers’ purported failure to comply with state abortion regulations places a substantial obstacle in the path of women seeking an abortion. Accordingly, McCormack is likely to succeed on her claim that Chapter 6 constitutes an undue burden on a woman’s constitutional right to terminate her pregnancy before viability.

    Because this case is still at an early stage in the litigation, the court refrained from saying that Idaho can never prosecute a woman under this statute again — yesterday’s order applies only to McCormack. Barring intervention by a higher court, however, it is likely that the Idaho law authorizing women to be targeted will eventually be struck down completely.

    Climate Progress

    Republican Meterologist To Romney: Top 10 Reasons The GOP Needs To Accept The Climate Reality

    By Climate Guest Blogger on Sep 12, 2012 at 5:48 pm

    by Paul Douglas via Neorenaissance

    During the Republican National Convention in Tampa, climate change became a punch line. “President Obama promised to begin to slow the rise of the oceans and heal the planet” Mitt Romney said.

    (Pause for polite laughter)

    “My promise is to help you and your family.”

    All well and good. But denying climate change won’t help any American family or our fledgling economy. And looking at the world with carbon-colored glasses, or using Solyndra as an excuse to snub renewables and clean-tech, is not only short-sighted, but makes America less competitive on the world stage. According to the World Economic Forum, America’s global competitiveness fell from 1st to 7th place since 2007. Should we just accept that most breakthrough energy technologies are originating in China and Europe, where there is no more “debate” about climate trends? Why is America still questioning the science? For political entertainment? Something tells me Mother Nature may get the last laugh.

    To be fair, Romney later adjusted his position on climate change. “My best assessment of the data is that the world is getting warmer, that human activity contributes to that warming,” he said last week in an online debate with president Obama at ScienceDebate.org, “and that policymakers should therefore consider the risk of negative consequences.” Bravo! That’s leadership. But then sadly, in the very next sentence he veered into denial when he said “there remains a lack of scientific consensus on the issue.” This is simply not true, and a candidate for president needs to be dealing in reality on an issue like this. Ninety-seven percent of climate scientists agree. That’s a consensus.

    If it’s not raining, why are we getting wet?

    As a Republican business owner, entrepreneur, meteorologist and father of two upbeat, optimistic boys, I may not fit the stereotype of a “global warming alarmist.” I’m an Evangelical Christian. I’m enthusiastic about streamlining government and letting the markets work. But unlike some, I see no inherent struggle between my faith and the ability of science to improve our understanding of the world. The Creator gave me a brain, to think and reason, and react to facts on the ground. And I’m disillusioned, because some in my party are pro-science-denial, and on the wrong side of history.

    The word “conservative” no longer applies to the environment. The GOP’s new energy platform shows this, in a stunning departure from 2008. Don’t get me wrong. My party’s focus on the economy and putting Americans back to work is dead on. And America has been blessed with a rich supply of natural resources and innovative technologies to wean ourselves off foreign crude. But our fossil fuel frenzy is impacting the weather floating above our heads. Denying that it’s raining doesn’t keep you from getting wet, and climate change has gone from theory to reality — while our side fiddles away like Nero.

    What the data tells me

    Read more

    Economy

    As New iPhone Hits The Market, Apple’s Chinese Manufacturer Accused Of Forced Student Labor

    By Guest Blogger on Sep 12, 2012 at 5:40 pm

    Just as Apple unveils the iPhone 5, its Chinese manufacturer, Foxconn Technology, is once again plagued with labor concerns. This time, the accusation is that it forced student interns to assemble iPhones, according to the New York Times.

    Chinese state media reported several schools in the eastern city of Huai’an were closed so that hundreds of students could work on assembly lines to make up for worker shortages. About 32,000 students work in Foxconn factories, and shifts can last up to 12 hours. Though the company says students are free to go at any time, interns that spoke with labor advocacy groups said that was not the case and that their teachers forced them to work there. Students were told they would not graduate unless they worked and that it was “a good way to experience corporate culture.”

    Labor advocates say Foxconn is under tremendous pressure to fill huge numbers of orders for devices like the iPhone 5 and that deadlines can only be met by adding workers. And Foxconn has a long history of labor abuses, which ThinkProgress has addressed before. Multiple investigations into its practices over the last few years — some of them commissioned directly by Apple — have found “illegal amounts of overtime, crowded working conditions, under-age workers, improper disposal of hazardous waste and, in some cases, industrial accidents.”

    In 2010, an undercover report found:

    New employees must sign a voluntary affidavit committing to between 60 and 100 hours of overtime each month — far more than the legal limit of 36 hours.

    Workers claimed they stood so long their legs swelled up and they had difficulty walking.

    Employees face more serious harm than swelled legs, however. Two explosions within 7 months at Foxconn factories killed four people and injured almost 80 in 2010. Employees also face serious health risks, and 137 were injured when they were forced to clean iPads with toxic chemicals. Perhaps not surprisingly, as many as 17 Foxconn employees committed suicide over the last five years — a trend that got so bad the company chairman sought the help of an exorcist.

    Though years of bad press prompted some improvements, including reduced hours and higher pay, Foxconn’s work environment apparently remains “military-like,” and Apple is still relying on it to deliver the iPhone 5 successfully.

    – Greg Noth

    LGBT

    Milton Hershey School Will Pay $700,000 In Damages For Discriminating Against HIV-Positive Student

    By Tara Culp-Ressler on Sep 12, 2012 at 5:30 pm

    After Milton Hershey School denied admission last year to an HIV-positive 13-year-old, his parents filed a lawsuit alleging the school violated the Americans with Disabilities Act by discriminating against their son based on his HIV status. The private boarding school reversed its decision last month, pledging to amend their policies to be more inclusive of HIV issues, and reached a settlement in the lawsuit today that awards the student’s family $700,000 in damages for HIV-based discrimination.

    Thomas E. Perez, the Assistant Attorney General for the Justice Department’s Civil Rights Division, applauded the settlement for reaffirming the importance of addressing HIV stigma:

    PEREZ: Children should not be denied educational opportunities simply because they have HIV. This settlement sends a clear message that unlawful discrimination against persons with HIV or AIDS will not be tolerated.

    The 13-year-old student has lived with HIV his whole life. After he was denied admission to Milton Hershey School based on concerns that his HIV status would “pose a direct threat to the health and safety of others,” national protests erupted, prompting the boarding school’s president to announce updates to the institution’s anti-discrimination policies to ensure it “treats applicants with HIV no differently than any other applicants.” Today’s settlement with the Justice Department also requires the school to provide staff and administrators with further training on the requirements of the ADA.

    Justice

    72,000 DREAMers Applied To Remain In The Country Under Obama Administration Policy

    By Amanda Peterson Beadle on Sep 12, 2012 at 4:50 pm

    Almost one month after young undocumented immigrants began applying for deferred action, federal immigration officials announced that about 72,000 DREAM Act-eligible young adults have applied so far. The new policy, which President Obama announced in June, gives undocumented immigrants who qualify two-year deportation deferrals and permits to legally work in the U.S.

    Officials in the Department of Homeland Security have worked quickly to process applications as they have poured in, with California leading in the number of applications from undocumented immigrants in that state. The largest portion of deferred action applicants were born in Mexico, but immigration officials said a large number also came from South Koreans, who make up a much smaller population of immigrants in the U.S.

    Republicans, however, are renewing their attacks against the program. Sen. Jeff Sessions (R-AL) questioned “the speed at which the deferrals are being granted” in a letter to John Morton, director of U.S. Immigration and Customs Enforcement, on Tuesday and back in August, Kansas Secretary of State Kris Kobach, an informal immigration adviser to Mitt Romney, filed a lawsuit challenging the policy. Kobach is representing 10 U.S. Immigration and Customs Enforcement employees who disagree with the directive. “It places ICE agents in an untenable position where their political superiors are ordering them to violate federal law,” Kobach said.

    Mitt Romney has not explained if he would continue the deferred action policy as president — although one of his advisers said Romney would end it — but at this rate, the New York Times estimates that at least 200,000 people potentially could have applied for deferred action by the presidential election in November.

    Climate Progress

    Three Questions For Romney’s Energy Adviser Harold Hamm

    By Rebecca Leber on Sep 12, 2012 at 4:45 pm

    On Thursday, oil baron Harold Hamm will testify to the House Energy and Commerce Committee on the unrealistic promise that the U.S. can drill its way to energy independence. As chief architect of Romney’s energy plan, Hamm will echo its pro-oil tenets.

    Hamm is CEO of Continental Resources, the company with the largest holdings in the Bakken oil and gas boom and his policy positions are, of course, firmly for maximizing drilling.

    As lawmakers discuss the prudence of the GOP’s “Drill Baby Drill” energy plan, here are three essential questions that Hamm should answer at Thursday’s hearing:

    How does the Romney/Ryan energy plan apply to national parks, and do you support the idea of throwing out federal safeguards for drilling in national parks that belong to all Americans?

    The Romney energy plan proposes turning energy development on public lands over to the states, but it includes no details about which public lands would be included and how such a policy would work. In fact a recent trade organization, the International Association of Drilling Contractors, said that working under various state regulations could cause operators to “tear their hair out” and that it was “a little bit of populist raw meat.” The Center for American Progress just released a map of 30 national park units with non-federal mineral rights that could face future drilling, including the Flight 93 National Memorial, Everglades National Park, and Grand Teton National Park.

    In his hearing testimony, Hamm supports opening federal lands and offshore areas for drilling, but claims it “would impact my company very little” because “we mainly work on private lands.” But Hamm holds a number of permits to drill on public lands, including recent permits for Montana and North Dakota. Romney’s plan would likely boost Hamm’s profits, but potentially at the risk of Americans’ national parks.

    How does clean energy and fuel efficiency fit into a plan for energy independence, since a realistic plan must include lower oil consumption?

    There are two parts of the equation to energy independence — energy production and consumption. But oil executives and some Republicans ignore initiatives that lower foreign oil consumption, like leaps in the production of clean energy and the Obama administration’s fuel efficiency standards.

    Interestingly, Brad Plumer of the Wonk Blog points out that Romney’s plan relies on a CitiGroup report that cites fuel economy standards “as a major reason why America is now lurching toward energy independence.” However, Romney wants to roll back these initiatives, even though they are the only true solution for protecting consumers from oil price shocks, according to the Congressional Budget Office.

    Why do you call oil safety regulations unnecessary and burdensome when your company is guilty of drilling violations?

    Hamm’s company Continental Resources has been fined for a number of violations in 2011: In several incidents, it’s been fined for improperly dumping oil and toxics into the air, soil and water. And even worse, neither Romney or Hamm show an interest in accounting for the risks to our climate posed by unchecked fossil fuel production.

    Hamm is a critic of the Obama administration’s energy policy, calling it “one of scarcity” — even though the oil industry has reached the highest level of production in eight years.

    Hamm is not only Romney’s policy adviser, but also a $1.2 million donor to Republicans and Romney’s super PAC. He has also been vocal about tax credits for oil, which Romney would protect by offering billions more in tax breaks for the top five oil corporations.

    NEWS FLASH

    Zachary Quinto: ‘No Good Can Come From Me Staying Quiet’ | Zachary Quinto — Spock, Sylar, Louis Ironson — has opened up to Out magazine about what life has been like in the 11 months since he came out publicly as gay. In terms of his sexuality, Quinto reached a point where he realized that “absolutely no good can come from me staying quiet about it.” Recognizing the good that can come from being open about it, the actor has dedicated much of his energy over the past six months to campaigning for Obama and pushing back against anti-gay Christian organizations:

    QUINTO: It boggles my mind that there are so many extreme, Christian organizations that are adopting a stance against homosexuality with such vitriol and hatred and targeted aggression that goes against the tenets of the Christian faith. The hatred that people are leading with in this discussion is really, for me, the biggest symptom of how sick we are. It’s the thing that makes me look at our culture and think, We are so far afield of any sort of connectivity or truth in relationship to one another.

    NEWS FLASH

    CHART: Public Investment Has Plunged Since The Great Recession | The yields on Treasury bills hit an all-time low over the summer, and have hovered at low rates since, meaning that investors are willing to lend the U.S. money for almost nothing. Considering that unemployment is still unacceptably high, the U.S. should be taking advantage of those low rates to put people back to work while fixing America’s crumbling infrastructure. But as Nobel Prize-winning economist Paul Krugman noted today, public investment has plunged since the Great Recession hit:

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