Today, the Wall Street Journal reported that foreclosures in commercial real estate could potentially deliver “a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.” Combined with continuing delinquencies on residential mortgages, these commercial foreclosures could spell real trouble for any burgeoning economic recovery.

For the last few months, members of Congress and various economists have been looking at ways to stem the foreclosure crisis, putting forth a series of legislative solutions. However, when MSNBC needed someone to discuss the situation, it turned to Americans for Tax Reform president Grover Norquist, the anti-tax crusader who famously quipped that he’d like to “reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub.”

When MSNBC’s Carlos Watson asked Norquist how he would prevent foreclosures, he launched into a bizarre non-sequiter about Congressional vacations and the stock market, which ultimately culminated in his advocating for corporate and capital gains tax breaks:

WATSON: So you’re saying the constructive thing that Congress could do is go on vacation for two months, number one, and number two is to say that we won’t issue or pass any additional taxes? That’s what you’re saying would be the solution to stem the foreclosure crisis, both on the residential and commercial side?

NORQUIST: Both of those would help. If we could actually get Congress to agree, we should do another repatriation — 2004, 2005, Congress said ‘companies that have money overseas, you can bring it back and not pay a prohibitive 35 percent tax’…We could do that again this year…And what we ought to do also is abolish the capital gains tax.

Watch it:

It’s abundantly clear that Norquist has no idea what’s happening in the mortgage sector, and merely fell back on the conservative tax cut wish-list. The inclusion of tax repatriation is particularly egregious, as not only does it have nothing to do with mortgages, but studies have shown that the 2004 version was simply a tax windfall for corporations. The break allowed corporations to bring back money that they held offshore at a lower tax rate, for the purpose of domestic reinvestment. But the National Bureau of Economic Research found that very little money was actually reinvested:

Now the most detailed analysis of what actually happened — using confidential government data as well as corporate reports — has estimated what happened to the $299 billion companies brought back from foreign subsidiaries. About 92 percent of it went to shareholders, mostly in the form of increased share buybacks and the rest through increased dividends. There is no evidence that companies that took advantage of the tax break…used the money as Congress expected.

In light of this performance, I hope MSNBC will think twice before bringing Norquist on to speak about foreclosures again.

Earlier this month, I noted that the Labor Department is trying to ramp up its effort to combat wage theft without a Wage and House Administrator, whose nomination is stalled in the Senate. Last week, Sen. Mike Enzi (R-WY), ranking Republican on the Senate HELP Committee, asked President Obama to to withdraw his nomination for Patricia Smith to be Department of Labor Solicitor, citing “inconsistent testimony” regarding a program that she launched in New York to monitor wage theft. According to the New York Times, there are currently five Labor Deptartment nominees awaiting Senate confirmation.

Today, the Wonk Room sat down with AFL-CIO Secretary Treasurer Richard Trumka — who is running unopposed for the AFL-CIO presidency. Trumka said that, in his opinion, those holding up Labor Department nominees are invested in the business-centric stance that came to characterize the Labor Department under the Bush administration:

They’re holding up scores of nominees because they don’t want those positions filled. In some cases, it’s because there are Republican holdovers in them, in some cases they just want the department to be slow and they think if they can hamper the President by keeping his people out and not having a full team on the field, that they come out ahead. [...]

They don’t want anybody in the Labor Department that’s actually going to look out for the interests of workers. They think that it ought to be Commerce Two. So you have the Commerce Department and under [former Labor Secretary] Elaine Chao it was Commerce Two, where they took care of business in both places. And we suffered. Health and safety of workers suffered, the lives of workers were taken needlessly.

Watch it:

As David Madland and Karla Walter wrote, “from air pollution to food safety to children’s toys, one of the hallmarks of President George W. Bush’s administration [was] its failure to enforce laws designed to protect ordinary Americans. This failure is perhaps nowhere more evident than at the Department of Labor, where the Obama administration will have an opportunity and an obligation to correct the Bush administration’s inadequate enforcement of important workplace protections.” But it’s going to be very difficult to fulfill that obligation if the administration can’t get its people in place to do the job.

For-profit health insurance giant WellPoint fired off an email blast to its customers (using its Anthem Blue Cross Blue Shield subsidiary) yesterday attacking the public option and Democratic plans for reforming health care, according to Politico’s Ben Smith. The email directs customers to its “grassroots Web site” for instructions on contacting legislators, a website ThinkProgress revealed to be run by the secretive corporate lobbying firm Democracy Data and Communications (DDC). DDC, which is operated by a former veteran of the astroturf organization now known as FreedomWorks, has helped various corporate and Republican interests shape legislation by helping to generate seemingly organic phone calls and letters to Congress.

In the letter to its customers, WellPoint makes a variety of false charges against health reform. Ironically, the attacks WellPoint makes against the public option are more appropriate criticisms of the way the private insurer does business:

1. THE LETTER STATES: Health reform will “increase the premiums of those with private coverage.”

– WELLPOINT POLICIES: In a recent giddy report about WellPoint’s expected profitability to investors, Barrons reported that WellPoint will be “hiking” premiums to at least “6% to 8% annually.” In 2006, WellPoint’s profits increased 34% as premiums and fees surged.

2. THE LETTER STATES: Health reform will cause “millions of Americans to lose their private coverage” and end up in the public option.

– WELLPOINT POLICIES: In March 2007, the state’s Department of Managed Health Care fined Blue Cross of California and its parent company, WellPoint, $1 million after an investigation revealed that the insurer routinely canceled individual health policies of pregnant women and chronically ill patients. Earlier this summer, despite promises by their lobbyists to the public, WellPoint refused to end the controversial practice of rescinding coverage after an applicant files a medical claim.

While WellPoint has been busy shedding customers and increasing premiums, AMNews reported that WellPoint has cut its medical loss ratio this year — meaning a greater percentage of every premium dollar is going to profits and overhead, rather than being spent on actual medical care. Not only that, while WellPoint has tried to put a “human face” on its company by encouraging their employees to show up at town halls with corporate talking points, WellPoint has cut over 1,500 jobs since the beginning of this year. As former CIGNA executive Wendell Potter has explained, private health insurance companies like WellPoint are an ATM machine for Wall Street.

In a recent interview, NPR’s Steve Inskeep forced WellPoint CEO Angela Braly to concede her company fears that “changes in the insurance market and regulations” could cut into her profits the most. That is because, as Igor Volsky has observed, WellPoint’s business model is “antithetical to regulation,” since the company aggressively pursues healthy customers who are less likely to use benefits to pay for medical care. As the company adds healthy customers, WellPoint has made a science of finding ways to deny coverage to the sick. California regulators uncovered more than 1,200 violations of the law by the company in regard to unfair rescission and claims processing practices.

Braly, who earns nearly $10 million a year, wants “sustainable reform,” yet opposes what her company calls “Obamacare,” refuses to stop rescinding coverage to the sick, and is even suspicious of an individual mandate. Although health insurance lobbyists continue to press their case that they truly want reform “this time,” WellPoint and its stealth lobbying efforts severely undermine that claim.

The right-wing, seizing on this report from CBS News, has begun claiming that the health reform bill currently before the House of Representatives will destroy tax privacy as we know it. The provision in question calls for income verification of those claiming the low-income subsidies (which are available for purchasing health insurance) that are established in the bill. “This totally eliminates the idea of tax privacy,” Dick Morris told Fox News’ Greta Van Susteren. “It’s really the equivalent of publishing your tax returns in The Congressional Record. It’s unbelievable!”

Fox also ran a segment today, excoriating Democrats for taking “information for health care, but not for preventing terrorism”:

Even more concerns this morning surrounding the President proposed health care reform bill. Provisions that would force the IRS to give your personal information to a new government health choices commissioner. So Democrats can take Americans’ information for health care, but not for preventing terrorism. Got it?

Watch it:

First, as even Fox’s analyst conceded, it makes sense to verify income for people claiming subsidies. Otherwise the subsidy system would be ripe for fraud and abuse. For an organization so often concerned with the government wasting money, you’d think Fox would be against giving subsidies to those who don’t qualify.

Second, data-sharing of this sort already happens, and from an efficiency standpoint makes perfect sense. Why require persons applying for subsidies to submit another income statement to the government, when the IRS already has the data? As the Georgetown University Health Policy Institute pointed out, state governments access IRS information — among other sources — to verify income for Medicaid and CHIP applicants:

Verifying income using other government databases requires cooperation and coordination with other programs…States typically use four to five databases to confirm income information—Food Stamps, TANF, Social Security, the IRS, and state wage and unemployment compensation programs. Typically, state Medicaid agencies already have access to these databases.

And then there’s this section of the health care bill which expressly forbids use of the information for purposes other than income verification:

(B) RESTRICTION ON USE OF DISCLOSED INFORMATION – Return information disclosed under subparagraph (A) may be used by officers and employees of the Health Choices Administration or such State-based health insurance exchange, as the case may be, only for the purposes of, and to the extent necessary in, establishing and verifying the appropriate amount of any affordability credit described in subtitle C of title II of the America’s Affordable Health Choices Act of 2009 and providing for the repayment of any such credit which was in excess of such appropriate amount.’

All in all, it seems like conservatives are making much ado about nothing.

Over at ThinkProgress, Lee Fang lays out how America’s Health Insurance Plans (AHIP) has enlisted the corporate consulting firm Democracy Data & Communications (DDC) to host its “grassroots” lobbying campaign against the public option. As Fang points out, “DDC has made a name for itself as one of the most effective stealth lobbying firms.”

Earlier this summer, DDC was caught using a front group called ‘Citizens for a Safe Alexandria’ to attack the Obama administration for seeking to prosecute Guantanamo Bay prisoners in Alexandria, VA. DDC also helped to orchestrate “grassroots” support for President Bush’s push to privatize Social Security. And the group is evidently not through helping advocates of anti-worker policies.

Case in point, according to a list of DDC-hosted domains obtained by ThinkProgress, DDC is hosting the website EFCA-info.org, which is chock-full of misinformation regarding the Employee Free Choice Act (in multiple languages, no less). Though EFCA-info purports to be “a website dedicated to providing visitors with factual and up-to-date information regarding the Employee Free Choice Act,” it spreads various falsehoods about EFCA eliminating the secret ballot or destroying small businesses. And it’s no surprise that the site has this slant, once you look at who keeps it going.

The site is supported by the Independent Women’s Forum (IWF) and the HR Policy Association, along with the U.S. Hispanic Chamber of Commerce and the National Black Chamber of Commerce. The IWF, according to SourceWatch, “is an anti-feminist organization predominately funded by conservative U.S. foundations.” IWF is funded by Koch Industries, which also funds Americans for Prosperity (AFP) and FreedomWorks, both of which were instrumental in organizing the anti-Obama tea party protests. [See response from Koch Industries below]

In fact, from 2003 to 2008, the IWF and AFP operated out of the same office space and had the same president — Nancy Pfotenhauer, a consistent member of the Koch Industries family and former spokeswoman for Sen. John McCain’s (R-AZ) presidential campaign. Currently, the IWF is headed by Michelle Bernard, who earlier this month appeared on MSNBC to declare that “quite honestly, a lot of labor unions are what holds America back and keeps us from being as good as we can be.”

This circle of groups — funded by Koch’s petro-dollars — are trying to derail reform on a variety of fronts, under the guise of grassroots lobbying. And they’re doing it with the aid of DDC’s servers.

Earlier this week, the Wall Street Journal reported that AHIP — the multimillion dollar lobbying juggernaut for the health insurance industry — has mobilized 50,000 employees to lobby Congress to defeat the public option. ThinkProgress has learned that AHIP’s grassroots lobbying is being managed by the corporate consulting firm Democracy Data & Communications. DDC has made a name for itself as one of the most effective stealth lobbying firms. Earlier this summer, DDC was caught by reporters using a front group called “Citizens for a Safe Alexandria” to attack the Obama administration for seeking to prosecute Guantanamo Bay prisoners in Alexandria, VA.

According to the server-information hub Domaintools.com, the AHIP grassroots outreach website AHIPAdvocacy.org is hosted on a server owned by DDC. Though DDC conceals the hosting of its other websites using a service called DomainsByProxy, ThinkProgress has obtained a list of the domains hosted on DDC servers. A review of this data shows that DDC maintains the grassroots outreach websites for large health insurance companies, but also for big tobacco and Koch Industries:

– phillipmorrisusaactioncenter.org (Altria)
– tobaccoissues.com (Altria)
– kochpac.com (Koch Industries)
– aetnavotes.com (Aetna)
– healthactionnetwork.org (WellPoint)
– humanapartners.com (Humana)
– ahipadvocacy.org (AHIP)

DDC is a firm that promises “high impact” outreach programs to not only influence the grassroots, but “change attitudes for the long term.” As the Washington Post explains, DDC pays over 500 contract workers to “spend much of their day telephoning people around the country and asking them to sign letters to Congress that press for legislation.” The firm helped orchestrate “grassroots” support for President Bush’s push to privatize Social Security, and helped manage online efforts for the right-wing attack group Freedom’s Watch. DDC is headed by B.R. McConnon, a former associate of Jack Abramoff’s lobbying partners, and a former employee of the Koch-funded astroturf organization known as Citizens for a Sound Economy.

Citizens for a Sound Economy — which has also received funds from private health insurers in the past and played a critical astroturf role in killing reform under Clinton — eventually split, with one wing forming Americans for Prosperity in 2003, and another forming FreedomWorks in 2004. Both organizations, which are still funded by the Koch Industries empire, were instrumental in organizing the anti-Obama tea party protests, and have been spreading misinformation and anger at the current health reform effort. Americans for Prosperity’s anti-health reform front group, Patients United, has hosted speakers comparing the House health reform bill to the Holocaust.

Curiously, DDC servers also host anti-health reform letters from the Chamber of Commerce and Rep. Charles Boustany (R-LA), as well as continual news updates about the reform debate. All three documents are under a subsection titled WellPoint.

Given the stealthy nature of astroturf lobbying firms, it is difficult to discern the extent to which DDC is managing AHIP’s efforts. UnitedHealth, another large insurer, was caught recently using a call center to direct people to a radical tea party anti-health reform protest outside of the offices of Rep. Zach Space (D-OH).

Already, the health insurance industry has flexed its muscle to water down reform. After spending millions on lobbying, advertising, and direct contributions to lawmakers, the Senate Finance Committee made a major concession allowing insurers to reimburse only 65% of medical bills (down from the 76% proposed requirement). And indeed, although AHIP has made grandiose promises of self regulation, many insurers have recently broke promises made by AHIP President Karen Ignagni. On June 16, despite Ignagni’s pledges of commitment, insurance executives from UnitedHealth Group, Assurant, and WellPoint specifically refused to “commit” to ending the controversial practice of rescinding coverage after an applicant files a medical claim.

With DDC’s stealth lobbying assistance, AHIP may well kill the public option too.

Yesterday, the Office of Management and Budget released an updated version of its ten-year deficit projections, which upped the cost estimate for the administration’s reformed Pell Grant program by $27 billion over ten years.

The OMB reported that the increase “is driven almost entirely by technical revisions to reflect historic increases in the demand for Pell Grants as more individuals choose to go to college in a weakened labor market.” But that didn’t stop Rep. John Kline (R-MN), the ranking member on the House Education and Labor committee, from criticizing the administration for being fiscally irresponsible in its proposals for student loan reform:

The deficit is soaring, a substantial portion of the so-called savings in [the administration's loan reform] may never materialize, and now we learn it will spend billions more than expected…The more we learn about this bill, the more obvious it becomes that there is nothing ‘fiscally responsible’ about it. These new figures are yet another reason Democrats should slow down and consider the consequences of the plan they’re recklessly rushing through Congress.

Is Kline blaming the administration for more people wanting to go to college than it anticipated? That seems like something we’d want to encourage instead of criticize. But this response is in line with the rest of Kline’s awful record in terms of doing what’s best for students.

The administration has proposed changes to the Pell Grant program that would expand the grant pool and ensure that the grants automatically increase to keep up with inflation, as opposed to requiring Congress to constantly adjust when the grants decline in value. In order to pay for this, the administration wants to end the practice of subsidizing private loan companies to originate and service loans.

Meanwhile, Kline’s response to historic grant demand (and the undeniable need to increase America’s level of educational attainment) is to defend the federal government unnecessarily subsidizing ostensibly private companies to the tune of $87 billion over ten years.

Republicans have already conceded that the proposed student loan reforms save money, yet they keep defending the status quo, out of some sense that “a government program is somehow less socialistic when business is allowed to take a huge cut.” Given that demand is higher than ever, it’s time to stop pretending that private providers are anything but middlemen, taking money that would be better spent on students.

When the Chamber of Commerce is not busy calling for the “Scopes monkey trial of the 21st century” in an attempt to publicly put climate science on trial, it is spending its time trying to scuttle an attempt by the Securities and Exchange Commission (SEC) to increase corporate accountability.

The SEC has proposed implementing what is known as “proxy access,” which would make it easier for shareholders to replace a company’s board of directors. Right now, during a corporate election, a company sends out a “proxy” (ballot) with its preferred slate of candidates, while “dissenting shareholders [must] pay up for mailing and publicity costs, sometimes in the millions of dollars,” to send out their own, separate ballot.

The SEC wants to mandate that shareholders who hold 1 to 5 percent of a company’s shares (depending on the company’s size) for more than one year be allowed to put their candidates on the main ballot. But as the Wall Street Journal reported “the largest U.S. businesses, law firms and business groups have stepped up their challenge” to the SEC’s proposal:

In a last-minute bid to derail or weaken the measure, opposing groups have dispatched both Washington lobbyists and grass-roots letter-writers…The U.S. Chamber of Commerce, the nation’s largest business lobby, is engaging in an all-out lobbying effort with lawmakers that it plans to ramp up after Labor Day.

Currently, only five of the 4,000 public companies that the data service FactSet SharkWatch tracks allow proxy access.

With its opposition, the Chamber is showing its contempt for shareholders who want to hold managers accountable for their actions. As Harvard law professor Lucian Bebchuk wrote, “the objections to the SEC proposal are weak“:

The case for comprehensive reform of corporate elections is supported by a significant body of empirical evidence. Arrangements that insulate directors from removal are associated with lower firm value and worse performance. The proxy rules have been intended by Congress, the courts have stated, “to give true vitality to the concept of corporate democracy.” Adopting the SEC proposal, and the additional reforms I discussed, would advance this important goal.

Even if this proposal were enacted, it wouldn’t cure all that is wrong with American corporate governance, but it would be a step in the right direction. The Chamber, though, prefers a status quo in which corporate boards remain unaccountable to the very people who own the company.

In an op-ed today in the Washington Times, Frank Donatelli smeared efforts to pass portions of health reform through reconciliation as an “arcane backroom procedure,” while referring to the legislation with the pejorative label “Obamacare.” Donatelli, who is a regular opinion writer for the Times, is also a frequent political pundit on CNN. In giving Donatelli a free platform to attack health reform, neither media outlet has disclosed that Donatelli is the director of public affairs for McGuireWoods Consulting (an affiliate of the law firm McGuireWoods LLP), a major lobbying firm that is currently representing Blue Cross Blue Shield.

Donatelli, whose firm has already received three separate payments of $54,000 from Blue Cross Blue Shield to lobby Congress and the administration, is also associated with various right-wing groups organizing to defeat reform:

– Donatelli is a member of Citizens for the Republic, a group organizing tea party protests against health reform.

– Donatelli’s McGuireWoods is a client of Shirley & Banister Public Affairs, an infamous GOP public relations firm with a history of working for health insurers like CIGNA and Aetna. Shirley & Banister is currently managing Let Freedom Right, a right-wing group preparing to run anti-health reform videos.

– Donatelli is the chairman of the Republican recruitment group GOPAC. At a GOPAC conference earlier this month, Gov. Tim Pawlenty (R-MN) declared that President Obama’s health reform plans should “be put out of business.” Other speakers lined up to similarly malign reform.

But Donatelli is not the only opponent of reform mobilizing opposition without disclosing ties to the health insurance industry.

The American Conservative Union is a right-wing “grassroots” organization that is currently mobilizing anti-reform activities around Congressional town halls. The group boasts that attendees at Democratic town halls were reading questions from “talking points off a guide produced by the American Conservative Union,” and recently the group distributed a letter that said health reform would “pull the plug on grandma.” ACU’s chairman David Keene is a lobbyist for the Carmen Group, a firm that represents various health care interests, including the New York health insurer HealthFirst.

In Florida, Richard Willich attempted to organize a “leaded tea party” where opponents of reform could gather for speeches while firing guns at a shooting range. Willich, the new state chairman for Americans for Prosperity — a group run by a former associate of Jack Abramoff — is also the president of MDI Holdings, a company with several health care subsidiaries which work closely with insurers. Similarly, Corey Lewandowski — the New Hampshire state director of Americans for Prosperity who organized the protest outside of President Obama’s health reform town hall a few weeks ago — is a chief lobbyist for Schwartz Communications, a firm representing pharmaceutical and medical device companies. Fox News aired several interviews of Lewandowski without once noting his role representing corporate health care interests.

Today, both the Congressional Budget Office and the Office of Management and Budget released revised deficit projections, which take into account changes in the economy that have occurred since the last projections were made. The projections reveal a lower deficit for 2009, but $2 trillion more in deficits over ten years due to the recession being deeper than previously calculated.

Conservatives have inevitably started using the projections to criticize the administration’s economic policies. For instance, Rep. Eric Cantor (R-VA) wrote in Politico today that the administration is being economically dishonest and that its economic credibility “has taken a sharp hit”:

The facts are disheartening. This year’s deficit is set to swell to more than $1.5 trillion…In this economy, as families review their own budgets and adjust accordingly, they expect their government to act in a manner that reflects the challenging times we are in. Much of the public frustration with Washington has been evident in town halls across the country, and many Americans believe the administration’s top priority should be cutting the federal deficit in half by the end of his first term.

First, Cantor is being disingenuous when he claims that the 2009 deficit is “set to swell” to $1.5 trillion. The 2009 projection has actually been revised downward, from $1.8 trillion, because less money than anticipated was spent on the bank rescues.

But more importantly, Cantor penned an entire op-ed hooked to the new projections, seemingly without reading them. If he had, he might have noticed that what he calls the “top priority” — halving the deficit by the end of the President’s first term — the administration is on course to achieve. Both the CBO (the top table) and the OMB (the bottom table) project that the deficit will be cut by more than half in 2013:

As the Center on Budget and Policy Priorities pointed out, all the new projections indicate is that the administration and Congress should “begin taking steps to ensure that the deficit will come down to reasonable levels (3 percent of Gross Domestic Product or less) in the slightly longer run (through 2019) and that the deficits do not begin to grow very rapidly in the following decades.”

Today, President Barack Obama interrupted his vacation on Martha’s Vineyard to nominate Federal Reserve Chairman Ben Bernanke for a second term. Bernanke’s first term ends on January 31, 2010, and his reappointment will require confirmation by the Senate Banking Committee.

During his announcement, Obama praised Bernanke’s action during the current crisis, and looked to the future of financial markets:

We have already seen how lax enforcement and weak regulation can lead to enormous wealth for a few and enormous pain for everyone else. And that’s why even though there is some resistance on Wall Street from those who prefer things the way they are, we will pass the reforms necessary to protect consumers, investors, and the entire financial system. And we will continue to maintain a strong and independent Federal Reserve.

I think there are some definite advantages to reappointing Bernanke. He has been admirably non-ideological, and the Fed under his guidance has taken very necessary steps to fight the economic crisis, particularly once the traditional Fed tool (cutting interest rates) was exhausted. He was slow in both noticing and reacting to the housing bubble and burst, but once the Fed was in full swing its actions helped to mitigate the worst of the downturn. I agree with Brad DeLong that there is no obvious better choice.

That said, his appointment makes the regulatory reform effort more difficult, even with Obama’s firm committment to it. Bernanke has been critical of many of the ideas that the administration has put forth, particularly the proposal to create a Consumer Financial Protection Agency (CFPA). He still has a very bank-centric notion of regulation, and he has jealously guarded the Fed’s consumer protection turf, even though the Fed undeniably failed in that duty.

As National Journal reported, in opposing the CFPA the financial service industry is “focusing on regulators’ qualms to make their point instead of emphasizing complaints of the industry that stands to come under tighter scrutiny.” So the administration has now given even more credibility to the prevailing view of the regulators, providing the industry with even more ammunition. Also, Bernanke’s reappointment will probably provide some jet-fuel to the effort to audit the Fed, and the plan to bestow the Fed with responsibility for regulating systemic risk will give Congress even more pause than it did before.

In re-upping with Bernanke, the administration chose macroeconomic policy over bringing in someone more sympathetic to its views on regulation or who could ease concerns over giving the Fed more power. Bernanke may be the right person to untangle the Fed from its various economic rescues and for promoting a recovery, but it may come at the expense of meaningful changes to the system.

Today, the Washington Times has an article carrying the headline “Small businesses turn against health plan.” With a headline like that, it seems logical that the article would provide some examples of small business owners turning against the health reform plans that are before Congress. But instead, the Times reported this:

The National Federation of Independent Business (NFIB) says small-business owners should worry about the bills’ requirement that employers provide health insurance, and about higher taxes on the wealthy to pay for the proposed benefits. NFIB, a powerful lobbying group and a traditional friend to conservative causes, also says the House reform bills wouldn’t be effective in decreasing insurance costs.

So the headline is based solely on a conservative lobbying group’s warnings about the bill, and not on any evidence (anecdotal or otherwise) that businesses are changing their support for the health reform bills. Actually, the only small business cited in the article at all is David White’s auto shop in Bar Harbor, ME. White is a member of the Main Street Alliance, a small-business group that supports Democratic reform proposals.

Meanwhile, the NFIB “was instrumental in blocking health reform in 1994,” and is back to its same old tricks now, propagating misleading studies that exaggerate the effects that reform will have on small businesses. In fact, the two proposals that that the NFIB claims small businesses “should worry about” — the employer mandate and a surtax on the wealthy — exempt 87 and 96 percent of small businesses, respectively.

Fifty eight percent of all small-business owners say that they’re having a hard time keeping up with the cost of health care, and the percentage of employers with fewer than 200 employees that offer insurance fell to 59 last year, down from 66 percent in 2002. So the real question here is: Why is the NFIB, which claims to be looking out for the interest of small business, opposing reform that will help those businesses control skyrocketing health care costs? And why is the Washington Times willing to air the NFIB’s grievances as indicative of the entire small business community?

Tomorrow, both the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) will release revised deficit projections showing that the 2009 deficit will be slightly lower than previously estimated, but that ten-year deficits will be about $2 trillion more. Reuters’ Jeff Mason wrote today that the new projections will likely “provid[e] further fiscal fodder to opponents of Obama’s nearly $1 trillion healthcare overhaul plan.” And indeed, Pat Buchanan had this to say today on MSNBC:

Let me say a word here for the Blue Dogs and the Republicans. Joe, I got up on Saturday, coming on over to MSNBC, and it said Obama said ‘well, we made a slight mistake,’ the ten-year year deficit total is not $7.1 trillion, it’s 9 trillion dollars. [...] And Joe, we’re talking about another $1 trillion entitlement program? Are we serious? [...] As a conservative going up there, I’d say, look you guys, we can’t afford this!

Watch it:

Echoing this, Sen. John McCain (R-AZ) told ABC’s This Week that the high deficit “gives people pause about another trillion dollars that would have to be spent to reform health care.”

First, it’s pretty disingenuous for Buchanan and Joe Scarborough to treat the revised numbers as if they are the product of a math error, instead of revisions that take into account updated economic information and data. Both OMB and CBO have released numerous projections this year, taking into account changing economic conditions. For instance, the 2009 deficit projection went down after less money was spent on the bank rescue than anticipated.

Second, every time new projections come out, the inevitable first question is whether they mean the death of health care reform. But as the Center on Budget and Policy Priorities pointed out, “the new projections won’t provide any evidence” to bolster the claim that health reform shouldn’t occur:

Not only will it be hard to say whether the projections clearly show an improvement or worsening in the fiscal outlook (better or worse than what?), but the factors that are likely to determine the final size of the deficit in 2009 — the costs recorded for TARP and for Fannie Mae and Freddie Mac — have nothing to do with questions that some are hoping the new projections will answer.

It remains the case that the best way to get long-term deficits under control is to slow down their “key driver”: skyrocketing health care costs. Without reform, the federal budget will be crippled — which is a fact that these updated projections do not refute.

Yesterday, the Swiss bank UBS announced that it was turning the names of 4,450 American account holders over to the IRS, in the culmination of a three-year IRS investigation into UBS’ work helping wealthy Americans evade taxes. These accounts contain an estimated $18 billion in assets, and as the Guardian noted, the move is expected to “reveal the secretive world of international wealth management in which complicated webs of sham trusts and shell companies are created in tax havens to protect the assets of the super-rich.”

I wrote yesterday that UBS’ acquiescence is a victory for the U.S., and a small first step in the much larger fight against tax evasion. But CNBC’s Michelle Caruso-Cabrera did not see it that way:

This is a terrible terrible thing that has happened today. You may think this is about rich tax cheats, but no matter what your income is, your taxes are lower because of tax havens and they help prevent tyranny by corrupt governments.

Watch it:

It should come as no surprise that the same network that repeatedly and vigorously went to bat for bailed-out bankers and their million dollar bonuses is now carrying water for wealthy tax evaders. But Caruso-Cabrera (despite her claim that she does not condone tax evasion) seems to think that the best way to force a change in tax policy is to have people avoid paying on such a large scale that the government resigns itself to lowering the rate.

There can be a legitimate debate over whether U.S. tax rates are too high or too low, but that doesn’t change the fact that there is a tax rate on the books and it’s against the law to avoid paying it. Tax evasion simply shifts the tax burden onto the law-abiding citizens and companies who don’t hide assets or set up sham subsidiaries in the Cayman Islands:

Over ten years, an estimated $1 trillion in revenues is lost due to the use of tax havens and the government must make up for this shortfall. This diversion ends up being shouldered by other companies and taxpayers and is transferred as higher debt for future generations…The $100 billion annual burden of these tax havens impacts every state in the union.

So does CNBC honestly think that tax evaders are doing their patriotic duty by dumping their tax burden onto everybody else? Are countries like Sweden, Austria, and the Netherlands tyrannical due to their higher income tax rates? Earlier this month, CNBC labeled unemployment benefits a “fraud,” but when faced with actual tax fraud, the network defends it.

After a three-year investigation that opened up “a deep diplomatic rift between the United States and Switzerland,” the Swiss bank UBS has finally succumbed to the IRS and is going to “hand over 4,450 accounts that contain a staggering $18bn”:

The 4,450 accounts soon to be in the possession of US investigators are expected to reveal the secretive world of international wealth management in which complicated webs of sham trusts and shell companies are created in tax havens to protect the assets of the super-rich. Switzerland shields nearly a third of the world’s $7tn of privately held wealth. Under US law, the IRS must be notified of offshore accounts holding more than $10,000.

For what it is, this is a good outcome. While the U.S. did not receive anywhere close to the 52,000 names that it requested from UBS earlier this year, as Bob Williams at TaxVox pointed out, the UBS probe has “really juiced the amnesty program,” under which tax evaders turn themselves in for smaller (though still hefty) penalties. Last month, for instance, the IRS reported that more than 400 evaders showed up in one week, “four times as many as in all of last year.” So the mere fact that the IRS wore down UBS is chasing other tax evaders out of the woodwork.

However, UBS is really the tip of the iceberg when it comes to tax evasion. The IRS estimates that about $5 trillion in assets is held in tax havens worldwide. In a report released last month, the Congressional Research Service said that the U.S. loses $40-$70 billion in annual revenue due to tax avoidance by individuals and another $10-$60 billion in corporate tax evasion. This squares with a report from the U.S. PIRG, which found that tax evasion shifts a $100 billion annual tax burden onto the individuals and corporations that do pay taxes in the U.S.

According to the Government Accountability Office, 83 of the 100 largest U.S. corporations have subsidiaries in nations judged by the US to be tax havens. In the Cayman Islands, for instance, “one mailing address alone houses 18,857 corporations.”

So this is a very widespread problem. To deal with it, the administration has proposed a handful of changes to the tax code — which are being vigorously opposed by the business lobby — and a doubling of the tax enforcement budget. These are good steps that would mitigate at least some of the evasion that is going on (although I’m willing to bet that armies of tax lawyers are already figuring out new ways around all of the changes). That UBS finally caved is definitely a victory, but there is far more that needs to be done.

Today, the Wall Street Journal reported that the Labor Department is “signaling it will soon begin putting in practice the more assertive regulation of business [Labor Secretary Hilda Solis] promised early in her tenure.” As part of that effort, “there will be 150 investigators added in the Wage and Hour division to enforce wage rules and child-labor laws.”

This increase is a smart move. As USA Today reported this week, “complaints of wage theft have risen as the economy tumbled.” In Austin, the Workers Defense Project received 63 complaints in June, compared with 25 it had in June last year, while Chicago’s Working Hands Legal Clinic received 252 complaints in the first half of this year, compared with 161 in the same period last year.

However, the administration’s nominee to run the Wage and Hour Division is still stuck in the Senate. Lorelei Boylan, the Director of Strategic Enforcement at the New York State Department of Labor, was announced as the nominee on April 14 and formally nominated on May 11, but has not even received a confirmation hearing before the Senate HELP Committee. By contrast, President Bush’s nominee for this position was confirmed in less than three months. As Bruce Goldstein put it at Harvesting Justice:

The failure to allow the President to place leaders of his choice in these positions severaly harms the Department’s capacity to enforce farmworkers’ rights and improve the operation of the agency. The Senate’s parliamentary rules (and lack of them) allow individuals substantial power. The failure of the Senate majority to force these long-delayed confirmations over the objection of whoever is stalling is harming the most vulnerable working people in this country.

The Wage and Hour Division was allowed to languish under former Secretary Elaine Chao, and is undeniably a mess, as a Government Accountability Office report from March revealed. To compile its report, the GAO called in some fictitious labor violations to the agency, to see how it responded. The results were not encouraging:

WHD successfully investigated 1 of our 10 fictitious cases, correctly identifying and investigating a business that had multiple complaints filed against it by our fictitious complainants. Five of our 10 complaints were not recorded in WHD’s database and 2 of 10 were recorded as successfully paid when in fact the fictitious complainants reported to WHD they had not been paid.

Boylan’s task force in New York, meanwhile, “flourished into a groundbreaking investigative unit with a high rate of success in resolving wage and hour investigations.” When it comes back from recess, the Senate needs to confirm her, so that the Labor Department has a competent administrator leading its fight against wage theft.

Today, Harvard economist and former Reagan Council of Economic Advisers Chairman Martin Feldstein appeared on CNBC to discuss his fear that the health care reforms being debated by Congress will lead to government rationing of care. But during the segment, he displayed a stunningly limited knowledge of how health insurance actually works, implying that insurance companies rarely cut people off when they get sick, and when they do, it’s easy to simply go somewhere else and buy a new policy:

[Insurance companies] turn down very, very few things, and again it is not the government doing it. So if my insurance company doesn’t allow certain drugs or doesn’t allow certain kinds of treatments, I can choose a different kind of policy. And the idea as I see it in the Obama proposal is to force us all into a certain kind of spending pattern because the government is concerned, the administration is concerned, with how much the government is spending.

Watch it:

CNBC’s Mark Haines (who makes a lot of sense when he is not discussing Wall Street bonuses) replied, “Oh please. First of all, the private insurance companies are a bureaucracy, so this bureaucrat argument is nonsense. And second, you’ll pardon me sir, your argument is a very easy one to make by someone who has money.” Indeed, Feldstein seems to think that buying health insurance is the same as buying apples. If one rots, it’s a cinch to go out a find a better one somewhere else. But the insurance market doesn’t work like that.

For one thing, even people with employer-based health insurance are limited in their options, and if the plans that their employer provides don’t have the coverage they want, they have to go into the individual market, where nearly nine out of every ten people seeking coverage never get it.

Second, the insurance market is riddled with monopolies that limit the sort of mobility Feldstein espouses. According to the American Medical Association, “94 percent of insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace.” And even assuming that there is competition, as the New York Times’ Gina Kolata pointed out today, buying individual insurance is often like ordering off a menu that “has no prices and you have no idea what you will be required to pay until a few weeks later when the bill arrives in the mail.”

So does Feldstein really think that people whose insurance company has turned down a treatment can take their now pre-existing conditions and go find coverage elsewhere? Or does he just expect everyone to pay huge out-of-pocket prices for things that the insurance companies refuse to fund? He may have the luxury of paying (or he may be covered by Medicare, since he is 69 years old), but that is not the situation that many Americans find themselves in.

A few weeks ago, TARP Inspector General Neil Barofsky ignited a media firestorm by adding up the cost of every financial rescue program ever proposed since 2007 and coming up with $23.7 trillion as possible government liability for the economic rescue.

The total was meaningless, because for the government to ever be on the hook for that much, every bank in America would have to fail, every mortgage held by the government would have to be worthless, and Treasury itself would have to default on its securities. (And Barofsky added in the full cost of programs that were discontinued or never even begun.)

Of course, that didn’t stop cable news anchors like Sean Hannity and Lou Dobbs from claiming that $23.7 trillion would be the total cost for government bailouts. And with that number finally out of the public discourse, along comes the Wall Street Journal’s editorial board, claiming that the federal government should add $5 trillion to the national debt by accounting for the possible liabilities of Fannie Mae and Freddie Mac:

Putting Fannie and Freddie on the national books would in an instant increase the national debt held by the public by 75%—to $12.7 trillion, from $7.3 trillion today…[T]his takes debt as a share of GDP to nearly 90%, or nearly double the peak it reached in the 1980s when the political class was hyperventilating even as the Reagan deficits were falling as a share of GDP. Congress would have to add that $5.4 trillion to the increase in the federal debt limit that Treasury Secretary Timothy Geithner is now requesting. But that would be truth-in-budgeting.

This proposal makes absolutely no sense. But it would be a really convenient way for conservatives to peg the Obama administration with an explosion in federal debt, and bolster arguments that increasing deficits and debt warrant cuts in spending.

Like Barofsky’s estimate, the Journal’s number assumes that every mortgage held by Fannie and Freddie goes into default and all of the homes turn out to be worthless. In other words, it accounts for all of the liabilities of the GSE’s while not taking into account any of their assets.

Conforming mortgages owned by Fannie and Freddie are actually performing far better than privately held and securitized mortgages. Fannie and Freddie account for 57 percent of the mortgage market, but only 22 percent of delinquencies, while private label companies have seven percent of the mortgages but 42 percent of the delinquencies. Does the Journal think all of those privately held mortgages need to be written off as a sunk cost as well?

Following the Journal’s proposal would be like assuming that the government will have to pay out every single deposit insured by the Federal Deposit Insurance Corp. — and thus putting them all on the government books today — when the likelihood of all that deposit insurance needing to be paid out is incredibly small and would be indicative of problems that far outweigh federal budget accounting. It’s a good way to pin a big number on the guys in charge, but it doesn’t accurately reflect much of anything.

Today, Cato Institute economist Daniel Griswold appeared on CNBC as part of a panel discussing whether unions are necessary to build and sustain the American middle class. During the segment, Griswold claimed that unions are “irrelevant” and constitute a “kind of leukemia on U.S. industry”:

Labor unions are becoming largely irrelevant for the vast majority of American workers. In fact, labor unions seem to be a kind of leukemia on U.S. industry. Labor imposes a steep cost, that are higher than their productivity gains.

Watch it:

Like most conservatives, Griswold relies on the example of Detroit’s Big Three automakers to make his point, even though unions were not the driving factor behind their failure. Jonathan Tasini of the Labor Research Association was absolutely right to point out that it’s unsustainable health care costs that are hurting businesses across America — including the Big Three — far more than unionization.

In fact, increased unionization has widespread economic benefits, as higher wages and a more secure workforce lead to increased productivity, demand, and ultimately higher profits for businesses. As David Madland and Karla Walter noted:

From 1947 to 1973, the period when unions were strongest and nearly one-third of workers were organized, U.S. economic output nearly tripled in size, growing at an average of 3.8 percent annually. The strength of unions during this period meant workers were rewarded with increasing real wages, and greater American purchasing power produced more profit for U.S. companies, more investment, and increased labor productivity. In the years since 1973, U.S. economic output grew by an average of 2.9 percent annually, and since 2001, output has grown by an average of only 2.2 percent per year.

Consider, “labor costs in 2005 for partially unionized retailer Costco were 40 percent higher than Sam’s Club, but Costco produced almost double the operating profit per hourly employee in the United States — $21,805 per employee versus $11,615 per employee.” Plus, the Small Business Administration has found that small business bankruptcy rates are lower in states with high unionization rates. So unless Griswold has some odd definition of leukemia that the rest of us are unfamiliar with, I’d say unionization doesn’t resemble it one bit.

Last week, University of California, Berkeley economist Emmanuel Saez released new data showing that U.S. income inequality in 2007 (the latest data available) was the worst that it has ever been. Saez found that the top ten percent of Americans made 49.7 percent of the total wages, a level “higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring’ 1920s.” Paul Krugman called the data “truly amazing.”

And as those at the top of the income scale have been getting richer, those at the bottom have been getting poorer. Bloomberg reported today on a new analysis by Tax Notes:

A separate analysis by the weekly journal Tax Notes suggested the poor got poorer in 2007. The share of all U.S. income made by the 66 million Americans who earn less than $30,000 a year shrank by 2.3 percent from 2006, a decline of $149 per taxpayer.

Tax Notes said the richest 0.01 percent of Americans has had greater income growth than the rest of the country since the early 1970s. From 1973 to 2007, the average income for taxpayers in that category grew 758 percent, or more than $30 million. Excluding the wealthiest 10 percent, the rest of the population got an average increase of $286 over that period, or about $8.41 annually, adjusted for inflation, Tax Notes said.

At the same time, the consulting firm Hewitt Associates found that “salary increases for 2009 were below 3%, on average, for the first time in the 33 years it has been keeping records.” Companies are also making “variable pay” (essentially incentive-based compensation) a much greater percentage of payroll. So as Businessweek put it, “while companies are paying less, they’re also making you work harder and perform better to get the pay you do receive.”

The Tax Notes report is indicative of two things: lower-income wages dropping and middle class wages stagnating. Of course, these income numbers are going to change in 2008, since the recession surely hit the wealth of those in the top percentiles pretty hard. Be that as it may, the trend for the last few decades has been toward wealth concentration in the hands of the few, and unless systemic changes are made, there’s no reason to think that this trend will change after the economy recovers.

As Matthew Yglesias put it, “using the tax code to take some of this wealth and transform it into more and better public services for the broad mass of people would do a lot of good.” Indeed, those vigorously opposing implementing a surtax on the richest Americans in order to pay for health reform need to square their position with these inequality numbers and the fact that executives made one-third of all the wages in the country in 2007.

Tax changes will not solve all of the problems keeping middle- and lower-class wages stagnant, but throw in the data showing that the effective tax burden of the richest one percent has been falling for nearly 15 years, and there’s little excuse for not using the tax code to address some of this inequity.