Back in August, the Treasury Department produced a list of mortgage servicers and their progress (or lack thereof) in successfully getting eligible borrowers into the administration’s signature mortgage modification effort — the Home Affordable Modification Program (HAMP). As the Associated Press reported at the time, “by publishing the names of companies that are lagging behind in the government’s plan to ease the housing crisis, officials are counting on public outrage to get the industry on track.”

Though conservatives freaked out about the public naming (with Neil Cavuto slamming Treasury for writing a “cockamamie scarlet letter list“), public outrage did not work the wonders that it was supposed to. Some banks are still enrolling borrowers at a snail’s pace, and as Andrew Jakabovics and I reported last week, Bank of America is even siphoning borrowers off into its own private modification program, in violation of HAMP guidelines. 650,000 borrowers have received trial modifications under HAMP, and just 1,711 of those have received permanent modifications. Meanwhile in the third quarter of this year alone, 937,840 homeowners received a foreclosure letter.

If foreclosures continue unabated, economic recovery is going to be delayed even longer than it otherwise would have been, and Treasury clearly recognizes that it needs to do something. The new strategy? Scold the banks again:

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be”…Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

As Tim Fernholz put it, “unfortunately, I don’t think shame will be enough to change these banks’ behavior (what, are they going to become less popular?) and withholding cash payments will probably be an incentive for the banks to stop doing the modifications altogether.”

Since its inception, HAMP has been hobbled by the lack of enforcement mechanism to use against banks that violate or slowfoot their way through the program. Some servicers have gotten upwards of forty percent of their eligible borrowers into trial modifications, proving that there is little excuse for the servicers which are still struggling to break into double digits. There is simply no reason for them to accelerate their efforts, as opposed to bogging homeowners down in an endless sea of paperwork and documentation requests.

Treasury is not suffering from a shortage of options for turning things around. It could implement right-to-rent, or try to spark an interest in reviving cram-downs, which were envisioned as the stick in Treasury’s plan before going down in flames in the Senate. It could also push Congress to support mandatory mediation programs across the country, which mandate that a servicer meet with the borrower before finalizing a foreclosure. Such programs have been quite successful at mitigating foreclosures, particularly once they’ve been underway for a while.

This week, the White House is convening a “jobs forum” to look at various job creating proposals, as Democrats in Congress prepare a jobs package that is slated for debate early next year. House Democrats are reportedly looking at a variety of measures to spur job growth, including “a tax credit for new hires, added incentives for credit to small businesses and at least a short-term extension of transportation construction spending.”

Already, the administration has “signaled that Mr. Obama’s willingness to back any expensive new government programs is limited” due to concerns over the deficit. And of course, the big business community (which will be well represented at the jobs forum) is weighing in with its list of favored policies, which are a plethora of tax cuts for corporations and the wealthy, including a tax holiday for multinationals to repatriate offshore earnings, eliminating the estate tax, and simply slashing the corporate tax rate.

Hopefully, these well-trodden items from the conservative wish list will be dismissed, particularly repatriation, which didn’t create any of the domestic investment that its proponents claimed, and eliminating the estate tax, which is a giveaway to the ultra-wealthy and will have very little impact on job creation. (For the deficit hawks, these proposals would also blow holes in the budget with almost nothing to show for it.)

That said, something needs to be done on the job creation front, as the economic damage from unemployment lingering at a high level is significant. As Paul Krugman pointed out, “failure to act on unemployment isn’t just cruel, it’s short-sighted”:

The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage — and pay a price in lower earnings for their whole working lives.

The Economic Policy Institute (EPI) estimates that a $40 billion per year WPA-style public jobs program — continued for three years — will create about one million jobs, which it recommends pairing with investments in schools and transportation, a tax credit for new hires, and fiscal relief for state and local governments. While the tax credit is not the most efficient use of money — and can be easily gamed — something like it will likely have to be included to generate any interest in the new legislation.

Obviously, the human element here is paramount, but there is also a political angle. Unemployment hanging above ten percent is a political mess, deficits or no deficits. And seeing as deficit reduction goes hand in hand with job creation, it would behoove Democrats to get moving on the jobs front, sooner rather than later.

As Congress struggles with whether and how to craft a new job creation package, it’s worth revisiting how little information the unemployment rate (currently at 10.2 percent) actually gives us. For instance, the underemployment rate (the U-6), which incorporates people who are working part-time that want to be working full time and those who have given up searching for work, stands at 17.5 percent.

And even that falls short in certain ways, which becomes clear when the unemployment rate is broken down further:

Joblessness for 16-to-24-year-old black men has reached Great Depression proportions — 34.5 percent in October, more than three times the rate for the general U.S. population….Young black women have an unemployment rate of 26.5 percent, while the rate for all 16-to-24-year-old women is 15.4 percent.

The national unemployment rate for the entire 16-24 age bracket is 19.1 percent. According to the Pew Research Center, ten percent of adults younger than 35 have moved back in with their parents due to the recession. Only 46 percent of 16-to-24-year-olds are employed, which is the smallest share since the government began keeping track in 1948, while 56 percent of men 18 to 24 years old and 48 percent of women are “still under the same roof as their parents.”

Young workers are suffering a triple whammy: sectors in which they typically work have been the hardest hit, they are usually the first fired when budget woes hit, and more experienced workers are moving down the ladder to take what were once entry-level jobs.

But being out of work for an extended period of time when you’re young can have lasting detrimental effects in terms of income, as each missed year of work translates into “2 percent to 3 percent less earnings each year thereafter.” College students who graduated during the 1982 recession were still earning less than students who graduated into a strong economy ten years later. As the Washington Post reported, “this might be the first generation that does not keep up with its parents’ standard of living.”

With Democrats reportedly looking at a direct jobs program — using some form of public-private partnerships — the time is right for focusing at least some attention on young people. To that end, Melissa Boteach, Joy Moses, and Shirley Sagawa advocate using national service programs to tackle both youth unemployment and the growing number of those “seeking assistance from the nation’s non-profits and relevant government agencies”:

National service programs create full-time positions that are — in most cases — jointly paid for by public and private resources. These entry-level public service positions pay a poverty-level living allowance or slightly more, and they come with health-care benefits, sometimes child-care benefits, and the opportunity for Segal AmeriCorps Education Awards, which help recipients pay for higher education, educational training, or student loans. National service programs are not designed as long-term career positions, but these national service jobs have historically helped boost job creation by providing opportunities for difficult-to-employ youth and recent college graduates, while also building nonprofit organizations’ capacity to continue this important social service.

A youth conservation corps, modeled off of the Civilian Conservation Corps, may not be a bad idea either.

With the unemployment rate above 10 percent and states across the country facing budget shortfalls left and right, Democrats in Congress are looking at a handful of measures to spur job creation, which could be included in a package introduced in the next month or so.

At the same time, deficit-mania has infected a wide swath of the political world, including the White House, which is reportedly going to “focus extensively on cutting the federal deficit in 2010.” On a conference call today, I asked Speaker of the House Nancy Pelosi (D-CA) how she plans to reconcile the inevitable deficit complaints with the need to pass a jobs bill that has enough in it to make a difference:

We don’t subscribe to the idea that some are for deficit reduction and some are for job-creation…We’re never going to decrease the deficit until we create jobs, bring revenue into the Treasury, stimulate the economy so we have growth. We have to shed any weakness that anybody may have about not wanting to be confrontational on this subject for fear that we’d be labeled not sensitive to the deficit. [...]

The American people have an anger about the growth of the deficit because they’re not getting anything for it. Again, we don’t have to go into everything they have lost while Goldman Sachs is giving out, is it $17 billion in bonuses?…So if somebody has the idea that the percentage of GDP of what or national debt is will go up a bit, but they will now — and their neighbors and their children — will have jobs, I think they could absorb that…If we pull our punch, as they did in the mid-30′s, we shouldn’t be surprised if history repeats itself.

Listen here:

Pelosi advocated front-loading an infrastructure bill, that would be paid for over the course of many years, as one approach, and also talked about work sharing, an idea that has gained some steam in recent weeks. To pay for a jobs bill, Democrats are looking at implementing a financial transactions tax (FTT), which in practice would mean that Wall Street shoulders the bulk of the cost.

The point about history repeating itself should be well-taken. During the Depression, Roosevelt had managed to knock the unemployment rate down to 14 percent, from 24 percent, by 1937. But then, as Paul Krugman has aptly explained, Roosevelt “mistakenly heeded the advice of his own era’s deficit worriers. He sharply reduced government spending, among other things cutting the Works Progress Administration in half, and also raised taxes. The result was a severe recession, and a steep fall in private investment.”

Yesterday, International Monetary Fund Managing Director Dominique Strauss-Kahn reiterated this point, saying that exit from stimulus efforts should “await a sustained recovery in private demand, as well as entrenched financial stability.” “We recommend erring on the side of caution, as exiting too early is costlier than exiting too late,” he said.

Ryan Grim at the Huffington Post reported today that “as desperate Democratic lawmakers cast about for ways to create jobs from Capitol Hill, a 1970s-era jobs program is getting a fresh look”:

Known as CETA — the Comprehensive Employment and Training Act — the program provided direct government funding to hire temporary workers. At its peak in 1978, it had created 725,000 public service jobs and shaved roughly one point off the unemployment figure…The version of CETA being discussed by Democrats would be some type of public-private partnership through which the government would pay part of an employee’s salary, while he or she would train under and work for a private firm.

Of course, as in most other issues, Republicans automatically voiced their displeasure with the idea, as Michael Steel, a spokesman for Minority Leader John Boehner (R-OH) “gave CETA the instant thumbs down.”

While I would prefer a straight, WPA-style program (both for efficiency and accountability purposes), instead of a public-private partnership, it’s encouraging to see that Congress is finally willing to put such a plan on the table, albeit far later than it should have. There’s no reason that direct job creation — particularly for young people — has been avoided for so long.

However, the Wall Street Journal reported this morning that the administration is “lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit.” “Hamstrung by the nation’s $1.4 trillion deficit and his pledge not to raise taxes on middle-class Americans, Mr. Obama is keen to avoid any measures suggestive of a second, big-ticket stimulus,” the Journal said.

As Paul Krugman noted today, deficit hysteria amounts to “scaring the government into inaction on unemployment.” That, combined with Republican insistence that repealing the stimulus is a sound jobs policy, are going to make serious job-creation proposals difficult to engineer. But as former Federal Reserve Vice Chairman Alan Blinder wrote:

Direct public-service employment is straightforward. As long as the new government jobs do not compete with the private sector, the net job creation should be one-for-one. So hire people to repair parks, not shopping malls. And if we restrict ourselves to low-wage jobs, the cost will not do grievous harm to the budget. For example, at an average all-in cost of $30,000 a year, one million new jobs would cost $30 billion.

As James Galbraith noted, in the absence of additional steps (including fiscal aid to states, which are seeing tax revenues plummet) “double-digit joblessness will linger on, breeding frustration and anger — perhaps all the way through to the mid-term elections.”

Of course, much like the brouhaha over stimulus accounting errors, a direct-jobs program opens its advocates up to criticism when, as Dean Baker put it, “reporters inevitably find some chump claiming to be employing his brother while splitting the government paycheck.” Does that making taking such a step not worth it? I don’t think so.

Last week, Treasury Secretary Tim Geithner had a much-publicized spat on Capitol Hill with Rep. Kevin Brady (R-TX), who told Geithner that “the public has lost all confidence in your ability to the do the job,” and asked if Geithner would “step down.” Geithner responded by telling the Republicans calling for his head that “I can’t take responsibility for the legacy of crises you bequeathed the country.”

Democrats have been critical of Geithner’s performance in recent weeks as well, with Rep. Peter DeFazio (D-OR) also calling for him to resign. And according to the New York Post, as Geithner gets battered, “JPMorgan Chase CEO Jamie Dimon is emerging as a potential replacement”:

Sources tell The Post that a number of policy makers have begun mentioning Dimon as a successor to Geithner, whose standing in Washington has suffered…[Dimon] has achieved rock star status during the financial crisis, having navigated JPMorgan through the recession and being a go-to guy when Uncle Sam last year needed Wall Street’s help during the collapses of Bear Stearns and Washington Mutual.

The Post cites “people familiar with Dimon’s thinking” as saying he “would love to serve his country.” No source in the article was willing to go on the record though, so who knows what their motivation for floating Dimon’s name was. As Laura Tara LaCapra wrote at The Street, “[Dimon's] name has been tossed about speculatively — and at times jealously — by those in the industry for some time.”

But politically, if such a personnel switch did come to pass, it would strike me as odd. Geithner’s problem is that he is perceived as being too cozy with Wall Street, and is blamed for the dichotomy between Wall Street’s resurgence and Main Street’s continued time in the doldrums. The failure of the “bailout” to translate into wider recovery is, fairly or not, laid on his doorstep, with 42 percent of Americans saying that “has done a poor job handling the credit crisis and federal bailout programs.”

If that is the case, how would the problem be assuaged by plucking a CEO directly from Wall Street to take over? For his part, Dimon has been very careful to applaud efforts at regulatory reform (aside from panning the idea of a Consumer Financial Protection Agency), and even penned a Washington Post op-ed fully supporting a robust resolution authority for taking apart failed financial institutions. He is also supportive of efforts to help troubled homeowners receive mortgage modifications, telling investors who were bashing the administration’s effort that “they should get over it.”

Dimon has also said that “tax cuts should go to lower paid citizens, not the wealthy.” But he does not support limits on bank size, and JP Morgan is part of a Wall Street trifecta (including Goldman Sachs and Morgan Stanley) that is on pace to pay out $30 billion in bonuses, an increase of 60 percent from last year.

So if the perception is that Geithner is coddling the banks, would that change with Dimon, as opposed to someone without ties to Wall Street? I’m not sure that case can be made. But on the plus side, Dimon hasn’t characterized anything that he’s done as “God’s work.”

Corporate front groups and large business trade associations are funneling their resources into defeating health reform. Even though health reform will lower costs for small businesses and boost worker productivity economy-wide, it appears that corporate entities influenced by major polluters are hoping that the defeat of health care legislation will slow President Obama’s agenda and derail their true enemy: clean energy reform.

The West Virginia Chamber of Commerce, which is largely backed by the coal industry, candidly revealed this strategy in a letter released today to Sens. Jay Rockefeller (D-WV) and Robert Byrd (D-WV). The Chamber of Commerce demanded that the senators use “their clout and seniority” to obstruct the health reform debate until cap and trade legislation is taken off the table and the EPA is barred from regulating carbon dioxide as a pollutant. As Ken Ward of the Charleston Gazette noted, Rockefeller has already rejected a similar proposal of blocking health reform unless the EPA stops reviewing mountaintop removal permits. The coal lobby has also pressured West Virginia state legislators to pass resolutions opposing clean energy reform.

The coal industry’s selfish push to block health reform displays how little it cares about West Virginia and the communities where coal is burned for energy. Not only do 19 percent of West Virginians lack health insurance, but coal is literally killing people:

– The American Lung Association reports that there are 24,000 premature deaths every year due to coal power plant pollution. In addition, the ALA research estimates that coal pollution causes over 550,000 asthma attacks, 38,000 heart attacks and 12,000 hospital admissions.

– A report by Physicians for Social Responsibility found that coal combustion releases mercury, particulate matter, nitrogen oxides, sulfur dioxide, and dozens of other substances known to be hazardous to human health. These coal pollutants are associated with increased congestive heart failure, lung cancer, infant mortality, stunted lung development, and Ischemic stroke, among other diseases.

The national Chamber of Commerce is also fighting health reform tooth and nail. Like the West Virginia Chamber, the U.S. Chamber is dominated by coal and polluter interests and denies the science underpinning climate change. The U.S. Chamber’s extreme approached forced pro-clean energy companies Apple, Levi Strauss & Company, Mohawk Paper and the utilities Pacific Gas and Electric, Exelon and PNM Resources to resign from the Chamber. By killing both clean energy and health reform, U.S. Chamber President Tom Donohue may be hoping to protect his own wallet. Donohue sits on the board of a major coal industry player, Union Pacific.

Indeed, one of the most powerful corporate front groups, Americans for Prosperity, is focusing its efforts on defeating health reform. Although AFP is backed by oil industry giant David Koch, his ultimate goal of stopping clean energy appears to begin with stopping health reform.

With House Democrats seriously considering proposing a financial transactions tax (FTT) to pay for a new jobs creation package, the financial services industry has gone on the defensive. The premise behind a financial transactions tax is that it is so small (a fraction of a percentage point) that a normal investor who is buying a stock to hold is barely going to notice it. But an investment bank like Goldman Sachs, which is involved in lots of high-frequency trading, is going to pay a pretty penny. It’s estimated that an FTT can raise about $150 billion annually.

The Securities Industry and Financial Markets Association, a leading lobbying organization for banks and securities firms, said that such a tax would literally stall the stock market:

Imposing a tax on financial transactions is the wrong idea at the wrong time. Such a tax would likely result in a stalling of the stock market, cutting off companies’ ability to raise capital to fund new investments in plants and equipment, and thus create jobs. Furthermore, it would directly and detrimentally affect millions of Americans by imposing a tax on their savings such as mutual funds, just as they are seeing their investment assets regain value.

An analyst in Washington at Concept Capital, which advises brokers and dealers, told clients that “we cannot completely dismiss the slight possibility it could be part of a House jobs bill,” but vowed that it has “virtually no chance in the Senate.” Even right-wing tea party organizers Americans for Prosperity got into the act, saying that the FTT would be a “disaster.”

Contrary to SIFMA’s assertion, under the proposed plan, the tax would be refunded “for those involving assets kept in individual retirement accounts, education savings accounts and health savings accounts” and the first $100,000 in annual transactions. So “millions of Americans” would not see their savings accounts slammed.

But furthermore, an FTT will make the financial system allocate capital more efficiently, as trading for the simple sake of trading will be more expensive. Center for Economic and Policy Research co-director Dean Baker estimates that an FTT could free up more than $60 billion a year in capital and labor for productive uses.

Finally, I’m not sure where SIFMA gets off suggesting that an FTT would stall the stock market, as the United Kingdom already has both a tax on stock trades and a vibrant stock exchange. Wall Street was saved by taxpayers to the tune of $700 billion dollars, plus untold amounts of guarantees against losses and cheap money from the Federal Reserve. An FTT — the revenues from which could be put towards programs or deficit reduction — seems only fair.

In response to the threat posed by the H1N1 virus (swine flu), Rep. Rosa DeLauro (D-CT) and Sen. Chris Dodd (D-CT) have proposed legislation that would require all businesses with more than 15 employees to provide seven days of sick leave. As I’ve noted before, the Centers for Disease Control has advised workers who contract the virus to stay home, to prevent them from infecting other workers, but nearly half of the private sector workforce has no paid sick leave — and the number increases to 78 percent of hotel workers and 85 percent of food service workers.

In response to the new legislation, the big business community — led by the Chamber of Commerce — has voiced its opposition to the very notion of paid sick days, by downplaying the extent of the problem. The Chamber said that “the problem is not nearly as great as some people say,” while the National Association of Manufacturers claimed that employers who don’t provide sick leave are “clearly the exception.”

The Wonk Room sat down with DeLauro today to discuss her bill. She said that by steadfastly opposing paid sick leave, the Chamber and its allies are simply ignoring the 57 million working Americans who currently have no paid sick days:

[The Chamber of Commerce] is just ignoring the needs of a bulk of a workforce, people who get up every day, go to work, want to work, but you know what? They get sick. People get sick and to not have the opportunity to take a day or two days, nobody’s talking about two weeks…What we are trying to do is address the issue of 57 million people — who are hard-working people — who today have not one paid sick day.

Watch it:

DeLauro noted that the arguments coming from the Chamber are the same that the group employed to oppose the Family and Medical Leave Act of 1993:

They said at that time that business was going to crash, that this country was going to go to hell in a handbasket, that we couldn’t survive this kind of an act. Well, they were proven wrong, and they are wrong in this instance.

Watch it:

DeLauro correctly noted that the U.S. economy loses $180 billion in productivity annually due to sick employees attending work and infecting other workers. DeLauro is also a sponsor of the Healthy Families Act, which would permanently require seven paid sick days for workers (again, at firms with more than 15 employees). In both bills, leave could be used to care for a sick child or elderly relative.

Yesterday, the House Financial Services Committee approved an amendment to its regulatory reform bill that would allow federal regulators, in consultation with the Treasury Secretary, to require any firm deemed a threat to the U.S. economy to break up and shrink. The amendment, proposed by Rep. Paul Kanjorski (D-PA), was bitterly opposed by the financial services industry, but still passed 38-29 (with three Democrats voting against).

Though regulatory reform legislation has been moving in the House for weeks, the Senate only started today, with members of the Senate Banking Committee giving their opening statements regarding Chairman Chris Dodd’s (D-CT) reform bill. Republicans, who have already said that they will lend the regulatory reform effort zero support, were unanimously opposed to the bill, particularly the provision to create a Consumer Financial Protection Agency (CFPA).

But Sen. Judd Gregg (R-NH) also took a few minutes to criticize the Kanjorski amendment, stating that it was too “European,” and that it empowers the government to break apart Coca-Cola and Wal-Mart, the latter because “they don’t have a union“:

The Kanjorski amendment that was dealt with yesterday on the House side was an exercise in European politics where there was some belief that a group of thoughtful people can choose winners and losers in the marketplace that are still doing well, that aren’t at risk, and decide how those winners and losers should be structured. Well where does that stop? Is Coca-Cola, should they be broken up under the House bill? Wal-Mart, maybe, because they don’t have a union, should be broken up under the House bill? This is undermining the American advantage, especially relative to our European neighbors.

Watch it:

While Wal-Mart’s lack of unionization is a shame, Kanjorski’s amendment clearly states that it only pertains to financial institutions, which can be broken apart only for threatening the financial system, and only after more stringent capital requirements have proven ineffective in removing the threat:

Scott Valentin, the banking analyst at FBR Capital Markets, told DealBook that he expects the Kanjorski’s push will meet its demise in the Senate, as “Wall Street’s objections…will win out in the end.” Valentin “based his opinions partly on meetings he had with Senate Republican staffers the day before the final language of the bill was released.”

Our guest blogger is Michael Linden, Associate Director for Tax and Budget Policy at the Center for American Progress Action Fund.

There’s been a fair bit of hemming and hawing over the news that the federal debt has now surpassed $12 trillion. Sen. Judd Gregg (R-NH), widely known for his fiscal hawkishness during Democratic administrations, couldn’t resist pointing the finger, saying, “this level of fiscal recklessness and irresponsibility should be shocking to the American taxpayer, especially since it is our children and grandchildren who will be forced to grapple with the consequences of our debt.”

While this milestone is actually nothing of the sort – $12 trillion is gross federal debt, not the debt owed to the public, which is the much more important figure – you can be sure that many people will use this as another excuse to condemn what Gregg called “expensive expansions of government” and to blame all of our fiscal problems on President Obama. But here are three facts about this year’s deficit that you probably won’t hear much about:

– Less than one-fifth of all the new spending in FY 09 came from Obama initiatives;

– The big deficit this year was as much a product of a huge decline in tax revenues as it was an increase in spending;

– The overall cost of the decline in tax revenues was four times larger than the cost of Obama’s initiatives.

These facts don’t fit with the narrative of an Obama “spending binge.”

It’s true that there was a big increase in spending in fiscal year 2009. Total spending rose by about $600 billion, not counting payments for interest on the debt (which actually declined in 2009 because of extraordinarily low interest rates).

But fiscal year 2009 began on October 1, 2008, when George Bush was still president, and by the time President Obama took office more than 40 percent of that new spending had already been committed, in the form of TARP and the bailouts for Fannie and Freddie. Another quarter of the new spending came from growth in entitlement programs and unemployment insurance, which was certainly outside the control of a new president.

The American Recovery and Reinvestment act, on the other hand, was responsible for only 18 percent of the new spending in 2009. So, spending did rise, but only one in five of those new dollars came from Obama’s initiatives.

And spending is only half the story. The other half is that tax revenues plummeted this year to their lowest levels since 1950.

Johnny-come-lately fiscal hawks almost never talk about the tax side of the balance sheet when they rail against deficits, because it’s more politically expedient to point fingers at the Recovery Act. But the size of the decline in tax revenues was four times larger than all the Recovery Act spending this year!

This year’s deficit was eye-catching, but it didn’t just appear out of the blue on January 20th, and it isn’t just a product of new spending. If you hear some pundit or politician claiming that a huge expansion of government is responsible for our fiscal woes without mentioning President Bush and with nary a word about tax revenues, you can be pretty sure that he’s more interested in scoring political points than actually solving problems.

Back in May, Congress approved and the President signed legislation reforming the credit card industry, ensuring that credit card companies couldn’t raise rates for no reason or retroactively increase rates on existing balances. However, most of the new rules don’t go into effect until February, 2010.

In the interim, banks have been jacking up rates left and right. In fact, half of Americans report that their credit card rates have been raised in the past six months. According to Pew Charitable Trusts’ Safe Credit Cards Project, the lowest interest rates offered on most bank cards “jumped by more than 20 percent” in that time.

To deal with this problem (which is significantly of their own making), Democrats crafted a bill bumping up the implementation date of the new regulations and freezing interest rates until the new laws come into effect. The bill was approved by the House on a vote of 331-92 earlier this month.

Due to a packed floor schedule, there was no stomach in the Senate for a prolonged fight over credit cards. So, as Ryan Grim noted “the only way Democrats could pass the bill in time for the holidays would be with the support of the GOP.”

Sen. Chris Dodd (D-CT) tried to do just that yesterday, with the support of Sen. Mark Udall (D-CO), by asking for unanimous consent to bring the bill to the floor. However, Sen. Thad Cochran (R-MS) objected “on behalf of several senators on this side of the aisle,” killing the whole effort. Watch it:

According to Pew, none of the credit cards currently offered online by the 12 largest U.S. banks “would meet requirements of new federal curbs on the industry’s rates and fees.” But Republicans still saw fit to allow the credit card companies to do whatever they want until the new rules comes into effect next year.

As the Coloradoan reported, “Republicans didn’t explain their decision to block a vote…beyond Cochran’s short objection.” Dodd, clearly expecting an objection, lamented that a bill “that would really have allowed us to do something meaningful” was being derailed.

This is, sadly, exactly how the rest of the financial regulatory reform debate is going. Yesterday, Senate Republicans said that “there is no support within the GOP for the financial overhaul plan outlined last week by Democrats.” “My understanding is that it’s not acceptable to any of the Republicans on the [banking] committee as it now stands,” said Minority Leader Mitch McConnell (R-KY).

That’s right. In the wake of the financial crisis, not one Republican is prepared to vote for regulatory reform. And the reason is that “they think the plan goes too far by putting onerous restrictions on Wall Street that could limit the availability of credit.” So by preventing the credit card bill from going forward — and by uniting in opposition against wider regulatory reform — the GOP is endorsing the credit card companies’ actions and the wider return to rampant risk on Wall Street.

Acknowledging that maybe he isn’t always “doing God’s work,” Goldman Sachs CEO Lloyd Blankfein yesterday took some responsibility for his company’s role in the economic crisis. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologize.”

And to show us that they really mean it, Goldman is devoting $500 million over the next five years to scholarships for business education and loans to small businesses:

Goldman Sachs said late Tuesday that it would provide $500 million to support small businesses, hours after its CEO Lloyd Blankfein apologized for the group’s role in the global financial crisis…The group said it will provide $100 million a year over the next five years, including a total of $200 million to provide scholarships for business and management educations and $300 million in the form of “loans and philanthropic support” to increase access to capital for small businesses.

Not that I want to in any way discourage big businesses from undertaking such efforts, but, really? As Daniel Indiviglio wrote, “maybe I’m crazy, but I don’t think this initiative, though a pleasant effort, will have many angry Americans putting down their pitchforks currently pointed at Goldman. If Goldman really wants to impress anyone, they’re going to have to do a little better than this.”

For some perspective, Goldman has already set aside $17 billion for bonuses this year, which could climb to $23 billion by year’s end. So the five-year program amounts to 2 percent of this year’s bonus pool. The Financial Times pointed out that “the $100 million annual cost is the equivalent of one good trading day” and that Goldman “had 36 days in the third quarter where it made more than $100 million.” And loans account for part of the $500 million, which presumably have to be paid back, while Goldman will get a write-off for any charitable giving, thus reducing their tax exposure.

And its not just Goldman that’s having a lot of good trading days recently. According to a report from the New York City Comptroller, “Wall Street profits in 2009 are on track to exceed the record set three years ago, at the height of the credit bubble”:

The report noted that the four largest investment firms in Manhattan — Goldman Sachs, Merrill Lynch, Morgan Stanley and the investment banking arm of JPMorgan Chase — earned $22.5 billion in the first nine months…Net revenue at the four firms, which excludes interest expenses, reached a high of $57.7 billion in the second quarter.

Of course, instead of $500 million, Goldman could up its small business program to, say, $23 billion (or whatever the entirety of its bonus pool turns out to be). After all, that money was earned, in large part, by Goldman’s access to cheap money from the Federal Reserve.

Barring that development, Democrats in Congress are reportedly looking quite seriously at a financial transactions tax, which is an excellent idea, unless we want to count on further charity from Blankfein and co. to boost the country towards economic recovery

This post was co-written by Andrew Jakabovics, Associate Director for for Housing and Economics at the Center for American Progress Action Fund, and Pat Garofalo.

Seemingly deliberate noncompliance with the Home Affordable Modification Program (HAMP) may explain why Bank of America has consistently lagged behind the other large servicers in the share of delinquent loans that have been modified under the program. Ever since the Treasury Department began releasing data on the performance of servicers participating in HAMP, Bank of America has always been dead last of the four large servicers.

BofA has been participating in HAMP since its inception in mid-April. As of the end of October, it had active trial modifications on 14 percent of its estimated 991,000 eligible mortgages. This rate is less than half that of Wells Fargo (29 percent), which is third among the big servicers. Even US Bank, which has a much smaller portfolio but only signed up for the program on September 9, has been able to get 15 percent of its borrowers into trial modifications.

The reported percentage of modifications for each servicer is calculated based on the number of active modifications divided by the number of loans that are at least 60 days late and otherwise meet eligibility criteria. But as this recent letter demonstrates (which is available here, courtesy of the Coalition for Mortgage Industry Solutions), BofA is actively soliciting borrowers to participate in its own private mortgage modification program, without first verifying whether or not the borrower is eligible for HAMP. (In the full document, the borrower’s personal information has been blacked out.)

The letter clearly indicates that BofA has no idea whether or not the borrower qualifies for HAMP, yet they are still offering an alternative program. This diversion is an apparent violation of the contract signed with Treasury. The Servicer Participation Agreement stipulates:

Servicer shall perform the Services for all mortgage loans it services, whether it services such mortgage loans for its own account or for the account of another party, including any holders of mortgage-backed securities (each such other party, an “Investor”).

The “Services” referred to in this section are elsewhere in the contract defined as “All services required to be performed by a participating servicer…including, but not limited to, obligations relating to the modification of first lien mortgage loans and the provision of loan modification and foreclosure prevention services relating thereto.”

The program guidelines released in March by Treasury quite plainly state that “participating servicers are required to consider all eligible loans under the program guidelines unless prohibited by the rules of the applicable PSA and/or other investor servicing agreements. Participating servicers are required to use reasonable efforts to remove any prohibitions and obtain waivers or approvals from all necessary parties.”

In case there remains any ambiguity as to whether a servicer can pull borrowers out of the pool to offer them a non-HAMP-compliant modification before determining their status under HAMP, Treasury official Herbert Allison recently testified, “under HAMP’s loan modification guidelines, mortgage servicers are prevented from ‘cherry-picking’ which loans to modify in a manner that might deny assistance to borrowers at greatest risk of foreclosure.”

So BofA can’t simply suggest an alternative program to this homeowner without determining eligibility for HAMP, and by doing so, it is potentially lowering the number of successful HAMP modifications it completes. Given the size of BofA’s portfolio, its compliance with program rules — particularly as it pertains to getting eligible borrowers into the program — directly impacts the public’s perception of the success of HAMP. If BofA were performing as well as CitiMortgage, Treasury would have reported an additional quarter million mortgages in its HAMP totals.

Diverting eligible borrowers from HAMP threatens to undermine support for the program. Treasury should not allow any contractual breaches to continue.

The resistance to reforming our nation’s healthcare system has been fueled by entrenched corporate interests. Their deep pockets are funneling money into generating attack ads, funding lawmakers’ campaigns, and hiring lobbyists. These corporate interests are also funding various front groups to make up their own facts and scare the public.

Among the latest corporate front groups orchestrating a campaign of misinformation against health reform, ThinkProgress has learned, is an outfit called the “Center for Medicine in the Public Interest” (CMPI). CMPI was originally a project of the Pacific Research Institute, an older corporate front established in conjunction with Philip Morris to fabricate academic support for the tobacco industry. Some of CMPI’s recent attacks on health reform have included:

– CMPI produced a series of “US Policymaker” interviews about health reform featuring exclusively Republican lawmakers — such as Reps. Louie Gohmert (TX), Bob Inglis (SC), Jack Kingston (SC), Tom Price (GA), Joe Wilson (SC), Michele Bachmann (MN), Paul Ryan (WI); Sens. Jim DeMint (SC), Jim Bunning (KY), David Vitter (LA) — attacking health reform. CMPI also produced a series of videos mocking health reform and the public option.

– CMPI created various video games distorting health reform. They serve as gimmicks to recruit users to sign up for CMPI’s daily anti-reform talking points.

– CMPI launched a website called “Hands off my Health” showcasing the supposed horrors of universal healthcare programs in Canada and the UK. CMPI officials centered a media campaign around Shona Robertson-Holmes, claiming she had a brain tumor the Canadian system refused to treat. However, the Ottawa Citizen reported that CMPI has been exaggerating Holmes’ case, and that she in fact had a benign cyst.

– CMPI helped sponsor anti-Obama tea party protests.

– CMPI has subcontracted GOP consulting firm Political Media to develop a blizzard of online ads attacking health reform. In the weeks preceding the House vote on reform legislation, CMPI ran ads on sites like the Politico, DrudgeReport, WashingtonPost.com, WashingtonTimes.com with an animated sheep stating that the public option is a “baaaaaad idea.” CMPI plans to run many more ads as the Senate begins debate.

The head of CMPI, Peter Pitts — a former Bush administration FDA communications official and director of marketing at the Washington Times — has a long history of using his CMPI title to hawk the interests of corporate clients. The Bioethics Forum has noted that CMPI, which receives drug company money, aggressively defends almost any practice of the pharmaceutical industry. For instance, as Slate reported, Pitts appeared on an NPR special to downplay fears about the side effects of antidepressants like Prozac, but failed to disclose his position as a VP of the PR firm Manning Selvage & Lee, which at the time represented Eli Lilly Inc. (the maker of Prozac), GlaxoSmithKline, Pfizer.

In March of this year, Pitts became the head of international corporate PR firm Porter Novelli’s healthcare division. Despite the fact that CMPI’s latest 990 tax form states that Pitts spends 40 hours a week at CMPI, a representative from Porter Novelli told ThinkProgress that Pitts actually works on a day to day basis in his office at Porter Novelli. Asked about how the firm engages in the health reform debate, ThinkProgress was told by Porter Novelli that Pitts is “pretty much our voice.” Porter Novelli specializes in using social networking and other stealth marketing techniques to help drug companies avoid FDA regulations on marketing pharmaceutical products. Since Pitts joined Porter Novelli, CMPI has continued to shill for drug companies.

Although CMPI refused to tell ThinkProgress about its funders, Pitt’s firm Porter Novelli has a financial stake in blocking reform. Porter Novelli is a subsidiary of the global lobbying and communications giant Omnicom Group. Other Omnicom Group subsidiaries include Frank Luntz’s firm Luntz, Maslansky Strategic Research — which counts insurance companies like Blue Cross Blue Shield and the Health Insurance Plans of New York as clients — and Clark and Weinstock, a major lobbying firm representing healthcare clients like the health insurance company HealthNet.

Porter Novelli has also created front groups for the insurance industry in the past. In 1998, Porter Novelli managed the insurance industry’s “Health Benefits Coalition” group to kill the Patients Bill of Rights. As former insider Wendell Potter explained, Porter Novelli helped the industry form alliances with right-wing groups like the Family Research Council, the Christian Coalition, as well as conservative talk radio. Similar to how CMPI is currently working closely with tea party groups to attack “big government healthcare,” Porter Novelli developed a message that the Patients Bill of Rights was part of a “big government agenda” the “Democrat” party failed to pass 1994.

CMPI is among a constellation of mysterious corporate front groups attacking reform. As the Associated Press reported over the weekend, a secretive group called Americans for Quality and Affordable Healthcare has operatives placing anti-health reform columns, booking anti-reform pundits on talk radio, and organizing anti-reform panel discussions. AQAH also refuses to disclose its backers, but it is apparently being managed in part by the North Carolina law firm Moore & Van Allen.

Yesterday, the House Education and Labor committee took a look at sick leave policies and their contribution to the spread of the H1N1 virus (swine flu). Public health experts have been voicing concerns that H1N1 is going to be transmitted by ill employees attending work, so Rep. George Miller (D-CA) has crafted a bill that would give employees five paid sick days if their employer sends them home due to H1N1.

Earlier this month, the Chamber of Commerce downplayed the extent to which lack of guaranteed paid sick leave could spread disease, saying that “the problem is not nearly as great as some people say.” And now the rest of the big business community is piling on:

Testifying on behalf of the National Association of Manufacturers Tuesday, A. Bruce Clarke, who runs his own 1,000-member business lobby in North Carolina, told Miller’s committee that most businesses already have comparable or more generous paid leave programs, so why bother? “While some employers may not have taken specific action in response to the H1N1 outbreak, these employers are clearly the exception to the widespread practices taking place today,” Clarke said in his prepared testimony.

And its not only business downplaying the extent of the problem. Rep. John Kline (R-MN), the ranking member on the Ed. and Labor committee, also tried to claim that the “vast majority” of workers have paid sick leave:

“With so many workers already having access to a variety of sick leave options, we need to look very carefully at proposals to add a new layer of federal leave mandates,” the 2nd District Republican said in a prepared statement during a House Education and Labor Committee hearing…According to Kline, the vast majority of workers in the United States already have access to paid sick leave.

Actually, nearly half of private sector workers have no paid sick leave. This includes 78 percent of hotel workers and 85 percent of food service workers, even though they are among the most likely to come in contact with other individuals. 68 percent of workers not eligible for paid sick days say that they have gone to work with a contagious illness.

According to the Centers for Disease Control, an employee with H1N1 will infect one in 10 co-workers if he or she attends work. But without any paid sick leave, many workers can’t afford to take a day off, or fear for their job if they request time off to recover.

Miller’s bill, as it is, would address the immediate threat of swine flu, but would continue to give employers the choice regarding whether or not workers receive sick leave. It also doesn’t provide time off to care for a sick child. The Healthy Families Act, sponsored by Rep. Rose DeLauro (D-CT), would guarantee seven paid sick days to all workers at firms with more than 15 employees. Enacting HFA would be an important step to ensuring that workers don’t have to place their job and their co-workers at risk when they come down with an illness.

According to the latest data released by the U.S. Department of Agriculture, nearly 50 million people, and almost one in four children, did not have enough to eat at some point in 2008:

In 2008, nearly 17 million children, or 22.5 percent, lived in households in which food at times was scarce — 4 million children more than the year before. And the number of youngsters who sometimes were outright hungry rose from nearly 700,000 to almost 1.1 million. Among Americans of all ages, more than 16 percent — or 49 million people — sometimes ran short of nutritious food, compared with about 12 percent the year before. The deterioration in access to food during 2008 among both children and adults far eclipses that of any other single year in the report’s history.

President Obama characterized the data as “unsettling,” and reiterated his campaign pledge to end child hunger by 2015. “These numbers are a wake-up call…for us to get very serious about food security and hunger, about nutrition and food safety in this country,” added Agriculture Secretary Tom Vilsack.

These numbers will only get worse in the short-term, as 2009′s increase in unemployment will negatively impact the food situation of even more families. This is just one more reason that any jobs package that Congress puts together should include further aid to states, so that they don’t cut back on services providing food to the hungry, or lay off even more people that will have to join lines at the soup kitchen.

But, since Obama is remaining committed to his 2015 goal, this could also be a time to look at poverty-fighting measures more widely. The Senate Agriculture Committee held a hearing today on reauthorization of U.S. Child Nutrition Programs, which is one more opportunity to combat hunger, if dollars are put in the right places. As Vilsack told the committee “this legislation is an opportunity to in one stroke confront both the challenges of obesity and hunger – with the prospect of better health and well-being in the years to come. Investing in meal quality and access to these critical programs will help support the capacity of our young people to learn and acquire the tools necessary to become the leaders of tomorrow.”

The U.S. Chamber of Commerce reflects neither the politics nor the priorities of the business community of the United States. The Chamber is spending hundreds of millions of dollars from its corporate members against President Barack Obama’s progressive agenda of health care, clean energy, and financial reform. The “principal governing and policymaking body” of the Chamber is its 116-member board of directors, purportedly with a “membership is as diverse as the nation’s business community itself”:

The Board of Directors is the principal governing and policymaking body of the U.S. Chamber of Commerce. The board’s membership is as diverse as the nation’s business community itself, with more than 100 corporate and small business leaders serving from all sectors and sizes of business, and from all regions of the country.

In fact, a Wonk Room analysis has found that the U.S. Chamber of Commerce board is overwhelmingly Republican, having contributed six to one to conservative over liberal politicians.

The nation’s business community, however, is a bipartisan participant in American politics, contributing about equally to both parties over the last ten years. The Wonk Room has found that from 1999 to 2007, corporate contributions broke 53% to 47% in favor of Republicans. After the presidential campaigns of Barack Obama and other Democrats massively outraised that of Sen. John McCain (R-AZ) and other Republicans, the split from 1999 to 2009 stands 52% to 48% in favor of Democrats:

Source: Center for American Progress Action Fund, from Federal Election Commission data compiled by the OpenSecrets project of the Center for Responsive Politics.

The Chamber — when not lying about the effects of climate or health care reform — has grossly inflated the numbers of its members. It also seems it’s misrepresenting the nature of the few members who make its misguided policy decisions. Read more