Today, the House of Representatives failed to pass a extension of unemployment benefits. The bill was brought up under suspension of the House rules, which meant it needed a 2/3rds majority to pass. 11 Democrats and 143 Republicans voted against the extension.

Even if the House had passed the extension three-month extension, which was far too short to be acceptable anyway, the Senate has not scheduled time to hold its own vote. “At this point it’s not been scheduled,” said Sen. Jack Reed (D-RI). “We’re trying to make a case that there be action but at this point I can’t point to a specific time it will come up for a vote this week.”

If allowed to expire on schedule at the end of the month, 2.5 million Americans will lose their unemployment benefits, right in the midst of the holiday season. In the past 40 years, the U.S. has not allowed extended benefits to expire with unemployment above 7.2 percent, so having them lapse at 9.6 percent would easily set a new record.

Unemployment benefits are providing a vital lifeline for millions of Americans, at a time when there are five unemployed persons for every job opening. There are so few job openings, in fact, that even if every open position in the country were filled, four out of five unemployed workers would still be out of work.

Not only that, but according to a new report by the non-partisan Congressional Budget Office, extended UI benefits kept the poverty rate more than a full point below where it would have been otherwise:

Without the financial support provided to families by UI benefits and under an assumption of no change in employment or other sources of income associated with the absence of that support, the poverty rate and related indicators of financial hardship would have been higher in 2009 than they actually were. For instance, in 2009 the poverty rate was 14.3 percent, whereas without UI benefits and with no behavioral responses taken into account, it would have been 15.4 percent.

In September, the Cenusu Bureau reported that 3.3 million people were kept out of poverty due to unemployment benefits. Providing UI benefits is also the most stimulative step that the government can take, as they create nearly two dollars in economic activity for every dollar spent.

It’s quite absurd that Congress is having an intense discussion over whether or not to spend $830 billion on tax cuts for the richest two percent of Americans, but can’t summon the will to extend unemployment benefits while millions of Americans cope with the lingering effects of the Great Recession. Priorities!

Our Guest Blogger is John Griffith, Research Associate with the Center For American Progress Action Fund’s Doing What Works Project.

Sen. Mary Landrieu’s (D-LA) decision to maintain her hold on Jack Lew, President Obama’s nominee for budget director, threatens the administration’s ability to address the country’s profound economic and fiscal challenges. What’s worse, she knows it.

“My position is unchanged,” Landrieu (D-LA) told reporters on a conference call yesterday, citing her concerns about the administration’s approach to offshore drilling. “I’m very sympathetic to the administration’s position. I understand how difficult it is to go without a point person for the budget.”

Difficult? Maybe a month ago. A budget chief is now desperately needed.

The director of the Office of Management and Budget is expected to brief the president on his initial budget proposal by the end of November. With little hope of a Senate confirmation vote before Thanksgiving, it looks like the administration will have to face this critical deadline without an experienced budget manager at the helm.

Lew headed OMB from 1999 until the end of the Clinton administration in 2001, leaving office with a $200 billion federal budget surplus. His experience is especially important as the federal government enters an era of constrained budgets. President Obama has ordered each nonsecurity agency to submit a budget request 5 percent below last year’s discretionary total. The administration must enforce those cuts while funding new measures to boost employment and promote economic growth.

But to Landrieu, that all takes a backseat to… well, it’s unclear.

Landrieu placed her hold on Lew because she opposed the administration’s moratorium on offshore drilling after the BP oil disaster. That moratorium was lifted last month. Now she is calling for a “clear path forward” for issuing permits for deepwater drilling in the Gulf. “When that happens, I’ll consider releasing my hold,” she said. “There’s no specific number of permits, but what there is, is a request that there be a clear path forward for the issuing of permits.”

In other words, Landrieu doesn’t know what exactly she’s waiting for. But she’ll know it when she sees it.

Last month, the Obama administration established new rules on offshore drilling aimed at preventing another blowout. Landrieu contends that companies are having trouble interpreting the new regulations. “I’m not asking to be easy on the oil and gas companies, I’m not asking to give blanket permits, I’m asking for clarity of the new regulatory regime,” Landrieu said. “We are asking for clarity, transparency and a statement of support for this industry. So far that hasn’t been completely delivered.”

But the administration has been more than accommodating to Landrieu’s demands for the past two months, despite the fact that her grievances are completely irrelevant to Lew’s nomination. After all, the OMB director has no direct jurisdiction over offshore drilling. The senator should let Jack Lew get to work. With the administration hustling to put together President Obama’s 2012 budget, now is not the time for procedural games.

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

The New Republic’s Jonathan Chait writes this morning about how he might have been a little too quick to jump into the seemingly open arms of Erskine Bowles and Alan Simpson, the co-chairmen of President Obama’s deficit commission. But now there is a new bipartisan deficit reduction plan out from Commission member Alice Rivlin and Pete Domenici at the Bipartisan Policy Center, and Chait thinks this could be the one. He seems to especially like Rivlin and Domenici’s approach to the tax code, saying, “the tax reform, while lowering the corporate and top income tax rates to 27%…also makes the overall burden more progressive.”

Well, I take no pleasure in being the bearer of bad news. The Tax Policy Center’s analysis of the BPC plan does suggest that their reforms would result in a more progressive system, but there is one really big problem –- the VAT. Rivlin and Domenici rely on a 6.5 percent value-added tax which they call a “debt reduction sales tax.”

Now, generally speaking, VATs are thought to be very regressive –- that is poorer people pay more in taxes, as a proportion of their income, than rich people do. The reason is simple. Poor people tend to spend all of their income in any given year, whereas rich people do not. If you pay a 6.5 percent tax on every dollar you spend, and poor people spend every dollar they earn, then they are paying the tax on 100 percent of their income.

Rich people, by contrast, only spend a portion of what they earn, and so they only pay the tax on a fraction of their income. But, that’s not how the Tax Policy Center models value-added taxes.

Instead of treating a VAT as a tax that is paid as income is spent, they treat it as a tax that is paid as income is earned (technically, they treat it as a tax on wages and existing capital). The idea here is that, after the VAT is introduced, every new dollar you earn will be worth a little less, because the consumption that you’ll eventually use that dollar for is going to be 6.5 percent more expensive. In other words, economically speaking, the VAT reduces the value of income at the time of earnings, because eventually those earnings will be used to pay the VAT.

The consequence of treating the VAT this way is a much less regressive-looking distributional analysis. Instead of showing poor people paying the tax on all their income, and rich people paying the tax on just some of their income, the burden of the VAT essentially falls on everyone’s total income each year.

To see what a huge difference this makes in terms of distributional analysis, take a look at this chart from a paper by Len Burman (who’s on the Rivlin/Domenici commission), Jane Gravelle and Jeff Rohaly (who actually helped produce TPC’s estimate of the commission’s plan):

The chart shows the average tax rate, by income percentile, of a 20 percent VAT, but using several different distributional methodologies. The first column, titled “Consumption” is how people usually think about a VAT, and the second column, “Wages and Equity” is essentially how TPC models a VAT. Under the first method, the VAT looks really regressive, with tax rates declining precipitously as income rises. But the second method makes the VAT actually look a little bit progressive! Big big difference. Read more

This morning, a rejuvenated General Motors made its initial public offering of stock, hoping to raise $23.1 billion. As a result of the offering, which is the largest in the nation’s history, the federal government’s ownership in the auto company was halved “and billions of dollars in bailout money was returned to the federal government.” According to the New York Times, “a complete exit by the government could happen even within the next two years.”

“Supporting the American auto industry required tough decisions and shared sacrifices, but it helped save jobs, rescue an industry at the heart of America’s manufacturing sector, and make it more competitive for the future,” said President Obama in a statement today. At the time of the auto company rescue, however, Republicans severely criticized the administration’s effort, warning that keeping the companies from a catastrophic collapse would lead the country down “the road to socialism,” and end in “predictable” disaster:

Rep. John Boehner (R-OH): “Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multi-national corporation to economic viability?” [6/1/09]

Sen. Richard Shelby (R-AL): “It’s basically going to be a government-owned, government-run company. …It’s the road toward socialism.” [5/29/09]

RNC Chairman Michael Steele: “No matter how much the President spins GM’s bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign.” [6/1/2009]

Sen. Jim DeMint (R-SC): “Now the government has forced taxpayers to buy these failing companies without any plausible plan for profitability. Does anyone think the same government that plans to double the national debt in five years will turn GM around in the same time?” [6/2/09]

Rep. Tom Price (R-GA): “Unfortunately, this is just another sad chapter in President Obama’s eager campaign to interject his administration in the private sector’s business dealings.” [6/2/09]

Rep. Lamar Smith (R-TX): The auto company rescues “have been the leading edge of the Obama administration’s war on capitalism.” [7/22/09]

Rep. Trent Franks (R-AZ): When government gets involved in a company, “the disaster that follows is predictable.” [7/22/09]

According to the Center for Automotive Research, “if the government had not invested in the automotive industry, up to 80,000 automotive jobs would have been lost, and General Motors alone would have lost one million units of sales in 2009. Once Chrysler and GM emerged from their ‘orderly’ bankruptcies, the growth of automotive sector employment has been strong, with 52,900 workers added since July 2009. Had GM and Chrysler not successfully emerged, those jobs would have been permanently lost.”