With foreclosures on pace to top one million this year, and federal programs designed to help troubled borrowers falling woefully short of their goals, a few states have stepped up and implemented their own programs aimed at stemming the foreclosure tide. Twenty states across the country are now offering what are known as mortgage mediation programs, which facilitate negotiations between lenders and borrowers before a foreclosure is finalized. In three states and two cities, these mediation sessions are required.

Such programs have been incredibly successful in keeping troubled borrowers in their homes, as the sessions require lenders to actively negotiate, instead of giving borrowers the run-around to which so many have been subjected. As Christopher Brecciano, a Connecticut attorney who represents borrowers in foreclosure, explained, mediation “requires the borrower to sit eye to eye with the bank’s attorney and means there is someone to hold accountable rather than just some service person on the telephone.” In Connecticut, which has an automatic mediation program, 62 percent of those entering mediation received a permanent loan modification. In Nevada, where the program is voluntary, the number is 74 percent.

But the mortgage lending industry is having a hard time getting on board with these successful efforts. In fact, the Mortgage Bankers Association, which represents many large mortgage lenders, opposes all such efforts to push banks into negotiating with borrowers:

John Mechem, a spokesman for the Mortgage Bankers Association, which represents the largest mortgage lenders, said the group is opposed to both mandatory and voluntary mediation programs. He argued that the programs are expensive and are often used by borrowers as a tactic to stall foreclosure. Mr. Mechem said the industry on its own has done almost 1.5 million mortgage modifications this year outside of mediation programs. If such programs must be implemented, he said, the MBA favors a voluntary system over mandatory meetings.

Of course, opposing smart efforts to help homeowners is nothing new for the MBA. Back in 2009, the MBA — with the help of Congressional Republicans — successfully lobbied against the adoption of mortgage cram-down legislation, which would have allowed judges to modify mortgages in bankruptcy court.

That legislation’s defeat, and the MBA’s subsequent celebrations, led Sen. Dick Durbin (D-IL) to say that when it comes to the Senate, the banks, “frankly, own the place.” And now that a moderately successful alternative has been found, which is allowing borrowers to stay in their homes and prevent all the negative effects of a foreclosure for both the borrower and the wider community, the MBA is standing in opposition once again.

Even with the foreclosure moratoriums that a few of the nation’s biggest banks instituted following the robo-signing scandal, foreclosures for this year will likely top one million. According to a report released yesterday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision — two of the federal bank regulators — foreclosure activities were up significantly in the last quarter:

The number of new foreclosures increased to more than 382,000 — 31.2 percent more than in the previous quarter and 3.7 percent more than a year earlier. The number of foreclosures in process increased to 1.2 million — 4.5 percent more than in the previous quarter and 10.1 percent more than a year earlier. The number of completed foreclosures also increased to nearly 187,000 — 14.7 percent more than in the previous quarter and 57.5 percent more than a year earlier.

A large reason for the jump, according to the report, is that mortgage modifications under the Home Affordable Modification Program (HAMP) — the Obama administration’s signature foreclosure prevention effort — have dropped significantly. Mark Zandi, chief economist of Moody’s Analytics, said that a main problem driving the foreclosure machine is the “inadequacy of loan modification programs”.

For months, it’s been apparent that HAMP and the administration’s other programs designed to keep borrowers in their homes are going to fall woefully short of their goals. HAMP has processed only about 500,000 permanent loan modifications, out of 1.4 million trial modifications that have been initiated. The redefault rate (the number of borrowers who again fall behind on their mortgages, post-modification) for the program is an ugly 21 percent.

The Congressional Budget Office estimates that just $12 billion of the $50 billion dedicated to foreclosure prevention will be spent. The Congressional Oversight Panel for TARP, which also oversees HAMP, estimates that at the current rate HAMP will only benefit 700,000 homeowners, far less than the 3-4 million that the Obama administration said would receive aid. “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help,” the panel said in a report.

There are still plenty of things that can be done to fix HAMP and ensure that the full resources dedicated to foreclosure prevention actually wind up in the hands of homeowners. Here are some recommendations.

The incoming Republican majority in the House of Representatives has laid out a series of changes it would like to make to the House rules, including replacing the current “pay-go” rules — which require all spending increases to be offset with spending cuts or tax increases — with a rule called “cut-go,” which requires that new spending programs — but not new tax cuts — be offset with spending cuts. The GOP has also proposed a new rule requiring that each piece of new legislation include a statement justifying the legislation’s constitutionality.

That’s not all, however. As National Journal reported today, “a little-noticed detail in the new rules proposed by House GOP leaders would greatly increase the power of Rep. Paul Ryan, R-Wis., the incoming chairman of the House Budget Committee.” Indeed, under the proposed rules, if the House and Senate do not agree on a budget resolution (a distinct possibility with a divided Congress), Ryan will be able to unilaterally set spending levels that are binding on the House, and any attempt to lessen the impact of these cuts can be ruled out of order.

The Center on Budget and Policy Priorities called the proposed change “stunning and unprecedented“:

This rule change has immediate, far-reaching implications. It means that by voting to adopt the proposed new rules on January 5, a vote on which party discipline will be strictly enforced, the House could effectively be adopting a budget resolution and limits for appropriations bills that it has never even seen, much less debated and had an opportunity to amend. (There is no requirement for Representative Ryan to make his proposed spending and revenue limits available to Members or the public before the vote on the new rules.)…Once Rep. Ryan places in the Congressional Record discretionary funding limits set at the [2008] level, they will become binding on the House, and any attempt to provide funding levels that allow for less severe cuts will be out of order.

Ryan, of course, has gained notoriety for his radical “Roadmap for America’s Future,” which purports to balance the budget by essentially privatizing both Social Security and Medicare, while the House GOP’s much-ballyhooed “Pledge to America” includes a promise to reduce non-defense discretionary spending to the 2008 level. If adopted, an across-the-board cut to 2008 levels would entail severe reductions in important and popular programs like Pell Grants and federal highway funding.

The proposed change also seems to fly in the face of the GOP’s promise to end backroom deals and increase transparency, as with one vote, the GOP House may yoke itself to a budget that has never been made public.

Cross-posted on ThinkProgress.

The Attorneys General of Nevada and Arizona last week slapped Bank of America with lawsuits alleging widespread fraud occurrs in the bank’s mortgage modification programs. BofA, the nation’s biggest bank, has consistently lagged behind the other big mortgage servicers in successfully modifying mortgages for troubled borrowers. Andrew Jakabovics and I also caught the bank violating the contract it signed with Treasury to participate in the Home Affordable Modification Program (HAMP) by siphoning borrowers into its own private modification program without determining their HAMP eligibility.

But these lawsuits allege an even bigger mess, with BofA accused of giving deceptive and inaccurate reasons for rejecting modifications, and stringing borrowers along in the modification process for months, allowing them to continue making futile mortgage payments before ultimately foreclosing on them:

As a result of Bank of America’s misrepresentations, many Arizona consumers stopped making mortgage payments in a perilous attempt to qualify for help. Others waited for months for — or never received — answers on their modification requests, all while fearing that they would lose their homes; many actually lost their homes. Some consumers were misled to continue making payments in the belief that they would be able to obtain modifications and keep their homes.

Had they known they would lose their homes despite making payments, some consumers might have sough short sales or other foreclosure alternatives or simply allowed their homes to be foreclosed, saving the money from the additional payments for other necessary expenses. Other consumers lose willing buyers who could have mitigated their own (and Bank of America’s) financial losses by stepping in to purchase their homes.

Nevada’s attorney general told a very similar tale, accusing BofA of “misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions.” The Upshot describes the “Boschian hell” that one Arizona family went through before having its home sold out from under it while waiting to see if it qualified for a modification.

Unfortunately, this story is all too common for homeowners seeking modifications. As Shahien Nasiripour noted today, 29,000 borrowers participating in HAMP have been stuck in the “trial modification” phase of the program for a year or more, unsure of whether they will ultimately keep their home, when that phase is only supposed to last three months. If those families are foreclosed upon in the end, they will have wasted months and months of payments that could have been used for something else.

HAMP, at this point, badly needs to fixed, and other foreclosure prevention efforts need to be undertaken. If they aren’t, the sorts of horror stories outlined above won’t stop, and the economy will continue to be weighed down by preventable foreclosures.

Last week, ThinkProgress reported that the U.S. Chamber of Commerce had quietly lobbied to help Republicans kill the “James Zadroga 9/11 Health and Compensation Act of 2010,” a bill to compensate the first responders and emergency workers who suffered illnesses from working at Ground Zero.

The Chamber — a powerful trade association representing the health insurance industry, ExxonMobil, as well as dozens of foreign corporations — opposed the bill because it paid for health care benefits by ending a special tax loophole exploited by foreign corporations with business interests in the United States. The Chamber also demanded that Congress should stop deliberating over benefits for 9/11 heroes, and instead focus on extending “all of the expiring 2001 and 2003″ tax cuts.

Disclosures reveal that the Chamber used part of its multi-million lobbying budget on defeating the bill because of its funding provision. The Republican caucus, which was unified in opposition to the legislation, cited both the priority of the Bush tax cuts for the richest 2 percent and the Chamber’s concerns about closing the tax loophole.

Over the weekend, Sen. Kirsten Gillibrand (D-NY) tried to revive the bill by changing the way the compensation fund would be paid for. Instead of ending the foreign corporate tax loophole, Gillibrand proposed a new funding mechanism, including a 2 percent excise fee on certain foreign companies that receive U.S. government contracts. However, the Chamber still believes the bill’s offsets are unacceptable.

Asked for comment by ThinkProgress, Chamber spokesperson Tita Freeman told us that the Chamber takes no position on compensating 9/11 first responders, but absolutely opposes Gillibrand’s new funding mechanism because the Chamber believes it to be “harmful to the business community and the economy.”

The Wall Street Journal reported earlier this month that the Obama administration has been trying to cajole Fannie Mae and Freddie Mac into writing down loan principal for troubled homeowners. Incoming House Financial Services Chairman Spencer Bachus (R-AL), however, is not on-board with the effort. And he’s evidently not alone.

In fact, the GOP is so dead-set against helping borrowers who are underwater on their mortgages — meaning they owe more than their house is currently worth — that they are delaying confirmation of the administration’s nominee to lead the Federal Housing Finance Agency (Fannie and Freddie’s chief regulator) because he might be sympathetic to loan write-downs:

Senate Republicans are pressing to delay the confirmation of Joseph A. Smith, the North Carolina banking commissioner, to head the Federal Housing Finance Agency. They are concerned he might allow Fannie and Freddie to participate in an Obama administration initiative to write down loan balances, say people familiar with the matter.

Mr. Smith first appeared to be headed for a quick confirmation. But he has become tripped up by a broader fight between the White House, which wants to use the firms to help heal housing markets, and GOP critics that say they shouldn’t be run as policy vehicles that create more losses.

The administration’s foreclosure prevention efforts have largely flopped, and the banking industry is on pace to foreclose on one million homes both this year and next. Allowing Fannie and Freddie to write-down loans could help put a dent in these huge numbers.

Republicans, however, are arguing that such a move is unfair, as Fannie and Freddie would be forced to eat losses while helping only specific homeowners. Senate Banking Committee Ranking Member Richard Shelby (R-AL) said that write-downs amount to “redistribution from taxpayers in general to certain classes of home owners.”

But this basically ignores the wider negative effects foreclosures, which drag down home values for everyone. As The American Prospect’s Tim Fernholz explained:

[Republicans have a] rather short-sighted approach, given that Fannie and Freddie are already propping up almost the entire housing market, and that the costs of both foreclosure and consumer debt overhang are a drag on the broader economy. Foreclosure is everyone’s problem, especially when many of these borrowers are underwater not because of their own irresponsibility but because of dramatic drops in the price of housing.

According to Treasury Secretary Tim Geithner there “is a pretty good economic case for Fannie Mae and Freddie Mac to participate in those programs.” FDIC Chair Sheila Bair has also called for principal write-downs, saying that they “could help reduce defaults, keep people in their homes, avoid costly foreclosures, and enhance the value of these loans.” But the GOP has stood in the way of every effort to help troubled borrowers, and this is no exception.

CBS’ 60 Minutes ran a segment last night on the fiscal nightmare currently underway in most of the states across the country. Faced with plummeting tax revenue and a rising demand for services in the wake of the Great Recession, many states are staring at huge fiscal holes (and most are constitutionally mandated to balance their budgets). The Center on Budget and Policy Priorities estimates that states are $101 billion in the hole for fiscal year 2011.

The segment praised Gov. Chris Christie (R-NJ) as the “canary in the coal mine” for state budget woes, featuring him prominently for, among other things, canceling a planned rail tunnel underneath the Hudson River, laying off thousands of public employees, and cutting education funding.

But even with these cuts, Christie is facing a $10.5 billion deficit. Warning that the “day of reckoning” has arrived, Christie said that there are “no alternatives” except to continue gutting education funding and public employee benefits:

The reason it’s different is because the only choices left are choices that people previously have said were politically impossible. That you couldn’t do. You couldn’t cut K-12 education funding, you couldn’t do those things. You couldn’t talk about pension and benefit reform for the public sector unions. We are now left with no alternatives.

Watch it:

Christie kept emphasizing that, when it came to funding for important projects, “I literally don’t have it.” But that begs the question (which CBS left unasked): if Christie is so certain that his state doesn’t have money to upgrade its infrastructure or prevent its schools from seeing their funding slashed, why is he contemplating cutting both his state’s personal income and corporate income taxes?:

New Jersey Governor Chris Christie may propose business- and income-tax cuts as soon as January, said Robert Grady, chairman of the governor’s Council of Economic Advisors. Christie and Treasurer Andrew Sidamon-Eristoff are evaluating options for reducing individual and corporate taxes, Grady said at a conference of business owners in Woodbridge today.

Back in September, Christie made some noise about cutting New Jersey’s top marginal income tax rate, which only applies to those making more than $500,000 annually (about seven times New Jersey’s median income). The Newark Star-Ledger criticized that decision, writing, “he was the guy telling us to live within our means, to face hard realities. And now this — a tax cut that would blow a new hole in the budget.” And it seems that he’s now added cutting the state’s corporate tax rate in to the mix.

Remember, in May, Christie vetoed a tax increase that would have applied only to his state’s millionaires. So on the one hand, Christie is warning about a “day of reckoning” forcing him to cut education funding, cancel infrastructure projects (thus losing jobs), and take a knife to public sector benefits, because everyone has to “share in the sacrifice.” But on the other, he is considering tax reductions for the wealthy. This is a nice microcosm of conservative priorities in action.

Senate Republicans last week successfully defeated an omnibus spending bill that would have funded the government through the end of the current fiscal year (October 2011). To avoid a government shutdown, the new plan is to pass a continuing resolution that funds the government at the current level through March 4, 2011.

The resolution unveiled by Senate Democrats, aside from the obvious benefits of keeping the normal functions of government rolling ahead, also addresses some key problems. Chief among them is covering the $5.7 billion shortfall in Pell Grants, which would have resulted in award cuts if it wasn’t addressed.

However, the resolution does not include funding for the implementation of the Dodd-Frank financial reform law. Under the omnibus, the Securities and Exchange Commission would have seen its budget increase to $1.3 billion from $1.1 billion, and the CFTC would have gone from $169 million to $286 million.

Already, the SEC has halted implementation of a variety of measures under the law as it waits for funding. Included in this halt are new regulations for credit rating agencies and an office for financial markets whistleblowers. The Commodity Futures and Trading Commission (which is charged with implementing the derivatives title of the bill) has said that its current funding level “is far less than what is required to properly fulfill our significantly expanded role.” “The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, has said.

If the prospects for enhanced funding next year looked promising, this would be less of a problem. However, House Republicans are threatening to deny funding to the agencies implementing the bill when they take control, and in particular to kneecap the newly-created Consumer Financial Protection Bureau before it even gets off the ground. This is much the same game that the GOP is threatening to play when it comes to funding the Affordable Care Act, which also got tripped up by the omnibus spending bill’s defeat.

One of the most legitimate criticisms of Dodd-Frank is that it left too much discretion to the regulators to design and implement new rules. Denying those regulators the funding to do an adequate job is a good way to make government look ineffective and then use government ineffectiveness as a justification for policy changes.

Last night, the Daily Show’s Jon Stewart skewered Republicans for killing deficit neutral legislation to provide health care to the 9/11 first responders and emergency workers who suffered illnesses from working at Ground Zero. He also mocked the celebrity-obsessed media that has completely ignored the story. Republicans, like Sen. John Thune (R-SD), filibustered the bill because they said tax cuts for the richest 2 percent were a higher priority for Congress. While Republicans quietly snuffed out efforts to compensate 9/11 heroes, they were aided by a quiet lobbying campaign by the powerful lobbying front — the U.S. Chamber of Commerce.

The Chamber fought to help kill the 9/11 compensation bill because it was funded by ending a special tax loophole exploited by foreign corporations doing business in the United States.

The “U.S.” part of the U.S. Chamber of Commerce is a misnomer. As ThinkProgress reported, the Chamber represents dozens of foreign businesses in the United Kingdom, France, Germany, Russia, Bahrain, India, Brazil, and other countries. An investigation of the Chamber turned up recent fundraising documents from the Chamber soliciting foreign contributions to the Chamber’s 501(c)(6), the tax entity the Chamber used to run nasty campaign ads against Democrats earlier this year.

In September, the Chamber sent a letter officially opposing the 9/11 first responders bill, called the “James Zadroga 9/11 Health and Compensation Act of 2010.” The Chamber warned that ending the tax loophole would “damage U.S. relationships with major trading partners” and “aggravate already unsettled financial markets.” A lobbying disclosure filed with the Senate confirms the Chamber contacted lawmakers to help kill the bill.

In typical fashion, the Chamber has not revealed which of its foreign members had asked them to kill the 9/11 bill. As the Chamber CEO explained to the Washington Monthly’s James Verini, the entire purpose of the Chamber is to provide “deniability” to corporations that want to affect the outcomes of elections or of public policy. In 2009, the Chamber secretly used a $86 million donation from the health insurance industry to fight health reform. At the time, the Chamber lied and claimed to the public that they were simply acting on behalf of the entire “business community.”

Republicans are continuing to protest any renewed attempts to pass the 9/11 first responders bill because of the tax issue raised by the Chamber. Yesterday, Sen. Susan Collins (R-ME) sent out a statement that mirrored the Chamber’s opposition to ending the foreign corporate tax loophole.

When the foreclosure fraud mess first broke back in October, a few banks — including Bank of America, JP Morgan Chase, and PNC Bank — instituted foreclosure moratoriums, saying that they would halt foreclosure proceedings until their myriad issues with robo-signed documents and improper notarizations were sorted out.

But this momentary halt from some of the country’s biggest banks didn’t stop them from setting a record for foreclosures in 2010. In fact, it’s highly likely that the foreclosure total for this year will eclipse one million:

The number of U.S. homes taken back by lenders dropped to the lowest level in 18 months in November, the result of foreclosure freezes enacted by several banks following allegations that evictions were handled improperly…The 67,428 homes lenders took back last month were the fewest since May 2009. But even with the decline, it was enough to push the total number of repossessions so far this year to more than 980,000 – the highest annual tally of properties lost to foreclosure on RealtyTrac’s records dating back to 2005.

“It’s almost impossible to imagine that we won’t break a million,” said Rick Sharga, a senior vice president at RealtyTrac. “Unfortunately, it’s a record that we’ll probably break again next year.”

And it seems that the banks haven’t even learned their lesson from the foreclosure fraud episode. In response to the fraud, New York state implemented a law “requiring attorneys in foreclosure actions to certify that they have taken reasonable steps to verify the accuracy of documents they submit to the court.” One New York judge has used the law to strike down 127 foreclosure filings, which, while showing that new enforcement tools employed by concerned judges are helpful, reveals that the banks still don’t hesitate to bring bogus documents before a court.

With one million foreclosures likely on the horizon next year, it’s imperative that the government ramp up its lackluster and ineffective foreclosure prevention efforts. HAMP — the Obama administration’s signature foreclosure prevention effort — has fallen woefully short of its goals and the $50 billion allocated to it won’t come close to being spent. In a final kick in the pants, 2,500 homeowners were foreclosed upon while waiting to see if they qualify for a mortgage modification, in violation of HAMP.

At the same time, the regulator for Fannie Mae and Freddie Mac is refusing to allow the two government sponsored enterprises to write down mortgage principal, even though that is arguably the most effective way to keep troubled borrowers in their homes and avoid all the negative effects of a foreclosure.

Clearly, if RealtyTrac is predicting that the foreclosure record will be met and broken again next year, this is a problem that shows no sign of going away. The lackluster response from policymakers, when viable solutions and the resources to implement them clearly exist, is pretty shameful.

Last week, Consumer Financial Protection Bureau head Elizabeth Warren told Bloomberg News that Wall Street pulling in record profits and gearing up for bonus season shows “we still have a problem” with economic disparity. “This just staggers me; I mean, I just don’t have words to describe what this means,” she said. “It isn’t meaningful to talk about profits and a growing economy until American families are stabilized.”

Thanks in large part to government assistance, Wall Street has had a profit bonanza over the last two years. And according to a new report from the New York State Comptroller, while the total Wall Street bonus pool has gone down, the average bonus may be going up:

As Wall Street returned to profitability, cash bonuses paid to securities industry employees located in New York City grew by 17 percent to $20.3 billion in 2009. Given compensation and revenue trends so far this year, it appears the cash bonus pool will be smaller than last year, although the average bonus may be somewhat higher since it will be shared among fewer workers.

Somewhat reassuringly, the report noted that “regulatory reforms (both enacted and anticipated) could result in the deferral of a larger share of bonuses.” But in a bit of a kick to Main Street, Goldman Sachs is preparing to pay out $111 million in deferred payments from 2007 and 2009 (yes, two years right around the heart of 2008′s meltdown). As John Ogg wrote at 24/7 Wall Street, “this is one of those situations where it almost looks like the financial crisis never existed.”

In the meantime, wage growth in the labor market has been steady (if unspectacular and low by historical norms) recently, but as the Center on Economic and Policy Research noted, “there is no sector showing strong job growth at this point. Furthermore, average weekly hours actually fell slightly for non-supervisory workers, suggesting that the demand for labor might actually be weakening.” 2009 saw the second-lowest wage increase ever, and the prospects for these numbers improving are not good.

Wall Street is also keeping its foreclosure machine chugging along, with a survey of consumer attorneys finding that at least 2,500 homeowners were foreclosed upon while waiting to see if they qualify for a mortgage modification.

A poll released this week shows that 70 percent of Americans want to see bonuses banned this year at firms that took government funds, while just 7 percent of respondents believe “bonuses are an appropriate incentive in light of Wall Street’s apparent return to financial health.”

Our guest blogger is Seth Hanlon, Director of Fiscal Reform for the Center for American Progress Action Fund’s Doing What Works project.

One of the enduring myths of American politics is that the estate tax falls hardest on small businesses and family farms, forcing them to sell their farms and businesses to pay the tax. It’s not true, and has never been true. Nonetheless, newspaper reporters have scoured the land for many years, searching in vain for families forced to sell small businesses or family farms due to the estate tax.

Now that Congress seems poised to eviscerate the estate tax, the task of finding these mythical estate tax victims is going to be even harder. The tax cut compromise moving through Congress would exempt all estates with assets valued at under $5 million and $10 million for couples. With the exemption raised to these levels, only the largest 3,600 estates in the country will pay any estate tax; the other 99.86 percent of estates will be entirely exempt.

Yet it appears that no matter how much Congress slashes the estate tax, the Wall Street Journal will continue to send its reporters in search of the “small businesses” that are going to be devastated by the tax. A Journal story today carries the headline, “For Family-Run Small Businesses, Estate-Tax Uncertainty Adds Cost.”

Has the Journal actually found a small business that will suffer under the weight of the estate tax? Not quite. The story profiles a wealthy Arkansas man who owns a lumber business, forest land, and five mills that are currently valued “between $30 million and $50 million apiece.” This is the Journal’s only example of the “small businesses” faced with uncertainty under the new estate tax regime.

Does a business with 600 employees that is worth more than $150 million fit within the definition of “small business”? Only if you’re the Wall Street Journal publishing a story about who pays the estate tax, and you need a sympathy-inducing headline.

Estimates by the Tax Policy Center show that only fifty small farm and business owners in the entire country will pay any estate tax next year under the new framework, and they would pay an average rate of just 7.4 percent. If they actually exist, these fifty farms and businesses can probably avoid the tax altogether with only a little bit of estate planning — and so can many estates well in excess of $5 million.

According to the Journal, the $5 million exemption “won’t apply” to the lumber mill owner “because the value of the mills is so high.” Actually, the $5 million or $10 million exemption applies to all estates, and only the value above that level will be taxed.

With the tax legislation nearing passage in Congress, the estate tax is all but dead. It appears, however, that on the pages of the Wall Street Journal the small business myth is as alive as ever.

Rep. Michele Bachmann (R-MN) made a bold attempt to redefine the word “deficit” last week during an interview on CNN, telling a perplexed John King that unpaid for tax cuts shouldn’t count as increasing the deficit. “I don’t think letting people keep their own money should be considered a deficit,” she said.

It’s easy to dismiss Bachmann’s bizarre pronouncement as just another in the long list of crazy things she’s said. But CNN was host to another attempt at deficit redefinition this morning, courtesy of Rep. Mike Pence (R-IN). When asked to square his fearmongering about the cost of the tax package before the House today with his desire to permanently extend all of the Bush tax cuts (at a cost of almost $4 trillion), Pence replied that tax cuts only contribute to the deficit in the minds of “Washington number crunchers”:

Q: How can you say the American people didn’t vote for deficits, when at the same time your plan would add almost $3 trillion to the deficit?

PENCE: Yeah, I’ve heard that analysis for years. I know in Washington D.C., they tend, the budget, the numbers-crunchers here tend to think that when they don’t take money from the American people there’s a cost that they ought to round…With a growing economy, I think those predictions are wrong. I think as the economy expands, even revenues to the federal government will expand.

Watch it:

Pence, it seems, believes wholeheartedly in the tax fairy: the notion that tax cuts cause revenue to increase, all actual evidence to the contrary. No serious economist, left or right, subscribes to this notion, and we have ample evidence showing that the Bush tax cuts definitely did not cause a boost in revenue (either in real dollars or revenue as a percentage of GDP).

But House Republicans are so in thrall with the misguided idea that tax cuts do not add to the deficit that they are making it part of their official House-governing rules for next year. As Congressional Quarterly noted today, House Republicans are putting the finishing touches on a new rule called “cut-go,” which requires that new spending programs — but not new tax cuts — be offset with spending cuts:

The budgetary mechanism, which Republicans refer to as a “cut-go” rule, will mandate that lawmakers pay for any new spending program by eliminating an existing program of equal or greater value. It is similar to the pay-as-you-go rule previously introduced by House Democrats except that it does not allow spending increases to be offset with new taxes or fees. Also, tax cuts would not have to be offset with spending reductions.

Pence, of course, would dismiss this as the silly ruminations of number-crunchers, but the Center on Budget and Policy Priorities found that the Bush tax cuts are one of the biggest drivers of the long-term deficit, causing $3.4 trillion in deficits over between 2009 and 2019 alone.

Incoming House Financial Services Chairman Spencer Bachus (R-AL) told the Birmingham News this week that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.” And Bachus plans to provide that service by trying to slow down a whole host of measures being implemented under the Dodd-Frank financial reform law.

One of the targets that Bachus has in his sights is derivatives reform, the title of the Dodd-Frank law that aims to bring some prudent regulation to the currently unregulated derivatives market, which played a significant role in the 2008 financial meltdown. During the debate over Dodd-Frank, Bachus had an utterly incoherent position on derivatives reform, but that hasn’t stopped him from saying that derivatives reform is “one of the job-killing provisions of Dodd-Frank that needs to be addressed.”

And Bachus is getting some help from his fellow Republicans, who are threatening to bog down rule-writing by the Commodity Futures Trading Commission, which is charged with implementing derivatives reform. First, comes Rep. Scott Garrett (R-NJ), who will be chairing the subcommittee on capital markets next year:

“The rule-making bodies, especially the CFTC, seem to be eager to move along at this faster than anyone can keep up with,” said Mr. Garrett, who will try to slow the process with heightened congressional oversight.

And then Reps. Jerry Moran (R-KS) and Frank Lucas (R-OK):

Republicans on the panel said CFTC should move more slowly. Frank Lucas, who will become Agriculture Committee chairman in January, said he was “willing to consider an easing of statutory deadlines.” Jerry Moran, who will become a senator in January, said CFTC was rushing to issue a rule before it has adequate information on market size or appropriate limits.

Michael Greenberger, a former CFTC division director and University of Maryland law professor, called these complaints “a red herring offered by Wall Street to delay implementation.” But it’s not only Congressional Republicans who are trying to slow-walk reform. Republican appointees to the CFTC itself are doing the same thing, according to the Wall Street Journal:

The CFTC’s two Republican commissioners say the agency is moving too fast. Commissioner Jill Sommers said she supports giving the agency another year to write the rules.

The derivatives title is one of the strongest in the Dodd-Frank law, and getting it into place will bring much-needed light to a market that is several times the size of the entire U.S. economy. But Republicans, who did nothing to contribute to the financial reform debate, are trying to throw as many wrenches into the gears as they can, while Wall Street reaps its second-highest amount of revenue ever.

For months now, the Financial Crisis Inquiry Commission — which is supposed to be offering a report on the causes of the 2008 financial meltdown — has been bogged down by partisan bickering, with the Republican commissioners griping about the tone of the commission’s final report, which they think is too tough on the banking industry. Now, as Shahien Nasiripour reported, all of the commission’s Republican members “voted in favor of banning the phrases ‘Wall Street’ and ‘shadow banking’ and the words ‘interconnection’ and ‘deregulation’ from the panel’s final report.”

Instead, the Republican commissioners plan to politicize the report by concluding that “government policy helped inflate the housing bubble and that prices weren’t expected to crash because the government pushed homeownership so aggressively.” Particular blame is to be reserved for Fannie Mae, Freddie Mac, and the Community Reinvestment Act, which have played the part of conservative bogeymen for the financial crisis ever since it struck.

The claim that Fannie, Freddie, and the CRA caused the financial crisis has been so thoroughly debunked that it’s hardly worth going over again. And even the Republican commissioners themselves didn’t always believe the nonsense they’re now selling. As the Roosevelt Institute’s Mike Konczal noted, commissioner Keith Hennessey used some of the banned words on his blog back in October:

Some of these large financial institutions were so big and so interconnected with other institutions, that their failure would create a domino effect. This is what we call “too big to fail”, which should more precisely be called “too big and interconnected to fail suddenly”.

And the commission’s Vice-Chairman Bill Thomas has also pointed to problems on Wall Street:

This was a multifaceted problem, cross-disciplinary, or interdisciplinary, if you will, affecting the government regulators, affecting a product, housing to a very great extent, but other products, Wall Street.

Commissioner Douglas Holtz-Eakin (who, admittedly, tends to allow his opinions to blow with the political winds), defended a pronouncement from his candidate, Sen. John McCain (R-AZ), that “we’re going to put an end to the reckless conduct, corruption and unbridled greed that have caused the crisis on Wall Street”:

“It has never hurt John McCain to tell the truth,” says policy adviser Doug Holtz-Eakin. “He’s running for president to help Main Street, not to be popular on Wall Street.“

Holtz-Eakin also said that Wall Street has “failed us”:

Where do you place your faith? Do you place it in the institutions that have failed us, which quite frankly are in Washington and in Wall Street, or do you put the money in the places where we know we can get effective results?

Holtz-Eakin added in May that something in the shadow banking system “went badly, badly wrong”:

The goal in these two days is not so much to understand Bear Stearns or GE Capital or the other witnesses, but to understand what happened with this set of practices that is referred to as shadow banking. Short term funding for long term investments went badly, badly wrong.

The only Republican commissioner, it seems, who has never allowed the facts to get in the way of his ideology appears to be the American Enterprise Institute’s Peter Wallison.

As CAP’s David Min explained, “because the shadow banking system lacks risk regulation or a liquidity safety net, it is highly susceptible to the bubble-bust cycle that historically plagues unregulated banking systems. This was what we saw during the last credit cycle from 2003 to 2008.” But the Republican commissioners are instead trying to pin the blame for a global financial conflagration on poor people receiving loans they couldn’t afford.

One of the concerns raised regarding the tax deal President Obama negotiated with Congressional Republicans is that it will undermine Social Security, as it includes a one-year cut in the payroll tax (the revenue from which goes to pay for Social Security). The administration has offered assurances that the lost revenue will be replaced with money from the general fund, but Republicans are already hinting that they will fearmonger about a tax increase when the cut expires, and if they are successful in blocking that expiration, Social Security’s long-term finances immediately get much worse.

But Rep. Rush Holt (D-NJ) is worried about something else too. During an interview yesterday with The Wonk Room, Holt explained that he doesn’t like the precedent of placing Social Security’s finances into a broader tax deal, saying that such a move will be “devastating” for the program’s future:

With this deal, Social Security is put into a package with the Bush tax cuts, with the AMT, with business accelerated expensing, and so forth. And as a result, Social Security, in a sense, becomes just another government program. And if Social Security is a program where one year you borrow from it to stimulate the economy, and another year you use it to balance the budget, you replace it from the general fund — or maybe you don’t — the political support for this will evaporate quickly…That’s the real problem here. It changes the very nature of Social Security. [...]

What is worse [than changes to the program's short-term funding] is if people begin to believe that Social Security is just another trading chip. You can use it this year for this purpose and that year for another purpose. Whether to use Social Security to accomplish other government aims, and put it in the debate just like whether the income cut-off should be $250,000 or $1 million, means that Social Security is just like those other things.

Listen here:

Holt said, “I think we’ve got to fix the deal, if we possibly can.” Instead of shifting money over to Social Security from the general fund, he advocated raising the cap on the payroll tax, to capture more income.

Holt is not alone with his concern. Eileen Applebaum at the Center for Economic and Policy Research wrote that “the most insidious aspect” of the payroll tax cut “is that it threatens the idea that Social Security is sacrosanct, a reality so important to the economic security of the nation that the taxes that support it should never be tampered with.” To address this problem, the House is reportedly considering changing the payroll tax holiday into a one-time refund check, based off a proposal by Rep. Brad Sherman (D-CA).

Cross-posted on ThinkProgress.