As ThinkProgress previously reported, online retailers like Amazon.com are using a loophole in state tax codes to avoid collecting sales taxes. This loophole is denying states millions of dollars of tax revenue. For example, in “2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online.”

In Texas, state lawmakers — overwhelmingly conservative Republicans — decided that they couldn’t tolerate Amazon’s tax dodging at a time when the state cut $15 billion from important social services, health care, and education in the name of deficit reduction. Seizing on an earlier ruling by state comptroller Susan Combs that said Amazon owed the state “$269 million in sales taxes it failed to collect from 2005 to 2009,” the legislature passed a bill that would tighten sales tax rules and force many online retailers to begin collecting sales taxes just like any other business.

This morning, Perry quietly vetoed the bill, protecting Amazon and other large retailers’ tax-dodging:

Gov. Rick Perry has vetoed legislation that was aimed at tightening the state’s rules on when online retailers must collect sales taxes on Texas transactions, the bill’s author said this morning. Perry had earlier criticized Comptroller Susan Combs for moving to collect $269 million from Amazon.com for uncollected sales taxes.State Rep. John Otto, R-Dayton, said Perry’s office told him the governor had vetoed the measure, House Bill 2403, but did not tell him why. However, Otto said the measure also was included in the fiscal matters bill that is on the agenda for the Legislature’s special session that begins today.

Combs has estimated in the past that Texas “loses $600 million a year from untaxed online sales.” When Combs originally demanded that Amazon collect sales taxes just like any other retailer, the online giant actually threatened to leave the state. More recently, Amazon CEO Jeff Bezos falsely claimed that collecting sales taxes from his company would be unconstitutional.

In response to the Great Recession and the continuing high unemployment that has followed in its wake, Congress wisely extended unemployment benefits beyond the traditional 27 weeks, with unemployed workers in the hardest hit states eligible for up to 99 weeks of benefits. These extended benefits were put in place over the strong objections of Republicans, who first filibustered an extension on the Senate floor, and then only agreed to approve the extension if it were paired with tax cuts for the wealthy.

Proving that the GOP is not through picking on those who lost their jobs during the recession, GOP 2012 hopeful Rick Santorum appeared on CNBC this morning where he claimed that extended unemployment benefits have created “too big of a social safety net”:

I’m talking about success from the standpoint of traditional capitalist success, in investing, in innovating, in succeeding, and not saying, well, we’re going to tax you more, we’re going to regulate you more because you’re successful. No. And by the way 99 weeks of unemployment — I always use the example, in Pennsylvania we have one of our big, favored companies is Hershey. I remind people that Milton Hershey, the person who started the Hershey chocolate company, went bankrupt four times. Now imagine if back in the late 1800′s you’d had a program of 99 weeks of unemployment benefits. Would there ever have been a Hershey chocolate company? And probably the answer is no! So we’re not doing favors by creating too big of a safety net, nor are we doing any favors by hammering businesses who are successful.

Watch it:

The sad truth is that the nation has to create millions of jobs just to get back to the employment level from before the recession. There were still 7 million fewer jobs in April 2011 than in December 2007, and 43 percent of the unemployed have been out of work for six months or more. As CAP chief economist Heather Boushey noted, “there is a large backlog of workers waiting in the unemployment queue as well as millions who have given up searching, but still want to work.”

As to Santorum’s particular argument — that unemployment benefits discourage people from looking for other work — research by the San Francisco Federal Reserve has found that workers who qualify for unemployment benefits stay unemployed just 1.6 weeks longer than those who do not qualify for such benefits. Republican lawmakers in several states, though, have taken Santorum’s advice to the extreme, cutting benefits to the bone.

As I’ve been documenting, Republicans in both the House and Senate have been refusing to reauthorize an expired trade assistance program until after the Obama administration moves several pending free trade agreements forward. The administration, in turn, said that it won’t move the FTAs until trade assistance is reauthorized.

One of the loudest voices against renewing the trade assistance program — which helped more than 100,000 workers last year cope with job loss that was a result of international trade — has been Sen. Orrin Hatch (R-UT). “[Tying trade agreements] to unrelated spending is hugely disappointing to American workers, farmers, and job creators, who are losing out to foreign competitors with every passing day. It makes no sense to shut the door on increasing U.S. exports by over $10 billion in order to fund a costly program,” Hatch said earlier this month.

But Hatch now has another justification for allowing workers hurt by trade to fend for themselves. According to Hatch, the country simply can’t afford to help them:

“One of the reasons I don’t think this will pass, is they want $7.2 billion at a time when this country is basically broke,” Hatch said. “Why hold up three agreements that are beneficial to the American worker?”

To push for more free trade deals while refusing to authorize more trade assistance to help the inevitable victims of such trade is bad enough. But to use the canard of “we’re broke” to justify it is even worse.

After all, the country is not broke. As the Center for American Progress’ Michael Linden and Michael Ettlinger note, “The notion that the United States is ‘broke’ is a popular talking point for conservative lawmakers…But we’re not broke. Not at all. If we were, it would mean that we were out of money, unable to pay our bills, or meet our financial obligations. We are none of those things.” Bloomberg’s David Lynch added that the notion the U.S. is broke “is a widely shared view with just one flaw: It’s wrong.”

Hatch and the rest of the Republicans standing against reauthorizing trade assistance refuse to admit that free trade has a downside, and that the government has a responsibility to help those most affected. As Sen. Sherrod Brown (D-OH), “they continue to want to do free trade on the cheap.”

Across the country, the House Republican budget plan — designed by Rep. Paul Ryan (R-WI) — has faced the ire of Main Street Americans, who are outraged that it effectively ends Medicare. But the plan also includes steep cuts to discretionary spending that would gut services and investments upon which Main Street depends.

For instance, the budget dramatically cuts back Pell Grants to college students and guts funding for food stamps. Ryan actually found 2/3 of his cuts in programs benefiting low-income Americans.

But at the same time, the budget would lower the top marginal tax rate on the wealthiest Americans to a 25 percent, returning the tax rate on the richest to pre-New Deal levels. The Center for Budget and Policy Priorities (CBPP) demonstrates this with the following graph:

While the House Republican budget passed the House of Representatives with the votes of all but four Republicans, it failed to pass in the Senate. But it did receive 40 votes, including the votes of all but four members of the Senate Republican caucus — with Sen. Rand Paul (R-KY) actually voting against it because it wasn’t conservative enough.

Yet this position is radically out of step with Americans. A New York Times/CBS News poll released last month found that 72 percent of Americans want to raise taxes on Americans who earn more than $250,000 a year — with even 55 percent of self-identified Republicans supporting such a measure. By taking the position that taxes should be dramatically cut on the richest Americans, Republicans aren’t only out of touch with the country as a whole, they aren’t even representative of their own party’s self-proclaimed members.

Gov. Sam Brownback (R-KS) has been pushing to implement what he calls “tax reform” in the Sunflower State — with the main thrust of his effort focused on reducing the Kansas’ income tax:

“I think there’s a combination of things that need to be looked at, but to me the tax that’s one of the most sensitive for economic growth is the state income tax,” Brownback said after an event in Lecompton. “To look at the total picture is what we want to do, with an eye toward getting the state income tax down.”

But cutting the state income tax would make Kansas’ already regressive tax system significantly worse. As the Institute on Taxation and Economic Policy noted, Kansas’ tax system already requires the poorest 20 percent of residents to pay nearly 10 percent of their income in taxes, while the richest one percent of residents pay less than six percent.

In fact, the only tax in the state that requires the rich to pay more than the poor is the income tax, the one that Brownback is intently focused on lowering. As Citizens for Tax Justice pointed out, the effort Brownback has in mind will “reduce the equity and sustainability of Kansas’s tax system.”

Brownback is moving this plan forward even though Kansas’ state Senate isn’t very interested in going along. After all, the Kansas state House already passed a bill that would have eliminated the state’s income tax and cut the corporate tax rate in half, but that was too much for the Senate, as the cost of the tax cuts was $739.4 million over two years. That revenue would have been foregone at the same time that Kansas is cutting its public school funding by nearly six percent.

But Brownback is not giving up, saying that he wants a plan for an income tax cut in place by the end of the year. “That would be great if the governor would facilitate that,” said House Speaker Mike O’Neal (R). However, the state senate is still very much on the fence, with Senate President Steve Morris (R) saying, “I don’t think that we’re at that point…It was not exactly well received.”

Back in February, House Republicans allowed an expansion of federal trade assistance to expire after new Tea Party members threw a fit about renewing spending for a program meant to aid workers who lose their jobs due to international trade. Workers who qualified under that particular expansion, which was funded by the 2009 Recovery Act, made up more than half of the 280,000 workers who benefited from trade assistance last year.

Republicans in the Senate then blocked consideration of the program’s renewal, saying they refused to move on it until several pending free trade agreements were approved. But at the same time that they have left the program to languish and die, Republicans have been making passionate defenses of it on behalf of their constituents, as the Hill found:

Several Republican lawmakers have sought help from a now-expired trade aid program that many in their party have bristled at reauthorizing. In letters and faxes sent to the Labor Department obtained by The Hill under the Freedom of Information Act (FOIA), 11 Republicans in the House and Senate forwarded constituents’ pleas or outright supported their petitions for aid under the Trade Adjustment Assistance (TAA) program. [...]

Many congressional aides dismissed the letters as constituent casework and not representative of where their lawmakers stand on renewing TAA. Nonetheless, several members made a forceful case for petitions to the trade aid program.

Rep. Sean Duffy (R-WI), for instance, asked the Labor Department to approve a constituent’s request for benefits because, “until lawmakers are able to solve the trade problems to level the playing field … it is incumbent upon us to provide assistance for the families who suffer as a result [of] these practices and conditions.”

But when asked for comment, Duffy’s spokesman parroted the Republican line regarding moving the trade agreements forward. Others who sent letters to the Labor Department looking to aid constituents in obtaining benefits include House Majority Leader Eric Cantor (R-VA) and Sen. John McCain (R-AZ).

Regardless of the merits of the trade deals in question, trade assistance should be reauthorized. Inevitably, more free trade produces both winners and losers, and trade assistance helps those who wind up with the short straw. And as these letters make clear, several Republicans feel the same way, even as their party holds trade assistance benefits hostage.

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section.

– The House of Representatives is expected to reject an increase in the nation’s debt ceiling today, “setting the stage for a long summer of heated negotiations.”

– Democrats hitch a ride on the auto industry’s rebound.

– The U.S. homeownership rate “is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier.”

– Bank of America forecloses on one of its own branches.

– Former Senator Judd Gregg (R-NH) joins Goldman Sachs as an international adviser.

– Speaking of Goldman, the mega-bank made a very expensive typo.

– “Two former admissions recruiters at the University of Phoenix have filed a federal whistle-blower lawsuit that accuses the giant for-profit university of continuing to violate a ban on paying recruiters based on the number of students they enroll,” the Chronicle of Higher Ed reports.

Welcome to ThinkProgress Economy, a new ThinkProgress blog focused on reporting and analyzing the latest economic policy news. Thanks for coming by!

Though it was just a few years ago, the 2008 economic crisis has already largely disappeared from the daily political discourse. But its effects are still being felt all across the country, as evidenced by an unacceptably high unemployment rate, continued foreclosures, and economic growth that too slow to get the country out of the jobs hole in which it finds itself. Corporate profits have rebounded, but Main Street’s pain is still all-too-real.

Even with those miserable indicators, conservatives in Congress are pushing their same old economic prescriptions: tax cuts for the country’s wealthiest paired with steep cuts to programs upon which working Americans depend. Republican governors across the nation have used battered state budgets as an excuse to launch an assault on the rights of working people, while an emboldened House Majority is aiming to slow down new rules aimed at reining in the titans of Wall Street.

There are, of course, better solutions. ThinkProgress Economy will be covering everything from tax and budget negotiations on Capitol Hill to the latest instance of corporate malfeasance. We will be keeping an eye on housing policy, the labor movement, the implementation of financial reform, and much more, as we work towards building a sustainable, progressive economy based on broadly shared prosperity

Please keep visiting TPEconomy and feel free to leave comments on our posts. You can also follow us on Twitter at @TPEconomy. Enjoy!

The struggles of families and businesses over the past seven years are linked directly to high profits for oil companies due to high energy price volatility. A new report from the Center for American Progress finds that families and businesses are exposed to massive price swings for the vast majority of their energy spending. CAP Senior Fellow Christian E. Weller and Special Assistant for Economic Policy Jaryn Fields explain that these large price swings for gasoline and other energy prices make it even more difficult for families, businesses, and ultimately the entire American economy to plan for the future:

Rising gasoline and energy prices should signal to families, businesses, and government policymakers that it is time to invest in energy efficiency and alternative energy sources. Higher gas and energy prices should lead to less demand and increased searches for alternatives. Yet the combination of high prices followed by increasing volatility quickly obscures these basic responses to higher prices.

This confusing energy price dynamic makes it difficult for families to budget expenses, estimate commuting costs, and make the informed economic decisions that will impact their households since families cannot really see where prices are heading amid the massive volatility. Many families consequently wait to buy a more fuel efficient car, or move closer to public transit, among other things, until they get a better sense of where prices are really headed. Businesses will similarly delay energy saving investments in more fuel efficient car and truck fleets, as will state and local governments and the federal government. And both consumers and businesses hold off on other energy-saving investments such as energy efficiency repairs or upgrades to homes, office buildings, and factories. The report’s authors find:

— Consumers delay purchasing a car after experiencing a period of high gasoline price volatility.

– Families spend less on home improvements and home purchases following a period of high energy price volatility.

– Businesses also reduce their investment spending after periods of high energy price volatility.

– The oil industry, in comparison, profits from periods of high volatility.

The so-called profit rate (profits to assets) of the oil industry is significantly higher during times of high energy price volatility, likely because the price spikes underlying increased volatility result in higher retail prices and more consumer spending, without an equal offsetting effect when prices go down again. The increased size of oil companies’ trading divisions may also play a role, as the companies are able to make profits through purely financial strategies that exploit volatility.

To rein in energy price volatility, CAP recommends that we clean up commodity markets and end our dependence on volatile oil. Increased transparency and more regulatory oversight over key markets, where energy prices are determined, will cause speculators to have less influence over commodity prices. Enacting comprehensive energy and climate legislation that fosters more energy efficiency and more alternative sources of energy will make an even larger and sustained difference for families and business.

Read the full report, Not Again: Why Energy Price Volatility Hurts Families, Businesses, and the Economy.

John Griffith, a Research Associate with the Doing What Works project at the Center for American Progress Action Fund, co-wrote this post. Seth Hanlon, Director of Fiscal Reform for Doing What Works, contributed to the graphic.

In a hearing this morning, the House Ways and Means Committee examined “improper payments” made in the Earned Income Tax Credit program, which distributed $64 billion in refundable tax credits last year to low-income families during the worst recession in 70 years. “Refundable tax credits not only reduce an individual’s tax liability, they can also result in payments from the government when the credits exceed one’s tax liability; meaning that millions of Americans have been able to eliminate any income tax liability and even get a check back from the government via refundable credits,” said oversight subcommittee chairman Charles Boustany (R-LA).

So instead of going after tax scofflaws that effectively rob the national treasury of hundreds of billions a year, House Republicans have decided to target one of the country’s largest anti-poverty programs, one that Ronald Reagan called “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”

Of course, the IRS and Congress must be vigilant about all errors — and some overpayments undeniably occur with the EITC — but policymakers who are serious about reducing the deficit could focus on far larger examples of waste in our federal tax system. For example, the government loses $100 billion every year in revenue to offshore tax havens. It loses another $90 billion when multinational corporations shift their profits out of the country. While low- and middle-income families sacrifice to pay their share, dozens of profitable U.S. corporations like Exxon Mobil and Boeing manipulate loopholes to dodge federal taxes altogether.

As the Center on Budget and Policy Priorities noted, charges of overpayments in the EITC are likely overblown anyway:

First, the commonly cited EITC error rate — 23 to 28 percent of EITC payments are said to represent overpayments — is likely to overstate the actual level of overpayments (although the overpayment level is clearly substantial). This is true for several reasons. First, as explained below, the 23 percent to 28 percent figure is based on IRS studies of tax data from 2001 and 2006 that suffer from some significant methodological problems. (The IRS is scheduled to complete and issue a new study of EITC overpayments in 2012, although the key methodological problem will remain.) Second, as also described below, the IRS has instituted various new enforcement actions and error-reduction techniques in the last several years that may be helping to reduce overpayments.

House Republicans — who have voted time and again to both protect tax loopholes for companies that ship jobs offshore and to preserve billions in federal payments to, among others, Big Oil companies — seem to only find it worrisome when a poor family has no federal tax bill (while, of course, paying their fair share of state and local taxes). Multinational corporations, meanwhile, can pay as little as they please, free from criticism.

For weeks now, Republicans have been claiming that they will refuse to raise the nation’s debt ceiling — thus forcing the U.S. to default on some of its obligations — unless Democrats agree to various policies on the conservative wish-list, including a balanced budget amendment, cuts to Social Security, or corporate tax reductions. To justify this blatant hostage-taking, Republicans have been claiming that having the U.S. default on some of its payments wouldn’t necessarily be a bad thing.

For instance, Sen. Pat Toomey (R-PA) said, “I don’t think it’s going to have an adverse impact on the economy for the days or weeks or perhaps even months that this would continue.” “The case has not been made that this is an absolute necessity,” said Rep. Bill Huizenga (R-MI). Rep. Devin Nunes (R-CA) even said that “by defaulting on the debt, in the short and long term, it could benefit us to go through a period of crisis that forces politicians to make decisions.”

This is, of course, nonsense, as failing to raise the debt ceiling would have several adverse consequences on both the U.S. and global economy. In fact, the spending cuts that would have to occur under such a scenario would wipe out all of the estimated 2011 economic growth in just 95 days. Bank of America analysts wrote that failing to raise the debt ceiling would likely tip the U.S. back into a recession. And as CAP’s Christian Weller noted, it would be terrible for the still-struggling housing market:

If Congress fails to raise that ceiling then the U.S. housing market would most likely experience a severe double-dip contraction marked by much lower home sales and depressed house prices. That in turn would spark a return of the economic pain of the past few years for many families as foreclosures would remain at or near record highs, and jobs in key sectors, such as construction, would disappear again.

Weller laid out several consequences for the housing sector if the ceiling isn’t raised, including:

– Mortgage interest rates will rise more than U.S. Treasury rates. An increase in the 10-year Treasury rate by half a percentage point — which is likely if the debt limit isn’t raised — could translate into a jump in the mortgage rate equal to 0.66 percentage points, increasing mortgage rates by close to 14 percent from their current levels to their highest levels since 2008.

– Mortgage rates will remain high for some time. Shocks to Treasury rates typically translate into mortgage rates rising and staying high. The housing market consequently would not get a reprieve once the federal government has to delay debt payments — even if the debt ceiling is eventually raised.

– New home sales could drop to new record lows. The relationship between mortgage rates and new home sales over the past decade suggests that between 27,300 and 31,600 fewer new homes will be sold in 2011 because of the increase in mortgage rates.

– The economy will suffer. Count on a repeat of the recent housing market-led downturn of the economy. The housing market’s decline during the Great Recession of 2007-2009 dragged down the economy for long afterwards. The economy would have been $222 billion larger (in 2011 dollars) than it was in March 2011without the decline in new home sales and home extensions alone from December 2007 to March 2011.

– Construction jobs would disappear again. Residential construction jobs fell by 1.1 million from December 2007 to December 2010, accounting for 13.9 percent of the job losses during this period. Residential construction employment has only started to level off in the spring of 2011, putting an end to more than three years of massive job losses.

House Republicans have already scheduled a vote to raise the debt ceiling for next week that is designed explicitly to fail.

Our guest blogger is Danielle Lazarowitz, Special Assistant for the Economic Policy Team at the Center for American Progress Action Fund.

As tough as the tax deal was to swallow last December, it is about to get even worse, as Republicans are trying to eliminate the key piece of the agreement that helped working Americans. At the time, President Obama had to make the difficult compromise of extending the high-end Bush tax cuts, an unnecessary tax break for millionaires, in order to keep tax rates low for 98 percent of Americans and to continue funding for extended unemployment benefits through the end of 2011.

Earlier this month, House Republicans introduced the Jobs, Opportunity, Benefits, and Services Act of 2011 or, as they prefer to call it, the JOBS Act of 2011, which will cut unemployment benefits and allow states to apply their UI money to other things (such as tax cuts). As the Center for American Progress’ Heather Boushey and Jordan Eizenga wrote last week, “the JOBS Act, which provides an incentive for states to cut unemployment benefits, is less about creating jobs and more about hurting those who have lost one.”

And because it would cut the unemployment benefits that were a key part of the tax deal, this legislation amounts to House Republicans breaking their word. “In December, the price that had to be paid in order to give unemployment benefits to America’s workers was to give tax cuts to the richest people in America. That happened — but now they want to renege on the other side of it,” said House Minority Leader Nancy Pelosi (D-CA) at a press conference.

With national unemployment at 9 percent and more than 40 percent of the nation’s unemployed out of work for over six months, it critical that extended unemployment benefits remain in effect. The benefits are not only an important safety net for unemployed workers who lost their jobs through no fault of their own, but good for the economy. Economist Wayne Vroman estimates that for every dollar spent on unemployment benefits, an additional $2 was put back into the economy. Meanwhile, Moody’s Analytics economist Mark Zandi estimates that making the Bush income tax cuts permanent only puts 32 cents back into the economy for every dollar spent.

Even Republican governors see the importance of this program. As Arizona Gov. Jan Brewer (R) said last week as she endorsed a proposal to extend unemployment benefits, “We know that we have lots of people here in Arizona that are depending on those dollars to put food on the table for their families.”

The passage of JOBS Act would void the bipartisan agreement made in December to help the nation’s unemployed. If we can’t trust republicans to keep their word on an agreement as substantial as the tax compromise, we can only guess who they will betray next.

Even as American workers and families struggle with the lingering effects of the Great Recession — a recession spurred in large part by Wall Street malfeasance — the nation’s biggest banks have rebounded, as have the pay packages of their CEOs. For instance, JP Morgan Chase CEO Jamie Dimon received more than $20 million in compensation for 2010, while Morgan Stanley CEO James Gorman made more than $15 million.

But American workers saw their pay grow by a measly two percent last year. And this is nothing new. Between 2000 and 2009, American workers experienced a “lost decade,” with incomes falling nearly five percent. As Marie Diamond noted, “the lack of wage growth has made it difficult for average Americans to keep up with rising prices on everything from gas to food.” Big bank CEO’s, meanwhile, made an average of $19 million per year between 2001 and 2010, as Fortune’s Colin Barr showed today:

Over the past decade the too-big-to-fail banks have showered a staggering $1.15 billion in cash and stock on a changing cast of hard-charging if inept chief executives, according to regulatory filings. That works out to an average paycheck of $19 million a year – this in a decade in which the biggest banks ripped off everyone in sight on their way to very nearly turning the lights out on the U.S. economy.

It’s not only in the banking industry that CEO pay has come roaring back. In 2010, median CEO pay climbed 27 percent. Median CEO compensation last year was $9 million, the highest since 2007, while the average CEO bonus grew by nearly 20 percent. CEOs at America’s largest companies now earn 343 times more than the typical worker. In 1970, the average CEO earned 28 times as much as the typical worker.

This disparity is contributing towards America’s sky-high income inequality, which is currently the worst its been since the 1920s. Currently, the top one percent of households make nearly 25 percent of the total income in the country, after they made less than 10 percent in the 1970s. Between 1980 and 2005, “more than 80 percent of total increase in Americans’ income went to the top 1 percent.”

House Republicans have been facing a backlash after voting for a plan authored by House Budget Committee Chairman Paul Ryan (R-WI) that would dismantle Medicare while cutting taxes for the rich. But that plan also included deep cuts in discretionary spending, the destructiveness of which is becoming more apparent as the budget process moves forward.

For instance, the Republican budget would implement a 15 percent cut in the agency tasked with policing oil markets, even with energy speculation at an all-time high. That same portion of the budget — which is being marked up by the House Appropriations agricultural subcommittee — would also cut $832 million from the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), a program that provides low-income women and children with food, counseling, and health care.

As the AP reported, Republicans claim that the cuts “are taken from excess dollars in those accounts, and participants won’t see a decrease in services.” However, the Center on Budget and Policy Priorities ran the numbers and found that, with the expected increase in food prices over the coming months, hundreds of thousands of women and children would be bumped from WIC under the GOP’s plan:

House Republicans are proposing a cut in the WIC nutrition program that would force WIC to turn away 325,000 to 475,000 eligible low-income women and young children next year…Economists have varying views on the size of the likely increase in food prices over the next 18 months. If the cost of WIC foods increases by 2 percent between fiscal years 2011 and 2012 — the smallest increase likely — the proposed funding cut would force WIC to serve roughly 325,000 fewer people in 2012 than in 2011. If, as some food price experts believe likely, the price increase is 5 percent, WIC would have to be cut by roughly 475,000 people. Both of these estimates reflect the use of all contingency funds, as well as the use of carryover funds from fiscal year 2011, to close funding shortfalls.

According to the Government Accountability Office, every dollar invested in WIC “generated $2.89 in health care savings during the first year after birth and $3.50 in savings over 18 years.” As Rep. Jim McDermott (D-WA) said regarding an earlier attempt by Republicans to cut WIC, “On two levels [the cuts are] wrong. One is they’re wrong morally…But on a second level it’s fiscally stupid, because if you don’t feed kids, if you don’t feed mothers and get them up to speed, they deliver a low birth-weight baby that then you spend hundreds of thousands of dollars dealing with in the premie units of hospitals.”