A bipartisan groups of attorneys general have been working on a settlement with the nation’s biggest banks over the foreclosure abuses that came to light several months ago, including the widespread use of “robo-signers.” The AG’s have been pushing for the banks to pay a monetary penalty — in the form of reducing loan principal for troubled borrowers — but eight Republican AG’s have broken with the group and sided with the banks, saying that they shouldn’t have to pay for their mortgage abuses. One Republican AG — Virginia’s Ken Cuccinelli — even derided principal reductions as “welfare.”

The Republican AG’s claim that principal reductions would create an incentive for borrower’s to default on their loans. As it turns out, according to a report today in Bloomberg, the Republican AG’s say this because it is exactly what banking lobbyists tell them to say:

Some of those attorneys general met yesterday in Atlanta to discuss the issue, said Adam Temple of the Republican State Leadership Committee. Bob Davis, an executive vice president with the American Bankers Association, spoke to the group in Atlanta, telling them principal reductions don’t work, he said in an interview. Loan balances must be reduced so much for borrowers struggling to make payments that it’s a better deal for lenders to foreclose instead, he said.

Dave Dayen pointed out that principal reductions are the most sustainable form of loan modification, while the IMF has said that banks can aggressively write down loans with “limited” effect on their balance sheets. As economist Paul Krugman explained, “the proposed settlement only calls for loan modifications that would produce a greater ‘net present value’ than foreclosure — that is, for offering deals that are in the interest of both homeowners and investors. The outrageous truth is that in many cases banks are blocking such mutually beneficial deals, so that they can continue to extract fees.”

Several of the eight AG’s who are pushing the bank line, in addition to receiving face to face briefings from bank lobbyists, had their campaign coffers filled in their last election cycle by the financial services industry*:

ATTORNEY GENERAL SCOTT PRUITT (R-OK): Pruitt received $115,000 from the finance/banking/real estate industry in 2010, his largest contributing industry, including $27,000 from securities and investment firms and $17,000 from commercial banks.

ATTORNEY GENERAL GREG ABBOT (R-TX): Abbot received more than $1 million from the finance industry, his largest contributing industry, including almost $185,000 from securities and investment firms and $225,000 from commercial banks and lending institutions.

ATTORNEY GENERAL KEN CUCCINELLI (R-VA): Cuccinelli received nearly $300,000 from the finance industry, his largest contributor after the Republican party, including $58,000 from securities and investment firms.

ATTORNEY GENERAL SAM OLENS (R-GA): Olens received $195,000 from the finance industry, his second largest contributing industry, including $17,000 from securities and investment firms and $35,000 from commercial banks.

ATTORNEY GENERAL PAM BONDI (R-FL): Bondi received nearly $300,000 from the finance industry, including $57,500 from securities and investment firms.

ATTORNEY GENERAL ALAN WILSON (R-SC): Wilson received almost $120,000 from the finance industry, his second largest contributing industry, including $11,350 from commercial banks.

ATTORNEY GENERAL JOHN BRUNING (R-NE): Bruning received almost $71,000 from the finance industry, including $12,540 from commercial banks.

ATTORNEY GENERAL LUTHER STRANGE (R-AL): Strange received almost $550,000 from the finance industry, his largest contributing industry, including $235,375 from securities and investment firms and $82,700 from commercial banks.

Republicans in Congress have also come out against the proposed settlement, falsely claiming that helping troubled homeowners would “impede” the economic recovery.

*Totals compiled by ThinkProgress using data from The National Institute on Money in State Politics. All totals are for the 2009 or 2010 election cycle.

Late last week, the Washington Post reported that House Majority Leader Rep. Eric Cantor (R-VA) backed away from the most divisive part of the Republican budget plan, the effort to end Medicare as we know it by transforming it into a privatized voucher program with limited benefits. Although Cantor’s office has denied the Post report, other Republicans, including Sens. Rob Portman (R-OH) and Lamar Alexander (R-TN) have been reluctant to embrace the budget plan. Perhaps most troubling for backers of the so-called “Ryan Plan,” Ways and Means Committee Chairman Rep. Dave Camp (R-MI) has said he will not bring up the bill in his committee.

Freshman Rep. Mick Mulvaney (R-SC) is a rising star in the GOP who has made a name for himself on budget issues. A strong proponent of the Republican budget, Mulvaney told ThinkProgress last Friday that he is determined to see the GOP carry the “separate bills through committees” to “put the Ryan plan in place.” Asked about reports of reluctance by his colleagues, including Camp and Cantor, Mulvaney was undeterred. “I’m hoping they do what they said,” Mulvaney told us:

MULVANEY: I’ve heard a lot of things. I know what leadership told us Thursday, which was that as we move into discussion of the debt ceiling, the Ryan plan is the plan, and that everything is still on the table. We’re not taking Medicare off, we’re not taking Medicaid off. Really seriously, if you’re serious about balancing the budget, you have to be serious about entitlement reform. [...]

FANG: Do you think they will move it through all the relavant committees to bring it to fruition as a serious proposal?

MULVANEY: I hope so! Listen, you and I both know the only way to put the Ryan plan into place, the policies, is to move those separate bills through committees. So I’m hoping they do what they said.

Watch it:

ThinkProgress attended one of Mulvaney’s town hall meetings last month, where he gave a presentation on the Ryan budget to a small audience in Florence, South Carolina. Although the crowd that day was largely receptive to Mulvaney’s message, the same could not be said in nearly identical town halls across the country. Republicans, from Rep. Paul Ryan (R-WI) himself, to lawmakers from as far south as Florida and as far north as New Hampshire, have faced a backlash because of toxic elements of the GOP plan, which cuts taxes on the rich, lowers the corporate income tax rate, and radically diminishes Medicaid, in addition to ending Medicare. Even Tea Party firebrand Rep. Michele Bachmann (R-MN) has refused to endorse the Medicare-ending provisions of the plan (which she voted for) recently.

While Mulvaney, who has been picked by GOP leaders as a spokesperson on budget-related issues, remains committed to the plan, it is still unclear if his colleagues will sustain the same wherewithal to slash services for the poor and elderly.

Speaker of the House John Boehner (R-OH) traveled to Manhattan on Monday to deliver a speech to the Economic Club of New York, during which he said that House Republicans will refuse to raise the nation’s debt ceiling unless government spending is reduced by “trillions.” (At the same time, Boehner admitted that failing to raise the debt ceiling would be “irresponsible.”) Yesterday, 2012 GOP presidential hopeful Tim Pawlenty released a statement praising Boehner’s call and adding that Republicans should demand two favorite Republican budget gimmicks — a balanced budget amendment to the Constution or a cap on federal spending — in return for agreeing to raise the debt ceiling:

While President Obama continues to offer America a false choice between more debt or default, I applaud Speaker Boehner’s comments yesterday. Speaker Boehner is right that we must offset any increase in the debt ceiling with trillions of dollars of real spending cuts. We also need a mechanism, such as a Balanced Budget Amendment or real spending caps to ensure that we never get into this debt mess again. Now is the time to say ‘enough’ and force Washington to make the hard choices to fix our budget mess.

A balanced budget amendment is a cockamamie conservative solution to all that ails the federal budget, but, as former Reagan official Bruce Bartlett has clearly explained, actually implementing one is a “phony” solution that would force the government to make recessions worse by slashing spending during a downturn. That Pawlenty would risk the country’s credit worthiness over such a scheme says something about his priorities.

Pawlenty’s second demand, a cap on spending as a percentage of the overall economy, is an idea that has been gaining steam in Washington recently. But, in addition to forcing the government into debilitating cuts to Medicare and Social Security, a cap in no way ensures, as Pawlenty put it “that we never get into this debt mess again.” After all, there are two sides to the federal ledger: spending and revenue. Capping one without paying attention to the other does not result in an instantly balanced budget. If government spending is consistently capped at 20 percent of GDP, but revenue is consistently lower, the debt goes up!

Failing to raise the debt ceiling would have widespread consequences for both the U.S. and global economy, but Republicans continue to play games, asking for any number of concessions in return for an action that all responsible parties agree is necessary. Pawlenty is merely encouraging this irresponsible behavior by laying out pie-in-the-sky demands that would require, as Paul Krugman noted, “savage cuts in federal programs.”

All around the country, Americans are feeling the pinch of high gas prices. Yet one group that is not only not feeling the pain of these prices but is profiting off of them are the big oil companies.

In fact, ExxonMobil, “the largest American oil company,” raked in $30.5 billion in profit in 2010, “making it the most profitable Fortune 500 company for the eighth year in a row.”

The Center for American Progress’s Valeri Vasquez has put out a new report titled “Exxon Mobil Dodges the Tax Man,” which finds that the effective income tax rate for the average American is higher than the effective rate for the oil giant over the past few years. The effective tax rate for the average American in 2007, the last year for which data is available, was 20.4 percent. The annual Exxon federal effective rate between 2008 and 2010, meanwhile, was 17.6 percent:

As ThinkProgress has previously documented, important services and public investments in Main Street America continue to be cut while the wealthiest among us are paying the lowest taxes in a generation. Meanwhile, a number of major corporations are going quarters and/or years without paying any federal corporate income taxes at all.