Congressional Republicans last week, as we’ve been documenting, blew up negotiations meant to produce a deal to raise the nation’s debt ceiling due to their insistence that no taxes be increased anywhere, even on those making more than half a million dollars annually. Summing up the attitude that the GOP has taken toward the obvious need to raise new revenues, House Ways and Means Committee Chairman Dave Camp (R-MI) said in an interview with the Wall Street Journal that, if given a choice, he would rather have a bigger deficit than see taxes go up on anyone, even the richest Americans:

MR. WESSEL: Would you rather reach [a deficit of] 3% [of GDP] even if it required some revenue increases, or hold the line on revenue and settle for a higher deficit?

MR. CAMP: What we want to do is not have higher revenues. Because the issue is who’s going to pay them. Their idea is always, quote unquote, “rich people over $250,000.” Half of that, as we know, is small business, which is the very sector we need to see some growth in.

For starters, Camp is simply wrong that half of those making more than $250,000 are people running small businesses. This is a common Republican claim that has no basis in reality.

But its Camp’s clear pronouncement that a bigger deficit is preferable to raising taxes even on the richest two percent of Americans that makes his priorities clear. When asked “if you had to raise revenues, where would be the least damaging place to look?” Camp literally refused to name anything. “I can’t think of a least damaging place,” he said.

However, Camp, unlike many of his Republican colleagues, did say that the debt ceiling needs to be raised before the August 2 deadline identified by the Treasury Department. “We need to because we can’t default,” he said. “The concern is, if you get close to that date without a deal, what the markets may do.” Several other Republicans have floated the possibility of forcing the U.S. over the cliff and into defaulting on some obligations for a short period while a deal is brokered.

At different times, former Massachusetts Gov. Mitt Romney (R) has both supported and derided the Troubled Asset Relief Program (TARP), better known as the bank bailouts of 2008. Most recently, Romney called it a “slush fund” that “should be shut down.”

Today, however, Romney’s 2012 presidential campaign stopped at Lincoln Financial Group in Concord, New Hampshire, where hundreds of the company’s employees turned out to hear Romney talk about jobs and the economy. Lincoln Financial Group and its parent company, Lincoln National Corporation, took $950 million in TARP funds in 2008.

That’s not the worst of it, though. Originally, Lincoln Financial was eligible for much less in TARP funding because it did not qualify for money marked for thrift savings companies. To become eligible, it bought a small thrift savings company that, on its own, would have received only $350,000 in TARP funding. Because of how TARP funding was calculated, however, Lincoln Financial was eligible for the $950 million it received solely because it added the small thrift savings company. In 2010, the Special Inspector of TARP issued an oversight report about the program in which he detailed the way Lincoln Financial gamed the system to receive more funding:

Hartford and Lincoln were able to obtain CPP funds by buying small thrift savings institutions and becoming thrift/savings and loan holding companies, thereby meeting the technical criteria for receipt of CPP funds. The amount of CPP funds provided, however, was then determined by the assets of the holding company (i.e., the parent insurance company), not just the assets of the much smaller qualifying thrifts. In the case of Lincoln, for example, the company was able to obtain $950 million in TARP funds after it acquired a thrift that, on its own, would have been able to obtain at most $350,000 (if it would have qualified for CPP funding at all). Moreover, in using TARP funds, there was no requirement that TARP funding be used in connection with the subsidiary thrifts’ activities. As it happened, the insurance companies reported that they used little (in the case of Hartford) or no (in the case of Lincoln) TARP funds in connection with the subsidiary thrifts’ activities but rather used the vast bulk of the funds to support their insurance businesses. Stated another way, simply by purchasing comparatively tiny thrifts, Hartford and Lincoln — companies whose primary businesses (unlike other CPP participants) have little to do with lending to consumers and businesses — gained access to more than $4.3 billion in taxpayer funds, an amount that is many multiples of the thrifts’ total assets.

In 2009, Romney told the crowd at the Values Voters Summit that, when the government starts “bailing out banks…we have we have every good reason to be alarmed and to speak our mind.” That apparently wasn’t the case today. According to reports from the event, Romney never mentioned the bailouts even while standing inside of a company that benefited directly from them.

Our guest blogger is Adam Hersh, an economist at the Center for American Progress Action Fund.

Govs. John Kasich (R-OH), Rick Snyder (R-MI), and Scott Walker (R-WI)

There’s a new cult of economic thought sweeping the nation — or at least many Republican (and even some Democratic) political circles. Its adherents cling to the erroneous belief that sharp government spending cuts will revitalize economic growth and create much needed new jobs

Speaker of the House John Boehner (R-OH) is an ardent follower of this Cut-Grow cult, as are a number of high profile governors. For instance, Gov. John Kasich (R-OH) declared, “We’re going to have to reduce spending…to create a platform for economic growth.” When Gov. Chris Christie (R-NJ) delivered his budget to the state Legislature he argued, “We must continue to cut government spending” to create jobs and prosperity for New Jersey families. Gov. Scott Walker (R-WI) vowed his budget “lays [the] foundation to create jobs.”

Now these Republicans want the American public to drink a giant glass of their Cut-Grow Kool-Aid. But the data actually show the opposite of their claims to be true: steep spending cuts are hampering economic recovery in some states, while other states that resisted cuts or increased spending are now seeing declining unemployment rates, faster private-sector job creation, and stronger economic growth.

From the start of the Great Recession in December 2007 through the end of 2010, 24 states have cut government spending by an average of 7.5 percent after adjusting for inflation. Another 25 states have expanded government outlays by an average of 11 percent. (The analysis excludes Alabama due to data problems reported by the National Association of State Budget Offices). And the differences in these states’ economic performance could not be more self-evident. Relative to national economic trends, states that increased spending enjoyed on average:

• 0.2 percentage point decrease in the unemployment rate

• 1.4 percent increase in private employment

• 0.5 percent real economic growth since the start of the recession

In contrast, states that cut spending saw on average

• 1 percentage point increase in the unemployment rate

• 2.1 percent loss of private employment

• 2.9 percent real economic contraction relative to the national economic trend

Steep state spending cuts have gone hand-in-hand with rising unemployment rates, falling private-sector payroll employment, and lower growth in state’s gross domestic product, or GDP — the sum of all goods and services produced by labor and equipment in each state, less imports. Read more

House Majority Leader Eric Cantor (R-VA) blew up debt ceiling negotiations with Vice President Biden last week due to the GOP’s insistence that any budget deal not include one dime of revenue. As we’ve been documenting, the GOP walked away in order to protect Americans making more than $500,000 and large corporations from seeing their taxes increase at all.

One of the other sources of new revenue suggested by Congressional Democrats during the negotiation was cutting oil subsidies. But over the last few years, Republicans have continually gone to bat to protect these subsidies, and this time was no exception. In fact, House Majority Whip Kevin McCarthy appeared on Bloomberg’s Political Capital with Al Hunt over the weekend, where he insisted that oil subsidies be taken off the table during the budget negotiations:

HUNT: Let me ask you about if you would go along with any so-called ending some tax expenditures. The oil industry is making record profits right now. Would you oppose, in order to reduce the deficit, ending the oil depletion allowance for major oil companies?

MCCARTHY: Look, in America today, we use 19 million barrels a day, and we produce roughly seven million. If you want to create a system that says we are going to rely on more money being spent on oil in other countries that create jobs in other countries, I say no. Invest in American jobs.

HUNT: Right. So am I to take it that you would oppose any new oil depletion allowance for major companies?

MCCARTHY: I would enhance the ability that we invest in American jobs and American energy.

HUNT: You are so good. But you would oppose ending the oil depletion allowance?

MCCARTHY: Look, you can raise the question -

HUNT: Can I say yes to that?

MCCARTHY: No, you can raise the question any way you want. But the sheer fact that you want to create a system that sends more money out of America and makes us more dependent on other countries, I say no.

Watch it:

However, after taking oil subsidies off the table — which cost U.S. taxpayers about $4 billion annually — McCarthy said Medicare cuts must be part of any deal to raise the nation’s debt limit. Over the weekend, House Minority Leader Nancy Pelosi (D-CA) said she wants reductions in corporate tax subsidies to be part of the final deal.

Sen. Jon Kyl (R-AZ) and Rep. Eric Cantor (R-VA)

Last week, House Majority Leader Eric Cantor (R-VA) and Sen. Jon Kyl (R-AZ) walked away from deficit reduction negotiations that were being led by Vice President Biden — even though Democrats had reportedly agreed to trillions in spending cuts — due to their insistence that a budget deal not include one dime of new revenue. As Marie Diamond explained last week, one of the suggestions that the GOP rejected was a phase-out of tax deductions and tax credits for people making more than $500,000 a year.

But it’s not only keeping taxes low on upper-income Americans that led Cantor and Kyl to blow up the negotiations. According to Bloomberg, the GOP negotiators also took exception to the administration’s proposal to end a corporate accounting gimmick that will help companies lower their tax bills to the tune of $72 billion over the next five years:

Ending the so-called last-in-first-out, or LIFO, provision, a method of accounting for inventory costs, was among options offered by White House officials for raising $400 billion in revenue over 10 years during seven weeks of negotiations led by Vice President Joe Biden, the people said, speaking on the condition of anonymity because they weren’t authorized to comment publicly…The LIFO provision was among possible revenue increases that Republicans opposed when the Biden talks, which included two Republicans and four Democrats, collapsed last week.

This particular accounting boondoggle allows companies to assume, for tax purposes, that their entire inventory was purchased for the last (most expensive) price. Thus, when they sell off their inventory, their taxable income looks smaller. International accounting standards do not allow the use of LIFO accounting, and both parties have supported its repeal in the past.

The largest beneficiary of this tax break is the oil and gas industry, which can use it to avoid $30 billion in taxes over the next five years, according to estimates by the administration. So in addition to shielding upper-income Americans from bearing any of the responsibility for deficit reduction, it seems that the GOP wants to ensure that corporate America avoids paying its fair share as well.

Over the weekend, New Jersey Gov. Chris Christie (R) was interviewed by New York City-based radio station WNYC. In the interview, the governor touched on a number of topics, including his support for a pension deal that would ask teachers and other public servants to pay more than millionaires were asked to pay (after Christie vetoed a millionaire’s tax last year).

At one point in the interview, Christie was asked about the state Assembly rejecting his effort to sell off the state’s public broadcaster NJN (ironically to another public media outlet based in New York). The governor said he believes “state-owned operation of media ended with the Soviet union” and that New Jersey shouldn’t support public television:

INTERVIEWER: You had a big win yesterday [Thursday]. But you did have one setback. The Assembly rejected your proposal to have WNET Channel 13 takeover the state’s public broadcaster NJN. Critics of the deal say they are concerned WNET won’t deliver the quality news product Michael Aron with NJN has been putting out. What’s at stake with this deal?

CHRISTIE: What’s at stake is, I really believed that the state-owned operation of media ended with the Soviet Union, and I don’t think we should be in the television business. I think its an inherent conflict of interest for us to be in the television business and for reporters to be state employees and I also think that the expense at this time is not justified into the budget.

Yet at a different point in the interview, Christie defended the state’s $400 million bailout of a giant corporate mall boondoggle, saying the state has to be a partner and that it’s a “great idea”:

INTERVIEWER: As Governor your tool box for fixing the macro economy that’s so tied into national and global trends is limited. But who have put a lot of chips on the table with your plan to provide $200 million in economic aid to the Triple 5 Company that runs the Mall of America to re-brand the stalled Xanadu project in the Meadowlands. That’s up for a vote Monday. What is that $200 million…I don’t want to say government giveaway but how would describe it for voters?

CHRISTIE: Listen, what we’re trying to do is provide incentives for places like the American Dream at the Meadowlands to be built, and in these difficult economic times, the state is going to become a partner, a small partner in the project, but a partner none-the less, and we’re going to get our money back once the project is successful. So I think this is a great idea for New Jersey.

The interview says a lot about Christie’s priorities. He appears to be fine with cutting back on education and social spending out of supposed concerns for cost and is willing to deride public media as a relic of the Soviet Union, but does not seem to have the same qualms about subsidizing a giant corporate mall.