As the government moves into the final days of negotiations over the debt ceiling — negotiations most likely to be concluded by a budget deal that will do significant harm to the poor, the working class and middle class Americans throughout the country — it seemed worthwhile to revisit the bizarreness of the Republicans’ refusal to consider tax hikes on the wealthy of any sort, while the accumulation of wealth at the very top of America’s economic ladder continues to reach staggering levels.
Forbes Magazine’s annual listing of the 400 richest Americans, as well as the news that student loans in this country are likely to total $1 trillion this year, gave ThinkProgress a practical example on which to base an animated infographic. Watch it:
Attempting to paint Democrats as hypocrites while drumming up support for his pet cause, Utah Sen. Mike Lee (R) released a list on his Senate website today that claimed to show 23 Democrats’ past support for a Balanced Budget Amendment.
Lee and his Republican colleagues have been pushing a Balanced Budget Amendment as a contingency for raising the nation’s debt ceiling, and Tuesday night, the House GOP passed its Cut, Cap, and Balance Act, which contains a provision for such an amendment. But with Democrats proclaiming the act dead on arrival in the Senate, Lee pushed out his list in an attempt to paint them as hypocrites. While Democrats have, unfortunately, supported less radical versions of a balanced budget amendment in the past, Lee’s release is fraught with errors and distortions about their positions.
A ThinkProgress examination of Lee’s report found multiple distortions of the senators’ records:
Three indicated support for balancing the budget, not a Balanced Budget Amendment: None of the quotes attributed to Sens. Debbie Stabenow (MI), Jon Tester (MT), or Bob Casey (PA) in Lee’s release reference a Balanced Budget Amendment. The quotes indicate support for balancing budgets, but not support for using a constitutional amendment to do so. All three voted against a Sense of the Senate calling for a BBA in March.
Six supported a less radical Balanced Budget Amendment in 1995 or 1997: Sens. Tim Johnson (SD), Max Bachus (MT), Dick Durbin (IL), Tom Harkin (IA), Herb Kohl (WI), and Mary Landrieu (LA) all supported the amendment in either 1995 or 1997, when it fell short by one vote each time. Of those six, only Herb Kohl voted in favor of the Sense of the Senate in March.
Three expressed support, but voted against Balanced Budget Amendments: Despite citations in Lee’s support that they supported a Balanced Budget Amendment, Sens. Harry Reid (NV), Dianne Feinstein (CA), and Kent Conrad (ND) all voted against the Balanced Budget Amendment in both 1995 and 1997.
One is not a Democrat: The end of the release cites Sen. Joe Lieberman’s vote in favor of the March Sense of the Senate. Lieberman, however, is not a Democrat, and has not been since 2006. In 1995 and 1997, when Lieberman was still a member of the Democratic Party, he voted against the Balanced Budget Amendment both times.
The remaining 10 senators referenced in the Lee report have offered varying degrees of support for a Balanced Budget Amendment, and of those 10, only Sen. Kirsten Gillibrand (NY) voted against the March Sense of the Senate. Among the other nine are Sen. Mark Udall (CO), who co-sponsored his own version of a Balanced Budget Amendment that is not under consideration, and Sens. Ben Nelson (NE) and Claire McCaskill (MO), who both stated their support was contingent on certain exceptions the Republican amendment does not contain.
Regardless of how many Democrats supported it, the Balanced Budget Amendment was a tragically bad idea in 1995 and 1997, when it contained looser provisions for wartime and recessions and when the American economy had largely recovered from its early ’90s slump. With America still mired in a sluggish economic recovery, the Republican pursuit of such an amendment today is even worse.
Earlier this week, a bipartisan group of senators revealed their “Gang of Six” deficit reduction plan, which aims to narrow cut the deficit by $3.7 trillion over the next ten years.
The plan does this in a variety of ways. It sets out spending reduction targets for a variety of government agencies and spending areas — including, admirably, defense — and would also cut entitlement programs. It aims for $500 billion of cuts in the short-term, and the rest of the cuts would be spaced out. It also would lower corporate tax rates while closing other loopholes; it leans heavily towards cutting spending rather than raising revenues.
With respect to Social Security, the plan would set up a process for “reform” in the future, with the aim of ensuring future solvency of the program. The plan would, however, required reduced benefits for seniors that could amount up to $1,300 annual cuts in benefits for the oldest seniors, thanks to a way it would change the program’s adjustments for inflation.
Now, four major national labor unions — the AFLCIO, AFSCME, SEIU, and NEA — representing 17 million workers have written an open letter to Congress declaring their opposition to the plan, condemning its planned cuts to Social Security and lowering of tax rates on corporations and the wealthy:
The letter concludes, “As Congress tackles the economic challenges facing this country, we urge you to put the highest priority on low- and middle-income families by focusing on job creation, demanding shared sacrifice, and ensuring that all Americans have a path to the middle class, while avoiding policies that increase economic inequality or destroy jobs. The Gang of Six proposal fails every one of these tests.” (HT: @RickSmithShow)
Transportation Secretary LaHood: FAA Shutdown Would Result In ‘Immediate Furlough’ Of 4,000 Workers |
The shutdown of the Federal Aviation Administration that will occur Friday night if Congress does not reach a deal to extend its authorization would result in the “immediate furlough” of 4,000 workers, bring a halt to $2.5 billion in airport construction projects, and cost the government about $200 million a week in lost airline ticket taxes, Transportation Secretary Ray LaHood said on a conference call Thursday. Previously, FAA reauthorization has sailed through Congress 20 times, but Republicans have ground the process to a halt with the inclusion of an anti-union measure this year. LaHood called on Congress to pass a clean re-authorization bill — preferably to cover the next five to six years, he said — before the FAA shuts down at close of business tomorrow. “This is just not the right way to run America’s aviation system,” LaHood said.
NEWS FLASH
Report: Financial Industry Tried To Convince Regulators To Exempt It From Executive Pay Rules In Dodd-Frank |
As part of the Dodd-Frank financial reform law — which President Obama signed one year ago today — regulators were directed to put in place new rules to rein in executive bonuses, as incentives built into the bonus structure at big Wall Street banks drove them to take on severe amounts of risk in the hopes of turning a quick profit. According to a new study by Public Citizen, the financial services industry has not taken kindly to this. “Industry comments on the proposed rule centered on a common theme,” Public Citizen found. “More than 70 percent of commenters asked to be partially or entirely exempted from the rule. Some also asked for whole classes of jobs or for types of pay to be excluded.” House Republicans have proposed repealing some of the executive pay provisions in Dodd-Frank.
President Obama signs the Dodd-Frank financial reform law.
During the debate over the Dodd-Frank financial reform law — which President Obama signed one year ago today — Republicans warned that the law would have a debilitating effect on the economy and undermine the “safety and soundness” of banks (code for cutting too deeply into their profits). But as the Los Angeles Times noted this week, banks “have been reporting billions of dollars in profits — including a record quarter for Wells Fargo & Co. — with nary a word about how the so-called Dodd-Frank financial reform law was hindering them”:
On Tuesday, Wells Fargo, the nation’s third-largest bank, posted record earnings of $3.9 billion for the second quarter. JPMorgan Chase & Co. reported last week that its revenue and profit were higher in the first half of this year than in the first six months last year, before Dodd-Frank was passed. Nor did the law seem to deter Goldman Sachs Group Inc., Bank of America Corp. and Citigroup Inc.
As Mother Jones’ Kevin Drum put it, “Dodd-Frank hasn’t taken full effect yet — nor have new capital requirements — but this is an ominous sign anyway. In the long run, if banks end up as profitable as they were before the law was passed, it almost certainly means that dangerous behavior really hasn’t been reined in significantly.” Indeed, several key regulations — including the Volcker rule, aimed at cutting down on risky trading — aren’t on the books yet, but there’s little reason to believe that the new rules will have any of the doomsday effects of which the banks were warning.
Even so, Republicans are doing everything they can do to undermine the law (while acknowledging that repeal is not inthe cards with President Obama in the White House). Here are some of the main thrusts of their attack:
– Weaken the Consumer Protection Bureau: The House plans to vote today on a bill that would significantly weaken the Bureau (which Obama has vowed to veto). Senate Republicans have said they won’t confirm any bureau director until the structure of the bureau is changed to be more bank-friendly. The bureau officially opened for business today.
– Water down derivatives reform: House Agricultural Committee Chairman Frank Lucas (R-OK) plans to introduce legislation weakening the derivatives title of the laws, providing more exemptions from the law’s requirements that derivatives deals be transparent and cleared by regulators.
– Let banks keep passing on risk: One important provision of the bill requires lenders to hold onto a portion of loans that they make, so that they can’t divorce themselves entirely from loans with low standards. Republicans have tried to weaken this provision.
All in all, Dodd-Frank is still a work in progress, and Republicans are doing their best to slow that progress down as much as posible.
By Tanya Somanader and Zaid Jilani on Jul 21, 2011 at 12:40 pm
Republicans have developed a cultish opposition to raising tax rates on the wealthy, consistently protecting over $1 trillion in tax breaks for corporate jets, hedge fund managers, horse breeders, etc. At the epicenter of this obstinacy is Americans For Tax Reform head Grover Norquist.
Shackling Republicans to his anti-tax pledge, Norquist is dictating to Republicans that they cannot close a single tax loophole or allow one tax cut to expire, not even to entice Democrats into agreeing to much larger spending cuts. As Matt Yglesias explains, “Norquist’s apparent veto-power over congressional Republicans” would require them to make billions in cuts that increase unemployment, slow economic growth, endanger children, undermine safety and health, and weaken the social safety net in order to satisfy his anti-tax demands.
But there may be one chink in the Norquistian armor. The Washington Post editorial board reported this morning that Norquist himself stated that allowing the Bush tax cuts to expire in 2012 would not technically violate his pledge as “not continuing a tax cut is not technically a tax increase”:
Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.
In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.
Now, Norquist is quickly trying to walk back that statement, declaring that “any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people.” However, even while reaffirming this principle on MSNBC this morning, Norquist stated again that there are technical ways to allow the tax cuts to expire that “and not violate the pledge.” Watch it:
Even Norquist’s own organization has maintained that position. Just a few weeks ago, in response to a question from the Washington Examiner’s Kevin Glass and ThinkProgress, ATR’s official Twitter account confirmed that allowing taxes to rise because of inaction on an expiring tax cut does not violate the organization’s pledge. It explained that “The Pledge is based on current law. If current law has a tax cut expire, that is not a Pledge violation”:
Norquist undoubtedly did not expect his own pledge to undermine his intentions and will certainly endeavor to walk back this inconvenient truth. But unfortunately for ATR, facts — like Norquist — are stubborn things.
Update
The Washington Post’s Greg Sargent reports that his colleague, reporter Karen Tumulty, was present at the Norquist interview and confirmed that he “did make the controversial concession.” “The very specific question was, ‘Would that be regarded as a vilation of the pledge?’” Tumulty told Sargent. “What he said is that it’s not a violation of the pledge. We were surprised, so he was pressed on it. He repeated it several times.”
On the campaign trail, former Massachusetts Gov. Mitt Romney (R) has rarely missed an opportunity to lambast President Obama’s handling of the economy. The centerpiece of his argument is that Obama has fostered uncertainty among business leaders, and no place has that uncertainty had a greater impact, Romney argues, than in the financial sector. The passage of the Dodd-Frank Act, the financial regulatory overhaul that passed a year ago today, has become Romney’s number one enemy.
The largest corporate sources of money for Romney are mostly finance industry leaders, including Morgan Stanley and Bank of America. Goldman Sachs employees have given nearly a quarter of a million dollars in contributions. [...]
Nearly three-quarters of Romney’s money came from donors giving the maximum $2,500 contribution, and one in eight of Romney’s donors live in New York City and its suburbs.
The bulk of Romney’s New York City fundraising came from one Wall Street event that netted his campaign nearly $1 million.
Romney, a former venture capitalist, and bank executives oppose Dodd-Frank because of the host of regulations that prevent America’s largest financial institutions from operating the way they did before the 2008 financial crisis, when many of these firms, including allthreenamed in the Post story, were bailed out by the federal government.
Repealing the law would prevent new consumer protections from taking effect, including the establishment of the Consumer Financial Protection Bureau, which Republicans have opposed unequivocally. Romney, however, might not know about those protections. Even though he announces his staunch opposition to Dodd-Frank at nearly every campaign stop, he hasn’t yet found time to read it.
Despite days of negotiations, House Republicans are still standing firm against increasing the federal debt ceiling, threatening the country with default unless their demands for huge spending cuts (and no tax increases) are met. Not only would failing to raise the debt ceiling do serious harm to the national economy, it would adversely impact state and local economies.
In fact, earlier this week, the credit rating agency Moody’s warned that five states — Virginia, Maryland, New Mexico, South Carolina, and Tennessee — could have their credit downgraded if the federal government’s credit rating goes down, “because their dependence on federal revenue makes them vulnerable to a U.S. credit cut.” In response, Virginia Gov. Bob McDonnell (R) urged Congress to come to a debt ceiling compromise “immediately“:
“There’s got to be a compromise, I’m not going to tell them how to do it. I’d suggest they try spending cuts — everybody knows they’re spending too much,” McDonnell said on MSNBC. “But they’ve got to get this done immediately or the uncertainty for the business community is going to be just devastating to our country.” [...]
“It’s not going to get done without some compromise and when it’s affecting states now, it’s creating great uncertainty, there’s massive unhappiness with the federal government generally over its inability to do the basic things that government needs to do.“
But McDonnell was not always so keen on Congress reaching a compromise. In fact, just a few months ago, he told the ultra-conservative Human Events that the debt ceiling shouldn’t be raised at all, unless Republicans received all their demands:
“The only way that it is appropriate to increase the debt limit,” McDonnell told HUMAN EVENTS, “is if there is a tangible, written, irreversible set of structural reforms in spending in the United States government that makes sure we are on a downward trajectory in spending that will get us to a balanced budget much farther.”
“If we don’t achieve those goals, then I don’t see any gain in increasing the debt limit.”
It’s no surprise that McDonnell sees a benefit to raising the debt ceiling now. Perhaps he could convince the Republicans in Congress of the urgency of the situation?
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. You can also follow ThinkProgress Economy on Twitter.
President Obama said yesterday that he “would accept a short-term increase” in the federal debt limit “if congressional leaders reach agreement on a ‘significant’ deficit-reduction plan before Aug. 2 but need more time to pass legislation.” [Wall Street Journal]
“The Federal Reserve is actively preparing for the possibility that the United States could default” as the deadline for raising the debt ceiling approaches, the President of the Philadelphia Federal Reserve Bank said yesterday. [Reuters]
The Consumer Financial Protection Bureau officially assumes its regulatory authority today. [McClatchy]
The White House said yesterday that President Obama will veto a Republican bill that would alter the structure of the Consumer Financial Protection Bureau; Obams said the bill “would ‘expose American consumers and the nation’s economy to the same risks that led to the 2008 financial crisis.’” [The Hill]
“The assets held by the five largest American banks — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs — grew 3 percent last year compared to the year prior,” according to SEC filings. [Huffington Post]
Sen. Herb Kohl (D-WI), chairman of the Senate’s antitrust subcommittee, “called on regulators Wednesday to block AT&T’s $39 billion bid for rival T-Mobile, saying the merger would lead to less competition and higher prices for consumers.” [Washington Post]
The main lobbying group representing for-profit colleges “sued the U.S. Education Department Wednesday, charging that the agency’s recently enacted regulation aimed at ensuring that vocational programs prepare students for ‘gainful employment’ is unconstitutional.” [Inside Higher Ed]
“After a legislative session that dragged on late into the night,” Gov. Mark Dayton (D-MN) signed into law legislation that ended the longest government shutdown in Minnesota history. [New York Times]
“The U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country’s move toward a ‘rentership society,’” according to an analysis from Morgan Stanley. [Bloomberg]
A group of Democratic senators yesterday penned a letter to federal banking regulators “requesting information regarding each mortgage servicer’s performance in preventing illegal foreclosure practices.” [The Hill]
The Federal Trade Commission announced yesterday that “hundreds of thousands of homeowners who took out mortgages with Countrywide Financial Corp. will soon receive their slice of a $108 million settlement over claims that the lender charged outsized fees to borrowers facing foreclosure.” [Associated Press]
Attempting to paint Democrats as hypocrites while drumming up support for his pet cause, Utah Sen. Mike Lee (R) released a list on his Senate website today that claimed to show 23 Democrats’ past support for a Balanced Budget Amendment. 
Republicans have developed a cultish opposition to raising tax rates on the wealthy, consistently protecting over $1 trillion in tax breaks for corporate jets, hedge fund managers, horse breeders, etc. At the epicenter of this obstinacy is Americans For Tax Reform head 
On the campaign trail, former Massachusetts Gov. Mitt Romney (R) has rarely missed an opportunity to lambast President Obama’s handling of the economy. The centerpiece of his argument is that Obama has fostered uncertainty among business leaders, and no place has that uncertainty had a greater impact, Romney argues, than in the 
