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Economy

FLASHBACK: In September, Cantor Pushed To Honor Spending Deal Levels That House GOP Budget Discarded

The House Republican budget, as the GOP has been hinting it would, reneges on the deal made to avoid a debt ceiling calamity back in August. The bill to raise the debt ceiling, known as the Budget Control Act, set a level for discretionary spending for 2013. However, the GOP budget cuts $19 billion below that level.

Since the current round of government funding runs out in September, the GOP’s decision to cut deeper than the Budget Control Act sets up another round of budget brinkmanship, with a government shutdown as a possible consequence. But back in September, House Majority Leader Eric Cantor (R-VA) seemed to believe that such brinkmanship should be avoided, saying during a pen and pad briefing that the GOP should stick to the spending level agreed to in August, at least when it came to a continuing resolution that was under consideration at the time:

Q: On the CR next week, will you do it at the level that you agreed to in August, the 1.043?

CANTOR: As Republicans, we believe strongly we ought to be reducing spending more than we have been able to. The other side has demonstrated unwillingness to join us in that. We did reach an agreement at the CR level and I am supportive of a CR being written at that level.

Q: So you would not go below it?

CANTOR: I think my colleague here would say we would try always to go below it. But the risk of bringing about brinksmanship or another potential shutdown is not something that we need right now, it is not something that would be helpful, that would create jobs and regain confidence, which is why I have taken the position I have.

During a December press conference, Speaker of the House John Boehner (R-OH) also promised that “the 1.043 [trillion] is going to happen,” referring to the spending level set by the Budget Control Act. But in the intervening few months, it seems that the GOP leadership has decided that yet another drive at the edge of the proverbial shutdown cliff is preferable to abiding by the terms of a deal passed just last year.

NEWS FLASH

Progressive Senators Introduce Bill That Would Force Regulator To Start Limiting Oil Speculation Within Two Weeks | Sen. Bernie Sanders (I-VT), along with Sens. Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Ben Cardin (D-MD), Al Franken (D-MN), Amy Klobuchar (D-MN) and Bill Nelson (D-FL), unveiled legislation today that would force the Commodity Futures Trading Commission to begin limiting speculation in oil markets within the next two weeks. The CFTC was given the power to curb speculation in energy markets by the Dodd-Frank financial reform law, but has yet to begin doing so. Gas prices at the moment are rising despite the lowest demand for oil since 1997, and many experts point to excessive speculation as the cause.

Education

What The House Republican Budget Gets Wrong About College Aid

Since House Republicans took over the majority in 2010, they have had higher education in their sights, proposing bill after bill that would bump up to a million students out of the Pell Grant program (which provides higher education grants to low-income students) and scaremongering about increased financial aid. And the GOP’s 2013 budget, released yesterday, is no exception.

In its budget document, the GOP claims that increased financial aid is a cause of rising college tuition, while implying that Pell Grants currently don’t go to the “truly needy” (a turn of phrase that fits in with House Budget Committee Chairman Paul Ryan’s (R-WI) recent rhetoric). However, as Center for American Progress Associate Director of Postsecondary Education Julie Morgan notes, there is more myth to the GOP’s claims than reality:

[The House GOP budget] claims that federal financial aid is responsible for increasing college tuition and cites a 2007 study conducted by University of Oregon economists showing that increases in Pell Grants are matched by increases in tuition at private nonprofit schools. But this study found no evidence that higher Pell Grants drive tuition increases at public universities, where 75 percent of all college students are enrolled.

The House Republican budget also cites the work of economist Richard Vedder as support for the notion that college prices are driven up by federal student financial aid. Yet Vedder’s own Center for College Affordability and Productivity recently released a paper that reexamines the link between federal aid and tuition, concluding that aid directed at low-income students does not, in fact, increase tuition. Since the Pell Grant is a program for low-income college students, even the research of Rep. Ryan’s favored scholars would not support cutting the program as a way to control tuition. [...]

And of course, an obvious flaw in the factual basis for Rep. Ryan’s proposal is that Pell Grants already do focus on the “truly needy.” Seventy-four percent of Pell Grant recipients in 2011 had family incomes of $30,000 or less. And 2012 changes to Pell Grant eligibility further concentrate federal aid on the poorest students. But the House Budget Committee ignores these facts and instead implies that Pell Grants are somehow going to those who are not “truly needy.”

Ryan has suggested that a student questioning the GOP’s proposed Pell Grant cuts simply work three jobs instead, showing exactly how he feels about helping Americans access higher education. But increasing the number of Americans with higher education degrees is key to the country’s economic competitiveness, which the GOP claims to care so much about.

Why Does Idaho’s Governor Pay Female Employees So Much Less Than Men?

The women who work in Idaho Gov. Butch Otter’s (R) cabinet make substantially less than their male colleagues, according to a McClatchy analysis of state salary data. Despite chairing the state Agriculture Department, for instance, Director Celia Gould makes less than male directors.

Gould has been with the administration since its first day in 2007 and oversees 259 employees; Commerce Director Jeffrey Sayer, by contrast, joined the administration in October and oversees 53. And yet, Sayer makes nearly $40,000 a year more than Gould, the highest-paid female employee. In fact, across Otter’s administration, the median wage for women is nearly $20,000 less than the median wage for men, McClatchy found:

She is the highest-paid of the women in Otter’s Cabinet but ranks just 16th among all top full-time officials. The median salary for 11 women in the Cabinet is $85,446; the median for the 33 men is $103,002.

“We really do have a glass ceiling in Idaho,” said Rep. Wendy Jaquet of Ketchum, the senior Democrat in the Legislature and a member of the budget committee.

While the pay gap between Otter’s male and female employees is substantial — the women make roughly 82 cents for every dollar earned by men — it isn’t as large as the overall pay gap between men and women in America. American women make about 77 percent of what men make, and the gap is even larger for minorities. In 2010, black women made 67.7 percent of all male earnings, while Latino women made just 58.7 percent. That wage gap costs women huge sums of money — a woman with a college degree, for instance, will earn $723,000 less over a 40-year career.

Despite legislative efforts, the gap isn’t closing. President Obama signed the Lilly Ledbetter Fair Pay Act, which made it easier for women to sue for pay discrimination, in 2009. Senate Republican, however, blocked the Paycheck Fairness Act, which would have updated the Equal Pay Act, closed many of its loopholes, and strengthened incentives to reduce pay discrimination, earlier this year.

Sears Lavishes CEO With Pay And Perks, While Laying Off Workers And Bilking Taxpayers

In the wake of the Great Recession, wages have stagnated while CEO pay has soared. Case in point, Sears last year paid its chief executive millions of dollars, and piled on hundreds of thousands of dollars in assorted perks, including charter airfare and covering some of his income tax bill:

Sears Holdings Corp. paid its chief executive $9.9 million last year, including incentives the ailing department store operator offered to lure the former technology executive, according to an Associated Press analysis of a regulatory filing.

Lou D’Ambrosio, who became Sears’ CEO in February 2011, received a signing bonus of $150,000 plus a base salary of $930,769 and $8 million in stock awards, according to a filing the company made Friday with the Securities and Exchange Commission.

D’Ambrosio got another $852,037 in perks, including $803,856 for charter and commercial airfare and ground transportation to commute from greater Philadelphia, where he lives, to Hoffman Estates, Ill., where Sears is based. And he received $29,985 for temporary housing in Hoffman Estates. Sears paid part of the income taxes due on those benefits.

Of course, it’s the company’s prerogative to pay its CEO this much. But at the same time that it was doling out perks to D’Ambrosio, Sears was planning to lay off thousands of workers. Sears has announced that it will be closing 173 stores this year — up from previous estimates of 120 stores — which means that nearly 14,000 workers could be seeing a pink slip.

Adding insult to injury, Sears was also pocketing millions of dollars in tax incentives from the state of Illinois, even as it fired Illinois workers. In fact, under the terrible deal that the state signed with the retail giant, Sears can lay off another 1,750 Illinois workers without losing its taxpayer largesse. But perhaps bilking a state of its needed tax revenue is what Sears pays D’Ambrosio the big bucks for.

Education

Students In Arizona’s Outlawed Mexican-American Studies Program Outperformed Their Peers

Our guest blogger is Stephanie Frenel, an intern with the education policy team at the Center for American Progress Action Fund.

Early this year, Arizona Republicans passed legislation banning ethnic studies in public school classrooms, jeopardizing a Tucson school district’s Mexican-American studies program. On January 10, conservatives in the Grand Canyon state, including Arizona State Superintendent of Public Instruction John Huppenthal, convinced the courts to declare that the program did not abide by current state law, putting school aid in jeopardy for any district deciding to implement it.

The Tucson Unified School District’s Mexican American studies (MAS) program was a series of classes that focused on the Mexican-American experience and history. The program gained national attention not only because it is contentious, but also due to its academic success. Arizona conservatives opposed the program because they believe it violated state law (HB 2281) which states that an academic program is illegal if it “promotes resentment toward a race or class of people.”

The conservative reaction was unfortunate, as the program focused on fostering pride in students’ heritage, not resentment toward others. And an audit mandated by Huppenthal showed that the MAS program had helped raise student achievement, and students who participated in the program were more likely to attend college:

Students in the MAS program far outperformed their peers on Arizona’s state standardized tests in reading (by 45 percentage points), writing (by 59 percentage points), and math (by 33 percentage points), and they enroll in post-secondary institutions at a rate of 67 percent, well above the national average. Also, pedagogies [teaching strategies] used in Tucson’s MAS classes encourage and support students to be actively involved in their communities, a strategy that has been shown to correlate with increased classroom engagement.”

Although many educators and civil rights activists opposed the banning of the program, the school district decided to suspend it due to fear of losing state aid. Many of the literary sources that were taught can no longer be a part of the Arizona curriculum, but students can use these books for independent reading. As a result, activists and writers last week smuggled banned books written by Mexican-Americans into Tucson. The movement is known as librotraficantes, or book traffickers, and the goal is to restore the successful program.

The banning of Mexican-American studies not only censors important perspectives in American history, but is also clearly a detriment to student achievement. Literature that reflects urban and minority perspectives can engage students and help them relate to their coursework. Just as increasing teacher diversity has become an important strategy to connecting with an increasingly multiethnic student population, so is creating a diverse curriculum crucial to addressing education disparities in schools with diverse student bodies.

How The House Republican Budget Protects Too-Big-To-Fail Banks

The House Republican budget that was released yesterday, in addition to blowing up the deficit and the national debt and shredding the social safety net, would repeal a key provision in the Dodd-Frank financial reform law. In response to the 2008 financial crisis and the ad-hoc bailouts to which the government was forced to resort, Dodd-Frank gives the government the ability to unwind failing financial firms. But the House Republican budget would take this important power away:

While the authors of the Dodd-­‐Frank Act went to great lengths to denounce bailouts, this law only sustains them. The Federal Deposit Insurance Corporation (FDIC) now has the authority to draw on taxpayer dollars to bail out the creditors of large, “systemically significant” financial institutions. CBO’s expected cost for this new authority is $33 billion, although the office recognizes that “the cost of the program will depend on future economic and financial events that are inherently unpredictable.” In other words, another large-­‐scale financial crisis in which creditors are guaranteed to get government bailouts would cost taxpayers much, much more…This budget would end the bailout regime enshrined into law by the Dodd-­‐Frank Act.

House Budget Committee Chairman Paul Ryan (R-WI) has done this before, dressing up his opposition to the power known as “resolution authority” in the Dodd-Frank law as a principled stand against bailouts. But make no mistake: repealing the power would return the nation’s regulatory framework to where it was in 2008, leaving the government with little choice when large interconnected financial firms fail other than bailing them out or risking the implosion of the financial system.

Resolution authority is meant for firms that can’t go through traditional bankruptcy, due to their size and importance to the financial system. Under that authority, the Federal Deposit Insurance Corp. unwinds such a firm when it fails, and then recoups any losses to the taxpayer by selling off assets from the dissolved firm. Importantly, Dodd-Frank bars the use of taxpayer money to preserve a financial firm: the money can only be used to ease a firm through its dissolution, with all of the funds paid back. As Rep. Barney Frank (D-MA), whose name graces the law, said, resolution authority is a “death panel” for banks.

Former Treasury Secretary Henry Paulson, who oversaw the 2008 bank bailout, said he “would have loved to have” resolution authority to take apart failing firms. House Republicans, instead, would prefer to just holler about bailouts, while taking away the government’s ability to prevent them, thus dooming the country to a repeat of 2008, should the financial system ever face such a systemic shock again.

Faith Leaders Blast House GOP Budget As ‘Immoral Disaster’ That ‘Robs The Poor’

When House Budget Committee Chairman Paul Ryan (R-WI) released his Medicare-ending, safety net-gutting 2012 budget plan last year, he was slammed by faith leaders who denounced his cuts to programs that aid the poor and middle class. Ryan released the 2013 version of that budget yesterday, and he is again facing criticism from a diverse group of faith leaders.

Ryan often says it is “morally wrong” not to address America’s debt, but faith leaders like Bishop Gene Robinson said the budget Ryan crafted fails basic moral tests. “The Ryan budget robs the poor, the marginalized and the vulnerable of the safety net so integral to their survival,” Robinson said. “By any measure of civility and regard for one’s neighbor, it is an immoral disaster.”

Father Thomas Kelly, a Catholic priest and constituent of Ryan’s, felt similarly:

As a constituent of Congressman Ryan and a Catholic priest, I’m disappointed by his cruel budget plan and outraged that he defends it on moral grounds. Ryan is Catholic, and he knows that justice for the poor and economic fairness are core elements of our church’s social teaching. It’s shameful that he disregarded these principles in his budget.”

That the GOP cuts vital programs like Medicare, Medicaid, and other safety net programs while giving tax breaks to the richest Americans is “immoral” and “unconscionable,” other leaders said. “The poor are not statistics,” Rabbi Jackie Moline said. “Whatever one thinks of Congressman Ryan’s ideas, it is unimaginable to look into the face of a child who would go hungry without government assistance and say, ‘Sorry — we need to reduce the deficit.’”

Econ 101: March 21, 2012

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.

  • During a talk on economic history yesterday, Federal Reserve Chairman Ben Bernanke said he is in no rush to raise interest rates. [Wall Street Journal]
  • Two banks may have received better stress test results from the Fed than they deserved. [CNN Money]
  • Developing nations intend to nominate two candidates to lead the World Bank, a position that has always been held by an American. [Reuters]
  • House Republicans are planning to pass a short-term transportation funding bill, rather than adopting the Senate’s bipartisan bill. [The Hill]
  • 40 states improved their high school graduation rates between 2002 and 2009. [Education Week]
  • The Senate yesterday delayed voting on the so-called JOBS Act, a bill that would loosen investor protections. [New York Times]
  • Senate Majority Leader Harry Reid (D-NV) has filed cloture on the STOCK Act, which would ban Congressional insider trading. [Politico]
  • Two of President Obama’s nominees to the Federal Reserve faced a confirmation hearing before the Senate Banking committee yesterday and are expected to be approved by the panel by next week. [New York Times]

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