Several states are planning to spend their share of the $25 billion foreclosure fraud settlement brokered with the nation’s biggest banks on things other than helping homeowners, even though the point of the settlement was to address improper foreclosures. Wisconsin, for instance, wants to use the money to plug a hole in its general fund; Georgia wants to bolster its rainy day fund; Ohio plans to use some of the money to demolish vacant homes; and several other states have proposed using the funds on everything from education to “inflation expenses.”

But South Carolina may take the cake in the quest for the most ridiculous perversion of the settlement, as its GOP-controlled state House voted to use the money for corporate tax incentives. The state’s Republican attorney general, Alan Wilson, would also like to spend the money on a slew of programs, including “to help pay for the state’s lawsuit to block the expansion of the Savannah River port in Georgia”:

South Carolina Attorney General Alan Wilson wants the state’s portion of a $25 billion mortgage fraud settlement to go to shelters for battered women and homeless military veterans, and to help pay for the state’s lawsuit to block the expansion of the Savannah River port in Georgia.

Last week, House Republicans voted to give South Carolina’s portion of the settlement – about $31 million – to the state Commerce Department to create incentives for companies to locate in the Palmetto State. Democrats vainly argued the money should be used to help people who have lost their homes to foreclosure.

Wilson, a Republican, told House Democrats Tuesday that while the settlement gives him “a lot of discretion” in how the money is spent, he thinks the state Legislature should decide.

Some of these suggestions — like shelters for women or aiding homeless veterans — are surely good ideas. But the foreclosure settlement money is simply not intended for them. And it certainly is not meant for states to throw tax incentives at corporations or to pay for lawsuits entirely unrelated to anything about housing.

State Rep. Gary Simrill (R), said that using the foreclosure fraud settlement on corporate tax incentives is legitimate because it “has an exponential impact … that it is going to bring in jobs.” “[Commerce Secretary Bobby Hitt] tells us he needs help. He needs to be able to bring the fish into the boat. We want jobs. We need jobs,” Simrill added. And evidently those in the state hoping for some housing help will just have to look elsewhere.

America’s unemployment rate has fallen a full percentage point in the last year on the back of strong private sector job growth. February marked the 24th consecutive month of private sector growth, with more than 240,000 jobs added. But the loss of jobs in the public sector continues to hold back the economy, as more than 600,000 federal, state, and local government employees have lost their jobs since President Obama took office.

And while Republicans are trying to credit their small government ideology with bolstering the current economic recovery, a new study from The Roosevelt Institute’s Mike Konczal and Bryce Covert found that those public sector losses have hit hardest and most often in states where Republicans took control of state legislatures during the 2010 mid-term elections. In 2011, newly-Republican states accounted for 40 percent of the public sector layoffs while cutting government jobs at rates that far outpace the national average:

The 11 states that the Republicans took over in 2010 laid off, on average, 2.5 percent of their government workforces in a single year. This is compared to the overall average of 0.5 percent for the rest of the states. [...] [T]hese 11 states as a whole account for a total of 87,000 jobs lost, reflecting around 40.5 percent of the total.

As the chart below (click to enlarge) shows, five of the seven states with the most public sector job losses in 2011 were states that came under Republican control in 2010.

Texas, which has long been controlled by Republicans, “also dropped 4 percent of its public sector workforce in 2011,” Konczal and Covert found. “Because of its size – it had 1,645,000 state and local workers at the end of 2010 – this is a loss of 68,000 jobs, or around an additional 31 percent of the public sector workforce.” Texas and the 11 newly-Republican states accounted for a total of 71.5 percent of the year’s public sector job losses, even though they account for less than one-third of the nation’s public sector workers.

Many government job losses were due, indeed, to the recession’s impact on state budgets. But in many of the newly-Republican states, the GOP made the problems worse. In Wisconsin, New Hampshire, and Maine, Republican-controlled legislators not only cut public sector jobs, they led assaults on public sector unions, targeting government workers under the guise of balancing their budgets. In those and others, Republicans exacerbated their states’ deficits with tax breaks for corporations and the wealthy, thus leading to even more public sector layoffs that didn’t take place in states that didn’t pursue similar policies.

Members of Congress who submitted comments advocating the weakening of the already watered-down Volcker Rule — which is meant to rein in banks’ risky trading — have received more than four times as much in campaign contributions from the financial sector as members who demanded stricter regulations, a report released today by Public Citizen reveals:

Those seeking to weaken the rule have received $66.7 million from the financial services industry since the 2010 election cycle compared to only $1.9 million in contributions received by those asking for a more robust rule. Those seeking to weaken the rule have received an average of $388,010 from the industry, more than four times as much as the average of $96,897 received by those asking for a stronger rule.

“Members of Congress should not serve as megaphones for industry’s claims,” said the report’s co-author, Negah Mouzoon, a researcher for Public Citizen’s Congress Watch division. “They should amplify the public’s call to prohibit banks from engaging in the same risky financial activities that contributed to the financial meltdown of 2008.”

The Securities and Exchange Commission received more than 18,000 comments before the public comment window for the Volcker rule closed on Feb. 13. Of the 20 separate letters submitted by U.S. legislators, 17 were signed by 172 members demanding changes that would weaken the rule, while just three letters signed by 20 members recommended steps to strengthen it.

The report’s findings come after a coordinated four-month lobbying blitz headed up by finance behemoths like Goldman Sachs, JPMorgan Chase, and Credit Suisse Group. And those lawmakers in favor of weakening the rule seem to have swallowed the financial industry’s doomsday predictions about its effect hook, line, and sinker. The banks’ general aim was to pressure federal agencies into delaying and weakening the Dodd-Frank Wall Street reform law, and on that score, their campaign was relatively successful, as lawmakers have signaled they are prepared to revise the rule.

– Fatima Najiy

Gov. Chris Christie (R-NJ), despite the budget woes faced by the Garden State, has seen fit to twice veto a millionaires tax passed by his state’s Democratic legislature. Christie, backed up by his chief economist, Charles Steindel, claims that enacting a millionaires tax would drive wealthy New Jerseyans out of the state. “Ladies and gentlemen, if you tax [millionaires], they will leave,” Christie says.

However, just a few months before joining the Christie administration, Steindel had a very different view, as Bloomberg News noted. In a report for the New York Federal Reserve, Steindel and his co-authors wrote that increasing taxes on high-income households was a good tool for balancing the state’s budget, as it has the advantage of placing the burden of deficit reduction on those who can afford it:

Another approach to closing sizable budget gaps like New York’s and New Jersey’s is to follow a policy rule of temporarily raising income taxes on high-income households during a downturn. The advantage of this approach is that it places a larger burden on households that are less liquidity-constrained than the average household during an economic decline (and less liquidity constrained than the state itself). Such a tax would be removed once the economy begins to improve. Edgerton, Haughwout, and Rosen (2004) point out that New York City has adopted this balancing strategy in the past, adding temporary surcharges to the top income tax bracket during downturns.

The report is careful to caveat that all the proposed approaches have drawbacks, but there is nothing resembling Steindel’s denunciation of a millionaire’s tax that he officially released one year later for the Christie administration. “I would assume [Steindel] had to take a special course at the University of Christie to reorient his economic thinking,” said state Senator Loretta Weinberg (D).

A study released last week by the Political Economy Research Institute at the University of Massachusetts found that contrary to conservative beliefs, millionaires don’t move to avoid higher taxes. “The evidence available in the research literature suggests that the worst fears of the policy debates over raising additional revenue from high-income households to sustain spending on public services are unlikely to materialize,” the study says. “They will not cease working, stop investing, or even move.” And once upon a time, Christie’s own economist seemed to believe that was the case, as well.

After contentious battles over emergency disaster relief funding in 2011, congressional Democrats and Republicans reached a bipartisan agreement during the August debt talks that would make it easier to fund disaster relief in the future. But that deal, like others reached under the Budget Control Act, would be voided by the House Republican budget, authored by House Budget Committee Chairman Paul Ryan (R-WI).

According to a legislative report on the House GOP’s budget, the disaster relief deal will not be recognized in the future should the budget take effect. Instead, emergency funds would have to be offset with other spending cuts, Politico reports:

“The budget assumes that any future disaster-relief-designated spending relief will be fully offset within the discretionary levels provided in this resolution,” the report reads. “Accordingly, the budget does not assume the extension of the disaster funding enacted last year and the upward adjustment of the BCA’s spending caps for subsequent years and it reflects the removal of this spending.”

The result of rolling back that deal is that future efforts to fund disaster relief will likely be heavily politicized, as they were in the wake of multiple disasters in 2011. House Majority Leader Eric Cantor (R-VA) took disaster relief funds hostage when he repeatedly declared that the House wouldn’t fund it without spending offsets. The GOP then attempted to cut spending from programs they opposed to pay for disaster relief, then nearly forced a government shutdown over the funds before buying off conservative members with additional spending cuts.

Last year wasn’t the first time that House Republicans attempted to hold disaster relief hostage to extract spending cuts from programs they opposed. By rolling back the 2011 deal, they’re ensuring that if their budget passes, it won’t be the last time either.

With the economy continuing to improve and unemployment figures in decline, some Republicans are beginning to worry that hitting President Obama on bad fiscal policy is not a winning strategy. Instead, they argue, Republicans should take all the credit for any economic improvement that is underway.

“I believe that if anybody’s going to get a pat on the back for [lower] unemployment and the better economy, it’s House Republicans, and not the president and not the Senate,” said freshman Representative Jeff Landry (R-LA) during a panel of House conservatives at the Heritage Foundation last week.

Landry is not alone either. The Hill spoke with several Republicans who agree that they are the reason the economy has improved:

– “Under Republican control of the House, [the unemployment rate] has begun a gradual but steady decline, and now it’s still disappointing, but it’s at 8.3 percent, which is much better than under the Democrats,” [Idaho Republican Rep. Raul] Labrador said.

– “In many ways our greatest success is the things we’ve stopped,” said freshman Rep. David Schweikert (R-Ariz.).

– “If you make the assumption the economy is improving, I would say yes, we have had an effect,” [South Carolina Republican Rep. Jeff] Duncan said.

Rep. Landry may want to look at the facts before he rushes to take credit for the positive economic forecasts. Thanks to Republicans in the house, who have demanded deep cuts to federal programs in the name of deficit reduction, strong job growth in the private sector have been partially offset by steady job losses in the public sector.

According to a recent report, after Republicans brought the federal government to the brink of a complete shutdown last year by demanding draconian cuts to federal programs, a last-minute continuing resolution that introduced some of the Republicans’ cuts led to the loss of an estimated 370,000 jobs.

Republicans also sought to block the American Recovery and Reinvestment Act in 2009, which helped save or create millions of jobs. Not a single Republican in the House voted for the bill. Economists have noted that if Republicans in Congress had succeeded in blocking the stimulus, the unemployment rate would have hit 10.8 percent and a further 1.2 million jobs would have been lost.

Despite Landry’s embrace of revisionist history, party leadership has been reluctant to back down from their attacks on President Obama. Speaker John Boehner (R-OH) and Majority Whip Eric Cantor (R-VA) have continued to criticize the president for failing to do more to help improve the economy, noting at every opportunity that despite the declining unemployment rate it is still above eight percent, an important, if largely symbolic, benchmark.

Last week, House Republicans released their social safety net destroying budget, authored by House Budget Committee Chairman Paul Ryan (R-WI), which they plan to bring to the floor for a vote this week. The budget includes trillions of dollars in tax cuts for the wealthy and corporations and would undermine the still fragile economic recovery.

The Congressional Progressive Caucus yesterday released its own budget — called The Budget for All — which lays out a very different path. Here are the highlights:

– Achieves lower deficits and debt than the House Republican budget, President Obama’s budget or current policy, reducing the debt-to-GDP ratio to 62 percent by 2022.

– Includes $2.9 trillion in job creation measures, including a public works program to hire two million Americans.

– Allows the Bush tax cuts to expire for the wealthiest two percent, phasing in increases in the 28 percent and 25 percent tax brackets over the next decade as well. The budget also introduces new tax brackets for the ultra-wealthy and taxes capital gains income at the same rates as wage income.

– Institutes a financial transactions tax and a big bank tax, raising nearly $1 trillion over the next decade.

– Ends emergency war funding in 2014, and eliminates several outdated and unnecessary weapons programs.

– Institutes a public health insurance option.

– Eliminates the payroll tax cap.

– Imposes a price on carbon, rebating some of the money to middle- and lower-income families.

“Republicans say we’re headed off a cliff because of spending. Well, our budget increases funding for job training, for education, for infrastructure, for low-income and veterans housing, and we chart a much more fiscally responsible path than the Republican scheme. It’s about more than numbers on a page to us – it’s about people,” said Progressive Caucus co-chair, Rep. Raul Grijalva (D-AZ).

Unlike the House Republican budget, the progressive caucus’ budget does not gut important safety net programs like food stamps or Pell Grants. It also shows that a fiscally responsible budget can be crafted that still maintains a focus on job creation and economic stimulus in the short-term. This is a serious effort to grapple with the economic troubles that the country is facing, and should receive treatment as serious as that given to Ryan’s budget, over which much ink has been spilled in the last week.