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Economy

NEWS FLASH

Senate Republicans Filibuster Buffett Rule | The Buffett Rule, a bill backed by President Obama that would ensure millionaires pay a comparable tax rate to middle-class Americans, fell to a Republican filibuster in the Senate this evening, despite a new poll showing it to be overwhelmingly popular. While the rule, named after billionaire investor Warren Buffett, earned a majority vote of 51-45, it didn’t get the 60 votes needed to overcome a GOP filibuster. Sen. Susan Collins (R-ME) was the only Republican to vote yes, while one Democrat, Mark Pryor (AR), voted no. The vote is no surprise as Republicans vowed to block it, but Democrats wanted to put the GOP on the record as yet again filibustering to preserve lower tax rates for the wealthy. A CNN poll released today found that 72 percent of Americans — including 53 percent of Republicans and almost 70 percent of independents — support the Buffett Rule.

At Least 30 Countries Have Unemployment Benefits More Generous Than The U.S.

According to data from the International Monetary Fund analyzed by Tim Vlandas, there are at least 30 countries with unemployment benefits that are more generous than those that go to American workers. The University of Missouri-St. Louis’ Kenneth Thomas broke the data down:

The metric used is the gross replacement rate (GRR) the ratio of unemployment benefits to a worker’s previous wages. The United States gives, on average, a miserly 27.5% of previous wages in unemployment benefits, behind 17 OECD members, though ahead of 11 others (no data was given for OECD members Iceland, Luxembourg, Mexico, Slovak Republic, and Slovenia). Not only that, the U.S. falls behind 13 non-OECD members, including Algeria, Taiwan, and Ukraine, all of which have at least double the replacement rate of the U.S.

The U.S. does rank ahead of the United Kingdom, New Zealand, and Australia, but trails Egypt, Azerbaijan, and Tunisia in terms of the amount of income replaced by unemployment insurance. And in the wake of the Great Recession, instead of fashioning a better unemployment insurance system, Republicans across the country have slashed benefits, even while some, such as Florida, have high unemployment rates. Meanwhile, Republican lawmakers in Congress have blocked and voted against several benefit extensions.

But it remains the case that there are nearly four unemployed job seekers for every available job opening, making unemployment benefits a critical source of income for those who can’t find work through no fault of their own. And contrary to conservative claims that unemployment benefits are a “lifestyle,” those unemployed workers receiving UI stay unemployed less than two weeks longer than those who receive no benefits at all, according to research by the San Francisco Federal Reserve.

In 2009, average unemployment benefits were just $310 per week, with some states paying much less (like Mississippi, with its $192 weekly benefit). As the IMF data shows, that simply isn’t keeping up with the standard set by other developed (or not so developed) nations.

NEWS FLASH

POLL: More Americans Think Their Taxes Are ‘About Right’ Than Think They Are Too High | A new Gallup poll shows that less than half of the country believes they are paying too much in taxes, matching its lowest level in well over a decade. 46 percent of respondents complained that their taxes were too high, down from 50 percent a year ago, while 47 percent said their taxes were about right. The political divide over taxes is apparent in Gallup’s poll as well, with 54 percent of Republicans saying they pay too much compared to just 34 percent of Democrats.

Election

Romney Book: ‘Nonworking Parents’ Produce ‘Indolent And Unproductive’ Children

As the presidential campaign has become embroiled in “mommy wars,” a passage from Mitt Romney’s autobiography sheds more light on what seems to be his bifurcated prescription for mothers.

For most women, Romney maintains that a choice to work or to stay at home with the kids should be regarded as equally valid, his campaign made clear last week. But for poor women who receive government assistance, staying home is not an option — they should work. Video recovered yesterday shows that Romney said in January that he wants to “increase the work requirement” for mothers who receive welfare. “Those parents [need] to go back to work,” he explained.

A passage from Romney’s book, No Apology: The Case For American Greatness, elaborates on this. In it, he argues that children of “nonworking parents” will be conditioned to have “an indolent and unproductive life:”

In some quarters, however, the American work ethic is waning. Some people devote themselves to find ways not to work. Some seem to take a perverse kind of pride in being slipshod or lackadaisical. In many cases, where our work culture has deteriorated, shortsighted government policies share a good part of the blame.

Welfare without work erodes the spirit and the sense of self-worth of the recipient. And it conditions the children of nonworking parents to an indolent and unproductive life. Hardworking parents raise hardworking kids; we should recognize that the opposite is also true. The influence of the work habits of our parents and other adults around us as we grow up has lasting impact.

While Romney’s sentiment is understandable and common among conservatives, it doesn’t fit easily with his view that all “all moms are working moms.” He’s quoted in Michael Kranish and Scott Helman’s book The Real Romney as saying motherhood is its own profession. “It’s one which is challenging, it’s demanding,” he said. “It requires being a psychologist, a psychoanalyst, an engineer, a teacher,” he added.

If nonworking mothers on welfare produce “indolent and unproductive” children, then why doesn’t the same hold true for other women?

No one is questioning the difficulty or value of motherhood, but many critics have pointed out that while Romney’s wife was able to devote herself full time to the work of the house, other women must juggle both home life and a job to supplement their partners’ incoming. Meanwhile, millions of other mothers — including a disproportionate number on welfare — have to do all of this on their own, without a partner.

Wealthy Investment Banker: ‘It Is Ridiculous That I Pay Substantially Lower Taxes’ Than Working Americans

Today, the Senate is scheduled to hold a vote on the Buffett Rule, the Obama administration’s proposed minimum 30 percent tax on millionaires. Prior to the vote, several wealthy Americans have come forward to offer their support for the rule — and for raising tax rates on the wealthy in general — effectively asking Congress to increase their taxes.

Case in point, former investment banker Eric Schoenberg told MSNBC’s Chris Jansing today that he feels “it is ridiculous” that he’s able to pay a much lower effective tax rate than middle class families:

SCHOENBERG: I think my taxes are too low. In 2009, for example, I paid 1 percent of my income in federal income taxes.

JANSING: Legally, I presume.

SCHOENBERG: Completely legally. I put my tax return online. I wouldn’t have done that if I’d done anything improper…For 2010, I calculated my tax rate at about 16 percent…The fact is, the people who have benefited most from the economic policies of the last 30 years have also received substantially lower taxes as a result. It is ridiculous that I pay substantially lower taxes than the average working American. I really can’t fathom the logic that allows that to take place.

Watch it:

Schoenberg inherited some of his fortune from his father, who Schoenberg said, “was only able to accumulate the wealth that he did because he was doing it in a society that functioned. A society that provided security in the form of police, army, firepeople. A society that provided education so that those workers were capable of filling those jobs. A society that provided national transportation infrastructure that allowed him to address a national market.”

Meanwhile, as the Senate votes on the Buffett rule, the House will be voting on a bill authored by Majority Leader Eric Cantor (R-VA) that, while called a “small business” tax cut, would actually just be another windfall for millionaires.

Justice

Two Federal Judges Suggest All Labor, Business or Wall Street Regulation Is Unconstitutional

Judges David Sentelle and Janice Rogers Brown

For more than two years, ThinkProgress has tracked “tentherism,” a radical misreading of the Constitution which claims that pretty much everything the federal government does is unconstitutional. Tenther lawmakers — who include members of Congress, senators, governors and at least one sitting Supreme Court justice — have claimed that child labor laws, Social Security, Medicare, Medicaid, clean air laws and the federal highway system all violate the Constitution.

Even tentherism has a limit, however. While tenthers would all but eliminate our national leaders’ ability to solve national problems, they concede that state governments are still free to serve their citizens. Which is why a recent concurring opinion signed by U.S. Court of Appeals judges David Sentelle and Janice Rogers Brown is so disturbing. Under Sentelle and Brown’s vision, any attempt to protect workers, investors or consumers from unscrupulous businesses is in jeopardy:

America’s cowboy capitalism was long ago disarmed by a democratic process increasingly dominated by powerful groups with economic interests antithetical to competitors and consumers. And the courts, from which the victims of burdensome regulation sought protection, have been negotiating the terms of surrender since the 1930s.

First the Supreme Court allowed state and local jurisdictions to regulate property, pursuant to their police powers, in the public interest, and to “adopt whatever economic policy may reasonably be deemed to promote public welfare.” Then the Court relegated economic liberty to a lower echelon of constitutional protection than personal or political liberty, according restrictions on property rights only minimal review. . . . Thus the Supreme Court decided economic liberty was not a fundamental constitutional right, and decreed economic legislation must be upheld against an equal protection challenge “if there is any reasonably conceivable state of facts that could provide a rational basis” for it.

To translate this a bit, Sentelle and Brown disagree with the fact that representatives chosen by the American people, rather than unelected judges such as themselves, get to decide America’s economic policy. At best, their opinion calls for a return to a discredited era when judges could simply toss out laws protecting workers or consumers that the judges did not like.

Yet Sentelle and Brown also appear to be arguing for something even more radical than that. Their opinion complains that “economic liberty [is] not a fundamental constitutional right.” “Fundamental rights” are the very most protected rights under the Constitution. The right to be free from race discrimination is a fundamental right. As is the right to criticize the government. Sentelle and Brown’s opinion, however, concerns a law that removes a loophole exempting certain dairies from a 70 year-old system regulating the milk industry. In their apparent view, a law that regulates how dairy executives operate their business is exactly as offensive as a law that bans black people from voting.

Nor would their opinion stop there. The minimum wage regulates how dairy executives operate their business. As do child labor laws. Or workplace safety laws. Or laws that prevent dairies from selling spoiled or tainted milk. In Sentelle and Brown’s America, these laws likely would also be just as constitutionally suspect as a law that gives special rights to white people and not to black people.

Nor would their opinion stop there, for, indeed, their opinion laments that “economic legislation” as a whole is left to the people’s representatives and not to judges. The likely implication of Sentelle and Brown’s vision is any attempt to protect workers, or to regulate Wall Street, or to ensure that food and drugs sold in the marketplace are safe, or to enact any law protecting ordinary American consumers must be treated with exactly the same constitutional skepticism judges would bring to a law that tosses people who speak out against President Obama in jail.

Yet for all the many, many laws they would strike down, for all the anarchy they would create by sweeping away literally centuries of regulation in a single constitutional whirlwind, one thing is conspicuously absent from Sentelle and Brown’s opinion. At no point do they cite a single word of the Constitution which supports their sweeping assault on America’s power to govern itself.

This is not a coincidence. Those words do not exist.

Mitt Romney Tells Rich Donors His Secret Plan To Cut Housing Assistance

During comments overheard by an NBC news reporter, Mitt Romney told a crowd at a private fundraiser last night that he might eliminate the Department of Housing and Urban Development, scale back the Department of Education, and eliminate some specific tax provisions. There are all details that he has refused to divulge on the campaign trail:

Romney went into a level of detail not usually seen by the public in the speech, which was overheard by reporters on a sidewalk below. One possibility floated by Romney included the elimination of the Department of Housing and Urban Development, the Cabinet-level agency once led by Romney’s father, George.

“I’m going to take a lot of departments in Washington, and agencies, and combine them. Some eliminate, but I’m probably not going to lay out just exactly which ones are going to go,” Romney said. “Things like Housing and Urban Development, which my dad was head of, that might not be around later.

Regarding taxes, Romney said, “I’m going to probably eliminate for high income people the second home mortgage deduction.” He also said that he would “likely eliminate deductions for state income and property taxes.” The campaign is already attempting to walk the comments back, with a Romney adviser telling CNN, “He was tossing ideas out, not unveiling policy.”

For starters, Romney’s tax ideas, while reasonable, would raise nowhere near enough money to offset the huge tax cuts that he has in mind. Those tax cuts would increase the deficit by $900 billion in 2015 alone. Meanwhile, eliminating the deduction for state and local taxes, one of the largest tax expenditures for the government, for everyone saves $72 billion per year, and saves far less if the elimination is limited to upper-income Americans.

Romney’s plan to eliminate HUD, assuming he didn’t shuffle its programs to other departments, would bring an end to critical programs like Section 8 housing vouchers and community development block grants. Eliminating housing assistance is even more problematic given the disproportionate percentage of veterans in the homeless population.

So while he’s happy to hand out tax breaks worth hundreds of thousands of dollars to the very richest Americans, Romney would at least contemplate eliminating housing subsidies for the very lowest income Americans, giving them little hope of putting a roof over their heads.

Why Eric Cantor’s $46 Billion Tax Boondoggle Will Cause A Real Headache For Small Businesses

Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.

With Tax Day approaching, House Majority Leader Eric Cantor and the House GOP are pushing a $46 billion boondoggle they call the “Small Business Tax Cut Act of 2012.” As ThinkProgress has previously reported, the bill is really just a windfall for rich people, many of whom, like hedge fund managers, owners of sports teams, celebrities, lawyers, and lobbyists are not most people’s idea of “small businesses.” Cantor’s tax giveaway, half of which goes to millionaires, is also among the least effective ways to create jobs. (Our full analysis is here.)

So what do actual small businesses get? A big headache, according to a new “tax complexity analysis” of Cantor’s bill from the Joint Committee on Taxation (Congress’s nonpartisan tax experts) and the IRS. By adding a complicated new provision to the tax code, Cantor’s bill would mean small businesses would have more paperwork, more time wasted on tax filing, and more disputes with the IRS:

It is anticipated that small businesses that elect to apply the provision will need to keep additional records due to this provision, and that additional regulatory guidance will be needed…It is anticipated that the provision will result in an increase in disputes between small businesses and the IRS. [...]

The provision likely will increase the tax preparation costs for most affected small businesses. Small businesses will have to perform additional analysis concerning whether the small business has 500 or fewer employees and which income qualifies for the deduction allowed under the provision. For income that is determined to be eligible for the deduction under the provision, small businesses will be required to perform additional calculations to determine the amount of the deduction…[S]mall businesses will be required to undertake calculations to determine the amounts of costs that are allocable to domestic business gross receipts. In some cases, small businesses would not have been required otherwise to perform these calculations but for the provision.

Due to the detailed calculations required by the provision, it is anticipated that the Secretary of the Treasury will have to create a new form for qualified small businesses to compute the deduction and will have to make appropriate revisions to several types of income tax forms and instructions. In addition, the Secretary of the Treasury will have to issue guidance to carry out the purposes of the provision.

The IRS adds that the new tax form required by Cantor’s bill, Form 8903-A, “would be complicated.”

By creating a complicated new loophole, available to some business but not to others according to arbitrary rules, and favoring the very rich, the Cantor bill epitomizes everything that is wrong about the tax code.

Ironically, the House GOP just passed a budget bemoaning the tax code’s “labyrinth of deductions” and promising tax reform to close special loopholes and carveouts (though it did not identify a single loophole that it would close). In less than three weeks, House Republicans have done a complete 180, abandoning their showy commitment to tax reform and carving out a new $46 billion loophole. The Cantor bill is the “antithesis of tax reform” according to Rep. Sandy Levin (D-MI), the top Democrat on the House Ways and Means Committee.

But at least the GOP budget and the Cantor bill are consistent about one thing – more windfall tax cuts for the rich.

Econ 101: April 16, 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.

  • This week, the Senate plans to vote on the Obama administration’s proposed minimum tax for millionaires. [The Hill]
  • Treasury Secretary Geithner pushed back yesterday on claims that a minimum tax for millionaires would hurt the economy. [Reuters]
  • Mitt Romney on Friday requested an extension for filing his 2011 tax return. [Reuters]
  • The state of Hawaii has sued seven major banks, alleging that they’ve used deceptive credit card marketing. [Huffington Post]
  • In the next two weeks, the Senate is expected to take up a resolution of disapproval aimed at blocking a new union election rule proposed by the National Labor Relations Board. [The Hill]
  • The World Bank is expected to announce its next president today. [CNN Money]
  • Public education issues are becoming a factor in several governor’s races. [Education Week]

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