ThinkProgress Logo

Economy

How The Media Have Failed To Explain Negative Effects Of ‘Fiscal Cliff’ Spending Cuts

Photo from the Washington Post Express

A lot of ink and airtime have been spent on the ongoing negotiations over the so-called “fiscal cliff,” the tax increases and spending cuts scheduled to take place at the end of the year. However, according to a Media Matters report, media outlets have been much more focused on the potential economic damage of the former than the latter:

Of all segments, 130 discussed the negative effects of tax increases, compared to only 50 that mentioned effects of spending cuts. Forty-two total segments mentioned only the effects of increasing taxes on the wealthy, with the bulk of these segments — 23 segments — being on Fox News. The effect of taxes on the wealthy outperforms other issues when discussed in isolation — 24 segments discussed only the effects of general tax increases, while only 13 total segments mentioned the effects of spending cuts in isolation.

According to the Economic Policy Institute, the spending cuts that would go into effect should the U.S. go over the fiscal cliff will actually be more detrimental to economic growth and job creation than the tax increases. In fact, spending cuts from that deal “threaten to shave 1.1 percentage points from GDP growth and reduce employment by more than 1.3 million jobs by the end of 2013, relative to prior law.”

Michigan Republicans Re-Pass Anti-Union Law That Voters Repealed Just Six Weeks Ago

Not content to push through an anti-union “right-to-work” law, new restrictive abortion policies, and an anti-Sharia law, Michigan Republicans are now pursuing a revamp of a law voters rejected at the polls barely more than a month ago.

Michigan’s House Republicans today passed a new version of the “emergency manager” law that voters repealed via ballot referendum in November. The initial version gave broader powers to state-appointed emergency managers who oversee townships that are struggling financially.

Among those powers was the ability to void union contracts and labor agreements. The new version, introduced by state Rep. Al Pscholka (R), makes small changes but still includes the provision granting the manager authority over labor contracts, as the Detroit Free Press reports:

The bill says an emergency manager will have the power to undertake “the modification, rejection, termination and renegotiation of contracts.”

The ability for an emergency manager to break or terminate collective bargaining agreements under certain circumstances was one of the most controversial aspects of PA 4.

But Pscholka said a key difference is that the new bill “gives a choice to local officials … on how to keep their heads above water.”

The new law does make changes that give localities more input with their emergency managers, and it includes a provision that gives local officials the option of choosing mediation or bankruptcy over the appointment of a manager once a financial emergency is declared. It also allows localities to remove the emergency manager a year later by a two-thirds vote from the local government.

But by leaving the broad powers over labor contracts intact in the new version, Michigan Republicans are again taking aim at the state’s unions. And they’re doing so in direct opposition to the state’s voters, given that such powers were “one of the most controversial aspects” of the repealed version.

Just as they did with the “right-to-work” law, Republicans attached an appropriations measure to the bill to make it tougher to overturn with a ballot referendum.

Public Transit Use Rises Steadily As GOP Threatens Severe Transit Cuts


Americans are relying more on public transportation than ever before, according to a report released Monday by the American Public Transportation Association. The rate of ridership has increased steadily in the last two years, with a 2.6 percent bump (or 7.9 billion trips) over the first three quarters of 2012.

Last year saw the second highest annual ridership since 1957, and the momentum seems to be growing. All forms of public transit, from buses to heavy rail like Amtrak, saw increases in ridership from January to September this year. Heavier use of public transit cuts down on use of fuel, carbon emissions, and congestion, while saving commuters time and money.

This encouraging trend toward public transit, however, could be easily stifled by Congress. Transportation funding is in dire straits, as APTA President Michael Melaniphy noted:

As Congress works to resolve our country’s deficit problem, it also needs to work to resolve the transportation deficit. Otherwise public transit and highway funding will be facing an annual $15 billion shortfall in the next 10 years. We continue to see that in areas where the local economy is improving and new jobs are being added, public transportation ridership is up. This makes sense since nearly 60 percent of the trips taken on public transportation are for work commutes. Public transit service is an important resource for employees and employers as it is instrumental in helping people travel to their jobs.

Though more and more people are relying on public transportation to get to work, Republicans are intent on further bankrupting these systems. The House GOP released a transportation bill in February that would have eliminated funding for mass transit systems, disproportionately hurting low-income urban communities for whom public transportation systems are the only way to get around. The bill failed, but Republicans continue to call for cuts to federal spending on transportation.

If a deal cannot be reached to avert the discretionary spending cuts in the so-called fiscal cliff next year, crucial public transportation programs will be essentially de-funded. One of the programs in danger is the Federal Transit Administration’s New Starts Program, which awards grants for major projects like Washington’s metro line to Dulles International Airport and the Bay Area’s new line to the Oakland International Airport. Amtrak, which suffered serious damages from Hurricane Sandy in October, would lose $131 million. An austerity budget like the one proposed by Republicans could sabotage a steadily growing industry and cut off whole communities that are increasingly relying on mass transit systems.

Health

Michigan’s New Union-Busting Law Will Undermine Workers’ Health Benefits

Michigan’s Gov. Rick Snyder (R) has incited a political firestorm over the controversial anti-union “right-to-work” law that he signed this week. That bill has significant implications for labor rights, particularly for Michigan’s middle class, and may threaten the health care benefits that union workers receive through their collective bargaining abilities.

According to the Employee Benefit Research Institute (EBRI), union workers have much better access to health insurance than their non-union counterparts. In 2005, a full 86 percent of unionized workers had access to health insurance, compared to 59.5 percent of non-union workers:

The report goes on to say that while non-union workers enjoy more health coverage as dependents, unionized workers have a significantly lower uninsurance rate as a consequence of their ability to negotiate with employers. That bargaining power is pretty significant in an era in which employers increasingly try to push the cost of essential benefits such as health care onto their workers. For some context, the Kaiser Family Foundation estimates that Michigan adults have an uninsurance rate of 18 percent.

In fact, a Center for American Progress report estimated that if the states that don’t currently have right-to-work laws lowered their benefit levels to those in anti-union states, 2 million fewer workers would receive health insurance benefits.

Speaker Boehner Doesn’t Understand The Debt Ceiling, But Takes It Hostage Anyway

The Obama administration’s initial offer to avert the so-called “fiscal cliff” included a provision that would end the ability of Congress to use the debt ceiling — and thus the creditworthiness of the United States — as a hostage to demand other policy outcomes. Employing a process invented by Senate Minority Leader Mitch McConnell (R-KY), Congress would have to act affirmatively to prevent a debt ceiling increase, rather than having to actively increase it.

Under this set-up, Congress would still control the nation’s finances and the amount of debt it accrues through Congress’ control over taxes and spending. However, Speaker of the House John Boehner (R-OH) doesn’t seem to grasp the specifics of the matter, as he claimed during a press conference today that changing the process for raising the debt ceiling would amount to Congress giving up “the power of the purse”:

Do you think there is any chance that Senator Reid or then-Senator Obama would have done that? Zero. Congress is never going to give up our ability to control the purse. And the fact is that the debt limit ought to be used to bring fiscal sanity to Washington D.C.

Watch it:

The simple way to ensure that Congress does not add any more debt is to not pass bills that add any more debt. The debt ceiling does not restrict spending in any way; it merely ensures that the U.S. will actually pay for spending that Congress has already authorized. As the Government Accountability Office explained, “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.” “We’ve already voted on spending and revenue, and so the debt ceiling is just a confirmation of what we voted on,” said Sen. Max Baucus (D-MT)

But Boehner’s fundamental misunderstanding of the debt ceiling (or his willingness to publicly lie about what it does) did not stop him from taking it hostage and threatening to use it to impose his version of “fiscal sanity.” Last year’s debt ceiling debacle ultimately will cost taxpayers $18.9 billion due to the elevated interest rates on U.S. debt issued during that period.

Virginia GOP Official Calls Union Members ‘Terrorists’

Shawn Kenney

Union workers who were protesting the passage of so-called “right-to-work” laws outside the state capitol in Lansing, Michigan are “terrorists,” according to a former high-ranking official in the Republican Party of Virginia who now serves in a county-level elected office.

Shawn Kenney, who formerly served as the communications director for the state GOP and is now the chairman of the Fluvanna Co. Board of Supervisors, posted an entry on his blog titled, “We Don’t Negotiate With (Union) Terrorists.” The post features a video of a brief fight that occurred outside the Michigan state capitol. Before the video, Kenney writes: “…and these people are terrorists.”

The video, the subject of numerous Fox News segments aimed at ginning up anti-union sentiment among the conservative base, shows an isolated fight between union protesters and Steven Crowder, a Fox News contributor who was punched during the dispute. A state employee (who is represented by a union) who witnessed Crowder’s earlier interactions with the crowd while passing by told the Huffington Post that Crowder appeared to be provoking the workers and there is evidence showing that the video may have been selectively edited to portray union members in a negative light. “There was no question he was there just to start a fight, to start some kind of trouble,” the witness said. Crowder admitted to HuffPost that he “definitely provoked them,” but said he did it by “asking them basic questions” and “didn’t expect to be assaulted.”

While it is unfortunate that any violence occurred, local media reports and police painted a picture of the protests that didn’t quite resemble “terrorism.” The protests, which included at least 10,000 workers, were “mostly peaceful” according to media reports, and the Michigan State Police said just three arrests were made.

Another former Republican Party of Virginia official wrote on the same blog this week that by passing “right-to-work,” Michigan had “finally unshackle[d] itself from slavery.”

Radio Host Stumps Michigan Governor By Asking How Union-Busting Will Help His State’s Economy

Michigan Governor Rick Snyder was happy to sign the union-busting “right-to-work” bill this week, saying that the law would help create jobs in his state. But in an interview with American Public Media on Thursday, Snyder was hard-pressed to give good reasons for why, exactly, the bill would inspire companies to move into Michigan and create new jobs.

Pressed by Marketplace Morning Report host Jeremy Hobson to explain what proof Snyder had that Michigan would see a job boom as a result of the law, the Governor cited neighboring Indiana’s recent job numbers as his only evidence:

SNYDER: This is about more and better jobs coming to Michigan. If you look at Indiana, they did similar legislation in February. And literally, thousands of new jobs are coming to Indiana where this was a major consideration in companies’ decision to move to that state.

HOBSON: Are you saying then that companies decided to go to Indiana, for example, because there’s less union membership in Indiana?

SNYDER: No, and I don’t want to speak for the companies but it is very clear that companies are looking at Indiana that previously did not. [...]

HOBSON: Well, make that connection though. You’re saying that, by not requiring workers to pay union dues, that therefore companies are going to be more attracted to the state. Why would that be?

SNYDER: Well, that’s a question for the companies but there is a strong sense, and companies do look at that. That’s something we’ve suffered here.[...]

HOBSON: Union membership has fallen dramatically in Michigan and across the country and it’s not as though that has translated into some boom in employment. I see the point you’re making, but it hasn’t been borne out in the evidence, has it?

SNYDER: Well, it’s been borne out in the Indiana case.

Listen:

The Economic Policy Institute estimates that right-to-work will cost all Michigan workers — not just those in unions — an average of $1,500 a year, and that there is “no relationship” between right-to-work laws and employment rates.

5 Things Boehner Doesn’t Want You To Know About His Fiscal Cliff Deal

As the Bush tax cuts are scheduled to expire automatically in a few weeks, some Republicans are urging their leaders to accept President Obama’s deal to allow tax rates to rise for the top 2 percent of earners, while looking ahead to the next budget showdown. The US will hit its debt limit in early 2013, and the GOP sees an opportunity to once again use the threat of default to force Democrats to concede to devastating cuts to entitlement programs along with more tax cuts for the wealthy.

Publicly, House Speaker John Boehner (R-OH) offered another deal to Obama on Tuesday night claiming to concede more than $800 billion in tax revenue — still without any tax increases. As more details of Boehner’s proposal emerge, the illusion of compromise has faded to reveal the same plan Republicans have pushed for all along. Here are 5 problems with the offer:

1) It will hurt the middle class. Refusing to raise taxes on the top 2 percent, the Republicans’ plan to raise more than $800 billion solely from closing loopholes would inevitably hurt middle class Americans. While they have not specified which loopholes they would close, Republicans would need to close off a huge range of deductions mainly employed by middle income earners, including, as Greg Sargent lists, “the write-offs for employee provided health insurance, interest from municipal bonds, and money invested in retirement plans, to itemized deductions for charitable contributions, state and local taxes, and mortgage interest payments.”

2) Skewed to help the rich. This new deal could also make the Bush tax cuts permanent for the top 2 percent of Americans, despite the pile of evidence that high-income tax cuts do nothing for the economy and exacerbate income inequality. The additional revenue Republicans are proposing would be consumed by maintaining these lowered tax rates.

3) Republicans will get everything they want. Boehner’s new offer is not actually a compromise; his plan to raise $800 billion in revenue without any tax increase is similar to former presidential candidate Mitt Romney’s proposal, right down to the impossible math. If the GOP holds the debt ceiling hostage, they can try to secure the spending cuts they’ve been after and lower tax rates through so-called tax reform.

4) Very painful cuts for Medicare beneficiaries. Boehner is hoping to pressure the president into conceding even more spending cuts than are already on the table. This includes “very painful cuts to Medicare,” as Sen. Bob Corker (R-TN) boasted. Medicaid and Social Security enrollees would also see their benefits gutted.

5) Gambling with America’s credit. Ratings agency Standard & Poor downgraded U.S. credit for the first time in history last year after Republicans brought the nation to the brink of default, even citing Republican intransigence on tax increases as a reason for the move. The fight to raise the debt limit also cost taxpayers $1.3 billion in 2011. With Republicans poised to pull the same shenanigans in the fiscal cliff talks, the US risks repeating history in 2013.

GOP Threatens To Hold Disaster Relief Hostage To Spending Cuts — Again

The White House last week requested $60 billion in federal disaster relief to rebuild the damage caused by Hurricane Sandy, but some Republicans are again threatening to hold disaster relief funding hostage unless it is offset by other budget cuts.

A day after Rep. Scott Garrett (R-NJ) called disaster relief for Hurricane Sandy “wasteful spending,” Reps. Cynthia Lummis (R-WY), Steve King (R-IA), Raul Labrador (R-ID), and Jeff Landry (R-LA), all from the more conservative wing of the House GOP, told The Hill that they will demand offsets for disaster spending:

Rep. Cynthia Lummis (R-Wyo.), who sits on the Appropriations Committee, said she will need to see offsets on Wednesday as did Rep. Raul Labrador (R-Idaho).

We have these emergencies every year and we should prepare for that in our budget,” Labrador said.

“No pun intended, we should have a rainy day fund,” Rep. Jeff Landry (R-La.) said.

After Hurricane Katrina in 2005, then-House Majority Leader Tom DeLay (R-TX) rebuked conservative members of his caucus for demanding spending cuts for disaster relief. “It is right to borrow to pay for it,” he said. But since the GOP took over the House in 2010, it has routinely made such demands. House Majority Leader Eric Cantor (R-VA) promised to block disaster funding in the wake of tornadoes that devastated Missouri, an earthquake that hit his own state, and Hurricane Irene.

House Republicans also cut disaster relief funding in a 2011 spending measure and cut it this year to preserve military spending. The GOP also reneged on a deal it struck with Democrats to make emergency disaster relief funding easier in the future.

Update

Politico reports that other Republicans, like Sen. Tom Coburn (R-OK), want spending offsets for disaster relief:

This country can’t continue spending money that they don’t have,” said Sen. Tom Coburn (R-Okla.). “So rather than go borrow the money, we ought to say, ‘What’s a lower priority than helping the people of Sandy?’ And that’s how we ought to do it.”

Rep. Jack Kingston (R-GA) told Politico, “Anything needs to be offset right now.” And Rep. Steve Scalise (R-LA) added, “If you look at what we’ve pushed for in the past, it’s to properly fund for disasters and when we fund for disasters, we also control spending in other places. We can’t give up our desire to control spending on any front.”

Econ 101: December 13, 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.

  • Sen-elect Elizabeth Warren (D-MA) was officially named to the Senate Banking Committee yesterday, along with Sen. Joe Manchin (D-WV) and Sen-elect Heidi Heitkamp (D-ND). [The Hill]
  • Americans are expected to travel and spend more than they did last holiday season. [CNBC]
  • The groups that pushed for a new union-busting law in Michigan plan to do so in several other states. [Washington Post]
  • The Senate unveiled a bill that would provide $60 billion in relief to areas hit by Hurricane Sandy. [The Hill]
  • India is investigating whether Walmart broke its foreign investment laws. [Wall Street Journal]
  • European Union leaders struck a deal to make the European Central Bank the continent’s top banking regulator. [Reuters]
  • European finance ministers finally released the latest round of aid for Greece. [Bloomberg]

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up