Federal Reserve Chairman Ben Bernanke had a succinct message today for lawmakers looking to monkey around with the debt ceiling — don’t do it. He also blew a hole in the myth that the debt ceiling has something to do with future spending, as opposed to spending already authorized by Congress:

Likening Congress to a family arguing that it can improve its credit rating by deciding not to pay its credit card bill, Bernanke said that raising the legal borrowing limit was not the same as authorizing new government spending.

“It’s very, very important that Congress takes the necessary action to raise the debt ceiling to avoid a situation where our government doesn’t pay its bills,” he told an event sponsored by the University of Michigan.

House Republicans have threatened to take the debt ceiling hostage in order to secure cuts to entitlements and other domestic spending. During a press conference today, President Obama excoriated Republicans for trying to take use the debt ceiling as leverage. “They will not collect a ransom in exchange for not crashing the American economy,” he said. “The full faith and credit of the United States of America is not a bargaining chip.”

Bernanke also revealed today that he reads blogs. “Blogs have become pretty important source of intellectual exchange,” he said.

Virginia Governor Bob McDonnell (R) was on Fox News today to discuss his new plan to shift the cost of highway construction from drivers to the poor, which he will accomplish by eliminating his state’s gas tax and replacing it with an expanded and increased sales tax. McDonnell called the idea a “new, innovative” way for his state to address its transportation shortfall:

Some have suggested that is why the gasoline tax is good, because people buy less gas and then the air is clean. That’s not the policy reason. You tax things to raise revenue to provide government services, and so that’s is the purpose of it, not to create those kinds of policies. But Neil, the whole goal here is to create a way to have a sustainable method of funding our roads and bridges and other transportation assets for the future so we can create more jobs, so that businesses will come and locate here, so entrepreneurs will start up here, so families can spend more time with their children, parents. That is the whole goal and do it in a way consistent with conservative principles. Look, it’s a different idea. We shouldn’t be afraid of new innovative ideas.

Watch it:

McDonnell’s plan will result in the cost of highways being borne by low-income Virginians — as the sales tax disproportionately affects those at the bottom of the income scale who are more likely to spend all or most of their income — and by those who use mass transit, walk or bike. It lets out-of-state drivers who use Virginia’s roads off without paying a single cent. As the Washington Post’s Robert McCartney wrote, “the gas tax is a nearly ideal way to fund highways. It’s borne by the people who use highways. It penalizes fossil fuel use and thus is environmentally friendly. Out-of-state drivers, rather than Virginians, pay a sizable chunk of it.”

Virginia already has a regressive tax system, with the richest 1 percent paying a 5.2 percent effective tax rate, while the poorest Virginians (those making less than $19,000) pay 8.8 percent, according to the Institute on Taxation and Economic Policy. Increasing the sales tax is only going to make that disparity worse, while making those who don’t use the state’s highways pay more for their upkeep.

Rep. Jerry Nadler (D-NY) recently gained some attention by strongly advocating that the Obama administration defuse the coming debt ceiling standoff by minting a $1 trillion platinum coin. “It would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things,” he said.

The platinum coin may have been ruled out as an option, but that doesn’t mean Nadler is stepping back from economic policy. In an interview with the Business Insider, Nadler had some choice words for Washington’s obsession with deficit reduction, even as unemployment is well over 7 percent. “I think the deficit is not our immediate problem, our immediate problem is unemployment,” he said. He also correctly noted that austerity is killing Europe’s economy:

I think the deficit is not our immediate problem, our immediate problem is unemployment and frankly, I think right now, we should be running a higher deficit, temporarily, to get the economy into high gear.

We’re in a very slow recovery, unnecessarily so. The deficit has come down from 10.1% percentage in 2009, to 7.1% now, without doing anything. I mean if we could have unemployment down to 5%, which it was in 2005, that would reduce the deficit by 40% by itself. I think this austerity policy of chasing this whole grand bargain thing, I don’t agree with. I don’t think we should be cutting spending at all, except the spending that is really unnecessary, like the military. [...]

I think trying to reduce the deficit right now is wrong, because this position is going to keep the economy in the doldrums and keep the depression going longer and it’s self-defeating.

You look at Europe. I often say in my speeches, I say, it’s rare in life that you get a controlled scientific experiment. Cause you can’t do controlled scientific experiments with real people, normally. But you have it, and if you grasp the economics of the economic recoveries from 2007 in Europe and the United States, they matched, until 2010, when they start to collapse. And then it diverges, and we keep going up, slowly.

Many economists agree with Nadler’s take. “The chorus of people advocating for a long-term deficit plan NOW, NOW, NOW, drowns out the more urgent need for job creation,” said Economic Policy Institute President Lawrence Mishel. “We are having the wrong conversation. Let’s focus on jobs and restoring wage growth.”

Nobel Prize winning economist Paul Krugman added, “the whole deficit panic is fundamentally misplaced.” Former Secretary of Labor Robert Reich, meanwhile, wrote “we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month. All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction.”

In a recent interview with GQ, pop icon Beyoncé Knowles struck a serious note when talking about sexism, specifically on the issue of the gender pay gap — the fact that women are paid, on average, 77 cents to a man’s dollar.

“Equality is a myth,” Knowles said, launching into an explanation of the impact that a lack of equal pay on the entertainment industry:

“You know, equality is a myth, and for some reason, everyone accepts the fact that women don’t make as much money as men do. I don’t understand that. Why do we have to take a backseat?” she says.

“I truly believe that women should be financially independent from their men. And let’s face it: Money gives men the power to run the show. It gives men the power to define value. They define what’s sexy. And men define what’s feminine. It’s ridiculous.”

Knowles is right to call out the entertainment industry. There’s a lack of accurate information on how women are faring in the industry, but, sadly, it is known that women in Hollywood earn less than men overall, and the pay gap increases as women age.

For young women overall, the gender pay gap starts immediately out of college and accrues over their lifetime. While the gap was closing for a period of time, it has stagnated at 77 cents on the dollar for years.

The Eurozone got some more discouraging economic news today, with industrial output dropping by its largest amount in three years. Eurozone unemployment recently hit yet another record high of 11.8 percent, with 18.8 million out of work. Spain’s unemployment rate is nearly 27 percent.

But the Eurozone is going to keep right on going with its austerity program, according to its top economic official:

The worst of the euro zone debt crisis may be over, but governments must not let up on reforms or budget cuts if they want to put the turmoil firmly behind them, the EU’s top economic official said on Friday.

In a speech to diplomats and industry officials, EU Economic and Monetary Affairs Commissioner Olli Rehn called for prioritising investment, fighting youth unemployment, continued reduction of budget deficits and tighter economic integration of the 17-member single currency area.

“Our patient may be out of intensive care, but it will still take some time before she can be given a clean bill of health,” Rehn said. “That’s why any lapse into complacency would be unforgivable. We need to stay the reform course to revitalise the European economy,” he added. [...]

[L]ower deficits were still central to emerging from the three-year public debt crisis, Rehn said, even though their is increasing debate about the impact of austerity on growth.

Spain is the case study in how budget deficits have nothing to do with the current Eurozone crisis: Spain has the Eurozone’s highest rate of unemployment, yet had balanced budgets before 2008.

The International Monetary Fund recently admitted that it vastly underestimated the detrimental effect of austerity spending cuts, and is now recommending that countries dial back their spending reductions in order to prevent stifling of economic growth. But European nations are stubbornly charging ahead. The UK, in fact, is headed towards a triple-dip recession, as its government doubles down on austerity.

President Obama today held the final press conference of his first term, and used the opportunity to reiterate that he is not interested in negotiating with House Republicans over the debt ceiling. “They will not collect a ransom in exchange for not crashing the American economy,” Obama said:

Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them…[House Republicans] will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.

Watch it:

“We are not a deadbeat nation,” Obama reiterated later. The last time that House Republicans threatened to push the U.S. past the debt ceiling, it cost nearly $19 billion in increased interest payments in the national debt. Obama also noted that Speaker of the House John Boehner (R-OH) admitted in 2011 that breaching the debt ceiling would bring about a “financial disaster.”

In California, Gov. Jerry Brown (D) and the state’s Democratically controlled legislature are anticipating a budget surplus for 2014 after finally receiving voter approval for a series of tax increases. But on the other side of the country, New Jersey Gov. Chris Christie (R) wants to forge ahead with his plan to cut the Garden State’s income tax, despite a large and seemingly ever-growing deficit, as NJ101.5 reported:

For the better part of 2012, Governor Chris Christie demanded that Democrats approve a tax cut and he criticized them at every turn for dragging their feet. Democratic leaders consistently said they wanted to wait until they were sure that revenues matched Christie’s projections. Revenues have not matched estimates, but despite that and the fact that the costs of recovering from super-storm Sandy will be astronomical, the Governor isn’t ready to give up.

Asked if his demands for a tax cut will continue in 2013, Christie said, “I think they have to because we have to get more competitive. You look at the region and we have the highest tax rates in the region.”

The Governor said you can expect to become an economic job creator when you have the highest rate of taxes in the region.

“Yeah, I’m still going to continue to call for cuts in taxes,” pledged Christie. “I think that in the end, I’m hopeful that the Democrats, if not now certainly after this election, will see the wisdom for that.”

For months, Christie has been asserting that revenue in the state would come in higher than projected. He even blasted one revenue analyst — who turned out to be nearly spot-on — as the “Dr. Kevorkian of the numbers.” Now, Christie is hoping for a burst in revenue that has not been seen in New Jersey for nearly a decade in order to balance the state’s books.

The tax cut plan that Christie unveiled in 2012 would have given 40 percent of its benefit to the richest 1 percent of New Jerseyans, while cutting taxes for middle-class families by just $80.

Republican Congresswoman Marsha Blackburn (TN) insisted that shutting down the government should be “on the table” as Congress and the Obama administration deal with passing a continuing resolution, raising the debt ceiling, and addressing the sequestration cuts.

Appearing on MSNBC on Monday, Blackburn echoed a growing consensus within the Republican party, insisting that lawmakers should close the federal government or allow the United States to default on its debt if President Obama does not agree to drastic spending cuts. “We are going to look at all of these options,” Blackburn insisted. “You know, there is the option of government shutdown. There is an option of raising the debt ceiling in short-term increments”:

CHRIS JANSING (HOST): [But are your constituents] willing to see the government shut down? Are you hearing that, Congresswoman?

BLACKBURN: Yes, they are. Yes, they are. But they want us to be thoughtful in what is done. And this is the good thing. You know, maybe it’s better to keep it open so we can keep cutting it. [...]

JANSING: Would you be willing if you don’t get the kind of cuts that you think are necessary, would you be willing to go into default or to shut down the government?

BLACKBURN: I think that there is a way to avoid default. If it requires shutting down certain portions of the government, let’s look at that. Let’s put these options on the table, be very thoughtful, but get this spending pattern broken. We cannot afford a $4 billion a day deficit and trillion dollar plus deficits every single year.

Watch it:

Jansing warned that should the government shutdown, the FBI would stop working, “prisons won’t operate, the court system closes, tax refunds won’t go out, the FAA would go off line.” But Blackburn dismissed these concerns by arguing that Republicans will set priorities for government spending and start eliminating “waste, fraud, and abuse.”

The line of thinking has caught fire with “more than half” of the Republican House caucus. As House Republican Conference Chairwoman Cathy McMorris Rodgers (R-WA) told Politico, “I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious.” “We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.”

Gov. Bobby Jindal (R-LA) last week tentatively endorsed a plan that would eliminate his state’s income and corporate taxes, replacing them with an increased sales tax. Such a move would disproportionately impact the poor, in a state where the tax code is already tilted against those with lower incomes.

But Jindal is not alone in this enthusiasm for pushing taxes down the income scale. North Carolina is also looking at replacing its income tax with an expanded sales tax, as Reuters noted:

“We have no choice but to make change,” said Bob Rucho, a Republican state senator in solidly Republican North Carolina, who is leading a push in that state for major tax changes.

Rucho and other like-minded lawmakers have a plan to do away with all state individual and corporate income taxes. The plan would replace lost revenue with a new business license fee and a higher sales tax on goods and services not now taxed by the state, such as legal, accounting and spa services, and food. [...]

Rucho’s plan would remake the North Carolina budget, which now derives 65 percent of its $18.5 billion in total tax revenues from individual income and corporate taxes.

To make up for that much lost revenue, the state sales tax rate would have to rise to 6.53 percent from 4.75 percent, according to a supportive study done by a consulting firm run by Arthur Laffer, a former adviser to Republican President Ronald Reagan and one of the fathers of “trickle-down” economics.

The Tarheel state’s incoming governor, Pat McCrory (R), has called for tax reform, but has yet to embrace any specific proposal.

North Carolina’s tax system already benefits the well off, with the richest 1 percent paying 6.8 percent, compared to 9.5 percent for those making less than $17,000, according to the Institute on Taxation and Economic Policy. Shifting to a larger sales tax will hit low-income residents the hardest, as they spend a much larger percentage of their income on basic needs. Tacking the sales tax onto food will make this change even worse for those at the bottom of the income scale.

Such a shift would also be bad for North Carolina’s economy. As Alexandra Forter Sirota of the North Carolina Justice Center wrote, “relying only on consumption taxes would make our revenue system less stable. When the next downturn hits and consumer spending plummets, North Carolina’s revenue would plummet along with it with no other tax to counter-balance its decline. That would trigger even harsher cuts to education, health care and public safety than we’ve seen in the last few years.”