Drawing from The Economist

Economists largely agree with that sentiment, according to a new survey by The University of Chicago. Of the 38 economists asked, all but one agreed that “a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes”:

Some of the economists did not mince words. Anil Kashyap said, “Deciding whether or not to pay the debts incurred to fund the previously approved tax and spending is nuts.” “The debt ceiling is a dumb idea with no benefits and potentially catestrophic costs,” said Richard Thaler. Former White House economist Austan Goolsbee merely said that the debt ceiling is “obviously” a problem.

Congressional Republicans in 2011 blocked the American Jobs Act, which included some desperately needed funds for infrastructure improvements. But even the money in that bill would have been a drop in the proverbial bucket when it comes to America’s infrastructure needs.

According to a new report from the American Society of Civil Engineers, America’s infrastructure deficit stands at $1.6 trillion and will grow to $2.75 trillion over the next decade, costing the country trillions of dollars in wasted economic potential and millions of jobs:

[T]he consequences of infrastructure shortfalls differ by each system. With degrading surface transportation, trips can still be made, but they would take longer and be less reliable, and travel could be less safe. Declining airport and marine port infrastructure directly impacts the nation’s ability to import and export goods efficiently, driving up costs to U.S. consumers.

Overall, if the investment gap is not addressed throughout the nation’s infrastructure sectors, by 2020, the economy is expected to lose almost $1 trillion in business sales, resulting in a loss of 3.5 million jobs. Moreover, if current trends are not reversed, the cumulative cost to the U.S. economy from 2012–2020 will be more than $3.1 trillion in GDP and $1.1 trillion in total trade.

A recent study found that infrastructure investments provide a major boost to the economy, but public investment has plunged since the Great Recession (even as the U.S. is paying record low rates to borrow money).

Louisiana Governor Bobby Jindal (R) recently rolled out a plan to replace his state’s personal income and corporate taxes with an increased sales tax. Such a move would shift taxes from the rich to the poor, who are disproportionately hit by the sales tax.

According to an analysis by the Institute on Taxation and Economic Policy, Jindal’s plan will raise taxes on the bottom 80 percent of Louisianians, while cutting them for the richest 1 percent:

– The bottom 80 percent of Louisianans in the income distribution would see a tax increase from repealing the personal and corporate income taxes and replacing them with a higher sales tax.

– The poorest 20 percent of taxpayers, those with an average income of $12,000, would see an average tax increase of $395, or 3.4 percent of their income, if no low income tax relief mechanism is offered.

– The middle 20 percent, those with an average income of $43,000, would see an average tax increase of $534, or 1.2 percent of their income.

– The largest beneficiaries of the tax proposal would be the top 1 percent—a group with an average income
of well over $1 million. Louisianans in the top 1 percent would see an average tax cut of $25,423, or 2.3 percent of their income under the plan described above.

Jindal is not the only Republican lawmaker looking to shift more taxes onto his low-income constituents. North Carolina Republicans are also looking to swap their state’s income tax for a sales tax, while Virginia Gov. Bob McDonnell (R) wants to finance elimination of his state’s gas tax with an expanded sales tax.

Senator Lisa Murkowski (R-AK)

Murkowski, at a News-Miner editorial board meeting on Jan. 9, said she doesn’t think the debt limit should be used for political leverage. Since borrowing will be required to pay off debts the country has already incurred, she said it would reflect badly on the U.S. to leave its willingness to pay those bills in doubt. [...]

Murkowski said not all of her colleagues in the Senate will say it out loud, but she believes most agree that failing to raise the debt limit would harm perception of the country.

“If you incur an obligation, you have a responsibility to pay for that,” Murkowski said.

The latest estimate from the Bipartisan Policy Center suggests that the United States could hit its borrowing limit in a month. Last year, Republican opposition to increasing the debt ceiling cost taxpayers an estimated $18.9 billion and as many as 1 million jobs. Playing another game of chicken this year would have similarly devastating consequences.

A group of six House Democrats will introduce legislation tomorrow to abolish the debt limit, a law they say is “unnecessary and increasingly an impediment to Congress’s ability to further economic recovery.” Reps. Jerrold Nadler (D-NY), Hank Johnson (D-GA), Jim Moran (D-VA), Jan Schakowsky (D-IL), Keith Ellison (D-MN), and Peter Welch (D-VT) will announce the legislation at a press conference tomorrow, according to a joint release, in an effort to “move forward with legislation that actually promotes jobs, economic recovery, and growth”:

Only a year-and-a-half after the last disastrous debt ceiling debate, House Republican leaders plan to use the same political brinksmanship again this year in order to impose their extreme and economically regressive agenda on the American people. A repeal of the debt ceiling would allow Congress to move forward with legislation that actually promotes jobs, economic recovery and growth.

A similar group of legislators, led by Nadler, also introduced legislation to abolish the debt limit in 2011, after Republicans demanded spending cuts in exchange for raising it. The result of that debt limit fight was the first credit downgrade in American history and the creation of the so-called “fiscal cliff” that Congress spent the last month trying to undo. The fight also led to increased borrowing costs that totaled $18.9 billion and at least a million jobs.

The United States is one of only two democratic countries, along with Denmark, that has a statutory debt limit that requires the legislative branch to separately authorize borrowing and spending. The Danish congress, however, has “set the ceiling high enough so that it never slows the process of borrowing money and they can avoid political conflicts,” according to ABC News. Yesterday, Federal Reserve Chairman Ben Bernanke said “it would be a good thing” if the U.S. abolished its debt ceiling.

Tea Party Congressman Steve King (R-IA) appeared on Fox News Tuesday morning to argue in favor of shutting down the federal government and breaching the debt ceiling if President Obama does not agree to drastic spending reductions. “We can start shutting down the appropriations. We can dig in,” King explained. “We must have cuts to go along with any debt increase. They must be substantial. There must be a line.”

But when pressed for specific spending cuts the GOP could support by host Martha MacCallum, King demurred, arguing that any details Republicans offer would simply be attacked as political fodder:

MACCALLUM: I guess what I’m asking for is in terms of a plan, I mean, are you going to put forth something that says, we, the House Republicans believe that this program should be cut, this agency should be cut, these are the spending cuts that we would outline in order to offset the increase in the debt ceiling? We believe that there needs to be cuts and these are what they would be? Are you going to do that?

KING: You know Martha, we’re going to get together this weekend and we’re gona crunch all that out. So I don’t want to presume that there is consensus there I might adhere to. [...]

MACCALLUM: You need to sell that idea to the American people with specifics and with a plan and say we’re the House GOP. Here’s what we would do. Here are the programs we would cut in order to reach parity over the next five years. We may never get this, but we want the American people to understand what we stand for. Is that something we can expect?

KING: Well, Martha, I take your point that we need to sell it with specifics. But you also understand as soon as a specific is put out there, it is attacked by the spending piranhas on the other side.

Watch it:

King’s approach mirrors the tactic of the Republican leadership, which refused to offer spending specifics throughout the debate over the so-called “fiscal cliff,” instead demanding that Democrats detail reductions the GOP might agree to.

Republicans point to the Rep. Paul Ryan’s (R-WI) budget as evidence of the cuts they’ve proposed, but that document is not an appropriations bill that specifies where the cuts will come from.

According to a new report, the number of families calssified as “working poor” — meaning they live in poverty despite the parents being employed — grew by 200,000 in 2011 (the latest data available from the Census Bureau). The Working Poor Families Project found that 10.4 million families live near poverty:

The result is 200,000 more such working families – the so-called “working poor” – emerged in 2011 than in 2010, according to the report, based on analysis of the most recent U.S. Census Bureau data.

About 10.4 million such families – or 47.5 million Americans – now live near poverty, defined as earning less than 200 percent of the official poverty rate, which is $22,811 for a family of four.

Overall, nearly one-third of working families now struggle, up from 31 percent in 2010 and 28 percent in 2007, when the recession began, according to the analysis.

“As the economy has improved one would expect that the benefits of that improvement would to some extent tie to these low-income families, and we’d see a decrease or at least a stabilization in the numbers,” said the report’s co-author, Brandon Roberts. “But the reality, the data show that the benefits of — even though it’s modest economic growth — it’s not going to these low-income families.” Overall, the poverty rate stabilized in 2011, despite analysts’ predictions that it would rise.

The number of Americans living in extreme poverty is up by 50 percent since 2000. Just three other countries in the developed world (Mexico, Chile, and Turkey) have a higher rate of child poverty than the U.S.