Our guest bloggers are Karla Walter, Senior Policy Analyst, and David Madland, Director of the American Worker Project at the Center for American Progress Action Fund.

Conservatives these days love to hate government workers—arguing that the highly unionized public sector workforce is overpaid and largely responsible state and federal governments’ budget woes. The poster child for the anti-public sector onslaught, former Minnesota Governor Tim Pawlenty (R), claims:

Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt. How did this happen? Very quietly. The rise of government unions has been like a silent coup, an inside job engineered by self-interested politicians and fueled by campaign contributions.

Critics of public sector unions will likely use the 2010 union membership rates — released today by the Bureau of Labor Statistics — to add fuel to the anti-government worker fire. Total unionization rates dropped to record lows in 2010, to just 11.9 percent of the American workforce. And now, most union members (51.8 percent) are government employees, rather than private sector workers, which has been the case since 2009, when just over fifty percent of union members were government employees.

However, the public sector’s increasing share of total union membership is no “coup” as Pawlenty argues. Public sector unionization rates have remained unchanged for the last 30 years. Just under 36 percent of government workers were unionized in 1980, and 36.2 percent of them were union members in 2010. As the chart below demonstrates, the public sector’s share of total union membership is only increasing because private sector unionization rates are in major decline, shrinking from 20.1 percent of the total private sector workforce in 1980 to 6.9 percent in 2010:

And numerous studies have debunked the myth of overpaid government workers. As a 2010 report from the Center for Economic and Policy Research noted:

When state and local government employees are compared to private-sector workers with similar characteristics, state and local workers actually earn 4 percent less, on average, than their private-sector counterparts.

To be clear, today’s announcement of the 2010 unionization rates is cause for real reason concern. But policy makers should be far more worried about private sector unions than those in the public sector. More than half of non-managerial workers say they would vote to join a union if they could, but current government policies make it nearly impossible for private sector workers who want to join together in a union to do so — and consequently private sector unionization rates have plummeted.

In contrast, the stability of public sector unionization rates demonstrates that when workers are able to freely choose to join together in unions, they often do so. Without major reforms to make it fairer for workers trying to form unions, we will continue to see union numbers fall.

*Sources: Union membership rates from 1980 to 2009 are from the “Union Membership and Coverage Database,” (Barry T. Hirsch and David A. Macpherson, www.unionstats.com), 2010 union membership rates from the Bureau of Labor Statistics.

House Budget Committee Chairman Paul Ryan (R-WI) was announced today as the Republican who will be responding to President Obama’s State of the Union address next week. Ryan has gained a (largely unearned) reputation as a fiscal hawk due to his radical Roadmap for America’s Future, under which the U.S. budget will eventually be balanced (after federal debt surpasses 100 percent of GDP), mostly via privatizing Social Security and Medicare.

According to an analysis by Citizens for Tax Justice, the Roadmap would raise taxes on 90 percent of Americans, while dramatically lowering them for millionaires. In fact, a new analysis from the Economic Policy Institute found that Ryan’s plan would ultimately translate into middle-class tax rates being higher than those for millionaires:

– The Roadmap would lead to the wealthiest Americans paying a lower average tax rate than most Americans. Eliminating taxes on capital gains, dividends, and interest, as the Roadmap proposes, would overwhelmingly help taxpayers at the top of the income distribution, who receive most or all of their income from capital. For example, Wall Street financiers could shelter all of their income as tax-free stock options or carried interest.

– Middle-class families earning between $50,000 and $75,000 a year would see their average tax rate jump to 19.1% (from 17.7%) under this plan—an increase of $900 on average [...]

– Millionaires would see their average tax rate drop to 12.8%, less than half of what they would pay relative to current policy

As EPI’s Andrew Fieldhouse concluded, under the Roadmap, “a long tradition of progressive taxation would be abandoned; millionaires and Wall Street bankers would pay significantly lower tax rates than middle-class workers…Income inequality would soar.”

Next week, on the same day that Obama delivers his address and Ryan gives his response, House Republicans will vote to endow Ryan with “stunning and unprecedented” powers to set discretionary spending levels that are binding on the House. The levels that Ryan has laid out, if actually enacted, would result in significant reductions to vital and popular programs like Pell Grants, the FBI, and the National Institutes of Health. This week, House Majority Leader Eric Cantor (R-VA) also called for “elements” of the Roadmap to be in the first GOP budget.

Today, President Obama will name General Electric CEO Jeffrey Immelt head of the newly renamed President’s Council on Jobs and Competitiveness. The old iteration of the council — the President’s Economic Recovery Advisory Board — was led by former Federal Reserve Chairman Paul Volcker.

As Alex Seitz-Wald noted, Immelt has had some harsh words for Obama in the not-too-distant past — “Business did not like the US president, and the president did not like business,” Immelt reportedly said — but if he has had a change of heart, he could be a good messenger on economic issues.

In one regard, Immelt’s company already highlights a need for change: due to a corporate tax system that is loophole-ridden and full of giveaways, General Electric pays a pittance in corporate income tax. Though the statutory corporate income tax rate is 35 percent, GE last year paid a paltry 3.6 percent. In 2009, despite making $10.3 billion in pretax income, GE paid nothing in corporate income tax (and, in fact, received $1.1 billion in tax benefits).

Immelt isn’t to blame for this; it makes sense that a company would take advantage of a tax code that enables it to dramatically lower its tax rate. The problem is that it is far too easy for companies to take advantage of the corporate tax code by shifting and sheltering income. Martin Sullivan of Tax Analysts explained this to the House Ways and Means Committee yesterday:

While many corporations have effective tax rates approximately equal to the 35 percent statutory rate, other corporations have effective rates in the low twenties, the teens, and even the single digits. The major reason for these low effective tax rates is the ability of some corporations to shift a significant portion of their profits into low-tax jurisdictions. As the table shows, low effective tax rates are common in industries like pharmaceuticals and computer equipment where it is easy to shift technology and manufacturing to low-tax jurisdictions.

GE is far from alone in exploiting the ability to shift profits to dramatically lower its tax rate. Pfizer, Hewlett-Packard, Coca-Cola, and many other do the exact same thing. At the moment, corporate tax receipts account for just 7.2 percent of federal revenues, while fifty years ago, they made up 23 percent of the total.

Congress and the administration are toying with the idea of reforming the corporate tax code, and if they do, this is one of the big problems that has to be addressed. It’s all well and good to talk about lowering the corporate tax rate, but knocking the rate down to 25 percent from 35 percent doesn’t do much if companies can exploit the system to bring their rate all the way down to zero.

The Republican Study Committee (RSC) today released a plan that supposedly outlines $2.5 trillion in spending cuts over ten years. But as I pointed out earlier, only $330 billion of the $2.5 trillion is specified, while the rest is simply hand-waving about keeping non-defense discretionary spending at the 2006 level for a decade. As TPM’s Brian Buetler put it, “In other words, it punts the question of what to cut to future Congresses, which could just as easily bust the cap.”

Today, Rep. John Campbell (R-CA), an RSC member, appeared on Fox News with Neil Cavuto, and Cavuto also evidently noticed that the vast bulk of the RSC’s savings come from unspecified cuts. When he asked Campbell explain how the RSC magically turned $330 billion into $2.5 trillion, Campbell dropped the ball:

CAVUTO: I don’t want to pick it apart too much, because you always appreciate the efforts at spending cuts, but a lot of these eliminations and reductions, Congressman, realistically come to $330 billion of the $2.5 trillion of proposed cuts. So, in other words, the real meat, up-front cuts, while still substantial, about $330 billion, ain’t the $2.5 trillion. So what is the more realistic figure?

CAMPBELL: The more realistic figure than the two, oh, you mean other than what’s listed on here?

Watch it:

Campbell then proceeded to incorrectly claim that the $2.5 trillion in savings is a result of multiplying the $330 billion in specific cuts out over a ten year budget window, which would actually amount to more than $2.5 trillion in savings.

It’s not surprising, of course, that the RSC would be hesitant to place on paper the practical implications of its plan. Returning non-defense discretionary spending to the 2006 level — and then keeping it there — would result in billions of dollars in cuts to vital and popular programs and agencies like Pell Grants, the FBI, the Coast Guard, the National Institutes of Health and the federal prison system.

As Steve Benen pointed out, the RSC’s plan would also be “devastating” for the labor market. “Indeed, if lawmakers were to get together to plot how Congress could deliberately increase unemployment, their plan would look an awful lot like this one,” he wrote. “The RSC proposal would deliberately fire thousands of civilian workers, force states to make sweeping job cuts, and lay off thousands more who work in transportation and infrastructure.” If you’re interested in a legitimate deficit reduction plan, go here.

Our guest bloggers are Karla Walter, Senior Policy Analyst, and David Madland, Director of the American Worker Project at the Center for American Progress Action Fund.

Union membership is at record lows and is likely to drop even further tomorrow when the Bureau of Labor Statistics announces new figures for 2010. Critics claim that unions are not important to the modern economy — with only 12 percent of workers currently unionized — but the truth is that if you care about the middle class, you need to care about unions.

The middle class is markedly stronger when workers join together in unions. As the chart below demonstrates, the sharp decline over the past 40 years in the percentage of workers organized in unions has been associated with an equally sharp drop in the share of the nation’s income going to the middle class — those in the second, third and forth income quintiles*:

The power of unions to create prosperity for working families is well recognized: Organized labor is one of the few voices for the economic interests of the middle class in our government. Unions were key to creating and protecting the social safety net (including Social Security and Medicare) and winning major legislative victories for working families such as the Equal Pay Act, the Civil Rights Act, the Family and Medical Leave Act and — most recently — the Affordable Care Act.

And unions ensure that workers are paid fair wages. Unionized workers today make significantly more on than their non-union counterparts — about $2.50 more per hour than an otherwise comparable worker in the typical state according to a recent study by the Center for Economic and Policy Research.

When unions were stronger in the middle part of the last century, American workers wages rose as they became increasingly more productive. But today, as union strength has decreased, this link has broken down: even though American workers grow increasingly more productive, their wages have stagnated. At the same time, more and more income has become concentrated at the very top of the income scale.

If DOL announces tomorrow that unionization rates have again fallen, it’s not just bleak news for the ranks of the unionized, it’s also bad news for the rest of the middle class.

*Sources: Union membership rate is from Barry T. Hirsch, David A. Macpherson, and Wayne G. Vroman, “Estimates of Union Density by State,” Middle class share of aggregate national income includes the second, third and forth income quintiles and is from the United States Census Bureau’s Current Population Survey (Shares of Aggregate Household Income by Quintile).

In their much-ballyhooed (and at this point, oftentimes abandoned) “Pledge to America,” House Republicans promised to reduce non-defense discretionary spending back to the 2008 level, which, as many analysts have pointed out, would entail cuts to a bevy of vital and popular programs and agencies (like Pell Grants, the FBI, all federal education funding, etc.) The House GOP claims that such a move would produce savings of $100 billion in one fiscal year.

The Republican Study Committee (RSC) — which last year crafted a “jobs plan” that would have caused $10 trillion in deficits while producing few, if any, jobs — is out today with a spending proposal that ups the ante for the GOP, claiming to cut $2.5 trillion from the budget. The RSC even goes through the motions of laying out $330 billion in specific savings over ten years.

But where does the rest of the $2.5 trillion come from? Reducing non-defense discretionary spending to 2006 levels until 2021:

Eliminate automatic increases for inflation from CBO baseline projections for future discretionary appropriations. Further, impose discretionary spending limits through 2021 at 2006 levels on the non-defense portion of the discretionary budget.

So what we have here, in essence, is a document concluding that $330 billion in specific cuts plus some hand-waving equals $2.5 trillion. It’s the underpants gnome theory of federal budgeting.

What the GOP leaves out is the real consequence of reducing all non-defense discretionary spending to the 2006 level. Such a cut would mean significant reductions in Pell Grants, federal highway funding, the National Park Service, federal education funding, cancer research, Immigration and Customs Enforcement, the Drug Enforcement Administration, the FBI, the Coast Guard, and the Secret Service. Here are some specifics*:

Pell Grants: About $14.9 billion in cuts

National Park Service: $600 million

Immigration and Customs Enforcement: $2.9 billion

Secret Service: $300 million

Coast Guard: $2.6 billion.

National Institutes of Health: $5 billion

Federal Prison System: $1.5 billion.

Every dollar that is preserved in those programs and agencies means that a deeper cut has to be made somewhere else. The RSC also left the defense budget completely off the table.

Even the specific cuts that the RSC laid out, like those to the Manufacturing Extension Partnership (MEP) Program, Economic Development Administration, and mass transit, would be detrimental, particularly to innovation and job creation. It’s a real problem that Republicans believe randomly choosing a year in which federal spending was lower in total dollars, and asserting that we should just go back to that, is a responsible and effective way to budget.

*Sources: Office of Management and Budget and Congressional Budget Office data

Center for American Progress Associate Director for Tax and Budget Policy Michael Linden provided data analysis for this post.

The House Ways and Means Committee will hold the first in a series of hearings on tax reform today, after Treasury Secretary Tim Geithner met with corporate CFOs last week to discuss corporate tax reform. The administration has been hinting that it may pursue corporate tax reform — ridding the corporate tax code of its labyrinth of loopholes and giveaways, and using the savings to lower the statutory corporate income tax rate — but has insisted that any corporate tax reform be “revenue-neutral,” with the new code raising as much revenue as the old code.

I wrote last week that even revenue-neutral corporate tax reform would constitute a missed opportunity, forcing more of the burden of deficit reduction onto working people, while corporate tax receipts make up an ever-shrinking proportion of overall government revenue. But according to Dow Jones Newswire, the corporate barons with whom Geithner met aren’t even willing to accede to revenue neutral reform, preferring that they receive tax cuts:

At that meeting, people briefed on discussions said, Geithner repeated a point he has made publicly that any tax overhaul should be “revenue-neutral”–that is, while tax rates may go down, the amount of revenue generated from corporate taxes, should not. Business leaders say they are willing to talk about giving up some current tax breaks in exchange for a lower rate. But they aren’t embracing “revenue-neutral” reform, preferring to talk about “fiscally responsible” reform where overall revenue from the corporate tax system may go down at least in the short term.

It makes sense that corporations would push for a corporate tax code even more preferential to their interest than the one they already have. But it would be absolute folly to actually move corporate tax reform in this direction.

At the moment, corporations are hauling in record profits and sitting on nearly $2 trillion in cash reserves. At the same time, according to the Office of Management and Budget, “corporate tax receipts will account for just 7.2% of federal revenues in 2010, with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury.” Fifty years ago, corporate tax receipts were 23 percent of federal revenue, and “and individual income tax payments were less than twice those of large corporations’ tax payments.”

The corporate tax code is an undeniable mess that encourages the use of tax havens and is riddled with giveaways to mature industries (like Big Oil). It needs to be fixed, but with full recognition that the U.S. needs to find more revenue if it is going to grapple with its long-term structural deficit.

2010 was an ugly year when it came to foreclosures and the housing market. More than one million homes were foreclosed upon, loads of homeowners were booted from federal foreclosure prevention programs without receiving a sustainable loan modification, and it came to light that mortgage companies were, through the use of “robo-signers,” short-circuiting the legal process for finalizing a foreclosure. Just this week, JP Morgan Chase was forced to pay out $2 million after realizing that it had improperly overcharged and foreclosed upon military families.

At this point, it seems that the housing market is going to be a drag on the economy for a very long time. But it didn’t have to be this way. As the Center for American Progress has argued time and again, real help for troubled homeowners would have been beneficial not only to those individual families, but to the wider economy. However, foreclosure prevention efforts have been hampered by mortgage servicers (like Bank of America, Wells Fargo, and CitiMortgage) dragging their feet, fighting against common-sense proposals to help homeowners, and then employing review processes (like those used by the robo-signers) biased in favor of foreclosure.

In a fiery speech today, Federal Deposit Insurance Corp. Chair Sheila Bair took mortgage servicers to task for their inability to help troubled borrowers, outright blaming them for the housing market’s continued woes:

Throughout the mortgage crisis, from the earliest days of the subprime credit problem to the current robo-signing controversy, the most persistent adversary has been inertia in the servicing and foreclosure practices applied to problem loans. Prompt action to modify unaffordable subprime loans in 2007 could have helped to limit the crisis in its early stages. Instead, we saw one and a half million foreclosures that year, contributing to a decline in average home prices that eventually totaled about one-third. Mortgage servicers have remained behind the curve as the problem has evolved to include underwater mortgages and, now, foreclosure practices that sow confusion and fear on the part of homeowners and fail to fully conform to state and local legal requirements.

“The bottom line is that we need more modifications and fewer foreclosures,” Bair said.

Yesterday, Sen. Jeff Merkley (D-OR) introduced a foreclosure prevention plan with some excellent ideas in it, including ending the “dual track” practice of foreclosing on a homeowner who is under review for a modification and allowing bankruptcy judges to modify primary mortgages (which is a provision that has come up time and again in Congress, only to get defeated each time by the banking industry).

The Securities and Exchange Commission — which, among other things, is tasked with policing the country’s financial markets — has been forced to cut back on some of its enforcement activities due to a budget impasse in Congress. The continuing resolution passed in March did not include new funding for the SEC to implement the Dodd-Frank financial reform law or to ramp up enforcement activities of money managers partially designed as a response to the Bernie Madoff ponzi scheme scandal.

The SEC has already curtailed investigations, allowed complaints from investors to go unaddressed, and even left important positions unfilled. As the Financial Times reported, “The [SEC's] New York office, a hub with oversight of hedge fund managers and Wall Street firms, has been operating without a head of information technology.” And it looks like the Republican majority in the House is disinclined to rectify the SEC’s funding situation any time soon:

Scott Garrett, a Republican from New Jersey who chairs the subcommittee overseeing the SEC and also sits on the budget committee, said that he was not in favour of granting the regulator the big budget increase that it — and leading Democrats — say is necessary to fulfil its expanded duties and to invest in extra staff and on new technology. “We’re going to say the federal budget is under a time of constraint … so everybody is being asked to cut back,” he told the Financial Times. “The whole House has been asked to cut back by 5 per cent.”

This is the sort of budget prioritizing that fits nicely with conservative ideology, but doesn’t work in practice if that budget cut Garret envisions results in the next big financial scam being missed by regulators. And the GOP, by preventing the SEC from expanding its enforcement division, is simply doing the bidding of some of its biggest patrons. As the Center for Public Integrity and NBC jointly found, “a small network of hedge fund executives pumped at least $10 million into Republican campaign committees and allied groups before November’s elections.” And look who’s leading the pack:

As it became increasingly clear late last summer that Republicans were likely to capture the House, the partners at Elliott Management Corp., a $17 billion Wall Street hedge fund that specializes in distressed foreign debt, mobilized to boost Garrett’s political fortunes…Elliott executives — one of whom wrote a check for $35,000 — ended up providing about 96 percent of all the funds raised by the Garrett committee, according to the review of campaign records by CPI and NBC.

Garrett and his fellow Republicans on the House Financial Services Committee were already inclined toward carrying Wall Street’s water and throwing sticks into the SEC’s spokes, but these last-minute checks from some of the Street’s big players likely added to that resolve.

Last week, during his “State of American Business” address, Chamber of Commerce President Tom Donohue decried the Dodd-Frank financial reform law as a “regulatory tsunami.” Donohue said that the Chamber is “particularly concerned” with the new Consumer Financial Protection Bureau — which the Chamber dishonestly fought against during the Dodd-Frank debate — and added that the Chamber would be “deeply involved in the regulatory rulemaking” moving forward.

The Chamber, of course, was at the forefront of the fight against Dodd-Frank, coordinating a campaign with the nation’s biggest banks to blunt the much-needed regulatory overhaul. And it seems that Donohue is preparing the Chamber to do much more than simply weigh in on the Dodd-Frank rule-writing process. In an address before 200 business executives in Minneapolis yesterday, Donohue pledged to “starve to death financially” new regulatory agencies:

He decried a “regulatory tsunami” that is “keeping your children out of work, that’s putting your father out of work.” He called for the repeal of health care reform, said the Dodd-Frank financial reform legislation vastly overreached, and described the consumer protection agency created by that legislation as, “the most intrusive you’ve ever seen anywhere.” He pledged to work with Congress to “starve to death financially” new regulatory agencies and rule-writing efforts.

This is a pretty clear declaration that the Chamber will push Republicans to complete their drive to defund the Consumer Protection Bureau, subjecting it to the congressional appropriations process and thereby deny it the money it needs to get off the ground. Donohue also seems to want to deny funding to the other federal regulatory agencies involved in implementing Dodd-Frank.

Already, a lack of funding has caused both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to delay implementation of some provisions of the law. “It’s what Republicans have done, historically, to regulatory bodies,” said former Sen. Chris Dodd (D-CT). “It’s harder to accuse someone of wanting to deregulate when they just starve the budget of an agency than it is for them when they actually try to get rid of it.” And it seems like the Chamber, since it failed to prevent the passage of Dodd-Frank, is hopping aboard.

Cross-posted on The Wonk Room.

Last week, during his “State of American Business” address, Chamber of Commerce President Tom Donohue decried the Dodd-Frank financial reform law as a “regulatory tsunami.” Donohue said that the Chamber is “particularly concerned” with the new Consumer Financial Protection Bureau — which the Chamber dishonestly fought against during the Dodd-Frank debate — and added that the Chamber would be “deeply involved in the regulatory rulemaking” moving forward.

The Chamber, of course, was at the forefront of the fight against Dodd-Frank, coordinating a campaign with the nation’s biggest banks to blunt the much-needed regulatory overhaul. And it seems that Donohue is preparing the Chamber to do much more than simply weigh in on the Dodd-Frank rule-writing process. In an address before 200 business executives in Minneapolis yesterday, Donohue pledged to “starve to death financially” new regulatory agencies:

He decried a “regulatory tsunami” that is “keeping your children out of work, that’s putting your father out of work.” He called for the repeal of health care reform, said the Dodd-Frank financial reform legislation vastly overreached, and described the consumer protection agency created by that legislation as, “the most intrusive you’ve ever seen anywhere.” He pledged to work with Congress to “starve to death financially” new regulatory agencies and rule-writing efforts.

This is a pretty clear declaration that the Chamber will push Republicans to complete their drive to defund the Consumer Protection Bureau, subjecting it to the congressional appropriations process and thereby deny it the money it needs to get off the ground. Donohue also seems to want to deny funding to the other federal regulatory agencies involved in implementing Dodd-Frank.

Already, a lack of funding has caused both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to delay implementation of some provisions of the law. As Reuters reported, “the delay could give a reprieve to big Wall Street players ranging from Goldman Sachs to BlackRock who, through their lobby groups, have been pressing regulators to slow their furious pace to impose a new rule book on the financial sector called for by the reform law.”

“It’s what Republicans have done, historically, to regulatory bodies,” said former Sen. Chris Dodd (D-CT). “It’s harder to accuse someone of wanting to deregulate when they just starve the budget of an agency than it is for them when they actually try to get rid of it.” And it seems like the Chamber, since it failed to prevent the passage of Dodd-Frank, is hopping aboard.

National Review’s Robert Costa has a piece on the hesitancy of freshmen House Republicans to embrace House Budget Committee Chairman Paul Ryan’s (R-WI) radical Roadmap for America’s Future, which purports to balance the budget by dramatically cutting both Social Security and Medicare. There’s no real surprise here: last session, when Republicans were in the minority with no hope of seeing their vision for the budget adopted, Republican House leadership pointedly refused to endorse Ryan’s plan.

However, Costa reported that House Majority Leader Eric Cantor (R-VA), while not on-board with wholesale adoption of the Roadmap, “does see an opportunity for aspects of the roadmap to become policy“:

“I am supportive of the direction that Paul is headed,” he says. Still, he cautions, “as you know, the budget is something that is [scored] within the budget window for the next ten years. I’m hopeful that we can get elements of what Paul is aiming for incorporated.”

Since the GOP seems to be scared stiff of (at least publicly) supporting the portions of the Roadmap dealing with entitlements, what elements might Cantor be talking about? Well, for one thing, since the GOP is endowing Ryan with the unprecedented power to unilaterally set spending limits that are binding on the House, the spending caps that Ryan proposes in the Roadmap (where he doesn’t spell out what these caps would mean in terms of cuts to actual programs) could make an appearance, even though Ryan himself can’t name actual spending programs that he wants to see cut.

But the real meat of Ryan’s proposal is its draconian cuts to both Social Security and Medicare, which would both be essentially privatized over a number of years. In fact, the phase-in of the Roadmap is so slow that federal debt actually increases for decades under the plan that Ryan put on paper, exceeding 100 percent of GDP before starting to come down. The Roadmap’s tax reforms also manage to lose trillions in revenue while raising taxes on 90 percent of Americans.

Back in September, Ryan and Cantor released the book “Young Guns,” which included a chapter detailing and praising the Roadmap. So is Cantor actually on-board with Ryan’s goal of fully dismantling Social Security and Medicare, but hiding from the political ramifications?

On Sunday, former Minnesota governor and potential 2012 presidential candidate Tim Pawlenty (R) — touting his own state’s 2005 government shutdown — said that Republicans in Congress should flat-out refuse to raise the nation’s debt ceiling when the country’s legal borrowing limit is reached in the coming months. “I’m glad we had that showdown in Minnesota. As to the federal government, they should not raise the debt ceiling,” Pawlenty said.

Pawlenty appeared on MSNBC today to expound on his views, as well as flesh out a proposal he has that would strictly sequence government spending in order to avoid the U.S. defaulting on its debt (which is what ultimately occurs if the debt ceiling is not raised). He told MSNBC’s Chuck Todd that failure to raise the debt ceiling is good for the U.S. economy, and said that the GOP should hold the debt ceiling hostage to cuts in entitlement spending:

TODD: Do you really think [refusing to increase the debt ceiling] is good for the American economy? Forget the politics of it a moment — it may be good politics — but is this good for the economy?

PAWLENTY: Well, I think it is, Chuck. [...] Say to the Congress, we’ll sequence the spending, pay those debt obligations with the interest as they’re due, make sure the military gets paid and taken care of, then let’s have the debate on entitlement reform that everybody always gets on your show and shows like this and say, ‘Savannah, Chuck, it’s time to make the tough decisions’ and they never do. The only way the politicians are going to make the tough decisions is to put their backs against the wall.

Watch it:

Conservative David Frum called Pawlenty’s sequencing proposal “more a piece of campaign positioning than a serious idea,” and noted serious problems with it, including that it would leave Medicare and Medicaid patients out in the cold and make the U.S. unable to replace military equipment in Afghanistan. And while Pawlenty is correct that the U.S. hitting its debt ceiling doesn’t immediately mean default, there is only so much Treasury can do before real problems would begin to occur in already shaky global financial markets.

Ultimately, as David Min wrote, failing to raise the debt ceiling in a timely manner may make paying off the debt — and therefore grappling with the country’s long-term structural deficit — far more expensive:

Taken together, these factors would almost certainly result in a significant increase in the interest rates we currently pay on our national debt, currently just above 2.5 percent for a 10-year Treasury note. If in the near term these rates moved even to 5.9 percent, the long-term rate predicted by the Congressional Budget Office, then our interest payments would increase by more than double, to nearly $600 billion a year. These rates could climb even higher, if investors began to price in a “default risk” into Treasurys — something that reckless actions by Congress could potentially spark — thus greatly exacerbating our budget problems.

That Pawlenty thinks this would be a good outcome — and is advocating Congress flirt with it unless President Obama accede to gutting entitlements — shows how irresponsible mainstream Republicans are when it comes to the nation’s finances.

A number of Republican lawmakers have recently trotted out the reasons that they favor raising the retirement age for Social Security (which is essentially the most regressive change would-be Social Security reformers could make). Gov. Mitch Daniels (R-IN) said he favored increasing it because young people will start living to 100 by “replacing body parts like we do tires,” while Gov. Tim Pawlenty (R-MN) said that he simply wants to “correlate your retirement…to life expectancy.”

These reasons for suggesting yet another increase in the retirement age, which was also raised in 1983, are quite bad. But according to another advocate, Sen. Richard Shelby (R-AL), raising the retirement age to “perhaps 70 or 72″ is actually a “positive thing,” because people are living longer and are more productive:

“To sit here and tell you it’s (Social Security) going to be actuarially sound for all the baby boomers and young people, that’s nonsense,” Shelby said, adding that the Social Security tax would have to be doubled or tripled to fully fund the system for younger people…“But,” he said, “we can do some positive things to prolong Social Security … will we is a different question, isn’t it?”

Shelby’s house-on-fire rhetoric regarding Social Security’s finances is vastly overblown. With no changes, Social Security will pay full benefits until 2037 and close to full benefits (once inflation is accounted for) for decades after that. Minor changes — including adjusting the rate of benefit growth for the richest beneficiaries and modest tax increases — can ensure full solvency for the program for the next 75 years, complete with benefit increases for the most vulnerable retirees.

Shelby, though, would prefer to just slash benefits for everybody to make his numbers add up. Here’s what his “positive” change would mean for retirees:

– As the Economic Policy Institute calculated, raising the retirement age to 70 would cut benefits for the average retiree by 19 percent, which amounts to about $35,419.

– As the Center for Economic and Policy Research found, if current trends in inequality continue, raising the retirement age to 70 would result in those born in 1973 and after having a shorter retirement than those born in 1912.

Plus, increasing the retirement age in response to America’s rising life expectancy ignores the fact that life expectancy gains have almost entirely benefited rich workers. Low- and middle-income workers haven’t seen the same gains.

While, on the surface, it seems logical to react to increased productivity and longer life expectancy by raising the retirement age, those gains should actually allow retirees to enjoy a longer retirement. “We have more than enough money to buy ourselves some leisure time at the end of our lives,” Ezra Klein wrote. “At least if that’s one of our priorities.” It’s clearly not a priority for Shelby.

Treasury Secretary Tim Geithner is meeting today with a group of corporate CFO’s to discuss corporate tax reform, as talk heats up on Capitol Hill of a wider tax reform effort. The goal, should the administration pursue corporate tax reform, is to rework a corporate code that has a high statutory rate compared to the rest of the industrialized world, but is so riddled with loopholes and giveaways that many corporations pay little to no corporate income tax. The corporate tax code is both inefficient and encourages tax-dodging.

The administration has pledged that corporate tax reform, if it occurs, will be revenue-neutral, meaning any reduction in rates must be accompanied by a corresponding elimination of loopholes and other junk, so that the overall amount of corporate tax revenue doesn’t fall. However, as the Washington Post’s Lori Montgomery noted today, revenue-neutral reform makes such action “virtually useless as a method of deficit reduction.”

Indeed, there’s no reason that corporate tax reform be deficit-neutral: it should raise additional revenue! As the Center on Budget and Policy Priorities noted, “large disparities in the treatment of different types of corporate investment create opportunities for reforms that could be revenue neutral — or even raise revenue — while at the same time improving economic efficiency.”

At the moment, the U.S. raises less corporate tax revenue than most developed countries, due to its inefficient and loophole-riddlen corporate code. According to the Office of Management and Budget, “corporate tax receipts will account for just 7.2% of federal revenues in 2010, with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury.” Fifty years ago, corporate tax receipts were 23 percent of federal revenue, and “and individual income tax payments were less than twice those of large corporations’ tax payments.”

Of course, Republicans will oppose any effort to increase corporate revenue, even if it means that the corporate tax code has a lower-rate and is easier to navigate. But with the U.S. facing large, structural deficits for years to come, failing to grab the opportunity to raise revenue — while still making the corporate income tax more efficient and aligned toward productive investment (instead of tax preferential activities) — would be irresponsible, and mean that more of the deficit-reduction burden will have come via other tax increases or cuts to important and popular programs. The era in which Exxon and General Electric pay no income taxes in the United States and Google’s tax rate hovers at 2.4 percent should end, if those companies want an easier tax code with which to work.

Sen. Rand Paul (R-KY) has already made it abundantly clear that he expects Republicans to demand concessions in return for raising the nation’s debt ceiling, which will have to be done sometime in the coming months. Like a slew of equally irresponsible Republicans, Paul has issued demands that he wants fulfilled in return for his vote to increase the debt limit, essentially holding the credit-worthiness of the United States hostage to his brand of radical fiscal conservatism.

Last night, Paul was asked about his stance on the debt ceiling by Fox News’ Sean Hannity, where he replied that the only way he will vote to increase the debt limit is if Congress adopts “an ironclad rule that we will balance the budget from here on after”:

HANNITY: So it will take what to get your vote to raise the debt ceiling?

PAUL: I think an ironclad rule that we will balance the budget from here on after, and that’s what it’s going to take. Not a rule that they can break. You know, they passed pay-as-you-go, they broke it 700 times in the late nineties and the early part of this century. It has to be a very strict rule, so we have to have different rules that they are forced to obey.

Watch it:

House Budget Committee Chairman Paul Ryan (R-WI) — who has some radical ideas about the federal budget himself — has said that failure to raise the debt ceiling is “unworkable.” “Does it have to be raised? Yes, you can’t not raise the debt ceiling,” Ryan said. Leaving aside the myriad disastrous consequences that would result if the U.S. failed to raise the debt ceiling — and the fact that the current Congress can’t tie the hands of a future Congress, as Paul seems to imagine they can — Paul’s demand shows that he’s completely out-of-touch with what the federal budget actually looks like.

After all, to balance the budget “from here on after” once the debt ceiling is raised necessarily implies balancing the budget this year. And to do so without raising any additional revenue would entail a 44 percent cut in literally everything the government does: everything from Social Security, Medicare, and defense spending to highway funds, the FBI and the Coast Guard. Removing Social Security and defense from the equation then requires an 89 percent cut in everything else.

Responsible budgeting means finding a balance between the important and popular functions of government and the revenue necessary to fund them. Any budget plan that actually succeeds in reducing the deficit without pummeling the middle- and lower-class has to include tax increases and must be phased in over time, as the economy gets back to full strength. But Paul would risk the United States defaulting on its debt obligations to implement his irresponsible slash-and-burn vision of the budget.

In the last few weeks, House Republicans have swiftly walked back their promises to completely overhaul the two government sponsored mortgage entities — Fannie Mae and Freddie Mac — after using the two mortgage giants, and their seemingly constant need for government support, to score political points during the 2010 campaign. The reality that they are currently supporting 90 percent of the mortgage market seemed to have severely watered-down the GOP’s zeal for kicking the legs out from beneath Fannie and Freddie.

However, Rep. Scott Garrett (R-NJ), who as chairman of the House Financial Services Committee’s capital markets subcommittee will play a big role in mortgage finance reform, told American Banker today that, “we are not backpedaling at all.” “We are still going full ahead,” Garrett said, while laying out the GOP’s vision for reform:

Garrett said the Republicans would probably reject anything that calls for a government mortgage guarantee. “We’re certainly not leaning that way”…To critics who assert that removing any government backing would effectively eliminate the 30-year fixed mortgage, Garrett’s response was, “that remains to be seen,” and “Is there an alternative?”

While a fully privatized mortgage market makes sense in conservative fantasyland, in reality, shifting to such a market would cause a huge mess, almost inevitably destroy the 30-year, fixed-rate mortgage that so many Americans depend upon. As CAP’s David Min wrote, “a full withdrawal of the federal government from the mortgage markets would lead to radical and catastrophic changes in the U.S. mortgage markets and thus our housing markets, including”:

– Limited availability of long-term, fixed-rate mortgages

– Sharp increases in the cost of mortgages

– Large reductions in the availability of mortgage credit

– A higher systemic susceptibility to housing bubbles

Here’s a fuller explanation for why all of these adverse effects would come to pass. And it’s no mystery as to what a completely privatized mortgage market would look like. After all, the U.S. had one in the 1930′s, when mortgages were expensive, high-risk, and could only be afforded by the richest Americans. And this system was no good for the banking industry either, which experienced several boom-and-bust cycles.

Fannie and Freddie absolutely have to be reformed, as the current setup in which they guarantee nearly the entire mortgage market is simply untenable. But cutting the government entirely out of the mortgage finance arena, as Garrett suggests, would take the country back to a pre-Depression era of homeownership, when the wealthy could afford homes, but everyone else was left out in the cold.

This weekend, House Republicans will embark on their annual retreat, where they will formulate their plans for the upcoming legislative session. Last year’s gathering, as Lee Fang reported, was a lobbyist-studded event where the GOP rubbed elbows with representatives of the nation’s biggest banks and health insurance companies.

This year, the House Republican game-plan is even more important, as the party has won control of the House of Representatives. Among other things, this means that the GOP will have the opportunity to present a budget, crafted by House Budget Committee Chairman Paul Ryan (R-WI). In preparation, according to Politico, Republicans are bringing some old budget hands to their retreat, to hear their pearls of wisdom:

This week’s party retreat in Baltimore, running through Saturday, features Republican veterans of past budget battles: former Texas Sen. Phil Gramm and House Speaker Newt Gingrich.…Watching is House Budget Committee Chairman Paul Ryan, who will have a critical role in setting the cap for all discretionary spending for fiscal year 2011.

In terms of budget acumen, the GOP would be hard-pressed to turn to two more disastrous figures. Consider:

– Gingrich orchestrated the government shutdown of 1995 by refusing to pass either a budget or a continuing resolution. The shutdown was incredibly unpopular with the American public, leading Gingrich’s disapproval ratings to hit 65 percent. But aside from the political effects, the shutdown caused an economic mess: it ended up costing taxpayers more than $800 million in losses for salaries paid to furloughed employees, delayed access to Medicare and Social Security, and “rattled the confidence of international investors in U.S. government bonds.”

– Gramm, who said that the U.S. was only in a “mental recession” when the Great Recession of 2008 began, snuck the Commodity Futures Modernization Act into an unrelated, 11,000 page appropriations bill. That act ensured that the huge market in over-the-counter derivatives stayed unregulated, laying the groundwork for the 2008 financial crisis (and the implosions of AIG and Lehman Brothers). When he wasn’t carrying water for the banking industry, Gramm “lent his name and energy to passage of the first Reagan budget in 1981, whose sweeping tax cuts failed to prevent recession — and eventually required a long series of tax increases, beginning in 1982, to stanch the enormous deficits they created.” Gramm’s also believes there should be no minimum wage and has derided the working poor by saying, “we’re the only nation in the world where all our poor people are fat.”

Also attending the GOP retreat is Frank Luntz, who has gained notoriety for drafting misleading and downright inaccurate catchphrases that the GOP has used to smear the Obama administration’s agenda.

A slew of Republicans are trying to hold an increase in the nation’s debt ceiling — which will need to pass Congress in the coming months — hostage for various demands. Sen. Lindsey Graham (R-SC), for instance, said that he wants Social Security cuts in return for voting to raise the debt limit, while House Budget Committee Chairman Paul Ryan (R-WI) wants “fiscal controls.”

In reality, the GOP will have to accede to an increase in the debt limit, as failure to enact one ultimately leads to the U.S. defaulting on its debt, and the many profound consequences that such a default would entail. Ryan himself said last week that “you can’t not raise the debt ceiling. Default is the unworkable solution.” Speaker of the House John Boehner (R-OH) said Republicans need to act like “adults” when it comes to the debt ceiling.

But that hasn’t stopped some Republicans from making truly outlandish demands in return for their vote to increase the ceiling. The newest one is a call that the ceiling not be raised unless Congress begins the approval process for a balanced budget amendment to the Constitution:

One way it could get done, Sen. Rand Paul (R-Ky.) said on Fox News Sunday, is tying a balanced-budget rule to any agreement by Republicans to raise the debt ceiling. “I can’t imagine voting to raise the debt ceiling unless we’re going to change our ways in Washington,” Paul said. “I am proposing that we link to raising the debt ceiling — that we link a balanced budget rule, an ironclad rule that they can’t evade.” Not a bad idea, suggested [Rep. Jason] Chaffetz (R-UT), who said, “I think we need to be moving in that direction.”

Sen. David Vitter (R-LA) said today on WND radio that, “I would like to see a balanced budget constitutional amendment” in return for raising the debt ceiling. Listen here:

It’s bad enough that Republicans are holding the debt ceiling — and therefore the credit worthiness of the U.S. — hostage, but to do so over a cockamamie constitutional amendment that would be completely disastrous in practice is even worse.

Not only would a balanced budget amendment take forever to pass, since it would have to be approved by 3/4ths of the states, it would be incredibly destructive by preventing the government from running a deficit when the situation calls for it (such as now, as the country tries to recover from a financial crisis). “The amendment’s requirement that the federal government annually spend no more than it collects is, quite simply, insane. Debt in itself is not harmful, neither for governments nor for households,” wrote Scott Galupo, a former staffer for Boehner.

Bruce Bartlett, a former economic official in the Reagan and George H.W. Bush administrations, laid out in excruciating detail why such an amendment makes no sense (including that it would make recessions worse and be completely unenforceable) before concluding that proposing one is just a “ploy by Republicans to avoid explaining how spending should be cut or taxes raised to actually achieve budget balance.”

And yet, some Republicans would threaten the credit of the entire nation by claiming that this unworkable idea is the only thing that can convince them to increase the debt limit.

Last week, Gov. Mitch Daniels (R-IN) said that he believes the retirement age for Social Security needs to be increased — despite the regressive nature and complete lack of need for such a move — because young people “will live to be more than 100.” “They’ll be replacing body parts like we do tires,” Daniels said.

Last night, Daniels was joined by another governor who may have his eye on the 2012 Republican nomination for president: Tim Pawlenty. During an interview with CNN’s Elliot Spitzer, Pawlenty said that, due to the nation’s fiscal position, young people will have to “correlate your retirement…to life expectancy“:

There’s other things that we can do that I think most Americans, Republicans and Democrats — because look, we’re in a hole. And we don’t have perfect options. We’re going to have to do some other things too. I would say that the new entrants into the program, we’re going to correlate your retirement. Not for the people already there, to life expectancy in the future in some reasonable way. And there’s other things like that. You add them up and they get to go a long ways towards solving the problem.

Watch it:

Pawlenty never used the words “raise the retirement age,” but “correlate your retirement…to life expectancy” means precisely the same thing. Like Daniels (and many others on both ends of the political spectrum), Pawlenty is relying on a faulty understanding of America’s increasing life expectancy to push a regressive cut in Social Security that will disproportionately impact those most in need of the program.

While average life expectancy has indeed been rising, the increase is largely a result of a significant rise in life expectancy among upper income earners. Middle- and low-income workers have not seen the same increases. As the Center for Economic and Policy Research put it, “there has been a sharp rise in inequality in life expectancy by income over the last three decades that mirrors the growth in inequality in income.”

So, in essence, raising the retirement age punishes low-income, blue-collar workers because high-income, white-collar workers are living longer. As Nobel Prize-winning economist Paul Krugman asked, “you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever?”

Social Security benefits are already quite modest, as the average benefit is “only about $1,100 a month, or $14,000 a year” — that’s less than 30 percent above the poverty line. While there are changes that can be made to make Social Security a more progressive program that does a better job of protecting society’s most vulnerable, raising the retirement age is certainly not one of them.