During last week’s recess, Representative Frank Guinta (R-NH) felt the heat once again at a town hall back in New Hampshire, and this time had an odd recommendation. When a constituent asked  a question about ending Big Oil subsidies – which received a round of applause from the audience – Guinta pointed his finger at the recent failed Senate vote to roll back some subsidies for the richest oil companies. He said that if oil companies lost their subsidies, they shouldn’t have to pay for leases. His suggestion prompted shouts of “ridiculous” and “that’s a giveaway to Big Oil” from angry Granite Staters:

Guinta: Here’s what I would suggest. You’re going to eliminate that, also eliminate the lease payments they have to make. Offset it. And be fair.

Audience: fair? [cross talk]

…

Guinta: So the specific issue is, if you’re going to get rid of that tax benefit to those five companies, let’s also eliminate lease payments, make it fair.

[crosstalk]

Constituent: That’s ridiculous. That’s a giveaway to Big Oil.

Watch it:

Guinta failed to mention the votes he’s taken against ending Big Oil handouts. Less than two weeks ago, he voted against ending a tax credit for oil companies. And earlier in the year, he voted against recovering $53 billion in foregone royalty payments from oil companies, and against ending $4 billion in taxpayer subsidies to Big Oil. In the last campaign cycle, Guinta received $14,000 from the oil and gas industry.

It’s not the first time Guinta faced a fiery crowd over Big Oil subsidies. Back home during the April recess, Guinta was forced to defend his votes to an often contentious crowd:

Republican Representative Frank Guinta spent much of the evening defending the tough decisions Congress has proposed to get the nation’s debt under control. He received occasional boos and shouts from audience members upset over changes to Medicare, subsidies to oil companies, and extended tax cuts for wealthy Americans.

On Monday, the United States officially hit its debt limit, meaning that the government is no longer legally able to borrow. However, Treasury Secretary Tim Geithner has tools at his disposal to delay the U.S. defaulting on its obligations until about August 2.

House Republicans, for months, have been saying that they are willing to raise the debt ceiling, with Speaker of the House John Boehner (R-OH) admitting that failure to do so would be “irresponsible,” while House Budget Committee Chairman Paul Ryan (R-WI) said that not raising the debt ceiling is “unworkable.” But Rep. Devin Nunes (R-CA) this week let the cat out of the bag, outright calling for the U.S. to default. “By defaulting on the debt, in the short and long term, it could benefit us to go through a period of crisis that forces politicians to make decisions” on major policies that affect the budget,” he said.

Actually allowing the U.S. to default on its debt would have widespread consequences for the U.S. and world economies, including potentially pushing the U.S. back into a recession or, in the words of Princeton Professor Alan Blinder, “reignit[ing] the world financial crisis.” And as the Wall Street Journal noted today, failure to raise the debt ceiling would force draconian spending cuts that would wipe out all of the anticipated 2011 economic growth in just 95 days:

Treasury Secretary Timothy Geithner has warned that if the debt limit isn’t increased by August 2, the government will no longer be able to spend more than it collects in revenue. That means it will have to cut spending by about 35%, probably choosing among such items as payments to contractors, soldiers’ salaries, social security and Medicare. On average, the cuts would amount to about $3.8 billion a day, according to our own estimates based on projections from the Congressional Budget Office. At that rate, over a period of only 95 days, the cuts would add up to 2.9% of gross domestic product, adjusted for inflation. That’s just enough to negate all the economic growth forecasters expect in 2011.

Back in 1983, conservative icon Ronald Reagan warned of “incalculable damage” if the debt ceiling were not raised. Today’s Republicans would do well to take heed.

I noted earlier that South Carolina’s state House gave in to a temper tantrum thrown by online retailer Amazon, granting the company an exemption from collecting sales tax, in addition to “a free site to build [its new South Carolina] facility, property tax breaks on equipment, [and] job tax credits from the state.” The South Carolina state Senate, meanwhile, is cooking up a budget that includes $100 million in corporate tax breaks.

At the same time that it is serving up all these corporate goodies, South Carolina is moving to cut aid to two of its most vulnerable groups of residents: low-income families and the unemployed. Already, the state has reduced its benefits under the Temporary Assistance for Needy Families (TANF) program by 20 percent to $216 per month, which is just 14 percent of the poverty line. And as The Huffington Post’s Arthur Delaney reported, South Carolina is also looking at cutting its unemployment insurance system:

The South Carolina State Senate gave preliminary approval last week to a bill that would reduce state unemployment benefits from 26 weeks to 20 weeks while simultaneously cutting unemployment surtaxes for businesses. In recent months Michigan and Missouri cut benefits to 20 weeks, and Florida and Arkansas have slashed aid as well. Those reductions served as models for South Carolina, where the idea to decrease the number of benefits popped up in the last few weeks.

As Heather Boushey and Danielle Lazarowitz pointed out, cuts to jobless benefits can stifle economic growth and increase poverty. In fact, the Center on Budget and Policy Priorities released a good chart today (based off of this study) showing that public programs, including TANF and unemployment benefits, successfully keep millions of people out of poverty:

However, government expenditures have recently shifted “away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased.” South Carolina, if all of the ideas being proposed become law, will certainly not help reverse that trend.

Several states around the country, in an effort to deal with huge budget shortfalls, have been attempting to close tax loopholes that let online retailer Amazon operate in their states without collecting sales tax. Even notoriously anti-tax Texas came after the company for $269 million in uncollected sales taxes.

By refusing to collect sales taxes, Amazon not only denies state’s desperately needed revenue, but it is also able to undercut local businesses. And the company responds to any attempt to do away with this tax preference by threatening to close plants and move elsewhere. Amazon actually closed a Dallas distribution center over its spat with Texas. Amazon CEO Jeff Bezos also claims that forcing his company to collect sales taxes would be unconstitutional, which, as my colleague Zaid Jilani noted yesterday, is bunk.

Last month, South Carolina’s state House, by a 71-47 vote, refused to grant Amazon a five year exemption from collecting sales taxes. The company then threw a temper tantrum and stopped building a distribution center in the state. Now, after Amazon promised to create more jobs than it had initially estimated, 49 members of the South Carolina House flipped their vote and approved the sales tax exemption:

After a dramatic turnaround Wednesday in the House, the battle to win a prized tax incentive to lure Amazon.com moves to the state Senate, where the online retailer’s support has not been tested. A 97-20 tally — aided by 49 legislators, mostly Republicans, who switched their vote — handed the Seattle-based company a real shot at receiving a five-year exemption from collecting state sales tax on each purchase by South Carolina shoppers.

“It obvious to me that dubious last-minute promises influenced some legislators to flip-flop on the vote,” says Brian Flynn with the South Carolina Alliance for Main Street Fairness. The tax exemption will be provided “on top of a free site to build the facility, property tax breaks on equipment, job tax credits from the state and repeal of Lexington County’s ban on Sunday morning retail sales.” Gov. Nikki Haley (R-SC) said that she is opposed to the exemption, but won’t veto the bill, which still needs to pass the state Senate, if it comes to her desk.

As Jilani pointed out, “it’s crucial that states are able to excise their powers of taxation to get revenue from transactions occuring within their territory, given that state governments are losing millions of dollars thanks to tax dodging by big online retailers. As just one example, in ’2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online.’” But instead, Amazon bullies weak-kneed legislators into giving away huge concessions, in return for jobs that may or may not materialize.

Several Congressional Republicans, including Sen. Pat Toomey (R-PA), have posited that failing to raise the debt ceiling — and thus forcing the U.S. to default on some of its obligations — would not be bad for the economy. “I don’t think it’s going to have an adverse impact on the economy for the days or weeks or perhaps even months that this would continue,” Toomey said.

These “default deniers” don’t believe that failing to raise the debt ceiling would have the negative consequences that most economic analysts say it will. Radio shock-jock Rush Limbaugh even said yesterday that failing to raise the debt ceiling will improve the nation’s creditworthiness.

Rep. Devin Nunes (R-CA), though, believes that default would cause a “crisis.” But, as he told Politico, he actively wants it to happen anyway:

Nunes says the debt cap must be raised at some point but not necessarily before the point of default.

“By defaulting on the debt, in the short and long term, it could benefit us to go through a period of crisis that forces politicians to make decisions” on major policies that affect the budget, he told POLITICO.

The GOP has been playing chicken with the debt ceiling for months, but Nunes is now advocating outright default and all of the consequences such a default would bring. As Princeton Professor Alan Blinder noted in the Wall Street Journal this morning, the U.S. defaulting on its obligations could eventually “reignite the world financial crisis”:

Should it occur, the consequences could be severe. It might, for example, reignite the world financial crisis. Remember how rattled financial markets became last year when it looked like Greece might default? And that was just little Greece and the possibility of default. An actual default by the mightiest nation on Earth would be immeasurably more unsettling. Where, in such a case, would frightened investors run to hide? The U.S. dollar would be among the first casualties. If hot money were to flee what was once its safest haven, the dollar would sink and U.S. interest rates would rise. The latter could lead us back into recession.

There would also be lasting costs to the U.S. government in the form of higher interest rates…How much? Again, no one can know. But even if it’s as little as 10-20 basis points on the U.S. government’s average borrowing cost, that’s an additional $10 billion to $20 billion in interest expenses every year. Seems like an expensive way to score a political point

Bank of America analysts agreed, noting that not raising the debt ceiling “would likely push the U.S. into recession and drag down the stock market.”

Rep. Michele Bachmann (R-MN) said earlier this month that “no one is advocating defaulting.” But it seems, for the House Republicans at least, that is no longer the case.

As states around the country continue to deal with budget deficits, many are looking for ways to raise revenues so that they don’t have to cut even deeper into crucial public services like education and health care.

One way states are looking to raise revenues is to close what has become known as the “Amazon Loophole.” Currently, online retailers like Amazon.com set up subsidiary corporations in states and then argue that the subsidiary corporation doesn’t obligate the parent company to collect sales taxes in that state.

Lawmakers in numerous states, like South Carolina, Texas, Tennessee, and others are tackling this loophole by mandating that Amazon customers in their states pay sales taxes, which would both provide revenue for their states and deny Amazon and other online retailers an unfair advantage over local retailers whose customers do have to pay sales taxes.

Responding to these legislators, Amazon CEO Jeff Bezos remarkably claimed today that state efforts to close the loophole and have Amazon behave like any other retailer are actually unconstitutional:

Now, Amazon CEO Jeff Bezos is saying that some U.S. states’ tax demands are violating the U.S. Constitution. [...] “First of all, most of where we do business – Europe, Japan, some of the states here in the United States – we collect sales tax. More than half our business,” said Bezos. “We do collect sales taxes, the European equivalent of value-added tax. And in the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses – it was mail-order at the time because the internet did not exist – that mail-order companies could not be required to collect sales tax in states where they didn’t have what’s called ‘nexus.’”

Bezos is referring to a 1992 Supreme Court decision that said “that retailers who lack a physical presence in a state, or ‘nexus,’ cannot be required to collect tax.” Yet states aren’t claiming extraordinary powers to tax Amazon transactions. Rather, they are expanding the definition of “nexus” to “include affiliate programs, such as when Amazon pays a commission for links that result in sales.”

But the Amazon CEO should know that his constitutional argument is bunk. After all, his company lost a constitutional challenge to New York when it sued to stop that state’s efforts to close the Amazon loophole (Overstock.com lost a similar case). “Amazon should not be permitted to escape tax collection indirectly, through use of an incentivized New York sales force to generate revenue, when it would not be able to achieve tax avoidance directly through use of New York employees engaged in the very same activities,” said Judge Eileen Bransten.

It’s crucial that states are able to excise their powers of taxation to get revenue from transactions occuring within their territory, given that state governments are losing millions of dollars thanks to tax dodging by big online retailers. As just one example, in “2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online.” Unfortunately, Amazon hasn’t reacted to these state efforts just by challenging them in court. When Texas tried to close its Amazon Loophole, the retailer announced that it would end all business there.

The Florida legislature moved earlier this month, with the support of Gov. Rick Scott (R), to cut its unemployment benefit system, even while its unemployment rate hovers above 11 percent and its median duration of unemployment hangs at 27 weeks. As the National Employment Law Project pointed out, with the legislation, Florida will “go further than any other state in dismantling its unemployment insurance system.”

The money Florida is saving is being put toward a corporate tax cut in a state where corporate taxes are already exceedingly low. And as CAP’s Heather Boushey and Danielle Lazarowitz noted, the cut could actually reduce the sunshine state’s economic growth:

Economist Wayne Vroman in a study for the Department of Labor estimates that for every dollar spent on unemployment benefits by the government, an additional $2 was put back into the economy. During the Great Recession, the regular unemployment insurance program — the exact program targeted in the Florida legislation — reduced the fall in the gross domestic product by 10.5 percent. Cutting unemployment benefits would remove a substantial amount of demand from Florida’s economy.

As people collect, and spend, their relatively meager unemployment benefits, that money ripples through the economy, supporting other workers and businesses. Taking that demand away leads to unnecessary drops in consumer spending. Boushey and Lazarowitz also note that cutting unemployment benefits could increase Florida’s poverty rate, as such benefits have kept more than 3 million people across the country out of poverty during the Great Recession.

Florida is far from the only state trying to cut unemployment benefits, even with long-term unemployment sky-high and job creation sluggish. Michigan and Utah have both cut their benefits, with lawmakers in Utah justifying their move by promoting the myth that unemployment benefits keep people from looking for work. As the Huffington Post’s Arthur Delaney reported, South Carolina is looking like the next state on the list, as its state senate approved a bill reducing state unemployment benefits from the national standard of 26 weeks to 20 weeks.

Politico today profiled the troubling growth in the number of “default deniers,” Republican Congressman who don’t believe, as most economists and analysts do, that failing to raise the nation’s debt ceiling will result in negative economic consequences. “The case has not been made that this is an absolute necessity,” said Rep. Bill Huizenga (R-MI), for instance. The U.S. officially hit its borrowing limit on Monday, but the Treasury Department can use various measures to stall default until August 2.

One of the leaders of the default deniers is Sen. Pat Toomey (R-PA), who authored a cockamamie bill that he claimed would prevent the U.S. from defaulting on its debt even if the ceiling weren’t raised. (Treasury called Toomey’s legislation “unworkable.”) Today, Toomey delivered a speech at the American Enterprise Institute where he claimed that failing to raise the debt ceiling wouldn’t have an adverse effect on the economy:

As I’ve said before, if we can get the things that I’m looking for, the spending cuts, the reforms in the process, I’m willing to vote to raise the debt limit because it is very disruptive. I don’t think it’s going to have an adverse impact on the economy for the days or weeks or perhaps even months that this would continue, I doubt that it would be that long, I doubt that it would be disruptive to the economy per se, but it would be disruptive certainly to the people who are accustomed to and relying on the programs that would necessarily be cut.

Watch it:

As former Reagan economic official Bruce Bartlett noted, “failure to raise the debt limit not only threatens a default that could potentially roil the entire world financial system, but would potentially deprive federal workers of their salaries, deny payments to businesses for goods and services sold to the federal government, renege on Social Security benefits to retirees, and shortchange savers who depend on interest income.” Bank of America analysts noted that not raising the debt ceiling “would necessitate politically unpopular and potentially economically crippling budget cuts that would likely push the U.S. into recession and drag down the stock market.” It would also make paying off the debt much more expensive (through higher interest rates). Those sure sound like adverse effects.

Former Minnesota Gov. Tim Pawlenty (R-MN) went a step further back in January, saying that failing to raise the debt limit would actually be good for the economy. These Republicans should check in with conservative icon Ronald Reagan, who in 1983 warned of “incalculable damage” to the economy if the debt limit wasn’t raised.

Back in February, Republicans in Congress allowed an expansion of federal trade assistance — meant to aid workers who lose their jobs due to international trade — expire, bumping thousands of workers off of the program. Workers who qualified under that expansion, which was funded by the 2009 Recovery Act, made up more than half of the 280,000 workers who benefited from trade assistance last year.

At the time, some Republicans, such as House Ways and Means Committee Chairman Dave Camp (R-MI), were ready and willing to extend the trade assistance, but Tea Partiers in the House balked. Senate Republicans then threw a fit and blocked an extension, saying that they refused to budge on trade assistance unless it was coupled with consideration of pending free trade pacts with Columbia, Korea, and Panama.

The Obama administration yesterday countered and said that it won’t move on the free trade pacts until trade assistance is reauthorized. “The administration will not submit implementing legislation on the three pending FTAs until we have an agreement with Congress on the renewal of a robust expanded TAA program,” said National Economic Council Director Gene Sperling. Republicans have responded to the administration’s stance with predictable disapproval:

SEN. MITCH MCCONNELL (R-KY): “Our economy needs jobs and growth, not an ever-expanding list of reasons to delay the creation those jobs. It is my hope that the President will reconsider this decision and will not allow anything to get in the way of Congressional consideration of these trade agreements and the jobs they’ll create.”

SEN. ORRIN HATCH (R-UT): “[Tying trade agreements] to unrelated spending is hugely disappointing to American workers, farmers, and job creators, who are losing out to foreign competitors with every passing day. It makes no sense to shut the door on increasing U.S. exports by over $10 billion in order to fund a costly program.”

SEN. CHUCK GRASSLEY (R-IA): “I don’t think the current funding level is sustainable,” said Senator Charles Grassley…“I see the possibility of more goal-post moving.”

So Republicans are allowed to hold benefits hostage for more trade deals, but the administration attempting to ensure that workers already affected by trade receive some help “makes no sense”? As CAP’s Sabina Dewan wrote, “threatening to let Trade Adjustment Assistance expire unless the administration ‘moves’ other trade agreements amounts to little more than a conservative anti-jobs and anti-worker agenda.”

Indeed, merits of the trade agreements aside, trade assistance should be reauthorized independently, as the current version of the program, which dates to 2002, “covers fewer workers and offers lower benefits and fewer opportunities” than the version of the program that expired. As AFL-CIO President Richard Trumka said, “for years the TAA program has been a lifeline for working people trying to get the skills necessary to change careers after their lives have been turned upside down.”

The bipartisan group of Attorneys General that is attempting to negotiate a settlement with the nation’s biggest banks over the foreclosure fraud scandal (in conjunction with the Justice Department and other federal agencies) has run into a slew of roadblocks. First, a group of eight Republican AG’s has broken with the group and criticized the idea that the banks should face monetary penalties. Some federal regulatory agencies, including the notoriously bank-friendly Office of the Comptroller of the Currency, have also split away and come to their own settlement with the banks.

As CAP Housing Policy Adviser Alon Cohen explained, the settlement that the regulators forged with the banks is a weak one. Adding insult to injury, one facet of the settlement required the banks to hire outside parties to conduct reviews of their past behavior, but the regulators have agreed to not make those reviews public:

When mortgage servicers signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve, these companies were required to hire outside firms to conduct “look back” evaluations of questionable foreclosure practices. But these reviews will not be made public, according to an OCC spokesman.

Major servicing arms at Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Ally Financial and others agreed to the enforcement actions taken in April as a result of mishandled foreclosures still being corrected.

So the banks not only get to pick and choose who they want to conduct these reviews, but the findings will never see the light of day. As FDIC Chair Sheila Bair noted, there is huge potential for conflict-of-interest, as these reviewers “may have other business with [banks] or future business they would like to do with them.” “This is a huge issue,” she said.

For some hint into what these reviews could potentially turn up, the Huffington Post’s Shahien Nasiripour reported that the Department of Housing and Urban Development’s inspector general found the nation’s biggest banks were potentially “defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans.” But instead of having to undergo a thorough investigation — and face the music if more misdeeds are uncovered — the banks will be able to pick their own reviewers, those reviews will be stamped by an agency that is extremely cozy with the banks, and then the public will never see the results.

Hopefully, this defection doesn’t deter the AG’s from continuing their investigation and ultimately winning homeowners some relief from bank misdeeds. (Cohen has some good ideas for how to apply monetary penalties to help homeowners here.) But with regulators and Republicans undermining the AG’s on all sides, that task is getting harder.

Last year, President Obama signed the Dodd-Frank financial reform law, enacted to give consumers vital protections and to rein in Wall Street excess in the wake of the 2008 financial crisis. Republicans were staunchly opposed to the bill, with no Republicans voting for it in the House and just three supporting it in the Senate.

As the bill has been implemented this year, Republicans have continued their opposition. Initially, they said they’d like a full repeal of the law, but they have since moved on to attempting to undermine the bill piecemeal, advancing legislation chipping away at both the Consumer Financial Protection Bureau and the reform of derivatives regulation.

But as the Boston Globe reported, 2012 GOP presidential hopeful Mitt Romney believes full repeal of Dodd-Frank should still be under consideration:

“Whether you repeal the whole bill wholesale is something which you’d have to resolve after you had a chance to look at each of the pieces of regulation that comes forward,” he said. “But clearly the consumers deserve protection.”

“Legislation and regulation is important, but the level of over-regulation and burden which has been placed on the financial services sector I think is unnecessary and will cost us jobs down the road,” he added.

Romney had previously defended Wall Street from criticism, saying those pushing for stricter regulation were acting “as if Wall Street greed is something new.’’ “It’s been there for a long time, and that is not the reason we had an economic meltdown,’’ Romney said. Late last month, Romney delivered a speech in New York in an attempt “to woo Wall Street donors.” That swing though the Big Apple netted Romney $1 million.

But Romney is not the only 2012 contender to come out against the Dodd-Frank law. Former Minnesota Gov. Tim Pawlenty (R) in April repeated the false GOP talking point that Dodd-Frank perpetuates bailouts.

Back in March, the Commodity Futures Trading Commission, which is charged with policing the nation’s commodity markets, said that energy speculation, including speculation in the oil markets, was at an all-time high. According to many analysts, rampant speculation was responsible for the 2008 spike in oil prices, while Goldman Sachs analysts calculated that speculation was adding $27 per barrel to the cost of oil just last month.

McClatchy today examined how much has changed in the oil market over the last few decades, and found that, in 1990, oil speculators made up less than one-third of the oil market, but are edging close to 70 percent of the market today:

A McClatchy review of two decades of data compiled by the CFTC documents the boom in speculative trading amid rising prices. In the 1990s, the ratio of speculative trades to trades made by commercial users of oil was tilted heavily toward users of crude. But from 1991 forward, the big financial players such as Goldman Sachs and J.P. Morgan Chase won exemptions that freed them from limits on how much they could speculate in futures markets…Prior to the 1990s, speculators made up about 30 percent of the futures market. In the latest reporting period, the ratio on May 3 stood at 68 percent speculators to 32 percent users of oil. Meanwhile, the volume of total reported trades has grown five-fold since 1995, underscoring the impact of speculation on futures markets.

The upshot is that supply and demand has not governed the recent run-up in oil prices. Even ExxonMobil CEO Rex Tillerson admitted as much last week, saying that purely supply and demand would suggest oil prices closer to $60 or $70 dollars per barrel.

As we’ve been documenting, the CFTC already has the authority to limit speculative positions in the oil market, due to the Dodd-Frank financial reform law, but the agency keeps punting the implementation of those rules down the road. Senate Republicans blocked development of similar rules in July 2008. A poll released last week shows that 90 percent of Americans believe oil speculators deserve some blame for the recent increase in gas prices.

As of today, the United States has officially hit its legal borrowing limit, bumping into the statutory debt ceiling. The Treasury Department has some options at its disposal for delaying default, but those will be exhausted around August 2.

For months, Republicans have been claiming that they will refuse to raise the debt ceiling — and thus risk the widespread economic consequences of the U.S. eventually defaulting on its debt — unless several conditions are met, including cuts to Medicare and Social Security. In fact, some Republicans have said that they think that default wouldn’t be so bad. “The case has not been made that this is an absolute necessity,” said Rep. Bill Huizenga (R-MI).

However, Republicans poo-pooing the necessity of raising the debt ceiling might want to look to conservative icon Ronald Reagan. In 1983, Reagan warned that the consequences of failing to raise the nation’s borrowing limit “are impossible to predict and awesome to contemplate”:

The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.

In a 1987 radio address, Reagan also said, “Congress consistently brings the government to the edge of default before facing its responsibility. This brinksmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar.”

Several key Republican leaders, including Speaker of the House John Boehner (R-OH) and House Budget Committee Chairman Paul Ryan (R-WI) have admitted that failing to raise the debt ceiling is simply not an option, with Boehner saying that it would be a “disaster,” while Ryan called it “unworkable.” But the GOP continues to play games, inching the U.S. ever closer to the scenario that Reagan explicitly warned against.

A slew of multinational corporations — who have crafted a campaign known as “WinAmerica” — are lobbying hard for Congress to enact a tax repatriation holiday, which would allow multinational corporations to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate. (Usually corporations pay the statutory 35 percent rate on repatriated earnings.)

The campaign has picked up a bit of steam, with Rep. Kevin Brady (R-TX) introducing legislation this week to enact a tax holiday. Two Republican 2012 hopefuls — Tim Pawlenty and Mitt Romney — and House Majority Leader Eric Cantor (R-VA) have all endorsed the idea. Their justification for supporting it is that corporations will use the repatriated money to invest domestically and create jobs.

However, the Congressional Research Service looked at a repatriation holiday approved by Congress in 2004 and found “little evidence exists that new investment was spurred.” In fact, many of the largest companies that took advantage of that holiday wound up cutting tens of thousands of jobs over the subsequent two years, as this table shows:

Corporation	Amount Repatriated	Layoffs In 2005-2006
Pfizer	$37 billion	10,000
Merck	$15.9 billion	7,000
Hewlett-Packard	$14.5 billion	14,500
Honeywell	$2.7 billion	2,000
Ford	$900 million	30,000
Colgate-Palmolive	$800 million	4,000

Even companies that actually used the money for domestic investment, like Dell, wound up spending their new-found windfall on projects that they were going to undertake even in the absence of a tax break. As MIT economist Kristen Forbes explained, “[Dell] said part of the money would be brought back to build a new plant in Winston-Salem, N.C. They did bring back $4 billion, and spent $100 million on the plant, which they admitted would have been built anyway.”

Overall, corporations used 92 percent of the money they brought back under the tax holiday to enrich their executives and buy back their own shares, not to invest in job creation. Several of the companies in the WinAmerica coalition already pay exceedingly low taxes due to the various loopholes and credits in the corporate tax code and through their use of offshore tax havens. The Joint Economic Committee found that a repatriation holiday would cost $78.7 billion.

Conservatives in several states, as we’ve been documenting, have moved in recent months to reduce their state corporate taxes at the same time that they’ve proposed raising taxes on low-income families and cutting services upon which their most vulnerable citizens depend. Last week, Gov. Rick Scott (R-FL) lost his fight to eliminate Florida’s corporate income tax, in the highest-profile defeat the corporate tax-cutters have suffered yet.

However, Gov. Rick Snyder (R-MI) has been far more successful in getting his tax package through. Yesterday, in fact, the Michigan legislature approved Snyder’s plan, with some slight modifications, by narrow margins in both the state House and state Senate:

For months, Governor Rick Snyder has been trying desperately to enact massive business tax cuts paid for with new taxes on pension income and the elimination of the Earned Income Tax Credit (EITC). Unfortunately, a modified version of Snyder’s plan passed both houses of the state legislature yesterday and is now on its way to the Governor’s desk, where it will soon be signed into law…In the end, the most notable change to occur in the Senate was the reintroduction of the EITC, set at a level equal to 6 percent of the federal credit. Given that Michigan’s current EITC is equal to 20 percent of the federal credit, this change will still result in a steep tax hike on low-income families.

This amounts to an 86 percent cut in the state’s corporate income tax, exempting nearly 100,000 businesses from paying any corporate income tax at all, combined with a two-thirds reduction in the state’s Earned Income Tax Credit (which goes to benefit low-income families). (Snyder originally wanted to eliminate the state’s EITC entirely.) As state Sen. Rebekah Warren (D) said, the plan represents a “significant tax shift” from business to those “who are the least among us.”

Adding insult to injury, there’s little guarantee that Snyder’s corporate tax cut will lead to job creation. Snyder himself confessed that “I can’t guarantee results.” State Sen. Jack Brandenburg (R) added that “there’s no guarantee that the tax cuts for businesses will generate a lot more jobs.” “The results are likely to be very disappointing,” said Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.

Since the National Labor Relations Board (NLRB) announced last month that it is launching a complaint against airline-manufacturer Boeing for potential union-busting, Republicans have been in an uproar. Sen. Jim DeMint (R-SC) likened the NLRB to “thugs” from “a third-world country.” Sen. Rand Paul (R-KY), meanwhile, said that the case is evidence the Obama administration has an “enemies list.”

Gov. Nikki Haley (R-SC) — whose state would have been the beneficiary of Boeing’s union-busting — said this week that “I’d like to see every [potential GOP 2012 presidential] candidate step up [and say] what they would do about it.” 2012 Republican hopeful Tim Pawlenty, when he was participating in a debate in South Carolina, did just that, calling the board’s decision “preposterous” and “outrageous.”

Yesterday was 2012 contender Mitt Romney’s turn, as he took a brief aside in his highly-anticipated health care speech to call the NLRB’s decision a “power grab” proving that the Obama administration “fundamentally distrusts free enterprise”:

The states, in the words of Justice Brandeis, would be the laboratories of democracy. They would try things. They would learn from one another. They would also compete with one another. So the same dynamic that would propel our economy — competition and freedom — would propel learning between the states…I’m convinced, however, that the Obama administration fundamentally doesn’t believe in that American experiment. They fundamentally distrust free enterprise and fundamentally distrust the idea that states are where the power of government resides. The most recent decision was the one made by the NLRB, to decide that Boeing can’t locate a factory in South Carolina. It was a power grab from states, with the federal government saying we know better than states.

Watch it:

To, once again, review what happened, Boeing, in 2007, announced a production line in Washington state, but in 2009 decided to move that line to South Carolina. Boeing officials very publicly explained that the decision was made because workers in Washington had engaged in a strike. According to labor law, shifting production as retribution against workers who exercise their rights is illegal.

As the Washington Post’s Steve Pearlstein wrote, “given the public statements of Boeing officials, there is nothing radical about the NLRB’s decision.” A lawyer who described himself as sympathetic to management told the Seattle Times, “If I’m [Boeing's] labor lawyer, I’m cringing when they are saying that.” But the GOP is treating this as some unprecedented assault on freedom, rather than an agency just enforcing the laws on the books and ensuring that workers don’t have their rights trampled by corporations.

On Tuesday, tech giant Microsoft announced to the world that it would be purchasing Internet communication service Skype in an all-cash, $8.5 billion acquisition deal.

One fact that has gone underreported about the deal is how Microsoft structured it to keep its taxes as low as possible. As the Wall Street Journal’s Ronald Barusch notes, Microsoft and Skype saved billions of dollars in taxes because Microsoft used its foreign profits to purchase Skype, which also happens to base its corporate headquarters in a major tax haven itself, Luxembourg.

Doing so allowed Microsoft to avoid paying taxes on its profits at the U.S. corporate tax rate of 35 percent. So how much does Microsoft pay on the profits it makes overseas in tax havens based in places like Ireland, Bermuda, and Singapore? To find the answer, we can turn to the University of Southern California’s Edward D. Kleinbard. In a paper titled “Stateless Income,” Kleinbard analyzed Microsoft’s overseas earnings. Kleinbard noted that in 2010, Microsoft has $29.5 billion in earnings overseas, and that the tax cost of these earnings if they were brought back to the U.S. would be $9.2 billion:

For example, Microsoft Corporation’s Financial Statements in its 2010 Annual Report indicated that the company has $29.5 billion in “permanently reinvested earnings” outside the United States (that is, after foreign-tax earnings of foreign subsidiaries that Microsoft does not currently intend to repatriate to the United States). Microsoft also noted that the tax cost of repatriating those earnings to the United States would be $9.2 billion.

The $9.2 billion would amount to paying a rate of 31 percent. The missing four percent would come from foreign tax credits — meaning, the taxes the company paid overseas. That means the effective corporate income tax rate for Microsoft for its overseas profits is a paltry 4 percent — almost 9 times lower than the U.S. corporate income tax rate. In its last quarterly statement, Microsoft noted that “$42 billion of its $50.2 billion in cash and short term investments was held by its foreign subsidiaries.”

Unsurprisingly, Microsoft is part of a coalition of companies advocating for a repatration tax holiday, which would allow them to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate.

But Microsoft isn’t the only company involved in the acquisition that has been getting a sweet deal with overseas profits. As stated before, Skype’s office is based in Luxembourg. The effective corporate income tax rate in Luxembourg? 0.4 percent (See “The Revenue Effects of Multinational Firm Income Shifting, Kimberly Clausing). MarketWatch’s Therese Poletti notes that Skype’s financial disclosures show “dizzying array of offshore entities and holding companies associated with its biggest investors.” The private equity firm Silver Lake, which owns 39 percent stake in Skype, is also a major tax dodger. “Two of the three Silver Lake Funds which own shares in Skype are based” in the Cayman Islands and George Town in the caribbean. eBay, which “retained a 30% stake in Skype, giving investors a return of about $1.4 billion,” uses eBay International AG unit for its Skype ownership. Despite being an American company, this unit is based in Bern, Switzerland.

While many in the financial world are unsure of the results of the recent acquisition, there is clearly one group that won’t be benefitting: U.S. taxpayers who will continue to watch supposedly “American” businesses exploit the tax code and set up tax havens to avoid paying taxes in our country.

Seth Hanlon, the Director of Fiscal Reform for the Center for American Project’s Doing What Works initiative, contributed to this post.

Speaker of the House John Boehner (R-OH) delivered an address Monday night at the Economic Club of New York, where (in addition to botching several key economic points) he reiterated that House Republicans will not consider tax increases as a legitimate option for reducing the deficit. “The big myth of the current budget debate is the notion that in order to balance the budget, we have to raise taxes. The truth is we will never balance the budget and rid our children of debt unless we cut spending and have real economic growth,” he said.

Boehner, in one fell swoop, pronounces that “everything is on the table” to reduce the deficit, before immediately taking one half of the federal ledger — taxes — off the table. But this is far from the first time that Boehner has attempted to convince the country that the budget can and should be brought into balance entirely on the spending side. In fact, on June 12, 1993, Boehner gave the weekly Republican radio address and used it to attack the tax increases and budget proposed by President Bill Clinton:

We Republicans are relegated to the sideline, even though we have a solid plan ready to go to reduce the deficit, a plan that calls for no tax increases and true cuts in government spending. [...]

The hard simple truth is, the President is taking us down the path of more taxes, more spending, and bigger government…President Clinton must understand that he has to cut spending, for real. He has to reduce the deficit, for real. And level with this nation about the direction he wants to take us.

Watch it:

Two months after this speech, Clinton’s 1993 tax increases were passed without a single Republican vote, and Boehner was far from the only one who said that the move would “kill jobs,” “kill the economic recovery,” and “set loose [a] dreadful virus into the economic bloodstream.” In reality, Clinton’s policies ushered in the longest sustained period of economic growth in the nation’s history, with 23 million jobs created. Compared to the administration of George W. Bush, the Clinton-era saw more job growth, more GDP growth, more wage growth, and more business investment.

Of course, it could be that Boehner is well-aware of all this and is just playing politics. After all, one Senate GOP aide admitted to the Atlantic’s Derek Thompson that his party’s no-taxes stance isn’t “intellectually honest” and is all about political gamesmanship.

(HT: Glenn Kessler)

A group of multinational corporations (that already pay exceedingly low taxes) have been lobbying Congress to enact what is known as a tax repatriation holiday. The plan would enable these companies to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate (instead of the statutory rate that they normally pay to repatriate money).

The corporations have united under a campaign called “WinAmerica,” and evidently they are having some effect. Yesterday, Rep. Kevin Brady (R-TX) unveiled a bill that would let corporations repatriate their money at a tax rate of 5.25 percent (instead of the usual 35 percent). Brady said that, “this is about creating jobs, expanding U.S. businesses and strengthening American companies.”

However, when Congress approved a repatriation holiday in 2004, companies used the money to enrich their executives, not create jobs. And according to an analysis by the Joint Economic Committee a repatriation holiday today would cost close to $80 billion in lost revenue:

Representative Lloyd Doggett, a Texas Democrat who is a senior member of the Ways and Means Committee, yesterday circulated an estimate from the Joint Committee on Taxation pegging the cost of a repatriation bill at $78.7 billion. An unsuccessful effort to create a similar holiday in 2009 would have cost the U.S. government about $30 billion over a decade in forgone revenue.

If the money that corporations brought back actually led to job creation, some might consider this worth the cost. But that’s not what happened in 2004. In fact, the Congressional Research Service found that the largest beneficiaries of the last tax holiday cut jobs over the subsequent two years. Hewlett-Packard, for instance, “returned $14.5 billion to the U.S. at a low rate in 2004 and cut its workforce by 14,500 employees in 2005.”

Kristen Forbes, who was on President Bush’s Council of Economic Advisers when the last repatriation holiday was approved, told the Boston Globe that the policy “didn’t accomplish the stated goals of bringing jobs and investment to the US.” But that hasn’t stopped several other Republicans, including 2012 presidential hopefuls Mitt Romney and Tim Pawlenty, from endorsing the idea.

A group of multinational corporations (that already pay exceedingly low taxes) have been lobbying Congress to enact what is known as a tax repatriation holiday. Under such a plan, multinational corporations would be able to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate (instead of the statutory rate that they normally pay to bring back money).

The corporations have united under a campaign called “WinAmerica,” and evidently they are having some effect. Yesterday, Rep. Kevin Brady (R-TX) unveiled a bill that would let corporations repatriate their money at a tax rate of 5.25 percent (instead of the usual 35 percent). Brady said that, “this is about creating jobs, expanding U.S. businesses and strengthening American companies.”

However, when Congress approved a repatriation holiday in 2004, companies used the money to enrich their executives, not create jobs. And according to an analysis by the Joint Economic Committee a repatriation holiday today would cost close to $80 billion in lost revenue:

Representative Lloyd Doggett, a Texas Democrat who is a senior member of the Ways and Means Committee, yesterday circulated an estimate from the Joint Committee on Taxation pegging the cost of a repatriation bill at $78.7 billion. An unsuccessful effort to create a similar holiday in 2009 would have cost the U.S. government about $30 billion over a decade in forgone revenue.

If the money that corporations brought back actually led to job creation, some might consider this worth the cost. But that’s not what happened in 2004. In fact, the Congressional Research Service found that the largest beneficiaries of the last tax holiday cut jobs over the subsequent two years. Hewlett-Packard, for instance, “returned $14.5 billion to the U.S. at a low rate in 2004 and cut its workforce by 14,500 employees in 2005.”

Brady claims that his bill “would impose sanctions for failure to maintain current workforce levels for two years.” For one thing, maintaining current levels is not the same as job creation. But the 2004 holiday also had restrictions on how the money could be used, which turned out to be “completely ineffective,” according to researchers at MIT. Kristen Forbes, who was on President Bush’s Council of Economic Advisers when the last repatriation holiday was approved, told the Boston Globe that the policy “didn’t accomplish the stated goals of bringing jobs and investment to the US.”

The GOP and the corporations behind WinAmerica are trying to convince Congress that providing them with a tax holiday will lead to a flood of domestic investment and job creation. But what they’re really asking for is another Congressionally-provided windfall, making the same mistake a second time for the same reason.