House Republicans made it clear earlier this year that they had no intention of upholding the debt deal reached in 2011, despite a vow from President Obama that he would veto any appropriations bills that attempted to cut more spending than was agreed upon last August and a pledge from Senate Minority Leader Mitch McConnell (R-KY) that the deal would be upheld in the Senate.

After earlier indications that they would make substantial cuts to domestic programs to preserve defense spending, the House Appropriations Committee made it official yesterday, setting a spending level $27 billion below the level agreed to in the debt deal. The committee, bowing to the GOP’s more conservative wing, will make deep cuts to food assistance, financial regulations, and a host of other programs, setting up the potential for a government shutdown when the fiscal year ends in October, Politico reports:

The House begins with a total of $1.028 trillion for discretionary spending, $19 billion below the $1.047 trillion target set last summer and $15 billion below what was enacted just months ago for the current 2012 fiscal year. Republicans would also go $8 billion over the caps set in the Budget Control Act for defense spending, and the result would be a net reduction of more than $27 billion from all other appropriations.

This translates into an added cut of about 5 percent, with the burden falling chiefly on a half-dozen domestic spending bills affecting nutrition programs, transportation, financial regulatory agencies, natural resources, and especially the labor, health and education bill cited by Dicks.

After GOP leadership worked with Democrats to form the debt deal last year, the party’s conservatives have seemingly wrangled control back from Speaker John Boehner (R-OH). House Appropriations Chair Hal Rogers (R-KY) opposed efforts to break the deal but went along at Boehner’s urging in attempts to assuage more conservative members — even still, four conservatives pushed Rogers to cut as much as $97 billion from the debt agreement.

Senate Republicans, despite McConnell’s stated position last week, are now making similar rumblings. South Dakota Sen. John Thune (R) said Wednesday that the Senate GOP may back House Republicans in setting lower spending limits, saying, “I think we’ve got to be as aggressive as we can in trying to rein in the cost of government, the growth of government.” With White House officials reiterating the president’s veto threat, however, 2012 is shaping up similarly to the summer of 2011, when Republicans repeatedly pushed the government to the brink of shutdown and nearly caused its default before striking a debt deal at the last minute.

President Obama and Senate Democrats have been trying to implement the Buffett rule, a minimum tax on millionaires, which would remedy the problem of millionaires being able to pay lower tax rates than middle class families. One state lawmaker in Iowa thinks his state needs its own version — the Branstad rule — after Gov. Terry Branstad (R-IA) was able to pay just $52 in state income taxes on his nearly $200,000 in income:

Gov. Terry Branstad’s $52 state income tax bill in 2011 is proof that fixes are needed in the tax system, Sen. Robert Hogg, D-Cedar Rapids said today.

“Some people talk about nationally we need a Buffet rule, maybe in Iowa we need a Branstad rule,” said Hogg, who additionally noted that a person making between $30,000 to $40,000 a year can expect to pay somewhere around $1,000 or more in state income tax.

Branstad was able to pay such a low amount because Iowa is one of just six states in the country that allows residents to write off their federal income tax payments from the previous year on their current year’s tax return. So Branstad was able to apply his 2010 federal income tax payments — which were paid on the salary he received from his prior job as the president of Des Moines University — to this year’s state income tax bill.

Iowa loses $642 million annually due to this provision, nearly one quarter of its total income tax revenue. More than half of the benefit of the deduction goes to the richest 5 percent of Iowans, while 76 percent of the benefits go to the richest 20 percent. “States should take a hard look at eliminating, or at least capping, their deduction because of the impact this lopsided tax policy has on state budgets and tax fairness,” the Institute for Taxation and Economic Policy wrote. Branstad’s administration called his low tax bill an anomaly. (HT: CTJ)

Republican support for Senate Democrats’ plan to prevent an interest rate-hike on federal student loans will depend on how anti-tax zealot Grover Norquist feels about it, the top Senate Democrat said Tuesday. President Obama last week began pushing Congress to act on student loan interest rates, which will double in July if Congress doesn’t act. Senate Democrats will unveil a plan this week that pays for the extension of the lower rate by closing a loophole that allows certain businesses to avoid payroll taxes by gaming the tax system.

Closing the “John Edwards loophole,” named after the former senator who used it while practicing law, would raise enough revenue to offset the $6 billion cost of extending the current interest rate. But Senate Majority Leader Harry Reid (D-NV) sounded pessimistic about garnering Republican support yesterday, saying the GOP would take its cues from Norquist, who opposes closing loopholes to raise new revenue, before deciding whether to support it, the Las Vegas Sun reports:

“I think the proper question is, is it something Grover Norquist would accept,” Reid said, invoking the author of the anti-tax pledge to chide his opponents’ unwillingness to raise taxes. “He seems to be the marker for Senate Republicans. We’ll see.”

If Republican reaction today is any indication, Norquist hasn’t given his blessing to the Democratic plan. Minority Leader Mitch McConnell (R-KY), who says he supports the extension, blasted the plan on the Senate floor today, saying it would “raid[] Social Security and Medicare” while “making it even harder for small businesses to hire”:

MCCONNELL: Democrats want to pay for it by raiding Social Security and Medicare and by making it even harder for small businesses to hire. We happen to think that at a time when millions of Americans and countless college students can’t even find a decent job it makes no sense whatsoever to punish the very businesses we’re counting on to hire them. It’s counterproductive and clearly the wrong direction to take.

McConnell’s argument that the plan would undermine Medicare and Social Security makes no sense — though the taxes raised from closing the loophole would normally be directed toward those programs, they are not going there currently because they are not being collected at all.

Closing the loophole, as Citizens for Tax Justice explained in 2010, would actually benefit small businesses and individuals, leveling the playing field for those that don’t game the tax code to lower their rate. “When some small business owners avoid taxes, honest taxpayers make up the gap by paying higher taxes,” CTJ wrote. “Lawmakers who are concerned about the tax burden of small businesses need to do everything possible to close loopholes in the tax code so that all Americans pay their fair share.”

Our guest blogger is Melissa Boteach, director of Half In Ten at the Center for American Progress Action Fund.

House Republicans recently proposed cuts to nutrition assistance that will kick 280,000 low-income children off automatic enrollment in the Free School Lunch and Breakfast Program. Those same kids and 1.5 million other people will also lose their Supplemental Nutrition Assistance Program (formerly food stamp benefits) that help them afford food at home.

Ten years’ worth of these nutrition cuts could be prevented for the price of one year of tax cuts on 3,340 multimillion dollar estates that House Republicans are protecting in their budget.

On April 18 the House Agriculture Committee passed a bill cutting over $33 billion from SNAP over the next decade. About one-third of these cuts ($11.5 billion) comes from putting restrictions on “categorical eligibility,” a provision that enables states to better coordinate between programs and improves access to assistance for low-income families.

By restricting this provision, the bill would kick an average of 1.8 million low-income people a year off of food aid and end automatic enrollment in free school meals for 280,000 children in struggling families.

The Republican budget sells this bill as an effort to “reduce lower‐priority spending” to avert military cuts that will otherwise take place in January 2013 due to the debt deal agreed to last summer. But when it comes to reducing the deficit, it’s clear the House would rather ask low-income kids and families struggling against hunger to foot the bill than asking multimillion-dollar estates to pay their fair share.

Case in point: As part of the 2010 tax-cut compromise, House Republicans insisted on including a tax cut on multimillion dollar estates, adding an estimated $11.5 billion to the deficit this year alone. That’s the same amount they’re now claiming is necessary to cut from low-income families through these restrictions.

By making it more difficult for low-income schoolchildren to access school breakfast and lunch, this bill will likely increase child hunger, which is associated with worse educational outcomes and higher long-term health costs. Both of these trends affect our economy and our deficits over the long run.

We should reconsider reduced spending on “lower priority” items — a.k.a breakfast, lunch, and dinner for low-income children — and instead adopt a deficit-reduction approach that asks everyone to pay their fair share—including multimillion-dollar estates.

President Obama signed the Stop Trading on Congressional Knowledge (STOCK) Act earlier this month, which was passed after a 60 Minutes investigation revealed that members of Congress were profiting from information they received in their official capacity. House Financial Services Chairman Spencer Bachus (R-AL), for instance, made nearly $30,000 trading on information he received during private briefings during the 2008 financial crisis.

The original version of the STOCK Act that passed out of the Senate included a provision that would have required Washington insiders who sell intelligence to corporate America to register as lobbyists. However, that provision was ultimately stripped from the bill by House Republicans. And according to an analysis by The Hill, it was Wall Street lobbying that proved the catalyst:

A review by The Hill of lobbying records from the first quarter of 2012 found that many of the financial sector’s biggest names lobbied on the Stop Trading on Congressional Knowledge (STOCK) Act. Many bolstered their forces with new lobbyists, while others turned to K Street for the first time as the bill moved toward President Obama’s desk to become law.

A concern for many in financial services was a provision that would have required “political intelligence” consultants to register as lobbyists and disclose their clients. Financial lobbyists were worried that would lead to thousands of research analysts having to register for even the briefest contact with Capitol Hill.

House Republicans stripped that measure from the final piece of legislation, spurring allegations from Democrats and some Republicans that the party was doing Wall Street’s bidding.

When the watered down bill passed the Senate, Sen. Charles Grassley (R-IA) — who sponsored the provision on political intelligence — blasted Congress, saying, “I won’t ascribe motives to anyone in this body, but I know that today’s actions only serve the desires of obscure and powerful Wall Street interests.” And it turns out that he comment was right on the mark.

The United Kingdom is officially back in a recession, after seeing growth drop 0.2 percent in the first quarter of this year. But neither Prime Minister David Cameron nor Chancellor George Osborne are backing down from their Conservative government’s adoption of austerity measures.

“The solution to a debt crisis cannot be more debt,” Cameron said, after calling the latest growth numbers “very, very disappointing.” Cameron even bragged about his nation’s low interest rate on its debt. Osborne, meanwhile, said in a statement that “the one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”

Osborne predicted back in November that Britain would not experience a double dip recession. But with the implementation of his austerity plan, the UK is not only experiencing a worse recovery than the one following the Great Depression, but is doing worse than the rest of the Eurozone (despite the fact that the UK doesn’t face the monetary policy restrictions that the Euro nations face):

Of course, it’s not like the Eurozone, with it’s own set of austerity measures in Greece, Spain, and other nations, has fared well:

As the New York Times noted yesterday, austerity has fueled a backlash in Europe, causing the Dutch government to fall and the French to vote against incumbent Nicolas Sarkozy in the first round of their presidential election. Spain, Italy, Belgium, the Netherlands and the Czech Republic are all back in a recession. Yet the sort of budget cutting that led to these results is the same as that which Republicans want to bring to the U.S.

Hundreds of protesters, including religious leaders, union workers, and other 99 Percent Movement activists, gathered outside Wells Fargo’s shareholder meeting in San Francisco today, protesting the bank’s fraudulent foreclosure practices. Wells Fargo, the nation’s largest mortgage servicer, has a well-documented history of using fraudulent practices like robo-signing, and even more came to light last week when an insider account detailed the bank’s foreclosure unit as operating “exactly like an assembly line.”

 

Ahead of the protests, a Wells Fargo spokesperson told San Francisco’s ABC news affiliate that the bank has paid taxes and is a “responsible corporate citizen” that “makes an effort to keep people in their homes“:

Wells Fargo spokesman Ruben Pulido released a statement early this morning saying the bank is a “responsible corporate citizen” and paid $6 billion in taxes for 2011.

“Wells Fargo makes efforts to keep people in their homes,” Pulido said. “Over the past year, less than 2 percent of owner-occupied loans in our servicing portfolio have resulted in foreclosures.”

Wells Fargo was among 30 corporations that paid nothing in federal income taxes from 2008-2010 — its tax rate over that time period, in fact, was -1.4 percent. Adding 2011 to that time period just barely inches the bank’s rate into the positive.

The idea that Wells Fargo makes every attempt to keep homeowners in their homes, meanwhile, is laughable. The bank has been among the worst perpetrators of practices like robo-signing and dual tracking — the process of simultaneously offering homeowners loan modifications while also pushing them toward foreclosure. It has wrongly foreclosed on homes it didn’t own, and its victims may include thousands of members of the American military.

The initial protests drew roughly 500 people, according to early reports from a local NBC affiliate. Early marches through the city shut down numerous San Francisco streets and remained peaceful, according to NBC, though there have been arrests reported on Twitter. Later, there were more than a thousand protesters, according to other estimates, and clergy members and protesters who had purchased shares in Wells Fargo attempted to enter the meeting. Here are some pictures of the protest:

This isn’t the first time religious leaders or Occupiers have targeted Wells at its San Francisco headquarters. Local churches moved $10 million from the bank in February to protest its foreclosure practices, and they held Ash Wednesday services outside Wells Fargo asking it to repent for its wrongful practices.

Occupy protesters chanting “we pay taxes and you should too” interrupted General Electric CEO Jeffrey Immelt today during a speech in Detroit before the SAE World Congress. Other protesters in the hall chanted “we are the 99 percent” before being escorted off the premises by police.

“We pay 29 per cent,” Immelt responded. A GE spokesman later told CBS that “the 29 percent tax rate was what the company payed globally in 2011. In the U.S., the rate was 25 percent.”

However, that doesn’t jive with what Citizens for Tax Justice found in a recent report. CTJ calculated that GE paid an 11.3 percent tax rate in 2011, which is actually a huge increase over previous years. In 2010, for instance, GE paid -76.6 percent. In 2009, it was -52.9 percent. So in each of those years, the government subsidized the hugely profitable mega-corporation:

GE’s low taxes stem mainly from its finance arm, GE Capital, which makes big profits, but generates huge tax “losses” that reduce GE’s taxable income from its other operations. Over the past decade, GE has paid virtually nothing in federal income taxes, paying a paltry 2.3% tax rate on its $83 billion in pretax U.S. profits.

26 major corporations, GE included, had no federal income tax liability for the period between 2008 and 2011 (thought they might have owed something in an individual year), while they made billions in profits. Occupy protesters plan to protest GE’s annual shareholders’ meeting in Detroit tomorrow.

Our guest blogger is Scott Nova, Executive Director of the Worker Rights Consortium.

Apple’s response to its current public relations crisis regarding its labor force in China has been to promise big improvements in working conditions at its supplier factories. Unfortunately, there is good reason to doubt the sincerity of those pronouncements.

After all, Apple has been promising to end labor rights violations at these factories for six years, but has neither delivered on these pledges nor done anything to hold the suppliers accountable.

Consider the example of excessive overtime, one of the glaring problems at Foxconn, Apple’s largest supplier. Workers at Foxconn’s plants in China have frequently been compelled to work upwards of 90 extra hours a month, sometimes far more, while the legal maximum in China is 36. Independent investigators have been reporting these abuses for years and auditors paid by Apple itself have just confirmed that massive overtime violations are still ongoing at Foxconn.

After these violations were first exposed in 2006, Apple issued a public report pledging corrective action. “Employees worked longer hours than permitted by our Code of Conduct,” Apple admitted, but “[Foxconn] has enacted a policy change to enforce the weekly overtime limits…and a management system has been implemented to track compliance… Supervisors must receive approval from upper level management for any deviation.”

Apple added, “We are committed to ensuring compliance with our Code of Conduct and will complete audits of all final assembly suppliers in 2006… In cases where a supplier’s efforts in this area do not meet our expectations, their contracts will be terminated.”

That certainly sounded like a strong stand by Apple: any supplier that did not meet the company’s labor standards would be terminated.

But as it turns out, Foxconn did not meet Apple’s standards. Instead, Foxconn continued to violate overtime laws, systematically, for the next six years (and counting). Since there are hundreds of thousands of workers making Apple products for Foxconn, the individual violations of Chinese overtime law that have been committed in the assembly of iPods, iPhones, and iPads now number in the millions.

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Social Security is going broke even faster than expected, according to a report from the program’s actuaries released yesterday. At least, that’s the narrative the national media presented to the American public.

Headlines from across the country — like the following from the Wall Street Journal, Los Angeles Times, and New York Times — were quick to paint a grim picture of the program’s future finances, noting that “painful” changes would need to be made to ensure its solvency beyond 2033:

The headlines and stories that follow create the illusion that Social Security is fast going broke, even though it is fully funded for another two decades and could pay 75 percent of its benefits thereafter (imagine the shock the media would display, meanwhile, if transportation, food stamps, or other programs had two decades of guaranteed funding).

They also ignore an easy way to ensure the program’s long-term solvency without large changes or cuts to benefits. Payroll taxes that finance Social Security are only collected on income up to a certain level ($110,100 in 2012), creating a regressive system that puts an undue burden on low- and middle-income workers. Eliminating that cap would allow Social Security to pay full benefits for the next 75 years, according to a Congressional Research Service report.

Vermont Sen. Bernie Sanders (I) introduced legislation that would raise the cap last year, but it has been ignored by Republicans and the media, who instead continue to feed the narrative that Social Security needs vast changes — including potential benefit cuts — to shore up its future. Americans of all political stripes oppose cuts to Social Security benefits, but as the Columbia Journalism Review noted earlier this month, media coverage has perpetuated the belief — particularly among young Americans — that Social Security is broken.

“The elite press repeatedly quotes the commentary of the devoted opponents of social insurance retirement programs,” Yale professor emeritus Theodore Marmor told CJR. “But they appear unaware of how they are supporting a strategic attack on social insurance that has been going on for years.”

According to the constant refrain from Republicans in Congress, the reason that tax rates can’t be raised on anyone, even the already super-wealthy, is because doing so will hurt economic growth. However, two prominent economists — Nobel Prize winner Peter Diamond and John Bates Clark award winner Emmanuel Saez — write in today’s Wall Street Journal that the conservative theory is basically bunk:

In the postwar U.S., higher top tax rates tend to go with higher economic growth — not lower. Indeed, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.

Saez and Diamond also note that growth can be boosted if the revenue raised from higher taxes gets spend on infrastructure or other public investments. “The neglect of public investment over the last few decades suggests that the returns could be quite high,” they wrote.

As this chart shows, job growth has been weakest when the top tax rate was at its lowest:

In fact, job growth has been stronger when taxes are higher overall:

Of course, none of this should be construed as proving that higher taxes cause better job growth. But the Republican claim that higher taxes will blunt job growth is most certainly not true, as the data shows.

Americans for Tax Reform President Grover Norquist has held most Republicans by the scruff of the neck during recent tax debates due to their having signed the ATR anti-tax pledge, which states that the signees will not vote for a tax increase any time, for any reason. Texas Gov. Rick Perry (R), who received accolades from Norquist during his presidential run, is aiming to start a similar pledge in the Lone Star State:

Borrowing a page from anti-tax crusader Grover Norquist’s playbook, Perry said on Monday, “Each and every member of the Legislature or anyone aspiring to become a member of the Legislature should sign on.” And right on the Governor’s website, individuals and lawmakers can sign on to the Compact: Yes, I stand with Governor Perry and I support his Texas Budget Compact. I want my state representatives in the Texas Legislature to sign on to Governor Perry’s Texas Budget Compact.

The compact calls for complete opposition to tax increases, as well as constitutional spending limits and restrictions on using the state’s Rainy Day Fund (which Perry previously plugged using federal money meant for education). While Perry isn’t personally tracking who signs his pledge, he said that outside organizations might.

Part of the compact calls for legislators to eschew budget gimmicks, even though Perry himself is quite fond of using such gimmicks to balance his budget. As Texas State Rep. Mike Villarreal said in a statement, “Governor Perry loves to talk about his principles in the abstract, but he doesn’t want to discuss the disabled kids who lose health services when he won’t close corporate tax loopholes, or the students crowded into full classrooms when he won’t touch the Rainy Day Fund.”

Fortunately, several lawmakers at the federal level have broken with Norquist and his anti-tax pledge. “I think anybody who doesn’t indicate their willingness to look at revenues — expiration of tax loopholes, tax credits, increase in contribution to Social Security, which is a tax, and otherwise — would be disingenuous and irresponsible,” said GOP Rep. Timothy Johnson (IL).