ThinkProgress Logo

Economy

Congresswoman Accuses Obama Of ‘Harming’ Auto Company That Went Defunct In 1988

A Republican congresswoman accused the Obama administration of promulgating regulations that are undermining job creation at an auto manufacturer that has been defunct since 1988. She was responding to a question on Monday about Mitt Romney’s dishonest claims regarding Jeep moving its production overseas.

During an appearance on MSNBC, Rep. Marsha Blackburn (R-TN) dodged a question about Romney’s debunked Jeep claims and instead attacked the Obama administration for issuing regulations that are harming workers at American Motors Corporation, a company once headed by George Romney. AMC was sold to Chrysler during the Ronald Reagan administration and its brands were then discontinued:

CHIRS JENSING (HOST): Let me ask you about some of the things going on on the campaign trail, and there’s a controversy about Mitt Romney telling voters that jeep is going to move production to China. According to the company that’s entirely false. Is he lying about that?

BLACKBURN: Oh, well, I don’t know. I haven’t talked with with the campaign staff about that. I will say this. For workers in the auto industry, across the board, whether it is GM, whether it’s Nissan, whether it’s American Motors, individuals are very concerned about the impact of regulation that the EPA and OSHA and other federal agencies are heaping on our manufacturers.

Watch it:

Since the auto rescue, GM, Ford, and Chrysler are experiencing increases in sales of 10, 13, and 14 percent, respectively. Obama’s approach, which Romney vehemently opposed, helped save as many as 1.3 million jobs and the administration’s new fuel efficiency standards and incentives included in the 2009 stimulus are driving American-made cars to be become more competitive in an international market.

GOP Senator Alleges Obama May Delay Friday’s Jobs Numbers To Boost Re-election Prospects

When last month’s jobs report showed a dramatic drop in unemployment, some conservatives invented a new conspiracy that the Labor Department numbers were politically motivated.

On Monday, rumors that Hurricane Sandy may force a delay to October’s jobs numbers invited a new accusation. Iowa Republican Sen. Chuck Grassley tweeted that any delay from the Labor Department would be attempt to sway next Tuesday’s election, and not prompted by a natural disaster:

As it turns out, the Labor Department says its Friday jobs report is still on track for release. Even though federal government offices shut down on Monday due to the hurricane, the BLS said in a statement, “It is our intention that Friday will be business as usual regarding the October Employment Situation report.”

Election

GOP Strategist Defends Romney’s Plan To Dismantle FEMA

Atlantic City, NJ

Mitt Romney’s past comments about dismantling FEMA and privatizing disaster relief have come back to haunt him as Hurricane Sandy begins to wreak havoc on the East Coast. Still, one Republican strategist, Ron Bonjean, agrees with him. On CNN Monday morning, Bonjean, a private consultant who advises GOP congressional leaders, defended Romney, suggesting that even talking about federal disaster relief is politically toxic:

Most people don’t have a positive impression of FEMA and I think Mitt Romney was right on the button. But I don’t think anybody cares about that right now. I think people care about whether or not their power’s on, whether or not their basement’s going to be flooded. And I think that if the president gets too far in front of this and something goes wrong, people are going to remember, hey, my power’s not out, and the president’s talking about FEMA. I’m not a real big fan of FEMA. That could sway their vote.

Watch it:

Sandy has already caused severe flooding in the Northeast, hours before the worst of the storm is projected to hit. President Obama has declared a state of emergency in 7 states and DC after several governors’ urgent requests for federal aid to combat the storm. Though Bonjean fails to make the connection between FEMA’s services and people worrying about their power going out, the agency has already dispatched emergency power teams to try to reinforce vulnerable power grids before the storm hits and provided hundreds of generators and other back-up power sources. Americans are unfortunately well-acquainted with the agency, despite Bonjean’s insistence that they “don’t care” about it; a recent study of FEMA data found that, since 2006, 4 out of 5 Americans have been affected by weather-related disasters.

How Economic Inequality Makes Hurricanes More Deadly

The aftermath of Hurricane Katrina.

While the Eastern seaboard braces for Hurricane Sandy, 65 people have already been killed by the storm in the Caribbean. The tragic death toll and accompanying widespread property damage are caused in part by poor infrastructure and poverty — problems that aren’t limited to the Caribbean. Indeed, America’s inequality problem is a key reason why natural disasters wreak such havoc inside the United States.

That our stratified society makes storms more deadly is nearly universally believed by disaster experts. According to a paper by three experts at the University of South Carolina (Cutter et al.), “[t]here is a general consensus within the social science community” that some key causes of vulnerability to storms include “lack of access to resources (including information, knowledge, and technology); limited access to political power and representation; social capital, including social networks and connections; beliefs and customs; building stock and age; frail and physically limited individuals; and type and density of infrastructure and lifelines.” Inequality was, the researchers found, the single most important predictor of vulnerability to storm damage — variation in the wealth of individual counties alone explained 12.4 percent of the differences in the impact of natural disasters between counties.

The reasons for this are fairly clear — poorer communities have less resources to evacuate and prepare for storms, and also live in housing that’s less likely to be build to withstand nature’s wrath. As Kathleen Tierney at the University of Colorado puts it:

[Dimensions] of social class, including education and income, affect the ability to engage in self-protective activities across all phases of the hazard cycle. Educational achievements and literacy competence influence access to information on disaster risks and risk-reduction measures…The lack of affordable housing in U.S. metropolitan areas forces the poor to live in substandard housing that is often located in physically vulnerable areas and also to live in overcrowded housing conditions. Manufactured housing may be the only viable housing option for people with limited resources, but mobile homes can become death traps during hurricanes and tornadoesdisaster evacuation scenarios are also based on other assumptions, such as the idea that in addition to having their own transportation, households also have the financial resources to leave endangered communities when ordered to do so. This is definitely not true for the poor.

Other sorts of related inequalities also make the impact of storms worse. Cutter et al. found that black, Hispanic, and Asian communities in the United States were also more at risk from storms, as were communities dependent on one industry (like mining or fishing), ones with high percentages of residents living in mobile homes, and ones with high population density.

The most vulnerable place in the country, in their analysis? Manhattan Borough.

How House Republicans Would Make It Harder To Provide Hurricane Relief

Red Hook, Brooklyn flooded on Monday morning


The East Coast is bracing for the ever-strengthening Hurricane Sandy, which will affect 50 million people when it makes landfall on Monday evening. President Obama has declared a state of emergency in 7 states and DC, allowing them to receive federal funds for emergency disaster assistance.

Depending on the outcome of next week’s election, future victims of natural disasters may not be able to receive the same kind of assistance. Mitt Romney has suggested shutting down FEMA and turning disaster relief over to private companies. Meanwhile, House Republicans have repeatedly attempted to slash funds for disaster preparedness and response in 2011:

According to the House Appropriation Committee’s summary of the bill, the [GOP's 2011 continuing resolution] funds Operations, Research and Facilities for the National Oceanic Atmospheric Association with $454.3 million less than it got in FY2010; this represents a $450.3 million cut from what the president’s never-passed FY2011 budget was requesting. The National Weather Service, of course, is part of NOAA — its funding drops by $126 million. The CR also reduces funding for FEMA management by $24.3 million off of the FY2010 budget, and reduces that appropriation by $783.3 million for FEMA state and local programs.

With each major natural disaster in 2011, House Republicans dug in their heels over providing disaster relief. They repeatedly demanded the funds be offset by other spending cuts in the budget — even as a deadly tornado tore through Missouri, an earthquake shook Virginia, and when Hurricane Irene struck the east coast last year.

The politicization of disaster relief is likely to continue; the House Republican budget ignored a bipartisan agreement to make it easier to fund disaster relief, instead insisting again that spending cuts offset the emergency aid.

Republican Senate Candidate’s Company Collected Millions In State Subsidies While Laying Off Workers

Connecticut Republican senate candidate Linda McMahon

On her campaign website, Republican senate candidate Linda McMahon (CT) rails against “reckless” and “out of control” government spending. She calls for the institution of a Balanced Budget Amendment (despite the widespread economic damage such an amendment could cause), and specifically singles out earmarks, claiming that they displace private sector job creation. McMahon has also called for “an end to corporate welfare.”

However, at the CT Post reported, McMahon was all too happy to accept government subsidies for her company, World Wrestling Entertainment, even when the company was laying off workers:

The Stamford-based WWE empire received about $37 million in state tax credits for staging and recording its wrestling spectacles dating back to July of 2009, state officials reported Friday.

The state Department of Economic and Community Development (DECD), in response to a request by Hearst Connecticut Newspapers, indicated that the WWE has received 20 separate tax credits totaling $36.7 million.

Three of the 20 credits, awarded as part of state legislation aimed at fostering film, TV and digital production in the state, totaled more than $5 million each in 2010, 2011 and 2012, according to a summary released under the state’s Freedom of Information Act.

Jim Watson, spokesman for the DECD, said Friday that the credits were granted, without strings, based on how much money the WWE had spent in Connecticut on producing its events.

“There are no job creation or retention requirements for them to earn the credits,” Watson said. “The credits are awarded based on qualified expenditures made in the state.”

In 2009, WWE collected $9 million in subsidies after announcing plans to lay off 60 workers.

Most states in the U.S. provide tax credits for movie and television production, despite the dubious effect they have promoting job creation. In 2007, Connecticut’s own Department of Community and Economic Development found that its film production credits were not worth the cost. (HT: Kenneth Thomas)

Econ 101: October 29, 2012

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Hurricane Sandy is expected to make landfall tonight in New Jersey, with the storm affecting 50 million people. [Associated Press] The National Weather Service has updates here.
  • U.S. stock markets will be closed today due to the hurricane. Both the NASDAQ and the New York Stock Exchange are closed. [Wall Street Journal]
  • Transit systems in major cities, as well as Amtrak, will be closed on Monday. [Reuters]
  • Most of the banks being investigated for manipulating the LIBOR interest rate are expected to settle in the next 12 months. [Financial Times]
  • The leaders of Spain and Italy are meeting today to discuss their countries’ respective economic woes. [Associated Press]
  • Consumer confidence is at a five-year high. [The Hill]
  • The White House denied that it has a plan to replace the payroll tax cut that is expiring at the end of the year. [Reuters]

Romney Auto Bailout Ad Tells Four Myths In 30 Seconds

As Mitt Romney continues to struggle to explain his various positions on the auto rescue that saved General Motors and Chrysler, his presidential campaign has released an ad about the bailout that is littered with falsehoods and misdirections.

Watch it:

The 30-second ad is running in Ohio, a state where Romney is trailing in the polls and has been battered by the Obama campaign for his opposition to the auto rescue. Here is a breakdown of the ad’s misleading, and sometimes false, claims:

1. “Mitt Romney has a plan to help the auto industry.” No specific plan is referenced in the ad, and Romney’s campaign web site does not include a plan to “help the auto industry.” In 2008, Romney wrote a New York Times editorial titled, “Let Detroit Go Bankrupt,” and he re-upped his call against the auto rescue during the Republican primaries this year.

2. “[Romney] is supported by Lee Iaccoca and the Detroit News.” Chrysler Chairman Lee Iaccoca has indeed endorsed Romney. The Detroit News, a self-described “conservative newspaper,” endorsed him last week. But in that endorsement, the paper slammed Romney’s “wrong-headedness on the auto bailout.”

3. “Obama took GM and Chrysler into bankruptcy.” Obama did take both companies into a managed bankruptcy, the path Romney says was originally his idea. Romney, however, supported private sector financing of the bankruptcy, a plan that was “pure fantasy” at the time since no private lenders could lend to the companies in the middle of the financial crisis. Without federal intervention, the companies would have almost assuredly collapsed, costing 1.3 million jobs, according to industry estimates.

4. “[Obama] sold Chrysler to Italians who are going to build Jeeps in China.” This week, Romney claimed he read a news story that said Chrysler was planning to “moving all production to China.” The Bloomberg News piece he referenced, though, made it clear that Fiat, the Italian company that now owns Chrysler, was opening new factories in China to make Jeeps for Chinese consumers. No American plants will be closed, and no American jobs will be lost. The ad’s claim may not be as false as Romney’s previous statement, but it is certainly misleading.

Update

The Romney campaign is now defending the ad, with an unnamed aide telling BuzzFeed that it is literally true:

“What’s in there that’s false? Are they building Jeeps in China or not?” an aide asked BuzzFeed, breaking the campaign’s silence on the ad. “I think a lot of Ohioans are wondering why we can’t make Jeeps here and ship them to China, just like they are wondering why we can’t make — insert product here — in this country and export them to China.”

That, of course, doesn’t explain away Romney’s clear misstatement that Chrysler planned to move “all production to China,” which the Romney campaign has thus far refused to address. Nor does it address the ad’s clear implication that American jobs would be lost if Chrysler decides to open production lines in China.

Update

Politico reporter Ben White, on Twitter: “I asked for a copy of Romney’s ‘plan to help the auto industry’ per the Jeep ad and received no response.”

How A Decade Of Rising Housing And Transportation Costs Squeezed The Middle Class

Since 2000, middle class incomes and wages have essentially been stagnant; that period has been called a “lost decade” for the middle class. Meanwhile, some costs have skyrocketed. According to a new report from the Center for Housing Policy and the Center for Neighborhood Technology, rising costs for housing and transportation have squeezed the middle class over the last 12 years, rising by 44 percent. As the report shows:

Housing and transportation costs have gone up faster than incomes for American households. Since 2000, combined housing and transportation costs have risen 44 percent in the 25 largest U.S. metros, while household incomes have risen only 25 percent. That means that for every dollar household incomes have gone up, housing and transportation costs have risen about $1.75, cutting into wealth, savings and even budgets for essentials.

Moderate-income households spend a disproportionate share of income for housing and transportation. For households earning 50 to 100 percent of the median income of their metropolitan area, nearly three-fifths (59 percent) of income goes to housing and transportation costs. For these households, the growing “costs of place” are particularly burdensome, leaving little for necessary expenses such as food, education and health care.

This chart compares the rising cost of housing and transportation to income, in non-inflation adjusted dollars:

Another recent study found that the U.S. transportation system does a miserable job connecting workers to jobs. Republicans, meanwhile, are trying to cut the few mass transit investments that the U.S. is making.

Democratic Rep. Explains Why Now Is The ‘Absolute Right Time’ To Invest In Crumbling Infrastructure

LOUISVILLE — There is no better time than now to invest in America’s crumbling infrastructure, Kentucky Rep. John Yarmuth (D) told ThinkProgress in an interview this week. With the nation facing high unemployment and in need of a massive upgrade to its roads, bridges, and other infrastructure projects, the government should take advantage of historically low borrowing costs to put people back to work, Yarmuth said:

YARMUTH: These are surefire job creators, it’s work that has to be done. This is not elective surgery, this is life-saving surgery, as far as the infrastructure is concerned. And we’ve never been able to borrow money cheaper. As a matter of fact, people are giving us money for 10 years now. It is the absolute right time to do it, and I think the payback over time would be substantial.

Watch it:

Yarmuth’s home district experienced a major infrastructure crisis in 2011, when a bridge between Indiana and Kentucky was closed because of structural deficiencies. That isn’t a rare problem: across the country, bridges and roads are failing in increasing numbers.

Republicans, however, have consistently opposed infrastructure investments that would fix those problems, even as roads and bridges in their own districts and states crumble.

As Yarmuth notes, the United States has never been able to borrow money cheaper. Real interest rates on government bonds are now lower than the rate of inflation, meaning the government would have to pay back less than it borrowed to fix the problems. And as he also noted, the problems are not optional: roads, bridges, sewer systems, and other infrastructure needs must be addressed at some point.

Republicans, meanwhile, repeatedly blocked the American Jobs Act when it was proposed last year, complete with its investments in infrastructure. They pushed for reductions in the amount of infrastructure spending contained in the 2009 stimulus law, and they want to lower the cost of highway bills that would pay for new and existing improvement projects. In the name of fiscal responsibility, Republicans have prohibited necessary spending on the nation’s infrastructure, even though the projects will only grow more expensive in the future.

NEWS FLASH

116 Million Europeans ‘At Risk Of Poverty,’ With More Austerity On The Horizon | According to the European Commission, “roughly 40 million Europeans are suffering ‘severe material deprivation’”, while “116 million EU citizens are judged ‘at risk of poverty.’” Yet, the continent is doubling down on the same austerity policies that have killed growth from Greece to the UK. Spain’s unemployment rate just hit 25 percent, while “austerity measures, worth over 60 billion euros by 2014, are likely to crimp growth further, and cast more workers out of a job.”

‘Anti-Business’ Obama Is Best President For Corporate Profits Since 1900

Since he came into office, Republicans have consistently attacked President Obama for supposedly being anti-business. As ThinkProgress noted last week, the data shows that this charge is nonsense.

In fact, as the financial website Motley Fool noted today, President Obama is far and away the best president for corporate profits since 1900:

Even if corporate profits under Obama are compared to the 2008 peak — in order to erase the effect of the financial crisis — “average annual corporate profit growth under President Obama is 6.8%,” or nearly three times as large as it was under President Reagan. Both Presidents Bush actually oversaw corporate profit declines during their terms. Meanwhile, real GDP growth per capita is far higher under Obama than it was under either Bush administration.

  • Comment Icon

Election

Romney Makes Closing Argument At Firm That Benefited From Stimulus Funds

On Friday, Mitt Romney will make his closing argument on the economy in what his campaign is touting as a major address. The site Romney has chosen, however, exposes the hypocrisy and fallaciousness of one of Romney’s central economic arguments: the notion that government has no role in growing the private economy and helping businesses expand. Romney frequently mocks Obama’s “didn’t build it” remarks and routinely derides the 2009 Recovery Act as a failure that did nothing to create jobs.

But now, the GOP presidential candidate is delivering one of the last speeches of the campaign at Kinzler Construction Services in Ames, Iowa. A search of Recovery.gov shows that the firm benefited from hundreds of thousands of dollars in contracts funded by the Recovery Act. Kinzler received $649,944 in contracts under stimulus-funded Department of Energy weatherization programs. The company also received $39,370 as a sub-contractor on a federal government contract to renovate a building owned by the federal government, making for a total of $689,314 in stimulus funds.

The firm’s website even includes a section touting its “featured projects.” Several of the projects appear to be publicly-funded renovation or construction projects, including public schools in Nebraska and Iowa, a community center in Iowa, and the new central station for Des Moines’ public transportation system:

This is not the first time that Romney has spoken at venues that undermine his economic claims. Earlier this week, Romney and his running mate campaigned at the Red Rocks Amphitheater in Colorado, a national landmark built as a public works project during the New Deal. Ann Romney recently visited a Florida cancer center that received nearly $24 million in stimulus funds. And, among many other examples, Romney bashed the stimulus at a college that received stimulus funds for federal work-study programs that help make college more affordable.

Update

Romney bashes the stimulus Kinzler benefited from in his speech:

A new stimulus, three years after the recession officially ended, may spare government, but it will not stimulate the private sector any better than did the stimulus of four years ago. And cutting one trillion dollars from the military will kill jobs and devastate our national defense.

  • Comment Icon

Six Important Things To Know Before Romney’s ‘Closing Argument’ On The Economy

Mitt Romney will deliver what’s being billed as his “closing argument” in Ames, Iowa today, focusing his speech on the economy. Here are six important things to know before Romney takes the stage.

1) ROMNEY’S BOGUS 12 MILLION JOBS: Romney consistently promises that his policies will create 12 million jobs over his first term. But that’s the number of jobs economists predict the economy will create regardless of who is president. Also, Romney’s math falls apart upon scrutiny. For instance, he claims that his tax plan will create seven million jobs, but uses as evidence a study showing that those jobs will be created over a ten-year budget window, not a four-year presidential term.

2) ROMNEY’S BUDGET WILL KILL JOBS: According to the Economic Policy Institute, Romney’s budget plan will kill more than half a million jobs in the next two years, even if he abandons his plan to pay for his massive cut in tax rates. If he does pay for his tax cuts (which would require raising taxes on the middle class), his plan will cause the loss of nearly two million jobs over the next two years.

3) OBAMA’S JOBS RECORD: Despite the Romney campaign’s dour talking points, the Obama administration is net positive for job growth. The economy has created 1.3 million jobs this year, more than in five of the eight years under the Bush administration. Since February 2010, when the economy hit bottom, 4.4 million jobs have been created.

4) ROMNEY’S TAX CUT FOR THE MIDDLE CLASS DOESN’T HELP THE MIDDLE CLASS: In addition to his income tax plan, which is “severely impossible” according to math, Romney wants to eliminate investment taxes for the middle class. The only problem: the vast majority of middle-class taxpayers don’t have any investment income to exempt from taxation.

5) ROMNEY’S ‘INCONSEQUENTIAL’ EDUCATION POLICIES: Romney likes to tout his education record in Massachusetts as proof that his education policies can boost the economy. However, education experts say that Romney’s K-12 policies were “inconsequential.” His signature college scholarship program, meanwhile, “backfired,” as it largely helped students who were going to go to college anyway.

6) ROMNEY’S $1 TRILLION CORPORATE TAX CUT: Romney talks a lot about his plan to cut income taxes (without detailing how we would pay for it). Less mentioned is his plan to cut corporate taxes by $1 trillion, which the campaign isn’t even bothering to pretend to pay for, even as corporate profits are at all-time highs. Romney’s switch to a “territorial” corporate tax system would also make it easier to outsource jobs.

  • Comment Icon

Despite Romney Claim, Chrysler Isn’t Moving Any Auto Production To China

Mitt Romney, attempting to bolster his case to Ohio voters, misinterpreted a story and passed on an outright lie at a rally in the swing state yesterday. Reacting to a Bloomberg News story about auto manufacturer Chrysler’s plans to open a plant in China, Romney said at a rally in Defiance, Ohio that the company was “thinking of moving all production to China,” and that he would prevent such action by fighting for “every good job in America”:

I saw a story today that one of the great manufacturers in this state, Jeep — now owned by the Italians — is thinking of moving all production to China,” Romney said at a rally in Defiance, Ohio, home to a General Motors powertrain plant. “I will fight for every good job in America. I’m going to fight to make sure trade is fair, and if it’s fair America will win.”

The Bloomberg News story, however, doesn’t say that Chrysler plans to move “all production to China.” Instead, it says that Fiat, which now owns Chrysler, is planning to open Chinese factories where it will make one of its most popular lines, Jeep, for Chinese consumers. Chrysler isn’t planning to shift production away from the United States. Instead, it will add factories in China to keep up with the nation’s growing demand for automobiles:

Chrysler currently builds all Jeep SUV models at plants in Michigan, Illinois and Ohio. Manley referred to adding Jeep production sites rather than shifting output from North America to China.

“That he would take an article that just described a global expansion and not a shift in jobs and use it to try to get Ohio votes, or to scare people into voting for him, is just another example of why you can’t trust this man,” former Michigan Gov. Jennifer Granholm said on a conference call today.

Romney has often struggled with facts about the auto industry. Though he now claims the auto bailout was his idea, his plan to let the private sector finance the bankruptcies of Chrysler and General Motors was “reckless” and “pure fantasy,” according to auto industry insiders. By some estimates, it could have cost more than 1 million American jobs.

  • Comment Icon

Republican Housing Appointees Sabotaged Mortgage Assistance Programs To Stop ‘Backdoor Economic Stimulus’

Republican appointees at Freddie Mac, the government-sponsored mortgage giant, resisted mortgage programs aimed at helping homeowners and alleviating the nationwide housing crisis because they feared the programs were an effort at “backdoor economic stimulus,” according to sources who spoke to ProPublica.

After the Obama administration instituted the Home Affordable Refinancing Program (HARP) to help homeowners refinance their mortgages at lower interest rates, Freddie Mac placed heavy restrictions on the program out of fear that it would hurt the company’s bottom line and its ability to repay taxpayers. But two Republican appointees and one executive also held back the program, ProPublica’s Jesse Eisenger reports, because they thought it would help the economy under a Democratic president:

In closed door meetings, two Republican-leaning board members and at least one executive resisted a mass refi policy for an additional reason, according to the interviews: They regarded it as a backdoor economic stimulus. [...]

Robert Glauber, who left Freddie’s board in March, contended in board meetings that aspects of the refinancing program were “designed to be a stimulus” for the economy, said John Koskinen, who served as Freddie Mac’s chairman from 2008 to 2011, during which time he also served briefly as its interim chief executive.

Glauber, director Linda Bammann and head of risk management Paige Wisdom resisted mass refis. One executive viewed their objections as colored by partisan unwillingness to help the economy recover, something that would benefit President Obama.

Glauber, a George H.W. Bush appointee who previously worked on Wall Street, and a former chief executive disputed the idea that opposition to the program was partisan in nature.

Whether the program would have been stimulative in nature is unquestionable. In fact, helping homeowners and reducing the drag of a slumping housing market was precisely the point of HARP and other mortgage programs. Columbia University housing economist Christopher Meyer told ProPublica that more aggressive programs by Freddie Mac and Fannie Mae, the other government mortgage giant, could have saved homeowners $75 billion in interest payments and prevented an untold number of foreclosures. Instead, Freddie Mac has only recently loosened the tight restrictions it placed on the refinancing program.

  • Comment Icon

Econ 101: October 26, 2012

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Bank of America employees could face civil charges in a case alleging widespread fraud at the bank. [Reuters]
  • Two Democratic senators are calling for an end to delays holding back a rule meant to rein in risky bank trading. [Washington Post]
  • Spain’s unemployment hit a record high of 25 percent, with more austerity still to come. [Reuters]
  • Pending homes sales held steady last month. [CNBC]
  • Nine more banks have received subpoenas in an investigation into rigging of the LIBOR interest rate. [Wall Street Journal]
  • How Vikram Pandit was forced out as Citigroup’s CEO. [New York Times]
  • Comment Icon

How Romney’s Tax Plan Denies $5 Billion In Credits To The Poorest Families

Mitt Romney’s tax plan would provide millionaires with a tax cut of $87,000, even under the very generous assumption that the plan will be paid for (which would require raising taxes on middle class families). At the same time, Romney calls for rolling back expansions of two important tax credits aimed at helping middle-class and low-income families.

First, Romney’s plan calls for repealing an expansion of the Earned Income Tax Credit, meaning that “a two-parent family raising three children on $30,000 of earnings would lose $1,076 a year.” Romney also wants to roll back an expansion of the Child Tax Credit that was included in the 2009 Recovery Act. As the Tax Policy Center explained, “the more generous refundability level enacted in 2009 is critically important for low-income families“:

Of the $38.3 billion in total child credits that TPC estimates families will claim this year, $29.5 billion comes from the 2001 tax law and another $8.8 billion from the 2009 stimulus. Most of the 2001 increase will go to families in the middle income quintile and higher (see chart). Families with the lowest incomes will get less than 3 percent of the 2001 increase. In contrast, fully 60 percent of the benefits from the 2009 changes will go to families in the lowest income quintile.

Of the total $8.8 billion, about $5.3 billion goes to families in the poorest 20 percent of the country. If the expansion expires, “working families earning less than about $13,350 would be ineligible for any child credit, and families with two children wouldn’t qualify for the full credit until their earnings surpass $26,683.” In 2010, the expansion of the Child Tax Credit kept one million people out of poverty.

  • Comment Icon

NEWS FLASH

College Costs Increase Again, While Financial Aid Stagnates | According to the College Board, the average cost of private and public college tuition and fees increased by more than 4 percent this year, while financial aid stagnated. Overall, “the net price (the cost after scholarships, grants and federal tax benefits) that in-state students at public colleges will pay this year rose 4.6% to an average of $16,510.” While college costs have sextupled in the last three decades, financial aid hasn’t kept up.

Older

Newer

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up