Redefining Recession
Paul Krugman makes a very pertinent point today in his blog: the technical definition of recession doesn’t really matter to Americans. What really matters is not how the economy is labeled, but whether or not Americans can fill their cars with gas, put food on the table, buy clothes for their kids, pay their bills — including their mortgage, and hold down a steady job with a well-paying wage.
In academic terms, a recession is defined as a “few” months of consistent pessimistic economic activity spread throughout the economy. This is normally visible in a convergence of negative GDP, income and employment levels, retail sales, and industrial production.
When all these elements converge, there is no disputing that the economy is going down the tubes. But Americans have been singing this song now for months, even years, and they don’t give two cents about dictionary definitions or Wall Street economists — they want relief. Other economic indicators tell a more revealing story:
– Gas prices, which have been quickly approaching the $4/gallon mark, have finally reached the record-breaking levels they haven’t seen since March of 1981.
– The unemployment rate has climbed to 5.1 percent and is expected to move higher in the coming months.
– Consumer spending and retail sales, which account for 70 percent of the US economy, have fallen steadily, scraping lows unseen in more than seven years.
– Home foreclosures have topped the charts, as a record 18.6 million U.S. homes stood empty in the first quarter of 2008.
– Consumer confidence levels, which record popular perceptions on inflation, the job market and the economy in general have hit bottom. The overall number has reached its lowest point since the 2003 invasion of Iraq, while inflation expectations are the highest they’ve been since Hurricane Katrina.
– The share of consumers planning to take a vacation in the next six months has plummeted to a 30-year low.
So when the Department of Commerce announces that the GDP has increased by a meager 0.6 percent in the first quarter of 2008 — signifying that the economy may not technically be in a recession — Paul Krugman asks: “Who cares?”
Is The McCain Health Care Plan A Massive Tax Increase?
Is The McCain Health Care Plan A Massive Tax Increase?
Our guest blogger is James Kvaal, Domestic Policy Advisor at the Center for American Progress Action Fund.
We’re halfway through health care week for the McCain campaign, with speeches in five states. But one critical question remains unanswered: how does the value of the credit change over time? If it grows slower than health care costs – as does the Bush plan it was modeled on – it would be a huge tax increase over time.
Sen. McCain has proposed a massive tax shift. He would end the tax break for health benefits that workers get from their jobs – a $3.6 trillion tax increase over the next decade. Then he’d redirect those resources into new tax credits worth $5,000 per family in the first year. The change would be a tax cut for some families and a tax increase for others.
The McCain campaign has not released a lot of details, particularly for such an important proposal. But we know more about the model for the McCain plan, a very similar Bush Administration proposal. (Bush’s proposal created tax deductions, but his aides said it was equivalent to a $4,500 credit for families. Adjust for rising health costs and you basically have McCain’s plan.)
The Bush plan capped the growth of credits at the rate of inflation (expected to be about 2 percent a year). That is much slower than current tax benefits, which grow with premiums (about 6 percent a year).
For Bush, capping the growth of tax benefits has two advantages. It makes the numbers work: the plan has a large initial cost that is slowly recouped over time as the tax cut turns into a tax increase. Second, as Ezra Klein notes, it drives families into cheaper coverage that will make them pay more for health care and therefore use less of it.
But this isn’t such a good deal for families. It’s more like a Trojan Horse: a tax increase disguised as an initial tax cut. The slower growth adds up to a 30 percent cut after 10 years and a 50 percent cut after 20 years.
So here’s my question: does the McCain proposal also limit health care cost growth? If so, it will soon become a massive cut in support for families’ health coverage costs.
UPDATE: In today’s New York Times, Kevin Sack and Michael Cooper observe that McCain’s plan “would have the effect of increasing tax payments for some workers.” Sack and Cooper note that even middle-income workers with conventional coverage could pay more over time, depending on how the tax credits are adjusted for inflation.
UPDATE II: Over at Swampland, Karen Tumulty confirms with Douglas Holtz-Eakin that the tax credit’s growth is limited to the inflation rate.
RNC Celebrates Windfall For Oil Companies
The Republican National Committee has put out a press release defending Sen. John McCain’s (R-AZ) proposal to suspend federal gas taxes over the summer. The press release claims that the proposal “would save Americans over $6 billion“:
Sen. John McCain Has Proposed Immediate Gas Tax Relief, Which Would Save Americans Over $6 Billion:
Sen. John McCain’s Gas Tax Relief Would Last From Memorial Day To Labor Day. “Hard-working American families are suffering from higher gasoline prices. John McCain calls on Congress to suspend the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day.” (John McCain For President Website, www.johnmccain.com, Accessed 4/22/08)
“A USA TODAY Analysis Showed That McCain’s Gas-Tax Proposal Could Save Motorists $6.8 Billion In Taxes During The Summer.” (Kathy Kiely, “Gas-Tax Holiday Among McCain’s Plans For Economy,” USA Today, 4/16/08)
The RNC fails to provide a link to the USA Today story. Here’s what the article actually says:
A USA TODAY analysis showed that McCain’s gas-tax proposal could save motorists $6.8 billion in taxes during the summer. Len Burman of the non-partisan Urban Institute said the money won’t necessarily go back to consumers. Refineries already are running high to meet summertime gasoline needs, Burman said, so if demand for gas increases, so will prices. He said that means “a huge windfall for refiners,” not consumers.
Reuters reiterates: “Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.”
OMB Calls Its Interference With EPA Regulation Of Cancer Agents ‘Sound Science’
OMB Calls Its Interference With EPA Regulation Of Cancer Agents ‘Sound Science’
Yesterday, yet more information about the politicization of the Environmental Protection Agency (EPA) came to light as the result of a congressional investigation.
One of the responsibilities of the EPA is to protect Americans from exposure to toxic chemicals that cause cancer, birth defects, and death when found in air, food, or water — such as Alar, chlordane, formaldehyde, and malathion. Since 1985 the EPA has placed its scientific risk assessments of such chemicals into a database called the Integrated Risk Information System (IRIS). In a contentious oversight hearing yesterday, Senate Environment and Public Works Committee chairman Barbara Boxer (D-CA) released a damning report that exposed how the “assessments are being undermined by secrecy and White House involvement.”
Before Stephen L. Johnson became administrator in 2005, the assessment process was a straightforward one run by the staff scientists of the EPA:
Even so, the IRIS assessment program was slow and deliberative, with fewer than 15 full-time staff and under 10 assessments completed each year from 2000 to 2004. But in 2004, the process was changed to give the White House Office of Management and Budget (OMB) oversight of the program:
Although IRIS staff has quadrupled, productivity has collapsed. In fiscal 2006 and 2007, only two assessments were completed. The current process gives OMB control over IRIS assessments — the GAO found the OMB aborted five assessments in 2006 without explanation. Other federal agencies such as the Departments of Defense and Energy — who “are among the biggest contributors to toxic Superfund sites” — can interfere with the assessment in complete secrecy and add years of delay. On April 10, the EPA announced it would be further changing the process to institutionalize this complete takeover of scientific procedure:
In the words of Richard Wiles of the Environmental Working Group, “With these rules in place, it’s now official: The Bush White House is where all good public health protections go to die.” Read the rest of this entry »
Scheunemann: Just Another Lobbyist On The Straight Talk Express
Scheunemann: Just Another Lobbyist On The Straight Talk Express
Via TAPPED, John McCain’s foreign policy spokesman Randy Scheunemann recently gave an interview to Radio Free Europe about the growing tension between Russia and Georgia. Scheunemann took a hard line against Russia’s “undermining of Georgian sovereignty” by moving to establish direct ties with breakaway regions of Georgia.
Interestingly, neither Scheunemann nor the interviewer mentioned that Randy Scheunemann used to be employed as a lobbyist for the Georgian government. That’s right, the person who’s giving John McCain advice on Russia and Georgia was “registered with the U.S. Department of Justice as a foreign agent working on behalf of the government of Georgia.”
Scheunemann is a longtime neoconservative activist and lobbyist. In addition to working for the government of Georgia, Scheunemann was was the director of the Committee for the Liberation of Iraq, a neocon front group spun off from the Project for the New American Century (where Scheunemann also works as a foreign policy and national security analyst) which lobbied for the invasion of Iraq. Scheunemann’s firm, Scheunemann and Associates, also lobbied for the National Rifle Association between 1999 and 2002.
Of course, Scheunemann is only one of the many former lobbyists helping to drive the Straight Talk Express. In fact, as Media Matters reported, “McCain has more current and former lobbyists working on his campaign staff than any other candidate in the 2008 presidential election.”
What You Need To Know About McCain’s Health Care Speech Today
What You Need To Know About McCain’s Health Care Speech Today
Sen. John McCain (R-AZ) released additional details of his health care plan today. In terms of key principles, there was nothing new. Sen. McCain is still not concerned about achieving universal coverage, and he continues to want to put a greater burden on individuals to take on health insurance companies by themselves and hope that they can get needed care.
Today, the Center for American Progress Action Fund released two new analyses of the McCain plan (you can read the whole reports here and here). The only two key things you need to know are the numbers 158 million and 56 million:
• 158 million is the number of people who could lose their existing health care coverage under the McCain plan. McCain believes that individuals should find health insurance by themselves, and he will give them a small tax credit to help cover the cost. To pay for this, McCain ends the tax break given to those who purchase insurance from their employer today. This means that all 158 million people with employer-sponsored coverage today could eventually be forced to find a new health plan.
• 56 million is the number of people who are at risk of not getting health insurance at all under the McCain plan because of their chronic condition. The individual market is notorious for denying coverage to those with preexisting conditions. By creating a system that tries to push people towards individual coverage, McCain’s plan could leave out in the cold the 56 million Americans with employer insurance who have one or more chronic diseases like hypertension, arthritis, and asthma.
Overall, the McCain plan today was just more of the same old conservative rhetoric. His promises to help cover those with pre-existing conditions have turned out to be empty. The McCain plan still doesn’t help cancer patients like Elizabeth Edwards. Far from improving health care, John McCain will only make it much worse.
Ali Velshi Hosts Glenn Beck To Promote Liquid Coal
Ali Velshi Hosts Glenn Beck To Promote Liquid Coal
Recently, CNN’s senior business correspondent Ali Velshi has been promoting coal-based liquid fuel as a response to high oil prices, even though it leads to climate disaster. Yesterday, the Wonk Room noted that Velshi has even implied coal is cleaner than himself. This afternoon, Velshi continued his obsession with liquid coal in a discussion with CNN’s Glenn Beck. Beck is a self-described “big dumb rodeo clown” who believes the United States is a “suicidal superpower” for not turning coil into gasoline:
This can be done — coal to oil — at $55 a barrel. That’s about half of what we are paying right now for oil. We can have cheap oil that is actually good for the nation because it is all home grown. We’re sitting … just Montana is the Saudi Arabia of coal.
Montana does indeed have vast coal reserves. But coal-based fuel is in fact a dangerous and expensive prospect once the high costs of its pollution are factored in — especially its carbon dioxide global warming emissions.
Velshi then noted that his “clean coal” boosterism has raised questions about his journalistic integrity:
Well you know, South Africa, most of the gasoline it uses is produced from coal. I did something on this the other day and the number of e-mails and comments I got about how I’m shilling for the coal industry . . .
After Beck scoffed, “Oh please,” Velshi then made his most accurate pronouncement about coal to date:
I don’t think it’s clean. It’s not cleaner. It just happens to not be oil.
Glenn Beck — whose response to the threat of climate change is to complain that polar bears eat people — was terribly alarmed by Velshi’s moment of truth:
Now hang on just a second. We can sequester the CO2 now. We can make it cleaner than it has been.
In fact, there is not a single coal plant producing electricity or fuel that sequesters carbon dioxide anywhere on the planet. Although we definitely can make coal cleaner, the coal industry is doing everything it can to ensure that the American taxpayer foots the bill. If Velshi were truly interested in the economics of coal, he would host financial analysts that discuss the economic risks of coal power, not global-warming deniers like Glenn Beck.
Watch it:
Transcript: Read the rest of this entry »
McCain: Against the ‘100 Years’ Before He Was For It
McCain: Against the ‘100 Years’ Before He Was For It
What to make of newly unearthed quotes from 2005 John McCain, who, unlike 2008 John McCain, seems to have understood that a long term U.S. military presence in Iraq was neither desirable nor workable. Back then, McCain straight talked that, not only could we get along without a permanent U.S. bases in Iraq, but that “one of our big problems has been the fact that many Iraqis resent American military presence”:
I would hope that we could bring them [the troops] all home…I would hope that we would probably leave some military advisers, as we have in other countries, to help them with their training and equipment and that kind of stuff.
Watch it:
McCain expressed similar sentiments in November 2007, telling Charlie Rose that he didn’t think that the South Korea analogy was a good one, which is what he thinks now. In other words, back then, he was making some sense. Since then, however, McCain has dug in under his infamous “100 years” comments, insisting that a century-long military presence in Iraq is an appropriate goal of American foreign policy, studiously ignoring or denying the fact that that presence is one of the main drivers of violence in Iraq.
This gets to the serious questions that exist over McCain’s claim of foreign policy as his area of greatest expertise. Or, as Tim Dickinson puts it, “the only game he’s got.” How does McCain’s foreign policy “game” square with the strategic confusion revealed in his flip-flopping on an Iraq troop presence?
Although John McCain’s March 26 foreign policy speech was widely praised initially, some analysts have realized upon closer inspection that, leaving aside a few head-fakes toward responsible multilateralism, the speech is essentially a manifesto for an even more activist and belligerent American foreign policy than George W. Bush’s.
Newsweek’s Fareed Zakaria wrote that “the neoconservative vision within the speech is essentially an affirmation of ideology.”
It places the United States in active opposition to all nondemocracies. It proposes a League of Democracies, which would presumably play the role that the United Nations now does, except that all nondemocracies would be cast outside the pale. The approach lacks any strategic framework…How would the League of Democracies fight terrorism while excluding countries like Jordan, Morocco, Egypt and Singapore?…Dissing dictators might make for a stirring speech, but ordinary Americans will have to live with the complications after the applause dies down.
Exactly right. No politician ever lost an American election by praising democracy and condemning oppression, but many thousands of Americans have lost their lives as a result of policies by politicians who assumed that admirable and airy sentiments were the equivalent of workable doctrine.
The real question, of course, is what policies one proposes to achieve those ends, and it’s in this area that neoconservatism has utterly and demonstrably failed in each and every particular. The last seven years of Bush have shown how destructive big and bold-sounding ideas can be in the hands of a president with no good idea of how to implement them.
CNN’s Velshi Promotes Coal: I’m Not Even As ‘Clean’ As Coal When I ‘Get Out Of The Shower’
CNN’s Velshi Promotes Coal: I’m Not Even As ‘Clean’ As Coal When I ‘Get Out Of The Shower’
Previewing his interview with the CEO of Sasol, a South African company that produces coal-based liquid fuels, chief business correspondent Ali Velshi admitted on CNN’s American Morning on Friday that “There are issues with coal,” but minimized its problems:
There are issues with coal. It’s not the cleanest thing in the world. You see the signs for clean coal, 99 percent clean. I’m not 99 percent clean when I get out of the shower. . . I just look clean.
Watch it:
Velshi’s hygiene is his own business, but it’s no secret that coal is a dirty fuel and Velshi’s “99 percent clean” is false:
– The misleading “clean coal” ads from the coal-industry front group ACCCE only claim that “today’s coal-based generating fleet is already 70 percent cleaner based upon regulated emissions per unit of energy produced.”
– The “70 percent” baseline is from 1970 and only refers to air pollutants covered by the Clean Air Act, not water and land pollution or greenhouse gases like carbon dioxide.
– Because coal use has more than tripled since 1970, total pollution from coal plants has increased. In fact, in 2004 the Clean Air Task Force found coal-plant pollution “cuts short the lives of nearly 24,000 people each year.”
Velshi has now used his position to repeatedly promote coal-to-liquids technology and minimize its problems. Perhaps he wasn’t kidding when he said, “I only look clean.”
Transcript: Read the rest of this entry »