US Economy Worse Than Expected
June 26, 2013
A dramatic downgrade of U.S. economic growth in the first quarter revealed the economy’s lingering weakness, exposed the folly of Washington’s austerity obsession and slapped the Federal Reserve’s newfound optimism right in the face.
Gross domestic product grew at just a 1.8 percent annualized pace in the first quarter, the Bureau of Economic Analysis said on Wednesday, revising down its earlier estimate of 2.4 percent growth. Economists had expected no change in the BEA’s third effort at estimating GDP, and such sharp revisions are rare in a third estimate.
The first quarter’s dismal growth was at least better than the 0.4 percent GDP growth of the fourth quarter of 2012. But it was still far from healthy, and economists don’t see it getting much stronger any time soon. Paul Edelstein, director of financial economics at the research firm IHS Global Insight, now estimates the U.S. economy will grow by just 1.6 percent this year, down from an earlier estimate of 1.8 percent. That is well below the economy’s long-term average growth rate of 3 percent or so. It means the economy is vulnerable to shocks and that it will be much more difficult to bring unemployment down quickly from 7.6 percent.
Nevertheless, the Fed recently announced plans to slow down the pace of its bond-buying program known as “quantitative easing,” in the belief that the economy and job market will bounce back by the end of the year.
That sunny view always seemed strange, and financial markets clearly didn’t buy it. Now it is even more questionable.
“This report is a reminder that the economy is not out of the woods,” independent economist Robert Brusca wrote in an email. “We will need a lot of magic to drop the unemployment rate as the Fed members see, given the sort of economic growth that seems to be percolating. Good luck with that.”
One big drag on growth in the first quarter was a sharp downward revision in the growth rate of consumer spending, to 2.6 percent annualized from an earlier estimate of 3.4 percent. Consumer spending makes up about two-thirds of total U.S. GDP and was likely hampered by an increase in payroll-tax withholding that took effect at the start of the year. Hourly pay for U.S. nonfarm workers suffered its biggest drop on record in the first quarter, the government announced earlier this month. That took an obvious toll on spending.
That payroll-tax hike was part of a deal to help the economy avoid falling entirely off what was known as the “fiscal cliff,” an assortment of tax hikes and spending cuts that Congress and the White House set up to punish themselves for failing to reach a Grand Bargain on budget deficits — a bizarre obsession anyway, in the middle of a stagnant economy.
Though the full fiscal cliff would probably have been even more damaging, the fiscal-cliff “solution” was not a whole lot better, involving several painful austerity measures, including the payroll-tax increase and the draconian budget cuts of the “sequester,” that will likely shave 1.5 percent from GDP growth this year, economists estimate.
Federal government spending shrank at an 8.7 percent annualized rate, on top of a 14.8 percent contraction in the fourth quarter, subtracting nearly 0.7 percentage points from total GDP growth. The U.S. government has been cutting spending for most of the past two years, at the fastest pace since the end of the Vietnam War, despite the shaky recovery from the Great Recession.
Weak demand has kept businesses anxious about hiring and expanding. Business investment grew at just a 0.4 percent rate in the first quarter, contributing nearly nothing to GDP growth.
One Step….Two Step
December 5, 2012
Does everyone know how to do….
The one step….. two step?
Tim Geithner presented the….
Democratic
Reach for the sky
Fiscal cliff solution
That landed like a lead balloon
It was the same offer from 2011
I guess it took them a long time
To come up with that?
The Republicans huddled and….
Went to their files
And pulled out their proposal
From…..
2011.
That is what I call progress
It has been 1 month since
The presidential election….
And these are my sins….
We are still back in 2011.
I have been reading a lot about this topic
Since Finance is my bag
Nobody wants to pay more taxes….
But the Government cannot
Continue to spend
33% more than they take in.
Raising the taxes from 35% to 39% for
The 2% highest earners
Is mostly symbolic
That does not mean they will actually
Be paying higher taxes
Without touching the deductions and loopholes
They will still be paying
14%
In order to increase revenue
You can’t just increase the rates
You have to close loopholes
That would bring in more revenue
Taxing the highest earning 2%
Will not solve the deficit issue
It only scratches at the surface
We are going to have to stick our heads
Into unchartered waters
When social security was started
The retirement age was 65 years old
The average life expectancy was
69 years old
The program was set up with the intention
That it had to provide benefits
On average for about 4 years
The average life expectancy today
Is 84 years old
That means that…..
Social Security is now expected
To cover
On average
A span of 19 years
Not…….4 years
Can you see why there
May be a problem
With this program
We all pay into it….
But as the boomers age
The support base diminishes
Where can we possibly look to
Save money in the budget
Let’s take a quick look at defense spending
1974
That was the last time we saw…
The defense budget under
$100 billion dollars
By the year 2000
The defense budget grew to
$372 billion dollars
That took 26 years
In a mere 12 years
2000 – 2012
The Defense Budget
Has more than doubled
And comes in at
$816 billion dollars
I think we can possibly find
Some savings there?
There has been a lot of talk about
Health Care
Currently the US spends
About 18% of GDP
On Healthcare
Other comparable nations spend
On average about 12%
A recent study by
Harvard Business Review states
“The proper goal for any health care delivery system
Is to improve the value delivered to patients.
Value in health care is measured
In terms of the patient outcomes
Achieved per dollar expended.
It is not the number of different services provided
Or the volume of services delivered that matters
But the value.
More care and more expensive care
Is not necessarily better care.”
Studies show that savings in Health Care cost
Can range from $700 billion to $1 Trillion dollars
Just by increasing the
Efficiencies of service.
These are just a couple examples
Every program should be reviewed
I believe there will be
A lot of finger pointing
While the Government works
Towards a solution
But it is in the best interest
Of all concerned
That a compromise
Is made
True saving can be found
In all programs
Without effecting
The integrity of any program
America is here for the long term
We just have to make smart decisions
To make sure we remain the
Beacon of light
That all other countries look
To emulate
Bill Clinton’s Stunning Jobs Claim At DNC Actually True
September 6, 2012
The Huffington Post |
Former U.S. President Bill Clinton highlighted a stunning fact during his speech at the Democratic National Convention on Wednesday: Democratic presidents have overseen the creation of nearly twice as many jobs as Republican presidents since 1961.
“What’s the job score? Republicans, 24 million; Democrats, 42 [million],” Clinton said to cheers and applause.
Bloomberg Government first reported these figures in May, after analyzing growth in private-sector jobs since 1961.
On Wednesday, Clinton used the figure to justify Democratic policies.
“It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics,” Clinton said. “Why? Because poverty, discrimination and ignorance restrict growth. When you stifle human potential, when you don’t invest in new ideas, it doesn’t just cut off the people who are affected; it hurts us all.”
That said, Democratic presidents may not be able to take all the credit for the private-sector jobs created during their tenure. After all, the economy saw a big boost under Clinton in part because of the technology boom and stock market bubble that resulted — Clinton arguably was just in the right place at the right time.
Presidents’ economic policies clearly play some role in the job growth that results while they’re in power, however. And on that measure, both President George W. Bush and President Barack Obama have performed very poorly. An average of 63,500 jobs were created per month during Bush’s tenure, according to Labor Department data. Under Obama, an average 62,500 jobs have been created per month when taking into account job losses at the beginning of his tenure.
Presidents of both parties have implemented policies that may have stifled job growth for future presidents. For example, it was Clinton who repealed the Glass-Steagall Act, which had separated investment banking from consumer banking. Some say the repeal of Glass-Steagall played a major role in the financial crisis, since it helped allow banks to become too big to fail.
The subsequent financial crisis also happened on Bush’s watch, and Obama has been saddled with much of the job wreckage that resulted.
Unemployment Insurance Cuts Come After Tax Cuts: Report
August 3, 2012
As reported in Huffington Post
WASHINGTON — In March, the commissioner of Georgia’s Department of Labor, Mark Butler, explained how the state’s unemployment insurance trust fund had gone broke.
“In an attempt to curry favor with Georgia businesses, Gov. Roy Barnes declared a ‘tax holiday’ before Barnes’ failed 2002 re-election campaign,” Butler wrote. “Businesses stopped paying into the trust fund. By the time we hit the Great Recession –- and many, many Georgians became unemployed through no fault of their own — the $2 billion Unemployment Insurance Trust Fund had been reduced by $1.3 billion.”
“Plainly speaking,” Butler added, “Georgia had not saved for that rainy day.”
Georgia lawmakers agreed to much of Butler’s plan to restore the trust fund to solvency — cutting the duration of benefits in an effort to save money. The legislature also modestly increased the amount of wages subject to the state payroll taxes that fund the unemployment system.
While the cuts to unemployment benefits were relatively drastic, the tax cutting that preceded them was typical. Most states failed to make prudent decisions about funding their unemployment trust funds over the years, according to a comprehensive report from the National Employment Law Project, a worker advocacy group.
States now owe $43 billion to the federal government, according to NELP policy analyst Mike Evangelist, and it’s likely lawmakers will rely more heavily on benefit cuts than tax hikes in order to get out of debt.
“Over the past 30 years, support for accepted norms in the UI program has been systematically eroded, with state lawmakers now more willing to go after long‐standing features of the program, such as the duration of state benefits or suitable work protections that were previously seen as untouchable,” Evangelist wrote in the report.
Businesses pay both state and federal unemployment taxes for each worker on payroll — state taxes fund the first 26 weeks of benefits for laid off workers, and federal taxes pay for extra benefits that Congress puts in place during recessions. When a state unemployment trust fund runs dry, the state can borrow from the federal government to pay benefits. If a state borrows for too long, federal payroll taxes go up.
When under pressure to refill trust funds, it used to be that state lawmakers would seek savings by tightening eligibility rules. But this year Georgia joined six other states states that had cut the standard 26 weeks duration of benefits for the first time ever. While each state differed in how they cut benefits, Georgia put benefits on a sliding scale that goes up and down with the state’s unemployment rate. When the rate goes down, the duration of benefits could be as low as 14 weeks. The upper limit is 20 weeks.
The states were strapped for cash because tens-of-millions of additional people filed claims, but also because of tax cuts.
According to Evangelist, 31 states cut unemployment taxes 20 percent or more between 1995 and 2005. And from 2000 to 2009, the overall percentage of wages subject to state unemployment taxes fell to the lowest level in the history of the federal-state unemployment system. In 2007, states were collectively $38 billion shy of recommended trust fund reserves.
Doug Holmes, an unemployment insurance expert who advocates for businesses, suggested states would be unwise to try and meet funding thresholds “because to do so would require dramatic increases in state unemployment taxes that would place these states in an uncompetitive position to attract and keep businesses in their states.”
It’s unlikely states will want to hike taxes to pay for unemployment, Evangelist wrote in his report. “Realistically, it is unreasonable to believe that states will close this gap without doing further harm to the UI program’s ability to sustain unemployed workers and their families through periods of temporary job loss.”
New Jersey…Is at it Again
June 18, 2012
Did I ever tell you the story
About trying to renew
My NJ plumbing license seal
It was old and needed to be
Replaced.
Do you have about an hour?
It is wayyyy tooooooo long of a story
Without going into details
Let me just say
After many phone calls
It only took the State a year
To mail out my new
Plumbing seal
Now the State is treading on sacred ground
Each year in late July or early August
The State of New Jersey
Mails out the
New Jersey Employer Contribution Reports
To all New Jersey Employers
This form shows you how the State
Calculates your new
Unemployment Tax rate
For the next 12 months.
You have to stay with me here…..
The form shows how much
Your Company has paid
Into the unemployment fund
Since inception
It also shows the total amount of
Unemployment claim dollars
The Company has paid out
Since inception
Confused yet?
Keep reading
The bottom line
Shows your reserve balance
Or
How much money is left
In your account
To pay
Future claims
Alright….. take a breath
To determine your new rate
The State looks at your
Reserve balance
The State also looks at your
3 year taxable wage base
And your
5 year taxable wage base
Guess which Taxable Wage Base
The State picks?
If you said the higher number…..
You would be correct.
Well….
Guess what?
New Jersey will not be mailing out the
New Jersey Employer Contribution Reports
Any longer
You will now have to go online…
Set up an account…
And look up the information…..
Yourself
Did I miss that memo?
Did you miss that memo?
I bet you did not know that
Unemployment is the 2nd highest
Employer mandated tax by the government
It is the only tax
That you are able to manage
You do have the ability to manage
What rate your company is assigned
And
What dollar amount will be
Paid into the account
For the next 12 months
Did you know
That the national average
For the overpayment of an
Unemployment claim is
Over 10%
That means the State may be paying
The wrong amount for an unemployment claim
And the money is
Coming out of your account
How do you even know your
Unemployment Rate
Is correct?
How do you know if your
Reserve balance
Is correct?
This is one of the services
HBS provides
We serve as a public advocate for
Our clients
We hold the state responsible
We verify the assigned rate
Is correct
We manage the payment of claims coming
Out of your account
Auditing each claim payment
Verifying it is the correct amount
For companies with over 100 employees
The cost savings to
Manage your unemployment account
Can be seen within the first year
With the unemployment fund depleted
Now more than ever
Companies should be taking steps to
Manage their unemployment accounts
To learn more contact george@hbsadvantage.com
Visit us on the web www.hutchinsonbusinesssolutions.com
Written by Alexander Eichler Reported in Huffington Post
What does it mean to be poor?
If it means living at or below the poverty line, then 15 percent of Americans — some 46 million people — qualify. But if it means living with a decent income and hardly any savings — so that one piece of bad luck, one major financial blow, could land you in serious, lasting trouble — then it’s a much larger number. In fact, it’s almost half the country.
“The resources that people have — they are using up those resources,” said Jennifer Brooks, director of state and local policy at the Corporation for Enterprise Development, a Washington, D.C., advocacy group. “They’re living off their savings. They’re at the end of their rope.”
The group issued a report today examining so-called liquid asset poverty households — the people who aren’t living below the poverty line, but don’t have enough money saved to weather a significant emergency.
According to the report, 43 percent of households in America — some 127.5 million people — are liquid-asset poor. If one of these households experiences a sudden loss of income, caused, for example, by a layoff or a medical emergency, it will fall below the poverty line within three months. People in these households simply don’t have enough cash to make it for very long in a crisis.
The findings underscore the struggles of many Americans during what has often seemed like an economic recovery in name only. While the Great Recession officially ended more than two years ago, unemployment remains high and wages have barely budged for most workers. For more people, whether they draw a paycheck or not, a life free of deprivation and financial anxiety seems perpetually out of reach.
That’s not to say that everyone who is liquid-asset poor spends all their time fretting. On the contrary, because many have regular paychecks coming in, they may not grasp the precariousness of their situation.
Rothstein, who also serves on a steering committee at the Corporation for Enterprise Development, told The Huffington Post that payday lenders — who loan money to desperate borrowers at high interest rates, drawing people into hard-to-escape cycles of debt — are “a huge problem” in Ohio, as in many other states. People often turn to payday lenders to cover one-time, unexpected expenses, but can end up in a long and costly relationship.
“People say things like, it’s just one mechanical problem with their car,” said Rothstein. Before they know it, he said, “every other week, they’re back at the payday lending shop.”
The Corporation for Enterprise Development findings echo other recent studies showing that many Americans are ill-prepared for financial emergencies. Analysts said the reasons include flat wages, the high cost of medical treatment and the nationwide drop in housing values leaving homeowners with less wealth than they believed they had.
Andrea Levere, the president of Corporation for Enterprise Development, told HuffPost that greater financial literacy might have helped prevent the current situation.
People can “graduate high school and not know how to write a check,” Levere said, adding that an increased emphasis on personal responsibility for budgeting and spending sould be an important part of any step forward.
At the same time, Corporation for Enterprise Development officials were quick to argue that public policy needs to address the scope of the problem. Levere cited the example of asset limits in public benefit programs, which restrict services like food assistance and public health insurance to households with few or no assets — a policy that critics say denies help to many people in need.
“In some cases,” said Levere, “it means they can’t even own a car that is in good enough shape to get them to work.”
Brooks agreed. “A family that loses its job, that was maybe solidly middle class, in a state where they have restrictive asset tests, is going to have to liquidate all their assets, all their savings for the future” in order to qualify for benefits.
The report maintains that there are a number of measures that could alleviate liquid asset poverty, from strengthening consumer protections against payday lenders to making greater assistance available to first-time homebuyers. Levere said even minor policy adjustments could have “revolutionary implications.”
“There’s a lot of ways forward. It doesn’t mean it’s not tough,” Levere said. “I’m a great believer in one step at a time.”
Payroll Tax Cut Bill: House Rejects Senate Extension
December 20, 2011
As reported in Huffington Post
WASHINGTON — House Republicans on Tuesday rejected a Senate bill that would have prevented a payroll tax cut from expiring on New Year’s Day, saying they wanted a year-long extension or no extension at all.
House Republicans accomplished that with a convoluted motion to reject a Senate compromise that would have extended the 2 percent payroll tax break for two months, voting 229 to 193 to send the measure to a conference committee.
Seven Republicans voted with Democrats, and no Democrats crossed the aisle. They were Reps. Charles Bass (R-N.H.), Jeff Flake (R-Ariz.), Chris Gibson (R-N.Y.), Jaime Herrera Beutler (R-Wash.), Tim Johnson (R-Ill.), Walter Jones (R-N.C.) and Frank Wolf (R-Va.).
Senate leaders also were hoping for a year-long deal, but sources told The Huffington Post that Republicans and Democrats could not agree on how to fund about half of the $200 billion needed to pay for the bill for a full year. The measure would also extend unemployment insurance benefits and would prevent a 27 percent cut to Medicare payments to doctors with a “doc fix” provision. Those also expire Jan. 1.
So instead, the Senate voted 89 to 10 on Saturday for a two-month extension to buy time to bridge the gap. The upper chamber then recessed, apparently confident that Senate Minority Leader Mitch McConnell (R-Ky.) had the go ahead from House Speaker John Boehner (R-Ohio) to cut a deal.
But Boehner’s members rebelled against the bill, even with 39 Senate Republicans backing it, and scrambled to oppose it. At first, the GOP had set a vote on the bill, but late Monday changed it to an unusual motion to reject the Senate compromise. If they had held the first vote, and it had passed, the bill would have gone straight to President Obama.
But under the new version, House leaders accomplished their goal of sending the bill to a conference committee instead, even though Senate and House Democratic leaders insist they will not appoint members to the committee.
“The Republican majority in this House of Representatives is refusing — it is refusing to allow a vote in this House on the Senate bipartisan compromise,” said Rep. Chris Van Hollen (D-Md.). “What are they so afraid of? It is very clear that the Republican leadership is afraid that the same bipartisanship that took place in the Senate will take place right here in the House… otherwise we’d have a vote on it.”
Republican leaders insisted they were preventing a vote to pass the Senate deal because approving a bill for just two months creates uncertainty. They cited a payroll business trade organization that said a two-month extension is problematic for electronically processed payrolls.
And they contended that the sides were “90 percent” of the way to a deal, even though $100 billion separated the GOP and Democrats in the Senate. The original version of the House bill also adds a string of “poison pill” riders on top of the differences over funding. Democrats initially wanted to tax the rich to pay for the bill, but dropped that surtax in the compromise.
“We need to come together in a responsible manner to find common ground,” said House Majority Leader Eric Cantor (R-Va.).
Cantor and others argued that the Senate had only been interested in going on vacation.
“We stand ready to work over the holidays to get this done,” said Rep. Jeb Hensarling (R-Texas). “That’s the question, are you willing to work over the holidays, or are you not willing to work over the holidays,” Hensarling said, suggesting that Democrats need to watch Schoolhouse Rock to figure out how Congress’ conference committees work.
Democrats didn’t buy it, and none budged to the GOP side, even though at least a handful usually do.
“If you’re so sure of your argument, why not vote on the Senate bill?” asked Rep, Sander Levin (D-Mich.), the top Democrat on the Ways and Means Committee. “Because everything you said is a smokescreen,” he said.
The House could still hold a separate vote directly on the Senate bill if GOP leaders relent.
However, they seemed intent on trying to make the president or Democratic leaders blink on their position, and restart negotiations.
Democrats insisted they would not budge, leaving the Senate bill as the only standing proposal.
“It is unconscionable that Speaker Boehner is blocking a bipartisan compromise that would protect middle-class families from the tax hike looming on January 1st – a compromise that Senator McConnell and I negotiated at Speaker Boehner’s own request,” Senate Majority Leader Harry Reid (D-Nev.) said in a statement just after the vote.
“I would implore Speaker Boehner to listen to the sensible Senate Republicans and courageous House Republicans who are calling on him take the responsible path, and pass the Senate’s bipartisan compromise,” Reid added. “I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then.”
GOP Policy Riders Complicate Year-End Spending Bill In Congress
December 8, 2011
As reported in Huffington Post 12/08/11 by Andrew Taylor
WASHINGTON — Conservative flashpoint issues from abortion and abstinence education to President Barack Obama’s health care law are the biggest obstacles to Congress completing a massive year-end spending bill next week that would keep the government running through next September.
Going into end-game negotiations this weekend on the $900-plus billion bill, Republicans expect to lose on most of the policy provisions, or “riders,” they added to House versions of the must-do spending measures. But the White House and Democrats are poised to make concessions on some environmental rules, wetlands regulations and, in all likelihood, on continuing a ban on government-funded abortions in the nation’s capital city.
“We’re meeting heavy resistance from the White House and Democrats in the Senate,” said House Appropriations Committee Chairman Harold Rogers, R-Ky., who is pressing for provisions to help the coal industry. “So, we’ll get as many as we possibly can.”
Among most popular targets for Republicans are environmental regulations they say hamper the economy, such as proposed Environmental Protection Agency rules on coal ash, large-scale discharges of hot water and greenhouse gases from electric power plants, and emissions from cement plants and oil refineries.
If past is prologue, most of the issues will end up on the chopping block. That’s what happened last spring during negotiations on a spending bill for the budget year that ended in September.
“There’s a lot of opposition to these and they know they need Democratic votes in the House to pass it,” said Rep. Norm Dicks of Washington, senior Democrat on the Appropriations Committee. “So we have made this very clear to the other side. … If you expect our votes you’ve got to get rid of the controversial riders.”
But some riders will be needed to win GOP support for the measure in votes next week. And many of the provisions are important to powerful members of the appropriations panel in both parties.
“We don’t want to be wholly inflexible,” said Rep. James Moran of Virginia, top Democrat on the spending panel responsible for the EPA’s budget. That measure is studded with riders.
“Virtually every rule the EPA has come up with, they’re trying to come up with a rider to stop it,” said Scott Slesinger, legislative director of the Natural Resources Defense Council.
For coal interests, there is a rider to block clean water rules opposed by mining companies that blast the tops off mountains as well as a rider to block proposed labor rules to limit miners’ exposure to coal dust, which causes black-lung disease. Electric utilities would benefit from delays of rules on traditional air pollution and emissions of carbon dioxide. Painting contractors would benefit from a delay in a 2008 rule that requires them to be certified by the EPA in order to remove lead paint.
“We’re pretty clear that we find these riders as unacceptable,” said Sen. Jack Reed, D-R.I. “We’re being very emphatic.”
On social issues, there are proposals to ban needle exchange programs that help stem the spread of HIV among drug users; cut off federal funding to Planned Parenthood, the nation’s leading provider of abortions; and adopt an abstinence-only approach for grants to reduce teen pregnancy.
Those riders, in addition to GOP efforts to block implementation of the new health care law – a nonstarter with Democrats and the White House – are among the reasons the labor, health and education chapter of the omnibus spending measure is at risk of being left out of the final bill.
“It’s from soup to nuts,” said Rep. Rosa DeLauro, D-Conn. “They just designed an ideological agenda.”
In addition to proposing to eliminate federal family planning funding, Republicans would block the District of Columbia government from providing abortions to poor women, which is a top priority of anti-abortion activists.
The D.C. abortion rider was in place when Republicans controlled the White House but was lifted after Obama took office. He reluctantly agreed to reinstate the funding ban this year, prompting Washington’s mayor and city council members to march on Capitol Hill. Democrats continue to fight the rider, but GOP leaders are likely to insist on it.
At the same time, Republicans are trying to reverse a loss earlier this year when they tried to block taxpayer money from going to Washington’s needle exchange program.
Some of the riders aren’t contentious. For instance, even though the EPA has no interest in regulating methane emissions from cow burps and flatulence, there’s a rider to block the agency from doing so. That’s fine with Democrats.
Then there are riders that have no practical effect but set a precedent that agencies would prefer to avoid. One would block the EPA from officially delineating any new wetlands in counties affected by flooding this year. It turns out that the agency has no plans to do so, so this might be a rider Democrats and the White House would accept.
Another battle involves an attempt to block the Obama administration’s 2009 policy lifting restrictions on travel and money transfers by Cuban-Americans to families remaining in Cuba. That provision drew an explicit Obama veto threat earlier this year and will probably be dropped in end-stage negotiations.
The White House warned last week it’ll play a strong hand in trying to keep the final measure as free of riders as possible. “There should be no miscalculation about the intensity of (Obama’s) feelings,” White House budget director Jacob Lew told reporters.
Reported by Sam Stein
WASHINGTON — As the United States Senate considers yet another variation of the payroll tax cut, there appears to be little common ground over how the measure should be paid for. Democrats, along with one Republican, continue to argue for a small surtax on millionaires. Republicans either balk at that proposal or say they don’t support extending the payroll tax cut at all.
The impasse is unlikely to be bridged by the time the newest bill comes to the floor on Thursday, leading operatives to suggest that it would simply be easier to pass the payroll tax cut extension without paying for it.
Longtime anti-tax advocate Grover Norquist said he would prefer to see the tax cut accompanied by an equivalent reduction in spending to make up for the decrease in revenue. He and other conservatives said that if spending offsets do not accompany the tax cut, it would be harder for Democrats to argue against other such tax cuts, including a repatriation holiday on corporate taxes.
“No to a tax increase, yes to extending it without a quote, unquote ‘pay for,’ and the preference is to do it with spending cuts as the offset,” said Norquist. “The worst thing you can do would be to extend it with a permanent job-killing marginal tax increase. You would end up with permanent marginal tax rates in exchange for a temporary reduction in tax rates on Social Security.”
When the payroll tax cut was first introduced at the end of 2010, there was no talk about how it would be offset. Instead, it was passed as part of an agreement to extend the Bush tax cut for an additional two years. The estimated $860 billion price tag was simply put on the books.
So why not do the same now, when the price tag is significantly lower — $185 billion to reduce the employee’s share from 4.2 percent to 3.1 percent of wages, along with other tax policy changes — and Republicans have, as a matter of ideological principle, argued that tax cuts pay for themselves?
The question was posed to two senior Obama administration officials during a briefing with reporters yesterday. And while they continued to argue that there were easy ways to cover the payroll tax cut — while needling Republicans for suddenly insisting that tax cuts be offset — they never explicitly said it had to be paid for.
Reminded that, at least as far as unemployment insurance is concerned, the president has consistently held that such emergency expenditures don’t need to be offset, the official replied: “I don’t think the president’s longstanding position on that has changed. But there is a way of paying for it that was put forward in the American Jobs Act.”
And therein lies the problem. While both Republicans and Democrats privately admit that they have been and would be comfortable with letting tax cuts continue without offsets, neither will say so publicly, lest their commitment to deficit reduction be questioned.
Top congressional Republican aides argue that a payroll tax cut extension without offsets isn’t necessarily easier to pass than one paid for by a millionaire’s surtax. But the reasoning behind that argument has more to do with timing than philosophical disputes.
Congress will be voting on major appropriations bills before the Christmas recess. To have them turn around and stack $185 billion on the deficit would be too much to ask, the logic goes.
“The president said in his speech to Congress and in speeches since, that ‘everything’ in the bill will be paid for,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said in an email. “I think it will be MUCH easier to pass it if they take out the poison pill of a tax hike on job creators; a tax hike, by the way, that has bipartisan opposition.”
A top House aide was more blunt. “I don’t think either would pass the House,” the aide explained, when asked about a payroll tax cut extension without offsets and one that was paid for with a millionaire’s surtax. “So it’s a ‘would you rather burn to death or drown’ type of question.”
as reported in HuffingtonPost 11/30/2011
WASHINGTON — For the second year in a row, Congress must decide during the holiday season whether to renew federal jobless benefits for people out of work six months or longer. While Democrats have been making a huge fuss, with a press conference Wednesday featuring hundreds of unemployed workers, Republicans have been relatively quiet — but that doesn’t mean they’re against reauthorizing the benefits.
Republican leaders in both Houses of Congress have expressed support for continuing the benefits, saying the holdup is just a matter of how the legislation is put together.
“We’re going to be discussing between the House and Senate ways to deal with both continuation of the payroll tax reduction and unemployment insurance extension before the end of the year,” Sen. Mitch McConnell (R-Ky.) said Tuesday. “And in the end, it will have to be worked out in a joint negotiation between a Democratic Senate and a Republican House.”
If the benefits are not reauthorized, 1.8 million jobless will stop receiving checks over the course of January, according to worker advocacy group the National Employment Law Project. The federal benefits kick in for laid off workers who use up to six months of state-funded compensation without finding work. Congress routinely provides extensions during recessions and hasn’t dropped extended benefits with the national unemployment rate above 7.2 percent.
Yet the need to reauthorize benefits has been overshadowed by the looming expiration of a payroll tax cut put in place last December, which would result in a tax hike on every working American — an average hike of $1,000 — a scenario Republicans would like to avoid. And Congress also needs to pass a so-called “doc fix” by the end of the year to prevent a 27 percent cut in pay for doctors who see Medicare patients.
“Nobody is coming out with any definitive statements on [unemployment insurance]. Last year they were happy to,” Judy Conti, a lobbyist for NELP, told HuffPost. “I think it’s indicative of the fact that on a bipartisan basis people understand that workers families and the economy need these programs to continue.”
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Many members of Congress expected the deficit reduction super committee to craft a deal that included the benefits, but the committee turned out to be less super than advertised.
“Any kind of grand deal that we’ve been after has eluded us,” House Speaker John Boehner (R-Ohio) said Tuesday, referring to the failed broader talks on the budget and debt. “So let’s try and work incrementally towards a conclusion this session that can benefit all Americans. Because we Republicans do care about people that out — that are out of work. We don’t want to raise taxes on anybody. We want to provide the help to the physicians and the providers in the health care arena in this country, and we want to make sure this country has a sound national defense policy.”
Even Sen. Orrin Hatch (R-Utah), who suggested during a standoff on jobless benefits last summer that unemployed people blow the money on drugs, sounded sympathetic to jobseekers on Wednesday.
“Nobody really has a real quick answer. We’re studying it, looking at it. We’re clearly going to have to do something — nobody wants to see people suffer,” Hatch told reporters outside the Senate floor on Tuesday. “There’s a huge underemployment rate as you know, of 16, 18 percent, somewhere in that area. People don’t even want to look for jobs anymore. There oughta be some incentives to find jobs, to get to work. It’s easier said than done. I think there’s a general consensus that we need to help people.”
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