In the USA...Sen. Sherrod Brown: GOP cocoon is impenetrable to objective facts
By Eric W. Dolan
Tuesday, December 4, 2012 18:13 EST
Sen. Sherrod Brown of Ohio said Tuesday on the Bill Press Show that Republican presidential candidate Mitt Romney and his running mate were fed misinformation.
Despite claims that the race was neck-and-neck, Brown noted that President Barack Obama became the second Democratic president to receive more than 50 percent of the vote twice in Ohio. Franklin D. Roosevelt became the first Democratic president to achieve that feat in 1940.
“What’s really curious is what Republican pollsters were telling them,” Brown said. “Romney really did — I talked to Paul Ryan the other day, he really thought they were going to win, they were told that. This echo chamber for them has weaved this cocoon around them that is sort of impenetrable to objective information. It is pretty interesting.”
The Ohio senator faced millions of dollars in outside campaign spending, but still managed to keep his seat for another six years. Brown said his Republican challenger had frequently noted he was more liberal than self-avowed socialist Sen. Bernie Sanders (I-VT).
“You don’t need to move to the center, you don’t need to talk mishmash and cloud the issue, you talk directly and voters appreciate it,” he added.
Click to watch: http://www.youtube.com/watch?feature=player_embedded&v=C67ZiiTxo78
*************Right-wing misinformation leads half of Republicans to believe ACORN stole 2012 election
By Stephen C. Webster
Tuesday, December 4, 2012 16:45 EST
Nearly endless gobs of misinformation spewed from partisan media outlets in recent years had resulted in an astonishing achievement: 49 percent of Republicans now say that the disbanded community organizing group ACORN stole the 2012 presidential election for President Barack Obama, according to a survey by Public Policy Polling (PPP) released Tuesday.
The finding is especially stunning considering that ACORN, which stands for The Association of Community Organizations for Reform Now, filed for bankruptcy and disbanded in 2010. The group was targeted by conservative media prankster James O’Keefe in a series of intentionally misleading videos that purported to show employees explaining how to force children into prostitution. Then-Minority Leader John Boehner (R-OH) sponsored a bill in 2009 to pull all government funding of the group, which passed and led to their collapse.
Following Obama’s successful campaign against Sen. John McCain (R-AZ) in 2008, PPP found that a whopping 52 percent of Republicans said that the loss was ACORN’s doing — meaning 2012′s figures are only a marginal improvement.
The apoplectic response to Obama’s win over former Massachusetts Gov. Mitt Romney doesn’t stop with feeling robbed. PPP also found that 25 percent of Republicans said they no longer want to be American and would rather their state to secede from the U.S. than take orders from President Obama.
The disbelief is so thick one could almost taste it emanating from television sets across the country on Election Day. Despite all available evidence pointing to nearly insurmountable numbers for the president, most Republican pundits and pollsters swore right up until the race was called for Obama that it would be a Republican landslide.
Even the candidate and his wife were blown away by Obama’s decisive victory, according to reports. A Romney adviser told CBS following the election that the Republican candidate was “shellshocked” after the loss. Friends of Ann Romney also told The Washington Post that she was convinced it was her “destiny” to live in the White House, and hasn’t overcome fits of crying since Election Day.
Not even former Bush strategist Karl Rove, who’s long positioned himself as the party’s preeminent electoral guru, could escape the schadenfreude on Election Day, looking about ready to vomit on live TV as he frantically argued with Fox News’s own pollsters on whether Obama had actually won or not.
That level of buying-you-own-nonsense is perhaps best illustrated in the debate over so-called “birther” conspiracy theories about the president’s citizenship, which has never actually been in question. After years of Fox News and its occasional guests promoting the theories as a legitimate topic of discussion, a poll by MIT professor Adam Berinsky found more Republicans in September 2012 who believed that the president is not a citizen than during the months before the 2011 release of his long-form birth certificate. In all, Berinsky found that 73 percent of Republicans said they either don’t believe Obama is an American or they’re just not sure, up from 70 percent in April 2011.
****************Indiana lawmaker plans new attack on evolution
By Eric W. Dolan
Tuesday, December 4, 2012 20:34 EST
After failing to allow public schools to teach “creation science,” Indiana state Sen. Dennis Kruse (R) plans to introduce a bill in the next legislative session that would allow students to question the theory of evolution.
“I would call it ‘truth in education’ to make sure that what is being taught is true,” Kruse, the chairman of the Senate Education and Career Development Committee, told Indystar. “And if a student thinks something isn’t true, then they can question the teacher and the teacher would have to come up with some kind of research to support that what they are teaching is true or not true.”
The Tennessee legislature passed a similar bill earlier this year. The law permitted public school teachers to discuss the “scientific strengths and scientific weaknesses of existing scientific theories.” Critics said the law was intended to undermine theories like evolution by presenting them to students as if they were controversial among scientists.
The Discovery Institute, which advocates the teaching of a variation of creationism known as Intelligent Design, is reportedly helping Kruse draft his new bill.
The Indiana Senate in February passed Kruse’s legislation to allow “the teaching of various theories concerning the origin of life, including creation science” in public schools. However, Republican Indiana House Speaker Brian Bosma killed the bill, saying it would result in a costly lawsuit if passed.
*************Republicans cite abortion, home schooling to defeat UN disability treaty
By David Edwards
Tuesday, December 4, 2012 16:02 EST
Republican Senators on Tuesday voted to block a United Nations treaty that would have helped to protect disabled Americans — including veterans — while they are in foreign countries.
Thirty-eight Republicans voted no, giving them five votes more than necessary to defeat the United Nations Convention on the Rights of Persons with Disabilities treaty, 61 to 38.
At an event with former Sen. Rick Santorum (R-PA) late last month, Sen. Mike Lee (R-UT) announced that 36 Republicans had signed a letter pledging to vote against the treaty.
Lee told Senators on Tuesday that the treaty “threatens the right of parents to raise their children with the constant looming threat of state interference.”
“We all want to support the best interest of the the child, every child,” Lee said in a speech on the Senate floor. “But I and many of my constituents, including those who home school their children or send their children to private or religious schools, have justifiable doubts that a foreign U.N. body, a committee operating out of Geneva, Switzerland should decide what is in the best interest of the child at home with his or her parents in Utah or in any other state in our great union.”
Writing for World Net Daily on Monday, Santorum said the treaty had “darker and more troubling implications” and suggested that it would have meant the forced abortion his daughter because she has a rare genetic disorder.
“In the case of our 4-year-old daughter, Bella, who has Trisomy 18, a condition that the medical literature says is ‘incompatible with life,’ would her ‘best interest’ be that she be allowed to die?” he asked. “Some would undoubtedly say so.”
Conservative activist Phyllis Schlafly also warned in November that proponents were “using this treaty as an opportunity to promote their abortion agenda.”
Sen. John McCain (R-AZ), who suffered disabilities while fighting in Vietnam, insisted that that the treaty would have no effect on abortion laws in the United States.
“With respect to abortion, this is a disabilities treaty and has nothing to do with abortion,” McCain told his Republican colleagues in a Monday speech on the Senate floor. “Trying to turn this into an abortion debate is bad politics and just wrong.”
President George W. Bush’s administration completed negotiations of the treaty in 2006 and it was signed by President Barack Obama in 2009. It had been supported by veterans groups, the disabilities community and the business community.
A Yale University Study released earlier this year found that the majority of homeless veterans suffered from PTSD or other mood disorders.
December 4, 2012Praising Immigrants, Bush Leads Conservative Appeal for G.O.P. to Soften Tone
By JULIA PRESTON
WASHINGTON — Looking for new footing on immigration before a debate on the volatile issue in Congress next year, Republicans and conservative leaders spoke out this week, raising arguments that immigration is good for the ailing economy and consistent with family values.
Former President George W. Bush weighed back in to the discussion on Tuesday by calling on policy makers in Washington to revamp the law “with a benevolent spirit” that recognized the contribution of those who moved here from other countries.
Mr. Bush spoke at the opening of a conference highlighting the benefits of immigration hosted by an institute in Dallas that bears his name and by the Federal Reserve Bank of Dallas. He described immigrants as a bedrock of the nation’s economy, providing new skills and ideas while filling critical gaps in the labor market. But he also presented the question in more human terms in a state that has been a home to huge numbers of immigrants.
“Not only do immigrants help build our economy, they invigorate our soul,” Mr. Bush said. Growing up in Texas, he said, he had “the honor and privilege of meeting the newly arrived.”
“Those whom I’ve met love their families,” he said. “They see education as a bright future for their children. Some willingly defend the flag.”
Mr. Bush, who has remained largely out of the policy arena since leaving office, issued an appeal. “As our nation debates the proper course of action relating to immigration,” he said, “I hope we do so with a benevolent spirit and keep in mind the contributions of immigrants.”
His tone contrasted sharply with the prevailing views and language of Republicans during the presidential campaign, when Mitt Romney said he favored policies that would force illegal immigrants to “self-deport.”
In Washington, leaders of a coalition that unites conservative law enforcement officials and clergy with business leaders — they described themselves as “Bibles, badges and business” — held a strategy session Tuesday on how to push for a comprehensive overhaul of immigration laws, which would include “a road to lawful status and citizenship” for 11 million illegal immigrants.
While several of the conservatives meeting here had expressed their support for legalization measures, they sought to enhance their influence in the coming debate by joining forces.
President Obama, acknowledging the central role of Latino support in his re-election, has said he intends to start the immigration debate early next year. Already, groups that favor legalization are assessing whether they should push for a path to citizenship as well as an overhaul of the immigration system, which is widely regarded as dysfunctional.
Some organizations argue that taking the thorny issues in smaller parts would be more likely to produce results, particularly since many House Republicans remain opposed to any amnesty for illegal immigrants.
But Richard Land, the president of the Southern Baptist Convention’s policy arm, the Ethics and Religious Liberty Commission, said Tuesday at a news conference here that immigration was a “moral issue.” He warned Republicans that “if they want to be a contender for national leadership, they are going to have to change their ways on immigration reform.”
The Rev. Samuel Rodriguez, the president of the National Hispanic Christian Leadership Conference, the largest organization of Latino evangelicals, portrayed the Republicans’ dilemma in biblical terms. “They must cross the proverbial Jordan of immigration reform,” he said, “if they want to step into the promised land of the Hispanic electorate.”
The conservatives argued that the outcome of the election, in which Latinos gave Mr. Romney only 27 percent of their votes, should force Republicans to reconsider their support for enforcement-only policies that offer no path to legal status for illegal immigrants. They argued that an overhaul would also stop the breakup of Hispanic families by deportation.
The Rev. Luis A. Cortés Jr., the president of Esperanza, an organization based in Philadelphia that includes 13,000 Hispanic churches, said conservatives had misread Latinos in the election. “In this election, the Hispanic voter moved away from social values to family values,” Mr. Cortés said.
Sheriff Mark C. Curran of Lake County, Ill., which includes the Chicago suburb of Waukegan, said he had undergone “a conversion” on immigration since taking office. He said law enforcement officials should “be honest” in recognizing that the borders could not be secured without giving legal documents to immigrants already here.
Tuesday’s strategy session was called by the National Immigration Forum, which favors an overhaul.
Steve Case, a co-founder of AOL who now runs a firm that invests in start-up companies, told the session that immigrant entrepreneurs were vital to bringing innovation that had spurred American growth in the past. “The data says they are job makers, not job takers,” Mr. Case said.
But he said both parties in Congress should focus on results. “My view is it’s important to get as much done as we can as quickly as we can,” Mr. Case said.
Peter Baker contributed reporting.
December 4, 2012Unionizing the Bottom of the Pay Scale
By EDUARDO PORTER
Other than poverty, José Carrillo and Joshua Williams have little in common. The austere life of Mr. Carrillo, a 79-year-old Peruvian immigrant from Washington Heights, is a universe apart from the hardscrabble reality of Mr. Williams, a 28-year-old single father from Atlanta staying at his aunt’s place in Brooklyn to save on rent.
But their lives are connected. They both work in the fast-food industry — Mr. Carrillo at a McDonald’s in Midtown Manhattan and Mr. Williams at a Wendy’s in Brooklyn. They both earn a little more than $7 an hour. And they both need food stamps to survive. Last Thursday, both did something they had never done before: they went on strike.
Their activism, part of a flash strike of some 200 workers from fast-food restaurants around New York City, caps a string of unorthodox actions sponsored by organized labor, including worker protests outside Walmart stores, which, like most fast-food chains, are opposed to being unionized, and union drives at carwashes in New York and Los Angeles.
Labor unions are hoping that the unusual tactics, often in collaboration with social justice activists and other community groups, will offer them a new opportunity to get back on the offensive, helping to raise the floor for wages and working conditions in the harsh, ultracompetitive economy of the 21st century.
Mr. Carrillo’s and Mr. Williams’s meager salaries also underscore the straightforward choice we face as a nation: either we build an economy in which most workers can earn enough to adequately support their families or we build a government with the wherewithal to subsidize the existence of a lower class that can’t survive on its own. We are doing neither.
More than two million workers toil in food preparation jobs at limited-service restaurants like McDonald’s, according to government statistics. They are the lowest-paid workers in the country, government figures show, typically earning $8.69 an hour. A study by the Economic Policy Institute, a liberal-leaning research organization, concluded that almost three-quarters of them live in poverty. And they are unlikely to have ever contemplated joining a union.
On a full-time schedule, they could make a little over $18,000 a year, just about enough to keep a family of two parents and one child at the threshold of poverty. But full-time work is hard to come by. With fast-food restaurants increasingly using scheduling software to adjust staffing levels, workers can no longer count on a steady stream of work. Their hours can be cut sharply from one week to the next based on the business outlook or even the weather.
Orley Ashenfelter, a labor economist at Princeton, published a study earlier this year that captured the plight of workers under the Golden Arches in a novel way: measuring pay by the burgers a worker could buy for an hour of work, he calculated that the real wages of McDonald’s workers in the United States hit about 2.2 Big Macs an hour last year. That’s 15 percent less than in 2000.
Many economists will argue that concern about the lowly McJob is misplaced. These jobs offer a wage to people with no training or education. Mr. Carrillo, for instance, doesn’t speak English. “To get a better job at my age, you need a profession,” he says. To improve the lives of American workers, most economists argue, we might do better by focusing on education to equip them with the skills to perform more productive, better-paid jobs.
But this argument overlooks the fact that the McJob is hardly a niche of the labor market reserved for the uneducated few. Rather, it might be the biggest job of our future.
The American labor market has been hollowing out for decades — losing many of the middle-skilled, relatively well-paid jobs in manufacturing that can be performed more cheaply by machines or workers overseas. It has split between a high end of well-educated workers, and a low end of less-educated workers performing jobs, mostly in the service sector, that cannot be outsourced or mechanized.
This process is not expected to reverse any time soon. According to government statistics, personal care aides will make up the fastest-growing occupation this decade. The Economic Policy Institute study found that some 57 percent of them live in poverty.
This poses an existential question for labor unions, which are struggling because of the loss of union jobs to automation and stiff competition, both from cheaper labor in the mostly union-free South and developing nations around the world: can they do something to improve workers’ lot?
They have in the past. A recent study by the International Labor Organization concluded that low-wage work was rare where unionization rates were high. In countries where more than half of workers belong to a union, only 12 percent of jobs pay less than two-thirds of the middle wage, on average.
Still, there is little reason to believe that American labor unions can do much to lift the floor on wages in the future. Fewer than 7 percent of workers in the private sector are in a union. We have the largest share of low-paid jobs in the industrial world, amounting to almost one in four full-time workers, according to the International Labor Organization. And our rates of unionization continue to fall.
Union leaders know they are fighting long odds — hemmed in by legal decisions limiting how they can organize and protest, while trying to organize workers in industries of low skill and high turnover like fast food. But they hope to have come upon a winning strategy, applying some of the tactics that workers used before the Wagner Act created the federal legal right to unionize in 1935.
“We must go back to the strategies of nonviolent disruption of the 1930s,” suggests Stephen Lerner, a veteran organizer and strategist formerly at the Service Employees International Union, one of the unions behind the fast-food strike. “You can’t successfully organize without large-scale civil disobedience. The law will change when employers say there’s too much disruption. We need another system.”
In the 1990s and 2000s, the S.E.I.U. unionized tens of thousands of mostly Latino janitors from Los Angeles to Houston, including thousands of illegal immigrants, who were until then considered impossible to organize because of their legal status. It did so by putting pressure not only on the building maintenance contractors but also on the building owners who hired them, often resorting to bare-knuckle tactics. In 1990, the union asked members to mail their trash to Judd Malkin, the chairman of the company that owned buildings in the Century City complex in Los Angeles, printing his address on garbage bags. Mr. Malkin met Mr. Lerner soon thereafter.
The second part of the S.E.I.U.’s strategy was equally important. Rather than proposing a union contract for janitors as a narrow goal, the S.E.I.U.’s “Justice for Janitors” campaign framed the effort as a broad movement for the economic rights of low-wage workers. And the union rallied local politicians, community leaders and civil rights groups to their cause.
If unions alone may be powerless, the thinking goes, they can be powerful as part of a broader social movement. “We need workers to come together in formations they haven’t done before,” says Mary Kay Henry, who heads the S.E.I.U. “The tipping point is the entire low-wage economy.”
The odds that organized labor can tip the scales remain long, however. The S.E.I.U. did organize many janitors, but it did not stem the decline of unions across the economy. Despite the victories, janitors in the United States today earn about 10 percent less on average than they did in 1990, in inflation-adjusted terms.
Still, if employers can’t be swayed to take on more responsibility for the welfare of their workers, the burden will fall on taxpayers. To put it succinctly, the bottom 40 percent of families earn less than they did almost a quarter of a century ago. If that trend continues, we may need a much bigger government.
**************Krugman: Budget proposals ‘only considered serious if you inflict pain on vulnerable people’
By Eric W. Dolan
Tuesday, December 4, 2012 21:56 EST
Nobel Prize-winning economist Paul Krugman on Tuesday said it was “unfair” to accuse President Barack Obama of not putting forth serious reforms to Medicare amid the fiscal cliff negotiations.
Krugman noted on PBS’ Newshour that Obamacare seeks to reduce Medicare costs without affecting eligibility or benefits. The law is estimated to have provided $716 billion in savings by reducing payments to hospitals and insurers.
“He’s actually done more to bring down the cost curve for Medicare than anyone has ever done before,” Krugman remarked. “But in Washington, that is considered not serious because he’s not actually taking benefits away from people who need them. So, it’s a really weird thing. It’s only considered serious if you inflict pain on vulnerable people.”
Republicans have proposed reducing the cost of Medicare by raising the eligibility age. Currently, Americans can enroll in Medicare when they turn 65. Some Republicans have proposed increasing the eligibility age to 67 or 68.
But Krugman said that proposal wouldn’t bring much savings, because most seniors between 65-68 years old are relatively healthy.
“It makes almost no difference to the financial outlook,” he said. “But it’s cruel.”
Krugman said it was wrong to focus on Medicare and Social Security to reduce the federal deficit.
“All of these things that have occupied all our attention are not actually where the big bucks are. The big bucks are in making high-income people pay higher taxes and in actually addressing health care costs, which the Affordable Care Act does and none of the things that we’re talking about now will actually do.”
Click to watch: http://www.youtube.com/watch?feature=player_embedded&v=xIYclBVJe_s
**************Obama to Republicans: Raise taxes on rich or no fiscal cliff deal
By Agence France-Presse
Tuesday, December 4, 2012 19:13 EST
US President Barack Obama warned Republicans Tuesday there would be no deal on averting a potentially disastrous fiscal crisis without them caving in to his demand to raise tax rates on the rich.
But in an interview with Bloomberg TV, Obama offered a hint of wiggle room, declining to state that the top income tax rate must go up and permanently remain at the 39.6 percent level seen under the Clinton administration.
“We have the potential of getting a deal done,” Obama said, adding that Republican proposals to close loopholes and cap deductions would not produce sufficient revenue to make a serious cut in the deficit.
“We’re going to have to see the rates on the top two percent go up and we’re not going to be able to get a deal without it,” Obama said.
If Obama and Republicans cannot get a deal, George W. Bush-era tax cuts on all Americans will expire on January 1, at the same time as huge automatic spending cuts come into force, likely throwing the economy into recession.
Obama wants to extend tax cuts for most people, but raise rates on the richest two percent of Americans. Republicans want to extend all tax cuts for a year, then discuss spending cuts and tax reform to produce more revenues.
The president campaigned for re-election on the basis of raising taxes on the wealthiest Americans, while Republicans, though open to raising more revenue, refuse to do so by raising marginal tax rates.
“Let’s let the tax rates on the upper income folks go up,” Obama told Bloomberg, arguing that there was no time before the deadline to work out the comprehensive reform on taxes and social programs that Republicans want.
“Then let’s set up a process with a time certain at the end of 2013 or the fall of 2013 where we work on tax reform, (where) we look at what loopholes and deductions both Democrats and Republicans are willing to close.
“It’s possible we may be able to lower rates by broadening the base at that point.”
Obama noticeably did not commit himself to a specific top tax rate for the wealthiest Americans — which he defines as individuals earning $200,000 or families making $250,000 a year — either this year, or next.
Some analysts believe that the crisis over the so-called “fiscal cliff” could be defused by Republicans agreeing to raise the top tax rate, but to a point some way short of the Clinton-era rate.
Obama in return could offer cuts in entitlement spending and allow the closure of some tax loopholes to raise further revenue.
White House spokesman Jay Carney was later repeatedly pressed on whether Obama would draw a line in the sand and insist that tax rates for the rich must return to the 39.6 percent level permanently.
“It is his position that he will not sign an extension of the Bush-era tax cuts for wealthy Americans,” Carney said.
“Those tax cuts have rates for top earners at 35 percent, and if you do not sign an extension, the rates go back up to 39, the top rate,” he said.
Obama spoke a day after Republicans laid out a plan that proposed $1.2 trillion in government spending cuts over 10 years in areas like Medicare health insurance for seniors that did not include tax rises for the rich.
The president has offered an end to Bush tax cuts for the richest Americans and a plan to raise $1.6 trillion in increased government income and $600 billion in spending cuts.
But the top Senate Republican Mitch McConnell accused the president of failing to seriously negotiate, and implicitly of misreading the message of his re-election triumph last month.
“I would hope the president would turn off the campaign — congratulations, you had a great victory — and let’s get serious about dealing with this deficit and debt here at the end of the year,” McConnell said.
“We’ve wasted an enormous amount of time here sparring back and forth in public. It strikes me it’s a good time to get serious about the proposals.”
December 4, 2012In Tax Fight, G.O.P. Seeks a Position to Fall Back On
By JONATHAN WEISMAN
WASHINGTON — With President Obama insisting on higher tax rates for affluent Americans and winning public support for the idea, Congressional Republicans find themselves in an increasingly difficult political spot and are quietly beginning to look for a way out.
Senior Republican leadership aides say they are contemplating a fallback position since a standoff over expiring tax rates will be portrayed by Democrats as evidence that the opposition is willing to allow taxes to rise on the middle class to keep taxes from rising on the rich — and their intransigence could mean taxes go up on rich, poor and middle class alike.
The leadership officials now say that if no deal can be struck to avert the automatic expiration of all the Bush-era tax cuts and the onset of deep, across-the-board spending cuts, they could foresee taking up and passing legislation this month to extend the tax cuts for the middle class and then resume the bitter fight over spending and taxes as the nation approaches the next hard deadline: its statutory borrowing limit, which could be reached in late January or February.
“There’s always better ground, but you have to get there,” said Representative Michael C. Burgess, Republican of Texas, who made it clear he does not support allowing any taxes to rise.
Senator Olympia J. Snowe of Maine, who is retiring, joined a handful of other Republicans on Tuesday suggesting that Congress should pass the middle-class tax cut extensions now, then leave the fight over taxes and spending until later. Americans, she said, “should not even be questioning that we will ultimately raise taxes on low- to middle-income people.” Congress could take that off the table “while you’re grappling with tax cuts for the wealthy,” she said.
But any move toward compromise with Democrats on fiscal issues quickly comes under attack from conservatives as a surrender and unsettles the rank and file.
It is a dynamic that has haunted Speaker John A. Boehner throughout the 112th Congress, as he has repeatedly been caught between the imperative to govern and the need to satisfy the restive right. Mr. Boehner, of Ohio, has drawn fire this week for removing a handful of House Republicans who have defied the leadership from their preferred committee seats, a step he took to enforce party discipline.
Mr. Obama made clear on Tuesday in an interview with Bloomberg News that he was not going to budge on raising tax rates on income over $250,000. “We’re going to have to see the rates on the top 2 percent go up,” Mr. Obama said in his first interview since his re-election, “and we’re not going to be able to get a deal without it.”
Allowing an extension only of the middle-class tax cuts is just one possibility, and Congress may never get to that point if an agreement can be reached or if another alternative can be found. And it would be a bitter pill for Republicans to swallow since they have repeatedly called for an extension of all the expiring tax cuts, saying any increases could harm the economy.
But Republicans also know they have a problem: many liberal Democrats are more than willing to return to the Clinton-era tax code, and to allow across-the-board spending cuts to take effect, which disproportionately affect the military, rather than compromise too much with Republicans after the strong Democratic showing in the elections.
“It’s a terrible position because by default, Democrats get what they want,” said Representative James Lankford, Republican of Oklahoma, who admitted his party is boxed in.
In the debt ceiling fight, the tables might turn. Many conservative Republicans say they are willing to let the nation default if Congress refuses to cut spending. If the tax rate fight is resolved by the time the debt limit increase is needed, Democrats will find themselves without the leverage they now have with the expiration of the lower tax rates a certainty unless Congress acts affirmatively.
That is why in his opening bid to end the fiscal standoff, Mr. Obama proposed a permanent policy change to let the president raise the nation’s borrowing limit on his own — and why Senator Mitch McConnell of Kentucky, the Republican leader, reportedly laughed out loud at the idea.
Popular opinion seems to be running against the Republicans. Most Americans support higher taxes on the rich, and a poll by The Washington Post and the Pew Research Center released Tuesday found that 53 percent say Republicans in Congress would and should be blamed if Washington fails to reach a deal before January. Just 27 percent said Mr. Obama would deserve more blame, while 12 percent say both sides would share the blame equally.
Most Republicans do not want tax rates to rise on anyone, and such national polls have little sway over House members in districts drawn to favor one party over the other. In November, 204 Republicans — 88 percent of the House Republican Conference — won at least 55 percent of the vote, according to David Wasserman, a House analyst at The Cook Political Report. Thirty-five of them won at least 70 percent.
Speaker Boehner took as much fire from conservatives as from Democrats after proposing a deficit-reduction plan that would raise $800 billion in tax revenue over 10 years. Conservative advocacy groups and conservatives on Capitol Hill were united in their condemnation.
“One party proposes 800 billion in tax increases. In an effort to counter them and continue to be the ‘low tax, small government’ party, the other party’s leadership proposes ... wait for it ... 800 billion in tax increases,” huffed Senator Rand Paul, Republican of Kentucky, on his Facebook page.
Given the difficulty of compromise, a fallback may emerge as a top option. Republican leaders could take up legislation already passed by the Senate to extend tax cuts on income under $250,000, attach a deferral or cancellation of the automatic spending cuts, and give Mr. Obama nothing else, denying requests for increased infrastructure spending, help for homeowners to refinance their mortgages, and extensions of the payroll tax cut and unemployment insurance.
Then Republicans would demand deep concessions on spending and changes to Medicare and Social Security as a price to raise the debt ceiling a few weeks later. Republicans say any such decision to follow that course is still a ways off.
There are significant problems with this possibility, starting with the estate tax. The Senate tax bill was silent on the federal tax on inherited estates, which means if the House passes that legislation at the last minute, estate taxes would rise to Clinton-era levels, with inheritances over $1 million taxed at 55 percent. Currently the value of estates over $5 million is taxed at 35 percent.
John Engler, a former Republican governor of Michigan who is president of the influential Business Roundtable, told Bloomberg News on Tuesday that Congress should raise the debt ceiling high enough to take the limit off the table for five years.
But Republicans are not about to give up that cudgel.
“Our ground is on spending, and the president intends to continue to spend more than he has coming in,” said Representative Austin Scott, Republican of Georgia. “For conservatives like me, we don’t want to see any debt ceiling increase without spending cuts to match.”
December 4, 2012Tax Deduction Limits May Trim Deficits, but Not Easily
By JACKIE CALMES
WASHINGTON — Behind President Obama’s insistence that tax rates must rise on higher incomes is a belief that Republicans cannot raise as much revenue as they claim, $800 billion in the first decade, simply by limiting deductions and loopholes. Yet in the past, Mr. Obama supported that option to collect even more.
Republican Congressional leaders, for their part, say it would be simple to design a plan limiting tax breaks for the affluent as part of a bipartisan budget deal. Yet they are not proposing how to do so because, well, it is not so simple. And it would certainly be controversial.
On Tuesday, a day after Speaker John A. Boehner made his deficit-cutting counteroffer to Mr. Obama that included a proposal for $800 billion in revenues, his office provided no details about how to raise that money. Instead, Republican aides cited a nine-page paper last month from the Committee for a Responsible Federal Budget, a centrist business-supported group dedicated to lower deficits, with three options for limiting deductions as an alternative to letting the top tax rates increase.
According to the analysis, each option could allow the government to collect about as much new revenue as it would if the top Bush-era tax rates of 33 percent and 35 percent expire as scheduled on Dec. 31 and revert to the Clinton-era levels of 36 percent and 39.6 percent, respectively, for couples with income above $250,000 and singles above $200,000.
Mr. Obama has vowed since his first campaign to let the top Bush rates expire, though he extended them for two years after 2010 in a compromise with Republicans for stimulus measures.
Mr. Obama is now standing his ground. He continued on Tuesday to insist that simple math argued that Republicans’ alternative to higher rates would not work, not without affecting middle-income taxpayers and eroding charitable contributions from people seeking the tax advantages for their donations.
“The only way to do that would be if you completely eliminated, for example, charitable deductions,” Mr. Obama said in an interview on Tuesday with Bloomberg TV. “Well, if you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse. So that’s not a realistic option.”
The president restated his bottom line for the negotiations with Congress to avert a fiscal crisis in January: “What I’m going to need, what the country needs, what the business community needs in order to get to where we need to be, is an acknowledgment that folks like me can afford to pay a little bit higher rate.”
But since 2010, Mr. Obama and lawmakers in both parties have promoted — and oversold, in the minds of some experts — the idea that Washington could overhaul the tax code, strip out deductions, tax credits, exemptions and loopholes and use the resulting revenues to both lower tax rates and reduce annual budget deficits. That idea was the core of recommendations from the bipartisan Simpson-Bowles fiscal commission in 2010 that Mr. Obama created, and cleared the way for a majority of liberals and conservatives to agree.
Months later, when Mr. Obama was engaged in ultimately unsuccessful negotiations with Mr. Boehner on a debt-reduction deal in the summer of 2011, he recounted his pitch to Republicans for reporters: “What we said was, give us $1.2 trillion in additional revenues, which could be accomplished without hiking taxes — tax rates — but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could have lowered rates generally while broadening the base.”
Now, with time running out for a budget deal that would head off the automatic tax increases and across-the-board spending cuts scheduled to occur in January, some Democrats and Republicans predict a compromise that combines a higher top rate and reduced tax breaks for upper-income Americans.
Mr. Obama has called for tax increases on the wealthy that would raise about $1.6 trillion more in the first decade, or twice the Republicans’ offer. About $1 trillion would result from not extending the top Bush rates, the rest by limiting deductions but with a different approach than Republicans have offered.
Nonpartisan analysts say Republicans are correct that it is possible to raise $800 billion or more from limiting deductions for the affluent. But, they add, any such proposal would face big political hurdles given the popularity of the tax breaks at issue — especially for charitable donations, mortgage interest, state and local taxes and employer-provided health insurance. And if Congress did pass such a plan, it could further complicate tax filing for many people.
“The trick is targeting that only on high-income folks — that’s not administratively simple,” said Roberton Williams, senior fellow at the nonpartisan Tax Policy Center. “You’ve got to figure out how you protect the people below the threshold and then how you phase it in for the people above the threshold so there’s not a cliff.”
The first option among the three proposed by the Committee for a Responsible Federal Budget that Republicans are considering would put a $25,000 cap on the deductions that high-income taxpayers could claim. Mr. Williams said that many upper-income taxpayers would hit a $25,000 threshold by adding up their mortgage interest or state and local taxes alone. “So there’s no tax benefit at all to giving money away with charitable contributions,” he added.
Under the second proposal, a taxpayer would compute the value of all tax breaks, based on the individual’s top marginal tax rate, and cap it at a percentage of the filer’s adjusted gross income. “It’s just really complicated,” Mr. Williams said.
A third option is similar to Mr. Obama’s own proposal for limiting deductions, but it would add additional restrictions for higher levels of income. Though details have changed, Mr. Obama has proposed since his first year to allow deductions at rates up to 28 percent, in effect reducing the tax advantages for higher income brackets.
Last week the White House released an analysis showing that a $25,000 deductions limit could raise about $650 billion in the first decade, and $450 billion if charitable contributions were exempted from the limit.
Doug Holtz-Eakin, the president of the American Action Forum, a center-right research organization that many Republicans consult, said: “It can be done. The next question is, would you like what you have when you finish?”
December 4, 2012Republicans Balk at Short-Term Stimulus in Obama Plan
By ANNIE LOWREY
WASHINGTON — Republicans and Democrats are struggling to find common ground on a long-term debt deal. But as economic growth has weakened this quarter, they are at odds over what the flagging recovery needs in the immediate future, too.
The Obama administration is arguing that the sluggish economy requires a shot in the arm, and it included tens of billions of dollars of little-noticed stimulus measures in its much-noticed proposal to Congressional leaders last week. But Republicans have countered that the country cannot afford to widen the deficit further, and have balked at including the measures in any eventual deal.
The stimulus measures in the White House’s debt proposal stem from President Obama’s long-since-scuttled American Jobs Act proposal, and include a continuation of emergency support for long-term unemployed workers, an extension of the payroll tax cut, billions in infrastructure investment and a mortgage refinancing proposal.
“We have a very good plan, a very good mix of tax reforms” and savings, said Timothy F. Geithner, the Treasury secretary, on ABC News last weekend. “We can create some room to invest in things that make America stronger, like rebuilding America’s infrastructure.”
But in his counteroffer, made on Monday, House Speaker John A. Boehner of Ohio did not mention any such measures. Republican aides said that securing stimulus was not the main priority given concerns about the country’s fiscal state, and they appeared to be holding back on supporting any stimulus measures to bolster their bargaining position.
“The president is asking for $1.6 trillion worth of new revenue over 10 years, twice as much as he has been asking for in public,” Mr. Boehner said on “Fox News Sunday.” “He has stimulus spending in here that exceeded the amount of new cuts that he was willing to consider. It was not a serious offer.”
As the debate rages in Washington, data has shown the recovery once again sputtering, with the underlying rate of growth too slow to bring down the unemployment rate by much and some of the economic momentum gained in the fall dissipating in the winter.
The weakness comes from the manufacturing and exports slowdown, disruptions from Hurricane Sandy and sluggish underlying wage and spending growth. The storm hit the economic juggernauts of New Jersey and New York hard, pushing down work and wages.
On top of that, consumers and businesses might be holding back out of concern for the tax increases and spending cuts scheduled to take place at the first of the year unless Congress and the administration come to some agreement.
In recent weeks, many forecasters have slashed their estimates of growth in the fourth quarter. Macroeconomic Advisers, for instance, estimates the economy is expanding at only a 0.8 percent annual pace, down from 2.8 percent in the third quarter.
“It’s a pretty dramatic slowdown,” said Joel Prakken, the chairman of Macroeconomic Advisers, the St. Louis-based forecasting firm. “There’s weak demand, which just does not portend well for the coming quarters,” he said.
RBC Capital Markets put the current pace of growth at just a 0.2 percent annual rate. The chance of seeing “a negative sign in front of fourth-quarter gross domestic product is nontrivial, to say the least,” Tom Porcelli, chief United States economist at RBC Capital Markets, wrote in a note to clients last week.
If Congress and the Obama administration are able to agree on a budget deal, economists expect that economic growth will pick up in 2013. Stock markets might cheer, businesses might feel more confident about hiring workers and signing contracts and investors might feel more comfortable investing if Congress struck a deal.
The turnaround in the housing market, rising auto sales and higher consumer confidence all bode well, they note. Refinancing — supported by the Federal Reserve’s effort to buy mortgage-backed securities — would also flush more money into households.
Much of the current slowdown might be a result of temporary factors that might fade away, like fluctuations in how factories stock their inventories or the lingering effects of the hurricane.
Still, recent economic data has come in surprisingly weak. On Monday, the Institute for Supply Management reported that the manufacturing sector contracted in November, with an index of purchasing activity falling to the lowest level since mid-2009.
The report said manufacturers expressed “concern over how and when the fiscal cliff issue will be resolved” as well as a slowdown in demand.
Over all, unemployment remains high, and wage growth weak. Global growth has gone through a slowdown as well. It all adds up to a United States recovery that might remain vulnerable to shocks — like the Midwestern drought that slashed agricultural production this year, or the Japanese tsunami that depressed exports in 2011, or the long-simmering European debt crisis that has spooked financial markets — for years to come.
Economists remain nervous about the combination of the already weak recovery and the prospect of the tax increases and spending cuts — with billions of dollars of fiscal contraction likely to occur even if the White House and Congress reach a deal.
“We are worried about going too fast, too quick on the cuts side,” said former Senator Pete V. Domenici, Republican of New Mexico, on Monday at a meeting with reporters at the Bipartisan Policy Center. He was presenting a plan for a deficit reduction framework along with Alice M. Rivlin, the budget director under President Bill Clinton.
Ms. Rivlin added, “We don’t need an austerity budget.” Indeed, the two budget experts proposed including a one-year income tax rebate to give the recovery some breathing room.
Originally published December 4, 2012 at 5:35 PM | Page modified December 5, 2012 at 6:37 AM Budget-crisis scenarios come in four flavors
There are at least four general scenarios for avoiding tax increases and automatic spending cuts at the start of next month.
By David Lightman and Lesley Clark
WASHINGTON — Trying to predict the outcome of the "fiscal cliff" negotiations is like trying to predict the final standings for your favorite teams when the season's only half over.
There are at least four general scenarios for avoiding tax increases and automatic spending cuts at the start of next month: No deal, a big deal, an agreement to make changes in stages over the next few months and a Democratic-led effort to maintain temporary tax cuts for everyone but the top earners.
The most likely outcome is the multistage agreement, phasing in different pieces over several months, an idea that President Obama praised Tuesday. Second on the maybe list is no deal.
A big accord and the Democratic plan are long shots at best. The history of big deals in recent times is varied. Over the past 30 years, the two sides have crafted historic agreements on Social Security, budget limits and overhauling the tax code.
In the summer of 2011, Obama and Republicans engaged in tortured, lengthy negotiations over reducing the budget deficit, winding up agreeing to $900 billion in cuts from anticipated spending over 10 years. But they couldn't agree on how to go further, triggering a series of $109 billion in automatic reductions that will go into effect Jan. 2 unless a new agreement is reached.
The prospects for several possible outcomes:
All sides mention this one, and it seems to be attainable. Republicans in the House of Representatives talked this week about agreeing to a framework, perhaps enough spending and tax cuts to avoid the January cliff, coupled with promises — written into law — to make structural changes to the tax code and Medicare sometime next year.
Congressional Democrats have criticized the plan for a lack of specifics, but Obama seemingly endorsed the idea Tuesday, saying it was unlikely that he and Congress would be able to overhaul taxes and entitlement programs in the few weeks that remain.
Instead, he suggested as a model former President Reagan's tax overhaul in 1986, which he said took 18 months to develop. He suggested letting tax rates on the top earners increase, then tackling a tax overhaul and changes to entitlement programs sometime next year. "That's the framework that we're operating on," he said in an interview with Bloomberg Television.
Taxes would rise across the board as income-tax rates revert to pre-George W. Bush-era levels.
A lot of lawmakers think that no deal is a real possibility. "We're standing on the edge," said Sen. Lindsey Graham, R-S.C.
And Democrats, their thinking goes, won the presidency with Obama campaigning on a pledge to raise income taxes only for the top earners, so why give in? They'd try their chances after Jan. 1, with more Democratic members joining a new Congress.
The nonpartisan Congressional Budget Office says that scenario might trim half a percentage point off economic growth in the first half of next year. The unemployment rate, which was 7.9 percent in October, might rise to 9.1 percent, which could spark another recession.
A BIG DEAL
White House and congressional leaders continue to offer hope — usually privately — that they can reach a grand bargain not only to get over the cliff but also to begin chipping away at the federal deficit with structural changes that eluded them last year.
Getting to that point in the next few weeks is doubtful, if only because big things such as overhauling the tax code or revamping Medicare aren't going to be decided — let alone clear Congress — before the lame-duck session ends in about a month.
TAXING TOP EARNERS
This is the most unlikely scenario, but it also isn't out of the question. The Senate passed legislation in July to continue the income-tax cuts for everyone except the top earners. It's gone nowhere in the Republican-dominated House.
Originally published December 4, 2012 at 6:44 AM | Page modified December 5, 2012 at 6:39 AM Makings of a fiscal deal behind the hot rhetoric
Bluster and hot rhetoric aside, the White House and House Republicans have identified areas of significant overlap that could form the basis for a final agreement after "fiscal cliff" posturing gives way to hard bargaining.
By JIM KUHNHENN and ANDREW TAYLOR
Bluster and hot rhetoric aside, the White House and House Republicans have identified areas of significant overlap that could form the basis for a final agreement after "fiscal cliff" posturing gives way to hard bargaining.
Both sides now concede that tax revenue and reductions in entitlement spending are essential elements of any deal. If the talks succeed, it probably will be because House Speaker John Boehner yields on raising tax rates for top earners and the White House bends on how to reduce spending on Medicare and accepts some changes in Social Security.
The White House and Boehner kept up the ridicule of each other's negotiating stances on Tuesday. But beneath the tough words were the possible makings of a deal that could borrow heavily from a near-bargain last year during debt-limit negotiations.
Then, President Barack Obama was willing to reduce cost-of-living increases for Social Security beneficiaries and increase the eligibility age for Medicare, as Boehner and other top Republicans have demanded. On Tuesday, Obama did not shut the door on Republican ideas on such entitlement programs.
"I'm prepared to make some tough decisions on some of these issues," Obama said, "but I can't ask folks who are, you know, middle class seniors who are on Medicare, young people who are trying to get student loans to go to college, I can't ask them to sacrifice and not ask anything of higher income folks."
"I'm happy to entertain other ideas that the Republicans may present," he added in an interview with Bloomberg Television.
At the core, the negotiations center on three key points: whether tax rates for upper income taxpayers should go up, how deeply to cut spending on entitlements such as Medicare and how to deal with raising the government's borrowing limit early next year.
White House spokesman Jay Carney dismissed Boehner's proposals as "magic beans and fairy dust."
Boehner countered: "If the president really wants to avoid sending the economy over the fiscal cliff, he has done nothing to demonstrate it."
Tax rates have emerged as one of the most intractable issues, with Obama insisting the rates on the top 2 percent of earners must go up and Boehner standing steadfast that they must not.
Boehner, instead, has proposed raising $800 billion through unspecified loophole closings and limits on tax deductions.
On Tuesday, the president said he would consider lowering rates for the top 2 percent of earners - next year, not now - as part of a broader tax overhaul effort that would close loopholes, limit deductions and find other sources of government revenue. "It's possible that we may be able to lower rates by broadening the base at that point," Obama said.
On Medicare and Social Security, the Republican proposals would do relatively little to curb the deficit over the next decade, but the impact would grow over the longer term.
Raising the Medicare retirement age from 65 to 67, for instance, would wring $148 billion from the program over 10 years, according to a Congressional Budget Office estimate last year, about one-fourth of the savings House Republicans hope to claim from federal health programs.
Another idea that gained currency during the Obama-Boehner talks last year would change the annual inflation measure used for Social Security cost-of-living increases and the indexation of tax brackets for inflation.
Many economists and government budget specialists believe the system is a more accurate measure of inflation because it takes into account changes in purchasing behavior
This "chained consumer price index" idea makes modest cuts to Social Security benefits at first - curbing program costs by $112 billion over a decade according to the 2011 CBO report. But those reductions build up more over time in a fashion comparable to the way compound interest builds personal savings.
The White House has not foreclosed the idea of addressing Social Security cost-of living changes in a new deal, but it has not embraced it because Obama's aides argue Social Security is not contributing to the federal deficit.
The stingier inflation measure also could raise tax revenue by $87 billion over the coming decade. Taxes would slowly increase because annual adjustments to income tax brackets would be smaller, pushing more people into higher brackets.
But the alternative inflation measure, while a favorite of budget hawks, has run into fierce opposition from defenders of Social Security.
"I've never been a part of that," said Senate Majority Leader Harry Reid, D-Nev., a top Obama ally.
The two sides are also close, at least in theory, on curbing spending on a host of miscellaneous programs, as well as new fees. These could lead to higher airline ticket prices, for example, an end to Saturday mail delivery, fewer food stamps and lower farm subsidies.
Republicans claim they could glean $300 billion from such cuts and fees over 10 years; the White House promises $250 billion.
So far, the public seems ready to hold Republicans responsible if negotiations fail. A new Washington Post-Pew Research Center poll shows that 53 percent say the Republicans would deserve blame if the nation tips over the fiscal cliff, and only 27 percent of those surveyed say Obama would be to blame.
Forty-nine percent don't believe Obama and Congress will reach a deal by Jan. 1, whereas 40 percent are more optimistic.
Republicans were quick to say on Tuesday that Boehner's plan was attracting criticism from the right, particularly from Republican Sen. Jim DeMint of South Carolina, a leader of tea party conservatives, and as such represented more of a compromise than Obama's stance. DeMint said Boehner's plan "will destroy American jobs and allow politicians in Washington to spend even more."
Associated Press writer Donna Cassata contributed to this article.