Re-Electing Family-Hating Professional Politician Jeff Flake Means Bigger Budget Deficits and Fewer Jobs for American Workers

At Newsweek's blog The Gaggle, Andrew Romano points out why re-electing family-hating professional politician Jeff Flake and his GOP cronies will just make things a lot worse in the country that crumbs like Flake seemed to determined to destroy:

Nothing is more important to Republican politicians these days than jobs and the deficit—at least according to Republican politicians. As House Minority Leader John Boehner put it in a "major economic address" on Tuesday, President Obama is "doing everything possible to prevent jobs from being created" while refusing to do anything at all "about bringing down the deficits that threaten our economy." Elect Republicans in November, Boehner assured his audience, and we will put an end to this insanity.

There's only one problem with Boehner's message: so far, the things that Republicans have said they want to do won't actually boost employment or reduce deficits. In fact, much the opposite. By combing through a variety of studies and projections from nonpartisan economic sources, we here at Gaggle headquarters have found that if Republicans were in charge from January 2009 onward—and if they were now given carte blanche to enact the proposals they want to—the projected 2010–2020 deficits would be larger than they are under Obama, and fewer people would probably be employed.

The math is pretty straightforward. Let's start with the deficit. According to the Congressional Budget Office, Obama's stimulus plan is projected to increase budget deficits over the next decade by $814 billion. That's a big number. But Republicans opposed the legislation refused to provide an alternative, and now insist that it's been a total failure. So let's be generous and subtract it from their side of the equation. The Obama deficit: $814 billion. The GOP deficit: $0.

Next up is health-care reform. Obama passed it; Republicans want to repeal it "lock, stock, and barrel." The reason, as Senate Minority Leader Mitch McConnell explained in July, is that "we all know that it's going to increase the deficit." Unfortunately for the GOP, though, nonpartisan experts tend to disagree. Just this Tuesday, for example, the CBO released a letter saying that Obama's health-care-reform legislation would "reduce the projected budget deficit by $30 billion over the next 10 years,” while repealing the law would generate "an increase in deficits ... of $455 billion ... over that [same] period." Factor those figures into the equation and the Obama deficit falls to $784 billion. The GOP deficit, meanwhile, rises to $455 billion. Getting warmer.

The final piece of the puzzle is the Bush tax cuts. Obama wants to extend them for the 95 percent of taxpayers making less than $250,000 a year; Republicans want to extend them for everybody. How will these extensions affect the deficit? Glad you asked. According to data compiled by The Washington Post, "the Democratic proposal would add about $3 trillion to the deficit during the next decade, while the GOP plan would cost $3.7 trillion." That brings the total Obama deficit to $3.784 trillion over 10 years, and its GOP counterpart to—drumroll, please—$4.155 trillion.

That's right. Even if we assume that the Republicans would've spent $0 to stimulate the economy in the wake of the largest economic collapse since the Great Depression—an unlikely scenario, given the very real risks of inaction—their proposed policies would still produce a deficit $371 billion larger than President Obama's.

(Or $335 billion; Boehner also says he'd like to freeze nondefense discretionary spending at 2008 levels, which would save a grand total of $36 billion.)

On jobs, it's a similar story. So far, Republicans have only said they'd do—or that they would've done—two large-scale things the Democrats haven't: (1) scrap the stimulus, and (2) extend the Bush tax cuts for Americans earning more than $250,000 so as not to (in Boehner's words) "impose job-killing tax hikes on families and small businesses."

How would these measures affect employment? Regarding the stimulus, the answer is pretty clear. In a report out this week, the CBO estimates that between 1.4 million and 3.3 million fewer people would be employed right now if the American Recovery and Reinvestment Act had never made it through Congress. Split the difference, and the pro-stimulus Obama moves ahead of the anti-stimulus GOP by about 2.35 million jobs. (A more dramatic estimate by the economists Alan Blinder and Mark Zandi [a McCain 2008 adviser] puts the number at 2.7 million, but we'll stick with the CBO stats for now.)

The effect of tax cuts on job creation is a little trickier to tally. Extending all of them, according to the CBO, would lower unemployment by 0.3 to 0.8 percent over the next year or so; extending them solely for people making less than $250,000 would produce a somewhat smaller effect, for a difference of roughly 200,000 to 500,000 people. The problem, as economist William G. Gale of the Brookings Institution has noted, is that "of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck." In fact, he continues, "letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits, [or] tax credits favoring job creation ... would have about three times the impact ... as continuing the Bush tax cuts."

In addition, it's unlikely that extending the cuts for the richest Americans would have much of an effect on small-business hiring, which is a claim that Republicans make with some regularity. Why? Because of the taxpayers that report running small businesses on their taxes, only 2 percent fall into the top two income brackets.* The other 98 percent of small-business owners make less than $250,000 a year and wouldn't pay higher taxes under Obama's plan.

History isn't on the GOP's side, either. If keeping the top marginal tax rate at 35 percent—the rate under Bush, and the rate that Republicans are fighting to preserve—spurs so much hiring, why didn't America experience any job growth at all during Bush's time in office? And if a top marginal tax rate of 39.6 percent—the rate under Bill Clinton, and the rate that Democrats are fighting to restore—is such a job killer, why did payrolls grow by 20 percent during the 1990s?

The implication here isn't that higher tax rates equal more jobs. Far from it. But there's simply no evidence, either in the history books or the latest projections, to suggest that extending all of the Bush tax cuts would provide an employment boost large enough to offset the number of jobs that would've been lost if the GOP had succeeded in blocking the stimulus—let alone lasting enough to justify adding another $700 billion to the deficit.

The bottom line, then, is that recent GOP proposals would produce fewer jobs and far larger deficits than the plans Obama has already passed or currently wants to pass.

Why We Need a Second Stimulus - and Why Radical Laissez-Faire Conservatives Like Jeff Flake Were Wrong About the First One

Today we'd like to reprint today's New York Times op-ed by Laura Tyson, the Berkeley economics prof and former chairwoman of the Council of Economic Advisers and the National Economic Council. We agree with her totally as to "Why We Need a Second Stimulus" (emphasis ours):

OUR national debate about fiscal policy has become skewed, with far too much focus on the deficit and far too little on unemployment. There is too much worry about the size of government, and too little appreciation for how stimulus spending has helped stabilize the economy and how more of the right kind of government spending could boost job creation and economic growth. By focusing on the wrong things, we are in serious danger of failing to do the right things to help the economy recover from its worst labor market crisis since the Great Depression.

The primary cause of the labor market crisis is a collapse in private demand — the same problem that bedeviled the economy in the 1930s. In the wake of the financial shocks at the end of 2008, spending by American households and businesses plummeted, and companies responded by curbing production and shedding workers. By late 2009, in response to unprecedented fiscal and monetary stimulus, household and business spending began to recover. But by the second quarter of this year, economic growth had slowed to 1.6 percent, according to a government estimate issued Friday. Clearly, the pace of recovery is far slower than what is needed to restore the millions of jobs that have been lost.

Households and businesses are on a saving spree to rebuild their balance sheets. Their spending relative to income has fallen more than at any time since the end of World War II. So there is now a substantial gap between the supply of goods and services the economy is capable of producing and the demand for them. This gap is starkly reflected by the 23 million Americans who are looking for full-time jobs and the millions more who have left the labor force because they could not find one.

The situation would be even worse without the $787 billion fiscal stimulus package passed in 2009. The conventional wisdom about the stimulus package is wrong: it has not failed. It is working as intended. Its spending increases and tax cuts have boosted demand and added about three million more jobs than the economy otherwise would have. Without it, the unemployment rate would be about 11.5 percent. Because about 36 percent of the money remains to be spent, more jobs will be created — about 500,000 by the end of the year.

But by next year, the stimulus will end, and the flip from fiscal support to fiscal contraction could shave one to two percentage points off the growth rate at a time when the unemployment rate is still well above 9 percent. Under these circumstances, the economic case for additional government spending and tax relief is compelling. Sadly, polls indicate that the political case is not.

Two forms of spending with the biggest and quickest bang for the buck are unemployment benefits and aid to state governments. The federal government should pledge generous financing increases for both programs through 2011.

Federal aid to the states is especially important because they finance education. Although the jobs crisis is primarily a crisis of demand, it also reflects a mismatch between the education of the work force and the education required for jobs in today’s economy. Consider how the unemployment rate varies by education level: it’s more than 14 percent for those without a high school degree, under 10 percent for those with one, only about 5 percent for those with a college degree and even lower for those with advanced degrees. The supply of college graduates is not keeping pace with demand. Therefore, more investment in education could reduce both the cyclical unemployment rate, as more Americans stay in school, and the structural unemployment rate, as they graduate into the job market.

An increase in government investment in roads, airports and other kinds of public infrastructure would be cost-effective, too, as measured by the number of jobs created per dollar of spending. And it would help reduce the road congestion, airport delays and freight bottlenecks that reduce productivity and make the United States a less attractive place to do business. The American Society of Engineers has identified more than $2.2 trillion in public infrastructure needs nationwide, and a 2008 study by the Congressional Budget Office found that, on strict cost-benefit grounds, it would make sense to increase annual spending on transportation projects alone by 74 percent.

Over the next five years, the federal government should work with state and local governments and the private sector to finance $1 trillion worth of additional investment in infrastructure. It should extend the Build America Bonds stimulus program, which in the past year has helped states finance $120 billion in infrastructure improvement.

The federal government should also create and capitalize a National Infrastructure Bank that would provide greater certainty about the level of infrastructure financing over several years, select projects based on rigorous cost-benefit analysis, invest in things like interstate high-speed rail that require coordination among states and attract private co-investors in projects like toll roads and airports that generate dedicated future revenue streams.

But can the government afford this additional spending? The answer is yes. Despite the large federal deficit, global savers, including savings-hungry American households, are snapping up United States government securities at very low interest rates. And they will continue to do so as long as there is ample slack in the economy and inflation remains subdued. Over the next few years, there is little risk that federal deficits will crowd out private investment or precipitate a crisis of confidence in the American government, a spike in American interest rates or a sudden drop in the dollar.

On the other hand, as long as private demand remains weak, the risk is uncomfortably high that trying to reduce the deficit — by cutting spending or increasing taxes — will tip the economy back into recession or condemn it to years of faltering growth and debilitating unemployment. In fact, either outcome would depress tax revenue and could mean larger deficits.

Faced with these risks, as long as the economy is operating far below potential, policy makers should do two seemingly contradictory things. First, they should provide additional fiscal support for job creation and growth. And, second, they should enact a credible multiyear plan now to stabilize the ratio of federal debt to gross domestic product gradually as the economy recovers.

By easing capital market concerns about the government’s future borrowing needs, such a plan would permit larger deficits and slower debt reduction while unemployment is still high. The long-run debt problem — the result of imprudent fiscal decisions before the recession, escalating health care costs and an aging population — must be addressed once the economy has recovered. But for now the priorities of fiscal policy should be jobs and investment.

That's not going to happen with laissez-faire out-of-touch corporate lackeys like Jeff Flake controlling Congress.

But most of you in the East Valley - even if you're out of work or your house is underwater or in danger of being foreclosed - are just too stupid to realize it, and that's why you vote Republican against your own interests. East Valley voters are largely the stupidest people on the planet Earth. (They're ugly, too.)

How the Republican Party of Jeff Flake Destroyed the American Economy: Lies and Damn Lies About the Federal Deficit Exposed by David Stockman

Free-market laissez-faire fanatics like Jeff Flake worship the free market. No taxes are always better than any taxes, no regulation is always better than any regulation, and so what if the rich keep getting much, much richer and the rest of us are losing ground? Republicans more hateful than Flake blame the immigrants and ethnic minorities for taking the jobs of Tea Party conservatives who would otherwise be getting hired as cleaning women and janitors, gardeners and laborers, bus boys and restaurant takeout delivery girls. (In Arizona, most white Republicans don't have college educations as most people we know do.)

For the few people in the East Valley with a modicum of intelligence, we're reprinting some of today's important New York Times op-ed on Republicans and the national debt written by David Stockman, Ronald Reagan's first budget director and a former Michigan congressman who always a little too intelligent to be a party to what his party has wrought:

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

In fact, since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.

Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

We'd love to hear a Jeff Flake response to any of this. But his is a mind that isn't open to new ideas that conflict with the ideology he worships as a God. He knows his constituents are too stupid to understand how he's fucked them over. And he's right.

* * *

Our friend from our 2004 race for Congress in North Florida, Rep. Corrine Brown (D-Jacksonville) said this week on the floor of Congress in relation to legislation supported by our creep of a congressman, "If it's Flake, it's bad." (Hat tip to the hardworking Pennsylvania Federation, Brotherhood of Maintenance of Way Employes Division, International Brotherhood of Teamsters.)

Stop Jeff Flake's Plan to ADD More than Two Trillion Dollars to the Federal Deficit! Don't Let Jeff Flake Mortgage Your Grandchildren's Future!

Wacky extremist Arizona Congressman Jeff Flake has proposed a risky scheme that would add over $2,000,000,000 - that's TWO TRILLION DOLLARS - to our nation's deficit.

That's right. The supposed fiscal conservative Flake, who's very big in protesting $200,000 federal expenditures when they're for community centers or libraries or care for senior citizens, is actually proposing hugely adding to the federal deficit and the nation's long-term debt.

Jeff Flake is irresponsible with the money coming out of your grandchildren's future.

Here's his plan: Pass a bill this fall to drastically reduce the taxes of the very wealthy. The Bush tax cuts, which did no good to stimulate the economy of the anemic past decade, were always scheduled to expire. But Jeff Flake is paying no mind to the looming crisis of unsustainable deficits as far as the eye can see. He wants to ADD more than two trillion dollars to our long-term debt.

If Jeff Flake has his way, the United States will be bankrupt in no time.

You need a fiscally responsible member of Congress representing Arizona's Sixth Congressional District, not a budget-busting Flake who doesn't care about debt or the deficit.