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 Reviving Revenue Sharing Would Be Good for America -- and Arizona

The number one issue of this campaign, and of the last couple of years of the Great Recession, is how to get our economy moving again. Right now, policy makers seem paralyzed by outdated notions, fear, and political dissent by those like Jeff Flake, who are wrong, wrong, wrong about everything.

Jeff Flake and the Republicans' solution to our economic crisis and terrible unemployment is their usual laissez-faire, trickle-down, supply-side, yada yada crap that started us on the path to extremes of wealth and poverty but mostly great gains for the very, very richest of Americans and bupkis or losses for the other ninety percent and more of us.

Their solution to everything is to cut government spending (which they certainly failed at spectacularly during their years of federal control in the Bush adminstration) and lower taxes: Grover Norquist's "Starve the Beast." Because Jeff Flake - although he's got his sinecure right in the middle of it - hates the federal government and thinks it can do nothing.

So when the Republicans take control of Congress, and if they gain the White House in two years, will drastically cut out needed spending just as they opposed the stimulus. Yesterday we reprinted a column by Laura Tyson explaining why the first stimulus did work but was too small to be effective in such a virulent Great Recession caused by a major financial catastrophe and why we need a second stimulus.

Today we post a column, from the Business section of yesterday's New York Times, by economist Robert J. Shiller on one form the stimulus can take, "The Case for Reviving Revenue Sharing." Revenue sharing is something that even conservative Republicans should like because it takes decision to the state and local level, but real fanatic extremists like Jeff Flake can never be satisfied in their irrational hatred of government at all levels. (We wonder if Jeff Flake's toilet training caused his psychological problems.) Herewith, Shiller's proposal:

PROTRACTED unemployment is eating away at millions of people. And the economy’s failure to create enough jobs for them is part of a vicious circle that could keep turning for years to come.

In my last column, I called for big, temporary government programs aimed directly at putting people back to work. But how might we best accomplish this? The clock is ticking, and we don’t have time to create new national organizations to employ people. Instead, the most efficient approach is to use existing organizations for specific ideas and projects.

State and local governments as well as nonprofit and other organizations need to be mainstays in this effort. We need to enlist their help — without telling them exactly what to do. As for a framework, think of the general revenue sharing program adopted by Congress in 1972.

In his 1971 State of the Union message, President Richard M. Nixon advocated general revenue sharing to offset the tendency for power to be concentrated in Washington. Give local governments the money and “put the power to spend it where the people are,” he said.

Support for the idea was not confined to Republicans. A leading Democrat, Senator Hubert H. Humphrey, supported it in 1972, saying that federal taxes were more progressive than state and local ones and that federal money could be spent more effectively by people with local knowledge than by “some agency head in Washington.”

General revenue sharing came under attack in the Reagan years, and Congress ended it in 1987, arguing that by breaking the link between taxation and local needs, it encouraged higher taxes.

We are in a different time now. State and local governments are in severe fiscal trouble, and their constitutions often prevent deficit spending. In these circumstances, the federal government, which does not face such constraints, needs to raise revenue for them.

Legislation providing the states with $26 billion, which President Obama signed into law this month, took an important step in this direction. It did not create true general revenue sharing, because it tied the funds to specific needs — mostly hiring teachers and paying for Medicaid. But it did free states to use other resources as they saw fit.
(Illustration by David G. Klein)

It is time to bring back true general revenue sharing — temporarily — to stimulate the economy. Hundreds of articles in political science and public policy journals have studied past efforts, and analyzed the concept of fiscal federalism, without establishing general revenue sharing as a fundamental pillar of Keynesian stabilization policies. This lapse is understandable: most of these articles were written before the current economic crisis, the most serious since the Great Depression.

The need for a Keynesian revenue-sharing program is clear. After Congress approved stimulus legislation in 2009, Lawrence H. Summers, head of the National Economic Council, said that “it’s harder to spend $300 billion within a year on quality projects than you might think.” And no wonder the task was tough: decision makers in Washington were removed from local needs.

Martin Shubik, a professor of mathematical institutional economics at Yale, has proposed creating a “Federal Employment Reserve Authority,” a permanent agency that would do extensive research and maintain a detailed list of ready-to-go public works projects should a recession come. That’s a great idea, but we do not have such an agency now, and, if we did, it might still suffer from a Washington bias.

Now, local governments are laying off a wide variety of employees, including teachers, police officers and social workers. So why don’t we embrace general revenue sharing? Unfortunately, when faced with a need for stimulus, members of Congress seem to prefer to start their own projects, for which they are likely to get more credit from voters. Local governments, meanwhile, which are more likely to know where spending is really needed, remain in deep trouble.

It’s time for the public to assert loftier expectations. We need to respect existing government bureaus and organizations for their ideas, and get down to the business of financing important jobs temporarily, and on a huge scale. This will avert more layoffs, and perhaps give cities and states time to recover to the point they can pay local employees from local revenue.

When the administration of Franklin D. Roosevelt began its vast job creation program in 1933, it had to accept certain practical realities, which limited the immediate stimulus that could be provided. Foremost among them was that the government had to work largely within the framework of existing organizations — whether state and local governments, the military or nonprofit groups — which provided much of the economy’s infrastructure.

Economic stimulus is not a matter of turning on the money spigot, as some economists are wont to describe it. It is about getting the widespread cooperation of dispersed organizations to provide jobs, at least for as long as the economy is weak.

When the Roosevelt administration and Congress created the Civilian Conservation Corps in 1933, it was done within the framework of the Army. There seemed to be no other organization that could move hundreds of thousands of young men into wilderness encampments where they could work on conservation efforts. But the Roosevelt C.C.C. placed no more than a half-million people in jobs. We need to reach further than that.

Labor unions, which represent workers who naturally fear displacement by people in new jobs, might seem to be an obstacle. But unions do have an idealistic base, and working union members have sons and daughters and friends and relatives who are unemployed. The unions need to be consulted if new jobs are to be created in a relatively nonthreatening way. In a savvy move, President Roosevelt made a union leader the head of the C.C.C.

The concept of general revenue sharing can also be extended to the nation’s nonprofits, including charities and foundations. The government has long given support to such organizations, but usually in the form of narrow grants. But broader general revenue grants could be made in times like these.

Millions of people need jobs, and there are organizations that could help put them to work. It’s time to move forward.

When Democrats Think John Kerry Is Too Passionate About Climate Change Legislation, You Know It's Green Party Time

E.J. Dionne has a column in today's Washington Post saying that the Obama administration and Democratic congressional leaders are annoyed with Sen. John Kerry for being too passionate about getting a climate change bill passed:

One of the strangest lead sentences I have ever encountered appeared in Politico last week. It read: "John Kerry has been the most aggressive advocate of climate change legislation in the Senate this year -- so aggressive that it's rubbed some of his colleagues the wrong way."

The story went on to say that Kerry's "zeal" is "making some swing-vote Democrats cringe at the thought of negotiating with someone they fear is tone-deaf to the political realities of their respective states -- particularly in a difficult midterm elections year."

So there you have it: Once criticized for being too aloof and patrician, Kerry is now being assailed for daring to have passion for the cause of reducing the amount of carbon we are pumping into the atmosphere.

Note that none of this is about the legislative merits. Kerry is being criticized for caring too much about an issue and not thinking enough about an election -- for being insufficiently opportunistic and unprincipled.

And Democrats wonder why the polls find an "enthusiasm gap" that suggests their supporters will sit around grumpily in November while Republicans flood the polling places. . .

On the current course, even a Republican Party whose leaders say the most outlandish and extreme things -- and whose own congressional rank and file worry about their lack of a coherent program -- could take back the House and make deep inroads in the Senate.

Which brings us back to Kerry, who in a talk with me made no apologies for his eagerness to get an energy bill. What's striking is that he has negotiated with every industry and trade group imaginable to find a deal. If he's passionate about this, he's also been relentlessly practical.

And he notes that many business groups would prefer that Congress deal with the carbon question. "They see it coming from the EPA and regulation, and they would rather have us legislate," he said. Kerry's persistence is one reason the Senate leadership and a White House with which he's been working closely are still trying to push an energy bill through.

Someone needs to find the same pugnacious spirit on a jobs bill. Yes, crucial assistance to states that are slashing programs and raising taxes has been blocked by Republican senators -- including Olympia Snowe and Susan Collins of Maine. Both prize their moderate images, but neither has been willing to break with the GOP leadership.

But either Obama and the Democrats really believe that giving the economy another shot in the arm now is essential or they don't. If they put no punch behind their argument, voters will have no idea that some state cutbacks or tax hikes they are worried about could be avoided if Congress were willing to act.

The spineless, somnolent Democratic leadership in Congress and the White House needs a push from both inside the party and from those of us who do have passion about core progressive issues, including the fate of our planet -- those of us in the Green Party.