Each morning, Bill Scher and Terrance Heath serve up what progressives need to affect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Is It Worth It?
OurFuture.org bloggers weigh in on tax cut deal. Robert Borosage: “We get in return a largely conservative recovery package built around tax cuts. No public investment to create jobs.” Dave Johnson: “The conservative plan all along has been to force a debt crisis that they can use to force ‘smaller government.’ How is cutting taxes going to make this situation any better?” Bill Scher: “To start the new year: Economy 1. Deficit hysterics 0.”
Unclear how many congressional Dems will back the deal. NYT: “Some senior Democrats said an agreement by Mr. Obama to accede to Republican demands on the estate tax could lead to a revolt among lawmakers.” Sen. Sanders pledges filibusters reports TPMDC.
WH aide takes swipe at congressional Dems for choosing not to hold pre-election vote. ABC: “‘We wanted a fight, the House didn’t throw a punch,’ a senior White House official tells ABC News … ‘The House wouldn’t vote before the Senate, and the Senate was afraid they’d lose a vote on it.’”
Leading GOPers signal support. ABC: “…top Senate Republicans tonight hailed the deal as ‘an important first step,’ thanked the Obama administration for its ‘determined efforts,’ …
But other GOPers hesitant. The Hill: “…a few GOP members sent signals they weren’t comfortable with where the talks were headed … some newly elected House GOP members claim the [jobless] benefits have gone on for too long and need to be halted …”
WH argues jobless aid extension will save 600,000 jobs reports The Hill.
Extension for Build America Bonds not in the deal, yet. Bloomberg: “The fate of the Build America program, which Obama has sought to extend, may be determined by a six-member panel headed by Treasury Secretary Timothy Geithner, the White House officials said. Panel members were appointed by Obama and congressional leaders to negotiate tax issues.”
No help for the 99ers. Daily Kos’ Joan McCarter: “It does not create another … tier for all of those people who have exhausted the 99 weeks they’ve received … There’s now over two million in that category. Their number is expected to triple over the next year…”
’12 end of temporary tax cut extension sets up fresh debate during presidential campaign. NYT’s Nate Silver: “Since most polls suggest that allowing the tax cuts to expire on the wealthiest earners is a popular position, some people have argued that Mr. Obama could be on solid footing in this debate. I am not quite so sure.”
FDL’s David Dayen notes the deal isn’t yet done: “I think there’s a real concern that this deal could fall apart. That’s why it’s called a ‘framework.’”
Katrina vanden Heuvel worries Obama is moving towards a “failed presidency”: “The president is touting a NAFTA-like corporate trade deal with South Korea. He appears to be headed toward supporting cuts in Social Security and Medicare and irresponsible reductions in domestic investment. And he’s on the verge of kowtowing to Republican bluster and cutting a deal to extend George W. Bush’s tax cuts for the rich in exchange (one hopes) for extending unemployment insurance and possibly getting a vote on the New START treaty. This is political self-immolation.”
Salon’s Steve Kornacki applauds deal: “As part of the deal, expiring unemployment benefits for millions of Americans will be extended for 13 months. Just as importantly, there is now a real prospect that the Senate will act on repeal of the ‘Don’t Ask, Don’t Tell’ policy and ratification of the START treaty … Is extending tax cuts … a steep price to pay for all of this? Absolutely. But that’s politics…”
Progressive Democrats for America threatens primary challenge over deal. NYT: “‘Obama may have just ensured that he’ll face a significant challenge to his renomination in 2012 from inside the Democratic Party,’ said Norman Solomon, a leader of Progressive Democrats of America.”
Time’s Michael Scherer explains why President Obama compromised on tax cuts: “A cynic could read the deal … as a classic Washington giveaway. In order to gain acceptance for budget-busting benefits that Republicans wanted, Obama had negotiated budget-busting benefits that Democrats wanted … at the White House, where there is much anxiety about the staggering performance of the economy, this is considered a victory. In crafting the compromise, Obama may be able to effectively able to sneak another stimulus bill through Congress, by capitalizing on the Republican habit of refusing to acknowledge the deficit impact of tax cuts.”
Slate’s Christopher Beam asks how much Obama’s tax cut deal will help the economy: “… the Obama tax cuts may have a better chance of stimulating the economy than Bush’s did. For one thing, unemployment is a lot higher now than it was in 2001, which allows more room for improvement. Plus, Democrats have tried to cut taxes in the most stimulative way possible—that is, in a way that benefits the lower and middle classes. Hence the provisions in Monday’s compromise to bump the child tax credit and earned income tax credit, plus a reduction of payroll taxes for employees from 6.2 percent to 4.2 percent.”
Paul Krugman says “better” but still not good: “… the CBO estimated that such an [tax cut] extension would reduce unemployment relative to what it would have been otherwise by 0.1 to 0.3 percentage points in 2011, twice that in 2012 … let’s say that [the rest of the package] raises GDP by 0.7 percent relative to otherwise; rule of thumb is that one point on GDP is half a point on unemployment, so add 0.35 points to the CBO numbers … was this worth it? I’d still say no, although it’s better than what I expected over the weekend.”
Economist’s View’s Mark Thoma underwhlemed by payroll tax cut: “Though the revenue the Social Security system loses due to the tax cut will be backfilled from general revenues, the worry is that the tax cut will not expire as scheduled — temporary tax cuts have a way of turning permanent … That endangers Social Security funding — relying on general revenue transfers sets the system up for cuts down the road…”
Ezra Klein, at WaPo, considers an imperfect but-not-that-bad deal on tax cuts: “So is this a good deal? It’s a lot better than I would’ve told you the White House was going to get if you’d asked me a week ago … the end result is between $200 and $300 billion more in tax breaks, tax credits and unemployment insurance than there would’ve been if not for this deal … That’s better than nothing — or to be more specific, better than backsliding.”
Capital Gains and Games’ Andrew Samwick argues the tax cuts are wasted money: “A weak economy is not an excuse to spend money we don’t have on things we don’t need … the 5-year cost of remediating the nation’s infrastructure at $2.2 trillion, more than a trillion of which is not currently authorized. For the $900 billion that this tax cut deal will cost, the government could go a long way toward meeting these objectives.”
Five reasons to hate and five to like it, from TNR’s Jonathan Cohn: “Obama gets to give people a tax break. Americans say they like that … [But] Americans already got a tax cut from Obama. Based on the election results, they don’t seem to have noticed.”
Will Deficit Reduction Be Next?
Next step after deficit commission report unclear. The Hill: “Sen. Kent Conrad (D-N.D.) is pressing for a bipartisan summit on the issue, but sources tell The Hill this is unlikely, if it happens at all, until the federal government reaches its debt ceiling in the spring … The White House and House Republicans have a similar reason to be cool to the idea of a debt summit: They’d rather present their own budget ideas.”
President says we face a “Sputnik moment” that demands investment in innovation and manufacturing: “50 years later, our generation’s Sputnik moment is back. This is our moment. If the recession has taught us anything, it’s that we cannot go back to an economy that’s driven by too much spending, too much borrowing, running up credit cards, taking out a lot of home equity loans, paper profits that are built on financial speculation. We’ve got to rebuild on a new and stronger foundation for economic growth. We need to do what America has always been known for: building, innovating, educating, making things. We don’t want to be a nation that simply buys and consumes products from other countries. We want to create and sell products all over the world that are stamped with three simple words: ‘Made In America.’”
Labor Ponders Korea Deal
Union movement grapples with Korea trade deal. Politico: “…some union leaders [are] accusing United Auto Workers president Bob King of embracing a deal to curry favor with a White House …
AFL-CIO president Richard Trumka hasn’t rendered a verdict yet … [He is] trying to decide whether to break ranks with the UAW and oppose the agreement, or take a neutral stance … Loose rules on the content of Korean-made autos will allow Korean cars made mostly with parts from China or elsewhere to qualify for an exemption from import taxes … [But UAW's Bob] King said that most of his fellow union presidents believe the Korea agreement was good for American workers.”
Supreme Court Takes Up Climate Case
Supreme Court to review if public nuisance laws can use to combat climate crisis. NYT: “It is the first public-nuisance suit related to climate change to reach the Supreme Court. Lower courts have generally declined to allow such suits to proceed because it would put judges in the position of deciding how much carbon dioxide was too much … The Obama administration urged the Supreme Court to hear the appeal … saying the nuisance claim would interfere with its current efforts to regulate carbon dioxide through the Environmental Protection Agency.”
Some hope remains for progress at international climate summit. Mother Jones’ Kate Sheppard: “…, the US is intent on hashing out details for transparency on emissions reductions, which has been a key sticking point with China, and has argued that it doesn’t believe components like a global fund to help poor countries cut emissions … can move forward without that … China’s chief negotiator Xie Zenhua also made some encouraging statements Monday … One of the few parties here who can push the issue forward may be the European Union…”
Where Homeowners Are Winning
NYT’s David Bornstein finds Cleveland group successfully fighting foreclosures: “Last year, ESOP, reported that about 70 percent of those who completed its process received loan modifications that allowed them to avert foreclosure. … [It] engages loan servicers or lenders and borrowers, acting as a good-faith intermediary between the parties, so it can effectively negotiate sustainable mortgage ‘workouts’ … ESOP requires that lenders provide a single point of contact, someone with decision making authority. Without this access, ESOP says, homeowners get bounced around the bureaucracy…”
Jill Campen explains how Wall Street “screwed” African-Americans and Latinos with the housing crisis: “In the 1980s and early 1990s, racial discrimination in mortgage lending resulted in less access to home loans for predominantly black and Latino borrowers and neighborhoods. Home mortgages were a fairly standardized product, and the problem was that banks avoided lending in minority neighborhoods (redlining) and denied applications from blacks and Latinos at disproportionately high rates compared to equally creditworthy white applicants (lending discrimination). Soon afterwards, however, a different form of lending discrimination rose to prominence as high-cost subprime loans became increasingly common. Precisely because borrowers and neighborhoods of color had limited access to the traditional prime loans, they were vulnerable for exploitation by predatory lenders pushing the new product.”
Citigroup bailout ends. W. Post: “The Treasury Department plans to sell the rest of its stake in Citigroup, a move that would allow the government to end its ownership in the bailed-out banking giant while turning a $12 billion total profit for taxpayers.”