How the Republicans Tried to Kill the Payroll Tax Cut…and Why

With the election year approaching, both parties are going to tell you that they will fight for you, the average American. Both will claim that, in the waning days of 2011, they pushed to lower your taxes, to boost the economy, to save the middle class.

Here’s how it really went down.

As part of the Democrats’ stimulus bill in 2009, the Making Work Pay credit reduced taxes by 6.2 percent, up to $400, on earnings, phased out between $75,000 and $95,000. (The numbers were double for couples.) It expired at the end of 2010.

Instead of renewing the MWP credit, Republicans insisted on replacing it with a two-percentage-point cut in employees’ payroll taxes, which reduced the average tax cut for low-income taxpayers and quadrupled the average tax cut for high-income payers — even though the poor are far more likely to spend those tax cuts and stimulate the economy.

The payroll tax cut cost almost twice as much as the MWP credit, but it didn’t affect the Social Security trust fund because the Treasury filled the hole with general revenues. In other words, they borrowed and increased the deficit. Apparently, Republicans didn’t care as much about the budget deficit as they did about tax cuts for the rich.   Continue reading “How the Republicans Tried to Kill the Payroll Tax Cut…and Why”

A Failure to Communicate, Not a Failure to Stimulate

It’s a little difficult to reply to Prof. Mishra’s latest op-ed because it doesn’t really have a point. It goes all over the place. As far as I can tell, the only actual argument he makes against President Obama’s American Jobs Act is:

…the first stimulus bill in 2008, a $700 billion package geared toward government spending to stimulate the economy, and financed with borrowed money, has obviously failed to create new jobs.

He never offers any evidence to support this claim.

I’ve disproven this hypothesis before, but I’ll do so again — first by repeating what I said last time, then with even more evidence. If you’ve already read the first part, you might want to skip to the new stuff, though it can’t hurt to refresh your memory…   Continue reading “A Failure to Communicate, Not a Failure to Stimulate”

5 Ways to Sound Stupid When Discussing the Debt Ceiling

In the past week, I’ve had conversations with people who voiced the following myths. Read and learn, lest you embarrass yourself in the same way.

Myth #1: Federal debt has been increasing under all presidents since World War II.

Reality: Federal debt steadily declined from the mid-1940s to the early 1980s, then it increased dramatically (with a brief hiatus in the mid-to-late 1990s). Ronald Reagan reversed four and a half decades of safe, responsible fiscal policy, and every successor except Bill Clinton followed his lead. See for yourself:   Continue reading “5 Ways to Sound Stupid When Discussing the Debt Ceiling”

What to Read on Tim Pawlenty

Pawlenty Stands Against Clean Air — Raj Salhotra & Stephen Lacey

Former Minnesota Governor Tim Pawlenty doesn’t seem to like any sort of regulation: “We need less EPA monitoring of our economy. And more monitoring of EPA’s affects on our freedom. I will require sunsetting of all federal regulations. Unless specifically sustained by a vote of Congress.”

According to a 2010 EPA progress report: “An analysis estimates annual public health benefits of the program in 2010 alone at more than $120 billion, about 40 times the estimated cost. Power plants have decreased emissions of SO2, a precursor to acid rain, to 5.7 million tons in 2009, a 67 percent decrease from 1980 levels and a 64 percent decrease from 1990 levels.”

A Contender to Reshape GOP’s 2012 Image — Dan Balz

He argued strongly for a stay-the-course policy in Afghanistan. He opposed President Obama’s July 2011 deadline for the start of a drawdown of forces and said more troops might even be necessary to assure eventual success.

On fiscal issues, he said the administration has spent too much for too little on the economy and that, if…the president’s debt and deficit commission then offers recommendations that include any new taxes, “it’s going to be a non-starter.”

He called the new health-care law misguided and said he and most Republicans still want to repeal it and replace it with something else. He said Arizona’s new immigration law has been “wildly and irresponsibly and recklessly mischaracterized” by government officials including the president.

Is He Too Nice for His Own Good? — Michael Crowley

Ventura had left behind a $4.5 billion deficit, which Pawlenty closed not by raising taxes (which he would slash by $800 million over the course of his term) but by dramatically slowing spending. He vetoed dozens of Democratic tax-hike bills, and in 2005 he allowed a nine-day state-government shutdown rather than give in to the Democrats’ budget demands.

In 2005, Pawlenty set out to cut the generous pension benefits of the state’s mass-transit workers’ union, triggering a 44-day strike before the union cried uncle. […] On social issues, Pawlenty approved tough new abortion restrictions and gave local school boards the freedom to teach intelligent design as an alternative to evolution.

Critics say Pawlenty used accounting shortcuts, like postponing spending and accelerating revenue collection, to balance budgets. Today, Minnesota is struggling with a projected budget deficit of $5 billion, which some blame on Pawlenty. “I don’t think any governor has left behind a worse financial mess than he has,” says Arne Carlson, a Republican who was Minnesota’s governor from 1991 to 1999.

But he tends not to mention the help he got from nonconservative sources — including more than $2 billion from an Obama stimulus bill that he has trashed as “largely wasted” and a 75 cents cigarette-tax hike he swallowed to end that 2005 budget shutdown.

Pawlenty will also have to explain to conservatives his stint of activism on global warming, which in 2007 he called “one of the most important [issues] of our time.” He signed bills promoting clean energy and a cap-and-trade system of carbon limits similar to the model envisioned by Obama. He toured the state with the Minnesota-based Arctic explorer Will Steger to “convince the skeptics,” as he put it, and even considered visiting the Arctic. He made a 2008 radio ad urging Congress to “cap greenhouse-gas pollution now!” But he now takes it all back, saying the human impact on climate change is unproven. “It was a mistake, and I’m sorry,” Pawlenty said…

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What to Read on Jon Huntsman

Jon Huntsman on the Issues — Ezra Klein

So he doesn’t oppose cap-and-trade because global warming is a hoax, or the science is unsettled. He opposes it because a) any solution will have to be international and b) we need to be worried about the economy right now. He’s not against stimulus in theory, but he thought the specific stimulus Obama passed was poorly designed. He doesn’t defend the specifics of Ryan’s changes to Medicare, but supports them because the mounting national debt has forced us to consider “proposals that would’ve been laughed out of the room” at another time.

Romney Doesn’t Scare Obama. This Guy Does. — Chris Jones

He was hugely popular in his home state, pursuing an agenda of fiscal conservatism and social semimoderation — he supports civil unions for gay couples and believes climate change is an urgent issue but remains staunchly pro-gun and antiabortion.

He says that from China, he gained a different perspective on America and its place in the world. He saw two countries, one on the rise, ascendant, and the other on the brink of economic collapse, crushed by debt and overregulation and taxes. He talks about sparking a new “industrial revolution,” mostly through energy technology, reducing our reliance on oil.
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He said he believed the United States should start a significant withdrawal of troops from Afghanistan immediately. He also would not have intervened in Libya — “We just can’t afford it.” And he would seek to make serious cuts to the military’s budget. “If you can’t find anything there to cut, you’re not looking hard enough.”

Polls Find Huntsman Unacceptable to Many in Republican Base — Nate Silver

About half of the views Republicans expressed about Mr. Huntsman were negative…

…they almost certainly reflect the fact that Mr. Huntsman has taken a number of positions that are bound to be unacceptable to large swaths of the Republican electorate. Among them are expressing support for Barack Obama’s 2009 stimulus package, endorsing an individual mandate for health insurance, and securing Utah’s participation in a regional cap-and-trade program. Mr. Huntsman also holds a moderate position on gay marriage, having endorsed civil unions for same-sex couples. And he served as President Obama’s ambassador to China.

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