Wonkbook: Stimulus reax; Mitch Daniels' plan; Obamas opposes tax cut extension
Are we calling the proposed raft of tax breaks and infrastructure investments stimulus? Jobs bills? Economic reforms? Either way, Mark Zandi, the Moody's economist who has emerged as the arbiter of stimulus spending, is unimpressed. "Helpful on the margin," he says, "but they're not a gamechanger." But Mitch Daniels, the Indiana governor who has emerged as the standard-bearer for serious conservatism, has released a six-part stimulus plan that shares features with Obama's proposal and adds the payroll-tax holiday that Obama considered but ultimately dropped. What happens if the Obama administration reverses course and decides to agree with him?
In other news, the Obama administration has broken with its former budget director, Peter Orszag, and reiterated its opposition to extending the Bush tax cuts for filers earning over $250,000 a year. Meanwhile, insurers are blaming rising health insurance rates on health care reform, and the Obama administration is blaming the increases on insurers. This either seriously complicates their efforts to defend the bill going into the midterms, or gives them a fight against insurers they're excited to have.
This. Is. Wonkbook.
Stimulus expert Mark Zandi doubts Obama's tax proposals will do much for job growth, reports Lori Montgomery: "'I think they're helpful on the margin to the recovery. But they're not a game-changer,' said Mark Zandi, chief economist at Moody's Analytics and a key architect of Obama's first stimulus package. Coupled with Obama's plan to boost spending on transportation, Zandi said, the tax breaks 'a year from now might create tens of thousands of jobs' - a drop in the bucket compared with the 7.6 million jobs lost during the recession that began in December 2007... The White House has declined to say how many jobs the proposals would create or precisely how they would be paid for."
Marshall Auerback is more positive: http://bit.ly/ahPkEQ
Mitch Daniels outlines the stimulus package he'd like to see: "Payroll tax holiday. Suspend or reduce for the emergency period, say one year, the Social Security payroll tax on workers...Impoundment power. Presidents once had the authority to spend less than Congress made available through appropriation...Recall federal funds...Federal hiring and pay freeze. Better yet cut federal pay, which now vastly outstrips private-sector wages, by 10% during the emergency term...A 'freedom window'"...in which the job-killing practice of agonizingly slow environmental permitting is suspended, perhaps in favor of a self-certification safe harbor process?...Accelerated or full expensing of business investment...Reports indicate that the administration is about to propose this very idea. If so, good.
The Obama administration is standing its ground on letting the Bush tax cuts on the rich expire, reports Karen Tumulty: "'The president's viewpoint is that we cannot afford to extend the tax cuts for those making more than $250,000 a year,' White House press secretary Robert Gibbs told reporters...He also said he had never heard Orszag argue in private White House meetings for a temporary extension of the tax cuts for wealthier Americans...The current Obama White House press secretary suggested that the former Obama White House budget chief might have been wearing 'a congressional relations hat on in terms of what political price Congress might have to go through to extend different things.'"
Insurers are blaming the Affordable Care Act for rate increases this year, reports Janet Adamy: "Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators...The rate increases largely apply to policies for individuals and small businesses and don't include people covered by a big employer or Medicare....Nancy-Ann DeParle, the White House's top health official...said that for insurers, raising rates was 'already their modus operandi before the bill' passed. 'We believe consumers will see through this,' she said."
The administration's infrastructure bank proposal will likely not take effect this Congress, reports Ashley Halsey: "'The calendar is not our friend here, and the Republicans in the Senate aren't going to let him have a win before the election,' said a staff member on a key transportation committee, who spoke on the condition of anonymity because he was not authorized to speak on the issue. 'We really can't expect any progress this year."
Music festival interlude: The Futureheads play "Hounds of Love".
Still to come: Young investors have become as allergic to risk as older elderly investors; activists are criticizing the Obama administration for not using its antitrust powers more aggressively; the oil industry is trying to sell people on the worth of dispersants; a federal judge has refused to stay a ban on stem cell research; and workers who can package playing cards faster than robots.
Young workers have become as allergic to financial risk as elderly investors, writes Nancy Cook: "Traditionally, we associate the early years with risky behavior—but one consequence of the recession appears to be a shift in the way 18- to 34-year-olds handle money. Affluent millennials and 30-somethings say their tolerance for risky investments is much lower than it was a year ago, rivaled only by people over the age of 65, according to a new study by Merrill Lynch Global Wealth Management...Avoiding risk may feel sensible to a generation whose financial coming-of-age has been bookended by the dotcom bubble and the subprime-mortgage meltdown."
Consumer advocates say Obama hasn't changed much on antitrust enforcement, reports Jia Lynn Yang: "The Justice Department's antitrust division has yet to exercise its signature power: to bring a case against a corporate titan suspected of abusing its dominance. In its other central role, as a merger cop, the division challenged in court fewer than half as many deals in 2009 as the Bush administration did in its last year in office, although the number of mergers also declined by about half. Instead, federal antitrust lawyers have eschewed aggressive litigation against big business in favor of a less-risky approach that works with companies to resolve anti-competitive concerns, according to many antitrust experts."
George Voinovich may serve as the Republican swing vote on the infrastructure bank proposal: http://bit.ly/aKeczv
The SEC is considering new rules on high frequency trading, reports Jesse Westbrook: "The SEC should consider whether traders with the 'best access' to markets should be obligated to buy and sell stocks to preserve liquidity, Schapiro said today in a speech at the Economic Club of New York. The agency is also examining whether stock quotations should have to stand for a minimum amount of time. Such a change would stop high-frequency traders from repeatedly placing and canceling orders in milliseconds."
Annie Lowrey argues for a millionaire's tax bracket: http://bit.ly/b5l8Mb
Steve Pearlstein argues long-term job growth requires export growth: "The problem with that strategy is that for the past two decades we have allowed our industrial and technological base to deteriorate as talent and capital were grossly misallocated toward other sectors of the economy, even as other countries were able to attract the investment, the technology and the know-how to serve the U.S. and global markets. For a time, none of this seemed to matter because we were consuming so much that we were able to support job creation at home as well as overseas. But now that the debt-fueled consumption binge is over, we find that we don't have the companies, the workers or the competitive products to replace the stuff we now import or expand our share of export markets."
Tim Noah provides a visual guide to the US' inequality problem: http://bit.ly/dyShwr
David Leonhardt thinks the housing market is a few years away from growing again: "The best advice for homeowners and would-be buyers may be to think of a house not as an investment, first and foremost, but as a place to live. If there is a good chance you will move in the next three years or so, you should probably rent. The hassles of buying and the one-time costs are just too big. Plus, house prices are not low in most places today...But if you can imagine staying much longer than a few years, you should take some comfort in the fact that the bubble seems mostly deflated. Sometime soon, prices should begin rising again. They may not quite keep up with incomes, but they will probably outpace the price of food and clothing."
Adorable animals being difficult interlude: This dog refuses to be walked.
Climate activist Bill McKibben is urging the movement to give up on Congress for the time being, reports Amy Harder: "My sense watching things in Congress was that our green groups gave it their very best shot, and as it turned out, they were significantly outgunned. The energy industry has so much money that they're able to fairly easily block even a very mild and tame legislation, which this was. And since we're not going to compete for them in cash money, we better figure out some other currency and I think that currency is going to have to be bodies and passion. And that's what we tried to do as we build movements."
The oil industry has proposed new offshore drilling regulations to the Interior Department: http://bit.ly/bTHNff
The oil industry alleges dispersants were "critical" in keeping the Gulf spill way from land, reports Andrew Restuccia: "A report written by the oil industry laying out recommendations for future oil spill responses says that the use of chemical dispersants to break up the oil that spilled into the Gulf 'was a critical element in preventing significant oiling of sensitive shoreline habitats during the [Deepwater Horizon] response.' The report, the Joint Industry Oil Spill Preparedness and Response Task Force, says 'misperceptions and knowledge gaps' about dispersants led to restrictions on their use."
David Roberts argues that regulation can spur technological innovation: http://bit.ly/cMwxSP
Weird weather is to be expected given global warming, writes Andrew Revkin: "With the global population cresting in the coming decades, our exposure to extreme events will only worsen. So whatever nations decide to do about greenhouse gas emissions, there is an urgent need to 'climate proof' human endeavors. That means building roads in Pakistan and reservoirs in Malawi that can withstand flooding. And it means no longer encouraging construction in flood plains, as we have been doing in areas around St. Louis that were submerged in the great 1993 Mississippi deluge."
How stuff is made interlude: Chinese workers put together playing card decks--by hand.
A federal judge won't stay his ruling against the Obama administration on stem cell research, reports Rob Stein: "Lamberth indicated that his injunction was less restrictive than had been interpreted by the Obama administration. 'Defendants are incorrect about much of their 'parade of horribles' that will supposedly result from this Court's preliminary injunction,' Lamberth wrote. The ruling did not necessarily apply to research that had been funded under guidelines issued during the Bush administration or that had previously been 'awarded and funded,' Lamberth wrote. He also indicated that he could make a final decision on the case soon."
Paying third graders leads to better test scores: http://bit.ly/doBmr8
The Obama administration's immigration crackdown is spreading to restaurants, reports Sarah Kershaw: "Restaurants are not the only businesses to fall under the searchlight. But until recently, immigration enforcement had been notoriously lax, with a kind of universal wink at kitchens filled with employees working either off the books or with false documents, government officials and industry experts say. But that is quickly changing, based on the rising number of investigations and the penalties being sought against restaurateurs."
For-profit colleges are stepping up anti-regulation lobbying, reports Tamar Lewin: "Some of the letters show little familiarity with the proposed regulations. For example, a Education Department official said, students at a particular school sent in dozens of hand-written letters asking for continued aid to for-profit colleges, but never mentioning the regulations. He said he called a letter-writer to ask whether the letter was intended as a comment on the regulations, and was told, 'This is what the school asked us to write.' He would not identify the school."
Young women make more than young men due to an education gap, writes Heather Boushey: "When you do the apples-to-apples comparison that the AAUW did, young women still earn less than comparably skilled men. What has changed is that there are more women with higher levels of education. Among women aged 22 to 30, a third (34 percent) have some college education and a third (35 percent) have a college degree or more. Among men in that age group, less than a third (30 percent) spent some time in college, and just over a quarter (28 percent) have a college degree. If one group (women) has more workers with more education, then they should outearn the other group."
Elizabeth Drew argues this Congress has hardly been "dysfunctional": "Democrats persevered despite the fact that the House and the Senate have different politics and different rules and that the two chambers have no love lost between them. (Thus the House, sometimes to appease certain members, has passed far more bills than the Senate has; this is not unusual and can happen no matter which party is in power.) Frustrated Democratic senators chose not to publicly get out ahead of the president for fear, some told me, of undercutting him, or vice versa. And in the end, they essentially met all of the president's major goals -- the one major exception being energy and climate legislation."
Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Pete Souza/White House.
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