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Wonkbook: Liberals push on taxes; G-20 agreement; Korea trade deal fails

By Dylan Matthews
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President Obama speaks during a news conference at the G-20 Summit in Seoul. (Reuters)

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Liberal activists are pushing the White House to not compromise on extending the Bush tax cuts, reports Perry Bacon: "Liberal groups have blasted Obama at times over the past two years as not being sufficiently dedicated to their positions - history that factored into their criticism of the White House on Thursday for signaling that it will compromise with the GOP on the issue of extending tax cuts that are scheduled to expire this year. Others said they would attack Obama if he embraced any proposal to reduce Social Security benefits, as the leaders of a bipartisan panel proposed this week to cut the federal deficit. ... This push from the left could complicate Obama's strategy as he tries to cope with the GOP gains in Congress."

The G-20 has agreed on broad principles but deferred decisions on substance, report Howard Schneider and Scott Wilson: "The agreement represents a middle ground between the more precise economic targets pushed by the United States as a way to influence China's currency management and other practices, and the backlash against the idea led by countries, notably China and Germany, that rely heavily on exports. A senior U.S. official said it was still considered a step forward in the push to 'rebalance' global economic patterns so that export-dependent countries begin to buy more from other nations, and countries with large levels of debt and trade deficits such as the United States begin to save and export more."

The U.S. and South Korea have failed to finalize a free-trade agreement, report Howard Schneider and Scott Wilson: "Upon his arrival at the summit, the U.S. president released a letter calling for resumption of the Doha round of world trade talks. Concluding a bilateral deal with Korea would have been a tangible demonstration of intent. ... Officials involved in the talks leading up to the summit had reported progress on the auto issue, including a possible agreement by South Korea to accept slightly weaker U.S. emissions standards as long as imports remained below a certain level. ... But in the end, negotiations did not advance enough to assure U.S. officials that American carmakers would gain better access to Korea's market."

Acoustic folk interlude: Sufjan Stevens plays "John Wayne Gacy Jr."

Still to come: Business groups are welcoming the debt commission's tax proposals; BP apologizer Rep. Joe Barton's campaign to be House energy committee chairman is gaining steam; the likely House appropriations chairman supports cutting defense spending; and a T-shirt with a built-in synthesizer.

Economy/FinReg

Business groups are welcoming the debt commission's tax proposals, reports Laura Saunders: "Perhaps most important, Option 2, and variants of Option 1, would shift the U.S. to a "territorial" tax on corporate income, a change business groups have endorsed. The current system taxes foreign corporate earnings at the U.S. rate only when they are repatriated, which might encourage U.S. multinationals to keep profits offshore. Under a territorial system, there would be no U.S. tax on foreign income from active businesses, and therefore no tax penalty for repatriation. Most of the U.S.'s major trading partners have territorial systems."

Obama is open to a temporary full tax cut extension, but not committed to it.

The debt commission's tax changes mainly affect high earners, report John McKinnon and Nick Timiraos: "Those deductions and investment breaks, such as mortgage interest and lower tax rates for capital gains, increase after-tax income for the top 20% of earners -- roughly, households earning more than $117,000 -- by more than 10%, according to data supplied by a White House-sponsored deficit panel that drafted the plan. That is compared to a 6% to 8% benefit for lower earners. Higher earners could stand to recoup some of that loss through several other proposed changes, notably lower marginal income-tax rates."

Record low mortgage rates still aren't enticing buyers.

Local officials are slowing down the foreclosure process, reports Ariana Eunjung Cha: "One month ago, the city of Chicago and the surrounding suburbs of Cook County became a foreclosure-free zone. It wasn't the banks or judges that instituted the moratorium, because they were still moving cases forward at a rapid clip. The holdup was elsewhere: at the sheriff's office. Sheriff Thomas J. Dart, whose office is responsible for physically evicting delinquent homeowners, announced Oct. 19 that his deputies would 'no longer be doing the banks' work for them anymore.'"

The White House is considering a tax cut proposal from Sen. Mark Warner.

The debt commission's Social Security proposal punishes lower-income workers, writes Paul Krugman: "They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable? The answer is no, for a number of reasons -- including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor. But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades."

Banning earmarks doesn't give the executive branch more power, writes Rep. Jeff Flake.

The debt commission's plan would help alleviate the global trade imbalance, writes Steven Pearlstein: "It takes two sides to create a trade imbalance -- one country that consumes too little (that's China), another that consumes too much (that's us). And certainly one measure of U.S. profligacy is the federal budget deficit. Reducing the federal deficit won't by itself do much to balance the U.S. trade account by increasing exports, but to the degree it involves increases in taxes or decreases in employment and income of government workers, demand for foreign imports will also decline. Such are the harsh realities of bringing an economy back into balance."

Adorable kids with good musical taste interlude: A toddler rocks out to Florence and the Machine's "Dog Days Are Over" in his car seat.

Energy

Four former House committee chairmen are backing BP apologizer Joe Barton to be energy committee chairman, reports Robin Bravender: "Three former House committee chairmen -- Rep. Don Young (R-Alaska) and former Reps. Bill Archer (R-Texas) and Bud Shuster (R-Pa.) -- are lobbying GOP leadership on Barton’s behalf to clarify that he hasn’t reached the end of a term limit as the panel’s top Republican, according to a letter obtained by POLITICO.  The letter of support comes as Barton works behind the scenes to win back his seat atop the powerful committee. But Barton’s bid is widely seen as a long shot, due in part to his icy relationship with House leadership. Reps. Fred Upton of Michigan and John Shimkus of Illinois are the likely front-runners for the slot."

The E.U. is tightening environmental regulations.

Evidence of the BP oil spill is being lost: "The owner of the rig that exploded in the Gulf of Mexico has told federal investigators that the now infamous blowout preventer is in danger of corroding and its value as a key piece of evidence may be compromised. Transocean lawyer Steven Roberts said in a Nov. 3 letter to the federal investigation team that forensic testing had not yet begun on the device even though it's been sitting at a NASA facility in New Orleans for two months. He said it may be corroding because of inadequate preservation."

Arctic oil drilling could be more dangerous than gulf drilling.

Global warming activists and skeptics can agree on green energy research, writes Bjorn Lomborg: "The United States witnessed an equally promising development in the climate debate just last month, when the conservative American Enterprise Institute, the liberal Brookings Institution, and the centrist Breakthrough Institute teamed up to publish a report that called for revamping America's energy system with the aim of making clean energy cheap. The report, titled 'Post-Partisan Power,' convincingly argues that the U.S. government should invest roughly $25 billion per year (about 0.2 percent of America's GDP) in low-carbon military procurement, R & D, and a new network of university-private sector innovation hubs to create an 'energy revolution.'"

Wearable instrument interlude: A T-shirt with an integrated synthesizer and keyboard.

Domestic Policy

Likely House appropriations chairman Jerry Lewis is promising defense cuts, reports Stephanie Kirchgaessner: "In an interview with the Financial Times, Mr Lewis said he would support across-the-board spending cuts if given the gavel of the House appropriations committee, adding that his push to cut funding for the F-22 fighter jet when he last held the post showed his willingness to make unpopular decisions. 'You need to be tough ... and examine these things very carefully,' he said. Funding for the jet was ultimately restored despite Mr Lewis’s initial efforts."

The governors of Minnesota and Rhode Island want to file a friend-of-court brief supporting a legal challenge to health-care reform.

The Obama administration will create a position for an online privacy watchdog, reports Julia Angwin: "The administration faces significant obstacles to enacting its privacy agenda. While the Republicans who now control the House of Representatives generally support privacy, they are unlikely to support any bill to expand the enforcement powers of the Federal Trade Commission, GOP congressional aides say. Privacy advocates will be reluctant to back legislation that lacks enforcement and is perceived as toothless. There is no comprehensive U.S. law that protects consumer privacy online. Internet privacy issues generally are policed by the FTC, which can take action only if a privacy-violating action is deemed 'deceptive' or 'unfair.'"

The FCC might require cell carriers to share data networks.

The lame duck session of Congress is a historical accident, writes Bruce Ackerman: "Congress passed the 20th Amendment, which 'promised to eliminate the legislative influence of Senators & Representatives whose constituencies have already repudiated them.' This was a big deal in 1932. The new amendment culminated a decade-long Progressive campaign against lame-duck sessions, and it rapidly gained the support of three-fourths of the states. ... Progressives shouldn't be obliged to launch another constitutional campaign for a new amendment. Congress should clean its own house. It should enact legislation prohibiting lame-duck sessions except in national security emergencies."

A focus on "national greatness" could make painful deficit reduction measures palatable.

Dylan Matthews is a student at Harvard and a researcher at The Washington Post.

By Dylan Matthews  | November 12, 2010; 9:16 AM ET
 
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Comments

nice and surprising job Dylan putting up the article about how Transocean is telling the federal regulators that they're botching their investigation of the BP Oil Spill. Maybe they used to work at MMA and were transferred to investigate it. Where are all the liberals now complaining that the DOJ and FBI are not fulfilling their obligations? I'm sure if this was BP doing something wrong we'd be having a full blown congressional inquiry by now.


And Krugman's arguement is bogus. Even if low income workers life expectancy has inched up smaller than high income workers the idea and concept is that the SS retirement age is also going to inch up very slowly. Its not as if tomorrow people are being forced under this OPTION to work 3 years longer. Also he gives no thought to the countless conservative sacred cows being slaughtered such as defense spending, ending the MID etc.

The point is EVERYONE needs to take a hit. There can be nothing left off consideration if we're going to avoid a 2020 $1 Trillion interest payment on the debt. Sorry but we can't just "tax the rich" to pay for that.

Posted by: visionbrkr | November 12, 2010 10:28 AM | Report abuse

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