Wonkbook: GOP spending cuts would cost 700,000 jobs
For most of 2009 and all of 2010, all Republicans asked Democrats was, "Where are the jobs?" Every Democratic bill got the prefix "job killing," as in "the job-killing health-care bill." Every address by Minority Leader John Boehner asked why jobs hadn't come roaring back since the passage of the stimulus. It wasn't always good economics -- the attack on the health-care law relied on a strategic bit on confusion about the difference between the supply of jobs and the supply of labor, for instance -- but it was very good politics.
But now Republicans control the House, and the question is getting turned around on them. Goldman Sachs and Mark Zandi both predict their spending cuts will have a sharp and brutal impact on job creation and economic growth (John Taylor, it should be noted, disagrees). Across the pond, England's sluggish, shrinking economy isn't giving advocates of austerity much support for their proposals. And the GOP's plans don't even have the benefit of consistency: their efforts to cut taxes and repeal the health-reform law would add vastly more to the deficit than their proposed spending cuts would remove.
In 2010, the key Republican argument was that Democrats were more interested in longtime ideological objectives like health-care reform than in jobs. Increasingly, Republicans are making themselves open to a similar charge: they're more interested in pursuing longtime ideological objectives like tax cuts and attacking government and repealing or undermining Obama's legislation than they are in creating jobs and reducing the deficit.
The GOP budget plan would cost 700,000 jobs, reports Lori Montgomery: "A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis set for release Monday. The report, by Moody's Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months. Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year."
Nancy Pelosi is critical of the stopgap spending deal, report Erik Wasson and Mike Lillis: "Congressional Democrats on Monday struggled to find a unified voice on funding the government as Republicans filled the message vacuum. House Minority Leader Nancy Pelosi (D-Calif.) criticized a Republican spending bill that Senate Majority Leader Harry Reid (D-Nev.) appeared to embrace late last week. The split in the Democratic Party was seen as a blow to the conventional wisdom that a government shutdown would be averted this week. Many political observers still anticipate that a two-week spending bill will clear the House and Senate by this weekend, though there will likely be some bumps along the way.
House Republicans introduced their stopgap measure on Friday, and in a move that surprised some Democrats, Reid’s office indicated support for it."
The White House wants a one-month stopgap, reports David Rogers: "Showing the first signs of coming off the sideline, the White House made a late bid Monday to extend the life of a stopgap government funding bill to a full month and thereby allow more time for the administration to become engaged in the House-Senate talks. The House is slated to vote Tuesday on a two week extension of the current continuing resolution due to expire this Friday, Mar. 4. The administration would instead like that to run a full 30 days, and this triggered a meeting Monday evening between Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) in the senator’s offices...Boehner would say only that he was sticking with the two-week time frame of the bill filed last Friday by the House Appropriations Committee."
Obama supports giving states the ability to experiment with different health plans, report Amy Goldstein and Dan Balz: "President Obama sought to defuse criticism of the new health-care overhaul Monday by saying he is willing to give states an earlier opportunity to opt out of certain key requirements - but only if they can find their own ways to accomplish the law's goals...If Congress approves the plan, states could gain exemption by 2014 rather than 2017 from some central and controversial elements of the law: that most Americans carry health insurance, that many employers offer their workers coverage, and that states create insurance marketplaces to help individuals and small businesses buy health plans that meet federal rules."
Ukelele cover interlude: Amanda Palmer does "Idioteque" by Radiohead.
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Still to come: The public supports collective-bargaining but is more mixed on unions; the administration is trying to prevent a court ruling from blocking health care reform's implementation; John Boehner takes aim at net neutrality; offshore drilling is started up again; and a baby who really loves ripped paper.
The NYT polls labor unions: "As labor battles erupt in state capitals around the nation, a majority of Americans say they oppose efforts to weaken the collective bargaining rights of public employee unions and are also against cutting the pay or benefits of public workers to reduce state budget deficits, according to the latest New York Times/CBS News poll. Labor unions are not exactly popular, though: A third of those surveyed viewed them favorably, a quarter viewed them unfavorably, and the rest said they were either undecided or had not heard enough about them."
Teacher's unions are the key to organized labor's revival, writes Ezra Klein: "State budgets are in worse shape than Charlie Sheen. With federal aid running out and local economies still struggling, the next few years will require deep cuts in spending. And where do states spend much of their money? On education - which is to say, on teachers. The prospect of firing tens of thousands of teachers is bad enough. But, as a chilling report from the New Teacher Project explains, about 40 percent of the nation's teachers work in states where their contracts don't allow administrators to take performance into account when making layoffs. That is to say, they cannot try to lay off the bad teachers while saving the good ones. Instead, they're forced to use the 'last-hired-first-fired' mechanism. The newest teachers get the pink slip, no matter how good they are. This will turn a crisis into a catastrophe. And let's be clear, it's the fault of the teachers unions."
Obama's trade agenda is stalled, reports Sewell Chan: "President Obama has made expanding exports a centerpiece of his plan for accelerating the economic recovery, but in recent weeks, his trade agenda has nearly ground to a halt amid partisan feuding. Although the White House renegotiated a pivotal free-trade agreement with South Korea in December, scoring rare bipartisan praise, House Republican leaders have refused to allow the deal to move forward. They want the administration to make progress first on similar accords with Colombia and Panama that face stiff opposition from labor unions and liberal Democrats. To add to the pressure on the administration, House Republicans in February blocked a big expansion of trade adjustment assistance -- which provides cash, training, relocation, job search and other benefits to workers displaced by globalization -- from being renewed."
Women still face a wage gap: http://on.wsj.com/iiA1GV
Higher food and energy prices are blunting the tax cut extension's impact, reports Ylan Mui: "Rising food and energy prices ate away at the extra money workers received in January from a reduction in the payroll tax, according to government data released Monday, stalling the momentum in consumer spending. The Obama administration had hoped to prop up the country's economic recovery through a wide-ranging tax-cut package passed late last year. One of the key components of the program is a 2 percent cut in the amount that workers must pay toward Social Security in 2011 - which the White House had hoped would encourage consumers to spend more. The tax cut saved workers roughly $66.3 billion and helped boost incomes by 1 percent in January compared with the previous month, the government data show. But much of the increase went toward paying for more expensive food and fuel."
Ben Bernanke will soon face a grilling on inflation before Congress: http://on.wsj.com/fD1kMr
Cuts should favor the young over the old, writes David Brooks: "Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most. So far, this principle is being trampled. Seniors vote. Taxpayers revolt. Public employees occupy capitol buildings to protect their bargaining power for future benefits negotiations. As a result, seniors are being protected while children are getting pummeled. If you look across the country, you see education financing getting sliced -- often in the most thoughtless and destructive ways. The future has no union."
Workers should organize as businesses have, writes Bob Herbert: http://nyti.ms/fUYOvT
Economic models like Goldman Sachs' and Mark Zandi's are inaccurate, writes John Taylor: "The analysis in this Goldman-Sachs report is based on the same type of 'large multiplier' theory that predicted that the stimulus package of 2009 would stimulate economic growth. Research by me and my colleague John Cogan finds that more up-to-date theories, which bring important incentive and expectations effects into account, show far smaller multipliers...Moreover, by following the stimulus money, we found that in actuality the stimulus package of 2009 had no material positive effect on economic growth or employment...The old-style Keynesian approach used by Zandi has many of the same flaws that are found in the Goldman Sachs approach."
"I wish I liked anything as much as kids like bubbles" interlude: A baby laughs hysterically at ripped paper.
The Obama administration is pressing an anti-health care reform judge to allow implementation, reports Jennifer Haberkorn: "The Obama administration on Monday defended its request that Judge Roger Vinson clarify his January ruling striking down the health care overhaul, arguing that the states and public have too much confusion otherwise. 'Clarification is appropriate so that defendants know how to proceed in this litigation and in implementing the Act, and to dispel the confusion of the public and many plaintiff states regarding their rights and obligations going forward,' the Department of Justice wrote in a reply memo sent to the judge late Monday. Vinson said he would reply 'promptly' once the DOJ sent in the response. The case was brought by 26 states in U.S. district court in Florida."
Many Republicans rule out Medicare and Medicaid cuts: http://politi.co/gdqydq
A new GAO report showcases billions in bloat, reports Damian Paletta: "The U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development. These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to the Government Accountability Office. A report from the nonpartisan GAO, to be released Tuesday, compiles a list of redundant and potentially ineffective federal programs, and it could serve as a template for lawmakers in both parties as they move to cut federal spending and consolidate programs to reduce the deficit. Sen. Tom Coburn (R., Okla.), who pushed for the report, estimated it identifies between $100 billion and $200 billion in duplicative spending."
The House is preparing a "resolution of disapproval" of net neutrality: http://politi.co/fIkFVI
John Boehner attacked net neutrality in a speech, reports Hayley Tsukayama: "The speaker...came out swinging against the FCC and net neutrality, promising to fight a government takeover of the Internet. He echoed the assertion of Republican colleague Marsha Blackburn (R-Tenn.) that net neutrality is a version of the Fairness Doctrine for the online era. 'Now, you know the old saying: ‘If you can’t beat ’em, join ’em.’ Well in Washington, it’s more like, ‘If you can’t beat ’em, tax ’em and regulate ’em' Boehner said in his speech. 'So, some members of Congress and the federal bureaucracy are still trying to reinstate - and even expand - the Fairness Doctrine. To them, it’s fair to silence ideas and voices they don’t agree with, and use the tools of government to do it.'"
Bulk-buying could cut state and local deficits considerably, writes David Yarkin: http://nyti.ms/gDpaH1
States are considering moving to 401(k)-style pensions, reports Jeannette Neumann: "Policy makers across the country are considering scrapping guaranteed retirement benefits for public workers in favor of 401(k)-like plans. In pursuing the switch, some state and local governments hope to shift more responsibility and risk--as well as potential reward--to employees. But some are discovering that closing down a pension plan can carry hefty costs. Many say 401(k)-style plans can yield meaningful cost savings over time if employer contributions are substantially reduced from what they were, and relieve governments of the obligation to make guaranteed payouts. Yet shorter-term pain can result from such a switch."
Classical music and beer interlude: Vittorio Monti's Czardas played on beer bottles.
The Obama administration has opened up offshore drilling again, reports Darren Goode: "The Obama administration Monday announced the first permit allowing for new production in deep waters in the Gulf of Mexico since last year's BP spill. The Bureau of Ocean Energy Management, Regulation and Enforcement granted Noble Energy's application for a permit roughly 70 miles off the coast of Venice, La. The approval comes more than 10 months since the April 20 explosion of the Deepwater Horizon rig that killed 11 workers and dumped 205 million gallons of crude oil into the Gulf over three months. Gulf state lawmakers and the oil industry have blasted the administration for installing a 'de facto' drilling ban long after the BP leak was plugged."
Northeast Senators want Florida's high-speed rail money, reports Felicia Sonmez: "Ten senators from northeastern states requested Monday that $2.4 billion in funding for high-speed rail rejected by Florida Gov. Rick Scott (R) be redirected to rail projects in their states. Democratic Sens. Tom Carper (Del.), Richard Blumenthal (Conn.), Ben Cardin (Md.), Chris Coons (Del.), Kirsten Gillibrand (N.Y.), John Kerry (Mass.), Frank Lautenberg (N.J.), Bob Menendez (N.J.) and Barbara Mikulski (Md.) as well as Independent Sen. Joe Lieberman (Conn.) made the request in a letter to Transportation Secretary Ray LaHood. 'With its large population and high economic activity, the Northeast Corridor is well-positioned to lead the nation into the future of high-speed rail transportation,' the senators wrote."
Warren Buffett is betting on rail, writes Annie Lowrey: http://slate.me/g3d7b6
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.
| March 1, 2011; 6:47 AM ET
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