James Pethokoukis

Politics and policy from inside Washington

Some context on the current budget battle

Apr 7, 2011 21:00 UTC

This graphic from the good folks at Hamilton Place Strategies adds some perspective on the billions and trillions at play:

hps

Ryan plan would boost U.S. economic security

Apr 7, 2011 20:49 UTC

It’s intriguingly simple: Limit future increases in Medicare and Medicaid healthcare spending to cut debt. That’s the easy-to-understand core of House Budget Committee Chairman Paul Ryan’s budget plan, The Path to Prosperity. But the idea risks a voter backlash if medical inflation doesn’t slow, too. Otherwise, quality and service will suffer, badly fraying the social safety net. Republican Ryan thinks injecting some needed market discipline rather than sticking with President Barack Obama’s bureaucratic tinkering will do the trick. And he’s right.

Federal government healthcare expenditure for those two programs could more than double over the next four decades to nearly 14 percent of GDP, according to the Congressional Budget Office. The CBO says the new plan devised by House Budget Committee Chairman Paul Ryan would keep spending at around 5 percent of output.

ryan

Or to put it another way, without the Ryan plan, Medicare and Medicaid are a $58 trillion (net present value through 2085) unfunded liability. These two programs are the main reason the CBO sees America’s debt-to-GDP ratio hitting 344 percent (assuming the economy doesn’t collapse first) in 2050 vs. 62 percent in 2010. But with the Ryan plan, the entire federal debt is just 10 percent of GDP in 2050 before disappearing later that decade. Problem solved.

usa

There’s no fiscal miracle here. Ryan accomplishes this feat through simple math. He would increase revamped subsidies to seniors and the poor at rates far below the predicted pace of healthcare inflation. That has led the CBO to raise an eyebrow, wondering if such effective reductions would be politically sustainable. Oldsters would, for instance, eventually bear a far larger share of personal healthcare costs than under the current Medicare program.

But what the CBO misses is that Ryan bets he can square the circle by slowing medical inflation through increased competition. Instead of Medicare providing insurance, retirees would pick their own government-certified private plan, helped by a fixed subsidy from Washington. Fancier coverage would cost more. And in exchange for some protection from big bills, seniors would pay a greater share of small ones. Both features might encourage bargain hunting among competing plans. Republicans also want to lessen the role of middlemen in medical billing. Economists think heavy intermediation makes people less aware of the costs and therefore allows healthcare prices to rise faster than they should.

Competition generally works in the other five-sixths of the U.S. economy. And it should also in healthcare if government loosens its grip. Prices for laser eye surgery, a procedure commonly paid directly out of pocket, have fallen sharply over the past two decades. Then there’s the Swiss example. There citizens choose, aided by subsidies, among competing private insurers who must provide a basic benefits package. Ryan’s Medicare reform proposals bear more than a passing resemblance to that system. Costs have risen more slowly in Switzerland than the United States. The Swiss also devote just 11 percent of their economy to healthcare, counting both government and private spending. While that’s a lot compared to the UK and Scandinavia, it’s thriftier than America’s 17 percent and rising.

The only real differences between Ryan’s new plan and the one he co-authored with Clinton administration economist Alice Rivlin, is that it’s a bit stingier on increasing the subsidies and it doesn’t have a public option. That, along with the Swiss feel to it, is evidence that what Ryan has proposed is a rather centrist plan that Democrats should flock to if they want to preserve economic security for all Americans.

COMMENT

There is nothing in Ryan’s “Path To Penury” that has not been circulated in policy circles for decades. Almost everything in the plan has been tried and has failed. The plan ignores obvious economic realities, such as the bubble-induced recession that has left 25 million people unemployed or underemployed. It gives all the benfits the rich and powerful, while destroying the limited economic security enjoyed by tens of millions of middle class families.

He wants to lower the top tax rate from the 39.6 percent in current law to 25 percent. This will means billions of dollars a year in additional spending money for Wall Street bankers, CEOs of major corporations and other major campaign contributors.

At the same time, he wants to abolish Medicare and replace it with a voucher program that will rapidly fall behind the rising costs of health insurance and health services. Medical bankruptcies will skyrocket.

Oh, and he does propose cutting the $7.8 trillion in defense spending projected for the next decade by 1 percent. Apparently Paul Ryan believes in a strong safety hammock for the defense industry.

I’ll say this. The fawning coverage of America’s corporate media of it’s new rising star does jump-start
the debate over how to rebalance the government budget. But this plan falls apart under the most basic analysis.

The Heritage Foundation, who helped Ryan craft the Path To Penury, scrubbed its website as soon as real budget analysts started pointing out the impossible numbers in the projections. It’s not economic policy. It’s economic ideology. Which is why we will see daily articles by Mr Pethokoukis telling us how great it is.

Posted by GetpIaning | Report as abusive

The liberal budget response to Paul Ryan

Apr 7, 2011 18:54 UTC

Philip Klein, now at the Washington Examiner, scores a great scoop today with a peek at how the House Progressive Caucus plans on responding to the Ryan Path.  The liberal blueprint claims to balance the budget by 2021, mainly through a laundry list of tax increases that would raise government revenue as a share of GDP to a record high of 22.3 percent — four points higher than the historical average. (This also assume the tax increases have zero impact on growth.)

But the fiscal problem is not merely making the numbers balance out over ten years, but also over the rest of the century. That will require spending less on entitlements and more economic growth. But this plan does give insight into the sort of budget Washington liberals would prefer. Here is Phil:

Overall, taxes would rise to 22.3 percent of the economy, compared with 18.3 percent under the Ryan proposal.

The plan would also build on Obama’s most notable initiatives. It includes an additional $1.45 trillion in economic stimulus spending. On health care, the plan would add a government-run plan, or “public option,” to Obamacare and have the government negotiate drug prices.

Yet while other parts of government would grow, the defense budget would be gutted. The proposal would “reduce baseline defense spending by reducing strategic capabilities, conventional forces, procurement, and R&D programs.”

If liberal activists and Democratic lawmakers rallied around this plan, or something similar, then there could be an honest debate contrasting Ryan’s vision of lower taxes and entitlement reform with liberal plans to raise taxes, slash the military and further expand the role of government.

COMMENT

re: “American exceptionalism…”

Electrobahn must be living in a parallel universe.

Unless you’re in the top 1%, you’re falling further and further behind. There’s been a tremendous shift in our country, the middle class is largely wiped out, and the poor are worse off than they’ve been in a long time.

According to the IRS, in 1980 the top 1% made less than 1/2 what the bottom 50% made. Now they make 60% MORE than the bottom 50%.

Warren Buffett says the rich have never had it this good. Time to push the pendulum back to the middle.

Posted by Adam.Smith | Report as abusive

How the economy may undermine Obama’s 2012 reelection hopes

Apr 7, 2011 16:15 UTC

It’s not just the labor market that worries Team Obama:

“We are making progress on jobs and need to make more progress on jobs,” said David Axelrod, a former senior White House aide who is part of Obama’s 2012 campaign team. “But people are also grappling with stagnant wages and rising prices. That’s a legitimate, important concern for people and we have to pay close attention to it.”

Further, Jay Cost of the The Weekly Standard elaborates in great detail on something I have been writing about, how weak income growth could hurt Obama’s 2012 chances:

So basically, here is where we are. Policymakers have spent the last three years tossing not millions, not billions, but trillions of borrowed dollars at the output gap in the American economy. And what is the result? A fair measurement of unemployment comes in higher than anything we’ve seen since the Great Depression. Real wages are in decline. Food stamp enrollment is at an all time high. Jobs are coming back, but at a painfully slow rate and without very good pay. Growth for this year and next are expected to come in below the historical trend. We’ve created a huge budget deficit, as we’ve borrowed from future generations to cover the output gap from the last couple years. And let’s not forget this one (not that we ever could!

So, for those analysts in the press who think that Obama will win in 2012 if incomes are still being propped up by massive (deficit financed) government spending, real salaries are declining or flat, unemployment is far above the historical trend, good paying jobs are scarce, the deficit is at an all time high, and the president has no real idea about what to do (except, of course, high speed rail), I have only this to say: you might want to think twice before you place that wager. This president is not yet out of the woods on the economy. Not even close.

The piece has some great charts, but I particularly like this one which shows any income bounce is all sugar and steroids:

costchart

COMMENT

James, they will not let me post.

Posted by madmilker | Report as abusive

Paul Ryan’s revolution would finish Reagan’s

Apr 5, 2011 17:58 UTC

Is Rep. Paul Ryan’s “Path to Prosperity” potentially the most important and necessary piece of economic legislation since President Ronald Reagan’s tax cuts in 1981? Quite likely. The blueprint embraces free markets and individual choice to radically reshape America’s social welfare state for the 21st century and shrink government. Instead of looking for ways to finance an ever-expanding public sector, it would prevent Washington from growing to a projected 45 percent of GDP by 2050 (vs. 24 percent today) and instead reduce it to just under 15 percent by that year. Ryan would downsize government to its smallest size since 1950 and prevent the Europeanization of the American economy. The Ryan Path embraces dynamic growth, not managed decline and stagnation.

But what’s really important is that it affirmatively answers three questions: First, does the Ryan Path put the federal government on a sustainable fiscal path? Second, does it promote more economic growth and higher incomes? Third, is it politically realistic? Let’s take those one at a time:

1) Does the Ryan Path put the federal government on a sustainable fiscal path? Yes. It’s easily superior to President Obama’s 10-year budget plan which would generate average annual deficits of $947 billion and let debt as a share of the economy rise to a dangerous 87.4 percent from 62.1 percent in 2010. And Obama does nothing to alter the long-term fiscal glide path into insolvency.

By contrast, the Ryan Path would see debt-to-GDP peak in 2013 at 74.5 percent and fall to 67.5 percent by 2021, then continue to steadily decline until the entire federal debt is eliminated in the 2050s. Medicaid spending for the poor would be sent to the states in a fixed lump sum indexed for inflation and population growth. Medicare spending for seniors would be transformed into a system where recipients would choose among private plans, aided by a government subsidy that would grow more slowly than healthcare price increases. Indeed, the market-based plan would help lower healthcare inflation.

2) Does the Ryan Path promote more economic growth and higher incomes? Yes. Ryan uses extremely cautious economic growth figures, the same ones employed by the Congressional Budget Office, to arrive at his budget totals. But his plan would almost certainly result in higher growth and more jobs — generating more tax revenue and reducing debt even faster than Ryan estimates. It shifts vast resources from the public sector to the far more productive private sector. It also sharply reduces top federal individual and corporate income tax rates to 25 percent from 35 percent. (The U.S. currently has the highest corporate tax rate among advanced economies.) According to the Heritage Center for Data Analysis, the plan would create nearly a million new private-sector jobs next year and bring unemployment down to 4 percent in 2015. A flat tax on income and consumption would be even better, but Ryan significantly moves the ball forward.

3) Is it politically realistic? The risk is that Paul Ryan has created a plan only Paul Ryan can sell with his passion and deep expertise. He does make political concessions. The plan doesn’t, for instance, cut Medicare spending on current retirees or older workers. But austerity of that sort probably isn’t needed yet. Current trends, though, are leading toward a fiscal crisis that would result in both extreme and immediate benefit cuts and higher taxes.

And that, ultimately, is how the political case is made. The alternative to the Ryan Path isn’t the fiscally unsustainable status quo, but a future of harsh austerity beset by financial crisis, stifled by higher interest rates and marred by a lower standard of living. In short, the death of the American Dream and  the collapse of any social safety net.

But there is a way forward to another American Century and away from that nightmare. And Ryan has found it.

COMMENT

Purely partisan foolishness. To suggest that Ryan’s plan somehow restores “free markets” is a spectacular insult to the intelligence of anyone with enough education to be barely literate and enough sense to look one level deeper than the TMZ headline of the day.

Ryan’s plan cements the corporate cronyism that has driven our economy into the turf. What’s needed is a REAL return to free markets, and this plan doesn’t even scratch that surface.

Pethokoukis, you’re nothing more than a partisan shill. My dog could eat an inkjet cartridge and defecate a better-reasoned column than this.

Posted by JackMack | Report as abusive

Dems may (again) target private equity firms to pay for corporate tax reform

Apr 4, 2011 18:55 UTC

Private equity firms could get roped into helping pay for U.S. tax reform. To help offset the budget cost of lower corporate rates, my industry sources tell me, Democrats in Congress are considering an attempt to alter the treatment of publicly traded partnerships. Such a move could bring in several billions of dollars a year from Blackstone, Fortress and Apollo, the latest buyout shop to move to the New York Stock Exchange. A similar legislative effort in 2007 failed, but this one might have legs.

The attempt four years ago suffered from the perception it was punitively targeting one firm. It landed the sobriquet “The Blackstone Bill,” and not without cause. It was introduced just as Steve Schwarzman’s firm was preparing to go public. The surprise bill would have slammed the qualifying partnerships at the time, Blackstone and Fortress, with a 35 percent corporate tax on profits before distributions to shareholders.

Fortress would have had a five-year grace period, but Blackstone probably would have been tagged immediately. No wonder the firm amended its IPO prospectus to warn that the bill could cause a “material increase in our tax liability and … a reduction in the value of our common units.”

The proposal stalled in committee, however. And later legislation that would have subjected carried interest, essentially performance fees, to the high marginal tax rate on ordinary income instead of the lower capital gains rate met a similar fate. Yet another attempt failed during last year’s financial reform debate.

But the push for broad corporate tax reform could provide an opportunity for congressional Democrats to revive the original approach, notes MF Global analyst Anne Mathias in Washington in a recent report, insight confirmed by my own reporting. There’s support on both sides of the aisle for reducing corporate tax rates this year, while also closing loopholes and eliminating tax breaks to make up potentially lost revenue. Republicans might accept the tradeoff to secure a lower overall rate — which might also lessen the sting for the buyout shops.

The industry would prefer the status quo, of course. And for now, the firms are betting reform is still at least a couple of years off. But if that schedule should accelerate — and it well could — the focus on private equity pocketbooks will sharpen.

COMMENT

In a time of economic recovery I just feel that it’s entrepreneurialism that’s going to help us out. But pinning corporate tax reforms on private equity firms is just going to discourage this and slow our attempts at achieving target growth levels.

Posted by JimmyChapman | Report as abusive

Incomes, not jobs, could sink Obama re-election

Apr 3, 2011 00:35 UTC

The Obama 2012 presidential campaign, which has now officially sprung to life, confronts a vexing political puzzle. The unemployment rate is plummeting. After the March jobs report release, White House economic adviser Austan Goolsbee pointedly noted that the full percentage-point decline over the past four months is the largest such drop since 1984.

That statistical coincidence dovetails neatly with this David Axelrod-endorsed narrative: Just as Ronald Reagan bounced back from a nasty first-term recession to win re-election in 1984, a jobs rebound will mean four more years for Barack Obama. Got that, MSM? Obama 2012 = Reagan 1984. Now shut your laptops and run along.

But as the Obama political shop has surely noticed, the unemployment rate isn’t the only politically important number on the decline. Simultaneously, their boss’s approval rating has fallen from 51.0 percent on Jan. 24 to 47.4 percent today, according to the RealClearPolitics poll average. A large-sample Quinnipiac survey out last week had Obama at 42 percent. And a recent Reuters-Ipsos poll found that Americans’ confidence in the way the country is going has slumped to its lowest point of Obama’s presidency with 64 percent believing the nation is on the wrong track. Even as more jobs are being created, so are doubts about Obama.

Keep in mind that forecasting models suggest a president with a 50 percent approval rating on Election Day has an 80 percent chance at re-election vs. just a one-in-three chance for an incumbent with a 45 percent rating. And polling analyst Nate Silver notes that every incumbent with an approval rating of 49 percent or higher since World War Two won re-election, while every candidate with a rating of 48 percent or lower lost.

Morning in America 2.0, Mr. Axelrod? More like Threat Level: Midnight. And here’s why: While jobs are growing, incomes are not. And income growth — or the lack of it — political scientists agree, is the economic variable with the most impact on national elections. Strong growth in real disposable personal income led to huge victories for Reagan in 1984, Richard Nixon in 1972 and Lyndon Johnson in 1964. Weak or negative growth doomed Jimmy Carter in 1980, George Bush in 1992 and John McCain in 2008.

Real disposable personal income fell 0.1 percent in February. Average hourly wages were flat in March, and have grown at a 1.8 percent annualized rate over the past three months, according to the Economic Policy Institute. With inflation running around 2 percent, this means the average American is falling behind, his standard of living dropping. As the Brooking Institution figures things, between October 2010 and February 2011, real hourly and weekly earnings in the private sector fell 1.1 percent.

Even Goolsbee knows those numbers won’t improve a whole lot unless the unemployment rate moves sharply lower. Yet the official White House economic forecast has unemployment averaging 8.6 percent in 2012, not much below the current 8.8 percent rate. (The broader U-6 rate, which includes discouraged workers and part-timers who want full-time gigs, is a sickening 15.7 percent.) JPMorgan economist Michael Feroli thinks a combination of so-so economic growth, a vast pool of unemployed, higher energy prices and the expiration of the 2011 payroll tax cuts means income growth will likely remain “tepid” going forward.

So for now, consider Obama a favorite to win a second term — most presidential incumbents do — but only by the narrowest of margins. If incomes stay stagnant — and if Republicans can nominate someone with a strong, passionate and specific pro-growth economic message — Election Night 2012 could be a long one.

COMMENT

I work at a very big software company that all of you have heard of — there is only one reason why this company hires Indian IT firms — PRICE!!!!! In India and China, there is plenty of SLAVE LABOR and the U.S. Govt. has decided to equalize U.S. JOBS and Salaries with these SLAVE LABOR conditions to do one thing: support a CEO to average worker pay gap of 400X (see below.) Don’t listen to anything else that the companies say, it’s about price. We could easily train Americans to develop these skills on the job in about three months. Price includes training and having to deal with workers who require health benefits and everything else that a person working should get.

There’s a big difference from the old days when American people cared about one another and nowadays where greed rules the day: while corporations have robbed pension funds that were committed to, banks have falsely appraised real estate for the past 10 years and aren’t held to account for the fraud when the borrowers are held to the falsely valued loans, and executives get paid 400 TIMES the average worker — see the following article:(http://www.opednews.com/article s/The-Wide-Divide–You-Are-B-by-Steve-Ell iott-080616-912.html), Americans continue to vote for the creators of these schemes: Republican schemers. It’s crazy how you are shooting yourself in the feet, ladies and gentlemen. Please get a clue. Yeah, Obama is not the best and is having a hard time, but if you think cutting more decent jobs is the answer, watch out because I can replace ANY U.S. Worker, and I mean any, (skilled or not, doctor, lawyer, IT, CEO, McDonald’s person, whatever) with a Chinese or Indian worker who will cost 5% of your total salary — want to compete with that? And I mean ANY job.

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What the March jobs report means for Obama 2012

Apr 1, 2011 19:59 UTC

OK, the unemployment is now down to 8.8 percent, and the economy added 216,000 jobs last month. Here is the political economy of the situation, which is not as good for Team Obama as you might think:

1) Let’s not overstate the strength of the report: a) based on last two nasty downturns, 1974-75 and 1981-82, jobs should be growing roughly 400K a month; b)  nominal wage growth over both the last quarter and year have both been 1.7% vs. 2.1% inflation; c) the number of people who have been unemployed less than five weeks rose by 59K, first increase since November; d) the share of the unemployed who have been unemployed for more than 26 weeks also hit a record high of 45.5 percent. (Numbers compilation courtesy of the Economic Policy Institute.)

2) Political scientists have found only so-so correlation between unemployment and presidential election results. It’s really income growth that counts. And over the past year — and past two months — that has been negative. Shorter: jobs are being created, but they are not so high paying as before. Note that WH economic adviser Austan Goolsbee said today that he does not expect strong income growth unless the unemployment rate moves lower.

3) So let’s say it is Election Day 2012 and the unemployment rate is 8 percent — but housing is still frozen, wages are flat and broader unemployment rate is 15 percent. Then I think it is a 51-49 situation, with the winner depending on what kind of political athlete the GOP nominates.

4) I also note that O’s recent approval in the Quinnipiac poll was 42% and Reuters had the right track/wrong track number at 31-64 — the worst level of O’s presidency. This shows that a falling unemployment rate is necessary but not sufficient to boost voter optimism.

5) As I have written before:

It takes a while for people to really perceive that an economy has turned around, especially if unemployment is high. Bill Clinton won the 1992 election on the economy (“it’s the economy, stupid”) even though GDP had been growing for six full quarters (and at a pretty good clip). According to Gallup, 88 percent of Americans thought the economy was “fair” or “poor” in October 1992 with some 60 percent saying the economy was “getting worse.”

Two years later, it was the Democrats turn to feel the brunt of widespread economic anxiety as the Republicans captured both the House and the Senate. Even though the economy had then been growing for 14 straight quarters and the unemployment rate was down to 5.8 percent, 72 percent of Americans still thought the economy was “fair” or “poor” and 66 percent though the nation was headed in the wrong direction.

That’s right 3 1/2 years after the 1990-91 recession ended, the economy was still weighing negatively on voters and hurting the incumbent political party. Is it so hard to imagine, then, that three or four years from now voters will also be unhappy about the state of the economy and blame the party in power, the Obamacrats?

COMMENT

Blah! Blah! Blah! We should be thankful for any positive news, unless you get a biased reporter like James. Blah Blah Blah

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No April Fools’ joke, U.S. now world’s highest corporate taxer

Apr 1, 2011 01:41 UTC

If only it were an April Fools’ Day prank. With Japan officially cutting its corporate tax rate as of today, America now has the highest rate among advanced economies. Even its effective tax rate is way above average despite the likes of General Electric spending billions to game the labyrinthine code. A smarter approach would be to substitute a business consumption tax.

Now the United States might cling to second place if Japan cancels the rate reduction to help pay for the tsunami and earthquake devastation. After factoring in state taxes, America’s top rate of 40 percent would still exceed the average of 26 percent for the rest of the OECD.

Headline rates, of course, are like sticker prices on new cars. The real numbers are lower, thanks in part to the $40 billion companies spend annually to comply with, and often sidestep, the maximum levy. GE, for example, has taken heat for consistently paying less than what the U.S. tax code would imply it should.

But even taking into account the efforts of attorneys and lobbyists, the average effective U.S. rate in 2010 was 29 percent against 21 percent for international counterparts, according to the  American Enterprise Institute. And before the recession, corporate tax revenue as a share of U.S. GDP was at its highest since the 1970s.

Politicians of all stripes have been talking about lowering corporate taxes and eliminating loopholes to pay for a sharp rate reduction.  A sharply lower rate —  Canada’s will be just 15 percent in January 2012 — would boost worker wages, investment, productivity, jobs and growth. Such reforms, though a big improvement, would still leave in place a flawed and unwieldy structure.

A better alternative might be a consumption tax where business would simply determine its liability by subtracting total purchases from total sales. The tax would then be imposed on what’s left, essentially a firm’s value added. Unlike the corporate income tax, a consumption tax would allow the cost of investments to be fully deducted immedi ately, providing incentives for more. Such a tax also could be imposed on imports and deducted from exports, as other nations currently do with their VATs.

The Tax Policy Center estimates an 8.5 percent consumption tax — by broadening the tax base and boosting output – would boost corporate tax collections as a percentage of GDP to 4.5 percent from the 2.4 percent the White House forecasts for the next few years. (This is the corporate tax plan, by the way, found in Rep. Paul Ryan’s “Roadmap for America’s Future.”) That’s no laughing matter.

Obama fails ‘Nixon to China’ budget moment

Mar 29, 2011 15:25 UTC

President Barack Obama should get in a New York state of mind. Over the weekend, Andrew Cuomo, the Democratic governor of the Empire State, struck a deal to balance the budget without major tax increases – and five days ahead of deadline. It’s the latest example of how left-of-center politicians, often considered profligate, are better sometimes placed than conservatives to cut spending. Obama is missing a “Nixon to China” moment on dealing with America’s dangerous budget deficit. Consider the following:

1) During the rare times when lawmakers attempt a measure of fiscal responsibility, liberals, generally speaking, prefer to close deficits by raising taxes while conservatives favor reducing spending. But when the spenders do the trimming, it can provide greater confidence to interest groups and voters that the cuts are rational and reasonable. And budget-minded liberal leaders can keep their free-spending legislative allies in check.

2) The phenomenon is global. Starting in 1984, New Zealand’s Labour party slashed the government’s share of GDP by 40 percent over the course of a decade. From the mid-1990s through the mid-2000s, Canada’s Liberals cut federal spending by a third, helping reduce the nation’s debt load from 68 percent of output to 39 percent. Around the same time, Bill Clinton, a Democrat, reached an agreement with congressional Republicans to balance the U.S budget for the first time since 1969.

3) Cuomo could have followed his party’s playbook. In Illinois, Governor Pat Quinn, a Democrat, rammed through dramatic increases in individual and corporate tax rates. Instead, Cuomo opted to eliminate a $10 billion shortfall with a 2 percent spending cut. He may have been worried about his chances for 2016 presidential nomination, but the state’s competitiveness also will have been a consideration.

4) Obama’s decisive moment was last December when his debt commission released its austerity recommendations. But the president has neither embraced that agenda nor given support to a bipartisan group of senators pushing the panel’s plan. Without Obama’s explicit backing, Capitol Hill Democrats will almost certainly kill the effort because it slashes entitlement spending.

When House Republicans come out with their 2012 budget in the coming days, the president may have his final chance to push a comprehensive fiscal reform plan. If Obama’s not careful, it could pass him by in a New York minute.

COMMENT

…which study after study shows brings a return on investment into the economy — unemployment compensation, for instance, injects $1.65 into the economy for every $1.00 of unemployment compensation paid out…

Well now there’s a sure-fire cure for the US economy! Fire EVERYBODY and put ‘em on unemployment – that’ll grow the economy 65%. Just like that!

Posted by Elektrobahn | Report as abusive
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