Wonkbook: The question Obama's jobs plan can't answer
By Ezra Klein,
Joe Raedle GETTY IMAGES
As one senior House Republican aide told Politico, “Obama is on the ropes; why do we appear ready to hand him a win?" That's a cynical question, obviously. But it's also the right question for understanding what is likely to happen next.
An ideal political process would work something like this: Congressional Republicans would take a look at the American Jobs Act and the forthcoming offsets. If they had specific concerns about some of the jobs proposals, they would propose alternatives. If they worried the offsets weren't sufficient, they would ask for more options. As the two parties agree on both the need to create jobs and reduce the deficit, this should be fertile ground for a compromise.
And maybe it will be. But that can only happen if the question is, "what's the best jobs package?" Unfortunately, as that senior House aide suggests, the question is likelier to be, "what's the best strategy for winning the White House in 2012?" And the answer to that question is to further the impression that Obama is a tax-and-borrow liberal who can't get things done in Washington and doesn't have a sound plan for the economy. Working with the president on a bipartisan jobs-and-deficit-reduction plan makes him look like, well, a good president. And good presidents often get reelected.
The question is even starker because Obama's numbers are so low. When the 2012 election looked like more of a longshot for the Republicans, it was easier for the GOP's congressional leadership to ignore it when crafting their legislative strategies. But the more vulnerable Obama looks, the harder it becomes for Republicans to work with him. And that's not even an entirely cynical calculation: Congressional Republicans really do believe that the election of a Republican president would do more for the economy than any policy the Obama administration might sign, and so maximizing the chances of a President Perry or a President Romney is simply good economic policymaking.
On a different note, if you're a Wonkbook reader who doesn't visit the blog much, today is the day to stop by: The site is relaunching as Wonkblog, and we have added three terrific policy reporters. The hope is to do for policy reporting what Wonkbook does for policy news aggregation, and my hunch is that Wonkbook readers in particular will find it a useful resource.
Five in the morning
1) Obama is sending the American Jobs Act to Congress today, reports David Nakamura: "President Obama plans to send the American Jobs Act, his $447 billion plan to jump-start the economy, to Congress on Monday evening, a White House official said Sunday. Obama will appear in the Rose Garden on Monday to call on Congress to approve the bill, which aims to create hundreds of thousands of jobs through a mix of tax cuts, infrastructure spending and direct aid to state and local governments. The president will be joined at the announcement by teachers, police officers, firefighters, construction workers, small business owners, and veterans, the White House official said...Obama will tour a school in Columbus, Ohio, on Tuesday to highlight the bill’s aid package to help communities hire teachers and rehabilitate aging school buildings."
2) Some in the GOP want to sink the jobs bill even though they like it, report Marin Cogan and Jake Sherman: "House Republicans may pass bits and pieces of President Barack Obama’s jobs plan, but behind the scenes, some Republicans are becoming worried about giving Obama any victories -- even on issues the GOP has supported in the past. And despite public declarations about finding common ground with Obama, some Republicans are privately grumbling that their leaders are being too accommodating with the president. 'Obama is on the ropes; why do we appear ready to hand him a win?' said one senior House Republican aide who requested anonymity to discuss the matter freely. 'I just don’t want to co-own the economy by having to tout that we passed a jobs bill that won’t work or at least won’t do enough.'"
3) The head housing regulator is officially working on the White House's refinancing plan, reports Brady Dennis: "The federal agency that oversees taxpayer-backed mortgage giants Fannie Mae and Freddie Mac said Friday it is working with the White House to explore ways to help troubled homeowners take advantage of historically low interest rates. The announcement by Edward DeMarco, acting director of the Federal Housing Finance Agency, came a day after President Obama referenced the effort in an address to Congress, saying his administration would 'work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent.' DeMarco said in a statement Friday that his agency would further reevaluate an existing initiative in order to 'determine if there are ways to extend the benefits of this refinance product to more borrowers.'"
4) The GOP wants to repeal the 20th century, writes Steven Pearlstein: "Repeal the 20th century. Vote GOP. It’s not just the 21st century they want to turn the clock back on -- health-care reform, global warming and the financial regulations passed in the wake of the recent financial crises and accounting scandals. These folks are actually talking about repealing the Clean Air Act, the Clean Water Act and the Environmental Protection Agency, created in 1970s. They’re talking about abolishing Medicare and Medicaid, which passed in the 1960s, and Social Security, created in the 1930s. They reject as thoroughly discredited all of Keynesian economics, including the efficacy of fiscal stimulus, preferring the budget-balancing economic policies that turned the 1929 stock market crash into the Great Depression. They...give the strong impression they wouldn’t mind abolishing the Federal Reserve and putting the country back on the gold standard."
5) The White House is considering a major corporate tax cut, report Damian Paletta and John McKinnon: "The Treasury Department is considering a proposal to eliminate some but not all taxes on the overseas profits of U.S. multinational companies, a central element of the administration's broader plans to overhaul the corporate-tax code, according to two people familiar with the deliberations. U.S. businesses have pushed hard to exempt all overseas earnings from U.S. taxes, claiming the current system puts them at a disadvantage to foreign competitors...The Treasury plan under consideration would create what officials refer to as a 'tough' territorial system, which would shield some overseas profits from U.S. taxes. A key issue is what kind of profits would be excluded. The details of the plan couldn't be learned. The provision is part of a broader Treasury rewrite of the corporate-tax code that has been in the works for months."
Math rock interlude: Battles play "Futura" on Late Night with Jimmy Fallon.
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Still to come: The supercommittee's drawing on the usual suspects for cuts; health providers are nervous about the jobs package; the FAA funding bill won't include a GOP-backed anti-union measure; how the White House changed course on regulations; and a dog balances treats on his nose.
Supercommittee will draw on the usual suspects for cuts, reports Scott Wong: "It has only met once, but the new deficit-cutting supercommittee doesn’t seem to be pushing the envelope with fresh ideas. With just 10 weeks to figure out how to slash $1.5 trillion, the bipartisan panel of 12 lawmakers seems more content to flip through a menu of old options, recycling proposals from bipartisan groups and commissions that have come before it 'It wouldn’t make sense to try to reinvent the wheel,' California Rep. Xavier Becerra, a supercommittee member and the Democratic Caucus vice chairman, told POLITICO...While that doesn’t sound terribly ambitious, it does create a pretty familiar road map for the deficit panel: tax code reform, including closing loopholes for special interests and overhauling the big entitlement programs of Medicare, Medicaid and Social Security. Other cuts to domestic programs are also under discussion, though the Defense Department is fighting deep cuts to military programs."
Low capital gains rates are fueling economic inequality, report Steven Mufson and Jia Lynn Yang: "As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle-class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically. The rates on capital gains -- which include profits from the sale of stocks, bonds and real estate -- should be a key point in negotiations over how to shrink the budget deficit, some lawmakers say...Advocates for a low capital gains rate say it spurs more investment in the U.S. economy, benefiting all Americans. But some tax experts say the evidence for that theory is murky at best. What is clear is that the capital gains tax rate disproportionately benefits the ultra-wealthy."
House Democrats are skeptical of the payroll tax cuts in the jobs plan, reports Mike Lillis: "House Minority Leader Nancy Pelosi (D-Calif.) on Friday backed President Obama’s plan to extend and expand a payroll-tax holiday, despite liberals’ concerns that the move will damage Social Security...A long list of liberal Democrats have hammered Obama’s plan to extend the 2011 payroll-tax holiday for another year, through 2012. The lawmakers warned that such a move steals from Social Security funding and threatens future senior benefits. A number of those lawmakers said Thursday that they’d continue to fight the extension, particularly because Obama is proposing to expand it to include employers as well as workers -- a benefit not currently in place. 'It’s imperative that we do everything we can to put money in the pockets of consumers,' said Rep. Ted Deutch (D-Fla.). 'But there are a lot of ways to do it that [don’t] take from the funding stream for Social Security.'"
We need to spur investment to get the recovery going again, writes Greg Mankiw: "What can policy makers do to stoke animal spirits and encourage businesses to invest? One obvious step would be a cut in the taxation of income from corporate capital. According to a 2008 study by the Organization for Economic Cooperation and Development, 'Corporate taxes are found to be most harmful for growth.' Tax reform that reduced the burden on capital income and shifted it toward consumption would improve prospects for long-run growth and, in so doing, encourage greater investment today. Yet it would be overly optimistic to think that any single public policy, by itself, could lead to the kind of robust investment spending seen in previous recoveries. Myriad government actions influence the expected future profitability of capital. These include not only policies concerning taxation but also those concerning trade and regulation."
Excessive spending isn't at the root of Europe's troubles, writes Paul Krugman: "Listen to many European leaders -- especially, but by no means only, the Germans -- and you’d think that their continent’s troubles are a simple morality tale of debt and punishment: Governments borrowed too much, now they’re paying the price, and fiscal austerity is the only answer. Yet this story applies, if at all, to Greece and nobody else...So why is Spain -- along with Italy...in so much trouble? The answer is that these countries are facing something very much like a bank run, except that the run is on their governments...Investors, for whatever reason, fear that a country will default on its debt. This makes them unwilling to buy the country’s bonds, or at least not unless offered a very high interest rate. And the fact that the country must roll its debt over at high interest rates worsens its fiscal prospects, making default more likely, so that the crisis of confidence becomes a self-fulfilling prophecy."
Robert Barro wants austerity measures: "Today’s priority has to be austerity, not stimulus, and it will not work to announce a new $450 billion jobs plan while promising vaguely to pay for it with fiscal restraint over the next 10 years, as Mr. Obama did in his address to Congress on Thursday. Given the low level of government credibility, fiscal discipline has to start now to be taken seriously. But we have to do even more: I propose a consumption tax, an idea that offends many conservatives, and elimination of the corporate income tax, a proposal that outrages many liberals."
The jobs bill is what the 2009 stimulus should have been, writes Ross Douthat: "A week after President Obama took the oath of office, Alice Rivlin, budget chief to President Bill Clinton, testified before a Congress that was about to consider sweeping stimulus legislation. In her remarks, Rivlin voiced her support for a swift and substantial federal intervention to prop up the sagging economy. But she offered lawmakers three warnings as well...The ideal anti-recession package, Rivlin told Congress, would include aid to state governments, extended unemployment benefits, money for genuinely 'shovel ready' projects and a payroll tax holiday...Instead of passing a targeted antirecession package, Congressional Democrats crammed the stimulus bill with spending on everything from Head Start and Pell Grants to high-speed rail and renewable-energy projects...Now, nearly three years after Rivlin’s warnings went unheeded, President Obama has groped his way to an agenda that looks more like what she originally recommended."
Stop motion animated short interlude: "Tape Generations" by Johan Rijpma.
Health providers are nervous about Obama's jobs package, reports Sahil Kapur: "Health care providers, already facing the prospect of billions of dollars in payment cuts from the debt limit law's super committee, are reeling at the possibility of billions in additional cuts if the White House's new jobs bill materializes. It's unclear whether President Obama's $447 billion jobs proposal unveiled Thursday (Sept. 9) will pass, but if some or all of it becomes law, the super committee would be tasked with finding additional savings to offset the cost, and the added debt-reduction burden would place greater pressure on the panel to cut health spending...Edwin Park, a health policy expert at the Center on Budget and Policy Priorities, which supports the president's jobs plan, said Medicare and Medicaid are 'already expected to be large sources of savings,' and the need for further offsets will only place more pressure on them."
A clean FAA funding increase will go through, reports Susan Crabtree: "Unions were breathing a sigh of relief Friday morning after House Republicans punted a contentious anti-union issue preventing funding for the Federal Aviation Administration to the end of December, providing back pay to agency workers and giving opponents more time to organize and fight GOP-backed anti-labor provisions. Rep. John Mica (R-FL), who chairs the the House Transportation and Infrastructure Committee, introduced a clean short-term extension of the FAA through December providing back pay to workers who were furloughed for nearly two weeks during a partial shutdown of the agency earlier this month. House GOP leaders plan to vote on the bill next week. The extension, which cuts the agency's overall budget by 5 percent, will be the 22nd for the agency since 2007, the last time Congress passed a full authorization bill."
A highway funding extension is getting passed as well, reports Jonathan Allen: "Congressional leaders struck a deal late Friday to extend temporarily the expiring laws governing the nation’s highways and airways at roughly their current funding levels. The bill would authorize programs of the Federal Aviation Administration through January and surface transportation laws through March. Highway programs would be funded at the fiscal 2011 rate -- $41.7 billion -- far above the $27 billion approved in their budget earlier this year. Because the extension is for six months and not a full year, the actual amount authorized is half of the fiscal 2011 level. The FAA would get about $5.4 billion for the four-month period beginning in October and ending Jan. 31. Without action, authorization for both highway and aviation programs would expire at the end of this month, and both President Barack Obama and members of Congress have warned that scenario could cost hundreds of thousands of jobs."
Supercommittee lobbyists are going local, reports Anna Palmer: "When it comes to a lobbying strategy for the supercommittee, K Street has a new plan: use Main Street. Lobbyists and trade groups are turning to companies in the hometowns and states of supercommittee members to put a local face on their causes, which includes protecting oil and gas incentives and corporate accounting rules. The trend is a reminder that even in the high-stakes world of the deficit-slashing supercommittee where national priorities might be set -- politics is still local. 'In this day and age, members of Congress don’t want to listen to people on K Street as much as they want to listen to their own constituents who are engaged every day in trying to make it,' said Judith Thorman of the International Franchise Association."
"I think Jenga's a game" interlude: A dog balances treats on his nose.
Cass Sunstein and Bill Daley have teamed up to make the administration cut regulations, report Laura Meckler and Carol Lee: "Cass Sunstein, the White House regulatory chief, had long argued for restraint in the growth of federal rules. As 2011 opened, he found a powerful, new ally inside the White House. Bill Daley, a veteran of the top circles in business and politics, had been hired by President Barack Obama as chief of staff after the Democrats' disastrous midterm elections. In the months that followed, Messrs. Daley and Sunstein helped reshape the administration's regulatory posture. The most prominent result came Sept. 2, when Mr. Obama surprised environmental activists by scrapping a rule that would have toughened air-quality standards, and which business groups had said would cost jobs. But the push to give business arguments greater consideration has been seen in other regulatory moves."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.