Mitt Romney's problem isn't his gaffes. It's probably better to refrain from saying you're "not concerned by the very poor" and that you "like being able to fire people," but campaigns are long, and all candidates make comments that can be taken out of context to make them look bad. Nor is Romney's problem his tax rate, or his wealth, or his time at Bain Capital. Romney's problem is the interaction all of this has with his policies. In particular, the interaction it has with his tax and fiscal policies.
That's a tough political sell for any candidate. But Romney is a very rich guy who already pays surprisingly little in taxes and has made some oddly callous comments about the poor. And now he wants to lower the tax burden on people like himself, and pay for it by cutting programs for the poor and seniors? That's a much tougher sell.
And it's probably not one that Romney, all things considered, wants to make. His tax plan, as I've pointed out ad nauseum, is the most moderate plan of any candidate in the GOP primary. Rick Santorum's plan would give the top one percent a $341,000 tax cut. Newt Gingrich's plan boosts that to $422,000. Nor is there much in Romney's background to suggest he's particularly interested in shredding the safety net to cut taxes. His big accomplishment in Massachusetts, after all, was universal health care, not a tax cut.
But Romney had to persuade conservatives he was one of them. And in today's Republican Party, tax cuts -- big ones -- are the cost of doing business. So Romney has a big tax cut plan, which was necessary for him to be a strong candidate in the primary, but now he's got to carry that big tax cut plan into the general. Now he has to explain why, with hundreds of millions of dollars in the bank, he wants to cut taxes on people like him and pay for those tax cuts by cutting programs for people who aren't like him.
There's been, of late, a fair amount of conversation about whether the long Republican primary will hurt the eventual candidate. Romney actually addressed the speculation in his Florida victory speech. "As this primary unfolds, our opponents in the other party have been watching," he said. "They like to comfort themselves with the thought that a competitive campaign will leave us divided and weak. But I’ve got some news for them: A competitive primary does not divide us; it prepares us."
He's probably right: there's not much evidence that long primaries hurt parties. Rather, the cost of the Republican primary came early for Romney. It locked him into a very conservative agenda that, due to Romney's particular history and the country's particularly budgetary situation, is going to be a big liability in the fall.
1) Obama rolled out a new plan for boosting the housing market, report Zachary Goldfarb and David Nakamura: "President Obama on Wednesday made his latest pitch to lift the nation’s beleaguered housing market, unveiling a series of proposals to help struggling borrowers reduce their monthly payments and to stem the continuing slide in real estate prices. The centerpiece of the effort is legislation that would make it easier for homeowners who have been paying their mortgages on time to take advantage of today’s ultra-low interest rates, perhaps saving thousands of dollars a year. Millions of homeowners, including many who owe more than their properties are worth, have been unable to refinance. White House officials estimated that the proposal, which requires congressional approval, would cost taxpayers between $5 billion and $10 billion. To offset that cost, Obama reprised his previous idea of imposing a new tax on the profits of financial firms. Republicans pledged to oppose the proposal."
@BCAppelbaum: Odd to see the White House criticize the FHFA's refinancing program. If they don't like it they should nominate a new director.
2) Mitt Romney said he is 'not concerned about the very poor', reports Rachel Weiner: "In an interview with CNN Wednesday morning that should have been a Florida victory lap, former Massachusetts governor Mitt Romney made a fumble that could give rivals an attack ad sound bite. Asked about his economic plan, Romney said repeatedly that he was not concerned with very poor Americans, but was focused instead on helping the middle class. Romney explained that he was confident that food stamps, housing vouchers, Medicaid and other assistance would keep the poor afloat -- he pledged to fix holes in that safety net 'if it needs repair.' He repeated past statements that his main focus is the middle class because those people, in his opinion, have been hardest hit by the recession (President Obama also has focused many of his efforts on the middle class)."
@chrislhayes: In describing the features of those in the "middle class" he's focused on Mitt says "people can't find a job." Some of them are very poor!
3) The Buffett rule has been introduced in the Senate, reports Kristina Peterson: "Democratic senators introduced a bill Wednesday based on President Barack Obama's proposed 'Buffett rule' that would require the wealthiest Americans to pay at least 30% in taxes...The legislation introduced Wednesday by Sen. Sheldon Whitehouse (D., R.I.) would ensure that anyone earning more than $2 million in income each year, including from capital gains, would pay a minimum 30% federal tax rate, Mr. Whitehouse said on the Senate floor Wednesday morning. Wealthy taxpayers who face a tax rate above 30% would still pay the higher rate. The 'fair share tax' would be gradually phased in for those earning between $1 million and $2 million in annual income. They would pay a portion of the extra tax needed to get them to the 30% rate, the lawmaker said."
4) A private estimate showed disappointing job growth in January, reports Shannon Bond: "Jobs growth slowed in the US private sector last month after a surge in December, missing estimates of a stronger rise in a report released ahead of Friday’s government payrolls tally...US companies added 170,000 jobs in January on a seasonally adjusted basis, according to ADP, the payroll processor, below expectations of 182,000 new positions. December’s record-high of 325,000 newly created jobs was revised down to 292,000...The report showed the private sector added 152,000 services jobs and 18,000 goods-producing jobs in January. Manufacturers added 10,000 workers, compared with a surge of 20,000 in December."
@Austan_Goolsbee: ADP job numbers decent but not great. What happens to the hiring rate and small business formation rate are key this year.
5) The Treasury is considering negative interest rates, reports Annie Lowrey: "Put simply, the Treasury Borrowing Advisory Committee, composed mostly of Wall Street types, is urging that investors be allowed to pay the government for the privilege of lending it money. For example, an investor would be able to bid and then pay the government $101 for a $100 Treasury bill...Chalk it all up to the extraordinary demand for and very high prices of United States government debt, driven by investors’ concerns about the economy, a flight to dollar-denominated assets and foreign governments’ insatiable appetite for American bonds, among other trends. Some other countries already allow negative interest rates. Germany, for instance, lets investors bid more than its short-term 'Bubills' are worth, giving the securities negative yields."
1) Two cheers for European Central Ban president Mario Draghi, writes David Ignatius: "Since Draghi took the ECB job in November, he has been accomplishing by stealth what he is forbidden to do by fiat — namely, backstop European markets by acting as a lender of last resort. He can’t directly buy up the toxic debt of European debtor nations, but he’s accomplishing a similar purpose by lending to banks at very low interest rates. He’s pumping in liquidity through the back door, even as the front door remains bolted tight...The Stoxx 600 European index entered bull-market territory last week, up 20 percent from its low in September...So, two cheers for Super Mario: His creative banking recalls innovative actions taken by Federal Reserve Chairman Ben S. Bernanke to keep U.S. credit markets operating during the dark days of 2008...The reason to withhold a third cheer for Draghi is that he can’t solve the core European problem."
2) Romney's comments reflect his tax policy, writes Derek Thompson: "So, Romney's right. The social safety net does a lot. But does it do enough?...Mitt Romney has made his choice. His tax plan is basically today's tax policy with more support for businesses and investors, and less for the poor. First, he makes investment income tax free for the middle class. Second, he cuts corporate income taxes. Third, he repeals the estate tax. And fourth, he does not extend the tax cuts created by the 2009 stimulus bill, which Obama has proposed keeping. Romney's tax proposal would 'raise taxes for households in the bottom two quintiles, relative to what they're paying this year,' wrote Roberton Williams of the Tax Policy Center, even as it cuts taxes for middle class investors."
3) Romney's comments don't reflect conservative economic thinking, writes John McCormack: "Romney's remark isn't merely tone-deaf, it's also un-conservative. The standard conservative argument is that a conservative economic agenda will help everyone. For the poor, that means getting as many as possible back on their feet and working rather than languishing as wards of the welfare state. And then of course there are the poor who will rely on the safety net even in good times. Romney isn't sure if the safety net is in need of repair, but for the poor, Medicaid is a dysfunctional system because of federal regulation. So Republicans are united behind the proposal to block-grant the program back to the states--not just to save money but to help the poor. School choice is another conservative program designed to help poor children flourish. Medicare and Social Security--programs Romney promised to protect the other night--are the two huge safety net programs, and they are being threatened by runaway spending. To be anti-debt is to be anti-poverty."
4) But Romney's comments do reject some of the very bad advice conservatives are giving, writes Ross Douthat: "His 'I’m not concerned about the very poor' comments were embedded in an attempt — however clumsy and faltering — to define himself as a champion of the hard-pressed middle class, and to distance himself both from the 'just expand the welfare state' politics of the left and the 'just cut taxes on the wealthy, and the rest will take care of itself' politics that too often defines the contemporary right. He may not have hit that sweet spot, but at least he knows that the sweet spot exists. Whereas many conservatives seem convinced that the best way for Romney to counteract his image as an out-of-touch Richie Rich is to embrace policies that are only likely to confirm that stereotype."
5) The U.S. should focus on growth for now, writes Ezra Klein: "The right strategy is to make growth the priority over the next few years while putting in place a credible, clear strategy for deficit reduction in the years after that. That’s entirely in Congress’s power. Lawmakers could pass a single bill that includes a short-term growth component to extend and expand the payroll tax, invest in public works projects and defuse the fiscal bombs, and a longer-term deficit reduction component, perhaps along the lines of the Bowles-Simpson plan, that cuts the deficit by more than $4 trillion beginning in 2014. What markets would hear in that case is a commitment to the best of both worlds: a more robust recovery now, deficit-reduction soon. That’s much more reassuring than the message markets are getting now, which is that current U.S. policies are configured to give us the worst of both worlds, and that Congress is too paralyzed to change course."
6) Obama's college affordability plan doesn't do enough, writes Matt Miller: "You probably don’t think President Obama’s new college affordability initiative will leave students with more debt than they incur today. But you’d be wrong. The president deserves credit for calling out soaring tuition and unsustainable student debt as huge barriers to upward mobility and a strong middle class. But unfortunately, the remedies he sketched in his State of the Union address and in a speech at the University of Michigan last week are textbook examples of proposals meant to signal the president’s 'values' (and win votes) while doing little to address the problem...Don’t get me wrong. These are nice little steps. But in light of the facts above, it’s hard to see this package as anything more than tinkering at the edges of tinkering at the edges."
Glam-rock interlude: Smith Westerns play "Still New" live on KEXP.
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Still to come: Car sales are off to a good start; the House votes to repeal the CLASS Act; Indiana adopts 'right to work'; the explosion of cheap natural gas is raising questions; and a cat struggles with technological advances.
The CBO is facing increased scrutiny, reports Jenny Strasburg: "Republican staffers on three Senate committees are pressing a congressional office that scrutinizes federal budget issues and proposed legislation over how its assessments are compiled. The inquiries of the Congressional Budget Office, which haven't been made public, concern the CBO's analyses of some of Washington's most complex and controversial measures, including bills on financial regulation, health care, small-business lending and efforts to aid the housing market, said people familiar with the matter...As part of the inquiries, some Republican committee staffers are examining whether CBO officials adequately monitored and disclosed the role of Wall Street banks, academic researchers with government ties and other outside advisers, the people said. They are pushing for greater transparency in the CBO's dealings with advisers, to shed light on the role of outside interests in shaping the office's views, the people said."
The CBO responds: http://cboblog.cbo.gov/?p=3250
Car sales started the year strong, reports Nick Bunkley: "New-vehicle sales in the United States were unexpectedly strong in January, an early sign that the auto industry could have its best year since 2007, carmakers and analysts said Wednesday. Sales increased 11.4 percent from January 2011, according to the research firm Autodata. The industry’s annual selling rate, an important measure of its health, climbed to 14.18 million, the highest in more than two years. Annual sales have been below 14 million for each of the last four years, falling to as low as 10.4 million in 2009. Hitting 14 million this year would represent at least a 9 percent increase from the 12.8 million sold in 2011. January was the first month in which the seasonally adjusted, annualized selling rate surpassed 14 million since August 2009, when the government’s cash-for-clunkers program briefly bolstered demand. Excluding that spike, January’s rate was the highest since May 2008."
Offsetting the cost is proving to be a hurdle for payroll tax extension, reports Kristina Peterson: "Lawmakers came to quick agreement Wednesday that Congress should extend a payroll-tax break for the remainder of the year, but Democrats cautioned that disagreements over how to offset the cost could still derail the consensus...However, Democrats cautioned that finding ways to offset the cost of a 10-month extension of the payroll tax cut could imperil the bipartisan agreement, as it did in December when lawmakers opted to extend the tax break for only a two-month extension. Last year lawmakers agreed to extend the payroll-tax break, federal jobless benefits for the long-term unemployed and a measure to reimburse doctors for treating Medicare patients just through the end of February. Continuing all of those provisions through the end of the year is expected to cost around $160 billion. If the negotiators don't reach a full-year agreement, the tax that most workers pay on their earnings to fund Social Security will revert in March to 6.2% from its current 4.2% rate."
Greece is resisting economic reforms, reports Michael Birnbaum: "If the Mediterranean country does not receive another bailout, it will default on its debts by mid-March, potentially sending it spinning off the euro currency or even out of the European Union. But before Greece can get more money, Europe is asking it to take steps that threaten to aggravate an already biting recession. Officials said Wednesday that they were within days of reaching a deal to reduce Greece’s crippling debt and to give it a second, $174 billion bailout. As Europe starts to acknowledge that its austerity-driven policies elsewhere have not done enough to lift the continent out of its economic troubles, leaders have shown a new willingness to consider economic stimulus policies. But Greece, so far, remains an exception."
@zerohedge: Has Greece asked creditors to take a 150% haircut yet?
Time lapse interlude: Night time in Bizkaia.
@radleybalko: If fed. gov. has the power to make private insurers cover birth control, would a GOP administration have the power to force them *not* to?
The House voted to repeal the CLASS Act, reports Pete Kasperowicz: "The House on Wednesday evening voted to repeal a section of the 2010 health reform law establishing a voluntary, long-term healthcare program that the Obama administration has since said is not financially viable. Members voted 267-159 in favor of the bill, H.R. 1173, which repeals the Community Living Assistance Services and Supports (CLASS) program. While 28 Democrats joined Republicans in support of the bill, House passage sends the bill to a Democratic Senate that is expected to ignore the bill completely. The Obama administration in October found that there is no viable financial path forward for the program, as it would rely on voluntary participation and could not receive taxpayer funds. Republicans argued today that the program should therefore be repealed, and said they favor this approach because failing to implement a program that is still on the books could lead to legal challenges."
The Komen Foundation's Planned Parenthood decision was driven by abortion, report Gardiner Harris and Pam Belluck: "When the nation’s largest breast cancer advocacy organization considered in October cutting off most of its financial support to the nation’s largest abortion provider, the breast cancer group was hoping for a quiet end to an increasingly controversial partnership. Instead, the organization, the Susan G. Komen for the Cure foundation, is now engulfed in a controversy that threatens to undermine one of the most successful advocacy campaigns. The foundation’s decision to eliminate most of its grants to Planned Parenthood for breast cancer screening caused a cascade of criticism from prominent women’s groups, politicians and public health advocates and a similarly strong outpouring of support from conservative women and religious groups that oppose abortion."
'Right to work' is now law in Indiana, reports Monica Davey: "Gov. Mitch Daniels of Indiana, who had once said that he did not wish to add a 'right to work' provision to the state’s labor laws, signed a bill on Wednesday doing just that. The legislation, which bars union contracts from requiring non-union members to pay fees for representation, makes Indiana the first state in more than a decade to enact right to work legislation and the only one in the Midwestern manufacturing belt to have such a law...For a month, the issue had loomed over Indianapolis, and hundreds of union members crowded, day after day, into the Statehouse halls. Democrats, who hold minorities in both legislative chambers, had refused at times to go to the House floor, hoping to block a vote on the matter, which they argued would weaken unions and lower pay and wages for workers at private-sector companies."
@NickBaumann: Mitch Daniels, who predicted Iraq war wld cost $50-$60 bn, predicts right-to-work bill will make Indiana better off.
This isn't Indiana's first experience with right to work, reports Abby Rapoport: "Right-to work, which prohibits mandatory union membership in the private sector and deals a crippling blow to the state's unions, will likely become law in the state once again today...The passage represents more than simply a loss in power for the state's unions. It's also a turning point in American labor history, marking the first time since 1957 that unions in a northern state have lost key rights, and first time since 1957 that a state's passed right-to-work laws with the hopes of ending union power rather than preventing it from taking hold. While state Republicans argue that getting rid of union fees will lure more jobs to the state, there's little union power left in the state. Rather the move to right-to-work instead represents an offensive into the pro-union part of the country, effectively a strike at unions while their power, even in the North, is at a 50-year low."
Amendments are weighing down a bill to curb insider trading, reports Robert Pear: "Most senators profess support for a bill to ban insider trading by members of Congress. But somehow the bill has quickly become snarled in a tangle of friendly and unfriendly amendments. Prospects for the legislation looked bright on Monday when the Senate voted 93 to 2 to take up the measure, which would prohibit lawmakers from trading stocks on the basis of confidential information they gain by virtue of their public office. Just 48 hours later the sponsors of the bill were trying to keep it on track. Some senators wanted to make it tougher. Some wanted to make it weaker. And some wanted to address tangential issues."
The House voted to extend the pay freeze for federal workers, reports Pete Kasperowicz: "The House on Wednesday evening handily approved a GOP proposal to extend the pay freeze for federal workers through 2013, despite the high hurdle for passage set by Republican leaders. The House voted 309-117 in favor of the bill, easily clearing the two-thirds majority required for passage under a suspension of House rules. Republicans needed about 50 Democrats for passage, and the bill, H.R. 3835, was supported by 72 Democrats. Republicans called up the bill to build support for the pay freeze as a way to help pay for a year-long payroll tax holiday -- the measure would raise $26 billion over 10 years. But the vote also gives Republicans a chance to remind voters that they are looking for ways to control federal spending, while portraying some Democrats as resistant to this proposals to trim the budget."
Animal problems interlude: A cat tries to use an iPad.
The rise of natural gas is raising new questions, reports Steven Mufson: "For the past three years, promoters of shale gas and environmentalists opposed to coal-fired power plants have hailed the sudden abundance of U.S. natural gas as a bridge to a renewable-energy future. But natural gas has become so cheap that many energy experts and environmentalists now wonder whether it will turn into a long, bumpy detour. U.S. natural gas prices, which hit more than $13 per thousand cubic feet in 2008, have tumbled to about $2.50 per thousand cubic feet. Rapidly rising production of shale gas and a warm winter have created a glut and pushed supplies in storage to 21 percent above the average of the past five years."
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.