Category Archives: Politics

Political Gridlock Will Spur Another Recession

The excesses that led to America’s economic malaise had little to do with politics. Gambling on unsecured derivatives based on triple A-rated bonds composed of subprime loans?  It took Wall Street to bring down the house, or more accurately, houses—millions of them.

But the headwinds that are preventing the U.S. economy from fully recovering from the 2008-09 financial collapse are very much a product of politics. And those ill political winds are blowing from both sides of the Atlantic.

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Obama’s budget focuses on job creation

President Obama called for more spending on community colleges, job training, infrastructure, and research and development as he touted an election-year budget that seemed to complete his shift in focus from budget cutting to job creation.

Arguing that the country can’t “cut our way to growth,” Obama delivered a $3.8-trillion budget plan to Congress and blew through a promise to cut the deficit in half by the end of his first term. Obama’s budget projects a $1.3-trillion deficit in fiscal year 2012 and $901 billion in 2013, both over the $700 billion that would have made good on his pledge.

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Obama budget: National debt will be $1 trillion higher in a decade than forecast

President Obama rolled out an election-year budget on Monday that would delay action to reduce the national debt in favor of fresh spending on Democratic priorities aimed at rebuilding the American middle class.

In his final budget request before facing voters in November, Obama called for $350 billion in new stimulus to maintain lower payroll taxes, bolster domestic manufacturing, lure jobs back from overseas, hire teachers, retrain workers and fix the nation’s crumbling infrastructure. There would be only modest trims to federal health-care programs and no changes to Social Security, the biggest drivers of future borrowing, despite last year’s raucous political debate over the federal debt.

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Congressional earmarks sometimes used to fund projects near lawmakers’ properties

A U.S. senator from Alabama directed more than $100 million in federal earmarks to renovate downtown Tuscaloosa near his own commercial office building. A congressman from Georgia secured $6.3 million in taxpayer funds to replenish the beach about 900 feet from his island vacation cottage. A representative from Michigan earmarked $486,000 to add a bike lane to a bridge within walking distance of her home.

Thirty-three members of Congress have directed more than $300 million in earmarks and other spending provisions to dozens of public projects that are next to or within about two miles of the lawmakers’ own property, according to a Washington Post investigation.

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Obama appoints Richard Cordray to head consumer watchdog bureau

In a bold act of political defiance, President Obama installed Richard Cordray as head of a new consumer watchdog agency Wednesday, bypassing Republican opposition in the Senate that derailed his nomination last month.

Obama cast the move as an effort to protect the interests of middle-class Americans who have suffered as a result of the Great Recession, which stemmed in part from abuses in the financial system.

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For Deficit Panel, Failure Cuts Two Ways

The latest Congressional failure to agree on a plan for balancing the government’s books could yield a surprising result: a sharp reduction in annual federal deficits, larger than anything contemplated by the special panel that reached its fruitless finale on Monday.

But the absence of an agreement also threatens to significantly slow growth in an already ailing economy by raising taxes on almost everyone while reducing government spending on almost everything.

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Lawmakers introduce compromise ‘minibus’ spending bill

House and Senate appropriators late Monday night released a compromise spending ‘minibus’ that combines three of the 12 annual appropriations bills and a temporary spending bill to fund the rest of the government through Dec. 16.

The bill, set for a Thursday vote in the House, is the first conferenced spending bill to go through Congress since 2009. All funding in 2011 was determined through catch-all continuing resolutions. For fiscal 2012, which began Oct. 1, Congress has yet to pass any of the regular bills.

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Witnesses Tell Congressional Subcommittee Small Business Health Tax Credit Is Too Complicated

A tax credit enacted to encourage small businesses and tax-exempt organizations to provide health insurance coverage for employees is too complicated and is not meeting its goal, witnesses told a congressional panel Tuesday.

The credit, passed as part of the Patient Protection and Affordable Care Act, P.L. 111-148, in 2010, was estimated by the Congressional Budget Office to cost $37 billion over 10 years and apply to approximately 4 million businesses and tax-exempt organizations. As of mid-October, only 309,000 taxpayers had claimed the credit, totaling $416 million versus the $2 billion anticipated for the tax year. To receive the credit, which offsets up to 35% of the employer’s health insurance premium costs, an employer must have 25 or fewer full-time-equivalent employees who earn average wages of $50,000 or less. The credit increases to 50% of the premium costs in 2013.

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Economy could get bumpier if tax cut expires Dec. 31

Economists are growing more worried that Congress will not extend this year’s payroll-tax cut past Dec. 31, pulling up to $120 billion out of consumers’ pockets and cutting into already tepid forecasts for household spending in the first half of 2012.

The tax cut was approved as a temporary measure last fall. The law cut the tax paid by employees, which supports the Social Security program, to 4.2% of the first $106,800 of a worker’s income from 6.2%. That cut gave $1,000 back to a worker earning $50,000 a year.

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Balanced Budget Pressure Rising

The tea party–fueled push for a constitutional amendment requiring a balanced federal budget will get its first real test this week, when House lawmakers cast ballots on the issue for the first time since the mid-1990s.

The amendment vote — mandated by the summer debt ceiling deal — is largely a sideshow to the deliberations of the Joint Select Committee on Deficit Reduction. That’s because a constitutional change of this magnitude has little chance of garnering the required two-thirds supermajority in both chambers, much less ratification by the legislatures of a minimum of 38 states.

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