Category: Uncategorized

Why Obama Dropped His $250,000 Tax Target

Posted on by The Progressive Policy Institute

Writing for The Wall Street Journal, PPI President Will Marshall explains why Obama should show some flexibility now and set the stage for a more comprehensive tax overhaul in 2013:

Barack Obama is under pressure from his left flank to break House Republicans on the wheel of higher marginal tax rates, but he is showing flexibility in negotiations with Speaker John Boehner. This is wise. By settling for something less than unconditional surrender, the president could get a deal that will avoid plunging the U.S. economy into austerity and set the stage for a historic tax overhaul next year.

So how do we get there from here? The first step is to resolve the dispute that has snagged the fiscal-cliff talks—how to raise taxes on the rich. To the horror of tea party purists, Mr. Boehner has acceded to higher tax rates on millionaires. Obama countered on Monday by proposing higher rates on households making $400,000 or more, and he lowered his overall revenue goal to $1.2 trillion from $1.6 trillion.

The president has the edge here. If Republicans refuse to accept higher rates for any wealthy taxpayers, there will be no deal. Then tax rates will rise for all Americans, and Republicans will be blamed for driving the economy off the cliff.

Read the piece at The Wall Street Journal.

Fannie and Freddie’s Fate

Posted on by The Progressive Policy Institute

In a Letter to the Editor of The New York Times, Jason Gold argues that the Times’ editorial gets it wrong and the Obama administration should act now on Fannie Mae and Freddie Mac:

Your Dec. 2 editorial “The Mortgage Challenge” drew welcome attention to a problem that neither party has done enough to fix. But it misses the mark by urging the Obama administration not to get “sidetracked” by discussions about reprivatizing Fannie Mae and Freddie Mac. That’s bad advice.

It’s been four years since Fannie and Freddie were taken into conservatorship. Until their fate is decided, we won’t see private capital get off the sidelines and back into mortgage lending. We need more first-time homebuyers participating in the market, not just investors snapping up bargain-basement homes.

The essential precondition for graduating Fannie and Freddie from conservatorship was stopping the decline in home prices. Mission accomplished. This should make it easier for Congress to pass long overdue measures for helping underwater homeowners, and to begin reducing Washington’s huge footprint in our housing markets.

Read the letter at The New York Times.

Will Marshall on Obama’s Fiscal Cliff Policy

Posted on by The Progressive Policy Institute

Writing for Politico‘s Arena , PPI President Will Marshall discuses Obama’s fiscal cliff policy:

President Obama holds the whip hand on taxes.

He campaigned and won on the explicit promise of raising tax rates on the wealthiest two percent of Americans. It’s the closet thing to a mandate the 2012 elections produced. And polls make it clear that the public will blame Republicans if there’s no deal and we go off the cliff.

Deal or no deal, tax rates on the rich are going up. Unless they have a political death wish, Republicans can no longer hold the Norquist line.  So they’d be wise to negotiate with the president, angling for a top rate lower than the default rate of 39.6, in return for a promise to revisit the issue next year in the context of comprehensive tax reform. The more lawmakers succeed next year in broadening the tax base – by closing tax loopholes and preferences – the stronger argument they can make for lowering tax rates.

Read it at Politico.

 

 

Fiscal Cliff Shouldn’t Scare Homeowners, But 2013 Should

Posted on by The Progressive Policy Institute

Writing for U.S. News & World Report, Jason Gold  explains the impact of the fiscal cliff on homeowners.

With the clock ticking, the nation is engrossed in Washington’s horse wrangling over the fiscal cliff, a nasty double whammy of spending cuts and tax hikes that experts predict could usher in another crippling recession.

But while Democrats defend entitlements and Republicans defend against tax increases, no bigger constituency seems to be more in the cross-hairs than homeowners. The popular mortgage-interest deduction (MID), long thought to have hands-off status, is now on the table as lawmakers try to steer the country away from plunging headlong over the fiscal cliff.

To what degree eliminating or reducing the MID, which costs the government an estimated $98 billion annually, impacts the housing market is debatable. While a potential change in the MID has caused a great deal of coverage in the news—and no doubt great anxiety for the average homeowner—most can sit back and take a deep breath … for now. The MID won’t be part of the fiscal cliff fix.

Read the entire article here.

 

Washington Insiders Tackle ‘Fiscal Cliff’ Policy Solutions

Posted on by The Progressive Policy Institute

Will Marshall was a panelist at the Fix The Debt policy conference on Tuesday, Dec. 4, discussing two of the biggest issues surrounding federal budget deficits and the national debt – tax reform and healthcare

The panel called on Pres. Obama and Congress to tackle the nation’s budget problems.  The group proposed fiscal policies for entitlements, discretionary spending and raising additional revenues.

Maya MacGuineas, head of the Washington-based Committee for a Responsible Federal Budget, provided introductory remarks and then Peter Cook, Bloomberg News, moderated discussions with leading corporate CEOs, top federal and state politicians along with advocacy groups and former World Bank President Robert Zoellick.

Watch the panel here.

 

 

Retail Holidays Show Need for More Small Business Financing

Posted on by The Progressive Policy Institute

With the “fiscal cliff” likely to be averted, consumers are gearing up for the Holiday season. Retail designated shopping days “Black Friday,” “Small Business Saturday,” and “Cyber Monday” all saw an increase in sales, a good sign of consumer optimism heading into December.

Small businesses depend on retail spending days like these, and on consumer optimism throughout the year. And a big part of successfully growing their business is to have adequate access to financing. But “tight credit” and “small business” have been tied together by politicians and pundits as headwinds to economic recovery. Last year, PPI contributor Brian Martin wrote “The Credit Gap: Easing the Squeeze on the Smallest Business” showing how increasing lending caps at credit unions would unleash billions to the smallest small businesses (50 employees or less) and allow new growth and hiring opportunities with no taxpayer assistance.

So PPI is spotlighting Martin’s paper. We urge Congress to pass the Credit Union Small Business Jobs Bill, S. 2231 [introduced Senator Mark Udall (D-CO)]. This bipartisan bill would raise the credit union member business lending cap to 27.5% of assets and could provide up to $13 billion to small businesses in the first year alone. This could create over 140,000 new jobs at no cost to taxpayers.

Democrats Must Step Up on Entitlement Reform for Fiscal Cliff Deal

Posted on by The Progressive Policy Institute

PPI President Will Marshall speaks to The Daily Beast regarding the compromises needed from the left to avoid the fiscal cliff:

‘It appears President Obama is serious about slowing the growth of public health and retirement costs, which is the key to bending down the curve of federal spending,’ says Will Marshall, president and founder of the Progressive Policy Institute. ‘The big question now is whether leading Democrats in Congress will stand up to the Norquists of the left and put real entitlement reform on the table.’

That is the big question. Labor unions rightly believe that they were essential to the president’s winning coalition and ground-game effort in the November election. They and many liberal partisans will insist that now is not the time to make any concessions, especially on core philosophic policies like Social Security and Medicaid. They will find comfort in the arguments of some party activists and pundits who say there is no problem, that the fiscal cliff is a myth, and that current levels of deficits and debt are perfectly sustainable, especially if we just soak the rich. They are, like their conservative corollaries, embracing a feel-good reality distortion field.

Math isn’t partisan. The Congressional Budget Office has projected that because of our aging population, cumulative spending on Social Security, Medicare, Medicaid, and interest on the debt could gobble all federal revenues by the end of the next decade. The status quo is unsustainable. We cannot simply tax or spend or borrow our way out of this problem. Striking the right decisive balance is critical to our long-term economic strength as a nation.

Read the entire article at The Daily Beast.

Challenge to Stop the Never-ending Campaign

Posted on by The Progressive Policy Institute

PPI Senior Fellow Jim Arkedis calls for members of Congress to take six-month timeout from raising money in Politico.

The 2012 election is over, but don’t tell Sen. Mitch McConnell (R-Ky.) and Rep. Kurt Schrader (D-Ore.). No sooner were the votes counted that they were back on the campaign money chase within a week, raising cash for the November 2014 contest.

Even though the culture of unlimited political money was cemented by the Citizens United decision, it’s time we ask our elected representatives a crucial question: Will members of Congress ever stop campaigning?

Congress has a major task ahead of it in the coming session. Members must compromise to strike a delicate balance on spending cuts and revenue increases that begins to control the country’s debt, while consolidating fragile economic momentum and continuing to make necessary investments in the education, infrastructure, and energy sectors among others. Isn’t there something wrong when elected officials are already asking for reelection funds before attempting to achieve results the voters are clearly demanding?

Efforts to reform money in politics have gained traction of late. Many ideas are in the mold of McCain-Feingold bill of 2002: legislative or constitutional fixes that restrict the amount of donations or increase transparency.

In theory, these initiatives are sound. In practice, they’re less viable. In the current climate, it’s doubtful that Congress would vote to handcuff its fundraising prowess, and constitutional amendments are complex endeavors facing long odds. And as McCain-Feingold has proven, megadonors will always find legal loopholes, like super PACs.

Read the entire piece at Politico.

Don’t Let Hamas Win

Posted on by The Progressive Policy Institute

Sensing a rising Islamic tide in the Middle East, Hamas has picked a fight with Israel it can’t win militarily, but could win politically.  That’s something Secretary of State Hillary Clinton should prevent as she works to make a fragile cease fire hold.

No one wants to see Israeli forces go back into Gaza. A lot of Palestinians will be killed, many of them civilians.  A ground incursion also would highlight the asymmetry of power between the two sides, allowing Hamas to win sympathy by playing the victim. That’s why Israeli leader Benjamin Netanyahu is holding back, for now.

Nothing new here. Yasser Arafat and the PLO pioneered the cynical tactic of using terror attacks to provoke harsh Israeli reprisals, hoping that the resulting death and destruction among Palestinians would turn world opinion against the “occupation.”

What’s different now, of course, is the regional political landscape. Democratic elections have brought Islamic parties to power in Turkey, Egypt and Tunisia. Secular dictators like Hosni Mubarak held no brief for Hamas, but his successor, Mohammed Morsi can’t disavow a kind of kinship with Hamas, which considers itself a branch of his party, the Muslim Brotherhood.

Continue reading “Don’t Let Hamas Win” →

Election Watch: 2012 Is in the Books!

Posted on by The Progressive Policy Institute

I won’t bore readers with much about what they already know: Obama won; Democrats increased their margins in the Senate; Republicans lost House seats but easily hung onto control. Many of the scenarios we all spent a lot of time discussing during the General Election cycle are now moot: there was no “disputed election;” no electoral vote/popular vote “split;” no Republican Senate that would have allowed the GOP (in conjunction with a Romney win) to enact its agenda on a party-line vote; no Romney presidency without a Republican Senate that might (in theory, anyway) have enabled him to abandon his many promises to conservatives and pursue a bipartisan fiscal agreement.

As the final votes trickle in, it’s increasingly clear total voting will be down a relatively small amount from 2008, though not in most of the battleground states. And the composition of the electorate was very similar to that of 2008, despite widespread predictions that under-30 voters and Latinos would not turn out at anything like 2008 levels. In the end, the main difference between 2008 and 2012 from a demographic point of view is that Obama’s percentage among white voters dropped from 43% to 39%, which was partially offset by an increase in his percentage among Latinos from 67% to 71%. Yes, Obama’s percentage of under-30 voters dropped, but it was partially offset by a small gain among voters aged 30-44 (probably reflecting late-twenties voters from 2008 who moved into the next category). The only two states Romney “swung” to the GOP were the two closest Obama states in 2008, Indiana and North Carolina. Obama’s final popular-vote percentage will be very similar to George W. Bush’s in 2004. It does, as you may have heard, make him the first Democrat to win a majority of the popular vote in two consecutive elections since FDR.

Democratic gains of two net seats in the Senate were the most remarkable result, given the vastly pro-Republican landscape. A lot of the post-election talk was about the unforced errors of Tea Party candidates in Missouri and Indiana, but Republicans would have still fallen four seats short of a majority had both those states fallen into the GOP column. In the House, although there is some controversy over how to measure the national popular vote (some states don’t collect or report votes for unopposed candidates), it’s reasonably clear Democrats won a small plurality even though they only picked up ten net seats, leaving Republicans with a 232-203 majority. Continue reading “Election Watch: 2012 Is in the Books!” →

Tech Investment Still Rising, Despite WSJ Story

Posted on by The Progressive Policy Institute

This morning the WSJ ran a story entitled “Investment Falls Off a Cliff: U.S. Companies Cut Spending Plans Amid Fiscal and Economic Uncertainty.” The story argued that:

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009.

It’s worth noting, however, that tech investment rose in the third quarter to its highest level on record. The chart below shows real investment in computers, software, and communications gear, in millions of 2005 dollars

 

The chart is based on BEA data. Please note that there was a pause in tech investment, but it came in the second quarter, not the third.

 

The way to interpret this chart is that we are in the middle of a data-driven boom. Companies view investment in data and data-related equipment as absolutely essential, and continue to spend, fiscal cliff or no.

This piece was cross-posted from Innovation and Growth.

As Boom Lures App Creators, Tough Part Is Making a Living

Posted on by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was quoted  in the New York Times on job creation in the App Economy:

A study commissioned by the tech advocacy group TechNet found that the “app economy” — including Apple, Facebook, Google’s Android and other app platforms — was responsible, directly and indirectly, for 466,000 jobs. The study used a methodology that searched online help-wanted ads.

Michael Mandel, the economist who conducted the TechNet study, said it was problematic to slice the jobs data as Apple had done. “The guy who writes an Apple app one day will write an Android app the next day,” he said. “You can’t add up all the numbers from every study to get the total number of jobs.”

Read the entire article here.

The 4 Issues Dragging Down the Economic Recovery

Posted on by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was featured in the National Journal on regulatory reform:

Mitchell suggests creating a commission, modeled on the process that Congress has used to determine which military bases to realign or close, to weed out and eliminate federal spending that benefits certain businesses at the expense of others. Economist Michael Mandel of the Progressive Policy Institute suggests a similar body to reduce the government’s impact on business growth by identifying federal regulations to repeal or modify.

Read the entire National Journal article here.

Trickle-Down Bribery, or, The Butch Cassidy Congress

Posted on by The Progressive Policy Institute

Lindsay Lewis writes in the Daily Beast that the real corruption in Congress is facilitated by congressional staff whose main goal is to keep their boss and donors happy:

The House of Representatives in the 112th Congress has earned its single digit approval rating with aplomb. Gridlock, brinksmanship, mistrust, and meaningless partisan votes make today’s Congress the most dysfunctional I’ve seen in twenty years working on and around Capitol Hill.

Today, it pays to be an ardent partisan. Both parties now have super PACs—outside political organizations established by the Supreme Court’s Citizen’s United decision—that accept millions in unlimited donations to support candidates. Democrats have House Majority PAC and Majority Leader Eric Cantor (R-VA) has established the Young Guns Action Fund for Republicans. Members may not be able to coordinate their activities with a super PAC, but they sure can raise money for them.

Though a July poll found two-thirds of Americans uncomfortable with unrestricted money in politics, the Supreme Court ruled that this influx of cash will not jeopardize our democratic process. Donors “might have influence or access to elected officials,” reads the Citizen’s United decision, but it “does not mean that those officials are corrupt.”

That interpretation may be technically correct, but it’s clear a majority of Supreme Court Justices have no idea how politics really works. I do. I’ve seen first hand how corruption infiltrates Congress. While Members’ votes are not necessarily for sale, America’s legislative process most certainly is. And the super PAC era is making the situation exponentially worse.

Congressional corruption is facilitated by Hill staff. Members of Congress are in the customer service business. Members must track down lost Social Security checks, listen to complaints in the district, and take feedback on proposed legislation.

Read the entire piece.