You’re Supposed to Get What You Pay For

 

Job Creation and Job Quality Standards in State Economic Development Subsidy Programs | PHENND Updates:

“Report: States Spend Billions on Economic Development Subsidies that Don’t Require Job Creation or Decent Wages

Pennsylvania scored a D, tied for 40th place among the states

Pennsylvania is spending millions of dollars per year on corporate tax credits, cash grants and other economic development subsidies that lack wage and benefit standards for workers at subsidized companies and sometimes don’t require job creation, according to a new national report card issued by Good Jobs First.”

(Via PHENND.)

When you pay for something like foregoing taxes, government’s should get something in return.  They’re our tax dollars right?

Republican Bait-and-Switch on Taxes

Republican Bait-and-Switch on Taxes:

“Thus we see that Republicans want their cake and eat it too. They want to use higher [CBO] revenue projections resulting almost entirely from expiration of the Bush tax cuts to prevent any discussion of tax increases to reduce the deficit, while implying that this revenue rise comes solely from faster economic growth. As Sen. Kyl put it, “So revenues are down, but it is due to the recession that we have. We have not cut tax rates in the last few years – since 2006 – for example.”

According to the CBO, ending all of the tax cuts and allowing scheduled tax increases now in law to take effect would raise revenues by $5.6 trillion between 2012 and 2021, including debt service. That would go a long way toward solving our debt problem. In fact, the Center on Budget and Policy Priorities says that this action, by itself, would be sufficient to stabilize the national debt and prevent it from rising as a share of GDP.”

(Via Capital Gains and Games | Washington, Wall Street and Everything ….)

Half-truths are whole lies.

Yes, Macroeconomics 101 is Correct

“Some Simple Deficit Reduction Arithmetic”:

Kash Mansori notes that it takes more than a $100 cut in government spending to cut the deficit by $100. The reason is fairly simple. A cut in government spending causes output and income to fall, and the resulting fall in tax revenue increases the deficit offsetting some of the gain from the cut in spending…

When the policies they want to pursue have large negative effect on the deficit, the economy, employment etc. Republicans invent a story where the pain goes away. Somehow, the deficit actually falls, output goes up, and employment is stimulated even if it runs counter to obvious intuition. When tax cuts are the goal, we are told that tax cuts lead to so much additional effort that revenues actually go up and this reduces the deficit. We can cut taxes, and reduce the deficit! This magical answer is, of course, nonsense, but Republicans were able to hoodwink quite a few people into believing this.

(Via Economist’s View (Mark Thoma).)

Read Mansori’s entire article.  It’s worth it.  A few nuggets:

Somehow, this simple exercise in macroeconomic math seems beyond the reach of policymakers around the world.

  • Many Republicans (and some Democrats) in Washington continue to believe that they can close a $1 trillion deficit by simply cutting $1 trillion in spending, and are apparently hoping to use the debt ceiling vote to do exactly that.
  • The Cameron government in the UK embarked on an austerity program last year to try to reduce its budget deficit, and now mysteriously keeps missing its deficit reduction targets as the UK economy shrinks.
  • The Greek government was forced into enacting a number of austerity measures last year, and… surprise, surprise… is now missing its deficit targets.

Cutting Down the Forest But Keeping the Trees

Cutting Government Spending May Be Popular But There Is Little Appetite For Cutting Specific Government Programs:

“Cutting government spending often sounds like a good idea to many people, and it is a popular rallying cry for many Republicans and Conservatives, but a new Harris Poll underlines how difficult it is. When shown a list of 20 areas of federal government spending, a majority of the public supports cutting only six of them and these do not include the big ticket items that comprise most of the federal budget. Furthermore large majorities oppose cutting Social Security or federal health care programs, which many economists believe are increasing at unsustainable rates…

These results prompt two thoughts. The first is that the big picture – cutting government spending, in general – looks very different than the more detailed picture – cutting specific programs. Many people seem to want to cut down the forest but to keep the trees. The second is that this is not 1980, when President Reagan came to power. At that time there was a much greater appetite for cutting many government programs than there is today. Furthermore it should be noted that, in spite of his rhetoric, Ronald Reagan had great difficulty cutting government spending.”

(Via Harris Interactive.)

When will we be adults about this?

Does The U.S. Really Have A Fiscal Crisis?

Does The U.S. Really Have A Fiscal Crisis?:

“But the problem here is bipartisan – as it was with the tax cut last year.  None of the leadership on either side is willing to talk openly about how our biggest banks caused great fiscal damage.  No one is willing to explain why our healthcare costs continue to rise.  And no top politicians currently champion real tax reform.

The Republicans have seized a moment.  To them, this is not really about fiscal responsibility; this is about an opportunity to shrink the size of government.

But the Democrats have played perfectly into their hands.  The heart of their mistake was the president’s refusal to explain clearly how the financial system produced a recession that has pushed up our national debt. “

(Via The Baseline Scenario.)

Obama: A Non-Compromise Compromise?

So Obama decides to go the “This $hit is chess; it ain’t checkers” route.  Gangsta for the middle.  I like.

It should be interesting to see if the mass middle will support him.  Obama’s already painting the GOP as the bad guys.  The thinking goes this way: my agenda that protects the middle class will go forward in exchange for giving the GOP what they want.  He’s already painting the GOP as the party for the rich against the rest of us.  In other words, he calls out the GOP on class warfare without using those words.  On first blush, I thought this was terrible for Obama, but he just might be on to something.

Keep solving problems, Mr. President.  Serve them fools!