2013 Sequestration Likely To Happen Despite Ominous GDP Report 30JAN13

IF sequestration happens, it will be because of the obstructionism of the repiglicans and tea-baggers who feel it is more important to defend the rich and corporate America from higher taxes at the expense of the poor, the working class and the middle class and to protect the profit margins of the military-industrial complex. I hope Pres Obama and congressional Democrats stand firm against the class warfare being waged by the gop / tea-bagger members of Congress because in the long run the 99% will loose a lot more from any compromise than if sequestration happens.  

This from HuffPost....

WASHINGTON -- Lawmakers and economists urged Congress to reconsider the massive spending cuts set to begin in March in light of Wednesday's alarming news that the nation's gross domestic product shrank for the first time in more than three years. But in a testament to beltway inertia, Congress seemed more likely than not to hit the fiscal snooze button.

Rep. Chris Van Hollen (D-Md.) said Wednesday's report from the Bureau of Economic Analysis was further proof that implementing "big austerity measures now will hurt the recovery." But the ranking member of the House Budget Committee added that the findings may not be enough to persuade lawmakers to replace the looming sequester, or a decade's worth of automatic cuts to defense and domestic spending.

"The question is how far over the ledge do we go before people take action," Van Hollen said in an interview. He said he hoped sequestration wouldn't be triggered. "But that may be required to bring some sense to the process. If you look at this report, there is no doubt that the spending slowdown contributed to the contraction and that was before the sequester. That was just in anticipation to the sequester."

Sen. John Thune (R-S.D.) said he was unsure how Wednesday's report would "be used in the debate about the sequester and what we ought to do going forward." But his outlook for a legislative compromise was pessimistic nonetheless.

"There doesn't seem to be much of an appetite by the president or Senate Democrats to do that," said Thune. "So I'm not sure how that ends up. What the Democrats want to do is they want to raise taxes to replace the sequester. That would make matters in the economy much worse in my view."

With both sides convinced that the other's solution to sequestration would result in further economic woes, a resolution appeared far off, even after Wednesday's unexpected news. In issuing its report, the Bureau of Economic Analysis blamed a combination of factors for the 0.1 percent contraction of the economy, most notably a 15 percent reduction in federal spending and a 22 percent decline in national defense spending.

While the report suggested that economic growth had paused, the underlying indicators weren't all depressing. With personal consumption up, an increase in the purchasing of durable goods and general improvement in the housing market, the shrinkage may be more a fluke than a trend.

Still, the news underscored the fragility of an already tepid recovery.

"Both before and after the report, the right approach was and is the barbell (upfront stimulus, delayed austerity, as a package)," emailed Peter Orszag, the former head of President Barack Obama's Office of Management and Budget. "Implementing sequestration is completely inconsistent with that framework ... The report ups the odds slightly of avoiding sequestration, but the base case still (unfortunately) is that it takes effect."

Orszag's skepticism seemed justified as Republicans called for further austerity. White House Press Secretary Jay Carney on Wednesday argued that sequestration should be replaced with a "balanced" mix of spending cuts and revenue raisers, pointing to the alternative plan the administration offered in September 2011.

"We are interested in avoiding sequester," he said. "We disagree with those in Congress who increasingly seem to suggest that it would be a good thing or a welcome thing to have in your 'back pocket' to make happen, or to use as a means of 'member management.'"

House Republicans, in response, noted that their chamber had already voted on legislation to replace sequestration and called on Senate Democrats to act. A spokesman for House Speaker John Boehner (R-Ohio) pushed back on the idea that he was content to let sequestration play out rather than work to reach a compromise.

"As demonstrated by the action we took to replace the sequester, we recognize there are better ways to find deficit reduction," said the spokesman, Brendan Buck. "Doing so, however, will require Washington Democrats to finally get serious about cutting spending."

Neither the White House nor congressional leadership said they supported delaying sequestration until the economy was on more stable footing. Van Hollen did say there was a "chance" that the sequester cuts scheduled to go into effect during the current fiscal year would be replaced. But, he added, the prospect of replacing all 10 years' worth of cuts "is slim."

The sequestration cuts were supposed to take effect at the start of the year, but Congress put them off by two months with its last-minute "fiscal cliff" deal. That deal slightly reduced the first-year impact of the cuts from $109 billion to $85 billion.

As it stands now, the modified sequestration will cut discretionary defense spending by 7.3 percent and discretionary non-defense spending by 5.1 percent this year, along with a 2 percent cut to Medicare. The non-defense cuts will land on housing assistance and community development programs, education grants to states and many federal agencies. Some initiatives are exempt, including Social Security, Medicaid, food stamps and children's health insurance.

Republicans, initially, were far more alarmed with the prospects of sequestration than Democrats, arguing that it would dramatically gut the country's military. GOP leadership moved over the summer to swap the more than $500 billion in defense cuts with savings from the federal workforce and reduced spending on the Supplemental Nutrition Assistance Program, better known as food stamps, among other things.

"House Republicans twice last year passed legislation to replace the sequester with changes to entitlement programs -- the major driver of our deficit; rather than opposing our efforts, President Obama should join us," Rory Cooper, a spokesman for House Minority Leader Eric Cantor (R-Va.), said in an email.

Recently, House Republicans' mindset has changed. Upset over deals that raised both tax rates and the debt ceiling, they began looking at sequestration as bankable spending cuts. The approach is driven, in part, out of the belief that the White House will eventually cut a deal favorable to the GOP (administration aides have been privately warning about the economic ripple effects of the sequester being triggered). But it has also caused concern among the party's defense hawks.

"I'm concerned about sequestration kicking in," Sen. John McCain (R-Ariz.) said on Wednesday. "My greatest concern of all is the president of the United States being missing in action. The president of the United States during the campaign said the sequester won't happen. Well, what's he doing about it? His own secretary of defense has said that it would be devastating to national security, and I agree with that."

http://www.huffingtonpost.com/2013/01/30/2013-sequestration-gdp-report_n_2584742.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

The Obama Coalition vs. Corporate America 9JAN13

A very interesting article sent to me by a friend, and my comments to her. Thanks again Heidi....

Pretty good article Heidi, thanks for sharing. The last two paragraphs hold a warning for all progressives."The 1980 election marked the start of a quarter-century of corporate political hegemony that permeated the administrations of Reagan, George Bush, and George W. Bush – as well as, to a substantial degree, the administration of Bill Clinton. In other words, the current Republican implosion notwithstanding, it would not be surprising to see conservative feet on Democratic throats before too much time has passed."
Just because we won the election doesn't mean we won. Pres Obama seems to be intent on continuing his administrations policies of extraordinary rendition as well as government surveillance within the U.S., both threats to our civil liberties and human rights. And his choice to head the cia is tainted by American torture of detainees in U.S. custody. That is not progressive. He could have sent a strong signal to the bank-financial cabal and wall street that times they are a'changin if he had nominated Paul Krugman for Treasury, but chose to go with someone who may be tough, but will not be able to reign in corporate corruption and abuse of power. The only bright spot so far is Chuck Hagel for Defense. Just his nomination is sending waves of panic through the military-industrial complex because he has been a real soldier and knows the horrors of war first hand and because he knows the Pentagon's budget must be cut and he will not sacrifice the welfare of the troops in favor of military contractor's profit margins.

Progressives have had to fight corporate political hegemony all through Pres Obama's first term, that is why not one ceo or member of any corporate board of the banks and financial institutions that almost destroyed our economy in this last recession has been charged in criminal court and why the "fines" levied against their financial institutions have done nothing to curb their greed and lust for power.

If the fractured, squabbling republican party ends up dominant with their feet on Democrats throats it will be because Pres Obama will caved to their demands. The next big fight is to raise the fed debt ceiling and Pres Obama has said he will not be held hostage by the gop. Does that mean he stands his ground and makes them responsible for possibly shutting down the government, or will he give in in another "compromise" where the progressive agenda is sacrificed? We shall see.

By the by, here's an interesting article on the civil war in the gop.....

Birch Society Republicans: America Now Has Three Major Political Parties 4JAN13 http://bucknacktssordidtawdryblog.blogspot.com/2013/01/birch-society-republicans-america-now.html

By THOMAS B. EDSALL

Tom Edsall on politics inside and outside of Washington.

The slow implosion of the Republican Party — along with the growing strength of a Democratic coalition dominated by low-to-middle-income voters — threatens the power of the corporate establishment and will force big business to find new ways to reassert control of the policy-making process.
The warning signs are everywhere.
The development carrying perhaps the most symbolic significance was the abandonment last week by 85 House Republicans and 40 of the 47 Republican senators of their longstanding commitment not to raise taxes. The tax increase was imposed on the affluent, a core Republican constituency. The Wall Street Journal’s editorial page did not mince words, not that it ever does:

The Senate-White House compromise grudgingly passed by the House is a Beltway classic: the biggest tax increase in 20 years in return for spending increases, and all spun for political purposes as a “tax cut for the middle class.”

The potential institutionalization of a majority Democratic coalition of the downscale – including single women, minorities, union members and the young — is equally (if not more) ominous for members of the top 0.1 percent and for the corporations that have profited over the past 40 years.
Voters in this ascendant coalition believe “politicians help the rich get richer and corporations collect record profits while refusing to hire or increase wages or salaries for workers,” according to an extensive study conducted by the Democratic polling firm Greenberg Quinlan Rosner Research.
Although there is a pro-business wing of the Democratic Party — associated with figures like current and former Treasury Secretaries Timothy Geithner and Robert Rubin, and with centrists like Senators Mark Warner of Virginia, Thomas R. Carper of Delaware and  Max Baucus of Montana — this faction is in danger of being submerged by a surge of redistributional demands coming from voters in the bottom half, income-wise.
This isn’t the only thing causing problems for what we used to call Big Business — represented by the Business Roundtable, the United States Chamber of Commerce, the National Association of Manufacturers, the American Bankers Association and other trade associations — which faces a set of challenges that have the potential to threaten its clout.
Economists on both the right and left, from Kenneth Rogoff of Harvard University to the Times columnist Paul Krugman, are increasingly talking about the detrimental consequences of high concentrations of economic and political power – concentrations that threaten the innovation that is supposed to be what makes unequal outcomes worth the price.
Daron Acemoglu of M.I.T., who wrote the highly regarded book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” with James A. Robinson of Harvard, argues that concentrations of wealth and market power allow “the already well off and already well organized” to exercise excessive leverage through “lobbying, campaign contributions and otherwise” that distort market processes.
The wide range of hostility to big business is reflected in the views of Erick Erickson, the influential right-wing blogger at RedState.com who, “through a mix of incendiary posts, canny self-promotion (he has 24,540 Twitter followers) and endorsement of conservative primary candidates” has made himself “a conservative powerhouse.” Erickson contends that a central failing of the Republican Party is its subservience to the business elite:

The Republican Establishment gets their head patted as they sip wine with major C.E.O.s who want Washington to just do something. But these C.E.O.s have something in common. They want Washington to work for them. Washington working for Fortune 500 does not equate to Washington working for families or entrepreneurs or small businesses. We have an unlevel playing field with Washington picking winners and losers with cushy jobs for the elites when they leave the Capitol.

A second development that raises the level of hostility to corporate chieftains is the fact that there has been, over the past decade, a sharp decline in the reward for work.
Margaret Jacobson and Filippo Occhino of the Cleveland Federal Reserve  documented this decline in a paper published in September, “Labor’s Declining Share of Income and Rising Inequality.” The following chart shows the continuing shift in the distribution of national income from labor to the owners of capital, beginning in 2000:

Cleveland Fed

An additional chart put together by the Cleveland Fed demonstrates that from 1948 to 1973 compensation rose at almost exactly the same rate as productivity; in other words, workers gained proportionately as their productivity improved. Over the following two decades, from 1974 to 1995, however, the rate of compensation growth fell behind productivity by roughly 0.25 percent a year, and then fell even further, by 0.5 percent, over the years from 1996 to 2011. For a worker making $25,000 a year in 1974, the failure of his pay to keep up with his productivity growth means that he made $5,763 less in 2011, $43,225, than he would have had his pay kept up with productivity gains, $48,988.
The more workers recognize that their wages are not keeping up with their productivity gains, the more they are likely to press for redistributive government action through tax policy or by other means.

Cleveland Fed

Jacobson and Occhino write

that economists have identified three long-term factors that explain why “the wage-productivity gap has widened and the share of income accruing to labor has declined.” The first is the decline of unions and the resulting weakening of the bargaining power of labor. The second has been the movement of well paying jobs overseas – the “migration of relatively more labor-intensive sectors from advanced economies to emerging economies. As a consequence, the sectors remaining in the advanced economies are relatively less labor-intensive, and the average share of labor income is lower.” The third factor is automation and technology advances which have encouraged a shift from workers to machines — “technological change connected with improvements in information and communication technologies, which has raised the marginal productivity and return to capital relative to labor.”

The shift of income from labor to capital occurs at a time (and may well be one of the causes) of huge increases in the share of income flowing to C.E.O.’s and those at the top of the income distribution.
Although the stars are lined up in favor of the anti-corporate left, American business, when its back is to the wall, has historically proved to be extraordinarily resourceful.
Just over 40 years ago, at a similarly volatile moment, Lewis F. Powell, Jr. wrote a 6,030-word memo to the United States Chamber of Commerce that has gained legendary status: The Powell Manifesto or, as it was formally titled, “Confidential Memorandum: Attack on American Free Enterprise System.” The soon-to-be-appointed associate justice of the Supreme Court warned: “We are not dealing with sporadic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued. It is gaining momentum and converts.”
In the face of this onslaught, business mobilized and by 1977 was back on top, defeating liberal initiatives like consumer protection and labor law reform during the Carter administration. Then, in 1980, a unified coalition of corporations and trade associations helped Ronald Reagan win the presidency, and the Republican Party wrested control of the Senate.
The 1980 election marked the start of a quarter-century of corporate political hegemony that permeated the administrations of Reagan, George Bush, and George W. Bush – as well as, to a substantial degree, the administration of Bill Clinton.
In other words, the current Republican implosion notwithstanding, it would not be surprising to see conservative feet on Democratic throats before too much time has passed.
http://opinionator.blogs.nytimes.com/2013/01/09/the-obama-coalition-vs-corporate-america/?emc=eta1 

TELL THE WHITE HOUSE WHAT $2000 MEANS TO YOU 30NOV12

PRES OBAMA is asking all Americans what $2000 means to us because that is approximately the amount taxes will increase for each family in the 99% if the gop doesn't stop their obstructionism and is able to come to an agreement with the administration and Democrats in Congress. Just click the link to send your message to the White House, and then tweet your Representative and Senators at hashtag my2k, or e mail them at
http://www.house.gov/representatives/find/
and  http://www.senate.gov/general/contact_information/senators_cfm.cfm

And you can check out my earlier post that includes the President's remarks on the budget negotiations at President Obama’s remarks on middle-class tax cuts on Nov. 28, 2012 (Transcript) & Patriotic Millionaires and Top Wonks Dominate Fiscal Cliff Debate 28&29NOV12

Hello -- When President Obama asked you to tell us what the middle-class tax cuts meant for your families, we knew you'd speak up. But I don't think any of us were prepared for this. The stories started pouring in immediately. Within a couple hours, we received messages from tens of thousands of people. Folks from every state in the country took time to write in. You nearly took over Twitter, where the hashtag #My2K trended all day. And people are starting to pay attention. News outlets are writing stories about how everyday Americans are engaged in this debate. Decision makers are coming to the sudden realization that they can't ignore the perspective of the middle class when it comes to cutting taxes. You're changing an entire policy conversation. And we have to keep it up. Tell us what $2,000 means to middle-class families. There's no denying the power of your voices. We heard from a woman in Alabama who explained that $2,000 was a crucial part of her family budget -- the choice between two house payments, three car payments, or medical prescriptions for a year. We heard from a farmer in Michigan, just starting his business, who wants to use $2,000 to invest in two greenhouses so he can extend his growing season. We heard from a dad in Indiana who did the math and realized that $2,000 will buy groceries for his family for 23.5 weeks. We heard from graduate students working to pay down student loans and parents trying to help put their kids through school. And these folks are not alone. Unless Congress acts, 114 million middle-class American families are staring down a tax increase starting January 1. So we need you to join them. We're doing everything to draw attention to the stories you share with us. We're sharing them on Facebook and Twitter. We're putting them on the front page of the White House website. Will you speak out today? http://www.whitehouse.gov/my2k Thanks, David David Plouffe Senior Advisor White House

Congressional Research Service Report On Tax Cuts For Wealthy Suppressed By GOP (UPDATE) 29OKT&1NOV12

FOR more than two years I have been a member of the choir asking and demanding the gop and tea-baggers show us the AMERICAN jobs that should have been created by the bush tax cuts. They have only responded with obstructionism in Congress and a propaganda campaign of lies, deceptions and misrepresentations of their plans for the US economy and about the Democrats and Pres Obama's administration. Whoever at CRS caved to repiglican demands that this report be held until after the election should be fired and Congress should investigate the agnecy for violating it's nonpartisan mandate. This from HuffPost....

The New York Times reported on Thursday that Senate Republicans applied pressure to the nonpartisan Congressional Research Service (CRS) in September, successfully persuading it to withdraw a report finding that lowering marginal tax rates for the wealthiest Americans had no effect on economic growth or job creation.
"The pressure applied to the research service comes amid a broader Republican effort to raise questions about research and statistics that were once trusted as nonpartisan and apolitical," the Times reported. Democrats in Congress, however, have resurfaced the report and published it in full. It can be read below.
Republicans told the Times they had issues with the tone, wording and scope of the report, but they clearly objected most strongly to its findings, which undermine the governing fiscal philosophy of the party, that tax cuts for the wealthy will spur growth and benefit everybody.
GOP officials told The Times that the decision by the CRS came after a cooperative discussion, but Democrats have suggested that the move is part of a broader effort by Republicans to squelch legitimate research that runs counter to their economic principles.
The CRS report, by researcher Thomas Hungerford, concluded:

The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.

Rep. Sandy Levin of Michigan, the top Democrat on the Ways and Means Committee, demanded the CRS explain its decision. "The impartial research and advice provided by CRS experts informs and strengthens the work of Congress. However, this valuable role hinges on the impartiality of CRS analysts and their freedom from political pressure. As with other non-partisan institutions, subjecting CRS analysts to political considerations undermines the legislative process and the American people’s trust in it," Levin wrote in a letter to CRS. "Therefore I was deeply disturbed to hear that Mr. Hungerford’s report was taken down in response to political pressure from Congressional Republicans who had ideological objections to the report’s factual findings and conclusion."
(Scroll down for Hungerford's response in the UPDATE.)
The report is extensive, but the reasoning behind its conclusion is fairly straightforward. The richest Americans are the least likely to spend extra money they get as a result of a tax cut, and are more likely to save it or invest it offshore. Those on the lower end of the economic spectrum, meanwhile, are the most likely to spend transfer payments they receive from the government.
A release by the Democratic Policy & Communications Center on Wednesday accused Republicans of attempting to bury the report because its "findings undermine a central tenet of Republican party orthodoxy on taxes." They included a copy of the original report, which is available below:
CRS Report: Top Tax Rates
UPDATE: 5:45 p.m. -- Thomas Hungerford, the CRS researcher who produced the report, told HuffPost that he stands by it. "Basically, the decision to take it down, I think The New York Times article basically got it right, that it was pressure from the Senate minority to take it down," Hungerford said. "CRS reports go through many layers of review before they're issued and as far as the tone and the conclusions go, people who specifically look at the writing and the tone said it was okay. So it's not going to be that and as I can tell you outright, I stand by the report and the analysis in the report."
Hungerford said that he had never experienced suppression like this before, and he pushed back on the GOP argument that he had only looked at the effect of tax cuts in the year immediately following enactment. Regardless, he said, Republicans argue that tax breaks for the rich will bring an immediate benefit to the economy, so their criticism is inconsistent. "I checked out three years and then five years and found that no, it doesn't change the results or the conclusion of my paper. So in a way, I find it interesting that they keep talking about the need to lower the top tax rate in order to stimulate the economy now," he said. 'It sounds like they're being a little inconsistent here."
Despite the pressure, Hungerford said he'll continue doing his job in a nonpartisan way. "I'm not going to change. My job is to do economic analysis on issues that the Congress is comparing and quite frankly, I'm going to continue doing that. That's my job," he said.
The Times reported that Hungerford has given $5,000 this election cycle to Democrats. HuffPost asked if that biased his report in any way. "I leave any political baggage at the door when I walk into my office and pick it up on my way out. I'm there to provide help to members of both parties, which I do," Hungerford said.
http://www.huffingtonpost.com/2012/11/01/congressional-research-service_n_2059156.html?utm_hp_ref=mostpopular

Why Biden Won 12OCT12

JOE BIDEN blew lyin' paul ryan out of the arena in the debate last night!!!! To all those whinny little bitch pundits I saw on Charlie Rose after the debate who could only complain about Joe's style more than about lyin ryan's lack of honesty and information need to get lives. Gwen Iffil swam against the tide as the lone person wanting to discuss policy and agendas of the candidates. Check this out from Robert Reich on HuffPost....
I thought Biden won last night's debate because he came off as genuine, passionate and brimming with conviction. Ryan, by contrast, seemed like a wooden marionette, a kid out of his depth relative to someone who not only knew the facts but lived them.
On taxes, Ryan couldn't come up with any details about what loopholes he and Romney would close, or how their magic arithmetic (giant tax cut for the wealthy plus $2 trillion more for the military than the joint chiefs of staff want) can possibly be paid for without socking it to the middle class.
By contrast, Biden made the case for average working people whose wages have barely risen in 30 years but who are bearing a higher total tax burden (payroll, sales, property, income) on a higher percent of their income than high rollers like Romney -- and why the well-off should do more.
On Medicare, Ryan couldn't explain why his plan wasn't a voucher program that "saved" money only by shifting the costs on to seniors who would end up holding the bag as medical costs rose. Biden effectively defended the president's plan to save Medicare by cutting excessive payments to providers.
Biden also pointed out that Ryan and his allies had tried to privatize Social Security. Score another one for Joe.
On abortion, Ryan had to admit he and Romney would work to prevent women from having the right to choose an abortion if they needed and wanted one. Biden made it clear his religious beliefs about when life began should not, in his view, force anyone who didn't share them to follow them.
I thought Biden's closing could have been tougher, drawing a sharper contrast between the Romney-Ryan "you're on your own" worldview, and the "we're in it all together" belief that has built America -- and which Obama and Biden represent.
But overall it was Biden's night. He not only trounced Ryan, but also, in the process, trounced Romney. Joe Biden is an average Joe solidly grounded in America's working middle class -- nothing pretentious or devious about him -- in contrast to the plutocrat who heads the Republican ticket, and the billionaires who are backing him.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage," now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
http://www.huffingtonpost.com/robert-reich/why-biden-won_b_1962939.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications