Posts Tagged ‘Obama’

By Stephen Dinan

It was a modest measure to designate several thousand beachfront acres of St. Croix as a National Historic Site, but in the hands of a skilled congressman such as Rep. Nick J. Rahall II, it became yet another jobs bill.

Likewise the Travel Promotion Act, which would create a nonprofit group to push U.S. tourism, has been billed as a job-producing machine by Senate Majority Leader Harry Reid, Nevada Democrat.

It doesn’t stop there – backers last week unveiled a bipartisan bill to create a visa category for entrepreneurs, predicting it “will create jobs in America.”

From immigration to clean energy to expanding the social safety net, there’s no better way to grease the skids for new government programs in Washington nowadays than to declare them job-producing bills, then watch supporters line up and potential opposition crumble.

When Mr. Reid dubbed as a jobs bill a simple $15 billion measure to offer payroll tax breaks and continued highway construction funding, it helped head off a potential Republican filibuster. Likewise, the Trade Promotion Act, which would tout the U.S. as an international tourist destination, sailed through the Senate after it was tagged with the almighty jobs-bill moniker.

Given an unemployment rate hovering near 10 percent, the focus on jobs is not surprising.

House and Senate lawmakers raised the jobs issue on the chamber floors at least 154 times over the past week, and the jobs issue is more popular in Congress now than it has been in nearly two decades – since the 1991-92 recession.

President Obama joined the jobs chorus Tuesday, touting a $6 billion plan to offer up to $3,000 rebates for energy-efficiency home upgrades as “a common-sense approach that will help jump-start job creation.”

Mr. Obama, who used the word “jobs” 11 times in his 17-minute speech in Savannah, Ga., said the issue is dominating his time right now.

“When it comes to domestic policy, I have no more important a job as president than seeing to it that every American who wants to work and is able to work can find a job – and a job that pays a living wage,” he said.

On Monday, Republicans fought back the ever-broadening definition of what creates jobs. They told Democrats to quit trumpeting a $104 billion bill on the Senate floor as a job creator and argued that it merely continues existing tax breaks and spending that are extended every year.

“The bill before us creates no new jobs, and I challenge my Democratic friends to show us how doing what we always do and what was done last year – extending the R&D tax credit, extending COBRA insurance, extending unemployment benefits – creates jobs,” said Sen. Jon Kyl, Arizona Republican.

Sen. Max Baucus, Montana Democrat, said saving jobs is just as important as creating them. If Congress allows tax cuts to expire, he said, jobs definitely would be lost.

“If the provisions we are seeking merely to extend were not passed, it would be a job destroyer,” Mr. Baucus said.

Members of both sides of the aisle are joining the chorus.

Sen. John Thune, South Dakota Republican, offered an amendment to the $104 billion extenders bill that would redirect unspent money from last year’s $862 billion stimulus bill to let small businesses write off more investments and give them a capital-gains tax cut.

“True job creation doesn’t happen when the government adds jobs; it grows when small businesses are given the incentives to thrive,” he said.

Meanwhile, the top Democrat and top Republican on the Senate Foreign Relations Committee are sponsoring the immigration bill to increase visas for entrepreneurs.

It’s sometimes tough to see how the jobs math adds up.

The administration has estimated that the $862 billion stimulus act would create up to 3.5 million jobs, which would seem like a bad deal if a $15 billion highway funding extension could create 1 million jobs alone, as Mr. Reid has said on the Senate floor.

Mr. Reid also has said a health care overhaul “would create 400,000 jobs a year,” and that his travel promotion bill “will create tens of thousands of jobs in the service industry.”

“It is a jobs bill, and that is an understatement,” he said.

Among the other job creators being touted, the beachfront historic site in the U.S. Virgin Islands stands out.

Democrats, arguing for the bill in January, said designating the site and spending the $40 million or more to acquire the land will transform it into a popular tourist destination.

“It will create jobs and help ease unemployment on the island,” said Mr. Rahall, the West Virginia Democrat who shepherded the bill through the House.

Dubious Republicans pointed out that the cost of a ticket from the U.S. to the island and the travel time make it unlikely that the new historic site would be a major economic draw.

“Let’s quit spending like crazy. Let’s sell off some of our assets, pay down our debt and let America find jobs again,” said Rep. Louie Gohmert, Texas Republican.


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By Rep. Doc Hastings

For the past two years, President Obama has given Americans mixed signals regarding his position on offshore energy production.

Sen. Obama opposed it. Candidate Obama changed his mind when gas prices soared. President Obama has stalled efforts to expand it, but then seemingly promoted it in this year’s State of the Union address. Understandably, his ever-changing position has left Americans confused and frustrated.

Yet we may have just discovered a valuable piece of information to help solve this puzzle. Hidden deep within the president’s budget proposal released on Feb. 1 are numbers that reveal his true intentions.

The budget shows that revenues collected from new offshore leasing will decline over the next five years – from $1.5 billion in 2009, to only $413 million in fiscal 2015. If the president planned on expanding offshore drilling, revenues would be increasing, not decreasing.

Despite what the president says, numbers don’t lie. This budget clearly indicates that he has no intention of opening additional areas to drilling off our nation’s coast.

To anyone who has been following the Department of the Interior, this revelation comes as no surprise. We’ve seen the writing on the wall.

First, there was a six-month delay on the new 2010 offshore drilling plan in order to extend the public comment period. Those six months came and went in September – yet still no plan.

Then Interior Secretary Ken Salazar announced that a new plan may not be in place until 2012. This means it’s possible that no new areas will be opened for offshore drilling during the president’s term.

With 68 percent of Americans supporting offshore-energy production, this is not a record I’d want going into an election year. It’s flat-out unacceptable from a president who claims he wants to increase our energy independence.

Americans have already waited long enough for new offshore drilling. When families experienced pain at the pump during the summer of 2008, they demanded action. The president and Congress responded by lifting the nearly 20-year ban on drilling. But little did the public know that they’d possibly have to wait up to four more years before any further action was taken.

Removing the ban on drilling opened up over 500 million acres that were previously unavailable. Imagine the possibilities this creates for new jobs, more energy and increased security. In these economic times, it’s unfathomable that this administration has chosen to drag its feet on this incredible opportunity.

The No. 1 priority right now for Americans is job creation. While everyone recognizes the problem, those who control Washington continue to falsely believe that throwing hundreds of millions of dollars at projects selected by government agencies is the answer. Democrats passed a $787 billion “stimulus bill,” yet our economy continues to lose jobs. Now the administration wants Congress to pass another jobs bill, which means more government spending and putting our nation further into debt.

However, according to American Energy Alliance, new offshore drilling would create over a million new jobs at no cost to American taxpayers – in fact it would actually make taxpayers money. Moving forward with a new offshore lease plan will enable private companies to invest their own money into American energy production. This is private investment that will create jobs instead of government spending that balloons the debt. If the president is really looking to put people back to work, this would be an ideal place to start.

During a recent town hall, the president said that “American-grown energy is good for our security.” I whole heartedly agree, which is why I find it difficult to understand why the administration is refusing to increase American oil and gas production. We have domestic resources, but we are choosing not to use them. Instead, we continue to import oil and allow our country’s energy to be at the mercy of volatile and hostile foreign governments.

It’s important to recognize that expanding offshore drilling can be done in a responsible, environmentally safe way. State-of-the-art technology has allowed us to safely procure oil and gas from deep under our oceans. Without a doubt, drilling in the U.S. is cleaner and safer than in many foreign countries with far lower environmental protections and standards. Importing oil not only puts our national security at risk, but also the environment.

It is clear that more drilling is not the single magic solution to our nation’s energy crisis – but it is an important component that can’t be ignored. Increased oil and natural gas production must be part of an all-of-the-above energy plan (like the Republicans’ American Energy Act, H.R. 2846) that also promotes clean, renewable energy sources such as wind, solar, hydroelectric and, especially, nuclear.

For a president who boasts about transparency, the public shouldn’t have to dig through budget numbers and analyze charts to figure out his hidden agenda.

The administration must change course and immediately finalize the new 2010 offshore drilling plan that opens as many new areas as possible for energy production. With our economy and national security on the line, there is absolutely no justification for this administration to continue blocking progress.

Rep. Doc Hastings of Washington state is the ranking Republican on the House Natural Resources Committee.

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You’d think the Obama administration is busy enough controlling the banks, insurance companies and automakers, but thanks to whistleblowers at the Department of the Interior, we now learn they’re planning to increase their control over energy-rich land in the West.

A secret administration memo has surfaced revealing plans for the federal government to seize more than 10 million acres from Montana to New Mexico, halting job- creating activities like ranching, forestry, mining and energy development. Worse, this land grab would dry up tax revenue that’s essential for funding schools, firehouses and community centers.

President Obama could enact the plans in this memo with just the stroke of a pen, without any input from the communities affected by it.

At a time when our national unemployment rate is 9.7 percent, it is unbelievable anyone would be looking to stop job-creating energy enterprises, yet that’s exactly what’s happening.

The document lists 14 properties that, according to the document, “might be good candidates” for Mr. Obama to nab through presidential proclamation. Apparently, Washington bureaucrats believe it’s more important to preserve grass and rocks for birdwatchers and backpackers than to keep these local economies thriving.

Administration officials claim the document is merely the product of a brainstorming session, but anyone who reads this memo can see that it is a wish list for the environmentalist left. It discusses, in detail, what kinds of animal populations would benefit from limiting human activity in those areas.

The 21-page document, marked “Internal Draft-NOT FOR RELEASE,” names 14 different lands Mr. Obama could completely close for development by unilaterally designating them as “monuments” under the 1906 Antiquities Act.

It says all kinds of animals would be better off by doing so, like the coyotes, badgers, grouse, chickens and lizards. But giving the chickens more room to roost is no reason for the government to override states’ rights.

Rep. Robert Bishop, Utah Republican, made the memo public because he didn’t want another unilateral land grab by the White House, like what happened under former Presidents Bill Clinton and Jimmy Carter.

Using the Antiquities Act, President Carter locked up more land than any other president had before him, taking more than 50 million acres in Alaska despite strong opposition from the state.

President Clinton used the authority 22 times to prohibit hunting, recreational vehicles, mining, forestry and even grazing in 5.9 million acres scattered around the country. The law allowed him to single-handedly create 19 new national monuments and expand three others without consulting anyone.

One of the monuments President Clinton created was the Grande Staircase-Escalante in Utah, where 135,000 acres of land were leased for oil and gas and about 65,000 barrels of oil were produced each year from five active wells. But, President Clinton put an end to developing those resources.

President Obama could do the same in other energy-rich places unless Congress takes action. At least 13.5 million acres are already on his Department of Interior’s real estate shopping list.

This includes a 58,000-acre area in New Mexico. The memo said this should be done so the lesser prairie chicken and the sand dune lizard will be better protected. Are these animals going extinct? No. The bureaucrats wrote that the land should be locked up to “avoid the necessity of listing either of these species as threatened or endangered.”

In Nevada, the Obama administration might make another monument in the Heart of the Great Basin because it, supposedly, is a “center of climate change scientific research.”

In Colorado, the government is considering designating the Vermillion Basin as a monument because it is “currently under the threat of oil and gas development.”

Americans should be wary of any plans a president has to seize land from the states without their consent. Any new plans to take away states’ freedom to use land as they see fit must be stopped.

That’s why I sponsored an amendment to block Mr. Obama from declaring any of the 14 lands listed in the memo as “monuments.” Unfortunately, the Senate, led by Democrats, rejected it on Thursday evening by a vote of 58-38.

It was particularly disappointing that the Senate Majority Leader Harry Reid, of Nevada, voted against the amendment. The government owns more than 80 percent of the land in Nevada and the unemployment rate there is 12.8 percent. Surely it would help job prospects if more land were open for business.

This is a nationwide problem. The government currently owns 650 million acres, or 29 percent of the nation’s total land.

Federal bureaucrats shouldn’t be wasting time thinking up ways to acquire more, especially in the middle of a recession. Taking the nation’s resources offline will stifle job creation and dry up tax revenues.

If anything, the government should be selling land off, not locking more up. By voting against my amendment, the Democrats tacitly endorsed Mr. Obama’s secret plan to close off millions more acres to commerce.

If enacted, the plan would mean fewer jobs for Americans.

The Democratic Congress refused to stop it, but one sure way Americans could help block it is if they decide some Democrats should lose their jobs on November.

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Obama throws gays under the bus

President Barack Obama promised gay and lesbian voters he would repeal a law banning their open service in the military, would do away with a federal marriage law and would champion their causes from the White House. In his first five months, he’s taken incremental steps that have little real effect and left some people feeling betrayed.But he’s still willing to take money from a reliably Democratic constituency—he was sending Vice President Joe Biden to a Democratic National Committee fundraiser Thursday evening with gay and lesbian donors.

Some gay donors called for a boycott after Obama’s Justice Department in a court filing, compared gay marriages to incest.

“I don’t think it’s an appropriate time to be raising money. No one is happy now,” said Richard Socarides who advised former President Bill Clinton on gay issues and did not plan to attend the event. “On gay rights, the country is already in the age of Obama, but he’s governing from the Clinton era.”

Obama issued a presidential memorandum that expands some federal benefits to same-sex partners, but not health benefits or pension guarantees. He has allowed State Department employees to include their same-sex partners in certain embassy programs already available to opposite-sex spouses.

But that remains far short of his campaign rhetoric.

“At its core, this issue is about who we are as Americans,” Obama said a 2007 statement on gay issues. “It’s about whether this nation is going to live up to its founding promise of equality by treating all its citizens with dignity and respect.”

Since then, he publicly has committed himself to repealing the “don’t ask, don’t tell” policy that allows gays and lesbians to serve in the military as long as they don’t disclose their sexual orientation or act on it. On Jan. 9, Obama spokesman Robert Gibbs answered “yes” when asked whether the administration would end the policy. But as president, Obama hasn’t taken any concrete steps urging Congress to rescind the Clinton-era policy that even some former chairmen of the Joint Chiefs of Staff have described as flawed.

Obama pledged during the campaign to work for repeal of the Defense of Marriage Act, which limits how state, local and federal bodies can recognize partnerships and determine benefits.

In a letter sent to gay-rights groups in February 2008, the president said “I support the complete repeal of the Defense of Marriage Act (DOMA)—a position I have held since before arriving in the U.S. Senate.”

But lawyers in his administration defended the law in a court brief. White House aides said they were only doing their jobs to back a law that is on the books.

At the time, even Democrats in his party criticized the move.

“I was profoundly disappointed by this action, particularly coming from this administration,” said Rep.Tammy Baldwin, D-Wis., the first openly gay nonincumbent to win election to Congress.

Even so, Baldwin and other high-profile gay and lesbians and their allies still planned to attend Biden’s fundraiser. The minimum donation was $1,000 and some tickets went as high as $30,400. The event was expected to draw 160 people, although the DNC was not releasing estimates on how much money the event would net, especially given some high-profile defections.

Human Rights Campaign grass-roots chief Marty Rouse Gay and Lesbians Advocates and Defenders projects director  Mary Bonauto and the Gay and Lesbian Victory Fund President Chuck Wolfe all withdrew. Several other high-profile activists also did not intend to participate, hoping to pressure Obama to make good on his promises now.

The White House plans an East Room reception on Monday for gay and lesbian advocates to commemorate the 40th anniversary of the Greenwich Village demonstrations at the Stonewall Tavern in New York City. The demonstrations are viewed as the start of the modern gay rights movement.

“Unless the president on Monday articulates a strong action plan, and is willing to do it with cameras rolling, it is going to go from bad to worse,” said Socarides, the Clinton adviser.

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WASHINGTON – Sweeping healthcare legislation working its way through Congress is more than an effort to provide insurance to millions of Americans without coverage. Tucked within is a provision that could provide billions of dollars for walking paths, streetlights, jungle gyms, and even farmers’ markets.

The add-ons – characterized as part of a broad effort to improve the nation’s health “infrastructure’’ – appear in House and Senate versions of the bill.

Critics argue the provision is a thinly disguised effort to insert pork-barrel spending into a bill that has been widely portrayed to the public as dealing with expanding health coverage and cutting medical costs. A leading critic, Senator Mike Enzi, a Wyoming Republican, ridicules the local projects, asking: “How can Democrats justify the wasteful spending in this bill?’’

But advocates, including Senator Edward M. Kennedy of Massachusetts, defend the proposed spending as a necessary way to promote healthier lives and, in the long run, cut medical costs. “These are not public works grants; they are community transformation grants,’’ said Anthony Coley, a spokesman for Kennedy, chairman of the Senate health committee whose healthcare bill includes the projects.

“If improving the lighting in a playground or clearing a walking path or a bike path or restoring a park are determined as needed by a community to create more opportunities for physical activity, we should not prohibit this from happening,’’ Coley said in a statement.

The Senate health panel’s bill does not specify how much would go to the community projects. A Senate staff member said the amount of spending will be left up to the Obama administration. A House version of the bill caps the projects at $1.6 billion per year and includes them in a section designed to save money in the long run by reducing obesity and other health problems.

It is not clear yet how the money would be allocated. The legislation says that grants will be awarded to local and state government agencies that will have to submit detailed proposals. The final decisions will be made by the secretary of Health and Human Services.

The proposal was inserted at the urging of a nonprofit, nonpartisan group called Trust for America’s Health, which produces reports about obesity and other health matters. Part of the group’s proposed language for the community grants was inserted into the Senate bill. It called for “creating the infrastructure to support active living and access to nutritious foods in a safe environment.’’ The group provided examples of grants for bike paths, jungle gyms, and lighting, though the Senate bill doesn’t list those specifics.

Jeffrey Levi, the group’s executive director, said that “it is easy to satirize’’ the projects, but they are needed to improve America’s health.

“We will see a return on this investment if you use this money strategically for proven, evidence-based programs,’’ Levi said in an interview, citing efforts to stop smoking and to promote physical activity. “We will prevent or reverse chronic diseases such as heart disease. . . . It will pay for itself.’’

While many may think the healthcare bill strictly aims to increase coverage, Levi said that is a mistaken impression. “This isn’t just about health insurance,’’ he said. “This bill is about creating a healthier country.’’

The group says that a modest community project can lead directly to improvements in public health. In a recent report, the group cited two examples from Massachusetts that it said were effective: Shape Up Somerville, which helped elementary school children lose weight by promoting physical activity, and the Physical Activity Club in Attleboro, which also helped children lose weight.

The idea of using the healthcare bill as a vehicle for preventing diseases has bipartisan appeal. President Obama has called for “the largest investment ever in preventive care, because that’s one of the best ways to keep our people healthy and our costs under control.’’ Enzi, too, has said that “reducing healthcare costs has to begin with promoting healthier behaviors.’’

But there is disagreement about the best way to do that. Senator Tom Harkin, an Iowa Democrat who is working closely with Kennedy on the healthcare bill, has criticized the current healthcare system for focusing on “sick care’’ and has called for more investment in a variety of measures that would help prevent diseases, including the community grants, restricting junk food in schools, and encouraging children to be more active.

“We spend 75 cents of every healthcare dollar treating people with chronic diseases like diabetes, heart disease, and asthma, and only 4 cents on prevention,’’ Harkin said in a statement. “But the majority of these diseases can be prevented through lifestyle and environmental changes.’’

However, it can be difficult to quantify the benefits of a park or pathway, leading some critics to say such funding is an example how the healthcare legislation has spiraled out of control.

Enzi has said that instead of paying for pathways, it would be more effective to encourage lower insurance premiums for individuals who can prove they have taken steps to improve their health. He said that construction grants belong in other bills.

Enzi, the top Republican on the Senate health committee, has unsuccessfully pushed an amendment that would specifically prohibit the use of funds for sidewalks, streetlights, and other infrastructure projects.

Kennedy spokesman Coley said such proposed amendments are counterproductive, stressing that the projects would be modest and are not intended to replace larger ones that can be funded in other bills. Nonetheless, he said, the projects “may be a very cost-effective and long-lasting intervention.’’

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Levy Viewed as Way to Reduce Deficits, Fund Health Reform

(Washington Post Staff) –  With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax — called a value-added tax, or VAT — has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity.

At a White House conference earlier this year on the government’s budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama’s policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.

“There is a growing awareness of the need for fundamental tax reform,” Sen. Kent Conrad (D-N.D.) said in an interview. “I think a VAT and a high-end income tax have got to be on the table.”

A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American — a tangible benefit that would be highly valuable to low-income families.

Liberals dispute that notion. “You could pay for it regressively and have people at the bottom come out better off — maybe. Or you could pay for it progressively and they’d come out a lot better off,” said Bob McIntyre, director of the nonprofit Citizens for Tax Justice, which has a health financing plan that targets corporations and the rich.

A White House official said a VAT is “unlikely to be in the mix” as a means to pay for health-care reform. “While we do not want to rule any credible idea in or out as we discuss the way forward with Congress, the VAT tax, in particular, is popular with academics but highly controversial with policymakers,” said Kenneth Baer, a spokesman for White House Budget Director Peter Orszag.

Still, Orszag has hired a prominent VAT advocate to advise him on health care: Ezekiel Emanuel, brother of White House chief of staff Rahm Emanuel and author of the 2008 book “Health Care, Guaranteed.” Meanwhile, former Federal Reserve chairman Paul A. Volcker, chairman of a task force Obama assigned to study the tax system, has expressed at least tentative support for a VAT.

“Everybody who understands our long-term budget problems understands we’re going to need a new source of revenue, and a VAT is an obvious candidate,” said Leonard Burman, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, who testified on Capitol Hill this month about his own VAT plan. “It’s common to the rest of the world, and we don’t have it.”

Seeking New Revenue

The surge of interest in a VAT is testament to the extraordinary depth of the nation’s money troubles. While some conservatives have long argued that a consumption tax would provide a simpler and more efficient alternative to the byzantine U.S. income tax code, this time it’s all about the money.

The federal budget deficit is projected to approach $1.3 trillion next year, the highest ever except for this year, when the deficit is forecast to exceed $1.8 trillion. The Treasury is borrowing 46 cents of every dollar it spends, largely from China and other foreign creditors, who are growing increasingly uneasy about the security of their investments. Unless Congress comes up with some serious cash, expanding the nation’s health-care system will only add to the problem.

Obama wants to raise income taxes for high earners and impose new levies on business, but those moves would not generate enough cash to cover the cost of health care, much less balance the budget, and they have not been fully embraced by Congress. Obama’s plan to tax greenhouse-gas emissions could raise trillions of dollars, but again, Congress is balking.

Key lawmakers are considering other ways to pay for health reform, including new taxes on sugary soda, alcohol and employer-provided health insurance. The last proposal could raise a lot of money — nearly $1 trillion over the next five years, according to White House budget documents. But options on the table would raise a fraction of that sum. And while it might pay for health care, it would barely dent deficits projected to total nearly $4 trillion over the next five years and to grow rapidly in the future, as baby boomers draw on Social Security and Medicare.

Enter the VAT, one of the world’s most popular taxes, in use in more than 130 countries. Among industrialized nations, rates range from 5 percent in Japan to 25 percent in Hungary and in parts of Scandinavia. A 21 percent VAT has permitted Ireland to attract investment by lowering its corporate tax rate.

The VAT has advantages: Because producers, wholesalers and retailers are each required to record their transactions and pay a portion of the VAT, the tax is hard to dodge. It punishes spending rather than savings, which the administration hopes to encourage. And the threat of a VAT could pull the country out of recession, some economists argue, by hurrying consumers to the mall before the tax hits.

A VAT’s Bottom Line

What would it cost? Emanuel argues in his book that a 10 percent VAT would pay for every American not entitled to Medicare or Medicaid to enroll in a health plan with no deductibles and minimal copayments. In his 2008 book, “100 Million Unnecessary Returns,” Yale law professor Michael J. Graetz estimates that a VAT of 10 to 14 percent would raise enough money to exempt families earning less than $100,000 — about 90 percent of households — from the income tax and would lower rates for everyone else.

And in a paper published last month in the Virginia Tax Review, Burman suggests that a 25 percent VAT could do it all: Pay for health-care reform, balance the federal budget and exempt millions of families from the income tax while slashing the top rate to 25 percent. A gallon of milk would jump from $3.69 to $4.61, and a $5,000 bathroom renovation would suddenly cost $6,250, but the nation’s debt would stabilize and everybody could see a doctor.

Sales Tax Gains Momentum

Burman, who helped House Democrats craft an unsuccessful 2007 plan to repeal the alternative minimum tax, said he’s received a number of phone calls from lawmakers interested in his idea, though “they can’t quite imagine how to make it happen politically.” Burman said the 25 percent rate has caused some sticker shock, and he’s trying to figure out how to bring it down.

Graetz’s proposal drew an endorsement from Volcker, who last year called it “a sensible plan for reform.” (Volcker did not respond to a request for comment.) It also has piqued the interest of Conrad, the Senate Budget Committee chairman who argues that it could be modified to accommodate Obama’s pledge not to raise taxes on families who make less than $200,000 a year.

“I think interest is quietly picking up,” Graetz said. “People are beginning to recognize that the mathematics of the current system are just unsustainable. You have to do something. And a VAT has got to be on the table if you want to do something big and serious.”

Still, the Senate Finance Committee declined to include a VAT among the options it is considering to pay for health reform. And even VAT supporters doubt the tax will find a place among the tax-reform proposals the Volcker panel has been asked to produce by Dec. 4.

Though the nation’s fiscal outlook is grim, Burman said “the situation will have to get more desperate” before lawmakers are likely to consider a new levy aimed directly at the pocketbooks of every one of their constituents.

Most lawmakers are still looking for “a painless source of revenue” to overhaul the health-care system and dig the nation out of debt, Burman said. “Who knows?” he added. “Maybe the tooth fairy will bring that to them.”

So, we have stupidity in the White House – of course we knew that – and now we’ve added, theft, nepotism, and the total lack of anyone in office knows what the fuck they’re doing. After Obama ruins our country and leaves office, and tomorrow wouldn’t be soon enough, where, exactly will he go? To Indonesia where was tutored in the Islamic Religion or to Kenya where his alcoholic polygamist father ended his life?

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(RWN – McQ)   —  I’ve tried to make the point in the past about how, regardless of anyone’s desire, there is going to be pain associated with the financial mess in which we presently find ourselves. The question is will an apparent aversion to pain lead government to soften it but also extend while doing so, or do politicians have the fortitude and will to advise us to endure the pain, get it over with and begin the inevitable recovery much more quickly?

As is obvious, it is the former pain aversion formula which seems to be the one our politicians choose. Because even short term but significant pain is likely to cost them their jobs, and, when all is said and done in matters such as these, that is what they end up focusing on.

However, what it means, according to news reports, is something I never thought I’d ever see contemplated, much less seriously considered in my lifetime.

Bank nationalization:

So far, President Obama’s top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a “bad bank” that would nationalize the worst nonperforming loans by taking them off the hands of financial institutions without actually taking ownership of the banks. Others talk of de facto nationalization, in which the government owns a sizeable chunk of the banks but not a
majority, with all that connotes.

That has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent. But the government’s influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks’ most toxic assets, a figure that could run into the hundreds of billions of dollars.

Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.

“The case for full nationalization is far stronger now than it was a few months ago,” said Adam S. Posen, the deputy director of the Peterson Institute for International Economics. If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.”

“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”

I’ve derisively cited the “Japanese model” repeatedly when discussing this on the blog and podcasts thinking, apparently erroneously, that we’d be smart enough to understand what Japanese government intervention ended up doing to their economy over the past two decades and not repeat that mistake.

Obviously I was wrong. As the government pumps in money in trade for stock in the taxpayers name (even though the taxpayers will never see a nickel of any future returns personally), nationalization becomes a de facto situation.

As the NYT points out, both Lawrence Summers (an Obama economic adviser) and Timothy Geithner (Obama’s choice for Sec Treasury) have made the point during the Asian financial crisis of the ’90s that governments make “lousy bank managers”.

Yet here we have government already hip deep in the banks and heading deeper. And even given the past experience cited, I guess we’re expected to believe that in this case, it will all be different.

Of course with de facto or actual nationalization, the entire political game changes. Politicians would have a new vehicle to enable pain aversion by short-circuiting the consequences of irresponsible actions by those who keep them in office:

Moreover, Mr. Obama’s advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies, which could imperil the effort to steer the banks away from the cliff.

“The nightmare scenarios are endless,” one of the administration’s senior officials said.

And, unfortunately, they’re only one part of the whole “nightmare sceanrio” this level of government spending and intrusion might bring.

“We told the Asians that they had to be willing to let banks and companies fail,” said Jeffrey Garten, a professor at the Yale School of Management and a top official in the Clinton administration. “We warned that there was great moral hazard if governments just bailed them out.”

“And now,” he said, “we are doing the polar opposite of our advice.”

Isn’t the definition of insanity trying the same thing over and over and expecting different results?

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